Case 1:18-cv-07143-JMF Document 112 Filed 10/18/21 Page 1 of 31
`
`
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`
`
`
`
`IN RE NIELSEN HOLDINGS PLC
`SECURITIES LITIGATION
`
`
`
`
`
`
`
`Civil Action No. 1:18-cv-07143-JMF
`
`
`
`
`
`
`
`
`
`
`
`
`DEFENDANTS’ MEMORANDUM OF LAW IN OPPOSITION TO PLAINTIFFS’
`MOTION FOR CLASS CERTIFICATION
`
`
`
`
`
`
`
`
`
`
`
`
`SIMPSON THACHER & BARTLETT LLP
`425 Lexington Avenue
`New York, New York
`Telephone: (212) 455-2000
`Facsimile: (212) 455-2502
`
`Attorneys for Defendants
`
`

`

`Case 1:18-cv-07143-JMF Document 112 Filed 10/18/21 Page 2 of 31
`
`
`
`
`
`TABLE OF CONTENTS
`
`PRELIMINARY STATEMENT .................................................................................................... 1
`
`BACKGROUND ............................................................................................................................ 3
`
`ARGUMENT .................................................................................................................................. 5
`
`I.
`
`PLAINTIFFS DO NOT MEET THE REQUIREMENTS OF RULE 23(b)
`BECAUSE THEY PROFFER NO VIABLE THEORY OF CLASS-WIDE
`RELIANCE ......................................................................................................................... 7
`
`A.
`
`Plaintiffs Have Failed to Carry Their Burden of Demonstrating Market
`Efficiency and Cannot Rely on the Fraud-on-the-Market Presumption ................. 7
`
`1.
`
`2.
`
`The Coffman Report Fails to Consider Frictions That Could
`Impede Market Efficiency .......................................................................... 9
`
`Plaintiffs’ Event Study is Methodologically Flawed and Does Not
`Support a Finding of Market Efficiency ................................................... 11
`
`B.
`
`Plaintiffs May Not Rely on the Affiliated Ute Presumption ................................. 14
`
`II.
`
`PLAINTIFFS DO NOT MEET THE REQUIREMENTS OF RULE 23(b)
`BECAUSE THEY PROFFER NO METHOD OF COMPUTING DAMAGES
`CONSISTENT WITH THE ASSERTED THEORIES OF LIABILITY ......................... 15
`
`A.
`
`B.
`
`Plaintiffs Provide No Method of Addressing the Impact of Confounding
`Information on Measurement of Damages ........................................................... 16
`
`Plaintiffs Provide No Method of Calculating the Inflation Attributable to
`the Surviving Allegations ..................................................................................... 19
`
`III.
`
`THE PROPOSED CLASS REPRESENTATIVES ARE ATYPICAL AND
`INADEQUATE................................................................................................................. 21
`
`A.
`
`B.
`
`The Proposed Class Representatives Cannot Satisfy Rule 23(a) Because
`Each Is Subject to Unique Defenses ..................................................................... 22
`
`The Proposed Class Representatives Cannot Satisfy Rule 23(a) Because
`Each Is Inadequate ................................................................................................ 24
`
`CONCLUSION ............................................................................................................................. 25
`
`
`
`
`
`
`
`i
`
`
`

`

`Case 1:18-cv-07143-JMF Document 112 Filed 10/18/21 Page 3 of 31
`
`
`
`Cases
`
`Table of Authorities
`
`Affiliated Ute Citizens of Utah v. United States,
`406 U.S. 128 (1972) .............................................................................................................. 7, 14
`
`Basic v. Levinson,
`485 U.S. 224 (1988) .................................................................................................................... 6
`
`Berwecky v. Bear, Stearns & Co.,
`197 F.R.D. 65 (S.D.N.Y. 2000) ................................................................................................ 23
`
`Cammer v. Bloom,
`711 F. Supp. 1264 (D.N.J. 1989) .......................................................................................... 8, 11
`
`Comcast Corp. v. Behrend,
`569 U.S. 27 (2013) ...................................................................................................... 6, 7, 15, 16
`
`Fort Worth Emps.’ Ret. Fund v. J.P. Morgan Chase & Co.,
`301 F.R.D. 116 (S.D.N.Y. 2014) .............................................................................................. 21
`
`George v. China Auto. Sys., Inc.,
`No. 11 Civ. 7533 (KBF), 2013 WL 3357170 (S.D.N.Y. July 3, 2013) ................................ 7, 22
`
`Goldman Sachs Grp., Inc. v. Ark. Teacher Ret. Sys.,
`141 S.Ct. 1951 (2021) ................................................................................................................. 7
`
`Halliburton Co. v. Erica P. John Fund, Inc.,
`573 U.S. 258 (2014) ............................................................................................................ 6, 8, 9
`
`In re BP p.l.c. Sec. Litig.,
`MDL No. 10-MD-2185, 2014 WL 2112823 (S.D. Tex. May 20, 2014) .................................. 19
`
`In re Flag Telecom Holdings, Ltd. Sec. Litig.,
`574 F.3d 29 (2d Cir. 2009) ....................................................................................................... 22
`
`In re Hebron Tech. Co., Ltd. Sec. Litig.,
`Nos. 20 Civ. 4420 (PAE), 20 Civ. 4746 (PAE),
`2020 WL 5548856 (S.D.N.Y. Sept. 16, 2020).......................................................................... 22
`
`In re IMAX Sec. Litig.,
`272 F.R.D. 138 (S.D.N.Y. 2010) .............................................................................................. 22
`
`In re Initial Pub. Offerings Sec. Litig.,
`471 F.3d 24 (2d Cir. 2006) ..................................................................................................... 6, 7
`
`In re Monster Worldwide, Inc. Sec. Litig.,
`251 F.R.D. 132 (S.D.N.Y. 2008) .............................................................................................. 25
`
`ii
`
`
`

`

`Case 1:18-cv-07143-JMF Document 112 Filed 10/18/21 Page 4 of 31
`
`
`
`In re Petrobras Sec.,
`862 F.3d 250 (2d Cir. 2017) ................................................................................................. 8, 11
`
`In re Williams Sec. Litig.,
`496 F. Supp. 2d 1195 (N.D. Okla. 2007) .................................................................................. 20
`
`Johnson v. Nextel Commc’ns Inc.,
`780 F.3d 128 (2d Cir. 2015) ....................................................................................................... 5
`
`Krogman v. Sterritt,
`202 F.R.D. 467 (N.D. Tex. 2001) ............................................................................................... 8
`
`Kulig v. Midland Funding, LLC,
`No. 13-CV-4715 (PKC), 2014 WL 6769741 (S.D.N.Y. Nov. 20, 2014) ................................. 24
`
`Maywalt v. Parker & Parsley Petroleum Co.,
`67 F.3d 1072 (2d Cir. 1995) ..................................................................................................... 24
`
`Menaldi v. Och-Ziff Capital Mgmt. Grp., LLC,
`328 F.R.D. 86 (S.D.N.Y. 2018) ................................................................................................ 17
`
`Pearlstein v. BlackBerry Ltd.,
`No. 13 Civ. 7060 (CM), 2021 WL 253453 (S.D.N.Y. Jan. 26, 2021) ...................................... 16
`
`Pirnik v. Fiat Chrysler Automobiles, N.V.,
`327 F.R.D. 38 (S.D.N.Y. 2018) (Furman, J.) ............................................................................. 8
`
`Roach v. T.L. Cannon Corp.,
`778 F.3d 401 (2d Cir. 2015) ................................................................................................. 7, 19
`
`Rocco v. Nam Tai Elecs., Inc.,
`245 F.R.D. 131 (S.D.N.Y. 2007) ........................................................................................ 22, 23
`
`Starr ex rel. Estate of Sampson v. Georgeson S’holder, Inc.,
`412 F.3d 103 (2d Cir. 2005) ..................................................................................................... 15
`
`Sykes v. Mel S. Harris & Assocs. LLC,
`780 F.3d 70 (2d Cir. 2015) ................................................................................................. 16, 17
`
`Teamsters Local 445 Freight Div. Pension Fund v. Bombardier, Inc.,
`546 F.3d 196 (2d Cir. 2008) ....................................................................................................... 8
`
`Waggoner v. Barclays PLC,
`875 F.3d 79 (2d Cir. 2017) ................................................................................................ passim
`
`Wal-Mart Stores, Inc. v. Dukes,
`564 U.S. 338 (2011) ................................................................................................................ 5, 6
`
`iii
`
`
`

`

`Case 1:18-cv-07143-JMF Document 112 Filed 10/18/21 Page 5 of 31
`
`
`
`Wilson v. Comtech Telecomms. Corp.,
`648 F.2d 88 (2d Cir. 1981) ................................................................................................. 14, 15
`
`Rules
`
`17 C.F.R. § 242.201 (2021) .......................................................................................................... 11
`
`Fed. R. Civ. P. 23(a)(3) ............................................................................................................. 6, 21
`
`Fed. R. Civ. P. 23(a)(4) ....................................................................................................... 6, 21, 24
`
`Fed. R. Civ. P. 23(b)(3)................................................................................................................... 6
`
`Other Authorities
`
`Jill E. Fisch, Jonah B. Gelbach, & Jonathan Klick,
`The Logic and Limits of Event Studies in Securities Fraud Litigation, 96 Tex. L.
`Rev. 553, 616 (2018) ................................................................................................................ 17
`
`
`
`
`
`iv
`
`
`

`

`Case 1:18-cv-07143-JMF Document 112 Filed 10/18/21 Page 6 of 31
`
`
`
`Defendants Nielsen Holdings plc (“Nielsen”), Dwight Mitchell Barns, Jamere Jackson,
`
`and Kelly Abcarian (the “Individual Defendants,” and together with Nielsen, “Defendants”)
`
`respectfully submit this memorandum of law, together with the Expert Report of Dr. Paul A.
`
`Gompers (the “Gompers Rpt.”) and the Declaration of Tyler A. Anger (“Anger Decl.”), dated
`
`October 18, 2021, in opposition to Plaintiffs’ motion for class certification (ECF No. 102).1
`
`PRELIMINARY STATEMENT
`
`Plaintiffs seek to represent a class of Nielsen shareholders allegedly harmed by
`
`statements made by Nielsen and certain of its officers between July 26, 2016 and July 25, 2018.
`
`Class certification should be denied here, however, because Plaintiffs have not met the
`
`significant evidentiary hurdle to establish that questions of law or fact common to class members
`
`predominate over questions affecting individual members, that Plaintiffs’ claims are typical of
`
`the class, and that Plaintiffs will adequately represent the proposed class’s interests.
`
`First, Plaintiffs cannot meet Rule 23(b)(3)’s predominance requirement because they
`
`have failed to proffer a viable theory of class-wide reliance. Plaintiffs must prove, by a
`
`preponderance of the evidence, that Nielsen’s stock traded in an efficient market during the
`
`proposed class period. Plaintiffs rely heavily on an expert report from Mr. Chad Coffman in
`
`attempting to meet that burden. But, as explained by Defendants’ expert, Dr. Gompers, Mr.
`
`Coffman’s analysis is fatally flawed because it fails to consider frictions that may impede market
`
`efficiency and relies on an unreliable, methodologically unsound event study that is incapable of
`
`demonstrating a cause-and-effect relationship between negative news about Nielsen and changes
`
`
`1
`As used herein, “Lead Plaintiff” or “MissPERS” refers to the Public Employees’ Retirement System of
`Mississippi. “Monroe” refers to the “Additionally Named Plaintiff” Monroe County Employees’ Retirement
`System. “Plaintiffs” refers to MissPERS and Monroe collectively.
`
`1
`
`

`

`Case 1:18-cv-07143-JMF Document 112 Filed 10/18/21 Page 7 of 31
`
`
`
`in Nielsen’s stock price. Accordingly, Plaintiffs have failed to carry their burden of
`
`demonstrating market efficiency and cannot rely on a class-wide presumption of reliance.
`
`Second, Plaintiffs cannot meet Rule 23(b)(3)’s predominance requirement because they
`
`have failed to proffer a method of computing damages that is consistent with their theories of
`
`liability. Plaintiffs blandly assert that “damages in this action are subject to a well-settled,
`
`common methodology.” But generically describing commonly-used tools in finance does not
`
`amount to a methodology for measuring damages consistent with Plaintiffs’ theories of liability.
`
`Such a methodology would need to address the fact that the surviving allegations in this case
`
`involve three overlapping categories of alleged misstatements and corrective disclosures that are
`
`fundamentally interwoven with simultaneously-issued statements for which liability has been
`
`dismissed, as well as other market-moving statements not at issue in this litigation. Neither
`
`Plaintiffs nor Mr. Coffman describe a methodology that would be capable of addressing these
`
`case-specific issues. Instead, the damages section of Mr. Coffman’s report is a copy-and-paste
`
`of the damages section of a report he submitted in an entirely unrelated case earlier this year.
`
`Plaintiffs cannot satisfy Rule 23(b)(3) with empty platitudes that computing damages will be no
`
`problem and need not be considered in any detail now, especially where there are significant
`
`doubts as to whether any common damages methodology consistent with Plaintiffs’ asserted
`
`theories of liability exists.
`
`Third, Plaintiffs cannot meet the typicality and adequacy requirements of Rule 23(a).
`
`MissPERS was expressly informed by its investment manager of the precise issues with
`
`Nielsen’s business outlook that Plaintiffs allege were fraudulently concealed from class
`
`members, conceded at deposition to reviewing that specific information at the time, yet
`
`continued to purchase Nielsen shares regardless. Similarly, Monroe purchased numerous shares
`
`2
`
`

`

`Case 1:18-cv-07143-JMF Document 112 Filed 10/18/21 Page 8 of 31
`
`
`
`after the class period ended and appears to have significantly increased its overall holdings of
`
`Nielsen stock. Both Plaintiffs are therefore subject to unique defenses concerning their
`
`knowledge and reliance, undermining their ability to represent the proposed class. In addition, at
`
`their depositions, neither MissPERS nor Monroe had more than a surface-level understanding of
`
`the issues in the case. Some of the allegations, including those relating to Nielsen’s goodwill,
`
`Plaintiffs did not understand at all. Accordingly, Plaintiffs are not adequate representatives of
`
`the putative class, and they cannot meet the requirements of Rule 23(a).
`
`BACKGROUND
`
`Nielsen is a data analytics company that provides clients detailed information about
`
`consumer preferences. Compl. ¶ 61.2 As originally pleaded, this putative securities class action
`
`involved allegations related to the two primary segments of Nielsen’s business—“Buy,” focused
`
`on consumer purchasing measurement and analytics in the Consumer Packaged Goods (“CPG”)
`
`space; and “Watch,” focused on media audience measurement and analytics—over a proposed
`
`class period from February 11, 2016 to July 25, 2018. See id. Among other things, Plaintiffs
`
`alleged that Defendants made material misstatements regarding the Buy Emerging Markets
`
`(“BEM”) and Buy Developed Markets (“BDM”) businesses; the value of Buy goodwill; revenue
`
`and growth forecasts; and the actual and anticipated impact of the E.U. General Data Protection
`
`Regulation (“GDPR”) on Nielsen’s business before and after its May 25, 2018 effective date.
`
`See generally Compl. ¶¶ 73-411.
`
`The Court’s Opinion and Order on Defendants’ Motion to Dismiss (“MTD Order”) (ECF
`
`No. 85) significantly narrowed Plaintiffs’ operative pleading. Plaintiffs’ allegations related to
`
`BEM were dismissed. MTD Order at 18-20. So, too, were those relating to Defendants’ BDM
`
`
`2
`All citations to the “Complaint” or “Compl.” reference the Second Amended Complaint (ECF No. 72).
`
`3
`
`

`

`Case 1:18-cv-07143-JMF Document 112 Filed 10/18/21 Page 9 of 31
`
`
`
`revenue and growth statements. See id. at 17-18. Alleged misstatements pertaining to the GDPR
`
`before its effective date were similarly dismissed. See id. at 25-27.
`
`As Plaintiffs concede, only three categories of alleged misrepresentations remain,
`
`pertaining to: (i) the financial outlook of the BDM business; (ii) the value of Buy goodwill; and
`
`(iii) the effect of the GDPR on Nielsen’s Watch Marketing Effectiveness business after the
`
`GDPR’s effective date. See Plaintiffs’ Mem. of Law in Supp. of Class Certification (“Moving
`
`Brief” or “Mov. Br.”) (ECF No. 103) at 5-7. Because all allegations prior to July 26, 2016 were
`
`dismissed, the MTD Order also shortened the proposed class period by eliminating the period
`
`between February 28, 2016 and July 25, 2016. See id. at 1 & n.2 (noting that a class period of
`
`July 26, 2016 to July 25, 2018 is “consistent with the claims sustained”). Plaintiffs maintain that
`
`these alleged misrepresentations were corrected as follows:
`
`(i) BDM allegations. Plaintiffs assert that corrective disclosures regarding BDM were
`
`made on October 25, 2016, when “Defendants revealed they knew discretionary spending had
`
`been declining . . . [and] that the decline was permanent.” Id. at 5.
`
`(ii) Goodwill allegations. Plaintiffs assert that Nielsen’s goodwill impairment charge
`
`taken on February 28, 2019, “should have been taken at an earlier time (at least as of [the] Fiscal
`
`Year 2016 10-K).” Compl. ¶ 280. The Moving Brief also notes that “Nielsen reported . . . an
`
`additional $1.0 billion impairment charge for 2019.” Mov. Br. at 6.3 Plaintiffs do not identify a
`
`date, either inside or outside the proposed class period, by which the alleged misrepresentation of
`
`goodwill was fully disclosed to the market.
`
`
`3
`The fiscal year 2019 impairment charge is not referenced in the Complaint. The Court’s MTD Order
`provided Plaintiffs an opportunity to amend the Complaint. See MTD Order at 29-30. Plaintiffs declined to do so.
`See January 13, 2021 Joint Response to MTD Order (ECF No. 86) at 1 (“Plaintiffs have informed Defendants that
`they do not intend to file an amended complaint”). Plaintiffs should not be permitted to rely on allegations beyond
`those in the Complaint, particularly when they could have amended to include such allegations but declined to do so.
`
`4
`
`

`

`Case 1:18-cv-07143-JMF Document 112 Filed 10/18/21 Page 10 of 31
`
`
`
`(iii) GDPR allegations. Finally, Plaintiffs assert that Defendants’ alleged
`
`misrepresentations regarding the GDPR’s impact on its business were disclosed on July 26,
`
`2018, which Plaintiffs allege contributed to “[Nielsen’s] stock price plummet[ing] 25% on July
`
`26, 2018.” Mov. Br. at 7. The Moving Brief also attributes an unspecified portion of the July
`
`26, 2018 drop to “unexpected negative news about the Buy business.” Id. The Complaint
`
`alleges that this “unexpected negative news” pertained to BEM. See, e.g., Compl. ¶ 20
`
`(attributing July 26, 2018 stock drop to “substantial declines in Emerging Markets revenues”);
`
`Compl. ¶¶ 235-248 (discussing the July 26, 2018 “[r]evelation of Buy Segment [i]ssues” as
`
`focused on “weaknesses in the Emerging Markets business”).
`
`Based on these three remaining categories of alleged misrepresentations, Plaintiffs seek
`
`relief under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. See Compl. ¶¶
`
`480-497. Plaintiffs move to certify a class consisting of “all persons and entities that purchased
`
`or otherwise acquired Nielsen publicly traded common stock during the period from July 26,
`
`2016 through July 25, 2018, inclusive (the “Class Period”), and were damaged thereby,” subject
`
`to certain exclusions. Mov. Br. at 1. Plaintiffs further request that MissPERS be appointed Lead
`
`Plaintiff, that Monroe be appointed as an additional class representative, and that Labaton
`
`Sucharow LLP be appointed as class counsel. Id. at 25.
`
`ARGUMENT
`
`In considering Plaintiffs’ motion for class certification, the Court must conduct a
`
`“rigorous analysis” to determine whether Plaintiffs have proven each element of Federal Rule of
`
`Civil Procedure 23(a) and (b)(3) by a preponderance of the evidence. See Wal-Mart Stores, Inc.
`
`v. Dukes, 564 U.S. 338, 350–51 (2011); Johnson v. Nextel Commc’ns Inc., 780 F.3d 128, 137 (2d
`
`Cir. 2015). Because “Rule 23 does not set forth a mere pleading standard,” any party “seeking
`
`5
`
`

`

`Case 1:18-cv-07143-JMF Document 112 Filed 10/18/21 Page 11 of 31
`
`
`
`class certification must affirmatively demonstrate his compliance with the Rule . . . .” Wal-Mart,
`
`564 U.S. at 350; see also Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013) (“The party must
`
`also satisfy through evidentiary proof at least one of the provisions of Rule 23(b).”). The court’s
`
`analysis “[f]requently . . . will entail some overlap with the merits of the plaintiff’s underlying
`
`claim,” Wal-Mart, 564 U.S. at 351, and “the obligation to make such determinations is not
`
`lessened” by such overlap, “even [where] a merits issue . . . is identical with a Rule 23
`
`requirement,” In re Initial Pub. Offerings Sec. Litig., 471 F.3d 24, 41 (2d Cir. 2006), decision
`
`clarified on denial of reh’g, 483 F.3d 70 (2d Cir. 2007). If any element of Rule 23 is not
`
`satisfied, class certification must be denied. See id. at 40–41.
`
`Rule 23(a) requires, among other things, that Plaintiffs demonstrate their claims are
`
`typical of the class and they will fairly and adequately protect the class’s interests. Fed. R. Civ.
`
`P. 23(a)(3)–(4).
`
`To satisfy Rule 23(b)(3), Plaintiffs bear the burden of proving by a preponderance of the
`
`evidence that “questions of law or fact common to class members predominate over any
`
`questions affecting only individual members, and that a class action is superior to other available
`
`methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). In a
`
`Rule 10b–5 case, Plaintiffs must demonstrate they are entitled to a class-wide presumption of
`
`reliance, as otherwise “[e]ach plaintiff would have to prove reliance individually, so common
`
`issues would not ‘predominate.’” Halliburton Co. v. Erica P. John Fund, Inc., 573 U.S. 258,
`
`281–82 (2014) (“Halliburton II”). Plaintiffs are entitled to a rebuttable presumption of class-
`
`wide reliance upon a showing that the defendant’s stock traded in an efficient market. See Basic
`
`v. Levinson, 485 U.S. 224, 246–47 (1988). Alternatively, in securities fraud cases involving
`
`“primarily a failure to disclose,” Plaintiffs are entitled to a presumption of reliance under
`
`6
`
`

`

`Case 1:18-cv-07143-JMF Document 112 Filed 10/18/21 Page 12 of 31
`
`
`
`Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128 (1972). The Affiliated Ute
`
`presumption is not available where the “complaint alleges numerous affirmative misstatements”
`
`and “the Plaintiffs focus their claims on those affirmative misstatements.” Waggoner v. Barclays
`
`PLC, 875 F.3d 79, 96 (2d Cir. 2017). Satisfying Rule 23(b)(3) also requires that Plaintiffs
`
`present a damages model demonstrating that damages can be measured in a manner that is
`
`consistent with Plaintiffs’ theory of liability. Comcast, 569 U.S. at 35; Roach v. T.L. Cannon
`
`Corp., 778 F.3d 401, 407 (2d Cir. 2015).
`
`I.
`
`PLAINTIFFS DO NOT MEET THE REQUIREMENTS OF RULE 23(b)
`BECAUSE THEY PROFFER NO VIABLE THEORY OF CLASS-WIDE
`RELIANCE
`
`In a securities fraud action, Rule 23(b)(3) cannot be satisfied if individualized reliance
`
`issues predominate. See, e.g., In re Initial Pub. Offerings, 471 F.3d at 42–43. Plaintiffs invoke
`
`the fraud-on-the-market presumption of reliance and argue in the alternative that the Affiliated
`
`Ute presumption of reliance applies. As explained below, Plaintiffs fail to meet their burden of
`
`proving that either presumption of reliance applies here, and therefore class certification should
`
`be denied. See, e.g., George v. China Auto. Sys., Inc., No. 11 Civ. 7533 (KBF), 2013 WL
`
`3357170, at *9 (S.D.N.Y. July 3, 2013) (denying certification because plaintiffs “failed to carry
`
`their burden” of showing “by a preponderance of the credible evidence” that presumption of
`
`reliance applied).
`
`A.
`
`Plaintiffs Have Failed to Carry Their Burden of Demonstrating Market
`Efficiency and Cannot Rely on the Fraud-on-the-Market Presumption
`
`As the Supreme Court recently explained, “[t]he ‘fundamental premise’ of the fraud-on-
`
`the-market theory underlying Basic’s presumption is ‘that an investor presumptively relies on a
`
`misrepresentation so long as it was reflected in the market price at the time of his transaction.’”
`
`Goldman Sachs Grp., Inc. v. Ark. Teacher Ret. Sys., 141 S.Ct. 1951, 1958 (2021). To establish
`
`7
`
`

`

`Case 1:18-cv-07143-JMF Document 112 Filed 10/18/21 Page 13 of 31
`
`
`
`the presumption, a plaintiff must prove (1) that the alleged misrepresentation was publicly
`
`known; (2) that it was material; (3) that the stock traded in an efficient market; and (4) that the
`
`plaintiff traded the stock between the time of the misrepresentation and the revelation of the
`
`truth. Id. (citing Halliburton II, 573 U.S. at 268).
`
`The Second Circuit “‘has not adopted a test for the market efficiency of stocks,’” but
`
`courts in this district typically refer to the “so-called Cammer factors” in evaluating whether a
`
`plaintiff has carried its burden of establishing market efficiency. In re Petrobras Sec., 862 F.3d
`
`250, 276 (2d Cir. 2017); see also Cammer v. Bloom, 711 F. Supp. 1264, 1286–87 (D.N.J. 1989).
`
`The first four Cammer factors “examine indirect indicia of market efficiency . . . such as high
`
`trading volume, extensive analyst coverage, multiple market makers, large market capitalization,
`
`and an issuer’s eligibility for simplified SEC filings.” Petrobras, 862 F.2d at 276 (emphasis
`
`added). The fifth Cammer factor calls for “direct evidence” of market efficiency in the form of
`
`“empirical facts showing a cause and effect relationship between unexpected corporate events or
`
`financial releases and an immediate response in the stock price.” Id. The fifth Cammer factor is
`
`regarded as “the most important” and “the essence of an efficient market and the foundation for
`
`the fraud on the market theory.” Teamsters Local 445 Freight Div. Pension Fund v.
`
`Bombardier, Inc., 546 F.3d 196, 207 (2d Cir. 2008). Courts also routinely examine the three
`
`“Krogman factors” in analyzing market efficiency: the capitalization of the company; the bid-ask
`
`spread of the stock; and the “float,” or percentage of stock not held by insiders. See Waggoner,
`
`875 F.3d at 94–95; Krogman v. Sterritt, 202 F.R.D. 467, 474 (N.D. Tex. 2001).
`
`Plaintiffs have not carried their burden of establishing market efficiency.4 In seeking to
`
`do so, Plaintiffs rely on the Expert Report of Mr. Coffman (the “Coffman Rpt.”) (ECF No. 109-
`
`
`4
`Defendants recognize that Nielsen traded on the New York Stock Exchange, typically viewed as “a
`paradigmatic efficient market.” See Pirnik v. Fiat Chrysler Automobiles, N.V., 327 F.R.D. 38, 44 (S.D.N.Y. 2018)
`
`8
`
`

`

`Case 1:18-cv-07143-JMF Document 112 Filed 10/18/21 Page 14 of 31
`
`
`
`1). In his report, Mr. Coffman discusses each of the Cammer and Krogman factors, as well as
`
`three “additional factors” of his own selection—“the amount of institutional ownership of
`
`Nielsen Common Stock,” “autocorrelation (meaning whether there is a pattern in a security’s
`
`returns so that future returns can be predicted based upon past returns),” and “options trading.”
`
`Coffman Rpt. ¶ 23; see also Gompers Rpt. ¶ 19. With respect to Cammer factor 5, Mr. Coffman
`
`relies on an event study comparing “news versus no news” days to conclude that “there is a clear
`
`cause-and-effect relationship between new public information about Nielsen and the market
`
`price of Nielsen common stock.” Coffman Rpt. ¶ 49. Mr. Coffman asserts that “all of these
`
`factors support the conclusion that Nielsen Common Stock traded in an open, developed, and
`
`efficient market at all relevant times during the Class Period.” Coffman Rpt. ¶ 25. But the
`
`evidence Mr. Coffman and Plaintiffs present does not satisfy that standard.
`
`1.
`
`The Coffman Report Fails to Consider Frictions That Could Impede
`Market Efficiency
`
`As explained in detail in Dr. Gompers’s Report, the Coffman Report fails to establish that
`
`Nielsen’s stock traded in an efficient market during the proposed Class Period. See generally
`
`Gompers Rpt. ¶¶ 19–58. Significantly, Mr. Coffman entirely ignores “limits to arbitrage”
`
`affecting Nielsen securities—that is, the existence of “innate or externally-imposed frictions
`
`[that] can result in the price of a stock moving in a manner inconsistent with the implications of
`
`the [efficient market hypothesis].” Gompers Rpt. ¶ 29. Constraints on short-selling are a key
`
`example of such limits to arbitrage. See id. ¶ 30 (describing “strong empirical support for the
`
`notion that, as restrictions on short-selling increase, market quality deteriorates and stock prices
`
`
`(Furman, J.). Plaintiffs nevertheless bear the “burden of proving” market efficiency. Halliburton II, 573 U.S. at
`275. As explained herein and in the accompanying Gompers Report, Plaintiffs have not carried that burden.
`
`9
`
`

`

`Case 1:18-cv-07143-JMF Document 112 Filed 10/18/21 Page 15 of 31
`
`
`
`become significantly less efficient”); Ex. A (Coffman Tr.) 56:14-16 (“[T]he literature suggests
`
`that the presence of the ability to short a stock improves market efficiency[.]”).5
`
`As Dr. Gompers notes, at times during the proposed Class Period—and in particular on
`
`October 25, 2016, and July 25, 2018, the only two corrective disclosure dates to survive the
`
`MTD Order,6 as well as in the days following each disclosure—Nielsen stock was subject to the
`
`so-called “short-sale circuit breaker” under Rule 201 of SEC Regulation SHO. See Gompers
`
`Rpt. at 33. Also known as the “Alternative Uptick Rule,” the short sale circuit breaker is
`
`triggered where the price of a security decreases by 10% or more from its closing price on the
`
`previous day. See 17 C.F.R. § 242.201 (2021). Once triggered, Rule 201 permits short sales
`
`only if the sale price is above the current national best bid. See id. Academic research indicates
`
`that Rule 201 is “associated with a relative reduction in market efficiency” for the affected
`
`securities. Gompers Rpt. ¶ 33.
`
`Mr. Coffman was not aware of and did not investigate whether any such restrictions on
`
`short sales of Nielsen’s stock were present here, and if so whether they impacted market
`
`efficiency, even though the restriction was in place on the two most significant trading dates in
`
`the proposed Class Period. See Ex. A (Coffman Tr.) 57:9-13 (“Q. [Y]ou haven’t investigated
`
`whether there were any restrictions on short selling with respect to Nielsen stock during the class
`
`period; correct? A. That’s not something I became aware of or investigated specifically, no.”).
`
`Mr. Coffman’s failure to even consider potential frictions affecting Nielsen stock at relevant
`
`times during the Class Period is emblematic of the overall genericity of his report and is
`
`
`5
`Except as otherwise stated, “Ex. __” refers to exhibits to the Anger Declaration.
`6
`The other four corrective disclosure dates pleaded in the Complaint—April 25, 2017; October 25, 2017;
`February 8, 2018; and April 26, 2018—pertain to dismissed allegations. Plaintiffs have conceded as much. See,
`e.g., Ex. B (Monroe 30(b)(6) Tr.) 140:17-19 (“[Defendants’] misrepresentations caused the stock to drop . . . two
`different times.”); id. 140:22-25 (“Q. So is it your understanding that this lawsuit relates to two stock drops? A. Two
`stock drops, three different misrepresentations.”).
`
`10
`
`

`

`Case 1:18-cv-07143-JMF Document 112 Filed 10/18/21 Page 16 of 31
`
`
`
`inconsistent with Plaintiffs’ burden to prove market efficiency based on a “holistic analysis . . .
`
`[of] the totality of the evidence.”7 Petrobras, 862 F.3d at 277; se