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A federal judge has delayed appointing the lead plaintiffs’ attorneys in the shareholder litigation against Toyota Motor Corp. until U.S. Supreme Court decides whether foreign purchasers of a company’s stock have standing to sue in the United States. U.S. District Judge Dale Fischer agreed on Monday to consolidate seven class actions pending in Los Angeles on behalf of Toyota shareholders whose holdings declined by tens of millions of dollars after the company announced a series of recalls associated with sudden unintended acceleration. After two hours of sometimes-contentious arguments in a courtroom full of plaintiffs’ attorneys, some of whom brought representatives of their institutional clients to the hearing, she declined to appoint a lead plaintiff and lead counsel. Rather, she told counsel to make fresh arguments 10 days after the Supreme Court rules in a case on point, Morrison v. National Australia Bank. The justices have heard oral arguments in the case, which addresses whether U.S. courts have jurisdiction over claims brought by foreign investors who purchased U.S. stock and allege fraudulent conduct that occurred in the United States. Fischer noted that the plaintiffs in the Toyota case include foreign purchasers of Toyota stock on U.S. and Tokyo exchanges. Thomas A. Dubbs, a senior partner at New York’s Labaton Sucharow who represents a foreign purchaser of Toyota stock, Skandia Life Insurance Company Ltd., argued for delay. Morrison, he said, could “help the court to shape the issues.” Dubbs represents the foreign investors in the Morrison case. Gerald Silk, a partner at New York’s Bernstein Litowitz Berger & Grossman whose clients include foreign investors, noted that 85% of the class could end up being foreign purchasers of Toyota stock. “There is a large foreign component to this case,” he said. Jeffrey Block, a partner at Boston’s Berman DeValerio Pease Tabacco Burt & Pucillo who represents the Massachusetts Pension Reserves Management Board, argued against appointing foreign investors, given the risk that they might get thrown out of the litigation. Another battle involved whether a large group of investors, rather than individual pension funds, should be named lead plaintiffs. Silk, for example, is one of 13 lawyers representing five institutional investors comprising what they call the Institutional Investor Group. Darren Robbins, a partner at San Diego’s Robbins Geller Rudman & Dowd who represents two pension and retirement funds, attacked such groupings as inherently inefficient. He noted that the Institutional Investor Group needed to draft a complex prosecution agreement just to pursue their claims. “What we have here is layer upon layer of lawyers overseeing this litigation,” he said, while his clients could “pick up the phone and talk to one another.” Silk denied that the lawyers on his team had purposely gathered such a large group of investors in order to present the greatest loss to the court — a key factor in determining who should be lead plaintiff and lead counsel. “We’ve made it clear this group was formed on its own initiative,” he said. “This group was formed organically, without the lawyers.” Silk’s clients include the Maryland State Retirement and Pension System and the City of Philadelphia Board of Pensions and Retirement. Not all the arguments came from lawyers for institutional shareholders. One lawyer, Jeremy Lieberman, a partner at New York’s Pomerantz Haudek Grossman & Gross, argued for co-lead plaintiff status for his client, a mutual fund that would represent note holders of Toyota Motor Credit Corp. He said it was “important there is representation for each and every security holder.” Another lawyer, Joe Kendall of the Kendall Law Group in Dallas, argued that individual shareholders — whom he described as the “grandma in tennis shoes in Kansas City” — should be represented. His client is an Alabama businessman who lost $23,000 on Toyota stock. “Sometimes, the little guy investor doesn’t get represented,” he told Fischer. Amanda Bronstad can be contacted at [email protected].

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