Pomerantz’s $3 Billion Petrobras Settlement Retains Fifth Place Position in Top 100 Securities Class Action Settlements of All Time
In February 2023, Securities Class Action Services (“SCAS”) released their annual list of the ‘Top 100 U.S. Class Action Settlements of All-Time’ as of 2022, ranking the $3 billion settlement that Pomerantz, as lead plaintiff, achieved with Petróleo Brasileiro S.A.–Petrobras as the fifth-largest securities settlement ever. The litigation against Petrobras that culminated in this historic settlement arose from the Brazilian oil giant’s concealment of a sprawling, decades-long kickback scheme from investors.
The lead plaintiff in the litigation, Universities Superannuation Scheme, is the largest private pension fund in the United Kingdom. The settlement, achieved after more than three years of hard-fought litigation, was comprised of a $2.95 billion settlement with Petrobras and a $50 million settlement with Petrobras’ auditor, PwC Brazil.
The Petrobras settlement also set records as the largest securities class action settlement in a decade, the largest securities settlement ever in a class action involving a foreign issuer, the largest securities settlement ever achieved by a foreign lead plaintiff, and the largest securities class action settlement in history not involving a restatement of financial reports.
Beyond the outstanding multi-billion-dollar recovery for shareholders, Pomerantz secured precedent-setting decisions during the Petrobras litigation at the Second Circuit Court of Appeals.
Defendants appealed the district court’s class certification of purchasers of both Petrobras equity and debt on multiple grounds, alleging plaintiffs’ failure to satisfy the requirement of ascertainability and to satisfy the burden of showing that the Petrobras securities traded in efficient markets. In an issue of first impression, the Second Circuit squarely rejected defendants’ invitation to adopt the heightened ascertainability requirement promulgated by the U.S. Court of Appeals for the Third Circuit, which would have required plaintiffs to demonstrate that determining membership in a class is “administratively feasible.”
The Second Circuit also rejected the defendants’ urging to adopt a requirement that all securities class action plaintiffs seeking class certification prove through direct evidence (i.e., via an event study) that the prices of the relevant securities moved in a particular direction in response to new information. In rejecting the notion that complicated event studies should be submitted by plaintiffs at the class certification stage, the Second Circuit agreed with Pomerantz that “event studies offer the seductive promise of hard numbers and dispassionate truth, but methodological constraints limit their utility in the context of single-firm analyses.”
The precedents set by Pomerantz in the Petrobras litigation will serve as the bedrock of class action jurisprudence in the Second Circuit for decades to come.
Pomerantz’s Petrobras litigation was led by Managing Partner Jeremy A. Lieberman, assisted by Partners Emma Gilmore, Marc I. Gross, Jennifer Pafiti and Brenda Szydlo, and Of Counsel Jennifer Banner Sobers.
Pomerantz made a second appearance in the Top 100 List, coming in at #80 with its $225 million settlement with Comverse Technology, Inc. in 2010, which is not only one of the largest securities class action settlements reached since the passage of the Private Securities Litigation Reform Act (“PSLRA”), but also stands as the second-largest recovery in a securities litigation involving the backdating of options, as well as one of the largest recoveries – $60 million – from an individual officer-defendant, Comverse’s founder and former CEO, Kobi Alexander.
Pomerantz is proud to be so highly ranked in SCAS’s list of the ‘Top 100 U.S. Class Action Settlements of All-Time.’ Visit our Notable Cases and News pages to learn more about the Firm’s achievements, and subscribe to our bi-monthly newsletter, The Pomerantz Monitor, to be kept abreast of the latest insights into securities litigation, corporate governance, and other issues of importance to investors worldwide.