UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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ROBERT CORWIN, Individually, and On
Behalf of All Others Similarly Situated,
Plaintiff,
v.
BERND R. SEIZINGER, MARTINE
GEORGE, MARCEL ROSENCZWEIG, and
GPC BIOTECH AG,
Defendants.
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Electronically Filed
Civil Action No.: 1:07-cv-06728-DC
(ECF Case)
Hon. Denny Chin
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(Additional captions on the following pages)
REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF THE
MOTION OF AXXION S.A. LUXEMBURG, ON BEHALF OF ITS AKROBAT FUND-
VALUE, FOR CONSOLIDATION, APPOINTMENT AS LEAD PLAINTIFF AND
APPROVAL OF SELECTION OF LEAD COUNSEL
Case 1:07-cv-06728-DC Document 30 Filed 10/22/2007 Page 1 of 14
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ISTVAN TEMESFOI, Individually, and On
Behalf of All Others Similarly Situated,
Plaintiff,
v.
GPC BIOTECH AG, BERND R. SEIZINGER,
MARTINE GEORGE and, MARCEL
ROSENCZWEIG,
Defendants.
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Electronically Filed
Civil Action No.: 1:07-cv-07016-DC
(ECF Case)
Hon. Denny Chin
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AUDREY DANG, Individually, and On Behalf
of All Others Similarly Situated,
Plaintiff,
v.
GPC BIOTECH AG, BERND R. SEIZINGER,
MARTINE GEORGE and, MARCEL
ROSENCZWEIG,
Defendants.
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Electronically Filed
Civil Action No.: 1:07-cv-07476-DC
(ECF Case)
Hon. Denny Chin
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Case 1:07-cv-06728-DC Document 30 Filed 10/22/2007 Page 2 of 14
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TABLE OF CONTENTS
I. THE TEMESFOI GROUP’S SPECULATION CANNOT REBUT THE
PRESUMPTION THAT AXXION IS THE MOST ADEQUATE PLAINTIFF ................2
A. The Value and Europa Funds are Separate Legal Entities...................................... 4
B. Axxion Has Attorney-In-Fact Authority to Move for Lead Plaintiff on Value’s
Behalf...................................................................................................................... 5
II. AXXION IS NOT SUBJECT TO A UNIQUE DEFENSE.................................................6
III. THE TEMESFOI GROUP AND GPC BIOTECH INVESTORS GROUP ARE
IMPERMISSIBLE AGGREGATIONS...............................................................................8
Case 1:07-cv-06728-DC Document 30 Filed 10/22/2007 Page 3 of 14
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TABLE OF AUTHORITIES
FEDERAL CASES
Borochoff v. Glaxosmithkline PLC,
2007 U.S. Dist. LEXIS 74621 (S.D.N.Y. Oct. 5, 2007) ............................................................7
In re Cable & Wireless, PLC,
321 F. Supp. 2d 372 (E.D. Va. 2004) ........................................................................................8
Constance Sczesny Trust v. KPMG LLP,
223 F.R.D. 319 (S.D.N.Y. 2004) ...............................................................................................3
In re Donnkenny Inc. Sec. Litig.,
171 F.R.D. 156 (S.D.N.Y. 1997) ...............................................................................................8
In re eSpeed, Inc. Sec. Litig.,
232 F.R.D. 95 (S.D.N.Y. 2005) .................................................................................................5
In re Fannie Mae Sec. Litig.,
355 F. Supp. 2d 261 (D.D.C 2005) ............................................................................................3
In re Gaming Lottery Sec. Litig.,
58 F. Supp. 2d 62 (S.D.N.Y. 1999)............................................................................................6
Kaplan v. Gelfond,
240 F.R.D. 88 (S.D.N.Y 2007) ...............................................................................................5,6
In re Molson Coors Brewing Co. Sec. Litig.,
233 F.R.D. 147 (D. Del. 2005) ..................................................................................................4
In re Nortel Networks Corp. Sec. Litig.,
No. 01 Civ. 1855 (RMB) 2003 WL 22077464 (S.D.N.Y Sept. 8, 2003) ..................................6
In re Oxford Health Plans, Inc. Sec. Litig.,
182 F.R.D. 42 (S.D.N.Y. 1998) .................................................................................................8
In re Razorfish, Inc. Sec. Litig.,
143 F. Supp. 2d 304 (S.D.N.Y. 2001)........................................................................................8
Sofran v. LaBranche & Co., Inc.,
220 F.R.D. 398 (S.D.N.Y. 2004) ...............................................................................................3
In re Vivendi Universal, S.A. Sec. Litig.,
241 F.R.D 213 (S.D.N.Y 2007) ................................................................................................7
Case 1:07-cv-06728-DC Document 30 Filed 10/22/2007 Page 4 of 14
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Weinberg v. Atlas Air Worldwide Holdings, Inc.,
216 F.R.D. 248 (S.D.N.Y. 2003) ...............................................................................................6
FEDERAL STATUTES
15 U.S.C. § 78u-4(a)(3)(B)(i) ..........................................................................................................2
15 U.S.C. § 78u-4(a)(3)(B)(iii)(II)(aa)-(bb) ....................................................................................2
Fed. R. Civ. P. 23.............................................................................................................................2
Case 1:07-cv-06728-DC Document 30 Filed 10/22/2007 Page 5 of 14
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INTRODUCTION
Axxion S.A. Luxemburg, as attorney-in-fact with full authority to act on behalf of the
Akrobat Fund-Value (“Axxion”), respectfully submits this reply memorandum in further support
of its motion to be appointed lead plaintiff and in reply to the opposition submitted by the
Temesfoi Lead Plaintiff Group (the “Temesfoi Group”) and the GPC Biotech Investors Group
(“GPC Biotech Group”).
Axxion overwhelmingly has the largest financial interest in the relief sought by the class
with losses of $1,832,888, more than double the claimed losses of the Temesfoi Group and more
than eleven times greater than the claimed losses of the GPC Biotech Group. In the face of
these facts, which unequivocally establish that Axxion should be appointed lead plaintiff
pursuant to the statutory criteria, the Temesfoi Group stridently speculates, without a scintilla of
evidence, that Axxion has withheld information about its transactions in GPC, purportedly by not
including transactions in another fund under its control. This argument ignores the fact that the
funds Axxion manages are distinct legal entities whose gains and losses should not be netted
(indeed, it would be improper to do that). The attached Declaration of Roman Mertes, Managing
Director of Axxion, confirms that the Akrobat Fund-Value (“Value”), the entity that is moving
for lead plaintiff, is legally distinct from the Akrobat Fund-Europa (“Europa”) (the fund whose
transactions the Temesfoi Group claims should have been included).
In any event, to silence the Temesfoi Group’s speculation that Europa’s transactions in
GPC securities were purposefully omitted to hide investment gains that should have been netted
against the Value fund’s losses, Axxion attaches a loss analysis of Europa’s transactions in GPC
securities, which demonstrate that Europa has a loss of approximately €461,690.
Case 1:07-cv-06728-DC Document 30 Filed 10/22/2007 Page 6 of 14
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The Temesfoi Group also speculates that Axxion may lack authority to move on behalf of
the Value fund. The declaration submitted herewith refutes this speculation. Axxion has full
authority to seek appointment as lead plaintiff in this action on behalf of the Akrobat Fund-
Value, is the movant with the largest financial interest, satisfies the adequacy and typicality
requirements of Rule 23, and should be appointed lead plaintiff in this action.
The GPC Biotech Group argues that Axxion is subject to a unique defense because of
“issues as to the court’s subject matter jurisdiction over the claims of foreign investors.”
Notwithstanding that the issue is premature at this stage, courts in this District have appointed
foreign investors as class representatives over class actions that included foreign purchasers of a
foreign company’s shares on a foreign exchange. The argument that a court may not ultimately
certify a class comprised of foreign citizens does not present a defense unique to Axxion – the
argument is against all foreign institutions, which form a large proportion of the class as it is
currently defined.
ARGUMENT
I. THE TEMESFOI GROUP’S SPECULATION CANNOT REBUT THE
PRESUMPTION THAT AXXION IS THE MOST ADEQUATE PLAINTIFF
Axxion’s financial interest in the outcome of this litigation is indisputably larger than that
of any other movant for lead plaintiff and it meets the typicality and adequacy requirements of
Rule 23 of the Federal Rules of Civil Procedure, making Axxion the presumptive “most adequate
plaintiff.” 15 U.S.C. § 78u-4(a)(3)(B)(i); see Axxion Opp. Mem. at 3-8. That presumption may
only be rebutted upon “proof” by a competing lead plaintiff movant that Axxion cannot fairly
and adequately represent the class or is subject to unique defenses rendering it incapable of
adequately representing the class. 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II)(aa)-(bb).
Case 1:07-cv-06728-DC Document 30 Filed 10/22/2007 Page 7 of 14
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This is a high standard that is rarely met because courts interpret the statute to mean what
it says. Accordingly, “conclusory assertions of inadequacy are . . . insufficient to rebut the
statutory presumption under the PSLRA without specific support in evidence ….” Constance
Sczesny Trust v. KPMG LLP, 223 F.R.D. 319, 324-325 (S.D.N.Y. 2004) (Stein, J.) (appointing
movant with largest loss in the securities purchased during the class period, and finding
attempted rebuttal not successful); see e.g., Sofran v. LaBranche & Co., Inc., 220 F.R.D. 398,
403-04 (S.D.N.Y. 2004) (Sweet, J.) (emphasizing that the PSLRA requires proof of inadequacy,
not speculation); In re Fannie Mae Sec. Litig., 355 F. Supp. 2d 261, 263-64 (D.D.C. 2005)
(same).
The vituperative attacks against Axxion lack any factual basis and are speculative on
their face. For example, the Temesfoi Group claims (incorrectly) that Axxion omitted
information that “might show” that the Akrobat funds had a gain rather than a loss on its GPC
investment. Temesfoi Group Opp. at 4. The Temesfoi Group also pretends there is no evidence
of a connection between Axxion and the Akrobat Fund-Value, feigns ignorance as to what such
relationship might be, but then speculates that maybe Axxion disclosed in its certification only
“some information about transactions undertaken under its management or supervision.”
Temesfoi Group Opp. at 4 (emphasis added). It concedes that whether such additional
transactions in fact exist is something that “we simply do not know.” Id. at 4. Fittingly, the
Temesfoi Group’s baseless diatribe ends with the patently speculative punchline, “What else is
Axxion not telling us?” Id. at 5. The answer is, nothing. Axxion’s initial submission did not
withhold any relevant information, and the irrelevant information whose absence the Temesfoi
Group complains about (included herewith) demonstrates that its speculation that Axxion is
hiding gains is wrong.
Case 1:07-cv-06728-DC Document 30 Filed 10/22/2007 Page 8 of 14
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The Temesfoi Group’s patent speculation is not the “proof” demanded by the statute (or,
arguably, the factual basis required by Rule 11), and, accordingly, it has not met its burden of
demonstrating why Axxion should not be appointed.
A. The Value and Europa Funds are Separate Legal Entities
The Declaration of Roman Mertes confirms that Axxion’s Akrobat Fund-Value and
Akrobat Fund-Europa are legally independent entities. An investment advisor is not required to
move for lead plaintiff with all of its funds that own stock in the defendant issuer. See In re
Molson Coors Brewing Co. Sec. Litig., 233 F.R.D. 147, 150 n.5 (D. Del. 2005) (“Metzler is a
German investment advisor/manager and asserts that it is acting as attorney in fact for investors
in two specific funds, its MI-FONDS 208 fund and its MI-FONDS 705 fund.”). Roman Mertes,
the managing director of Axxion, states in his declaration, attached hereto as Exhibit 1 (“Mertes
Decl.”), that Value and Europa “are special assets/partial funds in the umbrella Akrobat Fund.
Akrobat, Value, and Europa are legally dependent on Axxion to act. As between themselves,
Value and Europa are legally independent entities.” See Mertes Decl. ¶ 4 (emphasis added).
Therefore, despite Europa’s purchase of GPC stock, Axxion was not required to either move on
behalf of Europa or include Europa’s transactions in its loss analysis. Axxion did not disclose
Europa’s holding in GPC because Europa did not move for lead plaintiff.
Notwithstanding that Axxion had no obligation to provide Europa’s transactions in GPC,
Axxion has elected to include them here to silence any additional speculation by the Temesfoi
Group. Attached hereto as Exhibit A to the Mertes Declaration is a loss analysis of Europa’s
transactions in GPC. See Mertes Decl. ¶ 6. Europa suffered a loss of approximately €461,690,
which puts Axxion in the lead in the “largest financial interest” standings by an even bigger
margin than if only the Value fund’s losses are included in Axxion’s motion. See Mertes Decl.,
Ex. A. In addition, the Akrobat Fund “has no other funds under its umbrella besides Value and
Case 1:07-cv-06728-DC Document 30 Filed 10/22/2007 Page 9 of 14
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Europa.” Mertes Decl. ¶ 4. Therefore, the Temesfoi Group’s argument that “Axxion seeks to
avoid consideration of a complete record of its trading that might show. . . that Akrobat Fund
may not in fact have suffered any recognized losses on the sales of its GPC shares” is not only
speculative, but wrong. See Temesfoi Group Opp. at 4.1
B. Axxion Has Attorney-In-Fact Authority
to Move for Lead Plaintiff on Value’s Behalf
The Temesfoi Group also questions whether Mr. Mertes can authorize Value’s motion for
lead plaintiff, and whether Axxion has authority to move for lead plaintiff on behalf of the
Akrobat Fund-Value. See Temesfoi Group Opp. at 4. The Temesfoi Group lacks any factual
basis to believe that Axxion lacks this authority.
Mr. Mertes makes clear in his declaration that he is the Managing Director of Axxion,
which is the investment manager of the Akrobat Fund, and that he is an authorized signatory for
the Akrobat Fund-Value. Mertes Decl. ¶ 3. He also states that “Axxion has full and complete
authority and discretion to purchase and sell securities for the Akrobat Fund (comprised of Value
and Europa)” and that “Axxion has attorney-in-fact authority to institute legal action on behalf of
the Akrobat Fund, Value, and Europa, for investment losses, including filing a motion for
appointment as lead plaintiff in the present action.” Mertes Decl. ¶ 5.
An investment manager has standing to sue in order to recoup investment losses if it
has attorney-in-fact authority and unrestricted decision making authority. See Kaplan v.
Gelfond, 240 F.RD. 88, 95 (S.D.N.Y. 2007) (Buchwald, J.); In re eSpeed, Inc. Sec. Litig., 232
F.R.D. 95 (S.D.N.Y. 2005) (Scheindlin, J.) (“In order for an investment advisor to attain standing
1 Counsel for Axxion would gladly have provided the Temesfoi Group’s counsel with clarification regarding these
matters had it asked, which would have avoided burdening the Court with meritless argument. Instead, the Temesfoi
Group’s counsel chose to accuse another law firm of, essentially, knowingly perpetrating a fraud on the Court, without
undertaking the slightest effort to find out if such a serious accusation was actually true. Accordingly, the Court should
deny the Temesfoi Group’s request for discovery of Axxion. See Temesfoi Group Opp. at 5, n.2.
Case 1:07-cv-06728-DC Document 30 Filed 10/22/2007 Page 10 of 14
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on behalf of investors, the transactions in question must have been executed as if by a single
person. Moreover, the advisor must be the attorney in fact for his clients, and he must be granted
unrestricted decision-making authority and the specific right to recover on behalf of his
clients.”); Weinberg v. Atlas Air Worldwide Holdings, Inc., 216 F.R.D 248, 255 (S.D.N.Y. 2003)
(Conner, J.) (concluding that investment advisor who was also attorney-in-fact for clients with
unrestricted decision making authority and who had otherwise satisfied requirements under
PSLRA for presumptive lead plaintiff had standing to pursue securities claims on behalf of
investors.). A declaration stating that the investment manager or advisor was the attorney-in-fact
with the authorization to bring suit to recover investment losses is sufficient to show attorney-in-
fact authority. Kaplan, 240 F.RD. at 95 (holding that the declaration submitted by the investment
adviser’s Chief Compliance Officer was sufficient to establish attorney-in-fact authority, since it
stated the adviser was “authorized to undertake all acts on behalf of [the five funds], including
the right to commence legal action on their behalf, which includes the right to seek to serve as
lead plaintiff in an action brought pursuant to the federal securities laws on their behalf.”).
II. AXXION IS NOT SUBJECT TO A UNIQUE DEFENSE
The GPC Biotech Investor Group argues that its U.S. members should be appointed co-
lead plaintiff along with Axxion because of “issues as to the court’s subject matter jurisdiction
over the claims of foreign investors.” GPC Biotech Group Opp. at 1. No rule of law holds,
however, that there is no subject matter jurisdiction over the claims of foreign investors who
purchased stock of a foreign company on a foreign exchange. To the contrary, the same issue
has arisen several times in this District, and courts here have appointed foreign investors as class
representatives over class actions that included foreign purchasers of a foreign company’s shares
on a foreign exchange. See In re Nortel Networks, 2003 WL 22077464 (S.D.N.Y. 2003)
(Berman, J.); In re Gaming Lottery Sec. Litig., 58 F. Supp. 2d 62, 73-77 (S.D.N.Y. 1999)
Case 1:07-cv-06728-DC Document 30 Filed 10/22/2007 Page 11 of 14
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(Patterson, J.). In any event, this issue is confronted no earlier than the motion to dismiss stage
and requires detailed analysis of the conduct at issue in the litigation, its connection to the U.S.,
and an analysis of foreign law. Addressing it now would be premature. The complexity of the
analysis is highlighted by this District’s most recent decision on foreign classes, where Judge
Holwell certified a class of foreign investors from certain countries but not others, after an
exhaustive analysis of numerous factors and multiple expert affidavits on various issues. See In
re Vivendi Universal, S.A. Sec. Litig., 241 F.R.D. 213 (S.D.N.Y. 2007).
The Vivendi decision came at the class certification stage of that case, and, for this
reason, Axxion respectfully disagrees with Judge Stanton’s application of Vivendi at the lead
plaintiff stage in Borochoff v. Glaxosmithkline PLC, 2007 U.S. Dist. LEXIS 74621 (S.D.N.Y.
Oct. 5, 2007) (Stanton, J.). The issue at the lead plaintiff stage is who should represent the class
as it is currently defined. Because the class definition presently includes all purchasers of GPC
securities, regardless of citizenship, the argument that a court may not ultimately certify a class
comprised of Luxemburgian citizens does not present a defense unique to a particular institution.
Rather the argument is against all non-domestic institutions, which forms a large proportion of
the class as it is currently defined. The Court in Vivendi did not rule on whether a foreign
institution is adequate to represent a class that includes a large foreign constituency (which is the
issue before this Court), but rather that a class comprised of German and Austrian members
cannot be certified – regardless of the citizenship of the proposed representative. The issue
addressed in Vivendi is not the same issue before this Court.
If the Court believes it appropriate to appoint the GPC Biotech Group’s U.S. members as
co-lead plaintiffs along with Axxion to protect the interests of the Class, Axxion would not
oppose. See In re Oxford Health Plans, Inc. Sec. Litig., 182 F.R.D. 42, 49 (S.D.N.Y. 1998)
Case 1:07-cv-06728-DC Document 30 Filed 10/22/2007 Page 12 of 14
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(Brieant, J.); In re Cable & Wireless, PLC, 321 F. Supp. 2d 372, 377-78 (E.D. Va. 2004)
(appointing a foreign institution and a U.S. individual investor co-lead plaintiff).
III. THE TEMESFOI GROUP AND GPC BIOTECH
INVESTORS GROUP ARE IMPERMISSIBLE AGGREGATIONS
The Temesfoi Group and the GPC Biotech Group have not submitted any evidence that
they are anything more than an aggregation of unrelated investors cobbled together for the
purpose of achieving appointment as lead plaintiff. See Axxion Opp. at 6. The losses of each
group’s individual members should therefore not be aggregated for purposes of this motion. See,
e.g., In re Donnkenny Inc. Sec. Litig., 171 F.R.D. 156, 157-58 (S.D.N.Y. 1997) (Cederbaum, J.)
(finding that to allow an aggregation of unrelated plaintiffs to serve as lead plaintiff contravenes
the PSLRA’s purpose of eliminating lawyer-driven litigation); In re Razorfish, Inc. Sec. Litig.,
143 F. Supp. 2d 304, 309 (S.D.N.Y. 2001) (Rakoff, J.). No single member of the Temesfoi
Group has a financial interest larger than $240,971 (incurred by Mr. Temesfoi), compared with
Axxion’s financial interest of more than $1.8 million. Under these circumstances it would be
unprecedented to appoint the Temesfoi Group instead of Axxion, pursuant to the applicable
statute.2
2 Although the Temesfoi Group claims that Axxion, a large, regulated mutual fund management company with
a publicly accessible website, did not provide sufficient information about itself, we note that the Court, and the
other movants, know absolutely nothing about the five individuals that comprise the Temesfoi Group, such as who
they are, where they live, and how/why they decided to move as a group.
Case 1:07-cv-06728-DC Document 30 Filed 10/22/2007 Page 13 of 14
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CONCLUSION
For the foregoing reasons, Axxion respectfully requests that this Court: (i) consolidate the
related actions; (ii) appoint Axxion as Lead Plaintiff in the action; and (iii) approve Axxion’s
selection of Labaton Sucharow LLP as Lead Counsel for the Class.
Dated: October 22, 2007 Respectfully submitted,
LABATON SUCHAROW LLP
By: /s/ Christopher J. Keller
Christopher J. Keller (CK-2347)
Eric J. Belfi (EB-8895)
Andrei V. Rado (AR-3724)
Alan I. Ellman (AE-7347)
140 Broadway
New York, New York 10005
Telephone: (212) 907-0700
Facsimile: (212) 818-0477
Counsel for Axxion and Proposed Lead
Counsel for the Class
TILP PLLC
Marc Schiefer
140 Broadway
New York, New York 10005
c/o TILP Rechtsanwälte
Einhornstr. 21 72138
Kirchentellinsfurt, Germany
Tel.: +49-7121-90909-32
Fax: +49-7121-90909-81
Counsel for Axxion
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