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Law360 (October 14, 2020, 6:12 PM EDT ) A dozen law firms filed competing motions Tuesday to represent Eastman Kodak Co. shareholders in two proposed class actions in New York and New Jersey federal courts, alleging the former photography giant's executives enriched themselves with stock trading surrounding a $765 million loan from the federal government.
Kodak shareholders filed a suit in New Jersey federal court in August, alleging company executives touted the company's plan to manufacture "starter materials" and "active pharmaceutical ingredients" for generic drugs in response to the COVID-19 pandemic but were cashing in on stock options right before the deal was made public.
After allegations of wrongdoing became public, the Trump administration paused its $765 million coronavirus drug development loan to the company.
The shareholder allegations stem from the timing of stock options awarded to Kodak executives.
Kodak gave CEO James V. Continenza 1.75 million stock options on July 27, the day before the government contract was announced, according to the complaint.
The options were on top of the 46,737 shares Continenza bought on June 23, according to the suit. Shareholders believe Kodak filed its application for the loan in mid-June, according to the suit.
Chief Operating Officer David Bullwinkle was also given 45,000 stock options on July 27, according to the complaint.
After the July 28 announcement, Kodak's share price jumped by 200% and another 300% the next day, sending stock prices rocketing from $2.62 to $33.20 per share, the lawsuit says.
"This massive stock price increase allowed defendant Continenza and other Kodak insiders to enrich themselves spectacularly from the compensation scheme, as their stock options were now very much 'in the money,'" the suit said. "Continenza alone saw the value of his options go from zero to $50 million in just 48 hours."
Those profits caught the attention of media outlets and politicians, including U.S. Sen. Elizabeth Warren, who requested the U.S. Securities and Exchange Commission probe the options deal.
News coverage of the stock options deal, congressional committees asking for more information, the SEC probe and the decision to freeze federal funding caused a series of stock drops between Aug. 1 and Aug. 10, according to the complaint.
A second proposed class action with similar allegations was filed two weeks later in New York federal court.
The two suits allege the same securities fraud claims but the New York case doesn't include Bullwinkle as a defendant.
The New Jersey complaint has a proposed class period of between July 27 and Aug. 7, while the New York case has a slightly longer proposed class period between July 27 and Aug. 11.
Canadian companies Les Investissements Kiz Inc. and UAT Trading Service Inc. lead the dozen motions for lead plaintiff status with a claimed loss of $2,959,987 allegedly due to Kodak executives' trading.
Their counsel at Kaplan Fox & Kilsheimer LLP and Labaton Sucharow LLP seek to be co-lead counsel for the class.
Shareholder Scott Reynolds and Miami Beach-based company SRR Fortress Capital LLC claim a combined $1,649,523 loss, with Robbins LLP proposed as lead counsel.
With a combined loss of $1,355,399, shareholders Charles Satterwhite, Terry Butler and Yiki Woodling seek to be lead plaintiffs, with Hagens Berman Sobol Shapiro LLP as lead counsel.
Shareholders Fred and Elaine Khachi, Sasan Payvar, and Domenic Pesce lost a combined $1,019,282 and seek to lead the class with Saxena White PA and Carella, Byrne, Cecchi, Olstein, Brody & Agnello PC as co-lead counsel.
Shareholder John McMullan says he lost $630,246 and is represented by The Rosen Law Firm seeking to be lead counsel.
Kevin Harte and Alfred Fenelle claimed a combined loss of $624,122 and seek to have Pomerantz LLP and Bernstein Liebhard LLP as co-lead counsel for the class.
Doug Atkin claimed a loss of $376,540, with Levi & Korsinsky LLP seeking to be lead counsel.
Margaretha Welkhammer claimed to lose $348,813 and is seeking lead counsel status for Block & Leviton LLP.
Alexander Enciso claimed a loss of $228,671, with Gibbs Law Group LLP as proposed lead counsel.
With a claimed loss of $199,400, Florida-based Broward Motorsports Holdings LLC is seeking lead plaintiff status, with Jonckheer & Kolbe LLP and Shapiro Haber & Urmy LLP as co-lead counsel for the class.
Daniel, Paul and Mary Ann Yannes claimed a combined loss of $173,570, with Glancy Prongay & Murray LLP seeking lead counsel.
Shareholder Gary Eberhard lost $79,693 and is seeking lead counsel status for Berger Montague PC.
With the exception of the Yannes Family, all parties who filed to lead the New Jersey class also filed motions to lead the proposed class in the New York action Tuesday.
Counsel for the parties didn't immediately respond to requests for comment Wednesday.
Les Investissements Kiz and UAT Trading Service are represented by Christopher J. Keller, Eric J. Belfi, David J. Schwartz and Francis P. McConville of Labaton Sucharow LLP and Joel B. Strauss, William J. Pinilis, Donald R. Hall, Pamela A. Mayer and Frederic S. Fox of Kaplan Fox & Kilsheimer LLP.
Reynolds and SRR Fortress Capital LLC are represented by Brian J. Robbins and Gregory E. Del Gaizo of Robbins LLP and Serina M. Vash and John C. Herman of Herman Jones LLP.
Satterwhite, Butler and Woodling are represented by Lucas E. Gilmore, Reed R. Kathrein, Danielle Smith and Steve W. Berman of Hagens Berman Sobol Shapiro LLP and Bruce D. Greenberg of Lite DePalma Greenberg, LLC.
The Khachis, Payvar and Pesce are represented by James E. Cecchi and Donald A. Ecklund of Carella, Byrne, Cecchi, Olstein, Brody & Agnello and Maya Saxena, Joseph E. White III, Lester R. Hooker and Steven B. Singer of Saxena White P.A.
McMullan is represented by Laurence M. Rosen of The Rosen Law Firm.
Harte and Fenelle are represented by Gustavo F. Bruckner, J. Alexander Hood II and Jeremy A. Lieberman of Pomerantz LLP and Stanley D. Bernstein, Laurence J. Hasson and Matthew E. Guarnero of Bernstein Liebhard LLP.
Atkin is represented by Eduard Korsinsky and Shannon L. Hopkins of Levi & Korsinsky LLP.
Welkhammer is represented by Jeffrey C. Block of Block & Leviton LLP and Peter S. Pearlman and Audra DePaolo of Cohn Lifland Pearlman Herrmann & Knopf LLP.
Enciso is represented by Eric H. Gibbs and David Stein of Gibbs Law Group LLP, Eric T. Kanefsky of Calcagni & Kanefsky LLP and Javier Bleichmar of Bleichmar Fonti & Auld LLP.
Broward Motorsports Holdings LLC is represented by Edward F. Haber of Shapiro Haber & Urmy LLP, Willem F. Jonckheer of Schubert Jonckheer & Kolbe LLP and David C. Harrison and Anthony M. Christina of Lowey Dannenberg PC.
The Yannes family is represented by Robert V. Prongay, Charles H. Linehan and Pavithra Rajesh of Glancy Prongay & Murray LLP and Lisa J. Rodriguez of Schnader Harrison Segal & Lewis LLP
Eberhard is represented by Michael Dell'Angelo, Andrew Abramowitz and Donnell Much of Berger Montague PC and Janine Pollack of Calcaterra Pollack LLP.
Kodak and its executives are represented by Stephen M. Baldini of Akin Gump Strauss Hauer & Feld LLP
The New Jersey case is Tang v. Eastman Kodak Co. et al., case number 3:20-cv-10462, in the U.S. District Court for the District of New Jersey.
The New York case is McAdams v. Eastman Kodak Co. et al., case number Case 1:20-cv-06861, in the U.S. District Court for the Southern District of New York.
--Additional reporting by Dean Seal and Reenat Sinay. Editing by Janice Carter Brown.
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