Opinion
No. C02-1948L
February 20, 2003
ORDER APPOINTING TILSON GROWTH FUND AS LEAD PLAINTIFF AND APPROVING MILBERG WEISS AS LEAD COUNSEL
This matter comes before the Court on "Motion of Tilson Growth Fund for Consolidation, Preservation of Documents, Appointment of Lead Plaintiff, and Approval of Selection of Lead Plaintiff's Choice of Counsel." Having considered defendants' responses thereto and plaintiff's replies, the Court finds as follows:
(1) Pursuant to 15 U.S.C. § 77z-1(a)(3)(A)(i) and 78u-4(a)(3)(A)(i), plaintiff in the action entitled Bourret v. Cutter Buck, Inc., et al., published a notice of pendency of the action over the Business Wire on September 13, 2002.
(2) Pursuant to 15 U.S.C. § 77z-1(a)(3)(A)(i)(II) and 78u-4(a)(3)(A)(i)(II), Tilson Growth Fund ("TGF") filed a timely application to be appointed lead plaintiff. No other potential class members have applied to be lead plaintiff.
(3) At this stage of the proceeding, the Court accepts the allegations of the multiple complaints as true and evaluates the typicality of TOF's claims and the adequacy of its representation in light of those allegations In that context, defendants' argument that plaintiff will ultimately fail to prove injury arising out of purchases after May 2001 must be put off to another day. The Court finds that TGF satisfies the requirements of 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I) and is the most adequate plaintiff to prosecute the consolidated actions.
(4) Pursuant to 15 U.S.C. § 77z-1(a)(3)(B)(v) and 78u-4(a)(3)(B)(v), TGF has selected the law firm of Milberg Weiss Bershad Hynes Lerach LLP to be Lead Counsel and the law firm of Hagens Berman LLP to act as Liaison Counsel. The Private Securities Litigation Reform Act ("PSLRA") provides that once the lead plaintiff is selected, it "shall, subject to the approval of the court, select and retain counsel to represent the class." 15 U.S.C. § 78u-4(a)(3)(B)(v). The decision to approve counsel selected by the lead plaintiff is a matter within the discretion of the district court. See In re Milestone Scientific Sec. Litig., 187 F.R.D. 165, 176 (D.N.J. 1999). The legislative history of the PSLRA reveals that Congress wished to encourage the exercise of discretion in approving the selection of lead counsel. "[Congress] does not intend to disturb the court's discretion under existing law to approve or disapprove the lead plaintiff's choice of counsel when necessary to protect the interests of the plaintiff class." Joint Explanatory Statement of the Committee of Conference, Conference Report on Securities Litigation Reform, H.R. REP No. 369, at 31 (1995), reprinted in 1995 U.S.C.C.A.N. 679, 685. The exercise of such discretion necessitates an inquiry into the appropriateness of the appointment of more than one law firm and an independent evaluation of, among other considerations, the effectiveness of the proposed counsel structure to ensure the protection of the class. Vincelli v. National Home Health Care Corp., 112 F. Supp.2d 1309, 1315 (M.D. Fla. 2000).
Although there is no provision in the PSLRA for the appointment of "liaison counsel," the statute does not expressly prohibit the lead plaintiff from selecting more than one law firm to represent the class. See 15 U.S.C. § 78u-4(a)(3)(B)(v). In certain situations, such as where one firm has a relationship with the client but lacks the resources or expertise to prosecute an action, the appointment of multiple lead counsel may better protect the interests of the plaintiff class. The potential for duplicative services, leadership discord, and increased attorney's fees militate against the appointment of multiple law firms, however, especially in cases where one law firm has the proven ability to adequately manage and litigate securities class actions. In re Party City Sec. Litig., 189 F.R.D. 91, 115 (D.N.J. 1999). In addition, where more than one lead counsel is appointed, there is the potential that their coordinated handling of the litigation (assuming the best) or their fractious infighting (assuming the worst) could strip the lead plaintiff of control over the litigation, an occurrence the PSLRA intended to foreclose. See Ballan v. Upjohn Co., 159 F.R.D. 473, 491 (W.D. Mich. 1994) (seven law firms representing class attempted to remedy deficiencies in class description without obtaining client's approval of change which would adversely affect his interests). The PSLRA was designed, in part, to effectuate the transfer of control of securities class actions from the lawyers to the investors. Joint Explanatory Statement of the Committee of Conference, Conference Report on Securities Litigation Reform, HR. REP. No. 369, at 31 (1995), reprinted in 1995 U.S.C.C.A.N. 679, 685.
Although TGF is requesting the appointment of a relatively modest number of firms for purposes of this litigation, it makes no effort to explain why the law firm of Milberg Weiss, which maintains offices here in Seattle and is one of the most experienced and able securities litigation firms in the country, needs the assistance of Hagens Berman to prosecute this case. TGF seeks approval of Hagens Berman to serve as liaison counsel, but does not set forth the role Hagens Berman will play if approved to serve in that capacity. The responsibilities of liaison counsel typically involve "advising lead counsel on local procedural matters, coordinating administrative matters, distributing communications between the Court and other counsel, convening meetings of counsel and advising parties of developments in the case." In re Cendant Corp. Litig., 182 F.R.D. 144, 152 (D.N.J. 1998). See also Chill v. Green Tree Fin. Corp., 181 F.R.D. 398, 413 n. 13 (D. Minn. 1998). In the instant case, all of the tasks specified in TGF's motion and proposed order are assigned to Lead Counsel. TGF has not offered any explanation as to what duties would be assumed by Hagens Berman and why such duties could not be adequately performed by Lead Counsel. Milberg Weiss is a law firm with extensive experience in the litigation of securities class actions. There is nothing to suggest Milberg Weiss would not be capable of handling the administrative tasks presented by the litigation of the instant matter.
Based on the information currently before the Court, it appears that the appointment of a single, eminently capable law firm like Milberg Weiss will promote the efficient prosecution of this case. Having two firms appointed as counsel in the case, without specifying their roles in decision-making, discovery, monitoring, and trial preparation, would unnecessarily increase the difficulty of prosecuting this action. Further, absent some delineation of tasks, there is a significant risk of duplicative efforts by counsel, absence of coordination, delay, and/or increased costs resulting from a litigation-by-committee approach. TGF has not demonstrated any need justifying the approval of two law firms in this case: Milberg Weiss appears able to undertake and discharge the responsibilities of lead counsel in this action. Lead Plaintiff's selection of Milberg Weiss as Lead Counsel is approved. The motion to appoint the law firm of Hagens Berman as liaison counsel is denied without prejudice.
Milberg Weiss may, in its capacity as lead counsel, distribute non-duplicative work assignments to non-lead counsel so as to facilitate the orderly and efficient prosecution of the action, to take advantage of specialized knowledge and/or geographic proximity, or even to spread risk. See Vincelli, 112 F. Supp.2d at 1319; In re Nice Sys. Securities Litigation, 188 F.R.D. 206, 224 (D.N.J. 1999).
If there is some as-yet unidentified need for Hagens Berman's participation in this matter, TGF may file a properly supported motion to have the firm appointed as counsel.
(5) Lead counsel shall have the following responsibilities and duties, to be carried out either personally or through counsel whom Lead Counsel shall designate:
a. to coordinate the briefing and argument of any and all motions;
b. to coordinate the conduct of any and all discovery proceedings;
c. to coordinate the examination of any and all witnesses in depositions;
d. to coordinate the selection of counsel to act as spokesperson at all pretrial conferences and hearings;
e. to call meetings of counsel as they deem necessary and appropriate from time to time;
f. to coordinate all settlement negotiations with counsel for defendants;
g. to coordinate and direct the pretrial discovery proceedings, the preparation for trial, the trial, and the post-trial proceedings in this matter;
h. to delegate non-duplicative work assignments to selected counsel as may be advisable and required; and
i. to supervise all other matters concerning the prosecution or resolution of the consolidated actions.
(6) No motion, discovery request, or other pretrial proceedings shall be initiated or filed by any plaintiff without the approval of Lead Counsel, so as to prevent duplicative pleadings or discovery by plaintiffs. No settlement negotiations shall be conducted without the approval of Lead Counsel.
(7) Lead counsel shall be the contact between plaintiffs' counsel and defendants' counsel, as well as the spokesperson for all plaintiffs' counsel, and shall direct and coordinate the activities of plaintiffs' counsel.
(8) Lead Counsel shall be the contact between the Court and the plaintiffs.
(9) Defendants' counsel may rely upon agreements made with Lead Counsel. Such agreements shall be binding on plaintiffs.
For all of the foregoing reasons, TGF's motion for appointment as Lead Plaintiff is GRANTED. TGF's request that Milberg Weiss Bershad Hynes Lerach LLP be appointed as Lead Counsel is GRANTED. The related request that Hagens Berman LLP be appointed as Liaison Counsel is DENIED.