Opinion
Civil Action No. 3:99-CV-2604-M
January 7, 2003
MEMORANDUM OPINION AND ORDER
On January 26, 2000, Ralph R. Umsted, Jr. and Richard Davis White, Sr., among others, were appointed as lead Plaintiffs in this case. Other lead Plaintiffs having withdrawn, Umsted and White are the only remaining lead Plaintiffs. Before the Court is Plaintiffs' Motion for Class Certification pursuant to FED. R. CIV. P. 23(a) and FED R. CIV. P. 23(b)(3), filed August 19, 2002 and argued December 4, 2002, by which Umsted and White seek to have this case certified as a class action with the two of them as class representatives. For the reasons stated below and on the record at the December 4, 2002 hearing, the Court DENIES Plaintiffs' Motion.
For the Court to certify this class action, it must find that the lead Plaintiffs have met their burden to prove that the four prerequisites set forth in Federal Rule of Civil Procedure 23(a) have been satisfied. The class may be certified only if: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) claims or defenses of the representative parties are typical of the claims and defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. Lead Plaintiffs must also show that common questions of law or fact predominate, and that a class action is superior to other methods of adjudication. FED. R. CIV. P. 23(b)(3). In Berger v. Compaq Computer Corporation, 257 F.3d 475, 479 (5th Cir. 2001), clarified on rehearing en banc, 279 F.3d 313 (5th Cir. 2002), the Fifth Circuit stressed that an adequate representative must be willing to take an active role in and exercise ultimate control of the litigation in order to protect the interests of the absent class members.
This litigation was brought on November 16, 1999. However, the lead Plaintiffs did not file a motion for class certification until August 19, 2002, only eight months before the scheduled trial date of April 7, 2003, that was set by this Court's Scheduling Order dated May 15, 2001. This failure to move for class certification until almost three years into the litigation "bears strongly on the adequacy of representation that . . . class members might expect to receive." East Tex. Motor Freight v. Rodriguez, 43 U.S. 395, 405 (1977); McGowan v. Faulkner Concrete Pipe Co., 659 F.2d 554, 559 (5th Cir. 1981); see also e.g. Moreno v. Baca, 2002 WL 338366 at *18 (C.D. Cal. 2002) (striking class allegations because of undue delay when plaintiffs had still failed to move for class certification more than one year after the defendant filed its answer); Wilson v. Seven Seventeenth HP Phila. Corp. No. 2, 2001 WL 484193 at *5 (finding plaintiffs' failure to move for class certification suggests that "the case has not been diligently prosecuted to protect the interests of the class"). In addition, because lead Plaintiffs filed this Motion late in the litigation, the Court, when assessing the adequacy of the lead Plaintiffs who now seek to become class representatives, finds itself in the unique position of being able to consider their actual involvement in the litigation to date and how it might be predictive of their future actions, rather than simply to guess how they might function in a representative capacity.
From the record evidence before it, the Court concludes that Umsted is not an adequate representative of the class. Umsted had never met with lead Plaintiffs' counsel prior to the morning of his deposition in the summer of 2002, and the only attorney with whom he apparently communicates is Francis Farina, a Pennsylvania lawyer who has not been admitted to practice in this district and who has not been appointed by this Court in any capacity in this case (although his name recently appeared, without leave of this Court, on the signature block, with Plaintiffs' appointed counsel).
When deposed on July 23, 2002, Umsted could not identify the names of the attorneys who represented him and the proposed class. He never investigated the background and experience of lead Plaintiffs' counsel and did not know anything about the costs and fees involved in the litigation. He was unaware of the earlier motion that sought and eventually had him appointed a lead Plaintiff. He did not recognize or know the names of his co-lead Plaintiff White, nor the names of others who had served as co-lead Plaintiffs, but later withdrew from those roles. Umsted could not identify the claims asserted in the Complaint or any alleged misrepresentations or omissions by Intelect. Umsted exhibited a complete lack of knowledge of the facts surrounding the March 2000 dismissal of Defendant Arthur Andersen, L.L.P., and a complete lack of knowledge of the refiling of those claims in March 2002 in a separate suit in which he also seeks to be named a lead plaintiff. Umsted also exhibited a complete lack of prior knowledge of a mediation in this case, and neither he nor his co-lead Plaintiff attended. Umsted also exhibited a regrettably poor understanding of his fiduciary role and responsibilities to other members of the purported class. He has neither taken an active role in, nor exercised control over, the litigation. Umsted did not appear at the class certification hearing. His absence was not explained, but the Court made credibility and adequacy assessments based on his videotaped deposition. It was not persuasive as to Umsted's adequacy as a class representative, particularly due to his lack of active participation in, and knowledge of, key developments in this case.
Similarly, from the record evidence before it, the Court concludes that White is not an adequate representative of the class. When deposed on July 30, 2002, White did not know the names of the attorneys who had been acting on his behalf as lead Plaintiffs' counsel and had not inquired into lead counsel's qualifications. White also failed to inquire about any costs or expenses involved with this litigation. Although he knew the name of his co-lead Plaintiff Umsted, White had never spoken to him and did not know the names of others who had served in that capacity. White had never met with lead Plaintiffs' counsel prior to the morning of his deposition taken on July 30, 2002, and cannot recall ever commenting on a single draft pleading. White could not name any cause of action asserted in this case nor could he reference any specific misrepresentations or omissions by Intelect. White exhibited a complete lack of knowledge of the facts surrounding the March 2000 dismissal of Defendant Arthur Andersen, L.L.P., and a complete lack of knowledge of the refiling of those claims in a separate suit in March 2002, although he, like Umsted, also seeks to be named a lead plaintiff in that matter. White also exhibited a complete lack of prior knowledge of a mediation in this case that neither he nor his co-lead Plaintiff attended. Moreover, although Plaintiffs filed an Amended Complaint on June 30, 2000, White admitted at his July 30, 2002 deposition that he had only seen it reasonably recently. Although a banker, White exhibited a regrettably poor understanding of his fiduciary role and responsibilities to other members of the purported class. White has neither taken an active role in nor exercised control over the litigation. Business matters apparently caused White not to appear at the class certification hearing, but the Court made credibility and adequacy assessments based on his videotaped deposition. It was not persuasive on the subject of White's adequacy as a class representative, particularly due to his lack of active participation in, and knowledge of, key developments in this case.
On December 20, 2002, Plaintiffs filed a Renewed Motion and Brief in Support of Class Certification. While apparently abandoning their efforts to have Umsted appointed by this Court as a class representative, the Plaintiffs seek to rehabilitate White with a new affidavit reflecting his recently-refreshed recollection. Such amended evidence was submitted without leave of this Court and will not be considered in this riding on the original Motion for Class Certification.
Courts have refused to certify classes where the parties moving to be class representatives suffered from similar deficiencies. In Griffin v. G.K. Intelligent Systems, Inc., the court found the lead plaintiffs inadequate because they had "taken little or no supervisory role over lead counsel," did "not participate in litigation decisions," did not "receive regular cost/expense information," and learned "of activity in the case only when copied on matters already completed." 196 F.R.D. 298, 302 (S.D. Tex. 2000). In In re Quarterdeck Office Systems, Inc. Securities Litigation, the court found the lead plaintiffs inadequate when lead plaintiffs were unfamiliar with "changes in the various amended complaints filed on behalf of the class" and had not "participated in decisions to drop certain defendants." 1993 WL 623310, *6 (C.D. Cal. 1993). In Welling v. Alexy, the court found one lead plaintiff inadequate where he "failed to exhibit an interest in supervising the attorneys in the case." 155 F.R.D. 654, 659 (N.D. Cal 1994). In Ballan v. Upjohn, the court found the lead plaintiff inadequate and, pointed out, among other deficiencies, that the proposed class representative's failure to comment on the proposed truncating of the class period "evinces his disinterest in [the] litigation." 159 F.R.D. 473, 486 (W.D. Mich. 1994). The facts in these decisions are analogous to the failings the Court finds here, and they comport with the import of Berger: class representatives must be willing to be more than spectators; they must work at and participate actively in the litigation.
After reviewing the record evidence, case law, and oral argument, the Court concludes that lead Plaintiffs satisfied their burden under FED R. CIV. P. 23(a) to demonstrate numerosity and commonality, and under FED R. CIV. P. 23(b)(3) to show predominance. Lead Plaintiffs have failed, however, to satisfy their burden under FED R. CIV. P. 23(a) to provide sufficient evidence that Ralph R. Umsted, Jr. and Richard Davis White, Sr. are adequate class representatives. Since such a finding renders certification of the class inappropriate, the Court declines to reach the issues of superiority and typicality presented by FED R. CIV. P. 23(a) and 23(b)(3).
The Court DENIES the Motion for Class Certification. This case will proceed to trial as scheduled on the individual Plaintiffs' claims.
SO ORDERED.