Opinion
Nos. 04 Civ. 1921 (DAB), 04 Civ. 3501 (DAB), 04 Civ. 3637 (DAB).
September 6, 2005
MEMORANDUM AND ORDER
Pending before this Court are three class action lawsuits against the Scudder Investments mutual funds' ("Scudder Funds") investment advisers, the advisers' corporate parents, and the Scudder Funds' directors and trustees. These three actions each allege violations of sections 34(b), 36(a) and (b), and 48(a) of the Investment Company Act of 1940 and sections 206 and 215 of the Investment Advisers Act of 1940, as well as common law breach of fiduciary duty and aiding and abetting breach of fiduciary duty.
The Court has accepted the following three actions as related: Walker v. Deutsche Bank, AG, et al., 04 Civ. 1921 (DAB); IRA FBO Louis P. Mazza v. Deutsche Bank, AG, et al., 04 Civ. 3501 (DAB); and Michael and Nancy Icardo v. Deutsche Bank, AG, et al., 04 Civ. 3637 (DAB).
Plaintiffs in each of the three cases now jointly move for consolidation of the actions pursuant to Federal Rule of Civil Procedure 42(a) and for appointment of tri-lead counsel of such consolidated actions. For the reasons stated below, Plaintiffs' motion is GRANTED.
I. BACKGROUND
On March 10, 2004, Aaron Walker filed a class action against Deutsche Bank, AG ("Deutsche Bank"), three of its asset management subsidiaries — Deutsche Asset Management, Inc., Deutsche Investment Management Americas, Inc. ("Deutsche Investment Management"), and Scudder Investments (collectively, the "Investment Adviser Defendants") — and twelve named and 100 unidentified, or "John Doe," Scudder Funds trustees (collectively the "Trustee Defendants"). (Walker Compl. ¶¶ 12-30). Walker alleges violations of sections 34(b), 36(a) and (b), and 48(a) of the Investment Company Act of 1940, 15 U.S.C. §§ 80a-33(b), 80a-35(a) and (b), and 80-47(a), section 206 of the Investment Advisers Act of 1940, 15 U.S.C § 80b-6, as well as common law breach of fiduciary duty and aiding and abetting breach of fiduciary duty. Specifically, he alleges that (1) the Investment Adviser Defendants improperly used Scudder Fund assets to pay brokers to push Scudder Funds aggressively over other mutual funds and concealed such payments from Scudder Fund investors; (2) the Trustee Defendants breached their fiduciary duties to Scudder Fund investors by knowingly and recklessly allowing such improper conduct; and (3) Defendants' alleged wrongdoing injured Scudder Fund Investros by causing them to purchase Scudder Funds from brokers with conflicts of interest and to pay undisclosed fees which were used to make the aforementioned payments to brokers. (Id. ¶¶ 2-6). Walker brings his action on behalf of all persons or entities that purchased or held Scudder Fund shares between March 10, 1999 and November 17, 2003, and derivatively on behalf of the Scudder Funds themselves, who are also named as nominal defendants in this action. (Id ¶¶ 1, 26).
On May 6 and May 12, 2004, respectively, IRA FBO Louis P. Mazza and Michael and Nancy Icardo filed class action lawsuits against the very same Defendants which also alleged violations of §§ 34(b), 36(a) and (b), and 48(a) of the Investment Company Act and § 206 of the Investment Advisors Act, breach of fiduciary duty, and aiding and abetting breach of fiduciary duty. The claims in these two latter complaints arise from the the same alleged wrongdoing on the part of the Investment Advisor and Trustee Defendants as described in the Walker Complaint. (Mazza Compl. ¶¶ 2-6; Icardo Compl. ¶¶ 2-6). In addition, both theMazza and Icardo Complaints specify the same class period as the Walker Complaint, and both actions have also been brought derivatively on behalf of the Scudder Funds themselves, who are also named as nominal defendants in both actions. (Mazza Compl. ¶¶ 1; 33; Icardo Compl. ¶¶ 1; 26).
Due to a numbering error in the Icardo Complaint, there are two paragraphs numbered "26." The second of these, which is in fact the thirty-third paragraph contained in the Complaint, sets out the parameters of the purported plaintiff class.
All three named plaintiffs in the above-mentioned class actions now move the Court to consolidate these three cases pursuant to Federal Rule of Civil Procedure 42(a) and to appoint tri-lead counsel of the consolidated actions. To date, this motion is unopposed.
II. DISCUSSION
A. Legal Standard
The Walker, Mazza and Icardo Plaintiffs jointly move to consolidate the three above-mentioned actions, and any subsequently filed related actions, pursuant to Rule 42(a) of the Federal Rules of Civil Procedure. Rule 42(a) provides:
When actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial of any or all the matters in issue in the actions; it may order all the actions consolidated; and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.
In such instances, district courts have "broad discretion to determine whether consolidation is appropriate," and they "have taken the view that considerations of judicial economy favor consolidation." Johnson v. Celotex Corp., 899 F.2d 1281, 1285 (2d Cir. 1990); see also Garber v. Randell, 477 F.2d 711, 714 (2d Cir. 1973) (holding that determination of whether to consolidate stockholder suits "rests in the district court's sound discretion."). "[S]o long as any confusion or prejudice does not outweigh efficiency concerns, consolidation will generally be appropriate." Primavera Familienstiftung v. Askin, 173 F.R.D. 115, 129 (S.D.N.Y. 1997); Pinkowitz v. Elan Corp., PLC, No. 02 Civ. 865, 2002 WL 1822118, at *2 (S.D.N.Y. July 29, 2002) (quoting Primavera).
B. Plaintiffs' Motion to Consolidate
The three above-captioned actions pending before this Court involve common questions of both law and fact. Indeed, the factual allegations supporting the claims asserted in each of the actions are identical. (See Walker Compl., ¶¶ 2-6; Mazza Compl. ¶¶ 2-6; Icardo Compl. ¶¶ 2-6). Moreover, the Plaintiffs are all investors who purchased or possessed shares in one or more of the Scudder funds during the aforementioned Class Period. In addition, all three complaints allege the same seven causes of action based on the same federal statutes and common law theories of liability. (See Walker Compl. ¶¶ 59-105; Mazza Compl. ¶¶ 68-112; Icardo Compl. ¶¶ 59-105).
Meanwhile, it does not appear that any of the parties to these three actions would be prejudiced by consolidation. In fact, no one has opposed the instant consolidation motion. Accordingly, since the Court finds that the Walker, Mazza and Icardo actions involve common questions of law and fact and that consolidating them would not prejudice anybody, in the interests of judicial economy, these actions are hereby consolidated pursuant to Rule 42(a) of the Federal Rules of Civil Procedure.
C. Appointment of Tri-Lead Counsel
A court which has consolidated actions may also, at its discretion, "appoint one or more attorneys as liaison counsel, lead counsel, or trial counsel for the consolidated cases." 9 Charles Alan Wright and Arthur R. Miller, Federal Practice And Procedure § 2385 (2d ed. 1987); see also MacAlister v. Guterma, 263 F.2d 65, 68 (2d Cir. 1958) (recognizing federal courts' power to appoint general counsel for consolidated actions). Moreover, a court is not restricted to the appointment of only one lead counsel, and indeed, appointment of a single lead counsel is inappropriate when counsel for each named plaintiff in the consolidated actions, "being so experienced in [the] type of litigation [at issue in the consolidated actions], may be expected to coordinate the conduct of the proceedings in a manner that will avoid unnecessary duplication." Fields v. Wolfson, 41 F.R.D. 329, 330 (S.D.N.Y. 1967).
In the three now-consolidated actions, the law firms of Milberg Weiss Bershad Schulman LLP ("Milberg Weiss"), Stull, Stull Brody, and Schiffrin Barroway, LLP ("Schiffrin Barroway"), who respectively represent the named Plaintiffs in the Walker, Mazza, and Icardo actions, seek to be appointed tri-lead counsel. (See Notice of Unopposed Motion for Consolidation, at 2-3). Because the Court is aware that each firm is experienced in prosecuting lawsuits on behalf of defrauded investors in securities, and, as demonstrated by their joint consolidation motion, the firms have already shown the ability to work together in prosecuting this case without duplication of effort, the Court finds that appointment of Milberg Weiss, Stull, Stull Brody, and Schiffrin Barroway as tri-lead counsel of the consolidated class actions is proper.
III. CONCLUSION
Having considered the motion for Consolidation of the Walker, Mazza and Icardo class actions pursuant to Rule 42(a) of the Federal Rules of Civil Procedure, IT IS HEREBY ORDERED THAT:
1. The motion to Consolidate the three above-captioned cases is GRANTED;
2. The following actions are hereby consolidated for all purposes, including pretrial proceedings, trial and appeal, pursuant to Rule 42(a) of the Federal Rules of Civil Procedure:
Walker v. Deutsche Bank, AG, et al., No. 04 Civ. 1921 (DAB)
Mazza v. Deutsche Bank, AG, et al., No. 04 Civ. 3501 (DAB)
Icardo v. Deutsche Bank, AG, et al., No. 04 Civ. 3637 (DAB)
3. The caption of these consolidated actions shall be "In re Scudder Mutual Funds Fee Litigtion" and the files of these consolidated actions shall be maintained in one file under Master File No. 04 Civ. 1921 (DAB). Any other actions now pending or later filed in this district which arise out of or are related to the same facts as alleged in the above-identified cases shall be consolidated for all purposes, if and when they are brought to the Court's attention.
4. Every pleading filed in the consolidated actions or in any separate action included herein, shall bear the following caption:
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
In re SCUDDER MUTUAL FUNDS FEE LITIGATION 04 Civ. 1921 (DAB)
This Document Relates To:
5. When a pleading is intended to be applicable to all actions governed by this Order, the words "All Actions" shall appear immediately after the words "This Document Relates To:" in the caption set out above. When a pleading is intended to be applicable to only some, but not all of the consolidated actions, this Court's docket number for each individual action to which the pleading is intended to be applicable and the last name of the first-named plaintiff in said action shall appear immediately after the words "This Document Relates To:" in the caption described above.
6. When a pleading is filed and the caption shows that it is applicable to "All Actions," the clerk shall file such pleading in the Master File and note such filing on the Master Docket. No further copies need to be filed, and no other docket entries need be made.
7. When a pleading is filed and the caption shows that it is to be applicable to fewer than all of the consolidated actions, the Clerk will file such pleading in the Master File only, but shall docket such filing on the Master Docket and the docket of each applicable action.
8. This Court requests the assistance of counsel in calling to the attention of the Clerk of this Court the filing or transfer of any case which might be consolidated as part of In re Scudder Mutual Funds Fee Litigation.
9. The law firms of Milberg Weiss, Bershad Schulman, LLP, Stull, Stull Brody, and Schiffrin Barroway, LLP, are hereby appointed tri-lead counsel of the above-mentioned consolidated actions.
10 Plaintiffs shall file a Consolidated Complaint within 60 days of the date of this Order.
11 The Defendants shall move or answer within 60 days after filing of the Consolidated Complaint.
12 In the event any of the Defendants file a motion directed at the Consolidated Complaint, Plaintiffs shall file any opposition to such motion within 45 days of service of such motion, and Defendants shall file their reply in support of such motion within 30 days of service of Plaintiffs' opposition.
13. The Clerk is directed to serve a copy of this Order on all parties of record in the consolidated actions.
SO ORDERED.