Monday, September 12, 2005

PSLRA Sanctions Decision Delayed Pending Appeal Outcome

So will there be PSLRA sanctions in the ATSI Communications v. Shaar Fund litigation? Nobody knows, but Plaintiffs can breath a little easier – at least for now. You see, after tossing the action back in February, Judge Lewis A Kaplan (S.D.N.Y.) "invited the parties to submit papers on the issue of the appropriateness of sanctions." Being "invited" almost makes it seem like it's going to be something fun, doesn't it? Look, our invitation finally arrived! Hurray! But fun doesn't appear to have entered into the equation here, as the parties responded with briefing numbering "in the hundreds of pages."

Instead of deciding the sanctions issue, the court noted that "if the Court of Appeals were to overturn this Court's dismissal, all of the effort that has been and remains to be devoted to the sanctions issue will have been for naught," and "even if the Court of Appeals affirms, the sanctions may appear in a different light." "Furthermore, the ruling on the motions to dismiss is not dependent in any way upon the Court's view of the sanctions issue. Finally if plaintiff, contrary to this Court's view, has filed a legally sufficient complaint, delay of resolution of the merits of the controversy for the time necessary to determine the sanctions would be needlessly prejudicial to the plaintiff." Judge Kaplan then directed the clerk "to enter judgment dismissing the action, thus rendering the dismissal appealable." As for "the motions for sanctions," they "are denied without prejudice to reinstatement" after the appeal is over.

You can read ATSI v. Shaar Fund, issued September 6, 2005, at 2005 U.S. Dist. LEXIS 19235.

Nugget: "There also remains pending a counterclaim by defendant Corporate Capital Management. There have been no proceedings on the counterclaim, however, CCM has represented that it does not presently intend to pursue the counterclaim, and all parties other than plaintiff are prepared to stipulate to dismissal of the counterclaim without prejudice. Under these circumstances, the counterclaim provides no just reason for delay in the entry of judgment dismissing plaintiff's claims."

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