Rule Who?

Quick, who can recite Rule 17(a)? OK, that was a little easy for you procedure buffs. But bet you can't cite Rule 10. What's that, you say you can? Impressive. But for the rest of you, don't worry too much because it's probably never going to help you anyway (at least Rule 10 probably won't). Well, whether you agree or disagree, it sure didn't help certain financial institution Defendants (like Wachovia and CSFB) in their bid to dismiss the Division of Investment of the New Jersey Department of the Treasury from the Adelphia securities litigation for lack of standing.

The basis for Defendants' argument was that, "while the N.J. Division is vested with authority to invest on behalf of the funds, it does not allege that it purchased or held any Adelphia securities for its own account . . . nor does [it] plead facts supporting a valid assignment of the claims belonging to the numerous funds on whose behalf NJ Division invests." But alas, that didn't make it too far, as Judge Lawrence M. McKenna (S.D.N.Y.) said that "defendants fail to recognize the fact that Congress contemplated, in passing the PSLRA, that such funds would bring suit under the federal securities laws on behalf of their beneficiaries. Not only did Congress contemplate funds' standing, it expressed a strong preference that such funds be appointed lead plaintiffs."

Judge McKenna continued "were defendants' argument taken to its natural conclusion, pension and retirement funds would be effectively prohibited from bringing suit as plaintiffs on behalf of their beneficiaries. Not only would that outcome run counter to clear congressional intent, it would force thousands of individual beneficiaries to litigate on their own behalf, thus producing an impractical result. The individual beneficiaries of pension and retirement funds hold a comparatively small amount of assets, and would likely be unwilling, financially incapable, or lack sufficient knowledge of their legal rights to pursue litigation on their own behalf. In the context of class action litigation, just finding the potential class members would be an undertaking requiring significant judicial and attorney resources, given the unique fluidity of the potential plaintiff group." As a result, "this Court finds that the N.J. Division has standing to pursue the instant suit."

You can read In re Adelphia, issued September 1, 2005, at 2005 U.S. Dist. LEXIS 19052.

Nugget: "This Court is not inclined to ignore clear congressional intent, nor is it inclined to create the impractical situation described herein."