Confidential Sources Still Alive & Kicking

What's that? You thought Tellabs banned confidential witnesses? Well, let's not get carried away here, as there's certainly at least two ways to read that opinion. Of course, after the 7th Circuit decided Higginbotham v. Baxter, it was beginning to look like you might actually be right. But Senior Judge Samuel Conti (Nixon '70) (yes I said 1970) chose to reject the Seventh Circuit and go with the Fifth Circuit's view on the subject, which says that Tellabs does not "presumptively preclude confidential sources."

But wait a minute. The Fifth Circuit (in Central Laborers' Pension Fund v. Integrated Electrical Services Inc., 497 F.3d 546 (5th Cir. 2007)), never mentioned Tellabs in its CW analysis, so how can that be you ask? It's because "although the Fifth Circuit did not discuss Tellabs in its analysis of confidential sources, the court was clearly aware of the Tellabs decision as evidenced by numerous citations to Tellabs in its lengthy discussion of the PSLRA pleading standards. Thus, Central Laborers' Pension Fund suggests that, contrary to the Seventh Circuit's conclusion, Tellabs does not presumptively prohibit confidential sources."

So overall result: Defendants' Motions to dismiss denied in full.

You can read the whole opinion on Acquirelaw™ at ND CA Acquirelaw 242205801 In re Secure Computing II Sec. Litig. (March 4th, 2008) (just type the number in the citation in any Acquirelaw search box to quickly retrieve the Order).

Nugget: "The Ninth Circuit has not yet spoken to the issue of whether confidential sources, if described with the requisite particularity, may give rise to the cogent and compelling inference of scienter required by Tellabs. Without guidance stating otherwise, this Court is unwilling to abandon the binding Ninth Circuit precedent of Daou for the reasoning articulated by the Seventh Circuit in Higginbotham."

No Mondays Puh-leeze

Attorneys who voluntarily set Monday deadlines are just simply no fun. I mean, you get to pick the days, so why kill a future weekend? You know all the work gets done at the last minute, so nix those Mondays the next time your curmudgeon opposing counsel tries to get you to agree to one.

Well, we've located one Judge who agrees. In the Sourcefire securities class action, Judge J. Frederick Motz (Reagan '85) asked the attorneys to "confer with one another to agree upon a briefing schedule in the event that defendants decide to file a motion to dismiss. In your discussions, please agree upon deadlines that will have the effect of moving this litigation along expeditiously but avoid (1) Monday deadlines, and (2) deadlines that would have an adverse effect upon the holiday schedule of counsel on either side."

What's that? A Judge who actually is professional enough to care about attorney's personal and family lives? This Judge needs to talk to some of his brethren, as he (unfortunately for our families) sure seems in the minority.

You can read the whole letter on Acquirelaw™ at DD MD Acquirelaw 24686286 In re Sourcefire Sec. Litig. (D. Md. Sept. 4th, 2007) (just type the number in the citation in any Acquirelaw search box to quickly retrieve the Order).

Nugget: "Despite the informal nature of this ruling, it shall constitute an Order of Court, and the Clerk is directed to docket it accordingly.”

Reimbursement Denied

Now this is entertainment (at least to me it is). And if you're a securities class action lawyer that's a word that might not enter your daily routine all that often. In the Motorola securities class action, Dr. Antonio Pagnamenta (Professor of Physics, emeritus at UIC), wrote a letter to the court which says (along with my annotations in Nugget green italics below of course):

Your Honorable Wise, and Most Hopefully Generous Judge Pallmeyer:

[A]s a member of the Class, I have carefully considered the entire situation so please don't waste your time repeating my extensive work, and then agreed to be a witness out of conviction that this was the right thing to do. I never expected any award for this as I am only concerned about others.

Only now, can you believe it, I have heard that you have awarded some money to the Class member witnesses for their efforts and, well, it's a lot so....

I am pleasantly surprised to say the least, but now please allow me to draw your attention, pardon the legalese, to my special situation:

I was travelling by CTA, because these professor salaries stink let me tell you, to my first interview at Fay Clayton's law office. I passed out and had a Fall so big that I capitalized it on the CTA station which I readily admit is the only part of this story that readers should feel compassion about.

In this I suffered considerable injuries to the right side of my face. Specifically, three teeth on my right side needed to get root canal work, in the amount of approx. $6000 and I knew I should have listened to mother and became an endodontist.

Medicare essentially covered my emergency and medical cost which is fortunate in light of my ridiculously low professor salary and pension. However, my dental work was referred to my dental insurance, which only covered $2000. These are approx, numbers, the exact amounts will be documented.

As I suffered these injuries because of my willingness to testify, I would not have had the accident if I had not gone to the law office which I am sure you will agree is a classic but-for situation. The doctors found no basic reason for this sudden fainting spell. I would appreciate it very much if the court could consider to reimburse me for my own out-of-pocket expenses of approx $4000, which are clearly the fault of the defendants in this class action.

The accident, the injuries, the expenses, all can be documented as soon as I am back in Chicago, within 10 days and if I pass out and hit my head while on the flight I would appreciate being reimbursed for that too, since if I hadn't agreed to testify I wouldn't have wrote this letter, and therefore wouldn't have left for the airport at the same time (see, e.g., A Sound of Thunder), and therefore it is also the direct fault of the defendants.

Respectfully submitted,
Antonio Pagnamenta
Professor of Physics, emeritus, and Professor of Confusing Cause and Effect

So I bet you're wondering, what did Judge Pallmeyer say? Well, she wrote back that "I am sorry to hear about your accident. Unfortunately, the court has no funds available to reimburse you for the expenses resulting from that accident."

You can read the letters, both dated August 10, 2007, on Acquirelaw™ at In re Motorola Sec. Litig., ND IL Acquirelaw 2022814382 (N.D. Ill. August 10th, 2007) (just type the number in the citation in any Acquirelaw search box to quickly retrieve the Order).

Nugget: The only other sentence in the Judge's response letter, and we at the Nugget, despite our jesting, wholeheartedly agree: “Best wishes for your complete recovery.”

The Look is Back

I promise an article tomorrow, so in the meantime let me tell you that although the voting isn't closed yet it looks like the Acquirelaw™ Nugget will be be returning to its original color scheme. Even my long-time good friend and Super-Nugget fan (he is a top-notch securities class action investigator by the way if you are looking for one) Wolf at Worms & Hirsch told me straight up that the dark color scheme is one of the worst designs he has ever seen. (O.K, I guess I am paraphrasing, but that's not that far off). Adding insult to injury, my own spouse was one of those who voted it down, and both my Labradors started howling when they saw the screen. So enough already, you know what, forget the end of the vote, I'm putting it back the way it was now. Ah, now that's better, isn't it?

The Nugget Lives

Hey, remember the Nugget? Yes, I’ve been gone for a while, but I’m back now. And you might notice I’ve got a shiny new name. It’s the Acquirelaw™ Nugget now instead of the PSLRA Nugget, but nothing else is going to change so don’t get yourself all upset. Well, more on that later, (and yes, my wife and I own Acquirelaw™) let’s try to get back in the swing of things here.

I’ve personally never seen this happen, but the Plaintiffs in In re Eli Lilly & Co. Sec. Litig. filed their “extensive” amended complaint under seal. Seems Judge Jack B. Weinstein (E.D.N.Y.) wasn’t too keen on that idea, as he quickly ordered “the parties to show cause why [it] should not be unsealed.” Plaintiffs said they didn’t mind unsealing it, but Defendants wanted redactions.

Judge Weinstein said that the complaint had to be unsealed, but since certain “documents cited within the complaint may contain trade secrets or confidential commercial information properly protected under subsection (c)(7) of Federal Rule of Civil Procedure 26,” he would allow the complaint to be “redacted” and “Special Master Woodin shall unseal such redacted documents as need no longer be sealed and they shall thereafter be filed with the complaint.”

You can read the Order, dated August 17th, 2007, on Acquirelaw™ at In re Eli Lilly & Co. Sec. Litig., ED NY Acquirelaw 242606290 (E.D.N.Y. August 17th, 2007) (just type the number in the citation in any Acquirelaw search box to quickly retrieve the Order).

Note re Judge Weinstein: He took the bench in 1967. In addtion, according to Wikipedia, "Judge Weinstein is also well-known for his personal, informal courtroom style (Weinstein conducts most hearings seated at a table in the middle of the courtroom with counsel, rather than from the bench, and often chooses to wear an ordinary business suit with no judicial robe)." Can any readers confirm whether this is true? Please let us know in the comment area below.

Nugget: “Access to judicial proceedings and documents is necessary for federal courts to have a measure of accountability and for the public to have confidence in the administration of justice.”

New Service for Securities Class Action Researchers

Pssst… here’s a tip for you Nugget subscribers who just happen to be securities class action researchers. If your dream is to be able to word-search thousands of unpublished (and published) securities class action orders, opinions, and even minute entries check out the new service Acquirelaw™ at www.acquirelaw.com. I’m betting you won’t be sorry you did.

As for the Nugget, please be patient, I’ll get back in the swing of things soon. At least for this blogger, it’s a personal endeavor, so it’s something I do in my limited spare time, which lately has been very limited. Thank you for the many kind words from those of you who miss the Nugget’s ramblings – you make it all worthwhile, especially my favorite frequent commenters “Gary,” and “The Defense Bar,” whoever you are.

The Case that Just Won’t Die

So let’s see, back in 1999, the Judge approved the settlement of the In re Paracelus securities class action, and entered final judgment. So why in the world are we reading a Memorandum Opinion issued in the case eight years later, you might ask? Well, it seems the settlement distribution process “took years,” with “lost checks,” and trying to “find claimants who were no longer at the addresses that had been provided.” So finally, “at the end of this process,” and after “approximately 1,400 claimants had received and cashed settlement funds,” a whopping $30,547.06 remained unclaimed.

So no big deal, right? Well, Lead Counsel proposed that the money be distributed to two designated charities, the Methodist Hospital Foundation and the Houston Volunteer Lawyers Program, invoking cy pres. Oh, but it’s not going to be that easy. The Judge said that “neither of the two designated charities was related to the class or its members,” and to make matters worse, “one charity was connected to the district judge, who promptly recused.” After reassignment, and a whole new round of briefing, along with a hearing, Judge Lee H. Rosenthal (S.D. Tex.) finally ordered that the money go to the “Institute of Law and Economic Policy, which will spend the money in a way that may indirectly and prospectively benefit the class members in the aggregate.”

Sheesh.

You can read In re Paracelus, issued February 6, 2006 at 2007 U.S. Dist. LEXIS 8316.

Nugget: “In the class action context the reason for appealing to cy pres is to prevent the defendant from walking away from the litigation scot-free because of the infeasibility of distributing the proceeds of the settlement (or the judgment, in the rare case in which a class action goes to trial) to the class members.”