In re Seagate Technologies Securities Litigation

115 F.R.D. 264, 1987 U.S. Dist. LEXIS 14728
CourtDistrict Court, N.D. California
DecidedApril 1, 1987
DocketNo. C-84-20756(A)-WAI
StatusPublished
Cited by9 cases

This text of 115 F.R.D. 264 (In re Seagate Technologies Securities Litigation) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Seagate Technologies Securities Litigation, 115 F.R.D. 264, 1987 U.S. Dist. LEXIS 14728 (N.D. Cal. 1987).

Opinion

ORDER

INGRAM, District Judge.

Plaintiffs’ motions for certification of plaintiff and defendant classes and subclasses were reargued on January 29, 1987. Having considered the papers and argument of counsel, the motions are CONDITIONALLY GRANTED as discussed below.

[266]*266I. INTRODUCTION

The background of this case is set forth in detail in the court’s order of December 24, 1985. Briefly, this is an action alleging federal securities and common law fraud claims arising out of a February 9, 1983 public offering of Seagate common stock. Plaintiffs have moved to certify a plaintiff class of Seagate stock purchasers and a defendant class of underwriters.

Plaintiffs1 allege that the registration statement and prospectus issued by defendant Seagate in connection with the February 9, 1983 public offering contained material misrepresentations and omissions. Plaintiffs further allege that certain misrepresentations were made after the public offering. Various individual officers and directors2 of Seagate are named as defendants. Also named as defendants are the co-lead underwriters3 who participated in the public offering.

Following defendants’ motion to dismiss pursuant to Rule 12(b)(6), plaintiffs filed their consolidated amended complaint. The consolidated amended complaint alleges the following claims:

1. § 11 and § 15 of the 1933 Securities Act (15 U.S.C. §§ 77k and 77o );
2. § 12(2) and § 15 of the 1933 Securities Act (15 U.S.C. §§ 77/(2) and 77o);
3. § 10(b) of the [Securities Exchange Act of 1934] 1933 Securities Act, Rule 10b-5 promulgated thereunder, and § 20 of the [Securities Exchange Act of 1934] 1933 Securities Act4 (15 U.S.C. §§ 78j(b), 17 C.F.R. § 240.-10b-5 and 15 U.S.C. 78t)
4. negligent misrepresentation; and
5. fraud.

The first and second counts are brought by plaintiffs Feldman, Claiman, Selig and Kovar against all defendants except Waite. The third, fourth, and fifth counts are brought by all plaintiffs against all defendants except the underwriters.

Defendants challenge the certification of the proposed plaintiff and defendant classes on a number of grounds. Defendants, however, have stipulated to the certification of the §§ 10(b)/Rule 10b-5 and 20 plaintiff class represented by plaintiffs Feldman, Selig, and Sorrel.5 Accordingly, certification of that class is not at issue.

II. CERTIFICATION OF PLAINTIFF SUBCLASS AS TO SECTION 11 and 12(2) CLAIMS UNDER THE 1933 SECURITIES ACT

Plaintiffs seek certification of the following plaintiff class:

[A]ll persons who purchased the common stock of Seagate between February 9, 1983 and August 22, 1984 (the “Plaintiff Class”). Excluded from the plaintiff class are the defendants herein, members of the immediate family of each of the individual defendants, any entity in which any defendant has a controlling interest, including but not limited to Dysan Corporation, and the legal representatives, heirs, successors or assigns of any such excluded party.

1122. As to the §§ 11, 12(2) and 15 claims, plaintiffs seek certification on behalf of:

[T]hat portion of the Plaintiff Class which purchased the 3,000,000 shares of Seagate common stock issued in the February 9, 1983 public offering, either in [267]*267the offering or in the aftermarket (the “Subclass”).

1123. The court examines whether the four requirements of Rule 23(a) — and one of the requirements of Rule 23(b) — are met as to this subclass.

A. Rule 23(a)

1. Numerosity

The consolidated amended complaint estimates that the purchasers of Seagate common stock offered on February 9, 1983 “number in the thousands.” The court finds that the class is so numerous that joinder of all the class members would be impracticable. Weinberger v. Jackson, 102 F.R.D. 839, 844 (N.D.Cal.1984).

2. Commonality

The gist of the complaint is that the registration statement and prospectus contained various material misrepresentations and omissions. Various aftermarket misrepresentations and omissions are also alleged. Common questions of law and fact exist sufficient to comply with Rule 23(a)(2). Blackie v. Barrack, 524 F.2d 891, 902 (9th Cir.1975), cert. denied, 429 U.S. 816, 97 S.Ct. 57, 50 L.Ed.2d 75 (1976).

3. Typicality

The court finds this requirement met as to the subclass. Plaintiffs allege that “some or all of the shares purchased by Albert L. Feldman, David Claiman, Joseph Selig and Joseph Kovar were issued pursuant to the Registration Statement and Prospectus effective February 9, 1983.” 117. This is all that is required for conditional certification of the § 11 claims.

The cases relied upon be defendants, Abbey v. Computer Memories, Inc., 634 F.Supp. 870 (N.D.Cal.1986) and Kirkwood v. Taylor, 590 F.Supp. 1375 (D.Minn.1984), aff'd 760 F.2d 272 (8th Cir.1985), are not on point. Both Abbey and Kirkwood involve summary judgment motions brought after discovery which revealed that certain plaintiffs could not trace their shares back to the registration statement at issue. Kirk-wood, in fact, involved the decertification of the § 11 claims at the summary judgment stage after those claims had been conditionally certified. Neither Abbey nor Kirkwood stands for the proposition that the class representatives must prove their ability to trace their shares in order to obtain conditional certification of the class.

4. Adequacy

Defendants challenge only the adequacy of proposed class representative Claiman. Defendants argue that Claiman is an inadequate class representative because he did not appear for his deposition. The court finds that all proposed class representatives, including Claiman, appear able to prosecute this action vigorously. Jackson, 102 F.R.D. at 844-45. The court further finds that the named representatives do not have antagonistic or conflicting interests with the unnamed class members. Id. Finally, the court finds that the representatives’ counsel are competent to prosecute this action. Id.

B. Rule 23(b)

Plaintiffs seek certification of this subclass pursuant to (b)(3) of Rule 23. The issue is whether:

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Bluebook (online)
115 F.R.D. 264, 1987 U.S. Dist. LEXIS 14728, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-seagate-technologies-securities-litigation-cand-1987.