In re Sumitomo Copper Litigation

194 F.R.D. 480, 48 Fed. R. Serv. 3d 329, 2000 U.S. Dist. LEXIS 10791, 2000 WL 1072307
District Court, S.D. New York·Decided August 2, 2000·No. No. 96 CIV. 4584(MP)·Published·Cited by 16 cases

Opinion

OPINION

MILTON POLLACK, Senior District Judge.

Plaintiffs, pursuant to Rule 23 of the Federal Rules of Civil Procedure, move for an order certifying this case as a class action. For the reasons set forth herein, the Court will certify the proposed class for the periods of June 24 — September 24,1993 and June 24, 1994 — June 15, 1996. This action arises out of the alleged manipulation of prices of copper futures contracts traded on the Commodity Exchange Inc. and the Comex division of the New York Mercantile Exchange Inc. by an alleged conspiracy of certain defendants herein.

Background

On a Rule 23 motion, a Court will accept the substantive allegations in plaintiffs’ complaint as true. See Shelter Realty Corp. v. Allied Maintenance Corp., 574 F.2d 656, 661 n. 15 (2d Cir.1978); In re Prudential Securities, 163 F.R.D. 200 (S.D.N.Y.1995) (“[A]llegations” of complaint “are accepted as true for purposes of class certification.”). Rules 23(a) and b(3) provide that certification is appropriate if:

(1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class. ❖ $ ' $ * * *
... (A)nd in addition: ... (3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.

The proposed class satisfies all four requirements of Rule 23(a) and the pertinent requirements of Rule 23(b) of the Federal Rules of Civil Procedure.

Discussion

The Second Circuit has directed district courts to apply Rule 23 according to a liberal rather than a restrictive interpretation. See Korn v. Franchard Corp., 456 F.2d 1206, 1208-09 (2d Cir.1972); Green v. Wolf Corp., 406 F.2d 291, 298, 301 (2d Cir.1968), cert. denied sub nom. Troster, Singer & Co. v. Green, 395 U.S. 977, 89 S.Ct. 2131, 23 L.Ed.2d 766 (1969). The Second Circuit has held “if there is to be an error made, let it be made in favor and not against the maintenance of the class action, for it is always subject to modification should later develop-[482]*482merits during the course of the trial so require.” Green 406 F.2d at 298 (quoting Esplin v. Hirschi, 402 F.2d 94, 99 (10th Cir. 1968), cert. denied, 394 U.S. 928, 89 S.Ct. 1194, 22 L.Ed.2d 459 (1969)). As this Court has noted before, “[t]o the extent that particular [c]lass members are later found to be subject to defenses, ‘a court can certify a class while reserving the right to shape the class more precisely to fit the issues of the case as those emerge during the litigation.’ ” In re Sumitomo Copper Litigation, 182 F.R.D. 85, 94-95 (S.D.N.Y.1998) (quoting Langner v. Brown, No. 95 Civ. 1981, 1996 WL 709757 at *4 (S.D.N.Y.1996)). “[W]hen inquiring into the typicality requirement under Rule 23(a)(3), the focus must be on the defendants’ behavior and not that of plaintiffs.” In re Sumitomo, 182 F.R.D. at 94 (quoting Forman v. Data Transfer, Inc., 164 F.R.D. 400, 404 (E.D.Pa.1995)). See also Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 903 F.2d 176, 180 (2d Cir.1990) (“[T]he mere presence of questions unique to the class representative will not bar class certification.”); In re TCW/DW North American Government Income Trust Securities Litigation, 941 F.Supp. 326, 342 (S.D.N.Y.1996) (Holding that unique defenses bar certification only when they threaten to become the focus of the litigation.).

It is well recognized that the class action method provides a means for individuals whose claims would not otherwise induce litigation to assert those claims. See In re Sumitomo, 182 F.R.D. at 97. See Waters v. International Precious Metals Corp., 172 F.R.D. 479, 486-87 (S.D.Fla.1996) (“In cases involving securities or commodities fraud, there are frequently large numbers of investors who have relatively small stakes in the outcomes and who would be deterred from proceeding with lawsuits absent the availability of the class action.” (citations omitted)). Accord, In re Prudential, 163 F.R.D. at 209.

In order to maintain a class under Rule 23(a)(1), the class must be so large that joinder of all members would be impracticable. See In re Drexel Burnham Lambert Group, Inc., 960 F.2d 285, 290 (2d Cir.1992), cert. dismissed sub nom., Hart Holding Co., Inc. v. Drexel Burnham Lambert Group, Inc., 506 U.S. 1088, 113 S.Ct.. 1070, 122 L.Ed.2d 497 (1993). Here, the potential class numbers at least 20,000. This number satisfies the numerosity requirements of Rule 23(a)(1).

Plaintiffs have also demonstrated in their moving papers the existence of common questions of law satisfying the requirements of Rule 23(a)(2). See In re Prudential Securities Litigation, 163 F.R.D. 200, 206 n. 8 (S.D.N.Y.1995) (stating that the requirement of common questions is a “low hurdle”). Furthermore, the named plaintiffs’ claims satisfy the typicality requirements of Rule 23(a)(3). Plaintiffs have demonstrated in their moving papers that the claims of each plaintiff arise from the same course of conduct and involve the same legal claims and same issues under RICO and New York common law as do all the proposed class members’ claims. See In re Sumitomo Copper Litigation, 182 F.R.D. 85, 94-95 (S.D.N.Y. 1998) (“Rule 23(a)(3) is satisfied when each class member’s claim arises from the same course of events, and each class member makes similar legal arguments to prove the defendant’s liability.”) (quoting In re Drexel, 960 F.2d at 291). Plaintiffs allege that the same course of events — the same manipulation of market prices, the same continuing omissions to disclose material facts, and the same concealment efforts — is at issue throughout the Class Period. Rather than viewing the actions or inactions of the defendants as isolated or discrete instances, this Court views them as a pattern that commonly affects all of the proposed class members that provides sufficient typicality considering this Circuit’s flexible construction of Rule 23. Cf. Schenek v. FSI Futures Inc., et at, 1998 WL 427625 at *4-*5 (S.D.N.Y.1998).

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In re Sumitomo Copper Litigation, 194 F.R.D. 480, 48 Fed. R. Serv. 3d 329, 2000 U.S. Dist. LEXIS 10791, 2000 WL 1072307 (S.D.N.Y. 2000).

194 F.R.D. 480 (In re Sumitomo Copper Litigation) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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