Pope v. Harvard Bancshares, Inc.

240 F.R.D. 383, 2006 U.S. Dist. LEXIS 95105, 2006 WL 3952052
CourtDistrict Court, N.D. Illinois
DecidedNovember 16, 2006
DocketNo. 06 C 988
StatusPublished
Cited by14 cases

This text of 240 F.R.D. 383 (Pope v. Harvard Bancshares, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pope v. Harvard Bancshares, Inc., 240 F.R.D. 383, 2006 U.S. Dist. LEXIS 95105, 2006 WL 3952052 (N.D. Ill. 2006).

Opinion

MEMORANDUM OPINION AND ORDER

LEFKOW, District Judge.

This putative class action was brought by the former shareholders of a corporation who allege that the corporation’s former directors breached their fiduciary duties in connection with a merger and the sale of minority shareholders’ stock. Plaintiffs’ motion for class certification is presently before the court, and for the reasons set forth below, it is granted in part.

1. Background

Plaintiffs are former shareholders of Harvard Bancorp, Inc. (“Bancorp”), which was a holding company for the Harvard State Bank (the “Bank”) in Harvard, Illinois until early 2006. There are currently two named plaintiffs: Joan F. Pope as Trustee of the Bruce A. Pope Trust (“Pope”) and William Shearon as Trustee of the William Shearon Trust (“Shearon”). Pope and Shearon are represented by the Collins Law Firm, P.C. (“Collins”). Defendants are Harvard Bancshares, Inc. (“Bancshares”), the new corporation into which Bancorp merged, and individuals who were directors of Bancorp and are now directors of Bancshares (collectively, “defendants”).1

Pope and Shearon allege that defendants breached their fiduciary duties to Bancorp and to its shareholders when they created Bancshares, provided false pretenses for the merger, sent misleading notices to shareholders announcing the merger of Bancorp into Bancshares, and offered to buy the shareholders’ stock for an unfair price of $600. Shareholders that owned less than 101 shares had no choice in the matter; their stock was automatically sold.

Pope and Shearon have moved for an order certifying this case as a class action pursuant to Rule 23(b)(3) of the Federal Rules of Civil Procedure. Dkt. No. 45. They ask the court to certify the following class:

All persons whose shares of Harvard Ban-corp, Inc. were repurchased as a result of the merger of Harvard Bancorp, Inc. and Harvard Bancshares, Inc. Excluded from the Class are the defendants, their employees, and their families.

Pls.’ Mot. For Class Cert., Dkt. No 45, at 1. Pope and Shearon ask to be class representatives, and Collins asks to be class counsel. Id. at 1-2.

[387]*3872. Class Certification Standard

A class action may be certified when two conditions are met. First, the movant must satisfy the four prerequisites of Federal Rule of Civil Procedure 23(a): (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy. Fed.R.Civ.P. 23(a); Keele v. Wexler, 149 F.3d 589, 594 (7th Cir.1998); Retired Chicago Police Ass’n v. City of Chicago, 7 F.3d 584, 596 (7th Cir.1993) (citation omitted); Rosario v. Livaditis, 963 F.2d 1013, 1017 (7th Cir.1992). Second, the potential class must satisfy the requirements of at least one of the three subsections of Rule 23(b). Fed.R.Civ.P. 23(b); Rosario, 963 F.2d at 1017; Hardin v. Harshbarger, 814 F.Supp. 703, 706 (N.D.Ill.1993). Here, Pope and Shearon will attempt to satisfy Rule 23(b)(3), which requires a finding that “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.” Fed.R.Civ.P. 23(b)(3). Courts should liberally interpret the requirements of Rule 23, King v. Kansas City S. Indus., 519 F.2d 20, 25-26 (7th Cir.1975), but retain broad discretion when determining whether class certification is appropriate. Keele, 149 F.3d at 592; Robbins v. Wolpoff & Abramson LLP, 2006 WL 2473334, at *1 (E.D.Wis. Aug. 24, 2006).

The party seeking class certification bears the burden of showing that all of the requirements have been met. Retired Chicago Police Ass’n, 7 F.3d at 596 (citation omitted); Hardin, 814 F.Supp. at 706 (citing, inter alia, Gen. Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 161, 102 S.Ct. 2364, 2372, 72 L.Ed.2d 740 (1982)). When evaluating a motion, the court accepts the allegations made in support of certification as true and does not examine the merits of the case. Hardin, 814 F.Supp. at 706 (citing, inter alia, Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177-78, 94 S.Ct. 2140, 2152-53, 40 L.Ed.2d 732 (1974)). The court will not merely rubber stamp the movant’s allegations, however, but will look beneath the surface of the pleadings and independently examine the evidence in order to protect absent class members by ensuring that the requirements of Rule 23 actually are satisfied. Szabo v. Bridgeport Mach., Inc., 249 F.3d 672, 677 (7th Cir.2001); Falcon, 457 U.S. at 157, 160-61, 102 S.Ct. at 2370, 2372. Even if the court grants a motion for class certification, that ruling is inherently tentative, and the court retains the freedom to modify it in light of subsequent developments in the litigation. Fed.R.Civ.P. 23(c)(1)(C); Falcon, 457 U.S. at 160, 102 S.Ct. at 2372.

The Seventh Circuit has recognized the suitability of shareholder suits to class action treatment. In re Bank One Sec. Litig./First Chicago Shareholder Claims, 2002 WL 989454, at *2 (N.D.Ill. May 14, 2002) (citing King v. Kansas City S. Indus., 519 F.2d 20, 25-26 (7th Cir.1975)). Although Bank One and King dealt with securities fraud claims, their reasoning is equally applicable to a fiduciary duty case brought by minority shareholders, like this one.

3. The Requirements of Rule 23(a)

a. Numerosity

The first prerequisite for class certification that plaintiffs must satisfy, numerosity, requires that “the class is so numerous that joinder of all members is impracticable.” Fed.R.Civ.P. 23(a). “ ‘Impracticable’ does not mean ‘impossible,’ but rather, extremely difficult and inconvenient.” Fields v. Maram, 2004 WL 1879997, at *3 (N.D.Ill. Aug. 17, 2004) (citing Danis v. USN Commc’ns, Inc., 189 F.R.D. 391, 399 (N.D.Ill.1999)).

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Bluebook (online)
240 F.R.D. 383, 2006 U.S. Dist. LEXIS 95105, 2006 WL 3952052, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pope-v-harvard-bancshares-inc-ilnd-2006.