Opinion
Civil No. 99-CV-0121-L(JA) [Docket No. 98]
August 6, 2002
ORDER GRANTING MOTION FOR CLASS CERTIFICATION
This matter comes before the Court upon Plaintiffs' motion for certification of the plaintiff class and class representatives under Federal Rule of Civil Procedure 23. Defendants have filed a statement of non-opposition. The Court finds this matter suitable for determination without oral argument pursuant to Civil Local Rule 7.1(d)(1).
DISCUSSION
I. Applicable Law
Federal Rule of Civil Procedure 23 allows representative plaintiffs to litigate claims of members of a certified class although the members are not named parties. Fed.R.Civ.P. 23. The adjudication of the class action is binding on all of the members of the certified class unless a member has otherwise opted out. Amchem v. Prods. Inc. v. Windsor, 521 U.S. 591, 614-15 (1997); Brown v. Ticor Title Ins. Co., 982 F.2d 386, 390 (9th Cir. 1992). "A court need not reach the merits of the action in determining whether a class action is appropriate." Schwartz v. Upper Deck Co., 183 F.R.D. 672, 675 (S.D. Cal. 1999).
All future citations to "Rule" shall refer to the Federal Rules of Civil Procedure.
To certify a class under Rule 23(b)(3), the requirements of Rule 23(a) must be satisfied. Fed.R.Civ.P. 23(b); Amchem, 521 U.S. at 614. The parties seeking certification bear the burden of showing this requirement is satisfied. Amchem, 521 U.S. at 614; Slaven v. BP America, Inc., 190 F.R.D. 649, 654 (C.D. Cal. 2000). Rule 23(a) allows a class action to be maintained only 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.
Rule 23(a)(4)'s adequacy of representation requirement ensures constitutional due process for absent members. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998). The Court determines legal adequacy by resolving two legal questions: "(1) do the named plaintiffs and their counsel have any conflicts of interest with other class members and (2) will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the class?" Id.
If Rule 23(a)'s requirements are met, the Court next looks at Rule 23(b)(3)'s requirements. Slaven, 190 F.R.D. at 653. The Court must determine whether questions of law or fact common to the class "predominate" over those of the individual class members and examine the availability of "superior" alternative remedies. Fed.R.Civ.P. 23(b); Amchem, 521 U.S. at 615-16. "[C]lass resolution [must] be superior to other available methods for the fair and efficient adjudication of the controversy." Amchem, 521 U.S. at 615 (internal quotations omitted). In evaluating predominance and superiority, the Court must consider: (1) the extent and nature of any pending litigation commenced by or against the class involving the same issues; (2) the interest of individuals within the class in controlling their own litigation; (3) the convenience and desirability of concentrating the litigation in a particular forum; and (4) the manageability of the class action. Fed.R.Civ.P. 23(b)(3)(A)-(D); Amchem, 521 U.S. at 615-16. Under Rule 23(c)(1), the Court can alter or amend an order regarding class certification. Fed.R.Civ.P. 23(c)(1); Slaven, 190 F.R.D. at 652.
II. Rule 23(a) Requirements
(1) The class period in this case was between September 4, 1997 and July 15, 1998. As of December 31, 1997, there were approximately 9,000 Ashworth shareholders and by December 31, 1998, there were approximately 10,000 shareholders. (Leahy Decl. Ex. B at 14 Ex. C at 10.) (Ashworth's 1997 1998 Form 10-K.) The Court finds that the class is so numerous that joinder of all class members is impracticable.
(2) The Court finds that there are questions of law and fact common to the class. The Complaint alleges violations of Sections 10(b) and 20(a) of the Securities and Exchange Act and Rule 10b-5 promulgated by the Securities and Exchange Commission. The allegations are based on a common course of conduct consisting of misrepresentations and omissions to the investing public during the class period. In particular, the Complaint alleges that defendants made false and misleading statements about Ashworth's business condition, especially sales and demand for its products. In an effort to create the appearance of strong demand and earnings growth, defendants fabricated sales by parking goods in warehouses and recording these shipments as sales, shipping merchandise to customers who had not even ordered any merchandise and shipping massive amounts of goods to Ashworth's independent sales representatives on a consignment basis while improperly recording those shipments as sales. ¶¶ 6, 45, 55, 77, 91, 118-20. Defendants also falsely boosted Ashworth's financial results by manipulating inventory reserves. ¶¶ 7, 121-28.
(3) Plaintiffs' claims arise from the same event or course of conduct and are based on the same legal authority that gives rise to the claims of other class members. The interests of Plaintiffs and the class appear to be the same. Therefore, the Court finds that Plaintiffs' claims are representative and typical of the claims of the class.
(4) The Court also finds that the representative parties will fairly and adequately protect the interests of the class. Plaintiffs' counsel has extensive experience and expertise in class action litigation and the interests of Plaintiffs are not antagonistic to the interests of the class.
III. Rule 23(b)(3) Requirements
Having found that Rule 23(a)'s requirements have been met, the Court must now decide whether common questions of law or fact predominate over individual questions and whether a class action is superior to other available remedies. The Court has considered the factors outlined above in Amchem, 521 U.S. at 615-16 and finds that they have been met and that a class action is the fairest and most efficient way of proceeding. See Deposit Guaranty Nat'l Bank v. Roper, 445 U.S. 326, 339 (1980) (class action may be only effective redress for class members for whom bringing individual suits would not be feasible); Epstein v. MCA, Inc. 50 F.3d 644, 668 (9th Cir. 1995), rev'd on other grounds (class action particularly appropriate in suit brought by shareholders who may otherwise have brought thousands of individual actions); Blackie v. Barrack, 524 F.2d 891, 905-08 (9th Cir. 1975) (where there is common conduct of wrongdoing affecting all members of class, common questions predominate).
CONCLUSION
Based on the foregoing and good cause shown, IT IS HEREBY ORDERED:
1. Plaintiffs' motion for class certification is GRANTED.
2. The class is defined as:
All persons who purchased shares of Ashworth, Inc. common stock and its publicly traded options during the period of September 4, 18 1997 through July 15, 1998, inclusive (the "Class Period"), and who were damaged thereby. Excluded from the Class are defendants, the 19 officers and directors of Ashworth, Inc. during the Class Period, members of their immediate families, and their legal representatives, 20 heirs, successors or assigns, and any entity in which defendants have or during the Class Period had a controlling interest.
3. Lead Plaintiffs New Hampshire Retirement System, John Gervais, Debra Kopp and Tony Le are appointed as representatives of the Class.
IT IS SO ORDERED.