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In re Worldcom, Inc. Securities Litigation

United States District Court, S.D. New York
Jan 20, 2004
MASTER FILE No. 03 Civ. 7826 (S.D.N.Y. Jan. 20, 2004)

Opinion

MASTER FILE No. 03 Civ. 7826

January 20, 2004

William C. Rand, New York, NY, for Plaintiffs

David Wertheimer, Lyndon Tretter, Hogan Hartson, New York, NY, for Defendant Bernard J. Ebbers

R. David Kaufman, M. Patrick McDowell, Brunini Grantham Grower Hewes PLLC, Jackson, MS, of Counsel for Defendant Bernard J. Ebbers

Paul Curnin, David Elbaum, Simpson Thacher Bartlett LLP, New York, NY, for Director Defendants

Eliot Lauer, Michael Moscato, Michael Hanin, Curtis, Mallet — Prevost, Colt Mosle LLP, New York, NY, for Defendant Arthur Anderson LLP

Jay B. Kasner, Susan L. Saltzstein, Steven J. Kolleeny, Skadden Arps Slate Meagher Flom LLP, New York, NY, for Underwriter Defendants

Martin London, Richard A. Rosen, Brad S. Karp, Eric S. Goldstein, Walter Rieman, Marc Falcone, Joyce S. Huang, Paul Weiss Rifkind Wharton Garrison LLP, New York, NY, for Defendants Citigroup Global Markets, Inc. f/k/a Salomon Smith Barney, Inc., Citigroup Inc., and Jack Grubman

Robert McCaw, Peter K. Vigeland, Wilmer Cutler Pickering, New York, NY, for Defendants


MEMORANDUM OPINION AND ORDER


On October 3, 2003, SLS Investors, L.P., SLS Offshore Fund, Ltd., and GS SLS Portfolio, LLC (collectively "SLS") filed an action arising out of the collapse of WorldCom, Inc. alleging claims pursuant to the Securities Act of 1933 ("Securities Act") as well as other federal and state law claims. SLS amended its action on October 24, 2003. On that same day, a class was certified in the WorldComSecurities Litigation. See In re WorldCom, Inc. Securities Litig., No. 02 Civ. 3288 (DLC), 2003 WL 22420467 (S.D.N.Y. Oct. 24, 2003) ("Certification Decision").

The defendants have moved to dismiss all of the Securities Act claims based on the rulings contained in In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288 (DLC), 2003 WL 22738546 (S.D.N.Y. Nov. 21, 2003) ("November 21 Opinion"). The November 21 Opinion held, inter alia, that the one year/three statute of limitations applied to the Securities Act claims in the individual action addressed in that opinion, and that American Pipe tolling was not available to individual actions filed before there was a decision on class certification. SLS has been required to show why the November 21 Opinion does not require the motions to dismiss its Securities Act claims to be granted.

In addition to preserving its right to contend that the November 21 Opinion was wrongly decided, SLS first argues that American Pipe tolling should apply to its action since its pleading included state law claims that are not being pursued in the class action. SLS cites no law to support this exception to the principles described in the November 21 Opinion. The relation — back doctrine may permit otherwise time — barred claims to be added to a complaint, but the American Pipe tolling doctrine does not.

The American Pipe tolling doctrine is designed to discourage the filing a lawsuits pending a decision on the motion for class certification. As a consequence, any lawsuit or amendment of a pleading filed before that decision must be timely, based on the governing statute of limitations or other applicable principles of law. American Pipe tolling is not available simply because a federal claim is joined with a state law claim.

SLS next contends that its entire amended pleading is timely since it was filed on the same day as the decision certifying a class in the WorldCom Securities Litigation. It contends that, "at a minimum,"American Pipe tolling should permit it to sue the defendants who were named for the first time in the amended pleading. SLS filed its action before the decision on certification. As a result, American Pipe tolling is unavailable to the entire action, including to its amended pleading.

SLS does not contend that it was aware of or relied upon the Certification Decision when it filed its amended pleading. As it turns out, the amendment was filed approximately one and a half hours before the Certification Decision was filed.

Conclusion

The motions to dismiss the Securities Act claims in this action are granted.

SO ORDERED.


Summaries of

In re Worldcom, Inc. Securities Litigation

United States District Court, S.D. New York
Jan 20, 2004
MASTER FILE No. 03 Civ. 7826 (S.D.N.Y. Jan. 20, 2004)
Case details for

In re Worldcom, Inc. Securities Litigation

Case Details

Full title:IN RE WORLDCOM, INC. SECURITIES LITIGATION, This Document Relates to: 02…

Court:United States District Court, S.D. New York

Date published: Jan 20, 2004

Citations

MASTER FILE No. 03 Civ. 7826 (S.D.N.Y. Jan. 20, 2004)

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