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In re Worldcom, Inc. Securities Litigation

United States District Court, S.D. New York
Jan 30, 2004
MASTER FILE 02 Civ. 3288 (DLC), No. 03 Civ. 7826 (S.D.N.Y. Jan. 30, 2004)

Opinion

MASTER FILE 02 Civ. 3288 (DLC), No. 03 Civ. 7826

January 30, 2004

William C. Rand, Law Office of William Coudert Rand, New York, NY, for Plaintiffs

Max W. Berger, John P. Coffey, Steven B. Singer, Beata Gocyk-Farber, John C. Browne, Jennifer L. Edlind, Bernstein Litowitz Berger Grossman LLP, New York, NY, for Lead Plaintiff in the Securities Litigation

Leonard Barrack, Gerald J. Rodos, Jeffrey W. Golan, Mark R. Rosen, Jeffrey A. Barrack, Pearlette V. Toussant, Barrack Rodos Bacine, Philadelphia, PA, for Lead Plaintiff in the Securities Litigation

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 Citigroup Global Markets, Inc. f/k/a Salomon Smith Barney, Inc., Citigroup Inc., and Jack Grubman


MEMORANDUM OPINION AND ORDER


On December 18, 2003, SLS Investors, L.P., SLS Offshore Fund, Ltd., GS SLS Portfolio, LLC (collectively, "SLS") filed a motion to dismiss their complaint without prejudice pursuant to Rule 41(a)(1)(i), Fed.R.Civ.P., in order to permit them to join the class action. For the reasons explained in the Opinion and Order issued by this Court on January 26, 2004, to resolve a parallel motion brought in six actions filed by Milberg Weiss Bershad Hynes Lerach, the plaintiffs are permitted to dismiss their complaint on the condition that they not opt out of the class action or seek in any way to continue their Individual Action. Plaintiffs will be permitted to participate in the class action without prejudice to any claims being pursued in that action on behalf of the class.

This Memorandum Opinion and Order assumes familiarity with the background, discussion, and conclusions stated in the January 26 Opinion and Order, which are incorporated herein. See In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288 (DLC), 2004 WL 113484 (S.D.N.Y. Jan. 26, 2004).

Background

SLS filed its action, pleading solely state law claims, on October 3, 2003. It amended its action on October 24, to add federal claims, including claims made pursuant to the Securities Act of 1933 ("Securities Act"). An Opinion of January 20, 2004 granted the defendants' December 2 motions to dismiss the Securities Act claims. In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288 (DLC), 03 Civ. 7826, 2004 WL 97654 (S.D.N.Y. Jan. 20, 2004).

Meanwhile, on December 18, SLS brought the instant motion for a voluntary dismissal of its action without prejudice in order to join the WorldCom Securities Litigation class action. In its motion papers, SLS acknowledged that a November 21, 2003 Opinion of this Court regarding statute of limitations issues would inevitably cause its Securities Act claims to be barred as untimely.

Discussion

SLS principally argues that a Rule 41(a)(1) voluntary dismissal is appropriate since there is an absolute right to such a dismissal at any time before an answer or summary judgment motion has been filed. As explained in a December 30 Opinion in the Securities Litigation, however, the answers filed by defendants in the class action are deemed answers to the complaints filed in the individual actions, including to the SLS complaint. See In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288 (DLC), 2003 WL 23095478 (S.D.N.Y. Dec. 1, 2003). A November 5 Order provided that "for purposes of Rule 41(a) only, defendants are deemed to have filed an answer in each Individual Action as of the date the Individual Action arrives on this Court's docket." In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288 (DLC) 2003 WL 22508508 (S.D.N.Y. Nov. 5, 2003). The SLS complaint was accepted on the Court's docket on October 22, 2003. In addition, answers to the Amended Complaint in the class action were filed by October 14 by all defendants against whom litigation is not stayed, with the exception of the Audit Committee Defendants who had moved to dismiss. In re WorldCom, Inc. Sec. Litig., 2003 WL 23095478, at *1. Thus, defendants' answer to the SLS complaint occurred well before SLS moved to voluntarily dismiss its action.

Converting SLS's application to a motion to dismiss pursuant to Rule 41(a)(2), Fed.R.Civ.P., it is granted with the following conditions. SLS will be permitted to withdraw its action voluntarily for the sole purpose of remaining in the class action and not opting out of the class action.

The defendants have requested the imposition of fees and costs in the event that the application for a voluntary dismissal is granted. That request is denied.

Conclusion

The motion by SLS Investors, L.P., SLS Offshore Fund, Ltd., GS SLS Portfolio, LLC for the voluntary dismissal of their action is granted with the conditions described herein. SO ORDERED:


Summaries of

In re Worldcom, Inc. Securities Litigation

United States District Court, S.D. New York
Jan 30, 2004
MASTER FILE 02 Civ. 3288 (DLC), No. 03 Civ. 7826 (S.D.N.Y. Jan. 30, 2004)
Case details for

In re Worldcom, Inc. Securities Litigation

Case Details

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

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

Date published: Jan 30, 2004

Citations

MASTER FILE 02 Civ. 3288 (DLC), No. 03 Civ. 7826 (S.D.N.Y. Jan. 30, 2004)