Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_01-cv-02661/USCOURTS-cand-3_01-cv-02661-20/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

In Re EXODUS COMMUNICATIONS, INC.

SECURITIES LITIGATION

 

This Document Relates to: ALL ACTIONS

 /

No. C-01-2661 MMC

ORDER GRANTING DEFENDANTS’

MOTION TO DISMISS; DENYING ELLEN

BRODSKY’S MOTION TO INTERVENE;

DENYING BOILERMAKERBLACKSMITH NATIONAL PENSION

FUND’S MOTION TO INTERVENE;

VACATING HEARING

(Docket Nos. 313, 319, 348)

Before the Court are three motions: (1) Ellen Brodsky’s (“Brodsky”) motion, filed

May 5, 2006, to intervene as plaintiff in the instant action; (2) Boilermaker-Blacksmith

National Pension Fund’s (“Fund”) motion, filed May 19, 2006, to intervene as plaintiff; and

(3) defendant Ellen Hancock’s (“Hancock”) motion, filed June 9, 2006, to dismiss the action

for lack of subject matter jurisdiction. With respect to Brodsky’s motion, Hancock has filed

an opposition in which defendants Goldman, Sachs, & Co., Merrill Lynch & Co., Morgan

Stanley Dean Witter, and J.P. Morgan (collectively, “Underwriter Defendants”) have filed a

joinder, Brodsky has filed a reply, and Hancock, with the permission of the Court, has filed

a surreply. With respect to the Fund’s motion, Hancock has filed an opposition in which the

Underwriter Defendants have filed a joinder, and the Fund has filed a reply. With respect to

Hancock’s motion, the Underwriter Defendants have filed a joinder in the motion, lead

Case 3:01-cv-02661-MMC Document 364 Filed 08/14/06 Page 1 of 3
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counsel for plaintiffs has filed an opposition, and Hancock has filed a reply. Having

reviewed the papers filed in support of and in opposition to the motions, the Court finds the

matters appropriate for decision without oral argument, see Civil L.R. 7-1(b), and hereby

VACATES the July 14, 2006 hearing.

As defendants argue, where the named plaintiffs in a class action lack standing, the

action must be dismissed and new named plaintiffs with standing may not intervene. See,

e.g., Lierboe v. State Farm Mutual Automobile Ins. Co., 350 F.3d 1018, 1022-23 and n.6

(9th Cir. 2003) (holding class action must be dismissed where named plaintiff lacks

standing; noting “this is not a mootness case, in which substitution or intervention might

have been possible”); Walters v. Edgar, 163 F.3d 430, 432-33, 437 (7th Cir. 1998)

(affirming dismissal of class action where named plaintiffs lacked standing; rejecting

argument that other members of the class should have been named as class

representatives). Put another way, “intervention will not be permitted to breathe life into a

nonexistent lawsuit.” See McClune v. Shamah, 593 F.2d 482, 486 (3d Cir. 1979) (internal

quotation and citations omitted).

In the instant case, the only named plaintiffs who asserted a § 11 claim against

defendants were Martin Fox (“Fox”) and Thomas Welch (“Welch”). Fox was dismissed as a

named plaintiff for failure to prosecute, after he refused to participate in discovery, including

discovery with respect to standing, and disobeyed the Court’s order to file a declaration

stating whether he wished to proceed as a named plaintiff. (See Docket Nos. 310, 318.) 

Thereafter, the Court granted defendants’ motion for summary judgment on Welch’s

claims, on the ground Welch lacked standing. (See Docket No. 343.) Because Welch was

found to lack standing, Brodsky and the Fund may intervene in the action to assert a § 11

claim only if Fox had standing to assert such a claim. See, e.g., Lierboe, 350 F.3d at 1022-

23 and n.6; Walters, 163 F.3d at 432-33, 437.

Brodsky and the Fund have submitted no evidence, however, as to whether Fox had

standing. With respect to the motions to intervene, Brodsky and the Fund bear “the burden

of showing that all the requirements for intervention have been met.” See United States v.

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Alisal Water Corp., 370 F.3d 915, 919 (9th Cir. 2004) (emphasis in original). With respect

to the motion to dismiss for lack of subject matter jurisdiction, Brodsky and the Fund

likewise bear the burden of proof. See, e.g., Vacek v. United States Postal Service, 447

F.3d 1248, 1250 (9th Cir. 2006) (noting burden of establishing subject matter jurisdiction

“rests upon the party asserting jurisdiction”); see also Trentacosta v. Frontier Pacific

Aircraft Industries, Inc., 813 F.2d 1553, 1559 (9th Cir. 1987) (holding plaintiff bears burden

of proof where defendant challenges factual basis for subject matter jurisdiction). Contrary

to Brodksy’s and the Fund’s argument, a lack of standing, which is a component of subject

matter jurisdiction, is not subject to waiver. See, e.g., Arbaugh v. Y&H Corp., 126 S.Ct.

1235, 1244 (2006) (“[S]ubject matter jurisdiction, because it involves the court’s power to

hear a case, can never be forfeited or waived”); United States v. Hays, 515 U.S. 737, 742

(1995) (noting standing “is perhaps the most important” of the jurisdictional doctrines and

“is not subject to waiver”). Because Brodsky and the Fund have not met their burden of

demonstrating Fox had standing to assert a § 11 claim, their motions to intervene will be

denied and Hancock’s motion to dismiss will be granted.

Accordingly,

1. Brodsky’s motion to intervene is hereby DENIED.

2. The Fund’s motion to intervene is hereby DENIED.

3. Defendants’ motion to dismiss is hereby GRANTED. 

IT IS SO ORDERED.

Dated: August 14, 2006 

MAXINE M. CHESNEY

United States District Judge

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