Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_05-cv-01027/USCOURTS-cand-4_05-cv-01027-2/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

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

In re APPLIED SIGNAL TECHNOLOGY, 

INC. SECURITIES LITIGATION

_____________________________________

This Document Relates To: All Actions.

_______________________________________

Master File No. C 05-1027

CLASS ACTION

ORDER

[Docket No. 10]

This matter comes before the Court on Frank Whiting's Motion for Appointment as Lead

Plaintiff and Approval of Lead Plaintiff's Selection of Counsel [Docket No. 10]. Having read and

considered the arguments presented by the parties in the papers submitted to the Court, the Court finds

this matter appropriate for resolution without a hearing. The Court hereby GRANTS Whiting's Motion

for Appointment as Lead Plaintiff and Approval of Lead Plaintiff's Selection of Counsel.

BACKGROUND

On March 11, 2005, plaintiff Brent Berson ("Berson") filed a complaint in this district on behalf

of himself and on behalf of all persons who purchased the securities of Applied Signal Technology, Inc.

("Applied Signal") between May 25, 2004 and February 22, 2005 (the "Berson complaint"). In the

Berson complaint, Berson alleges, inter alia, that Applied Signal and certain of its officers and directors

violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder,

by issuing materially false and misleading statements. 

Also on March 11, 2005, counsel for Berson caused a notice to be published advising purchasers

of Applied Signal securities of (i) the pendency of a securities class action against defendants; (ii) the

claims asserted; (iii) the purported class period of the litigation; and (iv) the right of any member of the

purported class to move the Court to serve as lead plaintiff. See Decl. of Alan R. Plutzik ("Plutzik

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Decl.") at Ex. B. 

On April 19, 2005, plaintiff Shalomah Sameyah ("Sameyah") filed a complaint in this district

on behalf of himself and on behalf of all persons who purchased the securities of Applied Signal

between May 25, 2004 and February 22, 2005 (the "Sameyah complaint"). In the Sameyah complaint,

Sameyah alleges, inter alia, that Applied Signal and certain of its officers and directors violated Section

10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, by issuing

materially false and misleading statements. 

On May 10, 2005, this Court ordered that the Berson complaint and the Sameyah complaint be

deemed related. Also on May 10, 2005, Frank Whiting filed the instant Motion for Appointment as

Lead Plaintiff and Approval of Lead Plaintiff's Selection of Counsel ("Whiting's Motion for

Appointment as Lead Plaintiff"). No other members of the purported class have filed motions

requesting to be appointed lead plaintiff. 

On July 1, 2005, defendants Applied Signal, Gary Yancey, and James Doyle (collectively,

"Defendants") filed a Statement of Non-Opposition to Whiting's Motion for Appointment as Lead

Plaintiff.

On July 13, 2005, by Order of this Court, and pursuant to Federal Rule of Civil Procedure 42(a),

the Berson and Sameyah cases were consolidated into one action.

LEGAL STANDARD

The selection of the lead plaintiff is governed by the Private Securities Litigation Reform Act

of 1995 (the "PSLRA"). 

Under the PSLRA, the plaintiff who files the first class-action complaint must publish a notice

advising members of the purported class of the (i) pendency of the action, (ii) the claims asserted

therein, (iii) the purported class period, and (iv) the option of any member of the purported class to move

to be appointed as lead plaintiff of the purported class no later than sixty days after the date on which

the notice is published. See 15 U.S.C. § 78u-4(a)(3)(A). 

After the notice is published, the Court shall consider any motion by a class member and shall

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appoint as lead plaintiff "the member or members of the purported plaintiff class that the court

determines to be the most capable of adequately representing the interests of class members (hereafter

. . . referred to as the most adequate plaintiff) . . . ." 15 U.S.C. § 78u-4(a)(3)(B)(i). 

In selecting the lead plaintiff,

[T]he court shall adopt a presumption that the most adequate plaintiff in

any private action arising under this chapter is the person or group of

persons that -

(aa) has either filed the complaint or made a motion [for

designation as lead plaintiff];

(bb) in the determination of the court, has the largest

financial interest in the relief sought by the class; and

(cc) otherwise satisfies the requirements of Rule 23 of the

Federal Rules of Civil Procedure.

15 U.S.C. § 78u-4(a)(3)(B)(iii)(I). 

The presumption that a plaintiff is adequate may be rebutted

[O]nly upon proof by a member of the purported plaintiff class that the

presumptively most adequate plaintiff -

(aa) will not fairly and adequately protect the interests of the class; or 

(bb) is subject to unique defenses that render such

plaintiff incapable of adequately representing the class.

15 U.S.C. § 78u-4(a)(3)(B)(iii)(II).

ANALYSIS

In Whiting's Motion for Appointment as Lead Plaintiff, Whiting seeks to be appointed as lead

plaintiff and requests that the Court approve his selection of Schatz & Nobel, P.C., as lead counsel, and

Bramson, Plutzik, Mahler & Birkhaeuser, LLP, as liaison counsel. Whiting is the sole member of the

purported class seeking appointment as lead plaintiff. 

Having considered the requirements of 15 U.S.C. § 78u-4 and Federal Rule of Civil Procedure

23, the Court finds that Whiting has sufficiently shown that he should be appointed to serve as lead

plaintiff and that his choice of counsel should be approved.

A. Lead Plaintiff

1. Notice Requirement

First, the Court finds that the notice requirements set forth in 15 U.S.C. §§ 78u-4(a)(3)(A)(i)(I)

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and (II) have been satisfied. Specifically, on March 11, 2005, counsel for plaintiff Brent Berson caused

a notice (the "Notice") to be published advising purchasers of Applied Signal securities of (i) the

pendency of a securities class action against Defendants; (ii) the claims asserted; (iii) the purported class

period of the litigation; and (iv) the right of any member of the purported class to move the Court to

serve as lead plaintiff on or before May 10, 2005. See Plutzik Decl. at Ex. B. Whiting satisfied 15

U.S.C. § 78u-4(a)(3)(A)(i)(II) by moving for appointment as lead plaintiff on May 10, 2005. 

2. Financial Interest

The Court also finds that Whiting has demonstrated that he has the largest financial interest in

the relief sought by the class within the meaning of 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I)(bb). Specifically,

Whiting has shown that he purchased 10,000 shares of Applied Signal stock during the class period at

a total price of $309,037 and sustained an estimated loss of approximately $105,419. See Plutzik Decl.

at Ex. A; see also Greebel v. FTP Software, Inc., 939 F. Supp. 57, 64 (D. Mass. 1996) (finding that,

when only one person or group has moved to serve as lead plaintiff, that person or group presumptively

has the largest financial interest in the relief sought). 

3. Certification of Named Plaintiff

Further, as required by 15 U.S.C. §§ 78u-4(a)(2)(A)(i)-(vi), Whiting has submitted a sworn

certification stating that:

(i) he has reviewed the complaint;

(ii) he did not purchase his shares of Applied Signal at the direction of plaintiff's counsel

or in order to participate in any private action arising under the federal securities laws;

(iii) he is willing to serve as representative party on behalf of a class, including 

providing testimony at deposition and trial, if necessary;

(iv) in the past three years, he has not sought to serve, nor has served, as a representative

party on behalf of a class in any private federal securities action except for In re JAKKS

Pacific, Inc., No. 04-CV-8807-KMK (S.D.N.Y. 2004); and

(v) he will not accept any payment for serving as a representative party on behalf of the

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class beyond his pro rata share of any recovery.

See Plutzik Decl. at Ex. B. 

4. Rule 23(a)

Whiting has also satisfied the requirements set forth in Federal Rule of Civil Procedure 23. Rule

23 requires that the Court find that:

(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 class are typical of the claims and

defenses of the class, and 

(4) the representatives of the parties will fairly and adequately protect the interests of the

class.

 Fed. R. Civ. P. 23(a). In the context of determining the appropriate lead plaintiff under the PSLRA,

the requirements of "typicality" and adequacy of representation are the key factors. See Armour v.

Network Assocs., 171 F. Supp. 2d 1044, 1051 (N.D. Cal. 2001); see also In re Oxford Health Plans, Inc.

Sec. Litig., 182 F.R.D. 42, 49 (S.D.N.Y. 1998) ("[t]ypicality and adequacy of representation are the only

provisions [of Rule 23] relevant to a determination of lead plaintiff under the PSLRA."). 

The "typicality" requirement is satisfied when: (1) the claims of the proposed lead plaintiff arise

from the same course of conduct that gives rise to the other purported class members' claims, (2) the

claims are based on the same legal theory, and (3) the purported class members and proposed lead

plaintiff were injured by the same conduct. See Armour, 171 F. Supp. 2d at 1052. The "adequacy"

requirement of Rule 23(a)(4) is satisfied when the proposed lead plaintiff does not have interests

antagonistic to the proposed class, and when the proposed lead plaintiff has retained experienced and

capable counsel. In re Emulex Corp. Sec. Litig., 210 F.R.D. 717, 720 (C.D. Cal. 2002). 

Here, Whiting alleges that, due to Defendants' allegedly false and misleading representations

concerning Applied Signal, he suffered damages when he purchased Applied Signal securities during

the purported class period. Whiting's claims are therefore typical of the claims of other members of the

class. Additionally, it appears that Whiting's interests are aligned with those of the purported members

of the purported class, and there is no evidence of any antagonism between Whiting's interests and those

of the purported class. Further, Whiting has obtained qualified and experienced counsel, and, as set

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forth in his Certification of Named Plaintiff, Whiting has stated that he is willing to assume the

responsibilities of the class representative. See Plutzik Decl. at Ex. A. These factors demonstrate that

Whiting's claims are typical of those of the purported class, as required by Rule 23(a)(3), and that

Whiting will fairly and adequately represent the interests of the purported class, as required by Rule

23(a)(4). 

B. Selection of Counsel

The PSLRA provides that the "most adequate plaintiff shall, subject to the approval of the court,

select and retain counsel to represent the class." 15 U.S.C. § 78u-4(a)(3)(B)(v). 

Whiting argues that the Court should approve the firm of Schatz & Nobel, P.C., as lead counsel,

and Bramson, Plutzick, Mahler & Birkhaeuser, LLP, as liason counsel, because the two firms have

extensive experience in the area of securities class action litigation. In support of his argument, Whiting

has provided the Court with the resumes for the two firms. See Plutzik Decl. at Exs. C and D. Having

reviewed the firms' resumes, the Court is satisfied that Schatz & Nobel, P.C. and Bramson, Plutkik,

Mahler & Birkhaeuser, LLP are sufficiently qualified and experienced in securities class action

litigation. The Court therefore approves Whiting's selection of Schatz & Nobel, P.C., as lead counsel,

and Bramson, Plutick, Mahler & Birkhaeuser, LLP, as liaison counsel, provided, however, that there

is no duplication of attorney's services, and provided that the retention of the two firms does not in any

way unnecessarily increase attorney's fees and expenses. See, e.g., In re Donnkenny Inc. Sec. Lit., 171

F.R.D. 156, 158 (S.D.N.Y. 1997). 

CONCLUSION

IT IS HEREBY ORDERED THAT Whiting's Motion for Appointment as Lead Plaintiff and

Approval of Lead Plaintiff's Selection of Counsel [Docket No. 10] is GRANTED. Accordingly, Frank

Whiting is HEREBY APPOINTED to serve as Lead Plaintiff. 

IT IS FURTHER ORDERED THAT Lead Plaintiff's selection of Schatz & Nobel, P.C., as Lead

Counsel, and Bramson, Plutzik, Mahler & Brikhaeuser, LLP, as Liaison Counsel, is APPROVED, 

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provided that there is no duplication of attorney's services and provided that the retention of the two 

firms does not in any way unnecessarily increase attorney's fees and expenses. 

IT IS SO ORDERED.

 Dated: 7-14-05 SAUNDRA BROWN ARMSTRONG

United States District Judge

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