Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_08-cv-01510/USCOURTS-cand-3_08-cv-01510-134/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:77 Securities Fraud

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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: 

CHARLES SCHWAB CORPORATION

SECURITIES LITIGATION.

This Document Relates

To All Cases.

 /

No. C 08-01510 WHA

ORDER DENYING STUART 

AND ANDREA ZYKORIE’S

UNTIMELY REQUEST TO 

OPT OUT OF THE CLASS

This order addresses the motion filed by class members Stuart and Andrea Zykorie

seeking permission to opt out of the class after the December 2009 deadline.

The standard for determining whether a class member should be allowed to opt out of a

class action after the applicable exclusion deadline has passed is whether the class member’s

failure to meet the deadline is the result of “excusable neglect.” See Silber v. Mabon, 18 F.3d

1449, 1454-55 (9th Cir.1994). This standard allows courts, “where appropriate, to accept late

filings caused by inadvertence, mistake, or carelessness, as well as by intervening circumstances

beyond the party’s control.” Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. P’ship, 507 U.S.

380, 388 (1993). When evaluating whether “excusable neglect” applies, the Ninth Circuit

instructs courts to consider the “degree of compliance with the best practicable notice procedures;

when notice was actually received and if not timely received, why not; what caused the delay, and

whose responsibility was it; how quickly the belated opt out request was made once notice was

received; how many class members want to opt out; and whether allowing a belated opt out would 

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United States District Court

For the Northern District of California

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affect either the settlement or finality of the judgment.” Silber, 18 F.3d at 1455 (internal footnote

omitted). Additionally, the court should consider the danger of prejudice to the opposing party,

and whether the movant acted in good faith. Pioneer, 507 U.S. at 395.

Having considered all the factors set forth above, this order finds that the facts and

circumstances underlying the Zykories’ request do not support a finding of excusable neglect. 

First, while the Zykories may have first learned about their participation in this class action only

recently (by way of reading news on the Internet), the class action notice was properly sent via

first-class mail to the address associated with their Schwab account(s) and was not returned to the

claims administrator as “undeliverable” (see Dkt. No. 751-1, listing all class members where

notices were returned “undeliverable” and where new addresses could not be found). In other

words, the notice provided to the Zykories was reasonably calculated to give them actual notice

of this class action and was constitutionally sufficient. Moreover, it was entirely reasonable for

class counsel to assume that class members would keep their Schwab mailing addresses current,

and that class members would be responsible for ensuring that mail was properly forwarded if

they moved residences. The clear adequacy of notice weighs against a finding of excusable

neglect.

Second, while this order does not doubt that the various distractions of life, including

moving residences and other family developments mentioned in the instant motion, may have

contributed to the Zykories’ failure to timely opt out, the particular distractions mentioned in the

instant motion do not justify a finding of excusable neglect. In evaluating this factor, the

undersigned must consider the immense size of the class and the likelihood that other class

members with similar life stories would also seek to opt out if excusable neglect were found in

these circumstances. As discussed below, maintaining the stability of the class at this late stage in

the litigation is critical to avoiding undue prejudice to Schwab, and the excuses provided by the

Zykories appear to be ones that many other class members might raise. 

Third, the Court cannot ignore the fact that the Zykories’ opt-out request is over four

months late. While it may be true that the Zykories only learned about their participation in this

class action very recently, the request nevertheless comes on the heels of the preliminary approval

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For the Northern District of California

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of a $200 million settlement. Even assuming the instant motion was brought in good faith, there

is no question that granting the Zykories’ opt-out request would be prejudicial to Schwab since

the settlement was negotiated with a stable class membership in mind. 

For these reasons, this order finds that excusable neglect has not been shown with respect

to class members Stuart and Andrea Zykorie. On balance, the factors set forth by the Ninth

Circuit weigh against granting the motion at this stage in the proceedings. Accordingly, the

instant motion must be DENIED.

IT IS SO ORDERED.

Dated: May 27, 2010. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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