Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-04518/USCOURTS-cand-3_05-cv-04518-6/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 28:1331 Fed. Question: Securities Violation

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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

THE McDANIEL FAMILY TRUST,

individually and on behalf of all others

similarly situated,

Plaintiff,

 v.

WELLS FARGO & CO.; WELLS FARGO

FUNDS MANAGEMENT, LLC; WELLS

CAPITAL MANAGEMENT, INC.; H.D.

VEST INVESTMENT SERVICES; WELLS

FARGO INVESTMENTS, LLC; STEPHENS,

INC.; SEI INVESTMENTS DISTRIBUTION

CO.; WELLS FARGO FUNDS TRUST,

Defendants. /

No. C 05-04518 WHA

ORDER (1) APPOINTING LEAD

PLAINTIFF AND (2) DENYING

MOTION TO APPOINT

COUNSEL

INTRODUCTION

In this putative class action asserting federal securities fraud and other claims, Ronald

Siemers moves for appointment as lead plaintiff. He is the only such movant. There is no

opposition to the motion. Mr. Siemers meets the statutory requirements. The motion therefore

is GRANTED. Because Mr. Siemers must engage in due diligence before selecting counsel, the

motion to appoint counsel is DENIED WITHOUT PREJUDICE. 

STATEMENT

Plaintiff McDaniel Family Trust alleges that broker-dealers in mutual funds held

themselves out as impartial financial advisors to plaintiff and members of the putative plaintiff

class. Those broker-dealers, however, are accused in this action of secretly accepting financial

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For the Northern District of California

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incentives provided by Wells Fargo & Co. and related entities in return for encouraging clients

to invest in Wells Fargo-related funds. The defendants in this action are alleged to have

participated in this purported scheme as the investment advisor and manager for the funds,

broker-dealers, distributors of the funds and as a registrant of the funds. One defendant, Wells

Fargo & Co., is the supposed parent company of all other defendants (Compl. ¶¶ 1–10, 15–25). 

The complaint in the instant action was filed November 4, 2005. 

Movant Ronald Siemers purchased and sold shares he owned in the relevant funds

during the putative class period. Over the length of the class period (June 30, 2000, through

June 8, 2005), he averaged holdings per day in the funds of $155,355 (Reese Decl. ¶¶ 2, 4, Exh.

A (Vellrath Decl. ¶ 16 and Exh. 2); Exh. C (Certification of Proposed Lead Plaintiff ¶¶ 7–8 and

Schedule A)). 

Movant has not sought to serve or served in the past three years as a representative party

for a class in an action filed under the federal securities laws (Reese Decl. ¶ 2, Exh. C ¶ 9). 

On November 11, 2005, McDaniel Family Trust published on PR Newswire US an

announcement of the filing of the instant action and described the claims asserted in the

complaint. The release also stated that the action was on behalf of purchasers and holders of the

relevant funds during the class period. It advised potential class members that could move this

Court, by January 10, 2006, for appointment as lead plaintiff (Reese Decl. ¶ 3, Exh. B). 

In response, Mr. Siemers moved, as part of a group including individuals and the

McDaniel Family Trust, to be appointed lead plaintiff. That motion was replaced the one now

before the Court, seeking appointment of Mr. Siemers only. He is the only movant seeking lead

plaintiff status. At the hearing on the instant motion, he alleged that he purchased the relevant

shares in reliance on advice he believed to be impartial and asserted that he lost about $30,000

on his investment in the funds. 

He filed with the Court a certification under penalty of perjury under the laws of the

United States that: 

1. He reviewed the complaint in this action, 

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For the Northern District of California

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2. He did not purchase the mutual fund shares at the direction of plaintiff’s counsel

or in order to participate in this action or any other federal securities litigation, 

3. He is willing to represent the putative class and to provide testimony at trial and

deposition, 

4. He will not accept any payment for serving as lead plaintiff beyond his pro rata

share of any recovery, except reasonable costs and expenses directly relating to

his work as lead plaintiff or approved by the Court. 

He also provided the number of shares he owned immediately before the class period

and a list of his relevant transactions during the class period (Reese Decl. ¶ 4, Exh. C).

In addition, Mr. Siemers completed this Court’s questionnaire for lead-plaintiff

candidates, explaining his qualifications. They included earning a master’s degree in business

administration, previous active involvement in a ERISA class action and availability to travel. 

He stated that there are no circumstances to his own dispute with defendants that might give rise

to issues that would not generally apply against the rest of the class. He has never been sued for

fraud nor convicted of a crime (Ct. Questionnaire to Lead-Pl. Candidates, Questions 2, 4, 12,

13). 

ANALYSIS

Title 15 U.S.C. 77z-1 governs appointment of lead plaintiffs in federal, plaintiff class

actions that allege violations of federal domestic-securities statutes. 15 U.S.C. 77z-1(a)(1). The

instant action is covered by Section 77z-1 because it alleges violations of 15 U.S.C. 77l(a)(2),

among other securities violations (Compl. ¶ 132). 

Even if a would-be lead plaintiff was not a plaintiff in the original complaint, he or she

may seek appointment to serve as a representative by responding to a required public notice by

the original plaintiff or plaintiffs within sixty days of the notice’s publication. Section 77z1(a)(3)(A)(i). Mr. Siemers was not an original plaintiff but moved to be appointed within 60

days of publication of the November 11 notice, when he sought the office as part of a group. 

After the time for filing motions passes, the district court must appoint the lead plaintiff

it “determines to be most capable of adequately representing the interests of class members.” 

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Section 77z-1(a)(3)(B)(i). The court must presume that “the most adequate plaintiff” is the

person or group of persons that either filed the complaint or moved for appointment as lead

plaintiff in response to the requisite notice, have the largest financial interest – among otherwise

qualified lead plaintiffs — in the relief sought by the class, and satisfy the requirements of

Federal Rule of Civil Procedure 23. Section 77z-1(a)(3)(B)(iii)(I). The relevant requirements

of Rule 23, which governs class actions, are that the lead plaintiff have claims typical of the

class and be able to fairly and adequately represent the class’s interests. FRCP 23(a)(3)–(4). A

lead plaintiff is adequate when he or she selects qualified counsel, is not antagonistic to the

class, shares interests with class members and does not appear to be colluding with defendants. 

In re N.D. Cal., Dalkon Shield IUD Prods. Liab. Litig., 693 F.2d 847, 855 (9th Cir. 1982). 

Normally, no person can serve as a class-action securities lead plaintiff or as an officer, director

or fiduciary of such a lead plaintiff more than five times during a three-year period. Section

77z-1(a)(3)(B)(vi).

 As noted above, Mr. Siemers timely moved for appointment in response to the notice. 

As the only movant, he necessarily has the largest financial interest in the relief. His claims are

typical of putative class members because he alleges that he purchased and held the relevant

shares during the class period, bought and held them in reliance on purported representations

that the investment advice he received from one or more of the defendants was unbiased, and

lost money on the investments. Mr. Siemers appears ready, willing and able to pursue his duties

as lead plaintiff fairly, conscientiously, efficiently and thoroughly. There is no sign that he is

colluding with defendants or that he will select unqualified counsel. He is not disqualified by

prior service as a lead plaintiff, having not served as one in the prior three-year period. 

As lead plaintiff, he will be required to submit a certification pursuant to 15 U.S.C. 77z1(a)(2)(A). The certification described above substantially meets those requirements. 

After appointment, lead plaintiffs in securities class actions such as this one are required

to select and retain counsel to represent the class. This selection is subject to the approval of

the court. 15 U.S.C. 77z-1(a)(3)(B)(v). As the Court previously explained at the hearing and in

the Questionnaire to Lead-Plaintiff Candidates, no counsel will be approved until Mr. Siemers

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has demonstrated that he has engaged in a diligent and careful search for representation. Mr.

Siemers has not yet had an opportunity to do so. The motion to appoint Milberg Weiss Bershad

& Schulman LLP therefore is DENIED. 

CONCLUSION

Finding that Mr. Siemers meets the statutory requirements, he is APPOINTED LEAD

PLAINTIFF. By March 2, 2006, he is ORDERED to file, ex parte and under seal, a declaration

stating who he wants the Court to approve as class counsel and describing his process of

choosing that counsel. The instant motion to appoint counsel is DENIED. Also on March 2, Mr.

Siemers SHALL FILE the attached certification, if he agrees with its terms. 

IT IS SO ORDERED.

Dated: February 28, 2006 WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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