Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-07274/USCOURTS-cand-3_06-cv-07274-4/pdf.json

Nature of Suit Code: 160
Nature of Suit: Stockholder's Suits
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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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

INDIANA STATE DISTRICT COUNCIL OF

LABORERS AND HOD CARRIERS

PENSION FUND, Derivatively on Behalf of

Electronics for Imaging, Inc., et al.,

Plaintiffs,

v.

GUY GECHT, et al.,

Defendants.

and

ELECTRONICS FOR IMAGING, INC., a

Delaware Corporation

Nominal Defendant.

___________________________________/

CITY OF ANN ARBOR EMPLOYEES’

RETIREMENT SYSTEM, et al.,

Plaintiffs,

v.

GUY GECHT, et al.,

Defendants.

and

ELECTRONICS FOR IMAGING, INC., a

Delaware Corporation

Nominal Defendant.

___________________________________/

No. C-06-7274 EMC

(Related cases)

(Also consolidated case with C07-0698 EMC)

CORRECTED ORDER GRANTING

PLAINTIFF ANN ARBOR’S REQUEST

FOR COURT APPROVAL OF

VOLUNTARY DISMISSAL WITHOUT

PREJUDICE

(Correction made on page 4 in bold)

(Docket No. 47 in C-06-7453 EMC)

No. C-06-7453 EMC

(Related cases)

Case 3:06-cv-07274-EMC Document 51 Filed 04/03/07 Page 1 of 4
United States District Court

For the Northern District of California

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1 The Court previously ordered that any response to the notice and request be filed by March 30,

2007.

2

 Rule 23.1 provides in relevant part as follows: “The [shareholder derivative] action shall not

be dismissed or compromised without the approval of the court, and notice of the proposed dismissal

or compromise shall be given to shareholders or members in such manner as the court directs.” Fed.

R. Civ. P. 23.1.

2

TRUEMAN PARISH, et al.,

Plaintiffs,

v.

DAN AVIDA, et al.

Defendants.

and

ELECTRONICS FOR IMAGING, INC., a

Delaware Corporation

Nominal Defendant.

___________________________________/

No. C-07-0698 MEJ

(Related cases)

(Also consolidated case with C06-7274 EMC)

 Plaintiff in Case No. C-06-7453 has filed a notice of voluntary dismissal without prejudice

and request for Court approval pursuant to Federal Rules of Civil Procedure 23.1 and 41(a). 

The Court hereby finds that the Ann Arbor Plaintiff is entitled to a voluntary dismissal of its

case without prejudice. As the Ann Arbor Plaintiff notes in its letter of March 20, 2007, see Docket

No. 49, none of the Defendants in the case has answered the complaint or moved for summary

judgment. In addition, although Thomas Unterberg, the only Defendant in the case to make an

appearance, has not signed a stipulation of dismissal, neither he nor any of the parties in the two

related cases filed an opposition to the Ann Arbor Plaintiff’s notice and request.1

 The dismissal shall

be without prejudice.

The Court further finds that notice of the dismissal is not required under Rule 23.1. 

Although the language of the rule could be read to require notice,2

 case law indicates that such

notice may be obviated if the corporation will not suffer prejudice and there is no trace of collusion

between the plaintiff(s) and the defendant(s). See, e.g., Beaver Assocs. v. Cannon, 59 F.R.D. 508,

Case 3:06-cv-07274-EMC Document 51 Filed 04/03/07 Page 2 of 4
United States District Court

For the Northern District of California

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3

 As the Ann Arbor Plaintiff notes, a prior version of Federal Rule of Civil Procedure 23(e) was

similarly understood by several courts as not requiring notice in spite of language that could be read as

dictating mandatory notice. See, e.g., Shelton v. Pargo, Inc., 582 F.2d 1298, 1314 (4th Cir. 1978) (“[I]f

[the court] has found neither collusion nor prejudice, it is within the discretion of the District Court,

under the facts of the particular case, to approve the dismissal without requiring a certification

determination or a notice as mandated by 23(e).”); Selby v. Principal Mut. Life Ins. Co., 98 Civ. 5283

(RLC), 2003 U.S. Dist. LEXIS 21138, at *14 (S.D.N.Y. Nov. 21, 2003) (“The general view is that Rule

23(e) requires notice of compromise or dismissal ‘in all cases under Rule 23.’ Courts have allowed

limited exception to the rule, however, where class members will not be prejudiced by a compromise

or dismissal without notice.”; Austin v. Pennsylvania Dep’t of Corrections, 876 F. Supp. 1437, 1455

(E.D. Penn. 1995) (“When the dismissal or settlement of a class action is without prejudice and will not

prevent any class member from bringing a subsequent action, courts have held that the notice provision

of Rule 23(e) is inapplicable.”); Larkin General Hosp., Ltd. v. American Tel. & Tel. Co., 93 F.R.D. 497,

503 (E.D. Penn. 1982) (“[T]he majority of cases confronting this issue agree . . . that rule 23(e) does not

contain an absolute notice requirement.”).

3

511 (S.D.N.Y. 1978) (“[D]ismissal of the derivative claim by order of the Court should be possible

without the expense of Rule 23.1 notice, if no benefit is lost to the corporation and no trace of

collusion is perceived. However, if such dismissal may sacrifice an advantage to the corporation or

may be predicated upon a private agreement between the parties, the protections of Rule 23.1 notice

must be safeguarded.”) (emphasis in original); Sheinberg v. Fluor Corp., 91 F.R.D. 74, 75 (S.D.N.Y.

1981) (“[W]e are satisfied that none of the reasons which underlie the notice requirements of Fed. R.

Civ. P. 23 and 23.1 with respect to voluntary discontinuances are operative here; no one’s rights are

being cut off and no potential abuses are present.”).3 In the instant case, it is unlikely that the

dismissal would prejudice the corporation given that the same or similar claims are being litigated in

the two related cases in this Court as well as a case in another fora (i.e., Delaware state court). 

Indeed, Plaintiffs intend to join the Delaware action once this case is dismissed. Nor is there any

evidence suggesting there is any collusion between the Ann Arbor Plaintiff and Mr. Unterberg (or

any of the Defendants in the case).

Accordingly, the Court hereby GRANTS approval of the Ann Arbor Plaintiff’s voluntary

dismissal without prejudice and further holds that no notice to shareholders or members is required

under Rule 23.1.

///

///

///

Case 3:06-cv-07274-EMC Document 51 Filed 04/03/07 Page 3 of 4
United States District Court

For the Northern District of California

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4

The hearing on Mr. Unterberg’s motion to dismiss is VACATED in light of the dismissal. 

The Clerk of the Court is directed to enter judgment and close the file in the Ann Arbor case.

This order disposes of Docket No. 47 in C-06-7453.

IT IS SO ORDERED.

Dated: April 3, 2007

 EDWARD M. CHEN

United States Magistrate Judge

Case 3:06-cv-07274-EMC Document 51 Filed 04/03/07 Page 4 of 4