Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_06-cv-04671/USCOURTS-cand-5_06-cv-04671-2/pdf.json

Nature of Suit Code: 160
Nature of Suit: Stockholder's Suits
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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 The Derivative Cases are: Jesse Brown v. Stephen Kelly, et al., C 06-04671 (filed Aug. 1,

2006), and Louis Suba v. Stephen Kelly, et al., C 06-05603 (filed Sept. 13, 2006).

United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

Jesse Brown, derivatively on behalf of

Nominal Defendant Chordiant Software,

Inc.,

Plaintiff,

 v.

Stephen Kelly, et al.,

Defendants

 and,

Chordiant Software, Inc.,

Nominal Defendant. /

NO. C 06-04671 JW 

ORDER GRANTING MOTION TO

CONSOLIDATE CASES AND APPOINT

LEAD PLAINTIFFS, LEAD COUNSEL,

AND LIAISON COUNSEL

I. INTRODUCTION

There are currently two shareholders’ derivative actions (the “Derivative Cases”) on behalf

of nominal defendant Chordiant Software, Inc. (“Chordiant”) pending before the Court.1

 Presently

before the Court is Plaintiffs Jesse Brown and Louis Suba’s Motion to Consolidate Related Cases,

Appoint Lead Plaintiff and Lead Counsel, and Set Briefing Schedule. (hereafter “Motion,” Docket

Item No. 16.) The Court found the matter appropriate for submission on the papers. See Civ. L.R.

7-1(b). Based on the papers filed to date, the Court ORDERS (1) the Derivative Cases consolidated;

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(2) Jesse Brown and Louis Suba appointed Lead Plaintiffs; (3) Schiffrin & Barroway LLP appointed

Lead Counsel; and (4) Bramson, Plutzik, Mahler & Birkhaeuser LLP appointed Liaison Counsel.

II. BACKGROUND

On August 1, 2006, Jesse Brown (“Brown”) filed the first shareholders’ derivative complaint

on behalf of Chordiant alleging that certain of the company’s officers and directors wrongfully

diverted millions of dollars to themselves through a stock option backdating scheme. On September

13, 2006, Louis Suba (“Suba”) also filed a derivative action on behalf of Chordiant alleging the

same type of misconduct and harm. The Court declined to relate the Derivative Cases because both

actions were already pending before the Court. (See Order Re: Administrative Motion to Consider

Whether Cases Should Be Related, Docket Item No. 15.) On October 23, 2006, Brown and Suba

filed a motion to consolidate the Related Derivative Actions and to appoint themselves as lead

plaintiffs, Schiffrin & Barroway LLP (“Schiffrin”) as lead counsel, and Bramson, Plutzik, Mahler &

Birkhaeuser LLP (“Bramson”) as liaison counsel. To date, the Court is unaware of any opposition

to the Motion.

III. DISCUSSION

A. Consolidation of the Derivative Cases

A district court has broad discretion to consolidate actions involving “common issues of law

or fact.” Fed. R. Civ. P. 42(a); Investors Research Co. v. U.S. Dist. Ct. for Cent. Dist. of Cal., 877

F.2d 777, 777 (9th Cir. 1989). In exercising its broad discretion to order consolidation, a district

court “weighs the saving of time and effort consolidation would produce against any inconvenience,

delay, or expense that it would cause.” Huene v. U.S.,743 F.2d 703, 704 (9th Cir. 1984).

Having reviewed the Complaints filed in the Derivative Cases, the Court finds that the two

cases involve virtually identical factual and legal issues. The core issue of both cases is whether

executives at Chordiant breached their fiduciary duties when they backdated stock options that were

granted to them between 2000 and 2002. Given these similarities and the lack of any apparent

inconvenience, delay, or expense that would result from bringing the cases together, the Court finds

that consolidation of the Derivative Cases is appropriate.

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B. Appointment of Lead Plaintiffs

According to Federal Rule of Civil Procedure 23.1, a plaintiff in a shareholders’ derivative

action must “fairly and adequately represent the interests of the shareholders or members similarly

situated in enforcing the right of the corporation or association.” Factors courts have considered in

analyzing a plaintiff’s fitness to be lead plaintiff include: (1) whether the plaintiff held shares during

the relevant time period; (2) whether the plaintiff is represented by capable counsel; and (3) whether

the plaintiff is subject to any unique defense that would frustrate appointment. See Horn v. Raines,

227 F.R.D. 1, 3 (D. D.C. 2005); Millman v. Brinkley, Nos. 03-cv-3831, 03-cv-3832, 03-cv-0058,

2004 WL 2284505, at *3 (N.D. Ga. Oct. 1, 2004).

The Complaints filed in the Derivative Cases allege that all relevant times Brown and Suba

were shareholders of Chordiant. These Brown and Suba have also retained competent and

experienced counsel and do not appear to be subject to any unique defenses. The Court does not

find any reason not to establish the proposed leadership structure. Accordingly, appointment of

Brown and Suba as Lead Plaintiffs is appropriate.

C. Appointment of Lead Counsel and Liaison Counsel

Brown and Suba have agreed that Schiffrin should be appointed as lead counsel and that

Bramson should be appointed as liaison counsel. Given these firms’ experience with similar

shareholder actions, the Court finds it appropriate to appoint Schiffrin as Lead Counsel and Bramson

as Liaison Counsel.

IV. CONCLUSION

The Court ORDERS (1) the Derivative Cases consolidated; (2) Jesse Brown and Louis Suba

appointed Lead Plaintiffs; (3) Schiffrin & Barroway LLP appointed Lead Counsel; and (4) Bramson,

Plutzik, Mahler & Birkhaeuser LLP appointed Liaison Counsel.

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The Clerk shall consolidate these actions such that the earlier filed action, C 06-04671 JW, is

the lead case. All future filings shall be filed in C 06-04671 JW and bear the caption: "In Re

Chordiant Derivative Litigation."

A hearing on Defendants’ anticipated motion to dismiss is set for May 7, 2007 at 9:00 a.m.

If Defendants do not file a motion to dismiss, the Court will conduct a further case management

conference on this date at the 10 a.m. calendar.

Pursuant to the Private Securities Litigation Reform Act of 1995, the Court ORDERS all

discovery STAYED pending Defendants’ anticipated motion to dismiss. See In re Altera Corp.

Derivative Litigation, 06-03447 JW, 2006 WL 2917578 (N.D. Cal. Oct. 11, 2006).

Dated: November 27, 2006 

JAMES WARE

United States District Judge

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THIS IS TO CERTIFY THAT COPIES OF THIS ORDER HAVE BEEN DELIVERED TO:

Alan R. Plutzik aplutzik@bramsonplutzik.com

Christopher J. Sundermeier Sundermeierc@Cooley.com

Eric L. Zagar ezagar@sbclasslaw.com

Kathryn A. Schofield kschofield@bramsonplutzik.com

L. Timothy Fisher ltfisher@bramsonplutzik.com

Laura R. Smith smithlr@cooley.com

Dated: November 27, 2006 Richard W. Wieking, Clerk

By: /s/ JW Chambers 

Elizabeth Garcia

Courtroom Deputy

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