Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_07-cv-00955/USCOURTS-cand-5_07-cv-00955-2/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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 This disposition is not designated for publication and may not be cited. 1

Case No. C 07-0955 JF

ORDER (1) GRANTING MOTIONS TO CONSOLIDATE ACTIONS (2) DENYING MOTION TO APPOINT LEAD

PLAINTIFF AND (3) APPOINTING CO-LEAD COUNSEL

(JFEX1)

**E-Filed 05/29/07**

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

JAMES M. LEE, Derivatively on Behalf of

COHERENT, INC.,

 Plaintiff,

 v.

JOHN R. AMBROSEO, et al.,

 Defendants,

Case Number C 07-0955 JF (HRL)

ORDER (1) GRANTING MOTION 1

TO CONSOLIDATE ACTIONS (2)

DENYING MOTION TO APPOINT

LEAD PLAINTIFF AND (3)

APPOINTING CO-LEAD COUNSEL

[re: docket nos. 17, 20]

AND ALL RELATED ACTIONS

I. BACKGROUND

The following shareholder derivative actions on behalf of nominal defendant, Coherent,

Inc. (“Coherent”) presently are pending before this Court:

Case 5:07-cv-00955-JF Document 49 Filed 05/29/07 Page 1 of 7
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Case No. C 07-0955 JF

ORDER (1) GRANTING MOTIONS TO CONSOLIDATE ACTIONS (2) DENYING MOTION TO APPOINT LEAD

PLAINTIFF AND (3) APPOINTING CO-LEAD COUNSEL

(JFEX1)

Abbreviated Case Name Case Number Date Filed

Lee v. Ambroseo, et al. C-07-00955-JF 2/15/2007

Bartholomew v. Ambroseo, et al. C-07-01264-JF 3/2/2007

Werner v. Couillaud, et al. C-07-01265-JF 3/2/2007

All three actions allege that members of Coherent’s Board of Directors and other top

executives violated federal and state laws through a scheme of backdating stock options and

providing false statements to the Securities and Exchange Commission over a period of ten years

from 1996 to 2006.

On March 15, 2007, the Court found that these derivative actions are related within the

meaning of Civil Local Rule 3-12(a). On the same day, Plaintiff James Lee (“Lee”) moved to

consolidate the three actions, to appoint himself as lead plaintiff and his attorneys of record,

Lerach Coughlin Stoia Geller Rudman & Robbins, LLP (“Lerach”), as lead counsel in the

consolidated action. On April 3, 2007, after his case was reassigned to this Court, Lee re-noticed

his motion (“Lee Motion”). Also on April 3, 2007, Plaintiff Michael Werner (“Werner”) moved

(“Werner Motion”) to consolidate the three actions and to appoint as lead counsel his attorneys of

record, Schiffrin Barroway Topaz & Kessler, LLP (“Schiffrin”).

On April 27, 2007, Werner replied (“Werner Reply”) to the Lee Motion by

recommending that the Court designate Schiffrin and Lerach as co-lead counsel on the

consolidated action. In light of this Court’s prior decisions in other actions, Werner also

recommended that the Court not appoint a lead plaintiff. The Werner Reply also stated that

Lerach and Schiffrin have worked together as co-lead counsel on numerous other shareholder

derivative actions. On May 4, 2007, Lee filed opposition to Werner’s recommendation. Werner

subsequently renewed his initial request that the Court name Schiffrin sole lead counsel.

Coherent has submitted a statement of non-opposition to the motions for consolidation,

also stating that it has no opinion as to whom the Court should appoint as lead plaintiff and lead

counsel. The plaintiff in the third related action, J. Davis Bartholomew, has not expressed an

opinion regarding the consolidation or leadership of the litigation. 

Case 5:07-cv-00955-JF Document 49 Filed 05/29/07 Page 2 of 7
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 The Ninth Circuit has discussed appointment of lead plaintiffs in the context of 2

securities fraud class actions. See, e.g., In re Cavanaugh, 306 F.3d 726 (9th Circuit 2002).

Appointment of lead plaintiff in such cases is governed by the Private Securities Litigation

Reform Act of 1995, Pub.L. No. 104-67 (1995). There is no similar act addressing shareholder

derivative actions. Lee cites the United States Supreme Court’s decision in Cohen v. Beneficial

Indus. Loan Corp., 337 U.S. 541 (1949). However, that decision does not address a contested

position of lead plaintiff in a consolidated shareholder derivative action. Rather, Cohen discusses

the general responsibilities of a plaintiff in a derivative action as a representative of a group of

similarly situated shareholders.

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Case No. C 07-0955 JF

ORDER (1) GRANTING MOTIONS TO CONSOLIDATE ACTIONS (2) DENYING MOTION TO APPOINT LEAD

PLAINTIFF AND (3) APPOINTING CO-LEAD COUNSEL

(JFEX1)

II. DISCUSSION

1. Consolidation of Shareholder Derivative Actions

Federal Rule of Civil Procedure 42(a) governs the consolidation of actions in federal

court, allowing that actions involving a common question of law or fact may be consolidated and

that the Court may make orders concerning the consolidated proceedings to avoid unnecessary

costs or delay. Fed.R.Civ.P. 42(a). The three shareholder derivative actions clearly involve

common questions of law and fact as they are brought against substantially the same defendants,

allege the same violations of law and allege similar predicate facts. Moreover, the Court has

received no opposition to the motions to consolidate. Accordingly, the motions will be granted. 

2. Appointing Lead Plaintiff in a Consolidated Shareholder Derivative Action

Federal Rule of Civil Procedure 23.1 provides the requirements that must be met by a

plaintiff of a shareholder derivative action. However, neither Rule 23.1 nor Federal Rule of Civil

Procedure 42(a) requires that a court appoint a lead plaintiff in a consolidated shareholder

derivative action. No Ninth Circuit precedent suggests that appointment of a lead plaintiff is

required or even appropriate when that issue is contested in a shareholder derivative action.2

Accordingly, the Court finds no reason to appoint a lead plaintiff in this action. The Court

concludes that it need not formalize the relationship among the plaintiffs in the absence of a

dispute between them or Ninth Circuit authority for such an appointment.

3. Appointing Lead Counsel in a Consolidated Shareholder Derivative Action

Federal Rule of Civil Procedure 42(a) grants district courts the authority to consolidate

“actions involving a common question of law or fact” and to “make such orders concerning

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Case No. C 07-0955 JF

ORDER (1) GRANTING MOTIONS TO CONSOLIDATE ACTIONS (2) DENYING MOTION TO APPOINT LEAD

PLAINTIFF AND (3) APPOINTING CO-LEAD COUNSEL

(JFEX1)

proceedings therein as may tend to avoid unnecessary costs or delay.” The Second Circuit

interpreted this rule in MacAlister v. Guterma, 263 F.2d 65 (2d Cir. 1958), holding that a district

court may consolidate multiple derivative actions and appoint lead counsel for the consolidated

plaintiffs. The Ninth Circuit followed MacAlister in Vincent v. Hughes Air West, Inc., 557 F.2d

759 (9th Cir. 1977), noting that “[t]he benefits achieved by consolidation and the appointment of

general counsel, i.e. elimination of duplication and repetition and in effect the creation of a

coordinator through whom motions and discovery proceedings will be channeled, will most

certainly redound to the benefit of all parties to the litigation.” Vincent, 557 F.2d at 774 (citing

Guterma, 263 F.2d at 69). 

Lerach and Schiffrin have demonstrated an ability to work efficiently together and have

demonstrated independent expertise in complex derivative actions. Having considered the record

as a whole, and after reviewing other derivative actions in which these two firms have performed

and currently are performing as co-counsel, the Court appoints Lerach and Schiffrin as co-lead

counsel for this consolidated action. 

IV. ORDER

(1) Plaintiffs’ motions to consolidate the following actions is GRANTED: Lee v.

Ambroseo, et al., Case No. C 07-0955 JF; Werner v. Ambroseo, et al., Case No. C 07-

01265 JF; Bartholomew v. Ambroseo, et al., Case No. C 07-01264 JF. All three actions

will be litigated under the title In re Coherent, Inc. Shareholder Derivative Litigation

with the lead case number, C 07-0955 JF.

(2) A consolidated complaint shall be filed on or before June 25, 2007. The parties shall

appear for an initial Case Management Conference on July 13, 2007, at 10:30 a.m.

(3) Lee’s motion to appoint lead plaintiff is DENIED.

(4) The respective motions to appoint sole lead counsel are DENIED. 

(5) Lerach Coughlin Stoia Geller Rudman & Robbins, LLP and Schiffrin Barroway

Topaz & Kessler, LLP will serve as co-lead counsel for this litigation.

Case 5:07-cv-00955-JF Document 49 Filed 05/29/07 Page 4 of 7
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Case No. C 07-0955 JF

ORDER (1) GRANTING MOTIONS TO CONSOLIDATE ACTIONS (2) DENYING MOTION TO APPOINT LEAD

PLAINTIFF AND (3) APPOINTING CO-LEAD COUNSEL

(JFEX1)

DATED: 5/29/07

 

JEREMY FOGEL

United States District Judge

Case 5:07-cv-00955-JF Document 49 Filed 05/29/07 Page 5 of 7
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Case No. C 07-0955 JF

ORDER (1) GRANTING MOTIONS TO CONSOLIDATE ACTIONS (2) DENYING MOTION TO APPOINT LEAD

PLAINTIFF AND (3) APPOINTING CO-LEAD COUNSEL

(JFEX1)

This Order has been served upon the following persons:

John K Grant johnkg@lerachlaw.com, KiyokoH@lerachlaw.com,

cwood@lerachlaw.com, e_file_sd@lerachlaw.com

Shawn A. Williams shawnw@lerachlaw.com, aelishb@lerachlaw.com,

moniquew@lerachlaw.com

Travis E. Downs, III travisd@lerachlaw.com

William S. Lerach e_file_sf@lerachlaw.com

Diane M. Walters dwalters@wsgr.com

C. Brandon Wisoff bwisoff@fbm.com

Douglas R. Young cfisher@fbm.com

Norman J. Blears nblears@hewm.com

Charles Ralph Jaeger cjaeger@Hewm.com

Frank James Johnson frankj@johnsonbottini.com

Alan R. Plutzik aplutzik@bramsonplutzik.com

Robert M. Bramson rbramson@sbtklaw.com

James Arthur Maro jmaro@sbtklaw.com

L. Timothy Fisher tfisher@sbtklaw.com

Michael C. Wagner mwagner@sbtklaw.com

Notice will be delivered by other means to:

Darren J. Robbins

Lerach Coughlin Stoia Geller Rudman & Robbins LLP

655 West Broadway, Suite 1900

San Diego, CA 92101

Brett Michael Weaver

Johnson Bottini, LLP

655 West Broadway, Suite 1400

San Diego, CA 92101

Case 5:07-cv-00955-JF Document 49 Filed 05/29/07 Page 6 of 7
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Case No. C 07-0955 JF

ORDER (1) GRANTING MOTIONS TO CONSOLIDATE ACTIONS (2) DENYING MOTION TO APPOINT LEAD

PLAINTIFF AND (3) APPOINTING CO-LEAD COUNSEL

(JFEX1)

Robert B. Weiser

The Weiser Law Firm, P.C.

121 N. Wayne Avenue, Suite 100

Wayne, PA 19087

Lee D. Rudy

Schiffrin Barroway Topaz &Kessler, LLP 

280 King of Prussia Road 

Radnor, PA 19087 

Case 5:07-cv-00955-JF Document 49 Filed 05/29/07 Page 7 of 7