Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_14-cv-01160/USCOURTS-cand-3_14-cv-01160-6/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

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

KEITH THOMAS, et al.,

Plaintiffs,

v.

MAGNACHIP SEMICONDUCTOR 

CORP., et al.,

Defendants.

Case No. 14-cv-01160-JST 

ORDER RE MOTION TO 

COORDINATE AND PARTIALLY 

CONSOLIDATE A RELATED ACTION

Re: ECF No. 78

Before the Court is Lead Plaintiff Keith Thomas’s Motion to Coordinate and Partially 

Consolidate a Related Action. ECF No. 78. For the reasons set forth below, the Court will 

consolidate this action with related case Oklahoma Police Pension and Retirement System v. 

MagnaChip Semiconductor Corporation, et al., 3:15-cv-01797-JST.1 

I. BACKGROUND

In this securities class action, Plaintiffs allege that MagnaChip Semiconductor Corporation 

(“MagnaChip”) violated federal securities laws by engaging in a “massive fraud on investors”

involving false and misleading financial statements during the period between February 1, 2012, 

and February 12, 2015. ECF No. 79 at 1; Second Amended Complaint (“SAC”), ECF No. 70 

¶¶ 1, 3. This fraud was allegedly “so vast that the Company had to restate results for 2011 and 

2012, and the first nine months of 2013, resulting in a total reversal of earnings by $142 million, 

wiping out 55% of its reported profits for those periods.” SAC ¶ 3. 

The initial complaint was filed on March 12, 2014, and Plaintiff Richard Hayes promptly 

 

1 On June 10, 2015, the Court issued a tentative ruling regarding Thomas’ motion. ECF No. 103. 

Following the June 11, 2015 motion hearing, ECF No. 105, the Court reviewed new authorities 

cited by the parties at that hearing, as well as the letter submitted today by Lead Plaintiff Keith 

Thomas in response. Because the Court’s review of these materials leaves the Court convinced 

that its tentative order was correct, this order is in substantially the same form as the tentative one. 

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caused to be published a notice advising members of the purported class of the pendency of the 

action. ECF Nos. 1, 8; see 15 U.S.C. § 78u-4(a)(3)(A). On May 12, 2014, Keith Thomas filed a 

motion for appointment as Lead Plaintiff, which the Court granted on July 3, 2014. ECF Nos. 13, 

32. After the filing of an Amended Complaint, ECF Nos. 37, 38, the Court granted two 

stipulations extending Defendants’ time to respond in order to permit Plaintiffs to further amend 

their complaint following MagnaChip’s anticipated filing of its financial restatements. ECF Nos. 

48, 68. MagnaChip issued the restated results on February 12, 2015, and Plaintiffs filed their

Second Amended Complaint (“SAC”) on March 16, 2015. SAC ¶ 103. The SAC alleges claims 

under sections 10(b), 20(a), and 20A of the Securities Exchange Act of 1934 (the “Exchange 

Act”), 15 U.S.C. §§ 78j(b), 78t(a), 78t-1, and Rule 10b-5 promulgated thereunder by the Securities 

Exchange Commission (“SEC”), 17 C.F.R. § 240.10b-5. SAC ¶¶ 178-231. 

The Oklahoma Police Pension and Retirement System (the “Retirement System”) filed a 

separate class action complaint on April 21, 2015, and identified Thomas as a related case. See

Case No. 15-cv-01797, ECF Nos. 1 (“Okla. Police Compl.”), 1-2 (civil cover sheet). The 

Oklahoma Police complaint alleges that between February 1, 2012, and February 12, 2015, 

MagnaChip issued materially false and misleading statements and failed to disclose the 

inadequacy of its internal controls and procedures, leading MagnaChip securities to be traded at 

artificially inflated prices and ultimately causing economic harm and damages to investors. Okla. 

Police Compl. ¶¶ 1, 3, 11. In addition to Exchange Act claims alleged in Thomas, the Oklahoma 

Police complaint alleges claims under sections 11, 12(a)(2), and 15 of the Securities Act of 1933 

(the “Securities Act”), 15 U.S.C. §§ 77k, 77l(a)(2), 77o. Okla. Police Compl. ¶¶ 82-109. It also 

names several additional “Underwriter Defendants.” Id. ¶ 28. The Court granted MagnaChip’s 

motion to relate the cases on May 4, 2015. ECF No. 80. 

Now before the Court is Lead Plaintiff Keith Thomas’s Motion to Coordinate and Partially 

Consolidate a Related Action. ECF No. 78. 

II. DISCUSSION 

A. Consolidation

Under Rule 42(a) of the Federal Rules of Civil Procedure, “If actions before the court 

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involve a common question of law or fact, the court may: (1) join for hearing or trial any or all 

matters at issue in the actions; (2) consolidate the actions; or (3) issue any other orders to avoid 

unnecessary cost or delay.” A district court has “broad discretion under this rule to consolidate 

cases pending in the same district.” Investors Research Co. v. U.S. Dist. Court for the Cent. Dist. 

of Cal., 877 F.2d 777, 777 (9th Cir. 1989). In deciding whether to consolidate cases, “the Court 

should weigh the interest of judicial convenience against the potential for delay, confusion, and 

prejudice.” Zhu v. UCBH Holdings, Inc., 682 F. Supp. 2d 1049, 1052 (N.D. Cal. 2010). “Courts 

have recognized that securities class actions are particularly suited to consolidation to help 

expedite pretrial proceedings, reduce case duplication, avoid the involvement of parties and 

witnesses in multiple proceedings, and minimize the expenditure of time and money by everyone 

involved.” In re Century Aluminum Co. Sec. Litig., Nos. 09-cv-1001-SI, 09-1205-SI, 09-cv1103-SI, 09-cv-1162-SI, 2009 WL 2905962, at *2 (N.D. Cal. Sept. 8, 2009). 

Lead Plaintiff Keith Thomas seeks an order coordinating and partially consolidating the 

Thomas and Oklahoma Police actions. ECF No. 78. He originally proposed that the two cases 

should be consolidated under the existing leadership structure in Thomas, except with respect to 

the Securities Act claims unique to the Oklahoma Police action, which he suggested could be 

cabined off and separately litigated. ECF No. 79, at 1, 2. On reply, however, he agrees that the 

Securities Act claims could be incorporated into a combined Third Amended Complaint, as long 

as the Retirement System is responsible for prosecuting those claims. ECF No. 99 at 1. 

Defendants request that the two actions be consolidated in their entirety for all purposes, 

because they “are premised on the same facts, share the same putative class, and assert the same 

core Exchange Act claims,” and because the claims that are not common to both actions “share a 

common factual basis.” ECF No. 89 at 1-2; ECF No. 91. 

The Retirement System “generally agrees that its complaint is related to the [Thomas] case 

and, at the proper time may be consolidated therewith,” but argues that consolidation is premature 

before the deadline for lead plaintiff motions in Oklahoma Police expires on June 22, 2015, 

because it would preclude qualified movants from seeking to serve as lead plaintiff. ECF No. 86 

at 2-3, 6. The Retirement System contends that because the SAC in Thomas extends far beyond 

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the original class and claims for which Thomas was appointed to serve as lead plaintiff, the class 

members are entitled to notice of the expanded action. Id. at 5. Lead Plaintiff Thomas responds 

that there is no need to reopen the question of lead plaintiff because the Retirement System’s 

transactions were all covered by the initial notice in Thomas, and the Private Securities Litigation 

Reform Act (“PSLRA”) required the Retirement System to come forward as a potential lead 

plaintiff at that time. ECF No. 99 at 1. 

The Court will consolidate these related actions in the interest of judicial efficiency. The 

cases share common questions of fact because they are each centered on MagnaChip’s restatement 

of its financial results for 2011, 2012, and the first nine months of 2013. They also share 

Exchange Act claims. While the Securities Act claims are unique to the Oklahoma Police action, 

all of the claims revolve around whether MagnaChip materially misrepresented its financial 

condition, and the Court concludes that severance of the Securities Act claims would impair 

judicial efficiency. Accordingly, the Court will consolidate the Thomas and Oklahoma Police

actions in their entirety.

2

 See In re Century Aluminum Co., 2009 WL 2905962, at *2; In re 

Cyberonics Inc. Sec. Litig., 468 F. Supp. 2d 936, 940 (S.D. Tex. 2006). 

B. Lead Plaintiff Appointment

The Court will next consider whether it is appropriate either to defer consolidation until 

after the deadline for lead plaintiff motions in Oklahoma Police expires, see Boilermakers Nat’l 

Annuity Trust Fund v. WAMU Mortg. Pass Through Certificates, Series 2006-AR1, No. 09-cv0037-MJP, 2009 WL 5170186, at *2 (W.D. Wash. Dec. 18, 2009); or to consolidate the actions 

and then reopen the lead plaintiff contest by requiring that Plaintiffs republish notice in accordance 

with the PSLRA, cf. In re Leapfrog Enters, Inc. Sec. Litig., No. 03-cv-05421-RMW, 2005 WL 

5327775, at *3 (N.D. Cal. July 5, 2005). 

The PSLRA provides that

Not later than 20 days after the date on which the complaint is filed, 

the plaintiff or plaintiffs shall cause to be published, in a widely 

circulated national business-oriented publication or wire service, a 

 

2

It will be the responsibility of Plaintiffs’ counsel, and not the Court, to allocate responsibility for 

briefing related to Securities Act claims in any consolidated complaint. 

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notice advising members of the purported plaintiff class-

(I) of the pendency of the action, the claims asserted therein, 

and the purported class period; and 

(II) that, not later than 60 days after the date on which the 

notice is published, any member of the purported class may 

move the court to serve as lead plaintiff of the purported 

class. . . . 

If more than one action on behalf of a class asserting substantially 

the same claim or claims arising under this chapter is filed, only the 

plaintiff or plaintiffs in the first filed action shall be required to 

cause notice to be published . . . . 

15 U.S.C. § 78u-4(a)(3)(A). “This provision is ‘intended to encourage the most capable 

representatives of the plaintiff class to participate in class action litigation[,] parties with 

significant holdings in issuers, whose interests are more strongly aligned with the class of 

shareholders.’” In re Cyberonics, 468 F. Supp. 2d at 938 (quoting H.R. Conf. Rep. No. 104-369, 

at 32 (1995)). 

Lead Plaintiff Thomas argues that “nothing in the PSLRA compels re-opening the Lead 

Plaintiff appointment process when the Lead Plaintiff changes the Class Period, or adds a new 

claim arising out of the same facts alleged in the prior amended complaint.” ECF No. 99 at 2. 

Thomas emphasizes that the Retirement System’s MagnaChip transactions were covered by the 

original March 12, 2014, complaint and PSLRA notice in Thomas, and that the Retirement System 

has offered no explanation for its failure to act until April 21, 2015, more than one year later. ECF 

No. 99 at 2-4; see also ECF Nos. 8, 100-1. The Retirement System responds that although 

“‘minor amendments to complaints . . . do not warrant republication or revisiting the lead plaintiff 

contest,’ providing a new publication notice is required when amended complaints ‘vastly 

expand[]’ original complaints and ‘dramatically alter the contours of the lawsuit.’” ECF No. 86 at 

3 (quoting Leapfrog, 2005 WL 5327775, at *2-3) (emphasis omitted). The Retirement System 

argues that renewed notice is required here because the Thomas SAC includes new claims against 

new defendants and significantly expands the class period relative to the original complaint. Id. at 

1-2. 

“Although courts typically disfavor republication when a complaint is amended, courts 

have required new notice where the amended complaint substantially alters the claims or class 

members.” Kaplan v. S.A.C. Capital Advisors, L.P., 947 F. Supp. 2d 366, 367 (S.D.N.Y. 2013). 

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In general, republication is not required where a complaint expands the class period or includes an 

additional defendant or a closely related new claim. See, e.g., Turner v. ShengdaTech, Inc., Nos. 

11-cv-1918, 11-cv-1996, 11-cv-2064, 11-cv-3325, 2011 WL 6110438, at *3 (S.D.N.Y. Dec. 6, 

2011) (“Courts . . . disfavor republication of notice under PSLRA when a class period is extended 

beyond the period contained in the first-filed securities class action”); Greenberg v. Bear Stearns 

& Co., Inc., 80 F. Supp. 2d 65, 69 (E.D.N.Y. 2000) (“[N]either case law nor the provisions of the 

PSLRA require a second notice to be published when the complaint was amended to add the . . . 

additional defendant.”); In re Select Comfort Corp. Sec. Litig., No. 99-cv-884, 2000 WL 

36097395, at *2 (D. Minn. May 12, 2000) (“[L]ead plaintiffs are not automatically required under 

the PSLRA to republish notice where a consolidated complaint is amended to allege new, closely 

related claims or a different class period.”); In re Thornburg Mortg., Inc. Sec. Litig., 629 F. Supp. 

2d. 1233, 1242 (D.N.M. 2009) (declining to require republication where “[t]he new claims are 

closely related to the initial claims expressly covered in the notice, and requiring further notice for 

the amendments here would serve only to delay the progress of this case and would contravene the 

PSLRA notice provisions’ goal of securing lead plaintiffs as soon as practicable” (internal 

quotation marks omitted)). 

By contrast, courts have required renewed notice where the additions to a complaint “make 

it likely that individuals who could now be considered potential lead plaintiffs would have 

disregarded the earlier notice, and that ‘allowing plaintiffs . . . to proceed without publishing a new 

notice reflecting their additional claims would potentially exclude qualified movants from the lead

plaintiff selection process.’” Kaplan, 947 F. Supp. 2d at 367 (quoting Teamsters Local 445 

Freight Div. Pension Fund v. Bombardier Inc., No. 05-cv-1898-SAS, 2005 WL 1322721, at *3 

(S.D.N.Y. June 1, 2005)); see also Bombardier, 2005 WL 1322721, at *2-3 (requiring 

republication where a class was expanded from purchasers of a single class of securities to 

purchasers of many classes from different years, because it was “entirely possible that other wellqualified lead plaintiffs would have moved had they been notified that they were potential class 

members”); Leapfrog, 2005 WL 5327775, at *3 & n.1 (requiring republication where the amended 

complaint “dramatically alter[ed] the contours of the lawsuit” by adding new factual allegations

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and substantially expanding the class period, and the court identified another, possibly bettersuited, potential lead plaintiff that could not have moved to be appointed lead plaintiff in the 

original suit); In re Cyberonics, 468 F. Supp. 2d at 939-40 (requiring republication where the 

amended complaint substantially expanded the potential class of plaintiffs by adding new claims 

and significantly extending the class period, and the constraints of the original complaint had 

excluded a potentially more appropriate lead plaintiff from consideration); Boilermakers, 2009 

WL 5170186, at *1-2 (requiring republication and deferring consolidation where an amended 

complaint included ten additional securities in order to provide notice to the new classes of 

potential lead plaintiffs); Vanleeuwen v. Keyuan Petrochemicals, Inc., No. 11-cv-9495-PSG, 2013 

WL 2247394, at *5 (C.D. Cal. May 9, 2013) (requiring republication where the amended 

pleadings added allegations based on “an entirely different factual scenario,” including alleging 

“entirely new misrepresentations,” and added “a whole new class of plaintiffs who were not 

included in the Original Complaint”). 

Here, the contours of the lawsuit have changed somewhat since the original complaint was 

filed in March 2014, in that the class period length has expanded, additional Defendants have been 

added, and the Retirement System seeks to pursue Securities Act claims in addition to Exchange 

Act claims. But the Retirement System has not demonstrated that it is “likely that individuals who 

could now be considered potential lead plaintiffs would have disregarded the earlier notice” or that 

proceeding without republication would “potentially exclude qualified movants from the lead 

plaintiff selection process.” Kaplan, 947 F. Supp. 2d at 367. Although Plaintiffs have 

supplemented their allegations as additional information has come to light, the SAC still centers 

on the same factual scenario concerning MagnaChip’s financial statements that was presented in 

Hayes’s original complaint. The new Securities Act claims and additional defendants in the 

Oklahoma Police complaint relate to the same misrepresentations. No new classes of securities or 

groups of plaintiffs have been added, see Bombardier, 2005 WL 1322721, at *2-3; Boilermakers, 

2009 WL 5170186, at *1-2; and no party has identified a potentially more appropriate lead 

plaintiff that was excluded from the constraints of the original complaint, see In re Cyberonics, 

468 F. Supp. 2d at 939-40; Leapfrog, 2005 WL 5327775, at *3 & n.1. The Retirement System 

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could have sought appointment as lead plaintiff in Thomas in May 2014, but it did not. ECF Nos. 

8, 100-1. 

In these circumstances, the Court concludes that the filing of the SAC and the Oklahoma 

Police action do not “substantially alter[] the claims or class members” such that new notice is 

required. Kaplan, 947 F. Supp. 2d at 367. The Court therefore denies the Retirement System’s 

request that consolidation be deferred until the lead plaintiff motion deadline in Oklahoma Police

expires on June 22, 2015. The Court also declines at this time to require a new notice period for 

the purpose of identifying new potential lead plaintiffs in Thomas. 

CONCLUSION

For the reasons set forth below, the Court hereby consolidates cases No. 14-cv-01160-JST 

and No. 15-cv-01797-JST. The first-filed case, No. 14-cv-01160-JST, shall serve as the lead case

and Thomas shall continue to serve as Lead Plaintiff. The Clerk shall file future submissions in 

case No. 14-cv-01160. Case No. 15-cv-01797-JST is administratively closed, and any pending 

dates, deadlines, and case schedules in that case are vacated. 

IT IS SO ORDERED.

Dated: June 15, 2015

______________________________________

JON S. TIGAR

United States District Judge

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