Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_06-cv-05353/USCOURTS-cand-5_06-cv-05353-3/pdf.json

Nature of Suit Code: 160
Nature of Suit: Stockholder's Suits
Cause of Action: 28:1332 Diversity-Stockholders Suits

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United States District Court

For the Northern District of California

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 The Related Derivative Cases are: Berkowitz v. Fodor, et al., C 06-5353 (filed Aug. 30,

2006) and Powers v. Fodor, et al., C 06-05634 (filed Sept. 15, 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

Irwin Berkowitz, derivatively on behalf of

nominal defendant Affymetrix, Inc.,

Plaintiff,

 v.

Stephen P.A. Fodor, et al.,

Defendants,

 and

Affymetrix, Inc.,

Nominal Defendant. /

NO. C 06-05353 JW 

Related Case No. C 06-5634 JW

ORDER CONSOLIDATING CASES;

APPOINTING LEAD PLAINTIFFS AND

LEAD COUNSEL; SETTING BRIEFING

SCHEDULE

I. INTRODUCTION

There are currently two related shareholders’ derivative actions (the “Related Derivative

Cases”) on behalf of nominal defendant Affymetrix, Inc. (“Affymetrix”) pending before the Court.1

Presently before the Court is Plaintiffs Irwin Berkowitz and Samuel D. Powers’ Motion to

Consolidate Related Cases, Appoint Lead Plaintiff and Lead Counsel, and Set Briefing Schedule. 

(hereafter “Motion,” Docket Item No. 16.) The Court found it appropriate to take the motion under

submission without oral argument. See Civ. L. R. 7-1(b). Based on the papers filed to date, the

Court ORDERS (1) the Related Derivative Cases consolidated; (2) Irwin Berkowitz and Samuel D.

Case 5:06-cv-05353-JW Document 31 Filed 11/20/06 Page 1 of 5
United States District Court

For the Northern District of California

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 This motion also sought to relate the cases, which the Court ordered prior to considering

whether the cases should be consolidated.

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Powers appointed Lead Plaintiffs; and (3) Lerach Coughlin Stoia Geller Rudman & Robbins LLP

and Schiffrin & Barroway LLP appointed Lead Counsel.

II. BACKGROUND

On August 30, 2006, Irwin Berkowitz (“Berkowitz”) filed the first shareholders’ derivative

complaint on behalf of Affymetrix 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, Samuel D. Powers (“Powers”) also filed a derivative action on behalf of

Affymetrix alleging the same type of misconduct and harm. On October 20, 2006, the Court found

that these derivative actions were related within the meaning of Civil Local Rule 3-12(a). (See

Related Case Order, Docket Item No. 19.) On October 13, 2006, Berkowitz and Powers filed a

motion to consolidate the Related Derivative Actions and to appoint themselves as Lead Plaintiffs

and Lerach Coughlin Stoia Geller Rudman & Robbins LLP and Schiffrin & Barroway LLP

(collectively “Lerach and Schiffrin”) as Lead Counsel.2 To date, no oppositions have been filed to

the motion.

III. DISCUSSION

A. Consolidation of the Related 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 Related 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 Affymetrix breached their fiduciary duties when they backdated stock options

that were granted to them between 1998 and 2002. Given these similarities and the lack of any

Case 5:06-cv-05353-JW Document 31 Filed 11/20/06 Page 2 of 5
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For the Northern District of California

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apparent inconvenience, delay, or expense that would result from bringing these cases together, the

Court finds that consolidation of the Related Derivative Cases is appropriate.

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).

In their respective Complaints, Plaintiffs Berkowitz and Powers allege that they were at all

relevant times shareholders of Affymetrix. These applicants have also retained competent and

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

find any other factors against establishing the proposed leadership structure. Accordingly,

appointment of Plaintiffs Berkowitz and Powers as Lead Plaintiffs is appropriate.

C. Appointment of Lead Counsel

Plaintiffs Berkowitz and Powers have agreed that Lerach and Schiffrin should be appointed

Lead Counsel. Given these firms’ experience with similar shareholder actions, the Court finds it

appropriate to appoint Lerach and Schiffrin as Lead Counsel.

IV. CONCLUSION

The Court ORDERS (1) the Related Derivative Cases consolidated; (2) Irwin Berkowitz and

Samuel D. Powers appointed Lead Plaintiffs; and (3) Lerach Coughlin Stoia Geller Rudman &

Robbins LLP and Schiffrin & Barroway LLP appointed Lead Counsel.

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For the Northern District of California

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The Clerk shall consolidate these actions such that the earlier filed action, C 06-05353 JW, is

the lead case. All future filings shall be filed in C 06-05353 JW and bear the caption: "In Re

Affymetrix Derivative Litigation."

Lead Plaintiffs shall file a Consolidated Complaint no later than January 10, 2007. 

Defendants shall file an answer or a motion to dismiss no later than February 19, 2007. The

opposition to Defendants' motion to dismiss is due on April 2, 2007. Defendants' reply is due April

23, 2007. A hearing on the motion to dismiss is set for May 14, 2007 at 9:00 a.m. 

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).

In addition, the parties shall select an ADR process within sixty (60) days of this Order. The

parties may stipulate to conducting certain discovery in order to facilitate the ADR process.

Dated: November 20, 2006 

JAMES WARE

United States District Judge

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United States District Court

For the Northern District of California

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

Alan R. Plutzik aplutzik@bramsonplutzik.com

Arthur Joseph Burke arthur.burke@dpw.com

Eric L. Zagar ezagar@sbclasslaw.com

Kathryn A. Schofield kschofield@bramsonplutzik.com

L. Timothy Fisher ltfisher@bramsonplutzik.com

Dated: November 20, 2006 Richard W. Wieking, Clerk

By: /s/ JW Chambers 

Elizabeth Garcia

Courtroom Deputy

Case 5:06-cv-05353-JW Document 31 Filed 11/20/06 Page 5 of 5