Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_08-cv-01510/USCOURTS-cand-3_08-cv-01510-123/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

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

IN RE: 

CHARLES SCHWAB CORPORATION

SECURITIES LITIGATION.

This Document Relates

To All Cases.

 /

No. C 08-01510 WHA

ORDER DENYING THOMAS

CHOWATTUKUNNEL’S

REQUEST TO OPT OUT 

OF THE CLASS

This order addresses the motion filed by class member Thomas Chowattukunnel seeking

permission to opt out of the class after the applicable deadline (Dkt. No. 717). Defendants filed

an opposition brief and class member Chowattununnel filed a brief in reply (Dkt. Nos. 736, 741).

Based upon a review of the submissions by both sides, the following facts regarding Mr.

Chowattukunnel’s request are clear: On October 12, 2009, notice by first-class mail was sent to

all class members in this litigation, including Mr. Chowattukunnel (Fernandez Decl. ¶¶ 1, 3). The

mailing address used by the claims administrator to send this notice matches the mailing address

shown on Mr. Chowattukunnel’s untimely opt-out letter (see id. at ¶ 3; Dkt. No. 717-1 at 2). Mr.

Chowattukunnel’s request to be excluded from the class was submitted to the claims

administrator on January 7, 2010 (Br. 3). The opt-out deadline for class members was December

28, 2009.

Mr. Chowattukunnel does not deny that he received notice of this class action. Rather, his

excuse for failing to opt out by December 28 is that “he was traveling in India” and had an

“inability to communicate while traveling abroad” (Br. at 2). Additionally, Mr. Chowattukunnel 

Case 3:08-cv-01510-WHA Document 815 Filed 05/27/10 Page 1 of 3
United States District Court

For the Northern District of California

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argues that because he filed a FINRA arbitration matter against Schwab on September 21, 2009,

this should be deemed as proof of his intent to opt out of the class and timely notice to Schwab of

his intention to opt out. It is apparent, however, that Mr. Chowattukunnel was well aware of his

responsibility to file an opt-out request. Indeed, while Mr. Chowattukunnel’s opt-out letter was

submitted to the claims administrator on January 7, 2010, the letter was signed and dated by Mr.

Chowattukunnel on November 25, 2009, well over a month before the December 28 opt-out

deadline (Dkt. No. 717-1 at 2). In other words, despite an “inability to communicate while

traveling abroad,” Mr. Chowattukunnel received actual notice of the opt-out deadline, prepared an

opt-out letter in November 2009, but failed to submit it by the December 28 deadline.

The standard for determining whether a class member should be allowed to opt out of a

class action after the applicable exclusion deadline has passed is whether the class member’s

failure to meet the deadline is the result of “excusable neglect.” See Silber v. Mabon, 18 F.3d

1449, 1454-55 (9th Cir.1994). This standard allows courts, “where appropriate, to accept late

filings caused by inadvertence, mistake, or carelessness, as well as by intervening circumstances

beyond the party’s control.” Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. P’ship, 507 U.S.

380, 388 (1993). When evaluating whether “excusable neglect” applies, the Ninth Circuit

instructs courts to consider the “degree of compliance with the best practicable notice procedures;

when notice was actually received and if not timely received, why not; what caused the delay, and

whose responsibility was it; how quickly the belated opt out request was made once notice was

received; how many class members want to opt out; and whether allowing a belated opt out would

affect either the settlement or finality of the judgment.” Silber, 18 F.3d at 1455 (internal footnote

omitted). Additionally, the court should consider the danger of prejudice to the opposing party,

and whether the movant acted in good faith. Pioneer, 507 U.S. at 395.

This order finds that the facts and circumstances underlying this request do not support a

finding of excusable neglect. First, the record shows that class member Chowattukunnel had

notice of the class action and was aware of the consequences of not opting out by the December

28 deadline. Indeed, he had already signed and dated his opt-out request a full month before the

December 28 deadline (Dkt. No. 717-1 at 2). Additionally, there is no indication or allegation

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United States District Court

For the Northern District of California

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that Mr. Chowattukunnel failed to receive notice by first-class mail. By contrast, the evidence

shows that he had received notice well before the opt-out deadline. Second, while it may be true

that 

Mr. Chowattukunnel was overseas during this time, this does not excuse his failure to timely

submit his opt-out request. Indeed, he had over a month to find some means to ensure that his

opt-out request was received by the claims administrator by the December 28 deadline. 

Moreover, Mr. Chowattukunnel was somehow able to receive actual notice of the litigation,

which seems to indicate that he was not entirely cut off from communicating with the outside

world. Third, this opt-out request comes on the heels of preliminary approval of a 200 million

dollar class-wide settlement. Even if the motion has been brought in good faith, there is no

question that granting such a late opt-out request would be prejudicial to Schwab, since the

settlement was negotiated with the current class membership in mind. Considering all the factors

that underlie the determination of excusable neglect, this order finds that these factors weigh

against a finding of excusable neglect with respect to class member Chowattukunnel.

For these reasons, class member Chowattukunnel’s request to opt out of the class after the

deadline has passed is DENIED.

IT IS SO ORDERED.

Dated: May 26, 2010. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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