Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_08-cv-01510/USCOURTS-cand-3_08-cv-01510-118/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 GRANTING MOTION

FOR LATE EXCLUSION BY

CLASS MEMBERS BECKMANN,

FOX-MCMANUS, HOLMES, 

AND SILVER

This order addresses the motion filed by class members Martin J. Beckmann, Lisa FoxMcManus, Gary Holmes, and Shiela F. Silver seeking permission to opt out of the class after the

applicable deadline (Dkt. No. 764). Schwab does not oppose this motion (Dkt. No. 806).

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 

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United States District Court

For the Northern District of California

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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.

The unique facts and circumstances underlying this request support a finding of excusable

neglect. Movants are all clients of Hudson Valley Investment Advisors (“HVIA”), an investment

advisory firm that purchased Schwab YieldPlus funds on behalf of its many clients. Class

members Beckmann, Fox-McManus, Holmes, and Silver all assigned their claims to HVIA for an

arbitration matter filed by HVIA against Schwab in November 2009 (Br. 2; Exhs. A–D). As part

of the normal course of the arbitration proceedings, HVIA provided Schwab with a list of all of

the assigned claims, which included class members Beckmann, Fox-McManus, Holmes, and

Silver (id. at 2; Exh. E). On December 21, 2009, HVIA sent a letter to the claims administrator

for the instant action informing the administrator that HVIA and its investors in the Schwab

YieldPlus funds intended to opt out of the class (id. at 2; Exh. F). Accompanying the letter was a

list that should have contained all of HVIA’s investors as well as copies of all of their assignment

letters. The names of class members Beckmann, Fox-McManus, Holmes, and Silver were

inadvertently excluded from the list of investors. Their assignment letters, however, were

properly included with the letter sent to the claims administrator (ibid.).

Given this administrative mix-up, Schwab has notified the Court that it does not oppose

the instant motion filed by class members Beckmann, Fox-McManus, Holmes, and Silver seeking

late exclusion from the class (Dkt. No. 806). This fact is important, because it indicates that

Schwab is waiving any argument as to prejudice (at least as to these class members) that might

otherwise have tilted the excusable neglect analysis in its favor.

Given Schwab’s statement of non-opposition, and considering the circumstances

explained above, the factors underlying the determination of excusable neglect support granting

the instant motion. The facts clearly show that the letter sent to the claims administrator on

December 21 did include information — specifically assignment letters — pertaining to class

members Beckmann, Fox-McManus, Holmes, and Silver. For whatever reason, their names were

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left off of the separate list of investors that accompanied the assignment letters, which the claims

administrator apparently used to determine who had opted out. These unique circumstances

weigh in favor of allowing these class members to opt out.

As such, the motion for late exclusion brought by class members Beckmann, FoxMcManus, Holmes, and Silver is GRANTED.

IT IS SO ORDERED.

Dated: May 27, 2010. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

Case 3:08-cv-01510-WHA Document 810 Filed 05/27/10 Page 3 of 3