1

 Although defendants do not oppose the motion, they maintain that class certification would be improper

outside of the settlement context.

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

DR. ROBERTO MELO, ET AL. §

§

Plaintiffs, §

§

VS. § NO. 3-04-CV-2238-BD

§

GARDERE WYNNE SEWELL LLP, §

ET AL. §

§

Defendants. §

MEMORANDUM ORDER

Plaintiffs Dr. Robert Melo and Jaime de la Garza, individually and on behalf of other

similarly situated individuals, have filed an unopposed motion seeking preliminary certification of

a settlement class consisting of persons "who, as of September 1, 1998, had an investment account

with Sharp Capital and whose claims were approved by the Special Master . . ." 1 For the reasons

stated herein, the motion is granted.

Certification of a class is appropriate where all four requirements of Fed. R. Civ. P. 23(a) and

at least one of the requirements of Fed. R. Civ. P. 23(b) are satisfied. See Amchem Products, Inc.

v. Windsor, 521 U.S. 591, 613-14, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997). Rule 23(a) provides

that: 

One or more members of a class may sue or be sued as representative

parties on behalf of all only if (1) the class is so numerous that

joinder of all members is impracticable, (2) there are questions of law

or fact common to the class, (3) the claims or defenses of the

representative parties are typical of the claims or defenses of the

class, and (4) the representative parties will fairly and adequately

protect the interests of the class. 

 

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Fed. R. Civ. P. 23(a). Here, plaintiffs have identified a class of 186 individuals who invested money

in Sharp Capital, Inc. The question of whether defendants materially aided and abetted Sharp Capital

in transferring money to an offshore company without the knowledge or approval of investors is

common to all members of the proposed class. The court therefore preliminarily finds that plaintiffs

have satisfied the requirements of numerosity and commonality. See Mullen v. Treasure Chest

Casino, LLC, 186 F.3d 620, 624-25 (5th Cir. 1999), cert. denied, 120 S.Ct. 1169 (2000) (class

consisting of 100 to 150 members is within the "range that generally satisfies the numerosity

requirement" and commonality is established where "there is at least one issue, the resolution of

which will affect all or a significant number of the putative class members"). 

A more troublesome issue involves the typicality requirement of Rule 23(a). Typicality

focuses on the similarity between the legal and remedial theories of the named class representatives

and the legal and remedial theories of those whom they purport to represent. See Lightbourn v.

County of El Paso, 118 F.3d 421, 426 (5th Cir. 1997), cert denied, 118 S.Ct. 700 (1998), citing In 

re Asbestos Litigation, 90 F.3d 963, 976 (5th Cir. 1996). The theories of the named plaintiffs and 

the proposed class members need not be identical. Id. Rather, typicality exists if "the class

representative's claims have the same essential characteristics of those of the putative class." James

v. City of Dallas, 254 F.3d 551, 571 (5th Cir. 2001), cert. denied, 122 S.Ct. 919 (2002). In this case,

five members of the proposed settlement class--Hugo R. Baxter Saenz, Eduardo Filiberto Alvarado

Flores, Vincente Marino De Nigris, Rosana Morales Almaguer, and Jose Luis Herrera Barragan–

were parties to a related state court proceeding that was dismissed on limitations grounds. See 

Baxter v. Gardere Wynne Sewell, L.L.P., 182 S.W.3d 460 (Tex. App.--Dallas 2006, pet. denied). 

This caused the court to question whether including those five investors in the settlement class would

undermine the typicality requirement of Rule 23(a). See Order, 10/23/06, citing Doe v. Chao, 306

 

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F.3d 170, 183 (4th Cir. 2002), aff'd, 124 S.Ct. 1204 (2004) (typicality requirement may be

undermined by including class members with time-barred claims) and Daniels v. Federal Reserve

Bank of Chicago, 194 F.R.D. 609, 618 (N.D. Ill. 2000) (holding that "individuals with time-barred

claims may not be included within a proposed class"). After reviewing the supplemental briefing

submitted by plaintiffs, the court is persuaded that a potential limitations defense with respect to

these absent class members does not defeat typicality. See Corley v. Entergy Corp., 220 F.R.D. 478,

483 n.2 (E.D.Tex. 2004), aff'd, 152 Fed.Appx. 350, 2005 WL 2600177 (5th Cir. 2005). This is true

for two reasons. First, the test for typicality is not demanding and, other than the statute of

limitations issue, the legal and remedial theories of the named plaintiffs and the potential class

members are the same. See Lightbourn, 118 F.3d at 426. Second, and more importantly, the Baxter

plaintiffs asserted only three claims in the state court litigation--violations of the Texas Securities

Act, common law aiding and abetting, and common law conversion--all of which are subject to 

either a two-year or three-year limitations period. Unlike the named plaintiffs in the instant case, the

Baxter plaintiffs did not sue for common law fraud, which is governed by a four-year statute of

limitations. See Tex. Civ. Prac. & Rem. Code § 16.004(a)(4). The court therefore concludes that

the typicality requirement is satisfied.

Rule 23(a)(4) requires the class representatives and their counsel to "fairly and adequately

protect the interests of the class." Fed.R.Civ.P. 23(a)(4). In order to demonstrate adequacy,

plaintiffs must establish that: (1) counsel is qualified; and (2) the relationship between the interests

of the class representatives and the interests of other class members is not antagonistic. See Ahearn

v. Fibreboard Corp., 162 F.R.D. 505, 524 (E.D. Tex. 1995), aff'd, 90 F.3d 963 (5th Cir. 1996). The

court has no reason to doubt the quality of class counsel, who have years of experience litigating

class actions involving claims of securities fraud and aider and abettor liability. That some claims

 

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of a few absent class members may be barred by limitations does not create such antagonism

between them and other members of the class as to jeopardize the ability of counsel and the named

plaintiffs to "fairly and adequately protect the interests of the class." 

In addition to meeting the Rule 23(a) requirements, plaintiffs must also satisfy at least one

of the requirements of Rule 23(b). The court has little difficulty in concluding that "questions of law

or fact common to the members of the class predominate over any questions affecting only individual

members [ ] and that a class action is superior to other available methods for the fair and efficient

adjudication of the controversy." Fed. R. Civ. P. 23(b)(3). The Supreme Court has acknowledged

that "[p]redominance is a test readily met in certain cases alleging consumer or securities fraud."

Amchem, 117 S.Ct. at 2250. In this case, common issues of fact and law abound because all class

members were subjected to the same alleged misrepresentations and omissions by defendants, which

constitute a common course of conduct. This is sufficient to satisfy the predominance prong of Rule

23(b)(3). See Fry v. UAL Corp., 136 F.R.D. 626, 637 (N.D. Ill. 1991) (predominance is usually

decided on the question of liability, and "if the liability issue is common to the class, common

questions are held to predominate over individual questions"). Similarly, for purposes of deciding

the preliminary certification issue, the court finds that a class action is superior to other available

methods for resolving the claims against defendants. 

Accordingly, plaintiffs' unopposed motion for preliminary certification of settlement class

[Doc. #65] is granted. The parties are directed refile their joint motion for preliminary approval of

proposed class action settlement and any supporting materials within 20 days from the date of this

order. 

SO ORDERED.

 

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DATED: January 12, 2007.

 

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