4, Vigorousness of prosecution of the lawsuits

Dollens and Vukovich raise this factor to indicate that they have pursued this litigation
more vigorously than Ceyda and Rothchild. According to Dollens, they not only filed the
derivative action five months before Ceyda filed but also Dollens has filed numerous discovery
requests as opposed to Ceyda’s none, Although it appears that the firms representing Dollens,
Ceyda, and Rothchild are all capable of vigorously representing the derivative litigants, the court
agrees with Dollens that they have been more vigorous in prosecuting the case.

‘5. Attorneys’ fees

The court requested the attorneys for the Dollens and the Ceyda plaintiffs to submit a
letter concerning their anticipated fees. Both have expressed a willingness to accept the court’s
decision concerning a reasonable fee. The court has not used differences in the submissions as a
basis for its decision to appoint lead plaintiff and counsel other than to caution lead plaintiffs’
counsel, which in this case turns out to be three sets.of lawyers, that it will look closely at
duplication of effort and may require considerable detail in considering fees should plaintiffs
prevail.

CONCLUSION

Based on all of the factors on which the parties have relied, the court concludes that
Dollens and Vukovich should be co-lead plaintiffs. They have, in fact, been the leaders of the
litigation. Although Ceyda is an institutional investor, as indicated above, in this instance, the
court is not swayed by that factor. The court is not inclined to appoint Rothchild as lead plaintiff,
even though he has the largest financial interest, where he has simply adopted the complaint of

Dollens and has not otherwise demonstrated his ability to prosecute the case any more vigorously

13


When actions involving a common question of law or fact are pending before the

court, it may order a joint hearing or trial of any or all the matters in issue in the

actions; it may order all the actions consolidated; and it may make such

proceedings therein as may tend to avoid unnecessary costs or delay.

See Johnson v. Celotex Corp., 899 F.2d 1281, 1284 (2d Cir. 1990) (“Rule 42(a) of the Federal
Rules of Civil Procedure empowers a trial judge to consolidate actions for trial when there are
common questions of law or fact to avoid unnecessary costs or delay.”); Ikerd v. Lapworth,

435 F.2d 197, 204 (7" Cir. 1970); United States v. Knauer, 149 F.2d 519, 520 (7" Cir. 1945),
aff'd on other grounds, Knauer v. United States, 329 U.S. 818 (1946). A court has discretion to
consolidate related cases, which involve common questions of fact and law under Fed. R. Civ. P.
42(a), “under the policy that considerations of judicial economy strongly favor simultaneous
resolution of all claims growing out of one event.” Ikerd, 435 F.2d at 204; In Re Nuveen Fund
Litig., No. 94 C 0360, 1994 U.S. Dist. LEXIS 13098 (N.D. Ill. Sept. 9, 1994), at *4-5. A court,
however, should not consolidate actions when consolidation will prejudice a party. In Re Nuveen
Fund Litig., 1994 U.S. Dist. LEXIS, at *4-5.

Plaintiffs allege against the same director defendants that, from approximately June to
September 2000, the director defendants intentionally breached their fiduciary duty to Westell
and its shareholders in order to garner personal gain through misappropriation of information and
insider trading. The Ceyda complaint also alleges negligent breach of fiduciary duty. The cases
involve common questions of law and fact. No party argues here that it will be prejudiced by

consolidation. As such, consolidation of Ceyda, Dollens, Rothchild and any future shareholder

derivative actions based on the same or similar set of facts and law into one action is appropriate.


Dollens relies on TCW Technology Limited Partnership v. Intermedia Communications,
Inc., which recites the following criteria: (1) “the quality of the pleading that appears best able to
represent the interests of the. . . derivative plaintiffs”; (2) “the shareholder plaintiff that has the
greatest economic interest in the action”; and (3) “whether a particular litigant has prosecuted its
lawsuit with greater energy, enthusiasm or vigor than have other similarly situated litigants.”
No. 00 C 18336, 2000 Del. Ch. LEXIS 147, at *10-11 (Del. Ch. Oct. 17, 2000) [hereinafter
TCW]. Ceyda urges the court to adopt the criteria set out in the Private Securities Litigation

Reform Act of 1995 (“PSLRA”), 15 U.S.C. § 78u-4,° for fraud actions filed under the Securities

5(...continued)
court based upon diversity of citizenship, state ‘procedural’ requirements relating to derivative actions (such as
posting security for costs) are substantive for Erie R. Co. v. Tompkins purposes and are, therefore, applicable to the
federal! courts.”). Two of these secondary authorities rely, in part, on Cohen v. Beneficial Industrial Loan
Corporation, to support their conflicting positions. 337 U.S. 541 (1949). Cohen held that a federal court sitting in
diversity in a shareholder derivative suit must apply state law to the question whether the plaintiff was obligated
under a statutory procedure by which the corporate defendant is entitled to a bond of indemnity from the plaintiff.
id. at 554-56. In making its decision, the Court reasoned, “[The New Jersey law] creates a rew liability where none
existed before, for it makes a stockholder who institutes a derivative action liable for the expense to which he puts
the corporation and other defendants, if he does not make good his claims. Such liability is not usual and it goes
beyond payment of what we know as ‘costs.’ If all the Act did was to create this liability, it would clearly be
substantive.” Id. at 555-56, Because the questions of lead plaintiff and lead counsel do not create any additional
liabilities, this is a question of federal procedure.

°Ceyda specifically relies on 15 U.S.C. § 78u-4(a)(3)(B) for appointment of lead plaintiff, which states:

(B) Appointment of lead plaintiff
(i) In general
Not later than 90 days after the date on which a notice is published under subparagraph (A)(i), the court...
shall appoint as lead plaintiff the member or members of the purported class that the court determines to be
the most capable of adequately representing the interests of class members (hereafter in this paragraph
referred to as the “most adequate plaintiff’) in accordance with this subparagraph.
aa
(iii) Rebuttable presumption
(J) In general
Subject to subclause (II), for purposes of clause (i), the court shall adopt a presumption that the
most adequate plaintiff in any private action arising under this chapter is the person or group of
persons that—
(aa) has either filed the complaint or made a motion in response to a notice under
subparagraph (A)(i);
(bb) in the determination of the court, has the largest financial interest in the relief sought
(continued...)


(c) A lawyer who has formerly represented a client in a matter or whose present
or former firm has formerly represented a client in a matter shall not thereafter:

(1) use information relating to the representation to the disadvantage of the

former client except as LR83.51.6 or LR83.53.3 would permit or require

with respect to a client, or when the information has become generally

known; or

(2) reveal information relating to the representation except as LR83.51.6

or LR83.53.3 would permit or require with respect to a client.
In support of its position, Hedlund Hanley cites the court’s own decision, Wittenborn v. Pauly,
No. 87 C 5814, 1988 WL 33723, at *3 (N.D. Ill. Apr. 1, 1988). In Wittenborn, this court
disqualified defendant’s counsel in a multi-count complaint that included a shareholder
derivative suit from simultaneously representing both the defendant closely-held corporation and
the individual defendants on the basis that the interests of the corporation and the individual
defendants were materially adverse. Unlike Wittenborn, the pending case deals with whether
counsel who previously represented plaintiffs in the related class action, after having withdrawn
from that representation, may represent the derivative plaintiffs. Plaintiffs call the alleged
conflict of interest based on prior representation of plaintiffs in the securities fraud class action a

“surface duality” because the proof in both cases rests on the same nucleus of facts. See In re

Dayco Corp. Sec. Litig., 102 F.R.D. 624, 630-31 (S.D. Ohio 1984).3

>The court in In re Dayco Corp. Sec. Litig., wrote,

Nearly twenty years ago, Judge Marvin Frankel rejected the position advanced by Defendant{, in
which he stated,] “As to the role of plaintiffs as both ‘friend’ and ‘enemy’ to the corporation, this
surface duality is in fact a routine matter in the courts.”.... Heilbrunn v. Hanover Equities Corp.,
259 F. Supp. 936, 939 (S.D.N.Y. 1966). Most courts have followed Judge Frankel’s emphasis on
the “surface duality” of joining individual and derivative actions, and held that the “theoretical
conflict of interest” does not justify a per se test prohibiting joinder of such actions. These same
courts have added that a different result might [be] obtain{ed] if the potential conflict of interest

(continued...)


B. Appointment of Lead Plaintiff and Lead Counsel

Under Fed. R. Civ. P 23.1, “[tJhe derivative action may not be maintained if it appears
that the plaintiff does not fairly and adequately represent the interests of the shareholders . . .
similarly situated in enforcing the right of the corporation or association.” At this time, each
plaintiff appears to fairly and adequately represent the interests of shareholders because each held
shares during the time period in question, each is represented by able and experienced counsel,
and no party appears subject to a unique defense that might make the party’s status as lead
plaintiff problematic. Thus, it becomes necessary to choose among them based on more or less
marginal factors that tend to indicate that one plaintiff is likely to benefit the plaintiffs most.

At the threshold, Hedlund Hanley raises the issue that attorneys at Schiffrin & Barroway
(namely Robert B. Weiser) and Robert D. Allison & Associates (namely Robert D. Allison) for
Dollens have a conflict of interest in seeking to represent the derivative plaintiffs because they
previously represented plaintiffs in the securities fraud class action.

Pertaining to conflicts of interests, this court’s Local Rule 83.51.9 provides,

(a) A lawyer who has formerly represented a client in a matter shall not

thereafter represent another person in the same or a substantially related matter in

which that person’s interests are materially adverse to the interests of the former

client unless the former client consents after disclosure.

(b) A lawyer shall not knowingly represent a person in the same or a
substantially related matter in which a firm with which the lawyer formerly was
associated had previously represented a client

(1) whose interests are materially adverse to that person, and

(2) about whom the lawyer had acquired information protected by LR
83.51.6 and LR83.51.9(c) that is material to the matter;

unless the former client consents after disclosure.


in regard to liability insurance coverage on the defendant bank officers). Therefore, the court
concludes that plaintiffs’ counsel are not disqualified by a conflict of interest.

Turning now to the central issue of appointment of lead plaintiff and counsel, the first
question is what standard to apply. Dollens argues that this court must apply the law of Delaware
to determine who will be lead plaintiff, citing a reference in In re Continental Illinois Securities
Litigation to the applicability of Delaware law to considerations of whether it was in the
corporation’s best interest to dismiss various derivative claims. 732 F.2d 1302, 1304 (7 Cir.
1984). In an action based on diversity jurisdiction, a federal court will apply the Federal Rules of
Civil Procedure unless the issue rests on substantive state law. See, e.g., Erie R. Co. v.

Tompkins, 304 U.S. 64, 77-80 (1938); see also Gasperini v. Center for Humanities, Inc.,

518 U.S. 415, 426-431 (1996). Although Delaware law applied in Jn re Continental Ilinois
Securities Litigation to the issue of best interest of the corporation, the issue for decision in that
opinion — whether a special litigation committee report concluding that dismissal was in the
corporation’s interest must be disclosed to the media — was decided under federal law. See id. at
1302-10. Lacking any more persuasive authority for a rule that Delaware law applies, and
intuitively discerning that questions surrounding leadership of the litigation are essentially ones
of case management, the court will apply factors it believes valid in light of the collective

wisdom of other state and federal judges.°

SThere is some conflicting secondary authority pertaining to whether or not a federal court must apply state
law to determine who is lead plaintiff in a derivative action. See Wright, Miller & Kane, FEDERAL PRACTICE AND
PROCEDURE § 1833 (stating “in making the determination whether a particular shareholder meets the adequacy of
representation requirement, federal law will govern.”); BUSINESS ANDCOMMERCIAL LITIGATION INFEDERAL COURTS
§ 16.6 (“While state substantive law governs the typical derivative claim, the court whose jurisdiction is invoked
generally will apply its own procedural law. Whether an issue is substantive or procedural is not always readily
apparent.”); but see SECURITIES ANDFEDERAL CORPORATE LAW § 22:43 (‘In a derivative action brought in federal

(continued...)


Minute Qrder Form (06/97)

United States District Court, Northern District of Hlinois

eSAin alii, ing Be
serge Magtate Tage Joan H. Lefkow “than Assigned Judge
CASE NUMBER 01 C 2826 DATE 12/4/2001
CASE Ceyda vs. Zionts, et al.
TITLE
(In the following box (a) indicate the party filing the motion, ¢.g,, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
qd) im Filed motion of [ use listing in “Motion” box above.]
(2) Oo Brief in support of motion due
(3) im Answer brief to motion due. . Reply to answer briefdue__
(4) a Ruling/Hearingon___setfor____at
(5) im Status hearing[held/continued to} [set for/re-set for] on setfor at
(6) o Pretrial conference[held/continued to] [set for/re-set for]on__set for —_at_
(O) oO Trial[set for/re-set for]on__at
(8) Oo {Bench/Jury trial] [Hearing] held/continued to____at
(9) im This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) OGeneral Rule 21 CFRCP41(a)(1) C)FRCP41(a)(2).
(10) a [Other docket entry] _ Enter Memorandum Opinion and Order. The court GRANTS plaintiffs’ motion to consolidate the

derivative actions [#0-1] [#11-1], Case No. 01 C 2826 and Case No. 01 C 5931, and any shareholder derivative actions that are similar in fact and
law, including Rothchild’s derivative complaint pursuant to its Order of November 27, 2001. For administrative purposes, all pleadings and papers
for the derivative actions will hereafter be filed under the lower case number, which is Case No. 00 C 2826. Furthermore, the court GRANTS
Dollens’ and Vukovich’s motion to appoint them as co-lead plaintiffs, Schiffrin & Barroway and Garwin Bronzaft as co-lead counsel and Robert D,
Alllison and Associates as liaison counsel. [#11-2]. The court DENIES Ceyda’s motion for the court to appoint Ceyda as lead plaintiff and Hediund
Hanley as lead counsel [#0-2] [#0-3], and DENIES Rothchild’s motion for the court to appoint himas lead plaintiff, Cauley Geller Bowman & Coates
as lead counsel and David B. Kahn & Associates, Ltd. as focal counsel [#18-1].

aq) of (For further detail see order attached to the original minute order.]

No notices required, advised in open court,

No notices required.

J | Notices mailed by judge’s staff.

Notified counsel by telephone.

Docketing to mail notices,

Mail AO 450 form. a

Copy to judge/magistrate judge,

courtroom us
MD. deputy’s
initials

Date/time received in

central Clerk’s Oftice mang deputy inals



purpose of the PSLRA, which was in part to prevent lawyers from creating a lawsuit and then
seeking a representative plaintiff. See Congressional Reports, supra. “According to one
representative of institutional investors [who testified before Congress], ‘As the largest
shareholders in most companies, we are the ones who have the most to gain from meritorious
securities litigation.” See Congressional Reports, supra. The court in TCW opined that
Congress enacted the largest financial interest provision and indicated a preference for
institutional investors under this provision so that courts would not appoint lead plaintiffs simply
based on who was first to file a derivative action. 2000 Del. Ch. LEXIS 147, at *3 (determining
that there is no special status for plaintiffs who were first to file complaint). Because the TW
factors and the PSLRA factors are all relevant to the decision, the court addresses each (as well
as one additional factor), although it will not apply the PSLRA’s rebuttable presumption in favor
of the largest investor but rather consider it along with other factors in weighing the best interest
of the plaintiffs.

1. The largest financial interest

The holdings of the various plaintiffs and the intervenor are represented to be as follows:
Vukovich, 350 shares; Dollens, 2,000 shares; Ceyda, 2,000 shares; and Rothchild, 66,000 shares.

Prior to Rothchild’s intervention, Ceyda and Dollens each claimed the largest financial interest,

11


Exchange Act of 1934 and the Securities Act of 1933 on the grounds that a number of federal
cases have done so in derivative actions. See, e.g., In re Conseco, Inc. Sec. Litig. and In re
Conseco, Inc. Derivative Litig., 120 F. Supp. 2d 729, 733 (S.D. Ind. 2000) [hereinafter Conseco].
As set out in the margin, the PSLRA directs the court to adopt a presumption that the most
adequate plaintiff is the one with the largest financial interest in the relief sought by the class.
The presumption may be rebutted only on proof that the presumptively most adequate plaintiff
will not fairly and adequately protect the interests of the class or is subject to unique defenses
that render such plaintiff incapable of adequately representing the class. 15 U.S.C .§ 78u-
4(a)(3)(B).

In addition, Congress expressed its desire for institutional investors to take control of
private class action securities litigation through the lead plaintiff provisions. S. Rep. 104-98,
1995 U.S.C.C.A.N. 679, 689; H.R. Conf. Rep. 104-369. In large part, this is due to the fact that
institutional investors are most likely to have the largest financial interest in the case. In favoring

institutional investors, Congress believed such investors were more likely to carry out the stated

“(...continued)

by the class; and
(cc) otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil
Procedure.

(IL) Rebuttal evidence

The presumption described in subclause (I) may be rebutted only upon proof by a member of the

purported plaintiff class that the presumptively most adequate plaintiff
(aa) will not fairly and adequately protect the interests of the class; or
(bb) is subject to unique defenses that render such plaintiff incapable of adequately
representing the class. ...

(v) Selection of lead counsel
The most adequate plaintiff shall, subject to the approval of the court, select and retain counsel to represent
the class.

The court recognizes that 15 U.S.C. § 77z-1(a)(3)(B) also stands for the same proposition.

10


Under the governing local rule LR 83.51.9, both subparagraphs (a) and (b) permit the
former client to consent to the representation after disclosure. It is apparent that the class
plaintiffs both know the situation and do not object to it. This appears to resolve the matter.*
Neither is it apparent either than the interests of the two sets of plaintiffs are materially adverse
under subparagraph (b)(2) and Ceyda does not explain how the parties are materially adverse.
The plaintiffs in both cases need to prove the malfeasance of the same individual defendants
based on the same set of facts. Although recovery in the derivative suit could require individual
directors to return money to the corporation itself, while recovery in the class action would
require the individual defendants and the corporation to compensate the plaintiffs directly, the
source of the recovery is the same, and the shareholders benefit from cither result, To the extent
their interests diverge, the plaintiffs are now represented by separate counsel. See Jn re
Continental Illinois Sec. Litig., 750 F. Supp. 868, 875 (N.D. Ill. 1990), rev'd on other grounds,
962 F.2d 566 (7" Cir. 1992) (court referred to its earlier ruling that potential conflict existed
preventing class plaintiffs and derivative plaintiffs from being jointly represented by counsel,
particularly in the area of settlement negotiations where the two kinds of plaintiffs might be

competing for limited funds and noting that, in fact, the respective plaintiffs’ interest did diverge

3(...continued)

tipens into an actual conflict. See, In Re Transocean Tender Offer Securities Litigation,

455 F. Supp. 999, 1014 (N.D, IIL. 1978) (relying on Bertozzi v. King Louis International, Inc.,
420 F, Supp. 1166, 1179-80 (D.R.I. 1976))....

[The theoretical distinction] is just that, a theoretical one, not rooted in the realities of most
individual and derivative suits, which usually are “equally contingent upon the proof of the same
nucleus of facts.” Bertozzi, F. Supp. at 1180.

102 F.R.D, 624, 630-31 (S.D. Ohio 1984).

Tt further distinguishes the situation presented in Wittenborn which involved a corporation, whose
principals were also defendants. Whether a corporation could consent in such a situation is questionable.

7


to this forum, stayed proceedings in Dollens and Vukovich, and on August 2, 2001, Dollens and
Vukovich jointly refiled in this court, with the expectation that the Delaware actions would be
dismissed. On November 27, 2001, after having been granted leave to intervene, Joseph B.
Rothchild (“Rothchild”) filed a third shareholder derivative action in this court, thereby
substituting it for an action then pending in the Circuit Court for the Sixteenth Judicial Circuit
(Kane County) of Illinois.’ A related securities fraud putative class action, having withstood a
motion to dismiss, is also pending. Ceyda’s counsel advises, “[T]here remains the potential for
more.” (Ceyda’s Mot. { 4.)

Although all the plaintiffs agree that their derivative actions and any future shareholder
derivative actions that arise from the same or substantially the same set of facts should be
consolidated, each seeks to be appointed, with their respective attorneys, as lead plaintiff and
counsel, and Dollens and Rothchild further request additional attorneys be appointed liaison or
local counsel if needed. Ceyda, in opposition, contends that representation of plaintiffs by
Schiffrin & Barroway and Robert D. Allison & Associates, both attorneys for Dollens, presents a
conflict of interest.

DISCUSSION

A. Consolidation of the Derivative Actions

The court already indicated on the record its willingness to consolidate the actions. A

court may consolidate separate cases before it under Fed. R. Civ. P. 42(a), which states:

‘Rothchild v. Zionts, et al., No. 01-LK-159, filed May 31, 2001. The plaintiff represented that this action
has been stayed and once the federal case was filed he would dismiss the Illinois court action.

*For convenience, the captioned complaint of Dollens and Vukovich will be referred to as ‘Dollens” unless
otherwise specified. Messrs. Dollens and Vukovich will be referred to collectively as Doilens.

3


than other plaintiffs. Inasmuch as the co-lead plaintiffs, absent extraordinary circumstances,
should be able to select their own counsel, the court will appoint Schiffrin & Barroway and
Garwin Bronzaft as co-lead counsel. Robert A. Allison & Associates is appointed to serve as
liaison counsel in order to avoid unnecessary expense resulting from lead counsels’ distance from
the forum.
ORDER

For reasons set forth above, the court GRANTS plaintiffs’ motion to consolidate the
derivative actions, Case No. 01 C 2826 and Case No. 01 C 5931, and any shareholder derivative
actions that are similar in fact and law, including Rothchild’s derivative complaint pursuant to its
Order of November 27, 2001. [Case No. 00 C 6735 [#35-1]], [Case No. 01 C 2826 [#0-1] [#11-
1]], [Case No. 01 C 5931 [#0-1]]. For administrative purposes, all pleadings and papers for the
derivative actions will hereafter be filed under the lower case number, which is Case No.
01 C 2826. Furthermore, the court GRANTS Dollens’ and Vukovich’s motion to appoint them
as co-lead plaintiffs, Schiffrin & Barroway and Garwin Bronzaft as co-lead counsel and Robert
D. Allison and Associates as liaison counsel. [Case No. 01 C 2826 [#11-2]], [Case No. 01 C
5931 [#0-2]]. The court DENIES Ceyda’s motion for the court to appoint Ceyda as lead plaintiff
and Hedlund Hanley as lead counsel, [Case No. 00 C 6735 [#35-1] [#35-2]], [Case No. 01 C

2826 [#0-2} [#0-3]], [Case No. 01 C 5931 [#0-2] [#0-3]], and DENIES Rothchild’s motion for

14


MEMORANDUM OPINION AND ORDER

The captioned cases are shareholder derivative actions filed by shareholders of Westell
Technologies, Inc. (“Westell”) claiming breach of fiduciary duty for alleged actions of various
officers and directors of Westell. Westell is a Delaware corporation with its principal place of
business within the Norther District of Illinois. None of the plaintiffs is alleged to be a citizen
of Delaware. Therefore, the court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332.
The motions before the court concern consolidation of the derivative actions and appointment of
lead plaintiff and lead counsel. For reasons set out below, the actions will be consolidated and
the court will appoint Jeffrey Dollens (“Dollens”) and Jeff Vukovich’s (“Vukovich”) as co-lead
plaintiffs, Schiffrin & Barroway, LLP (“Schiffrin & Barroway”) and Garwin, Bronzaft, Gerstein,
& Fisher, LLP (“Garwin Bronzaft”), as co-lead counsel and Robert D. Allison & Associates as

liaison counsel.

FACTS AND PROCEDURAL HISTORY

On or about January 26, 2001, plaintiff Vukovich, by his attorneys Schiffrin & Barroway,
filed a derivative action in Delaware claiming breach of fiduciary duty for various alleged actions
of and statements by defendants, Marc Zionts, J. William Nelson, Howard L. Kirby, Jr., Thomas
A. Reynolds, Robert C. Penny, III, and Melvin J. Simon (collectively “defendants”) and Westell
as nominal defendant. On December 4, 2000, Dollens, by his attorneys Garwin Bronzaft, filed a
similar derivative suit in Delaware. On April 20, 2001, Ceyda, by its attorneys Hedlund, Hanley,
Koenigsknecht, Trafelet (“Hedlund Hanley”), filed a similar derivative action in the Northern

District of Illinois. On June 28, 2001, the Court of Chancery for the State of Delaware, deferring


UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

JEFFREY DOLLENS and JEFF VUKOVICH,
derivatively on behalf of WESTELL
TECHNOLOGIES, INC.,
Plaintiff,
vs.
MARC ZIONTS, J. WILLIAM NELSON,
HOWARD KIRBY, JR., THOMAS A.
REYNOLDS, ROBERT C. PENNY, UI and
MELVIN J. SIMON,
Defendants.
and

WESTELL TECHNOLOGIES, INC.,

Nominal Defendant.

THE CEYDA FOUNDATION TRUST, Dated
12/17/96, derivatively on behalf of WESTELL
TECHNOLOGIES, INC.,

Plaintiff,

vs.

MARC ZIONTS, J. WILLIAM NELSON,
HOWARD KIRBY, JR., THOMAS A,
REYNOLDS, ROBERT C. PENNY, III and
MELVIN J. SIMON,
Defendants.
and

WESTELL TECHNOLOGIES, INC.,

Nominal Defendant.

Case No. 01 C 5931
Judge Joan H. Lefkow

SS SS eS Se SE SS SS

Vi Case No. 01 C 2826

_ 4y

wee Se Se Se Se SE OS


but neither has a particularly large financial stake compared to Rothchild’s 66,000.” Clearly,
Rothchild is the plaintiff with the largest financial interest.

2. Institutional investor preference

Only Ceyda qualifies here, but the policy considerations that favor institutional investors
do not readily fit where Ceyda is concerned. It is not a large institutional investor, nor have any
facts been proffered that would suggest that Ceyda has any greater incentive to litigate this case
than any other plaintiff who seeks to lead.

3. The quality of the pleading

The court finds the pleadings in each action of high quality. The court does take note of
Dollens’ displeasure that Ceyda filed its complaint five months later and appears to have merely
reworked Dollens’ complaint. Ceyda does not respond to this allegation in any of its
corresponding briefs, so an inference that this occurred is appropriate and suggests that Ceyda at
least believes that Dollens’ lawyers crafted a quality complaint. Rothchild’s complaint is nearly

the same as that of Dollens.

7Courts are split over whether individual investors may aggregate their shares to claim the lead plaintiff
prize. See, e.g., See, e.g., In re Conseco, Inc. Sec. Litig. and In re Conseco, Inc. Derivative Litig., 120 F. Supp. 24
729, 733 (S.D. Ind. 2000) (in appointing institutional investor as lead plaintiff in securities action and not group of
investors, court determined that “[w]hile a lead plaintiff ‘group’ may be permissible, this District Court has stressed
that aggregating parties ‘that have nothing in common with one another beyond their investment is not an appropriate
interpretation of the term “group” in the PSLRA.’”) (citation omitted); but see In re Cendant Corp. Litig., 264 F.3d
201, 267 (3d Cir. 2001) [hereinafter Cendant]. In Cendant, the Third Circuit stated:

The [PSLRA] contains no requirement mandating that the members of a proper group be “related”
in some manner; it requires only that any such group “fairly and adequately protect the interests of
the class.” We do not intimate that the extent of the prior relationships and/or connection between
the members of a movant group should not properly enter into the calculus of whether that group
would "fairly and adequately protect the interests of the class," but it is this test, not one of
relatedness, with which courts should be concerned.

264 F.3d at 267. This court agrees with Cendant’s reasoning.

12


the court to appoint him as lead plaintiff, Cauley Geller Bowman & Coates as lead counsel and
David B. Kahn & Associates, Ltd. as local counsel, [Case No. 01 C 2826 [#18-1]].

ENTER:

Dated: December 4, 2001

JOAN HUMPHREY LEFKOW
United States District Judge

15