time and effort, the Court finds that such savings would not be substantial. In this case, there are
some common issues of fact related to the conduct of two of the individual defendants, W.F.
Aldinger and D.A. Schoenholz. In Jaffe, Aldinger as CEO and Schoenholz as COO are the only
individual defendants, and they are sued based on the theory of control person liability for
issuing materially false and misleading statements, reports and press releases to the public which
overstated its net income by $386 million beginning in 1994 and misled investors regarding its
credit card services. In Williamson, Aldinger and Schoenholz are two of sixtcen individual
defendants, and they are sued for causing, approving, or authorizing: (1) the sale of Household
to HSBC Holdings, PLC for 2.675 HSBC ordinary shares or 0,535 HSBC American Depository
Shares for each share of Household common stock; (2) the insulation of the board of directors
from liability in exchange for indemnity from HSBC for their past deeds; (3) improper actions
which resulted in the $484 million fine to settle the claims related to Household’s non-prime
consumer lending business; (4) improper accounting treatment of payments related to credit
card services; (5) manipulation of reported results due to re-aging delinquent accounts; and (6)
improper accounting and financial reporting of eamed future employee benefits as income
instead of a pension expense resulting in overstating net income by $386 million. Thus there is
some overlap regarding issues of fact as to Aldinger and Schoenholz’s conduct relating to (4)-
(6), but not (1)-(3). Further, the facts required to prove the elements of the Security Exchange
Act violation as they relate to Aldinger and Schoenholz conduct in the Jaffe case are clearly
substantially different than the facts needed to hold Aldinger and Schoenholz liable on the
various legal theories forwarded in the Williamson case. Accordingly, the Court finds that its

handling of both cases would not be likely to result in a substantial saving of judicial time and


demonstrate how this Court could resolve the two cases in a single proceeding.

CONCLUSION
For the foregoing reasons, the Court denies with prejudice plaintiff's Motion for a
Finding of Relatedness [doc. no. 45-1].

SO ORDERED. enrereD: 4/3/07

HON. RONALD A. GUZMAN
United States Judge



the board of Household International. To resolve at least some of the issues in both cases, a
court must make a factual determination as to the conduct relating to the representations made by
the CEO and COO of Household International. Therefore, the cases involve at least some
common issues of fact, satisfying Rule 40.4(a)(2).

Second, LR 40.4(b) requires that each of the following four criteria is met:

(1) both cases are pending in this Court;

(2) the handling of both cases by the same judge is likely to result in a substantial saving
of judicial time and effort

(3) the earlicr case has not progressed to the point where designating a later filed case as
related would be likely to delay the proceedings in the earlier case substantially; and

(4) the cases are susceptible of disposition in a single proceeding.

Here, the first and third conditions are satisfied. Both cases are pending before the
United States District Court for the Northern District of Illinois, and the Jaffe case has not
progressed to the point where designating the Williamson case as related would be likely to delay
substantially the proceedings in the Jaffe case.

Defendant Arthur Anderson argues that the second condition has not been met because
reassignment would not result in a substantial saving of judicial time and effort. (Opp’n Pl.’s
Mot., at 2.) The Court agrees. Specifically, the Court finds that the causes of action in Jaffe and
Williamson are fundamentally distinct. While Jaffe is a class action that alleges Household,
Arthur Andersen, W.F. Aldinger and D.A. Schoenholz violated the Securities and Exchange Act
by making false and misleading statements, Williamson is a derivative suit alleging a violation of
the Sarbancs-Oxley Act, breach of fiduciary duty, and other violations of common law. (/d.)

Although the Court acknowledges that there would be some degree of savings of judicial


effort.

Next, the Court finds that the fourth condition, LR 40.4(b)(4), which requires the movant
to demonstrate that a reassignment would be susceptible to disposition in a single proceeding has
not been satisfied. Judges of this Court have ruled that a movant satisfies this condition if issues
of both law and fact are the same in the related cases. See Fairbanks Capital Corp. v. Jenkins,
No. 02 C 3930, 2002 WL 31655277, at *3 (N.D. Ill. Nov, 25, 2002) (holding that LR 40.4(b)(4)
was satisfied where a determination of the key, common legal and factual issues would be
outcome determinative to all of the cases); Popovich v. McDonald's Corp., 189 F. Supp. 2d 772,
778 (N.D. Ill. 2002) (holding that LR 40.4(b)(4) was satisfied where a case before another court
was the equivalent of a cross-claim before that court); Anderson vy. Cornejo, 199 F.R.D. 228, 262
(N.D, Ill. 2000) (holding that LR 40.4(b)(4) was satisfied where there were common issues of
law and fact in two employment discrimination cases). Here, there are not common issues of
both law and fact. As defendant Arthur Anderson points out, the underlying causes of action in
Jaffe and Williamson are fundamentally distinct, (Opp’n PI.’s Mot., at 2), making it extremely
unlikely that the Court could dispose of both cases in a single proceeding. Any motions for
summary judgment would be unique to each particular case. See Clark v. ins. Car Rentals Inc.,
42 F. Supp. 2d 846, 849 (N.D, Iil. 1999). Additionally, while both cases involve at Icast some
common issucs of fact, these commonalities are not so great as to outweigh the dissimilarities.

In particular, the Williamson case involves many issues of fact that are not at issue in Jaffe. For
example, the Williamson plaintiffs allege that defendants wasted corporate assets and were
unjustly enriched by taking huge bonuses in the face of financial instability. (P1.’s Mot., Ex. B

132-34.) That is not an issue in the Jaffe case. Further, the Williamson plaintiffs allege that the


Minite Order Form (0697)

United States District Court, Northern District of [linois

Name of Assigned Judge Ronald A. Guzman Sitting Judge if Other
or Magistrate Judge than Assigned Judge
CASE NUMBER 02 C 5893 DATE 5/2/2003
CASE LAWRENCE E. JAFFE PENSION PLAN, vs. HOUSEHOLD INTERNATIONAL,
TITLE INC., etal
[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:
(1) im Filed motion of [ use listing in “Motion” box above.]
(2) a Bricf in support of motion due
(3) Qo Answer brief to motion duc_ . Reply to answer brief duc
(4) oO Ruling/Hearing on _, set for at
(5) oO Status hearing[held/continued to] [set for/re-set for] on sot for _at 7
(6) oO Pretrial conference[held/continued to] [set for/re-set for] on _ set for at =
(7) ao Trial[sct for/re-set for]on___ at _
(8) oO [Bench/Jury trial] [Hearing] held/continucd to at
(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agrcement/pursuant to}
CFRCP4(m) ClLocal Rule 41.1 CFRCP41(a)(1) CO FRCP41(a)(2).
ao [Other docket entry] The Court denies with prejudice Plaintiff's motion for a Finding of
Relatedness [45-1]. ENTER MEMORANDUM OPINION AND ORDER.
ab (For further detail see order attached to the original minute order.]
No notices required, advised in open court,
No notices required, umnber of notioes
Notices mailed by judge’s stuff. M AY 0 5 2003
Notified counse| by telephone, 6
wv | Dockeling to mail notices. vine me oo
Mail AO 40 form.
Copy to judge/magistrate judge, }
i
courtroom
CG deputy’s
initials
Date/time received in
central Clerk's Office ‘malting deputy iniiate



defendants breached their fiduciary duties by entering into an agreement with HSBC which
insulates defendants from any liability. (fd. 11.) This is also not an issuc in Jaffe.

Moreover, even if the movant could satisfy LR 40.4(b)(4) on the merits, under LR
40.4(c), a motion to reassign must explicitly indicate how conditions required by section (b) will
be met if the cases are found to be related. The judges of this Court have interpreted subsection
(c) to impose an obligation on the moving party to specifically identify why each of the four
conditions for reassignment under LR 40.4(b) is met. Here, the movant has failed to comply
with LR 40.4(c) because the movant has failed to articulate why the cases are susceptible of
disposition in a single proceeding. Although the common facts in this case may indirectly
implicate LR 40.4(b)(4), nothing in the four corners of the motion argues that the cases are
susceptible of disposition in a single proceeding. The plaintiff alleges that there is substantial
overlap of issues and parties, but does not argue that a reassignment would satisfy Rule
40.4(b)(4). In Davis v. Quebecor World, No. 01 C 8014, 2002 WL 27660, at *3 (N.D. IIL. Jan.
10, 2002), another judge of this Court denied the motion to reassign because the movant failed to
address whether the cases could be disposed of in a single proceeding and whether a
reassignment would result in savings of judicial time and effort. Similarly, in Daniels v.
Pipefitters’ Ass'n Local Union No. 597, 174 F.R.D. 408, 411 (N.D. Ill. 1997), another judge of
this Court denied a motion to reassign because the movant failed to specifically explain how the
conditions for reassignment were met, but rather made the general conclusory assertion that the
conditions were met. This Court will not stray from the holdings of those courts so as to lower
the bar for pleading under LR 40.4(c), which requires a movant to explicitly articulate reasons

that satisfy each of the four LR 40.4(b) conditions. The movant in this case has failed to


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION DOCKETED

LAWRENCE E. JAFFE PENSION PLAN,
On Behalf of Itself and All Others MAY 0 5 2003
Similarly Situated,

Plaintiff,

HOUSEHOLD INTERNATIONAL, INC.,
ARTHUR ANDERSEN, LLP,
W.F. ALDINGER, and D.A. SCHOENHOLZ,

)
)
)
)
)
)
v. ) Judge Ronald A. Guzman
)
) 02 C 5893
)
)
)
Defendants. )
MEMORANDUM OPINION AND ORDER
Before the Court is Lawrence E. Jaffe Pension Plan’s (“Jaffe”) Motion for a Finding of
Relatedness pursuant to Local Rule (“LR”) 40.4 between Williamson v. Aldinger, case no. 03 C
331, related to a case pending before this Court, Jaffe v. Household International Inc., case no.

02 C $893. For the following reasons, the Court denies the motion with prejudice.

BACKGROUND

Presently pending before another judge of this Court is Williamson v. Aldinger. In that
case, plaintiff Leland Williamson, has sued defendants derivatively on behalf of Houschold
International, Inc. and alleges that defendant members of the board of directors of Household
Intemational and several of its top officers violated the Sarbanes-Oxley Act, breached their
fiduciary duties of loyalty and due care, wasted corporate assets, abused their control, and were
unjustly enriched by their improper actions. (P1.’s Mot. Finding Relatedness at Ex. A, {j 1

(hereinafter “Pl.'s Mot.”).) Presently pending before this Court is Jaffe v. Household

gO


International, Inc, Jaffe alleges in a shareholder class action that defendant Household
International materially misrepresented critical information and filed false and misleading
statements in violation of Rule 10b-5 of the Security Exchange Act, 17 C.F.R. § 240.10b-5.

(Pl.’s Mot. at Ex. A, JY 1-5.)

DISCUSSION

In order to reassign a case under LR 40.4, the movant must satisfy the requircments of
both LR 40.4(a) and LR 40.4(b). First, under LR 40,4(a), “[t]wo or more cases may be related if
one or more of the following conditions are met: (1) the cases involve the same property; (2) the
cases involve some of the same issues of fact or law; (3) the cases grow out of the samc
transaction or occurrence; or (4) in class action suits, one or more of the classes involved in the
cases is or are of the same,”

Here, the movant satisfies the third criterion that the cases involve some of the same
issues of fact or law. Both the shareholder class action in Jaffe and the derivative suit in
Williamson are based on allegations that Household International misrepresented financial
information to the public and to its sharcholders by overstating its profits, and misled the public
and its shareholders by failing to disclose critical information regarding its general accounting
ptactices. Specifically, Count | of Jaffe alleges that defendant Household International and its
Chief Executive Officer (“CEO”) and Chief Operating Officer (“COO”) violated Section 10b-5
of the Securities and Exchange Act by releasing materially false and misleading statements,
reports, and press releases, Similarly, in Williamson, to establish violations of the Sarbanes-
Oxley Act and common law, plaintiffs rely in part on the conduct of the CEO, COO, as well as
fourteen other directors in relation to the alleged materially false and misleading statements by

2