of shares and could have the value of his currently held shares
diminished by a judgment against the Fund. That, however, does
not create a conflict because he stands to gain substantially
more by successfully pursuing the claims in this case than the
amount the value of his present shares might diminish.‘ See
Ziemack v. Centel Corp., 164 F.R.D. 477 (N.D. Ill. 1995). Last,
the attorneys for the lead plaintiffs are experienced and
qualified securities fraud litigators. Rule 23(a)(4) is
satisfied.

Since all the requirements for Rule 23(b) (3) class
certification are satisfied, the motion for class certification
will be granted.

If IS THEREFORE ORDERED that defendants' motion for
reconsideration or, alternatively, certification of an
interlocutory appeal [36-1,2] is denied. Lead plaintiffs' motion
for class certification [21] is granted. A class is certified
consisting of: All persons who purchased shares in Van Kampen
Prime Rate Income Trust between September 30, 1998 and March 26,
2001, inclusive. Excluded from the Class are the defendants,
members of each defendant's immediate family, any entity in which
any defendant has a controlling interest, and the legal

affiliates, representatives, heirs, controlling persons,

4A successful claim would not necessarily diminish the
value of current shares because it might be paid by other
defendants or insurance.

- 13-


within a reasonable period of time after the contested ruling and
may not be "inexcusably dilatory." Richardson Electronics,

Ltd. v. Panache Broadcasting of Pa., Inc., 202 F.3d 957, 958 (7th

Cir. 2000); Ahrenholz v. Board of Trustees of University of

Illinois, 219 F.3d 674, 675-76 (7th Cir. 2000). The two-month
delay in seeking certification may be considered inexcusably

dilatory. See Richardson, 202 F.3d at 958; Weir v. Propst, 915
F.2d 283, 286-87 (7th Cir. 1990); Fabricant v. Sears Roebuck &
Co., 2001 WL 883303 *1 (S.D. Fla. Jan. 29, 2001); United States

ex rel. N.E.W. Interstate Concrete, Inc. v. BUI Corp., 2000 WL

863039 *3 (S.D. Ind. June 9, 2000). A § 1292(b) interlocutory
appeal will not be certified.

The burden is on the lead plaintiffs to demonstrate that
all the requirements for class certification are satisfied.

Retired Chicago Police Association v. City of Chicago, 7 F.3d

584, 596 (7th Cir. 1993), cert. denied, 519 U.S. 932 (1996);
Thompson v. City of Chicago, 2002 WL 1303138 *3 (N.D. Ill.

June 12, 2002); Rahim v. Sheahan, 2001 WL 1263493 *9 (N.D. Ill.
Oct. 19, 2001); Anderson v. Cornejo, 199 F.R.D. 228, 238 (N.D.
Ill. 2000). Federal Rule of Civil Procedure 23(a) requires that
the following four prerequisites be satisfied: "(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


138 (N.D. Ill. 1993). To determine whether common questions
predominate, courts look to whether there is a 'common nucleus of
operative facts.' Ziemack [v. Centel Corp.], 163 F.R.D. [530,]

535 [(N.D. Ill. 1995)] (citing Rosario fv. Livaditis], 963 F.2d

(1013,] 1018 [(7th Cir. 1992), cert. denied, 506 U.S. 1051
(1993)]). A court should direct its inquiry primarily toward the

issue of liability, rather than damages, in determining whether

common questions predominate. Beale [v. EdgeMark Financial
Corp.], 164 F.R.D. [649,] 658 [(N.D. Ill. 1995)]." In _ re Bank

Qne Securities Litigation/First Chicago Shareholder Claims, 2002

WL 989454 *7 (N.D. Ill. May 14, 2002).

The question of which Documents relate to a particular
purchase is a relatively simple timing question that will not
predominate. Each of the Documents will relate to purchases made
within a particular time period. Whether a Document was
inaccurate is the more complicated and time-consuming issue and
one that will be generally applicable to the class, or at least
applicable to the subclass that purchased shares during the time
period relevant to that Document. Moreover, the Documents
generally contain similar wording and valuation issues, with much
of the analysis being applicable to all six Documents. As to the
knowledge of particular individuals affecting the statute of
limitations, there is nothing to indicate that a substantial

number of class members will have particularized knowledge that


common questions predominate, it is sometimes necessary to

determine the contours of the applicable law. See Szabo, 249

F.3d at 676-77; Retired Chicago Police, 7 F.3d at 598-99 (quoting

General Telephone Co. of Southwest v. Falcon, 457 U.S. 147, 160
{1982)); Anderson, 199 F.R.D. at 238; Clay v. American Tobacco
Co., 188 F.R.D. 483, 489 (S.D. Ill. 1999).

In this case, plaintiffs seek to certify a Rule 23(b) (3)
class. Plaintiffs' proposed class definition is:

All persons who purchased shares in the Fund
between September 30, 1998 and March 26, 2001,
inclusive (the "Class Period"). Excluded from
the Class are the defendants, members of each
defendant's immediate family, any entity in which
any defendant has a controlling interest, and the
legal affiliates, representatives, heirs,
controlling persons, successors, and predecessors
in interest or assigns of any such excluded
party.

To satisfy numerosity, it is not necessary to determine
the exact number of members in the class; a reasonable estimate

will suffice. Mungia v. Tony Rizza Oldsmobile, Inc., 2001 WL

1104635 *3 (N.D. Ill. Sept. 19, 2001); Rahim, 2001 WL 1263493 at

*12. The court may rely on commonsense assumptions or reasonable

inferences. Steinbrecher v. Oswego Police Officer Dickey, 138

F. Supp. 2d 1103, 1106 (N.D. Ill. 2001); Rahim, 2001 WL 1263493

at *12. However, a conclusory allegation that joinder is
impracticable or speculation as to the size of the class is

insufficient. Roe v. Town of Highland, 909 F.2d 1097, 1100 (7th


typical of the claims or defenses of the class, and (4) the
representative parties will fairly and adequately protect the
interests of the class." Failure to meet any one of these
requirements precludes certification of a class. Retired Chicago
Police, 7 F.3d at 596. If the Rule 23(a) elements are satisfied,
plaintiffs must also satisfy one of the subsections of Rule
23(b).

In ruling on class certification, the court has an
independent duty to scrutinize the appropriateness of class
certification; the court is not limited to arguments made by a
party opposing certification. In re General Motors Corp. Engine
Interchange Litigation, 594 F.2d 1106, 1134 (7th Cir.), cert.
denied, 444 U.S. 870 (1979); Anderson, 199 F.R.D. at 238. See

also Szabo v. Bridgeport Machines, Inc., 249 F.3d 672, 677 (7th

Cir.), cert. denied, 122 S. Ct. 348 (2001). Additionally, in
determining whether to grant certification, whether a claim will

ultimately be successful is not a consideration. Rahim, 2001 WL

1263493 at *9-10. However, that does not mean that the merits of
claims can be completely ignored. The "boundary between a class
determination and the merits may not always be easily
discernible." Retired Chicago Police, 7 F.3d at 598-99 (quoting

Eggleston v. Chicago Journeymen Plumbers' Local Union No. 130,

657 F.2d 890, 895 (7th Cir. 1981), cert. denied, 455 U.S. 1017

(1982)). In order to resolve questions of typicality or whether


other available methods for the fair and efficient adjudication
of the controversy." Fed. R. Civ. P. 23(b) (3). Matters to
consider include: "(A) the interest of members of the class in
individually controlling the prosecution or defense of separate
actions; (B) the extent and nature of any litigation concerning
the controversy already commenced by or against members of the
class; (C) the desirability or undesirability of concentrating
the litigation of the claims in the particular forum; and (D) the
difficulties likely to be encountered in the management of the
class action." Id. Defendants contend that common questions
will not predominate because of individual issues of causation
and knowledge.

During the proposed Class Period, there were a total of
six prospectuses and registration statements? that underlie the
claims in this case. Defendants contend that individual issues
will arise regarding which Documents relate to individual
purchases, whether there is a causal relationship between a
Document and a class member's Fund purchase, and whether
individual class members had knowledge of the alleged
misstatements outside the applicable statute of limitations.

"While common questions of law or fact must predominate,

they need not be exclusive. Scholes v. Moore, 150 F.R.D. 133,

3Hereinafter, these prospectuses and registration
statements will be referred to jointly as the "Documents."


Mimate Order Form (06/97)

United States District Court, Northern District of Illinois

N: f Assigned Jud; Sitting Judge if Oth
ioe Magistrate udge | WILLIAM T. HART than Assigned Judge
CASE NUMBER 01 C 7538 DATE AUG. 26, 2002
CASE IRENE ABRAMS, etc., et al. v. VAN KAMPEN FUNDS, INC., et al.
TITLE

[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

of the motion being presented.)

MOTION:

DOCKET ENTRY:

qd) Oo Filed motion of [ use listing in “Motion” box above.]

(2) oO Brief in support of motion due

(3) oO Answer brief to motion due___._ Reply to answer briefdue____.

(4) gq Ruling/Hearing on___set for at.

(5) oO Status hearing[held/continued to] [set for/re-set for] on set for at

(6) o Pretrial conference[held/continued to] [set for/re-set for} on setfor ss at_—
(72) o Trial[set for/re-set for] on at.

(8) oO (Bench/Jury trial] [Hearing] held/continued to___at

(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

Notified counsel by telephone.
Docketing to mail notices
Mail AO 450 form.

Copy to judge/magistrate judge.

courtroom
ow deputy’s

LUNOI Loisiq sn

ynay4a

82: Hd 92 ony Zo

initials

Coes antt

AUG 2 7 2002

date docketed

1S

docketing deputy initials

‘Aug. 26, 2002

dato maited notice

mailing initials

OFRCP4(m) O General Rule21 OFRCP41(a)(1) O FRCP41(a)(2).
ao [Other docket entry] Defendants’ motion for reconsideration or, alternatively, certification
of an interlocutory appeal [36-1,2] is denied. Lead plaintiffs' motion for class certification
[21] is granted. A class is certified (SEE DRAFT FOR DEFINITION). Parties shall meet to
discuss a proposed Notice to the Class. By September 6, 2002, parties shall file with the court
their proposed Notice to the Class.
(1) wf [For further detail see order attached to the original minute order.]
No notices required, advised in open court. “Document.
. . 7 Number
No notices required. umber of notices
A | Notices maited by judge’s staff

Y



(1977)). Accord Retired Chicago Police, 7 F.3d at 596-97; Rahim,
2001 WL 1263493 at *14. It is only necessary for the claim of
the class representative and the claims of the class at large to
have the "same essential characteristics;" there may still be

differences. Retired Chicago Police, 7 F.3d at 597 (quoting De

La Fuente, 713 F.2d at 232); Rahim, 2001 WL 1263493 at *14;

Danis v. USN Communications, Inc., 189 F.R.D. 391, 395 (N.D. Ill.

1999). Similar legal theories may control despite factual
distinctions. See Rosario, 963 F.2d at 1018; Clay, 188 F.R.D. at
491-92. "The key to typicality is based on the relationship
between the class representative and the class members: are the
named plaintiff's interests aligned with those of the proposed
class in such a way that the representative, in pursuing his own
claims, will also advance the interest of the class?" Rahim,
2001 WL 1263493 at *14. See also In re Bromine Antitrust
Litigation, 203 F.R.D. 403, 409 (S.D. Ind. 2001).

Defendants contend lead plaintiffs are not typical
because their Fund purchases relate to only four of the six
Documents that will be at issue for the Class Period. Defendants
also contend that lead plaintiffs face unique defenses based on
the dates they purchased Fund shares. As previously discussed
regarding the Rule 23(b) (3) requirements, the individual timing
issues are not overriding issues. Additionally, they do not make

the lead plaintiffs atypical. Their claims still rely on the

-1l1-


requires individual consideration. The common questions of law
and fact are likely to predominate over individual issues. Cf.
aid.

As to a class action being a superior method of
adjudication, securities cases often are particularly well-suited
for class action procedures. Id. at *4. Here, the predominate
issues of whether the Documents violated the Securities Act can
be more efficiently handled in a single litigation. Moreover,
pursuant to the PSLRA, all pending litigation on this issue has
already been consolidated before this court and the expense of
the litigation might otherwise make it difficult for the
plaintiffs to proceed individually. The superiority requirement
is satisfied. Cf. id. at *7-8. The Rule 23(b) (3) requirements
are fully satisfied.

Rule 23(a) (3) requires that the claims of the class
representatives be typical of the claims of the class. The
typicality requirement primarily focuses "on whether the named
representatives’ claims have the same essential characteristics
as the claims of the class at large. 'A plaintiff's claim is
typical if it arises from the same event or practice or course of
conduct that gives rise to the claims of other class members and
his or her claims are based on the same legal theory.'" De La

Fuente v. Stokely-Van Camp, Inc., 713 F.2d 225, 232 (7th Cir.

1983) (quoting Herbert Newberg, Class Actions @ 1115(b) at 185

-10-


Cir. 1990); Marcial v. Coronet Insurance Co., 880 F.2d 954, 957

(7th Cir. 1989); Mungia, 2001 WL 1104635 at *3; Steinbrecher, 138
F. Supp. 2d at 1106. As of January 2001, the Fund had over
560,000,000 outstanding shares. Plaintiffs estimate that there
would be thousands and possibly hundreds of thousands of class
members. Defendants do not dispute this estimate. Numerosity is
found to be satisfied.

Rule 23(a) (2) commonality "is not a demanding
requirement; one issue of fact or law common to all class members
will suffice." Anderson, 199 F.R.D. at 239. Accord Rahim, 2001
WL 1263493 at *13. In the present case, common questions will
include: whether defendants violated federal securities laws;
whether prospectuses and registration statements were materially
false and misleading; whether defendants were negligent and/or
grossly negligent in omitting or misrepresenting any material
facts; whether the Fund's net asset value ("NAV") was inflated at
times pertinent to the claims; and whether market prices were
available to value the senior loans held by the Fund. The Rule
23(a) (2) requirement is satisfied.

Related to the question of commonality are the Rule
23(b) (3) requirements. That rule requires two findings:

"[1] that the questions of law or fact common to the members
of the class predominate over any questions affecting only

individual members, and [2] that a class action is superior to


claims in that case. It is not a controlling resolution of this

issue. Danis v. USN Communications, Inc., 73 F. Supp. 2d 923,

932 (N.D. Ill. 1999). The motion for reconsideration will be
denied.

Alternatively, defendants move to certify the Rule 9(b)
issue for an interlocutory appeal under 28 U.S.C. § 1292(b).
Under the statute, certification "is appropriate when (1) the
appeal presents a question of law; (2) it is controlling; (3) it
is contestable; [and] (4) its resolution will expedite the

resolution of the litigation." Boim v. Quranic Literacy

Institute & Holy Land Foundation For Relief & Development, 291

F.3d 1000, 1067 (7th Cir. 2002). The split of authority supports
that the Rule 9(b) issue is contestable. However, the issue is
not controlling and its resolution will not materially advance,
but rather delay, the resolution of this case. The issue goes to
pleading requirements, not the merits of plaintiffs' securities
claims. Even if it were held that Rule 9(b) must be satisfied,
plaintiffs’ cause of action would not be dismissed. Instead,
they would be provided with the opportunity to amend their
complaint and likely would be able to file an amended complaint
satisfying the requirements of Rule 9(b).

Furthermore, even if the statutory criteria were
satisfied, the Seventh Circuit has also applied a judicially

created rule that the request for certification must be made


successors, and predecessors in interest or assigns of any such
excluded party. Parties shall meet to discuss a proposed Notice
to the Class. By September 6, 2002, parties shall file with the

court their proposed Notice to the Class.
ENTER:

Whew T Let

UNITED STATES DISTRICT JUDGE

DATED: AUGUST 26 , 2002

- 14 -


This court previously ruled on defendants' Rule 12(b) (6)

motion to dismiss.+ See Abrams v. Van Kampen Funds, Inc., 2002

WL 1160171 (N.D. Ill. May 30, 2002).? Almost two months later,
defendants filed their motion seeking reconsideration of the
holding that the pleading requirement of Rule 9(b) does not apply
to plaintiffs’ allegations of violations of sections 11 and 12 of
the Securities Act, 15 U.S.C. S§ 77k, 771(a) (2). In the prior
ruling, the split of authority was acknowledged and this court
chose to follow those precedents holding that Rule 9(b) does not
apply to claims for which fraud is not an element. Abrams, 2002
WL 1160171 at *6. Defendants present no convincing basis for
altering that ruling. Defendants' reliance on Sears _v. Liken,
912 F.2d 889, 892-93 (7th Cir. 1990), as binding precedent to the
contrary is misplaced. That case assumed, without any express

consideration of the issue, that Rule 9(b) applied to the § 12

JAlthough a motion for class certification should
generally be ruled upon prior to ruling on a motion to dismiss,
see Fed. R. Civ. P. 23(c) (1); Chavez v. Illinois State Police,
251 F.3d 612, 629-30 (7th Cir. 2001), some case law supports
that, under the PSLRA, it is appropriate to rule on a motion to
dismiss prior to considering class certification. See 15 U.S.C.
§ 77z-1(b) (1); Winn v. Symons International Group, Inc., 2001 WL
278113 *2 (S.D. Ind. March 21, 2001). But see In re Diamond
Multimedia Systems, Inc. Securities Litigation, 1997 WL 773733 *3
(N.D. Cal. Oct. 14, 1997). The parties in this case agreed it
was appropriate under the PSLRA to first rule on the motion to
dismiss.

?The allegations of the Consolidated Amended Complaint
are set forth in greater detail in Abrams. Familiarity with that
opinion is presumed.


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

DOGKETE

AUG 27 2002
IRENE ABRAMS, on behalf of
herself and all others
similarly situated,

Plaintiffs,

v. No. 01 C 7538
VAN KAMPEN FUNDS, INC.,

VAN KAMPEN INVESTMENT ADVISORY
CORPORATION, VAN KAMPEN PRIME
RATE INCOME TRUST, HOWARD TIFFEN,
RICHARD F. POWERS, III, STEPHEN L.
BOYD, DENNIS J. McDONNELL,

and JEFFREY W. MAILLET,

Defendants.

MEMORANDUM OPINION AND ORDER

This is a consolidated putative class action alleging
federal securities violations involving defendant Van Kampen
Prime Rate Income Trust's (the "Fund") valuation of senior loans
and is subject to the Private Securities Litigation Reform Act of
1995 ("PSLRA"), 15 U.S.C. § 77z-1. Under the PSLRA, Ken Fisher
and Tom Gallagher have been appointed as lead plaintiffs and
presently pending is their motion for class certification. Also
pending is defendants' motion for reconsideration or,

alternatively, for certification of an interlocutory appeal.

a


same legal theories as the putative class members and there are
no special defenses against the lead plaintiffs that would not
also apply as to other class members. Additionally, lead
plaintiffs do not lack an incentive to pursue claims regarding
the two Documents for which the lead plaintiffs did not make
related purchases since those two Documents contain statements
similar or identical to statements in the other four Documents.
Rule 23(a) (3) is satisfied.

Rule 23(a) (4) requires that the named representative
adequately represent the interests of the class. Three elements
must be satisfied: "(1) the class representative cannot have
antagonistic or conflicting claims with other members of the
class; (2) the class representative must have a ‘sufficient
interest in the outcome to ensure vigorous advocacy;' (3) counsel
for the class representative must be competent, experienced,
qualified and generally able to conduct the proposed litigation
vigorously." Lifanda v. Elmhurst Dodge, 2001 WL 755189 *3 (N.D.
Ill. July 2, 2001) (quoting Chandler v. Southwest Jeep-Eagle,
Inc., 162 F.R.D. 302, 308 (N.D. Ill. 1995)).

As previously discussed regarding typicality, lead
plaintiffs have an incentive to pursue claims as to ali the
putative class members and have a sufficient interest in
vigorously pursuing the entire case. Defendants contend that

lead plaintiff Fisher has a conflict because he is still an owner

-12-