UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

HANNA KLEINPETER-FLECK, individually and on

behalf of all others similarly situated,

Plaintiff,

vs.

COLLINS & AIKMAN CORPORATION, DAVID A.

STOCKMAN, J. MICHAEL STEPP and

BRYCE M. KOTH,

Defendants

Case No. 1:05-cv- 03791-MGC

K. J. EGLESTON, individually and on behalf of all

others similarly situated,

Plaintiff,

vs.

JERRY L. MOSINGO, DAVID A.

STOCKMAN, J. MICHAEL STEPP and

BRYCE KOTH,

Defendants

Case No. 1:05-cv-04950-JGK

MORRIS AKERMAN, individually and on behalf of

all others similarly situated,

Plaintiff,

vs.

COLLINS & AIKMAN CORPORATION, DAVID

STOCKMAN, J. MICHAEL STEPP and

BRYCE KOTH,

Defendants

Case No. 1:05-cv- 05098-UA

MEMORANDUM OF LAW IN SUPPORT OF MOTION OF K. J. EGLESTON

FOR CONSOLIDATION, APPOINTMENT

AS LEAD PLAINTIFF AND APPROVAL OF SELECTION OF LEAD COUNSEL

Case 1:05-cv-04950-MBM Document 3 Filed 06/06/2005 Page 1 of 18
TABLE OF CONTENTS

PAGE NO.

TABLE OF AUTHORITIES .......................................................................................................... ii

INTRODUCTION .......................................................................................................................... 1

PROCEDURAL BACKGROUND................................................................................................. 2

STATEMENT OF FACTS ............................................................................................................. 2

ARGUMENT.................................................................................................................................. 7

I. THE ACTIONS SHOULD BE CONSOLIDATED ........................................................... 7

II. MOVANT K. J. EGLESTON SHOULD BE APPOINTED LEAD PLAINTIFF.............. 7

A. The Procedure Required by the PSLRA ................................................................. 7

B. Movant K. J. Egleston Satisfies the “Lead Plaintiff”Requirements

of the PSLRA.......................................................................................................... 8

1. Movant K.J. Egleston Has Complied with the PSLRA and

Should Be Appointed Lead Plaintiff........................................................... 8

2. The Movant Has the Largest Financial Interest in the Relief

Sought by the Class..................................................................................... 9

3. The Movant Otherwise Satisfies Rule 23 ................................................. 10

III. THE COURT SHOULD APPROVE MOVANTS K.J. EGLESTON’S

CHOICE OF COUNSEL.................................................................................................. 12

CONCLUSION............................................................................................................................. 13

Case 1:05-cv-04950-MBM Document 3 Filed 06/06/2005 Page 2 of 18
ii

TABLE OF AUTHORITIES

CASES

Page(s)

In Re Auction Houses Antitrust Litigation,

197 F.R.D. 71 (S.D.N.Y. 2000)..............................................................................................13

Avagliano v. Sumitomo Shoji America, Inc.,

103 F.R.D. 562 (S.D.N.Y. 1984)............................................................................................11

Bassin v. Decode,

04 Civ. 7050,

2005 U.S. Dist. LEXIS 51 (S.D.N.Y. Jan. 3, 2005) .............................................................2, 9

Bishop v. New York City Department of Housing Preservation and Development,

141 F.R.D. 229 (S.D.N.Y. 1992)............................................................................................11

In re Cable & Wireless, PLC, Sec. Litigation,

217 F.R.D. 372 (E.D. Va. 2003).............................................................................................11

In re Cavanaugh,

306 F.3d 726 (9th Cir. 2002) ..............................................................................................8, 13

In re Drexel Burnham Lambert Group, Inc.,

960 F.2d 285 (2d Cir. 1992),

cert. dismissed sub nom., 506 U.S. 1088 (1993)....................................................................11

Ferrari v. Impath,

03 Civ. 5667,

2004 U.S. Dist. LEXIS 13898 (S.D.N.Y. July 15,2004)....................................................9, 10

Fischler v. Amsouth Bancorporation,

96-1567-C,

1997 U.S. Dist. LEXIS 2875 (M.D. Fla. Feb. 6, 1997)..........................................................10

Garfinkel v. Memory Metals, Inc.,

695 F. Supp. 1397 (D. Conn. 1988)........................................................................................12

Greebel v. FTP Software,

939 F. Supp. 57 (D. Mass. 1996)..............................................................................................8

Lax v. First Merchants Acceptance Corp.,

97 Civ. 2715,

1997 U.S. Dist. LEXIS 11866 (N.D. Ill. Aug. 11, 1997) .......................................................10

Case 1:05-cv-04950-MBM Document 3 Filed 06/06/2005 Page 3 of 18
iii

In re MicroStrategy Inc. Sec. Litigation,

110 F. Supp. 2d 427 (E.D. Va. 2000) .....................................................................................11

In re Olsten Corp.,

3 F. Supp. 2d 286 (E.D.N.Y. 1998)..........................................................................................2

In re Party City Sec. Litigation,

189 F.R.D. 91 (D.N.J. 1999).....................................................................................................2

Pirelli Armstrong Tire Corp. v. LaBranche & Co., Inc.,

03 Civ. 8264,

2004 U.S. Dist. LEXIS 9571 (S.D.N.Y. May 27, 2004) ..........................................................9

In Re Razorfish, Inc. Securities Litigation,

143 F. Supp. 2d 304 (S.D.N.Y. 2001) ....................................................................................13

Sczesny Trust v. KPMG LLP,

223 F.R.D. 319 (S.D.N.Y. 2004)..............................................................................................9

Walsh v. Northup-Grumman Corp.,

162 F.R.D. 440 (E.D.N.Y. 1995)............................................................................................12

Zaltzman v. Manugistics Group, Inc.,

S-98-1881,

1998 U.S. Dist. LEXIS 22867 (D. Md. Oct. 8, 1998) ............................................................11

STATUTES

15 U.S.C. § 78u-4(a)(3) ......................................................................................................... passim

Case 1:05-cv-04950-MBM Document 3 Filed 06/06/2005 Page 4 of 18
Plaintiffs K. J. Egleston submits this memorandum of law in support of his motion for: (i)

consolidation of the actions referenced in the instant captions (the “Actions”); (ii) appointment as

Lead Plaintiff, pursuant to Section 21D of the Securities Exchange Act of 1934 (the “1934 Act”),

as amended by the Private Securities Litigation Reform Act of 1995 (the “PSLRA”); and (iii)

approval of Lead Plaintiff’s selection of Lead Counsel.

INTRODUCTION

The Actions are securities fraud class actions brought against certain officers and

directors of Collins & Aikman Corporation (“Collins & Aikman” or the “Company”) who, but

for the automatic stay provisions of the United States Bankruptcy Code would be a defendant in

this action (all collectively, “Defendants”). The complaint alleges violations of Sections 10(b)

and 20(a) of the 1934 Act, and Rule 10b-5 promulgated thereunder, on behalf of a class (the

“Class”) consisting of all persons, other than defendants, who acquired Collins & Aikman

securities during the period from May 15, 2003 to March 17, 2005, inclusive (the “Class

Period”).

Movant K. J. Egleston (the “Movant”) acquired 2,000 shares of Collins & Aikman

common stock during the Class Period and suffered $6,390.00 in losses as a result of

Defendants’ misconduct. The Movant seeks Court approval of his appointment as Lead Plaintiff

and his selection of Lead Counsel for himself and the Class as set forth herein. The Movant

believes he has the largest financial interest in the litigation. See, e.g., In re Olsten Corp., 3 F.

Supp. 2d 286, 296 (E.D.N.Y. 1998)(citing Lax v. First Merchants Acceptance Corp., 97 Civ.

2715, 1997 U.S. Dist. LEXIS 11866, at *5 (N.D. Ill. Aug. 11, 1997)). Also, see Bassin v.

Decode, 04 Civ. 7050 (RJH), 2005 U.S. Dist. LEXIS 51, at *8 (S.D.N.Y. Jan. 3, 2005) (Holwell,

J.). As discussed below, the Movant has satisfied each of the requirements of the PSLRA and

this Court and, therefore, is qualified for appointment as Lead Plaintiff in this Action.

Case 1:05-cv-04950-MBM Document 3 Filed 06/06/2005 Page 5 of 18
2

PROCEDURAL BACKGROUND

On April 5, 2005, notice of pendency of a class action on behalf of a class consisting of

all persons who purchased the securities of Collins & Aikman, during a proposed Class Period of

between May 6, 2004 and March 17, 2005 inclusive, over a widely-available, national businessoriented newswire service, PRNewswire, advising members of the proposed class of their right

to move the Court to serve as lead plaintiff(s) no later than 60 days from the date of publication

of the notice. See Bruckner Decl., Ex. A.

STATEMENT OF FACTS

1

Collins & Aikman is engaged primarily in the design, engineering and manufacture of

automotive interior components, systems and modules. The Company supplies products from

three primary categories: plastic components and cockpits, soft trim and convertible roof

systems. Collins & Aikman corporate offices are located at 250 Stephenson Highway, Troy,

Michigan 48083. Collins & Aikman employs 24,000 individuals and has a network of more than

100 technical centers, sales offices and manufacturing sites in 17 countries.

Throughout the Class Period, Collins & Aikman issued statements and press releases, and

filed reports with the SEC describing the Company’s business and financial condition. These

representations were materially false and misleading throughout the Class Period because they

failed to disclose and/or misrepresented the following adverse facts, among others: (1) that the

Company improperly accounted for certain supplier rebates; (2) that the Company's financial

statements required net adjustments of approximately $10-$12 million; (3) that the Company's

financial statements were not prepared in accordance with GAAP; (4) that the Company lacked

1 All facts are taken from the complaint styled K.J. Egleston v. Jerry L. Mosingo, et al. which is

attached to this motion as per Your Honor’s Individual Practices. See Bruckner Decl., Ex. B.

Case 1:05-cv-04950-MBM Document 3 Filed 06/06/2005 Page 6 of 18
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adequate internal controls and was therefore unable to ascertain the true financial condition of

the Company; and (5) that as a consequence of the foregoing, the Company's net income and

financial results were materially overstated.

At the end of each quarter throughout the class period, the Company announced financial

results which were later repeated and reaffirmed in the Company’s Reports on Form 10-Q filed

with the SEC which were signed by one or more of the Defendants.

Defendants Stockman touted the Company’s results, after they were announced in

November 9, 2004, stating: “For the fifth consecutive quarter our EBITDA performance,

excluding restructuring and impairment charges, was up from the prior year on a comparable

basis. This was achieved despite the headwinds from increased commodity costs and OEM

production cuts. The savings from the restructuring program that began in the third quarter of

2003 has generated significant fixed cost reductions.”

On March 17, 2005, Collins & Aikman issued a press release announcing a delay in filing

its Form 10-K and admitted that the Company had improperly accounted for $2 million in

vendor rebates in 2004, thereby requiring a restatement of its results for the first three quarters of

2004 and perhaps of fiscal year 2003. Collins & Aikman further announced that the Company’s

audit committee had retained the law firm of Davis & Polk to assist with it ongoing

investigation. The press release stated:

The Company did not file its Annual Report on Form 10-K

containing fiscal 2004 audited financial statements by its due date

yesterday since it requires additional time to complete the review

of the accounting issues referred to below, the financial reporting

process, and the Company’s assessment of controls over financial

reporting. As permitted by Rule 12b-25 under the Securities

Exchange Act of 1934, the Company today filed a notification

providing that, among other things, its Form 10-K filing will

nonetheless be timely filed if it is filed no later than 15 calendar

days after its original due date. The audit, and other necessary

Case 1:05-cv-04950-MBM Document 3 Filed 06/06/2005 Page 7 of 18
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work required for the Form 10-K to be filed, may not be completed

within that extended time frame.

During the course of finalizing its financial statements for its fiscal

year ended December 31, 2004, the Company identified certain

accounting for supplier rebates that led to premature or

inappropriate revenue recognition or that was inconsistent with

relevant accounting standards and the Company's policies and

practices. The Company immediately initiated an internal review

of these matters and expects to restate its results for the nine

months ended September 30, 2004 to reflect the correct accounting

for these rebates. The Company is continuing to evaluate whether

a restatement of its 2003 results will be necessary. The Company

presently expects to reduce its previously reported operating

income by $10 - $12 million for the nine months ended September

30, 2004. The Company's outside auditors have not reviewed

these conclusions, and additional adjustments may be required.

* * * *

Internal Accounting Investigation and Related Matters

In the ordinary course, the Company has received and continues to

receive rebates as a result of anus length transactions with its

vendors. Depending upon the terms of the rebate agreement, these

rebates are either recognizable in the quarter in which the rebate

agreement is reached or recognized over an appropriate future

period. In the course of finalizing the Company's 2004 financial

results, the Company identified certain issues related to accounting

for supplier rebates that led to premature or inappropriate income

recognition or that was inconsistent with relevant accounting

standards and the Company's policies and practices. The Company

immediately initiated a review of all vendor rebates it received

from 2002 through 2004 to ensure that it has properly recognized

the rebates in the appropriate quarterly period. The Company has

completed its accounting review of these rebates, but expects to

undertake a thorough review of its controls, procedures and other

circumstances that led to the premature or inappropriate income

recognition and that was inconsistent with relevant accounting

standards and the Company’s policies and practices. The nature

and scope of that review is under consideration. The Company's

Audit Committee and outside auditors have been informed of these

issues and are evaluating an appropriate course of action.

The Company’s internal review of vendor rebates covered an

aggregate of approximately $88 million of vendor transactions in

fiscal years 2002 through 2004. Of such amount, the Company

Case 1:05-cv-04950-MBM Document 3 Filed 06/06/2005 Page 8 of 18
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believes that net adjustments of approximately $10 - $12 million,

are required primarily occurring during fiscal 2004. The Company

expects to restate its results for the nine months ended September

30, 2004 to reflect these revisions. The Company is continuing to

evaluate whether a restatement of its 2003 results will be

necessary. We have not taken into account this impact in our

preliminary report of 2004 results. These preliminary results

remain subject to material change and have not been reviewed by

our outside auditors.

The Company is working towards completion of its assessment of

internal controls over financial reporting required under Section

404 of the Sarbanes-Oxley Act and has concluded that certain

material weaknesses, in addition to the matters leading to the

restatement described above, existed at December 31, 2004, but its

assessment of the effectiveness of the Company’s control over

financial reporting is ongoing and the extent of those material

weaknesses remains under review. The Company’s outside auditor

is in the process of completing its audit of internal controls over

financial reporting and has communicated the existence of material

weaknesses. The potential material weaknesses identified include

the following: (i) the adequacy of the Company's resources with

appropriate accounting expertise to address accounting and

reporting matters in certain areas, including revenue recognition,

vendor arrangements and post-retirement benefits, and to supervise

the Company's decentralized and disparate accounting

environment and ensure an appropriate segregation of duties; (ii)

the adequacy of the Company's internal audit function’s resources

and ability to monitor compliance with established policies and

procedures; (iii) the effectiveness of certain information

technology controls and the sufficiency of documentation to assess

the effectiveness of such controls including embedded system

application controls; (iv) the adequacy of procedures to

consistently identify and reconcile fixed assets and periodically

review assets for impairment; and (v) the completeness and

consistent adherence to Company policies and procedures. These

issues include a range of documentation- related issues and

reconciliation issues. Other material weaknesses may be identified

as a result of further investigation of the circumstances

surrounding the expected restatement arising from vendor rebates.

Our review and the audit is ongoing.

While the Company has implemented remediation steps with

respect to certain significant deficiencies and material weaknesses,

a number of issues still need to be addressed. The Company's

remediation plans include the assignment of specific resources

with given timelines for each finding. Measurement criteria have

Case 1:05-cv-04950-MBM Document 3 Filed 06/06/2005 Page 9 of 18
6

also been established to monitor the progress of these remediation

efforts. To ensure that the Company addresses these issues

thoroughly, effectively, and timely, the internal audit department

has been supplemented with the services of several outside

specialists. Further required remediation will be identified and

undertaken as a result of the internal accounting investigation.

Impact on Financing Arrangements

The Company intends to operate in the ordinary course, but it

cannot presently comment upon the timing for completion of, or

the ultimate scope or outcome of, the internal accounting

investigation, the audit and the restatements. Until the audit and

any restatements are complete, it will be difficult to determine the

full scope of any financial restatement or prior period adjustments

arising from these irregularities. Consequently, the Company is

still evaluating its financial covenant compliance under its senior

credit facility, as well as other compliance issues under other

financing arrangements. If necessary or desirable, the Company

will seek a waiver of relevant provisions.

The Company is obligated to provide audited financial statements

under a number of its debt, receivables facility, operating lease and

other agreements within prescribed periods. The Company relies

upon its receivables facility with GE Capital Corporation for its

liquidity and the unavailability of funds thereunder would be

material and adverse. The Company has received waivers of

various provisions of its receivables financing facility and its

Hermosillo, Mexico funding arrangements, both of which are held

by GE Capital Corporation, so that it will continue to provide the

Company with access to financing under those facilities in the

ordinary course of business until May 20, 2005, absent certain new

adverse developments. The Company also intends to seek waivers

and amendments of its bank credit facilities and of various lease

agreements, as required or desirable. There can be no assurance

that any other required or desirable waivers will be received on a

timely basis and the failure to obtain waivers could be material and

adverse.

Upon this disclosure, shares of the Company’s stock fell $0.39 per share, or about 24% to

close at $1.24 per share, on unusually heavy trading volume.

Defendants misrepresented the Company’s revenues through accounting improprieties

resulting in reported financial results that were materially false and misleading, and in violation

Case 1:05-cv-04950-MBM Document 3 Filed 06/06/2005 Page 10 of 18
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of Generally Accepted Accounting Principles (“GAAP”), as well as the Company’s own stated

accounting policies. Moreover, Defendants represented to the public that Collins & Aikman was

a successful automotive supply company, with good financial results, while concealing that the

Company’s financial expectations were the results of Defendants’ having artificially inflated the

Company’s revenues by failing to properly account for supplier credits and rebates.

ARGUMENT

I. The Actions Should Be Consolidated

The above-captioned actions involve class action claims on behalf of all who purchased

shares of any and/or every class of Collins & Aikman shares during the Class Period and assert

essentially similar and overlapping class claims. Consolidation is appropriate where, as here,

there are actions involving common questions of law or fact. See Fed. R. Civ. P. 42 (a); Johnson

v. Celotex Corp., 899 F.2d 1281, 1284 (2d Cir.), cert. denied, 498 U.S. 920 (1990). That test is

met here, and the Actions should be consolidated.

II. Movant K. J. Egleston Should Be Appointed Lead Plaintiff

A. The Procedure Required by the PSLRA

The PSLRA has established the procedure that governs the appointment of a lead plaintiff

in “each action arising under the [Exchange Act] that is brought as a plaintiff class action

pursuant to the Federal Rules of Civil Procedure.” 15 U.S.C. §78u-4(a)(1) and (a)(3)(B)(i).

First, the plaintiff who files the initial action must publish a notice to the class, within 20

days of filing the action, informing class members of their right to file a motion for appointment

as lead plaintiff. 15 U.S.C. §78u-4(a)(3)(A)(i). Notice of an action was published via

PRNewswire on April 5, 2005. See Bruckner Decl., Ex. A. Second, within 60 days after

publication of the first notice, any person or group of persons who are members of the proposed

Case 1:05-cv-04950-MBM Document 3 Filed 06/06/2005 Page 11 of 18
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class may apply to the Court to be appointed as lead plaintiff, whether or not they have

previously filed a complaint in the action. 15 U.S.C. § 78u-4(a)(3)(A) and (B).

Third, the PSLRA provides that within 90 days after publication of the notice, the Court

shall consider any motion made by a class member and shall appoint as lead plaintiff the member

or members of the class that the Court determines to be most capable of adequately representing

the interests of class members. 15 U.S.C. § 78u-4(a)(3)(B). In determining the “most adequate

plaintiff,” the PSLRA provides that:

[T]he court shall adopt a presumption that the most adequate

plaintiff in any private action arising under this title is the person

or group of persons that --

(aa) has either filed the complaint or made a motion in response

to a notice . . .

(bb) in the determination of the court, has the largest financial

interest in the relief sought by the class; and

(cc) otherwise satisfies the requirements of Rule 23 of the

Federal Rules of Civil Procedure.

15 U.S.C. § 78u-4(a)(3)(B)(iii). See generally Greebel v. FTP Software, 939 F. Supp. 57, 64 (D.

Mass. 1996). See also In re Cavanaugh, 306 F.3d 726, 729 n.2 (9

th Cir. 2002): “The Act sets up

a rebuttable presumption that the plaintiff with the largest stake in the controversy will be the

lead plaintiff.” Movants satisfy each of these criteria and specifically have the largest financial

interest in the relief sought by the class.

B. Movant K. J. Egleston Satisfies the

“Lead Plaintiff” Requirements of the PSLRA

1. Movant K.J. Egleston Has Complied with the PSLRA and

This Court’s Order and Should Be Appointed Lead Plaintiff

Pursuant to the provisions of the PSLRA, the Movant K.J. Egleston has timely moved to

be appointed lead plaintiff within the requisite time frame on behalf of all members of the Class.

Case 1:05-cv-04950-MBM Document 3 Filed 06/06/2005 Page 12 of 18
9

The Movant has duly signed and filed a certification stating that he has reviewed the

complaint filed in the action and is willing to serve as a representative party on behalf of the

Class. See Bruckner Decl., Ex. B. In addition, the Movant has selected and retained experienced

and competent counsel to represent itself and the Class. See Bruckner Decl., Ex. D.

Accordingly, the Movant has satisfied the individual requirements of 15 U.S.C. § 78u4(a)(3)(B) and is entitled to have his application for appointment as Lead Plaintiff and selection

of counsel, as set forth herein, considered and approved by the Court.

2. The Movant Has the Largest Financial

Interest in the Relief Sought by the Class

According to 15 U.S.C. § 78u-4(a)(3)(B)(iii), the court shall appoint as lead plaintiff the

class member or members who represent the largest financial interest in the relief sought by the

action. “In light of the PSLRA’s silence in prescribing a method for assessing a movant's

financial interest, courts have examined several factors such as: (1) the number of shares

purchased during the class period; (2) the number of net shares purchased during the class

period; (3) the total net funds expended during the class period; and (4) the approximate losses

suffered.” Bassin v. Decode, 04 Civ. 7050 (RJH), 2005 U.S. Dist. LEXIS 51, at *8 (S.D.N.Y.

Jan. 3, 2005) (Holwell, J.) See also Pirelli Armstrong Tire Corp. v. LaBranche & Co., Inc., 03

Civ. 8264 (RWS), 2004 U.S. Dist. LEXIS 9571, at *7 (S.D.N.Y. May 27, 2004) (quoting Lax v.

First Merchants Acceptance Corp., 97 Civ. 2715, 1997 U.S. Dist. LEXIS 11866, at *5 (N.D. Ill.

Aug. 11, 1997)); Sczesny Trust v. KPMG LLP, 223 F.R.D. 319, 323 (S.D.N.Y. 2004); Ferrari v.

Impath, 03 Civ. 5667 (DAB), 2004 U.S. Dist. LEXIS 13898, (S.D.N.Y. July 15,2004), at *4.

During the Class Period, as evidenced by, among other things, the accompanying signed

certification, Movant K.J. Egleston acquired 2,000 shares of Collins & Aikman common stock

for $7,990.00 and thereby suffered $6,390.00 in losses as a result of Defendants’ misconduct.

Case 1:05-cv-04950-MBM Document 3 Filed 06/06/2005 Page 13 of 18
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The Movant herein has a significant financial interest in this case.

2

The Movant has not received

notice of any other applicant or applicant group that has sustained greater financial losses in

connection with the purchase and/or sale of the Company’s common stock. Therefore, the

Movant satisfies all of the PSLRA’s prerequisites and the practice of this judicial district for

appointment as Lead Plaintiff in this action and should be appointed as Lead Plaintiff pursuant to

15 U.S.C. § 78u-4(a)(3)(B).

3. The Movant Otherwise Satisfies Rule 23

According to 15 U.S.C. § 78u-4(a)(3)(B), in addition to possessing the largest financial

interest in the outcome of the litigation, the lead plaintiff must also “otherwise satisf[y] the

requirements of Rule 23 of the Federal Rules of Civil Procedure.” Rule 23(a) provides that a

party may serve as a class representative only if the following four requirements are 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

typical of the claims or defenses of the class, and (4) the

representative parties will fairly and adequately protect the

interests of the class.

Of the four prerequisites to class certification, only two – typicality and adequacy –

directly address the personal characteristics of the class representative. Consequently, in

deciding a motion to serve as lead plaintiff, the Court shall limit its inquiry to the typicality and

adequacy prongs of Rule 23(a), and defer examination of the remaining requirements until the

lead plaintiff moves for class certification. Lax v. First Merchants Acceptance Corp., 97 Civ.

2715, 1997 U.S. Dist. LEXIS 11866, at *20 (N.D. Ill. Aug. 11, 1997); Fischler v. Amsouth

2

It is well established in this judicial district that the presumptive Lead Plaintiff is the movant with

the largest financial interest in the litigation. See Ferrari v. Impath, 03 Civ. 5667 (DAB), 2004 U.S. Dist.

LEXIS 13898 (S.D.N.Y. July 15, 2004)(Batts, J.) where Plaintiffs Group with largest financial interest in

the Class appointed Lead Plaintiff.

Case 1:05-cv-04950-MBM Document 3 Filed 06/06/2005 Page 14 of 18
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Bancorporation, 96-1567-CIV-T-17A, 1997 U.S. Dist. LEXIS 2875, at *7-*8 (M.D. Fla. Feb. 6,

1997); Zaltzman v. Manugistics Group, Inc., S-98-1881, 1998 U.S. Dist. LEXIS 22867, at *20

(D. Md. Oct. 8, 1998).

The Movant satisfies both the typicality and adequacy requirements of Rule 23, thereby

justifying his appointment as lead plaintiff. Under Rule 23(a)(3), the claims or defenses of the

representative parties must be typical of those of the class. Typicality exists if claims “arise from

the same course of events, and each class member makes similar legal arguments to prove the

defendant’s liability.” See In re Drexel Burnham Lambert Group, Inc., 960 F.2d 285, 291 (2d

Cir. 1992), cert. dismissed sub nom., 506 U.S. 1088 (1993); In re Cable & Wireless, PLC, Sec.

Litig., 217 F.R.D. 372, 375 (E.D. Va. 2003); In re MicroStrategy Inc. Sec. Litig., 110 F. Supp. 2d

427, 435-36 (E.D. Va. 2000). However, the claims of the class representative need not be

identical to the claims of the class to satisfy typicality. Instead, the courts have recognized that:

[T]he typicality requirement may be satisfied even if there are

factual dissimilarities or variations between the claims of the

named plaintiffs and those of other class members, including

distinctions in the qualifications of the class members.

Bishop v. New York City Dep’t of Hous. Pres. and Dev., 141 F.R.D. 229, 238 (S.D.N.Y. 1992).

See also Avagliano v. Sumitomo Shoji America, Inc., 103 F.R.D. 562, 582 (S.D.N.Y. 1984).

The Movant seeks to represent a class of all persons, other than defendants, who acquired

Collins & Aikman securities during the Class Period, who have identical, non-competing and

non-conflicting interests. The Movant satisfies the typicality requirement because he:

(i) acquired Collins & Aikman securities during the Class Period; (ii) at a price allegedly

artificially inflated as a result of Defendants’ violations of the federal securities laws; and (iii)

suffered damages thereby. Thus, typicality is satisfied since the claims asserted by the Movant

“arises from the same event or course of conduct that gives rise to claims of other class members

Case 1:05-cv-04950-MBM Document 3 Filed 06/06/2005 Page 15 of 18
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and the claims are based on the same legal theory.” Walsh v. Northup-Grumman Corp., 162

F.R.D. 440, 445 (E.D.N.Y. 1995).

Under Rule 23(a)(4) the representative party must also “fairly and adequately protect the

interests of the class.” The standard for adequacy of representation under Rule 23(a)(4) is met

by : (1) the absence of potential conflict between the named plaintiff and the class members,

and (2) the class representative’s choice of counsel who is qualified, experienced and able to

vigorously conduct the proposed litigation. Garfinkel v. Memory Metals, Inc., 695 F. Supp.

1397, 1405 (D. Conn. 1988).

The Movant is an adequate representative of the class. As evidenced by the injury

suffered by the Movant, who acquired Collins & Aikman securities at prices allegedly artificially

inflated by Defendants’ violations of the federal securities laws, the Movant’s interests are

clearly aligned with the members of the class, and there is no evidence of any antagonism

between the Movant’s interests and those of the other members of the class. In addition, as

shown below, the Movant’s proposed Lead Counsel is highly qualified, experienced and able to

conduct this complex litigation in a professional manner. Thus, the Movant’s prima facie

satisfies the commonality, typicality and adequacy requirements of Rule 23.

Clearly, the Proposed Lead Plaintiff satisfies all prongs of the Exchange Act's

prerequisites for appointment as Lead Plaintiff in this action pursuant to 15 U.S.C. §78u4(a)(3)(B)(iii).

III. The Court Should Approve Movant K.J. Egleston’s Choice of Counsel

Pursuant to 15 U.S.C. § 78u-4(a)(3)(B)(v), proposed lead plaintiff shall, subject to court

approval, select and retain counsel to represent the class they seek to represent. In that regard,

the Movant has selected and retained Wolf Haldenstein Adler Freeman & Herz LLP to serve as

Lead Counsel for the Class. This firm has extensive experience in successfully prosecuting

Case 1:05-cv-04950-MBM Document 3 Filed 06/06/2005 Page 16 of 18
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complex securities actions and has frequently appeared in major actions in this and other courts.

See Bruckner Decl., Ex. E.

Because there is nothing to suggest that the Movant or his counsel will not fairly and

adequately represent the Class, or that the Movant is subject to unique defenses – which is the

only evidence that can rebut the presumption of adequacy under the Act – this Court should

appoint the Movant as Lead Plaintiff and approve Movant’s selection of Wolf Haldenstein Adler

Freeman & Herz LLP as Lead Counsel for the Class.

CONCLUSION

For the foregoing reasons, the Movant requests that the Court: (i) consolidate the above

captioned actions; (ii) appoint Movant K.J. Egleston as Lead Plaintiff in the Action; and

(ii) approve Wolf Haldenstein Adler Freeman & Herz LLP as Lead Counsel for the Class.

DATED: June 6, 2005

New York, New York

Respectfully submitted,

WOLF HALDENSTEIN ADLER

FREEMAN & HERZ LLP

By: /s/

Fred Taylor Isquith, Esq. (FI-6782)

Gustavo Bruckner, Esq. (GB-7701)

Aya Bouchedid, Esq.

270 Madison Avenue

New York, New York 10016

Telephone: (212) 545-4600

Facsimile: (212) 545-4653

Proposed Lead Counsel

Case 1:05-cv-04950-MBM Document 3 Filed 06/06/2005 Page 17 of 18
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Thomas J. McKenna

Gainey & McKenna

485 Fifth Avenue, 3rd Floor

New York, New York 10017

Tel: 212-983-1300

Fax: 212-983-0383

Additional Plaintiff’s Counsel

/404284

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