FILED

United States Court of Appeals

Tenth Circuit

January 27, 2010

Elisabeth A. Shumaker

Clerk of Court

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

In re:

TED KARKUS,

Petitioner.

No. 09-1500

(D.C. No. 1:08-CV-02048-REB-KLM)

(D. Colo.)

ORDER

Before KELLY, BRISCOE, and GORSUCH, Circuit Judges.

Ted Karkus requests a writ of mandamus vacating the district court’s

June 15, 2009, order that denied his motion to serve as lead plaintiff in a putative

securities class action lawsuit against The Spectranetics Corporation and

appointed the Spectranetics Investor Group (SIG) instead. Because Karkus has

failed to show a clear and indisputable right to the writ, we deny the petition.

“[A] writ of mandamus is a drastic remedy, and is to be invoked only in

extraordinary circumstances.” In re Cooper Tire & Rubber Co., 568 F.3d 1180,

1186 (10th Cir. 2009) (quotation marks and citation omitted). Accordingly, we

will issue the writ “only when the district court has acted wholly without

jurisdiction or so clearly abused its discretion as to constitute usurpation of

power.” Id. (quotation marks omitted). The petitioner must show that he has “no

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1 Under the PSLRA, a district court must appoint as lead plaintiff the class

member that it “determines to be most capable of adequately representing the

interests of class members.” 15 U.S.C. § 78u-4(a)(3)(B)(i) (emphasis added). 

“The ‘most capable’ plaintiff–and hence the lead plaintiff–is the one who has the

greatest financial stake in the outcome of the case, so long as he meets the

requirements of Rule 23.” Cavanaugh, 306 F.3d at 729 (footnote omitted). 

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other adequate means to attain [] relief” and “that his right to the writ is clear and

indisputable.” Id. at 1187 (quotation marks omitted). In exercising our

discretion, we must also “be satisfied that the writ is appropriate under the

circumstances.” Id. (quotation marks omitted). 

Mandamus relief may be appropriate under certain circumstances to vacate

lead-plaintiff appointments made in disregard of the Private Securities Litigation

Reform Act of 1995 (PSLRA), 15 U.S.C. § 78u-4(a)(3). See In re Cavanaugh,

306 F.3d 726, 729-32, 739 (9th Cir. 2002) (issuing writ where district court

departed from sequential analysis mandated by PSLRA). But Karkus has failed to

convince us that the district court’s appointment of the SIG as lead plaintiff in

this case either ignored the mandates of the PSLRA or otherwise constituted a

gross abuse of discretion justifying issuance of the writ. The district court denied

Karkus’s motion because he failed to demonstrate that he personally holds the

largest financial stake in the outcome of this case.1

 Rejecting Karkus’s attempt to

claim for himself the losses suffered by his personal investment vehicle, Forrester

Financial, LLC, the court held it was unclear whether Karkus would have

standing to assert claims stemming from Forrester’s losses. In reaching this

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conclusion, the court distinguished Grubb v. Federal Deposit Insurance

Corporation, 868 F.2d 1151 (10th Cir. 1989), which held that a shareholder had

standing to assert claims for his company’s losses because he had shown he was

the true party at risk in the challenged transaction. Seizing on a cautionary

footnote in Grubb, the district court held that Karkus’s position as sole

shareholder of Forrester was not, by itself, sufficient to confer Article III standing

upon him individually. And it found that other factors in this case counseled

against combining Karkus’s losses with Forrester’s for purposes of determining

Karkus’s financial interest under the PSLRA. 

While this conclusion was based on an extremely narrow interpretation of

Grubb, we are not prepared to say that the district court’s decision was an

abdication of its judicial function or “such a gross abuse of discretion as to

warrant the issuance of the writ.” Cooper Tire, 568 F.3d at 1186-87 (quotation

marks omitted). Accordingly, Karkus has not shown that his right to the writ is

clear and indisputable. His petition is, therefore, DENIED.

Entered for the Court,

ELISABETH A. SHUMAKER, Clerk

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09-1500, In re Spectranetics.

KELLY, Circuit Judge, dissenting.

The presumptive lead plaintiff in this action is the one who “has the largest

financial interest in the relief sought by the class” and can otherwise satisfy the

requirements of Fed. R. Civ. P. 23. 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I)(bb) & (cc). 

The objective is to secure the lead plaintiff best able to represent the class. 15

U.S.C. § 77z-1(a)(3)(B)(i). The lead plaintiff selects class counsel. 15 U.S.C. §

78u-4(a)(3)(B)(v).

The district court was required to “compare the financial stakes of the

various plaintiffs and determine which one has the most to gain from the lawsuit.” 

In re Cavanaugh, 306 F.3d 726, 730 (9th Cir. 2002). This should be a

straightforward requirement. Cohen v. U.S. Dist. Ct., 586 F.3d 703, 709 (9th Cir.

2009). Mr. Karkus has claimed losses of approximately $1.26 million, more than

twice that of the three-member group that became the lead plaintiff.

The district court reasoned that because Mr. Karkus and his investment

vehicle, Forrester Financial, LLC, are separate legal entities, Mr. Karkus could

not aggregate Spectranetics stock losses. Yet Mr. Karkus is the sole officer,

beneficiary, member, owner, manager and employee of Forrester and all of

Forrester’s operations, including stock losses, flow through Mr. Karkus’s tax

return. Petition at 8 n.5, 16, 19-20. The statute merely requires Mr. Karkus to

have “the largest financial interest in the relief sought by the class.” He certainly

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2

 The district court’s suggestion that Mr. Karkus should have sought to have

Forrester appointed as a co-lead plaintiff appears inconsistent with the statute

which speaks of a lead plaintiff, although the lead plaintiff may be an individual

or a group. Cohen, 586 F.3d at 711 n.4. Moreover, Mr. Karkus indicated that he

was certifying the qualifying transactions individually and as sole officer and

beneficiary of Forrester. Although with 20-20 hindsight, Mr. Karkus might have

moved to be appointed as part of a group including himself and Forrester, this is

plainly a form over substance argument.

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appears to.2 The district court’s focus on the legal separation of Mr. Karkus and

Forrester Financial, LLC, and insistence that Mr. Karkus disaggregate the losses

is inconsistent with the statute as well as Grubb v. FDIC, 868 F.2d 1151, 1162

(10th Cir. 1989), where we indicated that a court should look at transactions

realistically, particularly given the remedial purpose of the securities laws. See

also Norris v. Wirtz, 719 F.2d 256, 259-61 (7th Cir. 1983) (trust beneficiary had

section 10(b) and Rule 10b-5 standing); Kirshner v. United States, 603 F.2d 234,

240 (2d Cir. 1979) (same). Given rather specific statutory requirements for

appointment of a lead plaintiff and selection of class counsel, courts have granted

mandamus relief when those requirements are not followed. See Cohen, 586 F.3d

at 710; Cavanaugh, 306 F.3d at 739. Mr. Karkus appears to have no other

adequate means to secure relief; though he could perhaps raise this issue on

appeal, by then it would be too late given litigation conducted by another lead

plaintiff and its choice of counsel. The district court’s order is difficult to

reconcile with the statute which speaks to “financial interest” and we have

rejected the same type of technical construction found here in Grubb. The issue

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is important given the effort to ensure consistent application of the PSLRA. I

would grant the writ and respectfully dissent.

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