Case Name: Theodore NOWAK and Gary Brockway, Individually and On Behalf of All Others Similarly Situated, Plaintiffs, v. FORD MOTOR COMPANY, Mickey Poli-Bartlett, William Clay Ford, Jr., Joseph W. Laymon, Donat R. Leclair, David G. Leitch, Roman J. Krygier, and John Does 1-20, Defendants
Court: United States District Court for the Eastern District of Michigan
Jurisdiction: United States
Decision Date: 2006-12-22
Citations: 240 F.R.D. 355
Docket Number: No. 06-11718
Parties: Theodore NOWAK and Gary Brockway, Individually and On Behalf of All Others Similarly Situated, Plaintiffs, v. FORD MOTOR COMPANY, Mickey Poli-Bartlett, William Clay Ford, Jr., Joseph W. Laymon, Donat R. Leclair, David G. Leitch, Roman J. Krygier, and John Does 1-20, Defendants.
Judges: 
Reporter: Federal Rules Decisions
Volume: 240
Pages: 355–368

Head Matter:
Theodore NOWAK and Gary Brockway, Individually and On Behalf of All Others Similarly Situated, Plaintiffs, v. FORD MOTOR COMPANY, Mickey Poli-Bartlett, William Clay Ford, Jr., Joseph W. Laymon, Donat R. Leclair, David G. Leitch, Roman J. Krygier, and John Does 1-20, Defendants.
No. 06-11718.
United States District Court, E.D. Michigan, Southern Division.
Dec. 22, 2006.
David H. Fink, E. Powell Miller, Jayson E. Blake, The Miller Law Firm, Rochester, MI, David A. Rosenfeld, Milberg, Weiss, New York, NY, Debra B. Pevos, Sullivan, Ward, Southfield, MI, John R. Climaco, John A. Peca, Scott D. Simpkins, Climaco, Lefkowitz, Cleveland, OH, Samuel H. Rudman, Lerach, Coughlin, Melville, NY, Lynn L. Sarko, Derek W. Loeser, Elizabeth A. Leland, Keller Rohrbaek, Seattle, WA, Stephen F. Wasinger, Stephen F. Wasinger PLC, Royal Oak, MI, Jeffrey T. Meyers, Morgan & Meyers, Dearborn, MI, for Plaintiffs.
Gary S. Tell, Robert N. Eccles, O’Melveny & Myers, Washington, DC, Kathleen A. Lang, Michelle Thurber Czapski, Dickinson Wright, Detroit, MI, for Defendants.

Opinion:
OPINION AND ORDER GRANTING OUSACHI PLAINTIFFS' MOTION FOR APPOINTMENT OF LEAD AND LIAISON COUNSEL (DKT. #40) AND DENYING NOWAK AND MCNEELY PLAINTIFFS' MOTIONS (DKT. # 9, 25)
PEPE, United States Magistrate Judge.
This is a consolidated ERISA case brought by certain salaried and hourly Ford employ ees against Ford Motor Company and various fiduciaries of the Ford 401(k) plans. While not yet certified as a class action under Fed.R.Civ.P. 23(b)(3), counsel for the separate plaintiff groups are seeking to be named lead and liaison counsel under Rule 23(g). Although this currently is only a putative class, efficient management of this action requires selection of lead and liaison counsel under Rule 23(g)(2) because of the inability of the Plaintiffs to agree on such counsel.
I. Factual and Procedural Background
Several ERISA Actions were filed against Ford Motor Company ("Ford" or the "Company"), certain officers and directors of the Company, and other fiduciaries of the 401(k) retirement savings plans established and sponsored by Ford as a benefit for its employees, including the Ford Tax-Efficient Savings Plan for Hourly Employees ("Hourly Plan") and the Ford Motor Company Savings and Stock Investment Plan for Salaried Employees ("Salaried Plan")(collectively, the "Plans"). The ERISA actions allege that Defendants breached their fiduciary duties under the Employee Retirement Income Security Act of 1974 ("ERISA"), in six principal ways.
(1) selecting and maintaining Ford Motor Company stock as an investment for the Plans when it was no longer a suitable or prudent investment option;
(2) encouraging participants in the Plans to invest in Ford Motor Company common stock;
(3) continuing to invest Company contributions in Ford Motor Company common stock and failing to divest the Plans from shares in Ford common stock at a time when that investment option became imprudent due to the poor financial and operating performance of the Company;
(4) abdicating their continuing duty to review, evaluate and monitor the suitability of the Plans' investment in Ford Motor Company common stock;
(5) failing to provide accurate, material information to enable the Plans' participants to make informed investment decisions concerning their contributions invested in Ford Motor Company common stock; and
(6) failing to monitor others of the Plans' fiduciaries and to provide them with information sufficient to perform their duties overseeing the Plans and their investments.
Plaintiffs seek relief pursuant to § 409 and § 502 of ERISA, 29 U.S.C. § 1109, 1132, on behalf of all participants in or beneficiaries of the Plans who sustained losses in their retirement accounts.
The Nowak and Lennie Plaintiffs, represented by the same attorneys, were the first to file on April 7, 2006. Nowak, et al. v. Ford Motor Company, et al., Case No. 06-11718, Lennie, et al. v. Ford Motor Company, et al., Case No. 06-11722. On April 26, 2006, the Nowak Plaintiffs filed their motion for appointment of their counsel, Scott + Scott, LLC, and Milberg Weiss Bershad & Schulman LLP, interim Co-Lead Counsel (Dkt. # 9).
The McNeeley Plaintiffs filed their complaint on May 9, 2006. McNeely, et al. v. Ford Motor Company, et al., Case No. 06-12139. On June 1, 2006, this Court entered an Order of Consolidation consolidating the Nowak, Lennie and McNeely eases. (Dkt. # 15). It also issued a scheduling order for the then consolidated parties on the issue of lead counsel (Dkt. # 16).
On June 16, 2006, the McNeely Plaintiffs formally filed a motion to have their counsel, Climaco Lefkowitz Peca Wilcox & Garofoli Co., L.P.A., and Bernstein Litowitz Berger & Grossman LLP appointed lead co-counsel (Dkt. # 25). On June 28, 2006, these Nowak and McNeeley motions for appointment of lead counsel were referred for hearing and determination pursuant to 28 USC § 636(b)(1)(A) (Dkt. # 36).
Following the consolidation of the Nowak, Lennie and McNeely cases and entry of the briefing schedule on the two competing motions for appointment of lead counsel, Ousachi, et al. v. Ford Motor Company, et al., No. 06-12529, was filed on June 6, 2006, by Mark Ousachi "Individually and on Behalf of All Others Similarly Situated." On June 16, 2006, Plaintiff Ousachi filed a motion to consolidate with the three cases consolidated under the Nowak case number. In that motion to consolidate, Plaintiff Ousachi also seems to request that his counsel, Schiffrin & Barroway, LLP, serve as lead counsel and asks for leave to brief the issue on lead counsel. This carelessly drafted motion was, in effect, a joint motion by Plaintiff Ousachi to join the consolidated Nowak, Lennie and McNeely cases and to be allowed to brief the "Lead Counsel" issue and seek to have his attorneys appointed as lead counsel.
By order dated June 26, 2006, the Court consolidated the Ousachi action with the Nowak, Lennie, and McNeely actions and granted Plaintiff Ousachi fourteen days to submit briefing on the motions for appointment of interim counsel (Dkt. # 35). Under the Federal Rules of Civil Procedure, the deadline was July 13.
On July 7, 2006, David Cooper sued Ford and the other Defendants on similar claims to the other cases. Cooper v. Ford Motor Co., No. 06-13109, (Dkt. # 1 in case # 06-13109). He simultaneously sought to have his counsel, Keller Rohrback, LLP, named as lead counsel (Dkt. # 2 in case # 06-13109).
On July 13, 2006, Plaintiff Ousachi filed his memorandum regarding the appointment of interim lead counsel and (1.) urged that both his counsel, Schiffrin & Barroway, and Plaintiff Cooper's counsel, Keller Rohrback, serve as interim lead co-counsel, and (2.) opposed the MeNeely and Nowak Plaintiffs' respective motions. In addition to Plaintiffs Ousachi and Nowak agreeing to join forces of their out of state counsel as lead co-counsel, they also agreed to seek appointment of Plaintiff Ousachi's local counsel, Stephen Wasinger as interim liaison counsel.
On August 10, 2006, Judge Gadola entered an Order of Consolidation and For Briefing (Dkt. # 45 in Nowak; Dkt. # 11 in Cooper, case # 06-13109), which consolidated Cooper v. Ford Motor Co., No. 06-13109, with the other cases now pending under the lead case caption Nowak v. Ford Motor Co. This Order also granted counsel for Cooper an opportunity to submit briefing on the pending motions for appointment of lead counsel.
A summary chart of these procedural motions follows:
II. Analysis
A. Standards Of Review
Because of the large number of parties in this ERISA action, efficient management of the case mandates the selection of lead counsel and liaison counsel. Howard B. Newberg and Alba Conte, Newberg on Class Actions, § 9.31, at 9-82 (3d ed.1992) ("Newberg"). Selection of lead counsel is a duty often left to the court if the parties cannot decide among themselves. Id. § 9.35, at 9-95. Courts should consider the following factors when appointing lead counsel: experience; prior success record; the number size, and extent of involvement of represented litigants; the advanced stage of proceedings in a particular suit; and the nature of the causes of action alleged. Id. § 9.35, at 9-97.
In addition, Federal Rule of Civil Procedure 23(g) requires that the court choose counsel that will "fairly and adequately represent the interests of the class." Fed. R. Civ. Pro. 23(g)(1)(C)(I). Rule 23(g) enumerates the following factors a court must consider when choosing lead counsel: (1) work counsel has done in identifying or investigating potential claims in the action; (2) counsel's experience in handling class actions, other complex litigation, and claims of the type asserted in the action; (3) counsel's knowledge of the applicable law; and (4) the resources counsel will commit to representing the class. Rule 23(g) also provides that a court "may consider any other matter pertinent to counsel's ability to fairly and adequately represent the interests of the class." Fed.R.Civ.P. 23(g)(1)(c)(ii).
B. Factual Analysis of Applicants for Lead Counsel
1. Ousachi Plaintiffs Proposed Counsel: Schiffrin & Barroway and Keller Rohrback as Interim Co-Lead Counsel & Stephen Wasinger as Interim Liaison Counsel
Each firm has an impressive resume and is qualified to be'lead counsel, but the undersigned finds that the Ousachi Plaintiffs' proposed counsel, Schiffrin & Barroway and Keller Rohrbaek as Interim Co-Lead Counsel & Stephen Wasinger as Interim Liaison Counsel, will best be able to represent the putative class fairly and adequately because of their extensive experience in ERISA litigation and for other reasons noted below. In re Terazosin Hydrochloride, 220 F.R.D. 672, 702 (S.D.Fla.2004) (finding the proposed counsel's "experience in, and knowledge of, the applicable law in this field" the "most persuasive" factor when choosing lead counsel). Schiffrin & Barroway and Keller Rohrback have been appointed lead or co-lead counsel in several major ERISA litigations and have worked together in a number of analogous ERISA class action cases, including: In re Global Crossing ERISA Litig., No. 02-7453 (S.D.N.Y), IIn re Healthsouth ERISA Litig., No. 03-1700, 2006 WL 2109484 (N.D.Ala.); In re CIGNA Corp. ERISA Litig., No. 03-00714 (E.D.Pa.); In re BellSouth Corp. ERISA Litig., No. 02-2440 (N.D.Ga.); In re Mirant ERISA Litig., No. 03-1027 (N.D.Ga.); In re Merck Co., Inc. Sec., Derivative & "ERISA" Litig., MDL. No. 1658 (D.N.J.); In re: The Goodyear Tire & Rubber Co. ERISA Litig., No. 03-2182 (N.D.Ohio); and In re Visteon Corp. ERISA Litig., No. 05-71205 (E.D.Mich.). Together they have recovered tens of millions of dollars on behalf of the plans at issue.
The experience and expertise of each individual firm will also significantly aid the proposed class. Keller Rohrbaek has served as lead and co-lead counsel in many prominent ERISA class action cases, such as In re Enron ERISA Litigation, No. 01-3913 (S.D.Tex); In re WorldCom, Inc. ERISA Litigation, No. 02 — 4816 (S.D.N.Y); and In re Global Crossing ERISA Litigation, No. 02-7453 (S.D.N.Y). In the Eastern District of Michigan, Keller Rohrbaek has served or is serving as lead or co-lead counsel in the following: In re CMS Energy ERISA Litigation, 312 F.Supp.2d 898 (E.D.Mich.2004) (J. Steeh), In re Visteon ERISA Litigation, No. 05-71205, (E.D.Mich.) (J. Cohn), and the In re Delphi Corporation Securities, Derivative, and "ERISA" Litigation, MDL No. 1725 (E.D.Mich.) (J. Rosen). Moreover, through settlement negotiations, Keller Rohrback has recovered in excess of $500 million for the benefit of employees and retirees (Dkt. # 40, p. 24).
Similarly, Sehiffrin & Barroway has extensive experience litigating ERISA breach of fiduciary class actions. Some of the cases they have worked on analogous to the instant matter include: In re Lear ERISA Litig., No. 06-11735 (E.D.Mich.); Brieger v. Tellabs, Inc. et al., No. 06-01882 (E.D.Ill); In re Raytheon ERISA Litig., No. 03-10940 (D.Mass.); Gee v. Unum Provident Corp., No. 03-1552 (E.D.Tenn.); In re Westar Energy Inc. ERISA Litig., No. 03-4032 (D.Kan.); Koch v. Loral Space & Comm'n, Ltd., No. 03-9729 (S.D.N.Y.); In re Honeywell ERISA Litig., No. 03-1214 (D.N.J.); Wilson v. Federal Home Loan Mortgage Corp., MDL No. 1584, 04-2632 (S.D.N.Y.); In re Schering-Plough Corp. ERISA Litig., No. 03-1204 (D.N.J.); In re Calpine Corp. ERISA Litig., No. 03-1685 (N.D.Cal.); and In re Citigroup ERISA Litig., No. 03-2932 (S.D.N.Y.).
In addition to its extensive litigation experience, the firm has also successfully engaged in extensive, intricate and successful settlement negotiations and mediation involving ERISA claims. See In re AOL ERISA Litig., 02-8853 (S.D.N.Y.) (as Co-Lead Counsel, Sehiffrin & Barroway recently obtained preliminary approval of a $100 million settlement); In re Bristol-Myers Squibb Co. ERISA Litigation, No. 02-10129(LAP) (S.D.N.Y) (as Co-Lead Counsel, achieved a cash recovery of $41.22 million and significant structural relief regarding how the 401(k) plans at issue are administered valued at up to $52 million); In re Honeywell International ERISA Litigation, No. 03-1214(DRD) (D.N.J.2004) (as Lead Counsel, achieved a $14 million recovery to a defined contribution plan and its participants, as well as significant structural relief regarding the plan's administration and investment of its assets).
The vast experience of both Keller Rohrback and Sehiffrin & Barroway make them a superior choice for this type of case. They are well-versed in trial practice and in conducting discovery relevant to breach of fiduciary actions. Moreover, there experience has allowed them the opportunity to establish relationships with key experts in the field, as well as defense and insurance counsel who regularly appear in these actions, which should help to facilitate settlement alternatives. While there is some concern that having two major firms acting as lead co-counsel may lead to inefficiencies in staffing and communications, it is anticipated that co-lead counsel will be cognizant of this risk and take steps to minimize it. These two firms have also worked together as co-lead counsel in other cases
Proposed liaison counsel, Stephen F. Wasinger, is competent and able to carry out the duties required of liaison counsel. Currently, Mr. Wasinger serves as liaison counsel in two matters pending in this Eastern District of Michigan: In re Visteon Corp. ERISA Litig., No. 05-71205 (E.D.Mich.) and In re Lear Corp. ERISA Litig., No. 06-11735 (E.D.Mich.). Keller Rohrback serves as Lead Counsel in the matter of In re Visteon Corp. and Sehiffrin & Barroway serves on the Executive Committee for Plaintiffs. In the matter of In re Lear Corp. Sehiffrin & Barroway serves as Lead Counsel. Thus, Mr. Wasinger has an established working relationship with both applicants for co-lead counsel.
Sehiffrin & Barroway and Keller Rohrback will also be able to commit adequate resources to this matter. See Manual for Complex Litigation § 10.221 (instructing courts to ensure the designated counsel is able to represent adequately all of the parties on their side). Sehiffrin & Barroway is comprised of fifty-eight attorneys and a sup port staff consisting of over 75 paralegals, secretaries, file clerks, summer interns and administrative personnel (Dkt. # 40, pg. 17). In addition, Keller Rohrback has 50 members of its firm with a considerable support staff. Hearing Transcript, pg. 53. Moreover, as noted at the hearing, over the course of the year, both firms have resolved a number or their large ERISA cases, including Visteon, CMS, Healthsouth, Mirant, AOL/ Time Warner, and a part of Enron, thereby freeing up considerable legal staff resources. Id. at 50.
Schiffrin & Barroway and Keller Rohrback have demonstrated a commitment to identifying and investigating potential claims in the action. See Fed.R.Civ.P. 23(g)(l)(C)(I) (indicating that courts should consider the work counsel has done in identifying or investigating potential claims in the action). The Ousachi Plaintiffs and Cooper Plaintiffs respective complaints adequately meet the requirements of Fed.R.Civ.P. 8, which requires only a short and plain statement of claims. Here, the complaints filed by the Cooper and Ousachi Plaintiffs contain the grounds for jurisdiction and thoroughly outline the counts on which Plaintiffs believe relief should be granted. They carefully describe the Plan documents with particular attention to details of the Plans that pertain to their investment in Ford stock (such as the amount of Ford stock in the Plans, the discretion that the fiduciaries had with respect to the Ford stock investment, and the failure of the Plans to qualify as ESOPs, etc.). Cooper Compl. 111120-41. The Cooper complaint provides a detailed description of Ford's difficulties, detailed allegations regarding the unacceptable risks posed to Plan participants by Ford's massive investment in Ford stock, as well as important analysis regarding the debt/equity ratio of Ford in order to bring into the complaint the latest ERISA jurisprudence on the issues at hand. Cooper Compl. 111191-96, 97-132,133-134.
Overall, any added time these Plaintiffs' attorneys took to prepare and file their complaints resulted in a superior draft of a complaint. Lynn Sarko's presentation at the hearing on these motions overall had less overstatement and a more persuasive force than the counsel for the Nowak or the McNeely Plaintiffs.
In sum, Schiffrin & Barroway and Keller Rohrback have a high level of ERISA expertise and are willing to commit each firm's resources to this case such that they fairly and adequately represent all parties on their side. Moreover, should the putative class be certified, these firms have the experience and resources to represent adequately the certified class. Therefore, it is determined that any Plaintiffs' class certified in this matter will be best served if Schiffrin & Barroway and Keller Rohrback are appointed as Interim Co-Lead Counsel & Stephen Wasinger as Interim Liaison Counsel and it is ORDERED THAT the Ousachi Plaintiff request to Appoint Lead Counsel and Liaison Counsel is GRANTED.
2. Nowak Plaintiffs Proposed Counsel: Scott + Scott and Milberg Weiss as interim Co-Lead Counsel & Miller Shea as Interim Liaison Counsel
While Scott + Scott and Miller Weiss have noteworthy ERISA experience, particularly in a similar case involving General Motors employees, and have been appointed by various courts to be lead counsel in ERISA litigations, it is believed that Plaintiffs' interests will be better served by the Ousachi Plaintiffs' proposed counsel for three principal reasons.
First, serious questions exist as to whether the Milberg Weiss Firm will have the necessary resources to devote to the effective and efficient prosecution of this matter. The Mil-berg Weiss Bershad & Schulman firm and two of it named partners, David Bershad and Steven Schulman, have recently been indicted by a federal grand jury in California in a twenty count indictment related to alleged kickbacks paid to named class action plaintiffs (June 16, 2006, letter from Lori Feldmann to Judge Gadola, Dkt. #20). United States v. Milberg Weiss Bershad & Schul man, No. Cr. 05-0587(A) — DDP (C.D.Cal.) A number of the Milberg Weiss Firm's partners and associates have already left the firm, and there are significant questions that exist as to more lawyers leaving. While acknowledging the presumption of innocence and the vigorous denials of wrongdoing by Milberg Weiss and by counsel for the lawyers individually charged, this cannot erase the obvious — that this indictment of a major law firm for alleged bribery, perjury and fraud by its named partners, could significantly harm the commitment of long term, unaltered legal personnel resources from the Milberg Weiss firm.
Aso of significance, in Ms. Feldman's June 16, 2006, letter to Judge Gadola, she asserts that "the attorneys litigating this matter— including the undersigned — have not been accused of any wrongdoing." While this representation may be literally true with respect to attorneys actually involved in the work on this case, this statement nonetheless suggests that no attorney appearing for the Nowak Plaintiffs — i.e. "attorneys litigating this matter" — was accused in the indictment. Yet, the first name in the signature areas for the law firm of Milberg Weiss Bershad & Schulman on both the Nowak and the Lennie complaints and even on their current motion before the Court — and the name above the name of Lori Feldman — is "Steven G. Schulman" — the indicted partner whose name has now apparently been removed from the firm name. While such fine shading of words as those in Ms. Feldman's June 16, 2006, letter may be commonplace in the practice of law, they can erode confidence of the court and opposing counsel in the lawyer making such statements, and this reduced trust can, in turn, impede the efficient progress of a complex case.
Moreover, in addition to the questions about the ongoing legal personnel of the Milberg Weiss firm that will be committed to this litigation for the long haul, it is unclear the amount of resources Scott + Scott will be able to contribute to this matter. Mr. Scott, counsel for the Nowak Plaintiffs, stated his firm has thirty attorneys, but Scott + Scott only lists 17 individuals named as lawyers on the firm's website — which Mr. Scott indicates are the partnership track lawyers.
Second, the Nowak Plaintiffs' proposed counsel has less experience than the Ousachi Plaintiffs' proposed counsel at nearly every stage of this type of case. From a review of the cases cited by Scott + Scott in their filings, it would appear that they have served as co-lead counsel in five ERISA cases, only one of which has settled and none that have progressed far into discovery: In re General Motors ERISA Litig., No. 05-71085 (E.D.Mich.) (case in early stages of discovery); In re Royal Dutch Shell ERISA Litig., No. 04-1398 (S.D.N.Y.) (co-lead counsel with Milberg Weiss, settled before a decision was issued on motions to dismiss); In re Tribune Co. ERISA Litig., No. 05-02927 (N.D.Ill.) (motions to dismiss pending); In re ConAgra Foods ERISA Litig., No. 05-00386 (D.Neb.) (written discovery recently commenced); and Shirk v. Fifth Third Bancorp, No. 05-049 (S.D.Ohio) (motions to dismiss and for class certification pending).
The substantial reputation of Milberg Weiss was developed in complex securities class action litigation. Yet, with the exception of the Royal Dutch Shell case noted above, Milberg Weiss appears to be co-lead counsel in only two other ERISA cases, neither one of which is beyond the preliminary stages: Boston Scientific ERISA Litigation, No. 06-10105 (D.Mass.) (consolidated complaint recently filed); and Coca-Cola ERISA Litigation, No. 05-1514 (N.D.Ga.) (motions to dismiss granted in part, discovery not yet commenced). Milberg Weiss identifies two other ERISA cases in its motion papers; Delphi ERISA Litigation, No. MDL 1725 (E.D.Mich.); and In re Pfizer ERISA Litigation, No. MDL 1688 (S.D.N.Y.) (Dkt. # 39). Yet, Milberg Weiss is not actively involved in either the Delphi or Pfizer ERISA cases (proposed co-lead counsel Keller Rohrback is lead counsel in both). While there may be other ERISA cases in which Scott + Scott and Milberg Weiss play a role, they do not identify any others in their papers in which they serve in a leadership capacity.
Finally, Scott + Scott and Milberg Weiss argue they should be appointed lead counsel because they filed the first complaint in this case and have done all the original work. Hearing Transcript, pg. 8-9. They claim further that the other complaints filed are mere "copycat" complaints of their work. Id. at 12. Pursuant to Rule 23(g), the Court has the responsibility to select who among the competing firms are "best able to represent the interest of the class." Fed.R.Civ.P. 23(g)(2)(B). Rule 23 requires a qualitative assessment of the work performed by counsel to date and the knowledge, skill and experience of counsel in the area of law at issue, as well as the available resources counsel has to vigorously pursue the case. Whether someone was "first to file" by itself has little to do with who is the best qualified to lead the case, and does not satisfy the requirements of Rule 23(g). To hold otherwise would further encourage a "rush to the courthouse" in ERISA class action eases.
Nor has Scott + Scott and Milberg Weiss demonstrated that their investigation was more thorough or their complaint somehow superior to the other complaints filed. Counsel for the Nowak Plaintiffs allege without sufficient explanation that complaints filed by the competing firms in this case are copycats of their filing. Hearing Transcript, pg. 8-9. Yet, on closer examination, it appears that the opposite contention may be more accurate. Many of the paragraphs of the Nowak Complaint are verbatim or near verbatim copies of allegations from prior complaints prepared by attorneys at Keller Rohrback and Schiffrin & Barroway in other cases. Examination of the consolidated complaint filed by Keller Rohrback and Schiffrin & Barroway in April 2004 in the In re Polaroid ERISA Litig., No. 03-CV-8335 (S.D.N.Y.), demonstrate this duplication. Compare, e.g., Nowak Compl. HU 23-30 with Polaroid Compl. HH 82-88; Nowak Compl. HH 62-63, 65 with Polaroid Compl. HH 89-90, 105; Nowak Compl. HH 56-61 with Polaroid Compl. HH 181-185; Noivak Compl. HH 47-54 with Polaroid Compl. HH 159,162,166-168.
The counts of the Nowak Complaint also bear a remarkable similarity to counts previously drafted by Keller Rohrback and Schiffrin & Barroway in other cases. Compare Nowak Compl. HH 85-96 with Polaroid Compl. HH 186-199. Other paragraphs of the Nowak complaint are taken from other complaints previously filed by Keller Rohrback and Schiffrin & Barroway, such as the June 2004 consolidated complaint filed by Keller Rohrback in In re The Goodyear Tire & Rubber Co. ERISA Litig., No. 5-03CV02182 (N.D.Ohio). Compare Nowak Compl. HH 1-9 with Goodyear Compl. HH 1-8; Nowak Compl. HH 91-108 (Count II) with Goodyear Compl. HH 140-151; Nowak Compl. HH 109— 116 (Count III) with Goodyear Compl. HH 152-161. Thus, clearly the Nowak Plaintiffs' Complaint is not itself an original document. While the Keller Rohrback and Schiffrin & Barroway supplemental brief notes that they have no significant concern that the Nowak Complaint borrowed from "pleadings prepared by other firms" they resent the suggestion that Keller Rohrback and Schiffrin & Barroway, whose lawyers apparently drafted some of the initial complaints in this legal area, are being accused of copying from the Nowak Complaint. The claim by the Nowak lawyers that Ousachi and Cooper lawyers did little more than copy their complaint is without merit.
Therefore, for the above stated reasons the Nowak Plaintiffs' Motion to Appoint Lead Counsel and Liaison Counsel is denied.
3. McNeely Plaintiffs Proposed Counsel: Climaco and Bernstein Litowitz as Co-Lead Counsel & Sullivan Ward as Liaison Counsel
Proposed counsel for the McNeely Plaintiffs are also not as experienced in ERISA litigation as Keller Rohrback and Schiffrin & Barroway. Although Climaco and Bernstein Litowitz have significant securities class action experience and substantial labor based experience, they simply do not have the same degree of ERISA experience as the competing firms. Indeed, in the McNeely Plaintiffs' Motion they do not discuss or refer to any specific case experience they have with this particular type of ERISA company stock class action litigation (Dkt. # 25). In addition, they have failed to sufficiently demonstrate that they have superior resources with which to devote to this case.
It should also be noted that at the hearing on these motions counsel for the McNeely Plaintiffs, Mr. Climaco, launched an ethical attack on Schiffrin & Barroway and Keller Rohrback as having a conflict of interest by both firms being involved in the In re Visteon Corp. ERISA Litig in this District as well as in this action against Ford Motor Company. The Visteon case involves Schiffrin & Barroway and Keller Rohrback ERISA claims against Visteon, a former Ford subsidiary corporation. In this case Schiffrin & Barroway and Keller Rohrback are suing Ford for Plaintiffs Ousachi and Cooper. The alleged conflict of interest is that success of Schiffrin & Barroway and Keller Rohrback in Visteon may impose expenses on Ford making it less able to honor any judgment for the putative class Plaintiffs in this case.
Counsel for the McNeely Plaintiffs cites In re Cardinal Health, Inc. ERISA Litig., 225 F.R.D. 552, 557 (S.D.Ohio 2005), in support of this contention. This Cardinal Health case and legal issue were not cited in any response brief submitted prior to the hearing by counsel for the McNeely Plaintiffs.
In Cardinal Health, the court was concerned whether the same counsel, Schiffrin & Barroway and Keller Rohrback, could appropriately represent a class of Cardinal Health plan participants and also Syncor plan participants where Cardinal Health had acquired Syncor and arguably had some potential financial responsibility for any judgment entered against Syncor. At issue was Schiffrin & Barroway representing clients against both Syncor and against Cardinal Health and whether this circumstance created the possibility that the two classes would be competing for the same limited fund. Cardinal Health, 225 F.R.D. at 557. The Cardinal Health court refused to allow Schiffrin & Barroway and Keller Rohrback to serve as lead co-counsel in part because of this conflict of interest issue.
The reasoning of the Cardinal Health opinion seems incomplete and overly cautious. The court never made any finding that Cardinal Health would be liable for the debts of its subsidiary, Syncor. Nor did it find that the assets of Cardinal Health did not exceed the full amount of both of the plaintiff groups' claims against Cardinal Health and Syncor, which is an essential element needed to demonstrate a conflict of interest in such a situation. At the hearing on this motion, counsel arguing for Schiffrin & Barroway and Keller Rohrback also indicated that Cardinal Health in that litigation had a fiduciary insurance policy to provide another source of funding of any judgment or settlement against it. The Cardinal Health opinion also cites DR 5-105 and EC 5-14 which prohibited joint representation where there was an "appearance of divided loyalties of counsel." Having taught a course on legal ethics for many years, it was my understanding that decades ago when Ohio and nearly all states abandoned the ABA Code of Professional Responsibility and its Disciplinary Rule and adopted versions of ABA Model Rules of Professional Conduct, the new rules abandoned this "appearance of divided loyalty" standard and drafted more precise conflict guidelines. For various reasons, while recognizing the importance of the conflicts issues raised in Cardinal Health, that opinion does not demonstrate a sufficient factual basis to find that Schiffrin & Barroway was acting inappropriately.
The same conflict of interest also does not exist in the present ease. Here, Ford spun off Visteon (the opposite of an acquisition and merger in Cardinal Health), the companies are entirely separate. While Ford had retained certain contingent liabilities for its former employees at Visteon, it is not in any way directly liable for breaches of fiduciary duty by Visteon plan fiduciaries relating to Visteon stock. Moreover, counsel for the Ousachi Plaintiffs indicated on the record that a settlement has been reached in the Visteon case and that Visteon had fiduciary insurance exceeding the amount of the settlement, which is pending approval by this Court (Hearing transcript at 48, see also Dkt. # 53). Thus, this conflicts issue raised by the attorney for the McNeely Plaintiffs does not preclude Schiffrin & Barroway and Keller Rohrback from serving as interim co-lead counsel in these cases.
Accordingly, the McNeely Plaintiffs' Motion to Appoint Lead Counsel and Liaison Counsel is denied.
III. Ruling and order
For the reasons stated above, the Ousachi Plaintiffs' motion is granted and the Nowak Plaintiffs' and McNeely Plaintiffs' motions are denied. Accordingly, as set out in the separate order of this date Plaintiffs Ousachi & Cooper are appointed interim lead plaintiffs, Schiffrin & Barroway and Keller Rohrback are appointed as interim co-lead counsel and Stephen Wasinger is appointed as interim liaison counsel.
The parties to this action may object to and seek review of this Order, but are required to file any objections within ten (10) days of service of a copy hereof as provided for in 28 U.S.C. § 636(b)(1) and E.D. Mich. LR 72.1(d)(2). Any objections are required to specify the part of the Order to which the party objects and state the basis of the objection. Pursuant to E.D. Mich. LR 72.1(d)(2), a copy of any objections is to be served upon this Magistrate Judge. Within ten (10) days of service of any objecting party's timely filed objections, the opposing party may file a response. The response shall be not more than twenty (20) pages in length unless by motion and order such page limit is extended by the Court. The response shall address specifically, and in the same order raised, each issue contained within the objections. So Ordered.
ORDER APPOINTING INTERIM LEAD PLAINTIFFS AND CO-LEAD AND LIAISON COUNSEL
I. Lead Plaintiffs
The Court appoints Plaintiffs Mark Ousachi and David Cooper as Interim Lead Plaintiffs in this consolidated action and all subsequently filed related actions consolidated herewith. The Court shall make a final determination regarding the identity of Lead Plaintiff(s)/Class Representative(s) in ruling on the Interim Lead Plaintiffs' motion for class certification, or as the Court otherwise deems appropriate. The Interim Co-Lead Counsel as identified below may identify different or additional Lead Plaintiff(s)/Class Representative(s) at such time as they move for class certification in this litigation.
II. Lead Counsel
Pursuant to Rule 23(g)(2)(A) of the Federal Rules of Civil Procedure the Court designates the following to act as Interim Co-Lead and Liaison Counsel for Plaintiffs in this consolidated action, with the responsibilities hereinafter described:
a. As Interim Co-Lead Counsel for Plaintiffs
Schiffrin & Barroway, LLP
280 King of Prussia Road Radnor, PA 19087 Telephone: (610) 667-7706 Facsimile: (610) 667-7056 and
Keller Rohrback LLP
1201 Third Avenue, Suite 3200 Seattle, Washington 98101-3052 Telephone: (206) 623-1900 Facsimile: (206) 623-3384
b. As Interim Liaison Counsel for Plaintiffs
Stephen F. Wasinger, PLC
300 Balmoral Centre 32121 Woodward Avenue Royal Oak, Michigan 48073 Telephone: (248) 554-6306 Facsimile: (248) 479-0391
III. Powers and Duties of Interim Co-Lead Counsel
Interim Co-Lead Counsel in the consolidated actions shall have exclusive authority over the following matters on behalf of all Plaintiffs in those respective actions consolidated in this case:
(a) convening meetings of Plaintiffs' counsel;
(b) filing motions on behalf of Plaintiffs;
(c) initiating, responding to, scheduling, briefing, and arguing of all motions;
(d) determining the scope, order, and conduct of all discovery proceedings;
(e) assigning such work assignments to other counsel as they may deem appropriate;
(f) retaining plaintiffs' experts;
(g) designating which attorneys may appear at hearings and conferences with the Court;
(h) conducting settlement negotiations with Defendants;
(i) communicating with Defendants' counsel and the Court on behalf of all Plaintiffs. (Defendants' counsel may rely on all agreements made with Co-Lead Counsel, and such agreements shall be binding.)
(j) other matters concerning the prosecution of or resolution of their respective cases.
All Plaintiffs' counsel shall proceed in a manner reasonably calculated to avoid duplication of effort and to achieve efficient use of their time, and shall keep contemporaneous time and expense records, with those portions of records reviewing the telephonic, electronic or written notices and correspondence calculated in tenth of an hour units, and shall provide such records upon request to the Co-Lead Counsel.
Interim Liaison Counsel in the consolidated actions is charged with administrative matters such as receiving and distributing pleadings, notices, orders, motions and briefs, and advising parties of developments in the case.
IV. Coordination
Co-Lead Counsel shall coordinate activities to avoid duplication and inefficiency in the filing, serving and/or implementation of pleadings, other court papers, discovery papers, and discovery practice and in communications with other Plaintiffs' counsel regarding the status of the case.
V. Scope of Order
This Order does not have the effect of making any person, firm or entity a party to this or any action in which he, she or it has not been named, served or added as such in accordance with the Federal Rules of Civil Procedure. The terms of this Order and the consolidation ordered herein shall not constitute a waiver by any party of any claims in or defenses to any action.
VI. Schedule of Proceedings
Upon entry of this Order, Plaintiffs' Co-Lead Counsel wdll promptly thereafter contact counsel for Defendants regarding pretrial proceedings, including the filing of and answer or opposition to a consolidated complaint.
So Ordered.
. As described in the background section of the text: (1) the Nowak Plaintiffs filed their complaint on April 7, 2006; (2) the McNeely Plaintiffs filed their complaint on May 9, 2006; (3) the Ousachi Plaintiffs filed their complaint on June 6, 2006; (4) the Cooper Plaintiffs filed their complaint on July 7, 2006.
. The McNeely complaint listed the Melville, N.Y., firm of Lerach Coughlin Stopia Geller Rudman & Robbins LLP, as co-counsel with the Climaco Lefkowitz firm, and the name of the Bernstein Litowitz firm first appears in this June 16 submission.
. "2. In Case No. 06-11718, the Court has entered an order requiring Plaintiffs' counsel in that case to brief the issues relating to appointment of lead counsel (the 'Lead Counsel Order'). Plaintiffs (sic) in this case believe that they (sic) have extraordinary skill and expertise in cases of this type, and, therefore, that they are uniquely qualified to serve as lead counsel in this case. Therefore, they request an opportunity to submit briefing on the issues raised by the Lead Counsel Order." (112, Dkt. #4 in Case No. 06-12529).
. Under Fed.R.Civ.P. 6(e), the old three day addition under the "mail box" rule is now also applied to electronic service provided under Rule 5(b)(2)(D) if receipt of such electronic service is "consented to in writing by the person served." Under Local Rule 5.1.1(a) all papers filed after November 30, 2005, must be filed electronically (Electronic Filing System or Electronic Court Filing "ECF") pursuant to this Court's ECF Policies and Procedures. Under Local Rule 5.1.1(b) service of papers may be made by transmission of Notice of Electronic Filing ("NEF") through the Court's electronic transmission facilities as authorized by the Court's ECF Policies and Procedures on any party in the case registered as a filing user. Under this Court's ECF Policies and Procedures R8(c) notes "If the recipient is a filing user, the NEF shall constitute service of the papers as if by first class mail." Accordingly, for service of Court orders by NEF, the traditional Rule 6(e) "mail box" rule and its three day extension applies. Thus the fourteen day period in Judge Gadola's June 26 order for Ousachi to file his brief on the lead counsel would begin on June 27, and counting weekends and the 4th of July, the fourteen days would run until Monday, July 10, and then with the three days added under Rule 6(e) would extend to July 13.
In the Nowak Plaintiffs' REPLY BRIEF IN RESPONSE TO OUSACHI AND COOPER PLAINTIFFS' MOTION FOR APPOINTMENT AS LEAD PLAINTIFFS COUNSEL (Dkt. #43) they assert that "Ousachi did not file his papers by that deadline" referring to the deadline set by Judge Gadola in his June 26 order. Ironically, instead of referring to the appropriate Court rules in support of their assertion that the deadline was July 10, not July 13, the lawyers for Nowak refer to the July 7, 2006, Cooper Motion to Consolidate and have Keller Rohrback appointed as lead counsel (Dkt. # 2 in case # 06-13109). Yet, Keller Rohrback's reference to the July 10, date was merely to note that the Ousachi lawyers, Schiffrin & Barroway, got an extension to a future date to brief the issue of lead counsel and the Cooper lawyers were requesting a similar opportunity to do so. Indeed, noting the correct deadline date of July 13 would have better served this argument that granting them a similar opportunity to file a brief would not greatly delay resolution of the lead counsel issue. The lawyers for Nowak are using the reference to July 10 for the more aggressive purpose of accusing the Ousachi lawyers, Schiffrin & Barroway, of missing an important deadline and disregarding a Court order. Accusations of tins nature should be based on a more solid legal foundation, although it is acknowledged that the application of the three day extension to this new electronic filing system is not widely known and takes some reference of multiple sources. Having Schiffrin & Barroway serve as co-lead counsel, as this order provides, will assure that at least one set of attorneys centrally involved in this litigation is capable of reading our local court rules and complying with them.
. Plaintiff Ousachi's submission was titled MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS MARK OUSACHI'S AND DAVID COOPER'S CONSOLIDATED MOTION FOR APPOINTMENT OF INTERIM LEAD PLAINTIFFS CO-LEAD COUNSEL AND LIAISON COUNSEL AND OPPOSITION TO THE MCNEELEY AND NOWAK PLAINTIFFS RESPECTIVE MOTIONS FOR APPOINTMENT OF INTERIM CO-LEAD AND LIAISON COUNSEL (Dkt. # 40, also Dkt. # 9 in Case # 06-12529). Plaintiffs Ousachi and Cooper did not formally file a consolidated motion for appointment of counsel, but had each made respective requests for his out of state attorneys to be made lead counsel. This memorandum was signed by Plaintiff Ousachi's local counsel, Stephen Wasinger, and both Schiffrin & Barroway and Plaintiff Cooper's counsel, Keller Rohrback, were listed on the signature page (Dkt. #40, p. 21).
. Previously, Plaintiff Cooper did not file further briefs as permitted in this August 10 order, apparently because he was satisfied with his lawyers, Keller Rohrback, being appointed co-lead counsel with Schiffrin & Barroway as urged in the Ousachi July 13 submission.
. Settlements achieved through the combined results achieved by Keller Rohrback and Schiffrin & Barroway include: In re Global Crossing ERISA Litig., 225 F.R.D. 436 (S.D.N.Y.2004) (final approval of settlement providing injunctive relief and $78 million payment for plan losses); In re Health South ERISA Litig., No. 03-1700, 2006 WL 2109484 (N.D.Ala. June 28, 2006) (final approval of settlement providing a $28.875 million payment for plan losses); and In re Polaroid ERISA Litig. No. 03-8335 (S.D.N.Y. July 11, 2006) ($12 million partial settlement pending preliminary approval).
. Other ERISA breach of fiduciary duty class actions for which Keller Rohrbaek serves or has served as lead or co-lead counsel include: In re Lucent Technologies, Inc. ERISA Litigation, No. 01-3491 (D.N.J.); In re Providian Financial Corp. ERISA Litigation, No. 01-5027 (N.D.Cal.); In re Xerox ERISA Litigation, No. 02-1138 (D.Conn.); In re Dynegy, Inc. ERISA Litigation, No. 02-3076 (S.D.Tex.); In re Williams Cos. ERISA Litigation, No. 02-153 (N.D.Okla.); In re BellSouth Corp. ERISA Litigation, No. 02-2440 (N.D.Ga.); In re Household International, Inc. ERISA Litigation, No. 02-7921 (N.D.Ill.); In re CIGNA Corp. ERISA Litigation, No. 03-714 (E.D.Pa.); In re Syncor ERISA Litigation, No. 03-2446 (C.D.Cal.); In re Healthsouth ERISA Litigation, No. 03-1700, 2006 WL 2109484 (N.D.Ala.); In re Goodyear Tire & Rubber Company ERISA Litigation, No. 03-02182 (N.D.Ohio); and In re Merck ERISA Litigation, No. 05-01151 (D.N.J.).
. Indeed, at the hearing counsel for the Ousachi Plaintiffs, Mr. Sarko, indicated he has previously appeared with defense counsel as faculty on CLE programs. Hearing Transcript, pg. 52.
. In re CMS Energy ERISA, 312 F.Supp.2d 898, 909 (E.D.Mich.2004) (holding heightened pleading not necessary in ERISA actions because plaintiffs "are asserting a breach of fiduciary duty, not an intent to deceive").
. Mr. Climaco, counsel for the McNeely Plaintiffs, indicated on the record that Milberg Weiss is now down from 150 attorneys to 70. Hearing Transcript, pg. 37. This appears to be an exaggeration. In a cover story in the December 2006 ABA Journal, at p. 34, the attrition for Milberg Weiss was estimated to be "about 40 percent of its 128 lawyers in the five months after its indictment" while noting that the firm is attempting to add experienced lateral transfers. The 2005 Martindale-Hubbell Law Directory indicates 103 lawyers at Milberg Weiss Bershad & Schulman. Ms. Feldman, counsel for the Nowak Plaintiffs and representative of Milberg Weiss, confirmed at the hearing that her firm had 70 attorneys. Hearing Transcript, pg. 31. A more recent Martindale Hubbell listing on line shows 69 as of the information available to it on December 20, 2006, and it also shows a change of title to "Milberg Weiss & Bershad LLP." Ms. Feldman's June 16, 2006, letter to Judge Gadola notes that Bershad and Schulman have announced voluntary leaves of absence from the firm. Whatever the exact number of the attrition since the indictment, this indictment involving allegations of bribery, perjury and fraud by named partners clouds the attractiveness of working for Milberg Weiss. Many of its best and most "marketable" attorneys have, or may yield, to other offers from firms with a more certain future.
. A more thorough and accurate representation would have been, "While Mr. Schulman, who was listed among counsel in the Nowak and Lennie complaints and on our current motion, has been indicted, he has had minimum active involvement in these cases, and has taken a voluntary leave of absence from the firm. The attorneys who are and have been actively involved in litigating this matter — including the undersigned — have not been accused of any wrongdoing." If Mr. Schulman has had no involvement in these cases, then while the firms name can be used, listing him individually would be misleading.
. The often quoted statement that "imitation is the greatest form of flattery" has morphed into "plagiarism is the greatest compliment."