Opinion ID: 788062
Heading Depth: 2
Heading Rank: 1

Heading: The Securities Litigation in the District Court

Text: 4 On June 25, 2002, WorldCom announced a massive restatement of its financial statements, precipitating the filing of numerous individual and class actions in state and federal courts across the country.  5 On August 15, 2002, numerous class actions that had been filed in the Southern District of New York were consolidated before Judge Cote under the caption In re WorldCom, Inc. Securities Litigation. The Consolidated Class Action Complaint named former officers and directors of WorldCom, underwriters of WorldCom's May 2000 and May 2001 bond offerings, WorldCom's former auditor Arthur Andersen, WorldCom's chief outside analyst Jack B. Grubman, and Grubman's employers, Salomon Smith Barney Inc. and Citi-group Inc. The complaint asserted claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 (Securities Act) and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (Exchange Act). 6 WorldCom filed for bankruptcy in July 2002 — the largest bankruptcy filing in United States history. Thereafter, the defendants in various state court actions removed those actions to federal court on the ground that they were related to WorldCom's bankruptcy. The Judicial Panel on Multidistrict Litigation (MDL Panel) ordered that actions pending in federal courts across the country, including actions that had been removed from state court, be centralized in the Southern District of New York before Judge Cote. Prior to the MDL Panel's order, however, a handful of actions removed to federal court had been remanded to state court. One of these state court actions, Retirement Systems of Alabama v. J.P. Morgan Chase & Co., No. CV 2002-1947(a)-PR (Ala. Cir. Ct., Montgomery County) (the Alabama Action), is pending in the Alabama Circuit Court for Montgomery County, and is the subject of this appeal. 7 In December 2002, the consolidated class action and the actions transferred by the MDL Panel — collectively, the Securities Litigation — were consolidated for pretrial purposes. The District Court certified a class on October 24, 2003, and shortly thereafter set a date of January 10, 2005 for the trial of the consolidated class action, with the trials of the individual actions to follow. 8 In November 2003, the defendants in the Securities Litigation requested that plaintiffs' counsel in one of the remanded state court actions be required to participate in depositions in the Securities Litigation to avoid duplicative discovery. This request led to an exchange in which the parties, Judge Cote, and the state court judges in the remanded actions attempted to coordinate discovery in their related actions. On January 30, 2004, Judge Cote issued a Discovery Coordination Order (the Coordination Order), and sent it to the state court judges in the three remanded actions (the Alabama Action, and actions in Illinois and Pennsylvania) that were approaching or were already in the discovery stage. The Coordination Order, which invited the state judges to sign it if they wished to adopt it, provided that [d]iscovery and trial in the [remanded] [a]ctions shall not delay or interfere with discovery in and trial of the Class Action in the Securities Litigation in the Southern District of New York, and that the first trial would be the class action trial in the Securities Litigation, scheduled for January 10, 2005. Id. at 535. 9 The state court judges in each of the three remanded actions have generally coordinated discovery in those actions with discovery in the Securities Litigation. Additionally, the state court judges in two of the remanded actions, those in Illinois and Pennsylvania, scheduled their respective trials to follow the class action trial in the Securities Litigation. In contrast, Judge Charles Price, presiding over the Alabama Action, declined to adopt all the principles of the Coordination Order, and scheduled trial to begin on October 18, 2004 — three months in advance of the class action trial date in the Securities Litigation.