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IN RE WORLDCOM

United States District Court, S.D. New York


January 30, 2004.

IN RE WORLDCOM, INC. SECURITIES LITIGATION This Document Relates to: SLS INVESTORS, L.P., et al., Plaintiffs, -v- BERNARD J. EBBERS, et al., Defendants

The opinion of the court was delivered by: DENISE COTE, District Judge Page 2

MEMORANDUM OPINION AND ORDER

On December 18, 2003, SLS Investors, L.P., SLS Offshore Fund, Ltd., GS SLS Portfolio, LLC (collectively, "SLS") filed a motion to dismiss their complaint without prejudice pursuant to Rule 41(a)(1)(i), Fed.R.Civ. P., in order to permit them to Page 3 join the class action. For the reasons explained in the Opinion and Order issued by this Court on January 26, 2004, to resolve a parallel motion brought in six actions filed by Milberg Weiss Bershad Hynes & Lerach, the plaintiffs are permitted to dismiss their complaint on the condition that they not opt out of the class action or seek in any way to continue their Individual Action.*fn1 Plaintiffs will be permitted to participate in the class action without prejudice to any claims being pursued in that action on behalf of the class.

  Background

  SLS filed its action, pleading solely state law claims, on October 3, 2003. It amended its action on October 24, to add federal claims, including claims made pursuant to the Securities Act of 1933 ("Securities Act"). An Opinion of January 20, 2004 granted the defendants' December 2 motions to dismiss the Securities Act claims. In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288 (DLC), 03 Civ. 7826, 2004 WL 97654 (S.D.N.Y. Jan. 20, 2004).

  Meanwhile, on December 18, SLS brought the instant motion for a voluntary dismissal of its action without prejudice in order to join the WorldCom Securities Litigation class action. Page 4 In its motion papers, SLS acknowledged that a November 21, 2003 Opinion of this Court regarding statute of limitations issues would inevitably cause its Securities Act claims to be barred as untimely.

  Discussion

  SLS principally argues that a Rule 41(a)(1) voluntary dismissal is appropriate since there is an absolute right to such a dismissal at any time before an answer or summary judgment motion has been filed. As explained in a December 30 Opinion in the Securities Litigation, however, the answers filed by defendants in the class action are deemed answers to the complaints filed in the individual actions, including to the SLS complaint. See In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288 (DLC), 2003 WL 23095478 (S.D.N.Y. Dec. 1, 2003). A November 5 Order provided that "for purposes of Rule 41(a) only, defendants are deemed to have filed an answer in each Individual Action as of the date the Individual Action arrives on this Court's docket." In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288 (DLC) 2003 WL 22508508 (S.D.N.Y. Nov. 5, 2003). The SLS complaint was accepted on the Court's docket on October 22, 2003. In addition, answers to the Amended Complaint in the class action were filed by October 14 by all defendants against whom litigation is not stayed, with the exception of the Audit Committee Defendants who had moved to dismiss. In re WorldCom, Inc. Sec. Litig., 2003 WL 23095478, at *1. Thus, defendants' Page 5 answer to the SLS complaint occurred well before SLS moved to voluntarily dismiss its action.

  Converting SLS's application to a motion to dismiss pursuant to Rule 41(a)(2), Fed.R. Civ. P., it is granted with the following conditions. SLS will be permitted to withdraw its action voluntarily for the sole purpose of remaining in the class action and not opting out of the class action.

  The defendants have requested the imposition of fees and costs in the event that the application for a voluntary dismissal is granted. That request is denied.

  Conclusion


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