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IN RE WORLDCOM

March 19, 2004.

IN RE WORLDCOM, INC. SECURITIES LITIGATION, This Document Relates to: 02 Civ. 3288, 02 Civ. 3416, 02 Civ. 3419, 02 Civ. 3508, 02 Civ. 3537, 02 Civ. 3647, 02 Civ. 3750, 02 Civ. 3771, 02 Civ. 4719, 02 Civ. 4945, 02 Civ. 4946, 02 Civ. 4958, 02 Civ. 4973, 02 Civ. 4990, 02 Civ. 5057, 02 Civ. 5071, 02 Civ. 5087, 02 Civ. 5108, 02 Civ. 5224, 02 Civ. 5285, 02 Civ. 8226, 02 Civ. 8227, 02 Civ. 8228, 02 Civ. 8229, 02 Civ. 8230, 02 Civ. 8234, 02 Civ. 9513, 02 Civ. 9514, 02 Civ. 9515, 02 Civ. 9516, 02 Civ. 9519, 02 Civ. 9521, 03 Civ. 2841, 03 Civ. 3592


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

OPINION & ORDER

This motion concerns the circumstances under which claims against foreign defendants relate back to a timely filed pleading against their American affiliates. Six banks ("Foreign Affiliates") who underwrote notes of WorldCom, Inc. ("WorldCom") denominated in Euros and British Pounds Sterling ("Foreign Notes") and who are foreign affiliates of defendants, have moved to dismiss the claims against them in this securities class action on the ground, inter alia, that the claims are time-barred. The Foreign Affiliates were identified by name in a timely filed pleading, along with the quantities of Foreign Notes Page 3 that they had sold, but they were not named as defendants in, and were not served with, that original pleading. They have now been named as defendants in an amended pleading filed after the statute of limitations has run. The Foreign Affiliates are J.P. Morgan Securities Ltd., Bane of America Securities Ltd., ABN AMRO Bank N.V., Deutsche Bank AG London, BMP Paribas, and Salomon Brothers International Ltd. (now known as Citigroup Global Markets Ltd.). For the following reasons, the motion to dismiss is granted for four of the six Foreign Affiliates.

 Background

  In May 2001, WorldCom issued $11.8 billion worth of bonds. Over $10 billion were U.S. dollar bonds; approximately $1.7 billion were Foreign Notes ("2001 Offering"). The Registration Statement identified many banks associated with the underwriting of the bonds. It listed J.P. Morgan and Salomon Smith Barney as the joint book-runners. Banc of America Securities LLC, ABN AMRO Inc., and Deutsche Bane Alex. Brown were identified as the joint lead managers of the Euro and Sterling tranches and as senior co-managers of the dollar tranches.*fn1 The underwriters of the U.S. dollar bonds were each listed, and the underwriters for the Foreign Notes were separately identified as J.P Morgan Securities Ltd., Salomon Brothers International Ltd., Banc of America Securities Ltd., ABN AMRO Bank N.V., Deutsche Bank AG London, Page 4 Tokyo-Mitsubishi Int'l plc, Westdeutsche Landesbank Girozentrale, BNP Paribas, Caboto Holding SIM S.p.A., Robertson Stephens Int'l Ltd., Mizuho Int'l plc, Blaylock & Partners, L.P., and Utendahl Capital Partners, L.P. Thus, each of the Foreign Affiliates was identified in this Registration Statement, along with others, as an underwriter of the Foreign Notes.

  Approximately one year later, on June 25, 2002, WorldCom announced a massive restatement of its financials. WorldCom entered bankruptcy shortly thereafter.

  In April 2002, the first class action was filed in this district asserting federal securities law claims against those associated with WorldCom. Through an Order of August 15, 2002, the class actions were consolidated, and the New York State Common Retirement Fund ("NYSCRF") was appointed Lead Plaintiff. During this same period, many lawsuits brought on behalf of named plaintiffs ("Individual Actions") as opposed to a class of plaintiffs were also filed. The Individual Actions and the class action on this Court's docket have been consolidated for pretrial purposes within the WorldCom Securities Litigation ("Securities Litigation").

  On October 11, 2002, a consolidated class action complaint ("Complaint") was filed. The Complaint listed each of the Foreign Affiliates within the paragraph describing the American underwriter defendant to whom they were related. For example, J.P. Morgan Securities Ltd. was mentioned in the paragraph concerning J.P. Morgan Chase & Co. In relevant part the allegation reads as follows: Page 5

 
Defendant J.P. Morgan Chase & Co. (J.P. Morgan") is a financial services institution that, through its subsidiaries and divisions, provides commercial and investment banking services and advisory services. . . . J. P. Morgan also was the joint book runner and co-lead underwriter for the 2001 Offering. In connection with that Offering, J.P. Morgan sold $480,000,000 worth of the 6.50% Notes due 2004. . . .; and through J.P. Morgan Securities Ltd., €403,125,000 worth of the Euro 6.75% Notes due 2008 and £160,000,000 worth of the Sterling 7.25% Notes due 2008. Similar allegations were made against each of the Foreign
Affiliates. The allegations concerning Bank of America Securities Ltd. were made in the paragraph asserting allegations against defendant Bank of American Securities LLC. The allegations concerning Deutsche Bank AG London were in the paragraph asserting allegations against defendant Deutsche Bank Securities Inc., now known as Deutsche Bank Alex. Brown Inc. The allegations concerning ABN AMRO Bank N.V. were within the paragraph asserting allegations against defendant ABN/AMRO Inc. The allegations concerning BNP Paribas were within the paragraph asserting allegations against defendant BNP Paribas Securities Corp. The allegations concerning Salomon Brothers International Ltd. were within the paragraph asserting allegations against defendant Salomon Smith Barney Inc.

  Where an underwriter of the Foreign Notes did not have an American affiliate, it was separately named as a defendant. This was true, for example, for Blaylock & Partners, L.P., Tokyo-Mitsubishi Int'l plc, Westdeutsche Landesbank Girozentrale, Caboto Holding SIM S.p.A. and Mizuho Int'l plc. The Complaint listed eighteen entities as "Underwriter Defendants." The list did not include the Foreign Affiliates. Page 6

  On August 1, 2003, the first amended class action complaint ("Amended Complaint") was filed. The allegations concerning the Foreign Affiliates were essentially the same as those contained in the Complaint. Again, the Amended Complaint did not include the Foreign Affiliates among its list of Underwriter Defendants.

  In October 2003, NYSCRF came to understand that the Underwriter Defendants would not produce documents from the Foreign Affiliates because the Foreign Affiliates were not separately named as defendants. On October 9, NYSCRF moved to file a corrected amended complaint to add six foreign subsidiaries or affiliates of Underwriter Defendants as defendants.

  On December 1, 2003, the motion by NYSCRF to correct the Amended Complaint was granted. In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288 (DLC), 2003 WL 22831008 (S.D.N.Y. Dec. 1, 2003) ("December 1 Opinion"). The December 1 Opinion rejected the Underwriter Defendants' argument that Rule 16, Fed.R. Civ. P., barred the filing of a corrected pleading to add the Foreign Affiliates as defendants. It did not reach the issue of whether a corrected pleading would be timely as to the newly named defendants.

  On December 1, 2003, a Corrected Amended Complaint was filed. Each of the Foreign Affiliates was identified as a defendant. They were served with the pleading and have moved to dismiss the claims against them on the ground that they are time-barred and that the named plaintiffs lack standing to bring Page ...


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