United States District Court, S.D. New York
March 25, 2004.
IN RE WORLDCOM, INC. SECURITIES LITIGATION, This Document Relates to: 02 Civ. 3288, 02 Civ. 5108, 02 Civ. 3416, 02 Civ. 5224, 02 Civ. 3419, 02 Civ. 5285, 02 Civ. 3508, 02 Civ. 8226, 02 Civ. 3537, 02 Civ. 8227, 02 Civ. 3750, 02 Civ. 8229, 02 Civ. 3771, 02 Civ. 8230, 02 Civ. 4719, 02 Civ. 8234, 02 Civ. 4945, 02 Civ. 9513, 02 Civ. 4946, 02 Civ. 9514, 02 Civ. 4958, 02 Civ. 9515, 02 Civ. 4973, 02 Civ. 9516, 02 Civ. 4990, 02 Civ. 9519, 02 Civ. 5057, 02 Civ. 9521, 02 Civ. 5071, 03 Civ. 2841, 02 Civ. 5087, 03 Civ. 3592, 03 Civ. 6229
The opinion of the court was delivered by: DENISE COTE, District Judge
MEMORANDUM OPINION & ORDER
Byron B. Mathews, Jr. ("Mathews") has moved (a) to require the Lead
Plaintiff in the WorldCom, Inc. ("WorldCom") consolidated securities
class action to disclose any potential conflicts, and (b) to create
subclasses in the certified class. Mathews identifies himself as a
purchaser of WorldCom shares in 2000, who lost approximately $42,000 from
the investment. The Lead Plaintiff has opposed the motion; Mathews did
not submit any reply to the opposition.*fn1 For the following reasons,
the motion is denied.
Conflict of Interest Disclosure
Mathews seeks to discover if political contributions have ever been
made by a defendant or co-lead counsel for the class to Alan Hevesi, the
Comptroller of New York State, or if there are business dealings ongoing
between the Comptroller and any defendant. The New York State Common
Retirement Fund ("NYSCRF") is the Lead Plaintiff in the consolidated
securities class action.
Any objection to the appointment of the NYSCRF as lead plaintiff should
have been made in connection with the appointment proceeding in 2002.
Mathews has provided no basis to revisit that appointment or to conduct
discovery on these issues.
Mathews moves for the creation of four subclasses, and the appointment
of separate counsel for each, principally to assist in representation of
the class during settlement discussions. His four subclasses are for
investors who purchased shares as part of the performance of a fiduciary
role, investors who purchased shares in their own retirement accounts
where the shares represented 50% or more of the value of their holdings,
investors who purchased shares in their own retirement accounts where the
shares did not represent 50% or more of the accounts' value, and
investors who purchased shares in non-retirement accounts.
This class action has been actively litigated for over a year and a
half. Mathews has pointed to nothing that has occurred in the course of
this litigation that suggests that the class is not being well
represented or that subclasses should be created. Should a settlement be
reached, the Court will scrutinize any proposed settlement and make a
determination at that time whether subclasses need to be created for
purposes of the settlement. There is no evidence at this time that the
creation of subclasses would assist plaintiffs in this litigation. There
is every reason to believe that the creation of subclasses would cause
confusion, and lead to inefficiencies. This proposal creates the very
real danger that any settlement funds will needlessly be transferred from
victims to attorneys.
The motion by Byron B. Mathews, Jr. for the creation of subclasses and
for discovery is denied.