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IN RE GLOBAL CROSSING

United States District Court, S.D. New York


March 26, 2004.

In re GLOBAL CROSSING, LTD.; SECURITIES LITIGATION ABE NACHOM, Plaintiff, -v- CITIGROUP, INC., et al. Defendants

The opinion of the court was delivered by: GERARD E. LYNCH, District Judge

OPINION AND ORDER

By order dated November 13, 2003, this Court denied plaintiff's motion to remand or abstain in the above-captioned case. Accordingly, pursuant to paragraphs 17 and 41 of this Court's Order in In re Global Crossing, Ltd. Securities and ERISA Litigation, Dkt. No. 02 MD 1472, dated December 13, 2002 (the "Global Crossing Consolidation Order"), the above-captioned case is hereby consolidated for all purposes with In re Global Crossing, Ltd. Securities Litigation, Dkt. No. 02 civ. 910, pursuant to Rule 42(a) of the Federal Rules of Civil Procedure. All provisions of the Global Crossing Consolidation Order are hereafter applicable to this action. The parties are directed to file any objections to this consolidation or to the application of any provision(s) of the Global Crossing Consolidation Order, a copy of which is attached hereto, no later than April 30, 2004. In accordance with paragraph 33 of the Global Crossing Consolidation Order, the complaint in this action shall be deemed withdrawn and shall be dismissed unless the plaintiffs, no later than April 30, 2003, shows cause why the complaint should not be dismissed.

The Clerk of the Court is respectfully directed to file and docket this Order under both the above docket number and In re Global Crossing, Ltd. Securities Litigation, Dkt. No. 02 civ. 910.

  SO ORDERED. Page 2

  ORDER

  Approximately seventy cases growing out of the decline in value of Global Crossing, Ltd. ("GC") have been filed in this Court or transferred here by the Joint Panel on Multidistrict Litigation for consolidated or coordinated proceedings. The majority of these cases stem from class action complaints on behalf of purchasers of GC securities; essentially all of these complaints specifically allege that GC overstated revenues in its SEC filings and other public statements, primarily by means of fraudulent accounting practices in connection with reciprocal leases of cable capacity. Another set of class action complaints, brought on behalf of employee-participants in GC's retirement savings plan, charge that various defendants violated their duties as fiduciaries under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), by failing to monitor the plan's investments in company stock, and by failing to disclose to plan participants and beneficiaries the risks of investing in GC securities.

  Numerous motions for consolidation and for appointment of lead plaintiffs, and for other relief relating to the proper organization of these cases in order to resolve the various overlapping claims and common legal and factual issues, have been submitted, and the papers relating to these various motions have been considered by the Court. Conferences involving all counsel were held on November 22, 2002, and December 10, 2002, to hear arguments regarding these various applications, and to assist the Court in understanding the views of the various parties concerning the fairest and most efficient methods of resolving these disputes. On the basis of the oral and written submissions of the parties, and after extended reflection by the Court, it is hereby ORDERED, for the reasons stated on the record in open court on December 10, 2002, that: I. Proposed Consolidation of All Cases

  1. The motion of certain defendants to consolidate all of the actions relating to Global Crossing for pretrial purposes is denied. Page 3 discovery; (e) speak on behalf of plaintiffs at any pretrial conference; (f) employ and consult with experts; (g) conduct settlement negotiations with defense counsel on behalf of plaintiffs; (h) call meetings of plaintiffs' counsel; ft) accept service on behalf of all plaintiffs; (j) distribute to all plaintiffs' counsel copies of all notices, orders, and decisions of the Court, including this order: (k) maintain an up-to-date list of counsel available to all plaintiffs' counsel on request; and (I) keep a complete file of all papers and discovery materials filed or generated in the Consolidated ERISA Action which shall be available to all plaintiffs' counsel at reasonable hours.

  C. Scheduling of Pleadings

  8. Plaintiffs shall file a consolidated amended complaint for the Consolidated ERISA Action no later than January 24, 2003.

  9. Defendants shall respond to the consolidated amended complaint, by motion or answer, no later than March 10, 2003.

  10. If any defendant moves to dismiss the consolidated amended complaint, plaintiffs shall respond to such motion no later than April 24, 2003.

  11. Defendants shall reply to plaintiffs' response(s) no later than 30 days after filing of the response.

  12. Pursuant to the Court's Individual Practice Rules, courtesy copies of motions or responses need not be provided to chambers at the time of filing. When the reply or replies are served and filed, defendants shall supply two courtesy copies of all motion papers to chambers.

  13. Pending filing and service of the consolidated amended complaint, defendants shall have no obligation to move, answer, or otherwise respond to any of the complaints in the actions consolidated herein or any actions subsequently consolidated with them.

  14. The complaints previously filed in any of the GC ERISA Actions already before this Court shall be deemed withdrawn, and shall be dismissed, two weeks after the filing of the consolidated amended complaint, unless the plaintiff(s) filing said complaints, no later than February 3, 2003 (or, if the date for filing the consolidated amended complaint is extended by further Order of this Court, within ten days after the adjourned filing date), ft) shows cause for why the complaint should not be dismissed and (ii) delivers to chambers, if the plaintiff has not already done so, a courtesy copy of the original complaint.

  15. Discovery in the Consolidated GC ERISA Action is not stayed. However, the parties are encouraged to meet and confer with each other and with the Lead Plaintiff in the Consolidated Securities Action concerning a proposed schedule for discovery, taking into account the desirability of coordinated discovery in all the Global Crossing matters, the parties' Page 4 needs to focus on the filing of pleadings and motions, the desirability of expeditiously proceeding with the resolution of the disputes, and the impact of discovery on any settlement negotiations.

  16. Pusloskie v. Winnick, Dkt. No. 02 Civ. 8508 (GEL), a related action making claims under ERISA in connection with the Frontier Group Bargaining Unit Employees Retirement Savings Plan, is not consolidated with the Consolidated ERISA Action. Any filings in that action shall be captioned in the usual manner and docketed and filed only under Dkt. No. 02 Civ. 8508 (GEL). However, proceedings in Pusloskie and in the Consolidated ERISA Action will be coordinated to the extent feasible. Any amended complaint and all further pleadings shall be filed in Pusloskie in accordance with the schedule set forth in paragraphs 8 through 13 of this order.

 III. Securities Litigation

  A. Consolidation

  17. The actions listed on the annexed schedule under the heading "Global Crossing Securities Actions," as well as any other action pertaining to Global Crossing, Ltd., now pending before, hereafter filed in, or hereafter transferred to this Court, brought under the federal securities laws or state laws relating to fraud in connection with the issuance, purchase or sale of securities ("GC Securities Actions") are consolidated for all purposes pursuant to Rule 42(a), Fed.R.Civ.P. They shall be referred to collectively as In re Global Crossing, Ltd. Securities Litigation, Dkt. No. 02 Civ. 910 (GEL) (the "Consolidated Securities Action").

  18. The actions against GC and its investment bankers pending in this District which are presently consolidated before the Honorable Shira A. Scheindlin in In re Initial Public Offering Securities Litigation, Dkt. No. 21 MC 92 (SAS), are expressly excluded from this Order. No action consolidated in the Consolidated ERISA Action pursuant to paragraph 2 shall be consolidated into the Consolidated Securities Action.

  19. The Clerk of this Court shall file a copy of this Order in the separate file for each of the GC Securities Actions. Unless otherwise ordered by this Court, and except as specified in paragraphs 36 and 37 of this Order, future filings in any GC Securities Action herein consolidated shall be filed and docketed only under 02 Civ. 910.

  20. The Court requests the assistance of counsel in calling to the attention of the Clerk of this Court the filing or transfer of any case that might properly be consolidated as part of this litigation.

  21. Every pleading filed in the Consolidated Securities Action shall bear the following caption: Page 5

  B. Appointment of Lead Plaintiffs and Organization of Counsel

  22. Pursuant to 15 U.S.C. § 78u-4(a)(3)(B) and 15 U.S.C. § 77z-l(a)(3)(B), the Public Employees Retirement System of Ohio and the State Teachers Retirement System of Ohio are appointed Lead Plaintiffs in the Consolidated Securities Action.

  23. The Court approves the Lead Plaintiffs' selection of Grant & Eisenhofer, P.A., as Lead Counsel in the Consolidated Securities Action.

  24. Counsel for Staro Asset Management, LLC, Bennett Restructuring Funds, Richard P. Kleinknecht, and James F. Tucker shall serve as members of an Executive Committee of the plaintiffs in the GC Securities Actions. Alterations in the composition of the Executive Committee, to the extent necessary or desirable, may be made from time to time by application to the Court.

  25. Lead Counsel in the Consolidated Securities Action shall have the following responsibilities: (a) sign any consolidated complaint, motions, briefs, discovery requests, objections, stipulations, or notices on behalf of plaintiffs for any matters arising during pretrial proceedings; (b) conduct all pretrial proceedings on behalf of plaintiffs; (c) brief and argue motions; (d) initiate and conduct discovery; (e) speak on behalf of plaintiffs at any pretrial conference; (f) employ and consult with experts; (g) conduct settlement negotiations with defense counsel on behalf of plaintiffs; (h) call meetings of plaintiffs' counsel; ft) accept service on behalf of all plaintiffs; (j) distribute to all plaintiffs' counsel copies of all notices, orders, and decisions of the Court, including this order: (k) maintain an up-to-date list of counsel available to all plaintiffs' counsel on request; and (I) keep a complete file of all papers and discovery materials filed or generated in the Consolidated Securities Action which shall be available to all plaintiffs' counsel at reasonable hours.

  26. In carrying out these responsibilities, Lead Counsel shall consult with members of the Executive Committee, and shall keep members of the Executive Committee informed of significant developments in the litigation. The Executive Committee members shall assist Lead Counsel in communicating with all counsel in the GC Securities Actions. Page 6

  C. Scheduling

  27. Plaintiffs shall file a consolidated amended complaint for the Consolidated Securities Action no later than January 24, 2003.

  28. Defendants shall respond to the consolidated amended complaint, by motion or answer, no later than March 10, 2003.

  29. If any defendant moves to dismiss the consolidated amended complaint, plaintiffs shall respond to such motion no later than April 24, 2003.

  30. Defendants shall reply to plaintiffs' response(s) no later than 30 days after filing of the response.

  31. Pursuant to the Court's Individual Practice Rules, courtesy copies of motions or responses need not be provided to chambers at the time of filing. When the reply or replies are served and filed, defendants shall supply two courtesy copies of all motion papers to chambers.

  32. Pending filing and service of the consolidated amended complaint, defendants shall have no obligation to move, answer, or otherwise respond to any of the complaints in the actions consolidated herein or any actions subsequently consolidated with them.

  33. The complaints previously filed in any of the GC Securities Actions already before this Court shall be deemed withdrawn and shall be dismissed two weeks after the filing of the consolidated amended complaint, unless the plaintiff(s) filing said complaints, no later than February 3, 2003 (or, if the date for filing the consolidated amended complaint is extended by further Order of this Court, within ten days after the adjourned filing date), ft) shows cause for why the complaint should not be dismissed and (ii) delivers to chambers, if the plaintiff has not already done so, a courtesy copy of the original complaint.

  34. Discovery in the Consolidated Securities Action is stayed, pursuant to 15 U.S.C. § 77z-l(b)(1), 78u-4(b)(3)(B), pending determination of the Lead Plaintiffs' motion to lift the stay. However, the parties are encouraged to meet and confer with each other and with Lead Counsel in the Consolidated ERISA Action concerning a proposed schedule for discovery, taking into account the desirability of coordinated discovery in all the Global Crossing matters, the parties' needs to focus on the filing of pleadings and motions, the desirability of expeditiously proceeding with the resolution of the disputes, and the impact of discovery on any settlement negotiations.

  35. Within 30 days after the consolidated amended securities complaint is filed, plaintiffs in any action not dismissed pursuant to paragraph 33 may file amended complaints duplicating the consolidated complaint (as appropriate) and asserting any additional claims they wish to plead. Page 7

  36. Any party in any of the GC Securities Actions may apply to the court for a modification of or relief from this Order, including for lifting any applicable stay of proceedings, to allow motion practice on any issue unique to that action. Any such applications, and any pleadings filed pursuant to paragraph 35 of this Order, shall be captioned in the ordinary manner with the name of the particular action to which they apply, and docketed and filed both under its individual docket number and under the consolidated securities action, Dkt. No. 02 Civ. 910. Counsel filing such pleadings or applications are accordingly directed to supply two copies of such filings to the Clerk of the Court.

  37. The plaintiff in Pettit v. Winnick, Dkt. No. 02 Civ. 7469 (GEL), may file, within 30 days of the filing of this Order, a motion to remand to California Superior Court for lack of federal jurisdiction. Any such motion should be filed and docketed under the caption and docket number for that case alone.

 IV. Miscellaneous Administrative Provisions

  38. None of the provisions of this order shall apply to Garcia v. Winnick, Dkt. No. 02 Civ. 8890 (GEL). All proceedings in Garcia remain stayed in accordance with the stipulation of the parties entered by order of this court on December 9, 2002.

  39. Any papers intended to be considered in connection with both the Consolidated ERISA Action and the Consolidated Securities Action shall be captioned as follows:

  Such filings shall be filed and docketed under both 02 Civ. 910 and 02 Civ. 7453. Counsel shall provide the Clerk of the Court with two copies of each such filing for that purpose.

  40. In issuing this Order, the Court makes no ruling and expresses no opinion on any class certification issues.

  41. This Order shall apply to each action alleging ERISA violations or fraud in purchase or sale of securities brought in connection with Global Crossing which is subsequently filed in or Page 8 transferred to this Court and assigned to the undersigned, unless a party objecting to the consolidation of that action or to any other provision of this Order serves an application for relief from this Order or from any of its provisions within ten days after the Clerk mails a copy of this Order to counsel for that party. The provisions of this Order shall apply to such action pending the Court's ruling on the application.

  42. The Clerk of Court is respectfully directed that all of the cases listed on the attached schedule, whether or not consolidated by this Order, shall be treated as "related cases" for purposes of all internal Court statistical reports.

  43. This Order disposes of all motions for consolidation, appointment of lead counsel, or other miscellaneous relief that have been filed in Manson v. Winnick, Dkt. No. 02 Civ. 910 (GEL), Armezzani v. Winnick, Dkt. No. 02 Civ. 1086 (GEL), Tiwok. Inc. v. Winnick, Dkt. No. 02 Civ. 1129 (GEL), and Res v. Winnick, Dkt. No. 02 Civ. 2641 (GEL). Therefore, the Clerk of the Court is respectfully directed to close out all motions in those cases for purposes of all internal Court statistical reports.

  SO ORDERED.

20040326

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