United States District Court, S.D. New York
June 18, 2004.
IN RE WORLDCOM, INC. SECURITIES LITIGATION. This Document Relates to: Retirement Systems of Alabama
J.P. Morgan Chase & Co., et al., Case No. CV 2002-1947-P (Circuit Court, Montgomery County, Alabama).
The opinion of the court was delivered by: DENISE COTE, District Judge
Memorandum Opinion & Order
On May 11, 2004, plaintiffs in the above-captioned state court
action ("RSA"*fn1 and "Alabama Action") moved for a stay of
an April 23, 2004 Injunction affecting the schedule for summary
judgment and trial in the Alabama Action, pending the completion
of RSA's appeal to the Second Circuit Court of Appeals of the
Injunction and the April 23 Opinion and Order ("April 23
Opinion") which explained the grounds for the Injunction. For the
reasons stated below, RSA's motion for a stay is denied.
On March 23, 2004, an Order To Show Cause was issued on the
Alabama Defendants'*fn2 application under the All Writs Act,
28 U.S.C. § 1651, for a stay of the summary judgment practice and the trial in the Alabama Action for a period of no earlier than
sixty days following the conclusion of the trial of the
consolidated securities class action arising from the collapse of
WorldCom, Inc. ("WorldCom"). On April 7,*fn3 RSA and the
judge presiding over the Alabama Action, the Honorable Charles
Price, filed responses to the Order to Show Cause. In addition,
the Attorney General for the State of Alabama filed an amicus
curiae brief opposing the Alabama Defendants' application. Oral
argument was held on April 13.
The April 23 Opinion granted the Alabama Defendants'
application and enjoined the Circuit Court of Alabama from
resolving any summary judgment motion or beginning the trial in
Retirement Systems of Alabama v. J.P. Morgan Chase & Co., et
al., Case No. CV 2002-1947-P (Circuit Court, Montgomery County,
Alabama), until at least sixty days following the entry of a
verdict in the class action trial in the WorldCom Securities
Litigation.*fn4 See In re WorldCom, Inc. Sec. Litig.,
02 Civ. 3288 (DLC), 2004 WL 884960 (S.D.N.Y. Apr. 23, 2004). The
facts and analysis set forth in the April 23 Opinion are
incorporated herein. On April 27, RSA appealed to the United States Court of Appeals
for the Second Circuit from the April 23 Opinion and Injunction.
On May 11, RSA moved this Court for a stay of the April 23
Injunction pending the resolution of its appeal to the Second
Circuit. A May 14 Order required that opposition to RSA's motion
for a stay was to be submitted on May 21; any reply was due May
28. The Alabama Defendants filed a timely opposition. As of
today's date, RSA has not submitted a reply.*fn5 Its motion
is deemed fully submitted.
While different procedural rules govern the power of district
courts and courts of appeals to stay an order pending appeal, the
factors regulating the issuance of a stay "are generally the
same" under both sets of rules. Hilton v. Braunskill,
481 U.S. 770, 776 (1987) (citing Rule 62(c), Fed.R.Civ.P. 62(c);
Rule 8(a), Fed.R. App. P.). In determining whether to grant a stay
pending an appeal, a court must consider four factors:
(1) whether the stay applicant has made a strong
showing that he is likely to succeed on the merits;
(2) whether the applicant will be irreparably injured
absent a stay; (3) whether the issuance of the stay
will substantially injure the other parties
interested in the proceeding; and (4) where the public interest
Rodriguez ex rel. Rodriguez v. DeBuono, 175 F.3d 227, 234 (2d
In its May 11 motion for a stay, RSA seeks an order permitting
the trial of its action to proceed in Alabama state court on
October 18, 2004. This is a request for the same relief which RSA
seeks to obtain through the appeal from the April 23 Injunction
that it filed on April 27. The motion for a stay must be denied.
RSA principally argues in its motion for a stay that it "risks
losing its trial preference." RSA contends that since an Alabama
budget crisis has limited the number of jury trials, a change in
its trial date will interfere with the Alabama court's
organization of its trial schedule, and such a change may hinder
the rescheduling of its trial. This argument addresses the second
factor to be considered in connection with a stay, i.e., the
existence of irreparable injury to the applicant. This is a new
argument that RSA did not present in opposing the Alabama
Defendants' motion for a writ.*fn6 RSA has not shown that
the Alabama Circuit Court will penalize it or otherwise fail to
give it an appropriate trial date as soon as the April 23 Injunction
permits its trial to go forward.
RSA does not make any substantive argument with respect to the
other three factors. It does not make any showing, much less a
strong showing, that it is likely to succeed in the Second
Circuit on the merits. It did not make a motion for
reconsideration to point out any authority or argument that the
April 23 Opinion had overlooked, and its motion for a stay does
not analyze the legal authority on which the April 23 Opinion
The April 23 Opinion described the substantial injury to others
that would occur if the writ did not issue. RSA does not address
that issue. It confines itself to pointing out that the
plaintiffs in the WorldCom Securities Litigation class action
and in the WorldCom Securities Litigation individual actions
have not filed papers in support of the writ. As RSA well knows,
and as is described in the April 23 Opinion, see In re
WorldCom, Inc. Sec. Litig., 2004 WL 884960, at *5-7, the
Coordination Order of January 30, see In re WorldCom, Inc.
Sec. Litig., 02 Civ. 3288 (DLC), 2004 WL 817355 (S.D.N.Y. Jan.
30, 2004), was drafted after a lengthy consultation with all of
the parties in the Securities Litigation, including all of the
plaintiffs. All of the parties plaintiffs and defendants
unanimously agreed that the trials in the remanded state court
actions should follow the trial in the WorldCom securities
class action. In re WorldCom, Inc. Sec. Litig., 2004 WL 884960,
at *6. The final factor, the public interest, weighs strongly against
the RSA's motion for a stay. For the reasons described in the
April 23 Opinion, the trial of the Alabama Action this Fall will
seriously disrupt the schedule in the Securities Litigation.
Id. at *15-16. The writ was issued only after the Alabama court
repeatedly rejected the efforts by this Court and the defendants
to coordinate the schedules of our intertwined litigations. Id.
at *8-11, 17. In our federal system, principles of comity apply
to all courts, not just federal courts, and its obligations run
in both directions.
In sum, RSA has not shown that it is entitled to a stay. Each
of the relevant factors weighs against a stay. Even if RSA were
able to show that it would be "irreparably injured" by a stay a
showing that it has not succeeded in making the remaining
factors would require that its application for a stay be denied.
The schedule in this complex and massive multi-district
litigation should not be held hostage to the fear that Alabama's
fiscal crisis may result in some unidentified delay in 2005 in
scheduling the trial of the Alabama Action. Conclusion
The motion by plaintiffs in Retirement Systems of Alabama v.
J.P. Morgan Chase & Co., et al., Case No. CV 2002-1947-P
(Circuit Court, Montgomery County, Alabama), for a stay of the
April 23 Injunction pending a decision in their appeal of the
April 23 Opinion and Injunction is denied.