United States District Court, S.D. New York
July 20, 2004.
IN RE: INITIAL PUBLIC OFFERING SECURITIES LITIGATION. This Document Relates to: All Cases.
The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge
MEMORANDUM OPINION AND ORDER
On July 12, 2004, plaintiffs' expert, Dr. Daniel Fischel,
submitted a supplemental report in further support of plaintiffs'
motion for class certification in six focus cases in accordance
with this Court's June 21, 2004 Order. By letter dated July 15,
2004, Underwriters' liaison counsel requested that the Court
order plaintiffs to immediately produce information sought by
defendants in a letter addressed to plaintiffs' liaison counsel
dated July 13, 2004. This letter seeks nine categories of
documents. The thrust of defendants' request is that they are
entitled to examine "the data or other information considered by
the witness in forming [his] opinions." Fed.R.Civ.P.
By letter dated July 16, 2004, plaintiffs opposed defendants'
request, arguing that "the requested discovery is neither
contemplated by the Order, nor necessary to enable the
Underwriter defendants to submit a response that, as directed by the Order, shall be `addressed solely to whether
Dr. Fischel's methodology is "so flawed that it would be
inadmissible as a matter of law. . . ."'" 7/16/04 Letter from
Robert Wallner, plaintiffs' liaison counsel, to the Court
(quoting June 21 Order at 2 (quoting In re Visa
Check/MasterMoney Antitrust Litig., 280 F.3d 124, 135 (2d Cir.
2001))) (emphasis added).
After reviewing the submissions of counsel and Dr. Fischel's
Supplemental Report, I conclude that plaintiffs are not required
to supply the requested information at this time. At the
appropriate time, when the parties are engaged in reciprocal
discovery regarding the final opinions of their experts, they
will be required to provide "all of the data or other information
considered by the witness in forming the[ir] opinions."*fn1
This disclosure is not required, however, for the purpose of
responding to the supplemental report submitted in support of the
class certification motion.
A close review of Dr. Fischel's supplemental report and the
exhibits thereto reveals why this is so. Defendants' first
request, calling for all of the "data provided by plaintiffs'
counsel" is overly broad. In his first report, Dr. Fischel
asserted that he reviewed the "empirical evidence and the
relevant disclosures." 1/20/04 Fischel Report ¶ 10. Defendants were fully able to
respond to this report (and Dr. Fischel's rebuttal report),
challenging both their substance and methodology, with expert
submissions of their own. Defendants did not then ask plaintiffs
to identify the material on which Dr. Fischel relied.
The second request calls for the "data regarding allocants that
were allegedly required to engage in tie-in agreements," as
referenced in paragraph four of the supplemental report. This
information would not affect Dr. Fischel's analysis and
methodology. Indeed, Dr. Fischel notes in paragraph four of his
supplemental report that defendants' own documents reveal
examples of allocants' promises to buy in the aftermarket.
Defendants' third request calls for the information compiled by
plaintiffs' counsel on which Exhibit A to the supplemental report
is based. For the purpose of addressing Dr. Fischel's
methodology, defendants should assume that the number of
allocants with tie-in agreements is accurate. Once that
assumption is made, all of the remaining data in Exhibit A is
drawn from defendants' own records. Defendants should be capable
of attacking the methodology used by Dr. Fischel in relying on
the statistics cited in Exhibit A without knowing the
identities of the allocants. The number of allocants with
alleged tie-in agreements, not their identities, is the important
information. The fourth request, seeking the identity of each of the
allocants with tie-in agreements, is not required for the same
reason. The fifth request, seeking "information on pre-opening
orders" by allocants with tie-in agreements, provided to Dr.
Fischel by plaintiffs' counsel, raises the same issue. For the
purpose of responding to Dr. Fischel's methodology, the numbers
reflected in Exhibit B are presumed to be true. The question
remains whether the analysis of the data can support the
The sixth request, regarding "Trading Databases," calls for
information provided by the defendants. In Exhibits D-1 through
D-6, Dr. Fischel specifically notes his source as
"[Underwriter's] trading database." Accordingly, defendants have
this information.*fn2 Similarly, the eighth request, calling
for "the data relied upon in creating Exhibit G" must already be
in defendants' possession, as all of the information in that
exhibit is in the public domain. The ninth, and final request,
calling for "any and all" other data and information relied on by
Dr. Fischel, is repetitious and cumulative of all of the earlier
That leaves the seventh request, calling for the "entire
regression analysis" conducted by Dr. Fischel including "all of
the variables considered and all of the data relied upon." This request will be honored if and
when Dr. Fischel submits a final report and counsel engage in
reciprocal discovery including expert depositions. At this time,
defendants know that Dr. Fischel conducted an analysis of
"allocation and trading data provided by defendants." Fischel
Supplemental Report ¶ 15. Defendants obviously have that
information and have access to experts perfectly capable of
conducting their own analysis of that information. However, such
an analysis, if the defendant choose to offer it, is irrelevant
to the issue now before the Court. As noted in the June 21 Order,
the only issue now is: "whether Dr. Fischel's methodology is `so
flawed that it would be inadmissible as a matter of law. . . .'"
June 21 Order at 2 (quoting In re Visa Check/MasterMoney
Antitrust Litig., 280 F.3d at 135). The defendants have the
tools to argue, as they previously did, that the methodology is
In sum, while defendants are entitled to the data considered by
an expert at the appropriate time, this is not the appropriate
time. The Court has been inundated by voluminous submissions
addressing class certification. If defendants opposing class
certification were entitled to the extensive disclosure sought by
counsel here with the accompanying escalation of the battle of
the experts then certification could only be considered at the
end of discovery. The Federal Rules, to the contrary, direct
courts to consider certification "at an early practicable time." Fed.R.Civ.P. 23(c)(1)(A). Accordingly,
defendants' request is denied. The defense submission, if any, is
due by the close of business on Friday, July 23, 2004.