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IN RE WORLDCOM

United States District Court, S.D. New York


November 16, 2004.

IN RE WORLDCOM, INC. SECURITIES LITIGATION. This Document Relates to: IQ HOLDINGS, INC., et al., Plaintiffs,
v.
ARTHUR ANDERSEN LLP, et al., Defendants.

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

MEMORANDUM OPINION & ORDER

On October 12, 2004, procedures for the conduct of expert discovery in the Securities Litigation proposed by letters of October 8 and 12 were approved. The October 8 and 12 proposals had been agreed to by all parties to the Securities Litigation with the exception of one Individual Action plaintiff, IQ Holdings, Inc. ("IQ Holdings"). In a letter dated October 14, and received on October 15, IQ Holdings has asked for reconsideration of the October 12 ruling.

In accordance with a May 12, 2004 Order, parties to the consolidated class action scheduled the depositions of thirteen expert witnesses between October 12 and 22.*fn1 Pursuant to an April 19, 2004 Order, Individual Action parties who sought to reserve their rights to use class action experts in an Individual Action were required to provide timely notice of their intent to do so. Each of the thirteen experts proffered in the consolidated class action were therefore potential expert witnesses in the Individual Actions. In light of concerns over the efficiency, practicality, and fairness of conducting the thirteen depositions in two weeks if every party to the Securities Litigation were to participate, the parties to the Securities Litigation, with the exception of IQ Holdings, agreed to a procedure for conducting these depositions.

  As set out in their October 8 letter, the parties agreed that only counsel for Lead Plaintiff, the Underwriter Defendants, Andersen, and Roberts would be permitted to examine witnesses during this round of expert depositions. The parties also stipulated that

No plaintiff, defendant, or other party in an Individual Action may use or rely in any Individual Action on any Class Action Expert Deposition, or on any expert witness proffered in the Class Action, unless that expert witness is made available for a deposition during the period for consolidated discovery in the Individual Actions, as set forth in the Court's Scheduling Order of April 19, 2004.
  These two principles permitted the consolidated class action parties to examine the experts efficiently, and allowed parties to the Individual Actions the opportunity to depose these experts a second time if it becomes necessary in their own actions. The October 12 letter made clear that parties to Individual Actions may ultimately choose not to depose a witness proffered by an opposing party during expert discovery in the Individual Actions, but may nonetheless use the expert's class-action deposition for impeachment purposes if that same expert testifies on behalf of the opposing party at an Individual Action trial.

  In its letter dated October 14, and received by the Court on October 15, IQ Holdings has requested reconsideration of the October 12 Order on two grounds — that it was issued without giving IQ Holdings an opportunity to be heard, and that it is inconsistent with the Opinion of May 22, 2003, In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288 (DLC), 2003 WL 21219037 (S.D.N.Y. May 22, 2003), setting forth the reasons for consolidating the Individual Actions and the consolidated class action, as well as the May 28 Consolidation Order, In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288 (DLC), 2003 WL 21242882 (S.D.N.Y. May 29, 2003). These objections are without merit.

  IQ Holdings failed to act with sufficient diligence in response to the October 8 letter. The October 8 letter requested that the expert discovery procedure "be settled promptly in light of the imminent commencement" of the depositions on October 12. IQ Holdings does not deny that counsel for the Citigroup Defendants personally described the proposed deposition procedures to counsel for IQ Holdings prior to the submission of the application on October 8, does not claim that it failed to receive the October 8 letter, and does not claim ignorance that the depositions were scheduled to begin on October 12. IQ Holdings does not present any explanation for waiting until October 14 to submit the grounds for its opposition to proposals affecting depositions that began two days before.*fn2

  IQ Holdings identifies only one way in which it is potentially prejudiced by the modification of prior Orders. IQ Holdings argues that an expert should not have "to be deposed again" before a party can use the expert's deposition at trial. IQ Holdings misunderstands the procedures endorsed by the October 12 ruling. IQ Holdings has the opportunity to depose all expert witnesses proffered by any defendant in the IQ Holdings action. IQ Holdings, however, is not obligated to examine any such witness and is entitled to use the transcript of such expert's class action deposition for impeachment purposes if the expert testifies at the IQ Holdings' trial. For all these reasons, IQ Holdings' untimely objection to the expert discovery procedures adopted by memo-endorsement on October 12, 2004 is overruled.

  SO ORDERED.


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