United States District Court, S.D. New York
September 6, 2005.
AARON WALKER, Individually and on Behalf of All Others Similarly Situated, Plaintiff,
DEUTSCHE BANK, AG, et al., Defendants, IRA FBO LOUIS P. MAZZA, Individually and on Behalf of All Others Similarly Situated, Plaintiff, v. DEUTSCHE BANK, AG, et al., Defendants. MICHAEL and NANCY ICARDO, Individually and on Behalf of All Others Similarly Situated, Plaintiffs, v. DEUTSCHE BANK, AG, et al., Defendants.
The opinion of the court was delivered by: DEBORAH BATTS, District Judge
MEMORANDUM AND ORDER
Pending before this Court are three class action lawsuits
against the Scudder Investments mutual funds' ("Scudder Funds")
investment advisers, the advisers' corporate parents, and the
Scudder Funds' directors and trustees.*fn1 These three
actions each allege violations of sections 34(b), 36(a) and (b),
and 48(a) of the Investment Company Act of 1940 and sections 206
and 215 of the Investment Advisers Act of 1940, as well as common
law breach of fiduciary duty and aiding and abetting breach of
Plaintiffs in each of the three cases now jointly move for
consolidation of the actions pursuant to Federal Rule of Civil
Procedure 42(a) and for appointment of tri-lead counsel of such
consolidated actions. For the reasons stated below, Plaintiffs'
motion is GRANTED.
On March 10, 2004, Aaron Walker filed a class action against
Deutsche Bank, AG ("Deutsche Bank"), three of its asset
management subsidiaries Deutsche Asset Management, Inc.,
Deutsche Investment Management Americas, Inc. ("Deutsche Investment Management"), and Scudder Investments (collectively,
the "Investment Adviser Defendants") and twelve named and 100
unidentified, or "John Doe," Scudder Funds trustees (collectively
the "Trustee Defendants"). (Walker Compl. ¶¶ 12-30). Walker
alleges violations of sections 34(b), 36(a) and (b), and 48(a) of
the Investment Company Act of 1940, 15 U.S.C. §§ 80a-33(b),
80a-35(a) and (b), and 80-47(a), section 206 of the Investment
Advisers Act of 1940, 15 U.S.C § 80b-6, as well as common law
breach of fiduciary duty and aiding and abetting breach of
fiduciary duty. Specifically, he alleges that (1) the Investment
Adviser Defendants improperly used Scudder Fund assets to pay
brokers to push Scudder Funds aggressively over other mutual
funds and concealed such payments from Scudder Fund investors;
(2) the Trustee Defendants breached their fiduciary duties to
Scudder Fund investors by knowingly and recklessly allowing such
improper conduct; and (3) Defendants' alleged wrongdoing injured
Scudder Fund Investros by causing them to purchase Scudder Funds
from brokers with conflicts of interest and to pay undisclosed
fees which were used to make the aforementioned payments to
brokers. (Id. ¶¶ 2-6). Walker brings his action on behalf of
all persons or entities that purchased or held Scudder Fund
shares between March 10, 1999 and November 17, 2003, and
derivatively on behalf of the Scudder Funds themselves, who are also named as nominal defendants in
this action. (Id ¶¶ 1, 26).
On May 6 and May 12, 2004, respectively, IRA FBO Louis P. Mazza
and Michael and Nancy Icardo filed class action lawsuits against
the very same Defendants which also alleged violations of §§
34(b), 36(a) and (b), and 48(a) of the Investment Company Act and
§ 206 of the Investment Advisors Act, breach of fiduciary duty,
and aiding and abetting breach of fiduciary duty. The claims in
these two latter complaints arise from the the same alleged
wrongdoing on the part of the Investment Advisor and Trustee
Defendants as described in the Walker Complaint. (Mazza
Compl. ¶¶ 2-6; Icardo Compl. ¶¶ 2-6). In addition, both the
Mazza and Icardo Complaints specify the same class period as
the Walker Complaint, and both actions have also been brought
derivatively on behalf of the Scudder Funds themselves, who are
also named as nominal defendants in both actions. (Mazza Compl.
¶¶ 1; 33; Icardo Compl. ¶¶ 1; 26).*fn2
All three named plaintiffs in the above-mentioned class actions
now move the Court to consolidate these three cases pursuant to
Federal Rule of Civil Procedure 42(a) and to appoint tri-lead counsel of the consolidated actions. To date, this
motion is unopposed.
A. Legal Standard
The Walker, Mazza and Icardo Plaintiffs jointly move to
consolidate the three above-mentioned actions, and any
subsequently filed related actions, pursuant to Rule 42(a) of the
Federal Rules of Civil Procedure. Rule 42(a) provides:
When actions involving a common question of law or
fact are pending before the court, it may order a
joint hearing or trial of any or all the matters in
issue in the actions; it may order all the actions
consolidated; and it may make such orders concerning
proceedings therein as may tend to avoid unnecessary
costs or delay.
In such instances, district courts have "broad discretion to
determine whether consolidation is appropriate," and they "have
taken the view that considerations of judicial economy favor
consolidation." Johnson v. Celotex Corp., 899 F.2d 1281
(2d Cir. 1990); see also Garber v. Randell, 477 F.2d 711
(2d Cir. 1973) (holding that determination of whether to
consolidate stockholder suits "rests in the district court's
sound discretion."). "[S]o long as any confusion or prejudice does not outweigh efficiency concerns, consolidation will
generally be appropriate." Primavera Familienstiftung v. Askin,
173 F.R.D. 115, 129 (S.D.N.Y. 1997); Pinkowitz v. Elan Corp.,
PLC, No. 02 Civ. 865, 2002 WL 1822118, at *2 (S.D.N.Y. July 29,
2002) (quoting Primavera).
B. Plaintiffs' Motion to Consolidate
The three above-captioned actions pending before this Court
involve common questions of both law and fact. Indeed, the
factual allegations supporting the claims asserted in each of the
actions are identical. (See Walker Compl., ¶¶ 2-6; Mazza
Compl. ¶¶ 2-6; Icardo Compl. ¶¶ 2-6). Moreover, the Plaintiffs
are all investors who purchased or possessed shares in one or
more of the Scudder funds during the aforementioned Class Period.
In addition, all three complaints allege the same seven causes of
action based on the same federal statutes and common law theories
of liability. (See Walker Compl. ¶¶ 59-105; Mazza Compl. ¶¶
68-112; Icardo Compl. ¶¶ 59-105).
Meanwhile, it does not appear that any of the parties to these
three actions would be prejudiced by consolidation. In fact, no
one has opposed the instant consolidation motion. Accordingly,
since the Court finds that the Walker, Mazza and Icardo
actions involve common questions of law and fact and that consolidating them would not prejudice anybody, in the interests
of judicial economy, these actions are hereby consolidated
pursuant to Rule 42(a) of the Federal Rules of Civil Procedure.
C. Appointment of Tri-Lead Counsel
A court which has consolidated actions may also, at its
discretion, "appoint one or more attorneys as liaison counsel,
lead counsel, or trial counsel for the consolidated cases." 9
Charles Alan Wright and Arthur R. Miller, Federal Practice And
Procedure § 2385 (2d ed. 1987); see also MacAlister v.
Guterma, 263 F.2d 65, 68 (2d Cir. 1958) (recognizing federal
courts' power to appoint general counsel for consolidated
actions). Moreover, a court is not restricted to the appointment
of only one lead counsel, and indeed, appointment of a single
lead counsel is inappropriate when counsel for each named
plaintiff in the consolidated actions, "being so experienced in
[the] type of litigation [at issue in the consolidated actions],
may be expected to coordinate the conduct of the proceedings in a
manner that will avoid unnecessary duplication." Fields v.
Wolfson, 41 F.R.D. 329, 330 (S.D.N.Y. 1967).
In the three now-consolidated actions, the law firms of Milberg
Weiss Bershad & Schulman LLP ("Milberg Weiss"), Stull, Stull &
Brody, and Schiffrin & Barroway, LLP ("Schiffrin & Barroway"), who respectively represent the named Plaintiffs in
the Walker, Mazza, and Icardo actions, seek to be appointed
tri-lead counsel. (See Notice of Unopposed Motion for
Consolidation, at 2-3). Because the Court is aware that each firm
is experienced in prosecuting lawsuits on behalf of defrauded
investors in securities, and, as demonstrated by their joint
consolidation motion, the firms have already shown the ability to
work together in prosecuting this case without duplication of
effort, the Court finds that appointment of Milberg Weiss, Stull,
Stull & Brody, and Schiffrin & Barroway as tri-lead counsel of
the consolidated class actions is proper.
Having considered the motion for Consolidation of the Walker,
Mazza and Icardo class actions pursuant to Rule 42(a) of the
Federal Rules of Civil Procedure, IT IS HEREBY ORDERED THAT:
1. The motion to Consolidate the three above-captioned cases is
2. The following actions are hereby consolidated for all
purposes, including pretrial proceedings, trial and appeal,
pursuant to Rule 42(a) of the Federal Rules of Civil Procedure:
Walker v. Deutsche Bank, AG, et al., No. 04 Civ.
Mazza v. Deutsche Bank, AG, et al., No. 04 Civ.
3501 (DAB) Icardo v. Deutsche Bank, AG, et al., No. 04 Civ.
3. The caption of these consolidated actions shall be "In re
Scudder Mutual Funds Fee Litigtion" and the files of these
consolidated actions shall be maintained in one file under Master
File No. 04 Civ. 1921 (DAB). Any other actions now pending or
later filed in this district which arise out of or are related to
the same facts as alleged in the above-identified cases shall be
consolidated for all purposes, if and when they are brought to
the Court's attention.
4. Every pleading filed in the consolidated actions or in any
separate action included herein, shall bear the following
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
In re SCUDDER MUTUAL FUNDS
FEE LITIGATION 04 Civ. 1921 (DAB)
This Document Relates To:
5. When a pleading is intended to be applicable to all actions
governed by this Order, the words "All Actions" shall appear
immediately after the words "This Document Relates To:" in the
caption set out above. When a pleading is intended to be
applicable to only some, but not all of the consolidated actions, this Court's docket number for each individual action to
which the pleading is intended to be applicable and the last name
of the first-named plaintiff in said action shall appear
immediately after the words "This Document Relates To:" in the
caption described above.
6. When a pleading is filed and the caption shows that it is
applicable to "All Actions," the clerk shall file such pleading
in the Master File and note such filing on the Master Docket. No
further copies need to be filed, and no other docket entries need
7. When a pleading is filed and the caption shows that it is to
be applicable to fewer than all of the consolidated actions, the
Clerk will file such pleading in the Master File only, but shall
docket such filing on the Master Docket and the docket of each
8. This Court requests the assistance of counsel in calling to
the attention of the Clerk of this Court the filing or transfer
of any case which might be consolidated as part of In re Scudder
Mutual Funds Fee Litigation.
9. The law firms of Milberg Weiss, Bershad & Schulman, LLP,
Stull, Stull & Brody, and Schiffrin & Barroway, LLP, are hereby
appointed tri-lead counsel of the above-mentioned consolidated
actions. 10 Plaintiffs shall file a Consolidated Complaint within 60
days of the date of this Order.
11 The Defendants shall move or answer within 60 days after
filing of the Consolidated Complaint.
12 In the event any of the Defendants file a motion directed at
the Consolidated Complaint, Plaintiffs shall file any opposition
to such motion within 45 days of service of such motion, and
Defendants shall file their reply in support of such motion
within 30 days of service of Plaintiffs' opposition.
13. The Clerk is directed to serve a copy of this Order on all
parties of record in the consolidated actions.
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