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WALKER v. DEUTSCHE BANK

September 6, 2005.

AARON WALKER, Individually and on Behalf of All Others Similarly Situated, Plaintiff,
v.
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 fiduciary duty.

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.

  I. BACKGROUND

  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.

  II. DISCUSSION

  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.
Fed.R.Civ.P. 42(a).
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, 1285 (2d Cir. 1990); see also Garber v. Randell, 477 F.2d 711, 714 (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, ...


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