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United States District Court, S.D. New York

November 16, 2005.


The opinion of the court was delivered by: LEWIS KAPLAN, District Judge


The individual defendants move for reconsideration of so much of the Court's ruling on the motions to dismiss as sustained the claim against them under Section 20(a) of the Securities and Exchange Act of 1934, 15 U.S.C. § 78t(a), holding that culpable participation in the alleged Exchange Act violation is not an element a plaintiff must plead to state a claim; rather, lack of culpable participation is "an affirmative defense to be pleaded and proved by defendants." Alternatively, they seek certification of the question to the Court of Appeals under 28 U.S.C. § 1292(b).

A motion for reconsideration is a vehicle to bring to the Court's attention "matters or controlling decisions which counsel believes the court has overlooked." S.D.N.Y. Civ. R. 6.3. As review of movants' memorandum, the Court's opinion,*fn1 and the several previous decisions by the undersigned that were relied upon readily demonstrates, the Court did not overlook the point and has concluded that the question upon which it ruled against the individual defendants is not controlled by any existing Second Circuit or Supreme Court precedent.

  The motion for certification presents a closer question. The issue whether a plaintiff must plead culpable participation to state a claim under Section 20(a) is one on which courts are divided. It therefore should be regarded as one on which "there is substantial ground for difference of opinion."*fn2 28 U.S.C. § 1292(b). That question, if resolved in favor of the seven individual defendants, would terminate the action as to six, so the Court assumes that the question is "controlling" for purposes of the statute. The Court is not persuaded, however, that a definitive pretrial resolution of the issue would be likely "materially [to] advance the ultimate termination of the litigation." And it ultimately need not rely exclusively on that doubt in light of another practical consideration.

  "[I]nterlocutory orders are not to be certified routinely, even where the standards set forth in Section 1292(b) are met." Romea v. Heiberger & Associates, 988 F. Supp. 715, 717 (S.D.N.Y.), aff'd without consideration of the point, 163 F.3d 111 (2d Cir. 1998). One of the factors for consideration is whether the "case[is] of unusual significance, [one] in which a ruling is of practical importance going well beyond run-of-the-mill concerns of parties before the Court," In re Auction Houses Antitrust Litig., 164 F.R.D. 345, 348 (S.D.N.Y. 2001), a standard that arguably is met here. But courts should consider also whether the issue is likely to come before the Court of Appeals on an appeal from a final judgment, and thus resolve the uncertainty without burdening that court with an unnecessary application for leave to take an interlocutory appeal, and whether the benefit to the district court of a pretrial resolution outweighs the burden on the Court of Appeals of deciding an appeal prior to final judgment. See In re Currency Conversion Fee Antitrust Litig., No. M-95, 2005 WL 1871012, at *3 (S.D.N.Y. Aug. 9, 2005) ("district court must consider the institutional efficiency of the federal judiciary when considering an application for Section 1292(b) certification"). Further, they should take into account that most civil cases settle and that, in consequence, there is a substantial probability that courts of appeals never would be called upon to pass on appeals in cases in which certification is sought.

  This Court sees little likely advantage in the management or speed of resolution of this case that might be derived from an interlocutory determination of this issue. The action would be likely to consume substantially as much time with the individual defendants out of it as parties as it would if they remain. Regardless of whether they are parties, the individual defendants will be involved in the action as witnesses.*fn3 Moreover, this issue is being litigated so frequently in this district that the Section 20(a) issue almost inevitably soon will come before the Court of Appeals on an appeal from a final judgment in another case. In consequence, even assuming that all of the requirements of Section 1292(b) were satisfied, this Court would deny certification in the exercise of discretion.

  For the foregoing reasons, the motion is denied in all respects.



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