BORIS FELDMAN, State Bar No. 128838
DOUGLAS J. CLARK, State Bar No. 171499
CHERYL W. FOUNG, State Bar No. 108868
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304-1050
Telephone: (650) 493-9300
Facsimile: (650) 565-5100

Attorneys for Defendants
ELECTRONICS FOR IMAGING, INC., DAN
AVIDA, and ERIC SALTZMAN

Defendants Electronics for Imaging, Inc. ("EFI"), Dan Avida and Eric Saltzman respectfully submit this reply memorandum of points and authorities in further support of their motion to compel class certification.

Why are plaintiffs so desperate to avoid class certification in this case? Plaintiffs contend that class certification "would serve no purpose" in light of plaintiffs' motion to dismiss their own case pursuant to Federal Rules of Civil Procedure 41(a)(2). Pl. Opp. at 1. We disagree. First, defendants have opposed plaintiffs' motion to dismiss. Second, if the case is to be dismissed, the dismissal, be it with or without prejudice, should bind the entire class, not just the lead plaintiffs. For a dismissal to bind the entire class, the class must be certified.

Given that resolution of plaintiffs' motion to dismiss, regardless of the outcome, does not deprive class certification of its purpose, defendants' opening question remains unanswered. In a sense, the question is not susceptible to a ready answer. After all, plaintiffs petitioned the Court to represent the plaintiff class and alleged in their Complaint that the action should only proceed as a class action. One can only assume that plaintiffs not only wish (in vain, defendants believe) to dismiss this case, but to dismiss it quietly so as to evade the objections of absent class members or the appearance of potential successor lead plaintiffs.

The "why" of plaintiffs' strategy need not be answered for this motion to be resolved in defendants' favor. Class certification is necessary and proper and defendants' motion to compel certification should be granted.

Certification of the plaintiff class is necessary at this stage of the proceedings, especially in light of Rule 23's mandate that the class certification determination be made "[a]s soon as practicable after commencement of an action brought as a class action. . . ." Fed. R. Civ. P. 23(c)(1). This action has been pending for more than one and one-half years, discovery has been available for use in this action, and defendants have answered and stand ready to proceed.

Plaintiffs have not disputed this Court's authority to sua sponte address the issue of class certification.¹ Nor do plaintiffs argue that class certification is inappropriate in this action. Plaintiffs merely contend that certification is not practicable at this time because they have filed a dispositive motion. They argue that their motion, if granted, would dispose of the entire action and render class certification an "exercise in futility." Pl. Opp. at 1-2. Plaintiffs are mistaken.

In fact, the pendency of plaintiffs' dispositive motion actually heightens the need for the Court to address the issue of class certification now. "[A] motion for class certification should ordinarily be determined prior to the adjudication of a dispositive motion." Diamond, [1997 Transfer Binder] Fed. Sec. L. Rep. (CCH) at 97,796. See Head v. NetManage, No. C 97-4385 CRB, slip op. at 2 (N.D. Cal. Sept. 8, 1998) (same) (Lansky Decl. Ex. A); Wade v. Kirkland, 118 F.3d 667, 670 (9th Cir. 1997) (holding that district court should have ruled on the motion for class certification prior to dismissing action based on mootness). The reason a class should be certified prior to a motion to dismiss is to avoid "one-way intervention". One-way intervention is a term used by the Supreme Court to describe the unfairness arising out of rulings that do not bind a class. See American Pipe & Constr. Co., 414 U.S. 538, 547 (1974). For example, if a class is not certified in this action and plaintiffs obtain dismissal, defendants would be subjected to the risk that absent class members would file individual actions in federal court based on the same facts and circumstances alleged in the pending complaint. Rule 23(c) is designed to prevent one-way intervention by providing for class certification, notice to the class, and an opt-out procedure "as soon as practicable" after commencement of an action. Fed. R. Civ. P. 23(c).

As plaintiffs note in their Opposition, many courts have ruled on certification during the pendency of a motion to dismiss. Pl. Opp. at 2. Plaintiffs attempt to distinguish those cases by focusing on the fact that the motions to dismiss were filed by defendants. Plaintiffs, however, do not attempt to explain the relevance of that distinction. A motion to dismiss the case, whether brought by plaintiffs or defendants, could terminate the federal action with prejudice and would have preclusive effect. See Bioxy, Inc. v. Birko Corp., 935 F. Supp. 737, 740 (E.D.N.C. 1996) (granting plaintiff's motion to dismiss patent infringement claim with prejudice, pursuant to Fed. R. Civ. P. 41(a)(2); "[A] dismissal motion under Rule 41(a)(2) with prejudice acts as an adjudication on the merits with full preclusive effect.")

In fact, courts have addressed the need for class certification prior to voluntary dismissal. In Moreno v. Lo-Vaca Gathering Co., 80 F.R.D. 282 (W.D. Tex. 1978), the court stated that "[p]laintiffs purported to file this action as a class action yet have made no attempt to seek certification of the class. Likewise, they seek a dismissal as though the class they purport to represent did not exist. This Court cannot do likewise." Id. at 283. The Court warned that class actions should not be treated lightly, because "'having nominated themselves as class representatives, both plaintiff and his counsel have undertaken responsibilities, and triggered possible consequences that may not now be erased by routine acceptance of the resignation they now tender.'" Id. at 284 (quoting Rothman v. Gould, 14 Fed. R. Serv. 2d 1541, 1542 (S.D.N.Y. 1971). The Court concluded: "Plaintiffs have done nothing to pursue their certification or their alleged claims against the various Defendants for over a year. A dismissal at this stage, without certification, may prejudice someone whether the dismissal is with or without prejudice." Id. Plaintiffs in this case similarly should not be permitted to quietly walk away from claims they asserted on behalf of a class.

Plaintiffs cite two cases in support of the proposition that while Rule 23 requires certification "as soon as practicable," the Court has discretion to defer class certification in some instances. Pl. Opp. at 1. These cases, however, suggest that certification is proper now. In Christensen v. Kiewit-Murdock Investment Corp., 815 F.2d 206 (2nd Cir. 1987), the Court held that addressing a motion to dismiss prior to deciding the motion for class certification "may or may not be appropriate depending on the complexity of the legal or factual issues raised by the motion to certify." Id. at 214. After considering the breadth of the class sought to be certified, and in light of the absence of any showing that the district court abused its discretion by reserving decision on the motion for class certification, no abuse of discretion was found. Id. Here, the legal and factual issues raised by the class certification motion are nonexistent. No discovery is necessary. Defendants do not oppose certification and, in fact, have moved to compel it.

Similarly, in Wright v. Schock, 742 F.2d 541 (9th Cir. 1984), the court recognized "a concern that extensive discovery might be necessary on the class certification issue itself." Id. at 544. The district court deferred ruling on the motion for class certification until after the motion for summary judgment was resolved, but only with the consent of the defendants. Id. at 544-545. The Ninth Circuit was careful to note that the situation would have been different had the defendants not acquiesced, "for as the matter now stands, defendants have prevailed only against the named plaintiffs. The judgment will not be res judicata as to other individual plaintiffs or other members of any class that may be certified. These individuals or class members remain free to assert any claims they may have against the [defendants]." Id. at 544. As discussed above, that is the case here. In the unlikely event that plaintiffs obtain dismissal of their case, defendants may be forced to contest individual actions in this Court.

Certification of a class and notice to the class is a necessary predicate to addressing plaintiffs' motion to dismiss their own case. "[A]s a general rule, court approval of dismissal . . . of a class action cannot be given until notice thereof has been given to all members of the class. When, as here, the existence of a proper class has not yet been determined, it has been held that such court approval must be held in abeyance pending a determination of the class action question," unless the court has adequate information concerning the membership of the alleged class to allow adequate notice to be given. Burgener v. California Audit Auth., 407 F. Supp. 555, 560 (N.D. Cal. 1976) (emphasis supplied).

For the foregoing reasons, and those set forth in defendants' opening memorandum, defendants respectfully request that their motion to compel certification of the plaintiff class be granted in its entirety.

Dated: September 9, 1999

¹ See Defendants' Motion to Compel Certification of the Plaintiff Class at 3-4. See In re Diamond Multimedia Sys., Inc., [1997 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶ 99,561, at 97,796-7 (N.D. Cal. Oct. 14, 1997) (citing McGowan v. Faulkner Concrete Pipe Co., 659 F.2d 554, 559 (5th Cir. 1981) ("[t]he trial court has an independent obligation to decide whether an action was properly brought as a class action, even where neither party moves for a ruling on class certification") (citations omitted)). Diamond is attached as Exhibit B to the Declaration of David Lansky ("Lansky Decl."), filed concurrently with Defendants' opening memorandum.

I, Pamela Marie Oasay, declare:

I am a legal resident of the United States and a resident of the State of California. I am employed in Santa Clara County, State of California, in the office of a member of the bar of this Court, at whose direction the service was made. I am over the age of eighteen years, and not a party to the within action. My business address is 650 Page Mill Road, Palo Alto, California 94304-1050.

On the date set forth below, in accordance with ordinary business practices at Wilson Sonsini, Goodrich & Rosati, I served the following document(s):

1. DEFENDANTS' NOTICE OF MOTION AND MOTION RE AMENDMENT OF COUNTERCLAIM;

(   ) By placing such copy(s) in a sealed envelope, postage thereon and fully prepaid, for collection and mailing with the United States Postal Service on this day to the following person(s):

( x ) By consigning such copy(s) to an express mail service for guaranteed next day delivery to the following person(s):

William S. Lerach
Milberg Weiss Bershad Hynes & Lerach
600 West Broadway, Suite 1800
San Diego, CA 92101

Edward M. Gergosian
Matthew P. Montgomery
Barrack Rodos & Bacine
600 West Broadway, Suite 1700
San Diego, CA 92101

Reed R. Kathrein
Lisa C. Atkinson
David R. Stickney
Milberg Weiss Bershad Hynes & Lerach
222 Kearney Street, 10th Floor
San Francisco, CA 94108

Jeffrey H. Squire
Ira M. Press
Kaufman Malchman Kirby & Squire
830 Third Ave., 10th Floor
New York, NY 10022

(   ) By consigning such copy(s) to a messenger for guaranteed hand delivery on this date to the following person(s):

( x ) By consigning such copy(s) to a facsimile operator for transmittal on this date to the following person(s) without the exhibits:

Reed R. Kathrein
Lisa C. Atkinson
David R. Stickney
Milberg Weiss Bershad Hynes & Lerach
222 Kearney Street, 10th Floor
San Francisco, CA 94108

Edward M. Gergosian
Matthew P. Montgomery
Barrack Rodos & Bacine
600 West Broadway, Suite 1700
San Diego, CA 92101

( x ) By forwarding such copy(s) by electronic transmission on this date, to the designated Internet site listed below:

epost@securities.stanford.edu

I am readily familiar with Wilson Sonsini Goodrich & Rosati's practice for collection and processing of correspondence for delivery according to instructions indicated above. In the ordinary course of business, correspondence would be handled accordingly.

I declare under penalty of perjury that the foregoing is true and correct to the best of my knowledge. Executed at Palo Alto, California on September __, 1999.