Stanford University Law School - Securities Class Action Clearinghouse

 

MILBERG WEISS BERSHAD

HYNES & LERACH LLP

WILLIAM S. LERACH (68581)

600 West Broadway, Suite 1800

San Diego, CA 92101

Telephone: 619/231-1058

- and -

REED R. KATHREIN (139304)

JEFFREY W. LAWRENCE (166806)

KIMBERLY C. EPSTEIN (169012)

222 Kearny Street, 10th Floor

San Francisco, CA 94108

Telephone: 415/288-4545



WOLF POPPER LLP

LESTER L. LEVY

MICHAEL A. SCHWARTZ

845 Third Avenue

New York, NY 10022

Telephone: 212/759-4600

[Proposed] Co-Lead Counsel for Plaintiffs

[Additional counsel appear on signature page.]





UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA





E&L BALLAN, TRUSTEES FOR THE BENEFIT

OF E&L BALLAN, On Behalf of Themselves

and All Others Similarly Situated,

Plaintiffs,

vs.

ADAC LABORATORIES, et al.,

Defendants.

___________________________________

No. C-98-4934-MHP

CLASS ACTION


DATE: April 5, 1999

TIME: 2:00 p.m.

CTRM: The Honorable Marilyn Hall Patel



NOTICE OF MOTION AND MOTION AND

MEMORANDUM OF POINTS AND AUTHORITIES

IN SUPPORT OF MOTION TO CONSOLIDATE RELATED ACTIONS

AGAINST ADAC LABORATORIES FOR VIOLATIONS OF

THE SECURITIES EXCHANGE ACT OF 1934



TABLE OF CONTENTS

I. INTRODUCTION

II. SUMMARY OF PENDING ACTIONS

III. ARGUMENT

IV. CONCLUSION



NOTICE OF MOTION AND MOTION

TO: ALL PARTIES AND THEIR COUNSEL OF RECORD

PLEASE TAKE NOTICE that on April 5, 1999 at 2:00 p.m., or as soon thereafter as the matter may be heard in the Courtroom of the Honorable Marilyn Hall Patel, United States District Court, Northern District of California, located at 450 Golden Gate Avenue, San Francisco, California 94102, Movants(1) will, and hereby do, move the Court for an Order consolidating the above-captioned action with Field v. ADAC Laboratories, No. C-98-4936-MHP; Reynolds v. ADAC Laboratories, No. C-98-4941-MHP; Ingersoll v. ADAC Laboratories, No. C-98-4939-MHP; Park East, Inc. v. Lowe, No. C-98-4950-MHP; Davidson v. ADAC Laboratories, No. C-99-0019-MHP; Ansnes v. ADAC Laboratories, No. C-99-0024-MHP; Fernandez v. Lowe, No. C-99-0061-MHP; Bowdoin v. Lowe, No. C-99-0147-MHP; Polk v. ADAC Laboratories, No. C-99-0166-MHP; and High v. ADAC Laboratories, No. C-99-0723-SC, for all purposes under Rule 42 of the Federal Rules of Civil Procedure (the "Motion").

The Motion is brought on the ground that these 11 actions are substantially identical because each alleges claims for violations of the Securities Exchange Act of 1934 ("Exchange Act"), based upon similar factual allegations against the same defendants. The Motion is also brought on the ground that consolidation of these cases will promote efficiency.

The Motion is based upon this Notice of Motion and Motion, the accompanying Memorandum of Points and Authorities and the complete files and records in the 11 related actions and such oral argument as the Court may consider in deciding this Motion.(2)

MEMORANDUM OF POINTS AND AUTHORITIES

I. INTRODUCTION

Presently pending in this District are 11 related securities fraud class action lawsuits brought pursuant to §§10(b) and 20(a) of the Exchange Act, 15 U.S.C. §§78j(b) and 78t(a), and Securities and Exchange Commission ("SEC") Rule 10b-5 promulgated thereunder, 17 C.F.R. §240.10b-5. The pending cases in this District are:

    Abbreviated Case Name                        Case Number          Date Filed
1.  Ballan v. ADAC Laboratories ("Ballan")       C-98-4934-MHP         12/29/98
    Plaintiff: E&L Ballan, Trustees for the Benefit of E&L Ballan
2.  Field v. ADAC Laboratories ("Field")         C-98-4936-MHP         12/30/98
    Plaintiff: Joel Field
3.  Reynolds v. ADAC Laboratories ("Reynolds")   C-98-4941-MHP         12/30/98
    Plaintiff: John Reynolds
4.  Ingersoll v. ADAC Laboratories ("Ingersoll") C-98-4939-MHP         12/30/98
    Plaintiff: George Ingersoll
5.  Park East Inc. v. Lowe ("Park East Inc.")    C-98-4950-MHP         12/31/98
    Plaintiff: Park East, Inc.
6.  Davidson v. ADAC Laboratories ("Davidson")   C-99-0019-MHP         01/05/99
    Plaintiff: Arthur Davidson
7.  Ansnes v. ADAC Laboratories ("Ansnes")       C-99-0024-MHP         01/06/99
    Plaintiff: Terry Ansnes
8.  Fernandez v. Lowe ("Fernandez")              C-99-0061-MHP         01/08/99
    Plaintiff: Justin Fernandez
9.  Bowdoin v. Lowe ("Bowdoin")                  C-99-0147-MHP         01/19/99
    Plaintiff: Douglas Bowdoin
10. Polk v. ADAC Laboratories ("Polk")           C-99-0166-MHP         01/19/99
    Plaintiff: Mike Polk
11. High v. ADAC Laboratories ("High")           C-99-0723-SC          02/22/99
    Plaintiff: Walter High

Movants seek to consolidate these 11 related securities class actions pursuant to Rule 42(a) of the Federal Rules of Civil Procedure. Each of the actions asserts substantially the same claims and raise substantially the same questions of fact and law against the same defendants. Each alleges securities fraud claims on behalf of all persons who purchased or otherwise acquired the securities of ADAC. Thus, consolidation of these actions is appropriate. Any minor differences among the 11 actions will be resolved by a consolidated amended complaint.

II. SUMMARY OF PENDING ACTIONS

These 11 related class actions allege a common course of conduct by the same defendants in violation of §§10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. Each action alleges that, pursuant to a scheme to artificially inflate the price of ADAC's securities, defendants made a series of false and misleading statements during the Class Period about ADAC's business prospects and financial results. ¶¶21-56.(3) Defendants' scheme was successful until December 29, 1998 when the Company was forced to announce that it needed to restate its financial results for the previously reported 1996, 1997 and 1998 fiscal years. ¶57. Upon this revelation, the market price of ADAC shares dropped to $19-5/8 from the previous day's close of $22.125, at 25% drop. ¶58.

As a result of the materially false and misleading misrepresentations and omissions, class members were damaged by purchasing ADAC's securities at artificially inflated prices during the Class Period. Accordingly, these actions, which involve common questions of law and fact, are appropriate for consolidation in order to promote judicial economy and efficiency.

III. ARGUMENT

Consolidation pursuant to Rule 42(a) is proper when actions involve common questions of law and fact.(4) Manual for Complex Litigation Third §20.123, at 13-14 (1995); In re Equity Funding Corp. of Am. Sec. Litig., 416 F. Supp. 161, 175 (C.D. Cal. 1976). This Court has broad discretion under this rule to consolidate cases pending within the District. Investors Research Co. v. U.S. Dist. Court For Cent. Dist., 877 F.2d 777 (9th Cir. 1989); Perez-Funez v. Dist. Director, Immigration & Naturalization Serv., 611 F. Supp. 990, 994 (C.D. Cal. 1984) ("A court has broad discretion in deciding whether or not to grant a motion for consolidation, although, typically, consolidation is favored.") (citations omitted).

Courts have recognized that class action shareholder suits, in particular, are ideally suited to consolidation pursuant to Rule 42(a) because their unification expedites pretrial proceedings, reduces case duplication, avoids the contacting of parties and witnesses for inquiries in multiple proceedings and minimizes the expenditure of time and money by all persons concerned. See Equity Funding, 416 F. Supp. at 176. Consolidating multi-shareholder class action suits simplifies pretrial and discovery motions, class action issues and clerical and administrative management duties. Moreover, consolidation will reduce the confusion and delay that may result from prosecuting these related class action cases separately. See id.

As discussed in §II, supra, the 11 actions pending before this Court present virtually identical factual and legal issues, each one alleges violations of the same sections of the Exchange Act and each action names the same defendants. Because these actions are based on the same facts and involve the same subject matter, the same discovery will be relevant to all lawsuits. Thus, consolidation is appropriate here.

The PSLRA provides, among other things, for consolidation of substantially similar actions. The PSLRA states in pertinent part:

15 U.S.C. §78u-4(a)(3)(B)(ii).

Thus, the PSLRA establishes a two-step process for resolving lead plaintiff and consolidation issues where more than one action on behalf of a class asserting substantially the same claims has been filed. The court "shall" first decide the consolidation issue and thereafter decide the lead plaintiff issue "[a]s soon as practicable" after the consolidation motion has been decided. Id.

Given that the selection of lead plaintiff and lead counsel is the necessary first step to prosecute the actions, Movants urge the Court to grant the consolidation motion as soon as practicable and consolidate these related actions. A prompt determination is reasonable and warranted under Rule 42(a), given the common questions of fact and law presented by the actions now pending in this District.

IV. CONCLUSION

For the reasons stated above, and in order to promote judicial economy, Movants respectfully request that the Court consolidate the 11 related actions identified herein and any related actions subsequently filed, and permit the filing of a consolidated amended complaint within 45 days from the entry of the Court's Order granting this motion.

DATED: March 1, 1999

Respectfully submitted,



MILBERG WEISS BERSHAD

HYNES & LERACH LLP

WILLIAM S. LERACH

600 West Broadway, Suite 1800

San Diego, CA 92101

Telephone: 619/231-1058



MILBERG WEISS BERSHAD

HYNES & LERACH LLP

REED R. KATHREIN

JEFFREY W. LAWRENCE

KIMBERLY C. EPSTEIN







______________________________

JEFFREY W. LAWRENCE



222 Kearny Street, 10th Floor

San Francisco, CA 94108

Telephone: 415/288-4545



WOLF POPPER LLP

LESTER L. LEVY

MICHAEL A. SCHWARTZ

845 Third Avenue

New York, NY 10022

Telephone: 212/759-4600

[Proposed] Co-Lead Counsel for Plaintiffs



BARRACK, RODOS & BACINE

EDWARD M. GERGOSIAN

600 West Broadway, Suite 1700

San Diego, CA 92101

Telephone: 619/230-0800



BERMAN, DeVALERIO, PEASE

& TABACCO

JOSEPH J. TABACCO, JR.

CHRISTOPHER T. HEFFELFINGER

425 California Street

Suite 2025

San Francisco, CA 94104

Telephone: 415/433-3200



BERMAN, DeVALERIO & PEASE

JEFFREY C. BLOCK

One Liberty Square

Boston, MA 02109

Telephone: 617/542-8300



COHEN, MILSTEIN, HAUSFELD

& TOLL, P.L.L.C.

STEVEN J. TOLL

999 Third Avenue, Suite 3600

Seattle, WA 98104

Telephone: 206/521-0080



ENTWISTLE & CAPPUCCI LLP

VINCENT R. CAPPUCCI

400 Park Avenue

New York, NY 10022-4406

Telephone: 212/894-7200



LAW OFFICES OF LIONEL Z.

GLANCY

LIONEL Z. GLANCY

1801 Avenue of the Stars

Suite 308

Los Angeles, CA 90067

Telephone: 310/201-9150



LOCKRIDGE GRINDAL NAUEN

& HOLSTEIN, P.L.L.P.

RICHARD A. LOCKRIDGE

KAREN M. HANSON

GREGG M. FISHBEIN

100 Washington Avenue South

Suite 2200

Minneapolis, MN 55401-2159

Telephone: 612/339-6900



LOWEY DANNENBERG BEMPORAD

& SELINGER, P.C.

NEIL L. SELINGER

DAVID C. HARRISON

The Gateway

One North Lexington Avenue

White Plains, NY 10601

Telephone: 914/997-0500



LAW OFFICES OF BRUCE G. MURPHY

BRUCE G. MURPHY

265 Llwyds Lane

Vero Beach, FL 32963

Telephone: 561/231-4202



POMERANTZ HAUDEK BLOCK

GROSSMAN & GROSS LLP

STANLEY M. GROSSMAN

MARC I. GROSS

PATRICK V. DAHLSTROM

100 Park Avenue, 26th Floor

New York, NY 10017-5516

Telephone: 212/661-1100



WECHSLER HARWOOD HALEBIAN

& FEFFER LLP

STUART D. WECHSLER

JEFFREY M. HABER

FREDERICK W. GERKENS, III

488 Madison Avenue

8th Floor

New York, NY 10022

Telephone: 212/935-7400

Attorneys for Plaintiffs



ADAC-2\BM000706.BRF

DECLARATION OF SERVICE BY MAIL

PURSUANT TO NORTHERN DISTRICT LOCAL RULE 23-2(c)(2)

I, the undersigned, declare:

1. That declarant is and was, at all times herein mentioned, a citizen of the United States and a resident of the County of San Francisco, over the age of 18 years, and not a party to or interested in the within action; that declarant's business address is 222 Kearny Street, 10th Floor, San Francisco, California 94108.

2. That on March 1, 1999, declarant served the NOTICE OF MOTION AND MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO CONSOLIDATE RELATED ACTIONS AGAINST ADAC LABORATORIES FOR VIOLATIONS OF THE SECURITIES EXCHANGE ACT OF 1934 by depositing a true copy thereof in a United States mailbox at San Francisco, California in a sealed envelope with postage thereon fully prepaid and addressed to the parties listed on the attached Service List and that this document was forwarded to the following designated Internet site at:

http://securities.milberg.com

3. That there is a regular communication by mail between the place of mailing and the places so addressed.

I declare under penalty of perjury that the foregoing is true and correct. Executed this 1st day of March, 1999, at San Francisco, California.



______________________________

DEBORAH R. DASH

1. Movants consist of a group of purchasers of ADAC Laboratories ("ADAC" or the "Company") securities between January 10, 1996 and December 28, 1998, inclusive (the "Class Period"), who suffered damages in excess of $337,000. Collectively, Movants purchased 121,258 shares of ADAC during the Class Period. See Declaration of Jeffrey W. Lawrence in Support of Motion of the Ballan Plaintiff Group For Appointment of Lead Plaintiff and Approval of Lead Plaintiff's Choice of Co-Lead Counsel ("Lawrence Decl."), filed concurrently herewith, Exhibit A.

2. Movants have filed a motion for the Ballan Plaintiff Group to be appointed Lead Plaintiff pursuant to §21D(a)(3)(B) of the Securities Exchange Act and to approve Lead Plaintiff's choice of Co-Lead Counsel concurrently herewith. Under the Private Securities Litigation Reform Act of 1995, Pub. L. No. 104-67, 109 Stat. 737 (1995) ("PSLRA"), the consolidation motion must be ruled upon by this Court prior to hearing the lead plaintiff motion pursuant to 15 U.S.C. §78u-4(a)(3)(B)(ii).

3. All paragraph references ("¶") are to the Ballan Complaint for Violation of the Federal Securities Laws ("Complaint"), filed on December 29, 1998.

4. Rule 42(a) allows this Court to order consolidation of separate actions: