In Re Motorola Securities Litigation
644 F.3d 511
| 7th Cir. | 2011Background
- Plan seeks a portion of a $190,000,000 securities settlement on behalf of Plan participants who held Motorola stock through the Motorola Stock Fund.
- District court denied the Plan's claim, citing (a) absence of open-market Motorola stock purchases by Plan participants and (b) that the Plan was Motorola's affiliate, excluding it from the class.
- Plan administrator is the Profit-Sharing Committee, appointed by Motorola's Board; the Trustee holds Plan assets and executes trades.
- Motorola Stock Fund holds ~99% Motorola stock; Plan participants own units, with the Trustee voting shares per participant instructions or proportionally otherwise.
- This appeal focuses on whether the Plan is an affiliate and thus excluded from the class definition, and on the meaning of 'publicly traded' in the class scope.
- Court analyzes governing law: class definition interpreted under federal securities law; Illinois contract-law provisions apply only if necessary, but federal law controls.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper meaning of 'affiliate' in class definition | Plan is not an affiliate under securities-law control concepts. | Plan is an affiliate, due to Motorola's control over the Plan. | Affiliate interpretation reconciled with securities-law control; Plan excluded. |
| Whether Plan purchasers meet 'publicly traded' requirement | Plan purchased publicly traded Motorola stock via Stock Fund. | Plan participants did not purchase publicly traded stock directly. | Plan, through the Plan, purchases publicly traded stock; inclusion proper. |
| Standard of review and governing interpretation | Class-definition interpretation is a question of law. | Some findings are legal and some are factual; standard varies. | Interpretation of 'affiliate' is legal; factual findings reviewed for clear error. |
Key Cases Cited
- Howell v. Motorola, Inc., 633 F.3d 552 (7th Cir. 2011) (ERISA fiduciary duties; assumed for argument)
- In re Am. Cont'l Corp./Lincoln Sav. & Loan Sec. Litig., 49 F.3d 541 (9th Cir. 1995) (class-definition interpretation governs under substantive law)
- Schorsch v. Hewlett-Packard Co., 417 F.3d 748 (7th Cir. 2005) (district court may modify class definitions)
- Powers v. Hamilton Cnty. Pub. Defender Comm'n, 501 F.3d 592 (6th Cir. 2007) (courts may modify class definitions)
- Newkirk v. Vill. of Steger, 536 F.3d 771 (7th Cir. 2008) (contract interpretation; choice of law considerations in class context)
- Contempo Design, Inc. v. Chicago & NE Ill. Dist. Council of Carpenters, 226 F.3d 535 (7th Cir. 2000) (interpretation of class definitions; deference to substantive law)