216 F.R.D. 677 | D. Kan. | 2003
MEMORANDUM AND ORDER DENYING MOTION FOR CLASS CERTIFICATION
In an “Amended Class Action and Derivative Complaint” (Doc. 120), plaintiff Lewis Geer, as a shareholder of TransFinancial Holdings, Inc. (“TransFinancial”), seeks to assert class and derivative causes of action concerning the liquidation sale of assets by Crouse Cartage Company (“Crouse”), a subsidiary of TransFinancial, to RLR Investments and R & L Transfer (“R & L”). This matter is before the Court on plaintiff Lewis Geer’s Motion for Class Certification of Count I of the complaint, which alleges a direct claim against directors Cox, Laborde, O’Neil, Hill and Steward (“Individual Defendants”) (Doc. 70). Plaintiff also requests the Court appoint him Class representative and his counsel Class counsel. The Individual Defendants have moved to dismiss Count I and have objected to class certification (Doc. 160). Plaintiff has not replied, nor has he requested a hearing on his motion.
Subject matter jurisdiction
The Individual Defendants have asserted that the Court lacks diversity jurisdiction under 28 U.S.C. § 1332(a) because plaintiff has not claimed damages in excess of $75,000, seeking dismissal of Count I
Individual Defendants are correct that the Tenth Circuit and this court have held that each class litigant must satisfy the amount-in-eontroversy requirement for purposes of diversity jurisdiction.
Class certification
Class certification is an issue that is committed to the broad discretion of the trial court.
Before evaluating whether plaintiff has met this burden, however, the Court must make a threshold inquiry-has plaintiff defined the Class sufficiently?
Individual Defendants argue that plaintiff has not met his burden of sufficiently defining the Class. Plaintiff has proposed the following definition for the Class: “All persons, other than defendants, who held the securities of TransFinancial Holdings, Inc., a Delaware corporation, for violation of Section 271 of the Delaware Corporation Law, 8 Del. C. § 271, and for breach of the duty of candor.” Individual Defendants contend that this definition is insufficient because it is not limited to shareholders at a relevant or defined time period, but instead defines a class of all shareholders who have ever held TransFinancial securities.
The Court agrees that plaintiff fails to suggest a relevant time period during which class members must have owned shares in TransFinancial. Presumably, plaintiff intends to include all shareholders at the time of the sale of the Crouse Assets. The Court is troubled by plaintiffs failure to place a
Plaintiffs allegations in support of class certification appear to satisfy the first three prongs of Rule 23(a), that is, numerosity, commonality and typicality. However, Rule 23(a)(4) requires that the named representative have common interests with the unnamed class members, and that the named plaintiffs counsel be qualified to “vigorously and adequately prosecute the interests of the class.”
In this ease, the Court finds that plaintiff is not a representative that could fairly and adequately represent the interests of the class. Individual Defendants raise questions regarding plaintiffs ability to “fairly and adequately protect the interests of the class.”
More troubling to the Court, however, is that plaintiffs attorneys have not demonstrated that they will vigorously and adequately prosecute the interests of the Class. This finding is based upon the failure of plaintiffs counsel to reply to the Individual Defendants’ numerous objections to class certification, combined with counsel’s failure to meet discovery deadlines. Plaintiffs counsel has failed to designate any expert witnesses, despite obtaining a generous extension of time to do so. Lack of expert testimony may significantly impact the direct action for breach of § 271, in terms of proving the value of the shareholder’s right to vote and any disenfranchise of that right. While the Court does not relish criticizing members of the bar, it appears in this case that there is some question about the diligence of plaintiffs counsel in aggressively pursuing class discovery, and it is beyond explanation that counsel has failed whatsoever to defend the numerous objections to class certification. The record in this case simply does not reflect that plaintiffs counsel will vigorously prosecute this action. Consequently, upon consideration of the rights of absentee class members who would be bound by this adjudication, the Court finds that plaintiff has failed to carry his burden pursuant to Rule 23(a)(4) with respect to the adequacy of representation which he and his chosen counsel will provide, and class certification should be denied.
IT IS THEREFORE ORDERED BY THE COURT that the Individual Defendant’s motion to dismiss Count I is DENIED.
IT IS FURTHER ORDERED that plaintiffs motion for class certification is DENIED.
IT IS SO ORDERED.
. An Amended Scheduling Order (Doc. 135) entered by Magistrate Judge Waxse on February 7, 2003, gave defendants until April 21, 2003 to object to class certification; plaintiff's reply was due on or before May 21, 2003.
. Individual Defendants also move to dismiss Count I on the grounds .that the claim is derivative rather than direct. This issue was also raised by Individual Defendants in a separate Motion to Dismiss (Doc. 132), which has been addressed and denied in a separate order.
. See Leonhardt v. Western Sugar Co., 160 F.3d 631, 641 (10th Cir.1998); Havens Protected "C” Clamps, Inc. v. Pilkington PLC, 2000 WL 382027 (D.Kan.2000).
. 28 U.S.C. § 1367(b) provides that, "In any civil action of which the district courts have original jurisdiction founded solely on section 1332 of this title, the district courts shall not have supplemental jurisdiction under subsection (a) over claims by plaintiffs against persons made parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedure, or over claims by persons proposed to be joined as plaintiffs under Rule 19 of such rules, or seeking to intervene as plaintiffs under Rule 24 of such rules, when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of section 1332.” No person in this action is made a party under Rules 14, 19, 20 or 24 of the Federal Rules of Civil Procedure.
. Jinks v. Richland County, S.C., — U.S. -, -, 123 S.Ct. 1667, 1669, 155 L.Ed.2d 631 (2003).
. Zapata v. IBP, Inc., 167 F.R.D. 147, 156 (D.Kan. 1996) (citations omitted).
. Anderson v. City of Albuquerque, 690 F.2d 796, 799 (10th Cir.1982); Schreiber v. National Collegiate Athletic Ass’n, 167 F.R.D. 169, 173 (D.Kan. 1996).
. Fed.R.Civ.P. 23(a).
. Skeet v. Sears, Roebuck & Co., 137 F.R.D. 347, 350 (D.Kan.1991) (quoting Smith v. MCI Tele-comm. Corp., 124 F.R.D. 665, 674 (D.Kan.1989) (citation omitted)).
. Esplin v. Hirschi, 402 F.2d 94, 99 (10th Cir. 1968), cert. denied, 394 U.S. 928, 89 S.Ct. 1194, 22 L.Ed.2d 459 (1969).
. Vickers v. General Motors Corp., 204 F.R.D. 476, 477 (D.Kan.2001).
. Id. (quoting Davoll v. Webb, 160 F.R.D. 142, 146 (D.Colo.1995)).
. Id.
. Id. (quoting Zapata v. IBP, Inc., 167 F.R.D. at 156) (quoting Manual for Complex Litigation § 30.14 (3d ed.1995)).
. Sheet, 137 F.R.D. at 351 (citations omitted).
. Id. (citing Key v. Gillette Co., 782 F.2d 5, 7 (1st Cir.1986)).
. Klocek v. Gateway, Inc., 104 F.Supp.2d 1332, 1343-44 (D.Kan.2000).
. See Skeet, 137 F.R.D. at 351 (same). Cf. Northern Natural Gas Co. v. Grounds, 292 F.Supp. 619, 635 (D.Kan.1968), aff'd in part, rev’d in part on other grounds, 441 F.2d 704 (10th Cir.), cert. denied 404 U.S. 951, 92 S.Ct. 268, 30 L.Ed.2d 267 (1971) (Rule 23(a)(4) satisfied because work of plaintiffs’ counsel was of the highest quality).