The Wall Street Journal has an op-ed (subscrip. req.) in today's edition by Craig Barrett, the CEO of Intel, arguing that the main beneficiary of a proposed Financial Accounting Standards Board ("FASB") rule requiring companies to expense broad-based employee stock options will be the securities plaintiffs' bar. The problem is that there is no "model that can value options with any degree of accuracy." Companies will therefore have to make choices about how to value their options that can have a substantial impact on reported earnings. "The result," Barrett concludes, "may be a field day for trial lawyers and class action lawsuits."
Quote of note: "Two Columbia University economists, Charles Calomiris and Glenn Hubbard (who served as chairman of President Bush's Council of Economic Advisors from 2001 to 2003), have extensively documented the uncertainty surrounding attempts to quantify options expenses. The Black-Scholes model and its cousin, the binomial method, can be wildly inaccurate. FASB knows this and is, therefore, unlikely to require any single means of calculation. It's all up to corporate financial officers and their auditors, none of whom have a reliable method to account for options. It's the blind leading the blind leading the blind."
Addition: FASB has issued an "Exposure Draft" and background materials for their proposed new standards for expensing options.
As reported in The 10b-5 Daily, last December SkillSoft PLC (Nasdaq: SKIL) settled a securities class action brought against the company in the N.D. of Cal. for $32 million. But that still left another, more recent securities class action based on alleged misrepresentations relating to a 2002 financial restatement pending in the D. of N.H.
Yesterday, the New Hampshire-based business and IT training software maker announced the preliminary settlement of the D. of N.H. case for $30.5 million. SkillSoft stated that it is in discussions with its insurers over their potential contribution to the settlement amount.
The 10b-5 Daily continues to avidly follow the district court split over whether the extended statute of limitations for securities fraud in the Sarbanes-Oxley Act of 2002 revives time-barred claims. District courts have gone both ways on this question and the issue is currently before the U.S. Court of Appeals for the 11th Circuit.
Buried in a large Enron decision from last month is a new ruling on the issue. In Newby v. Enron Corp., 2004 WL 405886 (S.D. Tex. Feb. 25, 2004) , the court addressed a motion to intervene by the Imperial County Employees Retirement System. One issue was whether the proposed intervenor's claims would be time-barred. The decision has an extensive discussion of relevant case law and, on the revival of time-barred claims, holds:
"With regard to claims that were time-barred by the shorter one-year statute of limitations under Lampf prior to the enactment of the Sarbanes-Oxley Act, this court agrees with [the decision in Glaser v. Enzo Biochem, Inc., 2003 WL 21960613 (E.D. Va. July 16, 2003] that in what this Court finds is an absence of any expression of specific intent that Sarbanes-Oxley should apply retroactively, either in the Act or the legislative history, the Sarbanes-Oxley Act's extended limitations period cannot revive stale claims."
Rayovac Corp. (NYSE: ROV), a Madison-based consumer products company, has announced the preliminary settlement of the securities class action pending against the company in the W.D. of Wisconsin. The suit, originally filed in May 2002, alleges that the company and certain of its officers made misleading statements regarding the demand for the company's products and the company's future prospects in connection with a secondary offering. The settlement is for $4 million, to be "principally funded" by Rayovac's insurance carriers.
Two interesting lead plaintiff/lead counsel decisions from last week.
(1) There are usually a number of initial complaints filed in a securities class action, with later filers often copying, in whole or in substantial part, the allegations in the first-filed complaint. Some courts have questioned whether this practice meets the requirements of Federal Rule of Civil Procedure 11, but it usually does not become an issue in the lead plaintiff/lead counsel contest.
In Taubenfeld v. Career Education Corp., 2004 WL 554810 (N.D. Ill. March 19, 2004), however, one of the candidates for lead plaintiff argued that another candidate should be rejected because it had "selected counsel that has not independently investigated this case but instead simply copied the work product" of other counsel. The court declined to comment "on the appropriateness of copying another plaintiff's complaint verbatim" and held that the issue did not affect the candidate's adequacy to serve as lead plaintiff. The court also noted that there was evidence, in the form of an affidavit, that the proposed lead counsel had conducted an independent investigation of the claims (but apparently declined to include any additional allegations in its complaint "because it would have given the defendants more time to prepare defenses to such information").
(2) Sometimes even an unopposed motion for appointment as lead plaintiff can be rejected. In Huang v. Acterna Corp., 2004 WL 536951 (D. Md. March 18, 2004), the court found that the class notice published by the plaintiffs was insufficient because: (a) it did not provide enough information for potential lead plaintiffs; and (b) it was published in The New York Times, which might not meet the PSLRA's requirement that notice appear in a "widely-circulated national business-oriented publication or wire service."
The court instructed the plaintiffs to send a more informative notice directly to the largest financial and institutional investors in the company, which "can be easily identified by defendants and submitted to plaintiffs." No word on the propriety of requiring the defendants to help find a better lead plaintiff to prosecute the case against them. Ouch. (Securities Litigation Watch also has a post on this decision.)
In the wake of recent corporate scandals, directors-and-officers insurance carriers have sought to rescind policies that were allegedly purchased on the basis of misrepresentations. Not surprisingly, this has led to insurance coverage litigation. (The 10b-5 Daily has recently posted about the Cutter & Buck and Rite-Aid cases.)
The Wall Street Journal has an article (subscrip. req'd) on a recent decision by Judge Baylson of the E.D. of Pa. holding that Aegis Bermuda must pay the defense costs for several directors and officers involved in litigation, including a securities class action, over the collapse of Adelphia Communications. Although Adelphia is in bankruptcy proceedings, temporarily preventing Aegis Bermuda from taking legal action to rescind its policy, the court reportedly held that the insurer would have to continue paying legal fees until a judgment permitting recission was obtained.
Quote of note: "'Insurance carriers do not function as courts of law,' U.S. District Judge Michael M. Baylson wrote. 'If a carrier wants the unilateral right to refuse a payment called for in the policy, the policy should clearly state that right. This policy does not do so.'"
Addition: The decision is available on Westlaw - Associated Electric & Gas Insurance Services, Ltd. v. Rigas, 2004 WL 540451 (E.D. Pa. March 17, 2004).
Irvine Sensors Corp. (Nasdaq: IRSN), a Costa Mesa, Ca.-based microelectronics developer, has announced the receipt of preliminary court approval for the settlement of the securities class action pending against the company in the C.D. of Cal. The suit, originally filed in February 2002, alleges that the company made false and misleading statements concerning the prospects of its former Silicon Film subsidiary. The settlement is for $3.5 million, to be paid by the company's insurance carrier.
Cable & Wireless plc (NYSE: CWP) has announced the dismissal of the securities class action pending against the company in the E.D. of Va. Plaintiffs originally filed the case in December 2002 and claimed that C&W had misled investors concerning a potential tax liability arising from the sale of its One2One mobile telephone business to Deutsche Telekom. The court apparently has only issued an order at this time, with the memorandum opinion to follow.
Global Crossing Ltd. (Nasdaq: GLBC), a fiber-optic network operator that emerged from bankruptcy a few months ago, received preliminary court approval on Friday for a settlement of the securities class action pending against the company in the S.D.N.Y. (as well as a related ERISA action). The case alleges that Global Crossing and its executives falsely inflated the company's revenue by entering into sham swap transactions.
According to a Bloomberg report, the settlement is for $325 million ($245 million for the securities case and $85 million for the ERISA case). Although the company's insurers are paying the bulk of the securities class action settlement, former-CEO Gary Winnick ($30 million) and Simpson, Thacher & Bartlett ($19.5 million) are also making significant contributions. Simpson Thacher was not even a named defendant, but has been accused of engaging in a "flawed and incomplete" investigation on behalf of the board committee that examined the swap transactions.
The settlement is not global - the securities class action will continue against Global Crossing's accountants and underwriters, including Arthur Andersen, Salomon Smith Barney, J.P. Morgan, and Goldman Sachs.
Addition: The New York Times had a fairly comprehensive article on the settlement in Saturday's edition.
The PSLRA provides that "all discovery and other proceedings shall be stayed during the pendency of any motion to dismiss" unless the court determines "that particularized discovery is necessary to preserve evidence or to prevent undue prejudice to that party." The exact meaning of "necessary to preserve evidence" and "prevent undue prejudice" has been the subject of frequent litigation.
As discussed in The 10b-5 Daily, two recurring issues are: (a) whether defendants should be required to produce documents that previously have been produced to governmental entities (see this post); and (b) whether the discovery stay should also apply to related federal cases that do not allege securities law claims (see this post). District courts have come to markedly different conclusions.
In In re Royal Ahold N.V. Sec. & ERISA Litig., 2004 WL 502558 (D. Md. March 12, 2004), the court addressed both issues at the same time. Advantage: the plaintiffs.
The court held that Royal Ahold must produce any documents it had previously given to governmental entities and the reports of various internal investigations conducted by the company. First, the court found that there was a need to preserve evidence because Royal Ahold's corporate reorganization, including the divestiture of subsidiaries relevant to the case, added "urgency to the discovery timetable." Although there was no risk that the documents requested by the plaintiffs would be destroyed, they "could help the plaintiffs identify other specific materials that may be at risk of loss."
Second, the court found that the securities plaintiffs might suffer undue prejudice by being denied discovery that was available to other litigants. In particular, the court held that the discovery stay did not apply to the related ERISA litigation and, therefore, "the securities plaintiffs could suffer a severe disadvantage in formulating their litigation and settlement strategy -- particularly if [all of] the parties proceed quickly to settlement negotiations, as the court has urged them to do."
Holding: Partial lifting of discovery stay (although the court, at the request of the government, postponed production of the investigative reports).
One of the issues in the Enron securities class action has been whether the bankruptcy examiner, who prepared a report that was strongly critical of the role of Enron's banks and auditors in the collapse of the company, would be required to produce documents or testify in the case. (See this post in The 10b-5 Daily from last December.)
According to a report in the Houson Chronicle, Judge Melinda Harmon (S.D. of Tx.) has ordered "not that [the bankruptcy examiner] provide evidence to those suing in the civil lawsuits before her, but that the financial institutions themselves turn over copies of all deposition transcripts or sworn statements relating to the Enron bankruptcy." The production must be completed by March 29.
Quote of note: "[T]he statements have already been given to Enron, its debtors and its creditors committee, and they are referenced at length in the public examiner's report. [Judge Harmon] said fairness dictates that all parties in the would-be class-action suits before her have the information. 'The parties seeking the statements could, they acknowledge, retake depositions of the individuals whose statements and depositions were taken by the examiner, but the costs would be enormous,' Harmon noted."
Securities class actions brought against foreign companies, or their advisors, in U.S. court can be an adventure.
KPMG-Belgium was the auditor for Lernout & Hauspie Speech Products NV, the Belgian software maker that collapsed amid revelations of accounting fraud. A securities class action was brought against KPMG-Belgium and others in the D. of Mass. After the denial of KPMG-Belgium's motion to dismiss, pretrial discovery commenced in September 2002 with plaintiffs serving document requests for auditor work papers.
KPMG-Belgium refused to comply with the requests, asserting that producing the papers would violate Belgian law (plaintiffs were, however, able to examine the documents as part of the Belgian criminal investigation). Plaintiffs moved to compel the production of the documents and, on November 13, 2003, a magistrate judge granted the motion. Shortly thereafter, KPMG-Belgium filed an ex parte petition with a court in Brussels seeking to enjoin the plaintiffs from "taking any step" to proceed with the requested discovery. To obtain compliance, they asked the Belgian court to impose a 1 million euros fine for each violation of the proposed injunction.
The U.S. district court issued an antisuit injunction enjoining KPMG-Belgium from pursuing the Belgian court action. KPMG-Belgium appealed. Last week, the First Circuit affirmed the district court injunction order, holding that "[w]here, as here, a party institutes a foreign action in a blatant attempt to evade the rightful authority of the forum court, the need for an antisuit injunction crests."
Quote of note (WSJ article): "That means KPMG-Belgium could soon be faced with a stark choice: It can hand over the documents. Or the firm can disregard [the district judge's] orders. In that event, she has warned that she may enter a default judgment for the plaintiffs, exposing KPMG-Belgium to potentially billions of dollars of liability. A KPMG-Belgium spokesman, Jos Hermans, on Friday said, 'There hasn't been a final decision on what we're going to do,' although one could come this week.'"
Reuters reports that the securities class action pending against Juniper Networks, Inc. (Nasdaq: JNPR) in the N.D. of Cal. has been dismissed with prejudice. The suit was originally filed in 2002 and alleged among its claims that Juniper falsely recognized certain revenues.
The trial in the Enron securities class action has been postponed another year, until October 16, 2006, to accomodate the massive discovery in the case. (Last July, the court had set an October 17, 2005 trial date.) According to an article in today's Houston Chronicle, Judge Melinda Harmon of the S.D. of Tex. has scheduled 18 months for factual discovery.
Quote of note: "Harmon and Enron's bankruptcy judge even tried to force a settlement by ordering the deep-pocketed financial institutions to mediation with the representatives of shareholders and employees. But the parties were too far apart and, as in most litigation, the case needs to get further down the evidentiary road so both sides can better see exactly what can be proved in court before there may be a meeting of minds on settlement."
The Associated Press reports that Qwest Communications Intl., Inc. is "setting aside a reserve of at least $100 million to cover potential liability from stockholder lawsuits and federal investigations." The announcement was made as part of the company's recent Form 10-K filing, in which Qwest did not specify the exact amount of the reserve, but stated "it is probable that all but $100 million of the recorded reserve will be recoverable out of a portion of the insurance proceeds, but the use and allocation of these proceeds has yet to be resolved between us and individual insureds."
There seems little doubt that any settlement of the securities class action pending against Qwest in the D. of Colo. is likely to be for a significant sum (see this post in The 10b-5 Daily).
In 2001, more than 300 securities class actions were filed against companies and underwriters who engaged in initial public offerings in the high-tech boom years. The cases, known as the "IPO Allocation" cases, alleged that the underwriters gained increased trading commissions in exchange for access to IPO shares and that investors who were allocated IPO shares were required to buy shares in the after-market to help push up the share price.
An offshoot of this litigation is the class actions that have been brought on behalf of the companies who did IPOs alleging that the underwriters engaged in breaches of contract or fiduciary duty by engaging in these activities. An example is the case brought by Xpedior Creditor Trust against Donaldson Lufkin & Jenrette ("DLJ" - now owned by CSFB) on behalf of companies whose initial public offerings were underwritten by DLJ. On Tuesday, Judge Scheindlin denied the defendant's motion to dismiss. Most notably, the court determined that the plaintiffs' claims were not subject to preemption under the Securities Litigation Uniform Standards Act of 1998 ("SLUSA"), which generally requires the dismissal of class actions for securities fraud that are based on state law.
The court held that, based on the Second Circuit's recent decision in Spielman, it was not enough to rely on the plaintiffs' characterization of their claims. Instead, the court needed to examine whether the state law claims in the case relied on misstatements or omissions made in connection with the sale or purchase of a security as a "necessary component" of the claims. "To make this determination the simple inquiry is whether plaintiff is pleading fraud in words or substance." The court found, however, that none of the state law claims asserted by the plaintiffs - breach of contract, breach of the implied convenants of good faith and fair dealing, breach of fiduciary duty, or unjust enrichment - required misrepresentations as a necessary element and they did not sound in fraud.
Holding: Motion to dismiss denied (except as to the unjust enrichment claim on different grounds).
The Associated Press has an article on the decision, but gets the basis for the claims wrong. The decision makes it clear that Xpedior did not allege that DLJ "deliberately underpriced initial public offerings during the Internet boom," precisely because that would have led to the likely dismissal of the case due to SLUSA preemption.
The research analyst cases continue to generate interesting judicial opinions. Judge Gerard Lynch of the S.D.N.Y. recently denied the motion to dismiss in the DeMarco case, which involved allegedly fraudulent buy recommendations for Corvis Corp. stock made by Robertson Stephens. (The loss causation holding in that decision was discussed in this post.) Last month, however, Judge Lynch came to the opposite conclusion in two facially similar cases against Robertson Stephens over buy recommendations for Redback Networks and Sycamore Networks stock. See Podany/Finazzo v. Robertson Stephens, Inc., 2004 WL 307296 (S.D.N.Y. Feb. 17, 2004). Why the difference?
In all of the cases, the issue was whether the defendants deliberately misrepresented a truly held opinion (i.e., that the stock was not a good investment). The court framed the inquiry in this manner:
"While in a misstatement of fact case the falsity and scienter requirements present separate inquiries, in false statement of opinion cases such as these, the falsity and scienter requirements are essentially identical . . . . [A] material misstatement of opinion is by its nature a false statement, not about the objective world, but about the defendant's own belief. Essentially, proving the falsity of the statement 'I believe this investment is sound' is the same as proving scienter, since the statement (unlike a statement of fact) cannot be false at all unless the speaker is knowingly misstating his truly held opinion."
In the DeMarco case, the court found, the complaint "described acts and statements inconsistent with the defendants' published opinions about the value of Corvis stock," including the defendants' statements to others that Corvis stock was overvalued and their personal sales of Corvis stock. In contrast, the Podany and Finazzo complaints pointed "to no inconsistent statements or actions by defendants from which a factfinder could infer that the published opinions were not truly held." Plaintiffs' arguments that the opinions were not objectively reasonable, that the analyst had a motive to lie because he owned shares in companies that were being acquired by Redback and Sycamore, and that defendants had engaged in similar schemes (e.g., the Corvis allegations) were insufficient to establish any misstatements of opinion.
Holding: Motions to dismiss granted.
Quote of note: "While the commission of similar fraudulent schemes may be admissible evidence of defendants' state of mind under Federal Rule of Evidence 404(b), alleging the existence of such other schemes does not sufficiently plead that the opinions in these cases were fraudulent."
Everybody's talking about the Martha Stewart criminal case, but The 10b-5 Daily is primarily interested in the effect it will have on the securities class action pending against Martha Stewart Living Omnimedia, Inc. and certain individual defendants in the S.D.N.Y. (The 10b-5 Daily's most recent post about the class action can be found here.)
While some experts believe that the dismissal of the criminal securities fraud claim against Ms. Stewart will make it more difficult to prevail in the class action, lead counsel for the shareholders held a conference call today affirming that they would press ahead.
Quote of note (from the Crain's article on the conference call): "[Lead counsel] said his civil case remains viable because the burden of proof is lower than in the just-completed criminal proceeding. In civil cases, securities fraud can be demonstrated by a 'preponderance of evidence.' In criminal cases, fraud charges must be proven beyond a reasonable doubt."
Federal Rule of Civil Procedure 23 ("Class Actions") recently was amended to require a court to consider certain factors in appointing class counsel, including the "work counsel has done in identifying or investigating potential claims" and its overall expertise. As part of this process, the court can direct potential class counsel "to propose terms for attorney fees and nontaxable costs." If there is more than one adequate applicant for class counsel, the court must appoint "the applicant best able to represent the interests of the class." See FRCP 23(g).
Under the PLSRA, the lead plaintiff generally must satisfy "the requirements of Rule 23." The statute also states, however, that the lead plaintiff "shall, subject to approval of the court, select and retain counsel to represent the class." Many courts have interpreted this provision as granting them relatively little discretion over the appointment of lead counsel. Is that still true following the implementation of the Rule 23 amendments?
To date, only two courts have discussed the interaction between new Rule 23(g) and the PSLRA. In In re Cree, Inc. Sec. Litig., 219 F.R.D. 369 (M.D.N.C. 2003),* the court noted that it had an "obligation to assure that lead plaintiff's choice of representation best suits the need of the class" and it was "guided in the exercise of its discretion by the provisions of the new Rule 23(g)." The court previously had requested that the potential lead counsel submit information concerning its experience, resources, and proposed fees. After reviewing this information, the court found that it was satisfied with the proposed lead counsel, but warned that it "will take its obligation seriously to see that any fees sought by counsel are just and reasonable under the circumstances."
In In re Copper Mountain Sec. Litig., 2004 WL 369859 (N.D. Cal. Feb. 10, 2004) (discussed at length in this recent post), the court addressed the 9th Circuit's decision in In re Cavanaugh, 306 F.3d 726 (9th Cir. 2002) on remand. In reversing the lower court's earlier lead plaintiff/lead counsel decision, the Cavanugh panel had held that information about fee arrangements "is relevant only to determine whether the presumptive lead plaintiff's choice of counsel is so irrational, or so tainted by self-dealing or conflict of interest, as to cast genuine or serious doubt on that plaintiff's willingness or ability to perform the functions of lead plaintiff." After stating that "Cavanaugh would seem to establish that the largest stakeholder's selection of counsel must be approved unless that selection is either mad or crooked," the lower court noted that "the continuing vitality of the Cavanaugh test may be questioned in light of recent amendments to FRCP 23."
It seems likely that these cases are the tip of the iceberg on this issue. Stay tuned.
*Disclosure: The author of The 10b-5 Daily represents the defendants in the Cree securities litigation.
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The 10b-5 Daily asked readers last week to nominate contenders for the title of "Shortest Class Period Ever In A Securities Class Action." We have a winner.
Last December, a case was filed against the Nasdaq Stock Market on behalf of all persons who traded the stock of Corinthian Colleges, Inc. (Nasdaq: COCO) between 10:46 a.m. and approximately 12:30 p.m. on December 5, 2003. That's a proposed class period of a mere one hour and forty-four minutes.
A number of readers submitted the Nasdaq case, but the quickest was Adam Savett. Honorable mention goes to Bruce Carton over at Securities Litigation Watch, who went to the database to confirm his "final answer." No special prize this time, but The 10b-5 Daily is going to think about Carton's t-shirt suggestion.
Apropos Technology, Inc. (Nasdaq: APRS), an Illinois-based provider of interaction management solutions, has announced the preliminary settlement of the securities class action pending against the company in the N.D. of Ill. The suit, originally filed in November 2001, alleges Apropos made misstatements in the registration statement and prospectus for its initial public offering. The settlement is for $4.5 million (to be paid by Apropos' insurer) and is subject to final court approval.
Close on the heels of the Copper Mountain decision (the "fairy tale" case) comes another remarkable lead plaintiff/lead counsel order. In the Terayon securities class action, Judge Marilyn Hall Patel of the N.D. of Cal. has both disqualified two of the lead plaintiffs and found it "probable" that lead counsel must also be removed.
Terayon Communication Systems, Inc. is a Santa Clara-based maker of cable modem equipment. The securities class action against the company, initially filed in April 2000, is based on allegedly misleading statements concerning the company's ability to obtain certification for its technology.
Judge Patel originally appointed Cardinal Investment Co. and Marshall Payne (an employee of Cardinal) as two of the lead plaintiffs in the case. It came out in discovery, however, that Cardinal and Payne were significant short sellers of Terayon stock (hundreds of thousands of shares) and in early 2000 had begun a campaign to flood the market with negative information about the company. The campaign included phone calls to the certification entity, starting Internet chat room rumors, letters to the SEC, and contacts with financial reporters.
Moreover, Cardinal was apparently working closely with plaintiffs' counsel (later lead counsel for the class) during this period. Starting in February 2000, Internet website postings encouraged parties to contact plaintiffs' counsel about a proposed lawsuit against Terayon. According to Judge Patel, "the class period in the original complaint, i.e. the first day on which plaintiffs claim they were damaged, was February 9, 2000 the same day these Internet postings appeared. Defendants assert that these web postings were part of plaintiffs’ alleged scheme to drive the price of the stock down."
On April 11, 2000, the same day as a Terayon earnings conference call during which the company's executives were sharply criticized by short sellers using phony names, an investor plaintiff signed a sworn statement authorizing the filing of a complaint that closely tracked the language of Cardinal’s letters to the SEC. It was not until the next day, however, that the price of Terayon's stock dropped significantly. The complaint was filed on April 13.
Following the revelation of these facts, defendants moved to have Cardinal and Payne removed as lead plaintiffs. (See this earlier post in The 10b-5 Daily about press coverage of the hearing held last September.) Judge Patel has agreed and more.
The court found "[w]hile some short sales may not, in and of themselves render a lead plaintiff’s claims atypical, a pattern of affirmatively engaging in campaigns devised to lower the price of the stock in question certainly contains within it the seeds of discord between lead plaintiffs and the remaining plaintiffs." Accordingly, the court removed Cardinal and Payne as lead plaintiffs (and also noted that they "appear to have participated, if not perpetrated, a fraud of their own on the market" and could be subject to claims by their fellow shareholders).
As for lead counsel, the court expressed concern over lead counsel's pre-suit involvement with Cardinal and its apparent efforts "to mislead the court as to the scope and nature of lead plaintiffs’ holdings in Terayon stock" as part of the lead plaintiff selection process. Based on this course of events, the court wondered "whether counsel for plaintiffs actively participated in or provided advice to plaintiffs regarding their scheme to cause a fall in Terayon’s stock price" and invited a motion on whether lead counsel had waived privilege. In any event, the court found "it is probable that there is a conflict not only between lead plaintiffs and the class but also between lead counsel and the remainder of the class." Lead counsel was asked to provide a written response to a number of questions and defendants were given leave to take further discovery on the issue.