X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Attorneys in the investor lawsuits spawned by the multibillion-dollar WorldCom Inc. accounting fraud scandal received their marching orders Wednesday from Southern District of New York Judge Denise Cote. Cote ruled that discovery in the sprawling litigation will be conducted on behalf of all plaintiffs by lead counsel in the consolidated class action, In Re WorldCom Securities Litigation, 02 Civ. 3288. A second firm will act as liaison counsel on behalf of several categories of individual actions filed against the bankrupt telecommunications company, providing suggested deposition questions or document requests. However, when it comes to settlement talks, which will be overseen by Southern District Magistrate Judge Michael H. Dolinger, the individual actions will be allowed to come to the forefront, Judge Cote said, with lawyers for those plaintiffs able to participate directly in negotiations. Lead counsel in the class action, representing lead plaintiff the New York State Common Retirement Fund, are Bernstein Litowitz Berger & Grossman, and Philadelphia’s Barrack, Rodos & Bacine. Wednesday, Judge Cote appointed as liaison counsel Neil Selinger of Lowey Dannenberg Bemporad & Selinger, representing the New York City Employees Retirement System and eight other city pension funds. In discovery, Selinger will be the voice for a host of other plaintiffs, including those who sued as individuals in WorldCom’s home state of Mississippi, private and public pension funds that filed in state or federal courts, and other claimants. The lawsuits charge that accounting fraud, the company’s false filings with federal regulators, an illicit quid pro quo relationship between top figures at WorldCom and Citigroup’s Salomon Smith Barney, and the complicity of 17 other major investment banks, all contributed to the collapse of both WorldCom’s stock price and billions of dollars in bonds issued by the company. Judge Cote set the stage for Wednesday’s decision last Friday, when she rejected motions to dismiss made by former Chief Executive Officer Bernard Ebbers, WorldCom directors, and the investment banks that were part of the syndicate managing company’s bond offerings. The judge said Wednesday that several factors drove her decision to structure the discovery process in a manner different from the settlement talks. The chief concern, she said, was the preservation of assets. WorldCom hopes to emerge from bankruptcy under the name MCI later this year, and the nation’s No. 2 long-distance carrier still has sizeable assets. “The defendants in this case have been charged … with serious violations of federal law and state law,” she said. “Should the plaintiffs prevail at trial, it is important that as much of the covered assets be distributed to the victims.” Another policy consideration, she said, was the interest of individual litigants. Should their cases not be settled here, Judge Cote said, they would have to be returned to their respective federal districts “trial ready.” The judge said she was also trying to prevent repetitive discovery requests and motion practice, which, in addition to being inefficient and costly, would also divert resources away from where they are most needed — “getting to the merits of the litigation.” Finally, Judge Cote said, with minor differences, plaintiffs both large and small have essentially alleged the same facts. OBJECTIONS TO PLAN William Lerach of Milberg Weiss Bershad Hynes & Lerach, who represents several private and public pension funds outside of New York state, objected to the structure outlined by the judge. Lerach cited as an example a California fund where the bonds purchased were not those purchased by the lead plaintiff in the class action. He said there were “constitutional issues” at stake, and argued that Cote’s decision affected “our rights to prepare our client’s cases.” Other attorneys present at the hearing raised questions about their clients’ willingness to enter into settlement talks without having a direct hand in discovery. Not surprisingly, John P. Coffey of Bernstein Litowitz Berger & Grossman said he was satisfied with the judge’s plan. But Coffey also said the “settlement piece of it poses some challenges.”

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.