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The defective Chiron flu vaccine factory has borne something other than vaccine-tainting bacteria and a shortage of shots. In a San Francisco federal courthouse, it’s sired litigation with a striking subplot. Following a tense divorce earlier this year, the nation’s two biggest plaintiffs firms will vie for lead counsel status in a securities fraud class action against the vaccine maker. And they’ll be doing so in front of a federal judge who lawyers say is not only hostile to securities fraud suits, but earlier this year engaged in a public imbroglio with one of the lead attorneys. When UK health officials closed Chiron’s Liverpool factory on Oct. 6, the company’s stock dropped 16 percent. Six days later, Lerach Coughlin Stoia Geller Rudman & Robbins filed Gregory v. Chiron, 04-04293. The suit claims that Chiron executives knew of quality control problems with the factory for months while they made pronouncements that the vaccine would be a significant earnings source. But Lerach Coughlin encountered its own problem when the case was assigned to U.S. District Judge Vaughn Walker, chief judge of the Northern District of California. Few judges in the federal court system are as skeptical of securities class actions as Walker. “He really holds your feet to the fire. It doesn’t bode well for them,” said Solomon Cera, a partner at Gold Bennett Cera & Sidener, who represents plaintiffs in securities class actions. One day after the Lerach lawyers’ filing, their former partners at Milberg Weiss Bershad & Schulman filed Nach v. Chiron in California’s Northern District on nearly identical grounds. The Milberg filing was initially assigned to Judge Marilyn Hall Patel but is expected to be transferred to Walker’s courtroom since the judge hearing the first case generally takes all similar litigation. The antipathy triangle formed by the two firms and Walker went public over the past year. In the twilight of Milberg Weiss Bershad Hynes & Lerach, the firm challenged Walker’s practice of “lead counsel auctions” to the 9th U.S. Circuit Court of Appeals. The circuit agreed with the firm, and overruled Walker’s system — which allowed fees to become a prime consideration in choosing lead counsel — in a securities class action against Copper Mountain Networks Inc. Afterward, Patrick Coughlin raised the judge’s hackles by dropping efforts for lead counsel status in the case. Walker responded with a written order comparing the firm’s client unfavorably to a frog. The dispute came to a head in March with Walker and Coughlin — along with colleague Sanford Svetcov — trading barbs via letters to The Recorder. Coughlin is the Lerach firm’s lead partner in Gregory v. Chiron. Lerach Coughlin and Milberg Weiss will now compete to attract the largest number of Chiron shareholders, likely by seeking out investment funds that hold large numbers of Chiron shares. The firms have 60 days from the filing date to attract the largest number of stockowners. Attorneys from the firms did not return calls requesting comment. Representatives for Chiron also declined to return calls for comment. Boris Feldman, a Wilson Sonsini Goodrich & Rosati partner who specializes in securities defense, said the Chiron case was no surprise. “Any lawyer who follows shareholder lawsuits would have predicted it,” he said. What can’t be predicted, he said, is how Walker will handle the case.

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