In re Merrill Lynch & Co., Inc., Sec. Litigation, MDL No. 2030.

• Decision Date: 10 June 2009
• Docket Number: MDL No. 2030.
• Court: Judicial Panel on Multidistrict Litigation
• Parties: In re MERRILL LYNCH & CO., INC., AUCTION RATE SECURITIES (ARS) MARKETING LITIGATION.

Page 1331

626 F.Supp.2d 1331

In re MERRILL LYNCH & CO., INC., AUCTION RATE SECURITIES (ARS) MARKETING LITIGATION.

MDL No. 2030.

United States Judicial Panel on Multidistrict Litigation.

June 10, 2009.

Before JOHN G. HEYBURN II, Chairman, J. FREDERICK MOTZ, ROBERT L. MILLER, JR., KATHRYN H. VRATIL, DAVID R. HANSEN, W. ROYAL FURGESON, JR. and FRANK C. DAMRELL, JR., Judges of the Panel.

TRANSFER ORDER

JOHN G. HEYBURN II, Chairman.

Before the entire Panel: Defendants¹ have moved, pursuant to 28 U.S.C. § 1407, for centralization of four actions in the Southern District of New York. Lead plaintiffs in the Southern District of New York action do not oppose centralization. Plaintiffs in the three actions outside the Southern District of New York oppose centralization. Plaintiff in the E.D. Kentucky action alternatively suggests E.D. Kentucky as the transferee forum. If the Panel centralizes the actions, plaintiff in the D. Massachusetts action requests that its claim under Section 12(a)(1) of the Securities Act of 1933 be separated and remanded.

This litigation currently consists of four actions listed on Schedule A and pending in four districts as follows: an action each in the Eastern District of Kentucky, the Eastern District of Louisiana, the District of Massachusetts and the Southern District of New York.

On the basis of the papers filed and hearing session held, we find that these four actions involve common questions of fact, and that centralization under Section 1407 in the Southern District of New York will serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation. All actions arise from allegations that Merrill Lynch and/or its employees made misrepresentations or omissions in the context of the sale of auction rate securities (ARS) and manipulated the auctions for ARS in order to prevent auction failures. Centralization under Section 1407 will eliminate duplicative discovery, prevent inconsistent pretrial rulings, and conserve the resources of the parties, their counsel and the judiciary.

Plaintiffs opposing the motion argue, inter alia, that (1) the actions do not share sufficient questions of fact; and (2) voluntary coordination among the parties is preferable to centralization. Based upon the Panel's precedents and for the following reasons, we respectfully disagree with these arguments. All actions possess a common factual core regarding Merrill Lynch's role in selling ARS. In particular, plaintiffs in all actions allege that, inter alia, Merrill Lynch failed to disclose that (1) ARS were not cash alternatives similar to money market funds, and (2) the ARS sold by Merrill Lynch were only liquid because, at the time of sale, Merrill Lynch and other broker-dealers artificially supported and manipulated the market to maintain the appearance of liquidity and stability. Even though Louisiana Stadium & Exposition District (LSED) is brought by an issuer of ARS, plaintiffs in LSED allege that Merrill Lynch's conduct in selling ARS was central to inducing them to issue the securities. Transfer of these related actions under Section 1407 will foster a pretrial program that: (1) allows pretrial proceedings with respect to any non-common issues to proceed concurrently with pretrial proceedings on common issues, In re Multi-Piece Rim Products Liability Litigation, 464 F.Supp. 969, 974 (J.P.M.L.1979); and (2) ensures that pretrial proceedings will be conducted in a streamlined manner leading to the just and expeditious resolution of all actions to the overall benefit of the parties. The transferee judge, of course, may establish separate tracks for discovery and motion practice in any constituent MDL. No. 2030 action or actions, whenever she determines that such an approach is...