In re Charles Schwab Corp. Securities Litigation

Filing 819

ORDER DENYING JAMES MCLEOD'S UNTIMELY REQUEST TO OPT OUT OF THE CLASS. Signed by Judge Alsup on May 26, 2010. (whalc1, COURT STAFF) (Filed on 5/27/2010) (Additional attachment(s) added on 6/1/2010: #1 Certificate of Service) (dt, COURT STAFF).

1 2 3 4 5 6 7 8 9 10 IN RE: CHARLES SCHWAB CORPORATION SECURITIES LITIGATION. This Document Relates To All Cases. / No. C 08-01510 WHA FOR THE NORTHERN DISTRICT OF CALIFORNIA IN THE UNITED STATES DISTRICT COURT

United States District Court

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For the Northern District of California

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ORDER DENYING JAMES MCLEOD'S UNTIMELY REQUEST TO OPT OUT OF THE CLASS

This order addresses the letter sent by class member James McLeod seeking permission to opt out of the class after the December 2009 deadline. The standard for determining whether a class member should be allowed to opt out of a class action after the applicable exclusion deadline has passed is whether the class member's failure to meet the deadline is the result of "excusable neglect." See Silber v. Mabon, 18 F.3d 1449, 1454-55 (9th Cir.1994). This standard allows courts, "where appropriate, to accept late filings caused by inadvertence, mistake, or carelessness, as well as by intervening circumstances beyond the party's control." Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. P'ship, 507 U.S. 380, 388 (1993). When evaluating whether "excusable neglect" applies, the Ninth Circuit instructs courts to consider the "degree of compliance with the best practicable notice procedures; when notice was actually received and if not timely received, why not; what caused the delay, and whose responsibility was it; how quickly the belated opt out request was made once notice was received; how many class members want to opt out; and whether allowing a belated opt out would

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affect either the settlement or finality of the judgment." Silber, 18 F.3d at 1455 (internal footnote omitted). Additionally, the court should consider the danger of prejudice to the opposing party, and whether the movant acted in good faith. Pioneer, 507 U.S. at 395. Having considered all the applicable factors, this order finds that the facts and circumstances underlying this request do not support a finding of excusable neglect under Ninth Circuit law. There is no question that class member MacLeod received actual notice of this class action, as his letter acknowledges that he attempted to opt out before the deadline of December 28, 2010. In his letter, Mr. MacLeod notes that he "sent [his] opt out letter so that it would be received before the deadline" but then goes on (confusingly) to note that the delayed response from attorneys while he was pursuing an individual action "result[ed] in a delayed response to the opt in/out out mandate." In any event, class member MacLeod's opt-out request was not received in a timely manner by the claims administrator and there are no legally sufficient reasons provided in Mr. MacLeod's letter to find excusable neglect for his untimely submission. Under the factors that govern the determination of excusable neglect, this order finds that the reasons set forth by class member MacLeod are legally insufficient to show excusable neglect. If Mr. MacLeod's excuses were sufficient to warrant exclusion, a landslide of similar untimely opt-out requests would likely follow. The prejudice to Schwab that would result from the granting of such requests -- especially given the recent preliminary approval of a $235 million -- would be tremendous, since the settlement was negotiated with a stable class membership in mind. Considering all of the relevant circumstances, the Court cannot grant Mr. Macleod's request for late exclusion from the class. For these reasons, even if it was brought in good faith, the motion is DENIED.

United States District Court

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For the Northern District of California

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IT IS SO ORDERED.

Dated: May 26, 2010.

WILLIAM ALSUP UNITED STATES DISTRICT JUDGE

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