In re Charles Schwab Corp. Securities Litigation

Filing 826

ORDER DENYING STUART AND ANDREA ZYKORIE'S UNTIMELY REQUEST TO OPT OUT OF THE CLASS. #831 Signed by Judge Alsup on May 27, 2010. (whalc1, COURT STAFF) (Filed on 5/27/2010) (Additional attachment(s) added on 6/1/2010: #1 certificate of service) (sis, 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

11
For the Northern District of California

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ORDER DENYING STUART AND ANDREA ZYKORIE'S UNTIMELY REQUEST TO OPT OUT OF THE CLASS

This order addresses the motion filed by class members Stuart and Andrea Zykorie 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 factors set forth above, this order finds that the facts and circumstances underlying the Zykories' request do not support a finding of excusable neglect. First, while the Zykories may have first learned about their participation in this class action only recently (by way of reading news on the Internet), the class action notice was properly sent via first-class mail to the address associated with their Schwab account(s) and was not returned to the claims administrator as "undeliverable" (see Dkt. No. 751-1, listing all class members where notices were returned "undeliverable" and where new addresses could not be found). In other words, the notice provided to the Zykories was reasonably calculated to give them actual notice of this class action and was constitutionally sufficient. Moreover, it was entirely reasonable for class counsel to assume that class members would keep their Schwab mailing addresses current, and that class members would be responsible for ensuring that mail was properly forwarded if they moved residences. The clear adequacy of notice weighs against a finding of excusable neglect. Second, while this order does not doubt that the various distractions of life, including moving residences and other family developments mentioned in the instant motion, may have contributed to the Zykories' failure to timely opt out, the particular distractions mentioned in the instant motion do not justify a finding of excusable neglect. In evaluating this factor, the undersigned must consider the immense size of the class and the likelihood that other class members with similar life stories would also seek to opt out if excusable neglect were found in these circumstances. As discussed below, maintaining the stability of the class at this late stage in the litigation is critical to avoiding undue prejudice to Schwab, and the excuses provided by the Zykories appear to be ones that many other class members might raise. Third, the Court cannot ignore the fact that the Zykories' opt-out request is over four months late. While it may be true that the Zykories only learned about their participation in this class action very recently, the request nevertheless comes on the heels of the preliminary approval 2

United States District Court

11
For the Northern District of California

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of a $200 million settlement. Even assuming the instant motion was brought in good faith, there is no question that granting the Zykories' opt-out request would be prejudicial to Schwab since the settlement was negotiated with a stable class membership in mind. For these reasons, this order finds that excusable neglect has not been shown with respect to class members Stuart and Andrea Zykorie. On balance, the factors set forth by the Ninth Circuit weigh against granting the motion at this stage in the proceedings. Accordingly, the instant motion must be DENIED.

IT IS SO ORDERED.

United States District Court

11
For the Northern District of California

Dated: May 27, 2010.

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WILLIAM ALSUP UNITED STATES DISTRICT JUDGE