Hawaii Ironworkers Annuity Trust Fund v. Cole et al

Filing 96

Order. Defendants' motion for § 1292(b) certification is denied.(Related Doc # 82 # 84 ). Judge James G. Carr on 5/20/11.(G,D)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO
WESTERN DIVISION

Hawaii Ironworkers Annuity
Trust Fund,

Case No. 3:10CV371

Plaintiff
v.

ORDER

Bernard N. Cole, et al.,
Defendants

This is a suit by former shareholders of the Dana Corporation against three of the company’s
former officers. The gravamen of the complaint is that the three defendants worked together to
falsify financial information about the financial circumstances of an important Dana unit. That
misinformation contributed to overly optimistic public statements by Dana officials.
In time, Dana acknowledged the falsity of its earlier statements. It also restated past financial
reports and amended its related SEC filings. Thereafter the company filed a bankruptcy petition.
Plaintiff’s suit contends defendants are primarily liable to them for the role their misconduct
played in ensuing events. Defendants assert that, because they never made any statements to the
investing public, no one could have relied on any statements by them. Plaintiff, they contend,
improperly seeks to find them primarily liable on the basis that they aided and abetted others in
perpetrating a fraud on the investing public.
Defendants moved to dismiss. I denied that motion, stating, in part:
Defendants contend that they were mere aiders and abettors who merely assisted the
fraud perpetrated by their superiors. Viewed, however, most favorably to the
plaintiff, the complaint bears a contrary reading: namely, that those who spoke
directly to the investing public merely conveyed to the public the defendants’

conduct that was at the heart of the fraud. While defendants’ superiors could have
snuffed out what the defendants had started, the fact that they did not do so does not
relieve defendants of exposure to culpability as primary participants, even if they and
their role was hidden in the shadows from investors’ eyes.
*****
The complaint here alleges more than mere incidental and insignificant help in
creating the falsely bright picture that others presented to the public. According to
the complaint, the defendants sketched out and helped fill in that picture during the
entire period it was on display. If the jury finds truth in the plaintiff’s allegations, it
might also find that, but for the defendants’ handiwork, the public all along would
have seen the real Dorian Gray.
Hawaii Ironworkers Annuity Trust Fund v. Cole, 2011 WL 1257756, *8 (N.D. Ohio).
Pending are defendants’ motions to certify my decision for interlocutory appeal under 28
U.S.C. § 1292(b). (Docs. 82, 84). For the reasons that follow, I decline to do so.
Discussion
A district court may enter an order of certification under § 1292(b) where it finds: 1) the
decision sought to be reviewed involves a controlling issue of law; 2) there is substantial ground for
difference of opinion regarding that issue the opinion adjudicates; and 3) immediate appeal would
materially advance the litigation’s ultimate termination. E.g., In re Baker & Getty Financial
Services, Inc., 954 F.2d 1169, 1172 (6th Cir. 1992); League of Women Voters of Ohio v. Blackwell,
2006 WL 1580032, * 1 (N.D. Ohio 2006).
Defendants have shown the first ground: if I granted the motion to certify and the court of
appeals accepted the appeal and overruled my decision, the case would be over.
With regard to the second element – namely, substantial ground for disagreement – I agree
that reasonable jurists might reach a different conclusion. But, for the reasons I discussed at length
in my order denying the motions to dismiss, I believe the factual circumstances of this case, as
alleged in the complaint, distinguish the defendants’ conduct from non-actionable aiding and
abetting.

To be sure, this is a close case. But that fact alone is not enough to certify a decision for
interlocutory appeal. If it were, such appeals would be, contrary to fundamental principles of
appellate review, commonplace. Many, many motions to dismiss raise issues purely of law, and
often that law is far from entirely clear. So ultimate reversal is often a possibility as to decisions
denying motions to dismiss.
Whenever a District Judge overrules a motion to dismiss involving issues of law as to which
fair dispute and disagreement are possible, the prospect of allowing interlocutory review is tempting.
Appellate endorsement of the ruling before all the work that ensues – discovery, motion practice,
trial – would confirm the sure and certain usefulness of that work.
But intervening interlocutory appeal is not without its price. Work on the case stops. When
the appellate court affirms the denial of a dismissal motion and the case returns to resume again,
much time has been lost, and all the work the defendants sought to avoid by interlocutory appeal
remains to be done.
Even where a district court approves interlocutory review, as I did in League of Women
Voters, supra, accomplishment of its purposes is not guaranteed. That case involved a broad-scale
election year challenge to how Ohio and its eighty-eight county boards of elections conduct
elections. After overruling a motion to dismiss, I certified the appeal, hoping for expedited review
and a prompt decision. I wanted to be able, if the Circuit affirmed my decision, to proceed
expeditiously to a final decision on the merits, and to do so in sufficient time to allow review of such
decision before the election occurred the following November.
There could hardly be a case raising more important issues than those in that case.
Instead of responding with the guidance I and the parties so earnestly sought, the Circuit,
though it accepted the appeal, did not rule (upholding my denial of the motion to dismiss) until

several months after the election. By hindsight, I should have proceeded to address and adjudicate
the merits, instead of allowing the interlocutory appeal.
Unlike that case, this case involves a putative class of investors seeking recovery from
former corporate officers. The litigation means much to those directly affected, but little, if anything,
to anyone else.
Unlike many class actions brought by unhappy investors, this litigation is not likely to be
disruptive of the present company’s affairs. It may be called on to produce pertinent records, but
few, if any, of its current officers and employees are likely to be witnesses for either side.
Finally, I doubt that imposing the further delay of an interlocutory appeal – which the Circuit
might well not accept for hearing – would materially advance ultimate determination of this
litigation. That would occur only if the court reversed my order. If the court accepted the appeal only
to affirm my order, movement of this case, based on events occurring several years ago, towards
termination would simply have been further delayed.
It is, therefore,
ORDERED THAT defendants’ motion for § 1292(b) certification be, and the same hereby
is denied.
So ordered.

/s/James G. Carr
United States District Judge