Rosengarten v. McClendon et al

Filing 18

ORDER denying Dolezal's Motion to Consolidate Cases and to Appoint Lead Counsel Structure [docket no. 7 in Case No. CIV-12-477-M], denying the Initial Mallow Group's Cross-Motion to Consolidate All Related Cases and to Appoint Lead Counsel [docket no. 15 in Case No. CIV-12-436-M], denying Erickson's Motion to Consolidate and Appoint Lead Counsel [docket no. 15 in Case No. CIV-12-631-M], and granting in part and denying in part Shochat's Cross-Motion for Consolidation of Relat ed Cases and Appointment of Lead Plaintiff and Lead Counsel [docket no. 7 in Case No. CIV-12-488-M] as follows: the Court grants Shochat's crossmotion for consolidation of related cases and appointment of lead counsel and denies Shochat's motion for appointment of lead plaintiff. The Court will issue a separate order consolidating the related cases and appointing lead counsel (as more fully set out in order). Signed by Honorable Vicki Miles-LaGrange on 7/13/2012. (ks)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
DEBORAH G. MALLOW IRA SEP
INVESTMENT PLAN, Individually and
derivatively on behalf of CHESAPEAKE
ENERGY CORPORATION,

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)
)
)
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Plaintiff,
)
)
vs.
)
)
AUBREY K. McCLENDON,
)
RICHARD K. DAVIDSON,
)
KATHLEEN M. EISBRENNER,
)
V. BURNS HARGIS,
)
FRANK KEATING,
)
CHARLES T. MAXWELL,
)
MERRILL A. MILLER, JR.,
)
DON L. NICKLES, and
)
LOU SIMPSON,
)
)
Defendants,
)
)
and
)
)
CHESAPEAKE ENERGY
)
CORPORATION, an Oklahoma
)
Corporation,
)
)
Nominal Defendant. )

CHRISTOPHER SNYDER, Individually
and derivatively on behalf of
CHESAPEAKE ENERGY
CORPORATION,
Plaintiff,
vs.
AUBREY K. McCLENDON,
RICHARD K. DAVIDSON,
KATHLEEN M. EISBRENNER,
V. BURNS HARGIS,

)
)
)
)
)
)
)
)
)
)
)
)
)

Case No. CIV-12-436-M

Case No. CIV-12-437-M

FRANK KEATING,
CHARLES T. MAXWELL,
MERRILL A. MILLER, JR.,
DON L. NICKLES, and
LOU SIMPSON,

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Defendants,
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)
and
)
)
CHESAPEAKE ENERGY
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CORPORATION, an Oklahoma
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Corporation,
)
)
Nominal Defendant. )

DOLEZAL FAMILY LIMITED
PARTNERSHIP, Derivatively on Behalf
of Nominal Defendant CHESAPEAKE
ENERGY CORP.,

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)
)
)
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Plaintiff,
)
)
vs.
)
)
AUBREY K. McCLENDON,
)
RICHARD K. DAVIDSON,
)
KATHLEEN M. EISBRENNER,
)
V. BURNS HARGIS, FRANK
)
KEATING, CHARLES T. MAXWELL,
)
MERRILL A. MILLER, JR., DON L.
)
NICKLES, and LOUIS A. SIMPSON,
)
)
Defendants,
)
)
and
)
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CHESAPEAKE ENERGY CORP.,
)
)
Nominal Defendant. )

Case No. CIV-12-477-M

2

BRIAN F. LEONARD, Individually and
derivatively on behalf of CHESAPEAKE
ENERGY CORPORATION,

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)
)
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Plaintiff,
)
)
vs.
)
)
AUBREY K. McCLENDON,
)
RICHARD K. DAVIDSON,
)
KATHLEEN M. EISBRENNER,
)
V. BURNS HARGIS,
)
FRANK KEATING,
)
CHARLES T. MAXWELL,
)
MERRILL A. MILLER, JR.,
)
DON L. NICKLES, and
)
LOUIS SIMPSON,
)
)
Defendants,
)
)
and
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CHESAPEAKE ENERGY
)
CORPORATION, an Oklahoma
)
Corporation,
)
)
Nominal Defendant. )

Case No. CIV-12-479-M

JACOB SHOCHAT, Derivatively and
on Behalf of CHESAPEAKE ENERGY
CORPORATION,

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)
)
)
Plaintiff,
)
)
vs.
)
)
AUBREY K. MCCLENDON, RICHARD )
K. DAVIDSON, KATHLEEN M.
)
EISBRENNER, V. BURNS HARGIS,
)
FRANK KEATING, CHARLES T.
)
MAXWELL, MERRILL A. MILLER, JR., )
DON L. NICKLES, and LOUIS A.
)
SIMPSON,
)

Case No. CIV-12-488-M

3

)
Defendants,
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and
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CHESAPEAKE ENERGY
)
CORPORATION,
)
)
Nominal Defendant. )
THE DAVID A. KROLL, INC.
EMPLOYEES’ PROFIT-SHARING PLAN
AND TRUST, derivatively on behalf of
CHESAPEAKE ENERGY
CORPORATION,

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)
)
)
)
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Plaintiff,
)
)
vs.
)
)
AUBREY K. MCCLENDON, RICHARD )
K. DAVIDSON, V. BURNS HARGIS,
)
FRANK A. KEATING, BREENE M.
)
KERR, CHARLES T. MAXWELL, DON )
L. NICKLES, FREDERICK B.
)
WHITTEMORE, MARCUS C.
)
ROWLAND, MICHAEL A. JOHNSON,
)
LOUIS A. SIMPSON, KATHLEEN M.
)
EISBRENNER, and MERRILL A.
)
MILLER, JR.,
)
)
Defendants,
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and
)
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CHESAPEAKE ENERGY
)
CORPORATION,
)
)
Nominal Defendant. )

Case No. CIV-12-493-M

STEPHEN ROBACZYNSKI, Derivatively )
On Behalf of Nominal Defendant
)
CHESAPEAKE ENERGY
)
4

CORPORATION,

)
)
Plaintiff,
)
)
vs.
)
)
AUBREY K. MCCLENDON, RICHARD )
K. DAVIDSON, KATHLEEN M.
)
EISBRENNER, V. BURNS HARGIS,
)
FRANK KEATING, CHARLES T.
)
MAXWELL, MERRILL A. MILLER, JR., )
DON NICKLES, and LOU SIMPSON,
)
)
Defendants,
)
)
and
)
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CHESAPEAKE ENERGY
)
CORPORATION,
)
)
Nominal Defendant. )

Case No. CIV-12-501-M

NORMAN SPIEGEL, Derivatively On
Behalf of Nominal Defendant
CHESAPEAKE ENERGY
CORPORATION,

)
)
)
)
)
Plaintiff,
)
)
vs.
)
)
AUBREY K. MCCLENDON, RICHARD )
K. DAVIDSON, KATHLEEN M.
)
EISBRENNER, V. BURNS HARGIS,
)
FRANK KEATING, CHARLES T.
)
MAXWELL, MERRILL A. MILLER, JR., )
DON NICKLES, and LOU SIMPSON,
)
)
Defendants,
)
)
and
)
)
CHESAPEAKE ENERGY
)

Case No. CIV-12-502-M

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CORPORATION,

)
)
Nominal Defendant. )

HOWARD ROSENGARTEN, Derivatively )
on Behalf of CHESAPEAKE ENERGY
)
CORPORATION,
)
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Plaintiff,
)
)
vs.
)
)
AUBREY K. MCCLENDON,
)
MERRILL A. MILLER, JR.,
)
DON NICKLES,
)
CHARLES T. MAXWELL,
)
FRANK KEATING,
)
RICHARD K. DAVIDSON,
)
V. BURNS HARGIS,
)
KATHLEEN M. EISBRENNER,
)
LOUIS A. SIMPSON,
)
BREENE M. KERR, and
)
FREDERICK B. WHITTEMORE,
)
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Defendants,
)
)
and
)
)
CHESAPEAKE ENERGY
)
CORPORATION, an Oklahoma
)
corporation,
)
)
Nominal Defendant. )

ARTHUR ALBERTS, Individually and
derivatively on behalf of CHESAPEAKE
ENERGY CORPORATION,
Plaintiff,
vs.

Case No. CIV-12-505-M

)
)
)
)
)
)
)
)

Case No. CIV-12-545-M

6

AUBREY K. McCLENDON, RICHARD
K. DAVIDSON, KATHLEEN M.
EISBRENNER, V. BURNS HARGIS,
FRANK KEATING, CHARLES T.
MAXWELL, MERRILL A. MILLER, JR.,
DON L. NICKLES, and LOU SIMPSON,

)
)
)
)
)
)
)
Defendants,
)
)
and
)
)
CHESAPEAKE ENERGY
)
CORPORATION, an Oklahoma
)
Corporation,
)
)
Nominal Defendant. )

JOEL GERBER, Derivatively on Behalf
of CHESAPEAKE ENERGY
CORPORATION,

)
)
)
)
Plaintiff,
)
)
vs.
)
)
AUBREY K. MCCLENDON, RICHARD )
K. DAVIDSON, KATHLEEN M.
)
EISBRENNER, V. BURNS HARGIS,
)
FRANK KEATING, CHARLES T.
)
MAXWELL, MERRILL A. “PETE”
)
MILLER, JR., DON NICKLES, LOUIS A. )
SIMPSON, BREENE M. KERR, and
)
FREDERICK B. WHITTEMORE,
)
)
Defendants,
)
)
and
)
)
CHESAPEAKE ENERGY
)
CORPORATION, an Oklahoma
)
Corporation,
)
)
Nominal Defendant. )

Case No. CIV-12-584-M

7

GREG ERICKSON,

)
)
Plaintiff,
)
)
vs.
)
)
AUBREY K. MCCLENDON,
)
RICHARD K. DAVIDSON,
)
V. BURNS HARGIS,
)
FRANK KEATING,
)
BREENE M. KERR,
)
CHARLES T. MAXWELL,
)
DON NICKELS,
)
FREDERICK B. WHITTEMORE,
)
MERRILL A. MILLER, JR.,
)
KATHLEEN M. EISBRENNER,
)
LOUIS A. SIMPSON,
)
)
Defendants,
)
)
and
)
)
CHESAPEAKE ENERGY
)
CORPORATION,
)
)
Nominal Defendant. )

TIMOTHY POH, Derivatively on Behalf
of CHESAPEAKE ENERGY
CORPORATION,
Plaintiff,
vs.
AUBREY K. MCCLENDON,
BOB G. ALEXANDER,
ARCHIE W. DUNHAM,
V. BURNS HARGIS,
VINCENT J. INTRIERI,
R. BRAD MARTIN,
MERRILL A. “PETE” MILLER, JR.,
FREDERIC M. POSES,

Case No. CIV-12-631-M

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)

Case No. CIV-12-743-M

8

LOUIS A. SIMPSON,
RICHARD K. DAVIDSON,
KATHLEEN M. EISBRENNER,
FRANK KEATING,
BREENE M. KERR,
CHARLES T. MAXWELL,
DON NICKLES, and
FREDERICK B. WHITTEMORE,

)
)
)
)
)
)
)
)
)
Defendants,
)
)
and
)
)
CHESAPEAKE ENERGY
)
CORPORATION,
)
)
Nominal Defendant. )
ORDER
Before the Court are plaintiff Dolezal Family Limited Partnership’s (“Dolezal”) Motion to
Consolidate Cases and to Appoint Lead Counsel Structure with Memorandum of Law in Support
and the Declaration of Matthew M. Houston in Support of Dolezal’s Motion to Consolidate Cases
and to Appoint Lead Counsel Structure, both filed May 1, 2012; plaintiffs Deborah G. Mallow IRA
SEP Investment Plan, Christopher Snyder, and Brian F. Leonard’s (“Initial Mallow Group”) CrossMotion to Consolidate All Related Cases and to Appoint Lead Counsel and in Opposition to
Competing Motion to Appoint Lead Counsel, filed May 3, 2012; plaintiff Jacob Shochat’s
(“Shochat”) (1) Cross-Motion for Consolidation of Related Cases and Appointment of Lead Plaintiff
and Lead Counsel and Memorandum of Law in Support; and (2) Memorandum of Law in Opposition
to: (i) Plaintiff Dolezal Family Limited Partnership’s Motion to Consolidate Cases and to Appoint
Lead Counsel Structure; and (ii) Plaintiffs Deborah G. Mallow IRA SEP Investment Plan,
Christopher Snyder, and Brian F. Leonard’s Cross-Motion to Consolidate All Related Cases and to

9

Appoint Lead Counsel, filed May 9, 2012; plaintiffs Deborah G. Mallow IRA SEP Investment Plan
Christopher Snyder, Dolezal, Brian F. Leonard, and the David A. Kroll Inc. Employees’ ProfitSharing Plan and Trust’s (“Revised Mallow Group”) Response in Support of Cross-Motion to
Appoint Lead Counsel and Opposition to Plaintiff Jacob Shochat’s Cross-Motion for Appointment
of Lead Plaintiff and Lead Counsel, filed May 16, 2012; Shochat’s Reply Memorandum of Law (1)
in Reply to Plaintiffs Deborah G. Mallow IRA SEP Investment Plan, Christopher Snyder, Dolezal
Family Limited Partnership, Brian F. Leonard and the David A. Kroll Inc. Employees’ Profit
Sharing Plan and Trust Opposition to Plaintiff Shochat’s Cross-Motion, and (2) in Further Support
of Plaintiff Shochat’s Cross-Motion for Consolidation of Related Cases and Appointment of Lead
Plaintiff and Lead Counsel, filed May 30, 2012; plaintiff Greg Erickson’s (“Erickson”) Motion to
Consolidate and Appoint Lead Counsel with Memorandum of Law in Support and Declaration of
Darren Derryberry in Support of Plaintiff Greg Erickson’s Motion to Consolidate and Appoint Lead
Counsel, both filed June 28, 2012; plaintiff Joel Gerber’s Support of Plaintiff Greg Erickson’s
Motion to Consolidate and Appoint Lead Counsel, filed June 28, 2012; plaintiffs Deborah G.
Mallow IRA SEP Investment Plan, Christopher Snyder, Dolezal, Brian F. Leonard, the David A.
Kroll Inc. Employee’s Profit-Sharing Plan and Trust, and Norman Spiegel’s Opposition to Plaintiff
Greg Erickson’s Motion to Appoint Lead Counsel, filed July 5, 2012; and Shochat’s Memorandum
of Law in Opposition to Plaintiff Erickson’s Motion to Consolidate and Appoint Lead Counsel, filed
July 5, 2012.
I.

Introduction
The twelve above-captioned actions (the “Derivative Actions”) were filed by shareholders

of Chesapeake Energy Corporation (“Chesapeake”) derivatively on behalf of Chesapeake. The

10

Derivative Actions all allege that various officers and directors of Chesapeake breached their
fiduciary duties to Chesapeake and its shareholders in permitting material disclosure violations.
Each Derivative Action seeks to ensure that any damages suffered by Chesapeake by reason of these
alleged violations and other alleged fiduciary breaches are borne by the individual defendants and
not by Chesapeake and its shareholders. The Derivative Actions all allege that demand on
Chesapeake’s Board of Directors would be futile and is, therefore, excused.
Due to the substantial overlap of common issues of fact and law, as well as the similarity of
the defendants named in each of the Derivative Actions, various plaintiffs have moved to consolidate
the Derivative Actions. These various plaintiffs have also moved for the appointment of different
lead counsel for the consolidated derivative action. Finally, Shochat has moved to be appointed lead
plaintiff in the consolidated derivative action.
II.

Discussion
A.

Consolidation of related cases

Federal Rule of Civil Procedure 42(a) gives a court broad discretionary authority to
consolidate cases. Rule 42(a) provides, in pertinent part: “If actions before the court involve a
common question of law or fact, the court may: . . . (2) consolidate the actions; . . . .” Fed. R. Civ.
P. 42(a)(2). Having carefully reviewed the Complaints in the Derivative Actions, as well as the
parties’ submissions, the Court finds that consolidation of the Derivative Actions is appropriate
because each of the Derivative Actions arise from similar allegations against similar defendants
involving common questions of law and fact.1 The Court further finds that consolidation of the

1

The Court would note that no plaintiff has objected to consolidating the Derivative Actions.
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Derivative Actions achieves convenience and economy in the administration of justice and ensures
that the overall litigation, brought for the benefit of Chesapeake, is resolved in the most costeffective manner for Chesapeake. Additionally, to ensure continued judicial efficiency, the Court
finds that any future shareholder derivative actions based on the same or similar facts and
circumstances should be consolidated with the consolidated derivative action.
B.

Appointment of lead plaintiff

Shochat has moved to be appointed lead plaintiff for the consolidated derivative action.
Shochat asserts that appointment of a lead plaintiff is necessary to supervise the attorneys and direct
the course of the litigation. The Revised Mallow Group asserts that there is no statutory or
procedural requirement that a lead plaintiff be appointed in derivative actions and that there is no
need to appoint a lead plaintiff in this consolidated derivative action.
“There is no statutory authority, such as the Private Securities Litigation Reform Act of 1995
(“PSLRA”), Pub.L. 104-67, 109 Stat. 737 (1995), which requires the Court to appoint a lead
plaintiff in a shareholder derivative action.” In re Comverse Tech., Inc. Derivative Litig., No. 06CV-1849 (NGG)(RER), 2006 WL 3761986, at *1 (E.D.N.Y. Sept. 22, 2006) (emphasis in original).

Although some district courts have appointed lead plaintiffs in
consolidated derivative actions, others have declined to do so and
have appointed lead counsel only. See, e.g., In re Comverse Tech.,
Inc. Derivative Litig., 2006 WL 3761986 (E.D.N.Y. Sept. 22, 2006);
Gallardo v. Bennett, 2006 WL 2884497 (N.D. Cal. Oct. 10, 2006).
As explained in In re Comverse, because a plaintiff in a derivative
action is bringing claims on behalf of a company, it is unclear what
benefits there are to appointing a lead plaintiff, especially when lead
counsel is appointed.

12

Sparano v. Lief, Nos. 10cv2079 BTM(BLM), 10cv2132 BTM(BLM), 10cv2344 BTM(BLM), 2011
WL 830109, at *2 (S.D. Cal. Mar. 3, 2011).
Having carefully reviewed the parties’ submissions, and in light of the fact that lead counsel
will be appointed, the Court finds that the appointment of a lead plaintiff in this consolidated
derivative action is unnecessary. The Court, therefore, will exercise its discretion and not appoint
a lead plaintiff.
C.

Appointment of lead counsel

In its motion, Dolezal seeks the appointment of Harwood Feffer LLP (“Harwood Feffer”)
as lead counsel and Delluomo & Crow as liaison counsel. In its cross-motion, the Initial Mallow
Group seeks the appointment of Lovell Stewart Halebian Jacobson LLP (“Lovell Stewart”) and
Abbey Spanier Rodd & Abrams, LLP (“Abbey Spanier”) as co-lead counsel and Holloway, Bethea
& Osenbaurg, PLLC as liaison counsel. However, in its reply, the Revised Mallow Group seeks the
appointment of Lovell Stewart, Abbey Spanier, and Harwood Feffer as co-lead counsel. In his
motion, Shochat seeks the appointment of Kahn, Swick & Foti (“KSF”) as lead counsel and Strong,
Martin & Associates PLLC as local counsel. Finally, in his motion, Erickson seeks the appointment
of Robbins Umeda LLP (“Robbins Umeda”), Holzer Holzer & Fistel, LLC (“Holzer Firm”), and
Johnson & Weaver, LLP (“Johnson & Weaver”) as co-lead counsel and Derryberry & Naifeh LLP
as liaison counsel.
“The decision regarding appointment of Lead Counsel is within the discretion of the Court.
The principle that guides the Court’s decision is which counsel will best serve the interest of the
plaintiffs.” Horn v. Raines, 227 F.R.D. 1, 3 (D.D.C. 2005) (internal citations omitted). In making
this determination, courts have considered a variety of factors, including: (1) the quality of the

13

pleadings; (2) the vigorousness of the prosecution of the lawsuits; (3) the capabilities of counsel,
such as the work counsel has done in identifying or investigating potential claims in the action,
counsel’s experience in handling class actions, other complex litigation, and the types of claims
asserted in the action, counsel’s knowledge of the applicable law, and the resources that counsel will
commit to representing the class. See Moradi v. Adelson, Nos. 11-cv-00490-GMN-RJJ, 11-cv00595-GMN-RJJ, 11-cv-00636-GMN-RJJ, 2011 WL 5025155, at *2 (D. Nev. Oct. 20. 2011);
Sparano, 2011 WL 830109, at *2; Horn, 227 F.R.D. at 3.
Having carefully reviewed the parties’ submissions, the Court finds that all of the law firms
have significant experience in serving as lead counsel in derivative and class actions and have a
history of obtaining favorable results. Further, all of the firms have the resources and expertise to
fulfill the role as lead counsel in this action. Additionally, the Court finds that the quality of the
pleadings filed in these cases, while some slightly better than others, does not favor one firm over
the other.2 Further, the Court finds that any unique information included, or cause of action asserted,
in any one complaint can easily be incorporated into a consolidated amended complaint, regardless
of who is appointed lead counsel.3 See In re Bank of Am. Corp. Sec., Derivative & “ERISA” Litig.,
258 F.R.D. 260, 273 (S.D.N.Y. 2009).
The Court also finds that the Lovell Stewart, Abbey Spanier, Harwood Feffer, and KSF firms
have vigorously prosecuted these Derivative Actions, although the Court might question whether

2

The Court would note that, with the exception of those pleadings filed by KSF, a number
of pleadings have been stricken by the Court based upon counsel’s failure to follow the Court’s
rules.
3

The Court would, however, note that by filing an amended complaint in the Erickson case,
Erickson and his counsel have potentially limited Erickson’s ability to further amend his complaint,
to the possible detriment of Chesapeake and its shareholders.
14

the motions for preliminary injunction should have been filed. The Erickson case, by contrast, was
filed one and a half months after the Mallow case was filed, and Erickson’s motion to consolidate
and appoint lead counsel was not filed until June 28, 2012, approximately one week after the Court
denied counsel’s motion to lift the stay in the Arnold and Clem actions.4
The Revised Mallow Group and Erickson both seek the appointment of three law firms to
serve as co-lead counsel; whereas, Shochat seeks the appointment of a single law firm to serve as
lead counsel.
In certain situations, the appointment of multiple lead counsel may
better protect the interests of the plaintiff class. Where a single firm
lacks the resources or expertise to prosecute an action, for example,
the approval of multiple lead counsel may expedite litigation. . . .
However, . . . the appointment of several firms as lead counsel can
raise a number of concerns, including . . . duplication of efforts,
absence of coordination, delay and increased fees and costs.
In re Milestone Scientific Sec. Litig., 187 F.R.D. 165, 176 (D.N.J. 1999) (internal citations omitted).
Additionally, “the approval of several lead counsel may precipitate friction and a lack of
coordination among counsel.” Id. at 178.
While appointment of several firms as lead counsel may at times promote effective
management of a consolidated derivative action, the Court finds that this is not such a case. Neither
the Revised Mallow Group nor Erickson has demonstrated how the possible benefits derived from
appointing three lead counsel outweigh the likely complications, inefficiencies, and waste associated
with the appointment of three law firms as co-lead counsel. Having reviewed the parties’

4

The stayed actions are M. Lee Arnold v. McClendon, et al., Case No. CIV-11-985-M and
James Clem v. McClendon, et al., Case No. CIV-11-997-M.
15

submissions, the Court finds that the appointment of three law firms as co-lead counsel is ripe for
wasteful, duplicative work-product, excessive billing, and internal conflicts.
In fact, the motions filed by Lovell Stuart, Abbey Spanier, and Harwood Feffer in these cases
have demonstrated their inability to work efficiently and produce consistent and coherent legal
documents. In its cross-motion, the Initial Mallow Group argued that the Harwood Feffer firm’s
conduct bared its appointment as lead counsel because that firm made a secretive and improper
motion for consolidation and to appoint lead counsel which violated several rules. However, after
Lovell Stuart and Abbey Spanier united with Harwood Feffer to oppose Shochat’s motion, the
Revised Mallow Group changed its position regarding the Harwood Feffer firm’s conduct in filing
its original motion, providing absolutely no explanation for its change in position, and argued
against Shochat’s reference to the prior argument that Dolezal’s motion was improper, without even
acknowledging that it was the Initial Mallow Group that made the argument in the first place.
Further, in its cross-motion, the Initial Mallow Group specifically argued that there was no
justification for adding the Harwood Feffer firm as an additional lead counsel.
Additionally, the Court is concerned by the relationship between John Halebian, counsel at
Lovell Stewart, and Harwood Feffer, which is referenced in Shochat’s reply. Mr. Halebian is
currently lead plaintiff in a shareholder action, in which he is represented by Harwood Feffer and
which is still pending in New York federal court. Thus, the Revised Mallow Group is proposing for
lead counsel two attorneys who stand in a lawyer-client relationship to each other.
The Court is also troubled by the timing of Erickson’s motion to consolidate and appoint lead
counsel. Robbins Umeda and the Holzer Firm are counsel in the 2011 derivative actions brought
by Mr. Arnold and Mr. Clem that have been stayed by this Court. Robbins Umeda and the Holzer

16

Firm previously sought to lift the stay in the Arnold and Clem cases and to consolidate those actions
with the Derivative Actions and to be appointed lead counsel. On June 20, 2012, this Court denied
the motion to lift stay. Approximately one week later, Erickson filed his motion to consolidate and
to appoint Robbins Umeda, the Holzer Firm, and Johnson & Weaver as lead counsel. The timing
of Erickson’s filing suggests that the filing was a tactical maneuver by Robbins Umeda and the
Holzer Firm to avoid the Court’s ruling in the Arnold and Clem cases and have a second chance to
be appointed lead counsel.
Therefore, for the reasons set forth above, the Court finds that KSF should serve as lead
counsel and Strong, Martin & Associates PLLC should serve as local counsel in this consolidated
derivative action.
III.

Conclusion
Accordingly, the Court DENIES Dolezal’s Motion to Consolidate Cases and to Appoint Lead

Counsel Structure [docket no. 7 in Case No. CIV-12-477-M], DENIES the Initial Mallow Group’s
Cross-Motion to Consolidate All Related Cases and to Appoint Lead Counsel [docket no. 15 in Case
No. CIV-12-436-M], DENIES Erickson’s Motion to Consolidate and Appoint Lead Counsel [docket
no. 15 in Case No. CIV-12-631-M], and GRANTS IN PART and DENIES IN PART Shochat’s
Cross-Motion for Consolidation of Related Cases and Appointment of Lead Plaintiff and Lead
Counsel [docket no. 7 in Case No. CIV-12-488-M] as follows: the Court GRANTS Shochat’s crossmotion for consolidation of related cases and appointment of lead counsel and DENIES Shochat’s

17

motion for appointment of lead plaintiff. The Court will issue a separate order consolidating the
related cases and appointing lead counsel.
IT IS SO ORDERED this 13th day of July, 2012.

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