In Re Mckesson HBOC, Inc. Securities Litigation 99-CV-20743-Lead
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BERNSTEIN LITOWITZ BERGER BARRACK, RODOS & BACINE & GROSSMANN LLP LEONARD BARRACK 2 ALAN SCHULMAN (Bar No. 128661) GERALD J . RODOS ROBERT S. GANS (Bar No . 214420) M. RICHARD KOMINS DAVID R. STICKNEY (Bar No . 188574) JEFFREY A. BARRACK TIMOTHY A. DeLANGE (Bar No . 190768) 3300 Two Commerce Square 4 12544 High Bluff Drive, Suite 15 0 2001 Market Street San Diego, CA 92130 Philadelphia, PA 1910 3 Tel : (858) 793-0070 Tel : (215) 963-0600 Fax: (858) 793-0323 Fax : (215) 963-0838 6 -and- -and- MAX W . BERGER STEPHEN R. BASSER (Bar No . 121590) ROCHELLE FEDER HANSEN 402 West Broadway, Suite 85 0 1285 Avenue of the Americas San Diego, CA 92101 New York, NY 1001 9 Tel : (619) 230-0800 Tel : (212) 554-1400 Fax : (619) 230-1874 9 Fax : (212) 554-1444 10 Attorneys for Lead Plaintiff The New York State Common Retirement 11 Fund and Co-Lead Counsel for the Class 12 UNITED STATES DISTRICT COURT 13 NORTHERN DISTRICT OF CALIFORNIA 14 SAN JOSE DIVISION 15 In re McKESSON HBOC, INC . Master File No. 99-CV-20743 RMW (PVT) SECURITIES LITIGATION And Related Cases 16 CLASS ACTION 1. 7 Date: N/A 18 This Document Relates To : Time: N/A Place: Courtroom 6, 41h Floor 19 ALL ACTIONS. Before : Hon. Ronald M . Whyte 20 21 22 23 LEAD PLAINTIFF'S RESPONSE TO BEAR, STEARNS & CO . INC .'S OPPOSITION TO THE STIPULATION AND [PROPOSED] ORDER 24 (1) SUBSTITUTING THE FORM OF PROPOSED FINAL JUDGMENT AND ORDER OF DISMISSAL AND 2 PRELIMINARILY APPROVING SETTLEMEN T 25 26 27 28 LEAD PLAINTIFF'S RESPONSE TO BEAR, STEARNS & CO ., INC .'S OPPOSITION TO THE STIPULATION AND [PROPOSED] ORDER Master F ile No. 99-CV-20743 RMW (PVT) TABLE OF CONTENTS Pne TABLE OF AUTHORITIES . ...ii 1. INTRODUCTION .. .. .. .. .. ... ....... .. .. .. .. ... ............... ... .. ...... ... 1 II. ARGUMENT . ... ... .. ... .. .. ... ....... .. .. .. .. .. .. .. ... ............. .. ... ...... .... 2 A. The Proposed Judgment Addresses The Concerns Expressed In The Court's May 23 Order- . .. .. ... ...... ......... ... ... ......2 1 . The Bar Order . ... ....... ... .. .. .. .. .. ... ...... ............ .. .. ... ......2 2. The Judgment Reduction Provision. .. .. ... ..... -.......... .. .. .. ...... 4 B. The Proposed Judgment Does Not Violate Bea r Stearns' Contract Rights And Is Not Unfair. .. .. .. ... ...... ......... ... .. ... ...... 5 Ili. CONCLUSION . ... .. .. .. .. ... ....... ... .. .. .... .. ... ......... ...... ... .... .. .. 1 0 LEAD PLAINTIFF'S MEM, FURTHER SUPPORT . PRELIM . APPROVAL OF CLASS ACTION SETTLEMEN . 99-CV-,20743 RMWT Master File No (PVT) TABLE OF AUTHORITIES Case Page 148 Inv. Group, Inc. v. Elvis Presley Enter., Inc. (unpublished), No . 93 -6444, 1995 WL 283785 (6th Cir. May 10, 1995) .. ... ........... .. ... .. ... .. ... ...... ..7 American Broadcasting Cos. v. Wolf, 430 N.Y.S .2d 275 (N.Y .A.D . 1980) ....... ...... .... .. .. ... ...... ....... ... .. ... .. .. ........7 Cipriano v. Glen Cove Lodge, 769 N .Y.S .2d 168 (N.Y. 2003 ) . .. .... .............. .... .. ... .. .... ....... .... .. ... .. .. ........7 In re Consolidated Pinnacle West Sec. Litig./Resolution Trust Corp.-Merabank Litig. , 51 F .3d 194 (9th Cir. 1995) ...... .. ... ...... ........ ...... .. .. .... ....... .... .. ... .. .. .. ........ 8 Degree Sec. Sys., Inc. v. F.A.B. Land Corp. , 756 N .Y.S .2d 248 (N.Y.A.D. 2003) . ... .. ... ........ .... .. .. .. ..... ...... ....... .. .. .. .... ..7 Eichenholtz v. Brennan, 52 F.3d 478 (3d Cir. 1995) . ...... .. .. .. ... .. .... ........ ... ..... ..... .. .... ..... .. ... ..6 FDIC v. McSweeney, 976 F .2d 532 (9th Cir. 1992) .. .. .. ... .. .... ........ .. ... .. ... .. .... ..... ... .. 3 Franklin v. Kaypro Corp. , 884 F .2d 1222 (9th Cir. 1989) .. .. .. .. .... ........ .. ... .. ... ...... ..... ... .. 6 Gerber v. MTC Elec. Tech. Co. , 329 F .3d 297 (2d Cir. 2003) ... .. .... ... .. .... .. ...... ... ... ..... ...... ..... .. 33,5, Golden Gate Acceptance Corp. v. General Motors Corp. , 597 ' .2d 676 (9th Cir. 1979) .. .. ... ... .. .... ........ .. .... ...... ...... ..... .... .. 8 Gould v. American-Hawaiian S. S. Co. , 387 F . Supp. 163 (D. Del. 1974) .. ... .. ...... .... .. ..... ...... ..... .. .. ..66,7, In re Jiffy Lube Sec. Litig. , 927 F .2d 155 (4th Cir. 1991) .. .. .... .. .. .... ...... .. .... ...... ....... .... ... 4,5 Laventhol, Krekstein, Horwath & Horwath v. Horwitch, 637 F .2d 672 (9th Cir. 1980) .. .. .... ... ........ .... ..... ...... ..... ... .. ..66,7, Local No. 93 Intl Assn of Firefighters v. City of Cleveland, 478 U .S. 501 ( 1986) . ...... .... .. .... ........ ... .. ... ..... ...... ..... .. ... .... ..8 Lucas v. Hackett Assocs., Inc. , 18 F. Supp. 2d 531 (E.D. Pa. 1998) . ... ........ .... .. ... .. .... .. .. .. .. .. .. ... ........ 2 LEAD PLAINTIFF' S MEM. FURTHER SUPPORT . PRELIM. APPROVAL OF CLASS ACTION SETTLEMEN T Master File No. 99-CV-20743 RMW (PVT) In re MTC Elec. Tech, S"holder Litig., No . MDL 1059, 2005 U .S. Dist. LEXIS 10312 (E .D.N.Y. May 3I, 2005) .... ...... .. ....3 In re Masters elates & Pilots Pension Plan , 957 F .2d 1020 (2d Cir. 1992) .,. .. .. ... ..... .. .... ........ .. .. .. 8 Neuberger v. Shapiro, 110 F. Supp. 2d 373 (L D. Pa. 2000) . .. ..... .. .. ... ... ... .. .... .. ... .3 Norfolk Redevelopment & Hous . Auth. v. Chesapeake & Potomac Tel. Co. of Va. , 464 U.S. 30 (1983) . ... ...... .3 In re Rite Aid Corp. Sec. Lixig. , 146 F . Supp. 2d 706 (E.D. Pa. 2001 ) . .. .. .. ... ..... .. ... .. ... .. ... ........ ... .2 Stewart v. American Intl Oil & Gas Co. , 845 F .2d 196 (9th Cir. 1988) .... .. .. ... ..... .. ... .. ... .. ... ........ ... .. 6 In re US. Oil & Gas Litig. , 967 F .2d 489 (11th Cir. 1992) .. .. .. .. .. .... .. .. .. ... .. .... ........ ... .. 3 In re Wilshire Tech. Sec. Litig. , 887 F . Supp. 236 (S .D. Cal. 1995) . .. .. .. .... ..... .. ... .. .... ...... .. .... .. ... .. .6 Wisconsin Inv. Bd. v. Ruttenberg, 300 F. Supp. 2d 1210 (N.D. Ala. 2004) . .. .. .. ..... .. .. ... .. .... ........ ... .3 In re WorldCom, Inc. Sec. Litig. , No. 02 Civ. 3288, 2005 U.S . Dist . LEXIS 3791 (S.D.N.Y. Mar. 14,2005) ... ...... ... 3,8,9 STATUTES 15 U.S .C . § 78u-4(f)(7)(A) . .............. .. .. .. ... .. ... .. ..... ... ... .. .... ...... ........ ... .. 2,9 15 U.S .C . § 78u-4(f)(7)(B) . ........ .... .. .. ... .. ... ...... ..... .. .. .... ........ ...... ... .... 4 LEAD PLAINTIFF'S MEM . FURTHER SUPPORT . PRELIM. APPROVA L OF CLASS ACTION SETTLEMENT -iii- Master File No. 99-CV-20743 RMW (PVT) 1 II INTRODUCTION 2 On July 12, 2005, the New York State Common Retirement Fund (the "Lead Plaintiff" ) 3 [ and McKesson Corporation ("McKesson") submitted a Second Revised Proposed Final 4 I Judgment and Order of Dismissal ("Second Revised Proposed Judgment") to address the 5 [ concerns expressed in the Court's May 23, 2005 Order Denying Preliminary Approval of Clas s 6 [ Action Settlement ("May 23 Order"), Only Bear, Steams & Co ., Inc. ("Bear Stearns") continue s 7 [ to object. 8 As explained below, the Second Revised Proposed Judgment directly addresses the 9 concerns expressed in the Court's May 23 Order. The bar order has been revised to preserve 10 Bear Steams' contract-based claims, as well as defenses to such claims, and is consistent with 11 the Private Securities Litigation Reform Act of 1995 ("PSLRA") .' In addition, the Second 1 2 Revised Proposed Judgment eliminates the previous judgment reduction provision that was 13 disapproved in the Court's May 23 Order . ¶12. 14 Not satisfied, Bear Stearns adds invective to prior unsuccessful arguments, accusing the 15 Settling Parties of violating Bear Stearns' purported contract rights .2 Again, Bear Steams is 16 wrong. The Settling Parties included special provisions to accommodate Bear Stearns' contrac t 17 and specifically preserved Bear Stearns' contract-based claims . ¶ 10, 13. Bear Stearns' 1 8 purported rights under its contract are not prejudiced in any way . 19 The validity of such rights is not an issue before this Court . Thus, while Bear Steams' 20 claimed rights are in fact unenforceable for multiple reasons, the Court need not decide the issue 21 in order to preliminarily approve the Settlement because that contested issue is specifically 22 preserved . ' 10. It would be unprecedented to deny preliminary approval of a class actio n 23 24 25 E Second Revised Proposed Judgment, ¶10 . Throughout, "T,-" refers to paragraphs of the 26 Second Revised Proposed Judgment . 27 2 "Settling Parties" refers collectively to Lead Plaintiff, McKesson and McKesson Information Solutions, Inc. ("HBO & Company" or "HBOC") . 28 LEAD PLAINTIFFS RESPONSE TO BEAR, ST EARNS & CO., INC.'S OPPOSITION TO THE STIPULATION AND [PROPOSED] ORDER Master File No . 99-CV-20743 RMW (PVT) 1 settlement based on the contested assertion of a non-settling defendant that it has veto power 2 over any settlement or, alternatively, must be released as part of any settlement . 3 f II. ARGUMENT 4 A. The Proposed Judgment Addresses The Concerns Expressed In The Court's May 23 Order 5 6 The Second Revised Proposed Judgment addresses the two concerns expressed in th e 7 Court's May 23 Order . First, with respect to the bar order provisions, the Second Revise d 8 I Proposed Judgment makes clear that the bar order shall not "bar any claim by Bear Stearn s 9 against McKesson based on any contract (other than claims for contribution that are barred by § 10 1 21D(0(7)(A) of the Securities Exchange Act of 1934, 15 U .S .C. § 78u-(f)(7)(A)) . ." ¶i0. 11 Second, the Second Revised Proposed Judgment eliminates the judgment reduction provision 12 that the Court