Delaware Business Litigation Report

District Court Allows Plaintiff in Illinois Securities Class Action to Intervene in Delaware Action and Stays Delaware Action in Favor of First-Filed Illinois Action

Hyland v. Harrison, C.A. No. 05-162-JJF, 2006 WL 288247 (D. Del. Feb. 7, 2006). Dr. Stephen Blau, the lead plaintiff in a securities class action pending in the U.S. District Court for the Northern District of Illinois (the "Illinois Action"), moved to intervene in the later-filed present action in Delaware that alleged similar claims against the defendants by the Delaware plaintiffs, after he learned that the Delaware plaintiffs had filed several amici curai briefs seeking to have the Illinois court vacate its order appointing Dr. Blau as lead plaintiff and to transfer the Illinois Action sua sponte to Delaware. Dr. Blau also sought to have the Delaware district court stay the Delaware action in order to allow the first-filed Illinois Action to proceed. The court found that Dr. Blau's motion to intervene was timely filed, was not made for the sole purpose of delay, and would not prejudice the Delaware plaintiffs. The court also noted that the Illinois Action was based on the same facts and circumstances, sought the same relief, and raised similar legal issues. The court therefore concluded that permissive intervention was warranted. The court also concluded that Dr. Blau's appointment as lead plaintiff in the Illinois Action was consistent with the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). The court observed that the Delaware plaintiffs could have challenged that decision by contesting it in the Illinois Action under procedures outlined in the PSLRA, rather than filing a second action in the Delaware district court. The court held that the Delaware action would be stayed pending resolution of the Illinois Action. The Delaware plaintiffs moved to reopen and for reconsideration, claiming that the Delaware action was not similar to the Illinois Action and that the court should reconsider its decision to stay the Delaware action to prevent "manifest injustice" to the Delaware plaintiffs and other class members. The court denied the motion on April 27, 2006, holding that the Delaware plaintiffs did not advance a change in controlling law or the availability of new evidence. See Hyland v. Harrison, C.A. No. 05-162-JJF, 2006 WL 112809 (D.Del. Apr. 27, 2006). Share