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Class Action Defense Cases—In re Regions Morgan Keegan: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Western District of Tennessee

Over Objection of Three Class Action Plaintiffs, Judicial Panel Grants Defense Request for Pretrial Coordination of 20 Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 (Excepting One Class Action from Centralization Order) and Transfers Class Actions to Western District of Tennessee

Twenty-one (21) class actions – 18 in the Western District of Tennessee, and one class action each in the Northern District of Alabama, the Southern District of Indiana and the Middle District of Tennessee – were filed against Regions Financial Corp. and various subsidiaries, and other defendants. In re Regions Morgan Keegan Securities, Derivative & Employee Retirement Income Security Act (ERISA) Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. February 12, 2009) [Slip Opn., at 1 & n.1]. An additional 6 class actions (4 in the Western District of Tennessee and 2 in the Northern District of Alabama) were treated by the Judicial panel as potential tag-along class actions, id., at 1-2 n.2. Generally, the class actions were premised on the following set of common facts: Beginning in mid-2007, various Morgan Keegan proprietary investment funds suffered steep declines in value, which the class action complaints attribute to “the funds being overly concentrated in certain types of securities…and being heavily invested in thinly traded, illiquid and complex securities or securities for which there was no readily available market pricing.” Id., at 2. The class action complaints alleged that “defendants mismanaged, misrepresented, and omitted material facts regarding the nature, value, risk profile and investment practices concerning one or more of the funds.” Id.

Defense attorneys for several of the defendants filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Western District of Tennessee; plaintiffs in six of the class actions pending in that district supported the motion, as did PricewaterhouseCoopers. In re Regions, at 1. Further, plaintiffs in an additional 5 of the Western District of Tennessee class actions did not oppose the motion, id. Plaintiffs in three class actions opposed centralization, id. The Judicial Panel granted the motion to centralize the class action lawsuits, finding that “all actions except the Southern District of Indiana Eilenberg action involve sufficient common questions of fact, and that centralization of twenty actions under Section 1407 in the Western District of Tennessee will serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation.” Id., at 2. The Eilenberg action, however, was excluded from the centralization order because, unlike the other class actions, it “alleges a single claim under the Indiana Securities Act, focusing on specific facts concerning the unsuitability of particular investment product for the particular purchaser – an 89 year old infirm and unsophisticated investor – and the potential fraudulent inducements made to her at the time of the sale.” Id. Accordingly, with the exception of Eilenberg, the class actions were ordered centralized in the Western District of Tennessee, id., at 3.

Download PDF file of In re Regions Morgan Keegan Securities Transfer Order