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Class Action Defense Cases—Brieger v. Tellabs: District Court Denies Defense Motion To Reassign ERISA Class Action To Judge Who Handled Related PSLRA (Private Securities Litigation Reform Act) Case

Judge Refuses to Assign Related Case to Judge Who Handled Prior Cases Because of Uncertainty Created by Appeal

An employee filed a putative class action against his employer alleging a breach of fiduciary duty under ERISA in that its Profit Sharing and Savings Plan imprudently invested in the employer’s securities and published misleading information about the safety of those securities. Brieger v. Tellabs, Inc., 434 F.Supp.2d 567 (N.D. Ill. 2006). Class action defense attorneys agreed with the employee’s request that the class action be deemed “related” to two other cases against the employer. Defense attorneys then requested that the three cases be reassigned to a different judge (St. Eve) who handled a lawsuit against the employer alleging securities laws violations under PSLRA (Private Securities Litigation Reform Act). The district court denied the defense request.

The Court admitted that Judge St. Eve “put extensive time and effort into understanding the representations alleged by the plaintiffs in the [prior] case and assessing whether the claims in that case met the requirements of the PSLRA.” Brieger, at 568. Judge St. Eve had dismissed the PSLRA case, but the decision was appealed to and reversed by the Seventh Circuit. The Court found it unclear what would happen to the case because appellate review was not final. More importantly, however, the PSLRA pleading issues addressed by Judge St. Eve “have no bearing on the present cases, which are brought pursuant to ERISA, not under the securities laws.” Id., at 569. Moreover, the PSLRA case “never proceeded beyond the pleading stage,” so there was no reason to believe that she could administer the case “more efficiently,” id. Accordingly, the court denied the defense request to reassign the case to Judge St. Eve.

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