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Busy judge pulls plug on stock option class action
Legal Spotlight |
2008/01/24 04:46
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More than a year after Madison County Circuit Judge Daniel Stack took under advisement a defense motion for summary judgment in a stock options class action case, he reluctantly granted it. On Jan. 22, Stack ruled that there were no genuine issues of material fact for which any evidence could be produced in a five-year-old case against CyberSource Corp.
"The law of Illinois makes it very clear that resolution of any issue by the means of summary judgment is considered a drastic measure and it is certainly a disposition that this Court is reluctant to impose," Stack wrote.
Stack has had the case under advisement since Dec. 7, 2006, and apologized that it took him so long to reach his decision.
"This court's trial docket during the past year (which included asbestos, Vioxx, and manganese poisoning from welding rods) coupled with an extremely crowded motion docket (many of which required priority due to the types of injuries and/or imminent deaths of many of the litigants) caused this matter to be given lower priority," Stack wrote.
"Those factors do not, however, alleviate this court's regret for the length of this delay for which the parties and their counsel are begged their pardon."
Stack had to decide whether computer engineer Brian Wilgus tried to exercise stock options on his job.
Wilgus says he tried but his employer, CyberSource, thwarted him.
CyberSource argued that Wilgus never tried and its attorney Alan Goldstein asked Stack to grant summary judgment for lack of any issue of fact.
Wilgus filed a class action against CyberSource in 2002, claiming his employer's delays rendered the options worthless.
He moved to represent about 80 plaintiffs who worked for PaylinX Corporation when it merged into CyberSource, in 2000. CyberSource agreed to class certification.
PaylinX made software for payment transactions. CyberSource provides computer systems for Internet transactions.
At a hearing Goldstein argued that Wilgus could not complain about profit he could have earned.
"If you don't buy the stock you can't earn the profit," Goldstein said.
Howard Becker, representing Wilgus, said at the hearing, "This is a case about a promise made and a promise broken.
"The promise made was, if we merge with another company your stock options will become exercisable in full if you stay with the company.
"The employer did not make all options exercisable in full at the time of the merger," he said. "Instead they delayed for four months."
In his order, Stack wrote, "It has been this Court's experience the cases in which the law appears to be clearly against the Court's own sense of fairness are always the most difficult to decide."
"This is such a case," he added.
Stack said the class action is for breach of contract only and the contract consists of three documents that make up the stock option.
"The plaintiff's claims that he was lured into failing to exercise those options according to their own terms because of a belief that such manner of exercise would be futile, while evoking great sympathy by this court, appear to be immaterial to the issues in this case," Stack wrote.
Stack ruled that there was no count or claim for any equitable remedy, nor any apparent claim for the declaration of an equitable estopple regarding the enforcement of the written and signed documents.
He also ruled that all of the proposed evidence Wilgus supplied are "hearsay" statements which might be admissible as "statements adverse to the defendant made by the defendant," if Wilgus could attribute them to someone who could be held responsible.
"Furthermore, the plaintiff admits to not even having made the effort to exercise his stock options according to the contractual terms; when, had he or other class members done so and been rejected it certainly would have lent efficacy to his claim," Stack wrote.
Stack also ruled that all of the evidence constitutes "parole" evidence which is outside the "four corners of the contract documents" and could only be admissible to allegations of ambiguity or fraud.
"What appears by the allegations of the plaintiff, even when all taken as true for purposes of this motion, is that the plaintiff discovered, after the fact, that he could have exercised those stock options at a lower price and subsequently resold the stock at a nice profit (hindsight is almost always 20/20)," Stack wrote.
"There appears to be no sufficient evidence for the plaintiff to proffer at trial that would be admissible for consideration by the court or the jury," Stack adds. "As such, it is apparent that there exists no genuine issue of a material fact for which any evidence can be produced." |
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Class action or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued. This form of collective lawsuit originated in the United States and is still predominantly a U.S. phenomenon, at least the U.S. variant of it. In the United States federal courts, class actions are governed by Federal Rules of Civil Procedure Rule. Since 1938, many states have adopted rules similar to the FRCP. However, some states like California have civil procedure systems which deviate significantly from the federal rules; the California Codes provide for four separate types of class actions. As a result, there are two separate treatises devoted solely to the complex topic of California class actions. Some states, such as Virginia, do not provide for any class actions, while others, such as New York, limit the types of claims that may be brought as class actions. They can construct your law firm a brand new website, lawyer website templates and help you redesign your existing law firm site to secure your place in the internet. |
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