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IN RE PHAR-MOR

October 25, 1994

IN RE: PHAR-MOR, INC. SECURITIES LITIGATION. THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, et al., Plaintiffs,
v.
DAVID S. SHAPIRA, et al., Defendants. CORPORATE PARTNERS, L.P., et al., Plaintiffs, v. COOPERS & LYBRAND, et al., Defendants. WESTINGHOUSE CREDIT CORPORATION and FIRST WESTINGHOUSE CAPITAL CORPORATION, Plaintiffs, v. DAVID S. SHAPIRA, et al., Defendants. FOXMEYER DRUG COMPANY, Plaintiff, v. COOPERS & LYBRAND, Defendant. IRWIN J. ASKOW, et al., Plaintiffs, v. PHAR-MOR, INC., et al., Defendants. RICHARD ROSENBLOOM and CAROL ROSENBLOOM, et al., Plaintiffs, v. DAVID S. SHAPIRA, et al., Defendants, GENERAL ELECTRIC CAPITAL CORPORATION, Plaintiff, v. COOPERS & LYBRAND, et al., Defendants. THE EDWARD J. DEBARTOLO CORPORATION, et al., Plaintiffs, v. COOPERS & LYBRAND, et al., Defendants. GROVE ASSOCIATES, et al., Plaintiffs, v. COOPERS & LYBRAND, et al., Defendants. SEARS, ROEBUCK & CO., et al., Plaintiffs, v. DAVID S. SHAPIRA, et al., Defendants. BAKER NYE SPECIAL CREDITS, INC., et al., Plaintiffs, v. COOPERS & LYBRAND, et al., Defendants. GIROCREDIT BANK, Plaintiff, v. COOPERS & LYBRAND, et al., Defendants. GIANT EAGLE OF DELAWARE, INC., et al., Plaintiffs, v. COOPERS & LYBRAND, Defendant. MFS LIFETIME EMERGING GROWTH FUND, et al., Plaintiffs, v. COUNTY NATWEST GLOBAL SECURITIES, LTD., et al., Defendants. IVAN BOWEN, II, et al., Plaintiffs, v. DAVID S. SHAPIRA, et al., Defendants.


Ziegler


The opinion of the court was delivered by: DONALD E. ZIEGLER

Ziegler, Chief Judge

 Pending before the court are the motions of the plaintiffs in the above-captioned MDL actions for certification of a defendant class of Coopers & Lybrand partners and principals. For the reasons that follow, we will grant the motions and a defendant class will be certified in each of the actions as defined below.

 Plaintiffs contend that there is a "real danger" that Coopers' insurance funds and partnership assets will be insufficient to satisfy the judgments that may be rendered against the partnership. Plaintiffs' intent, in seeking certification of a defendant class, is to make the personal assets of the partners and principals available for satisfaction of such judgments. *fn2" Although it is clear that, under the laws of Pennsylvania and many other states, each of the partners and principals of Coopers is jointly and severally liable for any judgments which may be rendered against the partnership, 15 Pa.C.S.A. ยงยง 8325 and 8327; Resolution Trust Corp. v. KPMG Peat Marwick, Civil Action No. 92-1373, 1992 U.S. Dist. LEXIS 16670 (E.D. Pa. Sept. 22, 1992), it is also the rule in Pennsylvania and elsewhere that a judgment against a partnership may not be executed against the personal assets of the partners and principals unless the individuals are joined as parties to the litigation. See, e.g., Paulish v. Bakaitis, 442 Pa. 434, 275 A.2d 318 (Pa. 1971). Accordingly, plaintiffs move for certification of a defendant class pursuant to Fed.R.Civ.P. 23(b)(1)(B) or 23.2.

 Under Rule 23(b)(1)(B), a class action is maintainable only if the four prerequisites set forth in Rule 23(a) are satisfied and if:

 
the prosecution of separate actions by or against individual members of the class would create a risk of . . . adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests . . ..

 There is little dispute that the four prerequisites of Rule 23(a) are satisfied here. Those prerequisites are: (1) the class must be so numerous as to make joinder of all members impracticable; (2) there must be questions of law or fact which are common to the class; (3) the claims or defenses of the representative parties must be typical of those of the class; and (4) the representatives must fairly and adequately protect the interests of the class. Fed.R.Civ.P. 23(a).

 The first requirement, numerosity, is presumptively established by the existence of over 1200 Coopers partners and principals. See e.g., In re Alexander Grant & Co. Litigation, 110 F.R.D. 528 (S.D. Fla. 1986) (defendant class of 350 accounting partners held to be sufficiently numerous); Northwestern National Bank of Minneapolis v. Fox & Co., 102 F.R.D. 507 (S.D. N.Y. 1984) (class of over 300 accounting partners held sufficiently numerous). The third requirement is also satisfied because the defenses of Coopers and the representative partners and principals are typical, if not identical, of those of the class. Moreover, the parties agree and we find that Coopers and the class representatives would adequately protect the interests of the putative class members, the fourth requirement.

 We also hold that a class action is appropriate under Rule 23(b)(1)(B) because the prosecution of separate actions would substantially impair the ability of the individual class members to protect their interests. Because, under the theory of joint and several liability, all partners are legally responsible for the negligence of a single partner, a finding of liability against Coopers and any of the representative partners or principals would have a substantial effect on the interests of the putative class members. In a similar case, In re Alexander Grant & Co. Litigation, 110 F.R.D. 528 (S.D. Fla. 1986), the district court stated that:

 
a finding in the first trial that a Grant partner was responsible for authorizing financial statements containing materially misleading information would substantially bar the other partners from asserting a contrary position. Thus, these partners would be foreclosed from defending their interests.

 Id. at 537. Here, a finding that the negligent or fraudulent acts of a partner or partners were responsible for plaintiffs' losses would effectively foreclose any defense by the putative class members.

 Moreover, even if the effects of stare decisis are insufficient to satisfy the prerequisites of 23(b)(1)(B), see La Mar v. H & B Novelty & Loan Co., 489 F.2d 461, 467 (9th Cir. 1973), the combination of stare decisis and the fact that a partner's admissions against co-partners could be admissible against a putative class member as a statement of a party against its interest warrants certification of a non opt-out class of partners. See Resolution Trust Corp. v. KPMG Peat Marwick, No. 92-1373, 1992 U.S. Dist. LEXIS 16670, *5 (citing Fed.R.Evid. 801(d)(2)(D)).

 Finally, in Alexander Grant, the court was also concerned with:

 
protecting the partners' interests in a common fund -- their professional liability insurance coverage. Separate adjudications conceivably would exhaust coverage leaving subsequently tried partners to pay legal fees from their own pocket and leave them with only personal assets from which to compensate plaintiffs. Thus, this court must concern itself with the interests of ...

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