Appendix — Coopers & Lybrand v. Livesay

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Supreme Court, U. S,

FILED ]

| JAN @ 1978

APPENDIX CARL ROOAK, I, CLERK

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

No. 76-1836

COOPERS & LYBRAND,

Petitioner,

CECIL LIVESAY and DOROTHY LIVESAY,

Respondents.

ON WRITS OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE EIGHTH CIRCUIT

PETITIONS FOR WRITS OF CERTIORARI! FILED JUNE 23, 1977

CERTIORARI! GRANTED NOVEMBER 14, 1977

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

No. 76-1836

COOPERS & LYBRAND,

Petitioner,

CECIL LIVESAY and DOROTHY LIVESAY,

Respondents.

No. 76-1837

PUNTA GORDA ISLES, INC., WILBER H. COLE, ALFRED M. JOHNS,

ROBERT J. BARBEE, SAMUEL A. BURCHERS, DR. RUSSELL C. FABER,

JOHN MATARESE, ROBERT C. WADE, EARL DRAYTON FARR, JR.,

JOHN W. DOUGLAS, D.D.S.,

Petitioners,

CECIL LIVESAY and DOROTHY LIVESAY,

Respondents.

APPENDIX

INDEX

Page

Docket Entries in the District Court ................ l

Plaintiffs’ First Amended Complaint ................ 23

Answer of Defendant Coopers & Lybrand ............ 36

Answer of Individual Defendants .................... 42

Answer of Defendant Punta Gorda Isles, Inc. .......... 50

Excerpts From the Deposition of Cecil Livesay ........ 56

Excerpts From the Deposition of Dorothy Livesay ...... 77

Motion for Order to Determine That Class Action Can Be

Maintained Under Rule 25 ... 1... ccc cece ccc eee 85

Memorandum and Order Filed May 14, 1974 .......... 86

Excerpts From Transcript of Argument on Motions .... 87

Memorandum and Order Dated July 16, 1974 ........ 91

Defendant Coopers & Lybrand’s Motion to Modify the

Court’s Order Dated July 16, 1974 Relating to “Re-

RE Sioned cea eNhe bd ceeeabebasdee so eee ees 94

Motion to Dissolve Stay Order Relating to Discovery .... 96

Further Suggestions of Plaintiffs in Support of Their Mo-

tion to Dissolve Stay Order Relating to Discovery .... 98

Order Dated September 23, 1974 .................. 100

Letter From Martin Green to Judge Wangelin Dated Sep-

Es TE os 5 6 OSs wh 0 de OR ee nee seen ens 101

Original Petition for Writ of Mandamus .............. 103

Order of United States Court of Appeals Filed Novem-

re ee re rT ere re 107

Letter From Martin Green to Judge Wangelin Dated No-

Se CD av adenda dander danuabseewss aves 108

Excerpts From Transcript of Hearing of December 30,

| PEPE E COREE ET. EOE TOTO ETE Tee 109

og A er eet rere ere ee ree ee 110

gg ee eee ee 116

ATCT ET TTT E RT Tee ee 146

PY Gnd on wawewesencedees cesses 150

ce eee 167

Memorandum and Order of June 19, 1975 ............ 168

St EEE 6 icc btkevcbsducesdccadesects 172

Motion of Martin Green to Withdraw as Attorney for

Se re ree Tee ye ree er re 173

Dt Tuas weak e sees ecko h enn secon senit 174

Motion to Dissolve Stay Order ...................... 175

Letter From William Richter to Bernard Feuerstein Dated

August 4, 1975 (Exhibit C to Memorandum in Support

of Plaintiffs’ Second Request for Production of Docu-

ES Be We ED 6 ho ce sacucewoesecesencs 176

Motion for Reconsideration or in the Alternative, for

Modification in View of the Appearance of New Counsel 178

PERG OF Misivy 1. WED 2... ccc cc crccccececs 180

Affidavit of Cecil Livesay and Dorothy Livesay ...... 185

Memorandum and Order of October 23, 1975 ........ 186

Letter From Melvyn I. Weiss to Judge Wangelin Dated

TS ED orn ceed edness Sk ee ne ees 191

Letter From Judge Wangelin to All Counsel Dated March

0 ee ere re rrr TT ere errr re, ree 193

Letter From Judge Wangelin to All Counsel Dated April

9, 1976, Enclosing “Notice of Pendency of Class Action” 194

Plaintiffs’ Second Request for Production of Documents .. 200

Motion of Defendant Coopers & Lybrand to Decertify

SED Wisin nnd RODS 64680640494 CK KOON 201

Objections of Defendant Punta Gorda Isles, Inc., to Plain-

tiffs’ Second Request for Production of Documents .. 205

Memorandum and Order of September 1, 1976 ....... 207

a SD Guhi swe wesc ceases chose sescee ens 208

SD PTE SUED voc ccc cccencecesceasenes 210

Letter From Melvyn I. Weiss to Judge Wangelin Dated

SE Sah abbGaseeunscesacuweuees ssa 212

Letter From William A. Richter to Melvyn I. Weiss

ee Ee Os EE kv 6 coo 0 betes Fes dseeusaces 215

Date

1973

July 27

Aug. 13

CIVIL DOCKET

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MISSOURI

73 C517

Cecil Livesay

and

Dorothy Livesay

vs.

Punta Gorda Isles, Inc.

Wilber H. Cole

Alfred M. Johns

Robert J. Barbee

Samuel A. Burchers, Jr.

Russell C. Faber

John Matarese

Robert C. Wade

Earl Drayton Farr, Jr.

John W. Douglas, D.D.S.

Coopers & Lybrand (formerly Lybrand,

Ross Bros. & Montgomery)

Proceedings

Complaint filed and summons issd.

Order filed. Cause herein assigned to Court 3, Judge

Wangelin presiding.

Aug. 21

Aug. 24

Sept. 20

Bryan, Cave, McPheeters & McRoberts enter appear-

ance for deft Coopers & Lybrand; said deft granted

to & includ. Sept. 20, 1973, to answer or otherwise

respond to the complaint.

By leave of Court defendants Punta Gorda Isles,

Inc., Wilber H. Cole, Alfred M. Johns, Robert J.

Barbee, Samuel A. Burchers, Jr., John Matarese,

Robert C. Wade, and John W. Douglas granted to

and including September 20, 1973, to answer and

otherwise respond with respect to the complaint of

plaintiffs; Peper, Martin, Jensen, Maichel and Het-

lage appears specially for the purpose of this exten-

sion of time only and for no other purpose, reserving

all rights of said defendants to object to process,

venue or jurisdiction—per memo fid.

Piffs’ first amended complaint filed.

Piffs’ request for production of documents filed.

Deft Coopers & Lybrand granted an addn! 20 das.,

to & including October 10, 1973, to answer or

otherwise respond to plff's lst amended complaint.

By leave of court defts Punta Gorda Isles, Inc., Wil-

ber H. Cole, Alfred M. Johns, Robert J. Barbee, Sam-

uel A. Burchers, Jr., John Matarese, Robert C. Wade,

and John W. Douglas granted to and including Oc-

tober 12, 1973 to answer or otherwise respond with

respect to the complaint of plffs. Peper, Martin,

Jensen, Maichel and Hetlage appear specially for

the purpose of this extension of time only and for

no other purpose, reserving all rights of said defts

to object to process, venue or jurisdiction.

By leave of court deft Earl Drayton Farr, Jr. granted

to and including October 12, 1973 to answer or

A Oe OC ei te ae et

oe ae et em

Oct.

—_—

otherwise respond with respect to the complaint of

piffs. Peper, Martin, Jensen, Maichel and Hetlage

appear specially for the purpose of this extension of

time only and for no other purpose, reserving all

rights of said deft to object to process, venue or

jurisdiction.

Marshal's returns on summons, etc. filed as follows:

Deft Coopers & Lybrand served 8-1-73; Punta Gorda

Isles, Inc, Wilber H. Cole, Alfred M. Johns, Robert

J. Barbee, John Matarese, Robert C. Wade, served

8-7-73; Samuel A. Burchers, Jr. served 8-16-73;

Russell C. Faber served 9-21-73; Earl Drayton Farr,

Jr. served 8-30-73; and John W. Douglas served

8-9-73.

By leave of court, defendants other than Coopers &

Lybrand granted until Wednesday, October 10, 1973

in which to file their response to plaintiffs’ request for

production of documents.

Answer of deft Punta Gorda Isles, Inc. to plff’s Ist

amded complaint fi'ed.

Joint answer of defts Wilber H. Cole, Alfred M.

Johns, Robert J. Barbee, Samuel A. Burchers, Jr.,

Russell C. Faber, John Matarese, Robert C. Wade,

Earl Drayton Farr, Jr., and John W. Douglas, to

piffs’ 1st amded complaint filed.

Response to defendants Punta Gorda Isles, Inc., Wil-

ber H. Cole, Alfred M. Johns, Robert J. Barbee,

Samuel A. Burchers, Jr., Russell C. Faber, John

Matarese, Robert C. Wade, Ear! Drayton Farr, Jr.,

and John W. Douglas to plaintiffs’ request for pro-

duction of documents filed, with attached Exhibits

“A” and “B”.

Oct. 10

Oct. 18

Nov. 28

Dec. 3

Dec. 10

Dec. 19

Dec. 28

1974

Jan. 4

Jan. 22

Answer of deft Coopers & Lybrand to plffs’ Ist

amded complaint filed.

Piffs’ demand for trial by jury only with respect to

the issue of liability filed.

Interrogatories directed to plaintiffs by defendants

Wilber H. Cole, Alfred M. Johns, Robert J. Barbee,

Samuel A. Burchers, Jr., Russell C. Faber, John

Matarese, Robert C. Wade, Earl Drayton Farr, Jr.,

and John W. Douglas, D.DS., filed.

Piffs’ interrogs addressed to defts Punta Gorda Isles,

Inc., Wilber H. Cole, Alfred M. Johns, Robert J.

Barbee, Samuel A. Burchers, Jr., Russell C. Faber,

John Matarese, Robert C. Wade, Earl Drayton Farr,

Jr., and John W. Douglas, D.DS., filed.

Piffs’ interrogs addressed to deft Coopers & Lybrand

filed.

By leave Plaintiffs granted until 1 20 74 in which

to answer or object to interrogatories heretofore

served upon them.

Defts granted to & including Feb. 1, 1974 to answer

or object to plffs’ interrogs to defts Punta Gorda

Isles, Inc. et al.

Deft Coopers & Lybrand granted until Feb. 8, 1974

in which to answer or object to the interrogs here-

tofore served upon it by piffs.

Piffs’ answers to interrogatories of defendants Wilber

H. Cole, Alfred M. Johns. Robert J. Barbee, Samuel

A. Burchers, Jr., Russell C. Faber, John Matarese,

Robert C. Wade, Ear] Drayton Farr, Jr. and John

W. Douglas filed.

Jan. 30

Jan. 31

Feb. 1

Feb. 4

Feb. 8

Feb. 14

Mar. 27

Apr. 11

Apr. 16

——

Set for jury trial on Monday, March 18, 1974. (No-

ticed—EM)

By leave of court, defendants Punta Gorda Isles, Inc.,

et al. granted 15 additional days through February

16, 1974, to file answers to plaintiffs’ first inter-

rogatories which are not objected to.

Objections of defts Punta Gorda Isles, Inc., Wilber

H. Cole, Alfred M. Johns, Robert J. Barbee, Samuel

A. Burchers, Jr., Russell C. Faber, John Matarese,

Robert C. Wade, Earl Drayton Farr, Jr., and John

W. Douglas, D.D.S. to interrogatories filed.

Trial setting for 3/18/74 vacated to be rescheduled

in September, 1974.

Answers of defts Coopers and Lybrand to interrogs

of plffs fid. Objections of deft Coopers & Lybrand

to pliffs’ interrogs fid.

Answers—separate answers of defts fid.

Answers—fid by plffs to interrogatories of defts

Wilber H. Cole, Alfred M. Johns, Robert J. Barbee,

Samuel A. Burchers, Jr., Russell C. Faber, John

Matarese, Robert C. Wade, Earl Drayton Farr, Jr.,

& John W. Douglas.

Notice to Take Depo—of Robert L. Proost fid by

piffs.

Motion for Order to Determine That Class Action

Can Be Maintained Under Rule 23—fld by plff. Oral

argument requested.

Supporting Brief—fid with Exhibit A attached.

Memo for Clerk—Comes now deft, Coopers & Ly-

brand, and, by leave of Court, is granted 30 addi-

Apr.

May

_—

tional days to & incl. 5/16/74, within which to file

a Memorandum in Opposition to plff's Motion for

Order to Determine That Class Action Can Be Main-

tained Under Rule 23.

Order—filed, granting defts Punta Gorda, to and

incl. 4/16/74 to file memo in opposition to pltffs;

motion filed 4/11/74. (by endorsement on memo

request of attys for Punta Gorda)

Set for Jury Trial September 3, 1974.

Parties present; Motion for order to determine that

class action is maintainable under R. 23, passed to

further order of the Court.

Motion for Limited Stay of Discovery—filed, by

attys for deft, Coopers & Lybrand w/Memo &

(illegible) w/ proposed order.

Pre-trial conference had js 6.

Pitff's Brief in Opposition to Deft. Coopers & Ly-

brand’s Motion for Limited Stay of Discovery fid.

by Atty Green for pltff.

Memo Reply of Coopers & Lybrand’s to Arguments

Raised by Plaintiff's in Their Reply Memo,—fid. by

Attys Riddle & Hennelly.

Memo & Order fid. deft’s motion for limited stay

R. 26(c) granted except relating to class action cc

attorneys.

Copy of letter to J. Wangelin fid. confirming tel.

conversation that deft is granted to Mon. May 20,

to file its Memo in Opposition to Pitf's motion for

Class Action Designation.

enone

ee ee ee Ee et ee ere

Ci ie ane IE NO hs et AS a las A LN tl tn ey TR ey a eta te is

May 20

May 19

June 21

Motion of Defts. Punta Gorda Isles, Cole, Johns,

Barbee, Burehrs, Faver, Matarese, Wade, Farr and

Douglass fid to require pltffs to post surety bond

w/aff. memo in support of same and proposed order

by Atty Richter.

Memo of above defts in opposition to pltff's motion

for order determining that a class action can be

maintained fid by Atty Richter.

Motion of defts. Coopers, etc. pursuant to R. 12(b)(6)

& 23 to dismiss Cts. I & II of plitffs Ist amend com-

plaint as a class action with memo., fid by Atty Rid-

dle for Coopers & Lybrand.

Motion for limited stay of discovery and reply, sub-

mitted to J. Wangelin.

Memo for Clerk fid. by leave pltffs granted until

June 7, to submit reply memo on class action motion

and motion for undertaking for costs.

Motions filed 5/20/74 submitted to J. Wangelin.

Reply brief in support of class action determination

—fid on behalf of pltffs by Atty. Green.

Pitffs’ brief in opposition to defts’ motion to secure

the payment of costs—fid on behalf of pltffs by Atty

Green.

Memo of Deft Coopers & Lybrand in response to

Pitffs Reply Brief on Motion for Class Action Deter-

mination and Motion of Coopers & Lybrand to Strike

Affidavit of Rosenthal—fid bv Attys for deft (V.

Riddle)

Deposition of Cecil Livesay (2 vols) taken on behalf

of all defts except Coopers & Lybrand and Deposi-

July

Aug.

Sept.

itn

tion of Dorothy Livesay (same as Cecil Livesay) 1

vol. fid by Reporter Schroeder.

Memorandum & Order (HKW, J), fid. Deft’s (Coop-

ers & Lybrand) to Dismiss Cts I and II as a class

Action, denied. Copy to Attys.

Memorandum & Order—fid. Defts’ motion to req.

piffs to secure payment of costs by posting bond,

etc., Denied at this time. cc to Attys.

Cause passed to further Order of Ct. Parties Notified.

Motion of Piffs for an Order Enjoining Destruction

of Documents with Suggestions in Support thereof,

fid.

Motion to Dissolve Stay Order Relating to Discovery,

fid. by plffs.

Motion to Compel Defts Punta Gorda Isles, Inc. and

the Individual Defts. to Produce Copies of Certain

Documents, fid. by plffs.

By Ct. leave, Deft. Coopers & Lybrand granted an

additional 9 days to and including 9/20/74 to re-

spond to plffs’ Motion for and Order Enjoining

Destruction of Documents and Motion to Dissolve

Stay Order Relating to Discovery.

Memorandum of Deft. Punta Gorda Isles, Inc. and

Individual Defts. in Opposition to PIffs’ Motion to

Dissolve Stay Order, fid.; Memorandum of Deft.

Punta Gorda Isles, Inc. and Individual Defts. in Op-

position to Piffs’ Motion to Compel Production of

Certain Documents, fid; and Memorandum of Deft

Punta G. Isles, Inc. and Indiv. Defts. in Opposition

to Piffs’ Motion for an Order Enjoining Destruction

of Documents, fid.

Sept.

— von

Mtns. fid. 9/4/74 submitted to Judge Wangelin.

Memorandum of Deft. Coopers & Lybrand in Oppo.

to Plffs’ Mtn. to Dissolve Stay Order Relating to

Discovery.

Memorandum of Deft. Coopers & Lybrand in Op-

position to Pliffs’ Mtn. for an’ Order Enjoining

Destruction of Documents.

Further Suggestions and Aff. in Support of Plffs’ Mo-

tion for an Order Enjoining the Destruction of Docu-

ments fid by Piffs.

Further Suggestions in Support of Plffs’ Motion to

Dissolve Stay Order Relating to Discovery, fid.

Order, fid. Mtns seeking an order enjoining des. of

documents by deft, to dissolve a Stay Order, or in

the alter. and Order modifying Stay Order, etc. De-

nied. Copy sent attys. of record.

Suggestions by Punta Gorda Isles Defts in Oppo. to

Piffs’ Mtn. for and Order Enjoing the Destruction

of Documents and Suggestions by Punta Gorda Isles

Defts in Oppo. to Piffs’ Mtn. to Dissolve the Stay

Order.

Plaintiff's Brief in Opposition to Deft Coopers &

Lybrand’s Motion to Modify the Court’s Order dated

7/16/74, Relating to “Reliance”, fid.

Case Set for Trial, Mon., Dec. 16, 1974) (Jury).

Copy of Petition for Writ of Mandamus filed in

U.S.C.A., 8th Circuit (U.S.C.A. No. 74-1827) fid by

Piffs received.

Pre-Trial Conference had. Trial setting of 12/16/74

Vacated and Case passed to further Order of Ct.

Mar.

Apr.

—

Parties to appear 12/30/74 for hearing on Class

Action.

Parties appear for hearing on Class Action. Upon

receipt or transcript, parties to file briefs.

Transcript of Hearing had 12/30/74 fid by Off. Ct.

Rptr.

Brief in Support of Motion to determine the Class

Action be maintained under R 23—fid by Piffs.

By leave of Ct. deft Coopers & Lybrand granted to

and inc. 3/21/75 to file its Post Hearing Memoran-

dum, etc.

Post-Hearing Memorandum of Deft. Punta Gorda

Isles, Inc. and the Individual Defts. in Opposition to

Piffs’ Motion for a Determination that this Action

may Proceed as a Class Action, fid.

Deft. Coopers & Lybrand granted to and inc. 3/

31/75 in which to file its Memorandum in opp. to

plffs mtn for a determination that action may pro-

ceed as a class action. (HKW, J)

Coopers & Lybrand granted to 4/10/75 in which to

file reply brief. (HKW, J)

Post Hearing Memorandum of Deft. Coopers & Ly-

brand—Fld. in Opposition to Plffs’ Motion for a

Determination that this Action may Proceed as a

Class Action.

Piffs granted to and inc. 5/16/75 in which to file

their post-hearing reply brief in support of their

motion for class action determination.

aa —

—_ . — ee

May

June

—'

Piffs granted up to and inc. 5/28/75 in which to

file reply briefs in support of their motion for class

action determination.

Motion of Piffs to Amend Count I of First Amended

Complaint by Interlineation.

Amendment to PIffs’ First Amended Complaint—fid.

Piffs’ Post-Hearing Reply Brief Supporting Class

Action Determination—fid.

Mtn of 5/28/75 submitted to Judge Wangelin.

Rejoinder of the Deft Punta Gorda Isles, Inc., &

the Indiv. Defts to Plffs’ Post-Hearing Reply Brief

Supporting Class Action Determination—fid.

Memorandum and Order Filed—Ordered plffs mo-

tion to certify as class action pursuant to Rule 23, is

granted, Lawsuit is certified as class action pursuant

to Rule 23(B)(3) and Further Ordered case stayed

pending final determination of matters to be dealt

with in Courts show cause order attached. Copy

mailed to Bryan Cave etc. and to Peper Martin, etc.

Show Cause Order to Anderson, Green, Fortus &

Lander as Firm and to Mr. Martin M. Green per-

sonally Ordered to Show Cause Why Should Not Be

Enjoined From Acting as Counsel for the Class.

Hearing Concerning This Matter Will Be Held 10

AM 7/11/75. Copy of Show Cause order mailed

to Bryan Cave etc and to Peper, Martin, etc along-

with copy of above memorandum and Order. Copy

of Memorandum and Order and Show Cause Order

delivered to Office U.S. Marshal for service on An-

derson, Green, Fortus & Lander as a Firm and for

service on Martin M. Green, individually—filed.

June

July

Aug.

—_—,

—

Return of OSC—fid. executed on Martin Green on

6/20/75.

Return of OSC—fid. executed on Anderson, Green.

For Fortus & Lander on 6-20-75.

Motion of Martin M. Green and Anderson, Green,

Fortus and Lander to Withdraw as Attys. for Plffs—

Fid.

Memorandum for Clerk—Fld. Mtn of attys Green,

et al to withdraw as Plffs attys. “So Ordered, HKW,

J)” Attys. of record notified.

Entry of Appearance of Jared Spectrie, Milberg &

Weiss, N.Y., N.Y. and Local Counsel Richard L.

Ross, fid and approved. Attys. of record notified.

Motion to Dissolve Stay Orders—Fld by plffs.

Mtn for Reconsideration, or in the Alternative, for

Modification in View of the Appearance of New

Counsel & Mtn to Modify & Supporting Sugges-

tions—fid by deft Coopers & Lybrand, by leave.

Motion for Reconsideration, or in the Alternative,

for Modification in View of the Appearance of New

Counsel—Fld by defts. Coopers & Lybrand.

Motion to Modify—Fld by defts. Coopers & Ly-

brand.

Suggestions in Support of Deft’s Motions—Fld. by

defts. Coopers & Lybrand.

Suggestions of Punta Gorda Isles. Inc., and of the

Indiv. Defts. in Support of the Motions by Cooper

& Lybrand to Reconsider and/or Modify—Fld.

Mtn to Amend Ct. 1 fid 5/28/75—Submitted to

Judge Wangelin.

Aug.

Sept.

= =

Upon plffs application, plff granted to 9/5/75 to file

briefs, in opp. to Mtn for Reconsideration, etc.—In

memo for clerk, fid. (HKW, J)

Mtn for Reconsideration, etc. fid 8/20/75 sub-

mitted to Judge Wangelin.

Mtns fid 8/20/75 submitted to Judge Wangelin.

Memorandum of Law in Opposition to Defts Mo-

tion to Amend This Court's Prior Decision on the

Class Action With Affidavits of Cecil Livesay, Doro-

thy Livesay and Melvyn I. Weiss—Fld. by Piffs.

Deft. Coopers & Lybrand granted to and inc. 9/22/

75 in which to reply to plffs’ responsive brief and

pleadings with respect to defts’ Mtns to Modify and

Reconsider—In Memo for Clerk, fid. (HKW, J)

Response of Deft. Punta Gorda Isles, Inc. and In-

dividual Defts. to the Affidavit of M. I. Weiss and to

Pliffs’ Memorandum of Law—Fld.

Deft. Coopers & Lybrand’s Reply Memorandum in

Support of Its Motions for Reconsideration & Modi-

fication—Fld.

Memorandum & Order—Fld. Plffs’ mtn to dissolve

Ct’s Orders staying discovery and staying proceeding

granted insofar as allowing discovery to Proceed as

to names and addresses of members of the class.

Memorandum & Order—Defts’ Mtn to modify Ct’s

Order by defining the members of the class to in-

clude those defined in stipulation, etc. Granted: Defts’

mtn to modify Ct’s Order by defining those issues

suitable for class action held in abeyance until such

time as the period given in notice to be sent out to

Apr.

July

a eo

members of class to petn the Ct. or to intervene ex-

pired: Parties shall submit proposed drafts of notice

to be sent out to the class members within 30 days

from date of this Order: and Piff directed to join

the additional parties deft. for the reason stated, sub-

ject only to determination made by this ct in an in-

camera conference if requested by Piffs’ counsel.

Copy of order sent attys. of record.

Proposed form of Notice of Class Members in Case—

Fid.

Letter re proposed Class and Proposed Notice—Re-

ceived.

Proposed form of notice of Class Action fid. 11/21/

75—Submitted to Judge Wangelin.

Proposed Notice of Pendency of Class Action, etc.—

Mailed by Judge Wangelin to attys.

Proposed Notice of Pendency of Class Action—

Mailed attys. Attys. to respond no later than 3/26/

76.

Letter re Copy of Notice of Pendency as Class Ac-

tion which counsel for plff will issue, etc.—Mailed

attys. of record.

Ptf's Second Request for Production of Documents

from Dft. Punta Gorda Isles, Icn. Fld.

Motion of Dft. Coopers and Lybrand to Decertify

Class Action—Fld.

Suggestions in Support of Motion to Decertify Class

—Fid.

BU ee a0 trie |

Aug.

—

Piffs’ Memorandum of Law in Support of Their 2nd

Request for Production of Documents from Deft.

Punta Gorda Isles, Inc.—Fld.

Objections of Deft. Punta Gorda Isles, Inc. to Plffs’

Second Request for Production of Documents—Fld.

Memorandum of Deft. Punta Gorda Isles, Inc., in

Opposition to Piffs’ Second Request for Production

of Documents—Fld.

Cross Motion to Dissolve Stay Order and to Compel

Production of Documents by Deft, Punta Gorda Isles,

Inc.—Fld. by PIff.

Piffs’ Memorandum of Law in Opposition to Motion

of Deft. Coopers & Lybrand to Decertify—Fld by

Piffs.

Affidavit of PIffs in Opposition to Motion to De-

certify Class Action—Fld.

Affidavit of Jerome M. Congress in Opposition to

Motion of Deft. Coopers & Lybrand to Decertify

Class Action—Fld.

Response of Deft. Coopers & Lybrand to Plffs’ Mem-

orandum of Law in Support of Their 2nd Request

for the Production of Documents From Deft. Punta

Gorda—Fld.

Mtn. fid 7/23/76 submitted.

Piff granted until 8/30/76 to reply to response of

Cooper & Lybrand etc.—In Memo for Clerk, fid.

Memorandum of Deft & Indiv. Defts in Opposition

to Piffs’ Motion to Dissolve Stay Order—Fid.

Aug.

Sept.

Memorandum of Deft. Coopers & Lybrand in Op-

position to Piffs’ Motion to Dissolve Stay Order—Fld.

Supplemental Suggestions in Support of Deft. Coop-

ers & Lybrand’s Motion to Decertify—Fid.

Reply Memorandum in Support of Their 2nd Re-

quest for Production of Documents From Detf. Punta

Gorda Isles, Inc.—Fld by Piffs.

Memorandum (HKW, J)—Fid.

Order (HKW, J)—Fld. Motion of various defts. to

decertify case as class action Granted. Action Is De-

certified as a Class Action. Matter to Proceed to

Trial Only Upon Indiv. Claims of Cecil & Dorothy

Livesay. Action to Be Set for Trial at Later Date.

All Restrictions on Discovery Shall Be Lifted and

That Discovery With Regards to Individual Claims

of Cecil and Dorothy Livesay Shall Proceed in

Normal Fashion. Copy of order and Memo sent

attys.

Deft Coopers & Lybrand’s Request for Production

of Documents Pursuant to F.R.C.P. 34 Directed to

PIff—Fld.

Interrogatories Directed to Plffs by Deft. Coopers &

Lybrand—Fid.

Piffs’ Request for Production of Documents—Fld.

Transcript of Conference in Chambers—Fld by Off.

Ct. Reporter on 7/26/76.

ee ee

icici wis Minced Waki thd- ot: ial <a aa itl. DE that Bin Cece ARAB: NN K ab ha SO Nate et MB AI Hi

—_—

GENERAL DOCKET

UNITED STATES COURT OF APPEALS

For the Eighth Circuit

Case No. 76-1881

Appeal From Eastern District of Missouri

Title of Case

Cecil Livesay and Dorothy Livesay, for Themselves and on

Behalf of All Others Similarly Situated,

Appellants,

VS.

Punta Gorda Isles, Inc., Wilber H. Cole, Alfred M. Johns,

Robert J. Barbee, Samuel A. Burchers, Jr., Russell C. Fa-

ber, John Matarese, Robert C. Wade, Earl Drayton Farr,

Jr., John W. Douglas, D.D.S., Coopers & Lybrand (formerly

Lybrand, Ross Bros. & Montgomery),

Date

1976

Appellees.

Filings—Proceedings

Certified copies of notice of appeal & docket en-

tries rec’d from D.C. (1)

Request for docketing fee (2)

Docketed appeal.

Appearance for appellants. (3)

Designation of Record and Statement of Issues. (4)

Appearance appellees (5)

Nov.

Dec.

Appellees’ Joint Designation of Additional Contents

of Appndx to Br. (6)

Appearance appellants (7)

Joint motion of appellees to dismiss for lack of

jurisdiction. (8)

Memorandum in support of joint motion. (9)

Received letter from Karen Holm correcting errors

in mo to dismiss.

Memorandum of appellants in opposition to joint

mo of appellees to dismiss. (10)

Received copy of memo of appellants in opposition

to joint mo of appellees to dismiss. Signed copy

by all counsel to be forwarded.

Reply Memorandum in Support of Appellees’ Joint

Motion to Dismiss. (11)

Appndx (2 vol.) (12)

Brf aplints (13)

Ser w apndx & brf apints (14)

Law Clerk Memo w 1906

Transferred to January session. w 1906

Brf aplees Punta Gorda Isles, Inc., Wilber H. Cole,

Alfred M. Jones, Robert J. Barbee, Samuel A.

Burchers, Jr.. Russell C. Faber, John Matarese,

Robert C. Wade, Earl Drayton Farr, Jr., & John

W. Douglas (15)

Rec'd ser for brf aplees (16)

Brf aplee Coopers & Lybrand (17)

Ser w brf aplee (18)

1977

Jan. 3

Jan. §5

Jan. 7

Jan. 10

Jan. 13

Feb. 2

Feb. 4

Mar. 4

Mar. 18

Mar. 28

— vo

Mo appint for ext of time to file reply brief, with

1906. (19)

Received Large Box of Original Files and Exhibits

From Dist Ct, w-1906.

Order: Appellants-petitioners may have thru Janu-

ary 10 to serve and file reply brief (20)

Rep brf applnts-petitioners w 1906 (21)

Ser w rep brf (22)

Argued and submitted (with 1906) to Judges Hea-

ney, Stephenson, Stuart. Melvyn I. Weiss for ap-

pellant; John J. Hennelly for Coopers & Lybrand;

William A. Richter for Punta Gorda Isles, et al.

Rebuttal by Mr. Weiss.

Received and forwarded to court letter from Mar-

tin M. Green.

Received and forwarded to court letter from Veryl

Riddle.

Opinion by Judge Stephenson (Published) (23)

Judgment: Judgment of district court is reversed

and remanded to district court for proceedings con-

sistent with opinion (24)

Petition of appellees (all appellees except Coopers

& Lybrand) for rehearing en banc and rehearing

with service. (25)

Petition of appellee (Coopers & Lybrand) for re-

hearing en banc and rehearing. (26)

Certificate of service of petition for rehearing. (27)

Order: Petitions of appellees for rehearing en banc

and rehearing are denied (28)

Apr.

June

Nov.

—_

Mo appellees for stay of mandate. (29)

Appellants’ response to mo of appellees for stay of

mandate. (30)

Order: Appellees’ stay for issuance of mandate de-

nied (31)

Mandate issued.

Receipt for mandate (%2)

Appellants’ bil! of — + . (33)

Order: Sum of $1,836.19 for clerk’s docketing fee,

cost of preparation of appendix, appellants’ brief

and reply brief be taxed in favor of appellants for

collection from appellees in district court (34)

Notice of filing of petition for writ of certiorari to

the Supreme Ct. as Case No. 76-1837 (as of 6

23 77) with No. 76-1906. (35)

Notice of filing of petition for writ of certiorari to

the Supreme Ct. as Case No. 76-1836 (as of 6/

23 77) with No. 76-1906. (36)

Order of Supreme Court granting certiorari in Case

No. 76-1837 (w/ 76-1906) (37)

Order of Supreme Court granting certiorari in Case

No. 76-1836 (w/ 1906) (38)

cent enn anette Weer edlly rahe WANE LORE Dea Ome al ®

Si a e, aS = ee ee Om

eA wh A, how ei le

— a a

—

Case No. 76-1906

Appeal From Petition for Writ of Mandamus

Title of Case

Cecil Livesay and Dorothy Livesay, for Themselves and on

Behalf of All Others Similarly Situated,

Petitioners,

VS.

Punta Gorda Isles, Inc., Wilber H. Cole, Alfred M. Johns,

Robert J. Barbee, Samuel A. Burchers, Jr., Russell C. Fa-

ber, John Matarese, Robert C. Wade, Earl Drayton Farr,

Jr., John W. Douglas, D.D.S., Coopers & Lybrand (formerly

Lybrand, Ross Bros. & Montgomery),

Respondents,

and

Honorable H. Kenneth Wangelin, Judge, United States District

Court for the Eastern District of Missouri, Eastern Division,

Respondent.

Date Filings—Proceedings

1976

Oct. 21 Docketed case

Oct. 21 Petition for Writ of Mandamus (Orig. & 4 with

service) (1)

Oct. 21 Exhibits to Petition for Writ of Mandamus (5 cop-

ies) (2)

Oct. 26 Appearance respondent (3)

Oct. 26 Appearance respondent (4)

Nov. 3 Appearance petitioners (5)

Nov. 3

Nov. 18

Dec. 15

Dec. 20

1977

Jan. 3

Jan. 5

—_ F

Jan. 10

Jan. 13

Mar. 4

June 29

June 30

—.

Appearance petitioners (6)

Response of counsel for respondent Punta Gorda

Isles, Inc., and individual respondents to petition

for writ of mandamus. (7)

Answer of Cooper and Lybran to Plaintiffs’ Peti-

tion for Writ of Mandamus. (8)

Law Clerk Memo. w 1881

Transferred to January session. w 1881

Mo petitioners for ext of time to file reply brief,

w 1881.

Received Large Box of Original Files and Exhibits

From Dist Ct, w-1881.

Order: Appellants-petitioners may have thru Janu-

ary 10 to serve and file reply brief w 76-1881

Rep brf applints-petitioners w 1881

Ser w/rep brf

Argued and submitted (with 1881) to Judges Hea-

ney, Stephenson, Stuart. Melvyn I. Weiss for ap-

pellant; John J. Hennelly for Coopers & Lybrand;

William A. Richter for Punta Gorda Isles, et al.

Rebuttal by Mr. Weiss.

Opinion by Judge Stephenson (Published) w ‘76-

1881. Petition for writ of mandamus is dismissed.

Notice of filing of petition for writ of certiorari to

the Supreme Ct. as Case No. 76-1837 (as of 6,

23/77) with No. 76-1881.

Notice of filing of petition for writ of certiorari to

the Supreme Ct. as Case No. 76-1836 (as of 6

23 (77) with No. 76-1881.

_ vn

Nov. 18 Order of Supreme Court granting certiorari in Case

No. 76-1837 (w/ 76-1881)

Nov. 18 Order of Supreme Court granting certiorari in Case

No. 76-1836 (w 76-1881)

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

(Title Omitted in Printing)

PLAINTIFFS’ FIRST AMENDED COMPLAINT

(Filed September 5, 1973)

COUNT I

Jurisdiction, Venue and Nature of Action

1. This Court has jurisdiction of this action under Section

22(a) of the Securities Act of 1933, as amended (“1933 Act”),

15 U.S.C. Section 77v and Section 27 of the Securities Ex-

change Act of 1934, as amended (“Exchange Act”), 15 U.S.C.

78aa;

2. Plaintiffs bring this action under and pursuant to Sec-

tions 11, 12(2) and 17(a) of the 1933 Act, (15 U.S.C. §§ 77k,

77 \(2) and 77q(a)), Sections 10(b) and 20(a) of the Exchange

Act, (15 U.S.C. 78j(b) and 78t(a)) and Rule 10b-5 promul-

gated by the Securities and Exchange Commission (“SEC”)

thereunder (15 U.S.C. 78(j), 17 C.F.R. 240.10b-5);

3. Many of the acts and much of the conduct charged herein,

including the preparation and distribution of Prospectuses pre-

—

pared by or with the aid, participation, acquiescence, encourage-

ment, cooperation or assistance of the defendant Punta Gorda

Isles, Inc. (hereinafter “Punta Gorda”), defendant Coopers &

Lybrand and the individual defendants (all of the defendants

will hereinafter be referred to collectively as “the defendants”)

and the sale of securities offered by the Prospectus occurred

in the Eastern District of Missouri;

4. In connection with the acts and conduct alleged hercin

defendants directly and indirectly used the means and instru-

mentalities of interstate commerce and of the mails and the

facilities of a national securities exchange registered with the

SEC pursuant to the Exchange Act;

Parties

5. Plaintiffs Cecil Livesay and Dorothy Livesay are in-

dividuals residing in the City of Glendale, State of Missouri,

who, as a result of the wrongs hereinafter alleged, purchased

$5,000.00 worth of Punta Gorda’s 6% Convertible Subordi-

nated Debentures, due 1992 (“the debentures”) and 100 shares

of the common stock of Punta Gorda at a price of $18.00 per

share, or $1800.00. The debentures and common stock were

purchased on or about May 2, 1972, in connection with a

Punta Gorda public offering of that date;

6. Defendant Punta Gorda is a corporation duly organized

and existing under the laws of the State of Fiorida and main-

tains its executive Offices at 1625 West Marion Avenue, Punta

Gorda, Florida. The common stock of Punta Gorda is traded

on the American Stock Exchange and the debentures are

traded on the American Bond Exchange. The Company is

principally in the business of developing and selling homesites

at retail on the installment plan basis. In a typical transaction,

the customer pays 5-10% down on the purchase price of a

homesite, and then pays the balance in installments over a ten

year period;

a TT ee ee ee

= Anti d 6p th es

7. Defendant Coopers & Lybrand (formerly Lybrand, Ross

Bros. & Montgomery) a partnership, is a national accounting

firm with offices in major cities throughout the United States.

Said defendant maintains an office at 411 North Seventh Street,

St. Louis, Missouri, within the Eastern District of Missouri.

At all material times, including the times of the wrongs alieged

herein, defendant Coopers & Lybrand provided accounting

services to defendant Punta Gorda; defendant Coopers & Ly-

brand was at all material times the auditor for Punta Gorda

and certified certain of its financial statements, including the

financial statements used in connection with the May 2, 1972,

public offering referred to herein;

8. Defendant Wilber H. Cole is an individual who maintains

an office at 1625 West Marion Avenue, Punta Gorda, Florida,

and who at all times material to the Complaint herein, includ-

ing the times of the wrongs alleged herein, was the President

and a director of Punta Gorda, who personally sold 116,010

shares of the common stock of Punta Gorda pursuant to the

May 2, 1972, Prospectus;

9. Defendant Alfred M. Johns is an individual who main-

tains an Office at 1625 West Marion Avenue, Punta Gorda,

Florida, and who at all times material to the Complaint herein,

including the times of the wrongs alleged herein, was the Chair-

man of the Board, Secretary and a director of Punta Gorda,

who personally sold 55,560 shares of the common stock of

Punta Gorda pursuant to the May 2, 1972, Prospectus;

10. Defendant Robert J. Barbee is an individual who main-

tains an office at 1625 West Marion Avenue, Punta Gorda,

Florida, and who at all times material to the Complaint herein,

including the times of the wrongs alleged herein, was the Vice

President and a director of Punta Gorda;

11. Defendant Samuel A. Burchers, Jr. is an individual who

maintains an office at 1625 West Marion Avenue, Punta Gorda,

_—

Florida, and who at all times material to the Complaint herein,

including the times of the wrongs alleged herein; was the Vice

President and a director of Punta Gorda;

12. Defendant Russell C. Faber is an individual who main-

tains an office at 1625 West Marion Avenue, Punta Gorda,

Florida, and who at all times material to the Complaint, herein,

including the times of the wrongs alleged herein, was the

Financial Vice President and a director of Punta Gorda;

13. Defendant John Matarese is an individual who maintains

an office at 1625 West Marion Avenue, Punta Gorda, Florida,

and who at all times material to the Complaint herein, including

the times of the wrongs alleged herein, was the Vice President

of Punta Gorda;

14. Defendant Robert C. Wade is an individual who main-

tains an office at 1625 West Marion Avenue, Punta Gorda,

Florida, and who at all times material to the Complaint herein,

including the times of the wrongs alleged herein, was the

Treasurer of Punta Gorda;

15. Defendant Earl Drayton Farr, Jr. is an individual who

maintains an office at 115 West Olympia Avenue, Punta Gorda,

Florida, and who at all times material to the Complaint herein,

including the times of the wrongs alleged herein, was general

counsel and a director of Punta Gorda;

16. Defendant John W. Douglas, D.D.S. is an individual

who maintains an office at 209 N.E. Conway, Punta Gorda,

Florida, and who at all times material to the Complaint herein,

including the times of the wrongs alleged herein, was a director

of Punta Gorda;

Class Action Allegations

17. During the period beginning May 2, 1972, and for at

least several days thereafter, pursuant to the Registration State-

= es

ment which was declared effective by the SEC on or about

May 2, 1972, an undetermined number of persons purchased

$15,000,000.00 principal amount of Punta Gorda’s debentures

and 171,570 shares of its common stock at a price of $18.00

per share, aggregating an additional $3,088,260.00; all of the

foregoing debentures and common stock were purchased in

reliance upon and as a result of the information contained in

the aforesaid Registration Statement;

18. The class is defined as all of those persons who pur-

chased the above-described debentures and shares of the com-

mon stock of Punta Gorda during the underwriting and public

offering thereof which occurred on and following May 2, 1972;

19. Plaintiffs are informed and believe that the number of

such purchasers of the said debentures and shares of common

stock of Punta Gorda are so numerous that joinder of all of the

class members in this action is impracticable;

20. Plaintiffs are adequate representatives of the class inas-

much as they have the same identical interests as all of the

members of the class, and they will fairly and adequately protect

the interests of the class;

21. There are questions of law and fact common to the class

which include, inter alia, the following:

(a) Whether the defendants herein entered into and en-

gaged in a course of conduct which fraudulently induced plain-

tiffs and the members of the class to purchase the debentures

and shares of the common stock of defendant Punta Gorda for a

grossly excessive consideration;

(b) Whether defendants, in order to effectuate such course

of conduct, employed devices, schemes or artifices to defraud,

obtain money or property by means of untrue statements of

material facts or by omitting to state material facts necessary

— oo

in order to make the statements made, in the light of the cir-

cumstances under which they were made, not misleading, and

engaged in transactions, practices er courses of conduct which

operated as a fraud and deceit on the purchasers of the said

debentures and common stock of Punta Gorda in violation of

Sections 11, 12(2) and 17(a) of the 1933 Act:

of conduct, and in connection with such course of conduct,

engaged in acts and conduct in violation of Sections 10(b) and

20(a) of the Exchange Act and Rule 10b-5 promulgated there-

under by the SEC;

22. The foregoing questions of law and fact are common to

the class and predominate over questions affecting only in-

dividual members thereof; the class action herein is superior

to other methods for a fair and efficient administration of the

controversy since the class is so numerous and geographically

disbursed that joinder of all the members is impractical:

Cause of Action

Sections 11, 12(2) and 17(a) of the Securities Act of 1933

23. Plaintiffs allege that during the period of at least Novem-

ber 1, 1971, and possibly earlier, the exact dates being unknown

to plaintiffs, defendants engaged in an unlawful combination

and course of business pursuant to which defendants, among

other matters, employed devices, schemes and artifices to de-

fraud, obtain money by means of untrue statements of material

facts and omitted to state material facts necessary in order to

make the statements made, in the light of the circumstances

under which they were made, not misleading, and engaged in

transactions, practices and courses of business and conduct

which operated as a fraud and deceit upon purchasers of the

debentures and common stock of Punta Gorda, all in violation

—

of Sections '1, 12(2) and 17(a) of the 1933 Act. The purpose

and effect of these activities caused the plaintiffs and the mem-

bers of the class they represent to purchase debentures and

common stock of Punta Gorda for grossly excessive considera-

tion ($1,000.00 for each debenture and $18.00 per share for

the common stock) pursuant to the Registration Statement de-

clared effective by the SEC on or about May 2, 1972;

24. The fraudulent practices and the devices utilized by the

defendants in connection with and in order to effectuate the

aforesaid result (the sale of $15,000,000.00 worth of debentures

by Punta Gorda, and the sale by defendants Cole and Johns of

171,570 shares of the common stock of Punta Gorda at $18.00

per share, aggregating $3,088,260.00) consisted of, inter alia,

the following false representations by defendants, knowing them

to be false when made, and the following concealments of or

failures to disclose material facts necessary, in order to make

the statements made, in the light of the circumstances under

which they were made, not misleading to plaintiffs and the

members of the class, all or part of which are contained in (or

omitted from) the Registration Statement of Punta Gorda and

the Prospectus which is a part of such Registration Statement,

dated May 2, 1972:

(a) The defendants failed adequately to disclose and falsely

represented the financial condition of Punta Gorda;

(b) The defendants failed adequately to disclose and falsely

represented the results of operations, including the results of

operations of Punta Gorda at least for the following periods:

(i) The years ending December 31, 1967, December

31, 1968, December 31, 1969, December 31, 1970, and

December 31, 1971;

(ii) The three months period ending March 31, 1971,

and March 31, 1972;

— —

accounting rules and guidelines had been proposed by the

American Institute of Certified Public Accountants and were

imminent with respect to Punta Gorda’s operating statements,

and that they would require a materially adverse restatement,

retroactively applied, of the earnings of Punta Gorda for 1967

through 1971 and for the first three months of 1972. Notwith-

Standing such fact, the Prospectus falsely states that “The Com-

pany is unable to predict when any changes in accounting

practices applicable to the Company’s business will be made,

or what effect, if any, such changes will have on the Company’s

financial statements,” and that “. . . it is the Company’s

opinion that the accounting practices currently followed by it

present fairly the Company's financial conditions and the re-

sults of its operations and that no material changes in the

Company's accounting practices are warranted.”

(d) The defendants failed to disclose to the plaintiffs and

the members of the class what the results of Punta Gorda’s

operations for the period beginning 1967 through 1971 and

for the first three months period of 1972 would have been on

2 pro forma basis following Punta Gorda’s adherence to the

new accounting rules and guidelines applicable to its operat-

ing statement. The following chart sets forth the earnings of

Punta Gorda for the years 1967 through 1971 as set forth in

the Prospectus and the earnings for the same period, as re-

stated approximately six months thereafter, under the con-

templated revised accounting rules and guidelines:

Year Net Income Shown in Prospectus Restated

(1968 $ 407,918 ($.28 per share) $ 179,831 ($.12 per share)

1969 $1,037,385 ($.66 per share) $ 312,733 ($.20 per share)

1970 $1,581,564 ($.86 per share) $ 541,864 ($.29 per share)

1971 $3,360,855 ($1.72 per share) -$14,968.696 ($1.06 per share)

—

(e) The defendants failed to openly disclose that Punta

Gorda operates at a loss for federal income tax purposes, and

that its earnings are based entirely on anticipated receipts from

the installment contracts, and in this connection the Prospectus

fails to include in the statements of income a comparative pres-

entation of Punta Gorda’s reduced income and reduced in-

come per share as a result of the accounting principles used

for its federal income tax returns, which do not give recogni-

tion to income from the installment contracts until cash is

actually received. Instead, the defendants, in a false and mis-

leading way, provided a table showing a difference between

“Financial Statement Basis Over Income Tax Basis,” showing,

for example, differences in 1971 in the magnitude of $3,418,-

256.00 and a difference per share of $1.83 without stating

that earnings are lower by such amounts than those shown on

the statements of income preceding, utilizing the term “differ-

ence” to conceal the fact of “over-statement” of earnings as a

result of accrual of installment sales as income when made;

(f) The statement of income contained in the Prospectus con-

tains a presentation of the ratio of earnings to fixed charges prior

to the offering, showing a ratio of earnings which were 8.33

times fixed charges in the year 1971, with a pro forma earnings

ratio to fixed charges after the offering of 4.05 for such year.

Both of these ratios, which tend to indicate substantial coverage

for future fixed charges of Punta Gorda, are false and mislead-

ing because they are not based on actual cash flow available

for payment of fixed charges, but are based principally upon

book earnings resulting from installment sale contracts, where

the cash flow is inadequate to yield anywhere near the coverage

of fixed charges represented, and where the risk of default flow-

ing from any inability of Punta Gorda to perform its obligations

under the sale contract is real and substantial;

(g) The defendants failed and omitted to state that Punta

Gorda is and will continue to be materially adversely affected by

recent ecological regulations in the State of Florida preventing

future development of homesites with either saltwater or fresh

water frontage, stating that“. . . the Company has shifted its

emphasis to projects in which homesites will be located on

parkways or freshwater lakes and creeks,” and that “the Com-

pany will be dependent in its ability to develop such properties

upon the obtaining of requisite regulatory approvals and com-

plying with applicable laws and regulations.” In fact. laws

enacted, as enforced on the effective date of the Prospectus, tend

to indicate that such approvals will be extremely difficult, if not

impossible, to obtain, and that the State of Florida, in order to

preserve the ecology of its “wet areas” intends to prevent the

form of land development involving dredging and cutting of

canals and waterways heretofore engaged in by Punta Gorda.

As of the writing of this Complaint, Punta Gorda is virtually at a

standstill in obtaining additional properties with water frontage,

for development, and its cash flow, earnings and consequent

ability to comply with its obligations under prior buy-and-sell

contracts are being materially and possibly irreparably, adversely

affected. As a result of the crippling effect of such ecological

regulation upon future sales, and cash flow, the ability of Punta

Gorda to meet its fixed obligations to existing creditors and prior

purchasers of homesites is in severe jeopardy, and no disclosure

of this material risk is contained in the Prospectus:

(h) In addition to the restrictive effect of the foregoing regu-

lations on future development and sale of land with water front-

age, Punta Gorda’s ability to sell any lots will be impaired, be-

cause of the difficulty involved and lower price of lots without

water frontage and the increased costs of such sales in commis-

sions and other expenses, all of which will have a further mate-

rial adverse effect upon Punta Gorda’s cash flow and income;

(i) The defendants falsely represented that Punta Gorda had

not knowingly made any untrue statement of a material fact or

omitted to state any material fact required to be stated in the

am 39 «x=

Registration Statement, including the Prospectus, or necessary

to make the statements therein not misleading:

25. In connection with and in furtherance of the scheme to

defraud, as aforesaid, the defendants engaged in acts and con-

duct which they combined and agreed to do and each of the

defendants aided and abetted, acquiesced, encouraged, cooper-

ated and or assisted in the effectuation of such combination

and conspiracy;

26. By reason of the foregoing acts and conduct, plaintiffs

and the members of the class herein purchased $15,000,000.00

worth of Punta Gorda debentures and i71,570 shares of Punta

Gorda’s common stock at $18.00 per share in the public offer-

ing of May 2, 1972. By reason of said acts and conduct, plain-

tiffs and the members of the class paid an excessive and inflated

price for the said debentures and common stock which they

so purchased. Recently the common stock of Punta Gorda has

been trading on the American Stock Exchange at prices in the

vicinity of $8.00 per share and the debentures have been trading

on the American Bond Exchange at prices in the area of $600.00

per debenture. Plaintiffs on or about October 6, 1972, sold

their said 100 shares of Punta Gorda’s common stock at a price

of $8.00 per share, and thus, sustained a loss of more than $1,-

000.00 with respect thereto. On or about the same date plain-

tiffs sold their five debentures, which cost them $5,000.00, for

$3,375.00, thus sustaining a loss of approximately $1600.00;

27. That by reason of the aforesaid, the plaintiffs and all the

members of the class have been damaged in amounts, which al-

though easily ascertainable, are presently undetermined;

Wherefore, plaintiffs demand:

A. Judgment against all of the defendants, jointly and sever-

ally, and in favor of plaintiffs and each member of the class for

damages in the amount determined to have been sustained by

a, "

plaintiffs and each member of the class, together with interest

and costs of suit, including a reasonable attorney’s fee, and

B. Such other and further relief as may be necessary and

appropriate.

COUNT II

Sections 10(b) and 20(a) of the Exchange Act

and Rule 10b-5

28. Paragraphs 1 through 27 of Count I of this Complaint

are realleged and incorporated herein by reference as though

fully set forth;

29. Count II of this action is brought under and pursuant to

Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5

promulgated thereunder:

30. In connection with the Registration Statement referred

to above, including the Prospectus contained therein, defend-

ants engaged in an unlawful combination and in conduct pur-

suant to which they, inter alia, engaged in other acts, transac-

tions, practices and courses of business which operated as a

fraud and deceit upon plaintiffs and each member of the class,

and made various untrue statements of material facts and

omitted to state material facts necessary to make the statements

made not misleading to plaintiffs and the members of the class,

all in violation of Section 10(b) of the Exchange Act and Rule

10b-5 promulgated thereunder. The fraudulent practices and de-

vices, utilized by the defendants in connection with and in order

to effectuate the aforesaid, consisted of knowingly making false

representations and intentional concealment of and failure to

disclose material facts necessary in order to make the statements

made, in the light of the circumstances under which they were

made, not misleading to plaintiffs and members of the class:

31. All defendants have encouraged, cooperated, aided and

abetted, acquiesced, assisted and participated in the preparation

of and issuance of a Registration Statement, including a Prospec-

tus, and the sale of shares and debentures pursuant to such Regis-

tration Statement. As a result, defendants violated Section 10(b)

of the Exchange Act and Rule 10b-5 promulgated thereunder

in that they employed devices, schemes and artifices to defraud,

obtain money and property by means of untrue statements of

material facts, and omitted to state material facts necessary in

order to make the statements made, in the light of the circum-

stances under which they were made, not misleading, and en-

gaged in transactions, practices and courses of business which

operated as a fraud and deceit upon purchasers with respect to

the allegations more specifically set forth in paragraph 24 of

Count I of this Complaint, which are incorporated herein by

reference;

32. The individual defendants were at all times material to

the Complaint controlling persons of Punta Gorda within the

meaning of Section 20(a) of the Exchange Act.

Wherefore, in Count II of this Complaint plaintiffs demand:

A. Judgment against each defendant, jointly and severally,

and in favor of plaintiffs and each member of the class for dam-

ages in the amount determined to have been sustained by plain-

tiffs and each member of the class, together with interest and

costs of suit, including a reasonable atttorney’s fee, and

B. Such other and further relief as may be necessary and ap-

propriate.

ANDERSON, GREEN, FORTUS & LANDER

By MARTIN M. GREEN

Attorneys for Plaintiffs

Suite 938, Chromalloy Plaza

120 South Central

Clayton, Missouri 63105

862-6800

(Certificate of Service Omitted in Printing)

—

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

(Title omitted in printing)

ANSWER TO FIRST AMENDED COMPLAINT OF

DEFENDANT COOPERS & LYBRAND

(Filed October 10, 1973)

Comes now defendant Coopers & Lybrand and for its An-

swer to Plaintiffs’ First Amended Complaint states to the Court

as follows:

1. For answer to paragraph 1, this defendant admits that

plaintiffs seek to invoke the subject matter jurisdiction of this

Court pursuant to the statutes cited in such paragraph 1.

2. For answer to paragraph 2, this defendant admits that

plaintiffs seek to impose liability against it pursuant to the

statutes and Rule cited in such paragraph 2.

3. For answer to paragraphs 3 and 4, this defendant denies

each and every allegation contained therein.

4. For answer to paragraph 5, this defendant admits that a

public offering of Punta Gorda common stock and 6% Con-

vertible Subordinated Debentures, due 1992 (the “debentures”)

was made by certain undei vriters pursuant to a Prospectus with

an effective registration date with the Securities and Exchange

Commission of May 2, 1972. Except as so expressly admitted,

this defendant denies each and every allegation contained in

such paragraph 5.

5. For answer to paragraph 6, this defendant admits that

defendant Punta Gorda Isles, Inc. (“Punta Gorda”) is a corpora-

— os

tion duly organized and existing under the laws of the State of

Florida and maintains its executive offices at 1625 West Marion

Avenue, Punta Gorda, Florida. Except as so expressly admitted,

this defendant is without sufficient knowledge or information to

answer the remaining allegations of such paragraph 6 and, there-

fore, denies same.

6. For answer to paragraph 7, this defendant admits that it

was formerly known as Lybrand, Ross Bros & Montgomery,

that it is a partnership, that it is a national accounting firm with

offices in major cities throughout the United States and main-

tains an office at 411 North 7th Street, St. Louis, Missouri, that

from time to time it has provided accounting services to defend-

ant Punta Gorda, that from time to time it has been auditor for

defendant Punta Gorda and has certified certain of its financial

statements, and that it examined the balance sheet of Punta

Gorda as of December 31, 1971 and the related statements of

stockholders’ equity and income for the five years then ended,

and the statement of changes in financial position for the three

years then ended, all of which are contained in the Prospectus

for the May 2, 1972 offering of common stocx and debentures,

and certified in the Prospectus for such offering ihat such bal-

ance sheet and statements presented “fairly the financial posi-

tion of Punta Gorda Isles, Inc. at December 31, 1971, and the

results of its operations for the five years then ended, and

changes in financial position for the three years then ended, in

conformity with generally accepted accounting principles ap-

plied on a consistent basis.” Except as so expressly admitted,

this defendant denies each and every allegation contained in

such paragraph 7.

7. For answer to paragraphs 8, 9, 10, 11, 12, 13, 14, 15, 16

and 17, this defendant is without sufficient knowledge or in-

formation to answer the allegations in such paragraphs and,

therefore, denies same.

8. For answer to paragraphs 18, 19, 20, 21, 22 and 23,

this defendant denies each and every allegation contained therein.

— wo

9. For answer to the first paragraph and clauses (a) and (b)

of paragraph 24, this defendant denies each and every allega-

tion contained therein.

10. For answer to clause (c) of paragraph 24, this defendant

admits that the Prospectus contains the following statement:

“The Company is unable to predict whether any changes

in accounting practices applicable to the Company's busi-

ness will be made or what effect, if any, such changes will

have on the Company’s financial statements. However, it

is the Company’s opinion that the accounting practices

currently followed by it present fairly the Company’s

financial condition and the results of its operations and

that no material changes in the Company’s accounting

practices are warranted.”

Except as so expressly admitted, this defendant denies each

and every allegation contained in such clause (c).

11. For answer to clause (d) of paragraph 24, this defend-

ant admits that the earnings figures for the years 1968, 1969,

1970 and 1971 quoted in such clause do appear in the Pro-

spectus, and the earnings per share figures recited in such clause

do appear in such Prospectus as “fully diluted net income per

share.” Except as so expressly admitted, this defendant denies

each and every allegation contained in such clause (d).

12. For answer to clause (e) of paragraph 24, this defendant

admits that the Prospectus contains a table comparing the re-

sults for the accrual method of accounting for financial report-

ing with the accounting used for Federal income tax purposes,

that such table shows for the year 1971 a difference of financial

statement basis earnings .over income tax basis earnings of

$3,418,256 and a difference in earnings per share for such

year of $1.83. Except as so expressly admitted, this defendant

denies each and every allegation contained in said clause (e).

— —

13. For answer to clause (f) of paragraph 24, this defendant

admits that the Prospectus contains a presentation captioned

ratio of earnings to fixed charges of 8.33 for the year 1971,

with a pro forma ratio of earnings to fixed charges of 4.05 for

1971. Except as so expressly admitted, this defendant denies

each and every allegation contained in said clause (f).

14. For answer to clause (g) of paragraph 24, this defendant

admits that the following statement is contained in the Pro-

spectus:

“Management of the Company believes that compliance

with the above statutory requirements and agency regula-

tions related to environmental quality may materially

affect the ability .f the Company as well as other land

developers to develop an additional inventory of home-

sites with frontage on salt water bodies. As a result, the

Company has shifted its emphasis to projects in which

homesites will be located on parkways or fresh water lakes

and creeks. Such projects are also subject to the above

laws, regulations and regulatory agencies and, to the ex-

tent that dredging is required, fill is needed or sewage

disposal facilities are required to be constructed, the Com-

pany will be dependent in its ability to develop such

properties upon the obtaining of requisite regulatory ap-

provals and complying with applicable laws and regu-

lations.”

Except as so expressly admitted, this defendant denies each and

every allegation contained in such clause (g).

15. For answer to clause (h) of paragraph 24, this defend-

ant is without sufficient knowledge or information to answer

the allegations contained therein and, therefore, denies same.

16. For answer to clause (i) of paragraph 24, this defendant

denies the allegations contained in such clause.

—

17. For answer to paragraph 25, this defendant denies each

and every allegation contained in such paragraph.

18. For answer to paragraph 26, this defendant is without

sufficient knowledge or information to answer the allegations

therein and, therefore, denies same.

19. For answer to paragraph 27, this defendant denies each

and every allegation contained in such paragraph.

20. For further answer to Count I, this defendant states that

such Count fails to state any cause of action upon which relief

can be granted against it.

21. For further answer to Count I, this defendant states that

as regards any part of the Prospectus or the Registration State-

ment of May 2, 1972 purporting to be made upon its authority

as an expert, it had, after reasonable investigation, reasonable

ground to believe and did believe, at the time such part of the

Prospectus and Registration Statement became effective, that the

statements therein were true, and that there was no omission to

state a material fact required to be stated therein or necessary

to make the statements not misleading.

22. For further answer to Count I, this defendant states that

the damages, if any, suffered by the plaintiffs represent other

than the depreciation in value of their securities resulting from

those parts of the Prospectus or Registration Statement, with

respect to which this defendant's liability is asserted, not being

true or omitting to state a material fact required to be stated

therein or necessary to make the statements therein not mislead-

ing. There were no such untruths or omissions in the Prospectus

or Registration Statement.

23. For further answer to Count I, this defendant states that

plaintiffs failed to commence their action within one year after

the discovery of the alleged untrue statemerts or omissions, or

after such discovery should have been made by the exercise of

reasonable diligence.

24. For answer to paragraph 28, this defendant admits and

denies in the same manner as it admitted and denied the allega-

tions contained in paragraphs | through 27 of Count I, which

paragraphs are realleged and incorporated by reference into

such paragraph 28.

25. For answer to paragraph 29, this defendant admits that

plaintiffs seek to assert a cause of action under Sections 10(b)

and 20(a) of the Securities Exchange Act and Rule 10(b)-5 pro-

mulgated thereunder.

’ 26. For answer to paragraphs 30 and 31, this defendant

denies each and every allegation contained in such paragraphs.

27. For answer to paragraph 32, this defendant is without

sufficient knowledge or information to answer the allegations

contained therein and, therefore, denies same.

28. For further answer to Count II, this defendant states

that such Count fails to state a claim upon which relief can be

granted against it.

Wherefore, having fully answered, this defendant prays that

it be dismissed with its costs.

BRYAN, CAVE, McPHEETERS &

McROBERTS

By VERYL L. RIDDLE

CHARLES G. SIEBERT

JOHN J. HENNELLY

500 North Broadway

St. Louis, Missouri 63102

231-8600

Attorneys for Defendant

Coopers & Lybrand

(Certificate of Service omitted in printing)

— po

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

(Title Omitted in Printing)

ANSWER

Of Defendants Wilber H. Cole, Alfred M. Johns, Robert J.

Barbee, Samuel A. Burchers, Jr., Russell C. Faber, John

Matarese, Robert C. Wade, Earl Drayton Farr, Jr., and

John W. Douglas to Plaintiffs’ First Amended Complaint.

(Filed October 9, 1973)

Come now the Defendants Wilber H. Cole, Alfred M. Johns,

Robert J. Barbee, Samuel A. Burchers, Jr., Russell C. Faber,

John Matarese, Robert C. Wade, Earl Drayton Farr, Jr., and

John W. Douglas, and for their answer to Plaintiffs’ First

Amended Complaint state as follows:

COUNT |

1. These Defendants are without knowledge or information

sufficient to form a belief as to the truth of the allegations con-

tained in Paragraph | of Plaintiffs’ First Amended Complaint.

2. These Defendants are without knowledge or information

sufficient to form a belief as to the truth of the allegations con-

tained in Paragraph 2 of Plaintiffs’ First Amended Complaint.

3. These Defendants admit that portions of the Prospectus

of Punta Gorda Isles, Inc., dated May 2, 1972 (“Prospectus”),

were prepared in the Eastern District of Missouri, that some of

the Prospectuses were distributed in the Eastern District of

—

Missouri, that some of the securities offered by the Prospectuses

were sold in the Eastern District of Missouri, and that these

Defendants aided, participated, or acquiesced in the preparation

of those Prospectuses; the Defendants deny all other allegations

contained in Paragraph 3 of the Plaintiffs’ First Amended Com-

plaint.

4. These Defendants admit that the means and instrumentali-

ties of interstate commerce and the mails were used in con-

nection with the public offering of the securities of Punta Gorda

Isles, Inc., in May 1972; these Defendants deny all allegations

contained in Paragraph 4 of the Plaintiffs’ First Amended Com-

plaint.

5. These Defendants are without knowledge or information

sufficient to form a belief as to the truth of the allegations con-

tained in Paragraph 5 of Plaintiffs’ First Amended Complaint.

6. These Defendants do not know what is meant by “typical”

in Paragraph 6 of Plaintiffs’ First Amended Complaint, and

therefore are without knowledge or information sufficient to

form a belief as to the truth of the allegation that “In a typical

transaction, the customer pays 5-10% down on the purchase

price of a homesite, and then pays the balance in installments

over a ten year period”; these Defendants admit the other alle-

gations contained in Paragraph 6 of the Plaintiffs’ First

Amended Complaint.

7. These Defendants deny that the wrongs alleged in the

Plaintiffs’ First Amended Complaint ever occurred. These

Defendants admit the other allegations contained in Paragraph

7 of Plaintiffs’ First Amended Complaint.

8. These Defendants deny that the wrongs alleged in the

Plaintiffs’ First Amended Complaint ever occurred. These De-

fendants admit the other allegations contained in Paragraph 8

of Plaintiffs’ First Amended Complaint.

— _

9. These Defendants deny that the wrongs alleged in the

Plaintiffs’ First Amended Complaint ever occurred. These De-

fendants admit the other allegations contained in Paragraph 9

of Plaintiffs’ First Amended Complaint.

10. These Defendants deny that the wrongs alleged in the

Plaintiffs’ First Amended Complaint ever occurred. These De-

fendants admit the other allegations contained in Paragraph 10

of Plaintiffs’ First Amended Complaint.

11. These Defendants deny that the wrongs alleged in the

Plaintiffs’ First Amended Complaint ever occurred. These De-

fendants admit the other allegations contained in Paragraph 11

of Plaintiffs’ First Amended Complaint.

12. These Defendants deny that the wrongs alleged in the

Plaintiffs’ First Amended Complaint ever occurred. These De-

fendants admit the other allegations contained in Paragraph 12

of Plaintiffs’ First Amended Complaint.

13. These Defendants deny that the wrongs alleged in the

Plaintiffs’ First Amended Complaint ever occurred. These De-

fendants admit the other allegations contained in Paragraph 13

of Plaintiffs’ First Amended Complaint.

14. These Defendants deny that the wrongs alleged in the

Plaintiffs’ First Amended Complaint ever occurred. These De-

fendants admit the other allegations contained in Paragraph 14

of Plaintiffs’ Amended Complaint.

15. These Defendants deny that the wrongs alleged in the

Plaintiffs’ First Amended Complaint ever occurred. These De-

fendants admit the other allegations contained in Paragraph 15

of Plaintiffs’ First Amended Complaint.

16. These Defendants deny that the wrongs alleged in the

Plaintiffs’ First Amended Complaint ever occurred. These De-

fendants admit the other allegations contained in Paragraph 16

of Plaintiffs’ First Amended Complaint.

——

17. These Defendants admit that pursuant to a Registration

Statement which was declared effective by the Securities and

Exchange Commission (“SEC”) on May 2, 1972, $15,000,000

in principal amount of Punta Gorda Isles, Inc., Debentures and

171,570 shares of Punta Gorda Isles, Inc., Common Stock at

a price of $18 per share were offered to the public. These De-

fendants are without knowledge or information sufficient to

form a belief as to the truth of the other allegations contained

in Paragraph 17 of Plaintiffs’ First Amended Complaint.

18. These Defendants are without knowledge or information

sufficient to form a belief as to the truth of the allegations con-

tained in Paragraph 18 of Plaintiffs’ Firsts Amended Complaint.

19. These Defendants are without knowledge or information

sufficient to form a belief as to the truth of the allegations con-

tained in Paragraph 19 of Plaintiffs’ First Amended Complaint.

20. These Defendants are without knowledge or information

sufficient to form a belief as to the truth of the allegations con-

tained in Paragraph 20 of Plaintffs’ First Amended Complaint.

21. These Defendants deny all the allegations contained in

Paragraph 21 of Plaintiffs’ First Amended Complaint.

22. These Defendants deny all the allegations contained in

Paragraph 22 of Plaintiffs’ First Amended Cornplaint.

23. These Defendants admit that the Registration Statement

became effective with the SEC on or about May 2, 1972, and

these Defendants deny all other allegations contained in Para-

graph 23 of Plaintiffs’ First Amended Complaint.

24. These Defendants deny all the allegations contained in

Paragraph 24 of Plaintiffs’ First Amended Complaint.

25. These Defendants deny all the allegations contained in

Paragraph 25 of Plaintiffs’ First Amended Complaint.

—_—

26. These Defendants are without knowledge or information

sufficient to form a belief as to the truth of the allegations con-

tained in Paragraph 26 of Plaintiffs’ First Amended Complaint

that the Plaintiffs purchased and sold the Punta Gorda Isles,

Inc., Debentures and Common Stock. These Defendants admit

that $15,000,000 in principal amount of Punta Gorda Isles,

Inc., Debentures and 171,570 shares of Punta Gorda Isles, Inc..

Common Stock were offered to the public in the offering of

May 2, 1972. These Defendants deny all other allegations con-

tained in Paragraph 26 of Plaintiffs’ First Amended Complaint.

27. These Defendants deny all the allegations contained in

Paragraph 27 of Plaintiffs’ First Amended Complaint.

COUNT II

28. For their answer to Paragraph 28, the Defendants in-

corporate herein by reference the responses contained in Para-

graphs 1-27 of this Answer as fully as though said responses

were set forth in full herein.

29. These Defendants are without knowledge or informa-

tion sufficient to form a belief as to the truth of the allegations

contained in Paragraph 29 of Plaintiffs’ First Amended Com-

plaint.

30. These Defendants deny the allegations contained in

Paragraph 30 of Plaintiffs’ First Amended Complaant.

31. These Defendants deay the allegations contained in

Paragraph 31 of Plaintiffs’ Firs: Amended Complaint.

32. These Defendants deny the allegations contained in Para-

graph 32 of Plaintiffs’ First Amended Complaint.

Further answering, these Defendants allege as follows:

First Defense

33. A copy of the Prospectus dated May 2, 1972, is attached

to this Answer as Exhibit “A” and by reference is fully incor-

porated herein. A copy of Punta Gorda Isles, Inc.’s, 1972

Annual Report is attached to this Answer as Exhibit “B” and

by reference is fully incorporated herein. The changes in Punta

Gorda Isles, Inc.’s, accounting procedures are described on

Pages 3, 18 and 19 of the 1972 Annual Report. For the

reasons there stated, the differences between the income re-

ported in the Prospectus and the income reported in the 1972

Annual Report result solely from a difference in the method of

reporting and do not reflect any inaccuracy in the income figures

in the Prospectus. The Prospectus contains no misstatements

of material facts nor does it fail to state any facts necessary

to make the statements contained therein, in the light of the

circumstances under which they were made, not misleading.

Second Defense ©

34. These Defendants did not and do not know of any untrue

statements of material facts made in connection with the sale

of securities issued by Defendant Punta Gorda Isles, Inc., nor

or of any omissions to state material facts necessary to make

the statements, in the light of the circumstances under which

they were made, not misleading. The exercise of reasonable

care did not disclose and would not have disclosed any such

untruth or omission, and, in fact, there were no untruths or

omissions.

Third Defense

35. The Plaintiffs did not purchase any securities from these

Defendants. .

—

Fourth Defense

36. The damages, if any, suffered by the Plaintiffs represent

other than the depreciation in value of their securities resulting

from those parts of the Registration Statement, with respect to

which they assert the liability of Defendants, not being true

or Omitting to state a material fact required to be stated therein

or necessary to make the statements therein not misleading.

There were no such untruths or omissions in the Registration

Statement.

Fifth Defense

37. The damages, if any, suffered by the Plaintiffs were not

caused by any misstatements of material facts in the Registra-

tion Statement nor by any failure to state any material facts

required to be stated therein or necessary to make the state-

ments thereim not misleading.

Sixth Defense

38. The statements and reports in the Prospectus dealing

with accounting matters were made on the authority of Defend-

ant Coopers & Lybrand as experts on such matters; as regards

those statements and reports, these Defendants had no reason-

able ground to believe and did not believe, at the time the

Registration Statement became effective, that any of those state-

ments or reports were untrue or that there was an omission to

state a material fact required to be stated therein or necessary

to make those statements and reports not misleading.

Seventh Defense

39. As regards those parts of the Prospectus not purporting

to be made on the authority of Defendant Coopers & Lybrand

as experts On accounting matters, these Defendants had, after

reasonable investigation, reasonable ground to believe and did

believe, at the time the Registration Statement became effec-

— wn

tive, that the statements therein were true and that there was

no omission to state a material fact required to be stated

therein or necessary to make the statements therein not mis-

leading.

Eighth Defense

40. These Defendants at all times mentioned in the Plaintiffs’

First Amended Complaint acted in good faith and did not

directly or indirectly induce any violation of the Securities

Exchange Act of 1934 or any of the regulations promulgated

thereunder, and no such violations occurred.

Wherefore, having fully answered the Plaintiffs’ First

Amended Complaint, Defendants Wilber H. Cole, Alfred M.

Johns, Robert J. Barbee, Samuel A. Burchers, Jr., Russell C.

Faber, John Matarese, Robert C. Wade, Earl Drayton Farr,

Jr., and John W. Douglas pray that Plaintiffs take nothing on

their First Amended Complaint, that this action be dismissed

on the merits, and that these Defendants recover their costs

herein, including reasonable attorneys’ fees.

PEPER, MARTIN, JENSEN, MAICHEL ard

HETLAGF

By WILLIAM A. RICHTER

Attorneys for Defendants, Wilber H.

Cole, Alfred M. Johns, Robert J.

Barbee, Samuel A. Burchers, Jr.,

Russell C. Faber, John Matarese,

Robert C. Wade, Earl Drayton Farr,

Jr., and John W. Douglas

720 Olive Street

Twenty-Fourth Floor

St. Louis, Missouri 63101

(314) 421-3850

(Certificate of service omitted in printing)

— ee

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

(Title omitted in printing)

ANSWER

Of Defendant Punta Gorda Isles, Inc., to Plaintiffs’

First Amended Complaint

(Filed October 9, 1973)

Comes now the Defendant Punta Gorda Isles, Inc., and for

its answer to Plaintiffs’ First Amended Complaint states as

follows:

COUNT I

1. The Defendant is without knowledge or information suf-

ficient to form a belief as to the truth of the allegations con-

tained in Paragraph | of Plaintiffs’ First Amended Complaint.

2. The Defendant is without knowledge or information suf-

ficient to form a belief as to the truth of the allegations con-

tained in Paragraph 2 of Plaintiffs’ First Amended Complaint.

3. The Defendant admits that portions of the Defendant’s

Prospectus dated May 2, 1972 (“Prospectus”), were prepared

in the Eastern District of Missouri, that some of the Prospec-

tuses were distributed in the Eastern District of Missouri, that

some of the securities offered by the Prospectuses were sold in

the Eastern District of Missouri, and that the Defendant aided

and participated in the preparation of those Prospectuses; the

Defendant denies all other allegations contained in Paragraph

3 of the Plaintiffs’ First Amended Complaint.

_—

4. The Defendant admits that the means and instrumentalities

of interstate commerce and the mails were used in connection

with the public offering of its securities in May 1972; the De-

fendant denies all other allegations contained in Paragraph 4

of the Plaintiffs’ First Amended Complaint.

5. The Defendant is without knowledge or information suf-

ficient to form a belief as to the truth of the allegations contained

in Paragraph 5 of Plaintiffs’ First Amended Complaint.

.6. The Defendant does not know what is meant by “typical”

in Paragraph 6 of Plaintiffs’ First Amended Complaint, and

therefore is without knowledge or information sufficient to form

a belief as to the truth of the allegation that “In a typical trans-

action, the customer pays 5-10% down on the purchase price

of a homesite, and then pays the balance in installments over

a ten year period”; the Defendant admits the other allegations

contained in Paragraph 6 of the Plaintiffs’ First Amended Com-

plaint.

7. The Defendant denies that the wrongs alleged in the Plain-

tiffs’ First Amended Complaint ever occurred. The Defendant

admits the other allegations contained in Paragraph 7 of Plain-

tiffs’ First Amended Complaint.

8. The Defendant denies that the wrongs alleged in the Plain-

tiffs’ First Amended Complaint ever occurred. The Defendant

admits the other allegations contained in Paragraph 8 of Plain-

tiffs’ First Amended Complaint.

9. The Defendant denies that the wrongs alleged in the Plain-

tiffs’ First Amended Complaint ever occurred. The Defendant

admits the other allegations contained in Paragraph 9 of Plain-

tiffs’ First Amended Complaint.

10. The Defendant denies that the wrongs alleged in the

Plaintiffs’ First Amended Complaint ever occurred. The De-

— i

fendant admits the other allegations contained in Paragraph 10

of Plaintiffs’ First Amended Complaint.

11. The Defendant denies that the wrongs alleged in the

Plaintiffs’ First Amended Complaint ever occurred. The De-

fendant admits the other allegations contained in Paragraph 11

of Plaintiffs’ First Amended Complaint.

12. The Defendant denies that the wrongs alleged in the

Plaintiffs’ First Amended Complaint ever occurred. The De-

fendant admits the other allegations contained in Paragraph 12

of Plaintiffs’ First Amended Complaint.

13. The Defendant denies that the wrongs alleged in the

Plaintiffs’ First Amended Complaint ever occurred. The De-

fendant admits the other allegations contained in Paragraph

13 of Plaintiffs’ First Amended Complaint.

14. The Defendant denies that the wrongs alleged in the

Plaintiffs’ First Amended Complaint ever occurred. The De-

fendant admits the other allegations contained in Paragraph

14 of Plaintiffs’ First Amended Complaint.

15. The Defendant denies that the wrongs alleged in the

Plaintiffs’ First Amended Complaint ever occurred. The De-

fendant admits the other allegations contained in Paragraph

15 of Plaintiffs’ First Amended Complaint.

16. The Defendant denies that the wrongs alleged in the

Plaintiffs’ First Amended Complaint ever occurred. The De-

fendant admits the other allegations contained in Paragraph 16

of Plaintiffs’ First Amended Complaint.

17. The Defendant admits that pursuant to a Registration

Statement which was declared effective by the Securities and

Exchange Commission (“SEC”) on May 2, 1972, $15,009,000

in principal amount of its Debentures and 171,570 shares of its

Common Stock at a price of $18 per share were offered to the

—

public. The Defendant is without knowledge or information

sufficient to form a belief as to the truth of the other allegations

contained in Paragraph 17 of Plaintiffs’ First Amended Com-

plaint.

18. The Defendant is without knowledge or information suf-

ficient to form a belief as to the truth of the allegations con-

tained in Paragraph 18 of Plaintiffs’ First Amended Complaint.

19. The Defendant is without knowledge or information suffi-

cient to form a belief as to the truth of the allegations contained

in Paragraph 19 of Plaintiffs’ First Amended Complaint.

20. The Defendant is without knowedge or information suffi-

cient to form a belief as to the truth of the allegations contained

in Paragraph 20 of Plaintiffs’ First Amended Complaint.

21. The Defendant denies all the allegations contained in

Paragraph 21 of Plaintiffs’ First Amended Complaint.

22. The Defendant denies all the allegations contained in

Paragraph 22 of Plaintiffs’ First Amended Complaint.

23. The Defendant admits that the Registration Statement

became effective with the SEC on or about May 2, 1972, and

the Defendant denies all other allegations contained in Para-

graph 23 of Plaintiffs’ First Amended Complaint.

24. The Defendant denies all the allegations contained in

Paragraph 24 of Plaintiffs’ First Amended Complaint.

25. Tiie Defendant denies al! the allegations contained in

Paragraph 25 of Plaintiffs’ First Amended Complaint.

26. The Defendant is without knowledge or information suffi-

cient to form a belief as to the truth of the allegations contained

in Paragraph 26 of Plaintiffs’ First Amended Complaint that

the Plaintiffs purchased and sold the Defendant’s Debentures

and Common Stock. The Defendant admits that $15,000,000

—

in principal amount of its Debentures and 171,570 shares of its

Common Stock were offered to the public in the offering of

May 2, 1972. The Defendant denies all other allegations con-

tained in Paragraph 26 of Plaintiffs’ First Amended Complaint.

27. The Defendant denies all the allegations contained in

Paragraph 27 of Plaintiffs’ First Amended Complaint.

COUNT II

28. For its answer to Paragraph 28, the Defendant incorpo-

rates herein by reference the responses contained in Paragraphs

1-27 of this Answer as fully as though said responses were set

forth in full herein.

29. The Defendant is without knowledge or information suffi-

cient to form a belief as to the truth of the allegations contained

in Paragraph 29 of Plaintiffs’ Firsts Amended Complaint.

30. The Defendant denies the allegations contained in Para-

graph 30 of Plaintiffs’ First Amended Complaint.

31. The Defendant denes the allegations contained in Para-

graph 31 of Plaintiffs’ First Amended Complaint.

32. The Defendant denies the allegations contained in Para-

graph 32 of Plaintiffs’ First Amended Complaint.

Further answering, the Defendant alleges as follows:

First Defense

33. A copy of the Prospectus dated May 2, 1972, is attached

to this Answer as Exhibit “A” and by reference is fully incor-

porated herein. A copy of the Defendant’s 1972 Annual Report

is attached to this Answer as Exhibit “B” and by reference is

fully incorporated herein. The changes in the Defendant's ac-

—

counting procedures are described on Pages 3, 18 and 19 of

the 1972 Annual Report. For the reasons there stated, the

differences between the income reported in the Prospectus and

the income reported in the 1972 Annual Report result solely

from a difference in the method of reporting and do not reflect

any inaccuracy in the income figures in the Prospectus. The

Prospectus contains no misstatements of material facts nor does

it fail to state any facts necessary to make the statements con-

tained therein, in the light of the circumstances under which

they were made, not misleading.

Second Defense

34. The Defendant did not know, and in the exercise of rea-

sonable care could not have known, of any untrue statements

of material facts, or of any omissions to state material facts

necessary to make the statements, in the light of the circum-

stances under which they were made, not misleading.

Third Defense

35. The Plaintiffs did not purchase any securities from the

Defendant.

Fourth Defense

36. The damages, if any, suffered by the Plaintiffs represent

other than the depreciation in value of their securities resulting

from those parts of the Registration Statement, with respect to

which they assert the liability of Defendant, not being true or

omitting to state a material fact required to be stated therein

or necessary to make the statements therein not misleading.

Fifth Defense

37. The damages, if any, suffered by the Plaintiffs were not

caused by any misstatements of material facts in the Registra-

== $6 —

tion Statement nor by any failure to state any material facts re-

quired to be stated therein or necessary to make the statements

therein not misleading.

Wherefore, having fully answered the Plaintiffs’ First Amended

Complaint, Defendant Punta Gorda Isles, Inc., prays that Plain-

tiffs take nothing on their First Amended Complaint, that this

action be dismissed on the merits, and that this Defendant re-

cover its costs herein, including reasonable attorneys’ fees.

PEPER, MARTIN, JENSEN, MAICHEL and

HETLAGE

By WILLIAM A. RICHTER ;

Attorneys for Defendant Punta |

Gorda Isles, Inc.

720 Olive Street

Twenty-Fourth Floor

St. Louis, Missouri 63101 |

(314) 421-3850

(Certificate of service omitted in printing)

{2} IN THE UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

(Title omitted in printing)

DEPOSITION OF CECIL LIVESAY

Taken on the 19th day of April, A.D., 1974

[3] Direct Examination

By Mr. Richter:

Q. Wouid you state your name, please? A. Cecil Livesay.

—

Q. And where do you live, Mr. Livesay? A. 955 Glen Way.

In Glendale, Missouri.

Q. And what is your occupation? A. Police Chief.

Q. And in what City? A. The City of Glendale.

Q. And are you the Cecil Livesay who is one of the Plain-

tiffs in the case of Cecil and Dorothy Livesay versus Punta

Gorda Isles, Etc., et al? A. I am.

Q. How long have you been the Chief of Police in Glen-

dale? A. I am in my fifth year being Chief.

Q. How long have you been on the Glendale Police Force?

A. Eighteen years.

Q. How old a man are you? [4] I am forty.

Q. How long have you been in police work? A. Eighteen

years.

Q. And you started with Glendale? A. I did.

Q. The Glendale Police Department? A. I did.

Q. Had you had any employment prior to being a police-

man? A. Yes, sir.

Q. And what was your prior employment? A. I was work-

ing at Brown Shoe Company.

Q. What is your highest degree of formal education? A.

One semester of college.

Q. And you have had courses, I take it, in police work? A.

I have.

Q. Chief, I am going to ask you questions during the course

of this deposition, and I would assume from your work as a

police officer you had occasion to testify in Court from time

to time and you are familiar how these examinations go, gen-

erally? A. It’s all been criminal, but, yes, sir.

—

Q. If at any time I ask you something that you don’t under-

stand or you need clarification, just say so and we will pro-

ceed from that. A. Thank you.

[5] Q. I might say because of the nature of this suit that we are

going to get into some personal information which is because of

the type of case that you brought here, and we are not meaning to

pry, but it is information we are entitled to inquire into. A. I

understand.

Q. And first of all then, let’s start out with asking you what

your annual income is as Chief of Police? A. Fourteen five, fif-

teen thousand, something around there. Between fourteen and

fifteen.

Q. And what was your income, approximately, a Yb

A. Between twenty-three and—in '72? Twenty-one, twenty-one

thousand.

Q. Do you have another source of income other than your

pay as Chief of Police? A. And my wife’s salary.

Q. Okay. That twenty odd some thousand you gave me for

‘72 was a combined income of you and your wife; is that correct?

A. Yes, sir, that’s correct.

Q. And what was your income in "72? A. Thirteen thousand.

Q. And what is your wife’s current income? A. Her current

income, ninety-five hundred, nine thousand.

Q. And the figures that you have given me for your income [6]

and your wife’s, are those your gross before your various deduc-

tions? A. Yes, sir, it is.

Q. What training courses have you gone through as a police

officer in the last five years, let’s say? A. Well, I had a manage-

ment course, short seminars, and I think I went to the Major

Case Squad Training, and that would be in the last five years,

that would be it.

Q. What high school did you graduate from? A. Beaumont.

— —

Q. What university did you attend for a semester? A. Wash-

ington U,

Q. Here in St. Louis? A. Yes, sir.

Q. In your complaint you alleged that in May of 1972, you

purchased some securities of Punta Gorda Isles, Inc. Had you

purchased any corporate securities at any time prior to pur-

chasing the securities of Punta Gorda Isles, Inc., as alleged in

your complaint? A. Yes, sir, I have.

Q. When was the first time, to the best of your recollection,

that you purchased any corporate securities? A. 1961.

Q. And what fixes that date in your mind? A. I just remem-

ber when I got—when I became interested in securities was

1961. And I attended an investment [7] seminar, and it was 61.

Q. Who conducted that seminar? A. The first one I at-

tended was a one-day seminar given by the Globe-Democrat.

Q. And did you shortly thereafter purchase corporate se-

curities? A. I did.

Q. And have you continued to buy and sell securities since

1961? A. Yes, sir.

Q. Have you kept any records over the years of the securities

which you have bought and sold? A. If I would go back on my

income taxes, I am sure I would have it. I don’t know how long

I retain them, but, yes, I would probably have a record of every-

thing.

Q. Do you have any independent recollection of approxi-

mately how many securities you purchased since 1961? A. This

would be a guess, but since 1961, I would say between seventy-

five and one hundred.

Q. And do you have any approximation of how many of those

you sold, how many securities you have sold since that time?

A. I probably sold all of them but six or eight of them.

—_— =

QO. In 1972, what was the approximate amount you had in

investments in corporate securities? [8] A. $30,000.00.

* * *. * * * *

[12] QO. I believe you testified that you owned how many

stocks currently? A. Eight.

Q. And what is the stock value currently of your investment

portfolio? [13] A. $40,000.00.

Q. And I said stock. Do you own any other corporate se-

curities other than stocks? A. Debentures.

Q. Do you include that in the forty thousand? A. I do.

Q. Do you have any idea what the approximate value of

your bonds or debentures are as compared to your stocks? A.

Ten thousand in debentures.

[69] Q. Do you have any written agreement with Mr. Green

concerning his representation of you in this case? [70] A.

Written agreements, no, sir.

Q. Do you have any written agreement pertaining to his fees

in connection with this case? A. No, sir.

Q. Do you have any oral agreement with Mr. Green con-

cerning his representation of you in this case? A. An oral

agreement?

Q. Right. A. Yes.

Q. Do you have any oral agreement with him concerning

payment of fees and expenses in connection with this case? A.

Yes, sir, I do.

Q. Now has Mr. Green given you any writing, not in the

form of an agreement, but such as a letter signed by him re-

lating to his representation or fees in this case? A. His fees?

Q. Yes. Or his expenses. A. No.

Q. Have you given him anything in writing concerning those

subjects? A. No.

Mr. Green: Off the record.

[Whereupon there was an off the record discussion. ]

Mr. Richter: For the record: You are allowing your client

to answer questions with respect to your arrangements in fees

and arrangements on representation, and it will not [71] con-

stitute a waiver on any attorney-client privilege that you might

have. Now John, is that agreeable with you?

Mr. Hennelly: Of course.

Q. (Mr. Richter) Chief, you said that you had an oral agree-

ment with Mr. Green concerning his representation of you in

this case and concerning payment of fees and expenses in this

case, am I correctly stating what you testified to previously?

A. You are.

Q. Now first of all: Let me ask you what the agreement is

with respect to representation. Is there anything beyond the

fact that he would represent you in this case and that you

would bring these suits as the appointed representatives of a

class? A. Of a

Q. Let me ask you what your understanding is, your agree-

ment with Mr. Green concerning his representation of you

and your wife in this case. In other words, the question of

fees and expenses at this point. A. All right. That he would

represent me and the other class holders, and that he explained

that it would be a class action suit, and that he would repre-

sent me and the other class holders.

Q. And do you have any other agreement concerning his

representation? [72] A. No.

Q. And do you have any agreement concerning his repre-

sentation of you and your wife as individuals in the event for

some reason this should not be a class action? A. No.

Q. Now what is your agreement with him concerning pay-

ment of fees? A. Well, the fee—he said that he could not de-

termine that, that I would have to pay the court costs, and

that there would be some expenses involved, and again he said

that he could not determine what the expenses would be, but

he would have to take some trips, and it could be rather ex-

pensive.

Q. Do you have any agreement with him as to the maxi-

mum amount of expenses you will pay in this case? A. No.

Q. Have you agreed with him to pay the expenses regard-

less of what they might be? A. I have.

Q. And you have lost, if I have your figures correctly, ap-

proximately $2,443.29 on this transaction, do these figures

sound substantially right? A. Yes.

Q. And did Mr. Green in his discussions with you explain

that your expenses of this case could be substantially in ex-

cess of that amount? [73] A. Yes, sir. And he further stated

that the court could award me these expenses back.

Q. Have you agreed with him to pay the expenses incurred

in prosecuting this action even if it is not a class action? Have

you made any agreement as to what would happen if it is not

a class action? A. No, none.

Q. Have you made any agreement with him concerning the

payment of a fee to him? A. No. He said he could not de-

termine how many hours would be spent and what all would

be involved. There hasn't been an agreement on what the fee

would be.

Q. Have you agreed to pay him a fee at all? A. I said I

would pay him his fee.

Q. Have you agreed to pay him a fee regardless of the out-

come of the lawsuit? A. Yes, I have.

Q. Have you agreed to any basis on which you would pay

him a fee? A. Is that the end of the question?

eee eee ee ee

eel

Q. Yes. A. I'm sorry, would you repeat it?

Q. Have you agreed to any basis for the fee? A. No.

Q. You have no agreement on whether the fee is to be based

[74] on the amount of time he spends? A. Oh, he said that

he wouldn't be able to tell me the exact fee.

Q. Did you agree on a rate you would pay him for his time?

A. No.

Q. Did you agree that he would be paid on the basis of a

percent of any recovery of this? A. No. |

Q. You just agreed to pay him a fee? A. Yes.

Q. Is it your understanding you would pay him whatever

he would charge you? A. Well, if he—I might argue about it

if it was too high. Something unreasonable, but I said I would

pay his fee to represent me.

Q. And you also have agreed to pay the expenses whatever

they might be? A. I have.

Q. What if the expenses were say $25,000.00, what is your

understanding? Would you be obligated to pay him? A. If the

court would not, we agreed to pay him.

Q. If it were $10,000.00, you would pay him that? A. Yes.

Q. And in addition you agreed to pay him a fee? A. I have.

[75] Q. Have you made any agreement with him for the pay-

ment of a fee if this was not a class action? A. No.

Q. Your agreement has nothing to do with whether or not

this is a class action; is that correct? A. No.

Q. You just agreed to pay him whatever he charges you; is

that right, for a fee? A. Well, when I retained him he explained

what might be involved. And I said I would be willing to pay

the expenses and his fee plus court costs.

Q. And you made that agreement regardless of the out-

come of the case? A. I did.

Q. And is it your understanding that you will be obligated

to pay Mr. Green a fee if you lose this case? A. Yes, it is my

understanding.

Q. And whatever fee he might charge is what you would

be obligated to pay? A. Yes, it would be my obligation.

Q. But he has not agreed to charge any particular amount,

is that correct? A. No, he has not.

Q. Has he told you that he won't charge you any fee if you

didn’t recover anything? [76] A. No, he didn’t tell me that.

Q. Did he say that you would not have to pay a fee if the

fee was not recovered from the Defendants? A. No, he didn’t

tell me that.

Q. Have you advanced any expenses to this point in the

litigation? A. No.

Q. Have you paid for filing fees of this case? A. No.

Q. Have you received any bills for any costs? A. No, I

haven't.

Q. Would you pay a bill for $18,000.00 for expenses if

Mr. Green presented you with one after this case was over

and you did not recover anything? A. Well, I would have to

see that it was a truthful bill, but, yes, I would have to pay it.

My arrangement was to pay the expenses, his fee and the

court costs.

Q. Has Mr. Green told you that you would receive any-

thing out of this case other than a maximum of some twenty-

four hundred dollars, which you claim to have lost on the

stock? A. Well, it’s twenty-six hundred.

Q. Excuse me. A. And it is—well, twenty-five, whatever

it is.

[77] Q. Approximately twenty-five hundred doilars. Can we

use that for talking? A. Yes, sir. He said that I could recover

—_ wo

my loss and that the court could award me the expenses in-

volved in pursuing the case.

Q. But, of course, that would be money that would go to

reimbursing Mr. Green for expenses incurred in pursuing the

case, was that your understanding? A. Right.

Q. So you couldn't stand to gain any more in a round num-

ber of twenty-five hundred dollars, which you lost, plus per-

haps interest. A. That's true.

Q. Is that what he told you? A. That’s what he told me.

Q. And you agreed, with that understanding, to pay him

whatever the expenses are in prosecuting the action regardless

of the outcome? A. I have.

©. And you also agreed to pay him whatever he might

charge you regardless of the outcome of the action? A. I have.

Q. However you said that if you felt that his fee was too

high, you would argue with him about that; is that correct?

[78] A. Well, you know, when you mention $25,000.00, I

would want

Mr. Green: He is talking about expenses on twenty-five

thousand.

Q. (By Mr. Richter) Well, would you argue with him about

the fee if you felt the fee was too high? A. No, I am sure Mr.

Green would be fair in the fee he presents me, and the ex-

penses.

Q. As I understand your agreement, you would pay him

expenses no matter what they were? A. That’s true.

Q. But if he presented you a bill for $25,000.00 for a fee,

would you argue with him about that? A. Would I be happy

with him?

Q. Would you argue with him about it?

—

Mr. Green: Let me object. I think you are asking questions

that are becoming speculative in nature. I don’t see how he

can give a knowledgeable answer to something that may or

may not occur.

Q. (By Mr. Richter) If I understand your testimony, you

have not agreed to any maximum or minimum fee with Mr.

Green? A. You understand exactly.

Q. You have not agreed to any basis on which his fee would

be computed? [79] A. We have not.

©. You have agreed to pay all of the expenses no matter

what they are and regardless of the outcome of the suit? A.

I have.

Q. And you also agreed to pay him whatever fees he might

charge? A. I have.

Q. Did Mr. Green, in reaching this agreement, tell you that

he expected you would not have to pay him any fee out of

your own money? A. The fee out of my own money?

Q. Right. Did he tell you he expected to recover a fee out

of any amount he might recover in this case from the Defend-

ants? A. Now I don’t understand the question.

Q. Did Mr.Green tell you that he did not expect you to

pay him any amount for his fee out of your own money? A.

No, he didn’t tell me.

Q. Did he tell you in reaching any agreements that he ex-

pected that his fee would be paid out of the amounts recovered

from the Defendants? A. No, he didn’t tell me that.

Q. Did he tell you in reaching this agreement that he ex-

pected that any expenses he incurred would be paid out of

{80] the amounts recovered from the Defendants? A. No, he

didn’t tell me that.

eb tes Cormeen be! it Le we ee

—

Q. Did he tell you that he did not anticipate that you would

ever have to pay him any expenses? A. No, he didn’t tell me

that.

Q. Did you have any agreement as to when you will pay

him expenses which he has incurred in the prosecution of this

case? A. When the case comes to a conclusion.

Q. And your agreement is that you do not have to pay him

any expenses until the case is over? A. Unless he sent me a

bill before then, but that was

Q. But your understanding is that you will not have to pay

anything until the case is over? A. The conclusion, until he

determines what his expense and what his fee will be.

Q. Does your agreement on representation include an agree-

ment on how far Mr. Green will handle the case for you under

the agreement which you testified to? A. How far?

Q. Right. For example, to help you: Does this include the

trial, does this include an appeal, and how high an appeal?

A. Until the case reaches a conclusion, to take it to a con-

clusion.

[81] Q. Do you have any agreement with respect to his rep-

resentation in the event that there should be an appeal of the

case by either party to an apparent complete course? A. Do

\\ ‘© an agreement?

.ight. A. I said that I would pay his expenses, his fees,

ana «ne cour. sts to the conclusion of the case.

Q. But you haven’t—your agreement doesn’t specify what

the conclusion consists of? A. We haven't talked about an

appeal.

Q. And your agreement did not involve specifically the

question of whether an appeal would be included? A. No, we

have—I am sure—about an appeal, I don’t know, no.

* * * * * * *

== 68 —

[91] Q. If the class cannot recover, are you asking the court

to give you your loss in this case? A. No.

Q. You don’t want to recover in this case if you can't recover

for the whole class; is that your testimony?

Mr. Green: Let me object if only to distinguish between

whether you are talking about an issue of liability or an issue of

class action status. Obviously if the liability isn’t there, nobody

recovers, and if there is no class action there can still be liability

on the part of the individual.

Q. (By Mr. Richter) That's a good clarification. Chief, do

you understand that this case basically has two [92] claims.

That there is one claim on behalf of you and your wife to re-

cover what you lost, and another claim that you are represent-

ing a class for everything that supposedly the class lost, and it

may happen that you cannot maintain this as a class and all

that would be left would be your own complaint. Have you

understood that? A. Yes.

Q. And are you seeking recovery on behalf of yourself and

your wife in this case even if the class can’t recover? A. No.

QO. You don’t want to recover in this suit if the class can't

recover: is that correct? A. Well, I know this is a class action

suit.

Q. What if it is not a class action suit, are you still making

a claim for your own loss just for you and your wife in that case?

A. No.

Q. If it is not a good class action suit, you don’t want to re-

cover in this case; is that correct? A. I don't want to recover?

Q. Well, that’s what you just testified to. I don’t think that’s

accurate, and that is why I am trying to help you and ask you

if you are making a claim for your own twenty-five hundred

dollar loss in this case separate from the class action if it’s not

a good class action. [93] A. I guess I don’t understand, because

_— on

[ thought a class action was for all of the shareholders, and if

you win, all of the shareholders could share in it.

Q. That's not necessarily true. You want to get your twenty-

five hundred dollars back even if the other people can’t get their

loss back?

Mr. Green: I am going to object for the record. I think he

already answered the question. Bill, and we don't appreciate

the assistance that you claim you are giving him. I think he

answered that question.

[2] CONTINUED DEPOSITION OF CECIL LIVESAY

taken on the 30th day of April, A.D. 1974

[3] Cross-Examination

By Mr. Hennelly:

* * * * * * .

[83] Q. (By Mr. Hennelly) If Judge Wangelin decides that

this suit should not be a class action, what is your arrangement

with him to cover his fees then? A. That it should not be a——

Q. A class action. A. A class action? We haven't discussed

that.

Q. Aside from Mr. Green's fees, what is your agreement with

him with respect to court costs and expenses of discovery? A.

That I would have to bear those, the expenses and the court

costs,

Q. What about the cost of notifying all of the members of

the class? A. That would be my responsibility.

Q. What about the cost of retaining experts to testify in

support of the class action? A. That would be in the expenses.

Q. Is there any understanding as to a maximum amount

which you would have to pay to cover these costs? A. No.

—_—

Q. Is the agreement in writing? A. No.

[84] QO. Has your agreement with Mr. Green changed at all

since the last time we met here? A. No.

* + * * * * *

[98] Q. Why did you bring a class action on behalf of a whole

group of people instead of just suing on your own behalf, Mr.

Livesay? A. Well, it was a public offering, and it was not

only—I was not the only shareholder. And if I was misled or

something was wrong with it for me, it would be for everyone.

[99] QO. Well, do you understand that you could have sued

on your own? A. That I could have sued on my own?

Mr. Green: Let me object to it. It's irrelevant as to any-

thing that he could do or he could not have done, but you can

answer the question whether you knew if you could have sued

on your Own or not.

A. No, I would think it would have to be a class action suit.

Q. (By Mr. Hennelly) Why do you think it would have to

be a class action suit? A. Well, because there were a number

of other shareholders. Everyone who purchased this read the

same prospectus and got it at the same price with probably the

same information.

Q. Do you don’t think you could have gone into court by

yourself and sued? A. No.

Q. Could you tell me in your own words who vou think is

in your class that you represent in this lawsuit? A. All the other

individuals that purchased the stocks and the debentures that

particular date to public offering.

Q. All right. Did you have any discussions with your at-

torney as to anybody else to include in the class? A. Who to

include in the class? It was his investigations as to who he

thinks should be joined in the class.

[100] Q. Did you make any recommendations with respect to

the size or the composition of the class? A. No.

Mr. Green: Let me object and ask that the answer be stricken.

I don't think that question is capable of a knowledgeable an-

swer. How does one recommend the size of a class. That's a

matter of fact and a matter for a court to determine judicially

and not for a named Plaintiff to determine how many he would

like to have in the class that he represents, so I object for that

reason.

Q. (By Mr. Hennelly) How did you arrive at the decision

to sue the company and some of its officers and the accountants

but not A. G. Edwards, the underwriter? A. How did I?

Q. Yes. A. Well, I wasn’t the one that arrived at it. I pre-

sented my attorney with what little information I had and what

information I could secure and requested him to conduct an

investigation and sue those that he thought was responsible.

Q. Did he discuss with you any particular reason for not

filing suit against A. G. Edwards?

Mr. Green: Let me object. I think you are encroaching on

our attorney-client privilege. If you are only asking if there

was a discussion with the general subject matter of something,

I don’t mind if he answers it. But if you are [101] asking him

what was said between us with respect to it, I will have to in-

struct him not to answer the question.

Q. (By Mr. Hennelly) Did your attorney indicate to you why

he wasn’t filing suit against A. G. Edwards?

Mr. Green: I will instruct you not to answer that question

on the grounds that it tends to invade the attorney-client privi-

lege. We are not waiving that privilege.

Q. (By Mr. Hennelly) Did you ask your attorney at any

time why A. G. Edwards was not named as a Defendant in this

lawsuit?

—

Mr. Green: That's the same question rephrased and so I

will instruct you in the same way not to answer the question.

Q. (By Mr. Hennelly) Are you at all puzzled by the fact that

A. G. Edwards is not one of the named defendants in this law-

suit? A. Am I?

Q. Puzzled? A. No.

Q. That doesn’t bother you at all? A. No.

Q. Have you had any conversations with Mr. Green with

respect to retaining experts to testify in your behalf in this law-

suit?

Mr. Green: That's kind of a borderline question, John, and

while you are not specifically asking what we said, [102] the

question, since you put in a lot of facts at the very beginning

of the question, is a loaded question and borders on our privi-

leged communications. And if you think about it, you might

agree.

Mr. Hennelly: I asked whether he had any discussions.

Mr. Green: But you didn’t just ask that. You asked if there

were any discussions with respect to the possible employment

of expert witnesses, and so it does border on the nature of the

discussion between us. But I can tell you the answer is no, if

that is helpful.

Q. (By Mr. Hennelly) If the Judge were to decide that this

case wasn’t proper for a class action, would you proceed with

it on your own? A. If he decided that it was not proper for a

class action, would I proceed on my own?

Mr. Green: Let me object to the question because I think

it’s speculative. I don’t think he should be put in a position

where he has to give an answer to a question today on some-

thing that, number one, may never come about, and number

two, if it does, it might not be for many months from now.

And third, a decision that he really wouldn’t make until he

=—

conferred with his lawyer and the thing is discussed from be-

giving to end, if it ever gets to that point, so I wouldn’t—I

will let him answer the question, but I don’t want you to feel

that is bound by the answer that he gives today as to what

[103] his feelings might be six months from now, an unlikely

eventuality,

Q. (By Mr. Hennelly) If you can remember the question.

A. I guess—I couldn't give a yes or no. I would have to con-

sult Mr. Green and ask him his advice on this on your ques-

tion.. And if he said yes, then I would proceed, yes.

Q. How much do you have presently in the stock market,

in stocks and bonds? A. Forty thousand.

Q. Would that include your municipal bonds and—— A.

Yes.

Q. How about in savings accounts? A. $5,000.00

Q. Do you own any other real estate besides your home?

A. Not at this time.

Q. Certificate of deposits? A. No, no certificates, no.

Q. What is the market value of your home? A. Forty thou-

sand. Between forty and fifty.

Q. How much equity do you have in it? A. All about eleven

or twelve thousand dollars paid.

Q. You've got about—— A. Thirty.

Q. Thirty in equity? A. Uhuh.

[104] Q. Do you have any other major debts besides the out-

standing mortgage on your home? A. I don’t have any at all.

Q. Would you say your net worth then is somewhere in the

range of $75,000.00?

Mr. Green: That's jointly with his wife?

_—

Q. (By Mr. Hennelly) I am assuming that all of this is

jointly with his wife already. He already testified that she

didn’t own anything independently. A. Seventy-five and one

hundred thousand.

Q. How much of that would you be willing to commit to the

prosecution of this lawsuit? A. As much as necessary.

Q. If it’s necessary to commit $50,000.00, would you com-

mit $50,000.00 to it?

Mr. Green: Let me object to something that is really so far

out of line, John, that it borders on being really an unfair ques-

tion. You know, if you ask him if he is willing to commit five

thousand or something like that, when it comes down to the

realm of what the cost really might be in this case, but when you

are talking about $50,000.00, it’s such a gross exaggeration,

and so unrealistic, it really isn’t a fair question, and I don’t think

he can give you a knowledgeable answer to that one. And fur-

thermore, Bill Richter covered this ground previously and it is

[105] repetitious.

Mr. Hennelly: Well, are you telling me then that if the case

were to be lost, he could not be charged anymore than say

$5,000.00, you would waive all the time that you put into this?

Mr. Green: Without waiving our attorney-client privilege

what I am saying is———

Mr. Hennelly: That goes directly to the fee agreement.

Mr. Green: As he testified, there is no specific dollar and

cent amount described. I have advised him as to what I believe

the cost might be. They could be four or five thousand dollars.

And he told me, “Yes, that he will take care of that once an

itemized statement is made”, which I think he testified to, and

the bills have been reasonable. We never discussed the possi-

bility that there could be $50,000.00 in costs here, and the

mailing costs for the notices was four or five hundred dollars.

—_

Mr. Hennelly: What about your fees?

Mr. Green: Well, he testified that the court has discretion

to award those fees and may or may not award them. And he

is not responsible

Mr. Hennelly: He is not responsible for the fees if the suit

is not successful?

Mr. Green: That's right. He is not obligated to pay me any

fees whether we win or lose this lawsuit. I mean, [106] I be-

lieve I am testifying on his behalf in a sense, and I don’t mean

to, but I am trying to curtail this a little bit.

Mr. Hennelly: Well, that’s fine, I'm trying to get that.

Mr. Green: I know you have, and that is why I am giving

you a rather lengthy statement as to our fee arrangement, be-

cause what I know you really want is facts here, and it doesn’t

really matter where they come from, but, really, that’s the ar-

rangement.

Mr. Hennelly: I don’t have any further questions. I thank you

very much for your time, Mr. Livesay.

Redirect Examination

By Mr. Mills:

Q. Mr. Livesay, have you discussed with your counsel the

possibility that you may have to pay our attorney's fees in the

event that you are unsuccessful in this lawsuit? A. Pay your

attorney fees?

Q. Yes. A. The court costs?

Mr. Green: He wants a yes or no answer.

A. No.

Q. (By Mr. Mills) So at this point in time, you are not

aware of the possibility that you may be required to pay our

attorney fees? A. No.

—

[107] Q. Or Mr. Hennelly’s attorney's fees? A. No.

Mr. Green: He hasn't asked for them and it’s impossible any-

way to support a class action by the Defendants.

Q. (By Mr. Mills) Have you discussed with your attorney the

possibility that you may be required to pay our other expenses,

the expenses with the Defendants, in addition to their attorney's

tees? A. No.

Q. Independent of any discussions with your attorney, do you

have any awareness of any possibility such as that? A. Your

expenses? No.

Q. If you were advised of that possibility, would it affect

your determination to proceed with this class action? A. No,

not now, it couldn't now, no.

Q. So that even if you recognize a possibility that you might

have to pay our attorney's fees and our expenses, the attorney's

fees and expenses of the other Defendants, you would still pro-

ceed with the class action? A. Definitely.

Q. Without any concept of what the dollar amount might be

involved? A. I would have to know—yes, I would have to pro-

ceed with it now.

_—

[2] IN THE UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

(Title omitted in printing)

DEPOSITION OF DOROTHY LIVESAY taken on the 19th

day of April, A.D. 1974.

[3] Direct Examination

By Mr. Richter:

Q. Would you state your full name, please? A. Dorothy

Livesay.

Q. Where do you live, Mrs. Livesay? A. In Glendale.

Q. And what is your address? A. 955 Glen Way.

Q. How long have you lived there? A. Nine years, approxi-

mately.

Q. Are you currently employed? A. Yes, I am.

Q. And what is your occupation? A. Office manager.

Q. With whom? A. Woodard Rug & Drapery Cleaners.

Q. Where are they located? A. In Rock Hill.

[4] Q. How long have you been employed there? A. Eleven

years.

Q. Mrs. Livesay, I represent all of the Defendants except

Coopers and Lybrand in the case wthich you have brought

against Punta Gorda Isles, Etc., et al. And I am going to ask

you some questions here. If you don’t understand my ques-

tions or if you don’t understand a word I use, or if you have

any question at all, you let me know and then we will pro-

ceed. You are the Dorothy Livesay who is the Plaintiff in this

= =

suit, Cecil Livesay and Dorothy Livesay versus Punta Gorda

Isles, Incorporated, Etc., and other Defendants, are you not?

A. Yes, I am.

Q. Mrs. Livesay, what is your highest level of formal edu-

cation? A. High school.

Q. And you are a high school graduate? A. Yes, I am.

Q. And from what high school did you graduate? A. Soidan

Blewett.

Q. And Cecil Livesay, the other plaintiff in this action, is

your husband; is that correct? A. That's right.

Q. How long have you been married to him? A. Twenty-

one years.

{5] Q. And as I understand he is a police officer? A. That's

correct.

Q. Do you have any children? A. Yes, we do.

Q. How old are they? A. Eighteen and three.

Mr. Righter: Off the record.

[Whereupon there was an off the record discussion.]

Q. (By Mr. Richter) Prior to the time you purchased the

debentures in stock of Punta Gorda Isles, Incorporated, as al-

leged in your complaint, had you ever purchased any other

corporate securities? A. Yes, sir.

Q. When was the first time that you can recall of ever pur-

chasing any corporate securities? A. I really don’t remember,

recall.

Q. Approximately how many years ago was it? A. It would

be strictly a guess. My husband handled it, and I really don’t—

it would have to be strictly a guess.

Q. Have you ever yourself had any direct dealings with a

broker? A. No.

— ee

Q. Do you know whether your husband purchases securi-

ties in joint names with yourseif and himself as a matter of

course? A. 1 don’t understand what you mean.

Q. Are both of your names on the stock? [6] A. Yes.

Q. You had nothing to do with the purchasing of the securi-

ties; is that correct? A. That's correct.

Q. And you had nothing to do with the sale of securities? A.

No, I hadn't.

Q. Do you have any knowledge of the approximate value of

all of the securities owned by you and your husband in May

of 1972? A. No, I don’t.

Q. Do you know whether it would be more than $10,000.00?

A. I doubt it.

Q. But you don’t have any personal knowledge of the value

at that time? A. No, no.

= > as * oe * *

{21] Cross-Examination

By Mr. Hennelly:

Q. Mrs. Livesay, I represent Coopers and Lybrand Account-

ing. What are your children’s names? A. Melissa and Linda.

Q. And which child is eighteen, and which A. Linda

is eighteen.

Q. Linda is eighteen? A. And Melissa is three.

Q. Are they both in good health? A. Yes, tley are.

Q. Your husband is in good health, I take it? A. Yes.

Q. And Melissa was eighteen

and Linda is eighteen.

A. No, Melissa is three

Q. Is she going to college next year? A. Yes, she is.

—=—

Q. Do you know where she is going to college? A. She is

not sure.

Q. Does she have any school under consideration? A .Yes,

Cape Girardeau.

Q. Cape? A. Uhuh.

Q. Do you have any knowledge offhand how much it costs

[22] to—— A. Yes.

Q. ——to attend college at Cape? A. Yes.

Q. About how much would that be? A. About twelve hun-

dred a year.

Q. Do you expect to pay for that? A. Yes, we partly, and she

also will pay part.

Q. About what portion would you be paying and what por-

tion would she be paying for? A. I would assume probably

sixty-forty.

Q. How much do you earn a year at Woodward Rug &

Drapery Cleaners? A. Between eight and nine thousand.

Q. Between eight and nine thousand? A. Yes.

Q. Do you have any bank accounts which are separate from

your husband’s? A. No, I do not.

Q. Do you own any property which is separate A. No.

Q. ——separate from your husband? A. No.

Q. No securities? A. No.

Q. Any other real estate? [23] A. No.

Q. Any other things of value, jewelry or antiques, which

would be of sufficient value that you owned independent from

your husband? A. No.

* * * * * * *

[27] Q. How much do you have in the bank? A. I don’t know.

aw 8) ao

Q. Do you presently own any other securities? A. I believe so.

Q. Could you tell me what those are? A. No, I couldn't.

Q. Do you own any other real estate with your husband

besides your house? A. No.

Q. How much of your own money would you be willing to

expend in prosecuting this lawsuit? A. Whatever it took.

Q. If it took three or four or five thousand dollars, would

you be willing to spend that? A. Uhuh.

Q. Even though you told us you only lost twenty-seven hun-

dred dollars? A. Yes.

Q. And there was a possibility that you would not be re-

imbursed at all? A. Yes.

* * *s * + * *

[29] Redirect Examination

By Mr. Richter:

7 * x * * * *

Q. Mrs. Livesay, I want you to listen to this question very

carefully and only answer the question that I ask. Do you have

any signed fee agreement with Mr. Green? A. No.

[30] Q. Have you made any oral agreement with Mr. Green

concerning his fee? A. No.

Q. Did your husband, prior to the time he sold the Punta

Gorda securities, tell you why he was going to sell them? A.

Yes.

Q. And what reason did he give you?

Mr. Green: I think at that point you are now touching on

privileged matters, and I will instruct the witness not to answer

the question. Off the record.

[Whereupon there was an off the record discussion. ]

Q. (By Mr. Richter) Did your husband say anything to you

about the prospectus being incorrect before he sold the stock?

Mr. Green: Same objection and the same instructions to Mrs.

Livesay. In other words, that she is not to answer it because

it constitutes privileged information.

Q. (By Mr. Richter) Mrs. Livesay, when did you first obtain

any information that the prospectus might be incorrect? A. He

mentioned

Mr. Green: Just a minute.

Q. (By Mr. Richter) I asked you when you first obtained

this information? A. I don’t recall.

Q. Do you recall whether it was before or after your [31]

husband sold your Punta Gorda securities? A. Before.

Q. And would you state to me the names of all persons from

whom you received any information that the prospectus was

incorrect prior to the date that you sold the stock? A. That I

received?

Q. Right. A. My husband.

Q. Now would you state to me the names of all persons from

whom you received any information that the prospectus was in-

correct after the date you sold the stock? A. Of my attorney,

Martin Green, and my husband.

Q. What information were you given prior to the date that

your husband sold the stock relating to the prospectus being

incorrect?

Mr. Green: Wait. I’m going—the same instructions, not to

answer, because her previous testimony indicates that the sources

of this information is either her husband or her lawyer, and in

either case it would be privileged, so——

Mr. Richter: She didn’t get anything from her lawyer prior

to the time the stock was sold, and that was the question. What

information she received about the prospectus being incorrect

prior to the time the stock was sold.

Mr. Green: I stand corrected in that point, but she had testi-

fied that it all came from her husband, and so I think it is privi-

leged, and you are not to answer the [32] question.

Q. (By Mr. Richter) Did you have any opinion prior to the

time that you sold the stock on whether the prospectus was in-

correct or misleading? A. Other than what he said.

Q. Did you have any opinion yourself? A. Well, yes, I

thought he was right.

Q. in what respect did you believe the prospectus was mis-

leading prior to the time that you sold the stock, your stock? A.

Well, the dredging and the accounting.

Mr. Richter: That's all I have.

Recross-Examination

By Mr. Hennelly:

Q. How long prior to the time that you sold your stock did

you formulate this opinion? A. I don't—I don’t know.

Q. Was it the day before? A. I doubt it.

Q. A month?

Mr. Green: Let me object for two reasons. First of all, she

said she doesn’t know, and second of all, it’s beginning to border

on the conversations that she had with her husband. She already

indicated that was her only source, so I will instruct her on

this point not to answer it.

Mr. Hennelly: Wait a minute! I haven't asked about any

[33] conversations. I asked her about her own personal opinion,

and I am not badgering her. She said—I am trying to help her

focus in on some kind of time, at least a framework of time.

Mr. Green: The opinion is based directly on conversations.

Asking her opinion is the same thing as asking her about con-

versations at this point.

Mr. Hennelly: I am asking her about what point in time. I

am not asking for any substance of opinion.

Mr. Green: I think she said she didn't know.

Mr. Hennelly: I am trying to help her focus it on it. If you

want to register your objection to that and go on the record,

that’s fine, but that doesn’t mean that she is waiving any privi-

leges. I can inquire into dates.

Mr. Green: Well, as she said she doesn’t know, so——

Q. (By Mr. Hennelly) You indicated that you may have

formulated this opinion prior to the time that you sold the stock

but probably not the day before. Could it have been as long

as a month before? A. It could have been. I don't know.

Q. Could it have been as long as two months before? A. I

don’t know.

Q. Three months before? A. I don't know.

* * * * * me *

— =

UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

(Title omitted in printing)

MOTION FOR ORDER TO DETERMINE THAT CLASS

ACTION CAN BE MAINTAINED UNDER RULE 23

(Filed April 11, 1974)

Plaintiffs move that the Court enter its Order determining

that the above entitled action may be maintained as a class

action for the reason that all of the requirements pertaining to

the maintenance of class actions under Rule 23 have been met.

ANDERSON, GREEN, FORTUS &

LANDER

By MARTIN M. GREEN

Attorneys for Plaintiffs

120 South Central, Suite 938

Clayton, Missouri 63105

862-6800

(Certificate of Service omitted in printing)

am 86 «—

IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

(Title omitted in printing)

MEMORANDUM AND ORDER

(Filed May 14, 1974)

This matter is before the Court upon the motion of the de-

fendant, Coopers & Lybrand, for a limited stay of discovery

pursuant to Rule 26(c), Federal Rules of Civil Procedure.

Said defendant urges that all discovery in this action, except

that relating to the class action determination, be stayed pending

a ruling by the Court as to the existence of a class action. It

would seem that such contention is a viable one considering its

implications of judicial, time and pecuniary economy. Such a

limitation on discovery is within the discretion of this Court;

Houndry Process Corp. v. Commonwealth Oil Ref. Co., 24

F.R.D. 58 (S.D.N.Y., 1959); Bordonaro Bros. Theatres, Inc.

v. Loew's Inc., 7 F.R.D. 481 (S.D.N.Y., 1947). Accordingly,

It Is Hereby Ordered that the motion for a stay of discovery,

except that relating to the class action determination, be and is

Granted and that such discovery shall be pursued with due de-

liberate speed.

s/ H. KENNETH WANGELIN

United States District Judge

Dated this 13 day of May, 1974.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

(Title omitted in printing)

{1] TRANSCRIPT OF ARGUMENT ON MOTIONS

Transcript of argument had in the above-styled matter before

the Honorable H. Kenneth Wangelin, Judge of the District Court

of the,United States, Eastern District of Missouri, Eastern Di-

vision, presiding in Court No. 3 thereof.

June 24, 1974

Appearances:

Mr. Martin M Green and Mr. James A. Eidelman for the

Plaintiffs;

Messrs. Bryan, Cave, McPheeters & McRoberts, by Mr.

Veryl L. Riddle and Mr. J. Roger Edgar for Defend-

ant Coopers and Lybrand;

Messrs. Peper, Martin, Jensen, Maichel & Hetlage, by Mr.

Lewis R. Mills for Defendants Punta Gorda Isles, Inc.,

et al.

The Court: All right, you may proceed, gentlemen.

Mr. Green: Thank you, Judge. Your Honor, in this [2]

motion, which, of course, is the class action portion of the case

previously filed by the plaintiffs, we feel that this is a garden

variety situation for a class action determination. As Your

Honor knows, this entire lawsuit is predicated upon what we

believe to be false, misleading and untruthful statements dis-

seminated to the purchasers of Punta Gorda stocks and bonds at

= ;

a public offering in May of 1972. The misleading statements,

untruthful statements that we've alleged were all identical and

uniform with respect to the entire class, which was eighteen

hundred people who bought at the public offering, and they

were all contained in the preliminary and the definitive pros-

pectus, which, by law, must be delivered to be each member of

the class at the time that they purchase these stocks or bonds.

The prospectus which contains all of the misleading statements

has been admitted into the pleadings by both of the defendants.

There isn’t any dispute about the fact that what we have

alleged to be the prospectus is indeed the prospectus.

The fraud in this case was a very, very large one involving

the sale of some $15,000,000 at face value of Punta Gorda on

debentures by the company and the sale of several million dol-

lars worth of the company’s common stocks by its two principal

owners. The plaintiffs in this case, the plaintiffs in this case,

Cecil Livesay and his wife, sustained an over-all loss at the

time that they sold their [3] stocks and bonds after buying them

at the public offering of about $2,625. The over-all loss to the

entire class is something like in excess of $8,000,000.

[5] The named plaintiffs testified in their depositions that they

are willing to spend more money than their actual loss in

order to properly and fairly and adequately represent [6] the

class in this matter. They indicated a net worth of something

around $40,000 and a deep conviction and desire to see that

redress is provided for the members of the class who lost their

money in this public offering, so with respect to adequacy, [

at least don’t see any serious hurdle to a class action determi-

nation.

o eo e e e ® @

[8] They have said they weren't denying A. G. Edwards in

the case, that was the underwriter in this case. I'm not sure

— —

what they're getting at. At this point it’s true, I've not joined

them, I've explained to them and I've put in the brief—we

feel at this point we haven't done sufficient discovery to make

that determination and we simply don’t want to join every-

body in sight with the shotgun type of lawsuit and we're only

going to join those people that we feel we have a substantial

case against and it may well be A. G. Edwards in the near

future.

They claim that an evidentiary hearing is required in these

cases, and that simply isn’t so. The wealth of opinions in this

case say that only in certain isolated situations is an eviden-

tiary hearing required for a Court to determine that there is

a class action.

* s = * * * *

[26] In our memorandum we cite cases for the proposition

[27] .that the burden of proof on the class action issues is on

the plaintiff. Plaintiffs have cited no contrary cases and I

think we can accept that as a given starting point.

The Court: How long, gentlemen, would a hearing as to

whether or not—I'm not talking about argument on motions,

I'm talking about a regular fu.. dress hearing on whether or

not this should be a class action. I’m talking about introduc-

tion of evidence. How long would that take me?

Mr. Mills: Maybe a day, maybe a half a day.

Mr. Green: I would say that sounds about right if the Court

—if there’s evidence to be adduced, I can do it.

The Court: Well, I don’t know, a hearing—assuming there’s

a question in the Court's mind I think the hearing should be

had, how long do you think it would take, Mr. Riddle?

Mr. Riddle: Your Honor, a hearing on that, I think if all

of us would be prepared, could be concluded in a day and a

half.

The Court: All right. Pardon me, go ahead, Mr. Mills.

Mr. Riddle: That's my estimate on it. Is that consistent with

yours?

Mr. Green: I think it will depend on what issues, if any, the

Court thinks will require evidence. If there’s one or two or

three, I'd say a day.

The Court: Well, I'm going to get over this legal [28] hur-

dle on reliance.

Mr. Green: It’s been exhaustively briefed, Judge, by all of

us.

The Court: That's a threshold matter I think in this instance

as far as whether or not this is to be declared a class action.

Go ahead, Mr. Mills.

Mr. Mills: Plaintiffs have the burden of proof. There are a

variety of ways they could have attempted to meet it; through

request for admissions, through proposed stipulations, through

the admission of evidence. They haven't done any of these

things. They've made some factual assertions in their brief and

these do not bring facts properly to your attention. We might

say that the plaintiffs haven't met their burden of proof on a

variety of issues, the most crucial one of which is the adequacy

of their representation.

Mr. Green has suggested that nobody has questioned his

adequacy as counsel, and that is true in a sense, but that’s true

primarily because one of the avenues we attempted to explore

on deposition was blocked by the claim of attorney-client

privilege.

One of the questions that concerns us very much in this

case is plaintitis’ failure to join the underwriters. The under-

writers are not just A. G. Edwards & Sons, Your Honor, there

is a whole list of the underwriting syndicate towards [29] the

back of the prospectus. Certainly it is consistent with every-

thing that we know about the case that Mr. Green represents

a member of that syndicate. He has entered his appearance in

a court in the County for the partners of I. M. Simon, one

of the underwriters. We submit, Your Honor, that Mr. Green

may very well have a conflict of interest that bears very much

on the adequacy of representation issue that should be explored

at an evidentiary hearing, but that in any event, a determina-

tion that it can proceed as a class action without an eviden-

tiary hearing would be premature. The facts simply aren't in

the record to support that kind of a finding.

[34] The Court: I understand what you said and I under-

stand the difference of opinion. What do you say about this

conflict?

Mr. Green: Which conflict?

The Court: Their statement there's possibility of conflict of

interest, that you represent Simon and Simon's one of the un-

derwriters?

Mr. Green: There's no conflict of interest at all on that

case. I've given serious consideration to joining A. G. Edwards

in this case.

= @ a = oo = e

IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

(Title Omitted in Printing)

MEMORANDUM AND ORDER

(Filed July 16, 1974)

This matter is before the Court upon the motion of the de-

fendants Coopers and Lybrand to dismiss Counts I and II

as a class action.

am OF? a

The claimed class action status is founded upon the allega-

tions that certain information contained in a Registration State-

ment and accompanying Prospectus filed by the defendant,

Punta Gorda Isles, Inc., with the Securities and Exchange Com-

mission in connection with the registration and offering to the

public of $15,000,000 of debentures and 171,570 shares of its

common stock, was false and misleading. Plaintiffs seek redress

for the misrepresentations against various defendants pursuant

to Sections 11, 12(2) and 17(a) of the Securities Act of 1933

and Sections 10(b) and 20(a) of the Securities and Exchange

Act of 1934 and Rule 10b-5 promulgated thereunder.

The salient thrust of defendants’ motion to dismiss revolves

around the issue of reliance. Defendants contend that each

member of the class must establish his own individual reliance

aS a prerequisite to the maintenance of a claim under 10b-5,

that to do so would cause judicial chaos, and that consequently

the class action should be dismissed. However, the strength

of this contention has been severely limited by a myriad of vases

which have practicaily eliminated the requirement of proving

individual reliance in Rule 10b-5 class actions. Affiliated Ute

Citizens v. United States, 406 U.S. 128 (1972); Mills v. Elec-

tric Auto-Lite, 396 U.S. 375 (1970); Korn v. Franchard Corp.,

456 F.2d 1206 (1972); Kahan v. Rosenstiel, 424 F.2d 161

(3rd Cir., 1970), cert. den. sub nom. Glen Alden Corp. v.

Kahan, 398 U.S. 950 (1969); Entin v. Barg, 60 F.R.D. 108

(E.D. Pa., 1973); Tober v. Charnita, Inc., 58 F.R.D. 74 (M,D.

Pa., 1973). Cases which hold to the contrary involve situations

unlike the instant one, such as where the action is based on

oral misrepresentations, Simon v. Merrill Lynch, Pierce, Fenner

and Smith, Inc., 482 F.2d 880 (Sth Cir., 1973); Morris v.

Burchard, 51 F.R.D. 530 (S.D.N.Y., 1971): Moscarelli v.

Stamm, 288 F.Supp. 453 (E.D.N.Y., 1968), or where the

written misrepresentations vary or emanate from several sources.

Harris v. Palm Springs Alpine Estates, Inc., 329 F.2d 909 (9th

Cir., 1964); Frankel v. Wyllie and Thornhill, Inc., 55 F.R.D.

— ven

330 (W.D. Va., 1972); Dolgow v. Anderson, 43 F.R.D. 472

(E.D.N.Y., 1968); Richard v. Cheathan, 272 F.Supp. 148

(S.D.N.Y., 1967). Herein, the materials involved are the

written Registration Statement and Prospectus disseminated so

as to reach the investors. Such materials do not vary nor do

they originate from several sources.

Moreover, as plaintiffs’ claims go to a failure to disclose a

number of factors in the Registration Statement, then “positive

proof of reliance is not a prerequisite to recovery.” Rather,

“all that is necessary is that the facts withheld be material in

the sense that a reasonable investor might have considered

them important in the making of this decision.” Affiliated Ute

Citizens v. United States, supra at 153-4. At this time the

threshold question of materiality must be answered in the af-

firmative, that a reasonable investor might have considered

certain nondisclosures in the Registration Statement as impor-

tant in the making of his decision.

Accordingly,

It is Hereby Ordered that the motion to dismiss be and is

Denied.

‘s H. KENNETH WANGELIN

United States District Judge

Dated this 16th day of July, 1974.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

(Title omitted in printing)

DEFENDANT COOPERS & LYBRAND’S MOTION TO

MODIFY THE COURT'S ORDER DATED JULY

16, 1974 RELATING TO “RELIANCE”

(Filed October .., 1974)

Comes now defendant Coopers & Lybrand and respectfully

moves the Court to modify its Order dated July 16, 1974 re-

lating to “reliance” for the following reasons:

1. As stated in this Court’s Order dated September 23, 1974,

the class action question pending before the Court has yet to

be determined.

2. Defendants Coopers & Lybrand has heretofore argued

and represented to this Court that the question of “reliance”

is an issue which the Court should fully consider in finally de-

termining the class action questions raised by the plaintiff's

motion filed on or about the 9th day of April, 1974 seeking

an Order to certify this case under Rule 23.

3. The allegations in the Complaint in this purported class

action: allege violations of Rule 10b-5 and an analysis of said

allegations clearly indicate that “misrepresentation” is the

main thrust of the plaintiffs theory on which recovery is

sought.

4. While the complaint also alleges nondisclosures, the pre-

ponderance of the allegations, when analyzed, are affirmative

misrepresentations.

cite te aiid eats chee ee

6 pW Sy Ca oer Fy Bete ny p>

Oi it es ae

5. While individual “reliance” may not be a predicate for

recovery in a pure “nondisclosure” case, the law in the Eighth

Circuit, and the United States Supreme Court, is that indi-

vidual “reliance” is a predicate to recovery of damages in a

“misrepresentation” case under Rule 10b-5. Myzel v. Fields,

386 F.2d 718, 736-37 (8th Cir. 1967); City National Bank

of Ft. Smith v. Vanderbloom, 422 F.2d 221, 230-31 (8th

Cir. 1970); SEC v. First Am. Bank and Trust Co., 481 F.

2d 673 (8th Cir. 1973); and Affiliated Ute v. United States,

406 U.S. 128 (1972).

Respectfully submitted,

BRYAN, CAVE, McPHEETERS

& McROBERTS

By VERYL L. RIDDLE

JOHN J. HENNELLY, JR.

500 North Broadway

St. Louis, Missouri 63102

231-8600

Attorneys for Defendant

Coopers & Lybrand

(Certificate of service omitted in printing)

UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

(Title omitted in printing)

MOTION TO DISSOLVE STAY ORDER

RELATING TO DISCOVERY

(Filed September 4, 1974)

Come now the plaintiffs and move that the Court enter its

Order dissolving the Stay Order entered by the Court on May

14, 1974, on the following grounds:

1. On or about April 30, 1974, defendant Coopers & Ly-

brand filed a Motion Requesting the Court to Stay All Dis-

covery not related to the class action determination until the

class action issue is resolved; said Motion was based primarily

upon defendants’ desire to save the legal fees and other costs

connected with discovery proceedings pending rulings on the

class action motions;

2. That since discovery was stayed by the Court on May

14, 1974, the Court, although not ruling on plaintiffs’ Motion

for Class Action Determination, did, on July 16, 1974, over-

rule Coopers & Lybrand’s Motion to Dismiss the class action

herein; the Court has also denied Punta Gorda’s Motion for

Security for Costs, and in so doing, indicated in its Order, that

“From the record it does not appear that the Complaint is

without merit or that the plaintiff is unlikely to succeed, .. .”

3. That the within action was filed more than one year ago,

and plaintiffs have been and continue to be seriously preju-

diced by their inability to proceed with the normal discovery

—

procedures, including depositions, provided in the Federal

Rules of Civil Procedure; that the longer the plaintiffs are de-

prived of the right to depose witnesses and review and copy

documents in the defendants’ possession, the weaker their case

becomes, especially as certain witnesses, and documents, may

become unavailable;

4. That plaintiffs estimate they will need approximately five

to six months to complete their depositions and other discov-

ery to prepare the case for trial once the stay order is lifted;

Wherefore, plaintiffs pray that the Court enter its Order dis-

solving the Stay Order of May 14, 1974, relating to discovery

by the parties herein.

ANDERSON, GREEN, FORTUS

& LANDER

By MARTIN M. GREEN

Attorneys for Plaintiffs

120 South Central, Suite 938

Clayton, Missouri 63105

862-6800

(Certificate of service omitted in printing)

—_ 9g —

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

(Title omitted in printing)

FURTHER SUGGESTIONS OF PLAINTIFFS IN SUPPORT

OF THEIR MOTION TO DISSOLVE STAY ORDER

RELATING TO DISCOVERY

(Filed September 23, 1974)

Plaintiffs have moved the Court to dissolve the Stay Order

relating to discovery which was entered on May 14, 1974, and

all defendants have filed memoranda in opposition to this Mo-

tion. In their memoranda the defendants allege that following

oral argument with respect to the class action motions which

took place on June 24, 1974, the Court referred to the possi-

bility of an evidentiary hearing.' At that time plaintiffs’ coun-

sel advised the Court that while plaintiffs had no opposition

to such a hearing, he believed there was already a sufficient

basis for the Court to uphold plaintiffs’ Motion for Class Ac-

tion Determination based upon the pleadings, the depositions

of both plaintiffs, affidavits filed with the Court and oral argu-

ment of counsel. In their Briefs in Support of the Motion,

plaintiffs cited numerous cases which indicated that nothing

more was required for the Court to allow the class action to

proceed. Additional cases were cited to demonstrate that al-

most every Court faced with the issue of whether or not there

should be an evidentiary hearing considered it to be an utter

waste of the Court’s time. Under these circumstances, for any

' Defendant Coopers & Lybrand in its Memorandum states that

the Court indicated “there would have to be an evidentiary hear-

ing . . . Plaintiffs’ counsel does not remember that the Court made

a comment or entered an order requiring an evidentiary hearing.

—_ vo

of the defendants to suggest in their memoranda that the con-

tinuing existence of the Stay Order has resulted from plaintiffs’

failure to request such an evidentiary hearing is the grossest

possible perversion of the facts. especially in view of plaintiffs’

statement in a Brief heretofore filed with the Court to the effect

that they were not opposed to an evidentiary hearing if the

Court deemed it necessary. Plaintiffs are convinced that suffi-

cient evidence has been adduced to warrant the Court's class

action determination, especially since the key issue in any class

action determination motion, viz. reliance, has already been

resolved in favor of the plaintiffs and against the defendants.’

While the defendants urge the Court not to dissolve the

Stay Order because plaintiffs have failed to adduce evidence of

actual prejudice, it should be noted that the Stay Order was

entered in the first place solely on the strength of the Motion

without a scrap of evidence being presented to the Court to

support the Motion. The longer the defendants herein can

delay the progress of this case by plaintiffs, the happier they

will be. In the meantime although the defendants have fully

deposed both plaintiffs, plaintiffs’ case has come to a total

standstill. The rules never contemplated that because defend-

ants might incur some legal fees, they would be entitled to a

Stay Order for an indefinite period of time and the Court is

urged to dissolve the Stay Order, or in the alternative, either

sustain plaintiffs’ Motion for Class Action Determination, which

would make the Stay Order a moot issue, or set a date for

an evidentiary hearing with respect to this Motion if the Court

deems it necessary.

! Notwithstanding that Mr. Riddie during oral argument specifi-

cally told the Court that reliance was required.

—=_ —

IN THE UNITED STATES DISTRICT COURT FOR

THE EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

(Title omitted in printing)

ORDER

(Filed September 23, 1974)

This matter is before the Court upon plaintiffs’ several mo-

tions. Plaintiff has filed motions seeking an order enjoining

destruction of documents by the defendant, and a motion to

dissolve a Stay Order of this Court of May 14, 1974 relating

to discovery, or in the alternative an Order modifying the Stay

Order to order defendants to produce copies of certain docu-

ments requested by the plaintiffs.

Plaintiffs have made no showing in their motion to enjoin

defendants from destruction of documents that there is any

danger of such destruction and accordingly the motion will be

denied. In regards to the proposed dissolution or modification

of the Stay Order, the class action questions on which the

Stay Order is predicated have yet to be determined. Therefore,

the Stay Order will be continued. In consequence,

It Is Hereby Ordered that the motions specified above be

and are Denied.

Dated this 23rd day of September, 1974.

s' H. KENNETH WANGELIN

United States District Judge

— 101 —

Anderson, Green, Fortus & Lander

Attorneys at Law

Suite 938, Chromalloy Plaza

120 South Central Avenue

St. Louis (Clayton), Missouri 63105

[314] 862-6800

September 26, 1974

Honorable H. Kenneth Wangelin

Judge, Division 3

United States District Court

United States Courthouse & Customhouse

1114 Market Street

St. Louis, Missouri 63101

Re: Cecil Livesay, et ux. vs. Punta Gorda Isles, Inc.. et al.

Civil Action No. 73 C 517(3)

Dear Judge Wangelin:

The purpose of my telephone call to you yesterday was to re-

quest a pretrial conference for the purpose of determining what

steps, if any, should be taken at this time by counsel to expedite

the Court's ruling on plaintiffs’ Motion for Class Action Deter-

mination.

The defendants have indicated in their Briefs recently filed with

the Court that they believe I should request an evidentiary hear-

ing with respect to the unresolved class action issues and while I

have no odjection to this hearing, or making a request therefor,

I am uncertain as to what particular issue, if any, would be re-

solved at such a hearing. Accordingly, I should like to request

a conference with the Court, with all counsel present, so that I

— 102 — — 103 —

may obtain some guidance, at the Court's early convenience,

with respect to this matter. staan . | Ato = ee

ig ircui

Yours very truly,

Cecil Livesay and Dorothy Livesay, for )

s MARTIN M. GREEN Themselves and on Behalf of All

MMG:kg | Otiers Similarly Situated,

cc: William A. Richter, Esq. va Petitioners,

ce: John J. Hennelly, Jr., Esq.

Punta Gorda Isles, Inc.,Wilber H. Cole,

Alfred M. Johns, Robert J. Barbee,

Samuel A. Burchers, Jr., Russell C.

Faber, John Matarese, Robert C.

Wade, Earl Drayton Farr, Jr., John | No. 74-1827.

W. Douglas, D.D.S., Coopers & |

Lybrand (Formerly Lybrand, Ross

Bros. & Montgomery),

Respondents,

and

Honorable H. Kenneth Wangelin,

Judge, United States District Court

for the Eastern District of Missouri,

Eastern Division, Room 3,

Nominal Respondent.

ORIGINAL PETITION FOR WRIT OF MANDAMUS

(Filed November 1, 1974)

Petitioners state:

7 Petitioners Seeking Writ and Relief Sought

The petitioners and the members of the class represented by

them (hereinafter the petitioners and all of the members of the

— 104 —

class will be collectively referred to as “petitioners’) in the above-

entitled class action move the Court of Appeals to issue a Writ

of Mandamus directing the Honorable H. Kenneth Wangelin,

Judge of the United States District Cour for the Eastern Dis-

trict of Missouri, Eastern Division (“the Court” or “Judge

Wangelin”) to vacate (1) the Court’s Order of May 14, 1974,

staying all discovery in said action except that relating to the

class action, and (2) the Court's Order of September 23. 1974,

continuing said stay order.

Statement of the Facts

The facts supporting this Petition are as follows:

1. That on July 27, 1973, petitioners filed a class action

against the respondents herein which was assigned to Judge

Wangelin. That said class action alleges violations by the re-

spondents of Sections 11, 12(2) and 17(a) of the Securities Act

of 1933 and Section 10(b) of the Securities and Exchange Act

of 1934 and Rule 10b-5 promulgated thereunder, for certain

false and misleading statements appearing in the Prospectus in

connection with the sale of respondent Punta Gorda Isles, Inc.’s

stocks and bonds at their May 2, 1972, public offering;

2. That on April 9, 1974, petitioners filed their Motion for

an order, pursuant to Rule 23(c), to determine that the class

action may be maintained:

3. That on April 30, 1974, pursuant to an agreement be-

tween counsel, respondents, for almost two days, took the depo-

sitions of petitioners Cecil and Dorothy Livesay on all issues

relating to the pending action;

4. That on April 30, 1974, within hours after respondents

had completed their depositions of the same petitioners herein,

respondent Coopers & Lybrand, during the course of a pretrial

— 105 —

conference with the Court, filed a Motion requesting a stay of

discovery, except discovery relating to the class action deter-

mination, until the class action determination had been decided

by the Court;

5. That on May 14, 1974, the Court ordered “that the Mo-

tion tor a stay of discovery, except that relating to the class

action determination, be and is Granted . . .”; that said stay

order, according to the Court’s Memorandum and Order, was

based upon the “implications of judicial time and pecuniary

economy”;

6. That on or about May 15, 1974, respondent Coopers &

Lybrand filed a Motion asking the Court to dismiss the class

action allegations of petitioners’ Complaint; that although said

Motion was denied by the Court on July 16, 1974, said respond-

ent filed a similar Motion on or about October 2, 1974, asking

the Court once again to dismiss the class action allegations of

petitioners’ Complaint, which said motion has not to date been

ruled upon by the Court;

7. That petitioners’ Motion for Class Action Determination,

filed on April 9, 1974, and orally argued on June 24, 1974, has

also not been ruled on by the Court;

8. That on September 3, 1974, petitioners filed a Motion

asking the Court to dissolve the stay order of May 14, 1974,

which Motion was denied by the Court on September 23, 1974;

9. That on September 26, 197* counsel for the petitioners

wrote a letter to the Court req.-sting a conference with the

Court and all counsel with respect to any unresolved issues re-

lating to the anticipated ruling on petitioners’ Motion for Class

Action Determination;

10. That on October 4, 1974, the Court set the case for trial

on December 16, 1974;

— 106 —

11. The May 14, 1974, and September 23, 1974, stay orders

are not appealable and this Petition is the only remedy which

can afford the petitioners the kind of relief sought herein;

Issue Presented

12. The issue presented is whether or not the Court below

abused its discretion under the circumstances in staying all dis-

covery, except that discovery relating to the class action deter-

mination, until such time as the class action determination is

made;

Reasons Why Writ of Manda

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