# Appendix — Coopers & Lybrand v. Livesay > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_2068%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1978 - **Citation:** 437 U.S. 463 ## Text 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, v CECIL LIVESAY and DOROTHY LIVESAY, 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, V 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, v. 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 iV 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. Oct. 2 5 —_— 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. Apr. Apr. Apr. Apr. May May 17 17 18 30 30 14 14 _— 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 ee May 20 May 19 June 21 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 July Aug. Sept. Sept. Sept. Sept. Sept. 16 16 30 12 12 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. a Sept. Sept. Sept. Sept. Sept. Sept. Sept. 18 20 23 23 23 24 — 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. Mar. Mar. Apr. Apr. 12 20 28 10 16 — 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 June 14 26 17 19 19 —' 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 June June June June July Aug. Aug. Aug. Aug. Aug. Aug. 23 23 27 30 30 25 20 20 20 20 22 14 —_—, — 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. Aug. Sept. Sept. Sept. Sept. 26 11 22 23 23 = = 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 July 20 23 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. Aug. Aug. Aug. Aug. Aug. Aug. Aug. Aug. Aug. 16 16 16 16 16 18 16 23 23 — 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. Aug. Aug. Sept. Sept. Sept. Sept. Sept. 23 23 30 22 28 = 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 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 Mandamus Should Issue 13. The Writ should issue for the following reasons: (i) The original stay order was based upon the Court’s find- ing that respondent Coopers & Lybrand’s “contention is a viable one considering its implications of judicial time and pecuniary economy”, but there were no affidavits, testimony, documentary evidence, or any other evidence of any kind to support said re- spondent’s Motion; (ii) Regardless of whether the Court sustains or denies the class action determination herein, the petitioners will at that time commence full and complete discovery on all issues. Accord- ingly, the Court’s ultimate ruling with respect to the class action determination will not obviate the need for full and complete discovery and, therefore, there will be no saving of “judicial time and pecuniary economy”. It will only be delayed, to peti- tioners’ prejudice; (iv) For the foregoing reasons the issuance of stay orders relating to discovery is not logical and constitutes an abuse of discretion by the Court below; (v) That since the issuance of the original stay order, peti- tioners’ discovery has come to a complete standstill and that as = a result of petitioners’ inability to pursue normal discovery pro- cedures, including depositions, petitioners’ case has been and continues to be seriously impaired and prejudiced. * a * * * * * UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT Cecil Livesay and Dorothy Livesay, for themselves and on behalf of all | others similarly situated, | Petitioners, | v. Punta Gorda Isles, Inc., et al., Respondents, | No. 74-1827 and Honorable H. Kenneth Wangelin, Judge, United States District Court | for the Eastern District of Missouri, | Eastern Division, | Nominal Respondent. | Filed: November 15, 1974 Before GIBSON, Chief Judge, and HEANEY and STEPHEN- SON, Circuit Judges. ORDER It is the view of the Court that petitioner should request a prompt ruling on its motion of April 9, 1974, for an order — 108 — determining that a class action existed. If an evidentiary hear- ing is desired, that can likewise be requested. The trial court should then promptly rule on petitioner’s motion and remove its stay order and thereafter permit discovery to proceed on the merits, postponing the actual trial date in order to permit necessary discovery. We are satisfied that the trial court will act in compliance with the views of this Court, and, therefore, we now deny the peti- tion for writ of mandamus. A true copy. Attest: Clerk, U. S. Court of Appeals, Eighth Circuit ANDERSON, GREEN, FORTUS & LANDER November 18, 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 v. Punta Gorda Isles, Inc., et al. Civil Action No. 73 C 517(3) Dear Judge Wangelin: In accordance with the November 15, 1974, Order of the court of appeals, I should like to request a prompt ruling on plain- — 109 — tiffs’ Motion, dated April 9, 1974, for Class Action Determina- tion. Your Honor indicated on June 24, 1974 during the course of oral argument, that there should be a hearing after the reliance issue is resolved. Accordingly, I also ask that the Court con- sider this letter as a request for such hearing. I would also like to request that, prior to the hearing, the Court hold a pre-hearing conference to provide counsel with some guidance as to the scope and nature of the evidence to be adduced. Yours very truly, /s/ MARTIN M. GREEN MMG:kg cc: Veryl Riddle, Esq. ce: Lewis R. Mills, Esq. UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION (Title omitted in printing) TRANSCRIPT OF HEARING St. Louis, Missouri December 30, 1974 Transcript of testimony adduced and proceedings had in the above styled cause before the Hon. H. Kenneth Wangelin, Judge of the United States District Court, for the Eastern District of Missouri, Eastern Division. — 110— Appearances Anderson, Green, Fortus & Lander 120 South Central, Suite 938 St. Louis, Missouri 63105 by Mr. Martin H. Green and Mr. Edward Lander for plaintiffs; Bryan, Cave, McPheeters & McRoberts 500 North Broadway St. Louis, Missouri 63102 by Mr. Veryl L. Riddle for Defendant Coopers and Lybrand; Peper, Martin, Jensen, Maichel & Hetlage 720 Olive Street St. Louis, Missouri 63101 by Mr. William A. Richter and Mr. Lewis R Mills for Defendants Punta Gorda Isles, Inc., Wil- ber H. Cole, Alfred M. Jones, Robert J. Barbee, Samuel A. Burchers, Jr., Russell C. Wade, Earl Drayton Farr, Jr. and John W. Douglas. o * * . * * * [3] PLAINTIFF'S EVIDENCE CHARLES T. TOOLEY, was called as a witness, and being first duly sworn to tell the truth, the whole truth and nothing but the truth, testified as follows: Direct Examination By Mr. Green: Q. Would you state your name please? A. My name is Charles, initia! T. Tooley. -—-— ~w --—- -- -—_- —lli— Q. Mr. Tooley, what is your occupation? A. I'm an officer at Mercantile Trust Company. Q. Are you in the stock transfer department of Mercantile? [4] A. I'm in charge of it. Q. As such, are you responsible for the stock transfer duties of Punta Gorda Isles, Incorporated? A. Yes. Q. You handle that account? A. They're one of our cus- tomer accounts. Q. You're familiar, of course, with the fact that Punta Gorda made a public offering on May 2nd, 1972, are you not? A. I’m not sure of the date, but I know it was May of °72, yes. Q. As transfer agent for Punta Gorda Isles, what are your duties, in other words, what do you do? A. We mainly do the work of the corporate secretary, maintaining the records of stockholders, issuing certificates to—stock certificates to pur- chasers, cancelling certificates representing shares sold by former stockholders, maintaining the records. We prepare labels, cer- tified copies of lists, pay dividends from time to time. Q. Now, Mr. Tooley, in addition to Mercantile Trust Com- pany there is another transfer agent, is there not? A. On the common stock, yes, Chemical Bank. Q. Is that Chemical Bank and Trust Company in New York City? A. Yes, 770 Broadway, New York, New York. [5] Q. Now, with respect to Mercantile’s record keeping sys- tem on the transfer of all securities of Punta Gorda Isles, does Mercantile keep a microfilm system that permanently records all transfers? A. We do have a microfilm system that records a recap of all of the transactions for a given year. Our computer records are purged at the end of the year and they’re reduced to microfilm. Q. And then the microfilms are kept as permanent records, is that correct? A. That’s correct, yes, sir. — 112— Q. Is your microfilm system also kept as permanent records, the transfers made by Chemical Bank on the common stock? A. It would include those transfers because they send advice copies to us for posting. Q. Now, Mercantile, of course, is located in St. Louis is it not? A. That’s correct. Q. Are those microfilm records kept here in St. Louis? A. Yes they are. Q. Are they kept at Mercantile Trust Company? A. Yes, sir. Q. Are you in charge of that department? A. Yes, sir. [6] Q. And upon appropriate order of this Court, I assume you would make them available, naturally, with all the time and effort that’s necessary to go through them and dig them up? A. Yes, I would assume we’d have to have permission from Punta Gorda. We're only an agent in our capacity here. Q. I understand. Now, sometimes stocks or bonds are bought and sold in what known as a street name, is that correct? A. That’s correct. Q. Do you know what street name means, will tell us for the record? A. Securities registered in the name of a broker which are held in the broker’s name rather than being further transferred into the name of the purchaser. Q. So that your records would only show that they’re held in the broker’s name in some instances, and not in the customer name, isn’t that correct? A. There would be some instances where securities are held for a long extended period of time in the name of the broker, that’s correct, or various brokers or nominees. Q. Or nominees? A. Uh huh. Q. And we would then have to go to the brokers or the persons handling those transfers to obtain the names of the [7] _>- — 113 — actual beneficial owners? A. That's right. Our records would not reflect that. Mr. Green: I believe that’s all. Mr. Richter: No questions, Your Honor. Mr. Riddle: None, Your Honor. Examination By the Court: Q. Mr. Tooley, as I understand the gist of your testimony, that you did have available records of all transfers of Punta Gorda securities, either debentures or common stock that have occurred through your particular official position, or that have been handled under the supervision of the Chemical Bank in New York City, is that correct, sir? A. Well, Your Honor, I'd have to amend that slightly. We have in our office the cancelled certificates which have been presented to us for transfer in St. Louis. I do not have the cancelled certificates which have been transferred in New York. The Chemical Bank would have those. I receive from Chemical Bank a sheet on a daily basis or on such other time interval as they have transfer showing the certif- icates cancelled by number, name, prefix and shares, and show- ing the same information for the certificates issued with the ad- dition of address. Q. What types of securities, if I may use that broad term, have you handled in connection with Punta Gorda? A. My supervision is limited to the common stock. [8] The deben- tures—there is a debenture issue tied in with this public offering and that is handled by Otto Johnson, another Vice-President there in the bank. However, Bankers Trust Company in New York at 485 Lexington Avenue is the principal trustee on that issue, and our services on the debentures are limited to the cancellation of a certificate, the issuance of a new certificate, preparation of an advice sheet and then we send the new certifi- => $96 — cate out to the purchaser and we send the cancelled certificate and the advice sheet to Bankers Trust Company, so on the de- bentures we have very little in the way of records. We have a copy of the advice sheet. Q. Well now, is there any fixed relation between the transfer of the common stock and the debentures? In other words, does one indicate the transfer of another, or can they be done in- dependently? A. They're independent, sir. Q. They're independent, all right. Next question: Do your records indicate the date of the transfer? A. Of the various transfers, cancellation and the issuance, yes, sir. Q. Do they also indicate the price? A. No. Q. The price is not shown? A. No, sir. [9] The Court: I have no further questions. Either one of you gentlemen have anything more? Mr. Richter: No, Your Honor. The Witness: Could I just add one point? The Court: Certainly. The Witness: To clarify these records, the advice copies which we maintain in the case of the debentures reflect debit entries and credit entries which are then posted on the books at Bankers Trust Company as Trustee for the debenture issue. In the case of the common stock, Chemical Bank makes trans- fers and sends advice copies to us for posting on our computer. We have a consolidated posting on the computer. However, be- cause of the fact that the transfers pertaining to this particular transaction and the transfers pertaining to other transactions rep- resenting normal purchases in sales, are listed on the same sheets. The only identification of the transactions relating to this trans- action, the one that’s under study here, would be by certificate number. In other words, we would know which certificates were issued on the initial offering to identify those. To identify those — 1iS— shares we would have to refer back to that certificate number to be sure it was included in that group and then the identity of the transfer can best be obtained from the examination of the cancelled certificates which are filed in chronological order. [10] Now, the cancelled certificates representing New York transfers would be filed in similar order, but would be maintained at their office, and I believe the examination of the certificates would be easier than examination of the computer records. The Court: Anything further, gentlemen? May the witness be excused? Thank you, Mr. Tooley. Who do you have next? Mr. Green: Judge, at this time I'd like to add a further stipulation into the record, and that is Mr. Mills who represents Punta Gorda has agreed to stipulate for the record that Punta Gorda has a stockholder’s list in addition to what information Mercantile Trust has, isn't that correct? Mr Mills: I did not say in addition. They do have a stock- holder's list. Mr. Green: That's the stipulation I wanted to get. The Court: So that I may be fully advised, gentlemen, as 1 understand what that stipulation is, that the defendant Punta jorda maintains in its offices or office, a complete list of issuances, transfer, et cetera, of all its stock and debentures, is that nght or wrong? Mr. Mills: They maintain that list through Mercantile Trust Company, Your Honor, which is their transfer agent. Mer- cantile Trust Company maintains a stock register, stockholder’s list. [11] The Court: The certificate or the security, or whatever you want to call it, has on its face or on its back or somewhere imprinted that the transfer agent is such and such an institution? Mr. Mills: Yes, Your Honor. — 116— The Court: And let's assume that I buy a debenture from somebody or through a broker or however, and in order to have that issued in my name I must then take the -ertificate that I purchased, or have my broker do it, and take it down to the Merc or wherever and say here, and they then make the transfer and forward me a similar security in lieu of the one I’ve traded in, is that correct? * * a * - * * CECIL H. LIVESAY, [12] was called as a witness, and being first duly sworn to tell the truth, the whole truth and nothing but the truth, testified as follows: Direct Examination By Mr. Green: Q. State your name please. A. Cecil, middle initial H, Live- say. Q. And where do you live, Mr. Livesay? A. 955 Greenway, Glendale, Missouri. Q. What is your occupation or profession? A. Chief of Police. Q. Of what city? A. Glendale. Q. Are you married? A. I am. Q. And who is your wife? A. Dorothy Livesay. Q. Is she here in court with you today? A. She is. Q. Are you and Mrs. Livesay the two representative plain- tiffs in this lawsuit which is being heard today? A. Yes, sir, we are. Q. And did you purchase at the May 2nd, 1972 public offer- ing of Punta Gorda securities, five thousand dollars face amount ow 87 * * al [20] Cross-Examination By Mr. Richter: Q. Mr. Livesay, as I understand your testimony, you've agreed with Mr. Green to pay him, or to pay for the expenses of this lawsuit, regardless of how large those expenses will be, is that correct? A. I have agreed to pay for the expenses, yes, sir, that’s true. Q. And you've agreed to do that regardless of whether or not there's any recovery in this case, is that correct? [21] A. That's true. Q. And has Mr. Green advised you that those expenses could be very much greater than the $2,625.00 you lost on this se- curity? A. He’s told me approximately what it might be. Q. What statement has he given you as to the amount of those expenses? A. He said it might be in excess of $5,000.00. Q. Did he tell you how much in excess of $5,000.00 those expenses might be? A. No, he said that would probably be pretty close. — 120 — Q. Have you also agreed to pay him a fee in this lawsuit? A. No, I have not. Q. Well, you recall when we took your deposition some months ago, do you not? A. I do. Q. Do you recall] what you said at that deposition about a fee? A. Well, I remember how I corrected it. I wasn’t referring to his fee. I know the class action suit, that the fee is awarded by the Judge. Q. Didn't you initially testify, before you had a chance to talk to your counsel, that you had agreed to pay him a fee? [22] A. I stated that. I was confused. I knew that wasn’t so. Q. Then after you talked to your attorney at the second ses- sion of the deposition, you corrected that testimony, is that cor- rect? A. I did. Q. Was it your initial understanding that you were going to have to pay Mr. Green’s fee regardless of the outcome of the lawsuit? A. I knew I wasn’t going to. Q. You were or were not? A. I knew I was not going to have to. Q. But you testified just the opposite when I took your depo- sition. A. I did. Q. Isn’t that correct? A. I did. Q. Before you filed this suit, did you discuss with Mr. Green on whose behalf this suit should be filed? A. I’m sorry, I don’t understand the question. Q. Well, did you discuss with him whether this should be a suit on your behalf for the $2,625.00 you had lost on this se- curity? A. We discussed whether—yes, whether it would be a class action suit. [23] Q. Well, did you discuss with him at all whether you should merely sue on your own behalf? A. Yes. — 121— Q. Well, when I took your deposition back in April, April 19th of this year, didn’t you tell me that you did not discuss with him whether you should sue alone for your own loss? A. No, I can't recall that. I said—I think I said I don’t know how I could just sue on my behalf if indeed there was fraud. Everyone that bought the stock and everyone bought the debentures would be equally entitled to share in this. Q. What is your current understanding as to whether you could have sued on your own behalf in this case? Mr. Green: Let me object because that’s not the same ques- tion. Before I think the question was whether we had discussed that. Now he’s saying his current understanding and suggesting that it has changed. Q. Let me just ask you this: Did Mr. Green—I'll withdraw that question, Your Honor, to obviate the objection. Did Mr. Green ever tell you before you filed this suit that you had the right just to sue on your own behalf for your own loss? A. I think he did. Q. Would your recoliection in April of 1974 have been [24] better than your recollection right now on that point? A. No. Q. You mean your recollection’s gotten better as time has gone on? A. No, I said it wouldn't be any better. Q. What if your recollection then was different than your recollection now, don’t you think your recollection then would have been better than it is now? A. No. Q. Did you and Mr. Green discuss prior to the filing of this lawsuit the parties who should be sued as defendants in this suit? A. We did. Q. And did you discuss the joining of the underwriters as defendants? A. It was brought up. — 122— Q. Who brought that subject up? A. Mr. Green said that he would have to make an investigation and see what parties were liable, and he stated that if the underwriters were liable, we would also join them. Q. And did he later make a recommendation to you as to whether or not the underwriters should be joined? A. He did. Q. What was his recommendation? A. That they should not. [25] Q. And did he tell you the basis for that recommendation? A. He said that he would not see that they were liable in any way, and it would seriously damage our case if we did join them. Q. Before filing this lawsuit, did he tell you that he rep- resented, and did represent at that time one of the underwriters? A. He did. Q. Did he tell you the basis on which he had concluded the underwriters were not liable? A. Yes, he said there were a group of underwriters and he didn’t see how they could have all had this knowledge and to go before a jury and expect all of them to enjoin all of them and how they could have this advance knowl- edge that the directors of the company had. Q. Now, you understand that you coming in here and purport- ing to represent all of the people who purchased the Punta Gorda stock and debentures at the public offering on May 2nd, and possibly May 3rd of 1972, isn’t that correct? A. I under- stand that. Q. What do you understand your obligations to be with respect to representing all those people in this lawsuit? A. That I pursue the case as vigorously and as fairly as possible and be represented by the very best attorneys I can possibly be. [26] Q. At the time you filed this lawsuit, did your attorney tell you exactly what investigation he had conducted with re- spect to whether the underwriters should be joined? A. At the time the lawsuit was filed? — 123 — Q. Right. A. He told me about all the investigation he did. I can’t recall all of it. Q. Can you remember anything he told you he did? A. Yes, I can. Q. What? A. Well, he’s made trips to Florida. Q. Before this suit was filed? A. I can’t remember the dates of the trips. Q. You can’t remember whether or not he made a trip to Florida before he filed this suit, is that correct? A. That is correct. Q. What I'm asking you, and I want you to pay attention to this question: What investigation did he tell you he made with respect to joining the underwriters before this suit was filed? A. He said he made an extensive investigation; in his opinion the underwriters were not liable in any way. Q. But can you remember one specific thing he told you that he had investigated that led him to that conclusion? A. No, not offhand. 127} Q. Did he explain to you what would happen after this suit was filed with respect to trying to learn the facts about your claim? A. I'm sorry, would you repeat the question? Q. Did he explain to you before the suit was filed what would happen after the suit was filed with respect to attempting to learn the facts about your claim? A. I still don’t under- stand Q. Did he tell you there would have to be a lot of investiga- tion, formal investigation made under the Court’s supervision to try and get facts to try and prove your claim? A. Yes. Q. And did he tell you that that investigation might reveal many things you did not know at the time you filed that suit? A. No. — 124— Q. Did he tell you that that investigation might establish that the defendant who you did sue were not liable? A. No, he didn’t tell me that. Q. Did he tell you that that investigation might reveal that other people such as the underwriters may be liable? A. No. Q. He just told you that he had decided that the under- writers weren't liable, and they shouldn’t be sued, is that it? [28] A. No, he said he made an investigation. Q. Did he tell you that he decided that the results of his investigation showed that the underwriters were not liable? A. They were not liable, and it would seriously hurt our case if we joined them. Q. Did he tell you how it would hurt the case to join the underwriters? A. Yes, to just sue—to join everyone that signed their name to it, and to bring everyone into Court and to hear a jury—have a jury stating that everyone had signed their name to this, that we were going to sue them and when they're not liable would hurt our case. Q. Did he say anything to you about whether or not it was the usual practice by attorneys who handle these types of cases and by plaintiffs who bring these types of cases to sue the underwriters that sold the security? Mr. Green: Let me object to the implication as to any usual practice. It’s a fact that’s not in evidence. Are you just ask- ing if I said that? Mr. Richter: I object to him testifying, coaching the witness here in court, Your Honor. I asked whether he said anything about it, whether that was the usual practice. I very carefully phrased that question that way. Mr. Green: I noticed that, but I'm objecting because [29] it’s irrelevant. — 125— The Court: As I’ve indicated earlier, gentlemen, unless the question is clearly far beyond any possible issue in the case, the Court’s going to let the evidence in subject, of course, to the objection. You may proceed. Q. Do you understand the question? A. I do. I can’t re- member if Mr. Green said anything about it. I know many times underwriters are joined in the suit. Q. You knew that at the time you filed this case, is that correct? A. I did. Q. But you don’t recall whether or not Mr. Green discussed what the usual practice was with you? A. I don’t. Q. And did you know that that was done frequently at the time you filed this suit; that is, the joining of the underwriters? A. I don’t know the frequency. I wouldn’t know if it was a third of the time or half the time, but I know that they are frequently joined. Q. And you knew that at the time you filed the suit? A. I did. Q. Let me ask you this: Why did you file a suit as a class action where you could incur expenses substantially [30] more than your loss, rather than really suing for the $2,625.00 you lost? A. Well, I know—I know that the expenses can be awarded back to me from the Court on a class action suit, and I would leave it up to my attorney on what the best type of suit is to be filed. Q. So you left the decision whether to file a class action or individual suit up to Mr. Green? A. Absolutely. It was a joint decision, but I would certainly rely on his advice. Q. At the time I took you deposition you testified, did you not, that you did not understand it that you could recover on your own deal? A. I can’t recall. Q. I asked you on page 92: — 126— “Question: And are you seeking recovery on behalf of your- self and your wife in this case, even if the class can’t recover? Answer: No.” You remember when we went through that discussion? “Question: You don’t want to recover in this suit if the class can’t recover, is that correct? Answer: Well, I know this is a class action suit. Question: Well, if it is not a class action suit, are you still making the claim for your own loss, just for you and your wife in that case? Answer: No. Question: If it is not a good class action [31] suit, you don’t want to recover in this case, is that correct? A. Answer: I don’t want to re- cover.” Now, do you remember that discussion? A. Yes, I do. Q. Do you remember similar discussion perhaps with Mr. Hennelly and Mr. Mills? A. I do. Q. Did you indicate at that deposition you did not under- stand you could have sued on your own behalf? Mr. Green: Let me object, because if there’s such a state- ment I think it should come from the deposition. Mr. Richter: I want to ask his recollection at this time. Mr. Green: Well, if there’s a reference to a deposition, I think it should be a specific reference instead of a summary. The Court: Well, gentlemen, there’s two ways to proceed. One is to ask: Did you make this statement, or was this ques- tion asked, and did you make the statement? The other is to lay the foundation in general terms if that statement was made, and, gentlemen, if you’re going to get into deposition cross-examination it’s fine with me but let me just say this much in fairness to both parties: Where you get into whether or not the question was asked or statement was made in deposition the Court would appreciate [32] having the book and page. — 127 — Q. Yes, Your Honor. I think I'll go on to another ques- tion, I'm about finished, Your Honor. Did Mr. Green tell you whether or not he discussed repre- sentation of you in this case with his client, I. M. Simon, be- fore this suit was filed? A. He said he investigated it. Q. Did he say he had discussed representation of you in this suit with I. M. Simon? A. I can’t recall. Q. When he told you about his representation of I. M. Simon, did he indicate or did he tell you that this created a conflict of interest between you as a representative of the class and himself? A. No. Q. As a representative of one of the underwriters? A. No, he said if he—if it did represent a conflict of interest he would rather—he would tell me at tat time and rather give me the name of another attorney. Q. So did you anderstand from that that it was his position there was no conflict of interest that he had in this case be- tween his representation of you and his representation of I. M. Simon? A. Yes, that there was no conflict of interest. Mr. Richter: I have no further questions. 133] Cross-Examination By Mr. Riddle: Q. You pronounce your name Livesay? A. Livesay. Q. Livesay? A. Yes, sir. Q. Sir, you are the Chief of Police in the Village of Glendale? A. Yes, sir. Q. How long have you held that position? A. Chief of Police for five years. Q. How old a man are you? A. Forty-one. — 128 — Q. And before being Chief of Police, what office or what work did you engage in? A. I was a police officer. Q. How long have you been a police officer, sir? A. Eighteen years. Q. You've been a police officer almost all of your mature life then? A. I have. Q. Have you had any income other than what you have earned as a policeman through those years? A. Yes, investments in property and stocks and bonds. Q. And the money with which you made those investments [34] did that all come from—originally from your salary as a police officer? A. Mine and my wife’s. Q. Have you inherited any money? A. I have not. Q. And what is your formal education, sir? A. One semester in college. Q. Your wife work? A. She does. And what is her salary now per year? A. Ten thousand. And what is your salary, sir? A. Sixteen. Is that before the deductions? A. Yes, it is. of 8 In both instances? A. Yes, it is. The Court: I take it you mean the word “withholding”? Q. Yes I do, thank you, Your Honor. Sir, with respect to your present financial position, and I don’t intend to delve into it in any great detail, but do you have a bank account? A. I do. Q. What bank? A. Boatmen’s Bank. [35] Checking, savings. Q. Do you do business with any bank other than Boatmen’s? A. With savings and loan companies. — 129 — Q. What savings and loan company? A. Lafayette Federal, Community Federal, Carondelet Savings and Loan. Q. Aare all of your accounts in you and your wife's joint name? A. Yes. Q. Sir, just in general, not asking you to be specific, but what's your present balance in your checking account? A. Checking? Q. Yes. A. A thousand. Q. And what is the total of your savings account at the vari- ous institutions that you've given us? A. Several thousand. Q. Give us——— A. Three or four thousand. Q. They'd all total three or four thousand? A. In savings and loan? Q. Yes. A. Yes. Q. Plus a thousand dollars in the checking acocunt, makes a total of about four thousand dollars in cash? [36] A. Yes. Q. In addition to that, what property do you own, sir? A. My house at 955 Greenway. Q. And is there a mortgage against it? A. Yes. Q. And what's the amount of the mortgage against it? A. About ten or eleven thousand. Q. And how long have you owned that house? A. Nine or ten years. Q. How much did you pay for it? A. Twenty-two Q. Twenty-two thousand? A. Twenty-two. Q. Have you made any major improvements to the house? By that I mean in excess of a thousand dollars or in excess of five thousand dollars to it? A. No. — 130 — Mr. Green: Just a minute. I want to object to this line of questioning. I think it’s really getting to the point where it’s so far afield as to be irrelevant. Improvements to his home. The Court: Well, I previously indicated, let the matter get in. I assume the thrust of counsel's question, and if it’s not for this purpose the objection will be sustained, but I assume that this witness has testified that he’s agreed [37] to pay expenses which can range in excess of five thousand dollars. Now, will- ingness is one thing and ability is something else. If you're going to any other reason, Mr. Riddle Mr. Riddle: There is no other reason, otherwise it would be an invasion of this gentleman’s privacy, and I wouldn't pur- port and attempt to do that. The Court: All right, go ahead. Q. Your answer was that you made no major improvements to the house in excess of a thousand or two thousand dollars since you purchased it? A. No, I think the asking price of the house at the time was thirty-five thousand. Q. Sir, do you have any other property besides your home and what you've told us about in the banks and savings and loan? A. No. Q. Other than your household goods and household ac- cessories? A. No. Q. And do you have an automobiie? A. Two automobiles. And what sizes are they? A. Volkswagen and a Ford. You have children? [38] A. I do. What model is your Ford? A. °70 Ford. ‘70 model? A. Yes. And what model is your Volkswagen? A. ‘71. oor 99 8 O Are there mortgages against those cars? A. No. — 131— Q. Now, sir, are there any mortgages outstanding against any of your household appliances? A. None. Q. Have you told us all the property you hold? A. All the property, yes. Q. Do you have any debts other than the nine or so thousand dollars owing on your home? A. None. Q. Mr. Livesay, I understand your testimony to be that you had a net loss of $2,650.00 from the purchase and sale of these securities? A. I did. Q. Now, has it been made clear to you by Mr. Green the type of expenses that are likely to be incurred in this lawsuit? A. He made it extremely clear. [39] Q. Did he make it clear to you the type of expenses that would be incurred if it were allowed, and if this Honorable Court allowed this case to proceed as a class action? A. Yes, he did. Q. Did he tell you the number of depositions that would be necessary to take? A. He did. Q. What did he tell you in that regard? A. He said it would probably run three thousand dollars. Q. No, the number of depositions. A. The number. Well, he said he wants to—he wants to take these depositions. He’s extremely eager and he didn’t name the number, but I know he wants to do it with the directors, the auditors—I mean the accountants, with everyone he possibly can. Q. Did he tell you that it may involve taking as many as fifty depositions? A. He didn’t say the number. He said there would be considerable depositions to be taken. Q. Well, he did mention all the individual defendants, as well as anybody else throughout the country that might have some knowledge about this case? A. Yes, sir. — 132— Q. Sir, did you inquire as to what the price of a [40] deposi- tion, one deposition would be? A. No. Q. In the course of this case so far there have been some depositions taken. Have you been submitted a bill for those charges? A. Yes. Q. Have you paid them? A. I have. Q. Did you get an idea from those charges about what a deposition might be? A. Yes. Q. How much have you paid by deposition charges so far? A. A deposition charge for sixty dollars. Q. Sixty dollars? A. Sixty. Q. That’s just you and your wife's deposition? A. I paid sixty dollars for deposition charges. Q. Sir, have you been told by Mr. Green that it will necessi- tate his traveling to Florida, New York, California and other places throughout the United States to take these depositions? A. He has advised me of that, yes. Q. Do you have an agreement with him that you will pay his travel expenses and lodging and boarding expenses for all those trips? [41] A. I have. Q. Sir, have you paid for Mr. Green’s trip to Florida? A. For two trips to Florida. Q. Two trips to Florida. You have paid for those? A. I have. Q. By check? A. I have. Q. And what do they total? A. It was four trips, and filing fees and deposition, and it comes to $1,234.00. Q. One thousand how much? A. Two hundred, thirty four dollars. Q. To date? A. Yes. — 133 — Q. And there weren't any depositions taken in Florida? A. No. Q. Sir, based on the expenses for those trips alone, where depositions weren't even taken, have you done some calculating in your own mind as to what costs might be involved to you for the taking, of example, of depositions that might last for as long as three weeks in Florida? A. I have, and I've talked to Mr. Green about it. Q. And have you reached any conclusion as to what it might cost you, or will likely cost you to pay for, say, up to three weeks of depositions in Florida? [42] Mr. Green: Just a minute, I want to object because he’s assuming that his named plaintiff has to pay all of the costs himself. There will be evidence that there are other co-plaintiffs who have agreed to share in these costs, so when he says has this named plaintiff, does he understand that he will have to pay them, that’s assuming a fact that is not in evidence, and there will be evidence of the other co-plaintiffs who have re- tained me, as to their willingness to share these costs and I want the Court to know that in advance. So I’m objecting to the assumption that Mr. Riddle’s making which is not in evidence that this named plaintiff alone will have to bear the burden of all of these costs. Mr. Riddle: Then I think that’s very helpful and that casts a different light on this lawsuit. Mr. Green: That’s right. Q. Do I understand that there are other people who are helping you subsidize this lawsuit? A. There has been—there’s been at least four parties I know in addition to myself that have joined in it. I know the name of another individual that is going to help pay the expenses, yes. Q. Can you give us the names of those people who are going to join in? A. Joe Morrissey is one. — 134— Q. Where does he live? [43] A. He lives here in the St. Louis area. Q. And who else? A. I know there’s an attorney from—I be- lieve he’s from the west coast. Q. An attorney from the west coast is going to join in with you? A. He is. Q. Have you talked with the attorney from the west coast? A. I have not. Q. Has he made an offer to contribute to the expenses of the lawsuit? A. I don’t know. I just know of Mr. Morrissey has offered to contribute to the expenses of the lawsuit. He had a considerable loss. Q. What did Mr. Morrissey say he would contribute, how many dollars and cents? A. He talked to Mr. Green. Q. You haven’t talked to him? A. I have not. Q. What do you understand he’s pledged by way of funds for this suit? A. I don’t know what his arrangement is, I don’t know. Q. Then do you know whether or not he’s offered to pay a single penny? [44] A. Yes. Q. And how do you know that? A. Mr. Green told me so. Q. What did Mr. Green tell you that he would contribute? A. That he would share in the expenses. Q. To what extent? A. I don’t know. Q. Then is it your testimony to the Court that you don’t know whether he’d pay a penny or a dollar or a thousand dol- lars? A. Well, he said he would share in expenses to pursue this lawsuit. 4 — 135 — Q. Well, sir, sharing can be all the way from one to a hundred percent I take it, is that your understanding of it? A. Well, if he shares in it Mr. Green: Let me object, J think it’s getting highly argu- mentative. He’s testified as to what he knows and these ques- tions are now just simply baiting the witness and arguing with him about this stuff. The Court: Well, I don’t know whether the witness is being baited or not, but let me get the situation clear as far as my understanding of this testimony here today is concerned. Mr. Livesay has testified under oath that he is prepared to foot the bills and he’s been examined at length [45] on his ability to foot the bills. It now develops that there are other people who Mr. Livesay—let me ask you this much: Have you met or discussed this litigation with any of these four or five other parties, or however many there may be, Mr. Livesay? The Witness: No, sir, I received some correspondence from other individuals and I forwarded this information to my at- torney, Mr. Green, but I have not spoke The Court: In other words, what I’m asking about, and I’m trying to shorten this matter if I can, gentlemen; you haven't talked, we'll say to Mr. Morrissey, who lives here in the St. Louis area; you haven't been to him and say, Now, look, it’s cost- ing me a thousand dollars or twelve hundred already, are you going to pay me part of that, or are you going to pay that much in the next bills, or—in other words, as far as any written agree- ment in writing which would constitute a promise to pay? You understand what I’m talking about? The Witness: Yes, sir, I do. The Court: You don’t have any personal knowledge of that? The Witness: I do not. — 136 — The Court: All right, go ahead. Let’s take about a ten minute recess, gentlemen. (Recess.) [46] The Court: You may proceed. Q. (By Mr. Riddle): In addition to the cost that Mr. Green explained to you that would be incurred in this suit, were you told that if you lost the lawsuit that the cost could be assessed against you in addition to those that you had advanced? A. Yes, sir, I was told that. Q. Was any figure given you as to what those costs could potentially be? A. No, he said it could be substantial. Q. Substantial? A. Yes. Q. Do you understand that to be in excess of ten thousand dollars? A. No, I wouldn’t think it would be that much. Q. You think it would be as much as five thousand dollars? A. Yes. Q. That would be five thousand dollars in addition to the five thousand dollars you’d have to advance. A. Pardon me? Q. That would be five thousand dollars risk in addition to the five thousand dollars that you thought you might have to advance. A. I know it could run that much. [47] Q. Or a total of ten thousand. A. I know it could run that much. Q. Well, sir, do I understand your testimony to be that your net loss in this case was $2,650.00? A. It was. Q. What do you understand that you and your wife, as plain- tiffs in this lawsuit, what do you understand the maximum amount of a judgment is that you can recover? A. My actual losses, plus expenses involved in pursuing this case. —_—: Q. Sir, let me see if I understand what you say. Do you understand that the judgment could be rendered in favor of you? Do you understand that would be your actual loss which was the $2,650.00 fee? A. Plus the expenses involved. Q. Do you understand that the expenses involved would be only reimbursing you for expenses that you had paid out? A. Yes. Q. So then is it your understanding that the maximum amount that you and your wife could hope to gain in this law- suit would be the $2,650.00? A. That’s correct, I understand that. Q. Now, is it your position, and are you representing to this Court that you are agreeable to gambling up to [48] $10,000.00 in order to recover a maximum of $2,650.00? A. Well, I think you put it very strongly. I don’t think it is a gamble. I was very upset about it, and I’m going to pursue it, but I don't consider it a gamble. First of all I think we’re going to win this suit and I don’t consider it a gamble, and Q. What do you consider it to be? You're putting up at least a maximum of $10,000.00 as against getting $2,650.00. You don’t consider that a gamble of sorts? A. Well, I know I’m tak- ing a chance to lose more than I stand to gain, but again, I don’t consider it a gamble. Q. Now, Mr. Livesay, have you reached an agreement with Mr. Green as to how he would be compensated? A. How he would be compensated? Q. Yes. A. Yes, I have. Q. What is that amount? A. He would be awarded the fees by the Court. If he loses the case there would be no fee. Q. You have no commitment to Mr. Green to pay him for his services? A. None whatsoever. — 138 — Q. Do you have an understanding with Mr. Green that if he were to succeed and be awarded a sizeable attorney's fee that any part of that would be paid to you? [49] A. None. Q. You don’t have any such agreement? A. Do not. Q. Nor understanding? A. No. Q. Now, have you purchased any other stock or any other securities in the past? A. I have. Q. Through the same broker? A. Yes. Q. And what's the broker’s name? A. Ben Soffer. Q. And he’s with G. H. Walker and Company? A. No, he’s with H. E. Edwards. I now have an account with G. H. Walker. Q. Now, what are the size or number of the purchases that you've made of stocks or securities? A. I think I said in a deposition that over the years it would be between seventy-five and a hundred. Q. Thousand? A. No. Q. Seventy-five and a hundred different purchases? A. Sep- arate purchases. The Court: Transactions? The Witness: Yes, sir, Your Honor. [50] Q. And you don’t hold any of those securities now? A. Yes, sir, I do. When you said before about property I thought you was talking about real estate. I used to own some rental property. Q. What securities do you own now? A. I own a hundred shares of IBM. I own two hundred shares of Sperry-Rand. I own two hundred shares of Merck Drug. Q. Of what? A. Merck, M-e-r-c-k, Drug. I own five thou- sand dollars debentures of Greyhound Computer. I own four — 139 — thousand dollars in debentures in Liberty Leasing. I own five thousand dollars of Booth Debentures, fifteen hundred shares approximately of American Realty Trust and their warrants, fifty shares of Michigan Mobile Homes. I believe that’s it. Q. Are they all in the account that you now have with G. H. Walker? A. Yes, sir. Q. What's the value of that account as of today? A. Well, I have also some money just in my account that’s just sitting there, between sixty to seventy thousand dollars. Q. Is that what the worth of all of your assets in that ac- count is today? A. Yes, sixty, seventy thousand dollars. The Court: Let me ask a question here, and you [51] may be more experienced than I am in that area, be able to ad- vise me, but as I understand it, there are different kinds of accounts. One kind is where you call your broker up and say buy this, or sell that, and then there’s another type of an ac- count which I believe they call a discretionary account, is that the word? Where you just say here’s “x” dollars and you man- age it for me. Is this account one over which you have con- trol and order your broker to do this or that, or the other, or is it an account where the broker makes the investment and just lets you know what’s happened? The Witness: No, sir, Your Honor, I make all the decisions. The Court: All right, go ahead. Q. And you have on ali of these purchases? A. Every one of them. Q. You onlv use a broker as your agent for buying and selling? A. Yes, sir. Q. How long have you been buying and selling stock in the fashion you've described? A. Since 1961. =" Q. And have you been successful? Have you made gains through those years? A. I've had some losses, I’ve had some gains. "74—this was a good year. [52] Q. °74 was a good year? A. Yes, sir. Q. Have you gained in more years than you’ve lost? A. Yes, sir. Q. You made all those decisions on your own? A. Absolutely. I like to, especially now, but when I first started out I listened to a broker much more than I did now, but now I make all the decisions On my own. Q. Sir, I'm not sure that the record is entirely clear on this. I believe it needs to be. Is your commitment to this Court un- conditional that you will pay the expenses necessary if this were to be allowed to proceed as a class action? A. Would you repeat the question? Q. Is your commitment to this Court that—and is it uncon- ditional that you personally will be responsible for all of the expenses that are incurred? A. It is——— Q. In this action, if it goes forward as a class action? A. Yes, that is my commitment, that I will bear the expenses. [63] Q. Sir, the record may not be clear on this, but I want to ask you a few questions and I'll make it just as short as I can. At the time that you were discussing the filing of this suit with Mr. Green did you tell him you wanted to bring a class action? A. We talked about which would be the best and I said that I did want to bring a class action, yes. Q. Were you told that you had the option of bringing [64] a suit in your own name, or that you could bring it as a class action? A. Yes. Q. You were told that you had that option? A. Yes, I was. — 141 — Q. Sir, you remember when your deposition was taken back in May of 1974? A. I do. The Court: What page are you on? Mr. Riddle: Page 99. A. I do. Mr. Richter: Volume II. Q. Volume II, top of the page. You remember this question being asked you, and these answers being given: “Question: Well, do you understand that you could have sued on your own? Answer: That I could have sued on my own? No, I would think it would have to be a class action suit. Ques- tion: Why do you think it would have to be a class action suit? Answer: Well, because there were a number of other sharehold- ers. Everyone who purchased this read the same prospectus and got it at the same price with probably the same information. Question: You don’t think you could have gone into Court by yourself and sued? Answer: No.” Do you remember those questions and those answers [65] being given? A. I remember the answers. Q. You remember this question being asked you, and this answer being given: “Question: Could you tell me in your own words who you think is in your class that you represent in this lawsuit? Answer: All the individuals that purchased the stock, and the debentures that particular date at that public offering.” A. I remember that. Q. Sir, what is your testimony here today? Is it your view here today that you could have filed this suit in your own name without it being a class action? A. Yes, I knew it. Q. At all times? A. Yes. You know, I was confused by the questions, but I knew that you could and I know that even if — 142 — you don’t, if it’s not a class action suit, that you can proceed on your own afterwards. Yeah, I knew it. ‘ Mr. Riddle: I believe I have no further questions. The Court: Mr. Green? Redirect Examination By Mr. Green: Q. Mr. Livesay, Mr. Riddle asked you some questions about your home, and he asked you the amount of the mortgage, which I believe you said was ten or eleven thousand dollars, [66] and I believe he asked you what you paid for the house, which I be- lieve you testified was twenty-two thousand dollars, is that cor- rect? A. Yes, it is. Q. What is the present market value of your home? A. Fifty thousand. Q. So would you then have forty thousand dollars equity in your home? A. Yes, sir, I would. Q. And that would constitute part of your overall assets? A. Yes, sir, it would. Q. Mr. Livesay, prior to your retaining me to represent you and the punitive class in this case, we have been friends for in excess of some ten or twelve years, isn’t that correct? A. Yes, sir, we have. Mr. Green: No further questions. Mr. Richter: Nothing further, Your Honor. Mr. Riddle: Nothing further, Your Honor. Examination By the Court: Q. Mr. Livesay, have you talked to any of these other people personally who have bought this original debenture and stock? =» $49 A. Some people—I don’t know if they’re the ones—some people have corresponded with me and written me letters, [67] and some people have called me on the telephone and when they do this I refer them to Mr. Green. Q. Well, my question was: In other words, have you ever eye-balled anybody or shaken hands with them or discussed with them who bought this same new issue at the time you did? A. I understand, Your Honor. No, I have not. Q. Have you ever been involved in any class action litigation prior to this lawsuit, or what purports to be a class action or is requested to be? A. Yes, sir, I have. Q. In other words, when did you first learn in point of time about class actions? A. Well, you know—TI’ve known about class actions for—since I’ve been reading the Wall Street Jour- nal, but once I bought some—-— Q. Reason I asked, you seemed to have some expertise along that line. I understand you're not a practicing lawyer? A. No, sir. Q. But you have indicated by some of your answers that you understand opt in and opt out, and whether you can bring an- other lawsuit and whether you can’t, and things of that nature, so it may be a matter of some interest to you, is that correct? A. Yes, sir. Q. And you were aware of class actions prior to the [68] time that you discussed the matter with Mr. Green, is that cor- rect? A. I was aware of class action. Q. Where was your class action that you were involved in brought before? A. It was against Revenue Properties. Q. In what court? A. In Boston. Q. In Boston? A. Yes, sir. Q. And that was handled in the Federal Court in Boston? A. Yes, sir, it was. — 144— Q. Was it handled by a Boston attorney? A. Yes, sir. Q. Was it declared to be a class action? A. It was. Q. Was it settled or did it proceed to trial? A. It proceeded to trial. Q. And you testified in the matter? A. No, sir; no, sir. I was just a sharehoider in it, I just bought the same stock. Q. Were you the plaintiff or a member of a class, is what I'm trying to get to? A. Yes, sir, I was just a member of the class. nothing else. [69] Q. Do you have any knowledge of how the people who correspond with you got your name, or how they happened to write you? A. Yes, sir. Q. Well, can you tell me what it was? A. They read it in the newspapers or saw it—heard it on a news broadcast, and it was in the Wall Street Journal too, Your Honor. Q. This lawsuit—the fact that this lawsuit was brought was in the Wall Street Journal, is that right? A. Yes, sir, it was. Q. Now, I want to ask you this questien, and I certainly don’t want to disturb your relationship with Mrs. Livesay, but you have indicated some firm commitments here on these costs, and I am not taking the position that I’m trying to col- lect them or anything, but while we’re on the subject, you have also testified that practically all your holdings, stocks, C.D.’s, and buildings and loans, property, et cetera, are jointly held by you and your wife, is that correct? A. Yes, sir, that is correct. The Court: Well, I just want you gentlemen to know that as far as I understand the iaw, he can only commit himself as to what he’s got in his own name and committing Mrs. Livesay may be another proposition. I’m not suggesting [70] —" that she should or shouldn't, but I wanted that to be clear in the record. I have nothing further, gentlemen. * * * * * * * [72] Recross-Examination By Mr. Riddle: Q. As you sit here today, Mr. Livesay, without prejudicing anybody's position, would you be inclined to take your net loss and forget about this lawsuit as opposed to pursuing it as a class action? A. Pardon me? Q. As you sit right here today would you be inclined [73] to accept your net loss as opposed to pursuing this cause of action as a class action? A. I would be opposed to that. I think that Mr. Green received a phone call to that effect. Q. What you're telling the Court is if some greenback is placed on this desk in front of you that wholly compensated you for your loss, that you would refuse to accept it? A. That's true. Mr. Riddle: All right. The Court: Anything else, gentlemen? One thing, gentle- men, for the record that the Court’s concerned about. I take it that the proposed class is only those who purchased new issue? In other words, the thrust of my question is: Assum- ing, arguendo, without deciding, that this was declared to be a class action, would we wind up with more than one class? Because it’s quite obvious from the testimony here that the class of those who might have purchased ten days, two weeks later, other than the original, might be in a different position legally. Mr. Richter: Paragraph 4 of the stipulation, Your Honor. The Court: Well, I haven't got a chance to read it all, but that takes care of it? — 146 — Mr. Green: Yes, we've agreed there’s only one class for those who purchased in the two-day period of the [74] public of- fering. The Court: Now, gentlemen, the Court’s not in any hurry at all. We've got all afternoon. Can you give me some idea of how much further testimony there will be? Mr. Green: Yes, I can. The remaining witnesses will be Mrs. Livesay and I will testify and that’s it. The Court: Can you give me any information as to whether you gentlemen will have testimony? Mr. Richter: Your Honor, we will not put on any witnesses. Our further presentation will consist only of cross-examination. The Court: I assume then we will probably be able to ter- minate this hearing today, is that correct? Mr. Riddle: I’m sure that’s right, Your Honor. Mr. Green: No questions, Your Honor. (Discussion off the record.) The Court: May the witness be excused? Mr. Green: Yes, hc ll remain here for the hearing. The Court: Thank you, sir. DOROTHY LIVESAY, was called as a witness, and being first duly sworn to tell the truth, the whole truth and nothing but the truth, testified as follows: Direct Examination By Mr. Green: [75] Q. State your name and address please. A. Dorothy Livesay, 955 Greenway, Glendale, Missouri. =" Q. And Mrs. Livesay, you are the wife of Cecil Livesay, who just testified and you are named co-plaintiff in this case, is that correct? A. That’s correct. Q. And you have heard all of Mr. Livesay’s testimony with respect to—in connection with this hearing, have you not? A. I have. Q. Now, Mrs. Livesay, you have heard the issue raised with respect to your attitude towards the commitment that Mr. Livesay has made to pay the cost and expenses of this litiga- tion. Do you share his commitment? A. Yes, I do. Mr. Green: No further questions. Cross-Examination By Mr. Richter: Q. Mrs. Livesay, did you have any meetings with Mr. Green prior to filing this lawsuit? A. Yes, I did. Q. Did you take any part in the decision of whether this suit should be filed on your own behalf, or on behalf of a class? A. No, I did not. [76] Q. Did you take any part in any decision as to whom should be joined as defendants in this lawsuit? A. No, I did not. Q. Do you have an understanding who decided who should be joined as defendants in this lawsuit? A. Yes. Q. What is your understanding as to who decided that? A. I understand it was between my husband and our attorney. Q. Were you given any recommendation as to whom should be joined in this lawsuit? A. No, because I left it all up to my husband. Q. Were you told before this lawsuit was filed how much it could cost you? A. I think it was mentioned, but I really don’t know if it was before. — 148 — Q. You don’t remember whether there was any discussion or not, is that right? A. No, I don’t. Q. Did you agree before this lawsuit was filed to pay the expenses of the lawsuit regardless of whether you won? A. I did. Q. And who did you agree with? A. My husband. Q. Did you tell Mr. Green that you would pay the expense [77] of this lawsuit before it was filed regardless of who won? A. I don’t recall. Q. When you told your husband you’d pay the expenses, did he tell you how much they might be? A. I don’t remem- ber if he told me at that time. Q. Has anyone told you after this lawsuit started how much the expenses of it might be? A. I’ve heard a figure what it might be. Q. And what figure have you heard? A. Around five thou- sand. Q. From whom did you hear that figure? A. I believe I heard it from both my husband and my attorney. Q. Is it based on that five thousand dollar figure that you just testified that you’re agreeable to have your funds used to pay the expenses of this suit? A. No. Q. If the expenses were twenty-five thousand dollars would you be willing to pay that? A. I'd be willing to go along with whatever my husband thought was the thing we should do. Q. That’s not my question. The Court: She’s answered it. Q. Would you be willing to pay twenty-five thousand dol- lars if you lost this lawsuit? [78] A. If my husband said that we should, [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_2068%3A2. Public record. Not legal advice.