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A federal appeals court has affirmed the right of lead plaintiffs to select their own attorneys in a securities class action. In December 2008, Judge James Ware of the U.S. District Court for the Northern District of California appointed two co-lead plaintiffs in a securities case against the NVIDIA Corporation: the New Jersey Carpenters Pension and Annuity Funds and an individual named Roberto Cohen. The judge also appointed two law firms as co-lead counsel: Milberg LLP and Girard Gibbs LLP. However, one of these lead plaintiffs had not selected these firms as their counsel. While the Carpenters Pension Fund had retained Milberg, Roberto Cohen had chosen neither Milberg nor Girard Gibbs. He had actually retained another law firm altogether to represent him and the class. Cohen asked the judge to reconsider, but his request was denied. He then sought a writ of mandamus, asking the U.S. Court of Appeals for the Ninth Circuit to vacate the lower court's decision and allow his original choice of counsel. At issue was whether the district court has authority to select lead counsel under the Private Securities Litigation Reform Act of 1995, or PSLRA. Last month, the appellate judges sided with Cohen, instructing the lower court to vacate the order that appointed Girard Gibbs. The court then ordered that Judge Ware reconsider which firm to appoint on the merits. The decision is a clear victory for lead plaintiffs who should, as the PSLRA intended, have the right to choose their own counsel. The court wrote: "Although it cannot be contested that the district court had the authority to reject Cohen's choice of lead counsel, it does not follow that having done so it had the authority to select lead counsel of its own choosing. This argument misses the fundamental point that the PSLRA unambiguously assigns this authority to the lead plaintiff." The court went on to say that the PSLRA "clearly identifies the most adequate plaintiff as the actor that 'select[s] and retain[s]' class counsel. Although this power is subject to court approval and is therefore not absolute, it plainly belongs to the lead plaintiff." The court's decision wisely confirms the importance of the lead plaintiff's role in securities fraud litigation, which begins with the decision to retain counsel and continues throughout the prosecution of the litigation. |