Putative Class Members Lack Standing to Appeal after Dismissal of Uncertified Class Action

The appeal in Employers-Teamsters v. Watson Pharmaceuticals, case no. 04-56791 (9th Cir. August 16, 200) was from four consolidated actions brought by investment advisor Anchor Capital against Watson Pharmaceuticals, alleging violation of the securities laws.  The trial court considered motions for the appointment of lead plaintiff pursuant to the Private Securities Litigation Reform Act (the “PSLRA”), 15 U.S.C. § 78u-4(a), including a motion from the appellants.  Anchor Capital was appointed lead plaintiff.  After Watson Pharmaceuticals successfully moved to dismiss on Rule 9(b) grounds (insufficiently specific pleading of fraud, Fed. R. Civ. P. 9(b)), the court granted Anchor Capital’s request to dismiss all four actions with prejudice.  The appellants never filed a complaint, moved to intervene, or objected to the requested dismissal.  On appeal, appellants challenged the lead plaintiff ruling.

The court dismisses the appeal.  The court finds that appellants lack standing to appeal because they were never parties in any of the underlying suits.  They were “merely potential class members in a potential class action suit.”  (Emphasis added.)  The court also finds the appeal moot because the cases were dismissed without a class ever being certified.