United States District Court, D. Nebraska
Gerald J. KLEIN, Individually and on Behalf of All Others Similarly Situated; Plaintiff,
TD AMERITRADE HOLDING CORPORATION, TD AMERITRADE INC., and FREDERIC TOMCZYK, Defendants.
F. Bataillon Senior United States District Judge
matter is before the court on the lead plaintiff Roderick
Ford's objection, Filing No. 164, to the order
of the magistrate judge, Filing No. 163, granting TD
Ameritrade's motion for protective order, Filing No.
141, and denying lead plaintiff's motion to compel
responsive discovery, Filing No. 149.
are purported class actions alleging wrongdoing in connection
with stock trades. In this action, the lead
plaintiff alleges that TD Ameritrade did not route
its clients' equity orders for execution in a manner that
seeks “best execution, ” and claims that, as a
consequence, TD Ameritrade violated Section 10(b) of the
Securities Exchange Act of 1934.
lead plaintiff challenges the magistrate judge's denial
of his discovery request for classwide trading data
consisting of hundreds of millions of orders to prove
economic loss in support of a motion for class certification.
The magistrate judge found that the lead plaintiff's
discovery requests were overbroad and not relevant, as beyond
the scope of the class certification issues. The magistrate
judge also found that TD Ameritrade has provided extensive
discovery on the lead plaintiffs' equity orders and
concedes, for purposes of the class certification process,
many of the plaintiff's elements of proof for class
certification. The denial, however, was without prejudice
“to allow Ford an opportunity to narrow the requests
and provide detailed justification correlating specific
discovery sought to class certification issues based on the
proportional needs of the case.” Filing No.
163, Order at 4. Lead plaintiff declined to do so and
instead filed this objection to the magistrate judge's
lead plaintiff asserts the magistrate judge erred in failing
to substantiate its conclusions and failing to address
relevant precedent discussed at length in the parties'
briefing. He argues the affidavit of his expert demonstrated
that the requested discovery was necessary to establish
classwide harm. See Filing No. 151-3,
Affidavit of Haim Bodek (“Bodek Aff.”)
magistrate judge's authority over nondispositive pretrial
matters is governed by 28 U.S.C. § 636(b)(1)(A).
Gomez v. United States, 490 U.S. 858, 873-74 (1989);
see also Fed.R.Civ.P. 72(a). On review of a decision
of the magistrate judge on a nondispositive matter, the
district court may set aside any part of the magistrate
judge's order that it finds is clearly erroneous or
contrary to law. 28 U.S.C. § 636 (b)(1)(A); Fed.R.Civ.P.
72(a); see Ferguson v. United States, 484
F.3d 1068, 1076 (8th Cir. 2007). (“A district court may
reconsider a magistrate judge's ruling on nondispositive
pretrial matters where it has been shown that the ruling is
clearly erroneous or contrary to law.”).
decision is “‘clearly erroneous' when,
although there is evidence to support it, the reviewing court
on the entire evidence is left with the definite and firm
conviction that a mistake has been committed.”
Chakales v. Commissioner of Internal Revenue, 79
F.3d 726, 728 (8th Cir. 1996); see Ferguson v.
United States, 484 F.3d 1068, 1076 (8th Cir. 2007). A
decision is "contrary to the law" when it
"fails to apply or misapplies relevant statutes, case
law or rules of procedure." Knutson v. Blue Cross
& Blue Shield of Minn., 254 F.R.D. 553, 556 (D.
Minn. 2008) (quoting Transamerica Life Ins. Co. v.
Lincoln Nat'l Life Ins. Co., 592 F.Supp.2d 1087,
1093 (N.D. Iowa 2008)). A magistrate judge is afforded broad
discretion in the resolution of nondispositive discovery
disputes. Bialas v. Greyhound Lines, Inc., 59 F.3d
759, 764 (8th Cir. 1995).
defendants have shown that they undertook substantial efforts
to collect and produce detailed information on the putative
representative plaintiffs' 11, 491 equity orders during
the three year putative class period. This included 41
different categories of data, encompassing more than 470, 000
pieces of information, as well as multiple alternative
variations of requested data. They contend the question of
whether economic loss can be assessed on a common basis for
the entire class can be resolved by consideration of the
representative plaintiffs' equity order data.
court finds the lead plaintiff has not refuted that
contention. He relies on the affidavit of an expert for the
proposition that in order to make a best-execution analysis,
“no sample could precisely demonstrate economic loss on
a class-wide basis, which would require the entire dataset of
orders.” Filing No. 151-3, Bodek Aff. at 2.
The expert conceded, however, that he could make approximate
assessments of execution quality for orders placed by all TD
Ameritrade clients if limited to the transaction data of just
a few sufficiently active individual traders, but that the
assessments would be susceptible to criticism that the orders
were not representative. Id. at 2. The court finds
the lead plaintiff has not shown that the voluminous records
it seeks are necessary at the class certification stage. Nor
has he demonstrated that he will be unable to make a showing
of economic loss from a representative sample.
court agrees with the magistrate judge's findings. The
court finds the order of the magistrate judge is not clearly
erroneous or contrary to law. Accordingly, the lead