09-1750 In re: Motorola Securities Litigation

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Securities
ERISA; affiliated purchasers

A corporation’s profit sharing plan cannot claim a share of the settlement of a securities fraud action.

“[T]he Plan is an affiliate of Motorola and on this basis is excluded from the class, although we arrive at this conclusion by a slightly different analysis. The district court applied the ordinary meaning of the term ‘affiliate,’ but we think the term must be understood in light of the specialized context in which it is used here. This is a securities-fraud case, and under federal securities law, an ‘affiliate’ is defined by reference to control; one who controls, is controlled by, or is under common control with an issuer of a security is an affiliate. Motorola appoints the Plan’s administrator—the Motorola 401(k) Profit-Sharing Committee— and the members of this Committee serve at the pleasure of Motorola’s Board of Directors. This structural organizational control is sufficient to render the Plan an affiliate of Motorola. Accordingly, the Plan is excluded from the class definition, and the district court properly denied its claim to a share of the settlement proceeds.”

Affirmed.

09-1750 In re: Motorola Securities Litigation

Appeal from the United States District Court for the Northern District of Illinois, Pallmeyer, J., Sykes, J.

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