## Facts

- This consolidated securities-fraud class action arose from a December 1983 public offering of Doctors Officenters Corporation (DOC) common stock.
- Plaintiffs were purchasers of DOC stock who alleged they bought in reliance on a December 7, 1983 prospectus that contained material omissions and misleading statements.
- Plaintiffs asserted federal securities fraud claims under Exchange Act § 10(b) and SEC Rule 10b-5, along with common-law fraud theories.
- The litigation consisted of three related suits that were consolidated:
  - One suit named DOC, Flashner Medical Partnership (FMP), and several DOC directors and officers.
  - A second suit named DOC’s offering counsel (Katten, Muchin & Zavis) and certain individuals.
  - A third suit named Arthur Young & Company, the accounting firm that audited financial statements included in the prospectus.
- Steiner Diamond & Co., Inc. (Steiner Diamond), the managing underwriter for the offering, was not named as a defendant in any of the three actions.
- DOC and other defendants moved (1) for leave to serve third-party complaints on Steiner Diamond seeking contribution and (2) to decertify the previously certified class, arguing that the class representatives had a conflict of interest connected to Steiner Diamond’s absence as an original defendant.
- Arthur Young separately moved to dismiss the complaint against it in the third action.

## Issues

1. Whether the defendants could implead Steiner Diamond as a third-party defendant under Federal Rule of Civil Procedure 14(a) to pursue contribution for any liability stemming from alleged misstatements or omissions in the offering materials.
2. Whether the class should be decertified under Rule 23 based on an asserted conflict of interest between the class representatives and Steiner Diamond (including the contention that Steiner Diamond should have been named earlier as a defendant).
3. Whether the claims against Arthur Young should be dismissed as time-barred and, independently, for failure to plead facts sufficient to support securities-fraud aiding-and-abetting liability.

## Decision

- Granted the motion for leave to serve third-party complaints on Steiner Diamond for contribution.
- Denied the motion to decertify the class.
- Granted Arthur Young’s motion to dismiss the complaint against it.

## Legal Principles

- Rule 14(a) permits impleader of a nonparty who may be liable to the defending party for all or part of the plaintiff’s claim; in securities-fraud litigation, impleader may be allowed where the proposed third-party defendant (such as an underwriter) is alleged to have participated in the challenged offering materials and could share responsibility through contribution.
- Class certification and decertification focus on Rule 23’s requirements, including adequacy of representation; a claimed conflict tied to relationships with a newly added participant does not justify decertification absent a serious divergence between the representatives’ interests and the class’s interests.
- Where the asserted concern is that class representatives may be reluctant to pursue claims against a nonparty (or explain why it was not sued initially), courts may address fairness through steps short of decertification, such as disclosure to the class or adjustment of class representation.
- (Pre-*Central Bank*) aiding-and-abetting liability under § 10(b)/Rule 10b-5 required (at minimum) a primary securities-law violation, the alleged aider’s knowledge (or comparable state of mind), and substantial assistance; allegations that describe ordinary professional services without concrete facts supporting knowledge and assistance may fail, particularly under fraud-pleading standards.
- Securities-fraud claims may be dismissed as untimely when filed outside the applicable limitations period, including when the pleadings show that plaintiffs had (or should have had) notice of the alleged misconduct before the filing deadline.

## Conclusion

In *Robin v. Doctors Officenters Corp.*, the court allowed defendants in a consolidated § 10(b)/Rule 10b-5 class action to bring the offering’s managing underwriter, Steiner Diamond, into the case through Rule 14 impleader for contribution, rejected an attempt to decertify the class based on alleged conflicts tied to Steiner Diamond’s prior nonjoinder, and dismissed the separate complaint against auditor Arthur Young because it was filed too late and did not plead facts sufficient to support aiding-and-abetting securities-fraud liability.


Robin v. Doctors Officenters Corp., 686 F. Supp. 199 (1988)