The opinion of the court was delivered by: PATEL
Plaintiff Robert Hockey ("Hockey") brought this action on behalf of himself and all others similarly situated against various defendants in connection with the purchase and sale of common stock in Alliance Semiconductor Corporation. The complaint contains a single claim of securities fraud under section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and accompanying Rule 10(b)(5), and controlling persons allegations under section 20 of that Act, 15 U.S.C. § 78t(a).
Now before the court is defendants' motion for partial reconsideration of the court's May 16, 1996 order.
The May 16 order granted defendants' application for leave to file a motion to dismiss, but declined to stay disclosures under section 21D(b)(3)(B) of the Private Securities Litigation Reform Act of 1995 ("PSLRA" or "the Act") (codified at 15 U.S.C. § 78u-4(b)(3)(B)), finding that the Act does not affect disclosures required by the Federal Rules of Civil Procedure and the Civil Local Rules of this District.
On May 17, 1996, defendants filed their motion to dismiss. On May 24, 1996, defendants filed an ex parte motion for a stay, pending appellate review, of the portion of the May 16 order regarding section 78u-4(b)(3)(B). This court treated that motion as a request for leave to file a motion for reconsideration of the May 16 order and, since the court had issued its order without the benefit of briefing from the parties, granted reconsideration. The court also stayed all disclosures required by the Federal Rules of Civil Procedure and the Local Rules pending the resolution of the motion for reconsideration. On June 4, 1996, defendants filed their papers in support of partial reconsideration of the May 16 order, and on the same date, plaintiff filed his opposition.
Section 78u-4(b)(3)(B) provides:
In any private action arising under this chapter, all discovery and other proceedings shall be stayed during the pendency of any motion to dismiss, unless the court finds upon the motion of any party that particularized discovery is necessary to preserve evidence or to prevent undue prejudice to that party.
15 U.S.C. § 78u-4(b)(3)(B). The issue now before the court is one of statutory construction of the new Act, namely whether the phrase "discovery and other proceedings" includes disclosures required by Rule 26 of the Federal Rules of Civil Procedure.
B. Principles of Statutory Construction
The court must start with the cardinal canon of statutory construction that Congress "says in a statute what it means and means in a statute what it says there." Connecticut Nat'l. Bank v. Germain, 503 U.S. 249, 253-54, 117 L. Ed. 2d 391, 112 S. Ct. 1146 (1992). "When the words of a statute are unambiguous, then, this first canon is also the last: 'judicial inquiry is complete'". Id. at 254 (quoting Rubin v. United States, 449 U.S. 424, 430, 66 L. Ed. 2d 633, 101 S. Ct. 698 (1981)). In the same term that it decided Germain the Supreme Court noted in another statutory construction case that when the statutory language is clear, any further inquiry should occur only in the "most extraordinary circumstance". Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 475, 120 L. ...