Anwar et al v. Fairfield Greenwich Limited et al, No. 1:2009cv00118 - Document 1413 (S.D.N.Y. 2015)
Court Description: DECISION AND ORDER: For the reasons stated above, it is hereby ORDERED that the request of New Greenwich Litigation Trustee, LLC, as Successor Trustee of the Greenwich Sentry and Greenwich Sentry Partners Litigation Trusts ("Trustee") for a pre-motion conference concerning its proposed motion to intervene in this action for the purpose of objecting to the Proposed Citco Settlement is DENIED. (As further set forth in this Order) (Signed by Judge Victor Marrero on 9/15/2015) (lmb) Modified on 9/15/2015 (lmb). (Entered: 09/15/2015)
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Anwar et al v. Fairfield Greenwich Limited et al Doc. 1413 i •r >lT\'.l \T UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK -----------------------------------x 09-cv-0118 (VM) PASHA ANWAR, et al., Plaintiffs, DECISION AND ORDER - against FAIRFIELD GREENWICH LIMITED, et al., Defendants. VICTOR MARRERO, United States Didtrict Judge. I On August 13, 2015, this Court issued an order preliminarily approving a partial settlement of this action ("August 13 Order") (Dkt. No. 1402), resolving claims asserted by the Representative Plaintiffs on their own behalf and on behalf of the Settlement .class (collectively, "Anwar Plaintiffs") against the Citco Defendants, as embodied in the Stipulation of Settlement ("Proposed Citco Settlement"). (Dkt. No. 1398.) In the August 13 Order, Stipulation resulted negotiations; and (b) the Court found that "(a) from the good faith, the arm's-length is sufficiently fair, reasonable and adequate to the $ettlement Class Members to warrant providing notice of Settlement to Class Members and holding a Settlement Hearing." 1402.) The Court set a Settlement (Dkt. No. Hearing for November 20, 2015 to determine "whether the prpposed partial Settlement of Dockets.Justia.com the Action on the terms and conditions provided for in the ! Stipulation is and reasonable, fair, adequate to the Settlement Class and should be apwroved by the Court; whether a Final Judgment and Order of Disimissal with Prejudice . as provided in Exhibit B to the Stipulation should be entered herein; whether the proposed Plan of Allocation should be approved; to determine the amount of fees and expenses that should be awarded to Plaintiffs' Counsel; and to rule upon such other matters as the Court may deem appropriate." By letter Litigation dated Trustee, August LLC, as 2015, 21, New Successor (Id.) Greenwich Trustee of the Greenwich Sentry and Greenwich Sentry Partners Litigation Trusts regarding ("Trustee") the requested Trustee's a proposed pre-motion conference motion intervene, to pursuant to Fed. R. Civ. P. 24, for the purpose of objecting to the Letter"). Proposed Citco Settlement ("August 21 Trustee (Dkt. No. 1408.) The Trustee argues that Paragraph 19 of the Proposed Final Judgment and Order of Dismissal with Prejudice ("Proposed (Dkt. Order") No. 1398 Ex. 5)1 is objectionable as it implies that the Court has determined that Citco has "colorable rights to offset the Trustee's 1 The relevant portion of Paragraph 19 $tates: " . . . Nothing in this paragraph precludes the Citco from arguing that the settlement proceeds in this case are an! off set against claims that may be made against them in other proceedings. " (Dkt. No. 1398 Ex. 5, , 19.) 2 claims." (Dkt. No. 14 08.) that the Proposed Citco the Trustee claims including the proposed class notice, does not indicate the basis of the offset nor how such an offset would be calculated. This Court ordered ' the Parties to respond to the Aµgust 21 Trustee Letter by September 3, 2015. By letter dated September 3, 2015, the Anwar Plaintiffs responded to the August 21 Trustee Letter ("September 3 Anwar Plaintiffs Letter") . (Dkt. No. 1411.) The Anwar Plaintiffs argue that the Proposed Citco Settlement "expressly states that it does not operate to release 'any claims asserted or which may be asserted by the Funds, dismissed) or the pending (though derivative litigation brought in connection with the Funds.'" 2 (Id.) The Anwar Plaintiffs also assert that the Trustee does not have standing to object to the Proposed Citco Settlement because "the Trustee is not a class member and cannot show 'formal legal prejudice.'" v. Piedrahita, 756 F.3d 211, 219 (Id.) (2d Cir. (quoting Bhatia 2014)). Finally, the Anwar Plaintiffs contend that the Trustee could not meet the requirements for intervention under Fed. R. Civ. P. 24. By letter dated September 3, 2015, the Citco Defendants also responded to the August 21 Trustee Letter ("September 3 2 This language is included in both the Proposed Citco Settlement (Dkt. No. 1398, , 16) and the Proposed Order No. 1398 Ex. 5, , 16). 3 Citco Letter"). (Dkt. No. 1410.) The Citco Defendants join the September 3 Anwar Plaintiffs Letter in full and further argue that the Trustee lacks to object to the Proposed Citco Settlement. In adqition, the Citco Defendants argue that the Trustee's allegation that the class notice was deficient for not reflecting Citco Defendants' offset rights is inaccurate as the notice fully complies with Fed. R. Civ. P. 23(2). The Trustee responded by letter dated September 3, 2015 ("September 3 Trustee Letter") and reiterates that while the Trustee agrees that the Proposed Citco Settlement does not release the Trustee's claims, it could be read to offset the Trustee's damages, resulting in prejudice and providing the basis for the Trustee's standing to object. (Dkt. No. 1409.) A "non-settling defendant generally lacks standing to object to a court order approving a partial settlement because a non-settling defendant is ordinarily not affected by such a settlement." Bhatia, 756 F. 3d at 218 Fogel, 989 F.2d 93, 98 (2d Cir. 1993)). However, there is a recognized exception to this defendant can "demonstrate that rule (citing Zupnick v. when a non-settling will sustain some formal legal prejudice as a result of the settlement." Id. (citing Zupnick, 989 F.2d at 98). Formal legal prejudice exists in rare circumstances such 4 as when a "settlement agreemen:t formally strips a non- settling party of a legal claim 9r cause of action, such as a cross-claim for contribution or indemnification, invalidates a non-settling party's contract rights, right to present relevant evidence at a trial." Id. omitted) . In Bhatia, the settlement which does not Secqnd Circuit or the (emphasis held that "a the later assertion of a non-settling party's claims (although it may spawn additional litigation to vindicate such claims) , does not cause the nonsettling party 'formal' legal prejudice." Id. at 219. The dispute here focuses on Paragraph 19 of the Proposed Order, which states in relevant part: "Nothing in this paragraph precludes the Citco Defendants from arguing that the settlement proceeds in this case are an off set against claims that may be made against them in other proceedings." (Dkt. No. 1398 Ex. 5, 19.) The language of this provision in no way prevents the Trustee from asserting the claims or defenses ("Nothing available in the to Final it. See Order Bhatia, precludes 756 the F.3d at 218 Non-Settling Defendants from asserting in the district court or in other litigation any claims or defenses that may be available to them."). The Trustee concedes as much, stating: "The settling parties and the Trustee agree that the proposed settlement does not release the Trustee's claims." 5 (Dkt. No. 1409.) Further, the Trustee's argument that it prejudice because the Proposed Citco Settlement read to somehow unavailing. (Id.) 'offset' the Trustee's (emphasis omitted) . suffers "could be damages" is argument is This speculative and thus not sufficient to demonstrate legal prejudice. See, In re Commodities Litig., No. 10-CV-3617, (S.D.N.Y. July 15, 2014), Platinum formal & Palladium 2014 WL 3500655, at *6 appeal dismissed (Oct. 6, 2014) ("The trustee has not shown formal legal prejudice here and does not have standing to object. Courts do not typically prognosticate about the res judicata effect of current orders in some future circumstance."). The Court therefore finds that the Trustee does not have standing to object to the Proposed Citco Settlement. ORDER For the reasons stated above, it is hereby ORDERED Trustee, LLC, that the request of New Greenwich Litigation as Successor Trustee of the Greenwich Sentry and Greenwich Sentry Partners Litigation Trusts 6 ("Trustee") for a pre-motion conference concerning its proposed motion to intervene in this action for the .purpose of objecting to the Proposed Citco Settlement is DEN:I;ED. SO ORDERED. Dated: New York, New York 15 September 2015 Victor Marrero U.S.D.J. 7
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