Janssen v. OppenheimerFunds, Inc. et al
Filing
206
ORDER granting 201 Motion to Enforce Settlement, Final Judgment and Order of Dismissal Dated September 30, 2011 as to Putative Class Member Nancy Chard by Judge John L. Kane on 10/08/13.(jjhsl, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge John L. Kane
Civil Action No. 09-cv-00386-JLK-KMT (consolidated with 09-cv-525-JLK-KMT)
In re: OPPENHEIMER CHAMPION FUND SECURITIES FRAUD CLASS ACTIONS
ORDER GRANTING TFS SECURITIES, INC.’S MOTION TO ENFORCE THE
SETTLEMENT, FINAL JUDGMENT AND ORDER OF DISMISSAL DATED
SEPTEMBER 30, 2011 AS TO PUTATIVE CLASS MEMBER NANCY CHARD
Kane, J.
Broker-dealer TFS Securities, Inc. (“TFS”) moves to enforce the September 2011
settlement entered in the Oppenheimer Champion Fund securities fraud class action, specifically
asking the court to direct class member Nancy V. Chard to withdraw or otherwise cease
prosecuting claims against TFS currently pending before the Financial Industry Regulatory
Authority (FINRA) against it. Ms. Chard’s FINRA action is premised on claims TFS
encouraged her to invest in the Champion Fund based on “false representations” related to
“preservation of capital” and the security of her principal. Because these claims are
substantively identical to the claims litigated, and settled, in the Champion Fund Class Action,
TFS contends they were released under the terms of the Settlement Agreement and Judgment and
may not be pursued or litigated any further before FINRA. I agree.
I have already visited the standards applicable to this Motion in an Order issued in March
2012 related to a FINRA action being pursued by another Champion Fund class member,
Patricia Newton. In that Order (Doc. 195), I determined (1) that the question of arbitrability was
mine as the judge charged with the interpretation and enforcement of the Settlement Agreement
at issue (see *) and (2) that Ms. Newton’s FINRA claims premised on the “identical factual
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predicate” as settled claims had been released and were not properly the subject of arbitration or
any other legal proceeding against any Released Defendant under the Agreement. Finding the
broker-dealer against whom Ms. Newton had brought her FINRA arbitration action to be a
“Released Defendant” under the Agreement, and the claims she was bringing to be “Released
Claims,” I issued my order and directed Ms. Newton present it to the FINRA arbitration panel
for action consistent therewith.
In correspondence and FINRA filings leading up to the instant dispute, TFS gave Ms.
Chard’s FINRA representative, Benjamin Lapin, a copy of the Newton Order and formally asked
him to withdraw the FINRA arbitration action. Mr. Lapin declined, and TFS filed the instant
Motion to Enforce the Champion Class Settlement and a Motion to Stay in the FINRA action.
When the time for filing a response to the Motion to Enforce lapsed, I ordered counsel for TFS to
confer with Mr. Lapin and update me on the FINRA proceedings and Ms. Chard’s position on
the Motion to Enforce. See Minute Order (Doc. 203). That same day, the Court received a letter
from Mr. Lapin (Doc. 204) indicating he would not accept service in any proceedings before this
Court on Ms. Chard’s behalf. On October 4, 2013, TFS a Status Report (Doc. 205), relaying Mr.
Lapin’s position that he was not a lawyer and would not represent Ms. Chard on Motion to
Enforce, and asking me to exercise my jurisdiction under the Settlement Agreement to enforce
the Court’s Judgment before any more time and energy was spent arbitrating claims that were
settled in the Oppenheimer Champion Fund Class Action.
Before issuing my ruling on TFS’s Motion, I note Ms. Chard has been aware of TFS’s
position regarding the settled nature of her claims for several months, both through her FINRA
representative and in filings currently pending before the arbitrators there. In the six weeks since
the Motion to Enforce was filed, Ms. Chard has neither responded to the Motion nor retained
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counsel to address it. Because the status of her FINRA claims as “Released Claims” under the
Agreement is apparent on their face, I GRANT the Motion and make the following FINDINGS
of FACT and CONCLUSIONS of LAW:
1. The scope of an agreement to arbitrate is a question of arbitrability within the purview of
the court. In re American Express Fina. Advisory Secs. Litig., 672 F.2d 113, 139 (2d Cir.
2011). The scope of the Champion Fund class action Settlement Agreement and Release,
therefore, is for me to ascertain in the first instance. See Newton Order (Doc. 195) at 3.
2. Paragraph 2(b) of the Champion Fund Settlement Agreement (Doc. 177-2) releases “any
and all Released Claims against each and every one of the Released Defendant Parties . . .
.”
3. Paragraph 1(y) of the Champion Fund Settlement Agreement defines “Released
Defendant Parties” to include “broker-dealers or financial advisers of any Class
Member.” TFS is a “Released Defendant Party” under the Agreement.
4. Paragraph 15 of the Final Judgment incorporating the Settlement Agreement (Doc. 169)
prohibits any settlement class member, “other than a Class Member who validly and
timely elected to be excluded from the Class,” from commencing or continuing “any
action or proceeding in any court or tribunal asserting any of the Released Claims defined
in the [Settlement Agreement]” and “permanently enjoin[s]” them from doing so. Ms.
Chard is a member of the Champion Fund investor class who did not opt out of the
settlement. Accordingly, she is a member of the settlement class precluded under the
Final Judgment from pursuing any Released Claims under the Agreement.
5. “Released Claims” under the Champion Fund class action Settlement Agreement are
defined as:
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[A]ll claims, demands, rights, actions, suits, or causes of action of every nature
and description, whether known or unknown (including Unknown Claims, as
defined herein), whether the claims arise under federal, state, statutory,
regulatory, common, foreign or other law, whether foreseen or unforeseen, and
whether asserted individually, directly, representatively, derivatively, or in any
other capacity, that the Releasing Plaintiff Parties: (1) asserted in the Complaint
or the Action as against the Released Defendant Parties; (2) have asserted, could
have asserted, or could assert in the future, in any forum against the Released
Defendant Parties that are based upon, arise out of, or relate in any way to the
facts, matters, transactions, allegations, claims, losses, damages, disclosures,
filings, or statements set forth in the Complaint or at issue in the Action; or (3)
have asserted, could have asserted, or could assert in the future relating to the
prosecution, defense, or settlement of the action as against the Released
Defendant Parties.
Id., ¶ 1(x)(emphasis mine). That class action settlements may require class members to
release not only the claims asserted in the settled action but also any current or future
claims based on the same operative facts is well established. As the Supreme Court has
observed, in order to accomplish a full and effective settlement and thereby “prevent
relitigation of settled questions at the core of a class action, a court may permit the
release of a claim based on the ‘identical factual predicate’ as that underlying the claims
in the settled class action even though the claim was not presented and might not have
been presentable in the class action.” Matsushita Electric Indus. Co. v. Epstein, 516 U.S.
367, 376-77 (1996) (quoting Nottingham Partners v. Dana, 564 A.2d 1089, 1106 (Del.
1989) and TBK Partners v. Western Union Corp., 675 F.2d 456, 460 (2d Cir. 1982)).
The Champion Fund Settlement Agreement and Release were approved on that basis in
my September 30, 2011, Order.
6. Ms. Chard’s FINRA claims against TFS are “Released Claims” under the Champion
Fund class action Settlement Agreement in that they are “based on, arise out of, or relate
to” the same facts and allegations underlying the class action claims. Specifically, Ms.
Chard claims TFS and other agents and representatives of Oppenheimer encouraged her
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to invest in Champion Fund shares based on “false promises of preservation of capital”
and assurances that her “principal was guaranteed.”
[W]here there is a realistic identity of issues between the settled class action and
the subsequent suit . . . the situation is analogous to the barring of claims that
could have been asserted in the class action. Under such circumstances the
paramount policy of encouraging settlements takes precedence.
TBK Partners at 461. That those facts are presented to support relief under different legal
theories such as fraud, negligence and breach of fiduciary duty does not matter; what is to
be prevented is the “relitigation of settled questions at the core of a class action.” Id. at
460. Based on my knowledge of the Champion Fund litigation and my review of Ms.
Chard’s FINRA claims, there is, indeed, an identity of operative facts underlying them
both that impacts the original agreement to arbitrate. Accordingly,
TFS’s Motion to Enforce the Settlement and Final Judgment and Order of Dismissal
Dated September 30, 2011 (Doc. 201) is GRANTED. I have jurisdiction over the subject matter
of Ms. Chard’s claims against TFS and find them to be “Released Claims” within the meaning of
the operative Class Action Settlement Agreement entered in Civil Action No. 09-cv-386, In re
Oppenheimer Champion Fund Securities Class Action. I further find TFS to be a “Released
Defendant” under the terms of that Agreement that cannot be compelled to arbitrate “Released
Claims” before FINRA. TFS shall cause this Order to be submitted to the FINRA arbitration
panel for action consistent with it.
Dated October 8, 2013
s/John L. Kane
SENIOR U.S. DISTRICT JUDGE
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