Henderson v. The Bank of New York Mellon Corporation et al

Filing 370

Chief Judge Patti B. Saris: MEMORANDUM and ORDER entered.The Court DENIES BNY Mellons motion to strike putative class representative Ashby Henderson (Docket No. 319 ). The Court DEFERS ruling on the plaintiffs motion for class certification (Docket No. 285 ) until the Court has the opportunity to review full briefing on summary judgment. See ORDER for Details. (Geraldino-Karasek, Clarilde)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
___________________________________
)
ASHBY HENDERSON and THOMAS
)
HERSHENSON, Individually and on
)
Behalf of All Others Similarly
)
Situated,
)
)
Plaintiffs,
)
Civil Action
)
No. 15-10599-PBS
v.
)
)
THE BANK OF NEW YORK MELLON,
)
NATIONAL ASSOCIATION,
)
)
Defendants.
)
___________________________________)
MEMORANDUM AND ORDER
September 25, 2017
Saris, C.J.
This proposed class action claims that defendant Bank of
New York Mellon, National Association (“BNY Mellon”), the
trustee for thousands of trusts, breached its fiduciary duties
to its trust beneficiaries in two ways: by imprudently investing
trust assets in poorly performing proprietary and affiliated
investment vehicles and by charging unauthorized fees for the
preparation of tax returns.
The plaintiffs move for class certification. Docket No.
285. As part of its opposition, BNY Mellon moves to strike
putative class representative Ashby Henderson on the basis of
inadequacy. Docket No. 319. BNY Mellon also filed its motion for

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summary judgment ahead of schedule, Docket No. 315, and sought
to defer decision on class certification until after
adjudication of its motion to strike and its motion for summary
judgment, Docket No. 322.
The Court DENIES BNY Mellon’s motion to strike putative
class representative Ashby Henderson (Docket No. 319). Because
the other class certification issues are intertwined with the
merits of the case and the summary judgment briefing is not yet
complete, the Court DEFERS decision on the plaintiffs’ motion
for class certification (Docket No. 285). Once the Court reviews
the full summary judgment briefing, the Court will determine the
proper order of decision between class certification and summary
judgment.
DISCUSSION
I.

Background
Ashby Henderson is a beneficiary of a trust administered by

BNY Mellon. She is a purported class representative for both
sets of claims in this suit: that BNY Mellon imprudently
invested trust assets in poorly performing proprietary and
affiliated investment vehicles and that BNY Mellon charged its
trusts unauthorized fees for the preparation of tax returns. The
other named plaintiff, Thomas Hershenson, is only a purported
class representative for the claim of unlawful tax preparation
fees.
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II.

Procedural Posture
BNY Mellon seeks to strike class allegations related to

Henderson under Federal Rules of Civil Procedure 12(f) and
23(d)(1)(D) on the basis that Henderson would not be an adequate
class representative. Docket No. 319. Rule 12(f) allows a court
to “strike from a pleading an insufficient defense or any
redundant, immaterial, impertinent, or scandalous matter.” Fed.
R. Civ. P. 12(f). Striking class allegations under Rule 12(f) is
disfavored. Manning v. Boston Med. Ctr. Corp., 725 F.3d 34, 58–
60 (1st Cir. 2013)(vacating the Court order striking the class
allegations on the pleadings). Rule 23(d)(1)(D) allows a court
to “require that the pleadings be amended to eliminate
allegations about representation of absent persons and that the
action proceed accordingly.” Fed. R. Civ. P. 23(d)(1)(D).
BNY Mellon’s motion is not based solely on the pleadings.
Rather, BNY Mellon’s motion is based on evidence outside of the
four corners of the pleadings, including the deposition
testimony of Henderson and the unusual history of this case. As
such, a motion to strike class allegations is an ill-fitting
procedural vehicle for BNY Mellon’s argument. As the plaintiffs’
motion for class certification had already been filed, the
better course would have been for BNY Mellon to include its
arguments in its opposition to the plaintiffs’ motion for class
certification.
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While the Court could deny the motion as procedurally
deficient, the Court will treat it as a partial opposition to
the motion for class certification. The burden of showing
compliance with the Rule 23 requirements remains on the party
seeking certification, namely the plaintiffs. See In re Nexium
Antitrust Litig., 777 F.3d 9, 18 (1st Cir. 2015).
III. Adequacy Analysis
BNY Mellon’s instant motion challenges only the adequacy
prong of Rule 23, under which a class action may proceed only if
“the representative parties will fairly and adequately protect
the interests of the class.” Fed. R. Civ. P. 23(a)(4). The First
Circuit has stated that there are two elements to the adequacy
requirement: “first that the interests of the representative
party will not conflict with the interests of any of the class
members, and second, that counsel chosen by the representative
party is qualified, experienced and able to vigorously conduct
the proposed litigation.” Andrews v. Bechtel Power Corp., 780
F.2d 124, 130 (1st Cir. 1985).
BNY Mellon argues that Henderson does not meet the adequacy
requirement for two reasons. First, BNY Mellon argues that
Henderson does not have a sufficient understanding of the case
to protect the interests of the class. Docket No. 320 at 14.
Second, BNY Mellon argues that rather than meaningfully
participating in her case, Henderson has abdicated control of
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the case to Brian McTigue, a lawyer that BNY Mellon argues is
unfit to represent the interests of the class. Id. at 18.
Finally, BNY Mellon argues that Henderson’s reliance on McTigue
creates a conflict with the class because the Court already
refused to appoint McTigue as class counsel. Id. None of the
arguments succeed.
Courts in this district have held that “[w]ith respect to
[the class representative’s] knowledge of the case, all that is
required of her is a general knowledge of the contours of the
litigation and personal participation in discovery events.” Otte
ex rel. Estate of Reynolds v. Life Ins. Co. of N. Am., 275
F.R.D. 50, 57 (D. Mass. 2011). In actions such as this one
involving complex financial matters, a named plaintiff is not
required to have expert knowledge of the details of the case and
properly places a great deal of reliance on counsel. See In re
Relafen Antitrust Litig., 231 F.R.D. 52, 69 (D. Mass. 2005). A
class representative’s reliance on the advice of counsel does
not necessarily disqualify the class representative; on the
contrary, “[f]ar from showing [the class representative’s]
ignorance of the litigation or [her] inability to serve as class
representative, it demonstrates [her] ability to appreciate the
limits of [her] knowledge and rely on those with the relevant
expertise.” Baffa v. Donaldson, Lufkin & Jenrette Sec. Corp.,
222 F.3d 52, 62 (2d Cir. 2000).
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To be sure, the adequacy requirement might not be satisfied
“where the class representatives ha[ve] so little knowledge of
and involvement in the class action that they would be unable or
unwilling to protect the interests of the class against the
possibly competing interests of the attorneys.” In re Flag
Telecom Holdings, Ltd. Sec. Litig., 574 F.3d 29, 42 (2d Cir.
2009) (alteration in original) (quoting Maywalt v. Parker &
Parsley Petroleum Co., 67 F.3d 1072, 1077–78 (2d Cir. 1995)).
The Court finds that Henderson has demonstrated sufficient
knowledge of her claims to serve as class representative. At her
deposition, Henderson was able to explain the essential nature
of her claims, at least to the extent that is reasonable to
expect from a layperson class representative in a complex
financial case. See Docket No. 330-1 at 15–18. Henderson’s level
of understanding of her claims was greater than that of putative
class representatives that courts found to be inadequate in some
of the cases cited by BNY Mellon. See In re Sepracor Inc., 233
F.R.D. 52, 55 (D. Mass. 2005) (denying certification where
putative class representative was unable to name the defendant,
name the drug at issue in the case, identify the condition the
drug was intended to treat, or recall when he bought stock in
the drug manufacturer); Kulig v. Midland Funding, LLC, No. 13CV-4715 PKC, 2014 WL 6769741, at *3 (S.D.N.Y. Nov. 20, 2014)
(denying certification where putative class representative was
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unable to identify the defendants’ business or explain what a
class action is or that she was the putative class
representative). Henderson did not display a disqualifying lack
of knowledge or interest in the case by displaying some
uncertainty about whether her “trust level fee” claim remained
in the latest amended complaint, Docket No. 334 at 46–47, or by
responding to certain deposition questions on some of the
details of her claims by deferring to her counsel, Docket No.
334 at 12–13, 18–19.
At the hearing, BNY Mellon argued that Henderson was
inadequate because she failed to attend or call in to the
parties’ mediation. There is evidence in the record that the
mediator permitted Henderson to participate by phone. Docket No.
330-1 at 5. Plaintiffs’ counsel represented to the Court that
Henderson was available by phone and conferred with counsel
telephonically multiple times during the course of the
mediation. See Docket No. 330 at 4. As the mediator granted
permission for Henderson to not attend the mediation, it cannot
be said that Henderson has “so little . . . involvement” in the
case as to render her inadequate. See In re Flag Telecom, 574
F.3d at 42.
The Court also finds that Henderson has not ceded control
of the litigation to lawyer Brian McTigue. Her continued contact
with McTigue does not give rise to a conflict with the class.
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Last summer, the Court was made aware of discord among the
plaintiffs’ counsel that resulted in McTigue firing the other
plaintiffs’ counsel. Henderson represented to the Court that she
was only willing to serve as named class representative if
McTigue was appointed as interim co-lead or sole lead class
counsel. Docket No. 171 at 11. On September 30, 2016, the Court
denied McTigue’s motion to be appointed interim lead class
counsel upon finding that his conduct during the litigation was
“deeply disturbing,” “contumacious,” and “uncivil.” Docket No.
192 at 2, 4. Subsequently, plaintiffs’ counsel came to an
agreement in which Bailey & Glasser LLP and the Howard Law Firm
would serve as interim co-lead counsel and McTigue’s firm would
serve on an Executive Committee under the direction of the colead counsel. Docket No. 202. At an October 13, 2016 status
conference, the Court engaged in a colloquy with Henderson
regarding this arrangement. See Docket No. 207. Henderson stated
that while she wanted McTigue to be involved, she did not demand
that McTigue serve as lead counsel and she was willing to work
with the other plaintiffs’ lawyers. Id. at 6. The Court
confirmed that Henderson understood that even if McTigue served
as her contact person, the whole team of plaintiffs’ lawyers was
representing the putative class. Id. at 7.
BNY Mellon claims that notwithstanding this formal
arrangement, Henderson continues to rely solely on McTigue while
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ignoring the other plaintiffs’ counsel. Docket No. 320 at 21.
But BNY Mellon’s claim is not borne out by the evidence. BNY
Mellon relies heavily on Henderson’s deposition testimony about
the events of last summer, but there is no evidence that
Henderson’s unwillingness to work with the other plaintiffs’
counsel persists into the present. On the contrary, Henderson
testified at the deposition that “[t]he judge’s concern [about
McTigue] concerned me” and that “[i]t weighed very heavily on me
that my judge -- the judge in front of us was so concerned that
we talked in greater length about working together.” Docket No.
334 at 52. While Henderson maintains her preference that McTigue
remain her main point of contact, Docket No. 334 at 55–56, that
arrangement is unproblematic so long as Henderson understands
that she is being represented by the whole team of interim class
counsel -- a matter that the Court addressed in its October 13,
2016 colloquy. Moreover, Henderson’s deposition testimony was
that she did work with the other plaintiffs’ counsel in
preparation for her deposition. Docket No. 330-1 at 11–14. Even
when the evidence is viewed with the additional degree of
skepticism warranted by the history of this case, BNY Mellon
puts forth little to counter the evidence that Henderson has
been working with the whole team of interim class counsel under
the arrangement they agreed to in October 2016.

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In sum, the Court finds that Henderson has adequate
knowledge of the case to serve as class representative, that she
has not ceded control of the case to unfit class counsel, and
that her interests do not conflict with the interests of the
class.
ORDER
The Court DENIES BNY Mellon’s motion to strike putative
class representative Ashby Henderson (Docket No. 319). The Court
DEFERS ruling on the plaintiffs’ motion for class certification
(Docket No. 285) until the Court has the opportunity to review
full briefing on summary judgment.

/s/ PATTI B. SARIS________________
Patti B. Saris
Chief United States District Judge

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