Oetting v. Sosne et al
OPINION MEMORANDUM AND ORDER IT IS HEREBY ORDERED that the Motion to Dismiss, [Doc. No. 14], is granted. IT IS FURTHER ORDERED that this Appeal is dismissed. 14 Signed by District Judge Henry Edward Autrey on 6/21/17. (CLA)
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MISSOURI
IN RE GREEN JACOBSON, P.C., DEBTOR )
DAVID P. OETTING, CLASS
FOR THE NATIONSBANK CLASS,
) Case No 4:16CV1906 HEA
DAVID SOSNE, TRUSTEE FOR THE
DEBTOR AND SKMDV HOLDINGS, INC.
OPINION, MEMORANDUM AND ORDER
This matter is before the Court on the Motion of Appellee David A. Sosne,
Trustee for the Bankruptcy Estate of Green Jacobson, P.C. (the “Debtor”), to
Dismiss the Appeal, [Doc. No. 14]. Appellant opposes the Motion, and has filed a
responsive memorandum thereto. For the reasons set forth below, the Motion is
Appellant Appeals from certain orders of the Bankruptcy Court in the above
styled Bankruptcy Proceeding. Appellee urges dismissal for lack of standing of
Appellant, David P. Oetting, in his capacity as Class Representative for the
Facts and Procedural Background
The facts and procedural history giving rise to this matter are set out by the
Eighth Circuit Court of Appeals in Oetting v. Norton, 795 F.3d 886 (8th Cir. 2015):
After the merger of NationsBank Corporation and BankAmerica
Corporation, shareholders of both companies filed class action lawsuits
alleging violations of the federal securities laws. The cases were transferred
to the Eastern District of Missouri, where the district court appointed David
Oetting as one lead plaintiff of the NationsBank class and the St. Louis law
firm of Green Jacobson as lead counsel for the class. The litigation settled,
resulting in a $333 million settlement fund for the NationsBank class. We
affirmed the district court's approval of the settlement over Oetting's
objection that it was inadequate. In re BankAmerica Corp. Sec. Litig., 350
F.3d 747 (8th Cir.2003); see Koehler v. Brody, 483 F.3d 590, 598–99 (8th
On the recommendation of Green Jacobson, the district court
appointed Heffler, Radetich & Saitta, LLP (Heffler), as claims administrator
to distribute the settlement fund to class member claimants. During the
claims process, an employee of Heffler conspired to submit fifteen false
claims against the fund, resulting in the payment of $5.87 million that
otherwise would have been paid to members of the class. In 2010, the
district court denied Green Jacobson's motion for leave to file a
supplemental complaint against Heffler to recover this loss. Oetting
subsequently filed a separate action against Heffler on behalf of the
NationsBank class that was transferred to and is pending in the Eastern
District of Pennsylvania.
After two distributions to the NationsBank class in December 2004
and April 2009, some $2.4 million remained in the settlement fund. Green
Jacobson moved to have the remaining $2.4 million distributed cy pres and
requested an additional award of $98,114.34 in attorney's fees for postsettlement work. Oetting opposed the cy pres distribution as contrary to class
members' interests, opposed the award of additional attorney's fees, and
argued that Green Jacobson should disgorge $2 million in fees for
abandoning the class. Oetting also filed this separate class action, alleging in
four counts that class counsel Green Jacobson and three members of the firm
(collectively, “Green Jacobson”) (i) committed legal malpractice by
negligently hiring and failing to supervise claims administrator Heffler, and
(ii) breached its fiduciary duty by taking various actions that constituted
abandonment of the NationsBank class. The complaint sought damages for
causing the $5.87 million fraud loss to the settlement fund and disgorgement
of the entire $60 million in attorneys fees awarded Green Jacobson in the
In the main action, the district court granted Green Jacobson's motion
for a cy pres distribution and for a supplemental fee award and denied
Oetting's request for disgorgement. In re BankAmerica Corp. Sec. Litig., No.
4:99–MD–1264, 2013 WL 3212514, at *1, *6 (E.D.Mo. June 24, 2013).
Oetting appealed. We reversed the cy pres award, ordering the district court
to allow an additional distribution to the class and then to consider whether a
cy pres award of any remaining funds would be appropriate. In re
BankAmerica Corp. Sec. Litig., 775 F.3d 1060, 1064–67 (8th Cir.2015). We
vacated the supplemental fee award as premature prior to completion of
additional distributions that would be made after remand. Id. at 1067–68.
Oetting v. Norton, 795 F.3d 886, 887–88 (8th Cir. 2015).(footnotes omitted).
An involuntary petition under Chapter 7 of the Bankruptcy Code was filed
against Green Jacobson, P.C. on March 3, 2015. The Order for Relief in this
bankruptcy case was entered on April 26, 2015, and Appellee David A. Sosne was
appointed as the Chapter 7 Trustee.
On May 20, 2015, Appellant David P. Oetting, as “class representative” filed
a general unsecured proof of claim in the amount of $10,503,914.70. This Claim
was amended by Oetting on October 6, 2016 in the same amount.
Appellee/Trustee objected to the Claims. The Bankruptcy Court entered its
Order Denying Motion for Abstention and Sustaining Objection to Claim on
November 29, 2016. Appellant appeals this Order.
Appellee moves to dismiss this Appeal based on lack of standing of
Appellant in his capacity as Class Representative for the original NationsBank
class for lack of standing.
“[F]ederal courts are courts of limited jurisdiction.” Dakota, Minnesota &
E.R.R. Corp. v. Schieffer, 715 F.3d 712, 712 (8th Cir. 2013) (citations omitted).
The party invoking federal jurisdiction has the burden of establishing that it exists.
Id.; see also Jones v. United States, 727 F.3d 844, 846 (8th Cir. 2013); Bowe v.
Nw. Airlines, Inc., 974 F.2d 101, 103 (8th Cir. 1992). “Without jurisdiction the
court cannot proceed at all in any cause. Jurisdiction is power to declare the law,
and when it ceases to exist, the only function remaining to the court is that of
announcing the fact and dismissing the cause.” Steel Co. v. Citizens for a Better
Env't, 523 U.S. 83, 94 (1998).
The Eighth Circuit Court of Appeals has unequivocally resolved the issue
before this Court. In an action by Oetting against the Receiver for Green Jacobson,
P.C., the Court held that although Oetting was named the Class Representative in
the Multi-District Litigation, the appointment does not allow him to proceed in a
separate action against different parties.
[O]etting's duty to represent the class in the main action does not
afford him Article III standing to assert claims against different parties in a
new action. See In re Celotex Corp., 496 Fed.Appx. 3, 5 (11th Cir.2012)
(certified class representative in national class action denied standing to
assert class action claims against the settlement trust in a bankruptcy
adversary proceeding because it did not personally have the claim asserted
on behalf of the putative class).
[W]e conclude that Oetting's status as class representative of the
NationsBank class certified in the main action did not, without more,
provide either Oetting or the class itself with standing to maintain any of the
claims asserted in this separate action.
Oetting, 795 F.3d at 891.
Appellant’s reliance on Williams v. Employers Mutual Casualty Company,
845 F.3d 891 (8th Cir. 2017), which holds that a class representative of a certified
class acts on behalf of the class in ancillary proceedings, is misplaced. Appellant’s
Claim in the Bankruptcy proceeding is not ancillary to the original class action
case, but rather, the claims filed in the Bankruptcy Court are independent, separate
and distinct actions against different parties. The Eighth Circuit’s ruling in Oetting
is clearly applicable in this matter.
Appellant, as Class Representative, without more, lacks standing to bring the
claims of NationsBank class members. As such, the Court lacks subject matter
jurisdiction over this appeal. The matter will be dismissed.
IT IS HEREBY ORDERED that the Motion to Dismiss, [Doc. No. 14], is
IT IS FURTHER ORDERED that this Appeal is dismissed.
Dated this 21st day of June, 2017.
HENRY EDWARD AUTREY
UNITED STATES DISTRICT JUDGE
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