Cromeans v. Morgan Keegan & Company, Inc. et al

Filing 745

ORDER entered by Judge Nanette Laughrey, granting Plaintiffs' motion to compel, doc. 740 . (Barragan-Scott, Alana)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
CENTRAL DIVISION
JOHN W. CROMEANS., JR.,
Individually and on behalf of all
others similarly situated,
Plaintiff,
v.
MORGAN KEEGAN & CO., INC., et al.,
Defendants.

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No. 2:12-CV-04269-NKL

ORDER
Plaintiffs move to compel the settlement administrator to proceed to make payments to
class members who have submitted valid proofs of claim. Doc. 740. Morgan Keegan takes the
position that the settlement administrator cannot do so while Plaintiffs’ appeal is pending before
the Eighth Circuit and that this Court lacks jurisdiction to enter such an order. Plaintiffs’ motion
to compel is granted.
I.

Background
Under the Court-approved settlement, Plaintiffs’ attorneys have already been paid fees

and expenses, and the settlement administrator is prepared to disburse about $4.4 million to class
members who have submitted valid claims.
However, the process has been delayed by a post-settlement dispute between the parties.
Plaintiffs have claimed that Defendants were required under the settlement agreement to deposit
more money for payments to class members. Specifically, Plaintiffs claimed that some of the
bonds at issue were sold after the class period and are now held by non-class members, so those
bonds could not be tendered as part of the claims process. Plaintiffs therefore argued that

Defendants owe an additional $411,618 to the class.

Doc. 719.

The Court has rejected

Plaintiffs’ argument and ruled that Defendants do not owe the class an additional $411,618.
Docs. 732 and 737. Plaintiffs appealed the Court’s ruling to the Eighth Circuit and that appeal is
pending. When Plaintiffs appealed, Defendants took the position that the terms of the settlement
agreement stayed all further administration of the settlement pending final resolution of the
appeal, including disbursement by the settlement administrator of the $4.4 million, prompting
Plaintiffs to file the motion to compel, Doc. 740.
The relevant terms of the settlement agreement are as follows:
D.

PRELIMINARY APPROVAL

… In the event an appeal is filed from the Court's Judgment[ 1
that challenges the terms of the settlement, other than the
amount of the Plaintiffs' Attorneys’ Fees award, administration
of the Settlement shall be stayed pending final resolution of
the appeal or other appellate review. In the event an appeal is
filed that is limited to a challenge regarding the amount of the
Plaintiffs’ Attorneys’ Fees and the Court or applicable appellate
court certifies that this is the sole issue raised by the appeal, the
administration of the Settlement shall proceed in all respects
with the exception of the payment of Attorneys’ Fees at issue.
In the event there is an appeal limited to the Plaintiffs
Attorneys’ Fees and/or Costs, the amount awarded to Plaintiffs'
Counsel in Fees and/or Costs that is the subject of the appeal
shall remain in the interest bearing account at a federally
insured banking institution as described in Section III.R(S) below.
All interest earned on the amount shall inure to the benefit of
Class Counsel. If the appeal is successful, any interest earned on
the amount of Fees and/or Costs not awarded to Class Counsel
shall be distributed to Authorized Claimants on a pro rata basis.
[emphasis added] [Doc. 691-1, pp. 12-13 of 66.]
***
L.

NOTICE/APPROVAL OF SETTLEMENT,
SETTLEMENT IMPLEMENTATION

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“Judgment” was defined as “the Judgment and Order Re: Final Approval of
Class Action Settlement issued by the Court.” Doc. 691-1, p. 8 of 66.
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… (3) The Parties agree that neither they nor their counsel will
solicit or otherwise encourage directly or indirectly Class
Members to object to the Settlement or appeal from the Court’s
Judgment. Defendants agree that they will not discourage, either
directly or indirectly, Class Members from submitting a Claim
Form. [emphasis added] [Id., p. 21 of 66.]
***
T.

APPEAL WAIVER

The Plaintiffs, individually, Class Members, Defendants, all
attorneys for the Class Representatives and the Class, and all
attorneys for the Defendants hereby waive any and all rights to
appeal the Court’s Judgment, this waiver being contingent upon
the Court entering a Judgment that is consistent with the terms set
forth in this Agreement. This waiver includes waiver of all rights
to any post-judgment proceeding and appellate proceeding,
including but not limited to, motions to vacate judgment, motions
for new trial, and extraordinary writs. The waiver does not include
any waiver of the right to oppose any appeal, appellate proceedings
or post-judgment proceedings, if any. The waiver does not
include any waiver of the right by Plaintiffs’ Counsel to
challenge any ruling on Plaintiffs’ Counsel’s application for
award of attorneys’ fees and costs. [emphasis added] [Id., pp. 2930 of 66.]
***
R.

SETTLEMENT PAYMENTS

… (7) Transfer of Funds to Claims Administrator. Within ten (10)
calendar days of the Court granting final approval of this
Settlement, Defendants shall cause to be transferred to the Claims
Administrator an amount equal to the Settlement Payments to
Authorized Claimants who are referenced above in Section
III.R.(6)(b), Attorneys’ fees awarded by the Court not to exceed
33 113% of the Gross Settlement Amount, costs awarded by the
Court not to exceed $270,000, and Class Representative
Enhancements not to exceed $30,000. In the event of any appeal,
the Claims Administrator shall transfer back to Morgan Keegan
any amounts that had previously been deposited therewith to be
held by Morgan Keegan in an interest-bearing account pending the
appeal. [emphasis added] [Id., pp. 27-28 of 66.]

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With respect to the Court’s jurisdiction after entry of judgment, the settlement agreement
provides:
[] After entry of the Judgment, the Court shall have continuing
jurisdiction over the Litigation solely for purposes of (i) enforcing
this Agreement, (ii) addressing settlement administration matters,
and (iii) addressing such post-Class Final Judgment matters as may
be appropriate under court rules or applicable law. [Doc. 691-1,
p. 21 of 66.]
The order approving settlement also provided that the Court will retain jurisdiction after entry of
judgment, as follows:
Without affecting the finality of this Order or entry of judgment in
any way, the Court shall hereby retain continuing and exclusive
jurisdiction over the Stipulation of Settlement and Plan of
Allocation, including disputes or other issues relating to: (a) the
administration, consummations, interpretation, and enforcement
of the Stipulation of Settlement; (b) the implementation of the
Stipulation of Settlement and any award or distribution of the
Settlement Fund; (c) the disposition of the Settlement Fund and
implementation of the Plan of Allocation; and (d) all Parties hereto
for the purpose of construing, enforcing, and administering the
Settlement.
Doc. 715, pp. 7-8 (Report and Recommendation), and Doc. 719 (Order adopting and approving
R & R).
II.

Discussion
A.

Jurisdiction

As set out above, the Court expressly retained continuing jurisdiction over the settlement,
including enforcement of the settlement agreement and addressing settlement administration
matters. The reservation plainly covers Plaintiffs’ present motion to compel, and provides the
Court continuing jurisdiction to resolve such dispute. See Harris v. Ark. State Hwy. and Transp.
Dep’t, 437 F.3d 749, 751 (8th Cir. 2006) (express reservation of jurisdiction to enforce settlement
provided the district court with continuing jurisdiction to do so) (citing Gilbert v. Monsanto Co.,
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216 F.3d 695, 700 (8th Cir. 2000)). Nonetheless, Morgan Keegan argues that the reservation of
jurisdiction does not mention whether jurisdiction continues after an appeal. However, the
express reservation of jurisdiction broadly covers post-judgment settlement matters and this is a
post-judgment settlement dispute. Absent an express limitation to the Court’s jurisdiction after
appeal, the broad jurisdictional authority contained in the settlement agreement prevails.
Of course, the parties cannot confer subject matter jurisdiction on a court by agreement.
But contrary to Morgan Keegan’ argument, Plaintiffs’ appeal of the order denying the motion to
enforce settlement has not divested the Court of actual jurisdiction. Generally, “ʽ[t]he filing of a
notice of appeal ... confers jurisdiction on the court of appeals and divests the district court of its
control over those aspects of the case involved in the appeal.’” Ahlberg v. Chrysler Corp., 481
F.3d 630, 638 (8th Cir. 2007) (quoting Liddell v. Bd. of Educ. of St. Louis, 73 F.3d 819, 822 (8th
Cir. 1996)). “ʽ[T]he mere pendency of an appeal does not, in itself, disturb the finality of a
judgment.’” Knutson v. AG Processing, Inc., 302 F. Supp. 2d 1023, 1039-40 (N.D. Iowa 2004)
(quoting Wedbush, Noble, Cooke, Inc. v. S.E.C., 714 F.2d 923, 924 (9th Cir. 1983)). Thus, as
long as the order or judgment has not been superceded or stayed, it “ʽremains fully in effect, and
[the court that entered it] retains authority to enforce” it.

Id. (quoting ALLEN IDES, THE

AUTHORITY OF A FEDERAL DISTRICT COURT TO PROCEED AFTER A NOTICE OF APPEAL HAS BEEN
FILED, 143 F.R.D. 307, 323 (Nov. 1992)); see also Huey v. Sullivan, 971 F.2d 1362, 1367 n. 6
(8th Cir. 1992) (same). The district court simply may not “take any action that would undermine,
enlarge, or otherwise alter the status of the case on appeal.” Id. (quoting N.L.R.B. v. Cincinnati
Bronze, Inc., 829 F.2d 585, 588 (6th Cir. 1987)); see also 143 F.R.D. 307, 325 (same).
In this case, neither the judgment nor any post-settlement orders have been superceded or
stayed, whether by this Court or the Eighth Circuit. Furthermore, Morgan Keegan has not shown

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how a ruling on Plaintiffs’ motion to compel could undermine, enlarge, or otherwise alter the
status of the case on appeal. The issue on appeal concerns whether Defendants are liable to pay
an additional $411,618 toward class members’ claim payments, on top of the approximately $4.4
million Defendants will pay pursuant to the settlement agreement. Defendants do not dispute
their liability to pay the $4.4 million. In short, whatever happens with regard to the additional
$411,618, Defendants are required to pay the $4.4 million to the class members.
Although Morgan Keegan argues that both the present motion and Plaintiffs’ pending
appeal involve interpretation of the settlement, the comparison is so general as to swallow the
rule that permits a district court to exercise authority to enforce a judgment or control the
proceedings while an appeal is pending, as long as doing so does not alter the status of the case
on appeal.
Accordingly, the Court concludes it has jurisdiction to rule on the present motion.
B.

The settlement agreement and stays of settlement administration

The parties do not argue that the language of the agreement is ambiguous. They simply
disagree as to its meaning with respect to the provisions concerning the effect of an appeal. A
settlement agreement is a contract. Precision Investments, LLC v. Cornerstone Propane, LP, 220
S.W.3d 301, 303 (Mo. 2007) (en banc) (citations omitted). Interpretation of a “settlement
agreement is governed by the same principles applicable to any other contractual agreement, and
the primary rule of construction is that the intention of the parties shall govern.” Andes v.
Albano, 853 S.W.2d 936, 941 (Mo. 1993) (en banc) (citations omitted). Generally, where the
language of an agreement is plain and unambiguous, that language will be given full effect in the
context of the agreement as a whole. Id. (citation omitted).
Reading the settlement agreement as a whole and giving effect to its plain language, the

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Court concludes that Plaintiffs’ pending appeal does not operate to stay settlement
administration, specifically, payment of the $4.4 million in claims to class members. The
agreement reflects the parties’ focus on approval of the settlement, and potential challenges to
the Court’s Judgment. The parties expressly planned for how to manage settlement
administration “in the event an appeal is filed from the Court’s Judgment … challeng[ing] the
terms of the Settlement[.]” In such a case, the parties agreed, “administration of the Settlement
shall be stayed.” To maximize the chances of a successful settlement, the parties further agreed
that they would neither encourage class members to object to the settlement, nor appeal from the
Court’s Judgment themselves, and to waive “any and all rights to appeal the Court’s Judgment,”
provided that the Court approved the settlement as proposed.

The Court did approve the

settlement, and no one subsequently challenged its terms through an appeal of the Court’s
Judgment. These sections make it clear that a stay was to occur only if the Court’s Judgment
was appealed.
Finally, the agreement provides that “[i]n the event of any appeal, the Claims
Administrator shall transfer back to Defendants any amounts that had previously been deposited
therewith to be held by Morgan Keegan in an interest-bearing account pending the appeal.” This
provision is titled “(7), Transfer of Funds to Claims Administrator,” and in the context of the
agreement as a whole, it is fairly read only as a provision for the mechanics of how to handle
funds of the settlement and not an expansion of the earlier-discussed stay provisions. While this
section only refers to “appeal” and not an appeal from the Court’s Judgment, one would not
expect a later section dealing only with the mechanics of fund transfers to expand the earlier stay
provisions that limited such stays to appeals taken from the Court’s Judgment. None of the

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provisions prior to (7), Transfer of Funds to Claims Administrator, referred to stays for all
appeals.
Morgan Keegan focuses on part of the quoted language in the settlement—“in the event
an appeal is filed” and “administration of the Settlement shall be stayed,” Doc. 742, p. 9—failing
to account for the qualification that the appeal be “from the Court’s Judgment.” But the Court
must give effect to all parts of a contract where possible. Goldstein and Price, L.C. v. Tonkin &
Mondi, L.C., 974 S.W.2d 543, 552 (Mo. Ct. App. 1998) (citing Harris v. Union Electric Co., 622
S.W.2d 239, 248 (Mo. Ct. App. 1981)). A construction that gives a reasonable meaning to all of
a contract’s provisions is preferred to one that leaves a portion of it useless or inexplicable. Id.
Here, the Court cannot overlook that the parties qualified their agreement to a stay by reference
to appeals from the Court’s Judgment, and the Court will not rewrite the agreement.
In view of the foregoing, Plaintiffs’ present appeal does not trigger a stay of settlement
administration.
II.

Conclusion
Plaintiffs’ Emergency Motion to Compel Settlement Administrator to Make Payments to

Class Members, Doc. 740, is granted.
s/ Nanette K. Laughrey
NANETTE K. LAUGHREY
United States District Judge
Dated: July 18, 2016
Jefferson City, Missouri

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