Anwar et al v. Fairfield Greenwich Limited et al

Filing 1224

ENDORSED LETTER: addressed to Judge Victor Marrero from H. Eugene Lindsey dated 11/19/2013 re: Counsel for Plaintiff write one of the Plaintiffs in the Standard Chartered Cases ("SC Cases"). This letter responds to the Standard Chartered Defendants' November 12, 2013 letter seeking a pre-motion conference regarding a possible motion to dismiss the SC Cases under the Securities Litigation Uniform Standards Act ("SLUSA"). For the (reasons set forth in the correspondence from Plaintiffs' liaison counsel, which Ms. Barbachano adopt.s, Defendants' request should be denied. We write separately, however, to set forth the reasons why Defendants' SLUSA arguments are especially misplaced with regard to Ms. Barbachano. ENDORSEMENT: the Clerk of Court is directed to enter into the public record of this action the letter above submitted to the Court by Plaintiff Teresa Barbachano. (Signed by Judge Victor Marrero on 9/19/2013) (js) Modified on 11/20/2013 (js).

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P. DC:

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KATZ \BARRON
SQUlTER-O! FAUST

MIAMI
2699 S. BAYSHOR-E Oll.M
SEVENTH flOOR

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M:AMI.

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II [~ECTftOXIC,\LLY Fltl2D

November 19, 2013
By fax to [phone]

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FL 33133-540a

305-856·2444
305·285.9227 fAX

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wWW.k!HiurrOt\.eo,,",

Honorable Victor Marrero

United States District Judge

Daniel Patrick :'v1oynihan U.S. Courthouse

500 Pearl Street

New York, New Yorl< 10007-1312

Re:

Anwar, et al. v. Fabfield Greenwich Limiled, et al.,
Case No. 09-c:v-118 (VM)(THK), Standard Chartercd Cases

This correspondence relates to: Barbachano v. Standard Chartered Bank
International (Americas) Limited, el ai., 1:11-cv-03553-VM

Dear judge Marrero:
We write on behalf of Plail1tiff Teresa Barbachano, one of the Plaintiffs in the Standard
Chartered Cases ("SC Cases"). This let'ter responds to the Standard Chartered Defendants'
November 12, 2013 letter seeking a pre-motion conference regarding a possible motion to
dismiss the SC Cases under the Securities Litigation Uniform Standards Act ("SLUSA"). For
the ('casor.s set forth in the correspondence from Plaintiffs' liaison cOLinsel, which Ms.
B.arbachano adopt.s, Defendants' request should be denied. We write separately, however, to set
forth the reasons why Defendants' SLUSA a.rguments are especially misplaced with regard to
Ms. Barbachano.
A.

Ms.

B~"trbachano's

Suitabilitv Clllims Are Unique

From the beginning. it has been (and cOl1rimles to be) Ms. Barbachano's position that her
case should no! have been transferred to this l11ultidistrict litigation because legaJ and factual
que:ition) unique to her case predominate. In particular, Ms. Barbachano's complaint (and her
amended complaint) raise issues only pertaining to ber - that is. the suitability (or lack thereof)
of investment advice [I-at SCB! rendered to Ms. Barbachano regarding her entire portfolio, and
not merely the Defendants' advice and the leek of due diligence with regard to Fairfield Sentry.
See, e.g.. Comp!. ~i 40 ("Defendants breached their fiduciary duties t~at they owed to Barbachano
by causing her to make investments unsuited to her investment objectives and risk allocation. by
causing Barbachano to obtain a multi-million dollar loan from the Defendants rather than
liquidating part of her investments. and by ofren maldr.g investment decisions without obtaining
Barbachano'$ written authorization. The Defendants knew or should have known the
investments were unsuitable: for Barbachano ..."); Amended Compl. ~ 29 ("by JLlne 2008, the
allocation of B2..rbachano's portfolio to cash and bonds was a mere eleven (11) percent, that
ei location of assets \"/2.5 Ll:iSll itab 1e to Barbachano' s investme!1t objecri ve of capital preservation
and growth and her dsk tOlerance of moderate conservative.").
KATZ. BARRON. SQ.U InRO. FAUST. fIUCDSERG. ENGLISH &. A ~~U.N. P A
MIAMI' fT. LAUDER-DAU

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19-2013 TUE 04: 16 PM

P. 003

Honorable Victor Marrero
Page 2

Thus, Ms. 8arbachano opposed the Defendants' attempt to have her case transferred from
the Southern District of Florida (where it was originally tiled) to this forum. Initially, the Clerk
of the MlIltidistrict Panel agreed, denying Defendants' transfer request on March 1, 2011.
However, upon Defendants' motion, which Ms. Barbac,hano opposed, the mu!tidistrict panel
ordered the transfer of Ms. Barbachano's case on May 20,2011. In so doing, the panel expressly
set forth that this Court may suggest remand if the circumstances provided, stating: "To the
extent plaintiffs claims present some individual questions, the transferee judge is well suited to
handle those issues or to suggest remand whenever he deems appropriate." (See Transfer
Order. attached hereto as Exhibit A, emphasis supplied). This is now the occasion for remand if
the Court is inclined to grart the Defendants' request.
Indeed. having engineered the transfer of this case, Defendants now seek to profit by it,
:laiming that Ms. Barbachano's case should be considered part of a "covered class action"
because her case is part of this l11ultidistrict litigation. See Defendants' November 12, 2013
Letter, a! 1 n.l. However, if Defendants had made that claim to the multidistrict panel when it
sought transfer. the panel would surely have denied the request, especially given the panel's
acknowledgment that this Court COLlld revisit the transfer order whenever it saw fit. The panel,
we respectfully submit, did not order the transfer of Ms. Barbachano's action only to see her case
dismissed because of that decision. Cf 28 U.S.C. § 1407(a) ("[TJransfers shall be made by the
judicial panel on multidistrict litigation 2!llLhorizcd by this section upon its determination that
transfers for such proceedings will be for the convenience of parties and witnesses ami will
promote Ihejusl and efficient conduct ofsuch actions:') (emph3sis supplied).
Moreover, since transfer, Ms. Barbachano has continued to litigate separately the issues
unique to her case and she has maintained her own procedural rights. Thus, when the COLIrt
dismissed part of her original complaint. Ms. Barbachano moved for leave to amend based on
her rights under Rule 15(a), Fed. R. Civ. P. - rights that this Court recognized when it granted
her motion. Likewise, Ms. Barbachano (and the Defendants) have conducted discovery unique
to Ms. Barbachalio's case, including the depositions of former and present bank employees, Ms.
Barbachano, and her husband. Also, Ms. Barbachano has served her own eXFert reports -­
specific to Ms. Barbachano's claims -. as well as relying Llpon the other expert reports submitted
on behalfof all Plaintiffs.
For these reasons, therefore, Ms. Barbachano's case should be remanded if the Court is
inclined to grant :he Defendan~s' request to dismiss based on SLUSA. In thc lesser alternative,
the Court should permit Ms. Barbachano leave to amend J:er complaint to the extent that the
Court believes that any of Ms. Barbachano's claims are subject to dismissal under SLUSA.

B.

Trezziovll is Inapposite

Puning remand aside, SLL:SA is not applicable to Ms. Barbachano'S case a:1C the Second
Circuit'S recent decision in Tr(!!z;ow.r v. Kohn (In re Herald. Primeo & Themo Sec. Litig.), 730
F.3d 112 (2d Cir. 2013), is inapposite. Ms. Barbachano claims - even those regarding Standard
Chartered's failure to conduct reasonable due diligence of Fairfield - arise from her relationship
with the Defendants. See, e.g., Amended Comp\. ~ 66 (Barbachano and the Defendants "shared
a relationship Whereby Barbachano reposed her trust and confidence in Defendants regarding

KATZ. BAP..R.ON. SQ.UITER.O. FAUST. FR.IEOHRC. ENCLISH & ALLEN. P.A.

2699 S. BAVSHOIU D~(v£. SEVENTH FLOOi': MIAMI. FLOR.10A 33133-5408 . 305-856-2444·305·285-922" FAX

~0V-.9-:013

TUE 04: IE PM

Honorable Victor Marrero

Pag! 3

their investment recommendat'lons and decisions."); id. ~ 67 ("Defendants owed Barbachano
fiduciary duties of loyalty and care, including duties to make slIitable investment
recommendations and decisions only after conducting l'easonable due diligence, researching
potential investments, and disclosing all material facts, including the risks involved in any
investment."); id. ,; 68 ("Defendants also owed Barbachano fiduciary duties to render investment
and financial advice sllitable to ber investment objectives and risk tolerance. including suitable
recommendations regarding the asset allocations contained in Barbachano's portfolio.").
In contr~st. in Trezziova, the court held that claims against Madoffs b~nkers, JPMorgan
and BNY, arising from their materia~ assistance lO, and conslrllctive or actual knowledge of,
Madoff's Ponti scheme fell within the ambit of SLUSA - rhat is, the claims were founded on
~hose det'endaI1ts' direct assistance to the Ponzi scheme. As the Second Ci.cuit stated:
Plaintiffs, hovlevcr, conte:'ld that it is inappropriate under SLUSA to elide their
pLlrchase of "uncovered" interests in foreign feeder funds with Madofrs
"downstream" transactions in covercd securities. This argumenl. however,
ignores the fact that, on the very face of plaintiffs' complaints, the liability of
JPMorgan and S\lY is predicated !J.!2!. on these banks' relationships with
plaintiffs or their investment in the feeder funds but on the banks' relationship
with, and alleged assistance to, Mac/off Securities' Ponzi scheme, which
indisputably engaged in purported investments in covered securities on U.S.
exchanges.
Id. at 1J 8-19 (citation omined. emphasis added). Thus, liability of BNY and JPMorgan was
dependent on their relationship with Madoff. and not 0:1 those defendants' relationship with the
plaintiffs in that case. The exact Op~osile is true here.

Likewise. in Trezz;ovo, the court held SLUSA applicable oecause liability was predicated
on the complicity of defendants \vith Madoff. As the Second Circuit explained. "[t]he
complaints, fairly read, charge that JPMorgan and B~Y knew of the fraud, failed to disclose the
fraud, and helped the fraud succeed-in essence. that JPMorgan and BNY werc complicity (sic) in
Madoffs fraud." Id at 119. HO\NeVer, Ms. Barbachano's case - evcn that part of it related to
due diligence of Fairfield - is not based on the claim that scsr was complieit in Madoffs fraud.
Tbe decision in J'rezziovC! is, therefore. inapplicable to Ms. Barbachano's case for this reason as
well.

C.

Conclusion

For the forgoing reasons, and the reasons stated by Plaintiffs' Liasol'\ Counsel in his
letter, the Court should deny Standard Chartered's request for a pre-motion conference regarding
SLUSA. if, however, the Court is inclined to gran! Defendants' request and dismiss the actions
in this multidistrict litigation. then the Court ShOldd remand Ms. Barbachano'$ case to the
Southern District of Florida or, in the lesser alternative, grant Ms. Barbachano leave to amend
her complaint [0 withdraw My claim co the extent that the Court believes such claim is subject to
SLUSA.

KA.TZ. BARI\ON. SQUITER.O. FAUST. FRiEDBER.G. ENGLISH &. AllEN. P.A.
---2-6-S)-9-S-.-SA-Y-S-H....:.O.;..jt-E...;O;;..R.;...];;..;VE·. SEVENTH flOOR. MIAMI. FLOP-IDA 33133-5408·305·856·2444 - 305·285·9227 FAX

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p, 005

NOV-l9<Dl3 TCE 04:[6 PM

rlonorable Victor Marr!!ro
Page 4

Respectfl.d!y su b m itted,

Katz Barron Squitcro faust

Ene.
Cc; Counsel in the Standard Chartered Cases

The ~lerk of Court is directed 10 enter into the public record
·ofth aC!lOl)- th letter above submitted to the Court by

~rb

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KATZ. BAR-RON. SQUIHRO, FAUST. FR.rEOBH.G. ENGLISH &. AllEN. ?A.
2699 S. BAYSHOIU DI\.IVE. Sl'.VcNTH FLOOR.. MIAMI.

FLO~IDA

33133-5408 • 305-856-2444 - 305-285-9227 FAX

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rUE 04: 16 PM
Case MDL No. 2088 Document 132 Filed OS/20/11 Page 1 of 2

UNITED STATES JUDICIAL PA..'I\,l'EL

on

MULTIDISTRICT LITIGATION

IN RE: FAIRFIELD GREENWICH GROUP
SECURITmS LITIGATION
Joaquina Teresa Barbachano Herrero v. Standard Chartered Bank )
International (Americas) Limited, et al.,
)
S.D. Florida. C.A. No. 1:10-24387
)

MDLNo.2088

TRANSFER ORDER

Before the Panel:" Pursuant to 28 U.S.C. § 1407(c)(ji), defendants Standard Chartered
Bank International (Americas) Limited and Standard Chartered PLC (collectively Standard
Chartered) have moved to transfer the above-captioned action (Herrero) to MDL No. 2088.
Responding plaintiff opposes the motion.
After considering all arguments of counsel, we find that Herrero involves common
questions of fact with actions in this litigation previously transferred to MDL No. 2088, and that
transfer will serve the convenience of the parties and witnesses and promote the just and efficient
conduct of this litigation. Moreover, transfer is appropriate for reasons set out in our original
order directing centralization. In that order, we held that the Southern District of New York was
an appropriate Section 1407 forum for actions arising out of investments in Fairfield Greenwich
Group (Fairfield) funds which invested with Bernard 1. Madoff and Bernard L. Madoft'
Investment Securities LLC (Mado:ffi'BMIS). See In re: Fairfield Greenwich Group Sec. Litig..
655 F.Supp.2d 1352 (J.P.M.L. 2009).
The opposing Herrero plaintiff argues that although Herrero shares questions of fact
with previously centralized actions relating to allegations that her investment adviser failed to
conduct adequate due diligence of Fairfield Sentry fund and MadofflBMlS before
recommending this fund as an investment, questions of fact unique to Herrero will predominate
over these common factual issues. While there: undoubtedly will be some unique factual
questions in Herrero as to the suitability of the investments recommended for plaintiff's
portfolio and to a loan she obtained through Standard Chartered, common factual questions
between Herrero and the MDL No. 2088 actions are sufficiently numerous and complex to
warrant inclusion of Herrero in MDL proceedings. The Herrero plaintiff's claims will turn, in
large part, on factual questions concerning the Fairfield funds. For example, the extent and
adequacy of Standard Chartered's due diligence directly implicates Fairfield's due diligence of,
and representations regarding, BMIS and Madofl'. Discovery in Herrero necessarily will
• Judge Barbara S. Jones did not participate in the decision oitrus matter.

EXHIBIT

IA
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Case MDL No. 2088 Document 132 Filed 05120111 Page 2 of 2

implicate Fairfield's knowledge of, communications with, and representations concerning BMIS
and Madoff, which will directly overlap with the witnesses and documentary discovery in MDL
No. 2088. Transfer under Section 1407 is not dependent upon an identity of parties and legal
issues, but rather on the existence of common questions of fact. In re Zyprexa Prods. Liab.
Lilig., 314 F. Supp.2d 1380 (l.P.M.L. 2004); In re Gypsum Wallboard. 303 F. Supp. 510
(J.P.M.L 1969). To the ex.tent plaintiff's claims present some individual questions, the
transferee judge is well suited to handle those issues or to suggest remand whenever he deems
appropriate.

IT IS THEREFORE ORDERED that pursuant to 28 U.S.C. § 1407, this action is
transferred to the Southern District of New York and, with the consent of that court, assigned to
the Honorable Victor Marrero for inclusion in the coordinated or consolidated pretrial
proceedings.
PANEL ON MULTIDISTRlCTLlTIGATION

Chainnan
Kathryn H. Vratil
Frank. C. Darnrell, Jr.

W. Royal Furgeson, Jr.
Paul J. Barbadoro

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