Anwar et al v. Fairfield Greenwich Limited et al

Filing 1238

MANDATE of USCA (Certified Copy) as to #1120 Notice of Interlocutory Appeal filed by Miguel Lomeli, Morning Mist Holdings Limited USCA Case Number 13-1581. Ordered, Adjudged and Decreed that the judgment of the District Court is AFFIRMED. Catherine O'Hagan Wolfe, Clerk USCA for the Second Circuit. Issued As Mandate: 12/20/2013. (nd)

Case: 13-1581

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N.Y.S.D. Case #
09-cv-0118(VM)

MANDATE
13-1581
Lomeli v. Fairfield Greenwich

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

SUMMARY ORDER
RULINGS

BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

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At a stated term of the United States Court of Appeals
for the Second Circuit, held at the Thurgood Marshall United
States Courthouse, 40 Foley Square, in the City of New York,
on the 26th day of November, two thousand thirteen.
PRESENT: DENNIS JACOBS,
BARRINGTON D. PARKER,
DENNY CHIN,
Circuit Judges.
- - - - - - - - - - - - - - - - - - - -X
MIGUEL LOMELI, MORNING MIST HOLDINGS
USDC SDNY
LIMITED,
DOCUMENT
Plaintiffs-Appellants,

ELECTRONICALLY FILED
DOC #:
_________________
DATE FILED:December 20, 2013
______________

AXA PRIVATE MANAGEMENT,
Lead Plaintiff,
PASHA S. ANWAR, ON BEHALF OF
THEMSELVES AND ALL OTHERS SIMILARLY
SITUATED INVESTORS IN THE GREENWICH
SENTRY, L.P. PRIVATE INVESTMENT
LIMITED PARTNERSHIP, JULIA ANWAR, ON
BEHALF OF THEMSELVES AND ALL OTHERS
SIMILARLY SITUATED INVESTORS IN THE
GREENWICH SENTRY, L.P. PRIVATE
INVESTMENT LIMITED PARTNERSHIP, ET
AL.,
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MANDATE ISSUED ON 12/20/2013

Case: 13-1581

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Plaintiffs,
SHIMON LAOR, ET AL.,
Consolidated Plaintiffs,

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ARJAN MOHANDAS BHATIA, ET AL.,
All Plaintiffs,

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SECURITIES & INVESTMENT COMPANY
BAHRAIN, ET AL.,
Plaintiff-Appellees,

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-v.-

13-1581

-v.FAIRFIELD GREENWICH LIMITED, A CAYMAN
ISLAND COMPANY, ET AL.,
Defendants-Appellees,

FAIRFIELD GREENWICH ADVISORS L.L.C.,
AMIT VIGAYVERGIA, CITCO FUND SERVICES
(EUROPE) B.V.,
Defendants - Consolidated
Defendants - Appellees,
YANKO DELLAW SCHIAVA, ET AL.,
Consolidated Defendants Appellees,

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FAIRFIELD GREENWICH CORP.,
Consolidated Counter
Defendant - Appellee,
1-20 JOHN DOES,
Defendants,
- - - - - - - - - - - - - - - - - - - -X

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Case: 13-1581

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FOR APPELLANT:

ROBERT A. WALLNER, Milberg LLP,
New York, New York (Jennifer L.
Young, Kristi Stahnke McGregor,
Milberg LLP, Stephen Weiss,
Parvin Aminolroaya, Seeger Weiss
LLP, on the brief), for
Plaintiffs-Appellants Miguel
Lomeli and Morning Mist Holdings
Limited.

FOR APPELLEES:

DAVID A. BARRETT, Boies, Schiller
& Flexner LLP, New York, New
York (Howard L. Vickery, II,
Stuart H. Singer, Boies,
Schiller & Flexner LLP, Robert
C. Finkel, James A. Harrod,
Natalie M. Mackiel, Wolf Popper
LLP, Christopher Lovell, Victor
E. Stewart, Lovell Stewart
Halebian Jacobson LLP, on the
brief), for PlaintiffsAppellees.
MARK G. CUNHA, Simpson Thacher &
Bartlett LLP, New York, New York
(Peter E. Kazanoff, Jeffrey L.
Roether, Jeffrey E. Baldwin, and
Nicholas S. Davis, on the
brief), for Fairfield Greenwich
Limited, Fairfield Greenwich
(Bermuda) Limited, Fairfield
Heathcliff Capital LLC,
Fairfield Risk Services Limited,
Lourdes Barreneche, Vianney
d’Hendecourt, Yanko Della
Schiava, Harold Greisman,
Jacqueline Harary, Richard
Landsberger, Daniel E. Lipton,
Julia Luongo, Mark McKeefry,
Charles Murphy, Corina Noel
Piedrahita, Maria Teresa Pulido
Mendoza, Santiago Reyes, Andrew
Smith, Philip Toub, and Amit
Vijayvergiya.
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Case: 13-1581

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MARC E. KASOWITZ, Kasowitz Benson
Torres & Friedman LLP, New York,
New York (Daniel J. Fetterman,
on the brief), for Jeffrey H.
Tucker.
BRUCE A. BAIRD, Covington &
Burling LLP, Washington, D.C.,
for Gregory Bowes.
ANDREW J. LEVANDER, Dechert LLP,
New York, New York (Neil A.
Steiner, on the brief), for
Andres Piedrahita.
ANDREW HAMMOND, White & Case LLP,
New York, New York (Glenn M.
Kurtz, on the brief), for Walter
M. Noel, Jr.
EDWARD M. SPIRO, Morvillo
Abramowitz Grand Iason & Anello
P.C., for David B. Horn and
Robert A. Blum.
SEAN F. O’SHEA, O’Shea Partners
LLP, New York, New York, for
Cornelis Boele.
Appeal from a judgment of the United States District
Court for the Southern District of New York (Marrero, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
AND DECREED that the judgment of the district court be
AFFIRMED.
Miguel Lomeli and Morning Mist Holdings Limited appeal

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from the judgment of the United States District Court for

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the Southern District of New York (Marrero, J.), approving a

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partial class action settlement.

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The underlying class

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action (the “Anwar action”) alleges that the defendants made

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material misstatements concerning their due diligence while

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investing with Bernard L. Madoff Investment Securities LLC.

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During the district court proceedings, the plaintiffs and

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the Fairfield Greenwich defendants settled on a basis that

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requires the plaintiffs to release any derivative claims on

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behalf of the Fairfield Greenwich funds.

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filed a derivative claim in New York state court on behalf

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of one of the funds, Fairfield Sentry Limited (“Sentry”)

The appellants

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(the “Morning Mist action”).

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Southern District of New York and then remanded back to

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state court.

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in the British Virgin Islands, however, and the Morning Mist

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action therefore has been stayed by the Bankruptcy Court for

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the Southern district of New York.

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filed a direct action against the Fairfield Greenwich

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defendants, also in the Bankruptcy Court for the Southern

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District of New York.

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Fairfield Greenwich Grp., Adv. Pro. No. 10-03800 (Bankr.

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S.D.N.Y. Oct. 27, 2011).

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settlement insofar as it requires them to release their

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derivative claims, and cites deficiencies in the settlement

That action was removed to the

Sentry is undergoing a liquidation proceeding

Additionally, Sentry has

See Fairfield Sentry Ltd. V.

The appellants object to the

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notice.

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to reconsider the approval in light of the Supreme Court’s

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decision in Comcast Corp. v. Behrend, 133 S. Ct. 1426

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(2013).

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underlying facts, the procedural history, and the issues

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presented for review.

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They also appeal the district court’s decision not

We assume the parties’ familiarity with the

We review the approval of a class action settlement for

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abuse of discretion.

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(2d Cir. 2013).

Charron v. Wiener, 731 F.3d 241, 247

“A district court abuses its discretion

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when its decision rests on an error of law or a clearly

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erroneous factual finding, or when its decision cannot be

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located within the range of permissible decisions.”

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“We review factual findings relating to the settlement for

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clear error and issues of law de novo.”

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court’s denial of a motion for reconsideration is also

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reviewed for abuse of discretion.

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Indus. Corp., 329 F.3d 310, 316 (2d Cir. 2003).

Id.

Id.

A district

RJE Corp. v. Northville

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1.

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“[I]n order to achieve a comprehensive settlement that

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would prevent relitigation of settled questions at the core

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of a class action, a court may permit the release of a claim

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. . . even though the claim was not presented and might not

Scope of the Release

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have been presentable in the class action.”

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Ltd. v. Western Union Corp., 675 F.2d 456, 460 (2d Cir.

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1982).

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limited by the ‘identical factual predicate’ and ‘adequacy

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of representation’ doctrines.”

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Visa U.S.A., Inc., 396 F.3d 96, 106 (2d Cir. 2005); see also

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TBK Partners, 675 F.2d at 460-62.

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TBK Partners,

The “[p]laintiffs’ authority to release claims is

Wal-Mart Stores, Inc. v.

The claims in the Anwar action and the derivative
claims in the Morning Mist action share a single factual

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predicate: the alleged misconduct of the Fairfield Greenwich

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defendants in failing to conduct adequate due diligence, and

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misrepresentations regarding their due diligence.

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district court recognized this identity when it initially

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agreed to consolidate the two actions.

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Fairfield Greenwich Grp., No. 1:09-cv-00118,(S.D.N.Y. June

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9, 2009, ECF No. 167).

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identity.

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The

See Anwar v.

The appellants do not contest this

“Adequate representation of a particular claim is

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established mainly by showing an alignment of interests

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between class members.”

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07.

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in the Fairfield Greenwich funds (including Sentry), every

Wal-Mart Stores, 396 F.3d at 106-

Since the plaintiff class is composed of equity holders

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member of the class has an interest in claims that may be

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made derivatively on behalf of the funds.

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appellants claim that the release disproportionately affects

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them relative to other class members.

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representation exists to release derivative claims that may

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be pursued by the settling class.

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Nor do the

Therefore, adequate

We are unpersuaded that Sentry’s absence from the class

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nullifies the settlement.

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settling class from bringing a derivative action, an action

The settlement only limits the

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that belongs to the corporation.

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Mgmt., L.P., 380 F.3d 133, 138 (2d Cir. 2004).

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the settlement limits the ability of Sentry to pursue an

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action for its benefit or the ability of class members who

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opt out to pursue derivative claims.

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appellants’ reliance on National Super Spuds, Inc. v. New

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York Mercantile Exchange is misplaced: in that case, the

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factual predicate and adequate representation tests were not

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satisfied.

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Wal-Mart Stores, 396 F.3d at 110-11.

See Scalisi v. Fund Asset

Furthermore, the

660 F.2d 9, 18 n.7, 19 (2d Cir. 1981); see also

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2.

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A settlement notice must be reasonable.

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Nothing in

The Settlement Notice

P. 23(e)(2).

Fed. R. Civ.

“There are no rigid rules to determine whether

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a settlement notice to the class satisfies constitutional or

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Rule 23(e) requirements.”

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Agency, Inc., 473 F.3d 423, 438 (2d Cir. 2007) (quoting Wal-

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Mart Stores, 396 F.3d at 114).

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must ‘fairly apprise the prospective members of the class of

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the terms of the proposed settlement and of the options that

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are open to them in connection with the proceedings.’”

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Masters v. Wilhelmina Model

“[T]he settlement notice

Id.

This notice informed the class members that they would
not be able to participate in any other proceeding against

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the Fairfield Greenwich defendants in any forum.

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warned class members to seek counsel if they were involved

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in any litigation against the defendants, directed them to

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the stipulation, and explained how to opt out if they wanted

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to preserve their claims.

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The notice

The settlement notice here did not specifically refer

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to the Morning Mist derivative action.

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encourages settlement notices to include “specific

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reference[s] to pending actions,” we have never held this to

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be a requirement.

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The settlement notice was reasonable and could be

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“understood by the average class member.”

While this Court

Wal-Mart Stores, 396 F.3d at 116 n.22.

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Id. at 114.

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3.

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The appellants sought reconsideration of the district

Reconsideration of the Settlement Approval

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court’s settlement approval in light of the Supreme Court’s

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decision in Comcast Corp. v. Behrend, 133 S. Ct. 1426

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(2013).

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its discretion in denying reconsideration for the reasons

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articulated in its decision and order.

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Fairfield Greenwich Ltd., No. 1:09-cv-00118 (S.D.N.Y. Apr.

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4, 2013, ECF No. 1104).

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We conclude that the district court did not abuse

See Anwar v.

For the foregoing reasons, and finding no merit in the

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appellants’ other arguments, we hereby AFFIRM the judgment

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of the district court.

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FOR THE COURT:
CATHERINE O’HAGAN WOLFE, CLERK

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