Anwar et al v. Fairfield Greenwich Limited et al

Filing 1265

ENDORSED LETTER addressed to Judge Victor Marrero from David A. Barrett dated 4/24/2014 re: Counsel for the Anwar Plaintiffs write to oppose Plaintiffs' request to amend the SCAC. ENDORSEMENT: The Clerk of Court is directed to enter into the public record of this action the letter above submitted to the Court by plaintiffs on Anwar. (Signed by Judge Victor Marrero on 5/13/2014) (tn)

04 / 24 / 2014 09:23 FAX

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April 24 , 2014

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Judge Victor Marrero
United States District Court
Southern District of New York
500 Pearl Street
New York, N ew York 10007

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Anwar, e( al. v. Fairfield Greenwich Limited, et of.
Master File No. 09-CY -00118 (YM) (FM)

Dear Judge Marrero:
We write on behalf of the Anwar Plaintiffs to reply briefly to Citco's April 23,20 14 letter
("Letter") opposing Plaintiffs' request to amend the SCAC.
Timeliness. Citco argues that "Plaintiffs do not even attempt to offer a persuasive reason
why they seek to amend at such a late stage " Letter at 2. Respectfully, the Court's August 6,
2012 Decision and Order ("Order") was ambiguous, as implicitly recognized by Citco's letter
(Dkt. no. 1253) and the Court's order (Dkt. no . 1256) referring to "clarification" of the prior
Order. Plaintiffs interpreted the Order in good faith as dismissing only initial investor claims
against PwC because: (i) the two operative decretal sentences specifically referred to the "PwC
Defendants" rather than the "Defendants;" (ii) the Order's analysis of Credit Alliance focused
solely on allegations concerning PwC, as well as relying on Plaintiffs' concession that related
solely to the PwC Defendants; and (iii) respectfully, the Order's reasoning could not have
applied to all "Defendants" because the Fairfield Defendants solicited Plaintiffs to invest in the
Funds and therefore necessarily knew Plaintiffs' specific identities at all relevant times. See
Plaintiffs' April 17,2014 letter requesting a pre-motion conference and March 24, 2014 letter
(Dkt. no. 1255)1
Nor does Citco cite any authority that Plaintiffs are required to "offer a persuasive
reason" for moving to amend now, as opposed to a showing that Plaintiffs did not act with any
bad faith or dilatory motive. The length of time alone does not support denying the motion. See,
e.g., Commander Oil Corp v. Barlo Equipment Corp, 215 F.3d 321, 333 (2d Cir. 2000) (no
abuse of discretion to allow amendment after seven-year delay, absent prejudice) ; Rachman Bag
Co. v. Liberty Mutual Insurance Co, 46 F .3d 230,235 (2d Cif. 1995) (leave to amend properly
granted despite four-year delay).2
: Indeed, the Fairfield Defendants' joinder in PwC's motion did not even seek dismissal of
initial investor claims against FGG w1der Credit Alliance, but rather argued that Plaintiffs lacked
standing.
] Citco knew of Plaintiffs' position no later than its receipt of PI am tiffs' expert damages report
on August 23 , 2013, but did not seek clarification until March 19 , 2014 In herrebuttal report on

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04 / 24 / 2014 09:24 FAX

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Judge Victor MaITero
April 24,2014
Page 2

No Undue Prejudice. Citco claims that the "proposed amendments would not only
require additional fact discovery, but also would require significant additional expert discovery
as well." Letter at 2 . This claim of prejudice, however, is wholly conclusory and unsupp0l1able.
Citco asserts that "the proposed amendments are virtually the same as the allegations already
asserted in the SCAC" Letter at 3 (emphasis added) . As such, these allegations have been the
subject of discovery. For example, for three years prior to the date of the Order (August 6,
2012), the mitial investment negligence claims indisputably were in the case, with almost all
depositions of Plaintiffs having occurred prior thereto. Moreover, Plaintiffs ' other, non­
negligence causes of action necessitate consideration of initial investments; and the negligence­
based claims relating to subsequent investments pose the same merits issues as initial investment
claims. Finally, although Citco has made no meaningful showing of prejudice, Plaintiffs would
not oppose reasonable, specific requests by Citco for additional discovery or supplemental expert
reports concerning this issue .
Claims Well-Founded. In Stephenson v. PwC, LLP, 482 F. App'x 618 , 622 (2d Cif
2012) (summary order), the Second Circuit found no duty to the plaintiff because the auditor did
not know plaintiffs Identity prior to his actual " investment" in the fund . In contrast, Plaintiffs
here allege - and the facts established in discovery make clear - that Plaintiffs were identified
and known to Citco prior to their investments in the Funds. Citco received investors '
subscription requests, including name, country of residence, telephone number, fax number, and
email address, which Citco, in tum, sent to "FGG-NY" to decide whether to accept the investor
into the Fund. Citco does not - because it carmot - deny this djspositive fact
Instead, Citco argues that it did not know the identity of investors before they "made their
investment decisions" or before they "had already decided to invest in the funds." Letter at 3.
However, this is not the standard. Credit Alliance does not require that a service provider know
an investor's identity before they "decide" to invest - whenever that indefinable moment might
occur - and Citco cltes no authority for its self-serving interpretation. Rather, as the Second
Circuit makes clear, Credit Alliance requires only that a service provider know an investor's
identity "plior to his investment in [the fund]" Stephenson , 482 F. App'x at 622. See Anwar 11,
728 F. Supp. 2d at 424, 434 (quoted in Dkt. no. 1255 at 2-3). That circumstance exists here and,
in any event, to the extent Citco wlshes to advance this argument, it can do so at summary
judgment.
The Clerk of Court is directed to enter into the public record
of this action the letter above submitted to the Court by

~4EiDavid A. Barrett

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January 29, 2014, Plaintiffs ' expert presented damages calculations that both included and
excluded initial purchases, and she was deposed concerning both sets of calculations.