Anwar et al v. Fairfield Greenwich Limited et al

Filing 1311

MEMORANDUM OF LAW in Opposition re: #1292 MOTION for Disbursement of Funds of the GlobeOp Net Settlement Fund. . Document filed by Sylvia Tucker. (Leyva, Leonel)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
PASHA S. ANWAR, et al.,
Plaintiffs,
v.

Master File No. 09-cv-0118 (VM)

FAIRFIELD GREENWICH LIMITED, et al.,
Defendants.
This Document Relates To: 09-cv-118(VM)

SYLVIA TUCKER’S MEMORANDUM OF LAW IN PARTIAL OPPOSITION TO
CLASS PLAINTIFFS’ MOTION FOR DISTRIBUTION OF THE
GLOBEOP NET SETTLEMENT FUND

COLE, SCHOTZ, MEISEL, FORMAN & LEONARD, P.A.
Leo V. Leyva
David M. Kohane
900 Third Avenue
New York, New York 10022
Telephone: [phone]
Facsimile: [phone]
Attorneys for Sylvia Tucker

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TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ......................................................................................................... ii
PRELIMINARY STATEMENT ................................................................................................... 1
STATEMENT OF FACTS ............................................................................................................ 2
A. Sylvia Tucker Lost Most Of Her Life Savings ............................................................. 2
B. Sylvia Tucker Is Part Of The FG Settlement Class....................................................... 3
C. The GlobeOp Settlement Class ..................................................................................... 4
D. Class Plaintiffs Now Seek To Deny Mrs. Tucker Any Distribution From The
GlobeOp Net Settlement Fund............................................................................................ 4
LEGAL ARGUMENT ................................................................................................................... 5
I.

Mrs. Tucker Is A Member of the Globeop Settlement Class and Entitled to Receive her
Pro Rata Distribution from the Globeop Net Settlement Fund........................................... 5

CONCLUSION .............................................................................................................................. 8

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TABLE OF AUTHORITIES
Page(s)
Cases
A. Cappione, inc. v. Cappione,
119 A.D.3d 1121, 990 N.Y.S.2d 297 (3d Dep’t 2014.) .............................................................6
Bank of New York v. Amoco Oil Co.,
35 F.3d 643 (2d Cir. 1994).....................................................................................................5, 6
Black v. Transport Workers Union,
454 F. Supp. 813 (S.D.N.Y. 1978).............................................................................................6
Goldman v. Commissioner of Internal Revenue,
39 F.3d 402 (2d Cir. 1994).........................................................................................................6
Other Authorities
Fed. R. Civ. P. 24.............................................................................................................................2
Fed. R. Civ. P. 60.............................................................................................................................2

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PRELIMINARY STATEMENT
Sylvia Tucker respectfully objects to the Class Plaintiffs’ unjustified, unilateral, and
belated attempt to prevent her from receiving her pro rata distribution from the GlobeOp Net
Settlement Fund. Mrs. Tucker is a 96 year-old widow who lost 80 percent of her life savings –
more than $535,000 – through her investments in Greenwich Sentry, L.P. (“Greenwich”).
Mrs. Tucker is completely without fault in suffering this ruinous loss. Class Plaintiffs
appropriately do not suggest that Mrs. Tucker participated in or benefitted from any of the
wrongdoing alleged in the complaint. They appropriately do not contend she did anything
different from what they did in making, and losing, their investments. Rather, they assert Mrs.
Tucker can recover nothing from the GlobeOp Net Settlement Fund solely because she is the
mother of defendant Jeffrey Tucker and because the settlement class excludes defendants’
“immediate family members.” Class Plaintiffs unilaterally defined that term, for the first time
earlier this year, to exclude parents.
This effort to exclude Sylvia Tucker from recovery merely because she is a defendant’s
mother, and based on a settlement she did not negotiate, should be rejected. The settlement
documents contain no definition of “immediate family member.” Mark Cunha, the lead defense
lawyer who negotiated the 2012 Settlement with the “FG Defendants” (the “FG Settlement”) that
contains the identical exclusion for “immediate family members,” attests that the parties never
discussed that this language would preclude defendants’ innocent parents, like Mrs. Tucker, from
recovering.
Even Class Plaintiffs apparently believed, until a few months ago, that Mrs. Tucker was
eligible to recover. Although the FG Settlement Class incorporates the same exclusion of
“immediate family members” as the GlobeOp Settlement, Class Plaintiffs sent Mrs. Tucker
notice of the FG Settlement and a proof of claim form. After she completed and returned it,
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Class Plaintiffs’ claims administrator, Rust Consulting, Inc. (“Rust”), advised Mrs. Tucker that
she could participate in the distribution of FG Settlement funds if she provided certain missing
documentation. Thus, like Mr. Cunha, Class Plaintiffs and their counsel clearly regarded her as
part of the class despite the exclusion for “immediate family members.”
Nonetheless, Class Plaintiffs’ counsel instructed Rust not to send Mrs. Tucker notice of
the GlobeOp Settlement or a GlobeOp Proof of Claim form. (Declaration of Robert C. Finkel
dated Aug. 1, 2014 (“Finkel Decl.”), Dkt. 1293, ¶ 10). They now ask this Court to approve a
distribution of the GlobeOp Net Settlement Fund that denies Mrs. Tucker, an innocent victim,
any part of the distribution. Mrs. Tucker respectfully objects and asks this Court to allow her to
participate in the settlement pro rata with the other innocent class members.1
STATEMENT OF FACTS
A.

Sylvia Tucker Lost Most Of Her Life Savings

Mrs. Tucker is a 96 year-old widow. (Tucker Decl. ¶ 2.) She invested a total of
$588,407 in Greenwich between October 1, 1988 and April 1, 2008. (Tucker Decl. ¶ 3.) Every
penny Mrs. Tucker invested was from her personal funds. (Tucker Decl. ¶¶ 3, 11.) Since she
first made her investment, Mrs. Tucker has received a total of approximately $53,000 back from
her investment. (Tucker Decl. ¶ 4.) She lost the entire remainder – approximately 80 percent of
her life savings. (Tucker Decl. ¶ 4.)

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Mrs. Tucker respectfully reserves the right to seek leave to intervene pursuant to Fed. R.
Civ. P. 24 and/or seek to modify the Stipulation of Settlement pursuant to Fed. R. Civ. P. 60, in
the event the Court were to disagree with this partial opposition and conclude that Mrs. Tucker
should be excluded from the class as currently defined. Mrs. Tucker has refrained from
submitting a letter seeking a pre-motion conference for such a motion at this time, to avoid
burdening the Court with additional papers she believes will not be required, for the reasons set
forth herein.
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B.

Sylvia Tucker Is Part Of The FG Settlement Class

Mrs. Tucker has understood that she is a member of the class of plaintiffs on whose
behalf this action was brought (the “Class Plaintiffs”) from the inception of the case. (Tucker
Decl. ¶ 5.) It cannot be disputed that Mrs. Tucker meets the definition of “Class” set forth in the
Second Consolidated Amended Complaint, which defines the class as: “All shareholders or
partners of Fairfield Sentry, Fairfield Sigma, Greenwich Sentry, LP, and Greenwich Sentry
Partners, L.P., as of December 10, 2008 who suffered a net loss of principal invested in the
Funds.” (Second Consolidated Amended Complaint, Dkt. 273, p. ix.)
The Class Members entered into a Stipulation of Settlement with the “FG Defendants” in
2012 (the “FG Stipulation of Settlement”), which the Court approved. (FG Stipulation of
Settlement, Dkt. 996.)2 The FG Stipulation of Settlement excludes “immediate family members”
from the class but does not define that term. (FG Stipulation of Settlement, Dkt. 996, p. 18.)
Mark Cunha, counsel to a number of defendants including Fairfield Greenwich Limited
and Fairfield Greenwich (Bermuda) Ltd., personally negotiated the FG Stipulation of Settlement
with Class Plaintiffs’ counsel. (Cunha Decl. ¶ 3.) Mr. Cunha attests that he had no negotiations
or discussions of the meaning of “immediate family member” with Class Plaintiffs’ counsel but
that he understood and intended it to mean only spouses and children. (Cunha Decl. ¶ 6.) Mr.
Cunha further attests that he never understood the “immediate family member” exclusion to
include Sylvia Tucker and that Class Plaintiffs’ counsel never expressed the intention to exclude
her, or parents in general from the settlement class during the negotiations. (Cunha Decl. ¶ 6.)

2

In the FG Settlement, defendants Fairfield Greenwich Limited and Fairfield Greenwich
(Bermuda) Limited settled the case with the Class Plaintiffs. Under the settlement, all the
individual Fairfield Greenwich defendants, including Jeffrey Tucker, will be dismissed from the
case.
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Clearly, Class Plaintiffs’ counsel likewise did not, until recently, view Sylvia Tucker as
excluded from the settlement class. They sent Mrs. Tucker a proof of claim form for the FG
Settlement. (Tucker Decl. ¶ 6.) Mrs. Tucker timely submitted her claim. On July 15, 2013,
Class Plaintiffs’ claims administrator, Rust, sent Mrs. Tucker a letter titled “Notice of Deficiency
and Partial Rejection.” (Tucker Decl. ¶ 7; a true copy of the Notice of Deficiency is attached to
the Tucker Decl. as Exhibit A.) The letter explained that Mrs. Tucker’s claim lacked certain
required documentation but stated in capital letters: “THIS IS A ‘CURABLE’ CONDITION….”
(Tucker Decl., Ex. A.) Mrs. Tucker replied by email on July 26, 2013. (Tucker Decl. ¶ 8; Ex.
B.) She has not heard anything more from Rust concerning her claim under the FG Settlement.
(Tucker Decl. ¶ 9.)
C.

The GlobeOp Settlement Class

When the parties negotiated the GlobeOp Stipulation of Settlement, they adopted almost
identical language as the FG Settlement in the class definition, including the term, “immediate
family members.” (GlobeOp Stipulation of Settlement, Dkt. 1184, p. 11.) Like the FG
Stipulation of Settlement, the GlobeOp Stipulation of Settlement does not define “immediate
family members.” (See id.)
D.

Class Plaintiffs Now Seek To Deny Mrs. Tucker Any
Distribution From The GlobeOp Net Settlement Fund

Although Class Plaintiffs sent Sylvia Tucker notice of the FG Settlement and invited her
to file a proof of claim, their counsel unilaterally instructed Rust not to send her notice of the
GlobeOp Settlement, even though the settlement class was defined in almost identical terms.
(See Cunha Decl. Ex. A.) Mrs. Tucker first learned of the effort to exclude her earlier this year.
In April 2014, Mr. Cunha emailed Robert C. Finkel, another lawyer for the Class
Plaintiffs, inquiring about Mrs. Tucker’s claim on the FG Settlement. (Cunha Decl. ¶ 8 and Ex.
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A thereto.) Mr. Finkel responded on April 24, 2014, that Class Plaintiffs’ intended to exclude
Mrs. Tucker from participating in both the FG and GlobeOp settlements. (Cunha Decl. ¶ 9; Ex.
A.) Mr. Finkel relied on an SEC regulatory definition of “immediate family member.” (Id.)
That definition, however, was not incorporated in the settlement documents or mentioned in the
parties’ settlement discussions. (Cunha Decl. ¶ 9; Ex. A.) Accordingly, there clearly was no
agreement or any meeting of the minds between the parties to use that definition for “immediate
family members.”
Class Plaintiffs’ unilateral decision to deny an undisputedly innocent victim, Mrs.
Tucker, any recovery from the settlement funds is contrary to the parties’ intent, as evidenced by
Mr. Cunha’s declaration and Class Plaintiffs’ prior course of conduct. This Court should
overrule Class Plaintiffs’ unilateral, unjustified, and belated determination and permit Mrs.
Tucker a distribution from the GlobeOp Net Settlement Fund.
LEGAL ARGUMENT
I.

MRS. TUCKER IS A MEMBER OF THE GLOBEOP
SETTLEMENT CLASS AND ENTITLED TO RECEIVE
HER PRO RATA DISTRIBUTION FROM THE GLOBEOP
NET SETTLEMENT FUND.

Mrs. Tucker lost more than $535,000 – approximately 80 percent of her life savings – in
her investments in Greenwich. (Tucker Decl. ¶¶ 3-4.) Like other class members, she is faultless
in suffering this overwhelming loss. Yet Class Plaintiffs seek to deny her any recovery from the
GlobeOp Net Settlement Fund merely because she is the mother of one of the defendants. The
Court should reject their belated, unfair, and unilateral attempt to define “immediate family
member” to exclude her, as their effort is contrary to the parties’ intent.
Under New York law, settlement agreements are treated as contracts and interpreted by
the rules governing the construction of contracts. See, e.g., Bank of New York v. Amoco Oil
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Co., 35 F.3d 643, 661 (2d Cir. 1994); Goldman v. Commissioner of Internal Revenue, 39 F.3d
402, 405 (2d Cir. 1994). Settlement agreements will be construed in accordance with the intent
of the parties. Amoco Oil, 35 F.3d at 661 (citations omitted). “Where [] the meaning of a word
or phrase is ambiguous, the courts of New York will examine the record as a whole in an effort
to interpret the agreement so as to effectuate the intent of the parties.” Id. Furthermore, in
contract construction, “the goal should be a practical construction of the language used so that
the reasonable expectations of the parties are realized.” A. Cappione, inc. v. Cappione, 119
A.D.3d 1121, 990 N.Y.S.2d 297 (3d Dep’t 2014.) “There is no surer way to find out what the
parties meant than to see what they have done.” Black v. Transport Workers Union, 454 F.
Supp. 813, 824 (S.D.N.Y. 1978) (citation omitted).
Here, the understanding, intent, and conduct of the persons who negotiated the term in
contention – “immediate family members” – defeat Class Plaintiffs’ belated and improper effort
to deprive Sylvia Tucker of reimbursement for her loss. Although the settlement documents do
not define “immediate family members,” Mark Cunha attests that the settling parties’ intent was
never to treat innocent parents in general, or Mrs. Tucker in particular, as excluded “immediate
family members.” (See Cunha Decl. ¶ 6.) No negotiator expressed an intent to exclude Mrs.
Tucker. (Cunha Decl. ¶ 6.) Class Plaintiffs even sent Mrs. Tucker notification of the FG
Settlement and a proof of claim, and claims administrator Rust indicated in subsequent
communications that her claim was accepted. (Tucker Decl. ¶¶ 6-7; Ex. A.) Their conduct
reflects that they, too, understood that Mrs. Tucker was entitled to participate in the recovery.
When questioned about the basis for excluding Mrs. Tucker, Class Plaintiffs’ counsel had to
resort to an extrinsic definition from an SEC regulation to justify Mrs. Tucker’s exclusion – a

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definition that was not incorporated in the settlement documents, referred to in the parties’
settlement negotiations, or intended by the drafter. (Cunha Decl. ¶;8-10; Ex. A.)
Accordingly, there is absolutely no justification for excluding Mrs. Tucker, another
innocent investor, from recovering her pro rata share of her significant losses through the
GlobeOp Settlement. The Court should reject Class Plaintiffs’ proposed new, unilateral
definition of “immediate family members” and hold that Mrs. Tucker is entitled to participate in
the settlement. That is the only just result.

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CONCLUSION
Sylvia Tucker is an innocent victim, no different from the other class members whom
Class Plaintiffs concede are part of the class. She lost more than $535,000. No just reason exists
to exclude her from receiving her pro rata share of the GlobeOp Settlement proceeds. Nothing in
the record supports Class Plaintiffs’ counsel’s unilateral determination to exclude her. On the
contrary, the record, including Class Plaintiffs’ own conduct and the intent of negotiating
counsel, mandate that she be permitted to participate.
For the foregoing reasons, Mrs. Tucker is entitled to a distribution from the GlobeOp
Settlement funds. Class Plaintiffs’ motion to disburse the GlobeOp Net Settlement Fund should
be denied, in part, with instructions to accept Mrs. Tucker’s claim to the GlobeOp Net Settlement
Fund.
Respectfully submitted,
__/s/ Leo V. Leyva___________________
COLE, SCHOTZ, MEISEL,
FORMAN & LEONARD, P.A.
Leo V. Leyva
David M. Kohane
900 Third Avenue
New York, New York 10022
Telephone: [phone]
Facsimile: [phone]
Attorneys for Sylvia Tucker

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