Anwar et al v. Fairfield Greenwich Limited et al

Filing 1350

ENDORSED LETTER addressed to Judge Victor Marrero from Walter Rieman dated 12/2/2014 re: On behalf of the Citco Defendants, we are writing to respond to the portion of plaintiffs' letter dated November 20, 2014, that discusses the district court's decision in Osberg v. Foot Locker, Inc., No. 07-cv-1358 (KBF), 2014 WL 5800501 (S.D.N.Y. Nov. 7, 2014), petition for perm to app. under Fed. R. Civ. P. 23(f) filed, No. 14-3748(L), ECF No. 42 (2d Cir. Nov. 25, 2014). ENDORSEMENT: The Clerk of Court is directed to enter into the public record of this action the letter above submitted to the Court by Citgo defendants. (Signed by Judge Victor Marrero on 12/3/2014) (lmb)

PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP
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December 2, 2014

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United States District
Daniel Patrick Moynihan
United States Courthouse
500 Pearl Street, Room 1040
New York, New York 10007-1312

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MARK F. MENDELSOHN

WILLIAM 8. MICHAEL
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CHARLES E. DAVIDOW
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Anwar, et al. v. Fairfield Greenwich Limited, et al.,
No. 09-cv-118 (S.D.N.Y.) (VM) (FM)
Dear Judge Marrero:
On behalf of the Citco Defendants, we are writing to respond to the
portion of plaintiffs' letter dated November 20, 2014, that discusses the district court's
decision in Osberg v. Foot Locker, Inc., No. 07-cv-1358 (KBF), 2014 WL 5800501
(S.D.N.Y. Nov. 7, 2014),petitionfor perm to app. under Fed. R. Civ. P. 23(/)filed,
No. 14-3748(L), ECF No. 42 (2d Cir. Nov. 25, 2014). Osberg does not alter the
conclusion that plaintiffs' motion for class certification should be denied.

Osberg certified a class alleging claims for plan reformation under
ERISA. Such claims, the Osberg court held, do not require proof of reliance. See id. at
*1. The Osberg court's discussion ofreliance was consequently dicta. Here, in contrast,

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PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP

The Honorable Victor Marrero
United States District Judge

2

proof of actual and reasonable reliance is essential to the Anwar plaintiffs' claims. (See
Citco Opp. Br. 2-17, ECF No. 1323.) 1
In any event, Osberg' s dicta concerning reliance have no application to
Anwar. In Osberg, the court found that on the particular facts of that case, no reasonable
juror could have accepted the defendant's position respecting reliance. See 2014
WL 5800501, at *6. In the view of the Osberg court, the defendant there "ha[d]
proffered not a shred of evidence" that reliance would require an individualized inquiry.
Id.
Here, in contrast, the Citco Defendants have identified substantial
evidence demonstrating-among other propositions-that the alleged misrepresentations
were not made uniformly to the putative class members; that substantial individualized
issues of fact exist concerning whether any particular putative class member received the
alleged misrepresentations prior to making a decision to invest; and that actual and
reasonable reliance similarly involve substantial individualized inquiries. (See Citco
Opp. Br. 2-17.)
Plaintiffs suggest that they are exempt from the jurisprudence generally
governing attempts at class certification ofreliance-based claims, because, they say, "[i]t
is inconceivable that any investor would knowingly invest in a Ponzi scheme." (Pls.'
Ltr. 2.) That contention is merely a rephrased version of the so-called fraud-created-themarket theory, which is the theory "that but for the defendant's fraud, no market for the
securities would have existed at all." Pa. Pub. Sch. Emps. 'Ret. Sys. v. Morgan Stanley &
Co., No. 13-2095-cv(L), 2014 WL 5487666, at *6 (2d Cir. Oct. 31, 2014). As our letter
of November 17, 2014, explained, the Second Circuit's decision in Pennsylvania Public
School rejected the fraud-created-the-market theory as a purported interpretation of New
York law, and implicitly but unmistakably criticized that theory as a purported
interpretation of the federal securities laws. See id. at *6-7.
Respectfully submitted,

lDfltt'~~~
Walter Rieman
cc:

All counsel in Anwar (by e-mail)

The Clerk of Court is directed to enter into the public record
of~is ~ct~o~ the le~ter, ab~~e sub":itted t~e Court by

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SO ORDERED.

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~l(?'f'Q'RMARRERO. U.S.D.J.

Capitalized terms have the meanings set forth in Citco's letter to Your Honor dated
November 17, 2014.