Anwar et al v. Fairfield Greenwich Limited et al

Filing 1396

DECISION AND ORDER re: #1331 Endorsed Letter, #1383 Endorsed Letter, #1384 Endorsed Letter. For the reasons discussed above, it is hereby ORDERED that the motion to dismiss the Second Consolidated Amended Complaint of the Anwar Plaintiffs, as described in the decision above, under the Securities Litigation Uniform Standards Act of 1998 ( "SLUSA") (Dkt. No. 1383) of defendants PricewaterhouseCoopers Accountants N.V. and PricewaterhouseCoopers LLP is GRANTED in part and DENIED in part; and it is further ORDERED that the motion to dismiss the complaints of the Standard Chartered Plaintiffs, as described in the decision above, under SLUSA (Dkt. No. 1384) of defendants Standard Chartered Bank International (Americas) Ltd., Standard Chartered International (USA) Ltd., Standard Chartered Bank, and Standard Chartered PLC is GRANTED in part and DENIED in part; and it is further ORDERED that the motion (Dkt. No. 1331) of plaintiffs Continental Rainbow Group Inc., Nemagus Ltd., Ali Ltd., Bellwood Ltd., and Accent Group Ltd., to be dropped as plaintiffs under Federal Rule of Civil Procedure 21 is DENIED without prejudice; and it is further ORDERED that the motion (Dkt. No. 1331) of plaintiffs Juan D. Quiroz Stone and Lyac Venture Corp. dismissing their actions pursuant to Federal Rule of Civil Procedure 41(a) (2) is DENIED without prejudice. (Signed by Judge Victor Marrero on 7/29/2015) (lmb)

I•

' FCTRU:'\lC·\LLY l'JLED

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

------------------------------x

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PASHAS. ANWAR, et al.,
09 Civ.

118

(VM)

Plaintiffs,
DECISION AND ORDER

-againstFAIRFIELD GREENWICH LIMITED,
et al.,

Defendants.

----------------------------- x
VICTOR MARRERO, United States District Judge.

Before this Court are two sets of lawsuits by plaintiffs
asserting claims related to their investments in four feeder
funds

(the

"Funds")

founded and operated by the Fairfield

Greenwich Group ( "FGG") . 1 The Funds, in turn, invested heavily
in Bernard L.

Madof f

Investment

Securities

LLC

( "BMIS") ,

which, as is now well known, was a Ponzi scheme operated by
Bernard Madoff ("Madoff").
In the first of these actions,
certified

class

of

plaintiffs

(the

the

"Anwar Action,"

"Anwar

a

Plaintiffs")

representing shareholders and limited partners in the Funds,
assert various state and federal law claims against the Funds'

The feeder funds involved in these actions are Fairfield Sentry Limited,
Fairfield Sigma Limited, Greenwich Sentry L. P. and Greenwich Sentry
Partners L.P.

1

administrators

and

the

(collectively,

custodians 2

"Citco

Defendants"), as well as state law claims against the Funds'
auditors3

(collectively,

the

"PwC Defendants"). The second

action, the "Standard Chartered Action," involves a number of

Plaintiffs")

Chartered

"Standard

the

(collectively,

plaintiffs

who brought state law claims against Standard

Chartered Bank International

(Americas)

some of its corporate affiliates 4

Ltd.

( "SCBI")

(collectively,

and

"Standard

Chartered Defendants") concerning their investment advice and
recommendations regarding the Funds.
At issue in this proceeding is whether the Court should
dismiss any or all of these remaining state law claims in
both

the

Securities

Anwar

and

Standard

Litigation

Chartered Actions

Uniform

Standards

Act

under
of

the
1998

2

The fund administrators, the "Citco Administrators," include Citco Fund
Services (Europe) B.V. and Citco (Canada) Inc. The fund custodians, the
"Citco Custodians," include Citco Bank Nederland N.V., Dublin Branch, and
Citco Global Custody N.V. The Anwar Plaintiffs also have claims remaining
against the Citco parent company, Citco Group Ltd., as well as Citco Fund
Services Bermuda Ltd.
3 The PwC Defendants include PricewaterhouseCoopers Accountants N. V.
( "PwC
Netherlands") and PricewaterhouseCoopers LLP ("PwC Canada").

All Standard Chartered Plaintiffs assert claims against SCBI. In
addition to the claims against SCBI, three cases assert claims against
Standard Chartered PLC. See Lopez v. Standard Chartered Bank Int' 1.
(Americas) Ltd., No. 10-CV-919; Valladolid v. American Express Bank Ltd.,
No. 10-CV-918 ("Valladolid"); Barbachano Herrero v. Standard Chartered
Bank Int'l (Americas) Ltd., No. ll-CV-3553. One case, Valladolid, also
asserts claims against Standard Chartered International (USA) Ltd.
("SCI"), and one case Headway Investment Corp. v. American Express Bank
Ltd., No 09-CV-8500 ("Headway"), also asserts claims against Standard
Chartered Bank.
4

2

("SLUSA"), Pub. L. No. 105-353,
15

u.s.c.

the

§§

101, 112 Stat. 3227 (1998),

77p(b), 78bb(f) (1). Most relevantly, SLUSA bars

maintenance

alleging

§

of

falsity

certain state-law based class
"in

connection

actions

transactions

with"

in

"covered securities." Id.
The Court construes the May 29,
the

PwC Defendants

(Dkt. Nos.
state

1383,

law claims

below,

the

Court

and

the

2015 letter briefs of

Standard Chartered Defendants

1384) as motions to dismiss the remaining
under

SLUSA. 5

GRANTS

the

For
PwC

the

discussed

Standard

and

reasons

Chartered

Defendants' motions in part and DENIES the motions in part.
I.

BACKGROUND

The Court has addressed SLUSA on prior occasions, with
respect to the two related actions still pending. In Anwar v.
Fairfield Greenwich Ltd., 728 F. Supp. 2d 372 (S.D.N.Y. 2010)
("Anwar II"), the Court held that SLUSA did not preclude the
state law claims asserted in the .Anwar Action for two primary
reasons:

( 1)

investments
securities,"

the connection between the Anwar Plaintiffs'
in
was

the
too

Funds,

which

attenuated

were

with

not

BMIS's

"covered
purported

By letter dated July 22, 2015, the Anwar Plaintiffs and Citco Defendants
informed the Court that those parties had reached an agreement, subject
to documentation and approval by the Court, to resolve the claims asserted
against the Citco Defendants. (Dkt. No. 1395; Dkt. Minute Entry for July
22, 2015.) The Citco Defendants requested that their motion regarding
SLUSA be withdrawn without prejudice, and the Court so ordered. (Dkt. No.
1395.)
5

3

investments in covered securities; and (2) because the Anwar
Plaintiffs had successfully pleaded federal securities claims
against the Citco Defendants, the policy objectives of SLUSA
were not implicated. See 728 F. Supp. 2d at 397-99. However,
the Court has declined up until now to rule on the application
of SLUSA to the Standard Chartered Action, although the Court
has indicated that SLUSA preemption could be raised later in
these proceedings. Anwar v. Fairfield Greenwich Ltd., No. 09CV-118, 2010 WL 1948566, at *l (S.D.N.Y. May 5, 2010).
In the five years following Anwar II, the Supreme Court
and the Second Circuit have clarified the contours of SLUSA
preemption. As a result, the Court sought submissions by the
parties in both the Anwar and Standard Chartered Actions on
SLUSA preemption in light of these developments in the case
law -- most significantly the Second Circuit decision in In
re

Kingate Management

Ltd.

Litj:S...:_,

784

F.3d 128

(2d Cir.

2015). Having reviewed these submissions, the Court believes
it is appropriate and necessary to revisit its view of the
application of SLUSA to both actions.
II. DISCU:SSION

A.

STANDARD OF REVIEW

At the outset, this Court must decide whether to construe
the Anwar and Standard Chartered Defendants'

correspondence

as a motion for judgment on the pleadings for failure to state
4

a claim under Federal Rule of Civil Procedure 12 ( c)

("Rule

12(c)"),

matter

or,

alternatively,

for

lack

of

jurisdiction pursuant to Federal Rules of
12(b) (1) and 12(h) (3)
respectively) ) .

subject

Civil Procedure

("Rule 12(lb) (l)" and "Rule 12(h) (3),"

In Kingate,

the

Second Circuit questioned

whether the district court's dismissal for failure to state
a claim was the more appropriate standard of review, but the
court declined to decide the issue:
Although the issue is not presented to us, we question
whether a motion to dismiss pursuant to SLUSA is best
considered under Rule 12(b) (6), as a motion to dismiss
for failure to state a claim, or under Rule 12 (b) (1)
(and/or 12 (h) (3)), as a motion to dismiss for lack of
subject matter jurisdiction. A dismissal under SLUSA
simply means that lawsuit "may not be maintained" as ~
covered class action. 15 U.S.C. §§ 77p(b), 78bb(f) (1).
It does not adjudicate against any plaintiff the right
to recover on the claim. A dismissal under SLUSA would
not be with prejudice, barring a plaintiff from filing
a new, non-covered action asserting the same claims
against the same defendants.
Kingate, 784 F.3d at 135 n.9 (emphasis in original).
Typically, courts in the Southern District of New York
have followed the first option described above,

considering

dismissal of claims under SLUSA as failing to state a claim
in a pleading under Rule 12 (b) (6) or judgment on the pleadings
under Rule 12(c). See,

~,

In re Adelphia Commc'ns Corp.

Sec. and Derivative Litig., No. 03-MDL-1529, 2010 WL 3528872
(S.D.N.Y. Aug. 30, 2010}; In re Tremont Sec. Law, State Law,
&

Ins.

Litig.,

No.

08-CV-11117,
5

2014 WL 1465713

(S.D.N.Y.

Apr.

2014).

14,

See also Instituto De Prevision Militar v.

Merrill Lynch, 546 F.3d 1340 (11th Cir. 2008).
However,
state

a

First,

dismissing claims under SLUSA for failure to

claim raises
such

Circuit's
never be

an

significant

approach

indication

that

with prejudice.

is
a

doctrinal

inconsistent
dismissal

Generally,

complications.

with

under

the

Second

SLUSA

should

when deciding a

Rule

12(b) (6) or Rule 12(c) motion, courts have discretion whether
to dismiss with or without prejudice. When deciding a motion
under Rules 12(b) (6) or 12(c), courts often grant plaintiffs
leave to re-plead when dismissing without prejudice; but if
an amended complaint could not correct fundamental defects
that led to dismissal and thus the exercise would be futile,
courts often dismiss with prejudice. Here, re-pleading would
not save a claim that would otherwise be precluded by SLUSA.
Under SLUSA, a properly pleaded claim is precluded not because
of some deficiency in the pleading,
procedural

mechanisms

by

which

the

but rather because of
particular

claim

was

brought that conflict with the purposes of the statute.
Dismissing claims under SLUSA for lack of subject matter
jurisdiction, on the other hand, comports with the statutory
text and the Kingate dictum, while also avoiding some of the
difficulties that arise under application of a Rule 12(b) (6)
or Rule 12(c) approach. The text of SLUSA does not directly
6

address this issue,
claim may not be
action. 15 U.S.C.

"maintained"
§§

as part of a

covered class

77p(b), 78bb(f) (1). This language itself
involves

preclusion

that

suggests

except for indicating that a precluded

subject

matter:

a

traditional state law claim could survive dismissal before a
state or federal court -- as long as that claim is not part
of

a

"covered class

brought,

whether

in

action."
state

If,

or

however,

federal

that

court,

claim is
through

a

particular procedural mechanism (e.g., a class action lawsuit
on behalf of more than 50 plaintiffs,

or a group of such

lawsuits), then no court has jurisdiction to decide that claim
on the merits as long as it remains part of a covered class
action.

See Merrill Lynch,

Dabit,

547

plaintiffs

U.S.
the

71,

87

right

to

Pierce,
(2006)
use

the

Fenner & Smith Inc.
("[SLUSA]

simply

class-action

v.

denies

device

to

vindicate certain claims. The Act does not deny any individual
plaintiff, or indeed any group of fewer than 51 plaintiffs,
the right to enforce any state-law cause of action that may
exist."). Thus, courts can decide state law claims that turn
on allegations of falsity,

and would otherwise fall within

the ambit of federal securities law claims, only when those
state law claims are not covered class actions.
Dismissal

under

SLUSA

applying

the

lack

of

subject

matter jurisdiction approach is also in line with the Kingate
7

footnote explaining that "[a] dismissal under SLUSA would not
be with prejudice." 784 F.3d at 135 n.9. Dismissals for lack
of

subject

prejudice,

matter
because

jurisdiction
the

are

necessarily

without

dismissal

alternative

with

prejudice -- would have "the effect of a final adjudication
on the merits" with res judicata effect in both state and
federal court. See Hernandez v. Conriv Realty Associates, 182
F.3d 121, 123 (2d Cir. 1999). "For this reason . . . Article
III deprives federal courts of the power to dismiss a case
with prejudice where federal subject matter jurisdiction does
not exist." Id.
Indeed, the Second Circuit has considered other aspects
of SLUSA as raising a question of subject matter jurisdiction.
See Romano v.

Kazacos,

609 F.3d 512,

520-21

(considering SLUSA's removal provision as a

(2d Cir.

2010)

jurisdictional

question) . Courts outside the Southern District of New York
have

similarly

under SLUSA for

followed
lack of

this

approach,

subject matter

Araujo v. John Hancock Life Ins. Co.,
380 (E.D.N.Y. 2002)

dismissing

claims

jurisdiction.

206 F. Supp.

See

2d 377,

(performing Rule 12(b) (1) analysis after

defendants moved to dismiss under SLUSA and plaintiffs moved
to remand); Marchak v. JP Morgan Chase & Co., No. 11-CV-5389,
2015 WL 500486, at *4 (E.D.N.Y. Feb. 6, 2015)
of

the

Federal

Rules

of

Civil
8

Procedure

("Rule 12(b) (1)
provides

the

applicable

standard of

review

f:or

motions

to

remand

and

motions to dismiss pursuant to SLUSA,

'because each concerns

the

the

subject matter

jurisdiction of

Court.'"

(quoting

Araujo, 206 F. Supp. 2d at 380)) ,; Rowinski v. Salomon Smith
Barney,

Inc.,

398 F.3d 294,

297-98

(3d Cir.

2005)

(finding

the SLUSA removal provision to be jurisdictional, noting that
"[n] o matter how an action is pleaded,

involving a covered security, removal is

class action
proper"

(internal

quotation

marks

omitted));

Bordier et Cie, 519 F.3d 121, 129 n.7
preemption is jurisdictional,
lack

of

if it is a covered

subject-matter

Lasala

v.

(3d Cir. 2008) ("SLUSA

and we review dismissals for

jurisdiction

de

novo."

(citing

Rowinski, 398 F.3d at 298)); Campbell v. Am. Int'l Grp., Inc.,
760 F.3d 62, 64

(D.C. Cir. 2014)

for a specific purpose:

("Removal

[under SLUSA]

is

when a case is removed to federal

district court under that provision, the court's jurisdiction
is confined to examining whether the action in fact falls
within subsection (b)'s scope of preclusion. If so,

'neither

the district nor the state court may entertain it,

and the

proper course is to dismiss.'"

(quoting Kircher v.

Putnam

Funds Trust, 547 U.S. 633, 644 (2006))).
These considerations make clear that the SLUSA analysis
is driven by a jurisdictional inquiry: can a properly pleaded
state law claim be maintained in a
9

federal or state court

when it is part of a covered class action relating to covered
securities? In the action at hand,

the Court is persuaded

that it should conduct its analysis of SLUSA preclusion under
the standard for considering whether the existence of subject
matter jurisdiction has been sufficiently demonstrated.
"[F]ailure

of

subject

matter

jurisdiction

is

not

waivable and may be raised at any time by a party or by the
court sua sponte." Lyndonville Savings Bank
Lussier,

211 F.3d 697,

700

(2d Cir.

2000).

&

Trust Co. v.

"The court must

take all facts alleged in the complaint as true and draw all
reasonable inferences in favor of plaintiff, but jurisdiction
must be shown affirmatively, and that showing is not made by
drawing from the pleadings inferences favorable to the party
asserting it." Morrison v. Nat'l Austl. Bank Ltd., 547 F.3d
167, 170 (2d Cir. 2008)

(internal quotation marks, citations,

and alteration omitted), aff'd on other grounds, 561 U.S. 247
(2010). In resolving disputed jurisdictional facts, the court
can refer to evidence outside o:E the pleadings.
Middle East Constr.

Co.

v.

See Zappia

Emirate of Abu Dhabi,

215 F.3d

247, 253 (2d Cir. 2000).
B.

SLUSA AFTER CHADBOURNE, HERALD, KINGATE

Central

to

the

actions

before

the

Court

limitation on class actions, whic:h provides:

10

is

SLUSA' s

No covered class action based upon the statutory or
common law of any State or subdivision thereof may be
maintained in any State or Federal court by any private
party alleging (A)

a misrepresentation or omission of a material fact
in connection with the purchase or sale of a covered
security; or

(B)

that
the
defendant
used
or
employed
any
manipulative or deceptive device or contrivance in
connection with the purchase or sale of a covered
security.

u.s.c.

§

As

15

the

78bb(f) (1)
Supreme

6

Court

and

the

Second

Circuit

have

recognized, the history behind the passage of SLUSA is crucial
to

understanding

this

statutory

objectives of Congress. See,

~~·

directive

and

the

policy

Dabit, 547 U.S. at 81-83;

Kingate, 784 F'.3d at 136-40.
Following the stock market collapse in 1929 and the Great
Depression, Congress enacted the Securities Act of 1933 (the
"Securities Act") and the Exchange Act of 1934 (the "Exchange
Act"). Those federal securities laws were designed to deter
falsity propagated in connection with purchases or sales of
covered securities: mainly,

those statutes evince a purpose

to protect individual investors and the

6

integrity of this

A "covered security" is defined under SLUSA as a security that satisfies
the standards set forth in Section 18(b) of the 1933 Act, which is one
that is "'listed, or authorized for listing, on [the national exchanges]'
or that is 'issued by an investment company that is registered, or that
has filed a registration statement, under the Investment Company Act of
1940.'" Kingate, 784 F.3d at 139 (quoti!!9: Romano, 609 F.3d at 520 n.3; 15
U.S.C. § 77r(b)).
11

country's

financial

defendants'

conduct

markets
in

from

transactions

providing

incomplete information.

false,

In other words,

promote truth in investing,

induced

by

misleading,

or

these laws seek to

reco gnizing that to the extent
1

investors' decisions to buy or sell securities rely on false
information

provided

by

sellers

and

their

agents,

those

investors may suffer financial injury. The securities markets
are

also

harmed

insofar as

widespread

falsity

diminishes

investors' trust and confidence in the markets' integrity.
To this end,

the Securities Act imposes liability for

falsity occurring in a registration statement (Section 11, 15
U.S.C.

§

77k(a)), a prospectus or oral communication (Section

12(a), 15 U.S.C.

§

77l(a) (2)), or more generally, through the

use of "any device,

scheme,

or artifice to defraud" in the

offer or sale of a security (Section 17(a), 15 U.S.C.

§

77q).

Similarly, the Exchange Act imposes liability for the "use or
employ,

in

connection

with

the

purchase

or

sale

of

any

security registered on a national securities exchange or any
security not so registered . . . any manipulative or deceptive
device or contrivance . . . " (Section lO(b), 15 U.S.C.
See also S.E.C. Rule lOb-5, 17 C . F.R.

§

§

78j).

240.lOb-5.

Since at least 1946, courts have recognized an implied
private right of action under Rule lOb-5. See Dabit, 547 U.S.
at 78-79. As the Supreme Court has noted,
12

this recognition

brought about a substantial increase in the number of federal
securities claims, including a significant number of abusive
class action lawsuits by "vexatious" plaintiffs against deeppocketed defendants. Id. at 81. To curb the abuse of federal
securities class action lawsuits, Congress passed the Private
Securities Litigation Reform Act of 1995 (the "PSLRA"), Pub.
L. No. 104-67, 109 Stat. 737 (codified in scattered sections
of

Titles

15

and

18

of

the

United

States

Code) .

Most

significantly regarding the issue now before the Court, the
PSLRA imposes heightened pleading requirements for federal
securities fraud claims.
putative

Subsequently,

class

action

plaintiffs

increasingly sought to bring securities fraud claims under
state law causes of action in both state and federal court,
thus

attempting

requirements.

to

avoid

See Dabit,

PSLRA' s

547 U.S.

heightened

at 81-82.

pleading

These concerns

were presented to Congress in a 1997 hearing,

and Congress

enacted SLUSA the following year.
In essence,

SLUSA provides that insofar as the claims

that plaintiffs bring through class action litigation are
grounded

on

false

conduct

misrepresentations or omissions)

of

defendants

carried out in connection

with the purchase or sale of covered securities,

13

(material

investors

injured may pursue only one source of relief:

the remedies

and procedures available through the federal securities laws.
SLUSA

sought

to

streamline!

and

expedite

securities

litigation by precluding overlapping federal and state law
claims. To this end, if the crux of state law claims brought
by more than 50 plaintiffs entails false conduct,
evidence supporting the state

and the

law claims those plaintiffs

assert in federal class action litigation is essentially the
same as that on which their federal securities claims are
grounded,

the federal laws provide the exclusive source of

class action liability, as well as recovery solely in federal
courts.
In

2010,

when

this

Court

first

addressed

the

applicability of SLUSA to the Anwa.r Action, it did so without
the benefit of four now precedential decisions: the Supreme
Court's ruling in Chadbourne & Parke LLP v.

Troice,

134 S.

Ct. 1058 (2015), as well as the Second Circuit's in Kingate,
784

F.3d 128,

In re Herald,

730

("Herald I"), and In re Herald,

F.3d 112

(2d Cir.

2013)

753 F.3d 110 (2d Cir. 2014)

("Herald II") .
Those decisions

shed light on SLUSA' s

"in connection

with the purchase or sale of a covered security" requirement.
In

Chadbourne,

the

Supreme

Court

emphasized

that

SLUSA

precludes a claim only if an omission or misrepresentation is
14

"material to a decision by one or more individuals

(other

than the fraudster) to buy or sell a 'covered security.'" 134
S. Ct. at 1066. There, the Supreme! Court found that there was
no material omission or misrepresentation in connection with
covered

securities

when

a

group

of

plaintiffs

bought

certificates of deposit -- which were not covered securities
in a

bank

that

represented

that

it

purchased covered

securities with the proceeds of those sales, when in actuality
the bank was a Ponzi scheme using the money to repay some
investors and fund "elaborate lifestyles." Id. at 1064.
In both Herald II and Kingate,
distinguished

investors'

purchai::es

the Second Circuit has
in Madof f

feeder

funds

from the Ponzi scheme at issue in Chadbourne. In the Herald
cases, the investors' suit was brcmght against two banks that
provided banking services to BMIS .
before Chadbourne,

Herald I, decided slightly

found that the state law claims asserted

against BMIS' s banks were precluded.

Following Chadbourne,

the Second Circuit denied a petition for panel rehearing.
Herald II, 753 F.3d 110. The Second Circuit characterized the
Chadbourne

plaintiffs

indirectly,

to

investors

who

as

purchase
sought

to

"not

covered
invest

seeking,

directly

or

securities,"

whereas

the

in

Madoff

feeder

funds

"attempted investments in covered securities, albeit through
feeder funds." Herald II, 753 F.3d at 113.
15

Following Herald I and Herald II, this Court declined to
revisit its ruling in Anwar II. Notable factual distinctions
remained

between

the

PwC

Defendants

and

the

banking

defendants in Herald I. Whereas the defendant banks in Herald
I

provided

services

solely

and

directly

to

BMIS,

the

connection of the PwC Defendants to BMIS was more attenuated.
The PwC Defendants provided services to the Funds,

rather

than to BMIS directly.
however,

Kingate,
distinction.

has

In Kingate,

against managers,

a

all

the

but

foreclosed

investors'

consultant,

suit

such

was

a

brought

and an auditor of certain

Madoff feeder funds. The Second Circuit applied the reasoning
applied in Herald I

to these defendants,

finding that the

Kingate investors similarly expected that the feeder funds
were investing proceeds in S&P 100 stocks, which are covered
securities. See Kingate, 784 F.3d at 142.
Similarly,

here,

the Anwar Plaintiffs invested in the

Funds with the expectation that those proceeds would, in turn,
be invested in covered securities.
the Anwar Plaintiffs'

The question of whether

investments were

in connection with

covered securities no longer turns on whether there was,
fact,

actual

investment

in

covered

securities.

in

Following

Kingate, the Anwar Plaintiffs' investments in the Funds were
sufficiently "in connection with" covered securities because
16

the Anwar Plaintiffs expected that their investments would
involve

covered securities

conversion strategy." (See,
Complaint

( "SCAC") ,

Dkt.

through Madoff' s
~'

No.

"split

strike

Second Consolidated Amended

273

~

184.)

Similarly,

the

Standard Chartered Plaintiffs invested in the Funds with the
expectation that the proceeds would be invested in covered
securities.

(See,

~'

Int'l (Americas) Ltd.
(indicating

62(b)

Mantecon v. Standard Chartered Bank

("Mantecon"), No. ll-CV-5729, Compl. ~

the

expectation

that

the

Funds

were

investing in S&P 100 index stocks, as well as puts and calls
related to those stocks).)
As this Court now finds that claims against the PwC and
Standard Chartered Defendants

involve

connection with covered securities,
if any,

investments

made

in

it must consider which,

state law claims are precluded under SLUSA. 7 Again,

Kingate is instructive:
SLUSA requires courts first to inquire whether an
allegation is of conduct by the defendant, or by a third
party. Only conduct by the defendant is sufficient to
preclude an otherwise covered class action. Second,
SLUSA requires courts to inquire whether the allegation
is necessary to or extraneous to liability under the
state law claims. If the allegation is extraneous to the
complaint's theory of liability, it cannot be the basis
for SLUSA preclusion.
Also disputed in the Standard Chartered Action is whether those
individual actions constitute a "group of lawsuits" so as to qualify as
a "covered class action" under SLUSA. For reasons discussed infra, this
Court finds that the Standard Chartered cases constitute a group of
lawsuits for purposes of considering SL.USA preclusion.
7

17

Kingate,

784

precludes

F. 3d at

"state

142-43.

Under

this

approach,

law claims predicated on conduct

SLUSA
the

~

defendant that is specified in SLUSA's operative provisions
referencing the anti-falsity proscriptions of the 1933 and
1934 Acts," and which would normally be "subject to the PSLRA
if

pleaded as

a

private

securities

claim

(regardless

whether such a private claim could succeed) . "
(emphasis

in original) .

Id.

of

at 146

When conducting this analysis,

as

Kingate instructs, courts should make this determination on
a claim-by-claim basis and the outcome should not depend on
whether plaintiffs

have

artfully pleaded

their

claims

to

avoid SLUSA's terms. Id. at 143, 149.
Applying this standard to the Madof f

feeder funds at

issue in Kingate, the Second Circuit found that three groups
of

allegations

would

be

precluded

under

SLUSA:

(1)

allegations "predicat[ing] the named Defendants' liability on
their

own

omissions,

fraudulent
made

misrepresentations

and

in connection with the Funds'

misleading
investments

with Madoff in covered securities and with their oversight of
these investments";
"Defendants'
omissions

( 2)

negligent

allegations premising liability on
misrepresentations

in connection with

the

Funds'

and

misleading

investments

Madoff and with oversight of Madoff's operations"; and

18

with
(3)

allegations

"predicat [ing]

and abetting

liability on Defendants'

(rather than directly engaging in)

aiding

the frauds

underlying the [fraudulent misrepresentations and misleading
omissions]

claims." Id. at 134-3 !5, 151. Not precluded under

SLUSA, however, were allegations that "predicat[ed] liability
on Defendants'
based duties
detect

the

breach of contractual,
owed to

frauds

of

Plaintiffs,
Madof f

fiduciary,

resulting

and

BMIS"

in
or

or tort-

failure
that

to

"seek

compensation for fees paid to the named Defendants by the
Funds on the grounds that those Defendants failed to perform
the duties for which the fees were paid,
based on purported profits

and values

or that the fees

of

the

Funds

were

computed on the basis of inaccurate values." Id. at 135, 15152.

Ultimately,

what

Kingate

asks

courts

to

determine

comprises two inquiries: whether plaintiffs' state law class
action

claims

assert

conduct

not

compensable

under

the

federal securities law, or whether such claims fundamentally
constitute

a

species

of

federal

securities

class

action

litigation arising out of the same transaction, but artfully
camouflaged as state law causes o:IE action. The Court now turns
to a claim-by-claim analysis of the remaining claims asserted
against the PwC and Standard Chartered Defendants.

19

c.

THE ANWAR ACTION: Claims Against the PwC Defendants

In Anwar II, this Court held that SLUSA did not preclude
the state law claims asserted in the Anwar Action. 8 Crucial
to this determination was the
between

the

Plaintiffs'

finding that the connection

investments

in

the

Funds

to

transactions in covered securities was too attenuated. 728 F.
Supp. 2d at 397-99. As discussed supra, in light of Kingate,
the Court finds that the Anwar Plaintiffs' investments in the
Feeder Funds were in fact made in connection with covered
securities.9
Two claims remain against the PwC Defendants: state law
causes

of

action

asserting

negligence

and

negligent

misrepresentation. 10 In earlier decisions, the Court has found
that the Anwar Plaintiffs have adequately pleaded and can
show through common evidence that a duty of care was owed by
the PwC Defendants to Anwar Plaintiffs who made subsequent
investments in the Funds. 11 See Anwar II, 728 F. Supp. 2d at

8

Anwar II determined that New York law applies to the Anwar Plaintiffs'
common law claims. 728 F. Supp. 2d at 400.
9 The Anwar Plaintiffs also acknowledge that after Kingate,
"SLUSA's 'in
connection with' requirement is satisfied by transactions that involve
feeder funds." (Dkt. No. 1387 at 1.)

10 In Anwar II, the Court dismissed other state law claims against the PwC
Defendants, as well as all federal claims. See 728 F. Supp. 2d at 45060.

Under the test elaborated in Credit .Alliance Corp. v. Arthur Andersen
Co., 65 N.Y.2d 536 (1985) ("Credit l\lliance"), for accountants to be
held liable in negligence to noncontra.ctual parties "who rely to their
detriment on inaccurate financial reports," the defendant must have been
11

&

20

454-57; Anwar v.

Fairfield Greenwich Ltd.,

884 F.

Supp.

2d

92, 97-98 (S.D.N.Y. 2012); Anwar v. Fairfield Greenwich Ltd.,
306 F.R.D. 134, 141-44

(S.D.N.Y. 2015)

("Anwar VI").

The Court will now consider the claim-by-claim analysis
that Kingate directs to determine whether the negligence and
negligent

misrepresentation

claims

the

Anwar

Plaintiffs

assert against the PwC Defendants are precluded under SLUSA. 12
1.

Negligence

Under New York law,

to state a claim for negligence, a

plaintiff must allege "(l) that the defendant owed him or her
a cognizable duty of care;
that duty; and

(3)

(2)

that the defendant breached

that the plaintiff suffered damage as a

proximate result of that breach." Di Benedetto v. Pan Am World
Serv.,
Court

359 F.3d 627,
found

that

the

630

(2d Cir.

Anwar

2004)

Plaintiffs

In Anwar II,
pleaded

the

plausible

negligence claims against the PwC Defendants. 728 F. Supp. 2d
at 457. See also Anwar VI,

306 F.R.D.

134,

141-43

(finding

(1) "aware that the financial reports were to be used for a particular
purpose or purposes; ( 2) in the furtherance of which a known party or
parties was intended to rely; and (3) there must have been some conduct
on the part of the accountants linkinq them to that party or parties,
which evinces the accountants' understanding of that party or parties'
reliance." Id. at 551.
The Court notes that, unlike in the Standard Chartered Action, the
Anwar parties have not disputed whether the Anwar Action is a "covered
class action" under SLUSA. As the Anwar Plaintiffs' complaint names
significantly more than 50 claimants and seeks damages on behalf of an
even larger class, this case clearly qualifies as a "covered class action"
under SLUSA.
12

21

that common evidence could show that the PwC Defendants owed
the Anwar Plaintiffs a duty of care under Credit Alliance) .
The
against

crux
the

of

the

PwC

Anwar

Plaintiffs'
is

Defendants

negligence
allegedly,

that,

claim
"PwC

negligently failed to exercise due care by failing to properly
audit

the

Funds

in

auditing standards

accordance

( 'GAAS' ) ]

with

[generally

accepted

and other applicable auditing

standards and thereby caused injury to the Plaintiffs,

who

have lost all, or substantially all of their investments in
the Funds."

~

(SCAC

437.)

The PwC Defendants argue that this negligence claim is
precluded

because

it

is

predicated

misrepresentations and omissions.

on

(Dkt.

allegations

No.

1383

of

("May 29,

2015 PwC Letter Motion") at 2.) This conclusion follows, they
argue, because their duty to the lmwar Plaintiffs is premised
on satisfying Credit Alliance,
have

relied

reports.

(Id.

to

their

at 3-4.)

which requires investors to

detriment

on

inaccurate

The Anwar Plaintiffs,

financial

on the other

hand, argue that Credit Alliance is a standing doctrine for
determining whether accountants owe a duty of care, whereas
the

reliance

on an

inaccurate

financial

report

is

not

a

necessary element of a negligence claim once a duty of care
is established.

(Dkt.

No.

1392

Letter") at 3-4.)
22

("June 8,

2015 Anwar Pls.'

The

Court

is

not

persuaded

by

the

PwC

Defendants'

argument. In applying the Credit Alliance test, the Court has
looked to whether investors
issued by

investors

relied on misrepresentations

See,

Anwar VI, 306 F.R.D. at 143. The Credit Alliance

test

determines

PwC

on the relevant financial

materials

~'

the

relie~d

De?fendants,

whether an aud:L tor

but

not

whether

contained

owes

a

therein.

noncontractual

party a duty of care; to establish the existence of such a
duty

does

not

require

that

the

auditor

conduct. Conceivably, an accounta.nt,

engage

in

false

in violation of a duty

of care and for reasons unrelated with any scheme to harm
noncontractual

parties,

inaccurate

incomplete

or

detrimentally

rely,

might

issue

a

information

giving

rise

to

report
on

containing

which

investors

negligence

claims

unrelated to securities claims by such investors based on
falsity.
Here,
Defendants

the

Anwar

breached

Plaintiffs

their

duties

allege
to

that

audit

the

the
Funds

PwC
in

accordance with generally accepted domestic and international
auditing standards. Failure to abide by such standards could
constitute

a

breach

of

duty

I

regardless

of

whether

representations implicating auditing standards were made in
financial documents. The Anwar Plaintiffs do not allege that
PwC was somehow complicit in Madoff's fraud; instead, here,
23

"[the

PwC]

Defendants,

like

Plaintiffs,

were

victims

of

Madoff's frauds." Kingate, 784 F.3d at 152. Indeed, the Second
Circuit

noted

has

an

that

alleqations

that

auditor

negligently examined his clients' securities transactions and
failed to uncover fraud would not be precluded under SLUSA.
See id. at 148. Similarly here, the PwC Defendants owed duties
of care to the Anwar Plaintiffs, and their alleged failure to
follow industry-standard auditing procedures constituted a
breach of
negligence

that duty.
claims

Therefore,

against

the

the

PwC

Court

finds

that
are

Defendants

the
not

precluded by SLUSA.
2.

To

Negligent Misrepresentation

sufficiently allege

claim under New York law,
the

defendant

had

a

a

:negligent

misrepresentation

a plaintiff must plead that "(1)

duty,

as

a

result

relationship, to give correct information;

of

a

special

(2) the defendant

made a false representation that he or she should have known
was

incorrect;

( 3)

the

defendant

knew that

the plaintiff

desired the information supplied in the representation for a
serious purpose;

(4)

the plaintiff intended to rely and act

upon it; and (5) the plaintiff reasonably relied on it to his
or her detriment." Pension Comm. of Univ. of Montreal Pension
Plan v.

Banc of Am.

Sec.,

LLC,

24

446

F.

Supp.

2d 163,

198

(S. D. N. Y.

2006)

(citing Hydro Investors,

Inc.

v.

Trafalgar

Power Inc., 227 F.3d 8, 20 (2d Cir. 2000)).
In Anwar II, the Court found that the Anwar Plaintiffs
had sufficiently pleaded negligent misrepresentation claims
against the PwC Defendants. 728 F. Supp. 2d at 457. As part
of

this

claim,

the

Anwar

conducted

[their]

that

(1)

misrepresentations:

Plaintiffs

audits

in

the

allege
PwC

two

material

Defendants

accordance

with

"had

GAAS

or

[International Standards of Auditing ('ISA')]," and (2) that
the

"Funds'

material

respects,

~

(SCAC

financial

440

statements presented fairly,

the

(internal

financial
quotation

position of
marks

and

the

in all
Funds."

alterations

omitted) . )
The

PwC

Defendants

ar9ue

that

these

alleged

misrepresentations are squarely precluded by Kingate, because
these allegations premise liability on "Defendants' negligent
misrepresentations
with the Funds'

and misleading

omissions

investments with Madoff."

in

connection

(May 29, 2015 PwC

Letter Motion at 4-5 (quoting Kingate, 784 F.3d at 151) .) The
Anwar Plaintiffs, on the other hand, argue that the alleged
misrepresentations relate only to the
conduct

and

are

independent

of

PwC Defendants'

transactions

in

own

covered

securities. (Dkt. No. 1387 ("May 29, 2015 Anwar Pls.' Letter")
at 2.)
25

Claims

regarding both types

of

misrepresentations

those regarding auditing standards and those regarding the
financial condition of the funds -- are precluded by SLUSA.
As a preliminary matter, both were "made in connection with
the Funds' investments with Madoff in covered securities and
with [the PwC Defendants']
Kingate,

oversight of these investments."

784 F.3d at 134-35. Here,

the PwC Defendants were

hired to audit funds that the Anwar Plaintiffs believed were
in

investing

covered

securities.

misrepresentations do not,

Even

on their face,

though

discuss

the

covered

securities, the purpose of the audit reports was to ascertain
the accuracy of the Funds' financial condition and the Funds'
purported investments in covered securities.
Further,

these

negligent

misrepresentation

claims,

unlike the negligence claims, actually require a "showing of
false conduct
in SLUSA."

~

Id.

the named Defendants of the sort specified

at 152

(emphasis in original).

Whereas the

negligence claims are predicated on the failure of the PwC
Defendants to abide by auditing standards that may be required
even absent such language in a financial document, the Anwar
Plaintiffs'
whether

the

negligent
PwC

misrepresentation

Defendants,

knowing

claims

about

the

turn

on

falsity,

misrepresented that they had abided by those standards when
they prepared the financial report for the Funds on which the
26

Anwar Plaintiffs relied. Thus, although both types of claims
involve

the

PwC

failure

Defendants'

auditing procedures,

to

follow

standard

the negligent misrepresentation claims

necessarily turn on some false conduct, while the negligence
claims

do

not.

As

such,

the

Anwar

Plaintiffs'

state

law

negligent misrepresentation claims against the PwC Defendants
are precluded by SLUSA.
D.

THE STANDARD CHARTERED ACTION

The Standard Chartered Action is a consolidated action
which currently comprises 56 cases involving 74 plaintiffs. 13
These actions were filed between

P~.pril

from the following jurisdictions:

2009 and December 2012

the Circuit Court of the

11th Judicial Circuit in and for Miami-Dade County, Florida
(subsequently removed to the Southern District of Florida)

14 ;

the Superior Court of the State of California, County of Los
Angeles

(subsequently

California) 15 ;

the

removed

to

the

Central

Southern District of

District

FloridalG;

of

and the

13

Not included in this count is Caso v. Standard Chartered Bank
International (Americas) Ltd., No. 10-CV-9196, which is stayed in this
Court pending completion of individual arbitration in that case. (See
Dkt. Nos. 882, 1151.)
14

Headway Investment Corp. v. American Express Bank Ltd., No 09-CV-8500
("Headway"); Almiron v. Standard Chartered Bank Int' 1 (Americas) Ltd.,
No. 10-CV-6186 ("Almiron"); Carrillo v. Standard Chartered Bank Int'l
(Americas) Ltd., No. 10-CV-6187 ("Carrillo").
15

Valladolid, No. 10-CV-918.

Lopez v. Standard Chartered Bank Int'l (Americas) Ltd., No. 10-CV-919
("Lopez"); Maridom Ltd. v. Standard Chartered Bank Int'l (Americas) Ltd.,
No. 10-CV-920 ("Maridom"); Gerico, Inc. v. Standard Chartered Bank Int'l
16

27

(Americas) Ltd., No. ll-CV-909 ("Gerico"); Baymall Invs. Ltd. v. Standard
Chartered Bank Int'l
(Americas)
Ltd._,
No.
ll-CV-7649
("Baymall");
Blockbend Ltd. v. Standard Chartered Bank Int'l (Americas) Ltd., No. llCV-7650
( "Blockbend") ;
Escobar
v.
Standard
Chartered
Bank
Int' 1
(Americas) Ltd., No. 11-CV-6787 ("Escobar"); Eastfork Assets Ltd. v.
Standard
Chartered
Bank
Int' 1
(Americas)
Ltd.,
No.
ll-CV-7653
("East fork") ; Mai land Invs. , Inc. v. Standard Chartered Bank Int' 1
(Americas)
Ltd.,
No.
11-CV-5732
("Mailand"); Barbachano Herrero v.
Standard
Chartered
Bank
Int' 1
(Americas)
Ltd.,
No.
ll-CV-3553
( "Barbachano"); Asensio v. Standard Chartered Bank Int' 1 (Americas) Ltd.,
No. ll-CV-908 ("Asensio"); Auburn Overseas Corp. v. Standard Chartered
Bank Int'l (Americas) Ltd., No. 11-CV--904 ("Auburn"); Interland Invs.
Corp. v. Standard Chartered Bank Int'l (Americas) Ltd., No. 11-CV-905
("Inter land") ; Is ton Holdings Ltd. v. Standard Chartered Bank Int' 1
(Americas) Ltd., No. 11-CV-901 ("Istc~"); New Horizon Dev. Inc. v.
Standard Chartered Bank Int'l
(Americas) Ltd., No.
ll-CV-898
("New
Horizon"); Perez v. Standard Chartered Bank Int'l (Americas) Ltd., No.
ll-CV-903 ("Perez"); Rendiles v. Standard Chartered Bank Int'l (Americas)
Ltd., No. 11-CV-902 ("Rendiles"); Ruiz v. Standard Chartered Bank Int'l
(Americas) Ltd., No. ll-CV-900 ("Ruiz"); Salcar Ltd. v. Standard Chartered
Bank Int'l (Americas) Ltd., No. 11-CV-El99 ("Salcar"); Triple R Holdings
Ltd. v. Standard Chartered Bank Int' 1 (Americas) Ltd., No. 11-CV-897
("Triple R"); Velvor, S .A. v. Standard Chartered Bank Int' 1 (Americas)
Ltd., No. 11-CV-906 ("Velvor"); SC Invs. Ltd. v. Standard Chartered Bank
Int'l (Americas) Ltd., No. ll-CV-907 ("SC Invs."); Bahia Del Rio, S.A. v.
Standard Chartered Bank Int'l (Americas) Ltd., No. 11-CV-5716 ("Bahia Del
Rio") ; Archangel Res. Ltd. v. Standard Chartered Bank Int' 1 (Americas)
Ltd., No. 11-CV-5717 ("Archangel"); Blount Int'l v. Standard Chartered
Bank Int'l (Americas) Ltd., No. 11-CV-5719 ("Blount"); Diaz de Camara v.
Standard Chartered Bank Int'l (Americas) Ltd., No. 11-CV-5720 ("Diaz de
Camara"); Dougherty v. Standard Chartered Bank Int'l (Americas) Ltd., No.
ll-CV-5721 ("Dougherty"); De Passes Vieira Lima v. Standard Chartered
Bank Int'l (Americas) Ltd., No. ll-CV-5722 ("De Passes"); Echeverri de
Mata v. Standard Chartered Bank Int'l (Americas) Ltd., No. ll-CV-5723
("Echeverri");
Dougherty Novella v.
Standard Chartered Bank Int'l
(Americas) Ltd., No. 11-CV-5724 ( "~Jherty Novella"); Richmon Co. v.
Standard
Chartered
Bank
Int' 1
(Americas)
Ltd.,
No.
11-CV-5725
(Richmon"); Sabillon v. Standard Chartered Bank Int' 1 (Americas) Ltd.,
No. ll-CV-5726 ( "Sabillon"); San Blas S .A. v. Standard Chartered Bank
Int' 1 (Americas) Ltd., No. ll-CV-5727 ("San Blas") ; Smerant Corp. v.
Standard
Chartered
Bank
Int' 1
(Americas)
Ltd.,
No.
ll-CV-5728
("Smerant"); Mantecon v. Standard Chartered Bank Int'l (Americas) Ltd.,
No. ll-CV-5729 ("Mantecon"); Pharmafoods Int'l. c.v., et al., v. Standard
Chartered Bank Int' 1 (Americas) Ltd., No. 11-CV-5730 ( "Pharmafoods");
Tierra, C.V. v. Standard Chartered Bank Int'l (Americas) Ltd, No. ll-CV5731 ("Tierra"); Mizrahi v. Standard Chartered Bank Int' 1 (Americas) Ltd.,
ll-CV-6788 ("Mizrahi"); Quiroz Stone v. Standard Chartered Bank Int' 1
(Americas) Ltd., No. ll-CV-7651 ("Quiroz Stone"); Nautical Village, Inc.
v.
Standard Chartered Bank Int'l
(Americas)
Ltd.,
No.
ll-CV-7652
("Nautical Village"); Positano Inv. Ltd. v. Standard Chartered Bank Int'l
(Americas) Ltd., No. 11-CV-8371 ("Positano"); Maplehurst Holdings Ltd. v.
Standard
Chartered
Bank
Int' 1
(Americas)
Ltd.,
No.
11-CV-8372
("Maplehurst") ; Sand Overseas Ltd. v. Standard Chartered Bank Int' 1
(Americas) Ltd., No. 12-CV-148 ("Sand"); Rebac Enters. Ltd. v. Standard
Chartered Bank Int'l (Americas) Ltd., No. 12-CV-3969 ("Rebac"); Brea Int'l
Ltd. v. Standard Chartered Bank Int' 1 (Americas) Ltd., No. 12-CV-3970
28

Southern

District

of

New

York. 17

The

Judicial

Panel

on

Multidistrict Litigation (the "MDL Panel") transferred these
cases

to

this

Court,

pretrial purposes.

which

(See,

~'

consolidated

the

actions

for

Dkt. Nos. 282, 607.)

After the Court considered numerous motions to dismiss
in various actions, 1s it sustained five types of state law
claims against the Standard Chartered Defendants: breach of
fiduciary

duty,

gross

negligence,

negligence,

negligent

misrepresentation, and fraud. As discussed supra, in light of
Kingate,

the

Court

finds

that

the

Standard

Chartered

("Brea"); Diaz v. Standard Chartered Bank Int'l (Americas) Ltd., No. 12CV-9146 ("Diaz"); Rosental v. Standard Chartered Bank Int' 1 (Americas)
Ltd., 12-CV-9421 ("Rosental"); Lyac Venture Corp. v. Standard Chartered
Bank Int'l (Americas) Ltd., 12-CV-9422 ("Lyac"); Boltvinik de Uziel v.
Standard
Chartered
Bank
Int' 1
(Americas)
Ltd.,
No.
12-CV-9423
("Boltvinik"); TRE-C, S.A. v. Standard Chartered Bank Int'l (Americas)
Ltd., No. 12-CV-9425 ("TRE-C"); Skyworth Prods. Ltd. v. Standard Chartered
Bank Int'l (Americas) Ltd., No. 12-CV-9427 ("Skyworth); Optic Blue Ltd.
v. Standard Chartered Bank Int'l (Americas) Ltd., No. 12-CV-9426 ("Optic
Blue").
17

Saca v. Standard Chartered Bank Int' 1
("Saca").

(Americas)

Ltd., No.

11-CV-3480

This Court has ruled on three motions to dismiss regarding the remaining
state law actions asserted against the Standard Chartered Defendants. See
Anwar v. Fairfield Greenwich Ltd., 745 F. Supp. 2d 360 (S.D.N.Y. 2010)
("Anwar III"); Anwar v. Fairfield Greenwich Ltd., 826 F. Supp. 2d 578
(S.D.N.Y. 2011) ("Anwar IV"); Anwar v. Fairfield Greenwich Ltd., 891 F.
Supp. 2d 548 (S.D.N.Y. 2012)
("Anwar V"). Additional plaintiffs have
stipulated to dismissal of certain claims following these decisions. (See
Dkt. Nos. 936, 1193.)
18

Additionally, the Court has dismissed multiple other cases and plaintiffs
in various Decisions and Orders. See, ~'~, Anwar v. Fairfield Greenwich
Ltd., 831 F. Supp. 2d 787, 789-90 (S.D.N.Y. 2011) (dismissing Pujals v.
Standard Chartered International (Americas) Ltd., No. 10-CV-2878); Anwar
v. Fairfield Greenwich Ltd., 742 F. Supp. 2d 367, 375 (S.D.N.Y. 2010)
(granting motion to dismiss two actions based on forum selection clauses
and forum non conveniens) .

29

Plaintiffs' investments in the Funds were made in connection
with covered securities.

1.

"Groups of Lawsuits" as Covered Class Actions

In dispute in the Standard Chartered Action is whether
the

56

Standard

Chartered

cases

constitute

a

"group

of

lawsuits" under SLUSA's "covered class action" definition. As
a threshold matter, SLUSA precludes certain state law claims
only

in

"covered class

actions . "

As

defined

in

SLUSA,

a

"covered class action" is:
(i) any single lawsuit in which
I.

damages are sought on behalf of more than 50
persons or prospective class members, and
questions of law or fact common to those
persons or members of the prospective class,
without reference to issues of individualized
reliance
on
an
alleged misstatement
or
omission,
predominate over any questions
affecting only individual persons or members;
or

II.

one or more named parties seek to recover
damages on a representative basis on behalf of
themselves and other unnamed parties similarly
situated and questions of law or fact common
to those persons or members of the prospective
class predominate over any questions affecting
only individual persons or members; or

(ii) any group of lawsuits filed in or pending in the
same court and involving common questions of law or
fact, in which -I.

damages are sought on behalf of more than 50
persons; and

30

II.

the lawsuits are joined, consolidated, or
otherwise proceed as a single action for any
purpose.

15 U. S . C . § 7 8 bb ( f ) ( 5 ) ( B) .

The Standard Chartered Plaintiffs argue that a set of
cases should constitute a "group of lawsuits" only if such
actions

collectively

were

the

product

of

deliberate

and

purposeful collusion or collaboration among the plaintiffs.
(Dkt. No. 1349 ("Nov. 17, 2014 SCB Pls.' Letter").) In support
of their contention, the Standard Chartered Plaintiffs raise
two main arguments. First, they assert that the plain meaning
of "group" involves purposeful gathering. Here,
the

various

without

a

plaintiffs'

joint,

lawsuits

purposeful

plan,

were

filed

and were

they argue,
separately

involuntarily

joined together in this Court by reason of the MDL Panel's
action.

(Id.

Plaintiffs

at

argue

17.)

that

Second,
SLUSA's

the

Standard

legislative

Chartered

findings

and

history show that the statute sought to prevent collusive or
collective action -- but not uncoordinated, separately filed
actions

that were

grouped together.

involuntarily consolidated or otherwise
(Id. at 18-19.)

The Court is not persuaded by these arguments. Courts in
this District, as elaborated below, have overwhelmingly found
similarly

joined

lawsuits

to

constitute

a

"group"

under

SLUSA. In considering whether a set of lawsuits is a "group,"
31

courts have considered numerous factors,

including whether

the plaintiffs have common counsel, whether the allegations
are

substantially

identical,

whether

lawsuits

have

been

referred to a single court at the direction of an MDL panel,
whether

plaintiffs

whether

the

have

lawsuits

filed
are

joint

court

otherwise

filings,

subject

procedural treatment in a single court. See,

~,

to

and
joint

Amorosa v.

Ernst & Young LLP, 682 F. Supp. 2d 351, 376-77 (S.D.N.Y. 2010)
( "Amorosa II")
covered

(finding

class

complaint

action

reflected

individual

when,

among

similar

Time Warner Inc.,

409 F.

other

or
~ff

allegations as related cases),

lawsuit was part of
factors,

virtually

a

amended
identical

'd sub nom Amorosa v. AOL

App'x 412

(2d Cir.

2011);

Gordon

Partners v. Blumenthal, No. 02-CV-7377, 2007 WL 1438753, at
*3 (S.D.N.Y. May 16, 2007)

(approval of magistrate's finding

that a group of lawsuits had proceeded as "a single action
for any purpose" after they were consolidated for pretrial
purposes), aff'd on other ground:3, 293 F. App'x 815 (2d Cir.
2008);

Markey v.

6728102,

at

proceeding as

*5

Citigroup,
(S.D.N.Y.

Inc~,

Dec.

No.

20,

09-MDL-2070,
2013)

2013 WL

("[Actions]

'a single action for any purpose'

are

within the

meaning of SLUSA when they are grouped together as part of an
MDL."
859 F.

(internal citation omitted)); In re Refco Sec. Litig.,
Supp.

2d 644,

647-49

(S.D.N.Y.
32

2012)

(finding that

multiple

actions

purpose"

in

an

proceeded
MDL

as

a

proceeding

single

where

action

it

was

"for

any

accepted

as

"related" to that proceeding, had coordinated discovery with
other

actions,

shared

fees

for

the

services

of

Special

Masters, and participated in joint status conferences); In re
Adelphia Commc'ns Corp. Sec. & Derivative Litig., No. 03-MDL15 2 9 , 2 O1 o WL 3 5 2 8 8 7 2 , at * 5 ( s . D . N . Y . Aug . 3 o , 2 O1 o )

( "The

present action is one of more than 50 actions pending in this
district as a multidistrict liti9ation, in which damages are
sought for more than 50 people. It is plainly a covered class
action."); In re Citigroup Inc. Sec. Litig., 987 F. Supp. 2d
377,
state

387

(S.D.N.Y.

2013)

(finding

individual

plaintiffs'

law claims were precluded under SLUSA after an MDL

transfer,

even

if

not

formally

joined

or

consolidated,

because it was "proceeding as a single action for any purpose"
under SLUSA) .
Plaintiffs also argue that the purpose of SLUSA is to
prevent deliberate attempts by class action plaintiffs to
evade

PSLRA' s

prevent

bona

plaintiffs.
that

heightened
fide

Indeed,

SLUSA should

pleading

individual
SLUSA' s

standards,

actions

le9islative

"preserv [e]

the

of

but

fewer

findings

not

to

than

51

do

state

appropriate enforcement

powers of State securities regulators and not chang[e]

the

current treatment of individual lawsuits." SLUSA, Pub. L. No.
33

105-353,

§

2(5),

Stat.

112

3227

(1998).

The Senate Report

similarly stated that the "Committee does not intend for the
bill to prevent plaintiffs from bJ::-inging bona fide individual
actions

simply

because

more

than

fifty

persons

commence

actions in the same state court against a single defendant."
S. Rep. No. 105-182, 1998 WL 226714, at *7 (May 4, 1998).
But on this point the legislative history of SLUSA is
not so simple;

indeed,

acknowledged that

the

it is ambiguous.
law could affect

that were involuntarily consolidated:

The Senate Report
individual actions

" [T] he provisions of

the bill would apply where the court orders that the suits be
joined, consolidated, or otherwise proceed as a single action
at the state level. The Committee also notes that when such
suits

proceed as

a

single

action

in

state

court,

it

is

frequently at the request of the :plaintiffs." Id. at *8. Thus,
the

Senate

Report

implies

that

the

Senate

Committee

recognized that actions consolidated not at the plaintiffs'
request could still constitute a group of lawsuits subject to
SLUSA. Additionally, Congress adopted the current version of
SLUSA despite objections by some Senators who had argued that
the proposed language could be read to deprive

individual

investors of a state law remedy if they happened to file in
the same court as other individua1.l investors. See id. at *20.

34

Based

on

concludes

these

that

the

preceding

considerations,

Standard Chartered cases

the

Court

constitute

a

"group of lawsuits" for the purposes of SLUSA. They are all
pending in this Court,
fact

against

the

involve common questions of law or

Standard

Chartered

Defendants

(i.

e •/

alleging that the Standard Chartered Defendants induced the
Plaintiffs

to

invest

investment advice),
persons,

and,

in

the

Funds

based

on

unsupported

seek damages on behalf of more than 50

by decision of

the MDL Panel,

are

"joined,

consolidated, or otherwise proceed as a single action for any
purpose" under SLUSA. 15 U.S.C.
SLUSA' s

language

does

not

78bb(f) (5) (B).

§

indicate

that

the

statute

preempts only those claims that were purposefully grouped
together

by

more

than

50

plaintiffs.

Instead,

the

act

considers groups of lawsuits proceeding as a single action
"for any purpose." Id.

(emphasis added).

Indeed,

SLUSA was

adopted notwithstanding some ob:j ections indicating concern
over this issue, and the overwhelming majority of courts have
decided SLUSA preclusion without

an

inquiry

into whether

there was a purposeful grouping of lawsuits by plaintiffs.
See,~,

In re Citigroup Inc. Sec. Litig., 987 F. Supp. 2d

at 388 ("It is true that [the plaintiff] did not purposefully
direct his

lawsuit to this court,

nor is his complaint a

verbatim copy of the other complaints, nor is he represented
35

by the same counsel as other plaintiffs. SLUSA, however, does
not instruct the Court to consider any of these factors.").
Here,
Chartered

the MDL Panel referred the
cases

to

this

Court,

individual Standard

which

consolidated

Standard Chartered Action for pretrial purposes.
Dkt.

Nos.

282,

607.)

On multiple occasions,

Plaintiffs

Chartered
submissions,

have

and filings

submitted

(see,

~,

Standard
requests,

joint

Dkt.

~'

(See,
the

Nos.

the

445,

828,

1244), and common counsel represents many of the total number
of

plaintiffs. 19

Indeed,

undoubtedly

helped

Counsel

the

for

this

plaintiffs.

For

Standard Chartered

Plaintiffs were able

to

1329

Sept.

("Transcript

type

of

of

coordination

example,

as

Plaintiffs

29,

2014

Liaison

has

"coordinate discovery."

noted,

(Dkt.

Conference")

has

at

No.
23.)

Later-filed actions also had the benefit of Court decisions
on earlier-filed motions. After the Court decided multiple
motions

to

dismiss

on

earlier

filed

cases,

subsequent

plaintiffs were able to draft adequately pleaded allegations
in their complaints and stipulate dismissals of claims with
the Standard Chartered Defendants without resorting to motion
practice. See,

~'

Anwar III,

745 F. Supp.

2d 360; Anwar

The 74 plaintiffs are represented by a total of nine law firms. Curran
& Associates represents 54 of those plaintiffs; Marko & Magnolick, P.A.
represents 8 of those plaintiffs.
19

36

IV,

826 F. Supp. 2d 578; Anwar V,

891 F. Supp. 2d 548.

(See

also Dkt. Nos. 936, 1193.) Indeed, at the September 29, 2014
conference before

this

Court,

acknowledged that "many of
same
Sept.

lawyer
29,

are

Plaintiffs'

Liaison Counsel

[the complaints]

substantially

identical.

2014 Conference at 33.)

/1

brought by the
(Transcript

of

The Court has previously

recognized the similarities among many of these complaints as
well. See Anwar IV, 826 F. Supp. 2d at 590.
Additionally, at Plaintiffs' request (see Dkt. No. 291),
Magistrate

Judge

Theodore

Chartered

Plaintiffs'

Katz

appointed

Steering

the

Committee

Standard
("Steering

Committee") to, among other tasks, "initiate, coordinate and
conduct all discovery on behalf of all plaintiffs," "[s]peak
for all Standard Chartered Plaintiffs at pretrial proceedings
and

in

response

to

any

inquiries

by

the

Court,"

and

to

" [n] egotiate and enter into stipulations on behalf of the
Standard

Chartered

litigation."

(Dkt.

Plaintiffs
No.

602

at

regarding
3-4.)

The

four

this

attorneys

initially appointed to the Steering Committee represent the
four earliest filed cases that are currently pending in the
Standard Chartered Action.

(Id. at 2.) Thus, even though an

MDL Panel transfer and consolidation for pretrial purposes is
sufficient for the "group of lawsuits" analysis under SLUSA,

37

the

Standard

Chartered

Plaintiffs

have

also

coordinated

significant aspects of this litigation.
This result is consistent with the primary purpose of
SLUSA: to bring both state and federal securities fraud class
action claims to federal court and subject such litigation to
the heightened pleading standard of the PSLRA.

Here,

policy objective of SLUSA is directly implicated.

that

In Anwar

II, the Court found this policy objective was not implicated
in

the

Anwar

Action

because

the

Anwar

Plaintiffs

had

successfully pleaded federal securities law claims under the
PSLRA. 728 F. Supp. 2d at 399. Unlike the Anwar Plaintiffs,
the

Standard

Chartered

Plaintiffs

have

not

successfully

pleaded federal securities law claims. Significantly, after
the Court dismissed all federal securities law claims for
plaintiffs'

failure

to

requirements

of

PSLRA in

the

Chartered cases,
additional

67

see

satisfy

Anwar

plaintiffs

the

the

II,

then

heightened

first

745
filed

F.

pleading

wave

of

Standard

Supp.

2d

360,

actions

against

an
the

Standard Chartered Defendants asserting only state law causes
of action.

(See Dkt. No. 1333 ("Oct. 31, 2014 SCB Letter") at

6. )

To

satisfy

SLUSA' s

policy objectives,

matter whether more than 50

it

should not

individual plaintiffs brought

substantially similar lawsuits a9ainst defendants, or whether
38

a collective group of more than SO plaintiffs brought these
claims. Either type of action would result in the harm SLUSA
sought
state

to protect
law cases,

subject

to

defendants

a9ainst

namely,

essentially class actions,

multiple

that

the heightened pleading standard of

are

the

not

PSLRA

despite being grounded on the same allegations of falsity in
connection with covered securities,
evidence

as

their

counterpart

and based on the same

federal

securities

claims.

Accordingly, the Court concludes that the Standard Chartered
Action is a "group of lawsuits" under SLUSA. The Court now
turns to a claim-by-claim analysis to determine which,

if

any, of the Standard Chartered Plaintiffs' state law claims
are precluded by SLUSA.
2.

State Law Claims Analyais

Following three rulings by this Court on various motions
to dismiss and two stipulations among the parties, five types
of state law claims remain against the Standard Chartered
Defendants:

breach

of

negligence,

negligent

fiduciary

duty,

misrepresentation,

negligence,
and

fraud.

gross
20

The

Court notes that this Decision and Order considers only the
applicability of SLUSA to the remaining state law claims, and

20

These prior decisions have applied Florida law to the state law claims
before the Court. See, ~, Anwar III, 745 F. Supp. 2d at 369.
39

not

whether

such

claims

satisfy

any

relevant

pleading

standards.
The
claims

Standard

can

Diligence

be

Chartered

placed

Claims,"

in

which

Pla.intiff s

two

main

dependl

on

argue

that

these

categories:

( 1)

allegations

"Due

that

the

Standard Chartered Defendants failed to properly investigate
the

Funds

before

clients; and (2)

making

an

investment

recommendation

to

"Madoff Claims,"' which include claims that

depend on allegations that Standard Chartered Defendants made
misrepresentations or omissions in connection with the Funds'
investments in BMIS. 21 (Dkt. No. 1385 ("May 29, 2015 SCB Pls.'
Letter") at 5.)
The

Court

Plaintiffs'

now

finds

that

"Due Diligence Claims"

the

Standard

Chartered

breach of

fiduciary

duty, negligence, and gross negligence -- are not precluded
by

SLUSA.

However,

the

"Madof f

Claims"

negligent

misrepresentation and fraud -- are precluded by SLUSA. The

21

The Standard Chartered Plaintiffs also identify a third category of
claims -- "Non-Madoff Claims." (Dkt. No. 1385 at 5.) They argue that this
category includes claims that the Standard Chartered Defendants made
misrepresentations or omissions involving their investment advice and
recommendations but may not directly involve the Funds' involvement with
BMIS. (Id.) The Court notes that there are no surviving fee-based claims
asserted by any of the plaintiffs, but that some plaintiffs make
allegations of "trailer fees" as support for breach of fiduciary duty and
negligence claims. Thus, the Court considers these allegations as made in
support of breach of Standard Chartered Plaintiffs' fiduciary duty and
negligence claims.
40

Court now turns to a claim-by-claim analysis to explain its
conclusions.
a.

Breach of Fiduciary Duty

Under Florida law, a fiduciary relationship arises where
"a relation of trust and confidence exists between the parties
(that is to say, where confidence is reposed by one party and
a trust accepted by the other, or where confidence has been
acquired and abused) , that is sufficient as a predicate for
relief. The origin of the confidence is immaterial." Doe v.
Evans,

814

omitted)

So.

2d

370,

374

(Fla.

2002)

(quotation marks

(emphasis removed) . Florida has also adopted Section

874 of the Restatement (Second) of Torts, which provides that
a breach of a fiduciary relationship "'is not dependent solely
upon

an

agreement

fiduciary

and

relation. '"

Id.

the

or

contractual

beneficiary

(quoting

relation

but

Restatement

between

results

from

(Second)

of

the
the
Torts

Section 874 cmt. B (1979)).
The Court has previously allowed three separate theories
of breach of fiduciary duty owed by broker-dealers to survive
motions to dismiss in various Standard Chartered cases. 22 The
first

of

these

duties

obligatE!S

securities

broker-dealer

Multiple
plaintiffs
have
stipulated
that
allegations
of
misrepresentations in their fiduciary duty claims do not support a cause
of action. (See Dkt. Nos. 936, 1193.)
22

41

defendants

to

conduct

proper

diligence

before

making

an

investment recommendation. See Anwar III, 745 F. Supp. 2d at
375-78.

Under

dealers

have

Florida
a

duty

law,
to

"even nondiscretionary broker-

recommend

investments

studying them sufficiently to become

only

informed as

after

to their

nature, price, and financial prog1·nosis." Id. at 376 (quoting
Ward v. Atl. Sec. Bank, 777 So. 2d 1144, 1147 (Fla. Dist. Ct.
App. 2001))
All

(quotation marks and alterations omitted).

plaintiffs

allege

arguing

that

the

Standard

little

or no

due

diligence

this:

type

Chartered
on

the

of

breach

Defendants

Funds

before

of

duty,

performed
making

a

recommendation. 23 Such diligence could have included "typical
quantitative

analysis"

or auditing.

(See,

~'

Lopez Am.

Compl. ~ 49.) In support of this claim, some plaintiffs also

23

See Headway Compl. , , 37-38, 75-79; :!L.opez Am. Compl. , 81; Valladolid
Compl. , , 20-21; Maridom Am. Compl. , 5,: Almiron Compl. , , 35-36, 41, 58;
Carrillo Compl. , , 37-38, 43, 60; Geric~ Compl. , , 6-7; Baymall Compl. ,
, 6-7; Blockbend Compl. , , 6-7; Escobar Compl. , , 6-7; Eastfork Compl.
, , 6-7; Mailand Compl. , , 6-7; Saca Compl., 25; Barbachano Am. Compl. , ,
28, 67; Triple R Compl. , , 9, ~New Horizon Compl. , , 9, 48; Salcar
Compl. , , 9, 47; Ruiz Compl. , , 9, 46; Iston Compl. , , 9, 46; Rendiles
Compl. , , 9, 45; Perez Compl. , , 9, 44; A~ Compl. , , 9, 45; Interland
Compl. , , 9, 45; velVOr Compl. , , 9, 52; SC Invs. Compl. , , 9, 43; Asensio
Compl. , , 9, 48; Bahia Del Rio Am. Compl. H 9, 44; Archangel Compl. , ,
9, 45; Blount Am. Compl. , , 9, 40; Diaz de Camara Compl. , , 9, 43;
Dougherty Am. Compl. , , 9, 47; De Passos Compl. , , 9, 46; Echeverri Compl.
, , 9, 42; Dougherty Novella Am. Compl. ~, 9, 51; Richmon Compl. , , 9, 44;
Sabillon Compl. , , 9, 45; San Blas Am. Compl. , , 9, 49; Smerant Compl. , ,
9, 44; Mantecon Compl. , , 9, 41; Pha:rmafoods Compl. , , 9, 48; Tierra
Compl. , , 9, 67; Mizrahi Compl. , , 9, 47; Quiroz Stone Compl. , , 9, 45;
Nautical Village Compl. , , 9, 45; Positano Compl. , , 9, 44; Maplehurst
Compl. , , 9, 44; Sand Compl. , , 9, 42; :Rebac Compl. , , 9, 44; Brea Compl.
, , 9, 44; Diaz Compl. , , 9, 43; Rosental Compl. , , 9, 43; Lyac Compl. , ,
9, 44; Boltvinik Compl. , , 9, 43; TRE-C Compl. , , 9, 43; Skyworth Compl.
, , 9, 43; Optic Blue Compl. , 12.
42

allege

that

a

high-ranking

Standard

Chartered

executive

admitted that no diligence at all had been done on the Funds. 24
The second type of securities broker-dealer fiduciary
duty that this Court has recognized in the Standard Chartered
Action is the duty to continue to monitor investments. See
Anwar III, 745 F. Supp. 2d at 377·-78. The Court has found the
Standard

Chartered

Defendants

may

owe

such

a

duty

when

investors have discretionary accounts or when the Defendants
act as "far more than a passive broker taking orders" and are
alleged to have "reached out" to investors and "aggressively
marketed" the investments. Id. at 377. For example, Standard
Chartered account managers allegedly met personally with some
plaintiffs multiple times over the course of a year.
~'

Baymall Compl.

claims. 25 However,

24

See,
, 30.

~'

~

See,

20. Most plaintiffs have pleaded such

the Court has also dismissed such claims

Lopez Am. Compl. ,

9; Maridom Am. Compl. , 45; Saca Compl.

See Headway Compl. , , 37, 75; Lopez .A.m. Compl. , 86; Valladolid Compl.
, , 9, 41; Gerico Compl. , 73; Baymall Compl. , , 20, 63; Blockbend Compl.
, 69; Escobar Compl. , 69; Eastfork Compl. , 69; Mailand Compl. , 58;
Saca Compl. , , 25, 49; Barbachano Am. Compl. , , 14, 67-68; Triple R Compl.
, , 42, 58, 90; New Horizon Compl. , , 42, 57, 89; Salcar Compl. , , 39, 88;
Ruiz Compl. , , 39, 85; Iston Compl. , , 43, 90; Rendiles Compl. , , 43, 90;
Perez Compl. , , 38, 85;~rn Compl. , , 39, 86; Interland Compl. , , 39,
90; Velvor Compl. , , 39, 93; SC Invs. Compl. , , 39, 93; Asensio Compl. , ,
35, 92; Bahia Del Rio Am. Compl. , , 38, 85; Archangel Compl. , , 43, 90;
Blount Am. Compl. , , 38, 85; Diaz de Camara Compl. , 84; Dougherty Am.
Compl. , , 39, 88; De Passos Compl. , , 313, 87; Echeverri Compl. , , 37, 86;
Dougherty Novella Am. Compl. , , 38, 92; Richmon Compl. , , 38, 85; Sabillon
Compl. , , 37, 86; San Blas Am. Compl. , , 43, 90; Smerant Compl. , , 38,
85; Mantecon Compl. , , 38, 87; Pharmafoods Compl. , , 42, 89; Tierra Compl.
, , 61, 108; Mizrahi Compl. , , 39, 88; Quiroz Stone Compl. , , 37, 86;
Nautical Village Compl. , , 39, 85; Positano Compl. , , 38, 85; Maplehurst
25

43

when Defendants provided advice on

"particular occasions"

only, as opposed to aggressively marketing the investments. 26
Anwar IV, 826 F. Supp. 2d at 592.
The third securities broker-dealer fiduciary duty theory
that the Court has recognized is the duty to inform investors
of the risks of the transaction and to disclose all material
facts.

See Anwar V,

891 F. Supp.

2d at 557

(finding such a

(See Sac a Compl .

claim was adequately pleaded in Saca)

~

53.)
The

Standard

Chartered

Defendants

argue

that

these

breach of fiduciary duty claims necessarily involve false or
misleading
without

conduct:

performing

misrepresentation.

making

an

adequate

due

(Dkt. No. 1384

investment
diligence

recommendation
is

a

type

of

("May 29, 2015 SCB Letter

Motion") at 3-4.) Pointing to Omnicare, Inc. v. Laborers Dist.
Council Const. Indus. Pension Fund, 135 S. Ct. 1318 (2015),
the Defendants argue that a statement of opinion that lacks
a

good

faith

recommendation

basis
without

in

fact

due

Compl. , , 38, 87; Sand Compl. ,
, , 38, 85.
--

i.e.,

diligence

an

investment

constitutes

an

83; Rebac Compl. , , 38, 85; Brea Compl.

Although the Court has not ruled on the merits of some of the laterfiled claims, it notes that some of these complaints allege breach of
fiduciary duty to monitor investments without alleging either aggressive
marketing or even that the accounts were discretionary. See Diaz Compl.
, 51; Rosental Compl. , 58; Lyac Compl. , 59; Boltvinik Compl.----,-S8; TREf Compl. , 58; Skyworth Compl. , 58.
26

44

actionable misrepresentation or omission under the federal
securities laws.

(May 29, 2015 SCB Letter Motion at 4-5.) The

Standard Chartered Defendants ar9ue that,
Standard

Chartered

Plaintiffs'

breach

in any event, the
of

fiduciary

duty

claims are "replete" with allegations of misrepresentations.
(Id. at 5.)
Responding to the Defendants'
Chartered Plaintiffs

argue

that

arguments,

breach of

the Standard

fiduciary

duty

claims in Florida do not depend on implied representations.
(Dkt.

No.

Further,

13 91

("June

they note

that

2015

SCB

Pls.'

there

8,

Letter")

are

several

duties

at

3.)

that

a

broker-dealer fiduciary owes to its clients. Although some of
these duties, like the duty of full disclosure, might involve
misrepresentations, others do not.

(Id. at 4.)

The Court concludes that these three types of breach of
fiduciary duty claims are not precluded by SLUSA. All of the
Standard Chartered Plaintiffs allege some form of breach of
fiduciary duty claim that is not predicated on false conduct
by the Standard Chartered Defendants. In numerous rulings in
this

litigation,

the

Court

has

repeatedly

held

that

allegations that the Standard Chartered Defendants conducted
no due diligence (or that Standard Chartered executives have
stated as such),
investments

or that the Defendants failed to monitor

after

aggressively
45

recommending

continued

investment

in

the

Funds,

satisfactorily

plead

breach

of

fiduciary duty. The type of conduct at issue here -- whether,
for

example,

the

Standard

Chartered

Defendants

did

not

perform analytical tests as demanded of a fiduciary -- entails
an inquiry that is wholly distinct from the falsity wrongdoing
underlying Madoff fraud. Those duties exist and are breached
regardless

of

whether

the

Funds

were

merely

a

funnel

to

Madoff.
In addition to these three theories of fiduciary duty
claims,

the Standard Chartered Plaintiffs argue that claims

involving the non-disclosure of

fees paid to the Standard

Chartered Defendants by the Funds should not be precluded
under SLUSA. 27
They state
Herrero

(See May 29,

that one plaintiff,

( "Barbachano") ,

Barbachano Am.
Plaintiffs

SCB Pls.'

2015,

has

Compl.

~~

note

that

also

Joaquina Teresa Barbachano

asserted

73,

Letter at 7-8.)

97.)

while

such

The

the

a

claim.

(See

Standard Chartered

Court

has

previously

denied plaintiffs leave to amend complaints to include such
allegations,
supportive

the

Court

evidence

at

has

permitted plaintiffs

trial

to

support

their

to

offer

existing

An example of such a claim is the allegation that the Standard Chartered
Defendants failed to disclose that they received a return for each dollar
that each client put into the Funds. (May 29, 2015 SCB Pls.' Letter at
5.) Plaintiffs note, however, that "all [Standard Chartered] Plaintiffs
will seek to offer evidence at trial concerning this claim." (Id. at 6
27

n.4.)

46

claims.

(See May 29,

Anwar v.

2015 SCB Pls.'

Fairfield Greenwich Ltc!.:_,

1415621,

*4

Chartered

(S.D.N.Y.

Defendants

Letter at 5-6
No.

09-CV-118,

13,

respond

the

The

2012)).)

that

Apr.

(citing

Court

2012 WL
Standard

has

already

considered the merits of a trailer fee claim and dismissed
it.

(Dkt. No. 1390 ("June 8, 20151, SCB Letter") at 4.)
The trailer fee allegations asserted by Barbachano turn

on whether the Standard Chartered Defendants had a conflict
of interest with respect to their involvement with BMIS and
Madoff. Similar allegations were used to support Barbachano' s
negligent
later

misrepresentation

dismissed.

Anwar

v.

and

fraud

Fairfield

claims,

which

Greenwich

were

Ltd.,

286

F.R.D. 258, 260 (S.D.N.Y. 2012). In dismissing those claims,
the

Court

noted

that

allegations

of

such

fees

were

not

sufficiently concrete to serve as a foundation for inferring
fraudulent intent. Id. Barbachano cannot use such allegations
of a conflict of interest in support of both her fraud-based
claims

and

other

duty-based

claims.

This

condition

is

distinct from a plaintiff's claim seeking compensation for
fees paid by the Funds to the Standard Chartered Defendants
despite their failure to perform duties for which the fees

47

were paid. 2s See Kingate, 7 84 F. 3d at 152. Here, the Standard
Chartered Plaintiffs do not allege that the fees in question
related to a service that the Standard Chartered Defendants
failed to perform, but rather imply that the payment of such
fees created a conflict of interest -- i.e., that there was
some complicity with the underlying Madoff fraud,
by

conduct,

plaintiffs'

the

Standard

Cha.rte red

or false

Defendants.

Thus,

allegations of trailer fees here are precluded

under SLUSA.
Under

Kingate,

courts

are

directed

to

consider

the

individual allegations of a claim. See 784 F.3d at 150-51. As
all

Standard Chartered Plaintiffs

breach

of

fiduciary

allegations
generally,

of

claims

trailer

fees

that
or

on

have

adequately pleaded

are

not

the

predicated

Madof f

on

fraud more

SLUSA does not preclude the Standard Chartered

Plaintiffs' claims of breach of fiduciary duty.
b.

Gross Negligence and Negligence

The Florida Supreme Court has defined gross negligence
as "an act or omission that a reasonable, prudent person would
know is likely to result in injury to another."

Travelers

Indem. Co. v. PCR, Inc., 889 So. 2d 779, 793 n.17 (Fla. 2004)

The Court also notes that Kingate left open the question of whether
such fee-based claims would be derivative, rather than direct, claims.
See 784 F.3d at 152 n.24.

28

48

(quotation marks omitted) . The Court has found that certain
plaintiffs had adequately pleaded gross negligence by the
Standard Chartered Defendants in recommending investments in
the Funds without conducting proper due diligence beforehand
similar to a breach of fiduciary duty claim.

See Anwar

III, 745 F. Supp. 2d at 378; Anwar V, 891 F. Supp. 2d at 55758. Such gross negligence claims remain standing in respect
of many plaintiffs. 29 The allegations that form the basis for
such

claims

typically

focus

on

the

Standard

Chartered

Defendants' failure to perform due diligence, as well as their
failure to exercise the degree of prudence, caution, and good
business practices that would be expected of any reasonable
investment professional.
Most

(See,

~~,

Mantecon Compl.

Standard Chartered Plaintiffs

have

~

88.)

also pleaded

negligence claims, 30 or have been granted leave to re-plead a

29

See Lopez Am. Compl. , 86; Saca Compl. , 57-61; Barbachano Am. Compl.
, , 90-101; Triple R Compl. , , 88-93; New Horizon Compl. , , 88-92; Salcar
Compl. , , 86-91; Ruiz Compl. , , 84-87; Iston Compl. , , 89-92; Rendiles
Compl. , , 89-92; Perez Compl. , , 84-87; Al:.lbUTI1 Compl. , , 85-88; Interland
Compl. , , 89-92; ~r Compl. , , 92-95; SC Invs. Compl. , , 87-90; Asensio
Compl. , , 91-94; Bahia Del Rio Am. Compl. , , 84-87; Archangel Compl. , ,
89-92; Blount Am. Compl. , , 84-87; Diaz de Camara Compl. , , 83-86;
Dougherty Am. Compl. , , 87-90; De Passos. Compl. , , 86-89; Echeverri Compl.
, , 85-88; Dougherty Novella Am. Compl. , , 91-94; Richmon Compl. , , 8487; SabillonCompl. , , 85-88; San Blas.Am. Compl. , , 89-92; SmerantCompl.
, , 84-87; Mantecon Compl. , , 86-89; Pharmafoods Compl. , , 88-91; Tierra
Compl. , , 107-110; Mizrahi Compl. , , 87-90; Quiroz Stone Compl. , , 8588; Nautical Village Compl. , , 85-88; Positano Compl. , , 84-87; Maplehurst
Compl. , , 86-89; Sand Compl. , , 82-85; Rebac Compl. , , 84-87; Brea Compl.
, , 84-87; Diaz Compl. , , 80-84; Rosental Compl. , , 80-84; Lyac Compl. , ,
81-85; Boltvinik Compl. , , 80-84; TRE-C~ Compl. , , 80-84; Skyworth Compl.
, , 80-84; Optic Blue Compl. , , 24-25.
30

See Headway Compl. , , 127-34; Valladolid Compl. , , 91-98.
49

uniform negligence claim. 31 For these claims, these plaintiffs
typically allege that the Standard Chartered Defendants, by
virtue of

their

superior knowledge,

experience

in rendering

reasonable

care

in

investment advice,

recommendini9"

managing investment accounts.
60.)

investment

generally

allege

skill,

had a

and

duty of

products

and

(See, ~' Mantecon Compl. ~

As part of this duty of care,

Plaintiffs

judgment,

that

the Standard Chartered
the

Standard

Chartered

Defendants had a duty to conduct a proper investigation of
recommended investments,

and bn:ached this duty by,

among

other reasons, proposing investments without having conducted

In earlier decisions, the Court initially dismissed many of the
plaintiffs' negligence claims after application of Florida's "economic
loss rule." See, ~' Anwar IV, 826 F'. Supp. 2d at 593. However, after
the Florida Supreme Court clarified the application of the economic loss
rule in Tiara Condo. Ass'n Inc. v. Marsh & McLennan Companies, Inc., 111
So. 399 (Fla. 2013), the Court allowed plaintiffs to uniformly re-plead
negligence claims that had been dismissed under the economic loss rule.
(See Dkt. Nos. 1137, 1141, 1309.) See .~lmiron Compl. , , 85-90; Carrillo
Compl. ,, 86-91; Gerico Compl.
~ll-93; Baymall Compl. H 70-72;
Blockbend Compl. ,, 76-78; Escobar Compl. , , 75-77; Eastfork Compl. ,,
76-78; Mailand Compl. , , 65-67; Saca Compl. , 44-47; Barbachano Compl. ,,
44-51; Triple R Compl. ,, 62-7~New Horizon Compl. ,, 61-72; Salcar
Compl. ,, 61-71; Ruiz Compl. ,, 58-68; Iston Compl. , , 63-73; Rendiles
Compl. ,, 63-73; Perez Compl. ,, 58-68; A~ Compl. , , 59-69; Interland
Compl. ,, 63-73; ~r Compl. ,, 66-76; 5C Invs. Compl. ,, 61-71; Asensio
Compl. ,, 65-75; Bahia Del Rio Am. Compl. H 58-68; Archangel Compl. , ,
62-72; Blount Am. Compl. , , 57-67; Diaz de Camara Compl. ,, 57-67;
Dougherty Am. Compl. , , 61-71; De Passos: Compl. , , 60-70; Echeverri Compl.
,, 59-69; Dougherty Novella Am. Compl. ,, 64-74; Richmon Compl. ,, 5767; Sabillon Compl. ,, 58-68; San Blas Jl,m. Compl. ,, 62-72; Smerant Compl.
,, 67-77; Mantecon Compl. ,, 60-70; Pharmafoods Compl. , , 61-71; Tierra
Compl. , , 80-90; Mizrahi Compl. ,, 6~71; Quiroz Stone Compl. , , 59-69;
Nautical Village Compl. , , 59-69; Positano Compl. , , 57-67; Maplehurst
Compl. , , 60-70; Sand Compl. ,, 54-64; Rebac Compl. , , 57-67; Brea Compl.
,, 57-67.
-·--31

tt

50

sufficiently
investment.
The

careful

and

diligent

examination

of

the

(See, ~, id. at~~ 61-62.)

Court

finds

that

the

duty

of

care

required

in

connection with these negligence and gross negligence claims
are

owed

by

securities

broker-dealers

regardless

of

the

underlying Madoff fraud. Allegations of the underlying fraud
are

not

essential

for

plaintiffs

to

negligence or gross negligence claim;

plead

a

sufficient

allegations that the

Standard Chartered Defendants failed to conduct due diligence
and thus breached their duty of care to the Standard Chartered
Plaintiffs

are

sufficient.

Thus,

the

Standard

Chartered

Plaintiffs' surviving negligence and gross negligence claims
are not precluded by SLUSA.
c.

Fraud-Based Claims and Negligent Misrepresentation
Claims

Of the three unified motions to dismiss in the Standard
Chartered Action, the Court has found only one complaint that
adequately

pleaded

negligent

claims. See Anwar III,

745 F.

misrepresentation
Supp.

and

fraud

2d at 371-73. And even

then, those claims survived only insofar as they are based on
allegations of "Standard Chartered's failure to disclose that
[a Fund] was a funnel to Madoff." Id. at 373. Plaintiffs who
filed complaints after the Court's decisions in Anwar III and
Anwar IV have based negligent misrepresentation claims on

51

allegations that

the Standard Cl1artered Defendants made a

material omission by failing to disclose to investors that
the Funds were simply a "funnel" to BMIS. 32 (See,
Compl.

~

premised

72.)
on

knowledge or

Similarly,
the

to [BMIS]

."3 3

Chartered

[severe recklessness]
[Funds was]

(See,~,

Quiroz

the later-filed fraud claims are

Standard

modus operandi of the

~,

Defendants'

"actual

in not knowing that the
simply to turn over funds

Quiroz Compl.

~

80.)

These negligent misrepresentation and fraud claims are
precluded by SLUSA. The Standard Chartered Plaintiffs concede

32 See Maridom Am.
Compl. , , 31, S3, S8-S9; Triple R Compl. , 76; New
Horizon Compl. , 7S; Salcar Compl. , 7•1; Ruiz Compl. , 71; Iston Compl.
, 76; Rendiles Compl. , 76; Perez Comp~ 71; Auburn Compl. , 72;
Interland Compl. , 76; Velvor Compl. , 79; SC Invs. Compl. , 74; Asensio
Compl. , 78; Bahia Del Rio Am. Compl. , 71; Archangel Compl. , 76; Blount
Am. Compl. , 71; Diaz de Camara Compl. , 70; Dougherty Am. Compl. , 74;
De Passos Compl. , 73; Echeverri Compl. , 72; Dougherty Novella Am. Compl.
, 78; Richmon Compl. , 71; Sabillon Compl. , 72; San Blas Am. Compl. ,
76; Smerant Compl. , 71; Mantecon Compl. , 73; Pharmafoods Compl. , 7S;
Tierra Compl. , 94; Mizrahi Compl. , 74; Quiroz Stone Compl. , 72; Nautical
Village Compl. , 72; Positano Compl. , 71; Maplehurst Compl. , 73; Sand
Compl. , 69; Rebac Compl. , 71; Brea Compl. , 71; Diaz Compl. , 64;
Rosental Compl-.-,-64; Lyac Compl .-,-6S; Boltvinik Compl. , 64; TRE-C
Compl. , 64; Skyworth Compl. , 64.

See Maridom Am. Compl. , , S8-89; Triple R Compl. , , 83-78; New Horizon
Compl. , , 83-86; Salcar Compl. H 82-·8S; Ruiz Compl. , , 78-82; Iston
Compl. , , 84-86; Rendiles Compl. , , 84-86; Perez Compl. , , 79-81; A~
Compl. , , 80-82; Interland Compl. , , 84-86~vor Compl. , , 87-89; SC
Invs. Compl. , , 82-84; Asensio Compl. ~I, 86-88; Bahia Del Rio Am. Comp"l:""
, , 79-81; Archangel Compl. , , 84-86; Blount Am. Compl. , , 79-91; Diaz de
Camara Compl. , , 78-80; Dougherty Am. Compl. , , 82-84; De Passos Compl.
, , 81-83; Echeverri Compl. , , 80-82; Dougherty Novella Am. Compl. , , 8688; Richmon Compl. , , 79-81; Sabillon Compl. , , 80-82; San Blas Am. Compl.
, , 84-86; Smerant Compl. , , 79-81; Mantecon Compl. 81-83; Pharmafoods
Compl. , , 83-8S; Tierra Compl. , , 102-104; Mizrahi Compl. , , 82-84; Quiroz
Stone Compl. , , 80-82; Nautical Village Compl. , , 80-82; Positano Compl.
, , 79-81; Maplehurst Compl. , , 81-83; ~>and Compl. , , 77-79; Rebac Compl.
, , 79-81; Brea Compl. , , 79-81; Diaz Compl. , , 7S-77; Rosental Compl. , ,
7S-77; Lyac Compl. , , 76-78; Bol~ik Compl. , , 7S-77; TRE-C Compl. , ,
7S-77; Skyworth Compl. , , 7S-77; Optic Blue Compl. , , 14-17.
33

S2

that "Madoff Claims" are precluded (see May 29, 2015 SCB Pls.'
Letter at 5), and these negligent misrepresentation and fraud
claims

fall

within

description of

the

"Madof f

Standard

Chartered
claims

Claims"

Plaintiffs'

where

allegations of omissions centered. on the Funds'

essential

connections

to BMIS and Madoff. The failure to disclose that the Funds
were a

"funnel" to BMIS implicitly involves allegations of

either complicity (as to the fraud claims) or some other false
conduct (as to the negligent
Standard

Chartered

misrepresentation and

misn:~presentation

Defendants.
fraud

claims

claims) by the

These
were

negligent

clearly

"made

in

connection with the Funds' investments with Madoff in covered
securities and with [the PwC Defendants'] oversight of these
investments."

Kingate,

784 F.3d at 134-35.

Thus,

they are

precluded under SLUSA.
E.

RULE 21 AND RULE 41: Standard Chartered Plaintiffs'
Request to Drop Plaintiffs i:md Dismiss Claims

Finally,
plaintiffs

in

the

Court

turns

the

Standard

to

the

Chartered

motion

Action

of

seven

seeking

the

Court's permission to have them dropped as plaintiffs or to
have

their

cases

dismissed.

(Dkt.

No.

1331

(the

"Curran

Motion").) That request was made by Laurence Curran of Curran
Law PL

("Curran") ,

counsel to

Standard Chartered cases.

'54 plaintiffs

in 42 of

the

The Curran Motion seeks to have

53

five plaintiffs dropped in accordance with Federal Rule of
Civil Procedure 21 ("Rule 21") , 34 and have the actions of two
plaintiffs

dismissed

pursuant

to

Federal

Rule

of

Civil

Procedure 41 ("Rule 41") . 3 5 The Curran Motion argues that the
requested
would

relief

enhance

would

reduce

judicial

the

number of

depositions,

and

not

efficiency,

would

be

prejudicial to the Standard Chartered Defendants. (Id. at 3.)
By letter dated October 27, 2014, the Standard Chartered
Defendants opposed the Curran Motion.

(Dkt.

No.

1332.)

The

Standard Chartered Defendants argue that the Court should not
rule on the motion until after the SLUSA issue is decided,
indicating

that

they

"will

be

happy

to

work"

with

the

plaintiffs who seek to effect dismissal of their claims. 36

34

Those five plaintiffs include: plaintiff Continental Rainbow Group,
Inc., in New Horizon; plaintiff Nemagus Ltd. in Iston; and three
plaintiffs, Ali Ltd., Bellwood Ltd., and Accent Group Ltd., in Tierra.
All five of those plaintiffs hold shares in Fairfield Sentry, but they
did not make any direct investment in Fairfield Sentry. If these
plaintiffs were to be dropped, the actual purchasers of those Fairfield
Sentry shares would remain as plaintiff:3 in those actions. (Curran Motion
at 1-2.)
The plaintiff in Quiroz Stone seeks permission to have his case
dismissed because discovery has indicated that the investment in Fairfield
Sentry described in his complaint was "likely" made through non-plaintiff
Ponciana Holdings Ltd. and not by the plaintiff through his personal
account. The plaintiff in Lyac seeks to have his complaint dismissed after
having determined that his loss incurred from investment in Fairfield
Sentry was small. (Curran Motion at 2.)
35

36
The Standard Chartered Defendants also state that the request to
withdraw is "not entirely straightforward," because it involves issues
concerning the scope of claims being asserted and whether the plaintiffs'
stated reasons for seeking dismissal contradict allegations made in their
complaints or interrogatory responses. (Dkt. No. 1332 at 2 n.2.)

54

(Id.

at

suggest

1.)

Further,

that

maneuvering

the

to

the

Standard

Curran

bypass

Motion

SLUSA

plaintiffs to fewer than 51.

by

Chartered
represents

dropping

(Id. at 2.)

Defendants
procedural

the

number

of

They point to the

number of plaintiffs currently represented by Curran, and the
timeline of the events leading up to the Curran Motion.

(Id.

at 1-2.)
Under Rule 21, the court may·, on mot ion or sua sponte,
"at any time,

on just terms,

add or drop a party." Fed. R.

Civ. P. 21. While the rule is labeled "misjoinder of parties,"
its application is not limited to instances of misjoinder.
Its scope is broader,

affording courts discretion to shape

litigation in the interests of efficiency and justice.
exercising
consider

its

'principles

efficiency."'
(2015)

discretion
of

under

Rule

fundamental

4-21 Moore's

21,

the

fairness

court

and

Federal Practice 3d

§

"In
must

judicial
21.02[4]

(footnotes omitted).

Rule 41 (a),

on the other hand,

permits plaintiffs to

seek dismissal of their action. After the entry of an answer
or motion for summary judgment, an action "may be dismissed
at the plaintiff's request only by court order, on terms that
the court considers proper." Rule 41 (a) (2). Such a dismissal
can be made either with or without prejudice. Relevant factors
the Court may consider include: "the plaintiff's diligence in
55

bringing the motion; any 'undue vexatiousness' on plaintiff's
part; the extent to which the suit has progressed, including
the defendant's effort and expens:e in preparation for trial;
the duplicative expense of relitigation; and the adequacy of
plaintiff's explanation for the need to dismiss." Zagano v.
Fordham Univ.,

900

F.2d 12,

14

(2d Cir.

1990)

quotation marks omitted).

See also Camilli v.

F.3d

2006)

120,

123

(2d

Cir.

(noting

(internal

Grimes,

that,

436

instead

of

considering the Zagano factors, some courts look primarily to
whether

the

defendant

would

suffer

some

"plain

legal

prejudice other than the mere prospect of a second lawsuit").
Courts have recognized that

such requests

to dismiss

actions or drop plaintiffs can be denied when the request is
clearly an attempt to evade SLUSA. See In re Worldcom,

Inc.

Sec. Litig., No. 02-CV-3288, 2004 WL 692746, at *5 (S.D.N.Y.
Apr. 2, 2004)

("Worldcom II")

be wasteful and wrong,

("It is unnecessary, and would

to permit counsel for the plaintiff

more time in support of their effort to fashion another tactic
to evade SLUSA."); see also Lee v. Marsh & McLennan Companies
Inc., No. 06-CV-15448, 2007 WL 704033, at *2-4 (S.D.N.Y. Mar.
7, 2007)
41

(granting plaintiffs' motion for remand after Rule

dismissals,

upon

a

finding

that

removing

deceased,

duplicative, and mistaken names from the list of parties to

56

the

original

action

did

not

constitute

"impermissible

procedural maneuvering").
The Court agrees with the Standard Chartered Defendants
that the sequence of events leading up to the Curran Motion
supports a reasonable inference that Curran's motivation was
to bring the number of plaintiffs he personally represented
to below 51.

On September 29,

2014,

the Court held a pre-

motion conference with the Standard Chartered parties.
that

conference,

Standard

Chartered

Plaintiffs'

At

Liaison

Counsel first argued their theory that under SLUSA, a "group
of

lawsuits"

plaintiffs.

is

necessarily

one

deliberately

Liaison Counsel conceded,

however,

grouped

by

that if the

number of plaintiffs represented by Curran is greater than
50, then "maybe his cases are barred."
29,

2014

Conference

at

35.)

Ten

(Transcript of Sept.

days

after

the

Court

conference, Curran wrote directly to the Standard Chartered
Defendants

seeking consent

to

drop

the

seven plaintiffs.

(Dkt. No. 1332 at 2 n.2.) The Standard Chartered Defendants
opposed this request.

(Id.) After that, on October 21, 2014,

Curran submitted his motion to the Court on behalf of seven
individual

plaintiffs

Currently,

the

total

who

wish

number of

to

leave

plaintiffs

the

litigation.

represented by

Curran is 54. If Curran's request were granted, the number of
plaintiffs he represents would be 47. This sequence of events
57

provides

strong circumstantial support a

finding

that the

Curran Motion was motivated by a desire to reduce the number
of Curran's plaintiffs to below 51 in the event that the Court
were to rule that some degree of purposeful coordination by
plaintiffs is required to constitute a

"group of lawsuits"

under SLUSA.
However,
Chartered

the

Court

Plaintiffs'

has

now

theory

of

rejected

grouping.

the
Even

Standard
were

the

Curran Motion granted, the number of plaintiffs remaining for
purposes of SLUSA would be greater than 50. Currently pending
before this Court are 56 cases representing 74 plaintiffs for
purposes of
plaintiffs

the SLUSA "group of
were

dropped,

66

lawsuits"

plaintiffs

analysis.

would

remain;

If

7

the

Standard Chartered Action would nonetheless remain a "group
of lawsuits" under SLUSA.
For the reasons discussed above,

the Court denies the

Curran Motion without prejudice. The Court will not grant a
motion under Rule 21 or Rule 41 if there is a strong inference
that it is primarily designed to evade SLUSA's 50 plaintiff
threshold.

The

Court

denies

the

Curran

Motion

without

prejudice, however, to enable the parties to attempt reaching
a resolution of these claims with the knowledge that SLUSA
will apply regardless of those plaintiffs'
the Standard Chartered Action.
58

If,

continuation in

following such efforts,

those plaintiffs still seek dismissal,

they can re-submit

their request to the Court.
III. ORDER
For the reasons discussed above, it is hereby
that

ORDERED

the

motion

to

Second

the

dismiss

Consolidated Amended Complaint of the Anwar Plaintiffs,
described

in

the

decision

above,

under

the

as

Securities

Litigation Uniform Standards Act of 1998 ( "SLUSA")

(Dkt. No.

1383) of defendants PricewaterhouseCoopers Accountants N.V.
and PricewaterhouseCoopers LLP is GRANTED in part and DENIED
in part; and it is further
ORDERED that the motion to dismiss the complaints of the

Standard Chartered Plaintiffs, as described in the decision
above,

under SLUSA

Chartered

Bank

(Dkt.

No.

1384)

International

of defendants Standard

(Americas)

Ltd.

I

Standard

Chartered International (USA) Ltd., Standard Chartered Bank,
and Standard Chartered PLC is GRANTED in part and DENIED in
part; and it is further
ORDERED that the motion

Continental
Bellwood

Rainbow

Ltd.,

and

(Dkt.

No.

1331)

Group

Inc. ,

Nemagus

Accent

Group

Ltd.,

of plaintiffs

Ltd. ,
to

be

Ali

Ltd. ,

dropped

as

plaintiffs under Federal Rule of Civil Procedure 21 is DENIED
without prejudice; and it is further

59

ORDERED that the motion

(Dkt. No. 1331) of plaintiffs

Juan D. Quiroz Stone and Lyac Venture Corp. dismissing their
actions pursuant to Federal Rule of Civil Procedure 4l(a) (2)
is DENIED without prejudice.
SO ORDERED.

Dated: New York, New York
29 July 2015

60