Anwar et al v. Fairfield Greenwich Limited et al

Filing 1430

ORDER denying #1414 Motion for Summary Judgment. Accordingly, it is hereby ORDERED that the motion of PricewaterhouseCoopers LLP and PricewaterhouseCoopers Accountants N. V. (collectively, "PwC Defendants") for summary judgment on the remaining claim of negligence (Dkt. No. 1414) is DENIED as to the grounds described above; and it is further ORDERED that Anwar Plaintiffs are directed to respond to the three remaining issues outlined above in accordance with the schedule and page limits set by the Court during its telephone conference with the parties on October 21, 2015. (Signed by Judge Victor Marrero on 10/23/2015) (lmb)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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QJ.\TE.fJLI;::O.. JJJf'~ :

PASHA ANWAR, et al.,

09-cv-0118 (VM)

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Plaintiffs,
ORDER

- against FAIRFIELD GREENWICH
et al.,

LI ~ ITED,

Defendants.
--------------- - - -- --- ~ ------------x

VICTOR MARRERO, United States District Judge.

PricewaterhouseCoopers
Accountants N.V.

LLP

(collectively,

and

PricewaterhouseCoopers

"PwC Defendants")

instant motion for summary judgment ("Motion")
Plaintiffs' 1 remaining claim of negligence.
PwC

Defendants

(1)

Anwar

derivative

seek

Plaintiffs
under

summary
lack

judgment

Tooley

on

test,

on the Anwar

(Dkt. No. 1414.)
seven

standing because

Dela ware's

filed the

the
see

grounds:
action

is

Tooley

v.

Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031 (Del. 2004);
(2) the Securities Litigation Uniform Standards Act ("SLUSA")
precludes
limitations

the

negligence

bars

Accountants N.V.;
PwC Defendants'

cla ims
(4)

claim;
against

( 3)

the

statute

of

PricewaterhouseCoopers

nwar Plaintiffs did not rely upon the

audit opinions;

(5) Anwar Plaintiffs cannot

The term "Anwar Plaintif f s" describes a certified class of plaintiffs
comprising all shareholde r s and limited partners in Fairfield Sentry
Limited, Fairfield Sigma Limited, Greenwich Sentry, L.P., and Greenwich
Sentry Partners L.P . See Anwar v. Fairfield Greenwich Ltd . , 306 F . R . D.
134, 136 (S.D.N.Y. 201Sl ( ''Anwar VI").

1

prove that PwC Defendants' audits were deficient because PwC
Defendants did not have a duty to uncover the fraud conducted
by

Bernard

L.

Madoff

("Madoff");

(6)

Anwar

Plaintiffs'

damages are limited to losses based on subsequent purchases;
and

(7)

PwC Defendants and Anwar Plaintiffs did not have a

special relationship approaching contractual privity under
the three-pronged Credi t Alliance test,

see Credit Alliance

Corp. v. Arthur Andersen & Co., 483 N.E.2d 110 (N.Y. 1985).
I

(Dkt. No. 1414.)
Regarding the last argument, PwC Defendants contend that
Anwar Plaintiffs fail to meet all three prongs of the Credit
Alliance test: "(1) an awareness by the maker of the statement
that it is to be used for a particular purpose ['Particular
Purpose Requirement'];
statement

in

Requirement' ] ;

(2)

further a nce
and

(3

reliance by a known party on the
of

some

that
conduct

purpose
by

['Known

Party

the maker of

the

statement linking it to the relying party and evincing its
understanding

of

that

Requirement'] . " Anwar v.

reliance

['Linking

Fairfield Greenwich Ltd.,

Supp. 2d 372, 432 (S.D.N.Y. 2010)
Upon review of the Motion,

Conduct
728

F.

("Anwar II").
the Court finds that six of

the issues the Motion raises have been adequately addressed
in the Court's prior t ulings in this litigation and present
no genuine issue of material fact. First, the Court has found
2

that Anwar Plaintiffs have standing under both New York and
Delaware law. See Anwar II, 728 F. Supp. 2d at 401 n.9; see
also Anwar v. Fairfield Greenwich Ltd.,
99 (S.D.N.Y. 2012)

884 F. Supp. 2d 92,

("Anwar IV"). Second, the Court held that

SLUSA does not preclude the negligence claim.

See Anwar v.

Fairfield Greenwich Ltd., No.

09 CIV. 118, 2015 WL 4610406,

at

2015).

*8-*9

(S.D.N.Y.

limitations

Ju l y

does

29,
not

Third,

bar

the statute of

claims

against

PricewaterhouseCoopers Accountants N.V. See Anwar II, 728 F.
Supp.

2d

negligent

at

461.

Fou rth,

because

the

claim

was

misrepresentation

Anwar

Plaintiffs'

dismissed,

Anwar

Plaintiffs no longer have to demonstrate reliance. See Anwar,
2015 WL 4610406,

at * 8 -*10.

Fifth, Anwar Plaintiffs do not

have to demonstrate that PwC Defendants had a duty to uncover
the fraud perpetrated by Madof f
PwC

Defendants'

audits

were

in order to prove that the
deficient.

Rather,

Anwar

Plaintiffs must show that the PwC Defendants breached their
alleged

duty

to

conduct

the

audits

in

accordance

with

generally accepted aud iting standards and other applicable
auditing standards.

See Anwar,

2015 WL 4610406,

at *8-*9.

Sixth, as to the PwC Defendants' argument that they did not
have a special relationship with Anwar Plaintiffs approaching
contractual privity under the three-pronged Credit Alliance
test, the Court has previously found that with respect to the
3

Particular
that

Purpose

Requirement,

the audit opinion s

purpose. See Anwar II,

were

~ 28

PwC Defendants

were

to be used for a

aware

particular

F. Supp. 2d at 455. Therefore, the

Motion is denied as to these six grounds.
The
factual
parties:

Court

finds

disputes

that

that

the

warrant

remaining
further

issues

briefing

present
from

the

(1) whether t n e Anwar Plaintiffs were a known party

under the Known Party Re quirement of the Credit Alliance test;
(2) whether there was s ufficient linking conduct between PwC
Defendants

and Anwar Plaintiffs under the Linking Conduct

Requirement of the

Cred ~ t

Alliance test; and (3) whether Anwar

Plaintiffs' damages are limited to losses based on subsequent
purchases. Anwar Plaintiffs are directed to submit a response
to these three issues.
ORDER

Accordingly, it

i~

hereby

ORDERED that the motion of PricewaterhouseCoopers LLP

and

PricewaterhouseCoopers Accountants

N. V.

(collectively,

"PwC Defendants") for s ummary judgment on the remaining claim
of negligence

(Dkt.

No .

1414)

is DENIED as to the grounds

described above; and i t is further
ORDERED that Anwar Plaintiffs are directed to respond to

the three remaining is s ues outlined above in accordance with

4

the schedule and page limits set by the Court during its
telephone conference with the parties on October 21, 2015.
SO ORDERED.

Dated:

New York, Ne ~ York
23 October 2015

~
Victor Marrero
U.S.D.J.

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