Anwar et al v. Fairfield Greenwich Limited et al

Filing 1445

REPLY MEMORANDUM OF LAW in Support re: #1417 MOTION for Attorney Fees and Expenses in Connection with Settlement. . Document filed by Harel Insurance Company, Ltd., Pacific West Health Medical Center, Inc. Employee's Retirement Trust, Securities & Investment Company Bahrain, St. Stephen's School. (Attachments: #1 Exhibit Proposed Judgment)(Finkel, Robert)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

PASHA ANWAR, et al.,
Plaintiffs,
v.
FAIRFIELD GREENWICH LIMITED, et al.,

Master File No. 09-cv-118 (VM) (FM)

Defendants.
This Document Relates To: 09-cv-118 (VM)

REPLY MEMORANDUM IN FURTHER
SUPPORT OF PROPOSED CITCO SETTLEMENT
BOIES, SCHILLER & FLEXNER LLP
David A. Barrett
Howard L. Vickery, II
575 Lexington Avenue
New York, NY 10022
Telephone: [phone]
Facsimile: [phone]

WOLF POPPER LLP
Robert C. Finkel
845 Third Avenue
New York, NY 10022
Telephone: [phone]
Facsimile: [phone]

BOIES, SCHILLER & FLEXNER LLP
Stuart H. Singer
Carlos Sires
Sashi Bach
Eli Glasser
401 East Las Olas Boulevard, #1200
Ft. Lauderdale, Florida 33301
Telephone: [phone]
Facsimile: [phone]

LOVELL STEWART HALEBIAN JACOBSON LLP
Christopher Lovell
Victor E. Stewart
61 Broadway, Suite 501
New York, NY 10006
Telephone: [phone]

Lead Counsel for Plaintiffs

PRELIMINARY STATEMENT
Plaintiffs respectfully submit this Reply Memorandum in further support of their motion
for approval of the proposed $125 million Settlement with the Citco Defendants.1 The
Settlement has been accepted without a single objection. No class member who will share in the
recovery has objected to the Settlement, the Plan of Allocation or the request of Plaintiffs’
counsel for payment of fees and expenses. Plaintiffs and the Citco Defendants are fully
committed to effectuating the Settlement.
Indeed, the only question raised about the Settlement comes from representatives of
several hundred investors who have been litigating their own claims in a mass action in the
courts of The Netherlands since 2010. In essence, these investors have decided that they prefer
to continue prosecuting their Dutch action, rather than to participate in the Settlement.
Consequently, they have filed requests for exclusion from the Settlement Class. That is a choice,
of course, that they (or any other potential class member) are entitled to make, but it does not
change the fact that the Settlement is an excellent result that is fair, reasonable and adequate for
all other Class Members who unanimously support it.
SUPPLEMENTAL FACTS REGARDING THE SETTLEMENT
In accordance with the Preliminary Approval Order (Dkt No. 1402), the Settlement
Claims Administrator, Rust Consulting, mailed 4,430 notices and proof of claim forms to
potential Settlement Class members. In addition, a Summary Notice was published in the
international edition of The Wall Street Journal and issued worldwide over PR Newswire. See
accompanying Supplemental Affidavit of Jason Rabe (“Supp. Rabe Aff.”) ¶3; Affidavit of Jason

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Capitalized terms used herein have the same meaning as in the Stipulation of Settlement (Dkt
No. 1398) and the Joint Declaration of Lead Counsel In Support of the Proposed Citco Partial
Settlement and Fee and Expense Request (“Joint Declaration”; Dkt No. 1423).
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Rabe (Dkt No. 1424). Rust continues to operate a dedicated website and telephone inquiry lines,
to address Class Members’ questions; these have received 4,540 total hits and 159 calls
respectively from August 27, 2015 through November 5, 2015. Supp. Rabe Aff. ¶¶ 4, 5. As of
November 5, 2015, proofs of claim have been submitted by 508 class members, even though the
deadline for claims submissions is December 28, 2015, and the vast majority of claims are
typically filed shortly before the deadline. Id. ¶ 11. As noted, there have been no objections
filed by any Class Members.
On October 30, 2015, well after the October 16, 2015 deadline for both opt-outs and
objections, a letter to the Court was submitted by Deminor Recovery Services (Dkt No. 1435).
Prior to the opt-out deadline, Deminor had delivered to the Claims Administrator exclusion
requests for some 562 investors with aggregate Net Losses of $155.4 million.2 These opt-outs
comprise about 5% of approximately $3.265 billion in claims that Lead Counsel believe are
likely to be filed based on the amount of allowed claims in the FG Settlement. See Joint
Declaration, ¶ 84.
Deminor states in its letter that it is an “advisor to and representative of” the opt-out
group. According to its website, Deminor is not a law firm, but a Luxembourg-based group that
“originates and actively manages recovery actions on behalf of private and institutional
investors.” See http://www.deminor.com/drs/en/home;
http://www.deminor.com/drs/en/services/recovery-of-losses. Plaintiffs adopt the arguments with
respect to the Deminor opt-outs’ lack of standing in the November 4, 2015 letter of counsel for
the Citco Defendants (Dkt. No. 1444).

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Four additional Deminor investors with total losses of about $1.0 million submitted late
requests for exclusion, which Lead Counsel recommend should be accepted by the Court. See p.
7 below.
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The only non-Deminor opt-outs are two investors who initially made exclusion requests,
but revoked their requests after communicating with Plaintiffs’ counsel. See Supp. Rabe Aff. ¶7.
Thus, there is unanimity among all remaining members of the Settlement Class in favor of the
Settlement.
ARGUMENT
A. The Settlement Is Fair, Reasonable and Adequate
Given the absence of any objections, Plaintiffs respectfully refer the Court to the opening
Memorandum in Support of Proposed Settlement and Fee Award (Dkt No. 1422) and the
supporting Joint Declaration (Dkt No. 1423). We note again that the Settlement was based on a
mediator’s recommendation – after almost two years of multiple formal mediation sessions and
vigorous interim negotiations, all at arms’ length – by one of the nation’s leading mediators in
billion-dollar-plus litigation, former federal judge Layn Phillips. “[A] strong presumption of
fairness attaches to a class action settlement where, as here, it is reached in arm’s length
negotiations among able counsel.” Yang v. Focus Media Holding Ltd., No. 11 Civ. 9051
(CM)(GWG), 2014 WL 4401280, at *5 (S.D.N.Y. Sept. 4, 2014); Shapiro v. JPMorgan Chase &
Co., No. 11 Civ. 8331(CM)(MHD), 2014 WL 1224666, at *7 (S.D.N.Y. Mar. 24, 2014) (“A
class action settlement is entitled to a presumption of fairness when it is the product of extensive
arm’s-length negotiations.”); In re Bear Stearns Cos. Sec., Derivative, & ERISA Litig., 909 F.
Supp. 2d 259, 265 (S.D.N.Y. 2012) (finding settlement fair when parties engaged in “arm’s
length negotiations . . . mediated by retired federal judge Layn R. Phillips, an experienced and
well regarded mediator of complex securities cases”); In re Giant Interactive Grp., Inc. Sec.
Litig., 279 F.R.D. 151, 160 (S.D.N.Y. 2011) (finding settlement entitled to presumption of

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fairness where product of “arms-length negotiation . . . facilitated by [Judge Phillips,] a respected
mediator”).
In short, in this case the "settlement amount is sufficient when limited insurance
coverage, minimal domestic assets, and significant risk of being unable to collect any judgment
against . . . Defendants are taken into account." See In re Adv. Battery Tech., Inc. Secs. Litig.,
298 F.R.D. 171, 179 (S.D.N.Y. 2014).
B. The Settlement Class Unanimously Supports the Settlement
As noted, there have been no objections from anyone who stands to share in the
Settlement recovery. This includes all of the more than 300 Named Plaintiffs, many of whom
are institutional investors, as well as the 13 class members who filed the largest claims in the FG
Settlement, ranging in Net Loss amount from $40 million to $401 million and totaling
approximately $1.5 billion, or almost ten times the losses of the Deminor opt-outs. See Rabe
Declaration In Support of Entry of [FG Settlement] Distribution Order, Exhibit C (Dkt No. 13443). These are highly sophisticated institutional investors who are no doubt advised by
experienced litigation and corporate counsel. The approval of the largest and most sophisticated
class members who would share in the Settlement confirms its fairness. “[T]he reaction of the
class to the settlement is perhaps the most significant factor to be weighed in considering its
adequacy.” In re Bear Stearns Comp., Inc. Sec. Litig., 2012 U.S. Dist. LEXIS 161269, *at 16
(S.D.N.Y Nov. 9, 2012) (quoting In re Am. Bank Note Holographics, Inc., 127 F. Supp.2d 418,
425 (S.D.N.Y. 2001)).

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Although the Deminor opt-outs lack standing to object or appeal here,3 much of their
concern appears to be that they were not involved in settlement negotiations and believe their
claims are more valuable than the Settlement recovery. However, the duty of Lead Plaintiffs and
Lead Counsel is to obtain a “fair, reasonable and adequate” settlement of the Action that was
brought in this Court on behalf all Class Members, including the 95% who unanimously support
the Settlement. See Grant v. Bethlehem Steel Corp., 823 F.2d 20, 23 (2d Cir. 1987), affirming
settlement approval although 36% of class members objected: “[I]t is well established that a
settlement can be fair notwithstanding a large number of objectors.”; TBK Partners, Ltd. v.
Western Union Corp., 675 F.2d 456, 462-63 (2d Cir. 1982) (affirming approval notwithstanding
objections by 54-58% of class members because “[a] settlement can, of course, be fair
notwithstanding a large number of objectors.”); In re Bear Stearns Cos., 909 F. Supp. 2d 259,
267 (S.D.N.Y. 2012) (approving settlement in part because of “the absence of significant
exclusion or objection—the rate of exclusion is 5.1% and the rate of objection is less than 1%—
[and finding that] this factor weighs strongly in favor” of settlement); Frank v. Eastman Kodak
Co., 228 F.R.D. 174, 185 (W.D.N.Y. 2005), approving settlement although 21% of potential (6

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Only those who are members of a class are permitted to object to a settlement. See Fed. R.
Civ. P.23(e)(5) (“[a]ny class member may object to the proposal if it requires court approval”);
Newberg on Class Actions § 11:55 (4th ed.) (“as a general rule only class members have
standing to object to a proposed settlement”). Because opt-outs are no longer class members,
they lack standing. As the Court of Appeals held in this case, a purported objector to a
settlement lacks standing where the “settlement . . . does not cause the . . . party ‘formal’ legal
prejudice.” Bhatia v. Piedrahita, 756 F. 3d 211, 219 (2d Cir. 2014). See, e.g., In re Oil Spill by
the Oil Rig “Deepwater Horizon,”, 910 F.Supp.2d 891, 941 (E.D. La. 2012) (“The Court has
made this point abundantly clear…[i]f you opt out or if you are excluded, you legally have no
standing to object to the settlements because…the settlements do not affect your rights in any
way, one way or the other”); In re Ins. Brokerage Antitrust Litig., 282 F.R.D. 92, 110 (D.N.J.
2012) (“The case law does not suggest that a class member requesting exclusion from a
settlement may nonetheless object to that settlement,” citing cases); Olden v. LaFarge Corp., 472
F.Supp.2d 922, 930-31 (E.D. Mich. 2007) (“opting out of a settlement and choosing to object
logically are mutually exclusive options: if one actually opts out, she has no standing to object to
the settlement as she will not be bound by it”).
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of 28) class members opted out: “Even if this Court were to assume that all six of the potential
plaintiffs who elected to opt out did so because they believed the terms of the settlement to be
unfair, the objection percentage would still amount to only 21%, a rate similar to those found
acceptable in other cases,” citing Grant among other cases); Tornabene v. General Dev. Corp.,
88 F.R.D. 53, 61-62 (E.D.N.Y. 1980) (approving settlement where 2,179 of approximately
44,000 class members (4.95%) opted-out: “By approving this settlement the majority who never
objected and the very significant number who opted-out are satisfied.”).
C. Plaintiffs Propose Minor Revisions to the Final Judgment
The Settling Parties propose three revisions to the proposed Final Judgment filed on
August 12, 2015 as Exhibit B to the Citco Stipulation of Settlement (Dkt No. 1398-5) to address
matters raised during the notice period. A copy of the revised proposed Final Judgment
containing these revisions is attached as Exhibit A to this Memorandum.
First, the Successor Trustee of the Greenwich Sentry and Greenwich Sentry Partners
Litigation Trusts has requested that Paragraph 16 of the Judgment be revised because the
referenced litigation is not “derivative litigation,” but rather direct actions brought by the
Successor Trustee. The Settling Parties would revise the language in the first three lines of
Paragraph 16 (up to the semi-colon) to read: “This release does not include any claims asserted
or which may be asserted by the Funds in the proceedings entitled (i) New Greenwich Litigation
Trust, LLC, as Successor Trustee of Greenwich Sentry, L.P. Litigation Trust v. Citco Fund
Services (Europe) BV, et al., New York County Clerk’s Index No. 600469/2009; and (ii) New
Greenwich Litigation Trust, LLC, as Successor Trustee of Greenwich Sentry Partners, L.P.
Litigation Trust v. Citco Fund Services (Europe) BV, et al., New York County Clerk’s Index No.
600498/2009.”

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Second, the BVI court-appointed Liquidator of the Fairfield Sentry and Fairfield Sigma
Funds has requested that the underlined words be added for clarification to Paragraph 19 as
follows: “The Released Parties shall further waive all rights to seek recovery on claims for
contribution or indemnity that they hold or may hold against the Funds or any party indemnified
by the Funds, the FG Defendants, GlobeOp, and the PwC Defendants for any expenses incurred
or amounts paid in settlement or otherwise in connection with the Action.”
Third, four Persons affiliated with the Deminor group submitted late Requests for
Exclusion. Three of the Requests were received on October 19, 2015, one business day after the
exclusion period expired. The fourth Request was received on November 5, 2015. The
aggregate claimed dollar value of the four Requests, determined by Net Loss of principal, is
approximately $1 million. See Supp. Rabe Aff. ¶8. Citco does not object and we respectfully
request that the Court exercise its discretion to accept these late Exclusions as reflected in ¶14 of
the annexed revised Final Judgment.
CONCLUSION
For the reasons stated herein, and in Plaintiffs’ opening Memorandum and Joint
Declaration, Plaintiffs respectfully request that the Court approve the Settlement and Plan of
Allocation and enter the Final Judgment, including approval of Plaintiffs’ request for an award of
attorneys’ fees and reimbursement of expenses. 
Dated: November 6, 2015

Respectfully submitted,
By: /s/ David A. Barrett

Robert C. Finkel
WOLF POPPER LLP
845 Third Avenue
New York, NY 10022
Telephone: [phone]

David A. Barrett
Howard L. Vickery, II
BOIES, SCHILLER & FLEXNER LLP
575 Lexington Avenue
New York, NY 10022
Telephone: [phone]
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Christopher Lovell
Victor E. Stewart
LOVELL STEWART HALEBIAN JACOBSON LLP
61 Broadway, Suite 501
New York, NY 10006
Telephone: [phone]

Stuart H. Singer
Carlos Sires
Sashi Bach
Eli Glasser
BOIES, SCHILLER & FLEXNER LLP
401 East Las Olas Boulevard, #1200
Ft. Lauderdale, Florida 33301
Telephone: [phone]

Lead Counsel for Plaintiffs

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