Anwar et al v. Fairfield Greenwich Limited et al

Filing 1470

PwC DEFENDANTS' MEMORANDUM OF LAW IN OPPOSITION TO PLAINTIFFS' MOTION IN LIMINE NO. 5 TO EXCLUDE REFERENCE TO COLLATERAL SOURCE PAYMENTS. This Document was previously filed under seal in envelope doc. number 1458 and unsealed pursuant to Order doc. number 1463. (rjm)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
:
:
ANWAR, et al.
:
Plaintiffs,
:
v.
:
:
FAIRFIELD GREENWICH LTD., et al.,
:
:
Defendants.
:
:
:

MASTER FILE NO.
09-CV-00118 (VM)

PwC DEFENDANTS’ MEMORANDUM OF LAW
IN OPPOSITION TO PLAINTIFFS’ MOTION IN LIMINE NO. 5 TO
EXCLUDE REFERENCE TO COLLATERAL SOURCE PAYMENTS

FILED UNDER SEAL PURSUANT TO CONFIDENTIALITY ORDER

William R. Maguire
Sarah L. Cave
HUGHES HUBBARD & REED LLP
One Battery Park Plaza
New York, New York 10004
Tel: [phone]

Emily Nicklin, P.C.
Timothy A. Duffy, P.C.
KIRKLAND & ELLIS LLP
300 North LaSalle
Chicago, Illinois 60654
Tel: [phone]

Attorneys for Defendant
PricewaterhouseCoopers Accountants N.V.

Attorneys for Defendant
PricewaterhouseCoopers LLP

Defendants PricewaterhouseCoopers Accountants N.V. and PricewaterhouseCoopers
LLP (collectively, the “PwC Defendants”) respectfully submit this memorandum of law in
opposition to Plaintiffs’ Motion in Limine No. 5 seeking to exclude references to collateral
source payments made to Plaintiffs.
ARGUMENT
As an initial matter, the PwC Defendants do not intend to introduce evidence regarding
either the fact of the prior settlements in this case involving the Fairfield Greenwich Group
(“FGG”) Defendants, GlobeOp, or the Citco Defendants or any amounts Plaintiffs have received,
or are likely to receive, as a result of those settlements. As is commonly done in litigation of this
sort, the jury should simply be told that any claims Plaintiffs may have against others are being
handled separately. The jury will be asked to apportion any liability, and may assign a
percentage responsibility to the FGG Defendants and/or the Citco Defendants. As per the
Court’s prior orders in connection with those settlements and settled law, the PwC Defendants
will then be entitled to a set-off from any verdict rendered by the greater of the aggregate of
those percentages of the total damages found by the jury or the amounts paid in settlement.
These adjustments are appropriately performed by the Court after a verdict is rendered. Thus, to
the extent Plaintiffs’ motion seeks exclusion of this information, it is moot.
What remains of Plaintiffs’ motion is their request to exclude any evidence of other
payments that Plaintiffs may have received (or that they are likely to receive), as a result of
distributions by the funds in which they hold or held an interest. The Fairfield Sentry, Fairfield
Lambda, Fairfield Sigma, Greenwich Sentry and Greenwich Sentry Partners funds all have
liquidators, receivers, or trustees who have pursued and are pursuing assets on behalf of the

funds, or successors in interest to the funds, that have been or may be distributed to Plaintiffs in
accord with their status as fund unitholders or shareholders. This evidence is admissible.
These distributions are not “collateral source payments.” They are liquidations of the
value of the Plaintiffs’ interests in the various funds. These values are integral to measuring the
decline in value of the units or shares held by Plaintiffs for which they seek to hold the PwC
Defendants responsible. They are part of the affirmative calculation of damages: “My shares
were worth X. They are now worth Y. You owe me X-Y.” Plaintiffs may or may not contend
that “Y” in this case equals zero, but the PwC Defendants are clearly entitled to present evidence
that “Y” is greater than zero, and the jury must decide that issue in order to properly calculate
Plaintiffs’ damages.
No case cited by Plaintiffs bars evidence of amounts paid to investor plaintiffs for the
shares for which they are seeking to recover for a loss in value. In Hugo Boss Fashions, Inc. v
Federal Insurance Co., 252 F.3d 608 (2d Cir. 2001), the defendant insurance company argued it
should not have to pay the plaintiff’s defense costs incurred because the costs had actually been
paid by the plaintiff firm’s corporate parent. Id. at 623 n.15. Ocean Ships, Inc. v. Stiles, 315
F.3d 111 (2d Cir. 2002), demonstrates the most commonly excluded collateral source payment:
insurance. In that case, the court held “damages recoverable for a wrong are not diminished by
the fact that the party injured has been wholly or partially indemnified for his loss by insurance
effected by him and to the procurement of which the wrongdoer did not contribute.” Id. at 116.
(emphasis added). That is a fundamentally different scenario than what exists here, where
Plaintiffs admit that the PwC Defendants are entitled to a reduction in their damages. Ventura
Associates, Inc. v. International Outsourcing Services, Inc., No. 04 Civ. 5962(PKL), 2005 WL
1634002 (S.D.N.Y. July 12, 2005), is also an insurance case that parallels Ocean Ships.

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Judge Scheindlin’s decision in In re Methyl Tertiary Butyl Ether (MTBE) Products
Liability Litigation, No. 1:00-1898, 2011 WL 6096934 (S.D.N.Y. Dec. 6, 2011), also excluded
evidence of proceeds from insurance, but, as her decision explained: “The primary rationale for
the collateral source rule is a concern that juries will be unfairly influenced in their determination
of a defendant’s liability if they hear evidence that the plaintiff received payments for the same
injury from another source, such as the plaintiff’s personal insurance, or a gratuitous service
rendered by an unrelated third party.” Id. at *2, 7. Here the payments at issue are not
compensation for “the same injury from another source,” they are simply evidence of the
residual value of Plaintiffs’ interests in the funds. Moreover, there can be no basis for claiming
the jury might “unfairly” consider such evidence, as Plaintiffs admit it would be appropriate to
reduce any verdict against the PwC Defendants by these amounts.
The PwC Defendants should therefore be entitled to present evidence showing that
Plaintiffs’ share or units in the funds did or do have value despite the Madoff Ponzi scheme, and
that these amounts should not be included in any damages the jury may award for any diminution
in the value of those shares or units proximately caused by any negligence on the part of the PwC
Defendants.

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