Anwar et al v. Fairfield Greenwich Limited et al

Filing 1542

ENDORSED LETTER addressed to Judge Victor Marrero from David A. Barrett dated 1/28/2016 re: The Trustee's request to file a motion to intervene should be denied. ENDORSEMENT: The Clerk of Court is directed to enter into the public record of this action the letter submitted to the Court by the Anwar plaintiffs herein. (Signed by Judge Victor Marrero on 1/29/2016) (tro)

B
575

0

I E

S,

S

C

H

I L

LEXINGTlf:0iY;f"N:.\]~)\~;TH-FLO_O_R-;·NEW

i !j

~>~~C~l·,:.1;~, '.·(·~ ,\, 1 ,. 1
~-~

l ' . L . \ 1 .. ~\l __ _.,l

!DOC H:

BY

.:·n. .•
i.l

r.·.o
i.

L

E R

&

F

L

E

X

N

E

R

L

L

P

!tORK, NY 10022 ·PH. 212 446 2300 •FAX [phone]

t.

nuary 28, 2016

·

~~1r1 11"Lr~~~jJ~]J~-~~

The Honorable Victor Marrero
United States District Court
Southern District of New York
500 Pearl Street
New York, New York 10007
Re:

-...............

'

~........... _.._,\.

'

Anwar, et al. v. Fairfield Greenwich Limited, et al.
Master File No. 09-CV-00118 (VM) (FM)

Dear Judge Marrero:
We write on behalf of the Anwar Plaintiffs to respond to the January 25, 2016 letter
("Letter") from Robert A. Wallner, counsel for the Successor Trustee ("Trustee") of the
Greenwich Sentry ("GS") and Greenwich Sentry Partners ("GSP") Litigation Trusts; the PwC
Defendants also are submitting a responsive letter, such that both letters together will not exceed
five pages. Plaintiffs respectfully submit that the Trustee lacks standing to object to the PwC
settlement (see Dkt. No. 1533), his objections are unfounded and he cannot meet Rule 24's
requirements for intervention.
The Trustee's litigation in New York state court against the PwC Defendants was
dismissed more than two years ago in a comprehensive decision. See Walker, Truesdell, Roth &
Associates, Inc. v. Globeop Fin. Servs. LLC, 993 N.Y.S.2d 647 (N.Y. Sup. Ct. 2013). Although
the Trustee filed a notice of appeal on June 27, 2014, he did not perfect the appeal until August
10, 2015, and due to adjournments, the appeal will not be argued until at least March 2016.
The Letter must be addressed in light of these facts. The Trustee is seeking to inject
himself into the PwC settlement, yet the only way the settlement could even hypothetically affect
his claims would be if he were to prevail on an appeal that has not yet been argued and then win
damages at a trial years down the road. Such wholly conjectural circumstances provide no basis
to interfere with a $55 million settlement.
Lack of Standing. Four months ago, the Court rejected the Trustee's attempt to
intervene and object to the Citco settlement, in which the Trustee raised the same "offset" issue
asserted in the Letter. See Dkt. No. 1413 at 4 (Sept. 15, 2015) (the "Intervention Order"), and
authorities there cited; Bhatia v. Piedrahita, 7 56 F .3d 211, 218 (2d Cir. 2014) (a "non-settling
defendant generally lacks standing to object to a court order approving a partial settlement
because a non-settling defendant is ordinarily not affected by such a settlement"); Dkt. No. 1071
(denying intervention by BLMIS trustee, who sought to object to settlement with the Fairfield
Greenwich defendants), a.D''d, No. 13-1392, Dkt. No. 187 (2d Cir. Sept. 3, 2014); Cent. States

WWW.BSFLLP.COM

BOIES,

SCHILLER

&

FLEXNER

LLP

The Honorable Victor Marrero
January 28, 2016
Page2
Health & Welfare Fund v. Merck-Medco Managed Care, 504 F.3d 229, 244 (2d Cir. 2007)
("[n]onparties ... generally do not have standing to object to a settlement of a class action"). As
this Court held, the Trustee is not a class member and cannot show "'formal' legal prejudice."
See Intervention Order at 4-5; Bhatia v. Piedrahita, 756 F.3d at 219 (Citco and PwC lack
standing to object to settlement with Fairfield defendants in this case); In re Amer. Int'! Group,
Inc. Sec. Litigation, 2013 WL 68928 at *3 (S.D.N.Y. Jan. 7, 2013) (New York Attorney General
lacks standing to object to proposed class settlement).
The Trustee's Objections Are Meritless. Because the Intervention Order decided the
same issue as the Trustee presents here, the Trustee should be collaterally estopped. In any
event, none of the Trustee's objections to the PwC settlement warrants a result different from the
Intervention Order.
First, the Trustee claims that "PwCIL's failure to sign the agreement prejudices the
Trustee." Letter at 2. However, PwC International is not named as a party in the Trustee's
dismissed state court action, see Walker, 993 N.Y.S.2d 647, and as PwC's letter indicates, PwC
International will be bound by the Final Judgment.
Second, the Trustee argues that PwC "might contend" that certain language in the
settlement "reflects this Court's determination that PwC has colorable rights to offset the
Trustee's claims due to the settlement." Letter at 2 (emphasis added). However, the language of
the PwC settlement documents is substantively the same as the Citco settlement. Compare Dkt.
No. 1533 iii! 4, 16, 19 with Dkt. No. 1398 ~ii 4, 16.

Accordingly, the Court's prior holding that the Trustee has no standing based on the
"offset" argument is equally applicable here: "[A] settlement which does not prevent the later
assertion of a non-settling party's claims (although it may spawn additional litigation to vindicate
such claims), does not cause the nonsettling party 'formal' legal prejudice." Dkt. No. 1413 at 4
(quoting Bhatia, 7 56 F .3d at 219). As in the Citco settlement, Plaintiffs' counsel will represent
on the record at the final fairness hearing that the PwC settlement does not take a position either
way on the "offset" issue.
Third, the Trustee argues that a separate settlement fund should be established for
investors in each of the Fairfield funds or, alternatively, "each PwC Defendant should be
required to disclose the maximum amount it would claim as an offset against the Trustee's
claims." Letter at 2. The Trustee's hypothetical concern is to "ensure that the Trustee's claims
are not offset by settlement amounts allocated to class members who invested in Fairfield Sentry
Ltd. (by far the largest fund by reported value) and other off-shore funds." Id. at 2-3. As an
initial matter, the Trustee failed to object to the Fairfield and Citco settlements even though they
also established unitary settlement funds. Those single-fund settlements were, of course,
approved by the Court. Again, "[t]his argument is speculative and thus not sufficient to
demonstrate formal legal prejudice." Intervention Order at 6. In any event, if a breakdown of
the PwC settlement consideration ever were relevant in some future proceeding, we could

BOIES,

SCHILLER

&

FLEXNER

LLP

The Honorable Victor Marrero
January 28, 2016
Page 3
provide the Trustee with the amounts that actually were distributed from the PwC settlement to
investors in GS and GSP.
The Trustee Cannot Meet Rule 24's Requirements for Intervention. "Failure to
satisfy any one of [four] requirements is a sufficient ground to deny" a motion to intervene. See
Farmland Dairies v. Comm 'r of NY State Dep 't ofAgric. & Mkts., 847 F.2d 1038, 1043 (2d Cir.
1998 (emphasis in original); MasterCard Int 'I Inc. v. Visa Int 'I Serv. Ass 'n, Inc., 471 F.3d 377,
389 (2d Cir.2006) (requirements for intervention). Here, the Trustee cannot demonstrate that he
has "an interest" in this action or that "without intervention" the Trustee's "ability to protect its
interest" will be impaired or impeded. Id As discussed, the PwC settlement documents do not
address the viability of an offset either way and the Trustee can oppose an offset when and if the
issue were to arise in later proceedings.
For the reasons set forth above, the Trustee's request to file a motion to intervene should
be denied.
Respectfully yours,

...------..

~tlfo#
cc:

Robert A. Wallner (via email)
Sarah L. Cave (via email)
Timothy A. Duffy (via email)

The Clerk of Court is directed to enter into the public record
C~iz;t by •

_oft~is ac, ·on the letter abo-~e _submi~t~~ ,to .

I '(/U.~--,.i . ··s

74

SO ORDERED.

I-

)f~(6
DATE

M'J..-e.i- ..1 •