Anwar et al v. Fairfield Greenwich Limited et al
Filing
1547
DECISION AND ORDER: For the reasons stated above, it is hereby ORDERED that the request of New Greenwich Litigation Trustee, LLC, as Successor Trustee of the Greenwich Sentry and Greenwich Sentry Partners Litigation Trusts ("Trustee") for a pre-motion conference concerning its proposed motion to intervene in this action for the limited purpose of objecting to the Proposed PwC Settlement (Dkt. No. 1541) is DENIED. (Signed by Judge Victor Marrero on 2/2/2016) (lmb)
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PASHA ANWAR, et al.,
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DOCU~lENT
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
ELECTRONtCr\LLY FILED
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1
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1
Plaintiffs,
DECISION AND ORDER
- against FAIRFIELD GREENWICH LIMITED,
et al.,
Defendants.
-----------------------------------x
VICTOR MARRERO, United States District Judge.
On
January
7,
this
2016,
Court
issued
an
order
preliminarily approving a settlement of this action ("January
7
Order") .
(Dkt.
No.
1537.)
("Proposed PwC Settlement")
The Stipulation of Settlement
resolves claims asserted by the
Representative Plaintiffs on their own behalf and on behalf
of the Settlement Class
against
(collectively,
PricewaterhouseCoopers
LLP
PricewaterhouseCoopers Accountants N.V.
and
PricewaterhouseCoopers
"Anwar Plaintiffs")
( "PwC
Canada"),
("PwC Netherlands"),
International
Limited
("PwC
International," together with PwC Canada and PwC Netherlands,
the "PwC Defendants") .
(Dkt. No. 1533.)
In the January 7 Order,
[Proposed PwC Settlement]
the Court found that "(a)
resulted from good faith,
the
arm's-
length negotiations; and (b) the [Proposed PwC Settlement] is
sufficiently fair, reasonable and adequate to the Settlement
Class Members to warrant providing notice of the Settlement
to
Settlement
Hearing."
Class
(Dkt.
No.
Members
153 7
and
at
3.)
holding
The
a
Settlement
Court
scheduled
a
Settlement Hearing for May 6, 2016 "to determine whether the
proposed Settlement of the Action with the PwC Defendants on
the terms and conditions provided for in the
Settlement]
is
fair,
reasonable
and
[Proposed PwC
adequate
to
the
Settlement Class and should be approved by the Court; whether
a
Final
Judgment
and
Order
of
Dismissal
with
Prejudice
["Proposed Order"] as provided in Exhibit B to the [Proposed
PwC
Settlement]
should
be
entered
herein;
whether
the
proposed Plan of Allocation should be approved; to determine
the amount of fees and expenses that should be awarded to
Plaintiffs' Counsel; and to rule upon such other matters as
the Court may deem appropriate."
By
letter
Litigation
dated
Trustee,
January
LLC,
as
(Id. at 4.)
25,
2016,
Successor
New
Greenwich
Trustee
of
the
Greenwich Sentry and Greenwich Sentry Partners Litigation
Trusts
("Trustee")
regarding
the
requested
Trustee's
a
proposed
pre-motion
conference
motion
intervene,
to
pursuant to Rule 24 of the Federal Rules of Civil Procedure
("Rule 24"),
for the
limited purpose of objecting to the
Proposed PwC Settlement ("January 25 Trustee Letter").
No.
1541.)
The
Trustee argues
that
(1)
the
(Dkt.
Proposed PwC
Settlement is void and unenforceable because the attorneys
2
for
PwC
International
did
not
sign
(2) Paragraph 19 of the Proposed Order
B)
1
the
(Dkt. No.
agreement;
1533, Ex.
is objectionable because the PwC Defendants might contend
that the Court has determined that the PwC Defendants have
"colorable rights to offset the Trustee's claims;" and
(3)
the Proposed PwC Settlement allows a single fund to be shared
among all class members which could ultimately be used to
unfairly off set the Trustee's claims.
(Dkt. No.
1541.)
The
Court ordered the Anwar Plaintiffs
and PwC Defendants
respond jointly by January 28, 2016.
(Id.)
By letter dated January 28,
to
2016, the Anwar Plaintiffs
responded to the January 25 Trustee Letter ("January 28 Anwar
Plaintiffs Letter") .
(Dkt.
No.
1542.)
The Anwar Plaintiffs
state that the Court already rejected a similar attempt by
the Trustee to intervene and object to the settlement between
the
Anwar
Plaintiffs
Settlement").
and
the
Citco
Defendants
("Citco
(See Dkt. No. 1413.) Similar to issues raised
in connection with the Citco Settlement, the Anwar Plaintiffs
argue that the Trustee does not have standing to object to
the Proposed PwC Settlement because "the Trustee is not a
class member and cannot show formal legal prejudice."
(Dkt.
1 The relevant portion of Paragraph 19 states: "Nothing in this paragraph
precludes the PwC Defendants from arguing that the settlement proceeds in
this case are an offset against claims that may be made against them in
other proceedings." (Dkt. No. 1533, Ex. B.)
3
No. 1542 at 2)
756 F.3d 211,
omitted).
the
(citing Dkt. No. 1413; Bhatia v.
219
(2d Cir.
2014))
Piedrahita,
(internal quotation marks
In response to the Trustee's specific objections,
Anwar
Plaintiffs
contend
that
agrees to be bound by the final
(1)
PwC
judgment;
International
(2)
the Trustee
does not have standing based on the "offset" argument;
( 3)
single-fund settlements have been approved by the Court, and
if required in the future, the Anwar Plaintiffs could provide
a breakdown of the amounts that were distributed to investors
in Greenwich Sentry and Greenwich Sentry Partners;
the Trustee
cannot meet
under Rule 24.
The
the
requirements
for
and
(4)
intervention
(Dkt. No. 1542.)
PwC Defendants
also
responded
to
the
January
25
Trustee Letter on January 28, 2016 ("January 28 PwC Defendants
Letter") . (Dkt. No. 1543.) The PwC Defendants join the January
28 Anwar Plaintiffs Letter and further argue that the Trustee
lacks
standing
to
object
to
the
Proposed
PwC
Settlement
because the Trustee has failed to identify "anything in the
PwC settlement that prejudices any claims or defenses
the
Trustee may have in any proceeding." (Id. at 1.) Specifically,
the
PwC
Defendants
argue
that,
in
regards
to
PwC
International, it is not improper for the settling parties to
a
settlement
agreement
"to
release
or bar
claims
against
parties or non-parties who are not signatories to a settlement
4
agreement and to provide that they will be bound by orders
relating to the settlement."
(Id. at 2.) Second, in regards
to the offset argument, the PwC Defendants contend that "the
Court overruled precisely this objection in connection with
the Citco [S]ettlement, and the Trustee advances no grounds
for a different result here."
Defendants
state
impractical"
at
that
this
(Id. at 3.)
it
would
stage
to
be
Finally,
the PwC
"unnecessary
"predict
in
advance
appropriate allocation of settlement proceeds by 'fund'
and
the
as
the amount of and basis for such payments will ultimately
depend upon
the
claims
made
by participating
investors.
/1
(Id.)
In a reply letter dated January 29,
Trustee
Letter") ,
International
Settlement.
is
the
Trustee
required
to
("January 29
2016
reiterates
sign
the
that
Proposed
PwC
PwC
(Dkt. No. 1544.) Moreover, even if the settlement
agreement were enforceable, PwC International would unfairly
receive the benefits of the settlement while the Trustee and
the
Settlement
Class
would
not
receive
the
benefits
PwC
International is supposed to provide under the agreement.
(Id.)
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
5
a
settlement." Bhatia,
Fogel,
989 F.2d 93,
recognized
756 F.3d at 218
98
exception
(citing Zupnick v.
(2d Cir. 1993)). However, there is a
to
this
rule
when
a
non-settling
defendant can "demonstrate that it will sustain some formal
legal prejudice as a result of the settlement." Id.
(citing
Zupnick, 989 F.2d at 98).
Formal legal prejudice exists in rare circumstances such
as
when
a
"settlement
agreement
formally
strips
a
non-
settling party of a legal claim or cause of action, such as
a
cross-claim
for
contribution
or
indemnification,
invalidates a non-settling party's contract rights,
right to present relevant evidence at a trial." Id.
omitted) .
In
Bhatia,
the
Second
Circuit
held
or the
(emphasis
that
"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." Id. at 219.
The Trustee previously attempted to intervene for the
purpose of objecting to the Citco Settlement, and the Court
found that the Trustee lacked standing to do so.
(Dkt. No.
1413.) Here, the Trustee raises similar issues and has failed
to demonstrate formal legal prejudice.
The Court previously found that the same language used
in Paragraph 19 of the Proposed Order in no way prevents the
6
Trustee from asserting the claims or defenses available to
it.
(Dkt.
No.
1413.)
The Trustee even concedes that this
argument was previously dismissed by the Court, stating: "The
Trustee
raised
application
to
a
similar
intervene
point
in
in
connection
connection
with
with
the
its
Citco
Settlement, but the Court ruled that the Trustee had not shown
prejudice."
(Dkt. No. 1541 at 2 n.5.)
Although the Trustee argues that its other objections
are sufficient to establish prejudice (see Dkt. No. 1541 at 2
n.5),
the
Court
is
unpersuaded
that
the
Trustee
has
successfully demonstrated formal legal prejudice. First, PwC
International has agreed to be bound by the
Proposed PwC
Settlement. Second, the Trustee's allegation that the single
settlement fund could be used to unfairly offset the Trustee's
claims is speculative and insufficient to demonstrate formal
legal prejudice. The Court therefore finds that the Trustee
does
not
have
standing
to
object
to
the
Proposed
PwC
Settlement.
ORDER
For the reasons stated above, it is hereby
ORDERED
Trustee,
LLC,
that
the request of New Greenwich Litigation
as Successor Trustee of the Greenwich Sentry
and Greenwich Sentry Partners Litigation Trusts
("Trustee")
for a pre-motion conference concerning its proposed motion to
7
intervene in this action for the limited purpose of objecting
to the Proposed PwC Settlement (Dkt. No. 1541) is DENIED.
SO ORDERED.
Dated:
New York, New York
2 February 2016
~~
Victor Marrero
U.S.D.J.
8
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