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

Plaintiffs,
DECISION AND ORDER

- against FAIRFIELD GREENWICH LIMITED,
et al.,
Defendants.

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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.

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