Anwar et al v. Fairfield Greenwich Limited et al

Filing 680

MEMORANDUM OF LAW in Support re: #679 CONSENT MOTION to Dismiss Voluntarily the Claims of Named Plaintiffs AAC and Barco Without Prejudice.. Document filed by Fundacion Virgilio Barco. (Harrod, James)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

ANWAR, et al.,
Plaintiffs,
v.

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

FAIRFIELD GREENWICH LIMITED, et al.,
Defendants.
This Document Relates To: All Actions

MEMORANDUM IN SUPPORT OF PLAINTIFF AAC INVESTMENT, INC.’S AND
PLAINTIFF FUNDACIÓN VIRGILIO BARCO’S MOTION FOR
VOLUNTARY DISMISSAL OF THEIR CLAIMS WITHOUT PREJUDICE

INTRODUCTION
Plaintiffs, Fundación Virgilio Barco (“Barco”) and AAC Investment, Inc. (“AAC”), who
were added as named plaintiffs to this litigation on January 7, 2011, move the Court for an
Order, pursuant to Fed. R. Civ. P. 41(a)(2), voluntarily dismissing them as plaintiffs in this
litigation, without prejudice. The voluntary dismissal of their claims at this stage of the litigation
will have no effect on the remaining plaintiffs’ prosecution of this litigation.
Moreover, as discussed below, these plaintiffs are unable to continue participating in the
litigation based on very serious family health issues, and defendants will not suffer any legal
prejudice as a result of the voluntary dismissal of Barco and AAC. All Defendants in this Action
have consented to the voluntary dismissal of Barco and AAC. Therefore, pursuant to Fed. R.
Civ. P. 41(a)(2), this Court should grant plaintiffs Barco’s and AAC’s motion for voluntary
dismissal of their claims against defendants in this Action.
STATEMENT OF RELEVANT FACTS
On December 19, 2008, the Anwar plaintiffs filed their original complaint in the Supreme
Court of the State of New York, New York County. Defendants removed the Action to this
Court on January 7, 2009, and the Anwar plaintiffs’ complaint was subsequently consolidated
with similar complaints against defendants. (Dkt. Nos. 12 and 40).
On April 24, 2009, the Anwar plaintiffs filed a Consolidated Amended Complaint (“Am.
Complt.”) (Dkt. No. 116), and on September 29, 2009, Anwar plaintiffs filed a Second Amended
Consolidated Class Action Complaint (Second Am. Complt.) (Dkt. No. 273). Neither Barco nor
AAC were named plaintiffs in either of these complaints. Defendants filed Motions to Dismiss
the Second Am. Complt. on December 22, 2009 (Dkt. Nos.316, 318, 325, 329, 334, 340, 344,
347, 359, 360).

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By Second Notice and Order Adding Additional Named Plaintiffs filed on January 7,
2011, pursuant to the Stipulation and Order Regarding Additional Named Plaintiffs, entered
April 27, 2010, Barco and AAC were added as named plaintiffs, among a group of eight
additional named plaintiffs deemed parties to the Action (Dkt. No. 600).
Certain members of the family that controls and benefits from both Barco and AAC are
experiencing significant health issues, which are exacerbated by participation in this lawsuit, and
now preclude Barco and AAC from participating in this Action as named plaintiffs. One
member of the family that principally controls AAC and Barco is undergoing cancer treatment,
and another, a resident of Colombia, is undergoing treatment for diabetes in Boston,
Massachusetts, and is facing the possibility of a kidney transplant. See Declaration of James A.
Harrod annexed hereto (“Harrod Decl.”)
On May 16, 2011, plaintiffs’ counsel, Susan Elizabeth Klock, Esq., delivered Plaintiffs’
Third Supplemental Initial Disclosures to counsel for defendants by email, which also stated that
Barco and AAC would be filing a motion for voluntary dismissal.
Barco and AAC now move the Court for an Order voluntarily dismissing their claims
without prejudice, pursuant to Fed. R. Civ. P. 41(a)(2). This motion is being filed prior to any
discovery regarding Barco and AAC, and prior to the scheduling of a trial date in this litigation.
Counsel for Plaintiffs AAC and Barco requested defendants’ consent to this motion for voluntary
dismissal, and counsel for each defendant in this Action expressed consent. Harrod Decl. For
the reasons stated herein, Barco’s and AAC’s motion for voluntary dismissal without prejudice
should be granted.

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ARGUMENT
A.

Relevant Legal Standards

Federal Rule of Civil Procedure 41(a)(2) provides, in relevant part, that “[e]xcept as
provided in Rule 41(a)(1), an action may be dismissed at the plaintiff’s request only by court
order, on terms that the court considers proper … [and that] … [u]nless the order states
otherwise, a dismissal under this paragraph (2) is without prejudice.”
In the Second Circuit, “there is a presumption in favor of dismissing without prejudice
‘absent a showing that defendants will suffer substantial prejudice as a result.’” SEC v.
Chakrapani, 2010 U.S. Dist. LEXIS 65337 (S.D.N.Y. June 28, 2010), citing A.V. by Versace,
Inc. v. Gianni Versace S.p.A., 261 F.R.D. 29, 31 (S.D.N.Y. 2009); see also, BD v. DeBuono, 193
F.R.D. 117, 123-124 (S.D.N.Y. 2000) (“Although voluntary dismissal under Rule 41(a)(2) is not
available as of right, ‘the presumption in this circuit is that a court should grant a dismissal
pursuant to 41(a)(2) absent a showing that defendants will suffer substantial prejudice as a
result.’”), quoting Guzman v. Hazemag U.S.A., Inc., 145 F.R.D. 308, 309 (E.D.N.Y. 1993).
“Thus, the focus of the analysis on a motion for voluntary dismissal is the prejudice to the
defendant.” DeBuono at123-124, citing 9 Wright & Miller, Federal Practice and Procedure §
2364 at 279-80 (2d ed. 1994).
Courts in the Second Circuit have recognized that “[f]actors relevant to this analysis are
(1) the plaintiff's diligence in bringing the motion; (2) any ‘undue vexatiousness’ on the
plaintiff's part; (3) the extent to which the suit has progressed, including the defendant's effort
and expense in preparation for trial; (4) the duplicative expense of another litigation; and (5) the
adequacy of the plaintiff's explanation for the need to dismiss.” DeBuono, at 124, citing Zagano

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v. Fordham Univ., 900 F.2d 12, 14 (2d Cir. 1990), aff'd en banc, 900 F.2d at 15-16 (2d Cir.
1990), cert. denied, 498 U.S. 899, 112 L. Ed. 2d 213, 111 S. Ct. 255 (1990).
Consideration of these factors in this case clearly justifies the entry of an Order granting
Barco’s and AAC’s motion for voluntary dismissal without prejudice.
B.

Application of the Relevant Standards Demonstrates That Dismissal of the
Claims of Barco and AAC Without Prejudice is Warranted
1.

Plaintiffs’ Acted Diligently in Bringing the Motion

Plaintiffs Barco and AAC have not engaged in excessive delay or lack of diligence in
seeking to dismiss their claims in this Action. Barco and AAC were joined as additional
plaintiffs by the filing of the Second Notice and Order Adding Additional Named Plaintiffs filed
on January 7, 2011. After four months of participation in the action, it became impossible for
Barco and AAC to continue as named plaintiffs based on the significant health issues of the
individuals who own Barco and AAC. Harrod Decl. On May 16, 2011, just slightly over four
months after joining the litigation, plaintiffs’ counsel notified counsel for defendants that Barco
and AAC intended to file a motion for voluntarily dismissal. After further analysis of whether
similar issues impact other plaintiffs, Barco and AAC submit the present motion. Plaintiffs
Barco and AAC acted reasonably under the circumstances, and thus this factor supports their
present motion.
2.

Plaintiffs Have Not Acted With “Undue Vexatiousness”

“Courts define ‘undue vexatiousness’ to mean that the plaintiff acted with ‘ill-motive’ in
bringing or maintaining its claims.” SEC v. Chakrapani, 2010 U.S. Dist. LEXIS 65337
(S.D.N.Y. June 28, 2010), quoting Versace, 261 F.R.D. at 32. “[C]ourts find ‘ill-motive’ where
plaintiffs have assured the court and the defendants that they intended to pursue their claims
prior to seeking a dismissal.” Id. (citations omitted). Plaintiffs Barco and AAC acted in good

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faith in initially joining the Action, and now in bringing the present motion. There are no facts to
suggest that their original claims, or this motion were baseless or brought with ill-motive, and as
a result, this factor too, weighs in favor of an order granting dismissal of Barco’s and AAC’s
claims without prejudice.
3.

The Present Stage of this Litigation Supports Plaintiffs’ Motion

The present stage of this litigation also supports the dismissal of Barco and AAC and
named plaintiffs. Although litigation in this case has been ongoing, defendants have expended
very few resources, if any, specifically related to these plaintiffs that now seek to voluntarily
withdraw as named plaintiffs. Significantly, Barco and AAC have not been designated among
the 20 named plaintiffs from whom discovery is being sought. See Shaw Family Archives, Ltd.
v. CMG Worldwide, Inc, 2008 U.S. Dist. LEXIS 67474, 23-24 (S.D.N.Y. Sept. 2, 2008); Omega
Inst., Inc. v. Universal Sales Sys., 2010 U.S. Dist. LEXIS 10296 (W.D.N.Y. Feb. 5, 2010)
(granting plaintiff’s dismissal motion without prejudice where depositions had not been taken
and plaintiff had not answered any discovery requests.) Further, the parties continue to engage
in ongoing discovery, and Court has not set this case for trial.
Accordingly, the case is still at a relatively early stage of the litigation, which also
supports the present motion for voluntary dismissal of Barco’s and AAC’s claims without
prejudice.
4.

There Will Be No Duplicative Expenses

As mentioned above, it is apparent that defendants have expended very little effort and
expense in preparing for trial as to the claims of Barco and AAC, separate and apart from
whatever preparation has been done related to this Action as a whole. The discovery and pretrial activity in this case has been more or less identical for all of the plaintiffs in this case. Thus

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resources, if any, which have been expended by defendants regarding Barco and AAC will not
have been wasted. See DeBuono, 193 F.R.D. 117, 124 – 125 (“any concern that [defendants]
will face duplicative expenses in a second action is minimized by the fact that the issues and
discovery in this case have been essentially the same as to all Plaintiffs. … [defendants] can use
the same preparation and expense they have undertaken in this case in a subsequent action.”), see
also Allen v. Indeck Corinth Ltd. Partnership, 161 F.R.D. 233, 236 (N.D.N.Y. 1995) (observing
that defendants’ effort and expense in trial preparation would not be wasted where several
plaintiffs remained in action). Thus, this factor also supports the present motion.
5.

Plaintiffs’ Explanation For Dismissal is Sound

Barco and AAC request this Court’s permission to withdraw without prejudice in good
faith, as significant health concerns of the controlling family members precludes their further
involvement in the Action as named plaintiffs. One member of the family that principally
controls AAC and Barco is undergoing cancer treatment. Another family member is undergoing
treatment for diabetes in Boston (she is a resident of Columbia), and is facing the possibility of a
kidney transplant. See Harrod Decl. These medical problems have become more acute in recent
months. AAC and Barco’s participation in the lawsuit, which is itself unpleasant and stressful,
exacerbates the strain and difficulty of these very serious health issues.
The dismissal of Barco and AAC does not affect the continuing prosecution of this
litigation, nor will it modify any of the substantive claims asserted in this Action. Thus, like the
other relevant factors, this final factor supports Barco’s and AAC’s motion for an order granting
the requested voluntary dismissal without prejudice.

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CONCLUSION
Based on the foregoing, Plaintiffs Barco and AAC respectfully request that the Court
enter an Order granting their motion for voluntary dismissal without prejudice, and for such
further relief as the Court deems just.
Dated: July 7, 2011

Respectfully submitted,
By: /s/ James A. Harrod

David Boies
BOIES, SCHILLER & FLEXNER LLP
333 Main Street
Armonk, NY 10504
David A. Barrett
Howard L. Vickery, II
BOIES, SCHILLER & FLEXNER LLP
575 Lexington Avenue
New York, NY 10022
Stuart H. Singer
Carlos Sires
Sashi Bach Boruchow
BOIES, SCHILLER & FLEXNER LLP
401 East Las Olas Boulevard, #1200
Ft. Lauderdale, Florida 33301
Robert C. Finkel
James A. Harrod
WOLF POPPER LLP
845 Third Avenue
New York, NY 10022
Christopher Lovell
Victor E. Stewart
LOVELL STEWART HALEBIAN
JACOBSON LLP
61 Broadway, Suite 501
New York, NY 10006
Interim Co-Lead Counsel for Plaintiffs and
Counsel for PSLRA Plaintiffs

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