Anwar et al v. Fairfield Greenwich Limited et al

Filing 684

MEMO ENDORSEMENT on: #652 Response in Support of Motion, filed by Lorrene Da Silva Ferreira, Arlete Da Silva Ferreira. ENDORSEMENT: The Forrerira action has now been consolidated with the Anwar action and the discovery schedule is intended to be uniform. In light of the fact that there remains ample time to complete discovery, a motion to dismiss is pending, and a class has not yet been certified, and given Defendants' representation that Mr. Howell will be made available at a later time, Plaintiff's motion for issuance of a subpoena is denied without prejudice to renew. Should the status of the case remain unchanged by 10/3/11, Plaintiffs may revisit this issue. (Signed by Magistrate Judge Theodore H. Katz on 7/15/11) (cd)

Case 1:09-cv-00118-VM -THK Document 652

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

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PASHA ANWAR, et aI.,

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Plaintiffs,

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v.

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FAIRFIELD GREENWICH LIMITED, et aL,

MEMO' ENDORSED

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Master File No. 09-CV -118 (VM)

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Defendants.

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This Document Relates to:
Da Silva Ferreira v. EFG Capital International
Corp., et aI., II-CV-8J3(VM)

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PLAINTIFFS' REPLY IN SUPPORT OF MOTION FOR ISSUANCE OF SUBPOENA
TO LAWRENCE D. (LONNIE) HOWELL
Plaintiffs, Lorrene Da Silva Ferreira and ArIete Da Silva Ferreira, individually and on
behalf of all others similarly situated, reply in support of their Motion for Issuance of Subpoena
to Lawrence D. (Lonnie) Howell filed on May 2, 20 II (the "Motion") against Defendant, EFG
Capital International, Inc. ("EFG Capital"), and state:

INTRODUCTION
In its response, EFG Capital does not dispute the detailed factual recitation set forth in
Plaintiffs' Motion showing that Howell has relevant knowledge about the merits- and classrelated issues in this case. Moreover, EFG Capital agrees to produce Mr. Howell for deposition
"at a reasonable time and place that is convenient for all parties ...." Thus, the only question
for this Court to decide is when it should issue an Order allowing Plaintiffs to subpoena Howell.
The answer is: "Right now." This Court should have the benefit of Howell's testimony
when it considers Plaintiffs' motion for class certification. EFG Capital argued in its opposition
to certification that it treated each class member differently, and therefore individualized issues

1£

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Da Silva Ferreira v. EFG Capital International Corp., et al., ll-CV-813(VA1)
Master File No. 09-CV-118 (VM)
predominate over common ones. Plaintiffs replied that, to the contrary, class members were
treated identically through a policy of uniformity that Howell implemented. EFG Capital does
not dispute this assertion in its Response. Howell's testimony about that treatment is key to a
class determination.

ARGUMENT
In its response to Plaintiffs' Motion, EFG Capital does not overcome either of the two
Walsh Act factors.

EFG Capital does not challenge any of the facts set forth in Plaintiffs'

Motion showing that Howell's testimony is relevant and therefore "necessary in the interest of
justice." EFG Capital fails to dispute (i) that Howell has knowledge of EFG Capital's concerns
about Madoff; (ii) that Howell himself had concerns about Madoff, and directed EFG Capital to
limit the money lent to customers holding Fairfield Sentry; (iii) that Howell reviewed and edited
a letter to EFG Capital customers recommending a reduction in Fairfield Sentry concentration (a
letter than went out four days after Howell and EFG Capital received the Pehrrson Memo, which
revealed that Fairfield thought Madoff was "cheating"); (iv) that Howell participated in EFG
Capital's due diligencc of Fairfield Sentry and Madoff, and mediated a dispute between EFG
Capital and a European affiliate over access to certain due diligence (which, in the end, EFG
Capital did not receive); and (v) that it was Howell, and not EFG Capital's executives, who
decided that EFG Capital would not return bogus Madoff-related fees and commissions to
Plaintiffs and class members.
Nor does EFG Capital dispute the second Walsh Act factor. Because of restraints placed
on discovery by Swiss law and the Hague Convention on Taking Evidence Abroad, admissible
testimony cannot be gathered from Howell without his personal appearance here in the United
States, which EFG Capital has offered to make happen.

2

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Da Silva Ferreira v. EFG Capital International Corp., et al., J J-CV-8J 3(VM)
Master File No. 09-CV -118 (VM)
EFG Capital's response instead pursues the strategy that EFG Capital has employed
throughout this case: delay. Before this case was transferred to the Anwar multidistrict litigation
from the Southern District of Florida, EFG Capital filed numerous motions to stay discovery
pending the resolution of its motion to dismiss. When those motions were denied and a trial date
was set for August 2011, EFG Capital moved to transfer the case to this Court, where a trial date
has not been set. EFG Capital now cites the absence of a trial date to essentially argue that
"there's no rush" to depose Howell. But the March 2012 discovery deadline is only nine months
away. It will likely take two months or more to serve the subpoena on Howell in Switzerland
once this Court issues its order. Once the subpoena is served, scheduling the deposition may be
delayed to the extent it relies on Howell's travel schedule (EFG Capital has not indicated the date
of Howell's next trip to Miami or elsewhere in the u.S. I). Moreover, a deposition near the backend of the discovery period would prevent Plaintiffs from doing follow-up discovery.
EFG Capital also argues repeatedly that this Court should wait for a ruling on class
certification before allowing Howell's deposition. But there is no indication that a ruling on
class certification will occur any time soon, or before March 2012. This Court's most recent
Scheduling Order acknowledged that there is a "lengthy and undefined period for class-related
discovery." [D.E. 604

,1 4].

Indeed, precisely because this case currently is in the class-related discovery period,
Plaintiffs should be allowed to take deposition testimony from Howell so that this Court may
have the benefit of it when considering the class issues. As Plaintiffs set forth in their Motion,
Howell's testimony is relevant to Plaintiffs' class allegations -

particularly Howell's knowledge

Notably absent from EFG Capital's response is any indication of hardship or prejudice
relating to Mr. Howell's travel schedule. Victor Echevarria of EFG Capital testified that Howell
comes to Miami once or twice a year.
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Da Silva Ferreira v. EFG Capital International Corp., et al., ll-CV-813(VM)

Master File No. 09-CY -118 (YM)

of the broader, advisory role that EFG Capital assumed over its customers uniformly at Howell's

instruction. Howell approved the "Notice to Clients" sent by EFG Capital advising that Fairfield

Sentry's assets were custodized with Madoff. Howell capped the amount of money that EFG
Capital could lend its customers whose accounts held Fairfield Sentry. And Howell requested
that EFG Capital send out the concentration letter to EFG Capital's clients. Plaintiffs' expert
Paul Meyer, whose preliminary report is attached to Plaintiffs' Reply in Support of Class
Certification, opined that this uniform treatment would create a fiduciary duty by EFG Capital
over all class members, regardless of whether they purchased Fairfield Sentry based on EFG
Capital's recommendation or received no recommendation from EFG Capital.
Finally, EFG Capital's "apex deponent" argument is distinguishable here. This court has
routinely held that top executives may be deposed when they have relevant information. See,

e.g., Gen. Star Indemn. Co. v. Platinum Indemn. Ltd., 210 F.R.D. 80, 82-83 (S.D.N.Y. 2002)
(case cited by EFG Capital, denying motion for protective order where apex deponent did not
provide evidence disputing relevant knowledge); Speadmark, Inc. v. Federated Dep't Stores,

Inc., 176 F.R.D. 116, ] 18 (S.D.N.Y. 1997) (denying motion for protective order by apex
deponent); Naftchi v. N.Y. Univ. Med. Ctr., 172 F.R.D. 130, 132-33 (S.D.N.Y. 1997) (ordering
deposition of apex deponent where deponent's affidavit did not assert that he lacked familiarity
with matters at issue in the case); Lloyd v. Bear Stearns & Co., No. 99-CIV-3323-AGS, 1999
WL 813420 (S.D.N.Y. Oct. 12, 1999) (same). Here, there is already considerable evidence that
Howell has unique and personal information about events that are central to Plaintiffs' claims.
EFG Capital has not disputed any of that evidence.

Nor has EFG Capital argued that this

information can be obtained from lower-ranking officials.

(indeed, Plaintiffs have deposed

lower-ranking officials (EFG Capital's executives), who have attributed knowledge of certain

4

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Da Silva Ferreira v. EFG Capital International Corp., et ai., JJ-CV-8J 3(VM)
Master File No. 09-CY-118 (YM)
information to Howell.) Rather, EFG Capital argues that Howell's deposition would cause an
undefined "business disruption."

EFG Capital fails to provide any evidence showing that a

business disruption would occur, or otherwise showing that Howell could not set aside a day to
sit for deposition during one of his regular business trips to the United States. (In fact, EFG
Capital offers to make Howell available at a mutually agreeable date). Nor has EFG Capital
provided any evidence that Plaintiffs seek Howell's deposition for harassment purposes.
"Highly-placed executives are not immune from discovery."

Co., 210 F .R.D. at 83.
extraordinary relief."

General Star Indemnity

"An order barring a litigant from taking a deposition is most

Speadmark. Inc., 176 F.R.D. at 118.

There is no cause for barring

Howell's deposition in this case simply because he is a highly placed executive.

CONCLUSION
For the reasons stated above, Plaintiffs ask this Court to grant the relief sought
Plaintiffs' Motion for Issuance of Subpoena.
Dated: June 3, 2011.

Respectfully submitted,

COHEN KINNE YALICENTI & COOK LLP

LEVINE KELLOGG LEHtvlAN
SCHNEIDER + GROSSMAN LLP

Co-counselfor Plaintiffs
rd

Attorneysfor Plaint(ffs

28 North Street, 3 Floor
Pittsfield, MA 01201
Telephone: [phone]
Facsimile: [phone]
KEVIN M. KINNE
Massachusetts Bar No. 559004
KkinnC(d)cohcnkinnc.com

201 So. Biscayne Boulevard
th
Miami Center, 34 Floor
Miami, FL 33131
Telephone: [phone]
Facsimile: [phone]
By __~/~s/~J~a~so~n~K~e~ll~og~g~_______
LA WRENCE A. KELLOGG, P.A.
Florida Bar No. 328601
lak(Zi."lkllaw.com

DANIEL R. SOLIN, ESQ.

Co-counsel for Plaintiffs
401 Broadway, Ste. 306
New York, N.Y. 10013-3005
Telephone: [phone]
Facsimile: [phone]
New York Bar No. 8675
dansolin(u)yahoo.com

JASON KELLOGG, ESQ.

Florida Bar No. 0578401
jk(a)lkllaw.com

5

In

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Da Silva Ferreira v. EFG Capital International Corp., et ar, ll-CV-813(VA1)
Master File No. 09-CV-IlS (VM)

CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on June 3, 2011, I served a true and correct copy of the
foregoing via the CM/ECF system on all counselor parties of record on the Service List below.
I also served a copy of the foregoing document via facsimile and U.S. Mail on counsel for EFG
Bank, clo Tracy Nichols, Esq., Holland & Knight LLP, 701 Brickell Avenue, Miami, Florida
33131.
By lsi Jason Kellogg
JASOl\ KELLOGG

SERVICE LIST
Joseph C. Coates, III, Esq.
Coates.! (Zl;gtiaw .com

Jon A. Jacobson, Esq.
JacoosonJ(v.gtiaw.com

Lauren Whetstone, Esq.
Whetstoncl /(()utlaw.com

GREENBERG TRAURIG, P.A.
Counsel for Defendant EFG Capital
International Corp.
777 South Flagler Drive
Third Floor East
West Palm Beach, FL 3340 I
Telephone: [phone]
Facsimile: [phone]