Anwar et al v. Fairfield Greenwich Limited et al

Filing 815

MOTION for Leave to File Second Amended Complaint by Maridom, Caribetrans and Abbott. Document filed by Maridom Limited. Return Date set for 2/17/2012 at 10:00 AM.Filed In Associated Cases: 1:09-cv-00118-VM-THK, 1:10-cv-00920-VM(Brodsky, Richard)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
MASTER NO. 09-cv-118 (VM) (THK)
PASHA ANWAR, et al.,
Plaintiffs,
v.
FAIRFIELD GREENWICH LIMITED,
et al.,
Defendants.
This filing relates to Maridom Ltd., et al.,
v. Standard Chartered Bank International
(Americas), Ltd.
____________________________________________/
NOTICE OF
MOTION FOR LEAVE TO FILE
SECOND AMENDED COMPLAINT
Please take notice that on the following Memorandum of Law,
Plaintiffs Maridom Limited, Caribetrans, S.A., and Abbot Inc. (“Plaintiffs”)
will move this Court, before the Honorable Theodore H. Katz, at a time and
place to be determined by the Court, at the United States Courthouse, 500
Pearl Street, New York, New York 10007, for an order pursuant to
Fed.R.Civ.P. 15(a) and 21, for leave to file the proposed Second Amended
Complaint, and for such further and other relief that the Court may deem

1
THE BRODSKY LAW FIRM ⋅ 66 WEST FLAGLER STREET, 9TH FLOOR ⋅ MIAMI, FLORIDA 33130 ⋅ 786-220-3328

just and proper.1 The Plaintiffs have conferred with the Standard Chartered
Defendants (“Defendants”) and have been informed that the Defendants do
not consent to this Motion.
MEMORANDUM OF LAW
SUMMARY
Absent aggravated circumstances that materially prejudice the party
opposing a motion to amend a pleading, leave to amend must be granted.
Here, the following indisputable facts militate in favor of permitting the
amendment:
1.

There has been no dilatory conduct by the Maridom Plaintiffs:

discovery has been aggressively pursued, and the motion is made shortly
after the initial depositions have been completed. Moreover, discovery is still
underway.
2.

No trial date has been set.

3.

No party has moved for summary judgment.

4.

The two parties that are sought to be added are already

defendants in other Standard Chartered Cases, as is the ultimate parent of
Simultaneously with the filing of this Motion, the Movants are seeking
permission from Magistrate Judge Katz to file the proposed Second Amended
Complaint and the exhibits thereto under seal. Under the Stipulation and
Order Governing Confidentiality of Discovery Material (DE 107), these must
be filed under seal since the proposed Complaint refers to information from
documents produced by the Standard Chartered Defendants under a claim of
confidentiality and such documents are attached as exhibits. The Plaintiffs do
not waive their right to challenge such confidentiality designations under the
Stipulation and Order.
2

1

THE BRODSKY LAW FIRM ⋅ 66 WEST FLAGLER STREET, 9TH FLOOR ⋅ MIAMI, FLORIDA 33130 ⋅ 786-220-3328

all of the defendants.
5.

The additional factual allegations stem from the initial

allegations and come from the documents produced by the Standard
Chartered Defendants and testimony taken from present or former
employees of Standard Chartered, and will not require any additional
discovery that would not have been taken anyway.
6.

The one new claim, under the Florida Blue Sky Act, is merely a

statutory version of the existing negligent and fraudulent misrepresentation
claims, expanded to include information learned during discovery, and will
not require any additional discovery that would not have been taken anyway.
In short, there is no basis to deny the motion for leave to amend.
ARGUMENT
I.
HOW THE PROPOSED AMENDED COMPLAINT
AFFECTS THE EXISTING COMPLAINT
The pending Amended Complaint (“Complaint”) in Maridom names
one defendant, Standard Chartered Bank International (Americas) Limited
(“SCBI”), formerly known as American Express Bank International, and
contains three counts: breach of fiduciary duties to the Plaintiffs and
negligent and fraudulent misrepresentation. The claims arise from
recommendations to the three plaintiffs in Maridom by SCBI that they invest
in Fairfield Sentry Fund, which, unbeknownst to the Plaintiffs, was merely a
3
THE BRODSKY LAW FIRM ⋅ 66 WEST FLAGLER STREET, 9TH FLOOR ⋅ MIAMI, FLORIDA 33130 ⋅ 786-220-3328

feeder fund into Bernard L. Madoff Investment Securities, LLC. With minor
exceptions, these allegations track comparable allegations made in other of
the Standard Chartered Plaintiffs against two of the proposed additional
defendants: SCBI’s parent company, Standard Chartered International
(USA) Ltd. (“SCI”), formerly known as American Express Bank, Ltd.; and
Standard Chartered Bank (“SCB”), which acquired SCI and its subsidiary,
SCBI, in February 2008, as well as SCB’s parent, Standard Chartered PLC
(“PLC”).2 (PLC, a publicly held U.K. company, owns Standard Chartered
Holdings Limited, which owns SCB. Application to the Board of Governors of
the Federal Reserve System Relating to the Proposed Acquisition of
American Express Bank International by Standard Chartered PLC, Standard
Chartered Holdings Limited, and Standard Chartered Bank, October 31,
2007, at 2.)
The proposed Second Amended Complaint does three basic things:
First, it adds as proposed defendants the two corporate affiliates of
SCBI, SCI and SCB.
Second, based on information gathered in the discovery conducted to
date, it adds factual allegations to the basic allegations already made in the
Complaint.

SCI is already a defendant in at least one of the Standard Chartered
Cases, Valladolid, and SCB is already a defendant in Headway, while its
parent, PLC, is a defendant in Valladolid, Barbachano Herrero, Caso, Lopez,
and the dozens of other cases filed by counsel for Lopez.
4

2

THE BRODSKY LAW FIRM ⋅ 66 WEST FLAGLER STREET, 9TH FLOOR ⋅ MIAMI, FLORIDA 33130 ⋅ 786-220-3328

Third, it adds one count not previously made, a Florida Blue Sky Act
count, alleging the same misrepresentations and omissions pled in the
existing negligent and fraudulent misrepresentation claims, as well as
additional misrepresentations and omissions learned in discovery.
Under the liberal amendment policy set forth in Rules 15(a) and 21
and the cases interpreting those rules, the Court should grant this Motion.
II.
LEAVE TO AMEND IS TO BE FREELY GRANTED.
Rule 15(a) provides that “[t]he court should freely give leave [to
amend] when justice so requires.” The established general rule is that “[i]f
the underlying facts or circumstances relied upon by a plaintiff may be a
proper subject of relief, he ought to be afforded an opportunity to test his
claim on the merits.” Foman v. Davis, 371 U.S. 178, 182 (1962). The burden
rests on the party opposing amendment to justify denial.3
Leave to amend a complaint should be granted “[i]n the absence of any
apparent or declared reason-such as undue delay, bad faith or dilatory motive
on the part of the movant, repeated failure to cure deficiencies by
amendments previously allowed, undue prejudice to the opposing party by

A motion to add a defendant is governed by Fed.R.Civ.P. 21. “Rule 21
states that a party may be added to an action ‘at any time, on just terms.’ In
deciding whether to permit joinder, courts apply the ‘same standard of
liberality afforded to motions to amend pleadings under Rule 15.’” Bridgeport
Music, Inc. v. Universal Music Group, Inc., 248 F.R.D. 408, 412 (S.D.N.Y.
2008) (citation omitted) (citing cases) (Marrero, J.).
5

3

THE BRODSKY LAW FIRM ⋅ 66 WEST FLAGLER STREET, 9TH FLOOR ⋅ MIAMI, FLORIDA 33130 ⋅ 786-220-3328

virtue of allowance of the amendment, [or] futility of amendment.” Foman,
371 U.S. at 182. “A motion to amend should be denied only for such reasons
as ‘undue delay, bad faith, futility of the amendment, and perhaps most
important, the resulting prejudice to the opposing party.” Richardson
Greenshields Sec., Inc. v. Lau, 825 F.2d 647, 653 n. 6 (2d Cir.1987) (citation
omitted). Accord, Abbatiello v. Monsanto Co, 571 F. Supp. 2d 548, 552
(S.D.N.Y. 2008) (Marrero, J.). While the factors outlined in Foman are not an
exclusive list of reasons justifying denial of leave to amend, they are
universally regarded as the principal list, with prejudice to the party
opposing considered “the most important.” Wright, Miller, Kane & Marcus, 6
Fed. Prac. & Proc. Civ. § 1487 (3d ed.). See Ruotolo v. City of New York, 514
F.3d 184, 192 (2d Cir. 2008) (citing Wright & Miller).
A motion to add a defendant is governed by Fed.R.Civ.P. 21. “Rule 21
states that a party may be added to an action ‘at any time, on just terms.’ In
deciding whether to permit joinder, courts apply the ‘same standard of
liberality afforded to motions to amend pleadings under Rule 15.’” Bridgeport
Music, Inc. v. Universal Music Group, Inc., 248 F.R.D. 408, 412 (S.D.N.Y.
2008) (citation omitted) (citing cases) (Marrero, J.).
III.
THERE IS NO BASIS TO DENY LEAVE TO AMEND.
In this case, none of the factors cited in Foman to justify denial of a
motion to amend is present – no undue delay, no bad faith, no dilatory motive,
6
THE BRODSKY LAW FIRM ⋅ 66 WEST FLAGLER STREET, 9TH FLOOR ⋅ MIAMI, FLORIDA 33130 ⋅ 786-220-3328

no repeated failures to cure pleading deficiencies, no futility of amendment,
no prejudice to the defendants.
A.

The Plaintiffs Have Acted Expeditiously in All Respects.

As this Court is well aware, the Plaintiffs, including the Maridom
Plaintiffs, have actively and energetically sought discovery from the
Defendants and have diligently prosecuted this action through the discovery
phase, all the time facing determined opposition from the Standard
Chartered Defendants every step of the way. The Plaintiffs have proceeded
diligently and efficiently in advancing these cases, and have acted promptly
in corralling the facts learned through discovery and the Maridom Plaintiffs
are now moving to amend on account of these newly discovered facts.4
Despite the fact that these cases are proceeding for pre-trial purposes
in a forum not of the Plaintiffs’ choosing – the Defendants having convinced
an MDL Panel to transfer the Standard Chartered Cases to this Court for
coordination with the Anwar cases -- the members of the Standard Chartered
Plaintiffs’ Steering Committee, all of whom represent different clients and
come from different law firms and cities, have been required to come together
despite their lack of familiarity with one another and forge a common
approach to this litigation. To start with, virtually the entirety of their

The Maridom Plaintiffs understand that other Standard Chartered
Plaintiffs will likewise move to amend their complaints, and that some if not
all will seek to adopt the main substantive allegations against the
Defendants to the extent that apply equally to their own cases.
7

4

THE BRODSKY LAW FIRM ⋅ 66 WEST FLAGLER STREET, 9TH FLOOR ⋅ MIAMI, FLORIDA 33130 ⋅ 786-220-3328

different complaints survived a motion to dismiss. Anwar v. Fairfield
Greenwich Group, 745 F.Supp.2d 360 (S.D.N.Y. 2010).
Since the filing of answers, the Plaintiffs have mounted a strong
discovery campaign for their clients. They have propounded extensive written
discovery, reviewed and analyzed tens of thousands of documents that
continue to arrive from the Standard Chartered Defendants (with a
representation that the production will not be complete until later in
February 2012), and have taken five depositions of former employees of
American Express Bank, Ltd. or American Express Bank International, with
at least six more depositions to come.
All the while, the Plaintiffs have faced the determined opposition of the
Standard Chartered Defendants to all but the narrowest scope of discovery of
these defendants. The Court need not be reminded of the details of these
disputes, but, for the record, there have been numerous separate discovery
conferences with the Court, and countless written communications to the
Court, on issues ranging from the obligation of the Defendants to search for
documents in the Geneva, Switzerland offices of AEB to the entitlement of
the Plaintiffs to commence depositions before the Defendants’ production of
the very last document sought by the Plaintiffs. The Defendants’ zealous
advocacy of their positions respecting their discovery obligations has resulted
in the expenditure of substantial amounts of time (and money) to resolve the
resulting disputes. Many of the positions that the Defendants have
8
THE BRODSKY LAW FIRM ⋅ 66 WEST FLAGLER STREET, 9TH FLOOR ⋅ MIAMI, FLORIDA 33130 ⋅ 786-220-3328

interposed have ultimately been rejected by the Court, several of which, at
the time of the filing of this Motion, remain unsatisfied by the Standard
Chartered Defendants, long after the Court ordered compliance. Even as to
those objections that have not been resolved in the Plaintiffs’ favor, it cannot
be said that the Plaintiffs have acted other than in total good faith in
opposing the Defendants’ attempts to constrict their discovery obligations.
B.

No Legally Cognizable Prejudice will be Caused to
the Defendants Were Leave to Amend to be Granted.

Given that the Standard Chartered Plaintiffs, including the
Maridom Plaintiffs, have proceeded with diligence, dispatch, and good
faith, there is therefore no basis to argue that this Motion is in way
dilatory. Therefore, unless the Defendants can demonstrate actual,
substantial prejudice to them were this Motion granted, or bad faith on
the part of the Plaintiffs, there is no basis to deny the motion. In any
event, mere delay, without prejudicial effect on the party opposing an
amended pleading or bad faith on the part of the moving party, does
not justify denial of a motion for leave to amend. Bridgeport Music,
supra, 248 F.R.D. at 414 (citing cases).
The relevant factors “[i]n gauging prejudice … [include] whether an
amendment would ‘require the opponent to expend significant additional
resources to conduct discovery and prepare for trial’ or ‘significantly delay the
9
THE BRODSKY LAW FIRM ⋅ 66 WEST FLAGLER STREET, 9TH FLOOR ⋅ MIAMI, FLORIDA 33130 ⋅ 786-220-3328

resolution of the dispute.’” Block v. First Blood Assocs., 988 F.2d 344, 350 (2d
Cir. 1993) (citation omitted). A court’s discretion to deny a motion to amend is
therefore limited to such compelling circumstances as an “amendment [that
comes] on the eve of trial and would result in new problems of proof,” Fluor
Corp., 654 F.2d at 856 (reversing denial of leave to amend); “where the
motion is made after an inordinate delay, no satisfactory explanation is
offered for the delay, and the amendment would prejudice the defendant,”
Cresswell v. Sullivan & Cromwell, 922 F.2d 60, 72 (2d Cir. 1990) (affirming
denial of leave to amend filed more than 17 months after filing suit, more
than six months after filing second amended complaint, and more than one
month after responding to defendant’s motion for summary judgment, and
excuse for delay was counsel’s being unaware of statute under which
plaintiffs sought leave to add by amendment); or where a motion to amend
came after judgment and would require new discovery and a new trial,
Ruotolo v. City of New York, supra.
By contrast, here, discovery is still underway, no trial date has been
set, no summary judgments have been filed, and the additional factual
allegations in the proposed amended complaint merely fill out those made in
the pending pleading. There will be little, if any, discovery caused by the
granting of leave to amend, because the new allegations are based entirely on
documents produced by the Standard Chartered Defendants and deposition
testimony taken of their former employees.
10
THE BRODSKY LAW FIRM ⋅ 66 WEST FLAGLER STREET, 9TH FLOOR ⋅ MIAMI, FLORIDA 33130 ⋅ 786-220-3328

As to the additional defendants, as previously noted, SCI is already a
defendant in at least one of the Standard Chartered Cases, Valladolid, and
SCB is already a defendant in Headway, while its parent, Standard
Chartered PLC (“PLC”), is a defendant in Valladolid, Barbachano Herrero,
Caso, Lopez, and the dozens of other cases filed by counsel for Lopez. All three
of these entities have been actively represented from the outset by Sullivan &
Cromwell, LLP, the same lawyers who represent SCBI in the Standard
Chartered Cases.
Finally, the newly added count – under Chapter 517, Fla.Stat., the
Florida Securities and Investment Protection Act – is a claim for
misrepresentations and omissions in connection with investment advice given
to the Maridom Plaintiffs and with the purchase by them, on the defendants’
recommendation, of interests in Fairfield Sentry. The core allegations in this
claim are identical to those in the negligent and fraudulent representation
claims, and merely expand on the allegations (almost all sustained by the
Court) in the Amended Complaint.
Under these circumstances, therefore, the addition of new factual
allegations, new defendants and a new statutory claim will have no
prejudicial effect whatsoever on the Defendants. For them, it will be more of
the same. As Judge Francis noted in Bridgeport Music, at 248 F.R.D. at 415,
in a Memorandum and Order adopted by Judge Marrero, “federal courts have
consistently granted motions to amend where, as here, ‘it appears that new
11
THE BRODSKY LAW FIRM ⋅ 66 WEST FLAGLER STREET, 9TH FLOOR ⋅ MIAMI, FLORIDA 33130 ⋅ 786-220-3328

facts and allegations were developed during discovery, are closely related to
the original claim, and are foreshadowed in earlier pleadings.’ Xpressions
Footwear Corp. v. Peters, Nos. 94 Civ. 6136, 95 Civ. 8242, 95 Civ. 8243, 1995
WL 758761, at *2 (S.D.N.Y. Dec.22, 1995).” See also Fluor, supra, 654 F.2d at
856 (reversing denial of leave to amend filed promptly after learning new
facts, where “no trial date had been set by the court and no motion for
summary judgment had yet been filed by the defendants,” and where “the
amendment will not involve a great deal of additional discovery.”).
CONCLUSION
There is no basis to deny the Maridom Plaintiffs leave to amend as
requested, because the Plaintiffs have acted in good faith and not in a
dilatory fashion, the amendment will not delay the proceedings, and no
legally cognizable prejudice to the Defendants can be claimed. The Motion
should be granted.
Respectfully submitted,
/s/ Richard E. Brodsky
_________________________
Richard E. Brodsky
Florida Bar No. 322520
The Brodsky Law Firm
66 West Flagler Street, Ninth Floor
Miami, FL 33130
[e-mail]
786-220-3328
Attorney for Maridom Plaintiffs
Admitted pro hac vice
12
THE BRODSKY LAW FIRM ⋅ 66 WEST FLAGLER STREET, 9TH FLOOR ⋅ MIAMI, FLORIDA 33130 ⋅ 786-220-3328

CERTIFICATE OF SERVICE
I hereby certify that on February 9, 2012, I electronically filed the
foregoing document with the Clerk of the Court using CM/ECF. I also certify
that the foregoing document is being served this day on all counsel of record
or pro se parties identified on the attached Service List in the manner
specified, either via transmission of Notices of Electronic Filing generated by
CM/ECF or in some other authorized manner for those counsel or parties who
are not authorized to receive electronically Notices of Electronic Filing.
/s/ Richard E. Brodsky
_________________________
Richard E. Brodsky

0200812.motionforleavetoamend.docx

13
THE BRODSKY LAW FIRM ⋅ 66 WEST FLAGLER STREET, 9TH FLOOR ⋅ MIAMI, FLORIDA 33130 ⋅ 786-220-3328