Anwar et al v. Fairfield Greenwich Limited et al

Filing 838

MEMORANDUM OF LAW in Support re: #837 MOTION to Amend/Correct Complaint.. Document filed by Headway Investment Corp.. (Mestre, Jorge)

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 Headway Investment Corp.
v. Standard Chartered Bank Int’l (Americas),
Ltd., et al.
________________________________________/

HEADWAY INVESTMENT CORPORATION’S MEMORANDUM OF LAW IN
SUPPORT OF ITS MOTION FOR LEAVE TO AMEND COMPLAINT

Jorge A. Mestre
Alan H. Rolnick
Erimar von der Osten
Rivero Mestre LLP
2525 Ponce de Leon Blvd.
Suite 1000
Coral Gables, FL 33134
Phone Number: 305-445-2500
Fax Number: 305-445-2505
Email: [e-mail]
[e-mail]
[e-mail]

Table of Contents
Page(s)
I. Preface............................................................................................................................1
II. Introduction....................................................................................................................1
III. Argument .......................................................................................................................3
A. The Proposed Amended Complaint Refines the Existing Complaint
and the Common Allegations on which Both are Based ...............................................3
B. Leave to Amend Should be Freely Granted.............................................................4
C. There is no Basis to Deny this Motion to Amend....................................................5
i. Headway has acted expeditiously in all respects ...............................................6
ii. Defendants will not suffer any legally cognizable prejudice from
granting leave to amend .....................................................................................7
D. The Claims Against SCI Relate Back to the Date of Filing the Original
Complaint, as do the FSIA Claims Against the Private Bank and FGG
Defendants ...................................................................................................................11
i. The claims against SCI arise out of the very same conduct
underlying the claims against the other Private Bank Defendants in
the Original Complaint ....................................................................................12
ii. SCI had notice of the claims against it by virtue of (1) its
relationship with the other Private Bank Defendants, (2) the focus
on SCI and its employees in discovery, and (3) its inclusion in
other Steering Committee Plaintiffs’ actions...................................................13
iii. SCI was omitted from the original complaint by mistake, not as a
tactical or strategic decision, and as such, the amendment relates
back to the date of filing of the original complaint..........................................14
iv. The FSIA claim relates back to the date of the filing of the Original
Complaint because it arises out of the same conduct, transaction, or
occurrence set forth in the Original Complaint................................................15
IV. Conclusion ...................................................................................................................15

ii

Table of Authorities
Page(s)
Cases

Abbatiello v. Monsanto Co.,
571 F. Supp.2d 548 (S.D.N.Y. 2008).......................................................................5
Anwar v. Fairfield Greenwich Group,
745 F. Supp.2d 360 (S.D.N.Y. 2010).................................................................6, 12
Baez v. JetBlue Airways,
745 F. Supp.2d 214 (E.D.N.Y. 2010) ...................................................................13
Block v. First Blood Assocs.,
988 F.2d 344 (2d Cir. 1993).....................................................................................8
Bridgeport Music, Inc. v. Universal Music Group, Inc.,
248 F.R.D. 408 (S.D.N.Y. 2008) ..................................................................5, 8, 10
Collins v. Wal-mart, Inc.,
245 F.R.D. 503 (D. Kan. 2007)..............................................................................14
Cresswell v. Sullivan & Cromwell,
922 F.2d 60 (2d Cir. 1990).......................................................................................8
E.I. DuPont de Nemours & Co. v. Phillips Petroleum Co.,
621 F. Supp. 310 (D. Del. 1985)............................................................................13
Foman v. Davis,
371 U.S. 178 (1962).............................................................................................4, 5
Garvin v. City of Philadelphia,
354 F.3d 215 (3d Cir. 2003)...................................................................................13
In re Alstom SA,
406 F. Supp.2d 402 (S.D.N.Y. 2005).....................................................................12
In re Color Tile, Inc.,
316 B.R. 621 (D. Del. 2004)..................................................................................13
Mayle v. Felix,
545 U.S. 644 (2005)...........................................................................................4, 12
Richardson Greenshields Sec., Inc. v. Lau,
825 F.2d 647 (2d Cir. 1987).....................................................................................5
Ruotolo v. City of New York.,
514 F.3d 184 (2d Cir. 2008).................................................................................5, 8

iii

Schiavone v. Fortune,
477 U.S. 21 (1986).................................................................................................12
State Teacher Retirement Bd. v. Fluor Corp.,
654 F.2d 843 (2d Cir. 1981)...............................................................................8, 10
Swann Oil Co. v. M/S Vassilis,
91 F.R.D. 267 (E.D.N.C. 1981) .............................................................................13
VKK Corp. v. Nat’l Football League,
244 F.3d 114 (2d Cir. 2001)...................................................................................12
William H. McGee & Co. v. M/V Ming Plenty,
164 F.R.D. 601 (S.D.N.Y. 1995) ..........................................................................12
Williams v. Savage,
569 F. Supp.2d 99 (D.D.C. 2008) ............................................................................6
Xpressions Footwear Corp. v. Peters,
1995 WL 758761, at *2 (S.D.N.Y. 1995)..............................................................10
Statutes
Fed. R. Civ. P. 15.......................................................................................1, 4, 6, 11, 12, 15
Fed. R. Civ. P. 21.............................................................................................................1, 5
Fla. Stat. §§ 517.011 - 517.32 (2011) ..................................................................................2
Fla. Stat. § 95.11(4)(e) (2011) .............................................................................................4

Other Authorities
Wright, Miller, Kane & Marcus, 6 Fed. Prac. & Proc. Civ. § 1487 (3rd ed.)......................5
Stipulation and Order Governing Confidentiality of Discovery Material,
Master File No. 09-cv-118(VM)(THK)...............................................................................1

iv

I.

Preface
Plaintiff Headway Investment Corp. (“Headway”), in accordance with Fed. R.

Civ. P. 15(a) and 21, respectfully moves for leave to amend its Complaint as to
Defendants Standard Chartered Bank International (Americas) Ltd. f/k/a American
Express Bank International (“SCBI”), Standard Chartered Bank (“SCB”), Fairfield
Greenwich Group, Fairfield Greenwich Ltd., Fairfield Greenwich (Bermuda) Ltd.,
Fairfield Greenwich Advisors LLC, Walter M. Noel Jr., Jeffrey H. Tucker, Andres
Piedrahita, and Amit Vijayvergiya, and to add proposed Defendants Standard Chartered
International (USA) Ltd. f/k/a American Express Bank Ltd. (“SCI”)1 and
PricewaterhouseCoopers N.V. (“PwC Netherlands”), and for such further and other relief
as the Court may deem just and proper.2 Prior to filing this motion, Headway conferred
with Andrew Finn, one of the lawyers for the Private Banking Defendants, who states
that Headway does “not have Standard Chartered’s permission to make any
representations concerning whether Standard Chartered will consent to or oppose
Headway’s motion.” We have provided them with a copy of the Amended Complaint to
help them decide.
II.

Introduction
Absent narrowly construed, aggravating circumstances that would materially

prejudice a party affected by an amended pleading, leave to amend must be granted.
1

SCBI, SCB, and SCI will collectively be referred to as the “Private Bank” Defendants, while Fairfield
Greenwich Group, Fairfield Greenwich Ltd., Fairfield Greenwich (Bermuda) Ltd., Fairfield Greenwich
Advisors LLC, Walter M. Noel Jr., Jeffrey H. Tucker, Andres Piedrahita, and Amit Vijayvergiya will be
referred to as the “FGG” Defendants.
2
Simultaneously with the filing of this Motion, Headway is seeking permission from Magistrate Judge
Katz to file the proposed Amended Complaint and the exhibits under seal pursuant to paragraph 8(b) of the
Stipulation and Order Governing Confidentiality of Discovery Material, Master File No. 09-cv118(VM)(THK), as the proposed Amended Complaint refers to information from documents produced by
Standard Chartered under a claim of confidentiality. Headway does not hereby waive its right to challenge
such confidentiality designations under the Stipulation and Order.

1

Here, the circumstances and indisputable facts militate in favor of permitting the
amendment:
1. Headway has not been dilatory in prosecuting this case and obtaining the
factual information that underpins this amendment – We have aggressively pursued
discovery and are filing this Motion shortly after completing initial depositions, while
discovery continues;
2. No trial date has been set;
3. No party has moved for summary judgment;
4. The parties sought to be added are either Defendants in other Standard
Chartered cases or Defendants in the consolidated Anwar action;
5. The additional factual allegations arise from facts Headway has
discovered from documents Defendants have produced and testimony taken from present
and former Standard Chartered employees, and will not require any additional discovery
that would not have been taken otherwise;
6. The new claims – Aiding and Abetting Breach of Fiduciary Duty against
the Private Bank Defendants, Fraudulent and Negligent Misrepresentation against the
Private Bank and FGG Defendants, and violations of Florida’s Securities and Investor
Act, Fla. Stat. §§ 517.011 - 517.32, (“FSIA”) against the Private Bank and FGG
Defendants – all are based on the same core of operative facts as the claims in the
Original Complaint, which we have expanded to include information learned during
discovery. The new claims will not require any additional discovery that would not have
been taken otherwise.

2

In short, because there do not exist any of the very limited circumstances that
might justify the Court’s denying leave to amend, this Motion should be granted.
III.

Argument
A.

The Proposed Amended Complaint Refines the Existing
Complaint and the Common Allegations on which Both are Based

Headway’s Original Complaint named several Defendants, organized into
Defendant groups: the Private Bank and FGG Defendants, consisting of both the
institutional and individual defendants, together with PricewaterhouseCoopers LLP
(“PwC Canada”) and Citco Fund Services (Europe) B.V. (“Citco FS”). The complaint
contained three basic counts: Breach of Fiduciary Duty against the Private Bank and
FGG Defendants; Negligence against the Private Bank and FGG Defendants, Citco FS,
and PwC Canada; and Unjust Enrichment against the Private Bank and FGG Defendants.
These claims (as well as the additional claims presented by the amended
complaint) all arise from a single, common nucleus of operative fact – the operation,
promotion, and recommendation of the Fairfield Sentry and Sigma funds (the “Funds”),
which unbeknownst to Headway, were mere feeder funds for the massive Ponzi scheme
run by Bernard L. Madoff Investment Securities, LLC (“BLMIS”).
The proposed Amended Complaint does three basic things:
1. It drops individual Private Bank Defendants Robert Friedman, Rodolfo
Pages, John Dutkowski, Carlos Gadala-Maria, and Raul N. Mas, while clarifying the
naming of the institutional Private Bank Defendants. In the Original Complaint, these
parties were named as American Express Bank Ltd. d/b/a Standard Chartered Private
Bank a/k/a Standard Chartered Bank International (Americas) Limited and Standard
Chartered Bank. During the course of reviewing documents produced by the Private

3

Bank Defendants, Headway discovered additional information regarding the proper
identity of these parties. The Amended Complaint seeks to properly identify the Private
Bank defendants as SCBI, SCI, and SCB.
2. It corrects an inadvertent mistake in identifying the PwC entities. In the
Original Complaint, PwC Canada was named as the auditor for the Funds from 2003 to
2008, based on materials Headway received from the Private Bank Defendants. In
reviewing documents produced by the Private Bank Defendants, Headway learned that
there were two distinct member firms of PwC that served as auditors for the Funds during
the relevant time period: PwC Canada and PwC Netherlands. The Amended Complaint
clarifies and identifies PwC Netherlands as the Funds’ auditor from 2003 to 2005, and
PwC Canada as the Funds’ auditor from 2006 to 2008.
3. It adds four counts: Aiding and Abetting Breach of Fiduciary Duty against
the Private Bank Defendants, Fraud and Negligent Misrepresentation against the Private
Bank and FGG Defendants, and violations of the FSIA against the Private Bank and FGG
Defendants.3 All of these claims arise from the same conduct alleged in the Original
Complaint, together with related conduct and representations revealed through discovery.
B.

Leave to Amend Should 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

3

Although Fla. Stat. § 95.11(4)(e) provides that the statute of limitations for a claim arising under the FSIA
is one year from discovery and five years from the violation, the FSIA claims sought to be added in the
Amended Complaint would relate back to the date of filing of the Original Complaint because they arise
from the same conduct, transaction, or occurrence as the claims set out in the original complaint, as more
fully discussed in Section III(D). See Fed. R. Civ. P. § 15(c)(1)(B); Mayle v. Felix, 545 U.S. 644 (2005).

4

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.
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 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). Accord Abbatiello v. Monsanto Co.,
571 F. Supp.2d 548, 552 (S.D.N.Y. 2008) (Marrero, J.). While the Foman v. Davis,
factors are not an exclusive list of reasons that might justify denying a particular motion
for leave to amend, they are universally regarded as the principal justifications, with
prejudice to the opposing party considered the “most important.” Wright, Miller, Kane &
Marcus, 6 Fed. Prac. & Proc. Civ. § 1487 (3rd ed.), cited in Ruotolo v. City of New York,
514 F.3d 184, 192 (2d Cir. 2008). As demonstrated below, none are applicable here.
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) (Marrero, J.).
C.

There is no Basis to Deny this Motion to Amend

In this case, none of the factors cited in Foman v. Davis – nor any factors
whatsoever – could justify denying this motion for leave to amend. There is absolutely no
5

indication of undue delay, bad faith, or dilatory motive. Further, there has been no
previous amendment to Headway’s Complaint, and amendment clearly would not be
futile. In sum, there is not the merest hint of any prejudice that would befall the
defendants from granting leave to amend.
i. Headway has acted expeditiously in all respects
As the Court is aware, Headway has actively and energetically sought discovery
from the Defendants and has diligently prosecuted this action through the discovery
phase, while facing determined opposition from the Private Bank Defendants at every
step. Headway has acted promptly in reviewing documents the Defendants have produced
and in seeking to amend its Complaint on account of newly-discovered facts.
This case is proceeding for pre-trial purposes in a forum that Headway did not
choose – having been forced into MDL proceedings with the Anwar cases by the Private
Bank Defendants – and the members of the Private Bank Plaintiffs’ Steering Committee,
all of whom represent different clients and come from different law firms and different
parts of the country, have been required to come together, despite their lack of familiarity
with one another, and forge a common approach to this litigation. Nonetheless, virtually
the entirety of their complaints have survived a motion to dismiss. See Anwar v. Fairfield
Greenwich Group, 745 F. Supp.2d 360 (S.D.N.Y. 2010).
Since receipt of the Private Bank Defendants’ Answer,4 Headway has conducted
robust discovery, propounding extensive written requests, reviewing and analyzing

4

As of the filing of this motion, only the Private Bank Defendants have answered Headway’s Complaint.
The remaining defendants, namely the FGG Defendants, PwC Canada, and Citco FS, have yet to respond to
Headway’s complaint in any way. Thus, Headway is entitled to amend its Complaint as to these defendants
on notice, as a matter of right. See Fed. R. Civ. P. 15(a)(1); Williams v. Savage, 569 F. Supp.2d 99 (D.D.C.
2008) (“If there is more than one defendant, and not all have served responsive pleadings, plaintiff may
amend complaint as a matter of course with regards to those defendants that have yet to answer.”)

6

hundreds of thousands of pages of documents produced by the Private Bank and FGG
Defendants,5 and taking depositions, with more upcoming.
All the while, Headway has faced determined opposition from the Private Bank
Defendants to everything but the narrowest scope of discovery. We will not belabor the
point by cataloging the details of these disputes, but the Court will recall the numerous
discovery conferences it has conducted, and the countless written communications it has
received, on issues ranging from the Private Bank Defendants’ obligation to search for
documents in AEB’s Geneva, Switzerland offices, to their demand that Plaintiffs not be
allowed to take any depositions until the Court had ruled on all of their objections to
producing documents. The Private Bank Defendants’ zealous advocacy of their positions
on discovery has caused Headway and the other Plaintiffs to spend substantial amounts of
time and money on resolving the resulting disputes. Many of the Private Bank
Defendants’ positions ultimately have been rejected by the Court (although several
remain unresolved as of this writing). But even as to Private Bank Defendants’ objections
that have not been resolved in Headway’s favor, it cannot be said that Headway has acted
other than in good faith in opposing the Private Bank Defendants’ attempts to limit
discovery and their discovery obligations
ii. Defendants will not suffer any legally cognizable prejudice
from granting leave to amend
Given that Headway has proceeded with diligence and good faith, there is
absolutely no basis for arguing that this Motion is in any way dilatory or made in bad
faith. Therefore, unless the Defendants can demonstrate actual, substantial prejudice to
them from granting this Motion, it should be granted. When the party opposing an
5

The Private Bank and FGG Defendants are the only defendants that have produced any discovery to the
Standard Chartered Plaintiffs in this case.

7

amended pleading will not be prejudiced by allowing the amendment, the fact that the
amendment might delay the trial is of no consequence. Even bad-faith conduct by the
movant is of no import when the amendment will not prejudice the opposing party.
Bridgeport Music, 248 F.R.D. at 414.
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 resolution of the dispute.’”
Block v. First Blood Assocs., 988 F.2d 344, 350 (2d Cir. 1993). A court’s discretion to
deny leave to amend is thus limited to such compelling circumstances as: (1) an
“amendment on the eve of trial [that] would result in new problems of proof,” State
Teacher Retirement Bd. v. Fluor Corp., 654 F.2d 843, 856 (2d Cir. 1981); (2) “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)6; or (3) where a motion to amend is made after
judgment and would require new discovery and a new trial. See Ruotolo, 514 F.3d 184.
In this case, there is simply no reason to deny this motion – discovery is ongoing,
there is no trial date yet, there have been no motions for summary judgment, and the
Amended Complaint simply fills out the factual allegations made in the Original
Complaint, corrects errors as to the proper identity of the Private Bank and PwC
Defendants, drops the individual Private Bank Defendants, and adds claims that are mere
extensions and elaborations of the claims raised in the Original Complaint.

6

In Cresswell, the court denied a third motion for leave to amend, which the plaintiff filed more than six
months after filing the second amended complaint and more than one month after responding to the
defendant’s motion for summary judgment. The only excuse given for the delay was that plaintiff’s counsel
was unaware of the statute underlying the amendment.

8

The additional factual allegations in the Amended Complaint would not impose
any undue burden on the Private Bank defendants. Any additional discovery required
from them – the only parties who have responded in any way to the Original Complaint –
would be de minimus, because the new allegations are based entirely on documents they
have produced and depositions of their former employees.
As to PwC Netherlands, there is absolutely no evidence of bad faith, dilatory
motive, or prejudicial delay. PwC Netherlands was mistakenly omitted from the Original
Complaint because the only way to discern exactly which PwC entity was listed as the
auditor for the Funds in any given year was by reference to the address of the firm – the
prominent PwC logo affixed to the top of the page listing the entity does not reveal which
particular member firm was in fact responsible for the audit, or even whether PwC had an
organizational structure comprised of member firms. Having done half of the audits in
question, PwC Netherlands cannot credibly complain that it was unaware it was omitted
by mistake from the Original Complaint, or that it would be joined as a party when that
mistake was corrected. Moreover, PwC Netherlands always was on notice that it would
be made a Defendant, because both PwC Netherlands and PwC Canada are Defendants in
Anwar, which is based on the same underlying facts as this action.
Finally, the newly added counts – Aiding and Abetting Breach of Fiduciary Duty
against the Private Bank Defendants, Fraudulent and Negligent Misrepresentation against
the Private Bank and FGG Defendants, and violations of FSIA against the Private Bank
and FGG Defendants, are based on the same common nucleus of operative fact as the
Original Complaint. These claims simply reflect knowledge gained from discovery –
namely the material misrepresentations and omissions of the Private Bank and FGG

9

Defendants. Further, the addition of these claims should not come as a surprise to the
Private Bank Defendants, as other Private Bank Plaintiffs, including Maridom, asserted
claims for fraud and aiding and abetting breaches of fiduciary duty in their original
complaints, and those claims were predominantly upheld by the Court in ruling on
Standard Chartered’s motion to dismiss. The added claims for violations of the FSIA
should come as no surprise either. It goes without saying that the shares in the Funds that
the Private Bank Defendants sold to Headway were securities, and reining in improper
conduct in the sale of securities is the reason why state securities laws exist.
Under these circumstances, therefore, the addition of new factual allegations,
defendants, and claims will have absolutely no prejudicial effect whatsoever on the
Private Bank Defendants. The Amended Complaint is simply an elaboration of the
Original Complaint, fortified with facts learned during the course of discovery and claims
that arise from those facts. As Judge Marrero has stated, “federal courts have consistently
granted motions to amend where, as here, ‘it appears that new facts and allegations were
developed during discovery, are closely related to the original claim, and are
foreshadowed in earlier proceedings.’” Xpressions Footwear Corp. v. Peters, 1995 WL
758761, at *2 (S.D.N.Y. 1995) (citing Bridgeport Music, 248 F.R.D. at 415). See also
Fluor, 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.”).

10

D.

The Claims Against SCI Relate Back to the Date of Filing the
Original Complaint, as do the FSIA Claims Against the Private
Bank and FGG Defendants

Because the claims against SCI arise out of the same conduct, transaction, or
occurrence as the claims against the other Private Bank Defendants, SCI had constructive
notice of those claims, and because SCI was omitted from the Original Complaint due to
an inadvertent mistake -- Headway understandably having been less than fully aware of
the Private Bank entities’ corporate structure when this action commenced -- the claims
against SCI relate back to the date of filing the Original Complaint. Moreover, the FSIA
claims also relate back, because these claims arise out of the same conduct, transaction,
or occurrence as the claims alleged against these parties in the Original Complaint.
Under Fed. R. Civ. P. § 15(c)(1)(C) (2011), an amended complaint will “relate
back” to the filing of the original complaint in certain circumstances:
(1) When an Amendment Relates Back. An amendment to a pleading
relates back to the date of the original pleading when:
(A) the law that provides the applicable statute of limitations
allows relation back;
(B) the amendment asserts a claim or defense that arose out of the
conduct, transaction, or occurrence set out—or attempted to be set out—in
the original pleading; or
(C) the amendment changes the party or the naming of the party
against whom a claim is asserted, if Rule 15(c)(1)(B) is satisfied and if,
within the period provided by Rule 4(m) for serving the summons and
complaint, the party to be brought in by amendment:
(i) received such notice of the action that it will not be prejudiced
in defending on the merits; and
(ii) knew or should have known that the action would have been
brought against it, but for a mistake concerning the proper party's identity.
Interpreting Rule 15, the Second Circuit Court of Appeal has held:
There are thus three requirements that must be met before an amended
complaint that names a new party can be deemed to relate back to the
original timely complaint. First, both complaints must arise out of the

11

same conduct, transaction, or occurrence. Second, the additional defendant
must have been omitted from the original complaint by mistake. Third, the
additional defendant must not be prejudiced by the delay.
VKK Corp. v. National Football League, 244 F.3d 114, 128 (2d Cir. 2001). This Court,
citing Supreme Court precedent, has stated:
Relation back is dependent upon four factors, all of which must be
satisfied: (1) the basic claim must have arisen out of the conduct set forth
in the original pleading; (2) the party to be brought in must have received
such notice that it will not be prejudiced in maintaining its defense; (3)
that party must or should have known that, but for a mistake concerning
identity, the action would have been brought against it; and (4) the second
and third requirements must have been fulfilled within the pre-scribed
limitations period.
William H. McGee & Co. v. M/V Ming Plenty, 164 F.R.D. 601, 604-605 (S.D.N.Y. 1995)
(citing Schiavone v. Fortune, 477 U.S. 21, 29 (1986)); see In re Alstom SA, 406 F.
Supp.2d 402 (S.D.N.Y. 2005); Anwar v. Fairfield Greenwich Ltd., 728 F. Supp.2d 372,
428 (S.D.N.Y. 2010).
i. The claims against SCI arise out of the very same conduct
underlying the claims against the other Private Bank
Defendants in the Original Complaint
Under Fed. R. Civ. P. 15(c)(1)(C), an amended pleading will relate back to the
date of filing the original claim “only when the claims added by amendment arise from
the same core facts as the timely filed claims, and not when the new claims depend upon
events separate in both time and type from the originally raised episodes.” Mayle v. Felix,
545 U.S. 644, 645 (2005).
The claims Headway seeks to assert against SCI – the very claims asserted against
the rest of the Private Bank Defendants – arise out of precisely the same conduct
underlying the amended and original claims against the Private Bank Defendants. Thus
the first element of the Rule 15 analysis is wholly satisfied.

12

ii. SCI had notice of the claims against it by virtue of (1) its
relationship with the other Private Bank Defendants, (2) the
focus on SCI and its employees in discovery, and (3) its
inclusion in other Steering Committee Plaintiffs’ actions
In determining whether the party to be named in the amended pleading has had
sufficient notice to allow for the amendment to relate back, courts have developed the
concept of “identity of interest” test. “Identity of interest generally means that the parties
are so closely related in their business operations or other activities that the institution of
an action against one serves to provide notice of the litigation to the other.” In re Color
Tile, Inc., 316 B.R. 621, 627 (D. Del. 2004) (citing Garvin v. City of Philadelphia, 354
F.3d 215, 222-23 (3d Cir. 2003)). See also E.I. DuPont de Nemours & Co. v. Phillips
Petroleum Co., 621 F. Supp. 310 (D. Del. 1985) (notice of litigation served on a parent
corporation was sufficient to impart notice to subsidiary for purposes of amended
pleading relating back to filing date of original pleading).
Moreover, a “[p]laintiff need not show that two corporations are in a parent and
subsidiary relationship,” so long as they are closely related in their business operations.
Swann Oil Co. v. M/S Vassilis, 91 F.R.D. 267, 269 (E.D.N.C. 1981) (emphasis added).
Another court of this District recently held that “a defendant need not have received
formal notice in the form of a summons and complaint for the relation-back doctrine to
apply; it is sufficient that such notice occur through informal means.” Baez v. JetBlue
Airways, 745 F. Supp.2d 214, 222 (E.D.N.Y. 2010).
In this case, three factors demonstrate that SCI had the requisite notice: (1) SCI’s
relationship with the other Private Bank Defendants; and (2) the fact that discovery has

13

been focused on SCI and SCI employees; and (3) the fact that other Steering Committee
Plaintiffs, including Maridom, included SCI as a Defendant in their actions.7
First, as an inextricably related component of the Private Bank Defendants, SCI
had constructive notice of the claims against SCBI and SCB. Second, discovery in this
action has primarily been focused on SCI and its employees. Depositions of four SCI
employees have been taken (with more upcoming), and SCI has produced thousands of
entity-specific documents during discovery. Finally, other Plaintiffs in the Steering
Committee, including Maridom, have included SCI in their actions, based on the same
conduct. SCI always had clear, unambiguous notice of Headway’s claims.
iii. SCI was omitted from the original complaint by mistake, not
as a tactical or strategic decision, and as such, the amendment
relates back to the date of filing of the original complaint
“[A] court will deem that a mistake under Rule 15(c)(3) occurred if the plaintiff
intended to sue certain participants, but misidentified or misnamed them in the original
complaint. On the other hand, the Court will not find a mistake when a plaintiff, with full
knowledge of all potential defendants, made a tactical decision to pursue a particular
defendant in lieu of another.” Collins v. Wal-mart, Inc., 245 F.R.D. 503 (D. Kan. 2007).
In this case, the fact that SCI was left out of the original complaint was not a
tactical or strategic decision, but an inadvertent mistake. Only through the course of
discovery did Headway learn facts that allowed it to distinguish between the various
American Express and Standard Chartered entities, both pre- and post-acquisition, thus
leading to the conclusion that SCI had been inadvertently left out of the Original

7

Headway also notes that in the Original Complaint, we misidentified American Express Bank Ltd (SCI)
as doing business as Standard Chartered Bank (International), Ltd. (SCBI). SCBI answered Headway’s
Original Complaint, SCI did not. Upon review of the documents produced in discovery and the testimony
elicited during depositions, the distinction between the two entities became more clear.

14

Complaint. Because the omission of SCI was due to a mistake, and was not a conscious
decision, the Court should allow the addition of SCI in the Amended Complaint to relate
back to the date of filing of the Original Complaint.
Accordingly, because the claims against SCI are based on the same conduct
underlying claims against the other Private Bank Defendants in the Original Complaint,
SCI had notice of the claims Headway now seeks to assert, and because SCI was omitted
from the Original Complaint due to a misidentification and not any sort of tactical
decision, the claims against SCI relate back to the Original Complaint’s filing date.
iv. The FSIA claim relates back to the date of the filing of the
Original Complaint because it arises out of the same conduct,
transaction, or occurrence set forth in the Original Complaint
For the reasons explained above, the FSIA claims against the Private Bank and
FGG Defendants arise out of the exact same conduct underlying the claims alleged in the
Original Complaint. Specifically, the underlying allegations that relate to the FSIA claims
arise out of the sale to Headway of bogus investments by the Private Bank and FGG
Defendants, which precipitated Headway’s original filing. Thus, pursuant to Rule
15(c)(1)(C), these claims relate back to the date of filing of the Original Complaint.
IV.

Conclusion
There is no rational basis for denying Headway’s motion for leave to amend.

Headway has acted at all times in good faith, and there is no evidence of dilatory motive
or that granting this motion will cause an inordinate delay or any legally cognizable
prejudice to the Private Bank, FGG or PwC defendants. Further, the FSIA claim as well
as the claims against SCI relate back to the date of filing of the Original Complaint. In
sum, for all the foregoing reasons, this Motion should be granted.

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Dated: March 16, 2012
Respectfully submitted,
RIVERO MESTRE LLP
Attorneys for Headway Investment Corp.
2525 Ponce de Leon Boulevard
Suite 1000
Miami, Florida 33134
Telephone: [phone]
Fax: [phone]
Email: [e-mail]

By:

/s/ Jorge A. Mestre__________
JORGE A. MESTRE
Fla. Bar No. 088145
ALAN H. ROLNICK
Fla. Bar No. 715085
ERIMAR VON DER OSTEN
Fla. Bar No. 028786

CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on March 16, 2012, I electronically filed the foregoing
document with the Clerk of Court using CM/ECF. I also certify that the foregoing
document is being served this day on all counsel of record identified on the attached
Service List in the manner specified, either via transmission of Notices of Electronic
Filing generated by CM/ECF or via U.S. Mail.

By:

/s/ Jorge A. Mestre__________
Jorge A. Mestre

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Sullivan & Cromwell LLP
New York, New York
Attorneys for Private Bank Defendants

Simpson Thacher & Bartlett LLP
New York, New York
Attorneys for FGG Defendants

Sharon L. Nelles: [e-mail]

Peter E. Kazanoff: [e-mail]

Greenberg Traurig, P.A.
Miami, Florida
Attorneys for Individual FGG Defendants, Standard
Chartered Bank International (Americas) Limited and
Standard Chartered PLC

Brown & Heller
Miami, Florida
Attorneys for CITCO Fund Services (Europe)
B.V.

Ricardo Alejandro Gonzalez: [e-mail]
The Brodsky Law Firm
Miami, Florida
Attorneys for Maridom Ltd., Caribetrans, S.A.,
And Abbot Capital, Inc.
Richard E. Brodsky:
[e-mail]

Amanda McGovern: [e-mail]
Curran & Associates
Miami, Florida
Attorneys for Ricardo Lopez, Jorge Asensio,
Auburn Overseas Corp., Interland Investments
Corp., Iston Holding Limited, Nemagus Ltd.,
Moises Lou-Martinez, New Horizon Development
Inc., Alberto Perez, Ramiro Rendiles, Reinaldo
Ruiz , Salcar Limited, Triple R Holdings Ltd., The
Five Stars Financial Group Ltd., Vilebens, S.L.,
Velvor, S.A., 5C Investments Ltd., Archangel
Resources Limited, Apple Trading Limited, Bahia
Del Rio, S.A., Blount International, S.A. and
Esther Diaz de Camara

Dimond Kaplan & Rothstein, P.A.
Miami, Florida
Attorneys for Pujals

Laurence E. Curran III: [e-mail]
Jones & Adams
Miami, Florida
Attorneys for Almiron and Carrillo

Robert Linkin: [e-mail]

Matthew Jones: [e-mail]

Sonn Erez, PLC
Fort Lauderdale, Florida
Attorneys for Saca, Lancaster Overseas, Ltd., and
Dieka, S.A. de C.V.

de la O Marko Magolnick & Leyton PA
Miami, Florida
Attorneys for Gerico, de Rivera
Joel S. Magolnick: [e-mail]

Jeffrey Erez: [e-mail]
Kachroo Legal Services, P.C.
Cambrudge, Massachusetts
Attorneys for Caso

Aguirre Morris and Severson
San Diego, California
Attorneys for Marka Akriby Valladolid

Gaytri D. Kachroo: [e-mail]
Katz Barron Squitero Faust
Miami, Florida
Attorneys for Joaquina Teresa Barbachano Herrero

Maria Severson: [e-mail]
Kirkland & Ellis LLP
New York, New York
Attorneys for Pricewaterhousecoopers L.L.P.

Marissa C. Corda: [e-mail]

Andrew M. Genser: [e-mail]
Timothy A. Duffy: [e-mail]

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Wolf Popper LLP
New York, NY 10022
Attorneys for Pacific West Health Medical Center Inc.
Employees Retirement Trust

Lovell Stewart Halebian Jacobson, LLP
New York, NY 10006
Attorneys for Pasha S. Anwar
Victor E. Stewart: [e-mail]

James A. Harrod: [e-mail]
Alan Rolnick
Studio City, CA 91604

White & Case LLP (NY)
New York, New York
Attorneys for Walter Noel, Jr.

Attorneys for Headway Investment Corp.
Glenn Kurtz: [e-mail]
Alan Rolnick: [e-mail]
Hughes Hubbard & Reed LLP (NY)
New York, New York

Dechert, LLP (NYC)
New York, New York

Attorneys for PricewaterhouseCoopers Accountants
Netherlands N.V.

Attorneys for Andres Piedrahita

Andrew J. Lavender:
Gabriel Sean Marshall: [e-mail] [e-mail]
Sarah Loomis Cave: [e-mail]
William R. Maguire: [e-mail]
Kasowitz, Benson, Torres & Friedman, LLP (NYC)
Debevoise & Plimpton, LLP (NYC)
New York, New York
New York, New York
Attorneys for Jeffrey Tucker

Attorneys for Helen Virginia Cantwell

Adam K. Grant: [e-mail]

Helen Virginia Cantwell:
[e-mail]

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