Anwar et al v. Fairfield Greenwich Limited et al

Filing 847

JOINT MEMORANDUM OF LAW in Opposition re: (837 in 1:09-cv-00118-VM-THK) MOTION to Amend/Correct Complaint.. Document filed by Fairfield Greenwich Advisors L.L.C., Fairfield Greenwich Advisors LLC, Walter M. Noel, Jr, Jeffrey H. Tucker, Jeffrey Tucker. (Attachments: #1 Exhibit A)Filed In Associated Cases: 1:09-cv-00118-VM-THK, 1:09-cv-08500-VM(Cunha, Mark)

UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
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ANWAR, et al.,
Plaintiffs,
v.
FAIRFIELD GREENWICH LIMITED, et al.,
Defendants.
This Document Relates To: Headway Investment
Corp. v. American Express Bank Ltd., et al., No. 09CV-08500
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:: MASTER FILE NO. 09-CV-0118 (VM)
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MEMORANDUM OF LAW OF FAIRFIELD GREENWICH ADVISORS LLC,
WALTER M. NOEL, JR., AND JEFFREY TUCKER IN OPPOSITION TO
PLAINTIFF HEADWAY INVESTMENT CORPORATION’S
MOTION FOR LEAVE TO AMEND COMPLAINT

Defendants Fairfield Greenwich Advisors LLC, Walter M. Noel, Jr., and Jeffrey Tucker
respectfully submit this memorandum of law in opposition to the motion of Plaintiff Headway
Investment Corporation (“Headway”) for leave to file an amended complaint (the “Motion”) as
to Fairfield Greenwich Advisors LLC, Fairfield Greenwich Limited, Fairfield Greenwich
(Bermuda) Limited, Walter M. Noel, Jr., Jeffrey Tucker, Andrés Piedrahita, and Amit
Vijayvergiya (collectively, the “Fairfield Defendants”).1 Headway’s Motion must be denied
because it flies in the face of this Court’s prior orders consolidating the Headway action into
Anwar, et al. v. Fairfield Greenwich Limited, et al. (“Anwar” or the “Consolidated Action”) and
providing that Defendants shall respond only to the Anwar consolidated complaint.2
BACKGROUND
Headway, a Panamanian corporation, is one of dozens of plaintiffs that filed complaints
against the Fairfield Defendants over alleged losses in connection with investments made in
funds that had assets invested through or with Bernard L. Madoff and/or his firm, Bernard L.
Madoff Investment Securities LLC (“BLMIS”).3 When Headway filed its original complaint on
April 6, 2009, this Court had already consolidated numerous similar actions into the earlier-filed
Anwar action, and had issued an order providing for further consolidation of related actions and
appointing co-lead counsel. See January 30, 2009 Consolidation Order and Order for
Appointment of Interim Co-Lead Counsel (the “Consolidation Order”), Dkt. # 40; see also July
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Headway also seeks to amend its complaint as to Defendant Fairfield Greenwich Group (“FGG”). FGG is
not a legal entity but rather a marketing name for a group of Fairfield Greenwich entities. See Declaration of
Michael Thorne in Support of the FG Defendants’ Motion to Dismiss the Second Consolidated Amended Complaint
at ¶ 2, Dkt. # 363. Unless otherwise specified, docket citations herein refer to Anwar, et al. v. Fairfield Greenwich
Limited, et al., No. 09-CV-0118 (VM). Headway’s March 16, 2012 Memorandum of Law in Support of Its Motion
for Leave to Amend Complaint is abbreviated herein as “Headway MOL.”
2

The Fairfield Defendants preserve all rights and defenses, including any defenses they may have to the
personal jurisdiction or subject matter jurisdiction of the District Court for the Southern District of Florida.
3

Headway invested in the offshore funds Fairfield Sentry Limited (“Sentry”) and Fairfield Sigma Limited
(“Sigma”).

7, 2009 Order, Dkt. # 178 (appointing lead counsel). The Court had also entered a Civil Case
Management Plan and Scheduling Order (“CMO”) to efficiently manage the consolidated
litigation. See March 11, 2009 CMO, Dkt. # 69. The CMO provides that “[a]ll subsequently
filed or transferred cases…concerning losses by or on behalf of Fairfield Greenwich investors
arising from or relating to the facts and claims alleged in the Consolidated Action…shall be
consolidated, for all purposes, with the Consolidated Action.” CMO at ¶ 1.
In its complaint dated April 6, 2009, Headway asserted claims against the Fairfield
Defendants for breach of fiduciary duty, negligence, and unjust enrichment based on purported
shortcomings in the Fairfield Defendants’ due diligence of Madoff and BLMIS, as well as claims
against, inter alia, PricewaterhouseCoopers LLP (“PwC Canada”) and Citco Fund Services
(Europe) B.V. (“Citco”). See Exhibit A to Memorandum of Law in Support of Defendant
Fairfield Greenwich Advisors’ Motion to Stay Proceedings Pending Determination by the
Judicial Panel on Multidistrict Litigation in the Proper Venue for this Action, No. 09-CV-21395
(S.D. Fla. June 22, 2009), Dkt. # 19-1. Given the similarities between Headway’s action and the
Consolidated Action, the United States Judicial Panel on Multi-District Litigation transferred
Headway to this Court.4 See October 14, 2009 Memo Endorsement on Transfer Order, Dkt. #
281. On October 13, 2009, Judge Marrero endorsed the Transfer Order and directed the Clerk of
the Court to consolidate Headway into the Consolidated Action “for all pretrial purposes.” See
id. On October 14, 2009, pursuant to the CMO in the Consolidated Action, Judge Marrero
issued a formal order consolidating Headway into Anwar, concluding that “the complaints
describe the same or substantially similar underlying events and operative facts, and assert
claims arising out of the same or substantially similar actions against all or most of the same
4

Headway’s action, originally filed in Florida state court, was removed to Florida federal court, from where
the Panel transferred it to this Court. See Notice of Removal, No. 09-CV-21395 (S.D. Fla. May 22, 2009), Dkt. # 1.

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defendants and that the defendants in these cases are represented by the same counsel.” See
October 14, 2009 Order, Dkt. # 282.
The CMO unambiguously provides that the Defendants to the Consolidated Action “shall
respond only the Consolidated Amended Complaint; no response by Defendants is due to any
individual complaints that are consolidated into the Consolidated Action.” 5 CMO at ¶ 6.
Accordingly, on December 22, 2009, the Fairfield Defendants (and separately PwC Canada and
Citco) filed a motion to dismiss the Second Consolidated Amended Complaint (“SCAC”) in the
Consolidated Action. 6 See December 22, 2009 Notice of Motion, Dkt. # 360. In compliance
with the CMO, the Fairfield Defendants, PwC Canada and Citco did not move to dismiss or
otherwise respond to the individual Headway complaint or to any of the other individual
complaints in actions that had similarly been consolidated into Anwar.7 On October 15, 2010,
after this Court granted in part and denied in part the Fairfield Defendants’ motion to dismiss the
SCAC, the Fairfield Defendants filed their Answer to the SCAC. See FG Defendants’ Answer
to the Second Consolidated Amended Complaint, Dkt. # 545.
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Headway also named as defendants in its complaint Standard Chartered International (USA) Ltd. (f/k/a
American Express Bank Ltd.) and related entities and individuals (collectively, the “Standard Chartered
Defendants”), who served as the investment advisors and managers for Headway’s investments in Sentry and Sigma.
Numerous other actions have been filed against the Standard Chartered Defendants in connection with alleged losses
by investors in Sentry and Sigma. As the Court is aware, Headway and those cases are proceeding on a separate
track as to the Standard Chartered Defendants pursuant to separate case management and scheduling orders between
plaintiffs and the Standard Chartered Defendants to which the Fairfield Defendants are not a party. See February 22,
2011 Second Amended Scheduling Order Regarding Standard Chartered Cases, Dkt. # 609; February 1, 2010
Amended Scheduling Order Regarding Standard Chartered Cases, Dkt. # 376; January 29, 2010 Initial Scheduling
Order Regarding Standard Chartered Cases, Dkt. # 375. Under those orders—unlike the CMO applicable to the
Fairfield Defendants, PwC Canada, and Citco—the Standard Chartered Defendants are required to answer or
otherwise respond to each of the individual complaints. See January 29, 2010 Initial Scheduling Order Regarding
Standard Chartered Cases at ¶¶ 2, 5. Notably, Headway is the only plaintiff to assert claims against both the
Standard Chartered Defendants and the Fairfield Defendants.
6

The Anwar Consolidated Amended Complaint was filed on April 24, 2009 and the SCAC was filed on
September 29, 2009. See Consolidated Amended Complaint, Dkt. # 116; Second Consolidated Amended
Complaint, Dkt. # 273.
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While Headway now feigns ignorance, the Fairfield Defendants made it abundantly clear that they would
not be responding to individual complaints, including the Headway complaint, consistent with this Court’s directive
in the CMO. See, e.g., January 28, 2010 Letter from M. Cunha to J. Katz (attached as Exhibit A).

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ARGUMENT
Now, nearly three years after filing its complaint and two and a half years after its action
was consolidated into Anwar, Headway seeks leave to sidestep this Court’s orders and amend its
complaint to add new defendants and new claims, including three new claims against the
Fairfield Defendants (i.e., claims for fraudulent misrepresentation, negligent misrepresentation,
and violations of Florida’s Securities & Investor Act). See Headway MOL at 2.
The relief Headway seeks is improper and requires denial of the Motion. As noted supra,
under the Consolidation Order, the CMO and Judge Marrero’s October 2009 orders specific to
Headway, that action was consolidated into Anwar for all pre-trial purposes and Defendants were
required to respond only to the Anwar consolidated complaint rather than to individual
complaints like Headway’s. This Court established a consolidation mechanism to efficiently
manage what would otherwise be an unwieldy litigation and appointed co-lead plaintiffs’ counsel
to make assessments as to which claims should be pursued. See Consolidation Order at ¶ 14.
Headway cannot assert at this juncture new claims against the Fairfield Defendants by amending
a complaint to which the Fairfield Defendants are not to respond under the applicable court
orders. Headway’s back-door attempt to assert and preserve for trial new claims through a
pleading that is not operative as to the Fairfield Defendants must be rejected in its entirety.
Given the improper posture of Headway’s request to amend, we will not unnecessarily
burden the Court with arguments as to the merits of the proposed amendments but request an
opportunity to do so should the Court issue any order overriding or otherwise amending the
existing CMO in a manner that would render such arguments relevant. In any event, Headway’s
time to amend without leave of court has long expired8 and, in seeking leave to amend, Headway
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Headway asserts that, under Federal Rule of Civil Procedure 15(a)(1), it is entitled to amend its complaint
as to the Fairfield Defendants “as a matter of right,” without seeking leave of the court, since the Fairfield

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has provided absolutely no basis for its proposed amendments and no justification for its
unreasonable delay beyond vague references to “knowledge gained from discovery.”
CONCLUSION
For the foregoing reasons, Headway’s motion for leave to amend its complaint as to the
Fairfield Defendants must be denied with prejudice.
Dated: April 2, 2012
New York, NY

SIMPSON THACHER & BARTLETT LLP
By: /s/ Mark G. Cunha
Mark G. Cunha
[e-mail]
Peter E. Kazanoff
[e-mail]
425 Lexington Ave.
New York, NY 10017
[phone]
Attorneys for Fairfield Greenwich Advisors LLC

Defendants have not answered its complaint. See Headway MOL at n.4. Headway appears to rely on the obsolete,
pre-2009 version of Rule 15(a)(1), which permitted a party to amend its pleading once as a matter of course “before
being served with a responsive pleading.” See 6 CHARLES ALAN WRIGHT, ARTHUR R. MILLER, MARY KAY KANE &
RICHARD L. MARCUS, FED. PRAC. & PROC. § 1481 (3d ed.). However, the current Federal Rule of Civil Procedure
15(a)(1), effective since December 1, 2009, sets a specific date restriction and only permits a party to amend its
pleading once as a matter of course “within 21 days after serving it.” FED. R. CIV. P. 15(a)(1). Not surprisingly,
Headway also relies on a 2008 case—Williams v. Savage, 569 F. Supp. 2d 99 (D.D.C. 2008)— that applies the
obsolete Rule 15(a)(1). See Headway MOL at n.4.

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WHITE & CASE LLP

KASOWITZ BENSON TORRES &
FRIEDMAN LLP

By:/s/ Glenn Kurtz
Glenn Kurtz
[e-mail]
Andrew Hammond
[e-mail]
1155 Avenue of the Americas
New York, NY 10036
[phone]

By:/s/ Marc Kasowitz
Marc Kasowitz
[e-mail]
Daniel J. Fetterman
[e-mail]
1633 Broadway
New York, NY 10019
[phone]

Attorneys for Walter M. Noel, Jr.
Attorneys for Jeffrey Tucker

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