New Jersey Carpenters Annuity Fund et al v. Meridian Diversified Fund Management, LLC et al

Filing 40

OPINION, that on October 21, 2009, this court ordered consolidation of certain cases alleging violations of the Employee Retirement Income Security Act (ERISA), the Securities Act of 1933, etc., against Meridian Diversified Fund Management, LLC (Meri dian Diversified) and its affiliates (the Meridian MDL). Plaintiffs in the instant case are subject to the consolidation order but object to being so consolidated. Plaintiffs' objection to consolidation is overruled. (Signed by Judge Thomas P. Griesa on 8/30/11) Filed In Associated Cases: 1:09-md-02082-TPG, 1:10-cv-05738-TPG(pl)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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IN RE MERDIAN FUNDS GROUP
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SECURITIES & EMPLOYEE
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RETIREMENT INCOME SECURITY ACT
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(ERISA) LITIGATION
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:
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NEW JERSEY CARPENTERS ANNUITY
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FUND, ET AL.,
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Plaintiffs,
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- against :
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MERIDIAN DIVERSIFIED FUND
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MANAGEMENT, ET AL.,
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Defendants.
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09 MD 2082

10 Civ. 5738 (TPG)
OPINION

On October 21, 2009, this court ordered consolidation of certain
cases alleging violations of the Employee Retirement Income Security Act
(ERISA), the Securities Act of 1933, etc., against Meridian Diversified
Fund Management, LLC (“Meridian Diversified”) and its affiliates (“the
Meridian MDL”). Plaintiffs in the instant case are subject to the
consolidation order but object to being so consolidated.
Plaintiffs objection is overruled.

BACKGROUND
Plaintiffs in the instant case are various employee benefit funds
that invested in funds managed by Meridian Diversified. A portion of
Meridian Diversified’s funds were then invested in other funds that, in
turn, invested with Bernard Madoff. Meridian Diversified’s funds and, in
turn, plaintiffs suffered losses as a result of Madoff’s fraud.
Plaintiffs--suing derivatively on behalf of the funds in which they
invested--originally brought suit in New York state court, alleging
common law breach of fiduciary duty, and other state common law
claims. Defendants removed the action to federal court in August 2010
and sought to have it consolidated in the Meridian MDL. Plaintiffs
objected to consolidation and moved to remand the action to state court,
claiming that none of their claims arise under federal law. Plaintiffs’
motion to remand was denied in May 2011. In denying the motion to
remand, the court found that although plaintiffs’ complaint pleaded only
state law claims, plaintiffs’ breach of fiduciary duty claims were within
the scope of ERISA’s civil enforcement scheme and were thus, in reality,
federal law claims.
DISCUSSION
The decision to consolidate cases for pre-trial purposes rests in the
discretion of the trial judge. See Johnson v. Celotex Corp., 899 F.2d
1281, 1284-85 (2d Cir. 1990), cert. denied, 498 U.S. 920 (1990). “In the
exercise of discretion, courts have taken the view that considerations of

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judicial economy favor consolidation." Id. at 1285; see also Consorti v.
Armstrong World Indus.! Inc., 72 F.3d 1003, 1006 (2d Cir. 1995).
The instant case relies on the same allegations and makes similar
claims as those contained in the consolidated complaint, implicating,
among other things, ERISA. Thus common issues of law and fact
pervade the instant case and the Meridian MDL. This weighs in favor of
consolidation. See Johnson, 899 F.2d at 1284.
Plaintiffs' primary concern underlying their objection is that a
derivative action, like the instant action, should not be consolidated with
a class action, like the Meridian MDL. However, such consolidation for
pre-trial purposes is commonplace and will aid the court in efficient pre­
trial administration of these cases. See, e.g., Glauser v. EVCI Career
Colleges Holding Corp., 236 F.R.D. 184 (S.D.N.Y. 2006). Thus the court
does not, at this early point, share plaintiffs' concern. Should problems
arise later the court can revisit this determination. See id. at 186.

II
CONCLUSION

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Plaintiffs' objection to consolidation is overruled. OOCUME~T

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Dated: New York, New York
August 30,2011

Thomas P. Griesa
U.S. District Judge
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