National Credit Union Administration Board v. Goldman, Sachs & Co. et al
Filing
241
OPINION & ORDER....NCUA and Barclayss application of November 2, 2015, for a bar order in connection with their settlement is approved. By December 8, 2015, they shall submit an amended order allowing disclosure of the pertinent allocation information at the time a pretrial order is filed in an affected NCUA action. (Signed by Judge Denise L. Cote on 12/4/2015) (gr)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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NATIONAL CREDIT UNION ADMINISTRATION
:
BOARD, etc.,
:
Plaintiff,
:
-v:
:
GOLDMAN, SACHS & CO., et al.,
:
:
Defendants. :
:
:
And other NCUA Actions.
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DENISE COTE, District Judge:
13cv6721 (DLC)
13cv6727 (DLC)
OPINION & ORDER
NCUA and Barclays Capital, Inc. (“Barclays”) have reached
settlement in NCUA v. Barclays Capital, Inc., No. 12cv2631 (D.
Kan.) and NCUA v. Barclays Capital, Inc., No. 13cv6727
(S.D.N.Y.).
On November 2, 2015, NCUA and Barclays jointly
moved for the entry of an order barring claims by other
defendants in this coordinated litigation and others against
Barclays for contribution or indemnification in connection with
two certificates (the “Overlapping Certificates”) which are
included in the settlement and which are also at issue in NCUA
v. RBS Securities, Inc., No. 11cv2340 (D. Kan.) (the “RBS Kansas
Action”) and NCUA v. Goldman, Sachs & Co., No. 11cv6521 (C.D.
Cal.) (the “Goldman Sachs California Action”).
Both RBS
Securities, Inc. (“RBS”) and Goldman, Sachs & Co. (“Goldman”)
opposed the proposed bar order on November 13; the motion was
fully submitted on November 20.
The bar order jointly proposed by NCUA and Barclays
provides that NCUA
shall provide any Non-Settling Defendant against which
it obtains a judgment on claims related to the
Overlapping Securities a judgment credit in an amount
that is the greater of a) the amount of Plaintiff’s
settlement with Barclays Capital in the Settled
Actions allocated to the Overlapping Securities . . .
or b) for each such claim, state or federal, on which
contribution or indemnity is available, the
proportionate share of Barclays Capital’s fault as
proven at trial.
The portion of the total settlement amount allocated to the
Overlapping Certificates in the Barclays settlement with NCUA is
recorded in a “Confidential Schedule.”
The bar order requires
the Confidential Schedule to be kept under seal unless and until
a court of competent jurisdiction finds “good cause” to order it
disclosed.
RBS’s opposition to the proposed bar order is narrow.
RBS
does not oppose entry of an order barring contribution and
indemnification, but does seek immediate disclosure of the
Confidential Schedule.
RBS argues that a prior discovery
agreement between RBS and NCUA requires the disclosure.
NCUA
disagrees that any such agreement exists, but both NCUA and
Barclays consent to amendment of the proposed order to permit
disclosure of the allocation information regarding the
Overlapping Certificates at the time a pretrial order is filed
in an action brought by NCUA against either RBS or Goldman in
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this coordinated litigation.
That amendment to the proposed
order is approved.
Goldman opposes entry of the order until it can review the
settlement allocation information in the Confidential Schedule.
Goldman contends the order may violate its rights unless the
allocation is “fair and reasonable.”
Orders barring claims of non-settling defendants for
contribution or indemnification are an “integral part” of
settlement.
FDIC v. Geldermann, Inc., 975 F.2d 695, 698 (10th
Cir. 1992); see also Denney v. Deutsche Bank AG, 443 F.3d 253,
273 (2d Cir. 2006); In re Masters Mates & Pilots Pension Plan &
IRAP Litig., 957 F.2d 1020, 1031 (2d Cir. 1992).
Bar orders
provide the settling defendant with the “peace of mind” it
seeks.
Denney, 443 F.3d at 273 (citation omitted).
Where there
is joint liability among multiple defendants, courts reviewing
bar orders must “ensure that the only claims that are
extinguished are claims where the injury is the non-settling
defendants' liability to the plaintiffs.”
Gerber v. MTC Elec.
Techs. Co., 329 F.3d 297, 307 (2d. Cir. 2003); see In re
Heritage Bond Litig., 546 F.3d 667, 679 (9th Cir. 2008); Aks v.
Southgate Trust Co., No. Civ. A. 92-2193-JWL, 1992 WL 401708, at
*13 (D. Kan. Dec. 24, 1992); cf. TBG, Inc. v. Bendis, 36 F.3d
916, 928 (10th Cir. 1994).
Moreover, a court must ensure that
non-settling defendants “are not held responsible for any
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damages for which the settling defendants are proven liable.”
Gerber, 329 F.3d at 306.
This can be achieved through a capped
proportionate share provision in the bar order.
Aks, 1992 WL 401708, at *13.
Id.; see also
Accordingly, “no . . . fairness
hearing is necessary” prior to entry of a bar order if “the nonsettling defendants’ credit will be the greater of the
proportionate fault or the settlement amount.”
Gerber, 329 F.3d
at 306; accord In re Greektown Holdings, LLC, 728 F.3d 567, 576
n.7 (6th Cir. 2013); see also Franklin v. Kaypro Corp., 884 F.2d
1222, 1231 (9th Cir. 1989).
The proposed bar order provides that the judgment credit
for the non-settling defendants, including Goldman, will be “the
greater of [] the amount of Plaintiff’s settlement . . .
allocated to the Overlapping Securities . . . or . . . the
proportionate share of Barclays Capital’s fault as proven at
trial.”
The provision provides the non-settling defendants with
all of the protection to which they are entitled.
Goldman’s
opposition to the bar order on the ground that its fairness
cannot yet be evaluated is therefore denied.
Goldman’s reliance on selected passages from In re
WorldCom, Inc. Sec. Litig., No. 02cv3288 (DLC), 2005 WL 591189,
at *9 (S.D.N.Y. Mar. 14, 2005), does not affect this conclusion.
Those passages discussed whether the uncollectable share of a
judgment could be factored into a judgment credit.
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Id.
This
theoretical discussion has no application to NCUA’s claims
against the defendants in this coordinated litigation.
CONCLUSION
NCUA and Barclays’s application of November 2, 2015, for a
bar order in connection with their settlement is approved.
By
December 8, 2015, they shall submit an amended order allowing
disclosure of the pertinent allocation information at the time a
pretrial order is filed in an affected NCUA action.
Dated:
New York, New York
December 4, 2015
__________________________________
DENISE COTE
United States District Judge
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