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EXHIBIT A
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{N0043888 }
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
WEST PALM BEACH DIVISION
Case No.:10-80252-CV-KLR
SUZANNE STONE MARSHALL, ADELE FOX,
MARSHA PESHKIN, and RUSSELL OASIS,
individually and on behalf of a class of similarly situated
Plaintiffs,
vs.
CAPITAL GROWTH COMPANY;
DECISIONS, INC.;
FAVORITE FUNDS;
JA PRIMARY LIMITED PARTNERSHIP;
JA SPECIAL LIMITED PARTNERSHIP;
JAB PARTNERSHIP;
JEMW PARTNERSHIP;
JF PARTNERSHIP;
JFM INVESTMENT COMPANIES;
JLN PARTNERSHIP;
JMP LIMITED PARTNERSHIP;
JEFFRY M. PICOWER SPECIAL COMPANY;
JEFFRY M. PICOWER, P.C.;
THE PICOWER FOUNDATION;
THE PICOWER INSTITUTE OF MEDICAL
RESEARCH;
THE TRUST F/B/O GABRIELLE H. PICOWER;
BARBARA PICOWER, individually, and as Executor of
the Estate of Jeffry M. Picower, and as Trustee for the
Picower Foundation and for the Trust f/b/o Gabriel H.
Picower.
/
NOTICE OF APPEAL
PLEASE TAKE NOTICE that Plaintiffs, SUZANNE STONE MARSHALL, ADELE
FOX, MARSHA PESHKIN, and RUSSELL OASIS, individually and on behalf of a class of
similarly situated Plaintiffs, hereby appeal to the United States Court of Appeals for the
Eleventh Circuit the March 14, 2014 Order (entered on March 17, 2014) denying Plaintiffs’
cross-motion for a preliminary injunction and for an emergency hearing on the motion for a
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preliminary injunction. (DE 58). A true and correct copy of the Order is annexed hereto as
Exhibit “A”.
DATED this 24th day of March 2014.
Respectfully submitted,
BECKER & POLIAKOFF, P.A.
/s/ Allen M. Levine____________
Florida Bar No. 315419
Becker and Poliakoff, P.A.
1 East Broward Blvd., Suite 1800
Ft. Lauderdale, FL 33301
Telephone: (954) 987-7550
Facsimile: (954) 985-4176
and
BECKER & POLIAKOFF LLP
By:
/s/ Helen Davis Chaitman
45 Broadway
New York, New York 10006
Telephone: (212) 599-3322
Facsimile: (212) 557-0295
Email: [email protected]
Email: [email protected]
Attorneys for Plaintiffs and the Class
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 24th day of March 2014, 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/ Allen M. Levine____________
Allen M. Levine
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SERVICE LIST
Sanford L. Bohrer
701 Brickell Avenue, Suite 3300
Miami, FL 33131
Telephone: (305) 374-8500
Facsimile: (305) 789-7799
William D. Zabel, Esq.
Marcy Ressler Harris, Esq.
Schulte Roth & Zabel, LLP
919 Third Avenue
New York, NY 10022
Telephone: (212) 756-2351
Facsimile: (212) 593.5955
Lesley Guy Blackner
Blackner Stone & Associates
340 Royal Poinciana Way
St 317-377
Palm Beach, FL 33480
Phone: 561-659-5754
Fax: 561-659-3184
Email: [email protected]
Andrew Steven Kwan & Joseph George Galardi
505 South Flagler Drive
Ste. 1500
West Palm Beach, FL 33401
Phone: 561-835-0900
Fax: 561-835-0939
Email: [email protected]
Email: [email protected]
David Sheehan
Counsel for Trustee Irving Picard
BakerHostetler
45 Rockefeller Plaza, #10
New York, NY 10111
Phone (212) 589-4616
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EXHIBIT A
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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA
Case No. 10-80252-CIV-RYSKAMP/HOPKINS
SUZANNE STONE MARSHALL, ADELE FOX,MARSHA PESHKIN, and RUSSELL OASIS,individually and on behalf of a class of similarly situated
Plaintiffs,
v.
CAPITAL GROWTH COMPANY;DECISIONS, INC.;FAVORITE FUNDS;JA PRIMARY LIMITED PARTNERSHIP;JA SPECIAL LIMITED PARTNERSHIP;JAB PARTNERSHIP;JEMW PARTNERSHIP;JF PARTNERSHIP;JFM INVESTMENT COMPANIES;JLN PARTNERSHIP;JMP LIMITED PARTNERSHIP;JEFFRY M. PICOWER SPECIAL COMPANY;JEFFRY M. PICOWER, P.C.;THE PICOWER FOUNDATION;THE PICOWER INSTITUTE OF MEDICALRESEARCH;THE TRUST F/B/O GABRIELLE H. PICOWER;BARBARA PICOWER, individually, and as Executor ofthe Estate of Jeffry M. Picower, and as Trustee for thePicower Foundation and for the Trust f/b/o Gabriel H.Picower.
Defendants.___________________________________________/
ORDER DENYING MOTION FOR EMERGENCY HEARING AND MOTION FORLIMITED RELIEF FROM STAY
THIS CAUSE comes before the Court pursuant to Becker & Poliakoff LLP and Becker &
Poliakoff P.A., as counsel for Plaintiffs, March 12, 2014 [DE 52] motion requesting that this
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Court lift the stay entered February 21, 2014 for the purpose of scheduling an emergency hearing
on Defendants’ motion to stay and on Plaintiffs’ cross motion for injunctive relief.
On March 11, 2014, Bankruptcy Trustee Irving Picard filed an Amended Complaint
against several parties, including the Plaintiffs, in the Bankruptcy Court for the Southern District
of New York. See Securities Investor Protection Corporation v. Bernard L. Madoff Investment
Securities, LLC., Case No. 08-01789, DE 5807. Picard seeks an order enjoining Plaintiffs from
proceeding in this Court on the ground that their claims are duplicative and derivative
of the Trustee’s settled action against the Picower defendants. It is hereby
ORDERED AND ADJUDGED that the motion is DENIED. The Court declines to
conduct an emergency hearing on the question of whether to enjoin the New York action.
Rather, this Court defers to the Bankruptcy Court for the Southern District of New York for a
ruling on Picard’s motion to enjoin the instant action.
DONE AND ORDERED at Chambers in West Palm Beach, Florida, this 14th day of
March, 2014.
S/Kenneth L. Ryskamp KENNETH L. RYSKAMPUNITED STATES DISTRICT JUDGE
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EXHIBIT B
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{N0044888 }
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
NO. 14-11250
SUZANNE STONE MARSHALL, ADELE FOX, MARSHA PESHKIN, and RUSSELL OASIS, individually and on behalf of a class of similarly situated,
Appellants,
- versus -
CAPITAL GROWTH COMPANY; DECISIONS, INC.; FAVORITE FUNDS; JA
PRIMARY LIMITED PARTNERSHIP; JA SPECIAL LIMITED
PARTNERSHIP; JAB PARTNERSHIP; JEMW PARTNERSHIP; JF
PARTNERSHIP; JFM INVESTMENT COMPANIES;
JLN PARTNERSHIP; JMP LIMITED PARTNERSHIP; JEFFRY M. PICOWER
SPECIAL COMPANY; JEFFRY M. PICOWER, P.C.; THE PICOWER
FOUNDATION; THE PICOWER INSTITUTE OF MEDICAL RESEARCH; THE
TRUST F/B/O GABRIELLE H. PICOWER; BARBARA PICOWER, individually,
and as Executor of the Estate of Jeffry M. Picower, and as Trustee for the Picower
Foundation and for the Trust f/b/o Gabriel H. Picower.
Appellees. ________________________________________________________________________
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA _________________________________________________________________________
APPELLANTS’ MOTION FOR EXPEDITED APPEAL
BECKER & POLIAKOFF, LLP
Helen Davis Chaitman
45 Broadway
New York, New York 10006
Telephone: (212) 599-3322
Facsimile: (212) 557-0295
Counsel for Appellants
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CERTIFICATE OF INTERESTED PERSONS AND CORPORATE DISCLOSURE STATEMENT
OF APELLANTS SUZANNE STONE MARSHALL, ET AL.
Certificate of Interested Persons
Undersigned counsel for Suzanne Stone Marshall, Adele Fox, Marsha
Peshkin, and Russell Oasis, individually and on behalf of a class of similarly
situated Plaintiffs, pursuant to Federal Rule of Appellate Procedure 26.1 and
Eleventh Circuit Rules 26.1-1 through 26.1-3, hereby certifies that
the following is a complete list of persons and entities having an interest in
the outcome of this appeal:
Parties:
Plaintiffs/Appellants:
SUZANNE STONE MARSHALL, ADELE FOX, MARSHA PESHKIN,
and RUSSELL OASIS, individually and on behalf of a class of similarly
situated parties.
Defendants/Appellees: CAPITAL GROWTH COMPANY; DECISIONS, INC.; FAVORITE
FUNDS; JA PRIMARY LIMITED PARTNERSHIP; JA SPECIAL
LIMITED PARTNERSHIP; JAB PARTNERSHIP; JEMW
PARTNERSHIP;
JF PARTNERSHIP; JFM INVESTMENT COMPANIES; JLN
PARTNERSHIP; JMP LIMITED PARTNERSHIP; JEFFRY M. PICOWER
SPECIAL COMPANY; JEFFRY M. PICOWER, P.C.; THE PICOWER
FOUNDATION; THE PICOWER INSTITUTE OF MEDICAL
RESEARCH; THE TRUST F/B/O GABRIELLE H. PICOWER;
BARBARA PICOWER, individually, and as Executor of the Estate of Jeffry
M. Picower, and as Trustee for the Picower Foundation and for the Trust
f/b/o Gabriel H. Picower.
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Other Parties:
Irving H. Picard, Trustee of Bernard L. Madoff Investment Securities, LLC.
Counsel:
Becker & Poliakoff, P.A. and Becker & Poliakoff, LLP (Helen Davis
Chaitman and Lance Gotthoffer), counsel for Appellants
Baker & Hostetler, LLP (David Sheehan), counsel for Irving H. Picard
Holland & Knight LLP (Sanford Bohrer), counsel for Appellees
Shulte, Roth & Zabel LLP (William D. Zabel, Marcy Ressler Harris,
Michael Kwon, and Frank LaSalle), counsel for Appellees
Beasley, Hauser, Kramer and Galardi, P.A. (Joseph Galardi) and
Blackner Stone and Associates (Richard Stone), counsel for A & G
Goldman Partnership
and Pamela Goldman (co-defendants in the New York injunction action)
Judges:
Kenneth L. Ryskamp, United States District Judge
William Matthewman, United States Magistrate Judge
James M. Hopkins, United States Magistrate Judge
Kenneth A. Marra, United States District Judge
/s/ Helen Davis Chaitman
Helen Davis Chaitman
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Corporate Disclosure Statement
Undersigned counsel for Suzanne Stone Marshall, Adele Fox, Marsha
Peshkin, and Russell Oasis, individually and on behalf of a class of similarly
situated Plaintiffs, pursuant to Federal Rule of Appellate Procedure 26.1 and
Eleventh Circuit Rules 26.1-1 through 26.1-3, hereby certifies that none of
the Appellants is a corporate entity.
/s/ Helen Davis Chaitman
Helen Davis Chaitman
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MOTION FOR EXPEDITED APPEAL
Pursuant to FRAP 27-1 Appellants, plaintiffs below, respectfully
request that the Court issue an expedited briefing schedule. This is an
appeal of an order denying injunctive relief and as such Appellants are
moving simultaneously for an expedited briefing schedule and an injunction
pending appeal, preventing Appellees, and those in active concert and
participation with them, from seeking to litigate the claims in this action
other than in the court below.
Good cause exists for this request. The United States Court of Appeals
for the Second Circuit in related bankruptcy proceedings, has expressly held
that Appellants have leave to amend their proposed class action complaint,
originally filed below in 2010, and that the merits of such an amended
complaint is “a question in the first instance for the Southern District of
Florida.” See In Re: Bernard L. Madoff Investment Securities LLC, Case
No. 12-1645, Document 164-1 (2d Cir. 2014)
Despite the Second Circuit’s mandate, the Appellees, in concert with
the SIPA appointed Trustee for the Estate of Bernard L. Madoff, LLC, are
proceeding in the United States Bankruptcy Court for the Southern District
of New York in an attempt to enjoin Appellants from exercising their right
to proceed in the Southern District of Florida. As more fully explained in
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the accompanying Motion for an Injunction Pending Appeal, this Court
should not allow the Appellees to ignore the ruling of the Second Circuit and
force Appellants to litigate the merits of their claims outside of the forum
directed by it. Appellants must file their opposition papers in the Bankruptcy
Court by April 18, 2014 and the matter is set for hearing on May 7, 2014.
Accordingly, Appellants respectfully suggest the following expedited
briefing schedule for purposes of these time sensitive motions:
Appellees’ Response to Motion for Expedited Appeal April 15, 2014
Appellants’ Reply to Appellee’s Response re Expedited
Appeal
April 21, 2014
Appellees’ Response to the Emergency Motion for an
Injunction Pending Appeal
April 15, 2014
Appellants’ Reply to the Emergency Motion for an
Injunction Pending Appeal
April 21, 2014
Appellants’ Initial Brief and Memorandum of Law May 2, 2014
Appellees’ Response Brief and Memorandum of Law May 16, 2014
Appellants’ Reply Brief May 23, 2014
Respectfully submitted,
By: /s/ Helen Davis Chaitman
BECKER & POLIAKOFF, LLP
Helen Davis Chaitman
45 Broadway
New York, New York 10006
Telephone: (212) 599-3322
Facsimile: (212) 557-0295
Counsel for Appellants
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CERTIFICATE OF SERVICE
I hereby certify that an original and three copies of the foregoing
Certificate of Interested Persons and Motion were delivered by overnight
mail to the United States Court of Appeals for the Eleventh Circuit on the
9th day of April, 2014, and that a copy thereof was delivered by overnight
mail on the same day to all those on the attached service list:
/s/ Helen Davis Chaitman
Helen Davis Chaitman
Sanford L. Bohrer
701 Brickell Avenue, Suite 3300
Miami, FL 33131
Telephone: (305) 374-8500
Facsimile: (305) 789-7799
William D. Zabel, Esq.
Marcy Ressler Harris, Esq.
Schulte Roth & Zabel, LLP
919 Third Avenue
New York, NY 10022
Telephone: (212) 756-2351
Facsimile: (212) 593.5955
Lesley Guy Blackner
Blackner Stone & Associates
340 Royal Poinciana Way, St 317-377
Palm Beach, FL 33480
Phone: 561-659-5754
Fax: 561-659-3184
Email: [email protected]
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Andrew Steven Kwan & Joseph George Galardi
505 South Flagler Drive
Ste. 1500
West Palm Beach, FL 33401
Phone: 561-835-0900
Fax: 561-835-0939
Email: [email protected]
Email: [email protected]
David Sheehan
Counsel for Trustee Irving Picard
BakerHostetler
45 Rockefeller Plaza, #10
New York, NY 10111
Phone (212) 589-4616
The Honorable Kenneth L. Ryskamp
United States District Court for the Southern District of Florida
Paul G. Rogers Federal Building
701 Clematis Street, Room 416
West Palm Beach, FL 33401
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EXHIBIT C
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No. 14-11250-AA
IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
ADELE FOX, et al.,
Appellants/Plaintiffs,
vs.
CAPITAL GROWTH CO., et al.,
Appellees/Defendants.
Appeal from the United States District Court for the Southern District of Florida
West Palm Beach Division
PAMELA GOLDMAN AND A & G GOLDMAN PARTNERSHIP’S MOTION FOR LEAVE TO INTERVENE FOR LIMITED PURPOSES AND
TO DISQUALIFY BECKER & POLIAKOFF AS COUNSEL FOR APPELLANTS, OR FOR LIMITED REMAND
BEASLEY HAUSER KRAMER & GALARDI, P.A. JAMES W. BEASLEY, JR. 505 S. Flagler Drive, Suite 1500 West Palm Beach, FL 33401 Telephone: 561-835-0900 Fax: 561-835-0939
Counsel for Proposed Intervenors
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CERTIFICATE OF INTERESTED PERSONS AND CORPORATE DISCLOSURE STATEMENT
To the best of undersigned’s knowledge, the following is a complete list of
the trial judges, attorneys, persons, associations of persons, firms, partnerships, or
corporations that have or may have an interest in the outcome of this case,
including subsidiaries, conglomerates, affiliates, and parent corporations, including
any publicly held company that owns 10% or more of the party’s stock, and other
identifiable legal entities related to a party.
1. Suzanne Stone Marshall, Adele Fox, Marsha Peshkin, and Russell Oasis,
Appellants-Plaintiffs.
2. Becker & Poliakoff, Counsel for Appellants-Plaintiffs.
3. Capital Growth Company, Decisions, Incorporated, Favorite Funds, JA
Primary Limited Partnership, JA Special Limited Partnership, JAB
Partnership, JEMW Partnership, JF Partnership, JFM Investment
Companies, JLN Partnership, JMP Limited Partnership, Jeffry M. Picower
Special Company, Jeffry M. Picower, P.C., The Picower Foundation, The
Picower Institute of Medical Research, The Trust f/b/o Gabrielle H. Picower,
Barbara Picower, individually, and as Executor of the Estate of Jeffry M.
Picower, and as Trustee for the Picower Foundation and for the Trust f/b/o
Gabrielle H. Picower, Appellees-Defendants.
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4. Holland & Knight LLP and Schulte Roth & Zabel LLP, Counsel for
Appellees-Defendants.
5. Pamela Goldman and A & G Goldman Partnership, Proposed Intervenors.
6. Beasley Hauser Kramer & Galardi, P.A. and Blackner, Stone & Associates
P.A., Counsel for Proposed Intervenors.
7. The Honorable Kenneth L. Ryskamp, United States District Judge, Southern
District of Florida.
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INTRODUCTION Proposed intervenors Pamela Goldman and A & G Goldman Partnership
(“Intervenors”), by and through their undersigned counsel, move for leave to
intervene in this appeal for the limited purpose of disqualifying Becker & Poliakoff
(“Becker”) as counsel for a putative class of similarly situated persons represented
by Plaintiffs Suzanne Stone Marshall, Adele Fox, Marsha Peshkin, and Russell
Oasis. As innocent former BLMIS customers, Intervenors have standing to
intervene because they are members of the putative class, and Becker owes
fiduciary duties to Intervenors and other putative class members under Florida law.
Intervenors move to disqualify Becker because the firm suffers from conflicts of
interest arising from its representation of certain members of the putative class, in
actions where their interests are directly adverse to other class members.
Intervenors also move to disqualify Becker because the firm’s lead attorney in this
case, Helen Chaitman, was a member of the putative class when Becker first
accepted the representation, and suffered from a per se conflict of interest that
could not be cured after the fact. These conflicts substantially impair Becker’s
ability to freely and fully represent the proposed class, and Becker must therefore
be disqualified in this appeal. In the alternative, Intervenors move for limited
remand to the U.S. District Court for the Southern District of Florida to take
evidence and decide the disqualification issue.
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BACKGROUND
Bernard L. Madoff (“Madoff”) and Bernard L. Madoff Investment Securities
LLC (“BLMIS”) engaged in a Ponzi scheme that defrauded thousands of BLMIS
investors. In the course of the scheme, BLMIS sent monthly statements to its
nearly 7,000 customers reflecting phony investments and phony profits. After the
Ponzi scheme collapsed in December 2008, the U.S. District Court for the
Southern District of New York appointed Irving H. Picard, Esq., as trustee
(“Trustee”) for the substantively consolidated liquidation of Madoff’s estate and of
BLMIS under the Securities Investor Protection Act (“SIPA”).
On February 5, 2014, Appellants sought leave to file a class action
complaint arising out of the BLMIS Ponzi scheme in the District Court case below,
Marshall v. Capital Growth Co., 10-80252-CV-KLR (S.D. Fla.). This class action
complaint alleges that Madoff’s close friend and associate, Jeffry Picower,
participated in the Ponzi scheme and is liable, along with his affiliates, for damages
suffered by BLMIS customers. The proposed class in the complaint consists of
“all customers of BLMIS who entrusted securities or cash to BLMIS, either
directly or indirectly,” between December 1, 1991 and December 11, 2008,
excluding BLMIS employees and BLMIS’s co-conspirators. Within this class are
two separate and distinct groups of BLMIS customers: those who have net losses
associated with BLMIS and also have claims payable in the SIPA liquidation (“net
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3
losers”), and those who have already received from BLMIS pre-bankruptcy more
than the amount they invested in BLMIS and have been barred from recovering in
the SIPA liquidation (“net winners”).1 Intervenors are innocent BLMIS customers
who are members of the putative class described in Appellants’ complaint.
The class action complaint filed by Appellants is not the first complaint in
this case. More than four years ago, two class action complaints were filed in the
District Court below on February 16 and 17, 2010 by Appellants Adele Fox
(“Fox”) and Suzanne Stone Marshall (“Marshall”), respectively. These complaints
were filed on behalf of Fox and Marshall by undersigned counsel, Beasley Hauser
Kramer & Galardi, P.A. (“Beasley Hauser”), and by Blackner, Stone & Associates
P.A. (“Blackner Stone”). Becker began participating in these actions when
undersigned counsel moved to admit Becker pro hac vice as co-counsel for Fox
and Marshall on March 22, 2010. On April 28, 2010, Fox and Marshall were
enjoined from proceeding in these actions by the Bankruptcy Court for the
Southern District of New York. After nearly four years of appeals, the Second
Circuit ultimately granted leave to Fox and Marshall to file a new complaint in the
Southern District of Florida. See generally In re Bernard L. Madoff Inv. Securities
1 See generally In re Bernard L. Madoff Inv. Securities LLC, 654 F. 3d 229, 236-38 (2d Cir. 2011) (describing “net equity” in the context of the BLMIS fraud). The “net winner” label is somewhat misleading, as it suggests that these defrauded, innocent BLMIS customers somehow benefitted from the Ponzi scheme. In fact, the “net winners” in the putative class actually lost money, having paid federal and state income taxes on phony profits, and having lost the time value of their money.
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LLC, 740 F.3d 81, 85-86, 96 (2d Cir. 2014) (complaint in the Southern District of
Florida may be amended to assert claims for conspiracy against Jeffry Picower).
On February 5, 2014, Becker moved for leave to file a proposed amended
complaint in the District Court below. Neither Beasley Hauser nor Blackner
Stone, both co-counsel of record below, had any part in filing this amended
complaint. Shortly thereafter, on February 19, 2014, counsel for Intervenors
moved to disqualify Becker based on the firm’s conflicts of interest.
Rather than addressing the conflict, Becker responded by informing Beasley
Hauser and Blackner Stone that Fox and Marshall had terminated them on March
7, 2014. However, no motion to withdraw or substitute counsel was ever filed, and
no order relieving Beasley Hauser and Blackner Stone of responsibility for the
representation was ever entered. See S.D. Fla. L.R. 11.1(d)(3). On March 17,
2014, the District Court below deferred to the Bankruptcy Court for the Southern
District of New York for a decision on a motion by the Trustee to enjoin the case,
but failed to decide the motion to disqualify.2 Notwithstanding the pending
disqualification motion, Becker filed the instant appeal on behalf of Appellants on
March 24, 2014.
2 The District Court denied Appellants’ cross-motion for a preliminary injunction against the Appellees and the Trustee. Combined with the District Court’s deferral to the Bankruptcy Court, the District Court effectively granted Appellees’ motion to stay the case in favor of the Trustee’s motion.
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ARGUMENT
I. Limited intervention is necessary to protect the rights of Intervenors and other absent members of the putative class.
Under Florida Rule of Professional Conduct 4-1.7 (“Rule 4-1.7”), a lawyer
generally cannot represent a client if “the representation of 1 client will be directly
adverse to another client,” or if “there is a substantial risk that the representation of
1 or more clients will be materially limited by the lawyer's responsibilities to
another client, a former client or a third person or by a personal interest of the
lawyer.” Florida law thus “prohibits a lawyer from representing a client where that
client's interests are adverse to another client the lawyer represents in another
matter, even if the other matter is wholly unrelated.” The Florida Bar v. Dunagan,
731 So. 2d 1237, 1240 n.3 (Fla. 1999). In particular, Becker as class counsel owes
a fiduciary duty to all members of the putative class, including Intervenors, and
therefore must comply with Rule 4-1.7 with respect to the entire class. See The
Florida Bar v. Adorno, 60 So. 3d 1016, 1025 (Fla. 2011) (finding breach of
fiduciary duty with respect to putative class members that violated Rule 4-1.7,
regardless of whether or not counsel had an “attorney-client relationship with those
members”).
This Court has held that “[i]f at any time the trial court realizes that class
counsel should be disqualified, it is required to take appropriate action”; the
principle is equally applicable to the instant interlocutory appeal. Piambino v.
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Bailey, 757 F.2d 1112, 1145 n.88 (11th Cir. 1985). A limited intervention is
necessary here, because there is no other practical way for Intervenors to raise
Becker’s conflicts of interests before this Court; Becker certainly does not intend
to raise them. See Hall v. Holder, 117 F.3d 1222, 1231 (11th Cir. 1997) (direct
intervention in an appeal is permissible “in an exceptional case for imperative
reasons”). In light of the conflicts suffered by Becker, and the fiduciary duties
Becker owes to Intervenors and the other putative class members, Intervenors are
entitled to intervene for the limited purpose of moving to disqualify Becker.
II. In other BLMIS-related actions, Becker is advocating interests that are directly adverse to the “net losers.” In this appeal, Becker is representing both “net losers,” who are BLMIS
customers that can recover in the BLMIS SIPA liquidation, and “net winners,”
who have been barred by the Trustee from recovering in the SIPA liquidation. Net
winners and net losers have some common interests in this litigation, but they also
have some interests which conflict. For example, many net winners, including
individual clients of Becker, are being directly pursued by the BLMIS Trustee in
litigation for net profits they received from their BLMIS investments. These
actions against net winners are brought under fraudulent conveyance or bankruptcy
avoidance statutes. In practical effect, the Trustee’s claims may result in
recoveries to the BLMIS estate, and “net losers,” in turn, will receive these
proceeds. It is in the pecuniary interest of the net losers for the Trustee to
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successfully sue “net winners,” and it is in the pecuniary interest of the net winners
to resist such claims. Because of this direct conflict, any lawyer representing both
net losers and net winners in a class action should not take sides in the “clawback”
issue for one group versus the other.
An attorney cannot represent a class of plaintiffs if the attorney also
represents other clients whose interests are adverse to the class. See, e.g.,
Fiandaca v. Cunningham, 827 F. 2d 825, 829 (1st Cir. 1987) (“[counsel’s]
representation of the plaintiff class in this litigation was materially limited by its
responsibilities to the [other] class”); Moreno v. Autozone, No. C05-04432 MJJ,
2007 WL 4287517, at *3-*6 (N.D. Cal. Dec. 6, 2007) (counsel was disqualified
due to conflict of interest between two of counsel’s clients who had objected to a
settlement in which three other clients had filed claim forms). As set forth in more
detail below, because Becker currently represents parties and interests in other
actions that are materially adverse to the net losers, Becker must be disqualified as
counsel here.
A. Becker represents certain “net winners” in defending avoidance actions brought by the Trustee.
Becker and Ms. Chaitman represent, on an hourly fee basis, 128 net winners
(“Avoidance Defendants”) in their defense of various bankruptcy avoidance
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actions brought by the Trustee.3 See generally SIPC v. BLMIS, 476 B.R. 715, 717-
19 (S.D.N.Y. 2012). See Letter Response filed by Becker, SIPC v. BLMIS, No. 08-
01789 (SMB), [D.E. 5648], attached as Exhibit “A”. These avoidance actions
seek recovery for the BLMIS estate, and every dollar obtained from the Avoidance
Defendants will directly benefit the “net losers” in the underlying SIPA
liquidation. One group of clients – the Avoidance Defendants – is paying Becker
to defend against claims which would benefit another group of purported class
members – the net losers. Stated another way, Becker is actively preventing its net
loser clients from receiving monies from its net winner clients, whom Becker also
currently represents in this and such avoidance actions. Becker suffers from a
clear conflict of interest: it cannot adequately represent the interests of the
Avoidance Defendants without also harming the interests of the net losers. See
The Florida Bar v. Scott, 39 So. 3d 309, 315 (Fla. 2010) (to the extent that
“investors wanted to pursue claims against [a lawyer’s] past or present clients with
interests adverse to theirs, [the lawyer] should have referred them to other counsel,
someone without a disqualifying conflict”). This is a flagrant violation of Rule 4-
1.7 which disqualifies Becker from representing the class here. 3 By definition, the avoidance actions seek to avoid transfers to certain BLMIS investors who purportedly took out more from BLMIS than they paid in. See Trustee’s Website, Exhibit “B” (the avoidance actions “seek the return of transfers to the Customer Fund, for the benefit of all customers with allowed claims”). The Trustee seeks to force some BLMIS investors (net winners) to repay money to the estate for the benefit of other BLMIS investors (net losers).
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In the proceedings below, Becker argued that there is no conflict between
the interests of the “net losers” and “net winners” with respect to the BLMIS
liquidation, because the BLMIS Trustee has enough funds to pay all “net loser”
claims in full. This is patently false. The Trustee has stated publicly that as of
March 25, 2014, he has only recovered “approximately $9.795 billion, representing
approximately 55.9 percent of the estimated $17.5 billion in principal lost in the
[BLMIS] Ponzi scheme.” See Exhibit “C”, attached hereto. Almost half of the
$9.790 billion is from the singular $5 billion settlement payment that the Picower
estate paid to settle the Trustee’s fraudulent conveyance claims. Id. Put simply,
even after the unique Picower settlement with the Trustee, there will not be enough
money to pay the net losers’ allowed claims in the BLMIS liquidation, much less
to pay the net losers’ full losses.4 In reality, Becker and Ms. Chaitman are actively
4 Ms. Chaitman has also previously suggested that the BLMIS estate will eventually receive an additional $2 billion resulting from the Justice Department’s settlement with the Picower Defendants. See Declaration of Helen Chaitman, ¶ 26, attached as Exhibit “D”. This assertion has no basis in law or fact. Indeed, Richard Breeden, the special master appointed to distribute these funds, has stated they will not all go to the net losers, and has yet to determine how they will be allocated. See Forfeiture Website, attached as Exhibit “E”. The Settlement Agreement with the Picower estate is final, and that Settlement Agreement only contemplates $5 billion being paid to the BLMIS estate. See Picower Settlement Description, attached as Exhibit “F”; see generally In re BLMIS, 740 F.3d 81, 85-86 (2d Cir. 2014). Moreover, even with $2 billion more in assets, the net losers would still not recover all of their losses. That is why the Trustee is currently pursuing avoidance actions against net winners, many of whom are clients of Becker.
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and currently opposing the interests of net losers, who through the Trustee are
trying to get money from net winners who received purported overpayments from
BLMIS.5 Due to its dual representation of net winners and net losers, Becker has
an ongoing conflict of interest and must be disqualified.
B. Becker represents a purported class of “net winners” in objecting to the Trustee’s recent settlement with JPMorgan.
Becker and Ms. Chaitman also represent another purported class of “net
winners” who are attempting to opt out of and are currently objecting to the
Trustee’s settlement with JPMorgan, which will bring $435 million into the
BLMIS estate. See Hill v. JPMorgan Chase & Co., et al., No. 11-cv-7961 (CM);
Shapiro v. JPMorgan Chase & Co., et al., No. 11-cv-8331 (CM), [D.E. 55],
attached as Exhibit “G.” The JPMorgan settlement inures directly to the benefit
of the “net losers.” Again, this representation shows that the interests of one group
of Becker’s clients, the subclass of “net winners,” are adverse to the interests of
another group which Becker seeks to represent herein, the net losers. Becker
cannot fully represent both these groups simultaneously, and is therefore subject to
disqualification. 5 Moreover, Ms. Chaitman has publicly advocated against the net losers’ interests through congressional testimony. For example, in written testimony on March 10, 2011, Ms. Chaitman argued that the Trustee’s avoidance suits were “grossly inequitable and inconsistent with the law.” See Testimony, attached as Exhibit “H”, at 2. Ms. Chaitman cannot represent hundreds of net losers while at the same time publically advocating against their direct litigation interest with respect to the Trustee’s fraudulent conveyance claims.
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III. Becker’s lead attorney was a member of the class, and therefore she and Becker had an irreconcilable conflict of interest, which could not be cured after the fact. Becker’s lead attorney in this action, Helen Chaitman, was also a BLMIS
customer who invested (and lost) money in the Ponzi scheme, making her a “net
loser” member of the putative class. Due to Ms. Chaitman’s status as both class
counsel and a member of the class, she and her firm suffered from a per se conflict
of interest under Florida and Eleventh Circuit law, and should be disqualified. See
Zylstra v. Safeway Stores, Inc., 578 F.2d 102, 104 (5th Cir. 1978) (“attorneys . . .
who themselves are members of the class of plaintiffs . . . should not be permitted
to serve as counsel for the class”).6
In Zylstra, the Fifth Circuit found that an attorney who is both class counsel
and a class member is inherently conflicted, because class counsel’s fees “depend
upon the outcome of the case,” and the attorney who is also a class member
“cannot serve the interests of the class with the same unswerving devotion as an
attorney who has no interest other than representing the class members.” Id. Cf.
Shroder v. Suburban Coastal Corp., 729 F.2d 1371, 1375 (11th Cir. 1984) (“[i]f
the interests of a class are to be fairly and adequately protected . . . the roles of
6 This Court adopted all decisions of the former Fifth Circuit issued before October 1, 1981 as precedent. Bonner v. City of Prichard, 661 F. 2d 1206, 1209 (11th Cir. 1981). The common-sense Zylstra disqualification rule is still law in the Fifth Circuit. See, e.g., Deburro v. Apple, Inc., No. A–13–CA–784–SS, 2013 WL 5917665, at *1 n.2 (W.D. Tex. Oct. 31, 2013).
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class representative and of class attorney cannot be played by the same person.”)
(quoting Turoff v. May Co., 531 F. 2d 1357 (6th Cir. 1976)). Disqualification is
per se in part because “the public suspicion of such a conflict is sure to outweigh
any public benefit from having that attorney continue.” Zylstra, 578 F.2d at 104.
Accord Davidson v. Yeshiva Univ., 555 F. Supp. 75, 78 (S.D.N.Y. 1982) (attorney
could not serve as class counsel for alleged class of surgeons of which he was a
member); Kramer v. Scientific Control Corp., 534 F. 2d 1085, 1090 (3d Cir. 1976)
(attorney suffers from a conflict of interest if he takes “a share of the potential
court-awarded attorneys' fee in addition to his recovery as a member of the class”).
Applying the Zylstra rule to the facts of this case, it is clear that Becker attorney
Helen Chaitman’s dual status as class counsel and class member creates a per se
conflict of interest requiring disqualification.
In Becker’s response below, Ms. Chaitman asserted that she is no longer a
member of any relevant class because she sold her BLMIS customer claim in 2011.
See Exhibit D, Declaration of Helen Chaitman, ¶ 22. However, the Florida
Supreme Court has recently held under Rule 4-1.7 that a lawyer “has the duty to
decline representation if [a] conflict exists before representation is undertaken.”
The conflict cannot be cured by actions taken by the lawyer after the fact. See
Young v. Achenbauch, SC12-988, --- So. 3d ---, 2014 WL 1239965, at *6 (Fla.
Mar. 27, 2014) (lawyer could not “drop one client like a hot potato” in order to
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resolve a conflict of interest between two clients). Likewise, in this case, Ms.
Chaitman could not cure her per se conflict by selling her claim as a BLMIS
investor after having already accepted representation of the class. Because Ms.
Chaitman’s dual status as class counsel and class member created a per se conflict
of interest, Becker must be disqualified.
IV. In the alternative, this Court should remand the disqualification issue to the District Court, where the issue should have been decided.
Counsel for Intervenors moved to disqualify Becker in the District Court
below. The District Court was obligated to address that issue substantively, but
did not. Musicus v. Westinghouse Elec. Corp., 621 F. 2d 742, 743 (5th Cir. 1980)
(“the district court erred in failing to address the merits of the motion” to disqualify
counsel). The District Court instead deferred to the Bankruptcy Court for the
Southern District of New York, in effect granting the Appellees’ motion to stay the
Florida case and denying the Appellants’ cross-motion to enjoin the Appellees
from proceeding in New York. But the District Court was required to rule on the
disqualification motion prior to deciding any of these substantive motions,
“because the success of a disqualification motion has the potential to change the
proceedings entirely.” Bowers v. Ophthalmology Group, 733 F. 3d 647, 654-55
(6th Cir. 2013).7
7 Intervenors acknowledge that Bowers primarily dealt with the potential for confidential information to “infect the evidence presented to the district court,”
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Based on undisputed facts, Becker suffers from clear conflicts of interest
that prejudice ongoing proceedings on behalf of absent class members. These
conflicts must be addressed and ended now, before substantive litigation on the
claims begins. Should the Court decide that further evidence is required in order to
determine the issue, however, Intervenors respectfully request a limited remand of
this Motion to the District Court below.
Conclusion
Becker’s representation of the class is tainted by multiple conflicts of
interest. In other actions, Becker is advocating for the interests of its “net winner”
clients and directly against the interests of its “net loser” clients. Moreover, it is per
se improper for Ms. Chaitman and her firm to represent a class of which Ms.
Chaitman was also a member. Becker cannot represent the net winners and net
losers here, and this Court should disqualify the firm. In the alternative,
Intervenors request that this Court remand the disqualification issue for
determination in the District Court below.
Dated: April 9, 2014
which was not a concern in the proceedings below. However, the Sixth Circuit further held in Bowers that even on a Rule 12(b)(6) motion, where no evidence is involved, “a district court should rule first on the motion to disqualify counsel to avoid any chance of infecting the proceedings.” Id. at n.5; see also Williams v.
Department of Corrections, 306 P. 3d 821, 823 (Utah App. 2013) (“To allow a case to progress while potentially conflicted counsel continues to represent a party threatens to taint all further proceedings in the case”).
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Respectfully submitted,
/s/ James W. Beasley, Jr. James W. Beasley, Jr. Florida Bar No. 145750 [email protected] BEASLEY HAUSER KRAMER & GALARDI, P.A. 505 South Flagler Drive, Suite 1500 West Palm Beach, Florida 33401 Tel: (561) 835-0900 Fax: (561) 835-0939
CERTIFICATE OF FILING AND SERVICE
I HEREBY CERTIFY that on this 9th day of April 2014, this
document was electronically filed with the Clerk of this Court by using the
CM/ECF system, which will serve a copy on all counsel of record.
/s/ James W. Beasley, Jr. James W. Beasley, Jr.
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EXHIBIT D
08-01789-smb Doc 6441-4 Filed 04/24/14 Entered 04/24/14 20:38:51 Exhibit D Pg 1 of 30
IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
NO. 14-11250
SUZANNE STONE MARSHALL, ADELE FOX, MARSHA PESHKIN, and RUSSELL OASIS, individually and on behalf of a class of similarly situated,
Appellants,
- versus -
CAPITAL GROWTH COMPANY; DECISIONS, INC.; FAVORITE FUNDS; JA PRIMARY LIMITED PARTNERSHIP; JA SPECIAL LIMITED PARTNERSHIP; JAB PARTNERSHIP;
JEMW PARTNERSHIP; JF PARTNERSHIP; JFM INVESTMENT COMPANIES; JLN PARTNERSHIP; JMP LIMITED PARTNERSHIP; JEFFRY M. PICOWER SPECIAL
COMPANY; JEFFRY M. PICOWER, P.C.; THE PICOWER FOUNDATION; THE PICOWER INSTITUTE OF MEDICAL RESEARCH; THE TRUST F/B/O GABRIELLE H. PICOWER;
BARBARA PICOWER, individually, and as Executor of the Estate of Jeffry M. Picower, and as Trustee for the Picower Foundation and for the Trust f/b/o Gabriel H. Picower,
Appellees.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA
APPELLEES’ OPPOSITION TO APPELLANTS’ MOTION FOR INJUNCTION PENDING APPEAL
HOLLAND & KNIGHT LLP SCHULTE ROTH & ZABEL LLP Sanford L. Bohrer William D. Zabel Brian Toth Marcy Ressler Harris Michael Kwon Jennifer M. Opheim 701 Brickell Avenue, Suite 3300 919 Third Avenue Miami, Florida 33131 New York, New York 10022 Telephone: (305) 789-7678 Telephone: (212) 756-2000 Facsimile: (305) 789-7799 Facsimile: (212) 593-5955 [email protected] [email protected] Counsel for Appellees Of Counsel for Appellees
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No. 14-11250 Marshall et al v. Capital Growth Co. et al
C-i of ii
CERTIFICATE OF INTERESTED PERSONS AND CORPORATE DISCLOSURE STATEMENT OF APPELLEES
Certificate of Interested Persons
Undersigned counsel for Appellees Capital Growth Company;
Decisions, Inc.; Favorite Funds; JA Primary Limited Partnership; JA Special
Limited Partnership; JAB Partnership; JEMW Partnership; JF Partnership; JFM
Investment Companies; JLN Partnership; JMP Limited Partnership; Jeffry M.
Picower Special Company; Jeffry M. Picower, P.C.; The Picower Foundation;
The Picower Institute of Medical Research; The Trust F/B/O Gabrielle H.
Picower; Barbara Picower, individually and as Executor of the Estate of Jeffry M.
Picower, and as Trustee for the Picower Foundation and for the Trust f/b/o
Gabriel H. Picower, pursuant to Federal Rule of Appellate Procedure 26.1 and
Eleventh Circuit Rules 26.1-1 through 26.1-3, hereby certifies that the following is
a complete list of persons and entities that were omitted from the certificate
contained in Appellants’ Expedited Motion for an Injunction Pending Appeal:
Hon. Stuart M. Bernstein, United States Bankruptcy Court Judge for the Southern
District of New York
Estate of Bernard L. Madoff Investment Securities, LLC
Opheim, Jennifer
United States Bankruptcy Court for the Southern District of New York
/s/ Sanford L. Bohrer Sanford L. Bohrer
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No. 14-11250 Marshall et al v. Capital Growth Co. et al
C-ii of ii
Corporate Disclosure Statement
Undersigned counsel for Appellees Capital Growth Company; Decisions,
Inc.; Favorite Funds; JA Primary Limited Partnership; JA Special Limited
Partnership; JAB Partnership; JEMW Partnership; JF Partnership; JFM
Investment Companies; JLN Partnership; JMP Limited Partnership; Jeffry M.
Picower Special Company; Jeffry M. Picower, P.C.; The Picower Foundation;
The Picower Institute of Medical Research; The Trust F/B/O Gabrielle H.
Picower; Barbara Picower, individually and as Executor of the Estate of Jeffry M.
Picower, and as Trustee for the Picower Foundation and for the Trust f/b/o
Gabriel H. Picower (collectively, “Appellees”), pursuant to Federal Rule of
Appellate Procedure 26.1 and Eleventh Circuit Rules 26.1-1 through 26.1-3,
hereby certifies that no corporation directly or indirectly owns 10% or more of
any class of equity interest in any of the Appellees.
/s/ Sanford L. Bohrer Sanford L. Bohrer
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TABLE OF CONTENTS
Page
CERTIFICATE OF INTERESTED PERSONS AND CORPORATE
DISCLOSURE STATEMENT OF APPELLEES ............................................ i
TABLE OF AUTHORITIES .................................................................................... ii
PRELIMINARY STATEMENT ............................................................................... 1
STATEMENT OF FACTS ........................................................................................ 3
ARGUMENT ............................................................................................................. 9
I. Appellants Do Not Have a Likelihood of Success on the Merits .................... 9
A. The Order Is Not an Appealable Interlocutory Order ......................... 10
B. The Second Circuit Did Not “Mandate” That the Florida Court Is
the Only Forum That Could Decide Whether Appellants’
Amended Claims Are Barred By the Permanent Injunction ............... 11
C. The Florida Court Did Not Abuse Its Discretion in Deferring to
the New York Bankruptcy Court ........................................................ 14
II. Appellants Cannot Enjoin the Non-Party Trustee ......................................... 15
III. Appellants Will Not Suffer Irreparable Injury Absent an Injunction ............ 16
IV. The Picower Parties and Trustee Will Be Prejudiced by an Injunction ........ 17
V. An Injunction Would Harm the Public Interest ............................................. 18
CONCLUSION ........................................................................................................ 20
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ii
TABLE OF AUTHORITIES Cases Page(s)
Admin. Mgmt. Servs., Ltd. v. Royal Am. Managers, Inc., 854 F.2d 1272 (11th Cir. 1988) .................................................................... 10-11
Aldana v. Del Monte Fresh Produce N.A., Inc., 578 F.3d 1283 (11th Cir. 2009) .......................................................................... 20
Carpenter v. Mohawk Indus., Inc., 541 F.3d 1048 (11th Cir. 2008) .......................................................................... 11
Forsyth County v. U.S. Army Corps of Engineers, 633 F.3d 1032 (11th Cir. 2011) .......................................................................... 15
Fox v. Picard, 848 F. Supp. 2d 469 (S.D.N.Y. 2012) ........................................................ 4, 6, 16
M & N Plastics, Inc. v. Sebelius, No. 13-819, 2013 WL 5912523 (D.D.C. Nov. 5, 2013) ..................................... 20
Marshall v. Picard, 740 F.3d 81 (2d Cir. 2014) .........................................................6-7, 11-12, 19-20
Picard v. Fox, 429 B.R. 423 (S.D.N.Y. Bankr. 2010) .......................................................... 3-4, 5
Transamerica Leasing, Inc. v. Inst. of London Underwriters, 430 F.3d 1326 (11th Cir. 2005) .......................................................................... 13
Touchston v. McDermott, 234 F.3d 1130 (11th Cir. 2000) ............................................................................ 9
United States v. Hogan, 986 F.2d 1364 (11th Cir. 1993) .......................................................................... 12
United States v. N.Y. Tel. Co., 434 U.S. 159 (1997) ............................................................................................ 12
Statutes and Rules
11 U.S.C. § 105(a) ..................................................................................................... 5
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11 U.S.C. § 362(a) ..................................................................................................... 5
28 U.S.C. § 1292(a)(1) ............................................................................................. 10
Fed. R. App. P. 8(a) ................................................................................................. 14
Fed. R. App. P. 41(b) ........................................................................................... 7, 13
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1
PRELIMINARY STATEMENT
In Appellants’ Expedited Motion for an Injunction Pending Appeal (the
“Motion”), Appellants seek the extraordinary remedy of enjoining Appellees (the
“Picower Parties”) and non-party Irving H. Picard (the “Trustee”), the court-
appointed trustee for the liquidation of Bernard L. Madoff Investment Securities
LLC (“BLMIS”), from having the Bankruptcy Court for the Southern District of
New York (the “New York Bankruptcy Court”) determine the scope of its own
permanent injunction (the “Permanent Injunction”). For the reasons herein,
Appellants’ Motion should be denied.
The Permanent Injunction at issue was entered by the New York Bankruptcy
Court pursuant to a settlement between the Trustee and the Picower Parties, in
which the Picower Parties paid more than $7.2 billion to settle, inter alia, the
Trustee’s claims against the Picower Parties (the “Trustee’s Claims”). A key part
of the settlement (and the New York Bankruptcy Court’s centralized
administration of the BLMIS liquidation) is the Permanent Injunction, which
enjoins any actions against the Picower Parties that are “duplicative or derivative”
of the Trustee’s Claims.
This is not the first time Appellants have tried to enjoin the Trustee from
having the New York Bankruptcy Court determine whether Appellants’ claims
against the Picower Parties are impermissibly derivative of the Trustee’s Claims.
After this putative class action and a separately-filed companion complaint were
filed in the district court for the Southern District of Florida (the “Florida Court”)
on February 16 and 17, 2010, the Trustee initiated an action in the New York
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2
Bankruptcy Court on March 31, 2010 for a determination that those actions were
barred by the automatic stay. In response, on April 1, 2010, Appellants filed ex
parte motions in the Florida Court for emergency temporary restraining orders to
enjoin the Trustee from proceeding with that action in New York. The Florida
Court properly denied those motions that same day.
On May 3, 2010, the New York Bankruptcy Court held that Appellants’
putative class action complaints filed in the Florida Court were impermissibly
derivative of the Trustee’s Claims. On appeal, both the district court for the
Southern District of New York (the “SDNY District Court”) and the Court of
Appeals for the Second Circuit affirmed the New York Bankruptcy Court’s
decision, finding that Appellants’ complaints were barred by the Permanent
Injunction and the automatic stay.
Having lost in the New York federal courts, Appellants returned to the
Florida Court and filed a Motion to Reopen, seeking leave to file a proposed
Second Amended Complaint. Yet this time, relying on pure dicta that they
mischaracterize as a “mandate” from the Second Circuit, Appellants insist that the
New York Bankruptcy Court no longer has jurisdiction to decide whether their
newly amended claims also violate the Permanent Injunction and automatic stay.
If the Second Circuit had intended to divest the New York Bankruptcy Court of
jurisdiction, it surely would not have done so merely in a clause to a sentence,
without any analysis, and on an issue that was never briefed or argued.
Appellants’ fallacious “mandate” argument is another attempt to end run the New
York federal courts, where Appellants have litigated unsuccessfully for years, first
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in opposition to the Picower Parties’ $7.2 billion settlement and then in support of
claims found to be barred by the Permanent Injunction and automatic stay.
Consequently, in response to Appellants’ Motion to Reopen, the Trustee
again filed (a) a complaint against Appellants (and other related putative class
action plaintiffs) in the New York Bankruptcy Court (the “New York Action”), and
(b) a motion for preliminary injunction, scheduled for hearing on May 7, 2014, to
enjoin Appellants from filing their Second Amended Complaint because it would
violate the Permanent Injunction and automatic stay (the “Trustee’s Motion”). The
Florida Court, exercising sound discretion, entered an order stating that it would
defer to the New York Bankruptcy Court for the determination of whether
Appellants’ proposed Second Amended Complaint violates the Permanent
Injunction and automatic stay.
Appellants now appeal from that order and seek an injunction pending
appeal to enjoin the Trustee – not a party herein – from prosecuting the New York
Action. In the interests of comity and judicial efficiency, this Court should not
grant such an injunction and instead, like Florida Court below, should defer to the
New York Bankruptcy Court.
STATEMENT OF FACTS
This action arises from the multi-billion dollar Ponzi scheme perpetrated by
Bernard L. Madoff through his securities firm, BLMIS.1 On December 15, 2008,
1 This putative class action initially was brought by Appellant Adele Fox (“Fox”) on behalf of customers who withdrew more money than they deposited (“Net Winners”). A companion putative class action was separately filed by Appellant
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the SDNY District Court appointed the Trustee for the liquidation of BLMIS (“the
BLMIS Liquidation”) and removed that proceeding to the New York Bankruptcy
Court. See Picard v. Fox, 429 B.R. 423, 426 (S.D.N.Y. Bankr. 2010). As part of
the BLMIS Liquidation, on May 12, 2009, the Trustee sued the Picower Parties
and asserted the Trustee’s Claims, including for fraudulent transfers, preferences,
turnover, and state law fraudulent conveyances. See id. at 429.
Appellants Fox and Marshall were BLMIS customers who filed customer
claims in the BLMIS Liquidation. See id. at 428. Marshall’s customer claim was
allowed on July 24, 2009 in the amount of $30,000, the amount she lost in
Madoff’s Ponzi scheme. See id. Fox’s customer claims were denied because Fox
was a Net Winner. Like all other Madoff customers similarly situated, Fox was
barred from receiving payments through the BLMIS Liquidation until all Net
Losers recovered their principal investments. Fox v. Picard, 848 F. Supp. 2d 469,
474 (S.D.N.Y. 2012).
At the time the Trustee was negotiating his settlement with the Picower
Parties, the Fox/Marshall Class Actions were filed in the Florida Court, asserting
claims for conversion, unjust enrichment, conspiracy, and violations of Florida’s
Suzanne Stone Marshall (“Marshall”) under Case No. 10-80254 on behalf of customers who lost money in the Madoff Ponzi scheme (“Net Losers”) (the Fox and Marshall actions, collectively, the “Fox/Marshall Class Actions”). On March 22, 2011, Judge Ryskamp administratively closed the Fox/Marshall Class Actions. On February 5, 2014, a Motion to Reopen was filed, adding as Plaintiffs Marshall, Marsha Peshkin, and Russell Oasis (Fox, Marshall, Peshkin and Russell, collectively, “Appellants”). No motion to reopen was filed in the companion Marshall action (Case No. 10-80254), which remains administratively closed.
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RICO Act, all arising from the Picower Parties’ alleged withdrawals from their
BLMIS accounts. (S.D. Fla. Nos. 10-80252 and 10-80254.)2
On March 31, 2010, the Trustee filed a complaint in the New York
Bankruptcy Court against Fox and Marshall seeking, among other things, a
declaration that the Fox/Marshall Class Actions violated the automatic stay under
Section 362(a) of the Bankruptcy Code and a preliminary injunction pursuant to
Section 105(a) of the Bankruptcy Code enjoining any further prosecution of the
Fox/Marshall Class Actions. See Picard, 429 B.R. at 430.
The very next day, Fox and Marshall filed ex parte emergency motions in
the Florida Court for temporary restraining orders to enjoin the Trustee’s action in
the New York Bankruptcy Court. The Florida Court properly denied those
motions that same day. (DE 16 & 17; S.D. Fla. No. 10-80254, DE 14 & 15.)3
On May 3, 2010, after a hearing, the New York Bankruptcy Court granted
the Trustee’s motion for a preliminary injunction and deemed the Fox/Marshall
Class Actions void ab initio, finding that the Fox/Marshall Class Actions violated
the automatic stay because they impermissibly asserted claims that were derivative
of the Trustee’s Claims. Picard, 429 B.R. at 432, 437.
On December 17, 2010, the Picower Parties entered into two separate but
2 Fox and Marshall asserted identical claims against the Picower Parties, with the only differences being that Fox sought to represent a class of Net Winners and Marshall sought to represent a class of Net Losers. On March 15, 2010, Fox and Marshall filed amended complaints which made non-substantive changes. 3 Unless otherwise noted, citations to “DE” refer to the docket entries in S.D. Fla. Case No. 10-80252 (Ryskamp, J.).
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related agreements: (a) with the U.S. Department of Justice pursuant to which the
Picower Parties agreed to forfeit $7.2 billion, representing 100% of their net
withdrawals from BLMIS, and (b) with the Trustee (the “Settlement Agreement”),
pursuant to which they agreed that $5 billion of the forfeited funds would be
transferred to the Trustee for distribution to Madoff’s victims. Over the objections
of Fox and Marshall, on January 13, 2013, the New York Bankruptcy Court
approved the Settlement Agreement and issued the Permanent Injunction enjoining
claims against the Picower Parties that were “duplicative or derivative” of the
Trustee’s Claims. (Ex. A § 7; Ex. B.) The Florida Court later administratively
closed the Fox/Marshall Class Actions. (DE 26; S.D. Fla. No. 10-80254, DE 21.)
The SDNY District Court affirmed the New York Bankruptcy Court’s order,
agreeing that Fox’s and Marshall’s claims were barred by the Permanent Injunction
and automatic stay because they were duplicative and derivative of the Trustee’s
Claims. Fox v. Picard, 848 F. Supp. 2d 469 (S.D.N.Y. 2012).
The Second Circuit affirmed the decision of the SDNY District Court
enjoining the Fox/Marshall Class Actions, also finding that Appellants’ complaints
“impermissibly attempt to ‘plead around’ the [New York] Bankruptcy Court’s
injunction barring all claims ‘derivative’ of those asserted by the Trustee.”
Marshall v. Picard, 740 F.3d 81, 84 (2d Cir. 2014). The Second Circuit’s opinion
concluded with these words: Accordingly, the judgment of the [SDNY] District Court is AFFIRMED without prejudice to Fox and Marshall seeking leave to amend their complaints in the United States District Court for the Southern District of Florida.
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Of course, we intimate no view on an appropriate disposition of any such motion for leave to amend.
Id. at 96. Contrary to Appellants’ assertion, the Second Circuit did not thereby
direct that only the Florida Court could decide whether an amended complaint filed
by Fox and Marshall would be barred by the Permanent Injunction and automatic
stay. That issue was not before the Second Circuit.
On February 5, 2014, the Second Circuit issued a Mandate affirming the
judgment of the SDNY District Court, as required by FRAP 41(b). (Ex. C.) The
Mandate is completely silent as to whether Fox and Marshall can seek leave to
amend, or which court is to decide whether an amended complaint would be
“duplicative or derivative” of the Trustee’s Claims. That same day, Appellants
filed a Motion to Reopen in the Florida Court, seeking leave to file the proposed
Second Amended Complaint. (DE 28.)
On February 18, 2014, the Picower Parties filed an emergency motion in the
Florida Court seeking, among other things, to stay this action pending a ruling by
the New York Bankruptcy Court on a motion by the Trustee (the “Motion to
Stay”). (DE 29-30.) On February 24, 2014, the Florida Court stayed this action
pending resolution of the Motion to Stay. (DE 37.)
Also on February 24, 2014, based on Appellants’ misreading of the final
paragraph of the Second Circuit’s decision (which affirmed the SDNY District
Court’s decision affirming the New York Bankruptcy Court), Appellants filed an
Opposition to the Motion to Stay and a Cross-Motion seeking, among other things,
to preliminarily enjoin the Picower Parties “and any persons in active concert or
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participation with them” (purportedly, the Trustee) from litigating the new
Fox/Marshall claims outside of the Florida Court.4 (DE 38.)
On March 11, 2014, the Trustee filed the New York Action and the
Trustee’s Motion in the New York Bankruptcy Court, seeking (i) a determination
that this action and a related putative class action (the “Goldman Action”) filed by
Pamela Goldman and A & G Goldman Partnership (collectively, the “Goldmans”)
violate the Permanent Injunction and automatic stay; and (ii) a preliminary
injunction enjoining Appellants and the Goldmans from proceeding with their
respective actions against the Picower Parties. (Exs. D-F.) The hearing on the
Trustee’s Motion is scheduled for May 7, 2014.
On March 12, 2014, Appellants filed a Motion for Limited Relief from Stay
and Request for Emergency Hearing on the Motion to Stay and Cross-Motion for
Injunctive Relief, seeking an emergency hearing. (DE 52.) On March 17, 2014,
the Florida Court denied that motion, stating that it “declines to conduct an
emergency hearing on the question of whether to enjoin the New York action.
Rather, this Court defers to the Bankruptcy Court for the Southern District of New
York for a ruling on [the Trustee’s] motion to enjoin the instant action.” (DE 58
(the “Order”).) The Order did not deny Appellants’ Cross-Motion for preliminary
injunction, but only ruled on Appellants’ request for an emergency hearing.
On March 24, 2014, Appellants filed a Notice of Appeal from the Order.
4 While seeking to have the Florida Court enjoin the Trustee, Appellants did not name the Trustee as a defendant, nor did they properly serve him with their Cross-Motion seeking to enjoin him.
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(DE 59.) On April 9, 2014, more than three weeks after the Order was entered,
Appellants filed in this Court the Motion sub judice, seeking to enjoin the Picower
Parties and the Trustee “from litigating the merits of Appellants’ proposed second
amended complaint outside the Florida Court, pending resolution of this appeal.”
(Mot. at 18.)5
ARGUMENT
Appellants’ Motion for an injunction pending appeal should be denied. To
obtain the “extraordinary remedy” of an injunction pending appeal, Appellants
must show: (1) a substantial likelihood that they will prevail on the merits of the appeal; (2) a substantial risk of irreparable injury to the intervenors unless the injunction is granted; (3) no substantial harm to other interested persons; and (4) no harm to the public interest.
Touchston v. McDermott, 234 F.3d 1130, 1132 (11th Cir. 2000). Here, Appellants
cannot satisfy any of these requirements.
I. Appellants Do Not Have a Likelihood of Success on the Merits
Appellants do not have a likelihood of success on the merits of their appeal
of the Order because (i) the Order is a non-appealable interlocutory order; (ii) the
Second Circuit did not “mandate” that only the Florida Court can decide if the
proposed Second Amended Complaint would violate the Permanent Injunction and
5 Notably, neither the Picower Parties (who are not parties in the New York Action), nor the Trustee, seek to litigate the “merits” of the proposed Second Amended Complaint in the New York Action. Rather, the Trustee is seeking to have the New York Bankruptcy Court determine the threshold question of whether the proposed Second Amended Complaint is “duplicative or derivative” of the Trustee’s Claims, in violation of the Permanent Injunction and automatic stay.
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automatic stay; and (iii) the Florida Court did not abuse its discretion in deciding to
defer to the New York Bankruptcy Court for a ruling on the Trustee’s Motion.
A. The Order Is Not an Appealable Interlocutory Order
Appellants do not have a likelihood of success on the merits of their appeal
because the Order is not appealable, as set forth in Appellees’ Motion to Dismiss
the Appeal, being filed herewith. The Order simply stated that the Florida Court
was deciding Appellants’ motion “requesting that [the Florida Court] lift the stay
entered February 21, 2014 for the purpose of scheduling an emergency hearing.”
(DE 58.) The Florida Court further ruled that it “declines to conduct an emergency
hearing on the question of whether to enjoin the New York action.” (Id.) Thus,
the Florida Court did not deny Appellants’ motion for preliminary injunction, as
Appellants incorrectly claim; it only denied their motion for an emergency hearing.
Under 28 U.S.C. § 1292(a)(1), an order denying a request for an emergency
hearing is not appealable. Even if the Order had the practical effect of denying
Appellants’ motion for preliminary injunction, interlocutory orders that have the
practical effect of denying injunctions are appealable only if the appellants can
show “serious, perhaps irreparable, consequence.” Admin. Mgmt. Servs., Ltd. v.
Royal Am. Managers, Inc., 854 F.2d 1272, 1278 (11th Cir. 1988). Here,
Appellants have made no showing of “serious” or “irreparable” consequence. In
fact, they have failed to show that they would suffer irreparable harm at all if the
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Trustee’s Motion is not enjoined. Accordingly, the Order is not an appealable
interlocutory order.6
B. The Second Circuit Did Not “Mandate” That the Florida Court Is the Only Forum That Could Decide Whether Appellants’ Amended Claims Are Barred By the Permanent Injunction
Appellants’ sole basis for seeking an injunction is the false premise that the
Second Circuit “mandated” that only the Florida Court could decide if their
proposed amended claims violate the Permanent Injunction and automatic stay.
That is a gross mischaracterization of the Second Circuit’s opinion. The Second
Circuit did not “mandate,” “order,” “direct” or otherwise make a ruling as to which
court – the Florida Court or the New York Bankruptcy Court – should decide the
applicability of the Permanent Injunction and automatic stay to Appellants’
amended claims. Rather, the Second Circuit affirmed the SDNY District Court’s
judgment voiding the Fox/Marshall Class Actions without prejudice to Fox and
Marshall seeking to amend their claims, then added – in dicta – that:
There is conceivably some particularized conspiracy claim appellants could assert that would not be derivative of those asserted by the Trustee. That question, however, is not properly before us, and is a question in the first
6 Appellants’ alternative request that this Court consider their appeal as a mandamus petition fares no better. “The petitioner seeking the writ carries the burden of showing that its right to the issuance of the writ is clear and indisputable,” and “[a] writ will not issue merely because [the petitioner] shows evidence that, on appeal, would warrant reversal of the district court.” Carpenter v. Mohawk Indus., Inc., 541 F.3d 1048, 1055 (11th Cir. 2008). The writ of mandamus places a higher burden on the petitioner than does a direct appeal; the petitioner must show a “clear usurpation of power or abuse of discretion.” Id. at 1054-55. As set forth in Part I.C, infra, Appellants cannot meet this extraordinarily high burden and, accordingly, no writ of mandamus should issue.
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instance for the United States District Court for the Southern District of Florida.
Marshall v. Picard, 740 F.3d 81, 94 (2d Cir. 2014).
The Second Circuit plainly did not “mandate” that the question must be
decided only by the Florida Court. Such a ruling would have divested the New
York Bankruptcy Court of its jurisdiction to decide that threshold question itself,
based on its own interpretation of its own Permanent Injunction and automatic
stay. If, as Appellants insist, the Second Circuit had taken the highly unusual step
of stripping the New York Bankruptcy Court of jurisdiction to decide whether
Appellants’ amended claims are duplicative or derivative of the Trustee’s Claims,
and thus barred, it would have done so in a clear and purposeful way, after careful
discussion and analysis of all relevant facts and law. Yet there is no discussion and
analysis of the issue anywhere in the Second Circuit’s decision.
Indeed, the issue of whether the Florida Court or the New York Bankruptcy
Court (or both) can decide whether Appellants’ amended claims are derivative of
the Trustee’s Claims was never briefed by either party, nor decided by the Second
Circuit. Accordingly, the Second Circuit’s dicta that the question is “in the first
instance for the [Florida Court]” is not controlling, as the Florida Court properly
recognized. See United States v. N.Y. Tel. Co., 434 U.S. 159, 184 (1997) (where an
“issue was not briefed,” a court’s statement on that issue was “in dicta” and “has
absolutely no force”); United States v. Hogan, 986 F.2d 1364, 1372 (11th Cir.
1993) (where an “issue simply was not presented,” a court is “not bound by [the
case’s] dictum”).
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Necessarily, if the Second Circuit had concluded that only the Florida Court
could decide whether Appellants’ claims were “duplicative or derivative” of the
Trustee’s Claims, it would have reversed the SDNY District Court’s affirmance of
the New York Bankruptcy Court order, and directed that the Florida Court decide
the issue. Instead, the Second Circuit affirmed the New York District Court’s
affirmance of the New York Bankruptcy Court’s finding that the Fox/Marshall
Class Actions were impermissibly derivative of the Trustee’s Claims. There is no
plausible reason the Second Circuit thereafter would deprive the New York
Bankruptcy Court of jurisdiction to decide whether Appellants’ new claims are
similarly are derivative, and certainly Appellants have offered no reason. Rather,
Appellants seize on the Second Circuit’s dicta to litigate in their preferred forum.
Compounding the weakness of their position, Appellants also
mischaracterize the Second Circuit’s dicta as a purported “mandate” (Mot. at 8-
11), in order to invoke the “mandate rule,” pursuant to which a district court “may
not alter, amend, or examine the [Court of Appeals’] mandate, or give any further
relief or review, but must enter an order in strict compliance with the mandate,”
Transamerica Leasing, Inc. v. Inst. of London Underwriters, 430 F.3d 1326, 1331
(11th Cir. 2005); see also Fed. R. App. Pro. 41(b). Yet the “mandate rule” does
not apply here because the Second Circuit’s actual Mandate, which was issued on
February 5, 2014, is completely silent on which court – the Florida Court or New
York Bankruptcy Court – can or should decide whether Appellants’ amended
claims would violate the Permanent Injunction and automatic stay. (See Ex. C.)
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As an alternative to obtaining an injunction pursuant to the traditional
standard for injunctions under FRAP 8(a), Appellants also argue that they are
entitled to an injunction pursuant to the All Writs Act “to protect the integrity of
the Second Circuit mandate.” (Mot. at 14.) Appellants’ argument is based on the
faulty premise that the Second Circuit “mandated” that only the Florida Court can
decide whether the proposed Second Amended Complaint violates the Permanent
Injunction and automatic stay. Because the Second Circuit did not issue such a
“mandate,” Appellants are not entitled to an injunction under the All Writs Act.7
C. The Florida Court Did Not Abuse Its Discretion in Deferring to the New York Bankruptcy Court
Appellants’ next makeweight argument is that the Florida Court’s Order is
not subject to an abuse of discretion standard because “this case involves a clear-
cut issue of law.” (Mot. at 9.) Assuming arguendo that the Order – which merely
denied Appellants’ motion to lift the stay for an emergency hearing (i.e., a non-
appealable interlocutory order) – could be construed as an appealable denial of
7 Appellants also argue, in conclusory fashion, that “the judicially created ‘first-filed’ rule” is another basis for injunctive relief. To the contrary, the so-called “first-filed” rule has no application here because the Trustee filed his action in response to Appellants’ Motion to Reopen, which seeks leave to file their Second Amended Complaint. There is no scenario in which the Trustee could have filed his action to enjoin Appellants’ proposed Second Amended Complaint before Appellants filed their Motion to Reopen attaching the proposed Second Amended Complaint. This is not a situation in which there was a “race to the courthouse” between Appellants and the Trustee requiring deference to the first to file. In any event, the “first-filed” action here was actually the Trustee’s action against the Picower Parties in the New York Bankruptcy Court, first filed in May 2009. Thereafter, counsel for Fox and Marshall filed the Fox/Marshall Class Actions in the Florida Court, parroting the Trustee’s Claims.
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their motion for a preliminary injunction (which it is not), findings of fact made to
deny a motion for a preliminary injunction are reviewed under an abuse of
discretion standard. See Forsyth County v. U.S. Army Corps of Engineers, 633
F.3d 1032, 1039 (11th Cir. 2011) (“We review the decision to deny a preliminary
injunction for abuse of discretion. In so doing, we review the findings of fact of
the district court for clear error and legal conclusions de novo.” (internal quotation
marks and citations omitted)).
Here, the Order did not make any legal conclusions for this Court to review
de novo. (See DE 58.) Moreover, even assuming that the Order had the practical
effect of denying Appellants’ motion for preliminary injunction, the Florida Court
implicitly made the factual findings that Appellants would not suffer irreparable
harm and/or that the balance of the equities do not weigh in their favor, which are
reviewed for “clear error” under an abuse of discretion standard. Appellants have
made no attempt to show that the Florida Court committed “clear error.” Nor
could they, because, as discussed below, Appellants will not suffer any irreparable
harm in the absence of an injunction.
II. Appellants Cannot Enjoin the Non-Party Trustee
In addition to not having a likelihood of success on the merits, an injunction
pending appeal should not be granted because Appellants cannot enjoin the
Trustee, a non-party to this action. In seeking to have this Court enjoin the
Trustee, Appellants repeatedly mischaracterize the Picower Parties and the Trustee
as being agents of, or in concert with, each other. (See, e.g., Mot. at 8 (“Appellees
then colluded with the Trustee” and acted “[i]n furtherance of their plan”); id. at 7
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(mischaracterizing the court-approved Settlement Agreement as a “co-operation
agreement”); id. at 8 (“Appellees, and their agent, the Trustee”); id. at 11
(“Appellees, who are in privity with the Trustee”); id. (“the Trustee, on behalf of
Appellees” brought the New York Action).)
Appellants once again see conspiracies where none exist. Previously, in
objecting to the $7.2 billion settlement with the Picower Parties, Fox and Marshall
“argued, absurdly, that the Picower estate, the Trustee, and the Government
somehow conspired to recover more than they were entitled to ‘in order [to] divest
the Picower Defendants of the assets that should be available to satisfy Fox’s valid
and independent claims’ in the Florida action.” (Ex. G at 21 (emphasis added).)
The New York Bankruptcy Court correctly rejected their argument as “not
credible.” (Ex. B at 6.) Appellants’ arguments are no more credible now.8
III. Appellants Will Not Suffer Irreparable Injury Absent an Injunction
Appellants argue that they will suffer “per se irreparable harm” if they are
forced “to litigate the sufficiency of the proposed second amended complaint in
New York after the Second Circuit has ruled that the issue is to be resolved in the
8 Notably, the Trustee’s Motion is brought on behalf of the BLMIS estate, not the Picower Parties, to vindicate the BLMIS estate’s interests. See Fox v. Picard, 848 F. Supp. 2d 469, 490-91 (S.D.N.Y. 2012) (“Allowing the [Fox/Marshall Class Actions] to go forward would carry real risks to the [BLMIS] estate, implicating . . . the possibility of future settlements, and providing an avenue for BLMIS customers who are displeased with the Net Equity Decision to undermine that decision by directly pursuing claims that are wholly derivative of claims already brought by the Trustee.”). Appellants’ attempts to block the Trustee’s Motion by moving against the Picower Parties and not the Trustee is both improper and further evidence of forum shopping.
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Southern District of Florida.” (Mot. at 16.) As discussed above, the Second
Circuit did not rule in Appellants’ favor, on any issue. Moreover, Appellants
cannot be “irreparably harmed” by the lack of enforcement of a ruling that the
Second Circuit never made.
Appellants also argue that “proceeding in New York will result in another
multi-year delay before Appellants can even begin to litigate the merits of their
claims in Florida.” (Mot. at 16.) That argument is based on rank speculation.
Litigating in Florida could take just as long, or longer, than litigating in New York.
There is simply no way to know whether the issue would be resolved faster in New
York or Florida. Purported delay that may or may not occur is not a basis for
finding irreparable harm.
Finally, Appellants argue that “re-litigating” an issue constitutes irreparable
harm. (See Mot. at 16.) Yet Appellants do not seek to re-litigate any issue; they
seek to file a newly amended complaint that has not been tested by either the New
York Bankruptcy Court or the Florida Court. As Appellants cannot re-litigate a
new complaint, they cannot suffer irreparable harm thereby.
IV. The Picower Parties and Trustee Will Be Prejudiced by an Injunction
Appellants argue that the Trustee and the Picower Parties will not suffer any
prejudice if an injunction is granted because they “can – and should – litigate the
viability of the second amended complaint in the Florida Court, as the Second
Circuit ordered.” (Mot. 17.) That unsupported claim ignores that (i) the Trustee
already has briefed the viability of Appellants’ proposed Second Amended
Complaint in the New York Bankruptcy Court; (ii) the Second Circuit did not
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“order” that the issue must be decided by the Florida Court; and (iii) the New York
Bankruptcy Court is more familiar with issues related to the Permanent Injunction
and the automatic stay in the context of the BLMIS Liquidation.
If the Motion is granted, the Trustee would be forced to engage in
unnecessary, duplicative, piecemeal litigation, in both New York and Florida,
because the New York Bankruptcy Court still will decide the portion of the
Trustee’s Motion concerning whether the Goldmans’ proposed complaint (which is
substantively similar to Appellants’ proposed Second Amended Complaint)
violates the Permanent Injunction and automatic stay. Such piecemeal litigation is
the antithesis of judicial efficiency and would be a waste of the Trustee’s
resources, which should instead go to victims of Madoff’s scheme. Similarly, the
Picower Parties would be prejudiced if they had to expend resources to brief the
issue of whether Appellants’ amended claims violate the Permanent Injunction and
automatic stay, when that issue has already been briefed by the Trustee before the
New York Bankruptcy Court. The Picower Parties should not be forced to
undergo such an unnecessary and wasteful duplication of effort.
Given that Appellants will not suffer any irreparable harm in the absence of
an injunction, and there would be a waste of judicial and party resources from
duplicative litigation and the possibility of inconsistent results if an injunction is
granted, the balance of the equities weighs against issuing an injunction.
V. An Injunction Would Harm the Public Interest
The injunction sought by Appellants would harm the public interest.
Congress enacted the Bankruptcy Code to provide for centralized administration of
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bankruptcies in the bankruptcy courts. Thus, there is a strong public interest in not
interfering with a bankruptcy court’s administration of a bankruptcy estate. That
public interest is heightened in connection with the New York Bankruptcy Court’s
administration of the epic BLMIS Liquidation, which has been going on for more
than five years and involves more than a thousand cases. Enjoining the court-
appointed Trustee from seeking a determination from the New York Bankruptcy
Court to interpret its own Permanent Injunction and the automatic stay in the
BLMIS Liquidation would be contrary to the public interest.
Moreover, an injunction would lead to piecemeal litigation and could lead to
inconsistent results because the viability of the Appellants’ proposed Second
Amended Complaint and the Goldmans’ proposed complaint would be adjudicated
in parallel by the Florida Court and the New York Bankruptcy Court, respectively.
The most judicially economical approach would be to allow the New York
Bankruptcy Court to decide the applicability of its own Permanent Injunction and
automatic stay to both the Appellants’ and the Goldmans’ proposed complaints,
which is the same exact procedure that was followed to test the viability of their
prior complaints. Enjoining that procedure would be in direct conflict with the
Second Circuit’s decision that the New York Bankruptcy Court correctly enjoined
those initial complaints as being impermissibly derivative of the Trustee’s Claims.
An injunction also would reward Appellants for blatant forum shopping.
Appellants disingenuously accuse Appellees and the Trustee of “engaging in the
worst kind of forum shopping” (Mot. at 18), but it is the Appellants who chose to
bring their putative class actions in the Florida Court in order to “impermissibly
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attempt to plead around the Bankruptcy Court’s injunction barring all claims
‘derivative’ of those asserted by the Trustee.” Marshall v. Picard, 740 F.3d 81, 84
(2d Cir. 2014) (emphasis added).
Now that Appellants have lost before the (i) New York Bankruptcy Court,
(ii) SDNY District Court, and (iii) Second Circuit, Appellants understandably want
another court – the Florida Court – to test the viability of their newly amended
complaint. Looking for a better result in another court is not a proper basis for an
injunction, nor would such an injunction serve the public interest. See Aldana v.
Del Monte Fresh Produce N.A., Inc., 578 F.3d 1283, 1298 (11th Cir. 2009)
(recognizing “great[] policy interest in preventing forum shopping”); M & N
Plastics, Inc. v. Sebelius, No. 13-819, 2013 WL 5912523, at *5 (D.D.C. Nov. 5,
2013) (“public interest factors” include “the law’s aversion to forum shopping”).
CONCLUSION
For all of the foregoing reasons, Appellants’ Expedited Motion for
Injunction Pending Appeal should be denied in its entirety. Respectfully submitted,
HOLLAND & KNIGHT LLP By: s/Brian W. Toth
Brian W. Toth
701 Brickell Avenue Suite 3300 Miami, Florida 33131 (305) 789-7678 Attorneys for Appellees
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Of counsel: SCHULTE ROTH & ZABEL LLP William D. Zabel Marcy Ressler Harris Michael Kwon Jennifer M. Opheim
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CERTIFICATE OF SERVICE
I certify that a copy of this document was served by CM/ECF or U.S. mail
on April 16, 2014, on all counsel or parties of record on the Service List below.
s/Brian W. Toth Helen Davis Chaitman Becker & Poliakoff, LLP 45 Broadway New York, New York 10006 Telephone: (212) 599-3322 Facsimile: (212) 557-0295 Email: [email protected]
James W. Beasley Jr. Robert J. Hauser Joseph George Galardi Andrew Steven Kwan Beasley Hauser Kramer & Giraldi, P.A. 505 S. Flagler Drive, Suite 500 West Palm Beach, Florida 33401 Telephone: (561) 835-0900 Facsimile: (561) 835-0939 Email: [email protected] Email: [email protected] Email: [email protected] Email: [email protected]
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Lesley Guy Blackner Blackner Stone & Associates 340 Royal Poinciana Way, St 317-377 Palm Beach, FL 33480 Phone: 561-659-5754 Fax: 561-659-3184 Email: [email protected] David Sheehan Counsel for Trustee Irving Picard BakerHostetler 45 Rockefeller Plaza, #10 New York, NY 10111 Phone (212) 589-4616 Email: [email protected] The Honorable Kenneth L. Ryskamp United States District Court for the Southern District of Florida Paul G. Rogers Federal Building 701 Clematis Street, Room 416 West Palm Beach, FL 33401
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EXHIBIT E
08-01789-smb Doc 6441-5 Filed 04/24/14 Entered 04/24/14 20:38:51 Exhibit E Pg 1 of 31
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
NO. 14-11250
SUZANNE STONE MARSHALL, ADELE FOX, MARSHA PESHKIN, and RUSSELL OASIS, individually and on behalf of a class of similarly situated,
Appellants,
- versus -
CAPITAL GROWTH COMPANY; DECISIONS, INC.; FAVORITE FUNDS; JA PRIMARY LIMITED PARTNERSHIP; JA SPECIAL LIMITED PARTNERSHIP; JAB PARTNERSHIP;
JEMW PARTNERSHIP; JF PARTNERSHIP; JFM INVESTMENT COMPANIES; JLN PARTNERSHIP; JMP LIMITED PARTNERSHIP; JEFFRY M. PICOWER SPECIAL
COMPANY; JEFFRY M. PICOWER, P.C.; THE PICOWER FOUNDATION; THE PICOWER INSTITUTE OF MEDICAL RESEARCH; THE TRUST F/B/O GABRIELLE H. PICOWER;
BARBARA PICOWER, individually, and as Executor of the Estate of Jeffry M. Picower, and as Trustee for the Picower Foundation and for the Trust f/b/o Gabriel H. Picower.
Appellees.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA
APPELLEES’ OPPOSITION TO MOTION FOR EXPEDITED APPEAL AND CROSS-MOTION TO DISMISS APPEAL
HOLLAND & KNIGHT LLP SCHULTE ROTH & ZABEL LLP Sanford L. Bohrer William D. Zabel Brian Toth Marcy Ressler Harris Michael Kwon Jennifer M. Opheim 701 Brickell Avenue, Suite 3300 919 Third Avenue Miami, Florida 33131 New York, New York 10022 Telephone: (305) 789-7678 Telephone: (212) 756-2000 Facsimile: (305) 789-7799 Facsimile: (212) 593-5955 [email protected] [email protected] Counsel for Appellees Of Counsel for Appellees
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Pg 2 of 31
No. 14-11250 Marshall et al v. Capital Growth Co. et al
C-i of v
CERTIFICATE OF INTERESTED PERSONS
AND CORPORATE DISCLOSURE STATEMENT OF APPELLEES
Certificate of Interested Persons
Undersigned counsel for Appellees Capital Growth Company; Decisions,
Inc.; Favorite Funds; JA Primary Limited Partnership; JA Special Limited
Partnership; JAB Partnership; JEMW Partnership; JF Partnership; JFM
Investment Companies; JLN Partnership; JMP Limited Partnership; Jeffry M.
Picower Special Company; Jeffry M. Picower, P.C.; The Picower Foundation;
The Picower Institute of Medical Research; The Trust F/B/O Gabrielle H.
Picower; Barbara Picower, individually and as Executor of the Estate of Jeffry M.
Picower, and as Trustee for the Picower Foundation and for the Trust f/b/o
Gabriel H. Picower, pursuant to Federal Rule of Appellate Procedure 26.1 and
Eleventh Circuit Rules 26.1-1 through 26.1-3, hereby certifies that
the following is a complete list of persons and entities having an interest in
the outcome of this appeal:
A & G Goldman Partnership Baker & Hostetler LLP, counsel for Irving H. Picard, as Trustee of Bernard L. Madoff Investment Securities, LLC Beasley, Hauser, Kramer and Galardi, P.A., counsel for A & G Goldman Partnership and Pamela Goldman Becker & Poliakoff, LLP, counsel for Appellants
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Pg 3 of 31
No. 14-11250 Marshall et al v. Capital Growth Co. et al
C-ii of v
Becker & Poliakoff, P.A., counsel for Appellants Hon. Stuart M. Bernstein, United States Bankruptcy Court Judge for the Southern District of New York Blackner Stone and Associates, counsel for A & G Goldman Partnership and Pamela Goldman Bohrer, Sanford Capital Growth Company Chaitman, Helen Davis Decisions, Inc. Estate of Bernard L. Madoff Investment Securities, LLC Favorite Funds Fox, Adele Galardi, Joseph Goldman, Pamela Gotthoffer, Lance Harris, Marcy Ressler Holland & Knight LLP, counsel for Appellees Hon. James M. Hopkins, United States Magistrate Judge JA Primary Limited Partnership JA Special Limited Partnership JAB Partnership
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No. 14-11250 Marshall et al v. Capital Growth Co. et al
C-iii of v
JEMW Partnership JF Partnership JFM Investment Companies JLN Partnership JMP Limited Partnership Jeffry M. Picower Special Company Jeffry M. Picower, P.C. Kwon, Michael LaSalle, Frank Hon. Kenneth A. Marra, United States District Judge Marshall, Suzanne Stone Hon. William Matthewman, United States Magistrate Judge Oasis, Russell Opheim, Jennifer M. Irving H. Picard, Trustee of Bernard L. Madoff Investment Securities, LLC Picower, Barbara The Picower Foundation The Picower Institute of Medical Research Peshkin, Marsha Sheehan, David
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No. 14-11250 Marshall et al v. Capital Growth Co. et al
C-iv of v
Stone, Richard Toth, Brian The Trust F/B/O Gabrielle H. Picower Hon. Kenneth L. Ryskamp, United States District Judge Schulte Roth & Zabel LLP, counsel for Appellees United States Bankruptcy Court for the Southern District of New York Zabel, William D.
/s/ Sanford L. Bohrer Sanford L. Bohrer
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No. 14-11250 Marshall et al v. Capital Growth Co. et al
C-v of v
Corporate Disclosure Statement
Undersigned counsel for Appellees Capital Growth Company; Decisions,
Inc.; Favorite Funds; JA Primary Limited Partnership; JA Special Limited
Partnership; JAB Partnership; JEMW Partnership; JF Partnership; JFM
Investment Companies; JLN Partnership; JMP Limited Partnership; Jeffry M.
Picower Special Company; Jeffry M. Picower, P.C.; The Picower Foundation;
The Picower Institute of Medical Research; The Trust F/B/O Gabrielle H.
Picower; Barbara Picower, individually and as Executor of the Estate of Jeffry M.
Picower, and as Trustee for the Picower Foundation and for the Trust f/b/o
Gabriel H. Picower (collectively, "Appellees"), pursuant to Federal Rule of
Appellate Procedure 26.1 and Eleventh Circuit Rules 26.1-1 through 26.1-3,
hereby certifies that no corporation directly or indirectly owns 10% or more of
any class of equity interest in any of the Appellees.
/s/ Sanford L. Bohrer Sanford L. Bohrer
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i
TABLE OF CONTENTS
PRELIMINARY STATEMENT ............................................................................... 1
STATEMENT OF FACTS AND PROCEDURAL HISTORY ................................ 3
ARGUMENT ............................................................................................................. 8
I. Appellants Have Improperly Brought This Appeal ........................................ 8
A. The Florida District Court’s Order Is Not Appeallable Under 28
U.S.C. § 1292(a)(1) ............................................................................... 8
B. A Writ of Mandamus Is Not Appropriate ........................................... 12
II. Appellants Have Not Articulated Good Cause for Expediting Briefing ....... 16
CONCLUSION ........................................................................................................ 18
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TABLE OF AUTHORITIES
Cases Page(s)
Admin. Mgmt. Servs., Ltd. v. Royal Am. Managers, Inc., 854 F.2d 1272 (11th Cir. 1988) .................................................................... 10, 11
Carpenter v. Mohawk Indus., Inc., 541 F.3d 1048 (11th Cir. 2008) .................................................................... 12, 16
Fla. Wildlife Fed’n, Inc. v. Adm’r, U.S. Envtl. Prot. Agency, 737 F.3d 689 (11th Cir. 2013) .............................................................................. 8
Fox v. Picard, 848 F. Supp. 2d 469 (S.D.N.Y. 2012) .................................................................. 5
Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271 (1988) ........................................................................................ 9, 10
Kershaw v. Shalala, 9 F.3d 11 (5th Cir. 1993) ................................................................................ 9, 10
Marshall v. Picard, 740 F.3d 81 (2d Cir. 2014) ............................................................................. 5, 13
NAACP v. Thompson, 321 F.2d 199 (5th Cir. 1963) ................................................................................ 9
Picard v. Fox, 429 B.R. 423 (S.D.N.Y. Bankr. 2010) .............................................................. 3, 4
Sierra Rutile Ltd. v. Katz, 937 F.2d 743 (2d Cir. 1991) ............................................................................... 12
SIPC v. Bernard L. Madoff Inv. Sec. LLC, No. 08-01789 (SMB) (S.D.N.Y. Bankr. Mar. 11, 2014) ...................................... 6
Switz. Cheese Ass’n, Inc. v. E. Horne’s Mkt., Inc., 385 U.S. 23 (1966) ............................................................................................ 8, 9
Transamerica Leasing, Inc. v. Inst. of London Underwriters, 430 F.3d 1326 (11th Cir. 2005) .......................................................................... 15
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iii
United States v. Hogan, 986 F.2d 1364 (11th Cir. 1993) .......................................................................... 14
United States v. N.Y. Tel. Co., 434 U.S. 159 (1997) ............................................................................................ 14
United States v. Philip Morris USA Inc., 686 F.3d 839 (D.C. Cir. 2012) .............................................................................. 9
Statutes and Rules
11 U.S.C. § 105(a) ..................................................................................................... 4
11 U.S.C. § 362(a) ..................................................................................................... 4
28 U.S.C. § 1292(a)(1) ......................................................................................passim
28 U.S.C. § 1651 .................................................................................................. 8, 12
Fed. R. App. P. 21 ................................................................................................ 8, 12
Fed. R. App. P. 31 .................................................................................................... 17
Fed. R. App. P. 41(b) ........................................................................................... 5, 15
11th Cir. R. 12-1 ................................................................................................ 17, 18
11th Cir. R. 21-1 ................................................................................................ 15, 16
11th Cir. R. 27-1 ...................................................................................................... 16
11th Cir. R. 27 IOP 3 ............................................................................................... 16
11th Cir. R. 31-1(d) .................................................................................................. 16
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1
PRELIMINARY STATEMENT
Appellees Capital Growth Company; Decisions, Inc.; Favorite Funds; JA
Primary Limited Partnership; JA Special Limited Partnership; JAB Partnership;
JEMW Partnership; JF Partnership; JFM Investment Companies; JLN
Partnership; JMP Limited Partnership; Jeffry M. Picower Special Company;
Jeffry M. Picower, P.C.; The Picower Foundation; The Picower Institute of
Medical Research; The Trust F/B/O Gabrielle H. Picower; Barbara Picower,
individually and as Executor of the Estate of Jeffry M. Picower, and as Trustee
for the Picower Foundation and for the Trust f/b/o Gabriel H. Picower,
Defendants below, respectfully request that the Court deny Appellants’ motion for
an expedited briefing schedule on their appeal and, instead, dismiss this appeal for
lack of jurisdiction.
Appellants seek to invoke this Court’s jurisdiction under 28 U.S.C.
§ 1292(a)(1), a narrow exception to the general rule that interlocutory orders are
not appealable. Under that exception, appeals from orders denying injunctive
relief are immediately appealable. Despite Appellants’ characterizations of the
Order from which they take this appeal, however, the Order was simply an
interlocutory order denying a motion to lift a stay to schedule an emergency
hearing, from which no appeal can be taken. The most that can be said about the
Order is that it had the “practical effect” of denying Appellants’ motion for a
preliminary injunction, but Appellants cannot make the required showing that the
Southern District of Florida’s Order has “serious, perhaps irreparable,
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2
consequences,” which is the only way they could appeal the Order. Accordingly,
this appeal should be dismissed for lack of jurisdiction.
In the alternative, Appellants ask this Court to consider their appeal as a
petition for a writ of mandamus. That request, too, should be denied. A writ of
mandamus is an “extraordinary” form of relief, and the party seeking such relief
must demonstrate that its right to issuance of a writ is clear and indisputable. In
that regard, Appellants’ arguments in support of issuance of the writ are wholly
unpersuasive and depend upon a fatally flawed reading of an order issued by the
United States Court of Appeals for the Second Circuit. Moreover, Appellants have
not made the required showing that there is no other adequate remedy available.
Put simply, this Court should not entertain Appellants’ appeal or, at a
minimum, should decide the threshold question of its jurisdiction to do so before
entertaining Appellants’ motion for an expedited appeal and/or requiring Appellees
to submit an appellate brief in less than half the time they would otherwise be
allotted under the rules. But, even assuming the Court determines that it has
jurisdiction, an expedited appeal is not warranted here. Appellants have not and
cannot demonstrate “good cause” for expediting this appeal. There is no urgency
here, as demonstrated by the fact that Appellants not only waited almost three
weeks to seek an expedited briefing schedule, but also propose a schedule that
would give them essentially their full time to submit their opening memorandum
on appeal.
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STATEMENT OF FACTS AND PROCEDURAL HISTORY
This action arises from the multi-billion dollar Ponzi scheme perpetrated by
Bernard L. Madoff through his investment company, Bernard L. Madoff
Investment Securities LLC (“BLMIS”). On December 15, 2008, the United States
District Court for the Southern District of New York (“SDNY District Court”)
appointed Irving H. Picard as the court-appointed trustee (the “Trustee”) for the
liquidation of BLMIS (the “BLMIS Liquidation”) and removed the BLMIS
Liquidation to the United States Bankruptcy Court for the Southern District of
New York (“New York Bankruptcy Court”). See Picard v. Fox, 429 B.R. 423, 426
(S.D.N.Y. Bankr. 2010). As part of the BLMIS Liquidation, on May 12, 2009, the
Trustee filed a complaint against Appellees asserting claims for fraudulent
transfers, preferences, turnover, and state law fraudulent conveyances (the
“Trustee’s Claims”). See id. at 429.
Appellants Fox and Marshall were BLMIS customers. Apparently not
satisfied with the rulings in the New York Bankruptcy Court action, in February
2010, at a time when the Trustee for the liquidation of BLMIS was negotiating a
multi-billion dollar settlement with the Appellees for distribution to Madoff
victims, Appellants filed actions in the United States District Court for the
Southern District of Florida (the “Florida District Court”). (S.D. Fla. Nos. 10-
80252 and 10-80254.) In those actions, Appellants asserted claims for conversion,
unjust enrichment, conspiracy, and violations of Florida’s RICO Act, all arising
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from the Appellees’ alleged withdrawals from their BLMIS accounts. (DE 1; S.D.
Fla. No. 10-80254, DE 1.)1
On March 31, 2010, the Trustee filed a complaint in the New York
Bankruptcy Court against Fox and Marshall seeking, among other things, a
declaration that the Fox/Marshall Class Actions violated the automatic stay under
Section 362(a) of the Bankruptcy Code and a preliminary injunction pursuant to
Section 105(a) of the Bankruptcy Code enjoining any further prosecution of the
Fox/Marshall Class Actions. See Picard, 429 B.R. at 430.
The very next day, Fox and Marshall filed ex parte emergency motions in
the Florida District Court for temporary restraining orders to enjoin the Trustee’s
action in the New York Bankruptcy Court. The Florida District Court properly
denied those motions that same day. (DE 16 & 19; S.D. Fla. No. 10-80254, DE 14
& 15.)
On May 3, 2010, after a hearing, the New York Bankruptcy Court granted
the Trustee’s motion for a preliminary injunction and deemed the Fox/Marshall
Class Actions void ab initio, finding that the Fox/Marshall Class Actions violated
the automatic stay because they impermissibly asserted claims that were derivative
of the Trustee’s Claims. See Picard, 429 B.R. at 432, 437.
On December 17, 2010, Appellees entered into two separate but related
agreements: (a) with the U.S. Department of Justice pursuant to which the
Appellees agreed to forfeit $7.2 billion, representing 100% of their net withdrawals
1 Unless otherwise noted, citations to “DE” refer to the docket entries in S.D. Fla. Case No. 10-80252.
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from BLMIS, and (b) with the Trustee (the “Settlement Agreement”), pursuant to
which they agreed that $5 billion of the forfeited funds would be transferred to the
Trustee for distribution to Madoff’s victims. Over the objections of Fox and
Marshall, on January 13, 2011, the New York Bankruptcy Court approved the
Settlement Agreement and issued the Permanent Injunction enjoining claims
against the Appellees that were “duplicative or derivative” of the Trustee’s Claims.
(Dkt. No. 43, § 7.) Thereafter, the Florida District Court administratively closed
the Fox/Marshall Class Actions. (DE 26; S.D. Fla. No. 10-80254, DE 21.)
The SDNY District Court affirmed the New York Bankruptcy Court’s order,
agreeing that Fox’s and Marshall’s claims were barred by the Permanent Injunction
and automatic stay because they were duplicative and derivative of the Trustee’s
Claims. Fox v. Picard, 848 F. Supp. 2d 469, 473, 481, 485 (S.D.N.Y. 2012).
The Second Circuit affirmed the decision of the SDNY District Court
enjoining the Fox/Marshall Class Actions, also finding that Appellants’ complaints
“impermissibly attempt to ‘plead around’ the [New York] Bankruptcy Court’s
injunction barring all claims ‘derivative’ of those asserted by the Trustee.”
Marshall v. Picard, 740 F.3d 81, 84, 96 (2d Cir. 2014). On February 5, 2014, the
Second Circuit issued a Mandate affirming the judgment of the SDNY District
Court, as required by Federal Rule of Appellate Procedure 41(b). (Ex. 1). That
same day, Appellants filed a Motion to Reopen in the Florida District Court,
seeking leave to file the proposed Second Amended Complaint. (DE 28.)
On February 18, 2014, Appellees filed an emergency motion in the Florida
District Court seeking, among other things, to stay this action pending a ruling by
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the New York Bankruptcy Court on a motion by the Trustee (the “Motion to
Stay”). (DE 29-30.) On February 24, 2014, the Florida District Court stayed this
action pending the resolution of the Motion to Stay. (DE 37.)
Also on February 24, 2014, based on a misreading of the final paragraph of
the Second Circuit’s decision (which affirmed the SDNY District Court’s decision
affirming the New York Bankruptcy Court), Appellants filed an Opposition to the
Motion to Stay and a Cross-Motion seeking, among other things, a preliminary
injunction enjoining the Appellees “and any persons in active concert or
participation with them” (purportedly, the Trustee) from litigating the new
Fox/Marshall claims outside of the Florida District Court.2 (DE 38.) Appellees
opposed that motion. (DE 43.)
On March 11, 2014, the Trustee filed an action and motion in the New York
Bankruptcy Court, seeking, inter alia, (i) a determination that this action violates
the Permanent Injunction and automatic stay; and (ii) a preliminary injunction
enjoining Appellants from proceeding with their action against Appellees.
(Complaint, SIPC v. Bernard L. Madoff Inv. Sec. LLC, No. 08-01789 (SMB), DE 1
(S.D.N.Y. Bankr. Mar. 11, 2014); Mem. of Law in Supp. of Trustee’s Appl. for
Enforcement of Permanent Inj. and Automatic Stay, SIPC v. Bernard L. Madoff
Inv. Sec. LLC, No. 08-01789 (SMB), DE 3 (S.D.N.Y. Bankr. Mar. 11, 2014).)
Appellants are required to respond to the Trustee’s motion for preliminary
2 While seeking to have the Florida Court enjoin the Trustee, Appellants did not name the Trustee as a defendant, nor did they properly serve him with their Cross-Motion seeking to enjoin him.
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injunction (the “Motion”) by April 18, 2014, and the hearing is scheduled for May
7, 2014.
On March 12, 2014, Appellants filed a Motion for Limited Relief from Stay
and Request for Emergency Hearing on the Motion to Stay and Cross-Motion for
Injunctive Relief, seeking an emergency hearing to consider Appellants’ Cross-
Motion for a preliminary injunction. (DE 52.) On March 17, 2014, the Florida
District Court denied that motion. That Order states, in relevant part:
THIS CAUSE comes before the Court pursuant to Becker & Poliakoff LLP and Becker & Poliakoff P.A., as counsel for Plaintiffs, March 12, 2014 [DE 52] motion requesting that this Court lift the stay entered February 21, 2014 for the purpose of scheduling an emergency hearing on Defendants’ motion to stay and on Plaintiffs’ cross motion for injunctive relief.
****
ORDERED AND ADJUDGED that the motion is DENIED. The Court declines to conduct an emergency hearing on the question of whether to enjoin the New York action. Rather, this Court defers to the Bankruptcy Court for the Southern District of New York for a ruling on [the Trustee’s] motion to enjoin the instant action.
(Ex. 2, DE 58 (the “Order”).) The Order did not deny Appellants’ Cross-Motion
for preliminary injunction (DE 38), as Appellants mistakenly claim, but only ruled
on Appellants’ Motion to lift the stay and for an emergency hearing (DE 58).
On March 24, 2014, Appellants filed a Notice of Appeal from the Order.
(Ex. 3, DE 59.) On April 9, 2014, more than three weeks after the Order was
entered, Appellants filed in this Court the instant Motion for Expedited Appeal, as
well as a separate motion for an injunction pending appeal. This memorandum is
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being submitted in opposition to the Motion for Expedited Appeal and in support
of Appellees’ cross-motion to dismiss the appeal for lack of jurisdiction.
ARGUMENT
I. Appellants Have Improperly Brought This Appeal
Appellants contend that the Court has jurisdiction over this admitted
interlocutory order, pursuant to 28 U.S.C. § 1292(a)(1). In the alternative,
Appellants contend that “this Court has the power to consider this appeal as a
petition for a writ of mandamus to enforce the Second Circuit’s mandate pursuant
to 28 USC §1651 and FRAP 21.” (Appellants’ Expedited Mot. for an Inj. Pending
Appeal at 5.) Appellants are wrong as to both contentions, and their appeal,
therefore, should be dismissed.
A. The Florida District Court’s Order Is Not Appealable Under 28 U.S.C. § 1292(a)(1)
“[F]ederal law expresses the policy against piecemeal appeals.” Switz.
Cheese Ass’n, Inc. v. E. Horne’s Mkt., Inc., 385 U.S. 23, 24-25 (1966) (dismissing
appeal because no “interlocutory appeal” lies under 28 U.S.C. § 1292(a)(1) after
denial of summary judgment in action seeking injunctive relief). Accordingly, as a
general matter, interlocutory orders are not immediately appealable to federal
courts of appeals. Rather, “[a]ppellate jurisdiction depends on the existence of a
final trial court judgment that ‘ends the litigation on the merits and leaves nothing
for the court to do but execute the judgment.’” Fla. Wildlife Fed’n, Inc. v. Adm’r,
U.S. Envtl. Prot. Agency, 737 F.3d 689, 692 (11th Cir. 2013).
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There are some exceptions to this general rule, including the exception in 28
U.S.C. § 1292(a)(1), which permits interlocutory appeals from orders “granting,
continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or
modify injunctions . . . .” The U.S. Supreme Court has held that this exception is
to be narrowly construed, lest the exception swallow the rule. See Switz. Cheese,
385 U.S. at 24 (“Hence we approach [28 U.S.C. § 1292(a)(1)] somewhat gingerly
lest a floodgate be opened that brings into the exception many pretrial orders.”);
United States v. Philip Morris USA Inc., 686 F.3d 839, 843-44 (D.C. Cir. 2012)
(noting that the exception in 28 U.S.C. § 1292(a)(1) “is a limited one, and the
Supreme Court has construed [it] narrowly” (quotations and citations omitted)).
Appellants erroneously argue that their appeal falls within this narrow
exception. As is clear from the Florida District Court’s language, however, the
Order from which Appellants seek to take an appeal was not an order denying their
motion for a preliminary injunction. (DE 58.) Cf. NAACP v. Thompson, 321 F.2d
199, 202 (5th Cir. 1963) (“Ordinarily, of course, an order to be appealable under
Section 1292 as one ‘refusing’ injunctive relief is one which, in precise terms,
announces the decision of the Court denying the relief requested.” (emphasis
added)). By its plain terms, the Order being appealed was a denial of Appellants’
motion to lift a stay for the purpose of scheduling an emergency hearing on
Appellants’ cross motion for injunctive relief and Appellees’ motion to stay. (DE
58.) There is no right to appeal from a stay order. See Gulfstream Aerospace
Corp. v. Mayacamas Corp., 485 U.S. 271, 290 (1988); Kershaw v. Shalala, 9 F.3d
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11, 14 (5th Cir. 1993) (“An order staying judicial proceedings is ordinarily not
considered final and is hence not appealable.”).
Appellants may attempt to argue that the Florida District Court’s Order had
the effect of denying their motion for preliminary injunction and is therefore
immediately appealable under 28 U.S.C. § 1292(a)(1). Again, Appellants would
be wrong. Even if the practical effect of that interlocutory order were denying a
motion for an injunction, Appellants would have to make the additional showing
that the denial of their motion would have “‘serious, perhaps irreparable,
consequence.’” See Admin. Mgmt. Servs., Ltd. v. Royal Am. Managers, Inc., 854
F.2d 1272, 1278 (11th Cir. 1988) (quoting Gulfstream Aerospace, 485 U.S. at 287-
88). Appellants cannot make their showing.
The ultimate relief Appellants seek by means of their motion for a
preliminary injunction is to halt the Trustee’s action in the New York Bankruptcy
Court. Rather than seeking the extraordinary relief they sought from the Florida
District Court and now from this Court, namely, an injunction prohibiting a
stranger to these proceedings (the Trustee) from proceeding with a lawsuit in a
different jurisdiction, Appellants could and would – if they had any faith in the
merits of their arguments – seek directly from the New York Bankruptcy Court a
stay of those proceedings and/or a dismissal of that action. The Trustee’s action
has now been pending for more than a month, however, and Appellants have not
moved to stay those proceedings or to dismiss them. In fact, Appellants recently
negotiated an extension of time to respond to the Trustee’s Complaint, thereby
demonstrating that the relief they seek here is not “time sensitive.”
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But, putting aside that Appellants could seek the same relief from another,
more appropriate court, if it is the case – as Appellants argue – that the Second
Circuit’s “mandate” requires the Florida District Court, not the New York
Bankruptcy Court, to decide the threshold question as to whether Appellants’ new
complaint is barred by the Permanent Injunction and/or automatic stay, the
ultimate relief Appellants seek (a decision on this issue by the Florida District
Court) would be available after the New York Bankruptcy Court rules on the
Trustee’s Motion and the Florida District Court implements whatever decision is
reached on that Motion. If, for example, the Trustee’s Motion is granted and the
Florida District Court gives effect to that decision and denies Appellants’ Motion
to Reopen on that basis, Appellants can take an appeal from that decision and
advance at that juncture the same baseless arguments they advance here on appeal
– that the Second Circuit “mandate” forecloses the New York Bankruptcy Court
from issuing a binding ruling on this issue. Given that alternative, Appellants
cannot demonstrate that the Florida District Court’s Order has “serious, perhaps
irreparable, consequences.” Cf. Admin. Mgmt. Servs., 854 F.2d at 1279
(dismissing appeal and holding that “[i]f relief may be obtained upon review after
trial, the parties are not considered to have suffered irreparable consequences”).
In short, this interlocutory appeal is not properly brought pursuant to 28
U.S.C. § 1292(a)(1). The Order from which Appellants are appealing was an order
refusing to lift a stay, as opposed to an order denying a motion for preliminary
injunction. Moreover, even if the practical effect was denial of Appellants’ motion
for a preliminary injunction, Appellants will not suffer “serious, perhaps
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irreparable, consequences” as a result of the Florida District Court’s Order.
Accordingly, insofar as jurisdiction is predicated on 28 U.S.C. § 1292(a)(1), the
appeal should be dismissed.
B. A Writ of Mandamus Is Not Appropriate
In the alternative, Appellants argue that this Court should consider their
appeal as a writ of mandamus “to enforce the Second Circuit’s mandate pursuant to
28 USC §1651 and FRAP 21.” (Appellants’ Expedited Mot. for an Inj. Pending
Appeal at 5.) This request also should be denied.
Writs of mandamus issued pursuant to the All Writs Act are “extraordinary”
and are to be used “only to confine an inferior court to a lawful exercise of its
prescribed authority, or to compel it to exercise its authority when it is its duty to
do so.” Sierra Rutile Ltd. v. Katz, 937 F.2d 743, 749, 751 (2d Cir. 1991) (citations
and quotations omitted) (holding that trial court erred in granting stay, but
concluding that “issuance of a formal writ of mandamus [was] unnecessary” and
dismissing appeal). A party seeking a writ of mandamus bears a very high burden.
See Carpenter v. Mohawk Indus., Inc. 541 F.3d 1048, 1054-55 (11th Cir. 2008)
(dismissing appeal and denying writ). “The petitioner seeking the writ carries the
burden of showing that its right to the issuance of the writ is clear and
indisputable,” and “[a] writ will not issue merely because [the petitioner] shows
evidence that, on appeal, would warrant reversal of the district court.” Id. at 1055
(alteration in original) (citations and quotations omitted).
Here, Appellants plainly have failed to meet this extraordinarily high
burden. As detailed in Appellees’ Opposition to Appellants’ Motion for Injunction
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Pending Appeal, being filed herewith, Appellants have not made – and cannot
make – a showing that their right to issuance of a writ is clear and indisputable.
Appellants’ attempt to invoke the writ of mandamus is premised on the false notion
that the Second Circuit “mandated” that only the Florida District Court could
decide if their proposed amended claims violate the Permanent Injunction and
automatic stay. That is a gross mischaracterization of the Second Circuit’s
decision.
The Second Circuit did not “mandate,” “order,” “direct,” or otherwise make
a ruling as to which court – the Florida District Court or the New York Bankruptcy
Court – should decide the applicability of the Permanent Injunction and automatic
stay to Appellants’ amended claims. Rather, the Second Circuit affirmed the
SDNY District Court’s judgment voiding the Fox/Marshall Class Actions without
prejudice to Fox and Marshall seeking to amend their claims, then added – in
dicta:
There is conceivably some particularized conspiracy claim appellants could assert that would not be derivative of those asserted by the Trustee. That question, however, is not properly before us, and is a question in the first instance for the United States District Court for the Southern District of Florida.
Marshall v. Picard, 740 F.3d 81, 94 (2d Cir. 2014).
By such language, the Second Circuit plainly did not “mandate” that the
question must be decided only by the Florida District Court. Indeed, such a ruling
would have divested the New York Bankruptcy Court of jurisdiction to decide that
threshold question itself, based on its own interpretation of its Preliminary
Injunction and automatic stay. If, as Appellants insist, the Second Circuit, by the
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above dicta, had taken the highly unusual step of stripping the New York
Bankruptcy Court of jurisdiction to decide whether Appellants’ amended claims
are duplicative or derivative of the Trustee’s Claims, it would have done so in a
clear and purposeful way, after careful discussion and analysis of all relevant facts
and law. Yet there is no discussion and analysis of the issue anywhere in the
Second Circuit’s decision.
Indeed, the issue of whether the Florida District Court or the New York
Bankruptcy Court (or both) can decide whether Appellants’ amended claims are
derivative of the Trustee’s Claims was never briefed by either party, nor was it
decided by the Second Circuit. Accordingly, the Second Circuit’s dicta that the
question is “in the first instance for the [Florida District Court]” is not controlling,
as the Florida District Court properly recognized. See United States v. N.Y. Tel.
Co., 434 U.S. 159, 184 (1997) (where an “issue was not briefed,” a court’s
statement on that issue was “in dicta” and “has absolutely no force”); United States
v. Hogan, 986 F.2d 1364, 1372 (11th Cir. 1993) (where an “issue simply was not
presented,” a court is “not bound by [the case’s] dictum”).
Necessarily, if the Second Circuit had concluded that only the Florida
District Court could decide whether Appellants’ claims were “duplicative or
derivative” of the Trustee’s Claims, it would have reversed the SDNY District
Court’s affirmance of the New York Bankruptcy Court order, and directed that the
Florida District Court decide the issue. Instead, the Second Circuit affirmed the
New York District Court’s affirmance of the New York Bankruptcy Court’s
finding that the Fox/Marshall Class Actions were impermissibly derivative of the
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Trustee’s Claims. There is no plausible reason the Second Circuit thereafter would
deprive the New York Bankruptcy Court of jurisdiction to decide whether
Appellants’ new claims are similarly derivative, and certainly Appellants have
offered no reason. Rather, Appellants seize on dicta in the final paragraph of the
Second Circuit’s decision in order to litigate in their preferred forum.
Compounding the weakness of their position, Appellants also
mischaracterize the Second Circuit’s dicta as a purported “mandate” (Appellants’
Expedited Mot. for an Inj. Pending Appeal at 8-11), in order to invoke the
“mandate rule,” pursuant to which a district court, “may not alter, amend, or
examine the [Court of Appeals'] mandate, or give any further relief or review, but
must enter an order in strict compliance with the mandate.” Transamerica
Leasing, Inc. v. Inst. of London Underwriters, 430 F.3d 1326, 1331 (11th Cir.
2005) (citations and quotations omitted); see also Fed. R. App. P. 41(b). Yet the
“mandate rule” does not apply here because the Second Circuit’s actual Mandate,
which was issued on February 5, 2014, is completely silent on which court – the
Florida District Court or New York Bankruptcy Court – can or should decide
whether Appellants’ amended claims would violate the Permanent Injunction and
automatic stay. (See Ex. 1.)
For all of the foregoing reasons and the others set forth in Appellees’
Opposition to Appellants’ Motion for Injunction Pending Appeal, Appellants
cannot make the required showing that their right to a writ of mandamus is “clear
and indisputable.” Moreover, as a procedural matter, Appellants have not
complied with 11th Circuit Rule 21-1, which requires parties making a petition to
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“include a showing that mandamus is appropriate because there is no other
adequate remedy available.” A writ, therefore, should not issue.
II. Appellants Have Not Articulated Good Cause for Expediting Briefing
Appellants’ motion for an expedited briefing schedule on their appeal should
be denied first because this appeal is improper, as set forth above. At a minimum,
Appellees respectfully request that the Court address whether it has jurisdiction to
hear this appeal before requiring Appellees to brief the merits of the appeal. See
Carpenter, 541 F.3d at 1052 (“As an initial matter, we must address this Court’s
jurisdiction to review Appellant’s claims by way of interlocutory appeal.”); 11th
Cir. R. 31-1(d) (“If . . . it appears that this court may lack jurisdiction over the
appeal, the court may request counsel . . . to advise the court in writing of their
position with respect to the jurisdictional question(s) raised. . . . The due date for
filing appellee’s brief shall be postponed until the court determines that the appeal
shall proceed or directs counsel . . . to address the jurisdictional question(s) in their
briefs on the merits. When the court rules on a jurisdictional question, a new due
date will be set for filing appellee’s brief if the appeal is allowed to proceed.”).
In addition to the fact that the Order is a non-appealable interlocutory order,
Appellants have not made the requisite showing necessary for expediting their
appeal. Under Eleventh Circuit Rule 27-1 and Internal Operating Procedure 3, an
appeal may only be expedited “for good cause shown.” Appellants have not
articulated any such “good cause.”
The sole basis for Appellants’ request for an expedited appeal is their
fundamentally flawed argument that the Second Circuit purportedly issued a
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“mandate” that only the Florida District Court is permitted to “litigate the merits of
their claims,” and that the “mandate” forecloses the New York Bankruptcy Court
from addressing the threshold question of whether Appellants’ claims are barred by
the Permanent Injunction issued by the New York Bankruptcy Court and/or the
automatic stay. (Appellants’ Expedited Mot. for an Inj. Pending Appeal at 8, 16.)
That argument fails because the Second Circuit issued no such “mandate.”
Moreover, Appellants’ own conduct demonstrates that there is no urgency in
deciding this appeal. The Florida District Court entered the Order that is the
subject of Appellants’ appeal on March 17, 2014. Appellants then waited more
than three weeks to seek an expedited appeal.
Further, the briefing schedule Appellants have proposed belies any true
urgency. According to their proposed schedule, Appellants would give themselves
until May 2 to submit their opening brief, or more than 1 ½ months from the date
the Florida District Court’s Order was entered (March 17), 37 days from the date
the appeal was docketed (March 24), and a mere 3 days before their brief would
otherwise be due under a regular briefing schedule; Appellees would have only 2
weeks – or less than half their time under a normal briefing schedule, until May 16,
to respond; and Appellants would give themselves another full week, until May 23,
to submit their reply. See Mot. for Expedited Trial at 2; cf. Fed. R. App. P. 31
(appellants’ opening brief is due within 40 days record is filed; appellees’
responsive brief is due within 30 days after appellants’ brief is served; and
appellants’ reply brief is due within 14 days after service of appellees’ brief); 11th
Cir. R. 12-1 (record is deemed filed on date appeal is docketed where no transcript
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is ordered). Not only is this schedule fundamentally unfair to Appellees, but it also
has the briefing closing on May 23, more than two weeks after the hearing in the
New York Bankruptcy Court on the Trustee’s Motion, scheduled for May 7. If the
purported urgency is obtaining a ruling in this appeal before the Trustee’s Motion
is fully briefed and/or decided by the New York Bankruptcy Court, Appellants
would and should have (i) brought this motion weeks ago and (ii) proposed a
briefing schedule on the merits that concludes before the New York Bankruptcy
Court’s hearing on the Trustee’s Motion and does not give Appellants almost their
full time to submit their opening memorandum.
CONCLUSION
For the foregoing reasons, Appellees respectfully request that this Court
dismiss this appeal. In the event the Court declines to dismiss the appeal,
Appellees respectfully request that the Court deny Appellants’ Motion to Expedite
Appeal. Respectfully submitted,
HOLLAND & KNIGHT LLP By: s/Brian W. Toth
Brian W. Toth
701 Brickell Avenue Suite 3300 Miami, Florida 33131 (305) 789-7678 Attorneys for Appellees
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Of counsel: SCHULTE ROTH & ZABEL LLP William D. Zabel Marcy Ressler Harris Michael Kwon Jennifer M. Opheim
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CERTIFICATE OF SERVICE
I certify that a copy of this document was served by CM/ECF or U.S. mail
on April 16, 2014, on all counsel or parties of record on the Service List below.
s/Brian W. Toth Helen Davis Chaitman Becker & Poliakoff, LLP 45 Broadway New York, New York 10006 Telephone: (212) 599-3322 Facsimile: (212) 557-0295 Email: [email protected] James W. Beasley Jr. Robert J. Hauser Joseph George Galardi Andrew Steven Kwan Beasley Hauser Kramer & Giraldi, P.A. 505 S. Flagler Drive, Suite 500 West Palm Beach, Florida 33401 Telephone: (561) 835-0900 Facsimile: (561) 835-0939 Email: [email protected] Email: [email protected] Email: [email protected] Email: [email protected]
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Lesley Guy Blackner Blackner Stone & Associates 340 Royal Poinciana Way, St 317-377 Palm Beach, FL 33480 Phone: 561-659-5754 Fax: 561-659-3184 Email: [email protected] David Sheehan Counsel for Trustee Irving Picard BakerHostetler 45 Rockefeller Plaza, #10 New York, NY 10111 Phone (212) 589-4616 Email: [email protected] The Honorable Kenneth L. Ryskamp United States District Court for the Southern District of Florida Paul G. Rogers Federal Building 701 Clematis Street, Room 416 West Palm Beach, FL 33401
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EXHIBIT F
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UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
ELBERT PARR TUTTLE COURT OF APPEALS BUILDING 56 Forsyth Street, N.W. Atlanta, Georgia 30303
John Ley Clerk of Court
April 17, 2014
For rules and forms visitwww.ca11.uscourts.gov
Helen Davis Chaitman Becker & Poliakoff LLP 45 BROADWAY FL 8 NEW YORK, NY 10006 Appeal Number: 14-11250-AA Case Style: Adele Fox, et al v. Jerry Estate, et al District Court Docket No: 9:10-cv-80252-KLR Appellants’ response to the recently filed motion to dismiss is due by 9:00 am on Tuesday, April 22, 2014. Sincerely, JOHN LEY, Clerk of Court Reply to: Eleanor M. Dixon, AA Phone #: (404) 335-6172
MP-1
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EXHIBIT G
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IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
NO. 14-11250
SUZANNE STONE MARSHALL, ADELE FOX, MARSHA PESHKIN, and RUSSELL OASIS, individually and on behalf of a class of similarly situated,
Appellants,
- versus -
CAPITAL GROWTH COMPANY; DECISIONS, INC.; FAVORITE FUNDS; JA PRIMARY LIMITED PARTNERSHIP; JA SPECIAL LIMITED PARTNERSHIP; JAB PARTNERSHIP;
JEMW PARTNERSHIP; JF PARTNERSHIP; JFM INVESTMENT COMPANIES; JLN PARTNERSHIP; JMP LIMITED PARTNERSHIP; JEFFRY M. PICOWER SPECIAL
COMPANY; JEFFRY M. PICOWER, P.C.; THE PICOWER FOUNDATION; THE PICOWER INSTITUTE OF MEDICAL RESEARCH; THE TRUST F/B/O GABRIELLE H. PICOWER;
BARBARA PICOWER, individually, and as Executor of the Estate of Jeffry M. Picower, and as Trustee for the Picower Foundation and for the Trust f/b/o Gabriel H. Picower.
Appellees.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA
APPELLEES’ REPLY MEMORANDUM IN SUPPORT OF THEIR CROSS-MOTION TO DISMISS APPEAL
HOLLAND & KNIGHT LLP SCHULTE ROTH & ZABEL LLP Sanford L. Bohrer William D. Zabel Brian Toth Marcy Ressler Harris Michael Kwon Jennifer M. Opheim 701 Brickell Avenue, Suite 3300 919 Third Avenue Miami, Florida 33131 New York, New York 10022 Telephone: (305) 789-7678 Telephone: (212) 756-2000 Facsimile: (305) 789-7799 Facsimile: (212) 593-5955 [email protected] [email protected] Counsel for Appellees Counsel for Appellees
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TABLE OF CONTENTS
Page
ARGUMENT ............................................................................................................. 3
I. Appellate Jurisdiction Does Not Lie Under 28 U.S.C. § 1292(a)(1) ........................................................................................................ 3
II. The Second Circuit Did Not “Mandate” That the Florida Court Is the Only Forum That Can Decide Whether Appellants’ Amended Claims Are Barred By the Permanent Injunction and Automatic Stay ...................................................... 5
CONCLUSION ........................................................................................................ 10
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TABLE OF AUTHORITIES
Page(s)
Cases
Admin. Mgmt. Servs., Ltd. v. Royal Am. Managers, Inc., 854 F.2d 1272 (11th Cir. 1988) ............................................................................ 4
Buckley Towers Condo., Inc., v. QBE Ins. Corp., No. 07-22988-CIV, 2014 WL 1319307 (S.D. Fla. Mar. 31, 2014) .................. 6, 8
Edwards v. Prime, Inc., 602 F.3d 1276 (11th Cir. 2010) ............................................................................ 6
Gen. Universal Sys., Inc. v . HAL, Inc., 500 F.3d 444 (5th Cir. 2007) ............................................................................ 8, 9
Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271 (1988) .......................................................................................... 1, 4
Litman v. Mass. Mut. Life Ins. Co., 825 F.2d 1506 (11th Cir. 1987) .......................................................................... 10
Marshall v. Picard, 740 F.3d 81 (2d Cir. 2014) ................................................................................... 6
Metro. Water v. Kaw Valley, 223 U.S. 519 (1912) .............................................................................................. 9
Mitsubishi Int’l v. Cardinal Textile, 14 F.3d 1507 (11th Cir. 1994) .............................................................................. 4
Nixon v. Richey, 513 F.2d 430 (D.C. Cir. 1975) .............................................................................. 9
Piambino v. Bailey, 757 F.2d 1112 (11th Cir. 1985) .......................................................................... 10
Seese v. Volkswagenwerk, A.G., 679 F.2d 336 (3d Cir. 1982) ............................................................................... 10
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iii
Transamerica Leasing, Inc. v. Inst. of London Underwriters, 430 F.3d 1326 (11th Cir. 2005) ............................................................................ 8
United States v. Eggersdorf, 126 F.3d 1318 (11th Cir. 1997) ............................................................................ 6
United States v. Hogan, 986 F.2d 1364 (11th Cir. 1993) ............................................................................ 7
United States v. Mesa, 247 F.3d 1165 (11th Cir. 2001) ........................................................................ 8, 9
United States v. N.Y. Tel. Co., 434 U.S. 159 (1977) .............................................................................................. 7
Statutes
28 U.S.C. § 1292(a)(1) ................................................................................... 1, 2, 3, 5
Other Authorities
18B Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction & Related Matters § 4478.3 (2d ed. 2013) ............................................................... 8
FRAP 41(b) ................................................................................................................ 8
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1
Appellants1 advance three arguments in support of their contention that this
Court has jurisdiction to hear their appeal under 28 U.S.C. § 1292(a)(1), the narrow
exception to the general rule that interlocutory orders are not appealable: (i) the
Florida District Court’s order was a denial of their motion for injunctive relief; (ii)
there is no requirement that where an order merely has the “practical effect” of
denying a motion for an injunction, the party taking an appeal must demonstrate
that the order has “serious, perhaps irreparable, consequences”; and (iii) even if
there is such a requirement, Appellants can meet that standard. None of their
arguments has merit.
First, the Florida District Court’s order only addressed Appellants’ motion to
lift the stay that was in effect for purposes of scheduling an emergency hearing on
Appellants’ motion for a preliminary injunction. There is no mention of the
separate docket entry, or the merits, of Appellants’ motion for preliminary
injunction. Second, no less than the United States Supreme Court has held that
where an order does not rule on a motion for preliminary injunction, but the
“practical effect” of the order is denial of such motion, the appellant must
demonstrate that the order has “serious, perhaps irreparable consequence” in order
to invoke jurisdiction under 28 U.S.C. § 1292(a)(1). See Gulfstream Aerospace
Corp. v. Mayacamas Corp., 485 U.S. 271, 287-88 (1988). Third, Appellants
cannot make that showing; in fact, they are now seeking precisely the same relief
1 Capitalized terms shall have the same meaning assigned to them in Appellees’ opening memorandum in support of their cross-motion to dismiss this appeal.
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from the New York Bankruptcy Court that they seek here – an order that only the
Florida District Court has jurisdiction to determine whether Appellants’ claims are
barred by the Permanent Injunction as duplicative or derivative of the Trustee’s
claims against the Appellees. For each and all of these reasons, there is no
appellate jurisdiction in this case under 28 U.S.C. § 1292(a)(1).
In the alternative, Appellants ask this Court for “extraordinary” relief in the
form of a writ of mandamus. Appellants’ arguments in support of issuance of the
writ depend on a fatally flawed reading of an order issued by the United States
Court of Appeals for the Second Circuit. Moreover, the cases upon which
Appellants rely demonstrate precisely the error of their position: unlike this case,
in those cases the issue on which the “mandate” issued was litigated, argued, and
decided by the appellate court after reasoned analysis. That is not the case here.
The question of whether the New York Bankruptcy Court was divested of
authority to interpret its own Permanent Injunction and application of the
automatic stay was not at issue before the Second Circuit. If it had been, and if the
Second Circuit had decided that issue, the Second Circuit surely would have
reversed the orders of the SDNY District Court and New York Bankruptcy Court,
not affirmed them.
Based on the foregoing and on the arguments in Appellees’ opening motion,
this appeal should be dismissed.
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ARGUMENT
I. Appellate Jurisdiction Does Not Lie Under 28 U.S.C. § 1292(a)(1)
To support their jurisdiction claim, Appellants first accuse Appellees of
“play[ing] games with the Court” and then insist that “the court denied Appellants’
motion for an injunction.” (Opp’n at 6-7.) As set forth in Appellees’ opening
memorandum, this argument is false. Appellants filed their motion for preliminary
injunction on February 24, 2014, at Docket Entry No. 38, the same day the Florida
District Court issued an order staying the Florida District Court action (DE 37).
Thereafter, on March 12, 2014, Appellants filed a motion titled Motion for Limited
Relief from Stay and Request for Emergency Hearing on the Motion to Stay and
Cross-Motion for Injunctive Relief, seeking an emergency hearing to consider
Appellants’ Cross-Motion for a preliminary injunction. This motion was assigned
Docket Entry Number 52. Docket Entry Number 52, and Docket Entry Number 52
alone, is identified in the Florida District Court Order and is the Order from which
appellants seek to appeal. The Order states, in relevant part:
THIS CAUSE comes before the Court pursuant to Becker & Poliakoff LLP and Becker & Poliakoff P.A., as counsel for Plaintiffs, March 12, 2014 [DE 52] motion requesting that this Court lift the stay entered February 21, 2014 for the purpose of scheduling an emergency hearing on Defendants’ motion to stay and on Plaintiffs’ cross motion for injunctive relief.
**** ORDERED AND ADJUDGED that the motion is DENIED.
The Court declines to conduct an emergency hearing on the question of whether to enjoin the New York action. Rather, this Court defers to the Bankruptcy Court for the Southern District of New York for a ruling on [the Trustee’s] motion to enjoin the instant action.
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(Ex. 2, DE 58 (the “Order”).) There is simply no mention in the Order of Docket
No. 38. Hence, the Order the Appellants seek to appeal is not an order denying the
motion for preliminary injunction filed at that docket entry number.
As indicated in Appellees’ opening memorandum, it may well be that the
“practical effect” of the Order was a denial of Appellants’ motion for injunctive
relief. But, if that is the case, the Order is appealable only if Appellants can
demonstrate that the order has “serious, perhaps irreparable consequence.” (See
Opening Br. at 10 (quoting Admin. Mgmt. Servs., Ltd. v. Royal Am. Managers,
Inc., 854 F.2d 1272, 1278 (11th Cir. 1988)). Appellants dispute that they are
required to make any such showing, purportedly because no such requirement was
imposed in Mitsubishi International v. Cardinal Textile, 14 F.3d 1507 (11th Cir.
1994). (Opp’n at 7-8.) Yet even in Mitsubishi, 14 F.3d at 1515, this Court
confirmed that the “serious, perhaps irreparable consequence” standard applies,
citing and quoting Gulfstream, 485 U.S. at 287-88. Moreover, in Mitsubishi, the
Court concluded that the orders being appealed – which were issued after extensive
briefing and several hearings – were, in fact, denials of a preliminary injunction,
not that they merely had the practical effect of a denial of a preliminary injunction,
as is the case here. 14 F.3d at 1515 n.14 & 1517 (“[i]t is appropriate to treat the
district court’s orders as denials of a preliminary injunction”).
Consistent with these cases, Appellants must demonstrate that the Order they
seek to appeal has “serious, perhaps irreparable consequence,” which they cannot
do. Appellants advance two supposed “serious, perhaps irreparable consequences”
from the Order: (i) purported (and speculative) delay imposed by litigating in New
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York, which will allegedly prevent them from litigating the merits of their claims
in the Florida District Court and “impair if not destroy” their ability to gather
evidence, and (ii) if they are required to litigate in New York whether their claims
are barred by the Permanent Injunction, “they could never obtain meaningful
review by this Court of any decision rendered in New York.” (Opp’n at 8-9.)
Appellants’ arguments show that no harm, much less “serious, perhaps irreparable
consequence,” would flow from the Florida District Court’s Order and the
dismissal of this appeal. Their arguments unmask rank forum shopping and should
be rejected. Moreover, Appellants are now advancing precisely those same
arguments in the New York Bankruptcy Court action.2
II. The Second Circuit Did Not “Mandate” That the Florida Court Is the Only Forum That Can Decide Whether Appellants’ Amended Claims Are Barred By the Permanent Injunction and Automatic Stay
Appellants argue that even if this Court lacks jurisdiction under 28 U.S.C. §
1292(a)(1), they are entitled to a writ of mandamus under the All Writs Act
because the Second Circuit purportedly “ruled that the Florida Court must
determine ‘in the first instance’ if Appellants, in their proposed second amended
complaint, have pled viable claims against Appellees.” (Opp’n at 3 (emphasis
added).) To the contrary, even a cursory reading of the Second Circuit’s decision
shows that the Second Circuit did not use any mandatory language, such as “must,”
2 Since the filing of Appellees’ opening memorandum in support of their motion to dismiss this appeal, Appellants have filed a motion to stay the New York Bankruptcy Court proceedings, an opposition to the Trustee’s motion for a preliminary injunction, and a motion dismiss the Trustee’s claims.
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“shall,” “direct,” “order,” or even – as Appellants repeatedly insist – “mandate.”
Rather, the Second Circuit stated – in dicta – that:
There is conceivably some particularized conspiracy claim appellants could assert that would not be derivative of those asserted by the Trustee. That question, however, is not properly before us, and is a question in the first instance for the United States District Court for the Southern District of Florida.
Marshall v. Picard, 740 F.3d 81, 94 (2d Cir. 2014). By definition, dicta is
“[l]anguage in …[an opinion] not necessary to deciding the case then before [the
court].” Buckley Towers Condo., Inc., v. QBE Ins. Corp., No. 07-22988-CIV, 2014
WL 1319307, at *5 (S.D. Fla. Mar. 31, 2014) (quoting United States v. Eggersdorf,
126 F.3d 1318, 1322 n. 4 (11th Cir. 1997). Since dicta is not necessary to deciding
the case, dicta “is not binding on anyone for any purpose,” Edwards v. Prime, Inc.,
602 F.3d 1276, 1298 (11th Cir. 2010) (Carnes, J., concurring), and a later court is
free to give “fresh consideration” to a matter presented as dicta, as the Florida
District Court did here.
Moreover, the Second Circuit’s opinion does not state that only the Florida
Court, and not the New York Bankruptcy Court, can decide whether Appellants’
amended claims violate the New York Bankruptcy Court’s Permanent Injunction
and automatic stay. That issue was never briefed by any of the parties, nor did the
Second Circuit address or rule whether the New York Bankruptcy Court was
stripped of its jurisdiction to determine the scope and applicability of its own
Permanent Injunction and automatic stay. Appellants would have this Court
believe that the Second Circuit would “mandate” – sua sponte and without any
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discussion – that the New York Bankruptcy was divested of its jurisdiction to
decide that issue while simultaneously affirming the Bankruptcy Court’s finding
that Appellants’ initial claims were derivative. Appellants’ “mandate” argument
must be rejected.
Tellingly, Appellants do not dispute that the issue of which court can decide
whether Appellants’ amended claims are derivative of the Trustee’s Claims was
never briefed nor argued to the Second Circuit by any of the parties. As a result,
the Second Circuit’s statement that the question is “in the first instance for the
[Florida Court]” is non-binding dicta. (See Opening Br. at 14 (citing United States
v. N.Y. Tel. Co., 434 U.S. 159, 184 (1977) (where an “issue was not briefed,” a
court’s statement on that issue was “in dicta” and “has absolutely no force”);
United States v. Hogan, 986 F.2d 1364, 1372 (11th Cir. 1993) (where an “issue
simply was not presented,” a court is “not bound by [the case’s] dictum”).)
Compounding their misreading of the Second Circuit’s decision, Appellants
continue to blindly mischaracterize the Second Circuit’s dicta as a “mandate.”
Even though that dicta does not appear anywhere in the Second Circuit’s formal
Mandate (which was issued a month after the Second Circuit’s opinion),
Appellants argue that the Second Circuit’s dicta is nevertheless part of its formal
Mandate because the Mandate states that the SDNY District Court’s judgment is
affirmed “in accordance with the opinion of this court.” (See Opp’n at 10.)
In this regard, Appellants intentionally misstate the mandate rule. Under the
mandate rule, “a district court must follow an opinion’s holdings, either express or
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implied, and nothing more.” Buckley Towers, 2014 WL 1319307, at *5.3 Issues
that were neither raised by the parties nor ruled upon by the Court of Appeals (i.e.,
dicta) are not part of an opinion’s holdings or part of the Court of Appeals’ formal
mandate issued pursuant to FRAP 41(b). See, e.g., Transamerica Leasing, Inc. v.
Inst. of London Underwriters, 430 F.3d 1326, 1332 (11th Cir. 2005) (mandate rule
inapplicable where standing issue “was not addressed in the district court order
granting summary judgment,” “neither party discussed it in its appellate brief,” and
Court “did not consider it in [its] ruling”); 18B Wright, Miller & Cooper, Federal
Practice and Procedure: Jurisdiction & Related Matters § 4478.3 (2d ed. 2013)
(“The reach of the mandate is generally limited to matters actually decided. A
mere recital of matters assumed for purposes of decision and dicta are not part of
the mandate.”).
Even Appellants recognize this; in support of their faulty mandate rule
argument, Appellants themselves were forced to rely on cases holding that issues
not briefed to, or decided by, the Court of Appeals are not part of the court’s
mandate. (See Opp’n at 11 (citing Gen. Universal Sys., Inc. v . HAL, Inc., 500 F.3d
444 (5th Cir. 2007); United States v. Mesa, 247 F.3d 1165, 1168 n.2 (11th Cir.
2001).) In General Universal, a plaintiff/appellant argued that the Fifth Circuit
had remanded its claims against a certain group of defendants (the “Customer
Defendants”). On appeal from the district court’s grant of summary judgment in
favor of the Customer Defendants, the Fifth Circuit held that the mandate rule did
not apply to the plaintiff/appellant’s claims against the Customer Defendants 3 Appellants’ counsel Becker & Poliakoff, P.A. was one of the parties in Buckley.
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because in the prior appeal, the plaintiff/appellant had “failed to brief, and thus
waived, any arguments against the Customer Defendants on appeal” and therefore
“our remand in the prior opinion did not include any claims against the Customer
Defendants.” Gen. Universal, 500 F.3d at 454.
Similarly, in Mesa, this Court rejected the argument that its prior remand
established law of the case regarding the existence of a buyer/seller relationship
because “we did not make a decision on a question of law and did not establish the
law of the case to be that only a buyer/seller relationship could exist.” 247 F.3d at
1168 n.2. This Court further held that where a party initially failed to raise an
issue to the district court (in Mesa, a sentencing adjustment), on remand, “the
district court was not required to consider [that issue]” because “the argument for
the adjustment was unrelated to the reason for our remand.” Id. at 1170-71.
Moreover, none of the other cases cited by Appellants for the proposition
that “the mandate of the court of appeals includes its entire opinion” (Opp’n at 10-
11) held that issues that were never briefed by the parties or decided by the court
(i.e., dicta) are nevertheless part of the Court of Appeals’ mandate (as Appellants
incorrectly assert). Rather, those cases involved issues (unlike here) that actually
were argued to, and decided by, the appellate court. See Metro. Water v. Kaw
Valley, 223 U.S. 519 (1912) (petition to remove action was granted by trial court,
reversed by court of appeals and trial court correctly complied with mandate);
Nixon v. Richey, 513 F.2d 430, 434 (D.C. Cir. 1975) (issue of whether district court
must form a three-judge panel was briefed to the Court of Appeals, which ruled
that district court “‘must decide and decide now’ whether to call for a three-judge
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court”); Litman v. Mass. Mut. Life Ins. Co., 825 F.2d 1506 (11th Cir. 1987) (where
appellant argued that punitive damages were excessive and this Court reversed and
remanded for a new trial on punitive damages, appellant could not thereafter waive
its right to new trial and accept initial punitive damage award).4
Unlike the cases cited by Appellants, in this case Appellants never argued to
the New York Bankruptcy Court, SDNY District Court or the Second Circuit that
only the Florida District Court, and not the New York Bankruptcy Court, can
decide whether their claims violate the Permanent Injunction and automatic stay.
Accordingly, the Second Circuit’s statement that the issue is “in the first instance”
for the Florida District Court to decide is dicta and not a purported “mandate.”
The Florida District Court was free to give “fresh consideration” to the issue, and
did so, deferring to the New York Bankruptcy Court to decide whether Appellants’
new complaint states claims that are derivative of the Trustee’s claims in violation
of the Permanent Injunction and automatic stay. Appellants offer no legal basis to
disturb the Florida District Court’s ruling, nor is there jurisdiction to do so.
CONCLUSION
For the foregoing reasons, Appellees respectfully request that this Court
dismiss this appeal. 4 The cases cited in Appellants’ motion for injunction pending appeal in support of their mandate rule argument (at page 9) fare no better. See, e.g., Piambino v. Bailey, 757 F.2d 1112, 1120 (11th Cir. 1985) (“As with the mandate rule, the law of the case doctrine . . . does not extend to issues the appellate court did not address”); Seese v. Volkswagenwerk, A.G., 679 F.2d 336, 337 (3d Cir. 1982) (because issue of whether negligence theory was viable under North Carolina law was briefed by parties and ruled on by Court, district court correctly complied with Court’s ruling on that issue).
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Respectfully submitted, HOLLAND & KNIGHT LLP By: s/Brian W. Toth
Sanford L. Bohrer Brian W. Toth
701 Brickell Avenue Suite 3300 Miami, Florida 33131 (305) 789-7678 SCHULTE ROTH & ZABEL LLP
By: s/Marcy Ressler Harris Marcy Ressler Harris
919 Third Avenue New York, New York 10022 (212) 756-2000 Attorneys for Appellees
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CERTIFICATE OF SERVICE
I certify that a copy of this document was served by CM/ECF on April 24,
2014, on all counsel or parties of record on the Service List below.
s/Brian W. Toth
SERVICE LIST
Helen Davis Chaitman Becker & Poliakoff, LLP 45 Broadway New York, New York 10006 Telephone: (212) 599-3322 Facsimile: (212) 557-0295 Email: [email protected]
James W. Beasley Jr. Robert J. Hauser Beasley Hauser Kramer & Giraldi, P.A. 505 S. Flagler Drive, Suite 500 West Palm Beach, Florida 33401 Telephone: (561) 835-0900 Facsimile: (561) 835-0939 Email: [email protected] Email: [email protected]
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