Case 16-413, Document 34-1, 03/18/2016, 1731407, Page1 of 1 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT Thurgood Marshall U.S. Courthouse 40 Foley Square, New York, NY 10007 Telephone: 212-857-8500 Docket Number(s): Motion for: 16-413 MOTION INFORMATION STATEMENT consolidating appeals and establishing a common briefing schedule for docket numbers 16-413, 16-420, and 16-423. Sagor v. Picard Caption [use short title] Set forth below precise, complete statement of relief sought: An order consolidating appeals and establishing a common briefing schedule. MOVING PARTY: Plaintiff Appellant/Petitioner MOVING ATTORNEY: Court-Judge/Agency appealed from: Irving H. Picard, Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC Defendant Appellee/Respondent David J. Sheehan OPPOSING PARTY: OPPOSING ATTORNEY: [name of attorney, with firm, address, phone number and e-mail] Elliot G. Sagor Elliot G. Sagor Baker Hostetler LLP Mintz & Gold LLP 45 Rockefeller Plaza, New York, NY 10111 600 Third Avenue, 25th Floor New York, NY 10016 (212)589-4200 / dsheehan @bakerlaw.com (212)696-4848 / sagor@mintzandgold.com U.S. District Court, Southern District of New York, Hon. Paul A. Engelmayer Please check appropriate boxes: FOR EMERGENCY MOTIONS, MOTIONS FOR STAYS AND INJUNCTIONS PENDING APPEAL: Has movant notified opposing counsel (required by Local Rule 27.1): Has request for relief been made below? Yes No Yes No (explain): Has this relief been previously sought in this Court? Yes No Requested return date and explanation of emergency: Opposing counsel s position on motion: Unopposed Opposed Don t Know Does opposing counsel intend to file a response: Yes No Don t Know Is oral argument on motion requested? Yes No (requests for oral argument will not necessarily be granted) Has argument date of appeal been set? Yes No If yes, enter date: Signature of Moving Attorney: Date: /s/ David J. Sheehan March 18, 2016 Service by: CM/ECF Other [Attach proof of service] Form T-1080 (rev. 12-13)
Case 16-413, Document 34-2, 03/18/2016, 1731407, Page1 of 8 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SECURITIES INVESTOR PROTECTION CORPORATION, v. Plaintiff, BERNARD L. MADOFF INVESTMENT SECURITIES LLC, Adv. Pro No. 08-1789 (SMB) SIPA LIQUIDATION (Substantively Consolidated) In re: Defendant, BERNARD L. MADOFF, ELLIOT G. SAGOR, Debtor. Appellant, v. No. 16-413 IRVING H. PICARD, Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC, Appellee. EDWARD A. ZRAICK, JR., et al., Appellant, v. No. 16-420 IRVING H. PICARD, Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC, Appellee.
Case 16-413, Document 34-2, 03/18/2016, 1731407, Page2 of 8 AARON BLECKER, et al., Appellant, v. No. 16-423 IRVING H. PICARD, Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC, Appellee. APPELLEE S MOTION TO CONSOLIDATE APPEALS AND ESTABLISH A COMMON BRIEFING SCHEDULE Irving H. Picard, as trustee ( Trustee ) for the substantively consolidated liquidation of Bernard L. Madoff Investment Securities LLC ( BLMIS ) under the Securities Investor Protection Act, 15 U.S.C. 78aaa et seq. ( SIPA ), 1 and the estate of Bernard L. Madoff, respectfully submits this motion to consolidate the three above-captioned appeals (the Appeals ) and establish a common briefing schedule. Background The Appeals 2 stem from proceedings in the Bankruptcy Court and related appeals to the District Court in the BLMIS liquidation proceeding affirming the 1 For convenience, subsequent references to sections of the act shall be denoted as SIPA. 2 See Elliot G. Sagor v. Irving H. Picard, No. 16-413 (2d Cir.) ( Sagor ); Edward A. Zraick, Jr., et al. v. Irving H. Picard, No. 16-420 (2d Cir.) ( Zraick ); and Aaron Blecker, et al. v. Irving H. Picard, No. 12-423 (2d Cir.) ( Blecker ). 2
Case 16-413, Document 34-2, 03/18/2016, 1731407, Page3 of 8 Trustee s calculation of a customer s net equity where that net equity depends, at least partly, on amounts transferred from another BLMIS account ( inter-account transfers ). In order to calculate net equity for each BLMIS account, the Trustee applied a net investment method (i.e., cash in/cash out) to all BLMIS accounts, including those accounts that received one or more inter-account transfer from another BLMIS account. Specifically, the Trustee utilized the books and records of BLMIS to identify the amount of principal in a transferor account at the time of an inter-account transfer and gave credit to the transferee account up to the amount of principal available in the transferor account. See SIPA 78fff-2(b) (requiring Trustee to calculate net equity claims based on the books and records or otherwise to his satisfaction). The Trustee ignored any fictitious gains and thus, if there was no principal available, the transferee account was credited with $0 for that transfer. Alternatively, if a transferor account had principal available at the time of the interaccount transfer, the transferee account was credited with the amount of the interaccount transfer to the extent principal was available in the transferor account. More than 400 claimants, including defendants in avoidance actions, filed objections in the Bankruptcy Court in accordance with the claims procedures order issued by the Bankruptcy Court at the inception of the liquidation proceeding. Sec. Inv r Prot. Corp. v. BLMIS, No. 08-1789 (BRL) (Bankr. S.D.N.Y.) (ECF No. 12). 3
Case 16-413, Document 34-2, 03/18/2016, 1731407, Page4 of 8 The objections challenged the Trustee s treatment of inter-account transfers. Most of these objections sought credit for the inter-account transfer of fictitious profit amounts. Given the large number of accounts impacted by the inter-account transfer issue, an omnibus proceeding was commenced to address the legal issues on a consolidated basis. Following briefing and a hearing, the Bankruptcy Court issued its decision upholding the Trustee s treatment of inter-account transfers. See Sec. Inv r Prot. Corp. v. Bernard L. Madoff Inv. Sec. (In re Bernard L. Madoff Inv. Sec. LLC), 522 B.R. 41 (S.D.N.Y. 2014). Following entry of the order affirming the Trustee s inter-account transfer methodology, five appellants filed timely notices of appeal to the District Court. On January 14, 2016, the District Court affirmed the Bankruptcy Court s decision, holding that the Inter-Account Transfer method properly applies the net investment method and... is superior as a matter of law, and not clearly inferior, to the proposed alternatives offered by appellants. Diana Melton Trust, Dated 12/05/05, et al. v. Picard, Nos. 15 Civ. 1151, 15 Civ. 1195, 15 Civ. 1223, 15 Civ. 1236, 15 Civ. 1263 (PAE), 2016 WL 183492 (Jan. 14, 2016 S.D.N.Y.) (quoting In re Bernard L. Madoff Inv. Sec., 654 F.3d 229, 238 n.7 (2d Cir. 2011)). On or about February 16, 2016, the Appeals were taken from the District Court s decision to this Court. See Elliott G. Sagor v. Irving H. Picard, No. 16-4
Case 16-413, Document 34-2, 03/18/2016, 1731407, Page5 of 8 413 (2d Cir.); Edward A. Zraick, Jr., et al. v. Irving H. Picard, No. 16-420 (2d Cir.); and Aaron Blecker, et al. v. Irving H. Picard, No. 16-423 (2d Cir.). The Appeals have not yet been consolidated. The Appellants have each filed a scheduling request with the Court seeking to file their respective briefs on May 23, 2016. See No. 16-413 (ECF No. 29); No. 16-420 (ECF No. 28); No. 16-423 (ECF No. 29). No date has been assigned for the Trustee s appellee brief. For the reasons set forth herein, the Trustee respectfully requests the consolidation of the Appeals. Additionally, the Trustee seeks a common briefing schedule for the Appeals. ARGUMENT A. The Appeals Should Be Consolidated The Federal Rules of Appellate Procedure encourage consolidation of appeals whenever feasible. Fed. R. App. P. 3 Advisory Committee s Notes. Consolidation of cases is favored when it serves judicial economy and the interests of justice. Malcolm v. Nat l Gypsum Co., 995 F.2d 346, 350 (2d Cir. 1993); see also 20 Daniel R. Coquillette, et al., Moore s Federal Practice Civil 303.41[1] (2015). Further, when multiple appeals arise out of a common origin... and are taken from a single judgment disposing of all issues they should be consolidated for hearing at the same time... and should not be separated for hearing or final 5
Case 16-413, Document 34-2, 03/18/2016, 1731407, Page6 of 8 determination. Fuller Brush Co. v. Northern States Power Co., 261 F.2d 340, 342 (8th Cir. 1958); see also Allison v. Bank One-Denver, 289 F.3d 1223, 1230 n.1 (10th Cir. 2002) (appeals consolidated when sharing identical facts and a common record ). The proceedings relating to the Appeals were effectively consolidated before the Bankruptcy Court and the District Court. All of those matters were heard jointly. The Trustee filed one consolidated brief addressing those matters. The Appeals seek reversal of one decision of the Bankruptcy Court that was affirmed by the District Court also in a single decision. The factual and legal issues are substantially identical and it would aid in judicial economy to have the Appeals consolidated. Accordingly, the Trustee respectfully requests that the Appeals be consolidated. B. There Should Be A Common Briefing Schedule Given the overlapping factual and legal issues in the Appeals, it would be efficient to establish a common schedule for the remaining briefs to be filed. The Trustee anticipates that many of the issues are duplicative and will require substantially identical briefing. Accordingly, the Trustee respectfully requests permission to file one common brief addressing all of Appellants briefs. He further requests permission 6
Case 16-413, Document 34-2, 03/18/2016, 1731407, Page7 of 8 to file an oversize brief containing up to 19,000 words instead of the 14,000 words provided for under the Federal Rules of Appellate Procedure for individual briefs. Counsel for the Trustee has contacted the Securities Investor Protection Corporation ( SIPC ) and the Appellants and all consent to this relief. In addition, the Appellants have requested that they be permitted to file a Joint Appendix to accompany their individual briefs. The Appellee and SIPC consent to this request. Intentionally Left Blank 7
Case 16-413, Document 34-2, 03/18/2016, 1731407, Page8 of 8 CONCLUSION For the foregoing reasons, the Trustee respectfully requests that the Appeals be consolidated, the Court permit the Trustee to file an oversize brief of up to 19,000 words, and an order be entered containing the following briefing schedule: As they have requested, Appellants opening briefs due on May 23, 2016; Appellee s brief due on August 22, 2016; SIPC s brief due on August 22, 2016; and Appellants are filing a motion, to which the Trustee consents, seeking to extend the reply date mandated by the Federal Rules of Appellate Procedure Rule 31 and the Local Rules and Internal Operating Procedures of the Court of Appeals for the Second Circuit Rule 31.2(a)(2) to September 30, 2016. Dated: New York, New York March 18, 2016 Respectfully submitted, BAKER & HOSTETLER LLP s/ David J. Sheehan David J. Sheehan Email: dsheehan@bakerlaw.com 45 Rockefeller Plaza 14th Floor New York, New York 10111 Telephone: (212) 589-4200 Facsimile: (212) 589-4201 Attorneys for Appellee 8