Case 15-1886, Document 48-1, 07/16/2015, 1555504, 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: 15-1886-bk Consolidation of Dockets 15-1869-bk Set forth below precise, complete statement of relief sought: MOTION INFORMATION STATEMENT (Marshall v. Picard) and 15-1886-bk (Marshall v. Madoff) Consolidation of Dockets 15-1869-bk (Marshall v. Picard) and 15-1886-bk (Marshall v. Madoff) Marshall v. Madoff Caption [use short title] MOVING PARTY: Plaintiff Appellant/Petitioner Defendant Appellee/Respondent OPPOSING PARTY: David J. Sheehan-dsheehan@bakerlaw.com Helen Davis Chaitman-hchaitman@bplegal.com MOVING ATTORNEY: OPPOSING ATTORNEY: [name of attorney, with firm, address, phone number and e-mail] Baker & Hostetler LLP 45 Rockefeller Plaza Court-Judge/Agency appealed from: Intervenor - Irving H. Picard NY, NY 10111 Tel: 212 589-4200 Becker & Poliakoff LLP 45 Broadway Susanne Stone Marshall, et al NY, NY 10006 Tel: 212 599-3322 Southern District of New York- Docket # 14-cv-6790 Judge John G. Koeltl 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 July 16, 2015 Service by: CM/ECF Other [Attach proof of service] Form T-1080 (rev. 12-13)
Case 15-1886, Document 48-2, 07/16/2015, 1555504, Page1 of 12 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, Debtor. SUSANNE STONE MARSHALL, ADELE FOX, MARSHA PESHKIN, RUSSELL OASIS, individually and on behalf of the classes they represent, v. Petitioners-Appellants, BERNARD L. MADOFF, BARBARA PICOWER, DECISIONS INCORPORATED, JA PRIMARY LIMITED PARTNERSHIP, JA SPECIAL LIMITED PARTNERSHIP, JMP LIMITED PARTNERSHIP, CAPITAL GROWTH COMPANY, JAB PARTNERSHIP, JEMW PARTNERSHIP, JF PARTNERSHIP, JFM INVESTMENT COMPANIES, JLN PARTNERSHIP, JEFFRY PICOWER SPECIAL CO., FAVORITE FUNDS, JEFFRY M. PICOWER P.C., THE PICOWER FOUNDATION, PICOWER INSTITUTE FOR MEDICAL RESEARCH, TRUST F/B/O GABRIELLE H. PICOWER, 15-1886-bk Respondents-
Case 15-1886, Document 48-2, 07/16/2015, 1555504, Page2 of 12 Appellees IRVING H. PICARD, Intervenor. APPELLEE IRVING H. PICARD S MOTION TO CONSOLIDATE APPEALS Appellee Irving H. Picard, in his capacity as trustee (the Trustee ) for the substantively consolidated liquidation of the business of Bernard L. Madoff Investment Securities LLC ( BLMIS ) under the Securities Investor Protection Act, 15 U.S.C. 78aaa et seq. ( SIPA ) and the estate of Bernard L. Madoff, individually ( Madoff ), by and through his undersigned counsel, moves to consolidate the above-captioned appeals (the Appeals ) pursuant to Rule 3(b)(2) of the Federal Rules of Appellate Procedure (the Motion ). Both Appellants and the Picower Parties have confirmed to the Trustee s counsel that they consent to the consolidation of the Appeals. PRELIMINARY STATEMENT The Appeals arise from two separate, related cases, involving the same parties, that were heard together at a single hearing before the Honorable John G. Koeltl in the U.S. District Court for the Southern District of New York (the New York District Court ) on April 7, 2015. Judge Koeltl issued an order and opinion in each case on May 11, 2015. Fox v. Picard (In re Bernard L. Madoff Inv. Sec. 1
Case 15-1886, Document 48-2, 07/16/2015, 1555504, Page3 of 12 LLC), No. 14-cv-6790 (JGK), 2015 WL 2166508 (S.D.N.Y. May 11, 2015); Marshall v. Madoff, No. 15-mc-56 (JGK), 2015 WL 2183939 (S.D.N.Y. May 11, 2015). These Appeals concern Appellants efforts to sue the Picower Parties 1 for claims that the Trustee and the Picower Parties contend are duplicative and derivative of claims settled by the Trustee and thus precluded by a permanent injunction (the Permanent Injunction ) issued by the U.S. Bankruptcy Court in the Southern District of New York (the Bankruptcy Court ) as part of the Trustee s and the United States Attorney s Office 2011 settlement with the Picower Parties (the Settlement ). In 2014, Appellants sought for a second time to sue the Picower Parties in federal court in Florida. The Trustee moved the Bankruptcy Court to enforce the Permanent Injunction against the Appellants. The Bankruptcy Court granted the motion on June 23, 2014. Appellants appealed to the New York District Court. Fox, 2015 WL 2166508, at *1. 1 The Picower Parties refers to 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 Gabrielle H. Picower. 2
Case 15-1886, Document 48-2, 07/16/2015, 1555504, Page4 of 12 While Appellants appeal of the Bankruptcy Court s order enforcing the Permanent Injunction was pending before the District Court, Appellants moved the Bankruptcy Court to permit them discovery, including permission to depose Bernard Madoff under Federal Rule of Civil Procedure 27. See Picard v. Marshall (In re Bernard L. Madoff), Adv. Pro. No. 14-01840 (SMB), 2014 WL 5486279 (Bankr. S.D.N.Y. Oct. 30, 2014). The Trustee and the Picower Parties argued that Appellants stated goal was to conduct discovery that they could use to amend their complaint against the Picower Parties in an effort to plead claims that would not be precluded by the Permanent Injunction. (Fox Plaintiffs Motion for an Order Authorizing Discovery at 3 4, Picard v. Marshall, Adv. Pro. No. 14-01840 (SMB) (Bankr. S.D.N.Y. filed July 18, 2014), ECF No. 64.) On October 30, 2014, the Bankruptcy Court denied the motion on all grounds, except for finding that it lacked jurisdiction under Rule 27(a), and therefore it permitted Appellants to make their Rule 27(a) petition to a district court that would have such jurisdiction. Picard v. Marshall, 2014 WL 54862679, at *4 6. Rather than petition the New York District Court, Appellants made their petition to the U.S. District Court for the District of Delaware (the Delaware District Court ). See Marshall v. Madoff, 2015 WL 2183939, at *2. The Delaware District Court granted the Trustee intervenor status in the Rule 27 petition. After a transfer motion and opposition to the merits of the petition filed by the Trustee and 3
Case 15-1886, Document 48-2, 07/16/2015, 1555504, Page5 of 12 the Picower Parties, the Delaware District Court transferred the petition to the New York District Court, refraining from reaching the merits. Id. Judge Koeltl heard argument on Appellants petition and on their appeal of the order enforcing the Permanent injunction on April 7, 2015, and ruled against Appellants in both actions on May 11, 2015. Id. at *4. The Trustee respectfully requests that the Court consolidate the Appeals both in the interest of efficiency and to provide the Court with a more complete picture of the litigation given that: (i) the appeals arise from the same facts; (ii) the same parties are involved in both appeals; and (iii) Appellants seek to depose Madoff concerning the allegations made in their Second Amended Complaint, thereby making the two appeals intertwined. BACKGROUND A. Fox I: Appellants First Complaint and Proceedings Enforcing the Permanent Injunction On May 12, 2009, the Trustee commenced an action to recover nearly $7 billion in transfers made by BLMIS to the Picower Parties, captioned Picard v. Picower, No. 09-1197 (SMB) (Bankr. S.D.N.Y.). Appellants Adele Fox and Susanne Stone Marshall subsequently filed separate putative class actions (the Fox I Action ) against the Picower Parties on February 16, 2010 and February 17, 2010, respectively, in the United States District Court for the Southern District of Florida ( Florida District Court ). (See Complaint, Fox v. Picower, No. 10-cv- 4
Case 15-1886, Document 48-2, 07/16/2015, 1555504, Page6 of 12 80252 (S.D. Fla. Filed Feb. 16, 2010), ECF No. 1; Complaint, Marshall v. Picower, No. 10-80254 (S.D. Fla. Filed Feb. 17, 2010), ECF No. 1.) The complaints were virtually identical to each other and to the Trustee s complaint. See Picard v. Fox, 848 F. Supp. 2d 469, 479 (S.D.N.Y. 2012). The Trustee moved to enforce the automatic stay and otherwise preliminarily enjoin the Fox I Action as duplicative of the Trustee s action, and the bankruptcy court granted the Trustee s application. Picard v. Fox, 429 B.R. 423, 437 (Bankr. S.D.N.Y. 2010). The Trustee and the United States Attorney s Office for the Southern District of New York subsequently reached a settlement with the Picower Parties. On January 13, 2011, the Bankruptcy Court approved the settlement entered into between the Trustee and Barbara Picower, as the executor of the estate of Jeffry M. Picower, and on behalf of all of the Picower Parties. (Picard v. Picower, No. 09-1197 (SMB) (Bankr. S.D.N.Y. Jan. 13, 2011), ECF No. 43.) As part of the Settlement, the Trustee agreed to seek, and the Bankruptcy Court entered, a narrowly tailored permanent injunction that precluded the assertion of claims against the Picower Parties that are derivative or duplicative of claims asserted by, or that could have been asserted by, the Trustee. (See id. at 15.) Appellants appealed from the Bankruptcy Court orders enjoining the Fox I Action and issuing the Permanent Injunction. Judge Koeltl of the New York District Court consolidated the appeals and affirmed both orders. See Picard v. 5
Case 15-1886, Document 48-2, 07/16/2015, 1555504, Page7 of 12 Fox, 848 F. Supp. 2d 469 (S.D.N.Y. 2012). On appeal, this Court affirmed. Marshall v. Picard, 740 F.2d 81 (2d Cir. 2014). B. Fox II: Appellants Second Amended Complaint and Proceedings Enforcing the Permanent Injunction On February 5, 2014, Fox and Marshall, together with the other Appellants Russell Oasis and Marsha Peshkin, purportedly representing a putative class, moved in the Florida District Court to re-open the Fox I Action, Case No. 10-80252, and for leave to file a Second Amended Complaint. The Trustee moved to enforce the Permanent Injunction in the Bankruptcy Court. On June 23, 2014, Judge Bernstein of the Bankruptcy Court issued a memorandum decision enforcing the Permanent Injunction against Appellants and enjoining Appellants from prosecuting their Second Amended Complaint. 2 Id. at 395. Appellants appealed to the New York District Court, which affirmed the Bankruptcy Court s order. Fox v. Picard, No. 14-cv-6790 (JGK), 2015 WL 2166508 (S.D.N.Y. May 11, 2015) ( Fox II ). Appellants appeal to this Court followed. C. Appellants Rule 27 Petition In the interim, on July 18, 2014, shortly after the Bankruptcy Court s decision enjoining them from proceeding with their proposed Second Amended 2 The decision also enforced the Permanent Injunction against another set of putative class action plaintiffs, A&G Goldman Partnership and Pamela Goldman, who had brought claims similar to Appellants claims against the Picower Parties. The Goldman plaintiffs withdrew their appeal from Judge Bernstein s decision, and they are not parties to the instant Appeals. 6
Case 15-1886, Document 48-2, 07/16/2015, 1555504, Page8 of 12 Complaint, Appellants moved before the Bankruptcy Court for a deposition of Bernard Madoff under Fed. R. Civ. P. 27 and other discovery. (See Picard v. Fox, Adv. Pro. No. 14-01840, ECF No. 64 (Bankr. S.D.N.Y. July 18, 2014.)) On October 30 2014, the Bankruptcy Court issued a memorandum decision denying the motion, except for finding that it lacked jurisdiction to rule on the request under Rule 27(a). It stated that the proper procedure would be to refile the motion in an appropriate District Court. 3 Picard v. Fox, Adv. Pro. No. 14-01840, 2014 WL 5486279, at *5 (Bankr. S.D.N.Y. Oct. 30, 2014). On January 2, 2015, Appellants filed a petition under Fed. R. Civ. P. 27(a) seeking the deposition of Bernard Madoff in the Delaware District Court. (In re Marshall, 15-MC-00001, ECF No. 1 (D. Del. Jan. 2, 2015).) The Picower Parties moved to transfer venue to the New York District Court and opposed the petition on its merits. The Trustee intervened, and filed a brief in support of the motion and in opposition to the merits of the petition. On February 25, 2015, in a memorandum order issued by Chief Judge Leonard Stark, the Delaware District Court granted the motion and transferred venue to the New York District Court, 3 The Bankruptcy Court denied the request under Fed. R. Civ. P. 27(b), which authorizes the court in which a judgment has been rendered to permit a party to perpetuate testimony if an appeal has or may be taken, on the ground that the testimony would not be used in the Bankruptcy Court in the event of a remand from the New York District Court to the Bankruptcy Court. 2015 WL 5486279, at *5. 7
Case 15-1886, Document 48-2, 07/16/2015, 1555504, Page9 of 12 refraining from reaching the merits. See In re Marshall, 15-MC-00001, 2015 WL 849302 (D. Del. Feb. 25, 2015). On March 4, 2015, the case was transferred to the New York District Court. On March 9, 2015, Appellants filed an Emergency Petition for a Writ of Mandamus in the Third Circuit, seeking to vacate the Delaware District Court s order transferring the Rule 27 petition to the New York District Court and for an order that the Rule 27 petition be granted. The Third Circuit denied the Appellants mandamus petition on April 6, 2015. In the meantime, on March 12, 2015, at the request of the Picower Parties and the Trustee, Judge Koeltl accepted the assignment of the transferred Rule 27 petition case as related to matters previously before him. Marshall v. Madoff, Case No. 15-MC-56 (S.D.N.Y.). On March 25, 2015, again at the Trustee s and Picower Parties request, Judge Koeltl directed that the case be heard in tandem with the pending appeal in Fox II. Id. ECF No. 24. Judge Koeltl scheduled and heard oral argument on both the Rule 27 petition and the appeal of the Bankruptcy Court s order enforcing the Permanent Injunction on April 7, 2015. On May 11, 2015, the District Court issued a memorandum opinion and order denying the petition. See Marshall v. Madoff, 15-mc-56, 2015 WL 2183939 (S.D.N.Y. May 11, 2015). That same day, the District Court issued a separate opinion and order 8
Case 15-1886, Document 48-2, 07/16/2015, 1555504, Page10 of 12 affirming the Bankruptcy Court s order enforcing the Permanent Injunction order in Fox II. The appeals to this Court followed. ARGUMENT The Appeals Should Be Consolidated The Federal Rules of Appellate Procedure encourage consolidation of appeals whenever feasible. Fed. R. App. P. 3, Advisory Committee Note. Consolidation of cases serves the goal of fostering judicial economy.... 20-303 Moore s Federal Practice Civil 303.41[1] (2012), available at LexisNexis; Malcolm v. Nat l Gypsum Co., 995 F.2d 346, 350 (2d Cir. 1993) (consolidation is favored when it serves judicial economy); Chem One, Ltd. v. M/V RICKMERS GENOA, 660 F.3d 626, 642 (2d Cir. 2011) (consolidation of appeals from related litigation was efficient and equitable). Further, when two appeals arise out of a common origin..., they should be consolidated for hearing at the same time... and should not be separated for hearing or final determination. Fuller Brush Co. v. N. 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 issues in the Appeals plainly are intertwined, as the Trustee and the Picower Parties have argued that Appellants seek Madoff s testimony to bolster 9
Case 15-1886, Document 48-2, 07/16/2015, 1555504, Page11 of 12 their efforts to plead allegations falling outside the scope of the Permanent Injunction. (See Picard v. Fox, Adv. Pro. No. 14-01840, ECF No. 64 (Bankr. S.D.N.Y. July 18, 2014) 4.) And in their briefing before the Delaware District Court, Appellants cited to the Second Amended Complaint at issue in Fox II to show the allegations for which they sought Madoff s testimony. (See Petitioners Brief dated Feb. 9, 2015, at 1 2, In re Marshall, 15-MC-00001 (D. Del.), ECF No. 19.) Further, Appellants acknowledged in their Notices of Appearance and Acknowledgments before this Court and Forms C in these matters that the Appeals are related to each other. (Acknowledgment and Notice of Appearance on Behalf of Appellants, 15-1869(bk), June 24, 2015, ECF No. 27; Form C, 15-1869(bk), June 24, 2015, ECF No. 28; Acknowledgment and Notice of Appearance on Behalf of Appellants, 15-1886(bk), June 24, 2015, ECF No. 25; Form C, 15-1886(bk), June 24, 2015, ECF No. 26.) In addition, counsel for the Trustee reached out to counsel for all the parties, and all parties have consented to the proposed consolidation. The Trustee does not know if the Appellants intend to file a response. Consolidating the Appeals would serve judicial economy, provide this Court with a more complete picture of the litigation, and may help inform the Court s decision whether the relief sought by Appellants Rule 27 petition is warranted. 10
Case 15-1886, Document 48-2, 07/16/2015, 1555504, Page12 of 12 CONCLUSION For the foregoing reasons, the Trustee respectfully requests that the Appeals be consolidated. Dated: New York, New York Respectfully submitted, July 16, 2015 /s/ David J. Sheehan David J. Sheehan Email: dsheehan@bakerlaw.com Deborah H. Renner Email: drenner@bakerlaw.com Tracy L. Cole Email: tcole@bakerlaw.com Keith R. Murphy Email: kmurphy@bakerlaw.com Baker & Hostetler LLP 45 Rockefeller Plaza New York, New York 10111 Telephone: (212) 589-4200 Facsimile: (212) 589-4201 Thomas D. Warren Email: twarren@bakerlaw.com Baker & Hostetler LLP PNC Center 1900 East 9th Street, Suite 3200 Cleveland, OH 44114-3482 Telephone: (216) 621-0200 Facsimile: (216) 696-0740 Attorneys for Plaintiff-Appellee Irving H. Picard, as Trustee for the Substantively Consolidated SIPA Liquidation of Bernard L. Madoff Investment Securities LLC and the Estate of Bernard L. Madoff 11