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In re Drexel Burnham Lambert Inc.

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT


decided and filed: April 19, 1989.

IN RE DREXEL BURNHAM LAMBERT INCORPORATED, THE DREXEL BURNHAM LAMBERT GROUP INCORPORATED, MICHAEL R. MILKEN, LOWELL J. MILKEN, CARY J. MAULTASCH, AND PAMELA R. MONZERT, PETITIONERS

HONORABLE J. EDWARD LUMBARD, HONORABLE RICHARD J. CARDAMONE, HONORABLE LAWRENCE W. PIERCE, Circuit Judges.

Order

IT IS HEREBY ORDERED that the motion for modification of the stay of the proceedings is denied.

1. On October 20, 1988, this Court stayed all further proceedings herein in the district court pending determination of a petition for a writ of mandamus. On November 15, 1988, this Court denied the petition for a writ of mandamus, see 861 F.2d 1307, and on February 21, 1989, it denied a petition for rehearing en banc. On February 27, 1989, petitioners Michael Milken, Lowell Milken and Pamela Monzert moved for a stay of the mandate and a continuance of the stay of the proceedings in the district court, pending their application to the United States Supreme Court for a writ of certiorari. On March 7, 1989, we granted the stay for a 30-day period. We have received notice from the Clerk of the Supreme Court that on April 5, 1989 a petition for a writ of certiorari had been filed there and that the case is now pending.

2. On April 14, 1989, the Securities and Exchange Commission ("the SEC") and petitioners Drexel Burnham Lambert Inc., The Drexel Burnham Lambert Group Inc. (collectively "Drexel"), and Cary J. Maultasch jointly moved before us for a modification of our stay of the district court proceedings in order to allow the district court to consider and possibly to approve a settlement agreement which the SEC and Drexel had reached. As part of the agreement, Drexel agrees that upon the effective date of a final judgment approving the agreement, it will not employ and will not engage in business with Michael and Lowell Milken.

3. Federal Rule of Appellate Procedure 41(b) requires that if, during the period of a stay of the mandate pending application to the Supreme Court for a writ of certiorari, the Clerk of the Supreme Court files with the Clerk of the Court of Appeals a notice that the party who has obtained the stay has filed a petition for the writ, "the stay shall continue until final disposition by the Supreme Court."

4. Thus, following this Court's receipt of notice from the Clerk of the Supreme Court that a petition for certiorari had been filed, the stay of the mandate has continued and it will remain in effect until the Supreme Court disposes of the case. In our view, to give this stay meaning, we must preserve the status quo with regard to the interests of those who petitioned for certiorari. See Board of Educ. v. Harris, 444 U.S. 130, 138 (1979). The proposed settlement agreement between the SEC and Drexel clearly may affect the interests of Michael and Lowell Milken. To allow the district court to consider and to possibly approve this settlement would be to allow a change in the status quo as it concerns the interests of Michael and Lowell Milken before the Supreme Court has disposed of the case. Such a change would effectively defeat the purpose of the stay mandated by Rule 41(b). Therefore, we deny the motion.

April 19, 1989

19890419

© 1998 VersusLaw Inc.



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