decision and prior decisions in this action is assumed.
Under the terms of the Settlement, the settling defendants agreed to establish a fund of $ 42 million for payment of class claims, attorneys' fees and expenses. Class members of the submitting class would receive approximately 6% of the amount of their losses, a percentage which would vary depending on the amount of claims made and attorneys' fees award. Id. at 323. Any amount not distributed would revert to the settling defendants. Settlement, P 18(f).
Paragraph 21(b) of the Settlement required that all proofs of claim must be filed by a date specified in a notice of the proposed settlement of class actions, unless extended by agreement of the Plaintiffs' Executive Committee and counsel for the Settling Defendants. By order dated March 30, 1993, Judge Nickerson scheduled a hearing to determine the fairness of the Settlement and directed, inter alia, that the deadline for submitting proofs of claim be 90 days after the hearing. The actual notice of the proposed settlement (the "Notice") and form proof of claim sent to class members established August 25, 1993 as the deadline for submitting proofs of claim, requiring all mailed proofs of claim to be postmarked no later than August 25, 1993. See Exhibit B attached to the affidavit of Joseph T. McLaughlin dated November 21, 1994 ("McLaughlin Aff.") in opposition to the instant motion.
The Notice and form proof of claim were mailed to class members by April 30, 1993. In re Crazy Eddie, 824 F. Supp. at 324. Besides widespread media coverage of the Settlement, class members were notified of the agreement by notices published in the national editions of the New York Times and Wall Street Journal advising them of the deadlines for objecting to the Settlement and filing proofs of claim. Id. After the court approved the settlement on June 11, 1993, the Plaintiffs' Executive Committee apparently sent a further notice advising class members of the approval. See Exh. E to McLaughlin Aff.
The Claims Administrator received over 13,000 proofs of claim, of which 257 valid claims were postmarked after the August 25, 1993 deadline ("late claims"). See Affidavit of Brad Heffler dated October 28, 1994 ("Heffler Aff.") at P 4 attached as Exhibit A to the affidavit of Howard Sirota dated October 31, 1994 submitted in support of the instant motion. The amount of "recognized losses", as defined by the Settlement, declared in valid and timely proofs of claim totaled $ 231,212,431.41 and the valid late claims included recognized losses of $ 9,890,000. Id.
Copies of the letters of the late claimants explaining why they did not file their claims on time are attached as exhibits to the Heffler Aff. Defendants agreed on the record at oral argument to accept the veracity of the explanations contained in these letters.
By letter dated December 16, 1994, plaintiffs' counsel, Howard Sirota, Esq., submitted a list containing the names of all claimants with valid late claims and the postmark date of their submissions. The vast majority of the claims (187) were submitted within two months after the filing deadline, 60% (158) of which were submitted within the first month.
The determination of whether to allow the participation of late claimants in a class action settlement is essentially an equitable decision within the discretion of the court. See Zients v. LaMorte, 459 F.2d 628, 629-30 (2d Cir. 1972); In re "Agent Orange" Prod. Liab. Litig., 611 F. Supp. 1396, 1417 (E.D.N.Y. 1985). As the Second Circuit explained in Zients, "a court supervising the distribution of a trust fund has the inherent power and duty to protect unnamed, but interested persons." 459 F.2d at 630. See also Alexander v. Chicago Park Dist., 927 F.2d 1014 (7th Cir. 1991), cert. denied, 503 U.S. 905, 117 L. Ed. 2d 491, 112 S. Ct. 1262 (1992); In re Gypsum Antitrust Cases, 565 F.2d 1123, 1127 (9th Cir. 1977).
Accordingly, this court must make its determination after "taking account of all relevant circumstances surrounding the party's omissions." Pioneer Inv. Services v. Brunswick Associates, 507 U.S. 380, 123 L. Ed. 2d 74, 113 S. Ct. 1489, 1498 (1993). The Supreme Court in Pioneer observed that such an equitable inquiry cannot be limited to consideration of the movant's culpability and reasons for delay. 113 S. Ct. at 1498, n.13. Thus, any strict requirement that a late claimant must demonstrate "good cause" for delay in filing a proof of claim in a class action settlement, see In re Gypsum, 565 F.2d at 1127,
is clearly inappropriate when the court is exercising its equitable power in this context.
Although Pioneer dealt with interpretation of Rule 9006 of the Federal Rules of Bankruptcy Procedure which permits late filing of proofs of claim upon a showing of "excusable neglect," the Pioneer analysis is clearly applicable here. Weinstock v. Cleary, Gottlieb, Steen & Hamilton, 16 F.3d 501, 503 (2d Cir. 1994) (Pioneer applicable outside the bankruptcy context). Here, as in Pioneer, the proper inquiry is necessarily an equitable one. The role of bankruptcy courts in supervising Chapter 11 reorganizations is not dissimilar from the role of the Court in this class action -- both courts are "entrusted with broad equitable powers to balance the interests of affected parties. . . ." Pioneer, 113 S. Ct. at 1495 (citation omitted).
Moreover, since the deadline for filing proofs of claims was first set by Judge Nickerson in his order of March 30, 1993, the instant motion is essentially a request for an enlargement of time with respect to a court ordered deadline. It should thus be considered under the "excusable neglect" standard pursuant to Fed. R. Civ. P. 6(b)(2).
As the Supreme Court in Pioneer emphasized, "excusable neglect" under Rule 6(b) is a "somewhat 'elastic concept' and not limited strictly to omissions caused by circumstances beyond the control of the movant." Pioneer, 113 S. Ct. at 1496 (quoting 4A C. Wright & A. Miller, Federal Practice and Procedure § 1165, p. 479 (2d ed. 1987)). Since "neglect" ordinarily also encompasses inadvertence or negligent omission, a court should not automatically rule out delay caused by such conduct, but rather, must examine whether the conduct is "excusable". 113 S. Ct. at 1498. A court should therefore weigh "all relevant circumstances" in determining whether to permit a late claim, including the following factors:
the danger of prejudice to [other parties], the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith.