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United States District Court, S.D. New York

November 5, 2004.

CITIGROUP, INC., et al. Defendants.

The opinion of the court was delivered by: GERARD E. LYNCH, District Judge


Abe Nachom moves pursuant to Fed.R. Civ. P. 60(b) to set aside prior orders of the Court consolidating his case with other securities fraud cases related to Global Crossing, Ltd., and, later, dismissing his complaint.*fn1 Nachom failed to timely object either to the consolidation of his case with other cases involving the same subject matter, or to the routine dismissal of his complaint pursuant to the Court's standing case management order, which provided that separate complaints bringing overlapping causes of action would be dismissed unless the parties objected by a date certain. He now argues that the dismissal should be set aside for "excusable neglect," to permit him to object to the consolidation order. The motion will be denied.

First, Nachom has failed to show "excusable neglect" under Second Circuit precedent. The only basis for the claim of excusable neglect is his attorney's assertion that at the time the Court ordered consolidation, counsel "was very heavily involved in discovery matters relating to another case." (Declaration of Arnold G. Regardie, dated June 28, 2004 ("Regardie Decl."), ¶ 3.)*fn2 The attorney acknowledges that his office "receive[d] and had knowledge of" the Court's Order consolidating the case, but that "the final date for filing objections was not calendared by my office," and was therefore neglected by counsel. (Id.) The Order in question, dated March 26, 2004, consolidated this case with In re Global Crossing, Ltd., Securities and ERISA Litigation, Dkt. No. 02 MD 1472, for all purposes; directed any party to file "any objections to this consolidation or to the application of any provision(s) of the Global Crossing Consolidation Order, a copy of which is attached hereto, no later than April 30, 2004"; and specifically directed attention to ¶ 33 of that Order, under which the complaint "shall be deemed withdrawn and shall be dismissed," unless the plaintiff objected by April 30. Plaintiff did not so object, and on June 10, 2004, his complaint was dismissed.

  Nachom argues that his attorney's failure to remember the deadline, despite having received and being aware of the Order, constitutes "excusable neglect." Canfield v. Van Atta Buick/GMC Truck, Inc., 127 F.3d 248 (2d Cir. 1997), holds otherwise. There, the Second Circuit recognized that Pioneer Investment Services Co. v. Brunswick Associated LP, 507 U.S. 380 (1993), applied a "more liberal definition of excusable neglect" than the Second Circuit had previously applied, one that encompassed "situations in which the failure to comply with a filing deadline is attributable to negligence." 127 F.3d at 250. Nevertheless, while negligence of counsel is no longer a per se bar to relief under Rule 60(b), the Court emphasized that "the possibility that a court may properly find excusable neglect" in some such situations does not "alter? the principle that failure to follow the clear dictates of a court rule will generally not constitute such excusable neglect." Id. Where the rule setting a deadline "is entirely clear, we continue to expect that a party claiming excusable neglect will, in the ordinary course, lose under the Pioneer test." Id. at 251.

  Here, as in Canfield, id., the deadline was crystal clear and unambiguous. Moreover, as in Canfield, in which the Second Circuit held that "[c]ounsel's failure to read and obey an unambiguous court rule — especially when the opposing party told him what the rule said — was not excusable," id., counsel was admittedly on notice of the deadline. Indeed, in this case the deadline was set not merely by a general court rule, which even diligent counsel might overlook, but by a Court Order specifically entered in Nachom's case, and the notice was provided not simply by letter from an adversary, but by an Order specifically addressed to Nachom by the Court, specially tailored to his case, advising him of the Court's requirements, directly ordering the plaintiff to take action by a particular date, and specifying the consequences that would ensue from failing to do so. Finally, as in Canfield, "the fact that counsel was preoccupied" with other matters "does not alter th[e] conclusion." Id.*fn3 Second, granting the motion would be futile, since the objections that Nachom seeks to make to the consolidation order are completely lacking in merit. Nachom's case was properly consolidated with In re Global Crossing Securities and ERISA Litigation, because his action presents common questions of law and fact with the many actions previously consolidated in that matter. Fed.R. Civ. P. 42(a). Indeed, his complaint virtually duplicates allegations set forth in the consolidated amended complaint in that action. Neither the fact that his action is an individual action (Proposed Objections ¶ 1), nor the fact that it brings claims under state law (id. ¶ 2), nor that fact that a district judge in California had declined to accept the case as "related" to an earlier Global Crossing matter under the rules for the division of business in the Central District of California (id. ¶ 4), changes the basic similarity of the objections set forth.*fn4 Similarly, the purported objections that challenge the removal of the case to federal court (id. ¶¶ 3, 5) have no relevance to the consolidation order. Nachom litigated the jurisdictional question before this Court, which decided the issue against him in November 2003. In re Global Crossing Securities Litigation (Nachom v. Citigroup, Inc.), 02 Civ. 910, 2003 WL 22705127 (S.D.N.Y. Nov. 14, 2003). Nachom did not seek reargument of that order then, and it is too late to do so now, even if Nachom presented any argument to the Court meriting reconsideration (which he does not) and even if the question of jurisdiction were relevant to the question of whether the case, once here, should be consolidated (which it is not). Finally, Nachom argues that under Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998), he has a right to have his case transferred back for trial to the district where it originated. This is a misunderstanding of Lexecon. That case held that a federal court conducting consolidated multidistrict pretrial procedures pursuant to 18 U.S.C. § 1407(a) has no power to transfer cases to itself for trial. But nothing in Lexecon prohibits the dismissal of actions on proper grounds during the pretrial phase of the case. To the contrary, the Supreme Court specifically recognized in Lexecon that the requirement that the MDL panel remand cases back to transferor courts after conclusion of consolidated pretrial proceedings is limited to cases not "`previously terminated' during the pretrial period," such as cases "already concluded by summary judgment . . . or dismissal." 523 U.S. at 37, quoting 28 U.S.C. § 1407(a). If the case were to be tried, Lexecon holds that the statute prohibits this Court from trying the case here. Since the case has been dismissed, Lexecon has no application.

  The fact that the dismissal order was entered in the course of complex multidistrict litigation has significant bearing on this Court's exercise of discretion under Rule 60(b). Literally scores of cases arising out of the financial collapse of Global Crossing have been assigned to this Court for pretrial management — individual and class actions, predicated on various state and federal theories of liability, naming dozens of different individual and institutional defendants. In addition to those securities fraud and cases assigned by the MDL panel, the Court is also responsible for substantial separate actions filed in this District by lenders to Global Crossing and by its bankruptcy estate. Each case must be considered on its own merits, even as the Court undertakes to arrive at a resolution that achieves some measure of justice out of a financial catastrophe that leaves many losers and no winners. In seeking such a resolution, the Court is painfully cognizant of the limited resources available for compensating those who believe themselves to be victims of fraud, and the huge litigation expenses entailed by the multiplicitous filings, which virtually assure that little satisfaction will be had even by any plaintiffs who succeed in demonstrating that they were wronged. No individual plaintiff is required to opt into class actions, to settle his case, or to accommodate to the larger interests of alleged fraud victims as a group, and any plaintiff who chooses to pursue individual remedies by assiduously pursuing his own perceived interest has every right to do so. But "assiduously" is the key word. The premise of the individual action is that some plaintiffs believe they are better off retaining their own lawyers, pursuing their own case, and advancing their own theories. When it turns out, however, that such a plaintiff is not better off, because the lawyer he or she has chosen to protect his or her individual interests cannot be bothered to monitor the progress of the case, or respond to deadlines or directives, the Court has no reason to be solicitous. It is the Court's duty not to let a perceived interest in overall equity trump genuine individual rights, but it is not the Court's duty to ensure the continued pursuit of individual cases that are poorly conceived or poorly executed, or to protect individual plaintiffs from the consequences of their own lawyers' misfeasance.

  In this matter, given the desirability of streamlining the litigation and eliminating duplicative cases that serve no purpose in light of the class actions being vigorously pursued by Lead Plaintiffs appointed under the provisions of the Private Securities Litigation Reform Act, the Court has put plaintiffs and their attorneys on clear notice that they must advise the Court, within a specified time limit, whether they object to consolidation and/or whether, after consolidation is ordered, they continue to see a rationale for pursuing a separate complaint, on pain of dismissal. The vast majority of plaintiffs have elected to withdraw their complaints in accordance with the consolidation order, and have consented to dismissal; a handful have timely stated reasons why their complaints, though consolidated with the principal action for pretrial purposes, should not be dismissed. This plaintiff was individually served with notice of the consolidation order and of its provisions and its timetables. In this kind of complex litigation, the disadvantages of having to keep track of numerous tag-along and subsidiary litigation being half-heartedly pursued by lawyers who can't bother to keep track of the case on their own counsels strongly against allowing claims that have lapsed due to the inexcusable neglect of plaintiffs' attorneys to be revived.

  Accordingly, Nachom's motions to set aside the consolidation order and dismissal order (Doc. #456), and his motion to reinstate the complaint (Doc. #528), are denied.


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