Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In re Global Crossing Ltd. Securities Litigation

January 24, 2008


The opinion of the court was delivered by: Gerard E. Lynch, District Judge


Malik and Seeme Hasan ("the Hasans") move the Court either to declare that they have properly opted out of this securities class action or to reopen the opt-out period to permit them to opt out at this time. The motion will be granted, and the Hasans will be permitted to opt out of the settlement.


The following facts are essentially undisputed.

On October 27, 2006, this Court approved a settlement of the plaintiff class's action against underwriter defendant Goldman Sachs & Co. ("Goldman") and other underwriters. The underwriters' settlement was the fourth of five seriatim settlements by which the complex Global Crossing securities and ERISA class actions were ultimately resolved. The deadline for class members wishing to opt out of the settlement was October 6, 2006. Class members who failed to opt out by this deadline are barred by the terms of the settlement from pursuing claims against Goldman and the other underwriter defendants.

The Hasans have been pursuing multiple legal actions against Goldman, with whom they maintained a brokerage account. An arbitration in Denver relating to their investments through Goldman in Global Crossing has been pending since October 15, 2004. The Hasans, separately and together, are sophisticated businesspeople and experienced investors, and they have been represented by counsel at all times relevant to this motion.

The Hasans attempted to opt out of at least one of the five Global Crossing class actions. On or about August 9, 2004, counsel for the Hasans wrote a letter to the Claims Administrator, with a copy to Goldman, headed "Re: Global Crossing, Ltd. Securities Litigation -- Opt Out of Partial Settlement." (Hasan Reply Mem. Ex. 1.)*fn1 The letter specifically referenced a "Notice of Proposed Class Action Partial Settlement of Securities Litigation" that had been forwarded by Goldman to the Hasans,*fn2 and noted the "July 13, 2004 deadline for class members to exclude themselves from the proposed settlement." (Id.) The letter went on to advise that the Hasans "do wish to be excluded from the Securities Action Settlement," and urged that they be permitted to do so, notwithstanding that their letter post-dated the July 13, 2004, opt-out deadline, because they had not received notice until after that date. The July 2004 deadline related to the second partial settlement of the Global Crossing class actions, in which plaintiffs settled with various directors and officers of Global Crossing.

The Hasans took no action with specific reference to the October 2006 underwriters' settlement. The Hasans do not allege that they did not receive notice in due course of that settlement. However, they do assert (see Merrick Decl. ¶¶ 7-9) that a copy of the notice was not provided to their attorney in the arbitration, even though the Court's Order preliminarily approving the settlement directed the parties to cause a notice to be served on "all legal counsel known by . . . Financial-Institution Related Defendants' Counsel to represent a Class Member" in connection with "pending litigation, arbitration or other proceeding of any other Claim against any Releasee relating to any of the Released Claims." (Order of July 25, 2006, ¶ 4(a).) Goldman was indisputably a "Financially-Related Institution" and a "Releasee" within the meaning of this Order, the Hasans' arbitration related to a "Released Claim," and Goldman's attorneys were aware of the existence of the arbitration. Goldman concedes that it neither notified the Hasans' attorney of the settlement nor provided Lead Plaintiffs or the Claims Administrator with a list of class members involved in litigation or arbitration with Goldman, or of their attorneys, so as to enable the plaintiffs or administrator to notify the attorneys of such class members.

Once the class action settlement was finalized, however, Goldman's counsel in the arbitration took action, moving for partial summary judgment in the arbitration, asserting that the Hasans' claims regarding Global Crossing are barred by the class action settlement. The Hasans then brought the instant motion, arguing that either they should be held to have opted out of the settlement already, or, if not, that the opt-out period should be extended for their benefit to enable them to opt out of the settlement now and pursue their arbitration.


Goldman argues that the matter is simple: the Hasans failed to opt out of the underwriters' settlement by the deadline of October 6, 2006, and are therefore bound by the settlement and its accompanying release. The Hasans raise a number of objections to this analysis.

First, they argue that they did in fact opt out, by their letter of August 9, 2004. This argument is untenable. The 2004 letter can have no reference to the 2006 settlement with Goldman, which had not been reached when that letter was sent and was not reached and submitted to the Court for preliminary approval until July 2006. The letter does not purport to opt out of any future settlements, with Goldman or with anyone else, that might be reached in the Global Crossing litigation. By its own terms, the letter is captioned "Opt Out of Partial Settlement," not "Opt Out of Any and All Settlements with Respect to the Global Crossing Matter," or "Opt Out of the Global Crossing Class." (Hasan Reply Mem. Ex. 1.) The text of the letter specifically references "correspondence, dated July 14, 2004," which contained a "Notice of Proposed Class Action Partial Settlement." (Id.) It goes on to note that the letter was dated and received "after the July 13, 2004 deadline for class members to exclude themselves from the proposed settlement." (Id.) These dates make clear that "the proposed settlement" is the second Partial Settlement, preliminarily approved by the Court on April 27, 2004, for which the opt-out deadline was July 13, 2004. The letter announces the desire of the Hasans to be excluded from "the Securities Action Settlement," and seeks confirmation that they have been so excluded. (Id.) It is thus indisputable that the letter seeks only exclusion from the settlement of which the Hasans had received slightly belated notice. The impossibility of interpreting the letter in any other way is made manifest by considering the unfairness that would result had the Hasans submitted a claim in connection with a later settlement and been told that their 2004 letter opting out of the second Partial Settlement barred them from any future participation in later settlements. As Goldman points out, "the Claims Administrator did not exclude investors who had opted out of earlier partial settlements from those to whom it sent notice of the underwriters' settlement." (Goldman Mem. 11.) It would have been impermissible for the Claims Administrator to do so.

Second, the Hasans argue that their time to opt out should be extended because of a failure on the part of Goldman to comply with the Court's order for providing notice to affected class members. This argument is considerably more persuasive.

Provision of notice to class members in securities class actions is a difficult undertaking. Many beneficial owners of affected securities hold their shares through financial intermediaries such as banks and brokers, and cannot be identified directly from the records of the company that issued the securities. The Court, lead plaintiffs, and settlement administrators thus must rely on such intermediaries (who, as in this case, may themselves be defendants) either to provide the administrators with the identities of shareholders or to pass along information about the proposed settlement to their customers. Since the banks and brokers have little incentive to act ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.