IN RE THE BEAR STEARNS COMPANIES, INC. SECURITIES, DERIVATIVE, AND ERISA LITIGATION
Jonathan C. Medow, Esq., Brian J. Massengill, Esq., MAYER BROWN LLP, New York, NY, Attorneys for Movant Cancan limited.
Thomas A. Dubbs, Esq., James W. Johnson, Esq., Nicole M. Zeiss, Esq., LABATON SUCHAROW LLP, New York, NY.
Joseph J. Tabacco, Jr., Esq., Patrick T. Egan, Esq., BERMAN DEVALERIO, San Francisco, CA, Attorneys for Respondent Lead Plaintiff State of Michigan Retirement Systems and Class Counsel for the Settlement Class.
OPINION & ORDER
ROBERT W. SWEET, District Judge.
Absent Class Member Cancan Limited ("Cancan") has moved for (i) intervention in this instant action for the purpose of seeking to participate in the previously approved settlement pursuant to Rule 24 of the Federal Rules of Civil Procedure and (ii) modification of the Court's Order dated September 20, 2013 ("Approval Order") pursuant to Rule 60(b) of the Federal Rules of Civil Procedure and the Court's equitable powers. Lead Plaintiff The State of Michigan Retirement Systems ("Lead Plaintiff") opposes the instant motion pursuant to Fed.R.Civ.P. 23(e). For the reasons set forth below, Cancan's motions are granted.
I. Prior Proceedings
The facts and procedures underlying this case is discussed in this Court's November 9, 2012 opinion, In re Bear Stearns Co., Inc. Secs., Deriv., and ERISA Litig. , 909 F.Supp.2d 259 (S.D.N.Y. 2012). Accordingly, only facts relevant to this motion will be provided below.
By order dated August 18, 2008, the MDL Panel assigned to this Court a number of actions filed in the United States District Courts for the Southern and Eastern Districts of New York arising from the collapse of investment bank Bear Stearns in March 2008. On January 6, 2009, an Order was issued consolidating all of these actions. The Order appointed lead counsel and lead plaintiffs for each of the three species of actions comprising the consolidated set: (1) those asserting securities claims, (2) those asserting derivative claims and (3) those asserting ERISA claims.
On February 27, 2009, Lead Plaintiff for the securities actions, The State of Michigan Retirement Systems, filed a consolidated class action complaint ("Complaint") alleging, inter alia, that Defendants had violated federal securities law in that they (i) defrauded investors by overstating the value of Bear Stearns' assets and understating the risks entailed in those assets; and (ii) misled investors concerning the company's liquidity problems.
In May 2012, settlement discussions that had previously stalled in November 2009 were revived with the assistance of a mediator, and by June 2012, proposed settlements had been reached with both the Bear Stearns Defendants and Deloitte ("the Settlement"). The Settlement called for the Bear Stearns Defendants to pay $275 million and for Deloitte to pay $19.9 million, for a total settlement amount of $294.9 million ("Settlement Amount"). The Court granted preliminary approval to the Settlement via twin preliminary approval orders issued June 13, 2012 (the "Preliminary Approval Orders"). The Court also preliminarily certified the Settlement Class pursuant to Fed.R.Civ.P. 23 (a) and (23)(b)(3). On November 9, 2012, this Court approved the motion for final certification of the class, found the proposed settlement as procedurally and substantively fair and approved the proposed plan of allocation ("Plan of Allocation"). In re Bear Stearns Co., Inc. Secs Deriv., and ERISA. , 909 F.Supp.2d 259, 265-71 (S.D.N.Y. 2012).
Cancan filed the instant motion on October 23, 2013. In its motion, Cancan requests for (i) intervention from this Court in this action for the limited purpose of seeking to participate in the previously approved Settlement; and (ii) modification of the provisions in the Approval Order which approved administrated determinations, directed payment of net settlement funds and preclude Cancan from receiving payment in the forthcoming second distribution of proceeds.
Lead Plaintiffs have opposed the motion, contending that the Court barred claims submitted after June 15, 2013, and that the significant size of Cancan's potentially eligible claim, impact on claims the Court has already approved and considerations governing a showing of excusable neglect support denial of Cancan's motion.
Oral arguments were held, and the motion was marked fully submitted on December 4, 2013.
II. Facts Alleged by Movant
Cancan is a foreign financial investment company, incorporated in the British Virgin Islands and managed out of Geneva, Switzerland. (Broens Decl. ¶¶ 1-3). Between December 21, 2007 and March 14, 2008, Cancan made three purchases of Bear Stearns common stock, acquiring 3, 992, 499 shares at prices ranging from $51.09 per share to $89.46 per share. (Id. % 4). It sold those shares in three transactions between March 19, 2008 and March 25, 2008 at prices ranging from $6.31 per share to $12.12 per share. (Id. ¶ 5). Cancan's total out-of-pocket loss equals approximately $231 million. (Id. ¶ 6 & Ex. A). Cancan is a member of the certified Settlement Class. See In re Bear Stearns , 909 F.Supp.2d at 263 n.2 (Settlement Class includes "those who, during the period from December 14, 2006 through March 14, 2008 (the Class Period'), purchased or otherwise acquired the common stock... of... Bear Stearns... and were damaged thereby").
Cancan's shares were registered in the "street name" of Cede & Co. as nominee of Brown Brothers Harriman ("Brown Brothers"), the custodial bank of Cancan's custodian, Lombard Odier Darier Hentsche & Cie ("Lombard Odier"). (Broens Decl. ¶ 7).
On June 12, 2012, the Court preliminarily approved the Settlement of this class action. (See Dkts. 288-89). The Court approved the form and content of the negotiated form of Notice, which advised, among other things, that "[t]o qualify for a payment, " a class member "must send in a completed Proof of Claim, " and that "[a]ll Proofs of Claim need to be submitted by October 25, 2012." (Dkt. 302-2, Ex. A, Notice, at 6). The Court further approved the retention of Garden City Group, Inc. ("GCG") as Claims Administrator, and ordered the distribution of the Notice to members of the Settlement Class. (Dkts. 288-89, Preliminary Approval Orders ¶¶ 7-9). The Court included a specific directive to "nominee purchasers such as brokerage firms and other persons and entities who purchased or otherwise acquired the publicly traded securities of Bear Stearns during the Class Period as record owners but not as beneficial owners": "Mithin seven (7) calendar days of their receipt of the Notice, " such record owners were "directed" to provide the Administrator with "the names and last known addresses of the beneficial owners" or "request additional copies of the Notice and Proof of Claim, and within seven (7) calendar days of receipt of such copies send them by first-class mail directly to the beneficial owners." (Id. ¶ 9).
The Court initially set an October 2, 2012 Proof of Claim submission deadline. In the Corrected Order Approving Administrative Determinations and Directing Payment of Net Settlement Funds, dated September 20, 2013 (the "Distribution Order"), the Court approved a final cut-off date of ...