Pg 1 of 3 08-01789-smb Doc 6441 Filed 04/24/14 Entered 04 ...€¦ · SUZANNE STONE MARSHALL, ADELE...

08-01789-smb Doc 6441 Filed 04/24/14 Entered 04/24/14 20:38:51 Main Document Pg 1 of 3



EXHIBIT A

08-01789-smb Doc 6441-1 Filed 04/24/14 Entered 04/24/14 20:38:51 Exhibit A Pg 1 of 7

{N0043888 }

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

WEST PALM BEACH DIVISION

Case No.:10-80252-CV-KLR

SUZANNE STONE MARSHALL, ADELE FOX,

MARSHA PESHKIN, and RUSSELL OASIS,

individually and on behalf of a class of similarly situated

Plaintiffs,

vs.

CAPITAL GROWTH COMPANY;

DECISIONS, INC.;

FAVORITE FUNDS;

JA PRIMARY LIMITED PARTNERSHIP;

JA SPECIAL LIMITED PARTNERSHIP;

JAB PARTNERSHIP;

JEMW PARTNERSHIP;

JF PARTNERSHIP;

JFM INVESTMENT COMPANIES;

JLN PARTNERSHIP;

JMP LIMITED PARTNERSHIP;

JEFFRY M. PICOWER SPECIAL COMPANY;

JEFFRY M. PICOWER, P.C.;

THE PICOWER FOUNDATION;

THE PICOWER INSTITUTE OF MEDICAL

RESEARCH;

THE TRUST F/B/O GABRIELLE H. PICOWER;

BARBARA PICOWER, individually, and as Executor of

the Estate of Jeffry M. Picower, and as Trustee for the

Picower Foundation and for the Trust f/b/o Gabriel H.

Picower.

/

NOTICE OF APPEAL

PLEASE TAKE NOTICE that Plaintiffs, SUZANNE STONE MARSHALL, ADELE

FOX, MARSHA PESHKIN, and RUSSELL OASIS, individually and on behalf of a class of

similarly situated Plaintiffs, hereby appeal to the United States Court of Appeals for the

Eleventh Circuit the March 14, 2014 Order (entered on March 17, 2014) denying Plaintiffs’

cross-motion for a preliminary injunction and for an emergency hearing on the motion for a

Case 9:10-cv-80252-KLR Document 59 Entered on FLSD Docket 03/24/2014 Page 1 of 3Case: 14-11250 Date Filed: 03/24/2014 Page: 1 of 6


{N0043888 } 2

preliminary injunction. (DE 58). A true and correct copy of the Order is annexed hereto as

Exhibit “A”.

DATED this 24th day of March 2014.

Respectfully submitted,

BECKER & POLIAKOFF, P.A.

/s/ Allen M. Levine____________

Florida Bar No. 315419

Becker and Poliakoff, P.A.

1 East Broward Blvd., Suite 1800

Ft. Lauderdale, FL 33301

Telephone: (954) 987-7550

Facsimile: (954) 985-4176

[email protected]

and

BECKER & POLIAKOFF LLP

By:

/s/ Helen Davis Chaitman

45 Broadway

New York, New York 10006

Telephone: (212) 599-3322

Facsimile: (212) 557-0295

Email: [email protected]


Attorneys for Plaintiffs and the Class

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on this 24th day of March 2014, I electronically filed the

foregoing document with the Clerk of the Court using CM/ECF. I also certify that the foregoing

document is being served this day on all counsel of record or pro se parties identified on the

attached Service List in the manner specified, either via transmission of Notices of Electronic

Filing generated by CM/ECF or in some other authorized manner for those counsel or parties

who are not authorized to receive electronically Notices of Electronic Filing.

/s/ Allen M. Levine____________

Allen M. Levine



{N0043888 } 3

SERVICE LIST

Sanford L. Bohrer

701 Brickell Avenue, Suite 3300

Miami, FL 33131

Telephone: (305) 374-8500

Facsimile: (305) 789-7799

[email protected]

William D. Zabel, Esq.

Marcy Ressler Harris, Esq.

Schulte Roth & Zabel, LLP

919 Third Avenue

New York, NY 10022

Telephone: (212) 756-2351

Facsimile: (212) 593.5955

[email protected]

[email protected]

Lesley Guy Blackner

Blackner Stone & Associates

340 Royal Poinciana Way

St 317-377

Palm Beach, FL 33480

Phone: 561-659-5754

Fax: 561-659-3184


Andrew Steven Kwan & Joseph George Galardi

505 South Flagler Drive

Ste. 1500

West Palm Beach, FL 33401

Phone: 561-835-0900

Fax: 561-835-0939



David Sheehan

Counsel for Trustee Irving Picard

BakerHostetler

45 Rockefeller Plaza, #10

New York, NY 10111

Phone (212) 589-4616

[email protected]

[email protected]



EXHIBIT A

Case 9:10-cv-80252-KLR Document 59-1 Entered on FLSD Docket 03/24/2014 Page 1 of 3Case: 14-11250 Date Filed: 03/24/2014 Page: 4 of 6


UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA

Case No. 10-80252-CIV-RYSKAMP/HOPKINS

SUZANNE STONE MARSHALL, ADELE FOX,MARSHA PESHKIN, and RUSSELL OASIS,individually and on behalf of a class of similarly situated

Plaintiffs,

v.

CAPITAL GROWTH COMPANY;DECISIONS, INC.;FAVORITE FUNDS;JA PRIMARY LIMITED PARTNERSHIP;JA SPECIAL LIMITED PARTNERSHIP;JAB PARTNERSHIP;JEMW PARTNERSHIP;JF PARTNERSHIP;JFM INVESTMENT COMPANIES;JLN PARTNERSHIP;JMP LIMITED PARTNERSHIP;JEFFRY M. PICOWER SPECIAL COMPANY;JEFFRY M. PICOWER, P.C.;THE PICOWER FOUNDATION;THE PICOWER INSTITUTE OF MEDICALRESEARCH;THE TRUST F/B/O GABRIELLE H. PICOWER;BARBARA PICOWER, individually, and as Executor ofthe Estate of Jeffry M. Picower, and as Trustee for thePicower Foundation and for the Trust f/b/o Gabriel H.Picower.

Defendants.___________________________________________/

ORDER DENYING MOTION FOR EMERGENCY HEARING AND MOTION FORLIMITED RELIEF FROM STAY

THIS CAUSE comes before the Court pursuant to Becker & Poliakoff LLP and Becker &

Poliakoff P.A., as counsel for Plaintiffs, March 12, 2014 [DE 52] motion requesting that this

Case 9:10-cv-80252-KLR Document 58 Entered on FLSD Docket 03/17/2014 Page 1 of 2Case 9:10-cv-80252-KLR Document 59-1 Entered on FLSD Docket 03/24/2014 Page 2 of 3Case: 14-11250 Date Filed: 03/24/2014 Page: 5 of 6


Court lift the stay entered February 21, 2014 for the purpose of scheduling an emergency hearing

on Defendants’ motion to stay and on Plaintiffs’ cross motion for injunctive relief.

On March 11, 2014, Bankruptcy Trustee Irving Picard filed an Amended Complaint

against several parties, including the Plaintiffs, in the Bankruptcy Court for the Southern District

of New York. See Securities Investor Protection Corporation v. Bernard L. Madoff Investment

Securities, LLC., Case No. 08-01789, DE 5807. Picard seeks an order enjoining Plaintiffs from

proceeding in this Court on the ground that their claims are duplicative and derivative

of the Trustee’s settled action against the Picower defendants. It is hereby

ORDERED AND ADJUDGED that the motion is DENIED. The Court declines to

conduct an emergency hearing on the question of whether to enjoin the New York action.

Rather, this Court defers to the Bankruptcy Court for the Southern District of New York for a

ruling on Picard’s motion to enjoin the instant action.

DONE AND ORDERED at Chambers in West Palm Beach, Florida, this 14th day of

March, 2014.

S/Kenneth L. Ryskamp KENNETH L. RYSKAMPUNITED STATES DISTRICT JUDGE

Case 9:10-cv-80252-KLR Document 58 Entered on FLSD Docket 03/17/2014 Page 2 of 2Case 9:10-cv-80252-KLR Document 59-1 Entered on FLSD Docket 03/24/2014 Page 3 of 3Case: 14-11250 Date Filed: 03/24/2014 Page: 6 of 6


EXHIBIT B

08-01789-smb Doc 6441-2 Filed 04/24/14 Entered 04/24/14 20:38:51 Exhibit B Pg 1 of 9

{N0044888 }

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

NO. 14-11250

SUZANNE STONE MARSHALL, ADELE FOX, MARSHA PESHKIN, and RUSSELL OASIS, individually and on behalf of a class of similarly situated,

Appellants,

- versus -

CAPITAL GROWTH COMPANY; DECISIONS, INC.; FAVORITE FUNDS; JA

PRIMARY LIMITED PARTNERSHIP; JA SPECIAL LIMITED

PARTNERSHIP; JAB PARTNERSHIP; JEMW PARTNERSHIP; JF

PARTNERSHIP; JFM INVESTMENT COMPANIES;

JLN PARTNERSHIP; JMP LIMITED PARTNERSHIP; JEFFRY M. PICOWER

SPECIAL COMPANY; JEFFRY M. PICOWER, P.C.; THE PICOWER

FOUNDATION; THE PICOWER INSTITUTE OF MEDICAL RESEARCH; THE

TRUST F/B/O GABRIELLE H. PICOWER; BARBARA PICOWER, individually,

and as Executor of the Estate of Jeffry M. Picower, and as Trustee for the Picower

Foundation and for the Trust f/b/o Gabriel H. Picower.

Appellees. ________________________________________________________________________

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA _________________________________________________________________________

APPELLANTS’ MOTION FOR EXPEDITED APPEAL

BECKER & POLIAKOFF, LLP

Helen Davis Chaitman

45 Broadway


Telephone: (212) 599-3322

Facsimile: (212) 557-0295

[email protected]

Counsel for Appellants

Case: 14-11250 Date Filed: 04/09/2014 Page: 1 of 8 08-01789-smb Doc 6441-2 Filed 04/24/14 Entered 04/24/14 20:38:51 Exhibit B

Pg 2 of 9

{N0044888 } ii

CERTIFICATE OF INTERESTED PERSONS AND CORPORATE DISCLOSURE STATEMENT

OF APELLANTS SUZANNE STONE MARSHALL, ET AL.

Certificate of Interested Persons

Undersigned counsel for Suzanne Stone Marshall, Adele Fox, Marsha

Peshkin, and Russell Oasis, individually and on behalf of a class of similarly

situated Plaintiffs, pursuant to Federal Rule of Appellate Procedure 26.1 and

Eleventh Circuit Rules 26.1-1 through 26.1-3, hereby certifies that

the following is a complete list of persons and entities having an interest in

the outcome of this appeal:

Parties:

Plaintiffs/Appellants:

SUZANNE STONE MARSHALL, ADELE FOX, MARSHA PESHKIN,

and RUSSELL OASIS, individually and on behalf of a class of similarly

situated parties.

Defendants/Appellees: CAPITAL GROWTH COMPANY; DECISIONS, INC.; FAVORITE

FUNDS; JA PRIMARY LIMITED PARTNERSHIP; JA SPECIAL

LIMITED PARTNERSHIP; JAB PARTNERSHIP; JEMW

PARTNERSHIP;

JF PARTNERSHIP; JFM INVESTMENT COMPANIES; JLN

PARTNERSHIP; JMP LIMITED PARTNERSHIP; JEFFRY M. PICOWER

SPECIAL COMPANY; JEFFRY M. PICOWER, P.C.; THE PICOWER

FOUNDATION; THE PICOWER INSTITUTE OF MEDICAL

RESEARCH; THE TRUST F/B/O GABRIELLE H. PICOWER;

BARBARA PICOWER, individually, and as Executor of the Estate of Jeffry

M. Picower, and as Trustee for the Picower Foundation and for the Trust

f/b/o Gabriel H. Picower.


Pg 3 of 9

{N0044888 } iii

Other Parties:

Irving H. Picard, Trustee of Bernard L. Madoff Investment Securities, LLC.

Counsel:

Becker & Poliakoff, P.A. and Becker & Poliakoff, LLP (Helen Davis

Chaitman and Lance Gotthoffer), counsel for Appellants

Baker & Hostetler, LLP (David Sheehan), counsel for Irving H. Picard

Holland & Knight LLP (Sanford Bohrer), counsel for Appellees

Shulte, Roth & Zabel LLP (William D. Zabel, Marcy Ressler Harris,

Michael Kwon, and Frank LaSalle), counsel for Appellees

Beasley, Hauser, Kramer and Galardi, P.A. (Joseph Galardi) and

Blackner Stone and Associates (Richard Stone), counsel for A & G

Goldman Partnership

and Pamela Goldman (co-defendants in the New York injunction action)

Judges:

Kenneth L. Ryskamp, United States District Judge

William Matthewman, United States Magistrate Judge

James M. Hopkins, United States Magistrate Judge

Kenneth A. Marra, United States District Judge




Pg 4 of 9

{N0044888 } iv

Corporate Disclosure Statement

Undersigned counsel for Suzanne Stone Marshall, Adele Fox, Marsha

Peshkin, and Russell Oasis, individually and on behalf of a class of similarly

situated Plaintiffs, pursuant to Federal Rule of Appellate Procedure 26.1 and

Eleventh Circuit Rules 26.1-1 through 26.1-3, hereby certifies that none of

the Appellants is a corporate entity.




Pg 5 of 9

{N0044888 } 1

MOTION FOR EXPEDITED APPEAL

Pursuant to FRAP 27-1 Appellants, plaintiffs below, respectfully

request that the Court issue an expedited briefing schedule. This is an

appeal of an order denying injunctive relief and as such Appellants are

moving simultaneously for an expedited briefing schedule and an injunction

pending appeal, preventing Appellees, and those in active concert and

participation with them, from seeking to litigate the claims in this action

other than in the court below.

Good cause exists for this request. The United States Court of Appeals

for the Second Circuit in related bankruptcy proceedings, has expressly held

that Appellants have leave to amend their proposed class action complaint,

originally filed below in 2010, and that the merits of such an amended

complaint is “a question in the first instance for the Southern District of

Florida.” See In Re: Bernard L. Madoff Investment Securities LLC, Case

No. 12-1645, Document 164-1 (2d Cir. 2014)

Despite the Second Circuit’s mandate, the Appellees, in concert with

the SIPA appointed Trustee for the Estate of Bernard L. Madoff, LLC, are

proceeding in the United States Bankruptcy Court for the Southern District

of New York in an attempt to enjoin Appellants from exercising their right

to proceed in the Southern District of Florida. As more fully explained in


Pg 6 of 9

{N0044888 } 2

the accompanying Motion for an Injunction Pending Appeal, this Court

should not allow the Appellees to ignore the ruling of the Second Circuit and

force Appellants to litigate the merits of their claims outside of the forum

directed by it. Appellants must file their opposition papers in the Bankruptcy

Court by April 18, 2014 and the matter is set for hearing on May 7, 2014.

Accordingly, Appellants respectfully suggest the following expedited

briefing schedule for purposes of these time sensitive motions:

Appellees’ Response to Motion for Expedited Appeal April 15, 2014

Appellants’ Reply to Appellee’s Response re Expedited

Appeal

April 21, 2014

Appellees’ Response to the Emergency Motion for an

Injunction Pending Appeal

April 15, 2014

Appellants’ Reply to the Emergency Motion for an

Injunction Pending Appeal

April 21, 2014

Appellants’ Initial Brief and Memorandum of Law May 2, 2014

Appellees’ Response Brief and Memorandum of Law May 16, 2014

Appellants’ Reply Brief May 23, 2014


By: /s/ Helen Davis Chaitman

BECKER & POLIAKOFF, LLP


45 Broadway


Telephone: (212) 599-3322

Facsimile: (212) 557-0295

[email protected]

Counsel for Appellants


Pg 7 of 9

{N0044888 } 3


I hereby certify that an original and three copies of the foregoing

Certificate of Interested Persons and Motion were delivered by overnight

mail to the United States Court of Appeals for the Eleventh Circuit on the

9th day of April, 2014, and that a copy thereof was delivered by overnight

mail on the same day to all those on the attached service list:



Sanford L. Bohrer

701 Brickell Avenue, Suite 3300

Miami, FL 33131

Telephone: (305) 374-8500

Facsimile: (305) 789-7799

[email protected]

William D. Zabel, Esq.

Marcy Ressler Harris, Esq.

Schulte Roth & Zabel, LLP

919 Third Avenue

New York, NY 10022

Telephone: (212) 756-2351

Facsimile: (212) 593.5955

[email protected]

[email protected]

Lesley Guy Blackner

Blackner Stone & Associates

340 Royal Poinciana Way, St 317-377

Palm Beach, FL 33480

Phone: 561-659-5754

Fax: 561-659-3184



Pg 8 of 9

{N0044888 } 4

Andrew Steven Kwan & Joseph George Galardi

505 South Flagler Drive

Ste. 1500


Phone: 561-835-0900

Fax: 561-835-0939



David Sheehan

Counsel for Trustee Irving Picard

BakerHostetler

45 Rockefeller Plaza, #10

New York, NY 10111

Phone (212) 589-4616

[email protected]

[email protected]

The Honorable Kenneth L. Ryskamp

United States District Court for the Southern District of Florida

Paul G. Rogers Federal Building

701 Clematis Street, Room 416



Pg 9 of 9

EXHIBIT C

08-01789-smb Doc 6441-3 Filed 04/24/14 Entered 04/24/14 20:38:51 Exhibit C Pg 1 of 19

No. 14-11250-AA

IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

ADELE FOX, et al.,

Appellants/Plaintiffs,

vs.

CAPITAL GROWTH CO., et al.,

Appellees/Defendants.

Appeal from the United States District Court for the Southern District of Florida

West Palm Beach Division

PAMELA GOLDMAN AND A & G GOLDMAN PARTNERSHIP’S MOTION FOR LEAVE TO INTERVENE FOR LIMITED PURPOSES AND

TO DISQUALIFY BECKER & POLIAKOFF AS COUNSEL FOR APPELLANTS, OR FOR LIMITED REMAND

BEASLEY HAUSER KRAMER & GALARDI, P.A. JAMES W. BEASLEY, JR. 505 S. Flagler Drive, Suite 1500 West Palm Beach, FL 33401 Telephone: 561-835-0900 Fax: 561-835-0939

Counsel for Proposed Intervenors

Case: 14-11250 Date Filed: 04/09/2014 Page: 1 of 61 08-01789-smb Doc 6441-3 Filed 04/24/14 Entered 04/24/14 20:38:51 Exhibit C

Pg 2 of 19

CERTIFICATE OF INTERESTED PERSONS AND CORPORATE DISCLOSURE STATEMENT

To the best of undersigned’s knowledge, the following is a complete list of

the trial judges, attorneys, persons, associations of persons, firms, partnerships, or

corporations that have or may have an interest in the outcome of this case,

including subsidiaries, conglomerates, affiliates, and parent corporations, including

any publicly held company that owns 10% or more of the party’s stock, and other

identifiable legal entities related to a party.

1. Suzanne Stone Marshall, Adele Fox, Marsha Peshkin, and Russell Oasis,

Appellants-Plaintiffs.

2. Becker & Poliakoff, Counsel for Appellants-Plaintiffs.

3. Capital Growth Company, Decisions, Incorporated, Favorite Funds, JA

Primary Limited Partnership, JA Special Limited Partnership, JAB

Partnership, JEMW Partnership, JF Partnership, JFM Investment

Companies, JLN Partnership, JMP Limited Partnership, Jeffry M. Picower

Special Company, Jeffry M. Picower, P.C., The Picower Foundation, The

Picower Institute of Medical Research, The Trust f/b/o Gabrielle H. Picower,

Barbara Picower, individually, and as Executor of the Estate of Jeffry M.

Picower, and as Trustee for the Picower Foundation and for the Trust f/b/o

Gabrielle H. Picower, Appellees-Defendants.


Pg 3 of 19

4. Holland & Knight LLP and Schulte Roth & Zabel LLP, Counsel for

Appellees-Defendants.

5. Pamela Goldman and A & G Goldman Partnership, Proposed Intervenors.

6. Beasley Hauser Kramer & Galardi, P.A. and Blackner, Stone & Associates

P.A., Counsel for Proposed Intervenors.

7. The Honorable Kenneth L. Ryskamp, United States District Judge, Southern

District of Florida.


Pg 4 of 19

1

INTRODUCTION Proposed intervenors Pamela Goldman and A & G Goldman Partnership

(“Intervenors”), by and through their undersigned counsel, move for leave to

intervene in this appeal for the limited purpose of disqualifying Becker & Poliakoff

(“Becker”) as counsel for a putative class of similarly situated persons represented

by Plaintiffs Suzanne Stone Marshall, Adele Fox, Marsha Peshkin, and Russell

Oasis. As innocent former BLMIS customers, Intervenors have standing to

intervene because they are members of the putative class, and Becker owes

fiduciary duties to Intervenors and other putative class members under Florida law.

Intervenors move to disqualify Becker because the firm suffers from conflicts of

interest arising from its representation of certain members of the putative class, in

actions where their interests are directly adverse to other class members.

Intervenors also move to disqualify Becker because the firm’s lead attorney in this

case, Helen Chaitman, was a member of the putative class when Becker first

accepted the representation, and suffered from a per se conflict of interest that

could not be cured after the fact. These conflicts substantially impair Becker’s

ability to freely and fully represent the proposed class, and Becker must therefore

be disqualified in this appeal. In the alternative, Intervenors move for limited

remand to the U.S. District Court for the Southern District of Florida to take

evidence and decide the disqualification issue.


Pg 5 of 19

2

BACKGROUND

Bernard L. Madoff (“Madoff”) and Bernard L. Madoff Investment Securities

LLC (“BLMIS”) engaged in a Ponzi scheme that defrauded thousands of BLMIS

investors. In the course of the scheme, BLMIS sent monthly statements to its

nearly 7,000 customers reflecting phony investments and phony profits. After the

Ponzi scheme collapsed in December 2008, the U.S. District Court for the

Southern District of New York appointed Irving H. Picard, Esq., as trustee

(“Trustee”) for the substantively consolidated liquidation of Madoff’s estate and of

BLMIS under the Securities Investor Protection Act (“SIPA”).

On February 5, 2014, Appellants sought leave to file a class action

complaint arising out of the BLMIS Ponzi scheme in the District Court case below,

Marshall v. Capital Growth Co., 10-80252-CV-KLR (S.D. Fla.). This class action

complaint alleges that Madoff’s close friend and associate, Jeffry Picower,

participated in the Ponzi scheme and is liable, along with his affiliates, for damages

suffered by BLMIS customers. The proposed class in the complaint consists of

“all customers of BLMIS who entrusted securities or cash to BLMIS, either

directly or indirectly,” between December 1, 1991 and December 11, 2008,

excluding BLMIS employees and BLMIS’s co-conspirators. Within this class are

two separate and distinct groups of BLMIS customers: those who have net losses

associated with BLMIS and also have claims payable in the SIPA liquidation (“net


Pg 6 of 19

3

losers”), and those who have already received from BLMIS pre-bankruptcy more

than the amount they invested in BLMIS and have been barred from recovering in

the SIPA liquidation (“net winners”).1 Intervenors are innocent BLMIS customers

who are members of the putative class described in Appellants’ complaint.

The class action complaint filed by Appellants is not the first complaint in

this case. More than four years ago, two class action complaints were filed in the

District Court below on February 16 and 17, 2010 by Appellants Adele Fox

(“Fox”) and Suzanne Stone Marshall (“Marshall”), respectively. These complaints

were filed on behalf of Fox and Marshall by undersigned counsel, Beasley Hauser

Kramer & Galardi, P.A. (“Beasley Hauser”), and by Blackner, Stone & Associates

P.A. (“Blackner Stone”). Becker began participating in these actions when

undersigned counsel moved to admit Becker pro hac vice as co-counsel for Fox

and Marshall on March 22, 2010. On April 28, 2010, Fox and Marshall were

enjoined from proceeding in these actions by the Bankruptcy Court for the

Southern District of New York. After nearly four years of appeals, the Second

Circuit ultimately granted leave to Fox and Marshall to file a new complaint in the

Southern District of Florida. See generally In re Bernard L. Madoff Inv. Securities

1 See generally In re Bernard L. Madoff Inv. Securities LLC, 654 F. 3d 229, 236-38 (2d Cir. 2011) (describing “net equity” in the context of the BLMIS fraud). The “net winner” label is somewhat misleading, as it suggests that these defrauded, innocent BLMIS customers somehow benefitted from the Ponzi scheme. In fact, the “net winners” in the putative class actually lost money, having paid federal and state income taxes on phony profits, and having lost the time value of their money.


Pg 7 of 19

4

LLC, 740 F.3d 81, 85-86, 96 (2d Cir. 2014) (complaint in the Southern District of

Florida may be amended to assert claims for conspiracy against Jeffry Picower).

On February 5, 2014, Becker moved for leave to file a proposed amended

complaint in the District Court below. Neither Beasley Hauser nor Blackner

Stone, both co-counsel of record below, had any part in filing this amended

complaint. Shortly thereafter, on February 19, 2014, counsel for Intervenors

moved to disqualify Becker based on the firm’s conflicts of interest.

Rather than addressing the conflict, Becker responded by informing Beasley

Hauser and Blackner Stone that Fox and Marshall had terminated them on March

7, 2014. However, no motion to withdraw or substitute counsel was ever filed, and

no order relieving Beasley Hauser and Blackner Stone of responsibility for the

representation was ever entered. See S.D. Fla. L.R. 11.1(d)(3). On March 17,

2014, the District Court below deferred to the Bankruptcy Court for the Southern

District of New York for a decision on a motion by the Trustee to enjoin the case,

but failed to decide the motion to disqualify.2 Notwithstanding the pending

disqualification motion, Becker filed the instant appeal on behalf of Appellants on

March 24, 2014.

2 The District Court denied Appellants’ cross-motion for a preliminary injunction against the Appellees and the Trustee. Combined with the District Court’s deferral to the Bankruptcy Court, the District Court effectively granted Appellees’ motion to stay the case in favor of the Trustee’s motion.


Pg 8 of 19

5

ARGUMENT

I. Limited intervention is necessary to protect the rights of Intervenors and other absent members of the putative class.

Under Florida Rule of Professional Conduct 4-1.7 (“Rule 4-1.7”), a lawyer

generally cannot represent a client if “the representation of 1 client will be directly

adverse to another client,” or if “there is a substantial risk that the representation of

1 or more clients will be materially limited by the lawyer's responsibilities to

another client, a former client or a third person or by a personal interest of the

lawyer.” Florida law thus “prohibits a lawyer from representing a client where that

client's interests are adverse to another client the lawyer represents in another

matter, even if the other matter is wholly unrelated.” The Florida Bar v. Dunagan,

731 So. 2d 1237, 1240 n.3 (Fla. 1999). In particular, Becker as class counsel owes

a fiduciary duty to all members of the putative class, including Intervenors, and

therefore must comply with Rule 4-1.7 with respect to the entire class. See The

Florida Bar v. Adorno, 60 So. 3d 1016, 1025 (Fla. 2011) (finding breach of

fiduciary duty with respect to putative class members that violated Rule 4-1.7,

regardless of whether or not counsel had an “attorney-client relationship with those

members”).

This Court has held that “[i]f at any time the trial court realizes that class

counsel should be disqualified, it is required to take appropriate action”; the

principle is equally applicable to the instant interlocutory appeal. Piambino v.


Pg 9 of 19

6

Bailey, 757 F.2d 1112, 1145 n.88 (11th Cir. 1985). A limited intervention is

necessary here, because there is no other practical way for Intervenors to raise

Becker’s conflicts of interests before this Court; Becker certainly does not intend

to raise them. See Hall v. Holder, 117 F.3d 1222, 1231 (11th Cir. 1997) (direct

intervention in an appeal is permissible “in an exceptional case for imperative

reasons”). In light of the conflicts suffered by Becker, and the fiduciary duties

Becker owes to Intervenors and the other putative class members, Intervenors are

entitled to intervene for the limited purpose of moving to disqualify Becker.

II. In other BLMIS-related actions, Becker is advocating interests that are directly adverse to the “net losers.” In this appeal, Becker is representing both “net losers,” who are BLMIS

customers that can recover in the BLMIS SIPA liquidation, and “net winners,”

who have been barred by the Trustee from recovering in the SIPA liquidation. Net

winners and net losers have some common interests in this litigation, but they also

have some interests which conflict. For example, many net winners, including

individual clients of Becker, are being directly pursued by the BLMIS Trustee in

litigation for net profits they received from their BLMIS investments. These

actions against net winners are brought under fraudulent conveyance or bankruptcy

avoidance statutes. In practical effect, the Trustee’s claims may result in

recoveries to the BLMIS estate, and “net losers,” in turn, will receive these

proceeds. It is in the pecuniary interest of the net losers for the Trustee to


Pg 10 of 19

7

successfully sue “net winners,” and it is in the pecuniary interest of the net winners

to resist such claims. Because of this direct conflict, any lawyer representing both

net losers and net winners in a class action should not take sides in the “clawback”

issue for one group versus the other.

An attorney cannot represent a class of plaintiffs if the attorney also

represents other clients whose interests are adverse to the class. See, e.g.,

Fiandaca v. Cunningham, 827 F. 2d 825, 829 (1st Cir. 1987) (“[counsel’s]

representation of the plaintiff class in this litigation was materially limited by its

responsibilities to the [other] class”); Moreno v. Autozone, No. C05-04432 MJJ,

2007 WL 4287517, at *3-*6 (N.D. Cal. Dec. 6, 2007) (counsel was disqualified

due to conflict of interest between two of counsel’s clients who had objected to a

settlement in which three other clients had filed claim forms). As set forth in more

detail below, because Becker currently represents parties and interests in other

actions that are materially adverse to the net losers, Becker must be disqualified as

counsel here.

A. Becker represents certain “net winners” in defending avoidance actions brought by the Trustee.

Becker and Ms. Chaitman represent, on an hourly fee basis, 128 net winners

(“Avoidance Defendants”) in their defense of various bankruptcy avoidance


Pg 11 of 19

8

actions brought by the Trustee.3 See generally SIPC v. BLMIS, 476 B.R. 715, 717-

19 (S.D.N.Y. 2012). See Letter Response filed by Becker, SIPC v. BLMIS, No. 08-

01789 (SMB), [D.E. 5648], attached as Exhibit “A”. These avoidance actions

seek recovery for the BLMIS estate, and every dollar obtained from the Avoidance

Defendants will directly benefit the “net losers” in the underlying SIPA

liquidation. One group of clients – the Avoidance Defendants – is paying Becker

to defend against claims which would benefit another group of purported class

members – the net losers. Stated another way, Becker is actively preventing its net

loser clients from receiving monies from its net winner clients, whom Becker also

currently represents in this and such avoidance actions. Becker suffers from a

clear conflict of interest: it cannot adequately represent the interests of the

Avoidance Defendants without also harming the interests of the net losers. See

The Florida Bar v. Scott, 39 So. 3d 309, 315 (Fla. 2010) (to the extent that

“investors wanted to pursue claims against [a lawyer’s] past or present clients with

interests adverse to theirs, [the lawyer] should have referred them to other counsel,

someone without a disqualifying conflict”). This is a flagrant violation of Rule 4-

1.7 which disqualifies Becker from representing the class here. 3 By definition, the avoidance actions seek to avoid transfers to certain BLMIS investors who purportedly took out more from BLMIS than they paid in. See Trustee’s Website, Exhibit “B” (the avoidance actions “seek the return of transfers to the Customer Fund, for the benefit of all customers with allowed claims”). The Trustee seeks to force some BLMIS investors (net winners) to repay money to the estate for the benefit of other BLMIS investors (net losers).


Pg 12 of 19

9

In the proceedings below, Becker argued that there is no conflict between

the interests of the “net losers” and “net winners” with respect to the BLMIS

liquidation, because the BLMIS Trustee has enough funds to pay all “net loser”

claims in full. This is patently false. The Trustee has stated publicly that as of

March 25, 2014, he has only recovered “approximately $9.795 billion, representing

approximately 55.9 percent of the estimated $17.5 billion in principal lost in the

[BLMIS] Ponzi scheme.” See Exhibit “C”, attached hereto. Almost half of the

$9.790 billion is from the singular $5 billion settlement payment that the Picower

estate paid to settle the Trustee’s fraudulent conveyance claims. Id. Put simply,

even after the unique Picower settlement with the Trustee, there will not be enough

money to pay the net losers’ allowed claims in the BLMIS liquidation, much less

to pay the net losers’ full losses.4 In reality, Becker and Ms. Chaitman are actively

4 Ms. Chaitman has also previously suggested that the BLMIS estate will eventually receive an additional $2 billion resulting from the Justice Department’s settlement with the Picower Defendants. See Declaration of Helen Chaitman, ¶ 26, attached as Exhibit “D”. This assertion has no basis in law or fact. Indeed, Richard Breeden, the special master appointed to distribute these funds, has stated they will not all go to the net losers, and has yet to determine how they will be allocated. See Forfeiture Website, attached as Exhibit “E”. The Settlement Agreement with the Picower estate is final, and that Settlement Agreement only contemplates $5 billion being paid to the BLMIS estate. See Picower Settlement Description, attached as Exhibit “F”; see generally In re BLMIS, 740 F.3d 81, 85-86 (2d Cir. 2014). Moreover, even with $2 billion more in assets, the net losers would still not recover all of their losses. That is why the Trustee is currently pursuing avoidance actions against net winners, many of whom are clients of Becker.


Pg 13 of 19

10

and currently opposing the interests of net losers, who through the Trustee are

trying to get money from net winners who received purported overpayments from

BLMIS.5 Due to its dual representation of net winners and net losers, Becker has

an ongoing conflict of interest and must be disqualified.

B. Becker represents a purported class of “net winners” in objecting to the Trustee’s recent settlement with JPMorgan.

Becker and Ms. Chaitman also represent another purported class of “net

winners” who are attempting to opt out of and are currently objecting to the

Trustee’s settlement with JPMorgan, which will bring $435 million into the

BLMIS estate. See Hill v. JPMorgan Chase & Co., et al., No. 11-cv-7961 (CM);

Shapiro v. JPMorgan Chase & Co., et al., No. 11-cv-8331 (CM), [D.E. 55],

attached as Exhibit “G.” The JPMorgan settlement inures directly to the benefit

of the “net losers.” Again, this representation shows that the interests of one group

of Becker’s clients, the subclass of “net winners,” are adverse to the interests of

another group which Becker seeks to represent herein, the net losers. Becker

cannot fully represent both these groups simultaneously, and is therefore subject to

disqualification. 5 Moreover, Ms. Chaitman has publicly advocated against the net losers’ interests through congressional testimony. For example, in written testimony on March 10, 2011, Ms. Chaitman argued that the Trustee’s avoidance suits were “grossly inequitable and inconsistent with the law.” See Testimony, attached as Exhibit “H”, at 2. Ms. Chaitman cannot represent hundreds of net losers while at the same time publically advocating against their direct litigation interest with respect to the Trustee’s fraudulent conveyance claims.


Pg 14 of 19

11

III. Becker’s lead attorney was a member of the class, and therefore she and Becker had an irreconcilable conflict of interest, which could not be cured after the fact. Becker’s lead attorney in this action, Helen Chaitman, was also a BLMIS

customer who invested (and lost) money in the Ponzi scheme, making her a “net

loser” member of the putative class. Due to Ms. Chaitman’s status as both class

counsel and a member of the class, she and her firm suffered from a per se conflict

of interest under Florida and Eleventh Circuit law, and should be disqualified. See

Zylstra v. Safeway Stores, Inc., 578 F.2d 102, 104 (5th Cir. 1978) (“attorneys . . .

who themselves are members of the class of plaintiffs . . . should not be permitted

to serve as counsel for the class”).6

In Zylstra, the Fifth Circuit found that an attorney who is both class counsel

and a class member is inherently conflicted, because class counsel’s fees “depend

upon the outcome of the case,” and the attorney who is also a class member

“cannot serve the interests of the class with the same unswerving devotion as an

attorney who has no interest other than representing the class members.” Id. Cf.

Shroder v. Suburban Coastal Corp., 729 F.2d 1371, 1375 (11th Cir. 1984) (“[i]f

the interests of a class are to be fairly and adequately protected . . . the roles of

6 This Court adopted all decisions of the former Fifth Circuit issued before October 1, 1981 as precedent. Bonner v. City of Prichard, 661 F. 2d 1206, 1209 (11th Cir. 1981). The common-sense Zylstra disqualification rule is still law in the Fifth Circuit. See, e.g., Deburro v. Apple, Inc., No. A–13–CA–784–SS, 2013 WL 5917665, at *1 n.2 (W.D. Tex. Oct. 31, 2013).


Pg 15 of 19

12

class representative and of class attorney cannot be played by the same person.”)

(quoting Turoff v. May Co., 531 F. 2d 1357 (6th Cir. 1976)). Disqualification is

per se in part because “the public suspicion of such a conflict is sure to outweigh

any public benefit from having that attorney continue.” Zylstra, 578 F.2d at 104.

Accord Davidson v. Yeshiva Univ., 555 F. Supp. 75, 78 (S.D.N.Y. 1982) (attorney

could not serve as class counsel for alleged class of surgeons of which he was a

member); Kramer v. Scientific Control Corp., 534 F. 2d 1085, 1090 (3d Cir. 1976)

(attorney suffers from a conflict of interest if he takes “a share of the potential

court-awarded attorneys' fee in addition to his recovery as a member of the class”).

Applying the Zylstra rule to the facts of this case, it is clear that Becker attorney

Helen Chaitman’s dual status as class counsel and class member creates a per se

conflict of interest requiring disqualification.

In Becker’s response below, Ms. Chaitman asserted that she is no longer a

member of any relevant class because she sold her BLMIS customer claim in 2011.

See Exhibit D, Declaration of Helen Chaitman, ¶ 22. However, the Florida

Supreme Court has recently held under Rule 4-1.7 that a lawyer “has the duty to

decline representation if [a] conflict exists before representation is undertaken.”

The conflict cannot be cured by actions taken by the lawyer after the fact. See

Young v. Achenbauch, SC12-988, --- So. 3d ---, 2014 WL 1239965, at *6 (Fla.

Mar. 27, 2014) (lawyer could not “drop one client like a hot potato” in order to


Pg 16 of 19

13

resolve a conflict of interest between two clients). Likewise, in this case, Ms.

Chaitman could not cure her per se conflict by selling her claim as a BLMIS

investor after having already accepted representation of the class. Because Ms.

Chaitman’s dual status as class counsel and class member created a per se conflict

of interest, Becker must be disqualified.

IV. In the alternative, this Court should remand the disqualification issue to the District Court, where the issue should have been decided.

Counsel for Intervenors moved to disqualify Becker in the District Court

below. The District Court was obligated to address that issue substantively, but

did not. Musicus v. Westinghouse Elec. Corp., 621 F. 2d 742, 743 (5th Cir. 1980)

(“the district court erred in failing to address the merits of the motion” to disqualify

counsel). The District Court instead deferred to the Bankruptcy Court for the

Southern District of New York, in effect granting the Appellees’ motion to stay the

Florida case and denying the Appellants’ cross-motion to enjoin the Appellees

from proceeding in New York. But the District Court was required to rule on the

disqualification motion prior to deciding any of these substantive motions,

“because the success of a disqualification motion has the potential to change the

proceedings entirely.” Bowers v. Ophthalmology Group, 733 F. 3d 647, 654-55

(6th Cir. 2013).7

7 Intervenors acknowledge that Bowers primarily dealt with the potential for confidential information to “infect the evidence presented to the district court,”


Pg 17 of 19

14

Based on undisputed facts, Becker suffers from clear conflicts of interest

that prejudice ongoing proceedings on behalf of absent class members. These

conflicts must be addressed and ended now, before substantive litigation on the

claims begins. Should the Court decide that further evidence is required in order to

determine the issue, however, Intervenors respectfully request a limited remand of

this Motion to the District Court below.

Conclusion

Becker’s representation of the class is tainted by multiple conflicts of

interest. In other actions, Becker is advocating for the interests of its “net winner”

clients and directly against the interests of its “net loser” clients. Moreover, it is per

se improper for Ms. Chaitman and her firm to represent a class of which Ms.

Chaitman was also a member. Becker cannot represent the net winners and net

losers here, and this Court should disqualify the firm. In the alternative,

Intervenors request that this Court remand the disqualification issue for

determination in the District Court below.

Dated: April 9, 2014

which was not a concern in the proceedings below. However, the Sixth Circuit further held in Bowers that even on a Rule 12(b)(6) motion, where no evidence is involved, “a district court should rule first on the motion to disqualify counsel to avoid any chance of infecting the proceedings.” Id. at n.5; see also Williams v.

Department of Corrections, 306 P. 3d 821, 823 (Utah App. 2013) (“To allow a case to progress while potentially conflicted counsel continues to represent a party threatens to taint all further proceedings in the case”).


Pg 18 of 19

15


/s/ James W. Beasley, Jr. James W. Beasley, Jr. Florida Bar No. 145750 [email protected] BEASLEY HAUSER KRAMER & GALARDI, P.A. 505 South Flagler Drive, Suite 1500 West Palm Beach, Florida 33401 Tel: (561) 835-0900 Fax: (561) 835-0939

CERTIFICATE OF FILING AND SERVICE

I HEREBY CERTIFY that on this 9th day of April 2014, this

document was electronically filed with the Clerk of this Court by using the

CM/ECF system, which will serve a copy on all counsel of record.

/s/ James W. Beasley, Jr. James W. Beasley, Jr.


Pg 19 of 19

EXHIBIT D

08-01789-smb Doc 6441-4 Filed 04/24/14 Entered 04/24/14 20:38:51 Exhibit D Pg 1 of 30


NO. 14-11250


Appellants,

- versus -

CAPITAL GROWTH COMPANY; DECISIONS, INC.; FAVORITE FUNDS; JA PRIMARY LIMITED PARTNERSHIP; JA SPECIAL LIMITED PARTNERSHIP; JAB PARTNERSHIP;

JEMW PARTNERSHIP; JF PARTNERSHIP; JFM INVESTMENT COMPANIES; JLN PARTNERSHIP; JMP LIMITED PARTNERSHIP; JEFFRY M. PICOWER SPECIAL

COMPANY; JEFFRY M. PICOWER, P.C.; THE PICOWER FOUNDATION; THE PICOWER INSTITUTE OF MEDICAL RESEARCH; THE TRUST F/B/O GABRIELLE H. PICOWER;

BARBARA PICOWER, individually, and as Executor of the Estate of Jeffry M. Picower, and as Trustee for the Picower Foundation and for the Trust f/b/o Gabriel H. Picower,

Appellees.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA

APPELLEES’ OPPOSITION TO APPELLANTS’ MOTION FOR INJUNCTION PENDING APPEAL

HOLLAND & KNIGHT LLP SCHULTE ROTH & ZABEL LLP Sanford L. Bohrer William D. Zabel Brian Toth Marcy Ressler Harris Michael Kwon Jennifer M. Opheim 701 Brickell Avenue, Suite 3300 919 Third Avenue Miami, Florida 33131 New York, New York 10022 Telephone: (305) 789-7678 Telephone: (212) 756-2000 Facsimile: (305) 789-7799 Facsimile: (212) 593-5955 [email protected] [email protected] Counsel for Appellees Of Counsel for Appellees

Case: 14-11250 Date Filed: 04/16/2014 Page: 1 of 29 08-01789-smb Doc 6441-4 Filed 04/24/14 Entered 04/24/14 20:38:51 Exhibit D

Pg 2 of 30

No. 14-11250 Marshall et al v. Capital Growth Co. et al

C-i of ii

CERTIFICATE OF INTERESTED PERSONS AND CORPORATE DISCLOSURE STATEMENT OF APPELLEES


Undersigned counsel for Appellees Capital Growth Company;

Decisions, Inc.; Favorite Funds; JA Primary Limited Partnership; JA Special

Limited Partnership; JAB Partnership; JEMW Partnership; JF Partnership; JFM

Investment Companies; JLN Partnership; JMP Limited Partnership; Jeffry M.

Picower Special Company; Jeffry M. Picower, P.C.; The Picower Foundation;

The Picower Institute of Medical Research; The Trust F/B/O Gabrielle H.

Picower; Barbara Picower, individually and as Executor of the Estate of Jeffry M.


Gabriel H. Picower, pursuant to Federal Rule of Appellate Procedure 26.1 and

Eleventh Circuit Rules 26.1-1 through 26.1-3, hereby certifies that the following is

a complete list of persons and entities that were omitted from the certificate

contained in Appellants’ Expedited Motion for an Injunction Pending Appeal:

Hon. Stuart M. Bernstein, United States Bankruptcy Court Judge for the Southern

District of New York

Estate of Bernard L. Madoff Investment Securities, LLC

Opheim, Jennifer

United States Bankruptcy Court for the Southern District of New York

/s/ Sanford L. Bohrer Sanford L. Bohrer


Pg 3 of 30


C-ii of ii


Undersigned counsel for Appellees Capital Growth Company; Decisions,

Inc.; Favorite Funds; JA Primary Limited Partnership; JA Special Limited

Partnership; JAB Partnership; JEMW Partnership; JF Partnership; JFM






Gabriel H. Picower (collectively, “Appellees”), pursuant to Federal Rule of

Appellate Procedure 26.1 and Eleventh Circuit Rules 26.1-1 through 26.1-3,

hereby certifies that no corporation directly or indirectly owns 10% or more of

any class of equity interest in any of the Appellees.



Pg 4 of 30

i

TABLE OF CONTENTS

Page

CERTIFICATE OF INTERESTED PERSONS AND CORPORATE

DISCLOSURE STATEMENT OF APPELLEES ............................................ i

TABLE OF AUTHORITIES .................................................................................... ii

PRELIMINARY STATEMENT ............................................................................... 1

STATEMENT OF FACTS ........................................................................................ 3

ARGUMENT ............................................................................................................. 9

I. Appellants Do Not Have a Likelihood of Success on the Merits .................... 9

A. The Order Is Not an Appealable Interlocutory Order ......................... 10

B. The Second Circuit Did Not “Mandate” That the Florida Court Is

the Only Forum That Could Decide Whether Appellants’

Amended Claims Are Barred By the Permanent Injunction ............... 11

C. The Florida Court Did Not Abuse Its Discretion in Deferring to

the New York Bankruptcy Court ........................................................ 14

II. Appellants Cannot Enjoin the Non-Party Trustee ......................................... 15

III. Appellants Will Not Suffer Irreparable Injury Absent an Injunction ............ 16

IV. The Picower Parties and Trustee Will Be Prejudiced by an Injunction ........ 17

V. An Injunction Would Harm the Public Interest ............................................. 18

CONCLUSION ........................................................................................................ 20


Pg 5 of 30

ii

TABLE OF AUTHORITIES Cases Page(s)

Admin. Mgmt. Servs., Ltd. v. Royal Am. Managers, Inc., 854 F.2d 1272 (11th Cir. 1988) .................................................................... 10-11

Aldana v. Del Monte Fresh Produce N.A., Inc., 578 F.3d 1283 (11th Cir. 2009) .......................................................................... 20

Carpenter v. Mohawk Indus., Inc., 541 F.3d 1048 (11th Cir. 2008) .......................................................................... 11

Forsyth County v. U.S. Army Corps of Engineers, 633 F.3d 1032 (11th Cir. 2011) .......................................................................... 15

Fox v. Picard, 848 F. Supp. 2d 469 (S.D.N.Y. 2012) ........................................................ 4, 6, 16

M & N Plastics, Inc. v. Sebelius, No. 13-819, 2013 WL 5912523 (D.D.C. Nov. 5, 2013) ..................................... 20

Marshall v. Picard, 740 F.3d 81 (2d Cir. 2014) .........................................................6-7, 11-12, 19-20

Picard v. Fox, 429 B.R. 423 (S.D.N.Y. Bankr. 2010) .......................................................... 3-4, 5

Transamerica Leasing, Inc. v. Inst. of London Underwriters, 430 F.3d 1326 (11th Cir. 2005) .......................................................................... 13

Touchston v. McDermott, 234 F.3d 1130 (11th Cir. 2000) ............................................................................ 9

United States v. Hogan, 986 F.2d 1364 (11th Cir. 1993) .......................................................................... 12

United States v. N.Y. Tel. Co., 434 U.S. 159 (1997) ............................................................................................ 12

Statutes and Rules

11 U.S.C. § 105(a) ..................................................................................................... 5


Pg 6 of 30

iii

11 U.S.C. § 362(a) ..................................................................................................... 5

28 U.S.C. § 1292(a)(1) ............................................................................................. 10

Fed. R. App. P. 8(a) ................................................................................................. 14

Fed. R. App. P. 41(b) ........................................................................................... 7, 13


Pg 7 of 30

1

PRELIMINARY STATEMENT

In Appellants’ Expedited Motion for an Injunction Pending Appeal (the

“Motion”), Appellants seek the extraordinary remedy of enjoining Appellees (the

“Picower Parties”) and non-party Irving H. Picard (the “Trustee”), the court-

appointed trustee for the liquidation of Bernard L. Madoff Investment Securities

LLC (“BLMIS”), from having the Bankruptcy Court for the Southern District of

New York (the “New York Bankruptcy Court”) determine the scope of its own

permanent injunction (the “Permanent Injunction”). For the reasons herein,

Appellants’ Motion should be denied.

The Permanent Injunction at issue was entered by the New York Bankruptcy

Court pursuant to a settlement between the Trustee and the Picower Parties, in

which the Picower Parties paid more than $7.2 billion to settle, inter alia, the

Trustee’s claims against the Picower Parties (the “Trustee’s Claims”). A key part

of the settlement (and the New York Bankruptcy Court’s centralized

administration of the BLMIS liquidation) is the Permanent Injunction, which

enjoins any actions against the Picower Parties that are “duplicative or derivative”

of the Trustee’s Claims.

This is not the first time Appellants have tried to enjoin the Trustee from

having the New York Bankruptcy Court determine whether Appellants’ claims

against the Picower Parties are impermissibly derivative of the Trustee’s Claims.

After this putative class action and a separately-filed companion complaint were

filed in the district court for the Southern District of Florida (the “Florida Court”)

on February 16 and 17, 2010, the Trustee initiated an action in the New York


Pg 8 of 30

2

Bankruptcy Court on March 31, 2010 for a determination that those actions were

barred by the automatic stay. In response, on April 1, 2010, Appellants filed ex

parte motions in the Florida Court for emergency temporary restraining orders to

enjoin the Trustee from proceeding with that action in New York. The Florida

Court properly denied those motions that same day.

On May 3, 2010, the New York Bankruptcy Court held that Appellants’

putative class action complaints filed in the Florida Court were impermissibly

derivative of the Trustee’s Claims. On appeal, both the district court for the

Southern District of New York (the “SDNY District Court”) and the Court of

Appeals for the Second Circuit affirmed the New York Bankruptcy Court’s

decision, finding that Appellants’ complaints were barred by the Permanent

Injunction and the automatic stay.

Having lost in the New York federal courts, Appellants returned to the

Florida Court and filed a Motion to Reopen, seeking leave to file a proposed

Second Amended Complaint. Yet this time, relying on pure dicta that they

mischaracterize as a “mandate” from the Second Circuit, Appellants insist that the

New York Bankruptcy Court no longer has jurisdiction to decide whether their

newly amended claims also violate the Permanent Injunction and automatic stay.

If the Second Circuit had intended to divest the New York Bankruptcy Court of

jurisdiction, it surely would not have done so merely in a clause to a sentence,

without any analysis, and on an issue that was never briefed or argued.

Appellants’ fallacious “mandate” argument is another attempt to end run the New

York federal courts, where Appellants have litigated unsuccessfully for years, first


Pg 9 of 30

3

in opposition to the Picower Parties’ $7.2 billion settlement and then in support of

claims found to be barred by the Permanent Injunction and automatic stay.

Consequently, in response to Appellants’ Motion to Reopen, the Trustee

again filed (a) a complaint against Appellants (and other related putative class

action plaintiffs) in the New York Bankruptcy Court (the “New York Action”), and

(b) a motion for preliminary injunction, scheduled for hearing on May 7, 2014, to

enjoin Appellants from filing their Second Amended Complaint because it would

violate the Permanent Injunction and automatic stay (the “Trustee’s Motion”). The

Florida Court, exercising sound discretion, entered an order stating that it would

defer to the New York Bankruptcy Court for the determination of whether

Appellants’ proposed Second Amended Complaint violates the Permanent

Injunction and automatic stay.

Appellants now appeal from that order and seek an injunction pending

appeal to enjoin the Trustee – not a party herein – from prosecuting the New York

Action. In the interests of comity and judicial efficiency, this Court should not

grant such an injunction and instead, like Florida Court below, should defer to the

New York Bankruptcy Court.

STATEMENT OF FACTS

This action arises from the multi-billion dollar Ponzi scheme perpetrated by

Bernard L. Madoff through his securities firm, BLMIS.1 On December 15, 2008,

1 This putative class action initially was brought by Appellant Adele Fox (“Fox”) on behalf of customers who withdrew more money than they deposited (“Net Winners”). A companion putative class action was separately filed by Appellant


Pg 10 of 30

4

the SDNY District Court appointed the Trustee for the liquidation of BLMIS (“the

BLMIS Liquidation”) and removed that proceeding to the New York Bankruptcy

Court. See Picard v. Fox, 429 B.R. 423, 426 (S.D.N.Y. Bankr. 2010). As part of

the BLMIS Liquidation, on May 12, 2009, the Trustee sued the Picower Parties

and asserted the Trustee’s Claims, including for fraudulent transfers, preferences,

turnover, and state law fraudulent conveyances. See id. at 429.

Appellants Fox and Marshall were BLMIS customers who filed customer

claims in the BLMIS Liquidation. See id. at 428. Marshall’s customer claim was

allowed on July 24, 2009 in the amount of $30,000, the amount she lost in

Madoff’s Ponzi scheme. See id. Fox’s customer claims were denied because Fox

was a Net Winner. Like all other Madoff customers similarly situated, Fox was

barred from receiving payments through the BLMIS Liquidation until all Net

Losers recovered their principal investments. Fox v. Picard, 848 F. Supp. 2d 469,

474 (S.D.N.Y. 2012).

At the time the Trustee was negotiating his settlement with the Picower

Parties, the Fox/Marshall Class Actions were filed in the Florida Court, asserting

claims for conversion, unjust enrichment, conspiracy, and violations of Florida’s

Suzanne Stone Marshall (“Marshall”) under Case No. 10-80254 on behalf of customers who lost money in the Madoff Ponzi scheme (“Net Losers”) (the Fox and Marshall actions, collectively, the “Fox/Marshall Class Actions”). On March 22, 2011, Judge Ryskamp administratively closed the Fox/Marshall Class Actions. On February 5, 2014, a Motion to Reopen was filed, adding as Plaintiffs Marshall, Marsha Peshkin, and Russell Oasis (Fox, Marshall, Peshkin and Russell, collectively, “Appellants”). No motion to reopen was filed in the companion Marshall action (Case No. 10-80254), which remains administratively closed.


Pg 11 of 30

5

RICO Act, all arising from the Picower Parties’ alleged withdrawals from their

BLMIS accounts. (S.D. Fla. Nos. 10-80252 and 10-80254.)2

On March 31, 2010, the Trustee filed a complaint in the New York

Bankruptcy Court against Fox and Marshall seeking, among other things, a

declaration that the Fox/Marshall Class Actions violated the automatic stay under

Section 362(a) of the Bankruptcy Code and a preliminary injunction pursuant to

Section 105(a) of the Bankruptcy Code enjoining any further prosecution of the

Fox/Marshall Class Actions. See Picard, 429 B.R. at 430.

The very next day, Fox and Marshall filed ex parte emergency motions in

the Florida Court for temporary restraining orders to enjoin the Trustee’s action in

the New York Bankruptcy Court. The Florida Court properly denied those

motions that same day. (DE 16 & 17; S.D. Fla. No. 10-80254, DE 14 & 15.)3

On May 3, 2010, after a hearing, the New York Bankruptcy Court granted

the Trustee’s motion for a preliminary injunction and deemed the Fox/Marshall

Class Actions void ab initio, finding that the Fox/Marshall Class Actions violated

the automatic stay because they impermissibly asserted claims that were derivative

of the Trustee’s Claims. Picard, 429 B.R. at 432, 437.

On December 17, 2010, the Picower Parties entered into two separate but

2 Fox and Marshall asserted identical claims against the Picower Parties, with the only differences being that Fox sought to represent a class of Net Winners and Marshall sought to represent a class of Net Losers. On March 15, 2010, Fox and Marshall filed amended complaints which made non-substantive changes. 3 Unless otherwise noted, citations to “DE” refer to the docket entries in S.D. Fla. Case No. 10-80252 (Ryskamp, J.).


Pg 12 of 30

6

related agreements: (a) with the U.S. Department of Justice pursuant to which the

Picower Parties agreed to forfeit $7.2 billion, representing 100% of their net

withdrawals from BLMIS, and (b) with the Trustee (the “Settlement Agreement”),

pursuant to which they agreed that $5 billion of the forfeited funds would be

transferred to the Trustee for distribution to Madoff’s victims. Over the objections

of Fox and Marshall, on January 13, 2013, the New York Bankruptcy Court

approved the Settlement Agreement and issued the Permanent Injunction enjoining

claims against the Picower Parties that were “duplicative or derivative” of the

Trustee’s Claims. (Ex. A § 7; Ex. B.) The Florida Court later administratively

closed the Fox/Marshall Class Actions. (DE 26; S.D. Fla. No. 10-80254, DE 21.)

The SDNY District Court affirmed the New York Bankruptcy Court’s order,

agreeing that Fox’s and Marshall’s claims were barred by the Permanent Injunction

and automatic stay because they were duplicative and derivative of the Trustee’s

Claims. Fox v. Picard, 848 F. Supp. 2d 469 (S.D.N.Y. 2012).

The Second Circuit affirmed the decision of the SDNY District Court

enjoining the Fox/Marshall Class Actions, also finding that Appellants’ complaints

“impermissibly attempt to ‘plead around’ the [New York] Bankruptcy Court’s

injunction barring all claims ‘derivative’ of those asserted by the Trustee.”

Marshall v. Picard, 740 F.3d 81, 84 (2d Cir. 2014). The Second Circuit’s opinion

concluded with these words: Accordingly, the judgment of the [SDNY] District Court is AFFIRMED without prejudice to Fox and Marshall seeking leave to amend their complaints in the United States District Court for the Southern District of Florida.


Pg 13 of 30

7

Of course, we intimate no view on an appropriate disposition of any such motion for leave to amend.

Id. at 96. Contrary to Appellants’ assertion, the Second Circuit did not thereby

direct that only the Florida Court could decide whether an amended complaint filed

by Fox and Marshall would be barred by the Permanent Injunction and automatic

stay. That issue was not before the Second Circuit.

On February 5, 2014, the Second Circuit issued a Mandate affirming the

judgment of the SDNY District Court, as required by FRAP 41(b). (Ex. C.) The

Mandate is completely silent as to whether Fox and Marshall can seek leave to

amend, or which court is to decide whether an amended complaint would be

“duplicative or derivative” of the Trustee’s Claims. That same day, Appellants

filed a Motion to Reopen in the Florida Court, seeking leave to file the proposed

Second Amended Complaint. (DE 28.)

On February 18, 2014, the Picower Parties filed an emergency motion in the

Florida Court seeking, among other things, to stay this action pending a ruling by

the New York Bankruptcy Court on a motion by the Trustee (the “Motion to

Stay”). (DE 29-30.) On February 24, 2014, the Florida Court stayed this action

pending resolution of the Motion to Stay. (DE 37.)

Also on February 24, 2014, based on Appellants’ misreading of the final

paragraph of the Second Circuit’s decision (which affirmed the SDNY District

Court’s decision affirming the New York Bankruptcy Court), Appellants filed an

Opposition to the Motion to Stay and a Cross-Motion seeking, among other things,

to preliminarily enjoin the Picower Parties “and any persons in active concert or


Pg 14 of 30

8

participation with them” (purportedly, the Trustee) from litigating the new

Fox/Marshall claims outside of the Florida Court.4 (DE 38.)

On March 11, 2014, the Trustee filed the New York Action and the

Trustee’s Motion in the New York Bankruptcy Court, seeking (i) a determination

that this action and a related putative class action (the “Goldman Action”) filed by

Pamela Goldman and A & G Goldman Partnership (collectively, the “Goldmans”)

violate the Permanent Injunction and automatic stay; and (ii) a preliminary

injunction enjoining Appellants and the Goldmans from proceeding with their

respective actions against the Picower Parties. (Exs. D-F.) The hearing on the

Trustee’s Motion is scheduled for May 7, 2014.

On March 12, 2014, Appellants filed a Motion for Limited Relief from Stay

and Request for Emergency Hearing on the Motion to Stay and Cross-Motion for

Injunctive Relief, seeking an emergency hearing. (DE 52.) On March 17, 2014,

the Florida Court denied that motion, stating that it “declines to conduct an

emergency hearing on the question of whether to enjoin the New York action.

Rather, this Court defers to the Bankruptcy Court for the Southern District of New

York for a ruling on [the Trustee’s] motion to enjoin the instant action.” (DE 58

(the “Order”).) The Order did not deny Appellants’ Cross-Motion for preliminary

injunction, but only ruled on Appellants’ request for an emergency hearing.

On March 24, 2014, Appellants filed a Notice of Appeal from the Order.

4 While seeking to have the Florida Court enjoin the Trustee, Appellants did not name the Trustee as a defendant, nor did they properly serve him with their Cross-Motion seeking to enjoin him.


Pg 15 of 30

9

(DE 59.) On April 9, 2014, more than three weeks after the Order was entered,

Appellants filed in this Court the Motion sub judice, seeking to enjoin the Picower

Parties and the Trustee “from litigating the merits of Appellants’ proposed second

amended complaint outside the Florida Court, pending resolution of this appeal.”

(Mot. at 18.)5

ARGUMENT

Appellants’ Motion for an injunction pending appeal should be denied. To

obtain the “extraordinary remedy” of an injunction pending appeal, Appellants

must show: (1) a substantial likelihood that they will prevail on the merits of the appeal; (2) a substantial risk of irreparable injury to the intervenors unless the injunction is granted; (3) no substantial harm to other interested persons; and (4) no harm to the public interest.

Touchston v. McDermott, 234 F.3d 1130, 1132 (11th Cir. 2000). Here, Appellants

cannot satisfy any of these requirements.

I. Appellants Do Not Have a Likelihood of Success on the Merits

Appellants do not have a likelihood of success on the merits of their appeal

of the Order because (i) the Order is a non-appealable interlocutory order; (ii) the

Second Circuit did not “mandate” that only the Florida Court can decide if the

proposed Second Amended Complaint would violate the Permanent Injunction and

5 Notably, neither the Picower Parties (who are not parties in the New York Action), nor the Trustee, seek to litigate the “merits” of the proposed Second Amended Complaint in the New York Action. Rather, the Trustee is seeking to have the New York Bankruptcy Court determine the threshold question of whether the proposed Second Amended Complaint is “duplicative or derivative” of the Trustee’s Claims, in violation of the Permanent Injunction and automatic stay.


Pg 16 of 30

10

automatic stay; and (iii) the Florida Court did not abuse its discretion in deciding to

defer to the New York Bankruptcy Court for a ruling on the Trustee’s Motion.

A. The Order Is Not an Appealable Interlocutory Order

Appellants do not have a likelihood of success on the merits of their appeal

because the Order is not appealable, as set forth in Appellees’ Motion to Dismiss

the Appeal, being filed herewith. The Order simply stated that the Florida Court

was deciding Appellants’ motion “requesting that [the Florida Court] lift the stay

entered February 21, 2014 for the purpose of scheduling an emergency hearing.”

(DE 58.) The Florida Court further ruled that it “declines to conduct an emergency

hearing on the question of whether to enjoin the New York action.” (Id.) Thus,

the Florida Court did not deny Appellants’ motion for preliminary injunction, as

Appellants incorrectly claim; it only denied their motion for an emergency hearing.

Under 28 U.S.C. § 1292(a)(1), an order denying a request for an emergency

hearing is not appealable. Even if the Order had the practical effect of denying

Appellants’ motion for preliminary injunction, interlocutory orders that have the

practical effect of denying injunctions are appealable only if the appellants can

show “serious, perhaps irreparable, consequence.” Admin. Mgmt. Servs., Ltd. v.

Royal Am. Managers, Inc., 854 F.2d 1272, 1278 (11th Cir. 1988). Here,

Appellants have made no showing of “serious” or “irreparable” consequence. In

fact, they have failed to show that they would suffer irreparable harm at all if the


Pg 17 of 30

11

Trustee’s Motion is not enjoined. Accordingly, the Order is not an appealable

interlocutory order.6

B. The Second Circuit Did Not “Mandate” That the Florida Court Is the Only Forum That Could Decide Whether Appellants’ Amended Claims Are Barred By the Permanent Injunction

Appellants’ sole basis for seeking an injunction is the false premise that the

Second Circuit “mandated” that only the Florida Court could decide if their

proposed amended claims violate the Permanent Injunction and automatic stay.

That is a gross mischaracterization of the Second Circuit’s opinion. The Second

Circuit did not “mandate,” “order,” “direct” or otherwise make a ruling as to which

court – the Florida Court or the New York Bankruptcy Court – should decide the

applicability of the Permanent Injunction and automatic stay to Appellants’

amended claims. Rather, the Second Circuit affirmed the SDNY District Court’s

judgment voiding the Fox/Marshall Class Actions without prejudice to Fox and

Marshall seeking to amend their claims, then added – in dicta – that:

There is conceivably some particularized conspiracy claim appellants could assert that would not be derivative of those asserted by the Trustee. That question, however, is not properly before us, and is a question in the first

6 Appellants’ alternative request that this Court consider their appeal as a mandamus petition fares no better. “The petitioner seeking the writ carries the burden of showing that its right to the issuance of the writ is clear and indisputable,” and “[a] writ will not issue merely because [the petitioner] shows evidence that, on appeal, would warrant reversal of the district court.” Carpenter v. Mohawk Indus., Inc., 541 F.3d 1048, 1055 (11th Cir. 2008). The writ of mandamus places a higher burden on the petitioner than does a direct appeal; the petitioner must show a “clear usurpation of power or abuse of discretion.” Id. at 1054-55. As set forth in Part I.C, infra, Appellants cannot meet this extraordinarily high burden and, accordingly, no writ of mandamus should issue.


Pg 18 of 30

12

instance for the United States District Court for the Southern District of Florida.

Marshall v. Picard, 740 F.3d 81, 94 (2d Cir. 2014).

The Second Circuit plainly did not “mandate” that the question must be

decided only by the Florida Court. Such a ruling would have divested the New

York Bankruptcy Court of its jurisdiction to decide that threshold question itself,

based on its own interpretation of its own Permanent Injunction and automatic

stay. If, as Appellants insist, the Second Circuit had taken the highly unusual step

of stripping the New York Bankruptcy Court of jurisdiction to decide whether

Appellants’ amended claims are duplicative or derivative of the Trustee’s Claims,

and thus barred, it would have done so in a clear and purposeful way, after careful

discussion and analysis of all relevant facts and law. Yet there is no discussion and

analysis of the issue anywhere in the Second Circuit’s decision.

Indeed, the issue of whether the Florida Court or the New York Bankruptcy

Court (or both) can decide whether Appellants’ amended claims are derivative of

the Trustee’s Claims was never briefed by either party, nor decided by the Second

Circuit. Accordingly, the Second Circuit’s dicta that the question is “in the first

instance for the [Florida Court]” is not controlling, as the Florida Court properly

recognized. See United States v. N.Y. Tel. Co., 434 U.S. 159, 184 (1997) (where an

“issue was not briefed,” a court’s statement on that issue was “in dicta” and “has

absolutely no force”); United States v. Hogan, 986 F.2d 1364, 1372 (11th Cir.

1993) (where an “issue simply was not presented,” a court is “not bound by [the

case’s] dictum”).


Pg 19 of 30

13

Necessarily, if the Second Circuit had concluded that only the Florida Court

could decide whether Appellants’ claims were “duplicative or derivative” of the

Trustee’s Claims, it would have reversed the SDNY District Court’s affirmance of

the New York Bankruptcy Court order, and directed that the Florida Court decide

the issue. Instead, the Second Circuit affirmed the New York District Court’s

affirmance of the New York Bankruptcy Court’s finding that the Fox/Marshall

Class Actions were impermissibly derivative of the Trustee’s Claims. There is no

plausible reason the Second Circuit thereafter would deprive the New York

Bankruptcy Court of jurisdiction to decide whether Appellants’ new claims are

similarly are derivative, and certainly Appellants have offered no reason. Rather,

Appellants seize on the Second Circuit’s dicta to litigate in their preferred forum.

Compounding the weakness of their position, Appellants also

mischaracterize the Second Circuit’s dicta as a purported “mandate” (Mot. at 8-

11), in order to invoke the “mandate rule,” pursuant to which a district court “may

not alter, amend, or examine the [Court of Appeals’] mandate, or give any further

relief or review, but must enter an order in strict compliance with the mandate,”

Transamerica Leasing, Inc. v. Inst. of London Underwriters, 430 F.3d 1326, 1331

(11th Cir. 2005); see also Fed. R. App. Pro. 41(b). Yet the “mandate rule” does

not apply here because the Second Circuit’s actual Mandate, which was issued on

February 5, 2014, is completely silent on which court – the Florida Court or New

York Bankruptcy Court – can or should decide whether Appellants’ amended

claims would violate the Permanent Injunction and automatic stay. (See Ex. C.)


Pg 20 of 30

14

As an alternative to obtaining an injunction pursuant to the traditional

standard for injunctions under FRAP 8(a), Appellants also argue that they are

entitled to an injunction pursuant to the All Writs Act “to protect the integrity of

the Second Circuit mandate.” (Mot. at 14.) Appellants’ argument is based on the

faulty premise that the Second Circuit “mandated” that only the Florida Court can

decide whether the proposed Second Amended Complaint violates the Permanent

Injunction and automatic stay. Because the Second Circuit did not issue such a

“mandate,” Appellants are not entitled to an injunction under the All Writs Act.7

C. The Florida Court Did Not Abuse Its Discretion in Deferring to the New York Bankruptcy Court

Appellants’ next makeweight argument is that the Florida Court’s Order is

not subject to an abuse of discretion standard because “this case involves a clear-

cut issue of law.” (Mot. at 9.) Assuming arguendo that the Order – which merely

denied Appellants’ motion to lift the stay for an emergency hearing (i.e., a non-

appealable interlocutory order) – could be construed as an appealable denial of

7 Appellants also argue, in conclusory fashion, that “the judicially created ‘first-filed’ rule” is another basis for injunctive relief. To the contrary, the so-called “first-filed” rule has no application here because the Trustee filed his action in response to Appellants’ Motion to Reopen, which seeks leave to file their Second Amended Complaint. There is no scenario in which the Trustee could have filed his action to enjoin Appellants’ proposed Second Amended Complaint before Appellants filed their Motion to Reopen attaching the proposed Second Amended Complaint. This is not a situation in which there was a “race to the courthouse” between Appellants and the Trustee requiring deference to the first to file. In any event, the “first-filed” action here was actually the Trustee’s action against the Picower Parties in the New York Bankruptcy Court, first filed in May 2009. Thereafter, counsel for Fox and Marshall filed the Fox/Marshall Class Actions in the Florida Court, parroting the Trustee’s Claims.


Pg 21 of 30

15

their motion for a preliminary injunction (which it is not), findings of fact made to

deny a motion for a preliminary injunction are reviewed under an abuse of

discretion standard. See Forsyth County v. U.S. Army Corps of Engineers, 633

F.3d 1032, 1039 (11th Cir. 2011) (“We review the decision to deny a preliminary

injunction for abuse of discretion. In so doing, we review the findings of fact of

the district court for clear error and legal conclusions de novo.” (internal quotation

marks and citations omitted)).

Here, the Order did not make any legal conclusions for this Court to review

de novo. (See DE 58.) Moreover, even assuming that the Order had the practical

effect of denying Appellants’ motion for preliminary injunction, the Florida Court

implicitly made the factual findings that Appellants would not suffer irreparable

harm and/or that the balance of the equities do not weigh in their favor, which are

reviewed for “clear error” under an abuse of discretion standard. Appellants have

made no attempt to show that the Florida Court committed “clear error.” Nor

could they, because, as discussed below, Appellants will not suffer any irreparable

harm in the absence of an injunction.

II. Appellants Cannot Enjoin the Non-Party Trustee

In addition to not having a likelihood of success on the merits, an injunction

pending appeal should not be granted because Appellants cannot enjoin the

Trustee, a non-party to this action. In seeking to have this Court enjoin the

Trustee, Appellants repeatedly mischaracterize the Picower Parties and the Trustee

as being agents of, or in concert with, each other. (See, e.g., Mot. at 8 (“Appellees

then colluded with the Trustee” and acted “[i]n furtherance of their plan”); id. at 7


Pg 22 of 30

16

(mischaracterizing the court-approved Settlement Agreement as a “co-operation

agreement”); id. at 8 (“Appellees, and their agent, the Trustee”); id. at 11

(“Appellees, who are in privity with the Trustee”); id. (“the Trustee, on behalf of

Appellees” brought the New York Action).)

Appellants once again see conspiracies where none exist. Previously, in

objecting to the $7.2 billion settlement with the Picower Parties, Fox and Marshall

“argued, absurdly, that the Picower estate, the Trustee, and the Government

somehow conspired to recover more than they were entitled to ‘in order [to] divest

the Picower Defendants of the assets that should be available to satisfy Fox’s valid

and independent claims’ in the Florida action.” (Ex. G at 21 (emphasis added).)

The New York Bankruptcy Court correctly rejected their argument as “not

credible.” (Ex. B at 6.) Appellants’ arguments are no more credible now.8

III. Appellants Will Not Suffer Irreparable Injury Absent an Injunction

Appellants argue that they will suffer “per se irreparable harm” if they are

forced “to litigate the sufficiency of the proposed second amended complaint in

New York after the Second Circuit has ruled that the issue is to be resolved in the

8 Notably, the Trustee’s Motion is brought on behalf of the BLMIS estate, not the Picower Parties, to vindicate the BLMIS estate’s interests. See Fox v. Picard, 848 F. Supp. 2d 469, 490-91 (S.D.N.Y. 2012) (“Allowing the [Fox/Marshall Class Actions] to go forward would carry real risks to the [BLMIS] estate, implicating . . . the possibility of future settlements, and providing an avenue for BLMIS customers who are displeased with the Net Equity Decision to undermine that decision by directly pursuing claims that are wholly derivative of claims already brought by the Trustee.”). Appellants’ attempts to block the Trustee’s Motion by moving against the Picower Parties and not the Trustee is both improper and further evidence of forum shopping.


Pg 23 of 30

17

Southern District of Florida.” (Mot. at 16.) As discussed above, the Second

Circuit did not rule in Appellants’ favor, on any issue. Moreover, Appellants

cannot be “irreparably harmed” by the lack of enforcement of a ruling that the

Second Circuit never made.

Appellants also argue that “proceeding in New York will result in another

multi-year delay before Appellants can even begin to litigate the merits of their

claims in Florida.” (Mot. at 16.) That argument is based on rank speculation.

Litigating in Florida could take just as long, or longer, than litigating in New York.

There is simply no way to know whether the issue would be resolved faster in New

York or Florida. Purported delay that may or may not occur is not a basis for

finding irreparable harm.

Finally, Appellants argue that “re-litigating” an issue constitutes irreparable

harm. (See Mot. at 16.) Yet Appellants do not seek to re-litigate any issue; they

seek to file a newly amended complaint that has not been tested by either the New

York Bankruptcy Court or the Florida Court. As Appellants cannot re-litigate a

new complaint, they cannot suffer irreparable harm thereby.

IV. The Picower Parties and Trustee Will Be Prejudiced by an Injunction

Appellants argue that the Trustee and the Picower Parties will not suffer any

prejudice if an injunction is granted because they “can – and should – litigate the

viability of the second amended complaint in the Florida Court, as the Second

Circuit ordered.” (Mot. 17.) That unsupported claim ignores that (i) the Trustee

already has briefed the viability of Appellants’ proposed Second Amended

Complaint in the New York Bankruptcy Court; (ii) the Second Circuit did not


Pg 24 of 30

18

“order” that the issue must be decided by the Florida Court; and (iii) the New York

Bankruptcy Court is more familiar with issues related to the Permanent Injunction

and the automatic stay in the context of the BLMIS Liquidation.

If the Motion is granted, the Trustee would be forced to engage in

unnecessary, duplicative, piecemeal litigation, in both New York and Florida,

because the New York Bankruptcy Court still will decide the portion of the

Trustee’s Motion concerning whether the Goldmans’ proposed complaint (which is

substantively similar to Appellants’ proposed Second Amended Complaint)

violates the Permanent Injunction and automatic stay. Such piecemeal litigation is

the antithesis of judicial efficiency and would be a waste of the Trustee’s

resources, which should instead go to victims of Madoff’s scheme. Similarly, the

Picower Parties would be prejudiced if they had to expend resources to brief the

issue of whether Appellants’ amended claims violate the Permanent Injunction and

automatic stay, when that issue has already been briefed by the Trustee before the

New York Bankruptcy Court. The Picower Parties should not be forced to

undergo such an unnecessary and wasteful duplication of effort.

Given that Appellants will not suffer any irreparable harm in the absence of

an injunction, and there would be a waste of judicial and party resources from

duplicative litigation and the possibility of inconsistent results if an injunction is

granted, the balance of the equities weighs against issuing an injunction.

V. An Injunction Would Harm the Public Interest

The injunction sought by Appellants would harm the public interest.

Congress enacted the Bankruptcy Code to provide for centralized administration of


Pg 25 of 30

19

bankruptcies in the bankruptcy courts. Thus, there is a strong public interest in not

interfering with a bankruptcy court’s administration of a bankruptcy estate. That

public interest is heightened in connection with the New York Bankruptcy Court’s

administration of the epic BLMIS Liquidation, which has been going on for more

than five years and involves more than a thousand cases. Enjoining the court-

appointed Trustee from seeking a determination from the New York Bankruptcy

Court to interpret its own Permanent Injunction and the automatic stay in the

BLMIS Liquidation would be contrary to the public interest.

Moreover, an injunction would lead to piecemeal litigation and could lead to

inconsistent results because the viability of the Appellants’ proposed Second

Amended Complaint and the Goldmans’ proposed complaint would be adjudicated

in parallel by the Florida Court and the New York Bankruptcy Court, respectively.

The most judicially economical approach would be to allow the New York

Bankruptcy Court to decide the applicability of its own Permanent Injunction and

automatic stay to both the Appellants’ and the Goldmans’ proposed complaints,

which is the same exact procedure that was followed to test the viability of their

prior complaints. Enjoining that procedure would be in direct conflict with the

Second Circuit’s decision that the New York Bankruptcy Court correctly enjoined

those initial complaints as being impermissibly derivative of the Trustee’s Claims.

An injunction also would reward Appellants for blatant forum shopping.

Appellants disingenuously accuse Appellees and the Trustee of “engaging in the

worst kind of forum shopping” (Mot. at 18), but it is the Appellants who chose to

bring their putative class actions in the Florida Court in order to “impermissibly


Pg 26 of 30

20

attempt to plead around the Bankruptcy Court’s injunction barring all claims

‘derivative’ of those asserted by the Trustee.” Marshall v. Picard, 740 F.3d 81, 84

(2d Cir. 2014) (emphasis added).

Now that Appellants have lost before the (i) New York Bankruptcy Court,

(ii) SDNY District Court, and (iii) Second Circuit, Appellants understandably want

another court – the Florida Court – to test the viability of their newly amended

complaint. Looking for a better result in another court is not a proper basis for an

injunction, nor would such an injunction serve the public interest. See Aldana v.

Del Monte Fresh Produce N.A., Inc., 578 F.3d 1283, 1298 (11th Cir. 2009)

(recognizing “great[] policy interest in preventing forum shopping”); M & N

Plastics, Inc. v. Sebelius, No. 13-819, 2013 WL 5912523, at *5 (D.D.C. Nov. 5,

2013) (“public interest factors” include “the law’s aversion to forum shopping”).

CONCLUSION

For all of the foregoing reasons, Appellants’ Expedited Motion for

Injunction Pending Appeal should be denied in its entirety. Respectfully submitted,

HOLLAND & KNIGHT LLP By: s/Brian W. Toth

Brian W. Toth

701 Brickell Avenue Suite 3300 Miami, Florida 33131 (305) 789-7678 Attorneys for Appellees


Pg 27 of 30

21

Of counsel: SCHULTE ROTH & ZABEL LLP William D. Zabel Marcy Ressler Harris Michael Kwon Jennifer M. Opheim


Pg 28 of 30

22


I certify that a copy of this document was served by CM/ECF or U.S. mail

on April 16, 2014, on all counsel or parties of record on the Service List below.

s/Brian W. Toth Helen Davis Chaitman Becker & Poliakoff, LLP 45 Broadway New York, New York 10006 Telephone: (212) 599-3322 Facsimile: (212) 557-0295 Email: [email protected]

James W. Beasley Jr. Robert J. Hauser Joseph George Galardi Andrew Steven Kwan Beasley Hauser Kramer & Giraldi, P.A. 505 S. Flagler Drive, Suite 500 West Palm Beach, Florida 33401 Telephone: (561) 835-0900 Facsimile: (561) 835-0939 Email: [email protected] Email: [email protected] Email: [email protected] Email: [email protected]


Pg 29 of 30

mailto:[email protected]


23

Lesley Guy Blackner Blackner Stone & Associates 340 Royal Poinciana Way, St 317-377 Palm Beach, FL 33480 Phone: 561-659-5754 Fax: 561-659-3184 Email: [email protected] David Sheehan Counsel for Trustee Irving Picard BakerHostetler 45 Rockefeller Plaza, #10 New York, NY 10111 Phone (212) 589-4616 Email: [email protected] The Honorable Kenneth L. Ryskamp United States District Court for the Southern District of Florida Paul G. Rogers Federal Building 701 Clematis Street, Room 416 West Palm Beach, FL 33401


Pg 30 of 30


EXHIBIT E

08-01789-smb Doc 6441-5 Filed 04/24/14 Entered 04/24/14 20:38:51 Exhibit E Pg 1 of 31

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

NO. 14-11250


Appellants,

- versus -




BARBARA PICOWER, individually, and as Executor of the Estate of Jeffry M. Picower, and as Trustee for the Picower Foundation and for the Trust f/b/o Gabriel H. Picower.

Appellees.


APPELLEES’ OPPOSITION TO MOTION FOR EXPEDITED APPEAL AND CROSS-MOTION TO DISMISS APPEAL

HOLLAND & KNIGHT LLP SCHULTE ROTH & ZABEL LLP Sanford L. Bohrer William D. Zabel Brian Toth Marcy Ressler Harris Michael Kwon Jennifer M. Opheim 701 Brickell Avenue, Suite 3300 919 Third Avenue Miami, Florida 33131 New York, New York 10022 Telephone: (305) 789-7678 Telephone: (212) 756-2000 Facsimile: (305) 789-7799 Facsimile: (212) 593-5955 [email protected] [email protected] Counsel for Appellees Of Counsel for Appellees

Case: 14-11250 Date Filed: 04/16/2014 Page: 1 of 30 08-01789-smb Doc 6441-5 Filed 04/24/14 Entered 04/24/14 20:38:51 Exhibit E

Pg 2 of 31


C-i of v

CERTIFICATE OF INTERESTED PERSONS

AND CORPORATE DISCLOSURE STATEMENT OF APPELLEES










Gabriel H. Picower, pursuant to Federal Rule of Appellate Procedure 26.1 and

Eleventh Circuit Rules 26.1-1 through 26.1-3, hereby certifies that

the following is a complete list of persons and entities having an interest in

the outcome of this appeal:

A & G Goldman Partnership Baker & Hostetler LLP, counsel for Irving H. Picard, as Trustee of Bernard L. Madoff Investment Securities, LLC Beasley, Hauser, Kramer and Galardi, P.A., counsel for A & G Goldman Partnership and Pamela Goldman Becker & Poliakoff, LLP, counsel for Appellants


Pg 3 of 31


C-ii of v

Becker & Poliakoff, P.A., counsel for Appellants Hon. Stuart M. Bernstein, United States Bankruptcy Court Judge for the Southern District of New York Blackner Stone and Associates, counsel for A & G Goldman Partnership and Pamela Goldman Bohrer, Sanford Capital Growth Company Chaitman, Helen Davis Decisions, Inc. Estate of Bernard L. Madoff Investment Securities, LLC Favorite Funds Fox, Adele Galardi, Joseph Goldman, Pamela Gotthoffer, Lance Harris, Marcy Ressler Holland & Knight LLP, counsel for Appellees Hon. James M. Hopkins, United States Magistrate Judge JA Primary Limited Partnership JA Special Limited Partnership JAB Partnership


Pg 4 of 31


C-iii of v

JEMW Partnership JF Partnership JFM Investment Companies JLN Partnership JMP Limited Partnership Jeffry M. Picower Special Company Jeffry M. Picower, P.C. Kwon, Michael LaSalle, Frank Hon. Kenneth A. Marra, United States District Judge Marshall, Suzanne Stone Hon. William Matthewman, United States Magistrate Judge Oasis, Russell Opheim, Jennifer M. Irving H. Picard, Trustee of Bernard L. Madoff Investment Securities, LLC Picower, Barbara The Picower Foundation The Picower Institute of Medical Research Peshkin, Marsha Sheehan, David


Pg 5 of 31


C-iv of v

Stone, Richard Toth, Brian The Trust F/B/O Gabrielle H. Picower Hon. Kenneth L. Ryskamp, United States District Judge Schulte Roth & Zabel LLP, counsel for Appellees United States Bankruptcy Court for the Southern District of New York Zabel, William D.



Pg 6 of 31


C-v of v










Gabriel H. Picower (collectively, "Appellees"), pursuant to Federal Rule of

Appellate Procedure 26.1 and Eleventh Circuit Rules 26.1-1 through 26.1-3,

hereby certifies that no corporation directly or indirectly owns 10% or more of

any class of equity interest in any of the Appellees.



Pg 7 of 31

i

TABLE OF CONTENTS

PRELIMINARY STATEMENT ............................................................................... 1

STATEMENT OF FACTS AND PROCEDURAL HISTORY ................................ 3

ARGUMENT ............................................................................................................. 8

I. Appellants Have Improperly Brought This Appeal ........................................ 8

A. The Florida District Court’s Order Is Not Appeallable Under 28

U.S.C. § 1292(a)(1) ............................................................................... 8

B. A Writ of Mandamus Is Not Appropriate ........................................... 12

II. Appellants Have Not Articulated Good Cause for Expediting Briefing ....... 16

CONCLUSION ........................................................................................................ 18


Pg 8 of 31

ii

TABLE OF AUTHORITIES

Cases Page(s)

Admin. Mgmt. Servs., Ltd. v. Royal Am. Managers, Inc., 854 F.2d 1272 (11th Cir. 1988) .................................................................... 10, 11

Carpenter v. Mohawk Indus., Inc., 541 F.3d 1048 (11th Cir. 2008) .................................................................... 12, 16

Fla. Wildlife Fed’n, Inc. v. Adm’r, U.S. Envtl. Prot. Agency, 737 F.3d 689 (11th Cir. 2013) .............................................................................. 8

Fox v. Picard, 848 F. Supp. 2d 469 (S.D.N.Y. 2012) .................................................................. 5

Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271 (1988) ........................................................................................ 9, 10

Kershaw v. Shalala, 9 F.3d 11 (5th Cir. 1993) ................................................................................ 9, 10

Marshall v. Picard, 740 F.3d 81 (2d Cir. 2014) ............................................................................. 5, 13

NAACP v. Thompson, 321 F.2d 199 (5th Cir. 1963) ................................................................................ 9

Picard v. Fox, 429 B.R. 423 (S.D.N.Y. Bankr. 2010) .............................................................. 3, 4

Sierra Rutile Ltd. v. Katz, 937 F.2d 743 (2d Cir. 1991) ............................................................................... 12

SIPC v. Bernard L. Madoff Inv. Sec. LLC, No. 08-01789 (SMB) (S.D.N.Y. Bankr. Mar. 11, 2014) ...................................... 6

Switz. Cheese Ass’n, Inc. v. E. Horne’s Mkt., Inc., 385 U.S. 23 (1966) ............................................................................................ 8, 9

Transamerica Leasing, Inc. v. Inst. of London Underwriters, 430 F.3d 1326 (11th Cir. 2005) .......................................................................... 15


Pg 9 of 31

iii

United States v. Hogan, 986 F.2d 1364 (11th Cir. 1993) .......................................................................... 14

United States v. N.Y. Tel. Co., 434 U.S. 159 (1997) ............................................................................................ 14

United States v. Philip Morris USA Inc., 686 F.3d 839 (D.C. Cir. 2012) .............................................................................. 9

Statutes and Rules

11 U.S.C. § 105(a) ..................................................................................................... 4

11 U.S.C. § 362(a) ..................................................................................................... 4

28 U.S.C. § 1292(a)(1) ......................................................................................passim

28 U.S.C. § 1651 .................................................................................................. 8, 12

Fed. R. App. P. 21 ................................................................................................ 8, 12

Fed. R. App. P. 31 .................................................................................................... 17

Fed. R. App. P. 41(b) ........................................................................................... 5, 15

11th Cir. R. 12-1 ................................................................................................ 17, 18

11th Cir. R. 21-1 ................................................................................................ 15, 16

11th Cir. R. 27-1 ...................................................................................................... 16

11th Cir. R. 27 IOP 3 ............................................................................................... 16

11th Cir. R. 31-1(d) .................................................................................................. 16


Pg 10 of 31

1

PRELIMINARY STATEMENT

Appellees Capital Growth Company; Decisions, Inc.; Favorite Funds; JA

Primary Limited Partnership; JA Special Limited Partnership; JAB Partnership;

JEMW Partnership; JF Partnership; JFM Investment Companies; JLN

Partnership; JMP Limited Partnership; Jeffry M. Picower Special Company;

Jeffry M. Picower, P.C.; The Picower Foundation; The Picower Institute of

Medical Research; The Trust F/B/O Gabrielle H. Picower; Barbara Picower,

individually and as Executor of the Estate of Jeffry M. Picower, and as Trustee

for the Picower Foundation and for the Trust f/b/o Gabriel H. Picower,

Defendants below, respectfully request that the Court deny Appellants’ motion for

an expedited briefing schedule on their appeal and, instead, dismiss this appeal for

lack of jurisdiction.

Appellants seek to invoke this Court’s jurisdiction under 28 U.S.C.

§ 1292(a)(1), a narrow exception to the general rule that interlocutory orders are

not appealable. Under that exception, appeals from orders denying injunctive

relief are immediately appealable. Despite Appellants’ characterizations of the

Order from which they take this appeal, however, the Order was simply an

interlocutory order denying a motion to lift a stay to schedule an emergency

hearing, from which no appeal can be taken. The most that can be said about the

Order is that it had the “practical effect” of denying Appellants’ motion for a

preliminary injunction, but Appellants cannot make the required showing that the

Southern District of Florida’s Order has “serious, perhaps irreparable,


Pg 11 of 31

2

consequences,” which is the only way they could appeal the Order. Accordingly,

this appeal should be dismissed for lack of jurisdiction.

In the alternative, Appellants ask this Court to consider their appeal as a

petition for a writ of mandamus. That request, too, should be denied. A writ of

mandamus is an “extraordinary” form of relief, and the party seeking such relief

must demonstrate that its right to issuance of a writ is clear and indisputable. In

that regard, Appellants’ arguments in support of issuance of the writ are wholly

unpersuasive and depend upon a fatally flawed reading of an order issued by the

United States Court of Appeals for the Second Circuit. Moreover, Appellants have

not made the required showing that there is no other adequate remedy available.

Put simply, this Court should not entertain Appellants’ appeal or, at a

minimum, should decide the threshold question of its jurisdiction to do so before

entertaining Appellants’ motion for an expedited appeal and/or requiring Appellees

to submit an appellate brief in less than half the time they would otherwise be

allotted under the rules. But, even assuming the Court determines that it has

jurisdiction, an expedited appeal is not warranted here. Appellants have not and

cannot demonstrate “good cause” for expediting this appeal. There is no urgency

here, as demonstrated by the fact that Appellants not only waited almost three

weeks to seek an expedited briefing schedule, but also propose a schedule that

would give them essentially their full time to submit their opening memorandum

on appeal.


Pg 12 of 31

3

STATEMENT OF FACTS AND PROCEDURAL HISTORY

This action arises from the multi-billion dollar Ponzi scheme perpetrated by

Bernard L. Madoff through his investment company, Bernard L. Madoff

Investment Securities LLC (“BLMIS”). On December 15, 2008, the United States

District Court for the Southern District of New York (“SDNY District Court”)

appointed Irving H. Picard as the court-appointed trustee (the “Trustee”) for the

liquidation of BLMIS (the “BLMIS Liquidation”) and removed the BLMIS

Liquidation to the United States Bankruptcy Court for the Southern District of

New York (“New York Bankruptcy Court”). See Picard v. Fox, 429 B.R. 423, 426

(S.D.N.Y. Bankr. 2010). As part of the BLMIS Liquidation, on May 12, 2009, the

Trustee filed a complaint against Appellees asserting claims for fraudulent

transfers, preferences, turnover, and state law fraudulent conveyances (the

“Trustee’s Claims”). See id. at 429.

Appellants Fox and Marshall were BLMIS customers. Apparently not

satisfied with the rulings in the New York Bankruptcy Court action, in February

2010, at a time when the Trustee for the liquidation of BLMIS was negotiating a

multi-billion dollar settlement with the Appellees for distribution to Madoff

victims, Appellants filed actions in the United States District Court for the

Southern District of Florida (the “Florida District Court”). (S.D. Fla. Nos. 10-

80252 and 10-80254.) In those actions, Appellants asserted claims for conversion,

unjust enrichment, conspiracy, and violations of Florida’s RICO Act, all arising


Pg 13 of 31

4

from the Appellees’ alleged withdrawals from their BLMIS accounts. (DE 1; S.D.

Fla. No. 10-80254, DE 1.)1

On March 31, 2010, the Trustee filed a complaint in the New York

Bankruptcy Court against Fox and Marshall seeking, among other things, a

declaration that the Fox/Marshall Class Actions violated the automatic stay under

Section 362(a) of the Bankruptcy Code and a preliminary injunction pursuant to

Section 105(a) of the Bankruptcy Code enjoining any further prosecution of the

Fox/Marshall Class Actions. See Picard, 429 B.R. at 430.

The very next day, Fox and Marshall filed ex parte emergency motions in

the Florida District Court for temporary restraining orders to enjoin the Trustee’s

action in the New York Bankruptcy Court. The Florida District Court properly

denied those motions that same day. (DE 16 & 19; S.D. Fla. No. 10-80254, DE 14

& 15.)

On May 3, 2010, after a hearing, the New York Bankruptcy Court granted

the Trustee’s motion for a preliminary injunction and deemed the Fox/Marshall

Class Actions void ab initio, finding that the Fox/Marshall Class Actions violated

the automatic stay because they impermissibly asserted claims that were derivative

of the Trustee’s Claims. See Picard, 429 B.R. at 432, 437.

On December 17, 2010, Appellees entered into two separate but related

agreements: (a) with the U.S. Department of Justice pursuant to which the

Appellees agreed to forfeit $7.2 billion, representing 100% of their net withdrawals

1 Unless otherwise noted, citations to “DE” refer to the docket entries in S.D. Fla. Case No. 10-80252.


Pg 14 of 31

5

from BLMIS, and (b) with the Trustee (the “Settlement Agreement”), pursuant to

which they agreed that $5 billion of the forfeited funds would be transferred to the

Trustee for distribution to Madoff’s victims. Over the objections of Fox and

Marshall, on January 13, 2011, the New York Bankruptcy Court approved the

Settlement Agreement and issued the Permanent Injunction enjoining claims

against the Appellees that were “duplicative or derivative” of the Trustee’s Claims.

(Dkt. No. 43, § 7.) Thereafter, the Florida District Court administratively closed

the Fox/Marshall Class Actions. (DE 26; S.D. Fla. No. 10-80254, DE 21.)

The SDNY District Court affirmed the New York Bankruptcy Court’s order,

agreeing that Fox’s and Marshall’s claims were barred by the Permanent Injunction

and automatic stay because they were duplicative and derivative of the Trustee’s

Claims. Fox v. Picard, 848 F. Supp. 2d 469, 473, 481, 485 (S.D.N.Y. 2012).

The Second Circuit affirmed the decision of the SDNY District Court

enjoining the Fox/Marshall Class Actions, also finding that Appellants’ complaints

“impermissibly attempt to ‘plead around’ the [New York] Bankruptcy Court’s

injunction barring all claims ‘derivative’ of those asserted by the Trustee.”

Marshall v. Picard, 740 F.3d 81, 84, 96 (2d Cir. 2014). On February 5, 2014, the

Second Circuit issued a Mandate affirming the judgment of the SDNY District

Court, as required by Federal Rule of Appellate Procedure 41(b). (Ex. 1). That

same day, Appellants filed a Motion to Reopen in the Florida District Court,

seeking leave to file the proposed Second Amended Complaint. (DE 28.)

On February 18, 2014, Appellees filed an emergency motion in the Florida

District Court seeking, among other things, to stay this action pending a ruling by


Pg 15 of 31

6

the New York Bankruptcy Court on a motion by the Trustee (the “Motion to

Stay”). (DE 29-30.) On February 24, 2014, the Florida District Court stayed this

action pending the resolution of the Motion to Stay. (DE 37.)

Also on February 24, 2014, based on a misreading of the final paragraph of

the Second Circuit’s decision (which affirmed the SDNY District Court’s decision

affirming the New York Bankruptcy Court), Appellants filed an Opposition to the

Motion to Stay and a Cross-Motion seeking, among other things, a preliminary

injunction enjoining the Appellees “and any persons in active concert or

participation with them” (purportedly, the Trustee) from litigating the new

Fox/Marshall claims outside of the Florida District Court.2 (DE 38.) Appellees

opposed that motion. (DE 43.)

On March 11, 2014, the Trustee filed an action and motion in the New York

Bankruptcy Court, seeking, inter alia, (i) a determination that this action violates

the Permanent Injunction and automatic stay; and (ii) a preliminary injunction

enjoining Appellants from proceeding with their action against Appellees.

(Complaint, SIPC v. Bernard L. Madoff Inv. Sec. LLC, No. 08-01789 (SMB), DE 1

(S.D.N.Y. Bankr. Mar. 11, 2014); Mem. of Law in Supp. of Trustee’s Appl. for

Enforcement of Permanent Inj. and Automatic Stay, SIPC v. Bernard L. Madoff

Inv. Sec. LLC, No. 08-01789 (SMB), DE 3 (S.D.N.Y. Bankr. Mar. 11, 2014).)

Appellants are required to respond to the Trustee’s motion for preliminary

2 While seeking to have the Florida Court enjoin the Trustee, Appellants did not name the Trustee as a defendant, nor did they properly serve him with their Cross-Motion seeking to enjoin him.


Pg 16 of 31

7

injunction (the “Motion”) by April 18, 2014, and the hearing is scheduled for May

7, 2014.

On March 12, 2014, Appellants filed a Motion for Limited Relief from Stay

and Request for Emergency Hearing on the Motion to Stay and Cross-Motion for

Injunctive Relief, seeking an emergency hearing to consider Appellants’ Cross-

Motion for a preliminary injunction. (DE 52.) On March 17, 2014, the Florida

District Court denied that motion. That Order states, in relevant part:

THIS CAUSE comes before the Court pursuant to Becker & Poliakoff LLP and Becker & Poliakoff P.A., as counsel for Plaintiffs, March 12, 2014 [DE 52] motion requesting that this Court lift the stay entered February 21, 2014 for the purpose of scheduling an emergency hearing on Defendants’ motion to stay and on Plaintiffs’ cross motion for injunctive relief.

****

ORDERED AND ADJUDGED that the motion is DENIED. The Court declines to conduct an emergency hearing on the question of whether to enjoin the New York action. Rather, this Court defers to the Bankruptcy Court for the Southern District of New York for a ruling on [the Trustee’s] motion to enjoin the instant action.

(Ex. 2, DE 58 (the “Order”).) The Order did not deny Appellants’ Cross-Motion

for preliminary injunction (DE 38), as Appellants mistakenly claim, but only ruled

on Appellants’ Motion to lift the stay and for an emergency hearing (DE 58).

On March 24, 2014, Appellants filed a Notice of Appeal from the Order.

(Ex. 3, DE 59.) On April 9, 2014, more than three weeks after the Order was

entered, Appellants filed in this Court the instant Motion for Expedited Appeal, as

well as a separate motion for an injunction pending appeal. This memorandum is


Pg 17 of 31

8

being submitted in opposition to the Motion for Expedited Appeal and in support

of Appellees’ cross-motion to dismiss the appeal for lack of jurisdiction.

ARGUMENT

I. Appellants Have Improperly Brought This Appeal

Appellants contend that the Court has jurisdiction over this admitted

interlocutory order, pursuant to 28 U.S.C. § 1292(a)(1). In the alternative,

Appellants contend that “this Court has the power to consider this appeal as a

petition for a writ of mandamus to enforce the Second Circuit’s mandate pursuant

to 28 USC §1651 and FRAP 21.” (Appellants’ Expedited Mot. for an Inj. Pending

Appeal at 5.) Appellants are wrong as to both contentions, and their appeal,

therefore, should be dismissed.

A. The Florida District Court’s Order Is Not Appealable Under 28 U.S.C. § 1292(a)(1)

“[F]ederal law expresses the policy against piecemeal appeals.” Switz.

Cheese Ass’n, Inc. v. E. Horne’s Mkt., Inc., 385 U.S. 23, 24-25 (1966) (dismissing

appeal because no “interlocutory appeal” lies under 28 U.S.C. § 1292(a)(1) after

denial of summary judgment in action seeking injunctive relief). Accordingly, as a

general matter, interlocutory orders are not immediately appealable to federal

courts of appeals. Rather, “[a]ppellate jurisdiction depends on the existence of a

final trial court judgment that ‘ends the litigation on the merits and leaves nothing

for the court to do but execute the judgment.’” Fla. Wildlife Fed’n, Inc. v. Adm’r,

U.S. Envtl. Prot. Agency, 737 F.3d 689, 692 (11th Cir. 2013).


Pg 18 of 31

9

There are some exceptions to this general rule, including the exception in 28

U.S.C. § 1292(a)(1), which permits interlocutory appeals from orders “granting,

continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or

modify injunctions . . . .” The U.S. Supreme Court has held that this exception is

to be narrowly construed, lest the exception swallow the rule. See Switz. Cheese,

385 U.S. at 24 (“Hence we approach [28 U.S.C. § 1292(a)(1)] somewhat gingerly

lest a floodgate be opened that brings into the exception many pretrial orders.”);

United States v. Philip Morris USA Inc., 686 F.3d 839, 843-44 (D.C. Cir. 2012)

(noting that the exception in 28 U.S.C. § 1292(a)(1) “is a limited one, and the

Supreme Court has construed [it] narrowly” (quotations and citations omitted)).

Appellants erroneously argue that their appeal falls within this narrow

exception. As is clear from the Florida District Court’s language, however, the

Order from which Appellants seek to take an appeal was not an order denying their

motion for a preliminary injunction. (DE 58.) Cf. NAACP v. Thompson, 321 F.2d

199, 202 (5th Cir. 1963) (“Ordinarily, of course, an order to be appealable under

Section 1292 as one ‘refusing’ injunctive relief is one which, in precise terms,

announces the decision of the Court denying the relief requested.” (emphasis

added)). By its plain terms, the Order being appealed was a denial of Appellants’

motion to lift a stay for the purpose of scheduling an emergency hearing on

Appellants’ cross motion for injunctive relief and Appellees’ motion to stay. (DE

58.) There is no right to appeal from a stay order. See Gulfstream Aerospace

Corp. v. Mayacamas Corp., 485 U.S. 271, 290 (1988); Kershaw v. Shalala, 9 F.3d


Pg 19 of 31

10

11, 14 (5th Cir. 1993) (“An order staying judicial proceedings is ordinarily not

considered final and is hence not appealable.”).

Appellants may attempt to argue that the Florida District Court’s Order had

the effect of denying their motion for preliminary injunction and is therefore

immediately appealable under 28 U.S.C. § 1292(a)(1). Again, Appellants would

be wrong. Even if the practical effect of that interlocutory order were denying a

motion for an injunction, Appellants would have to make the additional showing

that the denial of their motion would have “‘serious, perhaps irreparable,

consequence.’” See Admin. Mgmt. Servs., Ltd. v. Royal Am. Managers, Inc., 854

F.2d 1272, 1278 (11th Cir. 1988) (quoting Gulfstream Aerospace, 485 U.S. at 287-

88). Appellants cannot make their showing.

The ultimate relief Appellants seek by means of their motion for a

preliminary injunction is to halt the Trustee’s action in the New York Bankruptcy

Court. Rather than seeking the extraordinary relief they sought from the Florida

District Court and now from this Court, namely, an injunction prohibiting a

stranger to these proceedings (the Trustee) from proceeding with a lawsuit in a

different jurisdiction, Appellants could and would – if they had any faith in the

merits of their arguments – seek directly from the New York Bankruptcy Court a

stay of those proceedings and/or a dismissal of that action. The Trustee’s action

has now been pending for more than a month, however, and Appellants have not

moved to stay those proceedings or to dismiss them. In fact, Appellants recently

negotiated an extension of time to respond to the Trustee’s Complaint, thereby

demonstrating that the relief they seek here is not “time sensitive.”


Pg 20 of 31

11

But, putting aside that Appellants could seek the same relief from another,

more appropriate court, if it is the case – as Appellants argue – that the Second

Circuit’s “mandate” requires the Florida District Court, not the New York

Bankruptcy Court, to decide the threshold question as to whether Appellants’ new

complaint is barred by the Permanent Injunction and/or automatic stay, the

ultimate relief Appellants seek (a decision on this issue by the Florida District

Court) would be available after the New York Bankruptcy Court rules on the

Trustee’s Motion and the Florida District Court implements whatever decision is

reached on that Motion. If, for example, the Trustee’s Motion is granted and the

Florida District Court gives effect to that decision and denies Appellants’ Motion

to Reopen on that basis, Appellants can take an appeal from that decision and

advance at that juncture the same baseless arguments they advance here on appeal

– that the Second Circuit “mandate” forecloses the New York Bankruptcy Court

from issuing a binding ruling on this issue. Given that alternative, Appellants

cannot demonstrate that the Florida District Court’s Order has “serious, perhaps

irreparable, consequences.” Cf. Admin. Mgmt. Servs., 854 F.2d at 1279

(dismissing appeal and holding that “[i]f relief may be obtained upon review after

trial, the parties are not considered to have suffered irreparable consequences”).

In short, this interlocutory appeal is not properly brought pursuant to 28

U.S.C. § 1292(a)(1). The Order from which Appellants are appealing was an order

refusing to lift a stay, as opposed to an order denying a motion for preliminary

injunction. Moreover, even if the practical effect was denial of Appellants’ motion

for a preliminary injunction, Appellants will not suffer “serious, perhaps


Pg 21 of 31

12

irreparable, consequences” as a result of the Florida District Court’s Order.

Accordingly, insofar as jurisdiction is predicated on 28 U.S.C. § 1292(a)(1), the

appeal should be dismissed.

B. A Writ of Mandamus Is Not Appropriate

In the alternative, Appellants argue that this Court should consider their

appeal as a writ of mandamus “to enforce the Second Circuit’s mandate pursuant to

28 USC §1651 and FRAP 21.” (Appellants’ Expedited Mot. for an Inj. Pending

Appeal at 5.) This request also should be denied.

Writs of mandamus issued pursuant to the All Writs Act are “extraordinary”

and are to be used “only to confine an inferior court to a lawful exercise of its

prescribed authority, or to compel it to exercise its authority when it is its duty to

do so.” Sierra Rutile Ltd. v. Katz, 937 F.2d 743, 749, 751 (2d Cir. 1991) (citations

and quotations omitted) (holding that trial court erred in granting stay, but

concluding that “issuance of a formal writ of mandamus [was] unnecessary” and

dismissing appeal). A party seeking a writ of mandamus bears a very high burden.

See Carpenter v. Mohawk Indus., Inc. 541 F.3d 1048, 1054-55 (11th Cir. 2008)

(dismissing appeal and denying writ). “The petitioner seeking the writ carries the

burden of showing that its right to the issuance of the writ is clear and

indisputable,” and “[a] writ will not issue merely because [the petitioner] shows

evidence that, on appeal, would warrant reversal of the district court.” Id. at 1055

(alteration in original) (citations and quotations omitted).

Here, Appellants plainly have failed to meet this extraordinarily high

burden. As detailed in Appellees’ Opposition to Appellants’ Motion for Injunction


Pg 22 of 31

13

Pending Appeal, being filed herewith, Appellants have not made – and cannot

make – a showing that their right to issuance of a writ is clear and indisputable.

Appellants’ attempt to invoke the writ of mandamus is premised on the false notion

that the Second Circuit “mandated” that only the Florida District Court could

decide if their proposed amended claims violate the Permanent Injunction and

automatic stay. That is a gross mischaracterization of the Second Circuit’s

decision.

The Second Circuit did not “mandate,” “order,” “direct,” or otherwise make

a ruling as to which court – the Florida District Court or the New York Bankruptcy

Court – should decide the applicability of the Permanent Injunction and automatic

stay to Appellants’ amended claims. Rather, the Second Circuit affirmed the

SDNY District Court’s judgment voiding the Fox/Marshall Class Actions without

prejudice to Fox and Marshall seeking to amend their claims, then added – in

dicta:

There is conceivably some particularized conspiracy claim appellants could assert that would not be derivative of those asserted by the Trustee. That question, however, is not properly before us, and is a question in the first instance for the United States District Court for the Southern District of Florida.

Marshall v. Picard, 740 F.3d 81, 94 (2d Cir. 2014).

By such language, the Second Circuit plainly did not “mandate” that the

question must be decided only by the Florida District Court. Indeed, such a ruling

would have divested the New York Bankruptcy Court of jurisdiction to decide that

threshold question itself, based on its own interpretation of its Preliminary

Injunction and automatic stay. If, as Appellants insist, the Second Circuit, by the


Pg 23 of 31

14

above dicta, had taken the highly unusual step of stripping the New York

Bankruptcy Court of jurisdiction to decide whether Appellants’ amended claims

are duplicative or derivative of the Trustee’s Claims, it would have done so in a

clear and purposeful way, after careful discussion and analysis of all relevant facts

and law. Yet there is no discussion and analysis of the issue anywhere in the

Second Circuit’s decision.

Indeed, the issue of whether the Florida District Court or the New York

Bankruptcy Court (or both) can decide whether Appellants’ amended claims are

derivative of the Trustee’s Claims was never briefed by either party, nor was it

decided by the Second Circuit. Accordingly, the Second Circuit’s dicta that the

question is “in the first instance for the [Florida District Court]” is not controlling,

as the Florida District Court properly recognized. See United States v. N.Y. Tel.

Co., 434 U.S. 159, 184 (1997) (where an “issue was not briefed,” a court’s

statement on that issue was “in dicta” and “has absolutely no force”); United States

v. Hogan, 986 F.2d 1364, 1372 (11th Cir. 1993) (where an “issue simply was not

presented,” a court is “not bound by [the case’s] dictum”).

Necessarily, if the Second Circuit had concluded that only the Florida

District Court could decide whether Appellants’ claims were “duplicative or

derivative” of the Trustee’s Claims, it would have reversed the SDNY District

Court’s affirmance of the New York Bankruptcy Court order, and directed that the

Florida District Court decide the issue. Instead, the Second Circuit affirmed the

New York District Court’s affirmance of the New York Bankruptcy Court’s

finding that the Fox/Marshall Class Actions were impermissibly derivative of the


Pg 24 of 31

15

Trustee’s Claims. There is no plausible reason the Second Circuit thereafter would

deprive the New York Bankruptcy Court of jurisdiction to decide whether

Appellants’ new claims are similarly derivative, and certainly Appellants have

offered no reason. Rather, Appellants seize on dicta in the final paragraph of the

Second Circuit’s decision in order to litigate in their preferred forum.

Compounding the weakness of their position, Appellants also

mischaracterize the Second Circuit’s dicta as a purported “mandate” (Appellants’

Expedited Mot. for an Inj. Pending Appeal at 8-11), in order to invoke the

“mandate rule,” pursuant to which a district court, “may not alter, amend, or

examine the [Court of Appeals'] mandate, or give any further relief or review, but

must enter an order in strict compliance with the mandate.” Transamerica

Leasing, Inc. v. Inst. of London Underwriters, 430 F.3d 1326, 1331 (11th Cir.

2005) (citations and quotations omitted); see also Fed. R. App. P. 41(b). Yet the

“mandate rule” does not apply here because the Second Circuit’s actual Mandate,

which was issued on February 5, 2014, is completely silent on which court – the

Florida District Court or New York Bankruptcy Court – can or should decide

whether Appellants’ amended claims would violate the Permanent Injunction and

automatic stay. (See Ex. 1.)

For all of the foregoing reasons and the others set forth in Appellees’

Opposition to Appellants’ Motion for Injunction Pending Appeal, Appellants

cannot make the required showing that their right to a writ of mandamus is “clear

and indisputable.” Moreover, as a procedural matter, Appellants have not

complied with 11th Circuit Rule 21-1, which requires parties making a petition to


Pg 25 of 31

16

“include a showing that mandamus is appropriate because there is no other

adequate remedy available.” A writ, therefore, should not issue.

II. Appellants Have Not Articulated Good Cause for Expediting Briefing

Appellants’ motion for an expedited briefing schedule on their appeal should

be denied first because this appeal is improper, as set forth above. At a minimum,

Appellees respectfully request that the Court address whether it has jurisdiction to

hear this appeal before requiring Appellees to brief the merits of the appeal. See

Carpenter, 541 F.3d at 1052 (“As an initial matter, we must address this Court’s

jurisdiction to review Appellant’s claims by way of interlocutory appeal.”); 11th

Cir. R. 31-1(d) (“If . . . it appears that this court may lack jurisdiction over the

appeal, the court may request counsel . . . to advise the court in writing of their

position with respect to the jurisdictional question(s) raised. . . . The due date for

filing appellee’s brief shall be postponed until the court determines that the appeal

shall proceed or directs counsel . . . to address the jurisdictional question(s) in their

briefs on the merits. When the court rules on a jurisdictional question, a new due

date will be set for filing appellee’s brief if the appeal is allowed to proceed.”).

In addition to the fact that the Order is a non-appealable interlocutory order,

Appellants have not made the requisite showing necessary for expediting their

appeal. Under Eleventh Circuit Rule 27-1 and Internal Operating Procedure 3, an

appeal may only be expedited “for good cause shown.” Appellants have not

articulated any such “good cause.”

The sole basis for Appellants’ request for an expedited appeal is their

fundamentally flawed argument that the Second Circuit purportedly issued a


Pg 26 of 31

17

“mandate” that only the Florida District Court is permitted to “litigate the merits of

their claims,” and that the “mandate” forecloses the New York Bankruptcy Court

from addressing the threshold question of whether Appellants’ claims are barred by

the Permanent Injunction issued by the New York Bankruptcy Court and/or the

automatic stay. (Appellants’ Expedited Mot. for an Inj. Pending Appeal at 8, 16.)

That argument fails because the Second Circuit issued no such “mandate.”

Moreover, Appellants’ own conduct demonstrates that there is no urgency in

deciding this appeal. The Florida District Court entered the Order that is the

subject of Appellants’ appeal on March 17, 2014. Appellants then waited more

than three weeks to seek an expedited appeal.

Further, the briefing schedule Appellants have proposed belies any true

urgency. According to their proposed schedule, Appellants would give themselves

until May 2 to submit their opening brief, or more than 1 ½ months from the date

the Florida District Court’s Order was entered (March 17), 37 days from the date

the appeal was docketed (March 24), and a mere 3 days before their brief would

otherwise be due under a regular briefing schedule; Appellees would have only 2

weeks – or less than half their time under a normal briefing schedule, until May 16,

to respond; and Appellants would give themselves another full week, until May 23,

to submit their reply. See Mot. for Expedited Trial at 2; cf. Fed. R. App. P. 31

(appellants’ opening brief is due within 40 days record is filed; appellees’

responsive brief is due within 30 days after appellants’ brief is served; and

appellants’ reply brief is due within 14 days after service of appellees’ brief); 11th

Cir. R. 12-1 (record is deemed filed on date appeal is docketed where no transcript


Pg 27 of 31

18

is ordered). Not only is this schedule fundamentally unfair to Appellees, but it also

has the briefing closing on May 23, more than two weeks after the hearing in the

New York Bankruptcy Court on the Trustee’s Motion, scheduled for May 7. If the

purported urgency is obtaining a ruling in this appeal before the Trustee’s Motion

is fully briefed and/or decided by the New York Bankruptcy Court, Appellants

would and should have (i) brought this motion weeks ago and (ii) proposed a

briefing schedule on the merits that concludes before the New York Bankruptcy

Court’s hearing on the Trustee’s Motion and does not give Appellants almost their

full time to submit their opening memorandum.

CONCLUSION

For the foregoing reasons, Appellees respectfully request that this Court

dismiss this appeal. In the event the Court declines to dismiss the appeal,

Appellees respectfully request that the Court deny Appellants’ Motion to Expedite

Appeal. Respectfully submitted,

HOLLAND & KNIGHT LLP By: s/Brian W. Toth

Brian W. Toth

701 Brickell Avenue Suite 3300 Miami, Florida 33131 (305) 789-7678 Attorneys for Appellees


Pg 28 of 31

19

Of counsel: SCHULTE ROTH & ZABEL LLP William D. Zabel Marcy Ressler Harris Michael Kwon Jennifer M. Opheim


Pg 29 of 31

20


I certify that a copy of this document was served by CM/ECF or U.S. mail

on April 16, 2014, on all counsel or parties of record on the Service List below.

s/Brian W. Toth Helen Davis Chaitman Becker & Poliakoff, LLP 45 Broadway New York, New York 10006 Telephone: (212) 599-3322 Facsimile: (212) 557-0295 Email: [email protected] James W. Beasley Jr. Robert J. Hauser Joseph George Galardi Andrew Steven Kwan Beasley Hauser Kramer & Giraldi, P.A. 505 S. Flagler Drive, Suite 500 West Palm Beach, Florida 33401 Telephone: (561) 835-0900 Facsimile: (561) 835-0939 Email: [email protected] Email: [email protected] Email: [email protected] Email: [email protected]


Pg 30 of 31

21

Lesley Guy Blackner Blackner Stone & Associates 340 Royal Poinciana Way, St 317-377 Palm Beach, FL 33480 Phone: 561-659-5754 Fax: 561-659-3184 Email: [email protected] David Sheehan Counsel for Trustee Irving Picard BakerHostetler 45 Rockefeller Plaza, #10 New York, NY 10111 Phone (212) 589-4616 Email: [email protected] The Honorable Kenneth L. Ryskamp United States District Court for the Southern District of Florida Paul G. Rogers Federal Building 701 Clematis Street, Room 416 West Palm Beach, FL 33401


Pg 31 of 31

EXHIBIT F

08-01789-smb Doc 6441-6 Filed 04/24/14 Entered 04/24/14 20:38:51 Exhibit F Pg 1 of 2

UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

ELBERT PARR TUTTLE COURT OF APPEALS BUILDING 56 Forsyth Street, N.W. Atlanta, Georgia 30303

John Ley Clerk of Court

April 17, 2014

For rules and forms visitwww.ca11.uscourts.gov

Helen Davis Chaitman Becker & Poliakoff LLP 45 BROADWAY FL 8 NEW YORK, NY 10006 Appeal Number: 14-11250-AA Case Style: Adele Fox, et al v. Jerry Estate, et al District Court Docket No: 9:10-cv-80252-KLR Appellants’ response to the recently filed motion to dismiss is due by 9:00 am on Tuesday, April 22, 2014. Sincerely, JOHN LEY, Clerk of Court Reply to: Eleanor M. Dixon, AA Phone #: (404) 335-6172

MP-1

Case: 14-11250 Date Filed: 04/17/2014 Page: 1 of 1 08-01789-smb Doc 6441-6 Filed 04/24/14 Entered 04/24/14 20:38:51 Exhibit F

Pg 2 of 2

EXHIBIT G

08-01789-smb Doc 6441-7 Filed 04/24/14 Entered 04/24/14 20:38:51 Exhibit F Pg 1 of 17


NO. 14-11250


Appellants,

- versus -




BARBARA PICOWER, individually, and as Executor of the Estate of Jeffry M. Picower, and as Trustee for the Picower Foundation and for the Trust f/b/o Gabriel H. Picower.

Appellees.


APPELLEES’ REPLY MEMORANDUM IN SUPPORT OF THEIR CROSS-MOTION TO DISMISS APPEAL

HOLLAND & KNIGHT LLP SCHULTE ROTH & ZABEL LLP Sanford L. Bohrer William D. Zabel Brian Toth Marcy Ressler Harris Michael Kwon Jennifer M. Opheim 701 Brickell Avenue, Suite 3300 919 Third Avenue Miami, Florida 33131 New York, New York 10022 Telephone: (305) 789-7678 Telephone: (212) 756-2000 Facsimile: (305) 789-7799 Facsimile: (212) 593-5955 [email protected] [email protected] Counsel for Appellees Counsel for Appellees


Pg 2 of 17

i

TABLE OF CONTENTS

Page

ARGUMENT ............................................................................................................. 3

I. Appellate Jurisdiction Does Not Lie Under 28 U.S.C. § 1292(a)(1) ........................................................................................................ 3

II. The Second Circuit Did Not “Mandate” That the Florida Court Is the Only Forum That Can Decide Whether Appellants’ Amended Claims Are Barred By the Permanent Injunction and Automatic Stay ...................................................... 5

CONCLUSION ........................................................................................................ 10


Pg 3 of 17

ii

TABLE OF AUTHORITIES

Page(s)

Cases

Admin. Mgmt. Servs., Ltd. v. Royal Am. Managers, Inc., 854 F.2d 1272 (11th Cir. 1988) ............................................................................ 4

Buckley Towers Condo., Inc., v. QBE Ins. Corp., No. 07-22988-CIV, 2014 WL 1319307 (S.D. Fla. Mar. 31, 2014) .................. 6, 8

Edwards v. Prime, Inc., 602 F.3d 1276 (11th Cir. 2010) ............................................................................ 6

Gen. Universal Sys., Inc. v . HAL, Inc., 500 F.3d 444 (5th Cir. 2007) ............................................................................ 8, 9

Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271 (1988) .......................................................................................... 1, 4

Litman v. Mass. Mut. Life Ins. Co., 825 F.2d 1506 (11th Cir. 1987) .......................................................................... 10

Marshall v. Picard, 740 F.3d 81 (2d Cir. 2014) ................................................................................... 6

Metro. Water v. Kaw Valley, 223 U.S. 519 (1912) .............................................................................................. 9

Mitsubishi Int’l v. Cardinal Textile, 14 F.3d 1507 (11th Cir. 1994) .............................................................................. 4

Nixon v. Richey, 513 F.2d 430 (D.C. Cir. 1975) .............................................................................. 9

Piambino v. Bailey, 757 F.2d 1112 (11th Cir. 1985) .......................................................................... 10

Seese v. Volkswagenwerk, A.G., 679 F.2d 336 (3d Cir. 1982) ............................................................................... 10


Pg 4 of 17

iii

Transamerica Leasing, Inc. v. Inst. of London Underwriters, 430 F.3d 1326 (11th Cir. 2005) ............................................................................ 8

United States v. Eggersdorf, 126 F.3d 1318 (11th Cir. 1997) ............................................................................ 6

United States v. Hogan, 986 F.2d 1364 (11th Cir. 1993) ............................................................................ 7

United States v. Mesa, 247 F.3d 1165 (11th Cir. 2001) ........................................................................ 8, 9

United States v. N.Y. Tel. Co., 434 U.S. 159 (1977) .............................................................................................. 7

Statutes

28 U.S.C. § 1292(a)(1) ................................................................................... 1, 2, 3, 5

Other Authorities

18B Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction & Related Matters § 4478.3 (2d ed. 2013) ............................................................... 8

FRAP 41(b) ................................................................................................................ 8


Pg 5 of 17

1

Appellants1 advance three arguments in support of their contention that this

Court has jurisdiction to hear their appeal under 28 U.S.C. § 1292(a)(1), the narrow

exception to the general rule that interlocutory orders are not appealable: (i) the

Florida District Court’s order was a denial of their motion for injunctive relief; (ii)

there is no requirement that where an order merely has the “practical effect” of

denying a motion for an injunction, the party taking an appeal must demonstrate

that the order has “serious, perhaps irreparable, consequences”; and (iii) even if

there is such a requirement, Appellants can meet that standard. None of their

arguments has merit.

First, the Florida District Court’s order only addressed Appellants’ motion to

lift the stay that was in effect for purposes of scheduling an emergency hearing on

Appellants’ motion for a preliminary injunction. There is no mention of the

separate docket entry, or the merits, of Appellants’ motion for preliminary

injunction. Second, no less than the United States Supreme Court has held that

where an order does not rule on a motion for preliminary injunction, but the

“practical effect” of the order is denial of such motion, the appellant must

demonstrate that the order has “serious, perhaps irreparable consequence” in order

to invoke jurisdiction under 28 U.S.C. § 1292(a)(1). See Gulfstream Aerospace

Corp. v. Mayacamas Corp., 485 U.S. 271, 287-88 (1988). Third, Appellants

cannot make that showing; in fact, they are now seeking precisely the same relief

1 Capitalized terms shall have the same meaning assigned to them in Appellees’ opening memorandum in support of their cross-motion to dismiss this appeal.


Pg 6 of 17

2

from the New York Bankruptcy Court that they seek here – an order that only the

Florida District Court has jurisdiction to determine whether Appellants’ claims are

barred by the Permanent Injunction as duplicative or derivative of the Trustee’s

claims against the Appellees. For each and all of these reasons, there is no

appellate jurisdiction in this case under 28 U.S.C. § 1292(a)(1).

In the alternative, Appellants ask this Court for “extraordinary” relief in the

form of a writ of mandamus. Appellants’ arguments in support of issuance of the

writ depend on a fatally flawed reading of an order issued by the United States

Court of Appeals for the Second Circuit. Moreover, the cases upon which

Appellants rely demonstrate precisely the error of their position: unlike this case,

in those cases the issue on which the “mandate” issued was litigated, argued, and

decided by the appellate court after reasoned analysis. That is not the case here.

The question of whether the New York Bankruptcy Court was divested of

authority to interpret its own Permanent Injunction and application of the

automatic stay was not at issue before the Second Circuit. If it had been, and if the

Second Circuit had decided that issue, the Second Circuit surely would have

reversed the orders of the SDNY District Court and New York Bankruptcy Court,

not affirmed them.

Based on the foregoing and on the arguments in Appellees’ opening motion,

this appeal should be dismissed.


Pg 7 of 17

3

ARGUMENT

I. Appellate Jurisdiction Does Not Lie Under 28 U.S.C. § 1292(a)(1)

To support their jurisdiction claim, Appellants first accuse Appellees of

“play[ing] games with the Court” and then insist that “the court denied Appellants’

motion for an injunction.” (Opp’n at 6-7.) As set forth in Appellees’ opening

memorandum, this argument is false. Appellants filed their motion for preliminary

injunction on February 24, 2014, at Docket Entry No. 38, the same day the Florida

District Court issued an order staying the Florida District Court action (DE 37).

Thereafter, on March 12, 2014, Appellants filed a motion titled Motion for Limited

Relief from Stay and Request for Emergency Hearing on the Motion to Stay and

Cross-Motion for Injunctive Relief, seeking an emergency hearing to consider

Appellants’ Cross-Motion for a preliminary injunction. This motion was assigned

Docket Entry Number 52. Docket Entry Number 52, and Docket Entry Number 52

alone, is identified in the Florida District Court Order and is the Order from which

appellants seek to appeal. The Order states, in relevant part:

THIS CAUSE comes before the Court pursuant to Becker & Poliakoff LLP and Becker & Poliakoff P.A., as counsel for Plaintiffs, March 12, 2014 [DE 52] motion requesting that this Court lift the stay entered February 21, 2014 for the purpose of scheduling an emergency hearing on Defendants’ motion to stay and on Plaintiffs’ cross motion for injunctive relief.

**** ORDERED AND ADJUDGED that the motion is DENIED.

The Court declines to conduct an emergency hearing on the question of whether to enjoin the New York action. Rather, this Court defers to the Bankruptcy Court for the Southern District of New York for a ruling on [the Trustee’s] motion to enjoin the instant action.


Pg 8 of 17

4

(Ex. 2, DE 58 (the “Order”).) There is simply no mention in the Order of Docket

No. 38. Hence, the Order the Appellants seek to appeal is not an order denying the

motion for preliminary injunction filed at that docket entry number.

As indicated in Appellees’ opening memorandum, it may well be that the

“practical effect” of the Order was a denial of Appellants’ motion for injunctive

relief. But, if that is the case, the Order is appealable only if Appellants can

demonstrate that the order has “serious, perhaps irreparable consequence.” (See

Opening Br. at 10 (quoting Admin. Mgmt. Servs., Ltd. v. Royal Am. Managers,

Inc., 854 F.2d 1272, 1278 (11th Cir. 1988)). Appellants dispute that they are

required to make any such showing, purportedly because no such requirement was

imposed in Mitsubishi International v. Cardinal Textile, 14 F.3d 1507 (11th Cir.

1994). (Opp’n at 7-8.) Yet even in Mitsubishi, 14 F.3d at 1515, this Court

confirmed that the “serious, perhaps irreparable consequence” standard applies,

citing and quoting Gulfstream, 485 U.S. at 287-88. Moreover, in Mitsubishi, the

Court concluded that the orders being appealed – which were issued after extensive

briefing and several hearings – were, in fact, denials of a preliminary injunction,

not that they merely had the practical effect of a denial of a preliminary injunction,

as is the case here. 14 F.3d at 1515 n.14 & 1517 (“[i]t is appropriate to treat the

district court’s orders as denials of a preliminary injunction”).

Consistent with these cases, Appellants must demonstrate that the Order they

seek to appeal has “serious, perhaps irreparable consequence,” which they cannot

do. Appellants advance two supposed “serious, perhaps irreparable consequences”

from the Order: (i) purported (and speculative) delay imposed by litigating in New


Pg 9 of 17

5

York, which will allegedly prevent them from litigating the merits of their claims

in the Florida District Court and “impair if not destroy” their ability to gather

evidence, and (ii) if they are required to litigate in New York whether their claims

are barred by the Permanent Injunction, “they could never obtain meaningful

review by this Court of any decision rendered in New York.” (Opp’n at 8-9.)

Appellants’ arguments show that no harm, much less “serious, perhaps irreparable

consequence,” would flow from the Florida District Court’s Order and the

dismissal of this appeal. Their arguments unmask rank forum shopping and should

be rejected. Moreover, Appellants are now advancing precisely those same

arguments in the New York Bankruptcy Court action.2

II. The Second Circuit Did Not “Mandate” That the Florida Court Is the Only Forum That Can Decide Whether Appellants’ Amended Claims Are Barred By the Permanent Injunction and Automatic Stay

Appellants argue that even if this Court lacks jurisdiction under 28 U.S.C. §

1292(a)(1), they are entitled to a writ of mandamus under the All Writs Act

because the Second Circuit purportedly “ruled that the Florida Court must

determine ‘in the first instance’ if Appellants, in their proposed second amended

complaint, have pled viable claims against Appellees.” (Opp’n at 3 (emphasis

added).) To the contrary, even a cursory reading of the Second Circuit’s decision

shows that the Second Circuit did not use any mandatory language, such as “must,”

2 Since the filing of Appellees’ opening memorandum in support of their motion to dismiss this appeal, Appellants have filed a motion to stay the New York Bankruptcy Court proceedings, an opposition to the Trustee’s motion for a preliminary injunction, and a motion dismiss the Trustee’s claims.


Pg 10 of 17

6

“shall,” “direct,” “order,” or even – as Appellants repeatedly insist – “mandate.”

Rather, the Second Circuit stated – in dicta – that:

There is conceivably some particularized conspiracy claim appellants could assert that would not be derivative of those asserted by the Trustee. That question, however, is not properly before us, and is a question in the first instance for the United States District Court for the Southern District of Florida.

Marshall v. Picard, 740 F.3d 81, 94 (2d Cir. 2014). By definition, dicta is

“[l]anguage in …[an opinion] not necessary to deciding the case then before [the

court].” Buckley Towers Condo., Inc., v. QBE Ins. Corp., No. 07-22988-CIV, 2014

WL 1319307, at *5 (S.D. Fla. Mar. 31, 2014) (quoting United States v. Eggersdorf,

126 F.3d 1318, 1322 n. 4 (11th Cir. 1997). Since dicta is not necessary to deciding

the case, dicta “is not binding on anyone for any purpose,” Edwards v. Prime, Inc.,

602 F.3d 1276, 1298 (11th Cir. 2010) (Carnes, J., concurring), and a later court is

free to give “fresh consideration” to a matter presented as dicta, as the Florida

District Court did here.

Moreover, the Second Circuit’s opinion does not state that only the Florida

Court, and not the New York Bankruptcy Court, can decide whether Appellants’

amended claims violate the New York Bankruptcy Court’s Permanent Injunction

and automatic stay. That issue was never briefed by any of the parties, nor did the

Second Circuit address or rule whether the New York Bankruptcy Court was

stripped of its jurisdiction to determine the scope and applicability of its own

Permanent Injunction and automatic stay. Appellants would have this Court

believe that the Second Circuit would “mandate” – sua sponte and without any


Pg 11 of 17

7

discussion – that the New York Bankruptcy was divested of its jurisdiction to

decide that issue while simultaneously affirming the Bankruptcy Court’s finding

that Appellants’ initial claims were derivative. Appellants’ “mandate” argument

must be rejected.

Tellingly, Appellants do not dispute that the issue of which court can decide

whether Appellants’ amended claims are derivative of the Trustee’s Claims was

never briefed nor argued to the Second Circuit by any of the parties. As a result,

the Second Circuit’s statement that the question is “in the first instance for the

[Florida Court]” is non-binding dicta. (See Opening Br. at 14 (citing United States

v. N.Y. Tel. Co., 434 U.S. 159, 184 (1977) (where an “issue was not briefed,” a

court’s statement on that issue was “in dicta” and “has absolutely no force”);

United States v. Hogan, 986 F.2d 1364, 1372 (11th Cir. 1993) (where an “issue

simply was not presented,” a court is “not bound by [the case’s] dictum”).)

Compounding their misreading of the Second Circuit’s decision, Appellants

continue to blindly mischaracterize the Second Circuit’s dicta as a “mandate.”

Even though that dicta does not appear anywhere in the Second Circuit’s formal

Mandate (which was issued a month after the Second Circuit’s opinion),

Appellants argue that the Second Circuit’s dicta is nevertheless part of its formal

Mandate because the Mandate states that the SDNY District Court’s judgment is

affirmed “in accordance with the opinion of this court.” (See Opp’n at 10.)

In this regard, Appellants intentionally misstate the mandate rule. Under the

mandate rule, “a district court must follow an opinion’s holdings, either express or


Pg 12 of 17

8

implied, and nothing more.” Buckley Towers, 2014 WL 1319307, at *5.3 Issues

that were neither raised by the parties nor ruled upon by the Court of Appeals (i.e.,

dicta) are not part of an opinion’s holdings or part of the Court of Appeals’ formal

mandate issued pursuant to FRAP 41(b). See, e.g., Transamerica Leasing, Inc. v.

Inst. of London Underwriters, 430 F.3d 1326, 1332 (11th Cir. 2005) (mandate rule

inapplicable where standing issue “was not addressed in the district court order

granting summary judgment,” “neither party discussed it in its appellate brief,” and

Court “did not consider it in [its] ruling”); 18B Wright, Miller & Cooper, Federal

Practice and Procedure: Jurisdiction & Related Matters § 4478.3 (2d ed. 2013)

(“The reach of the mandate is generally limited to matters actually decided. A

mere recital of matters assumed for purposes of decision and dicta are not part of

the mandate.”).

Even Appellants recognize this; in support of their faulty mandate rule

argument, Appellants themselves were forced to rely on cases holding that issues

not briefed to, or decided by, the Court of Appeals are not part of the court’s

mandate. (See Opp’n at 11 (citing Gen. Universal Sys., Inc. v . HAL, Inc., 500 F.3d

444 (5th Cir. 2007); United States v. Mesa, 247 F.3d 1165, 1168 n.2 (11th Cir.

2001).) In General Universal, a plaintiff/appellant argued that the Fifth Circuit

had remanded its claims against a certain group of defendants (the “Customer

Defendants”). On appeal from the district court’s grant of summary judgment in

favor of the Customer Defendants, the Fifth Circuit held that the mandate rule did

not apply to the plaintiff/appellant’s claims against the Customer Defendants 3 Appellants’ counsel Becker & Poliakoff, P.A. was one of the parties in Buckley.


Pg 13 of 17

9

because in the prior appeal, the plaintiff/appellant had “failed to brief, and thus

waived, any arguments against the Customer Defendants on appeal” and therefore

“our remand in the prior opinion did not include any claims against the Customer

Defendants.” Gen. Universal, 500 F.3d at 454.

Similarly, in Mesa, this Court rejected the argument that its prior remand

established law of the case regarding the existence of a buyer/seller relationship

because “we did not make a decision on a question of law and did not establish the

law of the case to be that only a buyer/seller relationship could exist.” 247 F.3d at

1168 n.2. This Court further held that where a party initially failed to raise an

issue to the district court (in Mesa, a sentencing adjustment), on remand, “the

district court was not required to consider [that issue]” because “the argument for

the adjustment was unrelated to the reason for our remand.” Id. at 1170-71.

Moreover, none of the other cases cited by Appellants for the proposition

that “the mandate of the court of appeals includes its entire opinion” (Opp’n at 10-

11) held that issues that were never briefed by the parties or decided by the court

(i.e., dicta) are nevertheless part of the Court of Appeals’ mandate (as Appellants

incorrectly assert). Rather, those cases involved issues (unlike here) that actually

were argued to, and decided by, the appellate court. See Metro. Water v. Kaw

Valley, 223 U.S. 519 (1912) (petition to remove action was granted by trial court,

reversed by court of appeals and trial court correctly complied with mandate);

Nixon v. Richey, 513 F.2d 430, 434 (D.C. Cir. 1975) (issue of whether district court

must form a three-judge panel was briefed to the Court of Appeals, which ruled

that district court “‘must decide and decide now’ whether to call for a three-judge


Pg 14 of 17

10

court”); Litman v. Mass. Mut. Life Ins. Co., 825 F.2d 1506 (11th Cir. 1987) (where

appellant argued that punitive damages were excessive and this Court reversed and

remanded for a new trial on punitive damages, appellant could not thereafter waive

its right to new trial and accept initial punitive damage award).4

Unlike the cases cited by Appellants, in this case Appellants never argued to

the New York Bankruptcy Court, SDNY District Court or the Second Circuit that

only the Florida District Court, and not the New York Bankruptcy Court, can

decide whether their claims violate the Permanent Injunction and automatic stay.

Accordingly, the Second Circuit’s statement that the issue is “in the first instance”

for the Florida District Court to decide is dicta and not a purported “mandate.”

The Florida District Court was free to give “fresh consideration” to the issue, and

did so, deferring to the New York Bankruptcy Court to decide whether Appellants’

new complaint states claims that are derivative of the Trustee’s claims in violation

of the Permanent Injunction and automatic stay. Appellants offer no legal basis to

disturb the Florida District Court’s ruling, nor is there jurisdiction to do so.

CONCLUSION

For the foregoing reasons, Appellees respectfully request that this Court

dismiss this appeal. 4 The cases cited in Appellants’ motion for injunction pending appeal in support of their mandate rule argument (at page 9) fare no better. See, e.g., Piambino v. Bailey, 757 F.2d 1112, 1120 (11th Cir. 1985) (“As with the mandate rule, the law of the case doctrine . . . does not extend to issues the appellate court did not address”); Seese v. Volkswagenwerk, A.G., 679 F.2d 336, 337 (3d Cir. 1982) (because issue of whether negligence theory was viable under North Carolina law was briefed by parties and ruled on by Court, district court correctly complied with Court’s ruling on that issue).


Pg 15 of 17

11

Respectfully submitted, HOLLAND & KNIGHT LLP By: s/Brian W. Toth

Sanford L. Bohrer Brian W. Toth

701 Brickell Avenue Suite 3300 Miami, Florida 33131 (305) 789-7678 SCHULTE ROTH & ZABEL LLP

By: s/Marcy Ressler Harris Marcy Ressler Harris

919 Third Avenue New York, New York 10022 (212) 756-2000 Attorneys for Appellees


Pg 16 of 17

12


I certify that a copy of this document was served by CM/ECF on April 24,

2014, on all counsel or parties of record on the Service List below.

s/Brian W. Toth

SERVICE LIST

Helen Davis Chaitman Becker & Poliakoff, LLP 45 Broadway New York, New York 10006 Telephone: (212) 599-3322 Facsimile: (212) 557-0295 Email: [email protected]

James W. Beasley Jr. Robert J. Hauser Beasley Hauser Kramer & Giraldi, P.A. 505 S. Flagler Drive, Suite 500 West Palm Beach, Florida 33401 Telephone: (561) 835-0900 Facsimile: (561) 835-0939 Email: [email protected] Email: [email protected]


Pg 17 of 17

Date post:	15-Jul-2020
Category:	Documents
Upload:	others
View:	1 times
Download:	0 times

Pg 1 of 3 08-01789-smb Doc 6441 Filed 04/24/14 Entered 04 ...€¦ · SUZANNE STONE MARSHALL, ADELE...

Documents