In re Gerova Financial Group, Ltd., Securities Litigation
2011 WL 4753420
J.P.M.L.2011Background
- Pursuant to 28 U.S.C. § 1407, movants sought coordinated or consolidated pretrial proceedings for five actions listed on Schedule A in EDNY or SDNY.
- Near the panel hearing, movants urged centralization in SDNY due to substantial progress in that district.
- SDNY plaintiffs Stillwater Capital and Hafif actions advocate centralization in SDNY; some SDNY defendants express concerns but none oppose centralization.
- Jason Galanis takes no position or seeks deferral; he previously moved to dismiss but now withdraws that motion.
- Panel determines actions share common questions of fact arising from Gerova/Stillwater Capital conduct and a later fraudulent conveyance involving Net Five Holdings.
- Centralization in SDNY is justified to prevent duplicative discovery, avoid inconsistent rulings (e.g., on class certification), and conserve resources; SDNY is appropriate because four actions are pending there, mediation progress is ongoing, and parties agree or do not oppose.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether centralization under §1407 in SDNY is appropriate | Stillwater/Goldberg argue for SDNY centralization. | Some SDNY plaintiffs are cautious but do not oppose. | Yes; centralization in SDNY approved. |
| Whether SDNY is the proper transferee district | SDNY is suitable due to progress and agreements. | Not opposed; still-further coordination left to transferee. | SDNY found appropriate. |
| What degree of coordination or consolidation is warranted | Coordination will streamline pretrial proceedings. | Discretion on coordination should be left to the transferee judge. | Degree of coordination to be determined by transferee judge. |
| Whether to transfer EDNY action to SDNY for centralized proceedings | Transfer will align with SDNY actions and progress. | No specific opposition; practical considerations favor transfer. | Action transferred to SDNY and coordinated with related actions. |
Key Cases Cited
- In re: The Reserve Fund Sec. and Derivative Litig., 598 F. Supp. 2d 1370 (J.P.M.L. 2009) (limits and efficiencies of coordination in limited-fund situations)
- In re: Citigroup, Inc., Auction Rate Sec. (ARS) Mktg. Litig. (No. II), 626 F. Supp. 2d 1329 (S.D.N.Y. 2009) (discretion to determine degree of coordination; transfer rationale)
- In re Pfizer Inc. Securities, Derivative & “ERISA” Litigation, 374 F. Supp. 2d 1348 (S.D.N.Y. 2005) (coordination framework for complex securities actions)