Retirement Program for Employees v. Madoff
130 Conn. App. 710
| Conn. App. Ct. | 2011Background
- Pls are town of Fairfield and two employee retirement programs appealing from dismissal of claims
- Madoff Ponzi scheme involved; Tremont Partners and Manzke advised pls and directed funds to Maxam Fund
- Maxam Fund invested with Madoff; Fairfield Greenwich feeder funds did not contact pls directly
- Court dismissed some claims as derivative; others as to Fairfield Greenwich and Peter B. Madoff were dismissed
- Delaware law governs whether claims are derivative; plaintiffs allege direct harms but lack individualized injury
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Fairfield Greenwich and Peter B. Madoff claims are direct or derivative | plaintiffs argue not derivative due to concerted acts with Maxam and others | defendants contend claims are derivative since harms flow to Maxam Fund | claims are derivative; lack standing to sue |
| Whether plaintiffs have standing to sue under Delaware framework | plaintiffs allege individualized harm from inducing investment | defendants argue harm was to Maxam Fund, not individuals | standing lacking; court affirmed dismissal |
| Whether the court correctly applied governing law to determine direct vs derivative | Delaware framework supports direct claims for individual harms | Delaware analysis shows only derivative injury | Delaware framework applied; claims deemed derivative |
Key Cases Cited
- McWeeny v. Hartford, 287 Conn. 56 (Conn. 2008) (standing is jurisdictional; pleadings viewed favorably)
- Keller v. Beckenstein, 122 Conn. App. 438 (Conn. App. 2010) (treatment of jurisdictional questions on motion to dismiss)
- Megin v. New Milford, 125 Conn. App. 35 (Conn. App. 2010) (plaintiff standing review is plenary)
- Connecticut State Med. Soc’y v. Oxford Health Plans (CT), Inc., 272 Conn. 469 (Conn. 2005) (standing generally requires direct harm, not derivative)
- Ganim v. Smith & Wesson Corp., 258 Conn. 313 (Conn. 2001) (indirect/derivative harm; stockholder injury analysis)
- Tooley v. Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031 (Del. 2004) (direct vs. derivative claims hinge on individualized harm)
- Feldman v. Cutaia, 951 A.2d 727 (Del. 2008) (Delaware framework for direct vs. derivative claims)