Wyly v. Weiss
2012 U.S. App. LEXIS 21032
| 2d Cir. | 2012Background
- Federal class actions against Computer Associates consolidated in 1998 and 2002; Milberg Weiss LLP and others appointed lead counsel.
- Settlement in 2003 approved as fair, reasonable, and adequate; class counsel to receive fee awards with broad releases for CA and officers.
- Wyly moved to vacate the Settlement Order under Rule 60(b) after post-settlement government investigations and restatements.
- District Court retained exclusive jurisdiction over settlement-related matters; subsequent government disclosures emerged (23 boxes, restatements, DP A).
- Wyly filed state court action alleging malpractice, fiduciary duty, and related claims; district court issued injunction under All Writs Act and Anti-Injunction Act.
- Appellants appeal; court considers whether injunction was proper under in aid of jurisdiction or relitigation exception.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether in aid of jurisdiction permits injunction of state action | Wyly argues in aid of jurisdiction does not apply (no direct overlap). | Appellees contend complex class action and retained jurisdiction justify in aid of jurisdiction. | Inapplicable; limited in‑personam circumstances not present. |
| Whether relitigation exception precludes malpractice action | Wyly asserts no relitigation because new state claims arose post-settlement. | Appellees contend award of fees and ongoing scrutiny show preclusion; full and fair opportunity to litigate reasonableness existed. | Affirmed: fee award precludes subsequent malpractice action under relitigation exception. |
Key Cases Cited
- Kline v. Burke Construction Co., 260 U.S. 226 (1922) (in aid of jurisdiction typically reserved for in rem actions)
- Baldwin-United Corp. v. Court of Appeals, 770 F.2d 328 (2d Cir. 1985) (injunction appropriate when class action is virtually the equivalent of a res)
- Retirement Systems of Alabama v. J.P. Morgan Chase & Co., 386 F.3d 419 (2d Cir. 2004) (limits on when in aid of jurisdiction applies; caution against overbroad rulings)
- Chick Kam Choo v. Exxon Corp., 486 U.S. 140 (1988) (relitigation exception kept strict and narrow)
- Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979) (due process in binding nonparties for issue preclusion not from prior suit)
- Marvel Characters, Inc. v. Simon, 310 F.3d 280 (2d Cir. 2002) (summary of four-element test for issue preclusion)
- Taylor v. Sturgell, 553 U.S. 880 (2008) (uniform federal rules for res judicata; role of issue preclusion)
- Bayer Corp. v. Slevin, 131 S. Ct. 2369 (2011) (test for when issue preclusion binds nonparties)
- In re Am. Int’l Grp., Inc. Sec. Litig., 689 F.3d 229 (2d Cir. 2012) (district court must separately evaluate fairness of settlement for Rule 23(e))