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finding that District Court did not abuse its discretion in denying claim where "[i]t was entirely within [claimant's] 'reasonable control' to file a timely claim with respect to its holdings in the Berger funds."
Summary of this case from Blank ex rel. William D. Witter Partners, LP v. JacobsOpinion
No. 09-2718-cv.
June 30, 2010.
Appeal from a judgment of the United States District Court for the Southern District of New York (Seibel, J.).
UPON DUE CONSIDERATION, it is hereby ORDERED, ADJUDGED, and DECREED that the judgment of the district court be AFFIRMED.
Marshall R. King, Gibson Dunn Crutcher LLP, New York, NY; Mark A. Perry, Gibson Dunn Crutcher LLP, Washington, D.C., of counsel, for Claimant-Appellant.
PRESENT: RALPH K. WINTER, JOSEPH M. McLAUGHLIN, DEBRA ANN LIVINGSTON, Circuit Judges.
SUMMARY ORDER
Claimant-Appellant Janus Capital Management LLC ("Janus") appeals from a June 3, 2009 order of the United States District Court for the Southern District of New York (Seibel, /.) allowing a distribution of certain funds from a class action settlement fund but, in relevant part, declining to approve the distribution of funds to parties, like Janus, whose claims were untimely filed. The district court had previously rejected all so-called "late-submitted claims" to the settlement in an oral decision on May 7, 2009. Janus contends on appeal that the district court's decision to exclude Janus's claim from the distribution constituted an abuse of discretion. We assume familiarity with the remaining facts and procedural history of the case and with the issues presented for review.
Pursuant to this Court's order of March 8, 2010, granting Lead Plaintiffs' motion to remove their designation as appellees, there are no appellees in this appeal. See Order, Mar. 8, 2010 (No. 09-2718-cv).
"[A] district court overseeing [a] settlement distribution has inherent power to accept late claims despite [the] contrary terms of [an] agreement" among the parties. In re Agent Orange Prod. Liab. Litig., 821 F.2d 139, 145 (2d Cir. 1987) (describing the holding of Zients v. LaMorte, 459 F.2d 628 (2d Cir. 1972)), superseded in part by statute as noted in SEC v. TheStreet.com, 273 F.3d 222, 233 n. 11 (2d Cir. 2001). Pursuant to Zients, a district court entertaining a late-submitted claim to a settlement should examine the equities to determine whether to allow the claim. See Zients, 459 F.2d at 630-31. In the analogous context of determining whether a party has shown "excusable neglect" of a deadline under an applicable federal rule, district courts make a similar "equitable" determination, "taking account of all relevant circumstances surrounding the party's" failure to act in a timely manner. Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 395, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993). The factors a district court should consider include:
the danger of prejudice . . ., the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith.
Id. In balancing the equities pursuant to Zients, it was proper for the district court in this case to look to the Pioneer factors. See, e.g., In re Crazy Eddie Sec. Litig., 906 F.Supp. 840, 844 (E.D.N.Y. 1995).
We have recognized in the past that, while there is "an institutionalized but limited flexibility at the margin with respect to rights lost because they have been slept on," the legal system relies on deadlines to function, and that "every missed deadline" should not become "the occasion for the embarkation on extensive trial and appellate litigation to determine the equities of enforcing the bar." Silivanch v. Celebrity Cruises, Inc., 333 F.3d 355, 367-68 (2d Cir. 2003). Therefore, we take a "hard line" when applying the Pioneer factors, and, because in the ordinary case there will be little prejudice or disruption caused by allowing a late-submitted claim, we focus our analysis on the asserted reason for the claimant's delay, "including whether it was within the reasonable control of the [claimant]." In re Enron Corp., 419 F.3d 115, 122 (2d Cir. 2005) (internal quotation marks omitted). We review the district court's decision to allow or disallow a late-submitted claim for abuse of discretion. See, e.g., id. at 124 (reviewing for abuse of discretion bankruptcy court's application of the Pioneer factors); cf. Manhattan-Ward, Inc. v. Grinnell Corp., 490 F.2d 1183, 1186 (2d Cir. 1974) (per curiam) (reviewing for abuse of discretion district court's grant of a motion for extension of time under Fed.R.Civ.P. 6(b)).
We conclude that the district court did not abuse its discretion in declining to allow Janus's late-submitted claim. First, the district court did not, as Janus asserts, commit legal error by considering itself inextricably bound to apply the court's earlier deadline for the filing of claims. Indeed, not only did the court discuss the application of the Pioneer factors, the court expressly stated that it had "the power to vary the terms of a settlement agreement for equitable considerations" and, in considering late-filed claims, that it "need[ed] to consider the excusable neglect standard. . . ." May 7, 2009 Hg. Tr. at 17. The district court's discussion of the importance of the prior deadline was, as discussed above, entirely proper.
We also find no abuse of discretion in the district court's weighing of the Pioneer factors. It was entirely within Janus's "reasonable control" to file a timely claim with respect to its holdings in the Berger funds. Enron, 419 F.3d at 122. Janus's agent, State Street Bank and Trust Co. ("State Street"), became custodian of the Berger funds in 2001, Sanders Decl. ¶ 16, and Janus provides no explanation why, following this event, State Street did not seek to standardize the trading records of the Berger funds with its own accounting system. Moreover, Janus concedes that State Street held all the information regarding the Berger funds' trading records on microfiche at the time the settlement was announced, and therefore could have discovered the Berger funds' holdings in Oxford Health Plans securities in time to file a claim. Id. ¶ 19. Finally, the district court did not clearly err in concluding that allowing late-submitted claims would cause at least some prejudice to claimants who had timely filed by diminishing those claimants' pro rata share of the settlement funds. See May 7, 2009 Hg. Tr. at 18.
We have considered Janus's remaining arguments and we conclude that they are without merit. For the foregoing reasons, the judgment of the district court is AFFIRMED.