By Nate Raymond
NEW YORK, Feb 26 (Reuters) - Fairfield Greenwich Group
investors who saw their money funneled to now imprisoned Ponzi
schemer Bernard Madoff can proceed as a class, assuming they're
not in 25 countries.
U.S. District Judge Victor Marrero in Manhattan on Monday
certified the class action by investors in four funds run by
Fairfield. But the judge excluded investors in 25 countries over
questions of whether those jurisdictions would recognize a U.S.
class action judgment.
The decision has the effect of excluding investors with
nearly 27 percent of the alleged losses, according to a document
the plaintiffs filed last year.
Stuart Singer, a lawyer with Boies, Schiller & Flexner
representing the investors, said he still needed to study the
decision to determine the exact impact of the holdings regarding
"We're very gratified the court has certified the class
action and agreed with basic position that it should proceed as
a class," Singer said.
Lawyers for the defendants either declined comment or didn't
respond to requests for comment.
Fairfield agreed in November to an $80 million settlement,
though Madoff trustee Irving Picard of Baker & Hostetler has
sought to block the accord.
Other defendants meanwhile remain, including CITCO Group
Ltd, GlobeOp Financial Services LLC, and two units of
The lawsuit contends Citco and GlobeOp, which acted as
administrator for the Fairfield funds, and PwC, which audited
them, failed in their duties and ultimately allowed Madoff to
get off with their money.
The plaintiffs and Fairfield defendants had submitted
dueling expert reports on the question of whether particular
foreign countries would recognize a class action judgment and
whether recognition would violate each country's public policy.
But the majority of countries haven't directly addressed the
efficiency and fairness of class action procedures, much less
whether a U.S. class action judgment could be recognized,
The legal analysis the parties submitted, as a result,
"amount to no more than high-priced arm-chair oracles."
Instead, Marrero said as long as a plaintiff demonstrates a
foreign country's policy is to recognize and enforce foreign
judgments, absent a showing to the contrary, the presumption
will be that even a U.S. class action judgment will not violate
The presumption is "especially warranted" where the foreign
courts don't typically get into the underlying substantive
issues in the judgment "and therefore have not had the occasion
to explicitly embrace, or reject, a particular question of
procedure or substance," he wrote.
Marrero said the plaintiffs demonstrated that a foreign
judgment would be recognized by courts in the Netherlands,
United Kingdom, Canada, Spain and Belgium, along with various
Latin American countries.
Most countries that are members of the European Community or
signatories to the Lugano Treaty also would recognize a judgment
involving absent class members, he said.
But he said the plaintiffs failed to show a French or
Luxembourg court would recognize a foreign judgment in an
opt-out class action.
Marrero had made a similar ruling in a 2008 securities class
action against Alstom SA. An amicus brief by France in the U.S.
Supreme court case Morrison v. National Australia Bank that the
country would "almost certainly" not recognize a U.S. class
action had only added support for his earlier conclusion,
He also excluded investors from Switzerland, noting that the
plaintiffs' own expert had stated that absent class members
wouldn't be bound by a class action judgment and could initiate
duplicative litigation back home.
Other countries where investors are excluded include Israel,
Kuwait, Korea, North Korea, Pitcairn, Tokelau, Mongolia, China,
Liechtenstein, Japan, Oman, Taiwan, United Arab Emirates, Qatar,
Saudi Arabia, Bosnia, Andorra, San Marino, Namibia, Monaco,
Germany and South Africa.
The case is Anwar v. Fairfield Greenwitch Limited, U.S.
District Court, Southern District of New York, No. 09-0118.
For the plaintiffs: David Barrett and Stuart Singer, Boies,
Schiller & Flexner; Robert Finkel, Carl Stine and James Harrod,
Wolf Popper; and Christopher Lovell and Victor Stewart, Lovell
For Fairfield: Mark Cunha, Simpson Thacher & Bartlett.
For PricewaterhouseCoopers (Canada): Timothy Duffy, Kirkland
For PricewaterhouseCoopers (Netherlands): William Maguire,
Hughes Hubbard & Reed.
For GlobeOp Financial Services: Jonathan Cogan, Kobre & kim.
For Citgo: Brad Karp, Paul, Weiss, Rifkind, Whartson &
(This article has been corrected to fix the spelling of
Judge Victor Marrero's last name in the 11th and 15th
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