12-3575(L)

Krys v. Sugrue

1 UNITED STATES COURT OF APPEALS

2 FOR THE SECOND CIRCUIT

3 S U M M A R Y O R D E R

4 RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO

5 A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS

6 GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S

7 LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH

8 THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN

9 ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY

10 CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT

11 REPRESENTED BY COUNSEL.

1 At a stated Term of the United States Court of Appeals for the Second Circuit, held at the Thurgood

2 Marshall United States Courthouse at Foley Square, in the City of New York, on the 2nd day of August,

3 two thousand thirteen.

4 Present: AMALYA L. KEARSE,

5 ROSEMARY S. POOLER,

6 DEBRA ANN LIVINGSTON,

7 Circuit Judges.

8 _____________________________________________________

9 KENNETH M. KRYS, as Joint Official Liquidators of SPHINX LTD,

10 SPHINX STRATEGY FUND, LTD, SPHINX PLUS SPC LTD, SPHINX

11 DISTRESSED LTD, SPHINX MERGER ARBITRAGE LTD, SPHINX

12 MACRO LTD, SPHINX LONG/SHORT EQUITY LTD, SPHINX

13 MANAGED FUTURES LTD et al., as Assignees of Claims assigned by

14 Miami Childrens Hospital Foundation, OFI, GREEN & SMITH

15 INVESTMENT MANAGEMENT LLC, KELLNER DILEO & CO. LLC,

16 MARTINGALE ASSET MANAGEMENT LP, LONGACRE FUND

17 MANAGEMENT LLC, ARNHOLD & S. BLEICHROEDER ADVISERS

18 LLC, et al., MARGOT MACINNIS, as assignee of claims assigned by Miami

19 Childrens Hospital Foundation, OFI ASSET MANAGEMENT, GREEN &

20 SMITH INVESTMENT MANAGEMENT LLC, THALES FUND

21 MANAGEMENT LLC, KELLNER DILEO & CO. LLC, MARTINGALE

22 ASSET MANAGEMENT LP, LONGACRE FUND MANAGEMENT LLC,
-2-

1 et al., as joint official liquidator of SPHINX LTD., SPHINX STRATEGY

2 FUND LTD., SPHINX PLUS SPC LTD, SPHINX DISTRESSED LTD.,

3 SPHINX MERGER ARBITRAGE, LTD., SPHINX SPECIAL SITUATIONS

4 LTD., SPHINX MACRO LTD., et al., HARBOUR TRUST CO. LTD., as

5 Trustee of the Sphinx Trust,

6 Plaintiffs-Appellants,

7 CHRISTOPHER STRIDE, as Joint Official Liquidators of SPHINX LTD,

8 SPHINX STRATEGY FUND, LTD, SPHINX PLUS SPC LTD, SPHINX

9 DISTRESSED LTD, SPHINX MERGER ARBITRAGE LTD, SPHINX

10 MACRO LTD, SPHINX LONG/SHORT EQUITY LTD, SPHINX

11 MANAGED FUTURES LTD et al., as Assignees of Claims assigned by

12 Miami Childrens Hospital Foundation, OFI, GREEN & SMITH

13 INVESTMENT MANAGEMENT LLC, KELLNER DILEO & CO. LLC,

14 MARTINGALE ASSET MANAGEMENT LP, LONGACRE FUND

15 MANAGEMENT LLC, ARNHOLD & S. BLEICHROEDER ADVISERS

16 LLC, et al., JAMES P. SINCLAIR, as Trustee of the Sphinx Trust,

17 Plaintiffs,

18 - v. - Nos. 12-3575(L)

19 12-3586(C)

20 WILLIAM T. PIGOTT, LIBERTY CORNER CAPITAL STRATEGIES, LLC,

21 INGRAM MICRO, INC., CIM VENTURES INC.,

22 Defendants-Appellees,

23 CHRISTOPHER SUGRUE, MARK KAVANAGH, BRIAN OWENS,

24 GRANT THORTON LLP, MARK RAMLER, MAYER BROWN LLP, FKA

25 Mayer Brown Rowe & Maw LLP, JOSEPH COLLINS, EDWARD S. BEST,

26 PAUL KOURY, PHILLIP R. BENNETT, ROBERT C. TROSTEN, TONE

27 GRANT, SANTO MAGGIO, THOMAS HACKL, DENNIS A. KLEJNA,

28 BAWAG P.S.K., BANK FUR ALBEIT UND WIRTSCHAFT UND

29 OSTERREICHISCHE POSTEPARKASSE AKTIENGESELLSCHAFT, JP

30 MORGAN CHASE & CO., CREDIT SUISSE SECURITIES (USA) LLC,

31 FKA Credit Suisse First Boston LLC, BANK OF AMERICA SECURITIES

32 LLC, THOMAS H. LEE ADVISORS, LLC, THL MANAGERS V. LLC, THL

33 EQUITY ADVISORS V. L.P., THOMAS H. LEE EQUITY (Cayman) FUND

34 V. L.P., THOMAS H. LEE INVESTORS LIMITED PARTNERSHIP, 1997

35 THOMAS H. LEE NOMINEE TRUST, THOMAS H. LEE, SCOTT L.

36 JAECKEL, SCOTT A. SCHOEN, EMF FINANCIAL PRODUCTS, EMF

37 CORE FUND, DELTA FLYER FUND, LLC, ERIC M. FLANAGAN,

38 BECKENHAM TRADING CO. INC., ANDREW KRIEGER, COAST ASSET
-3-

1 MANAGEMENT LP, FKA Coast Asset Management LP, CS LAND

2 MANAGEMENT LLC, REFCO GROUP HOLDINGS INC., MARI FERRIS,

3 THOMAS H. LEE PARTNERS, L.P., THOMAS H. LEE EQUITY FUND V,

4 L.P., PRICEWATERHOUSECOOPERS L.L.P., GIBSON, DUNN &

5 CRUTCHER LLP, REFCO ALTERNATIVE INVESTMENTS LLC, ERNST

6 & YOUNG U.S. LLP, DAVID V. HARKINGS, CHRISTOPHER PETTIT,

7 REFCO ASSOCIATES, INC., PRICEWATERHOUSECOOPERS CAYMAN

8 ISLANDS, MITCHELL A. KARLAN, SCOTT KISLIN, COAST ASSET

9 MANAGEMENT LP, ERNST & YOUNG LLP, THOMAS H. LEE

10 PARALLEL FUND V, L.P., MAYER BROWN INTERNATIONAL LLP,

11 MERRIL LYNCH, PIERCE, FENNER & SMITH, INCORPORATED,

12 Defendants.

13 _____________________________________________________

14 For Appellants: LEO R. BEUS, Phoenix, Ariz. (Lee M. Andelin, Beus Gilbert, Phoenix,

15 Ariz., David J. Molton, Andrew Dash, Brown Rudnick, New York, N.Y.,

16 on the brief).

17 For Appellees Liberty

18 Corner Capital

19 Strategies, LLC, and

20 William T. Pigott: KEVIN H. MARINO, Chatham, N.J. (John D. Tortorella, Roseann Bassler

21 Dal Pra, Marino, Tortorella & Boyle, Chatham, N.J., on the brief).

22 For Appellees Ingram

23 Micro, Inc., and CIM

24 Ventures, Inc.: ROBERT F. WISE, New York, N.Y. (Davis Polk & Wardwell, New York,

25 N.Y., on the brief).

26 Appeal from the United States District Court for the Southern District of New York.

27 ON CONSIDERATION WHEREOF, it is now hereby ordered, adjudged, and decreed that the

28 matter be remanded for supplementation of the record consistent with this order.

29 Plaintiffs Kenneth M. Krys et al. appeal from a July 31, 2012 judgment of the United States District

30 Court for the Southern District of New York, Jed S. Rakoff, Judge, entered pursuant to a July 28, 2012

31 order ("July Order"), dismissing, with prejudice, their claims against defendants William T. Pigott, Liberty

32 Corner Capital Strategies, LLC, Ingram Micro, Inc., and CIM Ventures Inc. (collectively "appellees")
-4-

1 pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiffs' amended complaint alleges, inter alia, that

2 appellees and certain other defendants--against some of whom plaintiffs' claims apparently remain

3 pending--provided sham loans to defendant Refco Group Holdings Inc. to allow Refco Inc. to hide Refco

4 Inc.'s insolvency from customers, thereby aiding and abetting frauds and breaches of fiduciary duty. In

5 October, the district court amended its July Order to instruct that a partial final judgment dismissing the

6 claims against appellees be entered "in accordance with Rule 54(b), the Court having determined there is

7 no just reason for delay." Order dated October 27, 2012 ("October Order"). For the reasons that follow,

8 we remand this matter for the district court to supplement the record with an explanation of its Rule 54(b)

9 determination.

10 Rule 54(b) gives the district court authority to enter a final judgment as to fewer than all of the

11 parties in a multi-party litigation, thereby permitting an immediate appeal before the action is concluded,

12 "only if the court expressly determines that there is no just reason for delay." Fed. R. Civ. P. 54(b). But

13 "[n]ot all final judgments on individual claims should be immediately appealable, even if they are in some

14 sense separable from the remaining unresolved claims." Curtiss-Wright Corp. v. General Electric Co., 446

15 U.S. 1, 8 (1980) ("Curtiss-Wright").

16 [I]n deciding whether there are no just reasons to delay the appeal of individual final

17 judgments . . . a district court must take into account judicial administrative interests as

18 well as the equities involved. Consideration of the former is necessary to assure that

19 application of the Rule effectively "preserves the historic federal policy against piecemeal

20 appeals."

21 Id. (quoting Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 438 (1956) ("Sears")). Ultimately, "the

22 decision to certify" is "left to the sound judicial discretion of the district court. At the same time, . . . 'any

23 abuse of that discretion remains reviewable by the Court of Appeals.'" Curtiss-Wright, 446 U.S. at 10

24 (quoting Sears, 351 U.S. at 437 (emphasis in Curtiss-Wright)).

25 "[T]he standard against which a district court's exercise of [this] discretion is to be judged is the

26 'interest of sound judicial administration.'" Curtiss-Wright, 446 U.S. at 10 (quoting Sears, 351 U.S. at 437)

27 (emphasis ours). "[T]he proper role of the court of appeals is not to reweigh the equities or reassess the

28 facts but to make sure that the conclusions derived from those weighings and assessments are juridically

29 sound and supported by the record." Curtiss-Wright, 446 U.S. at 10 (emphases added).

30 A statement by the district court only of its conclusion that "there is no just reason for delay,"

31 unaccompanied by any explanation of the assessments that led to that conclusion, is insufficient to permit

32 this Court to conduct the abuse-of-discretion review. See, e.g., Harriscom Svenska AB v. Harris Corp.,

33 947 F.2d 627, 630 (2d Cir. 1991) ("Absent an explanation by the district court, we have no basis for

34 conducting a meaningful review of the district court's exercise of its discretion."); National Bank of

35 Washington v. Dolgov, 853 F.2d 57, 58-59 (2d Cir. 1988) (given a certification that only tracked the

36 language of Rule 54(b), without an explanation, dismissing the appeal for lack of appellate jurisdiction);

37 Cullen v. Margiotta, 618 F.2d 226, 228 (2d Cir. 1980) (same); Arlinghaus v. Ritenour, 543 F.2d 461, 463-

38 64 (2d Cir. 1976) (same). To allow an immediate appeal, the district court's conclusion "must be

39 accompanied by a reasoned, even if brief, explanation of its conclusion." O'Bert ex rel. Estate O'Bert v.

40 Vargo, 331 F.3d 29, 41 (2d Cir. 2003).
-5-

1 In the present case, the district court's July Order dismissing the claims against appellees did not

2 indicate that a partial final judgment should be entered. Its October Order provided for the entry of such

3 a judgment "in accordance with Rule 54(b), the Court having determined there is no just reason for delay";

4 but it provided no explanation for that determination. It is unclear whether or to what extent the dismissed

5 claims are unrelated to claims that remain pending. Indeed, the same causes of action asserted against

6 appellees are also asserted against several other defendants (see, e.g., Amended Complaint ¶ 1016), and

7 the claims against at least some of those other defendants apparently remain pending. Without an

8 explanation as to why the district court concluded that an immediate final judgment as to these appellees

9 was appropriate, we are unable to assess whether that conclusion, given the interests of sound judicial

10 administration, e.g., avoiding requiring two (or more) appellate panels to review the same or closely

11 related issues, was within the bounds of the district court's discretion.

12 Rather than immediately dismissing this appeal for lack of final judgment, however, we remand

13 pursuant to the procedure set out in United States v. Jacobson, 15 F.3d 19, 22 (2d Cir. 1994), for the

14 district court to supplement the record with a reasoned, even if brief, explanation for why an immediate

15 appeal of the dismissal of the claims against appellees is appropriate. The mandate shall issue forthwith.

16 This appeal will be reinstated, without need for a new notice of appeal, upon notice by either side to this

17 Court by letter that the district court has supplemented the record or upon the expiration of 30 days,

18 whichever occurs sooner. The matter shall be referred to this panel for disposition of the appeal.

19 FOR THE COURT:

20 CATHERINE O'HAGAN WOLFE, Clerk of Court

21