UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

_________________________________________ ) UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) v. ) Civil Action No. 04

- 0798 (PLF) ) ALL ASSETS HELD AT ) BANK JULIUS BAER & COMPANY, LTD., ) Guernsey Branch, Account Number ) 121128, in the name of Pavlo Lazarenko ) last valued at approximately $2 million ) in United States dollars, et al

. , ) ) Defendants in rem

. )

_________________________________________ )

MEMORANDUM OPINION A ND ORDER
T he Liquidators of claimant European Federal Credit Bank Limited (“Eurofed”), acting on their own behalf and on behalf of Eurofed , together with plaintiff United States have filed a joint motion seeking the Court’s approval and entry of a Stipulation and Settlement Agreement (“the Settlement Agreement”) that resolves Eurofed’s claims in this forfeiture action

. 1 Claimant Pavel Lazarenko objects to the Settlement Agreement, and he requests an evidentiary hearing to assess whether there exist s a sufficient factual bas i s to support th is Court’s approval and entry of the A greement

. The Court has considered the partie s’ arguments, the

1 Throughout this litigation, Eurofed’s Liquidators have acted solely on behalf of Eurofed rather than on their own behal f

. See United States v. All Assets Held at Bank Julius Baer & Co., Ltd. , 959 F. Supp. 2d 81, 111

- 14 (D.D.C. 2013)

. The Settlement Agreement provides, however, that the Liquidators are parties to the A greement in dual capacities

— both “on their own behalf and on behalf of Claim ant Eurofed Bank Limited ( in Liquidation )

. ” Settlement Agreement at 1 (introductory p aragraph ). The Court presumes that this provision is included to give effect to terms of the A greement under which the Liquidators are bound to engage in specific future conduct , including the execution of signatory letters to effect the transfer of certain defendant funds. See id

. ¶ 20

.2 relevant legal authorities, and pertinent portions of the record in this case, and concludes that Mr.
L a zarenko’s objections to the proposed Settlement Agreement lack merit. Accordingly, the Court will grant the motion for approv al and e ntry of the Settlement Agreement , and it will enter the Settlement Agreement as an Order of this Court

. 2

I. BACKGROUND This is a civil action, brought in rem , in which the United States seeks forfeiture of over $250 million scattered throughout bank accounts located in Antigua and Barbuda, Guernsey, Liechtenstein, Lithuania, and Switzerland. United States v. All Assets Held at Bank Julius Baer & Co., Ltd. , 95 9 F. Supp. 2d 81, 84 (D.D.C. 2013). Claimant Eurofed is an Antiguan bank in liquidation, which has asserted an interest in some of the defendant assets sought by the plaintiff United States

. In March of 2012, the United States filed a motion for summary judgment aiming to strike Eurofed’s claim for lack of standing. See Dkt. No. 286. The Court subsequently granted in part and denied in part the United State s ’ motion. United States v. All Assets Held at Bank Julius Baer & Co., Ltd. , 959 F. Supp. 2d at 119

. The Court held that Eurofed had standing to contest the forfeiture of defendant assets located in Antigua and Barbuda , id . at 97

- 114 , but concluded that Eurofed lacked standing to lay claim to assets located in Switzerland and Lithuania. Id . at 114

- 15

. Following the issuance of this decision, the Court

2 The papers considered in connection wit h the pending motion include: the United States’ and Eurofed’s joint motion for approval and entry of S tipulation and S ettlement A greement (“Joint Mot.”) [Dkt. No. 314]; Stipulation and Settlement Agreement (“Settlement Agreement”) [Dkt. No. 314

- 1]; claimant Pavel Lazarenko’s opposition to proposed settlement and request for evidentiary hearin g (“Lazarenko Opp.”) [Dkt. No. 324]; Eurofed’s reply to Lazarenko’s opposition (“Eurofed Reply”) [Dkt. No. 325]; the United States’ reply to Lazarenko’s opposition (“Pl.’s Reply”) [Dkt. No. 326]; claimant Pavel Lazarenko’s motion for leave to file surreply (“Lazarenko Surreply Mot.”) [Dkt. No. 329]; claimant Pavel Lazarenko’s surreply (“Lazarenko Surreply”) [Dkt. No. 329

- 1]; Eurofed’s opposition to Lazarenko’s motion for leave to file surreply (“Eurofed Surreply Opp.”) [Dkt. No. 331]; and the United States’ opposition to Lazarenko’s motion for leave to file surreply (“Pl.’s Surreply Opp.” ) [Dkt. No. 332 ]

.3 lifted a stay that had been imposed on Eurofed’s earlier

- filed motion for summary judgment , and ordered the parties to agree upon a briefing schedule with respect to that motion . Order (Nov. 14, 2013 ) [Dkt. No. 305]

. After the United States had submitted its opposition to Eurofed’s summary judgment motion, the United States and Eurofed filed the pending joint motion for approval and entry of the Settlement Agreement

. Und er its terms, the parties each agree to the dismissal of their claims to a portion of the in rem defendants located in Antigua, Switzerland , and Lithuania,

a nd they further agree to cooperate in transferring to the United States those assets locate d in Swi tzerland and Lithuania. Joint Mot

. ¶ 2

. More specifically, the United States agrees to dismiss with prejudice its forfeiture action against 22.54% of the sum of two categories of assets: (1) “the Antiguan Interest,” which is the accrued interest on defendant funds currently held in an account of the Registra r of the Antiguan High Court of Justice ; and (2) “the European Funds,” comprised of the combined value of defendant funds held in Switzerland and Lithuania. Settlement Agreement ¶ 18. This tota l is defined as the “ Settlement Amount, ” which equals roughly $9 million. Id

. ¶¶ 14, 17

- 18. The A greement contemplates that this Court will amend its restraining order

— in force since July 8, 2005 , see Dkt. No s . 22 and 23

— to permit the release of the Antiguan
Interest to the Liquidators. See Settlement Agreement ¶ 18

. In addition, the A greement provides that the United States and the Liquidators consent to the transfer of the European Funds in to the custody of the United States Department of Justice. Id . ¶ 20. Following this transfer, the United
States will distribute to the Liquidators the remainder of the Settlement Amount for distribution in Eurofed’s liquidation. Id . ¶ 21. Ultimately, any of the European Funds remaining at the conclusion of this forfeiture action likewise will be transferred to the Liquidators for distribution

.4 Id

. The Settlement Agreement provides that Eurofed’s claims to any and all in rem defendants

are to be dismissed with prejudice. Id . ¶ 19

. To become effective, the A greement requires the approval of both this Court and the Antiguan High Court of Justice. Id . ¶ 33. 3
Claimant Pavel Lazarenko opposes the proposed settlement, and he requests that this Court “ conduct an evidentiary hearing to determine whether a sufficient factual basis exists” to support the Court’s approval and entry of the Settlement Agreement. Lazarenko Opp. at 1. 4
He main tains that “[t]he Liquidators need to present evidence at a hearing to justify their receipt of an additional $9,000,000. ” Id . at 6 (referring to the Settlement Amount) . In particular, Mr. Lazarenko suggests that the Liquidators do not need any additional funds to discharge their task of paying validated claims , and he complains generally about the Liquidators’ performance of their duties

. See i d . at 2

- 4, 6

- 11

. Lazarenko also asserts that the settl ement will prejudice him in various ways , warranting this Court’s rejection

— or, at least, its further scrutiny

— of the Settlement Agreement. See Lazarenko Surreply at 5

- 6. 5

II. LEGAL STANDARD Rule 41(a)(2) of the Federal Rules of Civil Procedure provides that “ an action

ma y be dismissed at the plaintiff’ s request

. . . by court order, on terms that the court considers

3 The Court has summarized only the basic terms of the Settlement Agreement.

4 Mr. Lazarenko’s central role in this forfeiture action previously has been described by the Court. See United States v. All Assets Held at Bank Julius Baer & Co., Ltd. , 959 F. Supp. 2d at 84

- 92 ; see also United States v. Lazarenko , 564 F.3d 1026 , 1029

- 32, 1047 (9th Cir. 2009) (affirming Lazarenko’s conviction on eight counts of money laundering and conspiracy)

. 5 The United States and Eurofed argue that the Court should not consider Lazarenko’s surreply, but the Court discerns no prejudice to either of these parties in doing so. Both the United S tates and Eurofed , in their memoranda opposing Lazarenko’s motion for leave to file the surreply, have responded to the merits of Lazarenko’s arguments. See Pl.’s Surreply Opp. at 4; Eurofed Surreply Opp. at 2

- 4 . Moreover, the Court agrees with the United States and Eurofed that the arguments advanced in the surreply are meritless.5 proper . ” F ED
. R. C IV
. P. 41(a)(2). Although the Rule’s text refers to “an action,” most federal courts agree that parties may voluntarily dismiss from a case only certain defendants

. See Reetz v. Jackson , 176 F.R.D. 412, 413 n.2 (D.D.C. 1997) (citing 9 C HARLES A LAN W RIGHT & A RTHUR R. M ILLER , F ED
. P RAC
. & P ROC
. C IV
. § 2362 (2d ed. 1995))

. The D.C. Circuit “ has observed that

‘ [voluntary] dismissals have generally been granted in the federal courts unless the defendant [that is being dismissed] would suffer prejudice other than the prospect of a second lawsuit or some tactical disadvantage. ’” Id . (quoting Conafay v. Wyeth Laboratories , 793 F.2d 350, 353 (D.C. Cir. 1986) ) ( alterations in original). This case presents a somewhat unique scenario in which to apply the legal standard governing voluntary dismissals under Rule 41(a)(2) . First, this is a forfeiture action in which the defendants are in rem assets. Second, the party claiming prejudice is not a defendant who is to be dismissed from the case , but , rather, is a claimant himself . Nevertheless, the Court finds that in these circumstances, the relevant question under Rule 41(a)(2) is whether the objecting party

— here, Mr. Lazarenko

— would be prejudiced by the Court’s approval of the Settlement Agreement. Cf

. Reetz v. Jackson , 176 F.R.D. at 413 (“ This case presents a slight ly different scenario, however, because the only defendant who is claiming prejudice is the one who will not be dismissed. Under such circumstances, it is appropriate for the Court to determine whether the remaining defendant . . . ‘ will be prejudiced by the dismissal when the plaintiff seeks the dismissal of less than all [the defendants]. ’ ” (quoting Plains Growers, Inc. v. Ickes

- Braun Glasshouses, Inc. , 474 F.2d 250, 254 (5th Cir. 1973) ) (internal quotation marks omitted))

.

III. DISCUSSION
Mr. Lazare nko advances several arguments in opposi tion to the proposed settlement and in support of his request for an evidentiary hearing. None of these arguments has6 merit. As a preliminary matter, Lazarenko contends that the joint motion filed by the United
Sta tes and Eurofed is not truly a motion for voluntary dismissal governed by Rule 41(a)(2) of the Federal Rules of Civil Procedure

— although he does not suggest under what alternative procedural framework the motion shou ld be considered

. See Lazarenko Surreply at 2

- 4

. Lazarenko focuses on the fact that the United States has agreed to dismiss its forfeiture action only as to certain portions of the in rem defendants

. See id . at 2. And he highlights the fact that the United States has not fully relinqu ished its asserted rights even as to those funds comprising the Settlement Amount. See id

. (citing Settlement Agreement ¶¶ 23

- 24). The Court already has noted , however, that the weight of judicial authority supports the application of Rule 41(a)(2) to circumstances involving only partial dismissals. See supra at 5

. And the language of paragraphs 23 and 24 of the Settlement Agreement

— which clarifies the scope of the United States’ voluntary dismissal with respect to certain assets

— does not negate the act of dism i ssal

. See Settlement Agreement ¶¶ 23

- 24. Ultimately, Lazarenko’s argument on this point seems to be irrelevant. Whether the proper procedural framework here is provided by Rule 41(a)(2) or by some other source of authority

— such as Rule 15 of the Federal Rules of Civil Procedure, or

e ven the Court’s “inherent power ” to drop some parties from a civil action

— see 9 C HARLES A LAN W RIGHT & A RTHUR R. M ILLER , F ED
. P RAC
. & P ROC
. C IV
. § 2362, at 410

- 14 (3d ed. 2008)

— the touchstone o f the Court ’s analysis still would hinge on whether approval of the Settlement Agreement would be likely to cause any prejudice to Lazarenko . As explained further below, the Court concludes that Lazarenko has failed to demonstrate any such likelihood

. Mr. Lazarenko maintains that the settling parties must offer a “sufficient factual basis” to support the Court’s approval and entry of the Settlement Agreement. Lazarenko Opp.
at 5. This argument appears to rest on two premises. First, Lazarenko contends th at the funds7 comprising the Settle ment Amount

— which, under the A greement’s terms, would be paid over to the Liquidators for distribution in the liquidation

— come from sources that the settling parties have no right to access. Id . at 6. With re spect to the Antiguan Interest, Lazarenko cites an earlier decision of an Antiguan appellate court , in which that court ruled that the Liquidators

were unable to use this interest a s a funding source to pay the validated claims of innocent third

party depositors

. See i d

. But of course, the basis of the Antiguan court’s ruling was that the enforcement of this Court’ s restraining order required this interest to remain frozen along with the principal on which it accrued

. S ee United States v. All Assets Held at Bank Julius Baer & Co., Ltd. , 959 F. Supp. 2d at 107

- 08. The Settlement Agreement provides for the amendment of this Court’ s restraining order, and the settling parties must then obtain the approval of the Antiguan courts before transf erring the interest to the Liquidators

. Thus, as Eurofed correctly argues, “[i]f Lazarenko believes the Registrar Interest should not be released to Eurofed because of the Antiguan court’s order, he can make that argument in Antigua.” Eurofed Reply at 7. As
to the European Funds , this Court’s previous ruling

— that Eurofed lacked standing under federal law to contest the United States’ forfeiture of those assets

— simply has no bearing on the propriety of the partial dismissal by the United States of its action with respect to those in

rem defendants, nor on its cooperation with Eurofed to transfer those funds out of Europe or its release of a portion of them (those no longer subject to forfeiture) to the Liquidators

. Claimant Lazarenko’s ability to assert his rights with respec t to the liquidation in Antigua, as well as concerning his claim in this forfeiture action, will remain unaffected by any of these activities

. The second premise of Mr. Lazarenko’s “factual basis” argument appears to be an

am algam of co ncerns regarding the Liquidator s ’ performance of their duties

. See Lazarenko Opp. at 2

- 4, 6

- 11. The gist of his complaint is that the Liquidators have not demonstrated their8 need for any additional funds to satisfy the claims of validated clai mants in the liquidation. See id . at 7

- 8 ; Lazarenko Surreply at 4

- 5

. Lazarenko also complains that the Liquidators have failed to provide a full accounting of their work, and he further asserts that they have needlessly protracted the liquidation proceedings. Lazarenko Opp. at 7

- 9

. These various grievances simply

are irrelevant to the Court’s consideration of the Settlement Agreement between the United
States and Eurofed. As Lazarenko seems to acknowledge, see id . at 8, this Court lacks any authority to control or administer the liquidation of Eurofed, a legal process that falls within the purview of the Antiguan courts. And as the Court ha s no ted, Lazarenko remains free to assert his interests in th ose proceedings

. Consequently, the Court discerns no need for an evidentiary hearing to determine the “factual basis” supporting the propriety of the Settlement Agreement. Finally, Lazarenko contends that the Court’s approval of the A greement would prejudice him in three ways. First, he argues that the Settlement Agreement somehow would result in his having to bear the Liquidators ’ attorneys’ fees. See Lazarenko Surreply at 6. As best the C ourt can discern, Lazarenko’s argument arises from his understanding of a provision of Antiguan banking law under which the expenses of a liquidator must be paid before any funds are disbursed to claimants. See id . (citing Section 289 of the Antiguan Inte rnational Business Corporations Act). Lazarenko’s reading of Antiguan law may be correct, but the Court simply fails to make out how its approval of the Settlement Agreement might have any negative bearing on Lazarenko’s bottom line. If anything, as Eurofed points out, this Settlement Agreement will reduce the Liquidators ’ legal expenses , thus lessening the chance that any liquidation distribution to Lazarenko would be diminished by them

. Lazarenko’s second and third allega tions of prejudice are e ven less creditable . He complains that the dismissal by the United States of its forfeiture action with respect to a portion9 of the Lithuanian funds will deprive him of the opportunity to assert a statute of limitations defense regarding those assets

. La zarenko Surreply at 6

. This argument is nonsensical; the United States’ voluntary dismissal of its forfeiture action with respect to a portion of the European Funds simply relieves Lazarenko of any need to defend against effort s by the United
States to fo rfeit those funds. And finally , Lazarenko cautions that this Court’s approval of the Settlement Agreement could misle ad the Angtiuan High Court of Justice regarding whether currently frozen funds lying in its Registrar’s account should be released to the Liquidators.
See id

. The Court has little doubt that the Antiguan judici ary is more than capable of resolving any issues that will come before it in the Eurofed liquidation proceedings

.

IV. CONCLUSION For the foregoing reasons, the Court will approve the Settlement Agreement reached between the United States and Eurofed , and it will enter the Settlement Agreement as an Order of t his Court . Accordingly, it is hereby ORDERED that the joint motion of the United States and Eurofed for approval and entry of the S tipulation and S ettlement A greement [Dkt. No. 314] is GRANTED; it is FURTHER ORDERED that Eurofed’s motion for summary judgment [Dkt. No. 269] is DENIED as moot; and it is FURTHER ORDERED that Pavel Lazarenko’s motion for leave to file a surreply [Dkt. No. 329] is GRANTED

. SO ORDERED.

__ /s/

____________________ PAUL L. FRIEDMAN United States District Judge DATE: November 14, 2014