Court Opinion

ID: 6933944
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:20:41.296723+00
Date Added: 2024-06-11T16:07:21.364431
License: Public Domain

RYMER, Circuit Judge,
dissenting:
I dissent, because the majority answers a question of law when I think the question is one of fact. As I read the district court’s order, the court was making a factual determination based on the record before it that the trustee’s claims do not fall within the class definition. The court acknowledged that the law which the majority’s opinion lays out is the correct legal standard for purposes of the securities laws, but that isn’t the issue it faced; rather, the issue was whether the Trustee’s acquisition of the shares it held entitled it to participation in the class recovery. Participation was limited to actual purchases as compared with transfers, roll-overs or cash-outs. The court found that the ACC “shares were not acquired in a manner or at a time that they are logically a part of this case.” As Judge Bilby had lived with this litigation for years, and knew what the common proof for the class was, I cannot say that he clearly erred.
The original claim filed by the trustee asserted that First Executive Capital purchased 91,500 shares of $3.44 Exchangeable Preferred Stock on February 5, 1988, during the class period. However, that claim was withdrawn and an amended Proof of Claim was filed which acknowledged that the stock was purchased before January 1, 1986, when the class period started. A portion of that stock, some 56,500 shares, was transferred from First Executive Capital into the Trust on March 10, 1989.
The claimant bears the burden of proving that it should participate in the class recovery. The trustee conceded at argument that there is nothing in the record other than a “bare assertion” about the nature of the transfer. There is no indication of any exchange for value, or that any kind of investment decision was made. The district court’s findings that the stock was purchased prior to the class period, and that the Trust gave nothing of value for the shares transferred during the period, are fully supported. Therefore, I would affirm.