MF Global Holdings Ltd. and Litigation Trustee of the MF Global Litigation Tru

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK 	FOR PUBLICATION
---------------------------------------------------------------x
In re: 	:
:
MF GLOBAL HOLDINGS, LTD. et al., 	: 	Chapter 11
: 	Case No. 11-15059 (MG)
:
Debtor. 	:
---------------------------------------------------------------x
TODD THIELMANN, PIERRE-YVAN 	:
DESPAROIS, NATALIA SIVOVA, SANDY 	:
GLOVER-BOWLES, AND ARTON SINA, 	:
individual, and on behalf of all other similarly 	:
situated former employees, 	:
:
Plaintiffs, 	:
: 	Adv. Proc. No. 11-02880 (MG)
v. 	:
:
MF GLOBAL HOLDINGS LTD, MF 	:
GLOBAL HOLDINGS USA INC., MF 	:
GLOBAL FINANCE USA, INC.; MF 	:
GLOBAL INC., et al., 	:
:
Defendants. 	:
---------------------------------------------------------------x
GENITRA GREENE and VICTOR HURTADO 	:
individual, and on behalf of all other similarly 	:
situated former employees, 	:
:
Plaintiffs, 	:
: 	Adv. Proc. No. 11-02921 (MG)
v. 	:
:
MF GLOBAL HOLDINGS LTD, MF 	:
GLOBAL HOLDINGS USA INC., MF 	:
GLOBAL FINANCE USA, INC.; MF 	:
GLOBAL INC., 	:
:
Defendants. 	:
---------------------------------------------------------------x
11-15059-mg Doc 395 Filed 01/30/12 Entered 01/30/12 11:25:25 Main Document
Pg 1 of 11

2
MEMORANDUM OPINION AND ORDER APPOINTING INTERIM COUNSEL IN
CERTAIN CONSOLIDATED WARN ACT CLASS ACTIONS AND
DISMISSING A DUPLICATIVE WARN ACT CLASS ACTION
A P P E A R A N C E S:
HARWOOD FEFFER LLP
Attorneys for Plaintiffs Genitra Greene and Victor Hurtado
488 Madison Avenue
New York, New York 10022
By: 	Robert I. Harwood, Esq.
Peter J. Overs, Jr., Esq.
OUTTEN & GOLDEN LLP
Attorneys for Thielmann Plaintiffs and the Putative Class
3 Park Avenue, 29 th Floor
New York, New York 10016
By: 	Jack A. Raisner, Esq.
Rene S. Roupinian, Esq.
KLEHR HARRISON HARVEY BRANZBURG LLP
Attorneys for Thielmann Plaintiffs and the Putative Class
1835 Market Street, Suite 1400
Philadelphia, Pennsylvania 19103
By: 	Jeffrey D. Kurtzman, Esq.
LANKENAU & MILLER, LLP
Cooperating Attorneys for the NLG Maurice and Jane Sugar Law Center for Economic and
Social Justice and Attorneys for Thielmann Plaintiffs and the Putative Class
132 Nassau Street, Suite 423
New York, New York 10038
By: 	Stuart J. Miller, Esq.
THE GARDNER FIRM, P.C.
Attorneys for Thielmann Plaintiffs and the Putative Class
201 S. Washington Avenue
Mobile, Alabama 36602
By: 	Mary E. Olsen, Esq.
PEPPER HAMILTON LLP
Proposed Counsel for Louis J. Freeh, Chapter 11 Trustee
4000 Tower Center, Suite 1800
Southfield, Michigan 48075
By: 	Deborah Kovsky-Apap, Esq.
11-15059-mg Doc 395 Filed 01/30/12 Entered 01/30/12 11:25:25 Main Document
Pg 2 of 11

3
MARTIN GLENN
UNITED STATES BANKRUPTCY JUDGE
The MF Global bankruptcy and liquidation cases continue to spawn a large amount of
litigation. Four class action adversary proceedings have been commenced asserting claims under
the federal Worker Adjustment and Retraining Notification Act and the New York State Workers
Adjustment and Retraining Act (collectively, the “WARN Act”). With the defendants’ counsel
happily standing on the sidelines, plaintiffs’ counsel are engaged in a vitriolic battle about which
cases will proceed forward and who will serve as interim counsel. Counsel in three cases have
joined together in a consolidated amended complaint, but they oppose consolidation of the
fourth, later-filed case, asking that it be dismissed. Counsel in the fourth case wants its case
consolidated with the earlier-filed three cases, with the firm appointed as lead counsel. The
Court must decide whether to consolidate or dismiss the fourth case, and whether and whom to
appoint as interim counsel. For the reasons explained below and in the exercise of the Court’s
discretion, the Court concludes that the last-filed case should be dismissed and one firm, Outten
& Golden LLP, should be appointed as interim counsel.
BACKGROUND
The federal Worker Adjustment and Retraining Notification Act is codified at
29 U.S.C. §§ 2101-09. In very general terms, it requires employers with more than 100
employees to provide sixty calendar days’ advance notice of “plant closing” or “mass layoffs”
(both terms are defined in section 2101(a)). There are three exceptions to the full sixty-day
requirement; however, employers must still provide notice as soon as practicable. The
exceptions are: (1) when an employer is actively seeking capital or business and reasonably
believes that advance notice would preclude its ability to garner capital or business (known as
the “faltering company” exception); (2) unforeseeable business circumstances; and (3) natural
11-15059-mg Doc 395 Filed 01/30/12 Entered 01/30/12 11:25:25 Main Document
Pg 3 of 11

4
disasters. See 29 U.S.C. § 2102(b). When section 2102 is violated, the employer is liable for
damages, including employee back pay and benefits under an employee benefit plan. See id.
§ 2104.
Three WARN Act class actions were initially filed between November 11 and November
14, 2011: (1) Abruzzo v. MF Global Holdings Ltd, Adv. Proc. No. 11-02882-mg (the “Abruzzo
Action”) was filed on November 11, 2011 by Lankenau & Miller, LLP (“Lankenau”) and The
Gardner Firm, P.C. (“Gardner”); (2) Sivova v. MF Global Holdings Ltd, Adv. Proc. No. 11-
02881-mg (the “Sivova Action”) was filed on November 14, 2011 by Outten & Golden LLP
(“Outten”); and (3) Thielmann v. MF Global Finance USA, Inc., Adv. Proc. No. 11-02880-mg
(the “Thielmann Action”) was filed on November 14, 2011 by Klehr, Harrison, Harvey,
Branzburg, LLP (“Klehr”).1 On December 1, 2011, approximately twenty days after the
Thielmann, Sivova, and Abruzzo Actions were commenced, another WARN Act class action
complaint, Greene v. MF Global Holdings Ltd, Adv. Proc. No. 11-02921-mg (the “Greene
Action”), was filed by Harwood Feffer LLP (“Harwood Feffer”).
According to the Thielmann Motion (defined below), Outten contacted Harwood Feffer
to determine why it filed a fourth class action and suggested that Harwood Feffer dismiss the
Greene Action because the Greene Plaintiffs were already well-represented in the Thielmann
Action. (Thielmann Mot. at 5.) Harwood Feffer’s answer came on December 7, 2011, when the
Greene Plaintiffs filed a motion (the “Greene Motion”) to consolidate all four class action
complaints and appoint Harwood Feffer as “lead counsel” of the combined class actions.
(Greene Action, ECF Doc. # 3; Thielmann Action, ECF Doc. # 3; Sivova Action, ECF Doc. # 4;
1 	Lankenau, Gardner, Outten and Klehr are collectively referred to as “Thielmann Counsel.”
11-15059-mg Doc 395 Filed 01/30/12 Entered 01/30/12 11:25:25 Main Document
Pg 4 of 11

5
Abruzzo Action, ECF Doc. # 3.) Harwood Feffer attached its firm biography to the declaration
in support of the Greene Motion.
On December 12, 2011, Thielmann Counsel filed a consolidated amended complaint2 in
the Thielmann Action to serve as the surviving class action complaint, adding the plaintiffs from
the Abruzzo and Sivova Actions, but excluding the Greene Plaintiffs. (Thielmann Action, ECF
Doc. # 4.) Motions to dismiss the Abruzzo Action and the Sivova Action voluntarily were filed
on December 20, 2011. Thielmann Counsel also filed a motion (the “Thielmann Motion”)
seeking an order appointing themselves as interim counsel pursuant to Rule 23(g) of the Federal
Rules of Civil Procedure, made applicable to adversary proceedings by Rule 7023 of the Federal
Rules of Bankruptcy Procedure. (Thielmann Action, ECF Doc. # 11.) Declarations in support of
the Thielmann Motion were filed by: (1) Jack Raisner, a partner at Outten; (2) Stuart J. Miller, a
partner at Lankenau; and (3) Charles A. Ercole, a partner at Klehr.
On January 12, 2012, the Thielmann Plaintiffs filed a response to the Greene Motion (the
“Thielmann Response”) (Thielmann Action, ECF Doc. # 32), and the Greene Plaintiffs filed a
response to the Thielmann Motion (the “Greene Response”) (Thielmann Action, ECF Doc. # 31).
In the Thielmann Response, Theilmann Counsel reasserted the same allegations against Harwood
Feffer that were made in the Thielmann Motion. Thielmann Counsel also objected to the
consolidation of the Thielmann Action and Greene Action and advocated for complete dismissal
of the Greene Action, arguing that the Greene Action is a copycat complaint that adds nothing to
the earlier filed Thielmann Action. In the Greene Response, Harwood Feffer pointed at certain
procedural mistakes Thielmann Counsel had made and again advocated for consolidation of all
four WARN Act class actions and appointment of Harwood Feffer as “lead counsel.”
2 	The plaintiffs listed on the consolidated amended complaint in the Thielmannn Action are collectively
referred to as the “Thielmann Plaintiffs.”
11-15059-mg Doc 395 Filed 01/30/12 Entered 01/30/12 11:25:25 Main Document
Pg 5 of 11

6
The Court held a hearing on these issues on January 19, 2012; counsel from Harwood
Feffer and Outten presented the arguments to the Court.
DISCUSSION
A. Dismissal of the Greene Action Is Warranted
The Court must first determine whether to consolidate the consolidated Thielmann
Action and the Greene Action, or to dismiss or stay the Greene Action. Consolidation of the
actions may be the “path of least resistance,” but based on the circumstances here, dismissal of
the Greene Action is warranted.
The Court has broad discretion to determine whether consolidation or dismissal is
appropriate. This power stems from the Court’s inherent authority “to control disposition of the
causes on its docket with economy of time and effort for itself, for counsel and for litigants.”
Lester-Krebs, Inc. v. Geffen Records, Inc., No. 85 Civ. 6320, 1985 WL 4270, at *2 (S.D.N.Y.
Dec. 4, 1985); see also Curtis v. Citibank, N.A., 226 F.3d 133, 138 (2d Cir. 2000). Rule 42 of
the Federal Rules of Civil Procedure dictates when multiple actions may be consolidated in
federal court and is made applicable in adversary proceedings by Rule 7042 of the Federal Rules
of Bankruptcy Procedure. In relevant part, Rule 42 provides:
(a) CONSOLIDATION . If actions before the court involve a common
question of law or fact, the court may:
(1) join for hearing or trial any or all matters at issue in the
actions;
(2) consolidate the actions; or
(3) issue any other orders to avoid unnecessary cost or delay.
FED. R. CIV. P. 42(a). Moreover, the Court must also consider
whether the specific risks of prejudice and possible confusion
[are] 	overborne 	by 	the 	risk 	of 	inconsistent 	adjudications 	of
common factual and legal issues, the burden on parties, witnesses,
and available judicial resources posed by multiple lawsuits, the
length of time required to conclude multiple suits as against a
11-15059-mg Doc 395 Filed 01/30/12 Entered 01/30/12 11:25:25 Main Document
Pg 6 of 11

7
single one, and the relative expense to all concerned of the single-
trial, multiple-trial alternatives.
Johnson v. Celotex Corp., 899 F.2d 1281, 1285 (2d Cir. 1990) (citing Hendrix v. Raybestos-
Manhattan, Inc., 776 F.2d 1492 (11th Cir. 1985)).
In addition to the power to consolidate multiple cases currently before it, “[a]s part of its
general power to administer its docket, a district court may stay or dismiss a suit that is
duplicative of another federal court suit.” Curtis, 226 F.3d at 138. When determining whether to
dismiss a second suit, a court must “consider the equities of the situation when exercising its
discretion.” Id. However, “[a] court must be careful, when dismissing a second suit between the
same parties as duplicative, not to be swayed by a rough resemblance between the two suits
without assuring itself that beyond the resemblance already noted, the claims asserted in both
suits are also the same.” Id. at 136. The United States Supreme Court in United States v. The
Haytian Republic, stated that “the true test of the sufficiency of a plea of ‘other suit pending’ in
another forum [i]s the legal efficacy of the first suit, when finally disposed of, as ‘the thing
adjudged,’ regarding the matters at issue in the second suit.” 154 U.S. 118, 124 (1894) (internal
citations omitted).
The rule against duplicative litigation and the doctrine of res judicata serve the same
purpose: fostering judicial economy. Here, judicial economy would best be served by dismissing
the Greene Action in its entirety. The Court has reviewed the complaints and amended
complaints filed in the Thielmann Action and the Greene Action.3 Based upon this review, it is
clear that the putative classes “are composed of the same members, and are organized to
3 	Here, it is clear that the two cases are duplicative. First, it appears that Harwood Feffer filed the exact same
complaint that was filed in the Sivova Action. Moreover, the amended complaint filed in the Greene Action appears
substantially similar to the amended complaint filed in the Thielmann Action, and certain paragraphs appear to be
copied verbatim.
11-15059-mg Doc 395 Filed 01/30/12 Entered 01/30/12 11:25:25 Main Document
Pg 7 of 11

8
vindicate the same rights.” James v. AT&T Corp., 334 F. Supp. 2d 410, 411 (S.D.N.Y. 2004)
(finding that a second action should be dismissed because it included the same parties and sought
the same relief and was only filed to correct a procedural flaw). Moreover, as in James, “[t]he
issues and facts to be determined, the witnesses and evidence required, and the relief requested,
are exactly the same.” Id.
The Thielmann Action and the Greene Action present the identical issue: Did the Debtors
provide sufficient notice to employees prior to termination under the WARN Act? Each action
will likely involve identical motion practice, discovery, and, possibly, trial or settlement
discussions. The Court is unable to find any additional benefit in permitting the Greene Action
to proceed. In fact, the Greene Plaintiffs admitted that the Greene Action was entirely
duplicative of the previously filed actions and did not add any claims or issues. (See Greene
Mot. at 7.) Assuming a class is ultimately certified, the Greene Plaintiffs are adequately
represented by the Thielmann Plaintiffs and are fully encompassed in the putative class in the
Thielmann Action.
For the reasons set forth above, the Court finds that the Greene Action is entirely
duplicative of the Thielmann Action. Therefore, in the exercise of discretion, the Greene Action
shall be dismissed.
B. One Law Firm Should Be Appointed as Interim Counsel
Although the Court has dismissed the Greene Action, the Court is still presented with a
motion to appoint interim counsel pursuant to Rule 23(g)(3) of the Federal Rules of Civil
Procedure. Here, the three law firms currently referred to as Thielmann Counsel jointly seek
appointment as interim counsel.
11-15059-mg Doc 395 Filed 01/30/12 Entered 01/30/12 11:25:25 Main Document
Pg 8 of 11

9
Class actions are governed by Rule 23. It requires a court “to determine at an ‘early
practicable time’ whether to certify a class and, if so, to appoint class counsel.” Anderson v.
Fiserv, Inc., No. 09 CIV 8397, 2010 WL 571812, at *2 (S.D.N.Y. Jan. 29, 2010). However,
representation of a putative class prior to the filing of a motion for class certification is often
necessary, and Rule 23(g)(3) permits a bankruptcy court to appoint interim counsel. See FED. R.
CIV. P. 23(g)(3) (“The court may designate interim counsel to act on behalf of a putative class
before determining whether to certify the action as a class action.”). If only one applicant seeks
appointment as class counsel, a court must only determine whether the applicant is “adequate”
under Rule 23(g)(1) and (4). However, if more than one applicant seeks appointment, “the court
must appoint the applicant that is best able to represent the interests of the class.” FED. R. CIV. P.
23(g)(2).
Generally, in selecting interim counsel where multiple law firms are seeking
appointment, courts have initially relied on the criteria for determining the adequacy of class
counsel set forth in Rule 23(g)(1)(A). Rule 23(g)(1)(A) provides that the court must factor “(i)
the work counsel has done in identifying or investigating potential claims in the action; (ii)
counsel’s experience in handling class actions, other complex litigation, and the types of claims
asserted in the action; (iii) counsel’s knowledge of the applicable law; and (iv) the resources
counsel will commit to representing the class.” In re Bank of Am. Corp. Secs., Derivative &
ERISA Litigs., 258 F.R.D. 260, 272 (S.D.N.Y. 2009); see also In re Mun. Derivatives Antitrust
Litig., 252 F.R.D. 184, 186 (S.D.N.Y. 2008). Moreover, under Rule 23(g)(1)(B), courts may
consider “any other matter pertinent to counsel’s ability to fairly and adequately represent the
interests of the class,” including: “(1) the quality of the pleadings; (2) the vigorousness of the
prosecution of the lawsuits; and (3) the capabilities of counsel, as well as whether . . . their
11-15059-mg Doc 395 Filed 01/30/12 Entered 01/30/12 11:25:25 Main Document
Pg 9 of 11

10
charges will be reasonable.” In re Bank of Am. Corp. Secs., 258 F.R.D. at 272. Finally, as stated
above, “the court must appoint the applicant that is best able to represent the interests of the
class.” FED. R. CIV. P. 23(g)(2); see also Anderson v. Fiserv, Inc., 2010 WL 571812, at *2.
Despite the heavy criticism directed by both Thielmann Counsel and Harwood Feffer
against each other, any one of the Thielmann Counsel would likely prove capable of adequately
representing the class. The Court believes that administrative and judicial efficiency is best
served in this case by appointing only one law firm as interim counsel. That counsel will be
responsible for coordinating proceedings with other firms representing plaintiffs, and with
defense counsel, and the Court. While all three firms appearing in the Thielmann Action are
capable, the Court appoints Outten & Golden, LLP as interim counsel.
Outten was one of the first firms to file a complaint against the Debtors. According to its
papers, Outten, along with the other firms that make up Thielmann Counsel, has met with dozens
of putative class members, reviewed extensive materials pertinent to the litigation, researched
relevant case law, and drafted an amended complaint. (Thielmann Mot. at 12.) Moreover,
“[a]pproximately 140 individual ex-MF Global employees have already retained Thielmann
Counsel to litigate their WARN claims.” 4 Id.
Additionally, although each of the firms has extensive experience handling complex
litigation, including class actions, Outten’s experience in representing WARN Act plaintiffs
specifically tips the balance in favor of Outten. Outten maintains a website exclusively devoted
4 	Harwood Feffer merely stated that it “has moved expeditiously to streamline the litigation” by filing the
Greene Motion. (Greene Mot. at 9.) Moreover, the complaint filed by Harwood Feffer in the Greene Action
appears to be a nearly-word-for-word copy of the complaint filed by Outten in the Sivova Action.
11-15059-mg Doc 395 Filed 01/30/12 Entered 01/30/12 11:25:25 Main Document
Pg 10 of 11

11
to WARN Act litigation, has litigated approximately fifty WARN Act class actions, including
two current cases before this Court.5 (Raisner Decl. ¶¶ 12-16.)
CONCLUSION
For the reasons stated above, the Court dismisses the Greene Action and appoints Outten
as interim counsel in the Thielmann Action. The Court expects that Outen will coordinate work
with Lankenau, Gardner, and Klehr, avoiding duplication of efforts. It appears that each of these
firms has specific skills that would benefit the putative class in the Thielmann Action. In the
event that class certification is granted, the Court will be required to appoint class counsel
pursuant to Rule 23(g), but the result is not preordained by the ruling here selecting interim
counsel.
IT IS SO ORDERED.
Dated: 	January 30, 2012
New York, New York
_____/s/Martin Glenn_______
MARTIN GLENN
United States Bankruptcy Judge
5 	The other firms that make up Thielmann Counsel have also litigated a large number of WARN Act class
actions. (Miller Decl. ¶ 3, 6-8.) Recently, Lankenau and Gardner represented WARN Act plaintiffs before this
Court in Pinsker v. Borders, Inc., Case No. 11-02586 and in Wenzel v. Partsearch Technologies, Inc., Case No. 11-
01445. Additionally, Klehr Harrison avers that it has obtained at least twelve WARN Act class counsel
appointments. (Ercole Decl. ¶ 6.)
Although Harwood Feffer has extensive experience in class actions, Harwood Feffer’s papers indicate that
it has mainly litigated class actions brought under the Employee Retirement Income Security Act (“ERISA”) and
other labor and employment matters. (Greene Mot. at 9.) At the hearing, counsel from Harwood Feffer
acknowledged that Harwood Feffer has never litigated a WARN Act class action. Therefore, even if the Greene
Action were consolidated rather than dismissed, the Court would not appoint Harwood Feffer as interim counsel.
11-15059-mg Doc 395 Filed 01/30/12 Entered 01/30/12 11:25:25 Main Document
Pg 11 of 11