Presidential Life Insurance v. Milken
Opinion of the Court
This appeal arises out of a so-called “settlement class action.” TLC Beatrice International Holdings, Inc. (“TLC Beatrice”) appeals from Judge Pollack’s denials of its motions seeking intervention as of right under Rule 24(a), Fed.R.Civ.P., and for relief under Rule 60(b) from the district court’s July 1992 final judgment approving the settlement. The district court denied the motions as moot. Although the parties agree that the district court was in error with regard to mootness, they urge us to resolve this appeal on the merits. We believe, however, that we would benefit from the views of the district court and remand.
We briefly sketch the background of this appeal. It arises from the bankruptcy of Drexel Burnham Lambert Inc. (“Drexel”) and from various activities of Michael Milken and others affiliated with Drexel that have generated a considerable volume of litigation arising under federal securities law. See In re Michael Milken and Associates Securities Litigation, 150 F.R.D. 57 (S.D.N.Y. 1993). In February 1992, negotiations resulted in an agreed framework for the settlement of all such claims (“Milken Global Settlement”) from a $1.3 billion settlement fund. As a condition of the Milken Global Settlement, Milken and the other defendants insisted on their release from all liability to anyone arising from their Drexel-related activities. The parties, with the participation of the district court, appear to have agreed that this condition could be met by bringing and settling a class action on behalf of all persons or firms who might have Drexel-related claims against the defendants and who were not then involved in the Drexel bankruptcy proceedings or in civil litigation against the defendants. The instant matter is that class action, appropriately described as “the Global Class Action.”
The complaint was filed on February 18, 1992. A settlement agreement was reached three weeks later. After approving the settlement, the district court entered an injunction that provided:
All members of the Global Class ... are hereby permanently enjoined from com*70 mencing or prosecuting in any court (federal or state) or any other forum against any of the Identified Settling Parties any claim that has been or could have been asserted in the Global Class Action. Further, all members of the Global Class Action ... are hereby permanently enjoined from commencing or prosecuting in any court (federal or state) or any other forum other than this Court, any claim, action or proceeding that challenges or seeks review of or relief from any act, decision, order, judgment or any other ruling of this Court in connection with the Global Class Action. ... Any violation of the foregoing injunctions may be punishable as contempt of court, in addition to all other available remedies.
Of the $1.3 billion in the Milken Global Settlement fund, $50 million was allocated for the settlement of the Global Class Action.
One of the Identified Settling Parties was Carlton Investments (“Carlton”), a partnership formed by Milken and his associates in Drexel’s High Yield Bond Department to hold equity interests and other securities taken by them from Drexel clients, including a claimed interest in over 25 percent of the stock of TLC Beatrice. In May 1994, Carlton filed suit in New York state court against TLC Beatrice alleging breach of a shareholder agreement that grew out of Drexel’s financing of the late Reginald Lewis’s acquisition of Beatrice. TLC Beatrice asserted various affirmative defenses. These were based on conduct of some of the defendants that might have been the basis for, in the injunction’s words, “[a] claim that ... could have been asserted in the Global Class Action.” In March 1995, Carlton moved to dismiss the affirmative defenses on the ground that TLC Beatrice’s assertion of them violated the injunction. TLC Beatrice responded, inter alia, that it was not bound by the judgment and injunction because it had not received notice of either the Global Class Action or the settlement and because the judgment was constitutionally deficient.
In July 1995, Carlton, filed a contempt motion against TLC Beatrice in the present action. It claimed that the affirmative defenses were barred by the judgment and that TLC Beatrice’s challenge to the validity of the Global Class Action settlement in the state court action violated the injunction. TLC Beatrice argued in response that the affirmative defenses were not “claims” covered by the final judgment in the Global Class Action. In addition, TLC Beatrice filed two motions that are the subject of the instant appeal. The first motion sought leave to intervene under Rule 24 and to assert counterclaims for money damages — in addition to the assertion of affirmative defenses — against Carlton in the state court action. The counterclaims were based on essentially the same conduct underlying the affirmative defenses. The second motion sought, under Rule 60(b), to void the judgment in the Global Class Action as against TLC Beatrice. It claimed that the district court lacked personal and subject matter jurisdiction and that the settlement violated TLC Beatrice’s due process rights.
At the district court’s request, TLC Beatrice filed an explication of its state court affirmative defenses, stating that “the only relief sought by the Affirmative Defenses is the denial of Carlton’s requested monetary recovery against TLC Beatrice for its alleged breach of the Stockholders’ Agreement. TLC Beatrice is not seeking any money damages, set off or declaratory relief by the Affirmative Defenses.” The district court agreed with TLC Beatrice that the assertion of affirmative defenses did not violate the injunction and denied Carlton’s contempt motion. Shortly thereafter, it also denied the Rule 24 and Rule 60(b) motions. The district court apparently read the language from TLC Beatrice’s description of its affirmative defenses quoted above as relating to its Rule 24 and 60(b) motions as well as to the response to Carlton’s contempt motion. The court then concluded that the denial of the contempt motion rendered TLC Beatrice’s Rule 24 and 60(b) motions moot and denied them without further explanation.
We believe, and the parties agree, that the motions in question were not moot. TLC Beatrice had interposed affirmative defenses in the state court action in the belief that the purely defensive use of the underlying claims did not violate the injunction. Recognizing that counterclaims for monetary damages
We have not had, therefore, the benefit of the district court’s views on the merits of the motions that are the subject of this appeal. Although the parties agree that the issues underlying the motions in question are not moot, they urge us not to burden the district court by remanding. They argue that the merits have been fully briefed on this appeal and that a remand will not appreciably add to the materials before us. However, the parties dispute the timeliness of TLC Beatrice’s motion to intervene and the adequacy of notice to it of the class action. These issues have a factual component that should be resolved in the first instance by the district court. We are also hesitant to address the important issue of the validity of this form of so-called settlement class action without knowing the views of the district court, which was deeply involved in both the Milken Global Settlement and the bringing and settlement of the Global Class Action. We therefore reject the urgings of the parties and remand to the district court for a decision on appellant’s Rule 24 and 60(b) motions.
Any appeal after remand shall be on an expedited basis. To the extent practicable, the parties may rely on the briefs and appendices filed in this appeal supplemented by letter briefs. Also to the extent practicable, any subsequent appeal should be referred to this panel. Any party filing a post-remand notice of appeal shall communicate immediately with staff counsel of this court regarding these instructions.
We therefore remand. The mandate shall issue forthwith.
Reference
- Full Case Name
- PRESIDENTIAL LIFE INSURANCE COMPANY, TLC Beatrice International Holdings, Inc., Movant-Appellant v. Michael R. MILKEN Roy Abbott Paul Abecassis Jack Ackerman Peter Ackerman Joseph P. Adams Steven Andreder Joel Asen Andrew Astrachan Mark Attanasio Eileen Austen Herbert Bachelor Stanley Bailowitz Jeffrey Balash Donald Balser Dan Bathon Jeffrey P. Beck Joseph Bencivenga Richard A. Bergman David W. Bergmann Martin L. Berman Robert D. Beyer Paul Biddelman Arthur H. Bilger Leon Black Jay Bloom Frederick Borden Thomas Boudakian Gerald Brodsky William Bron Bruce Brown Michael D. Brown E. Alan Brumberger Gerard M. Bucci Jon E. Budish Dort A. Cameron, III Thomas Cauchois John Cavalier Jeffrey Chanin Mark Chasin Franklin Chu John Chulick Thomas P. Clerkin Craig M. Cogut Thomas Connors Richard Crowell Lorraine D'Ambrosio James Dahl Charles Dargan Robert Davidow Marshall Davidson Logan D. Delany, Jr. Carl Deremer Dennis Dolan Scott Douglas Richard Dunler David DuPont Maurits Edersheim William Eng Donald Engel Chris Evensen Robert Fallon Geoffrey L. Faux David Feinman Michael Fields Ralph Finerman Alan J. Fishbein Steven Fisher Patrick Flanagan Allen Flans Richard S. Frary Joshua Friedman William Frymer Dennis K. Galgano Peter R. Gardiner Bruce Garver Richard L. Gelfond Michael E. Gellert Joel L. Gold Mark Goodman Robert Goodwin Nancy Cates Gordon Kevin J. Gorman Patrick L. Graham Jeffrey Green Richard Handler John J. Hannan Joseph Harch Reed L. Harman Scott Harrison David Hedley Andrew Heyer J. Ericson Heyke III Paul Higbee Richard H. Hochman Harry Horowitz John Humphreville Susan Humphreville Jay Jablonow Jon Jetmore Paul Jetter Roy J. Johnson Lisa Jones Roger Jospe Mitchell R. Julis Edwin Kantor Steven J. Kantor David Kay Dean Kehler Donald Kendall David Kiarsis John Kissick Barry F. Klein Robert Kline Lynne Knox Gerald Koenig Gerald Koerner Robert I. Kohl John Krasznekewicz John A. Ladyzinski Graciela Lagumen Anthony Lamport Jeffrey Lane Jack Langer Douglas Lehrman Paul Levy Trevor Lewis Robert Lloyd Bridgette S. Loden Kevin J. Madigan Joel Mael J.O. Maggard Mary Lou Malanoski Alison J. Mass Cary J. Maultasch Frederick McCarthy Douglas McClure John McMahon Leonard Meads Lori Milken Lowell Milken Michael Milken Sandra Milken David Mills Kenneth Moelis James Moglia Pamela Monzert John Moriarty Frederick Moseley Philip W. Moss Donald Mullen Allen Nadler Jeffrey L. Neuman Richard Nevins Bruce Newberg Thomas Noonan Terren S. Peizer Arthur Phillips Lawrence A. Post James D. Price Harold Purkey Bruce Raben Joseph J. Radecki Michael Ranger Marc Rapaport Paul Rapisarda Jess M. Ravich James L. Rawlings Langhorne Reid, III Thomas E. Reinhart Anthony Ressler Barry W. Ridings Randy Rock Richard Rosee Naomi Rosenfeld Alan E. Rosenthal Stephen Roth Peter Rothschild Richard V. Sandler Patrick Savin Sylvan Schefler James Schiffner Nicholas Schlumberger James A. Schneider Kevin W. Schultz Janice L. Shapiro Allyson Shields Ruben Shohet Jonathan D. Sokoloff John Sorte Lorraine Spurge Linda Stedman Stanley Stein Lee Stern James G. Sullivan David Sydorick Cathryn Taylor John Taylor Marla Thomas Charles A. Thurnher William R. Tobey, Jr. Warren Trepp Stanley Trotman Olivier Trouveroy Marc A. Utay Patsy Van Utt George Varughese Edward G. Victor James E. Virtue Leon Wagner Sven Wehrwein Jeffrey R. Weinhuff Stephen D. Weinroth John Wexler Henry M. Wilf Alexa D. Willson Gary Winnick Stephen Winningham Eugene Wong David Ying Ronald N. Yurcak AFP Investments AHP Holdings, Inc. AHP Investments Alamo Associates Alamo Investments L.P. All-Fed Investment Associates Alta Associates Anchor Capital Holdings ARA Partnership Arete Partners Argonaut Ventures Group Armacor Incorporated Arrowlake Investors Arroyo Pacific Investments, L.P. Associated Capital Associated Investors Atlantic Financial Investors Atlantic Management Group Baltmar Investors, L.P. Bandelier Associates Barid Corporation Barlem Associates Barrows Associates Bass Investment L.P. Bayberry Financial Group, Inc. BCP Capital Partners, a California Limited Partnership BCP Capital Partners L.P. BCP Capital Partners II, L.P. Beaumont Holdings Beauty Care Partners Berry Associates Belvedere Securities Bergman, Knox & Green Bering Associates Bicoast Investment Associates Biscayne Capital L.P. BMA Limited Partnership Brittany Holdings Buel's Gore Associates Cabat Associates Ltd. CACF Partners Ltd. Calco United Investors Cambrent Associates Cambrent Financial Group, Inc. Cambridge Associates Camden Investments Camont Associates Camont Investments, Inc. Camro Associates Camro II Associates Canterbury Group Capital Coast Partners Capital First Investors Capital Fund Foundation Capital Investments Captran Venture Associates Cardiff Associates Carlton Investments Carlyle Associates Carlyle II Associates Carthaway Investments Cavalier Associates Centennial Financial Century Institutional Advisors CFD Partners '81 Champlain Associates Chanticleer Investors, Ltd. Cheatham Capital Chesapeake Partners Chessment Investment Associates, a California Limited Partnership Chessment Investors, L.P. Chesterfield Investments Chesterfield Ventures Fund Co. Chieftan Investments Capital Corp. Childress Group, Inc. Childress High Yield Fund Chittenden Associates Clayton & Dublier Private Equity Fund Ltd. Clayton & Dublier Private Equity Fund II Ltd. Clayton & Dublier Private Equity Fund III Ltd. CLC Financial Partners, L.P. CLC Investors, L.P. Cleburne Enterprises Coast Holdings Coastal Capital Partners Color Tile Investments Commercial Management Co., L.P. Commonwealth Equities Commonwealth United Concordia Investment Associates Conport Associates, a California Limited Partnership Contera Partners Continental Associates L.T.D. CR Associates Crescent Capital Associates Cristal Partners Dalton Associates Dayton Investments DBL Employee Profit Sharing Plan Vol. Cont. A/C 1 DBL Transcap Partners Delphin Investment Associates Demeter Capital Corp. Dencal Partners Denslow Financial Associates Dickinson Associates Downingville Associates DR Capital Partners Drexel Reliance Capital Group Partnership, DRJ Associates Dunmore Partners Dunmore Partners Ltd. Dunstable Investments Durant Financial Associates EBOC Associates EJ Associates Elmwood Investments Elstead Partners Embassy Capital Group Inc. Ensign National Association Essex Financial Execor, Incorporated Fairfield Investment Group, Ltd. Fairwood Investments, Inc. Fairwood Partners Field Ranch, Inc. Fillmore Financial Financial Associates Financial Investments Financial Partners Financial Partners II Finfund Management L.P. Fircon Partners Firebird Investments First Alliance Financial First Alliance Investments First Brittany Holdings Inc. First Coastal Associates First Financial Partners First General Financial First Guardian Enterprises Inc. First Management Co First Stratford Inc First Stratford Life Insurance Co First Union Investments Foreman Associates Framingham Investments Framingham Partners Fulton Partners F.O.L. Holdings Galway Investments Associates L.P. GC Partners General Financial Glenbay, Inc. Glencoe Investors, L.P., f/k/a First Guardian of Texas, L.P. Gloucester Asset Management Gotham Capital GPI Associates Greystone Partners Guardian Equity, a California Limited Partnership Guardian Global Associates Guardian Global Incorporated Guildford Capital Hammond Associates Hanover Investment Associates, L.P. Hastings Associates Hatton Hall Associates Haywood Investments Hemisphere Capital Heritage Capital Heritage Hall Investments Hillside Capital Holland Partners Hopkins Associated Hudson River Associates Hybon Corporation IDS Investment Associates Incon Associates Interconsolidated Investors International Consolidated Associates, L.P. Investment National JEJ Partnership Jellicle Associates JMP Associates JMP Investors JP Associates Kidpix Associates Kingsley Partners, a California Limited Partnership Kraft Associates L Holdings Investment L & S Trust Lafayette Associates Lahus V Syndicate, Inc. Lambda Capital Corp., L.P. Lambda CFD '87 L.P. Lambda I Capital Partners Lambda II Lambda II Capital Partners Lambda II Private Investment Account Lambda III Lambda III, L.P. Lambda III Capital Partners Lambda III Fund Lambda III Private Placement Lambda Private Placement Lambda Private Placement Account Lambda Partners, Ltd. Lambda Private Investment Account Lennox Investors LMAR Partners Lobon Associates Lombardi Equities Lorsand Partnership L & S Milken Foundation M and L Milken Foundation Macpherson Investment Partners Macpherson Management Associates Macson Investments, Inc Magtek Partners, L.P. Malaga Capital, L.P. Manchester Investments, L.P. Marglen Associates Marglen Inc. Marley Holdings, L.P. McCook Financial Enterprises Meridian American, Inc. (CAL Meridian (in CA)) Merrick Associates Merrimac Fixed Assets Metro Associates MIAD Partners Milken Family Foundation Milow Corporation ML Associates ML Portland Associates, Ltd ML-SL Incorporated Model Investment Associates Monitor Equity, L.P., a California Limited Partnership Monmouth Partners Monogram Financial Investments, a California Limited Partnership Montaigne Enterprises Montgomery Partners Monument Capital L.P. Moredon Partners, Ltd Motel Investments L.P. MVS, Ltd M & L 1981 Trust Neilson Partners New CWT PARTNERS New Levitz Associates, a California Limited Partnership 9560 Associates, Ltd Ocelot Associates OP Capital Partners, L.P. Optimus Financial Associates Otter Creek Associates Owens Capital Ozark Investment Group Pace Investments, L.P. Pacific Asset Advisors Pacific Asset Corporation Pacific Asset Holdings L.P. Pacific Asset Management Inc. Pacific Assets Partnership Pacific Continental Partners Pargon Asset Holdings Parco, Inc Parco International, L.P. Parco Partners Picardy Financial Pier Port Investment Management Pollicle Capital Porter & Jenkins Enterprises Premier Paragon Partners (Gothic) Prime Assets Corporation Prime Capital Associates Prospero Asset Management, L.P. Prospero Assets, Inc. Prospero Partners Purnell Associates Quadpics Enterprises Inc. Ra Partnership Raleigh Investment Management Ramstar Investments Inc. Rayburn Associates Real Property Associates Regency Equities Corp. Regency Equities Corp. Stockholders Liquidating Trust Reliance Associates Reliance Capital Group, L.P. Remington Financial Resource Investors Revell Investments, L.P. RJ-LG Company, Inc Roblar Associates ROCAM Associates ROCAM II Associates Rodeo-Wil Associate, Ltd Romont Associates Romont Investments, Inc RWLC Partners Salisbury Enterprises, L.P. Samurai Associates Saxon Associates SCI Associates SCI Capital Associates, L.P. SCI Partners SDIC Associates, Ltd Second Financial Partners Second General Financial Sendel Partners Sherbrooke Associates Sheridan Associates Sherwood Financial Shoreglen Associates Shoreglen II Associates South Coast Partners South Saxony Investment Group Southern Electronics Investments Southwest Financial Srapex Associates Stoneham National Summit Holdings Sun Brook Partners Suncoast Financial Sunpow Investment Associates Tangent Associates Tangent Capital, a California Limited Partnership Tartan Financial Associates Teton Investors, L.P. Transcentury Investments Translimited Translimited II Triplestone, Inc. Valcour Associates, Valcour Associates II Wallstone Associates WB Associates Wellesly Investments, a California Limited Partnership Westam Capital Group Westminster Capital Westridge Investment Associates, a California Limited Partnership Whitehall Financial Associates Whitmore Capital L.P. Whitson Investors L.P. Whitworth Associates, Whitworth Capital Partners Wicklow Investment Associates Wilcam Financial Group, Inc. Wil Shire First Associates Winooski Associates Winooski Partners II Winooski Partners III Winooski Partners IV Winooski Partners V Winston Capital Partners Woodglen, Inc. Woodtime Associates WP Capital Partners WRC Associates, Wriston Associates, a California Limited Partnership WTV Associates Yorkshire Group Investments, a California Limited Partnership
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