Carroll
Jackson
Madison County Circuit Judge Barbara Crowder has taken under advisement both motions to amend and to dismiss two long-running mutual fund class actions that plaintiffs' counsel calls "fixable" and defense counsel calls "lawyer-driven."
Crowder heard arguments in the two cases brought by lead plaintiffs Steve and Beth Dudley Wednesday afternoon. Attorney Stephen Tillery filed the claims in 2003.
The Dudleys are leading two classes against Putnam International Equity Fund and Putnam Investment Funds over the alleged mismangament of the mutual funds.
At the center of both the motions to amend and dismiss is an opinion from the Fifth District Appellate Court entered in a similar case, Kircher v. Putnam Funds Trust.
In that decision, authored by Appellate Judge Stephen Spomer, the court ruled that the Kircher class actions ran afoul of the 1998 Securities Litigation Uniform Standards Act (SLUSA). The appellate court ordered Crowder, the presiding judge in the Kircher case, to dismiss.
At Wednesday's hearing, plaintiffs' attorney Robert King of Korein Tillery argued that while the appellate court read the claims too broadly, his clients and class should still be able to amend their complaint and that SLUSA allows for the amendments.
King told Crowder that the plaintiffs had winnowed their case down so that the claims were "crystal clear."
"We came to the conclusion that 'Yes, this is fixable,'" King said of the issues with the first set of claims.
He said that plaintiffs have tossed a series of complaints stemming from so-called "market timing" issues.
King cited a 50-page response the defense filed Tuesday night as proof that there were issues of fact still in play.
A copy of that response to the motions to amend is not yet available in the case file.
Defense counsel James Carroll countered that the amendment was untimely and that the case had dragged on long enough.
"This case should be dead," Carroll told Crowder, "taking nothing away from the ingenuity and relentlessness," of his
opponents. "There's not a lot of room for interpretation in the Fifth District opinion."
He called the move to amend the complaint after seven years of litigation a "lawyer-driven" attempt to keep the case alive.
Carroll argued that the appellate court's April ruling was clear.
"Negligence has been found already to be out," Carroll said. "All he's done is change the words. The substance of the case hasn't changed. They've been aware of the inadequacies of these claims under SLUSA for years."
Carroll argued that the appellate court had already rejected all of the claims King argued the amendment held and that the rest were precluded by SLUSA.
"If they think they're entitled to amend, let them file a new case," Carroll said.
Crowder questioned Carroll at length about that statement, asking whether a dismissal with prejudice of the class actions would preclude the Dudleys from seeking individual relief.
Carroll told her that they could join a multi-district class action on the verge of settlement in Baltimore, Md. as one remedy and that others were available.
King disagreed, arguing his clients would not be able to join a pending class.
He told Crowder that his clients, at least as individuals, should be able to amend their claims.
King also countered Carroll's timeliness argument, pointing out that the case spent nearly four years in federal court over the remand issue before Crowder ruled in 2007 on a defense motion for judgment on the pleadings. King said that had been the first substantive ruling in the case. With that in mind, he said, an amended complaint was not out of place.
Crowder told both attorneys that she would read the pleadings and try to enter a judgment as quickly as possible.
The cases are among a number pending both in Madison County and across the country. The Kircher cases were also filed by Tillery.
They have bounced between Madison County and the federal courts since their filings.
The Dudley cases reached the U.S. Supreme Court on the issue of remand before the high court sent them back to Edwardsville.
Carroll of Skadden, Arps, Slate, Meagher, & Flom in Boston, Rebecca Jackson of St. Louis and others represent the defendants in the suits.
The Dudley cases are Madison case numbers 03-L-1539 and 03-L-1540.
The Kircher case is Madison case number 03-L-1255.