A May 19 settlement in a Maryland federal court may put the brakes on two Madison County class action suits brought over alleged mutual fund mismanagement.
The defendants in the two suits, including Putnam International Equity Fund and Putnam Investment Management LLC, filed an order May 27 preliminarily enjoining the Madison County suits brought by lead plaintiffs Steve and Beth Dudley.
A defense move to dismiss the two class actions as well as a move by the plaintiffs to amend their suits had been taken under advisement by Madison County Circuit Judge Barbara Crowder on the same day that U.S. District Judge J. Frederick Motz of the U.S. District Court for the District of Maryland approved the Putnam settlement.
The defendants claim that, pending final approval of the settlement in Maryland, any other suits over same claims against Putnam are barred or restrained.
The Dudleys are leading classes of investors who claim that the Putnam companies mismanaged their mutual fund investments.
During arguments in Edwardsville on May 19, the defense argued that Crowder should dismiss the Dudleys' suits due to the dismissal of a similar case, Kircher v. Putnam Funds Trust.
Defense attorneys cited a Fifth District Appellate Court opinion at length in both their filings and in oral arguments.
Justices at the appellate court held that the Kircher plaintiffs' claims were barred by the 1998 Securities Litigation Uniform Standards Act (SLUSA).
The plaintiffs argued at the May 19 hearing before Crowder that the appellate court had used too broad of an interpretation of their clients' claims when making the Kircher decision.
In arguing for the amendement of the 2003 suits, Robert King of Korein Tillery told Crowder that his clients' claims were now "crystal clear" and had been condensed.
Defense counsel James Carroll countered that an amendment would come too late to fix the seven year-old class actions.
Carroll also argued that the suits should be dismissed on the same grounds as Kircher's class.
The May 27 notice of the Maryland federal court's order outlines the relief the class is afforded.
Final approval of that settlement remains pending.
The Dudley cases have bounced back and forth between the federal court and Madison County.
The cases went to the U.S. Supreme Court on the issue of remand before returning to Edwardsville.
The Dudley cases and the Kircher suit were filed by Stephen Tillery. They are among a number nationally pending over mutual fund mismanagment claims.
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.
The Maryland case is 04-md-15863-JFM.