Opinion
CIVIL ACTION NO. H-01-3913, CONSOLIDATED CASES
March 18, 2003
ORDER
Pending before the Court in the above referenced action are inter alia the following "house keeping" motions, grouped by subject matter, which must be decided as threshold questions before addressing the merits of other pending motions:
Judicial Notice
Tittle Plaintiffs' Motion to Strike
(1) the Tittle Plaintiffs' motion for judicial notice of the Senate Report on The Role of the Board of Directors in Enron's Collapse (instrument #377);
(2) the Tittle Plaintiffs' motion for judicial notice of Senate testimony on the role of the financial institutions in Enron's collapse (#379)
(3) Tittle Plaintiffs' motion for leave to file reply in support of #377 (#401);
(4) Outside Directors' motion for leave to file surreply to #377 (#410)
(5) the Tittle Plaintiffs' motion to strike improper documents submitted by the Northern Trust Company ("NT") (#366) or, alternatively, to convert NT's motion to dismiss to one for summary judgment;
(6) the Tittle motion for leave to file reply to the Northern Trust Company's response to #366 (#375)
(7) Tittle Plaintiffs' motion for leave to file supplemental memorandum in opposition to Defendants' motion to dismiss RICO claims (#419)
(8) Tittle Plaintiffs' motion for leave to file response to Defendants' opposition to Plaintiffs' supplemental memorandum in opposition to Defendants' motion to dismiss RICO claims (#434)
(9) Vinson Elkins' request (embodied in #421) and Rebecca Mark-Jusbasche, Robert Belfer, Norman Blake, Ronnie Chan, John Duncan, Joe Foy, Wendy Gramm, Robert Jaedicke, Charles LeMaistre, John Mendelsohn, Jerome Meyer, Paulo Ferraz Pereira, Frank Savage, Charles Walker, John Wakeham, and Herbert Winokur's request (embodied within #433) for leave to respond to Plaintiffs' supplemental memorandum, if that supplemental memorandum is allowed;
(10) The SPARK Institute's motion for leave to file an amicus curiae brief in support of Defendant Northern Trust Company's motion to dismiss (#465)
(11) The SPARK Institute's motion for leave to file supplemental amicus curiae brief (#508);
(12) Tittle plaintiffs' motion for leave to file response to supplemental brief of amicus curiae the SPARK Institute (#511);
(13) American Bankers Association's motion for leave to file amicus brief in response to Department of Labor's amicus brief (#470);
(14) American Bankers Association's motion for leave to file as amicus curiae a brief in response to the amended brief of the Secretary of Labor as amicus curiae opposing the amicus brief of the American Bankers Association (#463)
(15) Motion of the American Bankers Association for leave to file as amicus curiae a brief reply to the amended response of the Tittle plaintiffs to the amicus brief of the American Bankers Association (#518)
The documents (#358) were submitted as exhibits to its reply memorandum (#357) to Plaintiffs' memorandum in opposition (#316-321) to NT's motion to dismiss (#241).
The Court initially addresses the pleadings related to taking judicial notice of the Senate Report on The Role of the Board of Directors in Enron's Collapse. After carefully reviewing all submissions, the Court grants Tittle Plaintiffs' motion for leave to file a reply (#401) and Outside Directors' motion for leave to file a surreply (#410), since the Court has reviewed the contents of the reply and surreply in addressing the request to take judicial notice. Nevertheless, the Court concurs with Defendants that Federal Rule of Evidence 201(b) allows the Court to take judicial notice only of a fact "not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Furthermore, Rule 201(g) states, "In a civil action or proceeding, the court shall instruct the jury to accept as conclusive any fact judicially noticed."
The "facts" found by the Senate are obviously subject to reasonable dispute and are controverted, as evidenced by the litigation in MDL 446. The Senate's findings are not capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned" because these findings are the product of various Senators' interpretation of witnesses' credibility, witnesses' invocation of the Fifth Amendment, unidentified witnesses, confidential documents, etc. To take judicial notice of such facts would also usurp the role of the jury in this action. Therefore the Court denies the motion to take judicial notice.
The Court is, however, willing to note the existence of the report, as it has the existence of the Powers Report in Newby, and to review it for purposes of determining whether it is relevant to the issues in this suit and whether Plaintiffs may amend/supplement their complaint to include allegations based on the Senate's findings in order to state a claim under Federal Rule of Civil procedure 12(b)(6). The various parts of the report itself, however, will only be admissible for determining the truth of the matters contained therein where the portions satisfy the Federal Rules of Evidence.
For the same reasons, the Court denies the Tittle Plaintiff's motion for judicial notice of Senate testimony of Robert Roach before the Permanent Subcommittee on Investigations of the Committee on Governmental Affairs of the United States about the role of the financial institutions in Enron's collapse, but the Court, again, will review the report to determine where relevant findings may support an amendment or supplementation of the complaint to state a claim under Rule 12(b)(6) against the Investment Banking Defendants Merrill Lynch Co., Inc., J.P. Morgan Chase Co., Credit Suisse First Boston Corporation, Salomon Smith Barney, Inc. and Citigroup, Inc.
With respect to the motion to strike NT's documents, to insure a full record on the question, the Court grants Tittle plaintiffs' motion for leave to file reply (#375) and has reviewed the reply. NT argues, and attaches the documents to prove, that it was never the trustee of the Enron Employee Stock Ownership Plan ("ESOP") that was allegedly locked down, but that three individuals (Jack Tompkins, William Gathmann and Jeffrey McMahon) and the Wilmington Trust Company were the trustees at various times from 1989-2001. It has stated in pleadings and contends that its documents show that the 1999 restatement of that ESOP, which NT did not sign or prepare, nor have any input into its preparation — erroneously referred to NT as "Trustee" under a "Trust Agreement" with Enron and that it is only seeking expeditious resolution of the claim. NT further claims that aside from an affidavit from Ms. Kendall L. Kay, which merely clarifies what the other documents reflect, Plaintiffs have previously had notice of those documents they now seek to strike or the documents were integral to the complaint and should be reviewed by the Court under Rule 12(b)(6). If the Court finds that review of the documents is not proper under Rule 12(b), NT urges the Court not to convert NT's entire motion to dismiss into one for summary judgment, but just that one issue, and to limit the discovery regarding that question to obtain its quick resolution.
There are other claims asserted against NT besides the one related to the alleged lockdown of the ESOP.
Plaintiffs' reply maintains that review of Kendall L. Lay's affidavit is inappropriate under Rule 12(b)(6) and must be stricken. The Court agrees. They also point to a new document, ERISA Form 5500, prepared by Enron for the ESOP for the year 2000: Schedule P, dated August 8, 2001 was prepared by NT and signed by Mathew Savers on behalf of "The Northern Trust Company as Fiduciary." Ex. A to reply. Thus both Enron and NT's own sworn statement have identified NT as a fiduciary for the ESOP, giving rise to a legitimate dispute warranting discovery.
After reviewing the matter, the Court agrees with plaintiffs that review of the documents is inappropriate under Rule 12(b)(6). If the Court determines that NT's motion to dismiss pursuant to Rule 12(b)(6) should be granted on all other grounds, it grants leave to NT to move for limited and expedited discovery and summary judgment on the trustee issue.
To allow as full a record as possible regarding the "conviction exception" in 18 U.S.C. § 1964 (c) to the prohibition against bring securities fraud-based claims under the Racketeer Influenced and Corrupt Organizations Act of 1970 ("RICO"), the Court grants the Tittle Plaintiffs' motion for leave to file a supplemental memorandum in opposition to Defendants' motion to dismiss RICO claims (#419) and motion for leave to file a response to Defendants' opposition to Plaintiffs' supplemental memorandum in opposition to Defendants' motion to dismiss (#434)
With respect to the SPARK Institute's motion for leave to file an amicus brief supporting NT's motion to dismiss and addressing the application of the fiduciary responsibility provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, to employee benefit plan record keepers, and the American Bankers Association's motion for leave to file as amicus curiae a brief in response to the Secretary of Labor's amicus brief, plaintiffs object that the briefs are untimely after the Court's April 1, 2002 order setting the briefing schedule on the motions to dismiss and limiting replies to June 24, 2003. Nevertheless, the Court notes that the briefs have been filed as exhibits to the motions for leave to file and plaintiffs have not only had time to file a substantive response (#481), but also an amended response (#496), and SPARKS has asked to file a supplemental brief, Plaintiffs have requested a motion for leave to reply. Moreover the motions and the briefs, as attachments, have been on file for several months, so that all parties have had time to consider them.
SPARK states that it is the largest national association of service providers to employee benefit plans in the United States and has over 650 members from more than 250 companies, which provide trust, custodial, and record keeping services to defined contribution plans. It claims that its membership provides services to nearly all of the 38 million Americans participating in such plans. Therefore, it emphasizes that its members have a strong interest in the uniform and predictable interpretation and enforcement of ERISA, because an interpretation may affect the ability of service providers to ERISA plans to provide high quality and low cost services to employers and to keep the administration costs low for the employees.
The American Bankers Association is "the principal national trade association of the banking industry in the United States, having as members banks of all sizes and types including national and state chartered banks, community, regional and money center banks and holding companies, as well as savings associations, trust companies, and savings banks. Its member banks are located in each of the fifty states and the District of Columbia and collectively control approximately 90 percent of the domestic assets of the banking industry in the United States. . . . [M]any of its members serve as trustees of [ERISA] pension plans . . ." Brief (#464) at 1.
Plaintiffs further object regarding the amicus curiae submissions that they add no new argument or point of view not available from the parties, they advocate only on behalf of NT, and there is no provision for such briefs in the Federal Rules of Civil procedure.
Granting leave to file an amicus curiae brief is within the sound discretion of the Court, which may grant such leave where the proffered material is timely or useful. Mechmet v. Four Seasons Hotel, Ltd., No. 84 C 7341, 1985 WL 766, *1 (N.D. Ill. 1985). While the Federal Rules of Civil Procedure for the district court do not directly address the issue, the Federal Rules of Appellate procedure Rule 29 provides in relevant part as a guide,
(a) When Permitted. The United States or its officer or agency, or a State, Territory, Commonwealth, or the District of Columbia, may file an amicus-curiae brief without consent of the parties or leave of court. Any other amicus curiae may file a brief only by leave of court or if the brief states that all parties have consented to its filing,
(b) Motion for Leave to File. The motion must be accompanied by the proposed brief and state:
(1) the movant's interest;
(2) the reason why an amicus brief is desirable and why the matters asserted are relevant to the disposition of the case.
Only "a small body of judicial opinions . . . look with disfavor on leave to file amicus briefs." Neonatology Associates, P.A. v. C.I.R., 293 F.3d 128, 130 (3d Cir. 2002). Parties with pecuniary as well as policy interests can be valuable friends of the court and proposed amicus curiae need not be unrepresented or inadequately represented to make a valuable contribution. Id. at 132. The better and more prevalent practice is a nonrestrictive policy of granting leave. Id. at 132-133, citing such a liberal policy as "the predominant practice in the courts of appeals, " Michael E. Tigar and Jane B. Tigar, Federal Appeals — Jurisdiction and Practice 181 (3d ed. 1999) ("Even when the other side refuses to consent to an amicus filing, most courts of appeals freely grant leave to file, provided the brief is timely and well-reasoned.") The Court finds that the briefs here satisfy such concerns. Thus in the interests of justice and a full record, the Court grants all motions for leave to file amicus curiae briefs, responses, supplements and replies.
In sum, for the reasons stated above, the Court ORDERS the following:
(1) Tittle Plaintiffs' motion for leave to file a reply (#401) and Outside Directors' motion for leave to file surreply (#410) are GRANTED;
(2) Tittle Plaintiffs' motion for judicial notice of the Senate Report on The Role of the Board of Directors in Enron's Collapse (instrument #377) and motion for judicial notice of Senate subcommittee testimony on the role of the Financial Institutions in Enron's Collapse (#379) are DENIED;
(3) Tittle plaintiffs' motion for leave to file reply to NT's response (#375) and motion to strike improper documents (#366) are GRANTED;
(4) Tittle Plaintiffs' motion for leave to file supplemental memorandum in opposition to Defendants' motion to dismiss RICO claims (#419) and motion for leave to file a response to Defendants' opposition to Plaintiffs' supplemental memorandum in opposition to Defendants' motion to dismiss (#434) are GRANTED;
(5) Vinson Elkins' request (embodied in #421) and Rebecca Mark-Jusbasche, Robert Belfer, Norman Blake, Ronnie Chan, John Duncan, Joe Foy, Wendy Gramm, Robert Jaedicke, Charles LeMaistre, John Mendelsohn, Jerome Meyer, Paulo Ferraz Pereira, Frank Savage, Charles Walker, John Wakeham, and Herbert Winokur's request (embodied within #433) for leave to respond to Plaintiffs' supplemental memorandum are GRANTED and said responses shall be filed within twenty days of entry of this order;
(4) American Bankers Association's motion for leave to file amicus brief in response to Department of Labor's amicus brief (#470), motion for leave to file as amicus curiae a brief (#463) in response to the amended brief of the Secretary of Labor, and motion for leave to file as amicus curiae a brief reply to the amended response of the Tittle Plaintiffs to the amicus brief of the American Bankers Association (#518) are GRANTED;
(5) The SPARK Institute's motion for leave to file an amicus curiae brief in support of Defendant Northern Trust Company's motion to dismiss (#465) and motion for leave to file supplemental amicus curiae brief (#508) are GRANTED; and
(6) Tittle Plaintiffs' motion for leave to file response to supplemental brief of amicus curiae the SPARK Institute (#511)is GRANTED.