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Oetting v. Heffler, Radetich & Saitta, LLP

United States District Court, E.D. Pennsylvania

December 15, 2017

JAMES OETTING, Individually and on behalf of all others similarly situated, Plaintiff,
v.
HEFFLER, RADETICH & SAITTA, LLP, EDWARD J. SINCAVAGE, EDWARD J. RADETICH, JR., and MICHAEL T. BANCROFT, Defendants.

          MEMORANDUM

          DuBois, J.

         I. INTRODUCTION

         This class action involves claims asserted by plaintiff James Oetting on behalf of himself and a certified class of similarly situated individuals who received payments from a settlement fund in a long-running multidistrict litigation in the United States District Court for the Eastern District of Missouri. This case was originally filed as a separate action in that district but was transferred to this Court pursuant to 28 U.S.C. § 1404(a) by Order dated July 25, 2011. Plaintiff seeks damages from defendants for harm suffered by the class due to fraudulent claims made on the settlement fund by a former employee of defendant Heffler, Radetich & Saitta, LLP ("Heffler"), that were authorized by defendants. Plaintiff asserts claims for negligence, accountant malpractice, breach of fiduciary duty, and fraud.

         Presently before the Court is defendants‘ Motion for Reconsideration, or in the Alternative, to Certify Order for Interlocutory Appeal of its August 11, 2017, Memorandum and Order ("Motion"). In that Memorandum and Order, this Court ruled that Missouri substantive law applied to the case, that Missouri law incorporated Pennsylvania‘s statute of limitations through Missouri‘s borrowing statute, and that Missouri‘s savings statute, which allows certain cases to be refiled within one year of dismissal, barred application of the borrowed Pennsylvania statute of limitations. Oetting v. Heffler, Radetich & Saitta, LLP, Civ. No. 11-4757, 2017 WL 3453342 (E.D. Pa. Aug. 11, 2017), Doc. No. 117 [hereinafter, "August 11 Memorandum and Order"].

         In their Motion, defendants seek reconsideration of the following rulings in the August 11, 2017, Memorandum and Order: (1) that the decision of the United States Court of Appeals for the Eighth Circuit in Davis v. Liberty Mutual. Insurance Co., 55 F.3d 1365 (1995), is distinguishable from this case and does not bar application of Missouri‘s savings statute to a borrowed statute of limitations, and (2) that Missouri‘s savings statute may be applied to two legally distinct plaintiffs, an issue defendants raise for the first time on reconsideration. In their Motion, defendants also seek certification for interlocutory appeal of the question whether docketing of a supplemental complaint under Federal Rule of Civil Procedure 15(d), without leave of court, commences an action for purposes of the Missouri savings statute.

         II. BACKGROUND

         The facts set forth below are drawn from the Second Amended Complaint and attached exhibits, the underlying MDL docket, and the parties‘ briefing on the choice of law issue.

         A. Underlying Proceedings

         This case arises out of securities litigation following a merger between BankAmerica Corporation ("BankAmerica") and NationsBank. On February 12, 1999, the Judicial Panel for Multi-District Litigation issued a Transfer Order, consolidating the many cases relating to the merger for all pretrial purposes in the Eastern Division of the Eastern District of Missouri. Second Am. Compl. ¶ 2. The multi-district litigation is identified as In re BankAmerica Corp. Securities Litigation, MDL No. 1264 (E.D. Mo.) ("the MDL"). Four classes were certified in the MDL on July 6, 1999, two of which are relevant in this case: The first, the NationsBank Holder Class, consisted of "all common and preferred shareholders of NationsBank Corporation who were entitled to vote on the merger of NationsBank and Old BankAmerica or who held their shares in NationsBank as of the close of business on September 30, 1998." Order Relating to Class Certification at 3, In re BankAmerica Corp., No. 99-md-1264 (E.D. Mo. July 6, 1999), Doc. No. 39. The second class, the NationsBank Purchaser Class, consisted of "all purchasers of NationsBank securities between August 4, 1998, and September 30, 1998."[1] Id. David Oetting, a former plaintiff in this case, was a representative of only the NationsBank Holder Class.[2] Id. at 4. James Oetting, the current class representative in this case, was not a class representative in the MDL, id. at 4, and later withdrew as a plaintiff in the MDL. Order, In re BankAmerica Corp., No. 99-md-1264 (E.D. Mo. May 15, 2001), Doc. No. 236. A settlement was approved in the MDL on September 20, 2002, with $333.2 million to be paid to the NationsBank Classes. Order at 1, In re BankAmerica Corp., No. 99-md-1264 (E.D. Mo. Sept. 30, 2002), Doc. No. 571; Second Am. Compl. ¶¶ 3, 24, Oetting v. Heffler, Radetich & Saitta, LLP, Civ. No. 11-4757 (E.D. Pa. Sept. 3, 2015) [hereinafter "Second Am. Compl."].

         The MDL Court appointed Heffler as the Claims Administrator for the settlement. Second Am. Compl. ¶¶ 4-9, 25-26. During Heffler‘s administration of the settlement, but prior to the first distribution of settlement funds authorized by the MDL Court by Order dated June 14, 2004, a then-employee of Heffler, Christian Penta, submitted false claims for payment from the class settlement fund. Second Am. Compl. ¶¶ 28, 30. He and his co-conspirators received "payment(s) of over $5.87 million based on [the] false claims." Id. A grand jury sitting in Philadelphia, Pennsylvania, returned a sealed indictment against Penta and four co-conspirators on September 11, 2008, and the United States Attorney for the Eastern District of Pennsylvania publicly announced the indictment by press release in Philadelphia on November 20, 2008. Defs‘ Mem. on Choice of Law Issues ("Defs‘ Mem.") at 2-3, Oetting, Civ. No. 11-4757 (E.D. Pa. Jan. 27, 2015), Doc. No. 107; id. Ex. G, Press Release, "Six Charged in $40 Million Class Action Fraud, " Issued by the United States Attorney for the Eastern District of Pennsylvania, Nov. 20, 2008 ("Press Release").

         On October 29, 2009, the law firm of Green Jacobson, P.C., former counsel for the NationsBank Classes in the MDL, docketed a Supplemental Complaint with the MDL Court, asserting claims against Heffler for breach of fiduciary duty, negligent misrepresentation, accountant malpractice, conversion, and money had and received. Supp. Compl., In re BankAmerica Corp., MDL No. 1264 (E.D. Mo. Oct. 29, 2009), Doc. No. 723. Plaintiffs in the Supplemental Complaint were identified as the "NationsBank Class." Id. Shortly afterwards, David Oetting, pro se, filed a Motion for Appointment of Special Class Counsel to represent the NationsBank Classes for the claims asserted in the Supplemental Complaint, arguing that the relationship between Green Jacobson and Heffler prevented Green Jacobson from serving as an adequate lead counsel for the classes. Mot. for Appointment of Special Class Counsel at 6, In re BankAmerica Corp., MDL No. 1264 (E.D. Mo. Feb. 12, 2010), Doc. No. 731. Oetting‘s Motion was denied. Order, In re BankAmerica Corp., MDL No. 1264 (E.D. Mo. Apr. 12, 2010), Doc. No. 743. On May 3, 2010, more than six months after the docketing of the Supplemental Complaint, Heffler moved to dismiss or strike the Supplemental Complaint because, inter alia, the NationsBank class did not first obtain leave of court as required by Federal Rule of Civil Procedure 15(d). Mot. to Strike the Supp. Compl., or in the Alternative, to Dismiss the Supp. Compl., In re BankAmerica Corp., MDL No. 1264 (E.D. Mo. May 3, 2010), Doc. No. 745. In response, on May 13, 2010, Green Jacobson moved for leave to file the Supplemental Complaint. Mot. for Leave to File Supp. Compl., In re BankAmerica Corp., MDL No. 1264 (E.D. Mo. May 13, 2010), Doc. Nos. 749-50. The MDL Court ultimately granted Heffler‘s Motion to Dismiss the Supplemental Complaint and denied Green Jacobson‘s Motion for Leave to File the Supplemental Complaint by Order dated November 5, 2010, concluding that although the allegations in the Supplemental Complaint were "connected to" the underlying MDL, the asserted claims were "not similar enough in substance to the claims in the underlying action to justify supplemental pleading." Mem. and Order, In re BankAmerica Corp., MDL No. 1264 (E.D. Mo. Nov. 5, 2010), Doc. No. 763.

         B. This Action

         On February 8, 2011, former plaintiff David Oetting filed a complaint in the Eastern District of Missouri on behalf of a putative class of "all members of the NationsBank class who have or are to receive a distribution from the action." Complaint ¶ 24, Oetting, Civil Action No. 11-253 (E.D. Mo. Feb. 8, 2011). The Complaint did not define the term "NationsBank class, " but it stated that $333.2 million-the combined amount awarded to both the NationsBank Holder and Purchaser classes-was awarded to the "NationsBank class" in the MDL, suggesting plaintiffs used the term to include both the NationsBank Holder and Purchaser Classes. Id. ¶ 11. On July 25, 2011, the case was transferred to this Court on Heffler‘s motion pursuant to 28 U.S.C. § 1404(a) for the convenience of the parties and witnesses. Order, Oetting, Civil Action No. 11-253 (E.D. Mo. July 25, 2011), Doc. Nos. 18, 21. During the course of the litigation, the Complaint was twice amended to add James Oetting as a named plaintiff and class representative, to assert additional claims, and to name additional individual defendants. The First Amended Complaint did not alter the definition of the class, while the Second Amended Complaint provided that the suit was brought on behalf of a class of "all the members of the NationsBank classes (a) who were entitled to receive a distribution from the Action in 2004; (b) who have received a distribution at any time from the Action and (c) who are yet to receive a distribution from the Action." Second Am. Compl. ¶ 31.

         By Memorandum and Order dated December 16, 2015, the Court granted in part and denied in part defendants‘ Motions to Dismiss the Second Amended Complaint, concluding that David Oetting lacked standing to pursue the claims in this case under Article III of the United States Constitution because he did not cash the checks issued by the MDL settlement fund. Pursuant to that Memorandum and Order, the Court dismissed David Oetting from the case.

         By Order dated March 24, 2016, the Court certified the plaintiff class in the case, as follows:

All individuals and entities who are or were members of one of the NationsBank classes in In re BankAmerica Securities Litigation, Multidistrict Litigation Number 1264, in the United States District Court for the Eastern District of Missouri, who (1) filed valid claims for distribution(s) from the NationsBank settlement fund, (2) received payment on their claims from the NationsBank settlement fund, and (3) are eligible for any additional distributions from the NationsBank settlement fund.

         Order, Oetting, Civil Action No. 11-253 (E.D. Mo. Mar. 24, 2016), Doc. No. 58.

         On December 2, 2016, counsel for defendants submitted to the Court a letter requesting a scheduling conference for the purpose of addressing an "as-yet undetermined choice of law issue." See Doc. No. 104. The Court held a scheduling conference on December 14, 2016, and, recognizing that the parties had not previously raised choice of law issues, ordered the parties to brief all such issues. Following an initial round of briefing, on June 1, 2017, the Court ordered the parties to file supplemental memoranda of law addressing (1) the applicable statute of limitations, (2) the applicability of equitable tolling, and (3) the applicability of the Missouri and Pennsylvania savings statutes, and the parties did so. In addition, the Court held a telephone conference on August 4, 2017, at which counsel for the parties agreed that all choice of law issues, including the applicable statute of limitations and savings statute, had been fully briefed and were ripe for decision.

         On August 11, 2017, this Court ruled that Missouri substantive law and, through Missouri‘s borrowing statute, Pennsylvania‘s two-year statute of limitations apply to plaintiff‘s claims. Memorandum, Oetting, Civil Action No. 11-4757, WL 3453342 (E.D. Pa. Aug. 11, 2017), Doc No. 117. The Court also ruled that Missouri‘s savings statute is applicable to the case, notwithstanding the application of Pennsylvania‘s statute of limitations. Id. On August 25, 2017, defendants filed their Motion for Reconsideration or, in the Alternative, to Certify Order for Interlocutory Appeal. They seek reconsideration of the August 11, 2017, Memorandum and Order under Federal Rule of Civil Procedure 60 and for certification for interlocutory appeal of that part of the Order relating to docketing of a supplemental complaint without court approval. See Doc. No. 118.

         III. LEGAL STANDARD

         Defendants move for reconsideration pursuant to Federal Rule of Civil Procedure 60. Doc 118 at 1. Rule 60(b), however, pertains only to "final" judgments or orders, defined as "one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Penn W. Assocs. v. Cohen, 371 F.3d 118, 125 (3d Cir. 2004) (quoting Catlin v. United States, 324 U.S. 229, 233 (1945)). Where an order or judgment is not "final, " relief is unavailable under Rule 60(b). Id.

         Despite the limitation on Rule 60(b), a district court retains inherent authority to reconsider any previous ruling in the same litigation. Santamarina v. Sears, Roebuck & Co.,466 F.3d 570, 571-72 (7th Cir. 2006). "Rule 60 does not affect, interfere with, or curtail the common-law power of the Federal courts" in cases over which they maintain jurisdiction; instead, "the broad power, which was theirs by the common law, to deal with situations where . . . relief should be granted from manifest error, remain[s] inherent in the courts." United States v. Jerry,487 F.2d 600, 605 (3d Cir. 1973) (quoting Bucy v. Nevada Construction Co.,125 ...


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