FTX Investor Suits Belong In Fla., Boies Tells JPML
By: Enrique Serna
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FTX Investor Suits Belong In Fla., Boies Tells JPML
Written By: P.J. D’Annunzio; Additional reporting by Pete Brush. Editing by Alanna Weissman
Re-posted from Law360, Philadelphia (May 25, 2023, 4:15 PM EDT) — Investor litigation stemming from the collapse of cryptocurrency exchange FTX should be consolidated in Florida despite objections that the claims don’t overlap, plaintiffs’ lawyer David Boies of Boies Schiller Flexner LLP told the Judicial Panel on Multidistrict Litigation on Thursday.
The seven-judge panel, convened in Philadelphia and led by U.S. District Judge Karen K. Caldwell, mulled Boies’ argument that despite there being varying types of defendants, the litigation would benefit from consolidation. The defendants — categorized by Boies as FTX insiders, promoters, professional servicers and financial backers — could be put on separate tracks under the same MDL, he said.
He advocated for the litigation to be based in the U.S. District Court for the Southern District of Florida.
“It is the only place where all four groups of defendants are present now,” Boies said.
Defendant Sequoia Capital‘s attorney, Rishi Zutshi of Cleary Gottlieb Steen & Hamilton LLP, also called for consolidation, arguing that the overarching theme in the case was FTX’s alleged misconduct.
“The facts and circumstances of what FTX’s misconduct was is going to be key to the resolution of all these cases,” Zutshi said. “That’s why this is a classic example of an MDL case.”
However, a number of other attorneys do not favor consolidation.
Andrew Clubok of Latham & Watkins LLP spoke after Boies and argued that the claims are too varied to be consolidated, citing differences between suits against financial institutions and the celebrity promoters he represents, including sports stars Tom Brady and David Ortiz.
Laurence King of Kaplan Fox & Kilsheimer LLP, who represents plaintiffs in the U.S. District Court for the Northern District of California, told the panel that U.S. District Judge Jacqueline Scott Corley was doing a good job of coordinating the FTX cases there.
“The parties are doing what they should be doing and coordination is working,” King said.
Stuart Davidson of Robbins Geller Rudman & Dowd LLP, who also represents plaintiffs, echoed Clubok in arguing that consolidation was not merited.
“There is no overlap whatsoever,” he said, adding that the differences in the cases are “so stark that it defeats the purpose of a multidistrict litigation in this case.”
John Landry, who represents Silvergate Bank and Silvergate Capital, said his clients oppose consolidation because the issues they are facing are different from those of the other defendants.
FTX’s collapse last year resulted in U.S. Department of Justice and U.S. Securities and Exchange Commission investigations in addition to spawning several investor lawsuits. Federal prosecutors allege FTX founder Sam Bankman-Fried and several co-conspirators looted FTX starting in 2019 and ran it into bankruptcy to support his Alameda Research hedge fund.
In addition to lawsuits against FTX’s leadership, several suits against celebrity promoters like Brady, Ortiz, model Gisele Bündchen and, most recently, basketball legend Shaquille O’Neal have been filed.
That JPML panel consists of U.S. District Judges Karen K. Caldwell, Nathaniel M. Gorton, Matthew F. Kennelly, David C. Norton, Roger T. Benitez, Dale A. Kimball and Madeline Cox Arleo.
The plaintiffs are represented by Adam M. Moskowitz and Joseph M. Kaye of The Moskowitz Law Firm PLLC, David Boies, Stephen Neal Zack and Alex Boies of Boies Schiller Flexner LLP, Jose Ferrer of Mark Migdal Hayden LLP, and Stuart Davidson of Robbins Geller Rudman & Dowd LLP.
The defendants are represented by Roberto Martínez, Stephanie A. Casey and Zachary Lipshultz of Colson Hicks Eidson PA, Andrew B. Clubok, Susan E. Engel, Brittany M.J. Record, Marvin S. Putnam, Jessica Stebbins Bina, Elizabeth A. Greenman and Michele D. Johnson of Latham & Watkins LLP, Matthew S. Kahn, Michael J. Kahn, Michael Dore and Jamila MacEbong of Gibson Dunn & Crutcher LLP, David A. Rothstein, Alexander M. Peraza and Eshaba Jahir-Sharuz of Dimond Kaplan & Rothstein PA, Eric A. Fitzgerald and Hillary N. Ladov of McAngus Goudelock & Courie LLC, Edward Soto of Weil Gotshal & Manges LLP, Nathan Bull, Jason D. Strabo, Ellie Hourizadeh and Sarah P. Hogarth of McDermott Will & Emery LLP, Christopher S. Carver, Jason S. Oletsky and Katherine A. Johnson of Akerman LLP, Jeffrey Neiman, Jeffrey Marcus, Michael Pineiro and Brandon Floch of Marcus Neiman Rashbaum & Pineiro LLP and Andrew B. Brettler of Berk Brettler LLP.LLP.
The case is In Re FTX Cryptocurrency Exchange Collapse Litigation, MDL number 3076.
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