NEW YORK (Legal Newsline) - A federal judge has denied New Jersey Attorney General Paula Dow's objection to a $6.5 million settlement reached with financial services provider Morgan Stanley in a class action lawsuit.
U.S. District Judge Victor Marrero wrote on Wednesday that he is not persuaded that the relief requested by Dow is warranted. The settlement resolves allegations against Morgan Stanley stemming from a bid-rigging scheme, though no proof has been offered that the company took part in it.
Dow had argued that the notice of settlement sent to class members was unfair because it required the class member to decide whether to remain in the class before it could determine whether it will receive any payment from the settlement fund, worth $4.95 million.
Also, it asked for unnecessary information from the class member, Dow said, involving financial transactions.
"The notice states that a class member will be 'bound by all of the court's decisions with respect to the settlement,'" a letter sent by Dow's office to Marrero in October said. "The notice is, however, silent about what 'claims are resolved by this settlement,' i.e., the scope of the release.
"In order to determine the scope of the release, a class member has to review the settlement agreement."
The class action lawsuit alleges a conspiracy among brokers and providers in the sale of municipal derivatives. More than 30 parties are alleged to have taken part.
Dow received a notice of preliminary approval of the settlement in August. Many New Jersey-based governmental entities are included in the class.
The interim co-lead plaintiffs attorneys disagreed with Dow's concerns in a letter sent to Marrero on Nov. 4. Megan Jones of Hausfeld LLP wrote that the language in the notice made it clear what claims were being settled and that Dow's request is without precedent in the Second Circuit.
She also compared the released-claims language to that which was used by some state attorneys general in their notice of the opt-in settlement with Bank of America.
"The class notice makes clear that all claimants falling within the settlement class will receive a pro rata payment from the settlement fund, and provides potential class members with the means to determine whether they are included in that class," the letter says.
"Thus, settlement class members are provided with the information Attorney General Dow asserts is necessary - whether they have an eligible claim based on their status as settlement class members.
"To inform settlement class members that they risk receiving no payment at all because they are not a member of the class (i.e., have no eligible claims), as the attorney general suggests, would potentially mislead class members and is unnecessary."
A Star-Ledger report from Friday quotes sources who say Dow is expected to leave her position by the end of the year to pursue becoming a judge.
From Legal Newsline: Reach John O'Brien by e-mail at email@example.com.