United States District Court, N.D. Illinois, Eastern Division
October 11, 2005.
UNITED STATES OF AMERICA, Plaintiff,
THE NORTHERN TRUST COMPANY, as Trustee of the Caterpillar Inc. Master Trust, Defendant. UNITED STATES OF AMERICA, Plaintiff, v. THE NORTHERN TRUST COMPANY, as Trustee of the Inland Steel Industries Pension Trust, Defendant.
The opinion of the court was delivered by: JAMES MORAN, Senior District Judge
MEMORANDUM OPINION AND ORDER
In this long drawn-out controversy Northern Trust Co. has
itself made its peace with the government, but it has brought two
new actions in hopes, apparently, that the new defendants can
somehow show that Northern Trust Co. should not be liable (so
they are not liable) or can be required to assume the economic
burdens of its liability, or it can rescind the underlying
transactions and thus extinguish the tax liability arising from
them. The two cases are Northern Trust Co. v. MS Securities
Services, Inc. (Morgan Stanley), Bear Stearns and Company, Inc. and Bear Stearns Security Corporation (Bear
Stearns), 05 C 3370, pending before Judge Zagel, and Northern
Trust Co. v. Merrill Lynch, et al., 05 C 3373, assigned to Judge
Gottschall. Northern Trust Co. moves to have those cases
designated as related cases to those pending before this court.
Morgan Stanley does not object to the relatedness motion. Merrill
Lynch does object, with memoranda explaining why. Bear Stearns
also objects, relying on the Merrill Lynch submissions. We grant
The new cases should be heard by one judge, and the choices are
this court or Judge Zagel, who has the lowest numbered case of
the two new cases. The two new cases are related to each other in
the classic sense. The relatedness of those cases to the 1998
cases is less apparent, particularly as Merrill Lynch represents
that it has no intention of contending that Northern Trust Co.
has no tax liability. It apparently becomes a dispute between
Northern Trust Co. and the brokerage defendants, with the
government looking on.
The reason, however, for the new cases, was Northern Trust's
concern that the peculiarities of the tax laws did not permit it
to bring the brokerage defendants into the 1998 cases. The
government, we are told, has now advised Northern Trust Co. that
it is mistaken. So now it could, presumably, dismiss the new
cases and start over here. We are also mindful that the amount of
overlap between the old and new cases has yet to be determined
and could be considerable. While the court has only a limited
understanding of the QFV transactions, it does have a head start
on Judge Zagel. Finally, there can be no dispute that the cases,
together, relate to the economic consequences of the QFV
transactions. We think those are reasons enough to litigate all
the disputes here. We are mindful that judges denying relatedness
motions have sometimes imposed somewhat stringent standards but
they were denying, not granting, the motion. The ultimate
judgment is not substantive; it only relates to which judge will hear a matter that is going to be heard by
one of the judges in any event. We think this court should be the
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