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Disher v. Citigroup Global Markets

April 24, 2007

RICHARD DISHER, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
CITIGROUP GLOBAL MARKETS, INC., D/B/A SMITH BARNEY, DEFENDANT.



The opinion of the court was delivered by: Murphy, Chief District Judge

MEMORANDUM AND ORDER

This matter is before the Court on the Motion for Reconsideration and Vacatur of this Court's Order Entered March 2, 2007 (Doc. 62) and the Motion for Oral Argument thereon (Doc. 64) brought by Defendant Citigroup Global Markets, Inc. ("Citigroup"). For the following reasons, the motions are DENIED.

BACKGROUND

Plaintiff Richard Disher brings this action on behalf of himself and a proposed class of customers of Citigroup and/or a predecessor entity, Salomon Smith Barney, Inc., alleging that Citigroup and/or its predecessor, operating as a full-service securities firm, disseminated materially misleading investment research reports and ratings concerning Internet and telecom stocks to Disher and other holders of those stocks. The action was filed originally in the Circuit Court of the Third Judicial Circuit, Madison County, Illinois, in March 2004, then removed to this Court the following May. In its notice of removal Citigroup asserted federal subject matter jurisdiction on various bases, including: diversity of citizenship, see 28 U.S.C. § 1332; a substantial question of federal law, see 28 U.S.C. § 1331; bankruptcy, see 28 U.S.C. § 1334; and preclusion of the claims of Disher and the proposed class pursuant to the Securities Litigation Uniform Standards Act of 1998 ("SLUSA"), Pub. L. 105-353, 112 Stat. 3227 (codified at 15 U.S.C. § 77p(b)-(f) and 15 U.S.C. § 78bb(f)).*fn1

In August 2004 the Court remanded the case to state court for lack of subject matter jurisdiction, whereupon Citigroup appealed from the order of remand. In August 2005 the United States Court of Appeals for the Seventh Circuit held on the basis of Kircher v. Putnam Funds Trust, 373 F.3d 847 (7th Cir. 2004), that 28 U.S.C. § 1447(d) did not preclude appellate review of the Court's remand order. See Disher v. Citigroup Global Mkts. Inc., 419 F.3d 649, 652 (7th Cir. 2005) ("Disher I"). The Disher I court held further that, on the basis of Kircher v. Putnam Funds Trust, 403 F.3d 478 (7th Cir. 2005), the claims of Disher and the proposed class were precluded by SLUSA and ordered the Court to vacate the remand order and to dismiss the claims of Disher and the proposed class. See Disher I, 419 F.3d at 654-55. In October 2005 the Court executed the mandate of the Seventh Circuit Court of Appeals in Disher I, vacating the order of remand and dismissing the claims of Disher and the proposed class pursuant to SLUSA.

In June 2006 the Supreme Court of the United States granted Disher'spetition for a writ of certiorari in Disher I. See Disher v. Citigroup Global Mkts. Inc., 126 S.Ct. 2964 (2006) ("Disher II"). In light of Kircher v. Putnam Funds Trust, 126 S.Ct. 2145 (2006), which held that appellate review of orders remanding cases removed under SLUSA is precluded by 28 U.S.C. § 1447(d), see 126 S.Ct. at 2157, the Supreme Court vacated Disher I, and remanded the case to the Seventh Circuit Court of Appeals for further proceedings consistent with the Supreme Court's decision in Kircher. See Disher II, 126 S.Ct. at 2964. Thereafter, the Seventh Circuit Court of Appeals issued its mandate stating:

This case is before the court on remand from the Supreme Court of the United States.

The Supreme Court vacated our earlier judgment, see Disher v. Citigroup Global, 403 F.3d 478 (7th Cir. 2005), and remanded the case to us with instructions to reconsider our earlier determination in light of Kircher v. Putnam Funds Trust, 547 U.S. ----, 126 S.Ct. 2145 (2006). See Disher v. Citigroup Global Markets, Inc., 548 U.S. ----, 126 S.Ct. 2964 (2006).

Kircher came from this circuit, and we already have taken action in that matter in light of the decision of the Supreme Court. See In the Matter of Mutual Fund Market-Timing Litigation, 468 F.3d 439 (7th Cir. 2006). The same action is appropriate here. Accordingly, because we lack jurisdiction, we dismiss the appeal.

Disher v. Citigroup Global Mkts. Inc., No. 04-3073, 2007 WL 173824, at *1 (7th Cir. Jan. 22, 2007) ("Disher III"). On March 2, 2007, the Court executed the mandate in Disher III by remanding the case to state court. Citigroup has appealed from the Court's order executing the mandate in Disher III and remanding this case to state court. Additionally, Citigroup has filed a motion for reconsideration of that order and has requested oral argument thereon. The motion for reconsideration has been fully briefed and is ripe for decision. The Court has reviewed carefully the submissions of the parties and concludes that oral argument on Citigroup's motion for reconsideration will not be helpful in this case. Accordingly, the Court now proceeds to rule on the motion for reconsideration.*fn2

DISCUSSION

As an initial matter, the Court notes that Citigroup's motion for reconsideration is somewhat unclear as to the procedural basis for the motion. However, the Court deduces that the motion is brought pursuant to Rule 60 of the Federal Rules of Civil Procedure, consistent with the general rule in this Circuit that requests for reconsideration of a final judgment or order brought more than ten days after the date of entry of such judgment or order are deemed to be brought under Rule 60, rather than Rule 59(e) of the Federal Rules of Civil Procedure. See Talano v. Northwestern Med. Faculty Found., Inc., 273 F.3d 757, 762 (7th Cir. 2001); United States v. 47 West 644 Route 38, Maple Park, Ill., 190 F.3d 781, 783 n.1 (7th Cir. 1999); Britton v. Swift Transp. Co., 127 F.3d 616, 618 (7th Cir. 1997); Mares v. Busby, 34 F.3d 533, 535 (7th Cir. 1994); United States v. Deutsch, 981 F.2d 299, 301 (7th Cir. 1992); Seabolt v. Humphreys, No. 05-C-1198, 2006 WL 2518502, at *1 (E.D. Wis. Aug. 28, 2006). See also Spano v. Boeing Co., No. 06-cv-743-DRH, 2007 WL 1149192, at *6 n.6 (S.D. Ill. Apr. 18, 2007) (quoting Armament Sys. & Procedures, Inc. v. Suncoast Merch. Corp., No. 02 C 5310, 2004 WL 1433588, at *3 (N.D. Ill. June 25, 2004)) (noting the presumption in favor of proceeding under the Federal Rules of Civil Procedure, rather than the inherent powers of a federal court, where a given procedural matter is expressly governed by procedural rules).*fn3

In general, of course, the filing of a notice of appeal confers jurisdiction on a court of appeals and divests a district court of control over aspects of a case involved in the appeal. See Kusay v. United States, 62 F.3d 192, 193 (7th Cir. 1995) (quoting Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982)) ("The filing of a notice of appeal is an event of jurisdictional significance -- it confers jurisdiction on the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal."). Notwithstanding the pendency of an appeal, however, a district court may entertain a Rule 60 motion. See Chicago Downs Ass'n, Inc. v. Chase, 944 F.2d 366, 370 (7th Cir. 1991); Simons v. Gorsuch, 715 F.2d 1248, 1252 (7th Cir. 1983); Gould v. Kemper Nat'l Ins. Cos., No. 93 C 7189, 1995 WL 573426, at *3 (N.D. Ill. Sept. 7, 1995). The district court has authority to deny such a motion but not to grant it. See Boyko v. Anderson, 185 F.3d 672, 675 (7th Cir. 1999); Fejzoski v. Ashcroft, No. 99 C 3392, 2001 WL 1231654, at *1 (N.D. Ill. Oct. 12, 2001); J&W Fence Supply Co. v. United States, No. IP-97-128-C-Y, 1999 WL 1332375, at *1 (S.D. Ind. Dec. 9, 1999). If the district court is willing to grant the motion, it should indicate this on the record, so that the movant may then ask the court of appeals to remand the case to the district court for the purpose of acting on the motion. See Boyko, 185 F.3d at 675; Textile Banking Co. v. Rentschler, 657 F.2d 844, 849-50 (7th Cir. 1981); Binks Mfg. Co. v. Ransburg Electro-Coating Corp., 281 F.2d 252, 260-61 (7th Cir. 1960). See also 11 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 2873 ("[D]uring the pendency of an appeal the district court may consider a [Rule 60] motion and if it indicates that it is inclined to grant it, application then can be made to the appellate court for a remand . . . . This procedure is sound in theory and preferable in practice.") (collecting cases).

In this instance, Citigroup's notice of appeal has divested the Court of jurisdiction to vacate its order executing the mandate of the Seventh Circuit Court of Appeals in Disher III and, for the reasons discussed infra, the Court is not inclined to grant Citigroup's Rule 60 motion. The motion argues, in essence, that the Disher III mandate did not require the Court to vacate its 2005 order dismissing the claims of Disher and the proposed class and that Disher's sole remedy for relief from the Court's 2005 dismissal order is a motion under Rule 60. The Court does not agree. Under Rule 60 a district court may grant relief from a final judgment or order on the following grounds: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, ...


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