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Restraining Order in Securities America Case

Restraining Order in Securities America Case

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Published by DealBook
Temporary restraining order to stay an arbitration hearing by the Financial Industry Regulatory Authority in a case involving Securities America.
Temporary restraining order to stay an arbitration hearing by the Financial Industry Regulatory Authority in a case involving Securities America.

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Published by: DealBook on Mar 04, 2011
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04/30/2012

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THE
UNITED STATES
DISTRICT
NORTHERN
DISTRICT
OF
TE
DALLAS DIVISION
c{i
U.S.
DISTRICT
COURT
;,;t
NOR'llmRN
DISTRICT OF
TEXAS
If
FILED
qURT
FEB
J
82011
A S ~ 
BILLITTERI
v.
SECURITIES
3:
09-cv-O
1568-
F
AMERICA,
INC.,
et al. (Provident
AND
RELATED
CASES
Royalties Litigation)
THIS DOCUMENT
RELATES TO:
ALL
ACTIONSC.
RICHARD TOOMEY,
et
al.
v.3:10-cv-01833-F
SECURITIES
AMERICA, INC.,
et
al.
IN
RE: MEDICAL CAPITAL
Case No.
ML
10-2145
DOC
SECURITIES
LITIGATION
(RNBx) (C.D. Cal.)
THISDOCUMENT RELATES TO:
Limited
transfer
for settlement
McCoy,
SACV09-1084
DOC
(RNBx) (C.D.purposes as Case No. 3-11-cv-Cal.)00191-F (N.D. Tex.)
ORDER
GRANTING
PLAINTIFFS'MOTION
FOR
TEMPORARY
RESTRAINING
ORDER
BEFORE THE COURT are Plaintiffs Joseph Billitteri, the Sharon KreindelRevocable Trust DTD
02/09/2005,
Henry Mitchell, Alvin Sabroff, and June Sabroff's("the Representative Plaintiffs") Motion for Temporary Restraining Order under the AllWrits Act
(Billitteri
Docket No. 202,
Toomey
Docket No. 67, and
McCoy
Docket No.124), filed February
17,
2011. Defendants Securities America, Inc. and SecuritiesAmerica Financial Corporation ("the Settling Defendants")
do
not oppose the Motion.
1 
Case 3:09-cv-01568-F Document 210 Filed 02/18/11 Page 1 of 9 PageID 7722
 
Earlier on February
17,
2011, the Representative Plaintiffs and the Settling Defendantsjointly filed a Motion for Preliminary Approval
of
Partial Class Action Settlement
(Billitteri
Docket No.
199,
Toomey
Docket No. 64, and
McCoy
Docket No. 121), whichnotified the Court
of
a Settlement Agreement reached between the RepresentativePlaintiffs and the Settling Defendants. The parties' Motion seeks the Court's approval
of
a Settlement Agreement between the Representative Plaintiffs
as
representatives
of
theprospective classes in this case and the Settling Defendants. The RepresentativePlaintiffs seek preliminary approval
of
the a Settlement Agreement "on behalf
of
personswho invested through Securities America, Inc. in
(I)
a series
of
shale gas venturessponsored by Provident Royalties, LLC between September 2006 and January 2009, and(2) a series
of
notes sponsored by Medical Capital Holdings, Inc. between November2003 and July 2008." Mot. for Prelim. Approval,
Billitteri
Docket No.
199,
Toomey
Docket No. 64,
McCoy
Docket No. 121, at
1.
Among the relief sought by the parties is acourt order "to preserve the
status quo
pending the Court's final settlement approvaldetermination, preliminarily enjoining all proceedings in federal or state court and allarbitration proceedings by or on behalf
of
members
of
the proposed Settlement Classesagainst Settling Defendants or their Registered Representatives asserting claims arisingfrom its offer and sale
of
Provident Securities or Medical Capital Notes."
See
id.
at
2.
More immediately, the parties seek a Temporary Restraining Order that wouldtemporarily stay an arbitration proceeding scheduled to begin on February 22, 2011 inLos Angeles, California, entitled
Bryan
v.
Securities America,
which is being conductedbefore the Financial Industry Regulatory Authority ("FINRA") and has been captioned as
2 
Case 3:09-cv-01568-F Document 210 Filed 02/18/11 Page 2 of 9 PageID 7723
 
FINRA Arbitration No. 10-01437. The parties also ask the Court to stay two additionalFINRA arbitrations:
Guillaume
v.
Securities America,
FINRA Arbitration No. 09-05740,scheduled to begin in Atlanta, Georgia on February 28, 2011, and
Albino
v.
SecuritiesAmerica et ai,
FINRA Arbitration No. 09-06150, scheduled to begin in Los Angeles,California on March
1,
2011. The claimants
in
these arbitrations would apparently bemembers
of
the proposed settlement class.
If
the arbitration were to proceed, it wouldexpend funds for legal defense that would otherwise be made available to class members.Additionally,
if
the claimants in these arbitrations are fully successful, they could receivea significant portion
of
the funds available to potential class members under the proposedSettlement Agreement. Should the arbitrations be temporarily restrained, funds thatwould otherwise be equitably distributed to members
of
the potential settlement classwould not be depleted. In the Motion for Preliminary Approval, the parties before theCourt seek similar injunctive relief to enjoin other arbitration proceedings scheduled totake place throughout
20
II
that would have the same potential effect on the fundsavailable to all potential class members as the aforementioned upcoming arbitrations.The Representative Plaintiffs and the Settling Defendants ask the Court to exerciseits authority under the All Writs Act to temporarily restrain the arbitrations fromproceeding. The All Writs Act provides, "The Supreme Court and all courts established
by
Act
of
Congress may issue all writs necessary or appropriate in aid
of
their respectivejurisdictions and agreeable to the usages and principles
of
law."
28
U.S.c.
§
16S1(a). Ina complex class action such
as
this one, district courts have been ruled to have theauthority to stay proceedings taking place elsewhere "in aid
of
their respective
3 
Case 3:09-cv-01568-F Document 210 Filed 02/18/11 Page 3 of 9 PageID 7724

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