Estate of Bernard J. Sherlip v. Morgan Stanley

Background

Counsel for Morgan Stanley and Morgan Stanley Smith Barney LLC, together with counsel for the plaintiffs in the Sherlip and Safron cases, submitted a joint letter about coordinating the two actions. The letter states that, under the Court’s November 14, 2024 order in the Safron action, the parties consented to consolidating the Safron action with the Sherlip action. The parties also submitted a joint stipulation and proposed order requesting that the defendants’ deadlines to respond to the existing complaints be postponed until the Court set deadlines for a consolidated complaint and any response to it.

The proposed schedule from the Sherlip plaintiffs and defendants called for motions to appoint interim class counsel, followed by responses and replies; a consolidated complaint 45 days after the appointment order; and the defendants’ answer or motion to dismiss 45 days after the complaint. If a motion to dismiss were filed, the proposed schedule provided additional deadlines for opposition and reply briefs.

The Parties’ Positions

The Sherlip plaintiffs and defendants opposed a motion asking the Judicial Panel on Multidistrict Litigation to centralize cash-sweep cases involving different financial institutions. They argued that the institutions’ programs involved different contracts, disclosures, and decision-making processes, and that the cases lacked common factual issues warranting nationwide centralization.

Safron Capital took the position that the Judicial Panel was the proper forum for addressing the centralization motion and believed centralization was likely. Safron argued that the cases involved a common practice of paying customers low interest through cash-sweep programs and proposed that the deadline for filing a consolidated complaint run from the Judicial Panel’s decision. Safron also proposed shorter response and briefing periods.

The letter noted that another case, McKinney v. Morgan Stanley, had been filed and included statements indicating that it was related to the Sherlip and Safron actions. At the time of the letter, the defendants and the Sherlip plaintiff had not taken a position on whether McKinney should be related and consolidated with those cases.

Court’s Order

Judge Valerie Caproni ordered that, no later than Wednesday, November 27, 2024, the parties submit a joint letter stating whether McKinney should be consolidated with the Sherlip and Safron cases if McKinney was assigned to the Court as a related case. The letter had to be filed on all three case dockets.

This document is a scheduling and case-management order. It does not decide the merits of the claims concerning Morgan Stanley’s cash-sweep program, the proposed nationwide centralization, or any motion to dismiss.