In re Morgan Stanley Data Security Litigation

Background

Objector/Appellant Steven Helfand had filed an appeal in the Morgan Stanley data-security litigation. The plaintiffs moved under Federal Rules of Appellate Procedure 7 and 8 for an appeal bond. The opinion states that, under the settlement, class members would not receive any of the $60 million in cash benefits, Aura Financial Shield coverage, or Kroll’s investigative and recovery services until the appeal was resolved.

Court’s analysis

Federal Rule of Appellate Procedure 7 allows a district court to require an appellant to file a bond or provide other security in an amount needed to ensure payment of appeal costs. The court said an appeal bond protects an appellee—the party responding to the appeal—from the risk that an unsuccessful appellant will not pay those costs.

The court identified four factors relevant to whether a bond should be required: the appellant’s financial ability to post it, the strength of the appeal, any bad-faith or harassing conduct, and the risk that the appellant would not pay costs if unsuccessful. The court stated that each factor supported requiring Mr. Helfand to post a bond. It found the plaintiffs’ requested amount of $25,000 reasonable and appropriate.

Ruling

The court granted the plaintiffs’ motion for imposition of an appeal bond in the amount of $25,000. As a condition of proceeding with his appeal, Steven Helfand must file a $25,000 bond or deposit $25,000 in cash into the court registry. He must file with the clerk and serve settlement-class counsel and Morgan Stanley’s counsel proof that he satisfied the bond requirement within 20 days of the order.