Not every shred of hope is lost for Bernard Madoff trustee Irving Picard in his quest to recover billions from the international banks he has accused of abetting Madoff’s fraud. But it’s looking bleak for the Madoff trustee after the Justice Department filed a brief Friday at the U.S. Supreme Court. In response to the court’s request for the government’s view of Picard’s petition for a writ of certiorari, Solicitor General Donald Verrilli advised the justices to reject Picard’s appeal.
The dismissal in 2013 of Picard’s fraud suits by the 2nd U.S. Circuit Court of Appeals “does not conflict with any decision of (the Supreme Court) or of another court of appeals,” the SG’s brief said. “The decision below also does not preclude customers from pursuing their own actions against (the banks) based on the same alleged conduct that forms the basis of (Picard’s) claims. Further review is not warranted.”
The brief is an arduous trudge through the deep weeds of the law on federal pre-emption of state contribution claims; subrogation rights of the Securities Investor Protection Corporation; and the Bankruptcy Code standing of securities trustees to bring common-law claims on behalf of brokerage customers. If you are in the extremely small group of people for whom these are consequential questions, perhaps you’ll find illumination in the SG’s discussion of the intersection of Picard’s claims with such precedent as Caplin v. Marine Midland and Redington v. Touche Ross. For the rest of us, the brief is notable for the many different ways in which the Justice Department and its co-signer, the Securities and Exchange Commission, undercut Picard’s arguments for Supreme Court review.
According to the filing, the issues are obscure, the 2nd Circuit decision was well-founded and Picard’s appeal suffers from procedural defects because he didn’t even raise at the 2nd Circuit some of the arguments he’s asserting in his cert petition. In short, the Justice Department and the SEC said, there’s no justification for the Supreme Court to revive Picard’s suits claiming that JPMorgan Chase, UBS, HSBC and Unicredit made possible Madoff’s infamous Ponzi scheme.
It’s still possible that four justices will vote to take the case when it comes up for conference next term. A fascinating empirical study of cert grants and SG briefs, published in the George Mason Law Review in 2009, concluded that the Supreme Court followed the Justice Department’s recommendation in about 80 percent of the cases in which it invited briefing by the SG between 1998 and 2004. But in 18 percent of the cases in which the SG recommended against review, the justices nonetheless granted cert. Those aren’t great numbers for Picard, but his chances of a hearing at the Supreme Court are still better, according to the 2009 study, than they’d have been if the justices had not asked for the Solicitor General’s brief. A spokeswoman for Picard and his BakerHostetler team said in an emailed statement that the trustee and his lawyers “respectfully disagree” with the government’s brief and are still hoping that the Supreme Court grants cert and resolves the important issues the case presents.