Judge Wood
http://nycourts.law.com/CourtDocumentViewer.asp?view=Document&docID=117284
PLAINTIFFS’ amended complaint charged defendants with unjust enrichment and civil conspiracy in connection with their promotion of the COINS Strategy tax-shelter scheme. The IRS disallowed plaintiffs’ claimed tax savings and required them to pay substantial settlements. On March 30, 2009, the court ruled that plaintiffs sufficiently pleaded claims of direct and indirect fraud based on a theory of civil conspiracy but did not sufficiently plead defendants’ vicarious liability for fraud under an agency theory. The court denied reconsideration of its March order, ruling that the U.S. Supreme Court’s decision in Ashcroft v. Iqbal was not an intervening change in controlling law concerning pleading standards under Federal Rules of Civil Procedure 8 and 9(b). It also declined to sever the claims of certain groups of individual plaintiffs. Finding that the groups’ claims had a sufficient “logical relationship” to be considered as arising from the same transaction or occurrence, and that common questions of fact and law were central to their adjudication, the court held that the groups’ joinder satisfied Rule 20(a)(1). The court was also not persuaded by defendants’ argument that severance of each plaintiff group’s claims was necessary to avoid unfair prejudice to defendants and to serve interests of judicial economy.
