IN RE CENDANT CORPORATION PRIDES LITIGATION WELCH & FORBES, INC. , an institutional… v. Cendant Corporation

Filed November 22, 2000
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 00-5199
IN RE CENDANT CORPORATION PRIDES LITIGATION
WELCH & FORBES, INC. , an institutional investment
manager, individually and on behalf of all others similarly
situated
v.
CENDANT CORPORATION; MERRILL LYNCH & CO. ;
CHASE SECURITIES, INC.; HENRY R. SILVERMAN;
WALTER A. FORBES; COSMO CORIGLIANO
CENDANT CORPORATION,
Appellant
Appeal from the United States District Court
for the District of New Jersey
(D. C. Civ. No. 98-cv-02819)
District Judge: Honorable William H. W alls
Argued
October 25, 2000
Before: MANSMANN, SCIRICA and FUENTES,
Circuit Judges.
(Filed: November 22, 2000)

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Michael Rosenbaum, Esquire
(ARGUED)
Carl Greenberg, Esquire
Budd, Larner, Gross, Rosenbaum,
Greenberg & Sade
150 John F. Kennedy Parkway
CN 1000
Short Hills, NJ 07078-0999
Samuel Kadet, Esquire
Skadden, Arps, Slate, Meagher &
Flom
Four Times Square
New York, NY 10036
Counsel for Appellant
Roger W. Kirby, Esquire (ARGUED)
Kirby, McInerney & Squire
830 Third Avenue 10th Floor
New York, NY 10022
Lead Counsel for the Appellee
PRIDES Class
OPINION OF THE COURT
MANSMANN, Circuit Judge.
Cendant Corporation and Cendant Capital I ("Cendant")
appeal the District Court' s orders permitting certain late
claims and late cures to participate in an agr eed-upon
settlement of a securities class action suit. Cendant claims
that the District Court erred in failing to enforce the
settlement agreement as written, and instead, in effect,
imposed upon the parties a settlement other than the one
to which they agreed. Further, Cendant claims that the
District Court erred by applying the "excusable neglect"
standard to permit class members who submitted untimely
claims to participate in the settlement. Finally, Cendant
argues in the alternative that even if the "excusable neglect"
standard were applicable here, the District Court erred by
allowing certain claimants to participate in the settlement
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since those claimants failed to demonstrate "excusable
neglect." The PRIDES Class defends the District Court' s
conclusions.
With respect to the claim that the District Court failed to
enforce the settlement agreement as written, we must
determine, first, whether the District Court had the power
to extend the deadlines it had inserted into the Settlement
at the request of the parties and had r etained the discretion
to allow the late-filed and late-cured claims, and second, if
so, whether the District Court in applying the "excusable
neglect" standard, did so appropriately. We conclude as to
the first question that the court-order ed deadline for
submitting claims was not part of Cendant' s bar gain and
thus the date was not forever unalterable. On the contrary,
we agree with the District Court that under both its
inherent equitable powers, and under the specific terms of
Fed. R. Civ. P. 6(b)(2), the District Court r etained the power
to modify the Stipulation terms. As to the second question,
we agree, too, with the District Court, that the appropriate
standard under which requests to allow tar dy proofs of
claim or requests to cure is "excusable neglect." Finally, we
find that the District Court did not abuse its discretion in
concluding that the late claimants successfully
demonstrated that "excusable neglect" caused the delays.
We will, therefore, affir m.
Because this litigation is already the subject of at least
three published opinions, each exhaustively setting forth
the procedural and factual background, we will not do so
here, but instead refer interested parties to these prior
dispositions. 1 We set forth only those facts crucial to a
resolution of the disputes here.2
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1. Opinions in In re Cendant Corp. Litig. , 182 F.R. D. 144 (D.N. J. 1998),
In re Cendant Corp. Prides Litig., 51 F . Supp. 2d 537 (D.N.J. 199), and
In re Cendant Corp. Prides Litig., 189 F . R.D. 321 (D.N.J. 1999), provide
a full factual and procedural history of this litigation.
2. Bearing in mind the expedited nature of this appeal, for our recitation
of the pertinent historical facts we have relied heavily upon the appellee' s
brief. These facts are of record, and for the most part, not disputed by
the parties.
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I.
On March 17, 1999, the parties presented a proposed
settlement agreement between Cendant and the class of
persons who purchased Income or Growth Prides
("PRIDES") during the period February 24, 1998 through
April 15, 1998.
The draft Stipulation of Agreement of Settlement and
Compromise (the "Stipulation") and the draft Order
Regarding Proposed Class Action Settlement, Settlement
Hearing and Notice of Proposed Settlement (the"Settlement
Hearing Order" ) jointly submitted by the parties to the
District Court in connection with the March 17, 1999
hearing, did not contain any reference to a specific date as
the deadline for submission of Proofs of Claim. The
Settlement Hearing Order contained a blank space for the
date, to be selected and inserted by the District Court: "The
deadline for submitting Proofs of Claim (the"Deadline")
shall be _______________________, 1999." The Stipulation defined the
Deadline only as the date to be identified as the deadline in
the notice to be sent to class members. At the hearing, the
District Court selected and then wrote in, by hand, the date
of "June 18, 1999" in the blank that had been left by the
parties for the Deadline in the draft Hearing Or der. The
District Court also filled in other dates that had been left
blank by the parties in the Draft Hearing Or der, the
determination of which followed from the selection of June
18, 1999. The District Court approved the Prides
Settlement by an order dated June 15, 1999.
Under the terms of the Stipulation, Cendant agreed to
distribute one Right, with a theoretical value of $11. 71, for
each PRIDES owned as of the close of business on April 15,
1998. See also In re Cendant Corp. Prides Litig., 51 F. Supp.
2d at 539-40.3 To collect the Rights each PRIDES owner
was required to submit a valid proof of claim by June 18,
1999, the deadline selected by the District Court at the
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3. Cendant agreed to issue two New Income Prides or two New Growth
Prides to any person who delivered to Cendant three Rights, together
with existing Income or Growth Prides, r espectively, before the expiration
of the close of business on February 14, 2001, unless the Prides are
amended. Id.
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hearing and inserted into the Hearing Order . Under the
terms of the Settlement Hearing Order , a settlement
administrator, Valley Forge Administrative Services, was to
verify the proofs of claim. If the administrator rejected a
claim, each claimant would be given twenty days after the
administrator mailed a request to cure its claim. Further,
the administrator was required to send afinal notice of
disallowance to claimants within 60 days of the deadline for
the submission of proofs of claim, i.e., within 60 days of
June 18, 1999. The deadlines were provided in both
individual and published class notices. In short, the
deadlines respecting the submission of pr oofs of claim and
cures of proofs of claim had not been negotiated by the
parties, but rather these deadlines had been supplied by
the District Court in the order preliminarily approving the
settlement.
Accordingly, claims were submitted and during July
1999, the claims administrator issued requests to cure, and
on August 17, 1999, rejection letters. In addition, although
not obligated to do so, on August 5, 1999, the
administrator mailed a second request to cur e to most
institutional clients, and although not obliged to do so, on
August 27, 1999, mailed another letter urging claimants
whose claims or cures were being attacked as being
untimely to provide explanation to the District Court by
September 7, 1999.
On September 7, 1999, Cendant filed a motion to
disallow late and purportedly deficient pr oofs of claim.
Cendant objected to fifty-four claims filed after the June 18,
1999 deadline, one hundred and forty-one claims accepted
by the administrator after the twenty-day time-to-cure
period had expired, and twelve claims that Cendant
asserted were supported by insufficient documentation.
Claims for approximately 20.7 million Rights had not been
disputed.
The PRIDES Class, in response, submitted a brief and
supporting papers on behalf of class members whose
claims were being disputed generally, and in particular on
behalf of certain class members. The PRIDES Class also
filed a cross-motion to extend the time forfiling proofs of
claim and to extend the time to respond to the
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administrator' s requests to cure. The PRIDES Class
asserted that those claims should be allowed that either
were set in motion toward the administrator by June 18,
1999 or were cured by August 17, 1999, or were
accompanied by an explanation for tardiness; and were
completed and substantiated to the reasonable satisfaction
of the administrator. At a hearing held on October 6, 1999,
the District Court described its role as follows:
I select the date which is subject to change. And you
[Cendant] and everyone else involved in this case
knows that that date was subject to change based
upon cause.
By a decision dated October 21, 1999, the District Court
denied Cendant' s motion and granted that of the PRIDES
Class, extending the deadline for the submission of proofs
of claim from June 18, 1999 to September 7, 1999, and
extending the date for the submission of papers in r esponse
to requests to cure from August 17, 1999 (the latest
possible date for submission under the District Court' s
previous order) to September 7, 1999 as well. See In re
Cendant Corp., 189 F.R.D. 321, 327. The District Court
determined that each late claim should be examined under
an "excusable neglect" standard and that the District Court
would examine each late claim or cure filed before
September 7, 1999 to determine if ther e had been
"excusable neglect, " and if the claim wer e otherwise valid.
The District Court made clear that it would consider only
information that claimants had supplied prior to the
extended cut-off date of September 7, 1999.
The District Court expressly relied upon the Court' s
general equitable power to define the scope of class action
judgments and settlements and Fed. R. Civ. P . 6(b)(2),
which permits courts to enlarge the time to respond to
court ordered deadlines. "Until the fund created by the
settlement is actually distributed, " the District Court held,
quoting the Second Circuit, "the court r etains its traditional
equity powers . . . to protect unnamed, but interested
persons." Id. (quoting Zients v. LaMorte, 459 F. 2d 628, 630
(2d Cir. 1972)).
The District Court determined that any extension of the
June 18, 1999 deadline for filing proofs of claim would "not
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change the bargained-for terms of the Stipulation" because
the parties had not negotiated for a date-certain but left the
date blank for insertion by the District Court. Id. at 324-25.
The District Court considered In re Crazy Eddie Sec.
Litig. , 906 F. Supp. 840 (E. D.N.Y . 1995), a case in which
the United States District Court for the Easter n District of
New York rejected a similar argument by a defendant that
the Court-ordered deadline was "an integral part of the
bargain" because the proof of claim"simply contain[ed] a
blank where the date should be inserted." As the District
Court here noted:
The Crazy Eddie court . . . rejected defendant' s
argument . . . because (1) the Proof of Claim "simply
contain[ed] a blank where the date should be inserted";
(2) the judge who entered the settlement or der
determined the deadline; (3) under the ter ms of the
settlement, the claimants were given time to cure
deficient claims; and (4) the settlement allowed the
court to review rejected claims. A similar situation is
present here. Like the Crazy Eddie settlement deadline,
the June 18 deadline was left blank in the Mar ch 17
Order and was set by the Court. Further , the Cendant
settlement allows claimants time to cure and permits
the Court to review the claims. The Court, ther efore,
cannot conclude that the June 18 deadline was an
essential part of Cendant' s bargain. It follows that
Cendant will not be prejudiced by failing to r eceive its
benefit of the bargain if the Court extends the deadline
for filing proofs of claim.
(citations omitted. )
The District Court also held that Cendant was unable to
show immediate economic dislocation, impact or har m to
the corporation if the District Court were to extend the
deadline for the filing of claims. The District Court noted
that "the time obligation remains the same as before with
the original issue."
The District Court determined that "in the aggregate the
claimants' neglect to strictly adhere to the deadlines for
filing proofs of claim and/or responding to requests to cure
is excusable. " The District Court emphasized that by virtue
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of the extension of time, "Cendant will not be unreasonably,
nor palpably, nor illegally harmed . . . because the Court
iterates the original limits of . . . Cendant' sfinancial
obligations willingly undertaken [$341,480,861] have not
been expended nor has the potential number of issued
rights, [29,161,474] increased."
On January 14, 2000, the District Court issued an or der
allowing certain late claims respecting 1,727,991 Rights
and disallowing others, and by an order dated February 22,
2000, the District Court authorized distribution of Rights to
settling PRIDES Class members and designated the October
and January decisions as final and appealable judgments.
Cendant now appeals, asserting that the rights of late-
filing and late-curing class members were extinguished
after June 18, 1999, and twenty days following the Notices
of Cure, respectively, and that, as such the District Court' s
allowance of late-filed and late-cured claims was error.
We review the District Court' s modification of its own
order establishing a deadline for abuse of discretion.
Dominic v. Hess Oil V.I., 841 F.2d 513, 516 (3d Cir. 1988),
see also Adkins v. United States, 816 F. 2d 1580, 1581 (Fed.
Cir. 1987). Similarly evaluated under an abuse of discretion
standard is the District Court' s allowance of late claims in
a class action claims settlement. In re Gypsum Antitrust
Cases, 565 F.2d 1123, 1128 (9th Cir . 1977). We have held
as to abuse of discretion, generally, that"an abuse of
discretion arises when the [D]istrict[C]ourt' s decision ` rests
upon a clearly erroneous finding of fact, an errant
conclusion of law or an improper application of law to
fact.' " Oddi v. Ford Motor Co., 2000 WL 1517673, *7 (3d
Cir. 2000) (citation omitted). An abuse of discretion may
also occur "when no reasonable person would adopt the
district court' s view." Id. Finally," we will not interfere with
the [D]istrict [C]ourt' s exercise of discretion ` unless there is
a definite and firm conviction that the court . . . committed
a clear error of judgment in the conclusion it reached upon
a weighing of the relevant factors.' " Id. quoting Hanover
Potato Products v. Shalala, 989 F .2d 13, 127 (3d Cir. 1993).
Cendant, which seeks to overturn the District Court' s
decision, contends that our review over this entire case
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should be plenary. This assertion follows fr om Cendant' s
leitmotif that this case is solely one of contract
"interpretation." While basic contract principles do indeed
apply to settlement agreements, several times we have held
that contract interpretation is a question of fact, and review
is according to the clearly erroneous standard. Harkins Co.
v. Waldinger Corp. 796 F.2d 657 (3d Cir. 1986); Ram
Construction v. American States Ins., 749 F . 2d 1049, 1052-
53 (3d Cir. 1984). In contrast, contract construction, that
is, the legal operation of the contract, is a question of law
mandating plenary review.4Harkins, 796 F.2d at 659. Here,
contract interpretation, and thus the clearly erroneous
standard, governs the District Court' s factual appraisal that
the June 18 deadline was not part of Cendant' s bar gain
especially where, as here, the Court supplied the date. We
have stated that "a finding of fact is clearly erroneous
when, after reviewing the evidence, the court of appeals is
left with a definite and firm conviction that a mistake has
been committed." United States v. Various Articles of Merch.,
2000 WL 1573084, *5 (3d Cir. 2000) (citation omitted); see
also United States v. United States Gypsum, 333 U.S. 364,
395 (1948).
II.
A. The District Court' s Power to Modify the Stipulation
Cendant claims that the District Court erred in failing to
enforce the settlement agreement as written, and instead,
in effect, imposed upon the parties a settlement other than
the one to which they agreed. In essence, Cendant asserts
that claims upon a share of the Settlement fund become
worthless at the stroke of midnight on certain dates or
upon the failure of punctilious document compliance.
Cendant either portrays the dates as a crucial "bargained-
for" part of the settlement negotiations, or mor e subtly,
alternatively portrays the iron-clad, absolute nature of the
deadlines as the crucial "bargained-for" part of the
settlement negotiations. The PRIDES Class has maintained
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4. See Ram Construction, 749 F. 2d at 1052-53, for an exhaustive
discussion of the distinction between the definitions of interpretation and
construction and the respectively applicable standards of review.
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throughout this case that the parties did not negotiate the
June 18, 1999 deadline for filing proofs of claim, but rather
that the District Court selected that date. The District
Court found not only that the deadline had been left blank
and was set by the court, but also that the June 18
deadline was not an "essential part of Cendant' s bargain."
These factual findings can only be overtur ned by our
determination that they are "clearly erroneous." We find
that since the deadline date was not agreed upon by the
parties nor set by them, these facts are not"clearly
erroneous," but rather in concert with a plain reading of the
Stipulation and the history of the case in general. 5
Examining the "four corners" of the Stipulation as a
contract,6 as Cendant urges us to do, we observe that the
Stipulation itself anticipates the need for some claimants to
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5. This is one crucial way in which this case is distinguishable from In
re ML-Lee Aquisition Fund II, 1999 WL 184135 (D. Del. 1999). In ML-Lee,
the District Court for the District of Delawar e was asked to use its
equitable powers to make incidental modifications to a settlement
agreement. It declined to do so, while r ecognizing that it possessed those
equitable powers. The court held that "under the circumstances of the
instant case, equitable principles do not require the court to modify the
Settlement Agreement." Id. at *2. The court specifically found that the
parties "negotiated and bargained for the deadline" to submit forms and
the date by which to respond to requests to cures, and that to provide
time extensions would, under the specific facts there, substantially
change the negotiated bargain. Id.
6. Also supporting our conclusion here r egarding deadlines is New York
contract law, which governs this case. The District Court found that this
Stipulation did not include a "time is of the essence" clause. Under New
York law, "parties are presumed to have agreed that time is of the
essence unless there is contract language to the contrary, " in actions at
law, however, "the converse is true in an action in equity . . . ." Towers
Charter & Marine v. Cadillac Ins., 894 F . 2d 516, 523 (2d Cir.
1990)(emphasis supplied)(citation omitted). See also Lusker v. Tannen,
90 A.D. 2d 118, 124, 456 N.Y.S.2d 354, 357 (1st Dept. 1982)("[T]he rule
in equity is that the time of performance will not be considered of the
essence unless it affirmatively appears that the parties regarded it as a
material consideration. "). Though Cendant brings to our attention a
clause in the Stipulation prohibiting modification of its terms other than
in a writing signed by the parties, this clause does not bind the District
Court, but rather is merely a method for the parties themselves to
effectuate changes.
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cure their proofs of claims, and the need for an extension
of time in which to do so. The Stipulation pr ovides, in
pertinent part:
A claimant shall have twenty (20) days after the
mailing of such Request to Cure to respond thereto or
to explain why substantial compliance therewith
cannot be made. Failure to respond to such Request to
Cure . . . shall constitute consent to . . . disallowance
of the claim. . . .
and
[w]ithin 20 days after the date of mailing of such Notice
of Disallowance, any unresolved objection that Cendant
has to any determination shall be submitted to the
Court for summary disposition on an expedited basis.
The Court shall hear and resolve the validity of all
Proofs of Claim pursuant to the Settlement Hearing
Order.
The explicit inclusion of a mechanism in the Stipulation for
curing deficient claims after June 18, 1999, underscores
the flexibility of that deadline. Compar e Crazy Eddie, 906 F.
Supp. at 845 ("[T]he anticipated flexibility in processing
claims is also apparent in [the] paragraph . . . which
permits the Claims Administrator to give class members
with deficient claims an opportunity to cur e.").
Though Cendant argues on appeal that they and the
Stipulation document ascribed to the District Court only
the ministerial responsibilities of interpr eting and enforcing
the terms of an ordinary contract, the Stipulation actually
places into the District Court' s jurisdiction ongoing
authority over the Settlement, and with that comes the
discretion necessary to exercise jurisdiction. The
Stipulation provides that the District Court shall retain
"jurisdiction over the implementation of the Settlement and
the distribution of the Rights, the Additional PRIDES, the
New PRIDES, and the Special PRIDES." Thus, we do not
find error in the District Court' s conclusion that, based
upon the Stipulation itself, "the Cendant settlement allows
claimants time to cure and permits the Court to review the
claims"; nor do we find error in the District Court' s
conclusion that it could, without upsetting the bar gained-
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for terms of the Stipulation, modify particular dates to file
and cure claims.
In addition to deriving its authority from the terms of the
Stipulation itself, the District Court, as it cogently
articulated, has the general equitable power to modify the
terms of a class action settlement. Though several aspects
of this case are governed by straight contract law,
Cendant' s argument that this case is gover ned only by
black-letter contract law is unavailing. In a class action
settlement, a court retains special responsibility to see to
the administration of justice. It is worth noting at this
juncture that the foundation of this settlement litigation
was a securities fraud class action against Cendant alleging
overvaluation of stock, not a mere contract between
neighboring farmers for the purchase of a milk cow. Here,
the District Court retains the "ultimate r esponsibility" for
the protection of class members. Maywalt v. Parker &
Parsley Petroleum, 67 F.3d 1072, 1078 (2d Cir. 1995).7 We
find right on target the District Court' s assertion of its
traditional equity powers over the disposition of the
settlement here:
"Until the fund created by the settlement is actually
distributed, the court retains its traditional equity
powers . . . to protect unnamed, but inter ested
persons." Zients v. LaMorte, 459 F . 2d 628, 630 (2d Cir.
1972). A Court may assert this power to allow late-filed
proofs of claim and late-cured proofs of claim. See id.;
see also In re Agent Orange Product Liability Litig., 689
F. Supp. 1250, 1263 (E.D.N.Y. 1988); The Manual For
Complex Litig. §30.47 at 248 (3d ed. 1995) ("Adequate
time should be allowed for late claims befor e any
refund or other disposition of settlement fund occurs.").
Courts which have considered requests to extend
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7. Indeed, we have remarked in another context that class actions
themselves are grounded in equity. See, e.g., Grimes v. Vitalink Comm.,
17 F. 3d 1553, 1570 (3d Cir. 1994)("[E]quity' s long experience with the
administration of estates commonly requiring r esolution of competing
claims to a res among various kinds of cr editors and classes of
beneficiaries provide[s] an additional underpinning for the remedy of
class relief with its origin in equity." ).
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deadlines for filing proofs of claim and other settlement
documents have generally subjected each request to a
general "good cause" analysis. See Kyriazi v. Western
Elec. Co., 647 F. 2d 388, 396 (3d Cir . 1981) (affirming
trial court' s application of a good cause standar d to
claims of plaintiffs who failed to opt-in to settlement by
deadline); In re Gypsum Antitrust Cases , 565 F. 2d
1123, 1128 (9th Cir. 1977) (affirming district judge' s
decision that he "would have discretion to permit a
claim and allow a late claim when there' s good and
sufficient cause shown therefor"); see also Grace v. City
of Detroit, 145 F. R.D. 413, 414-15 (E. D.Mich. 1992)
("The adoption of the good cause standard[to a
decision to accept untimely claim forms] is` an
appropriate exercise of the trial court' s discretion in
defining the scope of the class action judgment and
settlement.' ")
(some citations omitted).
Consequently, far from serving a merely ministerial
function with respect to the disposition of a class action
settlement, when parties avail themselves of the District
Court to implement such a settlement, the District Court
may use its traditional powers to implement the settlement
fairly and in accordance with its usual r ole. This applies
not only to its powers in equity, but also to the statutory
powers granted by Congress, such as the Federal Rules of
Civil Procedure.
When the District Court undertakes to implement a
settlement such as this, the Federal Rules of Civil
Procedure are impliedly part of the package through the
Court' s associated orders. We do notfind any fault,
therefore, with the District Court' s locating within Rule
6(b)(2) yet an additional source of its power to modify the
deadlines here. Rule 6(b)(2) provides, in pertinent part:
When by . . . order of court an act is r equired or
allowed to be done at or within a specified time, the
court for cause shown may [enlarge the time] at any
time in its discretion . . . (2) upon motion made after
the expiration of the specified period per mit the act to
be done where the failure to act was the r esult of
excusable neglect . . . .
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Here, the District Court treated the r equests to accept late-
filed or late-cured proofs of claim as motions to enlarge the
time to comply with a court-ordered deadline and was
prepared to grant the late claimants r elief if they could
prove that the "failure to act was the result of excusable
neglect" in accordance with Rule 6(b)(2). T reating the
claimants' requests in this manner was well within the
District Court' s discretion. The standar d under which the
District Court must evaluate such claims is plainly
articulated in the Rule, though the particulars of precisely
what is meant by "excusable neglect" has been left to the
federal courts to parse.
B. The District Court' s Findings of "Excusable Neglect"
Cendant further asserts on appeal that even if the
"excusable neglect" standard applied her e, the District
Court erroneously concluded that certain claimants had
demonstrated "excusable neglect" for their failure to file
claims or to respond to requests to cur e timely. The
PRIDES Class counters that the District Court pr operly
held that "in the aggregate, the claimants' neglect to strictly
adhere to the deadlines . . . is excusable." We agree with
the PRIDES Class' argument and find that the District
Court did not abuse its discretion in this r egard.
In Pioneer Inv. Servs. v. Brunswick Assoc. Ltd.
Partnership, 507 U.S. 380 (1993), the Supr eme Court held
that the rule authorizing courts to accept latefilings where
the failure of a party to act is the result of "excusable
neglect" contemplates that courts are per mitted, where
appropriate, to accept late filings caused by inadvertence,
mistake, or carelessness, as well as by intervening
circumstances beyond a party' s control. At the outset, the
Supreme Court pronounced that the inquiry is essentially
equitable, and necessitates considering a situation' s
totality:
Because Congress has provided no other guideposts for
determining what sorts of neglect will be considered
"excusable," we conclude that the deter mination is at
bottom an equitable one, taking account of all r elevant
circumstances surrounding the party' s omission.
Id. at 395.
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While "all relevant circumstances" are properly
considered, the Supreme Court specifically delineated four
factors:
These include . . . the danger of prejudice to the
debtor, the length of the delay and its potential impact
on judicial proceedings, the reason for the delay,
including whether it was within the reasonable control
of the movant, and whether the movant acted in good
faith.
Id. In the wake of Pioneer, we have imposed a duty of
explanation on District Courts when they conduct
"excusable neglect" analysis. In Chemetr on Corp. v. Jones,
72 F.3d 341 (3d Cir. 1995), we addr essed the Bankruptcy
Rule that permits courts to accept late-filed claims when
the late-filing was due to "excusable neglect. " In Chemetron
we held that the bankruptcy court' s "analysis failed to
adequately consider the totality of the circumstances
presented." Id. at 349. In the case before us now, the
District Court discussed the Pioneer standar d, considered a
totality of the circumstances, and appraised each of the
four Pioneer factors seriatim. 8
Under the prejudice prong, as already discussed supra,
the District Court concluded that an "extension of the June
18, 1999, deadline for filing proofs of claim would not
change the bargained-for terms of the Stipulation." In
addition, the District Court found that the length of the
delay, which amounted to a few months, did not involve a
"substantial lapse of time. " Cendant ar gues that it will be
harmed by the time extension because, in essence, claims
that it believed should have been barred under a strict
deadline might ultimately be permitted by the District
Court through a time extension. Since unclaimedfinancial
obligations from the pool of $341,480,861 will revert to
Cendant, it is easy to ascertain Cendant' s inter est in
_________________________________________________________________
8. Additionally, the District Court mentioned the three factors we
identified in a case predating Pioneer, Dominic v. Hess Oil V.I., 841 F. 2d
at 517 (inadvertence reflecting professional incompetence, excuse
incapable of verification, complete lack of diligence), though these are
arguably integrated within the fourth Pioneer factor, "reason for the
delay."
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challenging every claim. We find unavailing for reasons
already discussed, however, Cendant' s passionate and
recurring argument that it bargained to make this fund
available only to those claimants who adhered to strict
deadlines. We agree with the District Court that Cendant' s
bargained-for agreement to make available up to
$341,000,000+ of Rights remains unchanged with the time
extension. As to "impact on judicial proceedings," we
properly defer to the District Court' s conclusion that "a
slight enlargement of time to file . . . will not unreasonably
hamper proceedings before the Court. "
The District Court found that the reasons for the delays
were satisfactory, though because we find that the District
Court' s general extension of the cure deadline to September
7, 1999, was not an abuse of discretion, we agr ee with the
PRIDES Class that the District Court need not have
scrutinized claims meeting that extended date with the
same exactitude as those claims missing even that
deadline. Nevertheless, we find the District Court to have
acted within its discretion in excusing those claims which
it did. Without reviewing each claim independently, we set
forth several examples which should suffice; the failure of
claimants to receive notice, illness, misr outed mail,
intervening company name changes, or short inter nal mail
system delays all seem to us to fall within the ambit of
reasons which a District Court, in its discr etion, may
reasonably accept under "excusable neglect." Finally, while
Cendant suggests that the District Court should have
rejected many excuses because in those cases the
claimants were sophisticated investors or because, in
essence, the problem was the claimants' own fault and
preventable or foreseeable, we disagr ee; neglect "is not
limited strictly to omissions by circumstances beyond the
control of the movant." Pioneer, 507 U.S. at 391. In
permitting the claims it did, the District Court did not
abuse its discretion.
III.
In conclusion, where the parties affir matively subjected
themselves to the Court' s jurisdiction by seeking its
assistance in administering the settlement and deliberately
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left the important dates to the Court' s discr etion without a
time-of-the-essence clause, we find that the District Court
had the power to modify the terms of the Stipulation
originally set by the Court and had the discr etion to allow
late-filed and late-cured claims. We also find that the
District Court did not abuse its discretion in applying the
"excusable neglect" standard to per mit the claims it did in
this case. Accordingly, we will affir m the decision of the
District Court.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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