United States District Court, W.D. North Carolina, Charlotte Division
KENNETH D. BELL, in his capacity as court-appointed Receiver for Rex Venture Group, LLC d/b/a ZeekRewards.com, Plaintiff,
TODD DISNER, in his individual capacity and in his capacity as trustee for Kestrel Spendthrift Trust; TRUDY GILMOND; TRUDY GILMOND, LLC; JERRY NAPIER; DARREN MILLER; RHONDA GATES; DAVID SORRELLS; INNOVATION MARKETING, LLC; AARON ANDREWS; SHARA ANDREWS; GLOBAL INTERNET FORMULA, INC.; T. LEMONT SILVER; KAREN SILVER; MICHAEL VAN LEEUWEN; DURANT BROCKETT; DAVID KETTNER; MARY KETTNER; P.A.W.S. CAPITAL MANAGEMENT LLC; LORI JEAN WEBER; and a Defendant Class of Net Winners in ZEEKREWARDS.COM; Defendants.
C. Mullen United States District Judge
matter is before the Court upon motion of Net Winner Class
members Darlene Armel, Ronald Cox, Frank Scheuneman, Edward
Rourke, Theresa Bridie, Marc Kantor, Paola Kantor, Tim Rice,
Wayland Woods and two movants listed only as D.W. and T.H.
(collectively “Movants”) to intervene in this
action and decertify the class or alter the Final Judgments
issued. (Doc. No. 196). This matter has been fully briefed
and is ripe for disposition.
Court certified the Net Winner Class (over the opposition of
a number of net winners who were represented by counsel) on
February 10, 2015, more than two and a half years ago.
See Doc. No. 101. In the certification Order, the
Court explained the basis for the certification of the Class
and responded to the same concerns over commonality and
alleged conflicts expressed in the Movants' motions.
While acknowledging the challenges of a defendant class
action and the due process concerns of those opposed to the
Class, the Court concluded that “the Court is firmly
convinced a class action is the only means to reasonably and
efficiently resolve the Receiver's claims against 9, 400
Net Winners.” Id. at p.12.
Counsel Kevin Edmundson was appointed on September 14, 2015.
The Court provided a 30 day period of time for objections to
his appointment. None of the Movants (or any other net
winner) expressed an objection to Mr. Edmundson based on his
representation of other net winners, which was a matter of
record and specifically stated in the Order appointing him
Class Counsel. See Consent Order Appointing Class
Counsel, Doc. No. 125 at pp. 2, 4. Subsequently, the Court
authorized the defendant class to engage an expert witness,
Berkeley Research Group (“BRG”), at the primary
expense of the Receivership.
given an expansive opportunity to review the RVG records and
ask questions of FTI, the Receiver's expert, but was
unable to raise any material objections or evidence that
challenges FTI's conclusions. In its initial report dated
January 18, 2016, BRG agreed that it was able to
“replicate the exhibits in the Turner Report [the
Receiver's financial expert's report], within a
reasonable margin of difference.” Then, in its
“Phase II” report, BRG reached two conclusions
(bolded in the report):
[B]ased upon a preliminary analysis, it does not appear that
the magnitude of profit from the auction business would
materially impact the assessment of whether or not the
business, taken as a whole, operated as a Ponzi
As a result of our testing in Phase II, we have not found
evidence that definitively disproves that the business as a
whole operated as a Ponzi scheme.
findings on the existence of a Ponzi scheme were consistent
with the findings of the Receiver's expert. In addition,
the finding of the existence of a Ponzi scheme by all
concerned was consistent with the guilty pleas and/or
criminal convictions of those who ran the scheme.
30, 2016, the Receiver moved for summary judgment against the
named net winners on liability and damages and the Class on
liability. While Class Counsel had no choice but to concede
the existence of a Ponzi scheme based on the Defendants'
expert report and the other facts in the record, Class
Counsel vigorously opposed the Receiver's motion on other
grounds. On November 29, 2016, the Court granted the
Receiver's Motion for Summary Judgment.
entry of Summary Judgment on liability, the Court approved a
process reached after consultation between the Receiver and
Class Counsel that provided a fair and thorough process for
determining the amount of each class member's net
winnings. See Doc. No. 153. This process, to which
none of the Movants or any Class member objected, included
both an opportunity for Class members to dispute the amount
of their net winnings to the Receiver and to present any
unresolved dispute over the amount to a Special Master or,
ultimately, to the Court. A number of the Movants
participated in this process but stopped short of referring
their disputes to the Special Master.
Receiver's Motion seeking Final Judgments against the
remaining Movants who chose not to disagree with the amount
of their net winnings or for whom the Receiver accepted their
alternate amount was filed on June 27, 2017 (Doc. No. 166).
In the Notice by the Court related to the Receiver's June
27 motion (Doc. No. 167), the Court stated that “[t]he
Court expects to rule on the Receiver's Motion and enter
Final Judgments as appropriate on or after July 31,
2017.” Final Judgments were accordingly entered on
August 14, 2017. Movants filed the present motion on
September 11, 2017. Therefore, despite being on notice that
any filing challenging the Receiver's motion seeking
Final Judgments should have been made before July 31, 2017,
Movants failed to do so.
members of the Net Winner Class, the Movants may seek to
alter or amend the certification of the Class “before
final judgment.” See Fed. R. Civ. Proc.
23(c)(1)(C). While Final Judgment has already been entered
against a number of the Movants, Judgment has not been
entered against at least two of the Movants. Therefore, those
Movants, as Class members, may seek decertification of the
Class. Because one or more Movants can seek decertification