In Re: Cendant Corp

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit

7-18-2006

In Re: Cendant Corp
Precedential or Non-Precedential: Precedential

Docket No. 04-1410

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 PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 04-1410

IN RE: CENDANT CORPORATION
SECURITIES LITIGATION

Sheldon Danuff,
SKAT Capital LP and
Joel D. Zychick,

Appellants

On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil Action No. 98-cv-01664)
District Judge: Honorable William H. Walls

Argued March 9, 2006
 Before: AMBRO and BECKER,* Circuit Judges,
and STAGG,** District Judge

(Filed July 18, 2006)

William J. Bailey, Esquire
Huntington Carver, LLP
312 Kinderkamack Road
Westwood, NJ 07675

James S. O’Brien, Jr., Esquire (Argued)
Leah D. Weitzen, Esquire
Pryor Cashman Sherman & Flynn LLP
410 Park Avenue
New York, NY 10022

Counsel for Appellants

*
This case was argued before the panel of Judges Ambro,
Becker, and Stagg. Judge Becker died before the filing of this
Opinion. It is filed by a quorum of the panel. 28 U.S.C.
§ 46(d).
**
Honorable Tom Stagg, Senior District Judge for the Western
District of Louisiana, sitting by designation.

2
Max W. Berger, Esquire
Daniel L. Berger, Esquire
Jeffrey N. Leibell, Esquire
Bernstein Litowitz Berger & Grossmann LLP
1285 Avenue of the Americas
New York, NY 10019

Leonard Barrack, Esquire
Gerald J. Rodos, Esquire
Jeffrey W. Golan, Esquire (Argued)
Barrack, Rodos & Bacine
3300 Two Commerce Square
2001 Market Street
Philadelphia, PA 19103

Counsel for Appellees

OPINION OF THE COURT

AMBRO, Circuit Judge

Sheldon Danuff, SKAT Capital, and Joel Zychick
(collectively, “Appellants”) challenge a District Court order
rejecting their claims for compensation under a plan of
allocation for a class action settlement. At the threshold, this
case requires us to decide whether Appellants’ notice of appeal
was timely filed. Under the rules of civil and appellate

3
procedure, the notice was timely filed only if the District Court’s
order ruling against Appellants was not a “separate document”
within the meaning of Federal Rule of Civil Procedure 58. To
determine whether the order satisfied the separate-document
requirement, we must resolve two subsidiary questions: (1)
whether Rule 58 mandates that a district court issue two distinct
documents when disposing of a case, and (2) whether a lengthy
recitation of facts and procedural history prevents an order from
complying with the separate-document requirement.

While we reject the contention that the separate-
document rule requires two separate documents, we hold that a
lengthy discussion of facts and procedural history precludes an
order from complying with Rule 58. Because the final order in
this case was not a separate document that triggered the typical
30-day appeal period, Appellants’ seemingly late notice of
appeal fits in the safe harbor Rule 58 and Federal Rule of
Appellate Procedure 4(a)(7) provide, and was timely filed; we
thus have jurisdiction over the case.

As to the merits, we determine that Appellants are not
entitled to compensation under the terms of the allocation plan.
Accordingly, we affirm.

I. Factual and Procedural Background

The relevant facts are undisputed. Appellants held
common stock in Getko Group, which was acquired by CUC

4
International (“CUC”); CUC then merged with another
company, HFS Incorporated, to form Cendant Corporation
(“Cendant”). As a result of these combinations, Appellants
received stock in Cendant in exchange for their stock in Getko.

CUC’s accounting irregularities spawned a securities
class action suit, filed on behalf of all persons or entities who
purchased or otherwise acquired publicly traded securities of
Cendant and CUC and who were injured thereby. A Plan of
Allocation of Net Settlement Fund (the “Plan”), which was
previously approved by this Court, In re Cendant Corp. Litig.,
264 F.3d 201 (3d Cir. 2001), was crafted to resolve all potential
claims. As members of the plaintiff class certified by the
District Court, Appellants were entitled to seek compensation
from the Net Settlement Fund under the terms of the Plan for
losses sustained by holding Cendant (previously CUC) stock
during the period from May 31, 1995, to August 28, 1998 (the
“Class Period”). This case arises from the claims
administrator’s determination that Appellants were not entitled
to any compensation.

At issue is the Plan’s so-called “netting provision,” which
ensures that claimants only recover for net losses. All three
Appellants sold a substantial share of their Cendant holdings
during the Class Period—but before the public disclosure of
Cendant’s accounting irregularities—when the stock price was
artificially inflated due to the accounting irregularities; they also

5
sustained considerable losses on securities held after those
irregularities were disclosed. Each Appellant, with the possible
exception of SKAT, made a net gain; and SKAT reaped a net
gain unless its losses are computed on the basis of the date on
which its shares became freely tradeable (September 6, 1995)
rather than the date on which its shares were acquired (June 27,
1995). Processing Appellants’ claims on the basis of the date of
acquisition, the claims administrator found that Appellants did
not merit compensation under the Plan because the profits they
made by selling stock at artificially inflated prices cancelled out
any losses they suffered on stock held after the irregularities
were disclosed.

The District Court held a hearing to consider the
objections of class members whose claims had been rejected. At
the hearing, Appellants argued that the netting provision should
not have been applied to their claims because the part of the
Plan that governs their compensation does not provide for losses
to be offset by gains. The District Court rejected this
contention, noting that Appellants’ argument was at odds with
the commonsense principle embedded in the Plan: “If there were
a net impact of the fraud upon [a] claimant’s holding as a
benefit[,] then there is little reason to compensate . . . [such
claimant] for any losses.” App. 30.

On August 19, 2003, the District Court issued an order
granting the class lead plaintiffs’ motion to adopt the claims
administrator’s recommendation to reject all disputed claims

6
(the “Order”). It was entered on the docket on August 21, 2003.
Appellants thought that the District Court had not satisfied the
separate-document requirement of Rule 58, and were apparently
under the impression that they could not appeal the Order until
a complementary judgment was separately entered.1 Hence, on
January 14, 2004, Appellants filed a motion for entry of
judgment on the Order. Appellants now claim that this motion
was rendered moot on January 19, 2004, when they say entry of
judgment was effected by operation of law pursuant to Federal
Rule of Civil Procedure 58(b)(2)(B), and they appealed within
30 days thereafter (February 13, 2004).

We address two questions. First, we determine whether
Appellants filed a timely notice of appeal. As noted above, this
requires us to decide whether the District Court’s Order satisfied
the separate-document rule. Second, assuming Appellants’
notice of appeal was timely filed, we determine whether
Appellants are entitled to compensation under the Plan.

II. Jurisdiction: Separate-Document Rule

A. Background

Federal Rule of Appellate Procedure (“FRAP”) 4—in

1
This impression was incorrect. See Fed. R. App. P. 4(a)(2)
(allowing parties to file a notice of appeal of a decision or order
“before [its] entry”).

7
conjunction with Federal Rule of Civil Procedure 58—sets out
the mechanism for determining when the time to appeal begins.
FRAP 4(a)(1)(A) requires (with exceptions irrelevant here) that
notices of appeal be filed “within 30 days after the . . . order
appealed from is entered.” Thus, Appellants typically would
have had 30 days from the entry of the Order to appeal. Under
FRAP 4(a)(7)(A)(ii), however, “if Federal Rule of Civil
Procedure 58(a)(1) requires a separate document” to put the
parties on notice that the time to appeal has started, the appeal
period begins on the earlier of (1) when that separate document
is entered or (2) when 150 days have run from the entry of the
Order in the docket.

Because certain exceptions in Rule 58 do not apply here,
the general requirement of Rule 58 governed: “[e]very
judgment2 . . . must be set forth on a separate document,” Fed.
R. Civ. P. 58(a)(1). To know whether Appellants’ appeal was

2
Although Rule 58(a)(1) refers to a “judgment,” Federal Rule
of Civil Procedure 54(a) provides that “‘[j]udgment’ as used in
these rules includes a decree and any order from which an
appeal lies.” Fed. R. Civ. P. 54(a) (emphasis added).
Also, the separate-document requirement applies to
partial dispositions such as the Order before us—it was certified
as final by the District Court under Federal Rule of Civil
Procedure 54(b). See Fed. R. Civ. P. 58(a)(1) (not including
Rule 54(b) certification orders in list of exceptions to separate-
document requirement); Silivanch v. Celebrity Cruises, Inc., 333
F.3d 355, 363 (2d Cir. 2003).

8
timely, we must determine which date in Rule 4(a)(7)(A)(ii)
applies to begin the appeal period: August 21, 2003, or January
19, 2004. If the former, Appellants’ appeal—filed on February
13, 2004—was too late; if the latter, the appeal was timely. The
answer depends on whether the District Court’s Order qualifies
as a separate document.

Both Rule 58 and Rule 4 were amended in 2002. Before
2002, if a district court did not enter a separate judgment, the
appeal period never started—and thus theoretically never ended.
After the amendments, the lack of a separate document only
gives the potential appellant another 150 days. The situation for
potential appellants is now more certain, but the touchstone of
the separate-document requirement remains: a judgment
separate from an opinion or decision.

We face the question whether the Order issued by the
District Court (after an oral ruling) meets the separate-document
requirement when it contains an extensive factual and
procedural background discussion.

B. Analysis

Appellants assert that the Order was not a separate
document in the way required by Rule 58(a)(1). Instead, they
claim that judgment was entered by operation of law on January
19, 2004, pursuant to Rule 58(b)(2)(B) (providing that a
judgment entered in the civil docket and subject to Rule

9
58(a)(1), but not set forth in a separate document, will be
deemed “entered . . . when 150 days have run from entry in the
civil docket . . . [August 21, 2003]”). (One hundred fifty days
from August 21, 2003, is January 19, 2004.) Appellants filed
their notice of appeal almost six months after the Order was
entered but less than 30 days from the date on which Appellants
claim the judgment was entered by operation of law. Whether
their notice of appeal was timely filed thus depends on whether
the Order was a separate document within the meaning of Rule
58(a). If it was, Appellants’ notice of appeal was not timely
filed and their appeal must be dismissed.

Our Court’s application of Rule 58(a) is controlled by
Local Union No. 1992, IBEW v. Okonite Co., 358 F.3d 278, 285
(3d Cir. 2004). There we held that an “order’s denomination as
an ‘order,’ rather than a ‘judgment,’ does not mean that it fails
to satisfy the separate document requirement.” Id.3 Instead, we
explained that an order will be treated as a separate document if
it meets three criteria: first, the order must be self-contained and
separate from the opinion; second, the order must note the relief
granted; and third, the order must omit (or at least substantially

3
Some of our sister Circuits are divided on this point.
Compare Kanematsu-Gosho, Ltd. v. M/T Messiniaki Aigli, 805
F.2d 47, 49 (2d Cir. 1986) (per curiam) (holding that a
document must be denominated a “judgment” in order to satisfy
Rule 58), with United States v. Johnson, 254 F.3d 279, 285 n.7
(D.C. Cir. 2001) (“The fact that the page is labeled ‘Order’
rather than ‘Judgment’ is not relevant.”).

10
omit) the District Court’s reasons for disposing of the parties’
claims. See id. (noting, by way of qualification as to the third
criterion, that some “courts of appeals have found that including
a bit of analysis does not run afoul of the separate judgment
requirement,” but reserving judgment on that issue).

The Order satisfies the first criterion. The whole
document—not just the last page—is presented as an “order,”
rather than an opinion, and this designation is confirmed by the
docket. The Order is “self-contained” in the sense that it is not
stapled or otherwise attached to an opinion or memorandum.
Indeed, the only “opinion” that the District Court offered was its
oral ruling on May 16, 2003.4

4
The District Court made clear that its oral ruling was the
only opinion it would make available. See App. 27 (“I’m not
going to spend time, gentlemen, crafting an opinion because
frankly the issues are so uncomplicated that those who dislike
the decision can order the [transcript] and take the appeal.”). In
addition, at the end of the May 16 hearing the District Court
suggested that its forthcoming order was the only document
needed to get the appeals process started. See App. 30 (“So,
those claims are denied. You can send in the order and I will
sign it [and] then you can take your appeals.”). While it may
seem counterintuitive, the fact that the parties knew, or should
have known, that the Order was intended to serve as a final
judgment does not make it compliant with Rule 58. See
Gregson & Assocs. Architects v. Gov’t of the Virgin Islands, 675
F.2d 589, 592 (3d Cir. 1982) (applying separate-document

11
 Appellants argue that the Order is not “separate from” the
District Court’s prior oral ruling because it is the sole document
issued by the District Court that purports to dispose of
Appellants’ claims. The only authority they cite for this
proposition is Miller v. Marriott International, 300 F.3d 1061
(9th Cir. 2002), where the Ninth Circuit held that, “because the
dismissal order provide[d] the basis for the entry of judgment,”
it is but a single document, and “one document, by definition,
cannot also constitute a separate document.” Id. at 1064.

While on its face Miller seems logical, we decline to
follow it for several reasons. Rule 58 does not expressly state
that the “separate document” must be distinct from another
document (as opposed to an oral decision on the record). And
we cannot discern any value that would be furthered by finding
a two-document rule implicit in the text. Hence, the Rule is
most reasonably read to mean only that the judgment must be set
forth in a document that is independent of the court’s opinion or
decision, regardless whether that opinion takes written form.

Notably, Miller is at odds with every other authority we
have found, including earlier Ninth Circuit precedent. In United

requirement and holding that notice of appeal was timely filed
because 30-day period never began to run, even though
appellant correctly “believed that the order was the final
judgment”). Put simply, Rule 58 is a touch-the-base
requirement that lays perception aside.

12
States v. Schimmels (In re Schimmels), 85 F.3d 416 (9th Cir.
1996), for example, that Court held that a short order satisfied
the separate-document requirement even though the “order was
not followed by an additional document entering judgment.” Id.
at 421.5 The Court observed:

The separate judgment rule does not
always require the filing of two separate
documents. . . . [W]hen a court enters a short
order that clearly constitutes a final decision, that
short order meets the separate judgment rule.
Similarly, if a court grants a summary judgment
without writing an opinion or memorandum, then
the order granting summary judgment is enough
to meet the separate document
requirement. . . . The separate judgment rule
requires that the court enter a judgment or an
order—it does not require that a court enter an
initial memorandum or opinion.

Id.; see also Pac. Empls. Ins. Co. v. Domino’s Pizza, 144 F.3d
1270, 1278 (9th Cir. 1998) (“[U]nder Rule 58, a district court is

5
Schimmels applied Bankruptcy Rule 9021, which contains
a separate-document rule “identical to Federal Rule of Civil
Procedure 58.” 85 F.3d at 420.

13
not even required to file two separate documents.”); Laidley v.
McClain, 914 F.2d 1386, 1390 (10th Cir. 1990) (holding that a
summary judgment order met the separate-document
requirement and that the rule thus did “not require that two
documents be used instead of one”), superseded by rule on other
grounds; United States v. Perez, 736 F.2d 236, 238 (5th Cir.
1984) (per curiam) (holding that a district court order did not
violate separate-document requirement of Rule 58, as “[t]he
mere fact that the first sentence of the order adopts the
magistrate’s report and recommendation . . . does not require
that two documents be used by the district court rather than
one”), superseded on other grounds as recognized in Kadelski
v. Sullivan, 30 F.3d 399, 402 (3d Cir. 1994); United States v.
Clearfield State Bank, 497 F.2d 356, 358–59 (10th Cir. 1974)
(rejecting as “unfounded” the argument that “two documents are
required in all cases,” and holding that Rule 58 was satisfied
where no opinion was written because the “order granting
summary judgment [was] itself a separate document”).

In short, the Order satisfies the first of the three criteria
set forth in Okonite for a separate document to exist under Rule
58(a) because it was a “self-contained” document that was
separate from the District Court’s oral opinion.

The second criterion set out in Okonite is also met, as the

14
Order does state the relief granted.6

That leaves the third criterion—omission of reasoning.
As noted above, our Court has yet to rule whether an order that
includes a modicum of analysis may satisfy the separate-
document rule. See Okonite, 358 F.3d at 285. We need not
resolve this question now, as the prefatory “whereas” clauses of
the Order contain only facts, procedural history, and summary
conclusions—not reasoning. Hence, the practical question we
must decide is not whether a little bit of reasoning is acceptable,
but whether a protracted recitation of facts and procedural
history precludes the Order from serving as a “separate
document” under Rule 58(a)(1).

The aim of the separate-document requirement suggests
that a lengthy description of facts and procedural history takes
an order outside the realm of Rule 58(a). As the Supreme Court
has explained, the “sole purpose of the separate-document
requirement . . . was to clarify when the time for
appeal . . . begins to run.” Bankers Trust Co. v. Mallis, 435 U.S.
381, 384 (1978) (per curiam). Clarification was needed
because, prior to the adoption of the separate-document rule,

6
The Order reads: “Lead Plaintiffs’ motion for an Order
adopting the Claims Administrator’s recommendation to reject
all disputed Claims as set forth in Exhibits A and B hereto is
GRANTED. All such Claims, as set forth in Exhibits A and B
hereto[,] are rejected.”

15
court clerks would often enter judgments in the civil docket on
the basis of opinions or memoranda “containing some
apparently directive or dispositive words.” Id. (internal
quotation marks omitted). If the opinion or memorandum on
which an entry was based did not contain all the elements of a
judgment, or if the judge later signed a formal judgment, it then
became “a matter of doubt whether the purported [initial] entry
of a judgment was effective” for purposes of starting the appeals
period. Id. at 385 (internal quotation marks omitted). The
addition of the separate-document requirement to Rule 58 was
intended to “‘eliminate[] these uncertainties by requiring that
there be a judgment set out on a separate document—distinct
from any opinion or memorandum . . . .’” Id. (quoting Fed. R.
Civ. P. 58 advisory committee notes on 1963 amendments)
(emphasis added).

The goal of Rule 58(a) is to impose a clear line of
demarcation between a judgment and an opinion or
memorandum. The question thus becomes whether an extensive
recitation of facts and procedural history is as fatal, for separate-
document purposes, as an extensive recitation of legal reasoning
and analysis.

Facts—and conclusions of law—may be either stated
orally at the close of evidence or written in an opinion or
memorandum. Fed. R. Civ. P. 52(a). Neither are to appear in
the Rule 58 judgment. Cf. id. A lengthy overview of
background information, while not setting out the basis for a

16
decision as much as does legal reasoning, nevertheless partakes
more of a judicial opinion or memorandum than it does of a
judgment. Just as for legal reasoning, the purpose of providing
such a factual overview is not to lay out the relief granted, but
to offer context in which the court’s decision may be
understood. Because of the purpose of Rule 58—to eliminate
uncertainty—and because a putative judgment containing an
extensive factual discussion might look to a party more like an
opinion than a judgment, the mechanical application of Rule 58
does not, we believe, contemplate judgments containing
extensive factual recitations to be separate documents.

Our conclusion that the separate-document requirement
does not allow for an extended presentation of facts and
procedural history is supported by Model Forms 31 and 32 of
the Federal Rules of Civil Procedure (“Judgment on Jury
Verdict” and “Judgment on Decision by the Court”). See Fed.
R. Civ. P. 58 advisory committee notes on 2002 amendments.
Added as part of the 2002 amendment to Rule 58, these forms
are intended to facilitate mechanical application of the Rule by
providing examples of qualifying documents. We note the
contrast between the Forms’ brief statements of the terms of the
judgments and the extended recitation of factual and procedural
history in the Order before us.

The proposition that an extended presentation of facts
and procedural history runs afoul of the separate-document
requirement also finds support in the case law. See, e.g.,

17
Diamond v. McKenzie, 770 F.2d 225, 230 n.10 (D.C. Cir. 1985)
(per curiam) (holding that a three-page order containing two
sentences on the case’s procedural posture and three sentences
summarizing the court’s conclusions transformed the order into
a “combined decision and order”). Indeed, we do not know of
any authority holding that facts and procedural history should be
treated differently than reasoning for purposes of determining
whether an order satisfies the separate-document requirement.
In all cases of which we are aware, the court’s analysis has
focused on the extent to which the order includes material not
traditionally found in a judgment, regardless whether that
material consists of facts, history, or reasoning. See, e.g.,
Schimmels, 85 F.3d at 422 (holding that an order denying a
motion for reconsideration satisfied the separate-document
requirement where “[t]he order contains only a one-sentence
recitation of the procedure, documents, and arguments
considered by the court in denying the motion. There is no
explanation of the reasoning of the court.”).

Here, the District Court issued a six-page Order, five
pages of which were devoted to expounding the background of
the case. Significantly, this overview was not needed to state
the relief granted. See Fed. R. Civ. P. 58 advisory committee
notes on 2002 amendments (“It is easy to prepare a separate
document that recites the terms of the judgment without offering
additional explanation or citation of authority.” (emphasis
added)). Nevertheless, the overview and the judgment were
both set out in the same document. In these circumstances, the

18
Order does not satisfy the separate-document requirement.
After all, “the rule is designed to simplify and make certain the
matter of appealability.” Bankers Trust Co., 435 U.S. at 386
(internal quotation marks omitted). That goal would be
thwarted by foreclosing an appeal where a party was reasonably
in doubt whether a final order complied with the formalities of
Rule 58(a). See United States v. Indrelunas, 411 U.S. 216,
221–22 (1973) (per curiam) (“[T]he separate document
provision . . . [is] a mechanical change that must be
mechanically applied in order to avoid new uncertainties as to
the date on which a judgment is entered.” (internal quotation
marks omitted)); see also id. at 219 (emphasizing that the
purpose of the separate-document requirement was “to remove
uncertainties as to when a judgment is entered”).7

7
Attempting to show that the Order satisfies the separate-
document requirement, Appellees note that in its last paragraph
the document is twice referred to as a “Final Order.” See
Appellees’ Letter Brief dated March 10, 2004, at 3. But this fact
does not help their cause, as an order or judgment may be final
without complying with the formalities of Rule 58. See Shalala
v. Schaefer, 509 U.S. 292, 303 (1993) (“Since the District
Court’s April 4 remand order was a final judgment, a ‘separate
document’ of judgment should have been entered.” (citation
omitted)); id. at 303 n.6 (“By entering a . . . remand order, the
District Court did enter a judgment; it just failed to comply with
the formalities of Rule 58 in doing so.” (emphasis in original));
Diamond, 770 F.2d at 229 (holding that the fact that a document
was a “‘final order of the Court’” does not resolve the Rule 58

19
 *****

In sum, Appellants’ notice of appeal was only timely if
the Order was not a separate document within the meaning of
Rule 58(a). The Order was not because it contained an extended
discussion of facts and procedural history. This discussion
raised doubt to Appellants whether a final judgment had been
entered. Doubt is exactly what the separate-document
requirement was designed to avoid. See Bankers Trust Co., 435
U.S. at 386 (“[Rule 58] should be interpreted to prevent loss of
the right of appeal, not to facilitate loss.” (internal quotation
marks omitted)); Diamond, 770 F.2d at 230 (“It is precisely this
kind of uncertainty about whether the District Court intended to
enter a final order that warrants the mechanical application of
Rule 58.”).

Our decision here is designed to make the mechanical
application of Rule 58 easier, and more simple, for judges and
parties. For judges, the separate judgment should be as minimal
as possible to comply with Rule 58’s requirements, and should
include little more.8 (See, for example, Forms 31 and 32 of the

problem, since the “question whether an order is a final order is
separate from the question whether a separate document setting
forth the judgment has been properly entered”).
8
Indeed, we cannot resist observing that the spare simplicity
of a Rule 58 separate judgment (as bare-boned as “Defendant’s
motion for summary judgment is denied.”) seems to many of us

20
Federal Rules of Civil Procedure. In fact, the District Court’s
language quoted in our footnote 6 is all that the Court needed.)
For parties, these minimal judgments make clear when the time
to appeal is at hand.9

In this context, Appellants were entitled to consider
January 19, 2004, as the “magic date” to begin their appeal
period. Filing that appeal on February 13, 2004, was thus
timely.

III. Merits

Because the notice of appeal was timely filed, we now
reach the merits. We must decide whether the District Court
erred in granting lead plaintiffs’ motion to adopt the claims

counter to the custom of “talking orders” that explain in detail
the context and reasons for a ruling (thus avoiding the need for
an accompanying opinion).
9
We note, however, that Appellants took the wrong course in
their uncertainty. When parties are in doubt about whether the
separate judgment rule has been met, they should file a notice of
appeal. A too-late appeal is fatal, but a too-early appeal
provides safety, as a premature appeal becomes effective on the
entry of the judgment or order, Fed. R. App. P. 4(a)(2). Here, an
early appeal would have avoided all dangers (including the
possibility that we might have held the Order to have satisfied
the separate-document requirement).

21
administrator’s recommendation to reject all disputed claims,
including that of Appellants.

The backdrop for these rejections is as follows.
Appellants were denied any payment from the settlement, which
they claim to be an error. Their principal contention (although
the different Appellants each have different individual
arguments) is that the District Court improperly “netted” their
gains on the sale of Cendant stock against the losses calculated
under the Plan. This netting of gains and losses left them with
no payments due under the Plan.

Section IV of the Plan gives specific calculations of
allowed loss amounts for each share held to the end of the Class
Period.10 But Section V(B) does two things. First, it matches
stock acquisitions with subsequent stock sales on a first-in-first-
out basis—the matching provision. Second, it subtracts all
stock-sale profits from any losses to reduce claimant
recoveries—the netting provision. We quote Section V(B) in
full (adding emphasis to show the matching and netting
provisions):

For Class Members who made multiple
purchases, acquisitions or sales during the Class
Period, the earliest subsequent sale shall be

10
Appellants are not entitled to any compensation for the
shares they sold before April 15, 1998.

22
 matched with the earliest purchase and
chronologically thereafter for purposes of the
Claim calculations.

PLEASE NOTE: ALL PROFITS SHALL BE
SUBTRACTED FROM ALL LOSSES ON ALL
TRANSACTIONS OF CUC AND CENDANT
PUBLICLY-TRADED SECURITIES DURING
THE CLASS PERIOD TO DETERMINE THE
NET CLAIM OF EACH CLASS MEMBER. IF
A CLASS MEMBER MADE A NET PROFIT,
THE VALUE OF HIS, HER OR ITS CLAIM
SHALL BE ZERO.

Appellants all want some recovery based on the shares
they held to the end of the Class Period (10,790 shares for
Danuff; 2,103,196 shares for SKAT; and 56,250 shares for
Zychick). Each Appellant made some profits on the stock they
sold during the Class Period. And the District Court found
that—based on the netting provision—those profits outweighed
any losses Appellants had on the shares they continued to hold,
thus giving them no recovery.

Appellants make three arguments in opposition to the
Plan’s netting provision. First, all assert that the “general”
netting provision of the Plan does not apply to any of them
because their “specific” loss calculations are governed solely by
another Plan section, which does not contain a netting provision.

23
Second, Danuff and SKAT claim that the netting provision does
not apply to them because they did not engage in “multiple
transactions” that trigger netting. Third, SKAT contends that,
even if deemed subject to the netting provision, it was entitled
to compensation because it did not reap a net gain.

We address each claim in turn.11

A. Whether netting provision applies to Appellants?

Appellants first claim that the netting provision in
Section V(B) of the Plan does not apply to them because the
Plan elsewhere provides that their losses should be calculated
solely on the basis of the methodology set forth in Plan Section
IV. As Section IV carves out a “specific” rule for Cendant stock
obtained in exchange for the stock of acquired companies (such
as Getko), Section V’s general provisions, they argue, do not
apply to them.

We disagree. Although the specific usually controls the
general in contract construction, we are to construe a contract as
a whole. Capitol Bus Co. v. Blue Bird Coach Lines, Inc., 478
F.2d 556, 560 (3d Cir. 1973). Both provisions apply to the pool
of claimants; they simply have different functions. Section IV

11
The District Court’s interpretation of the Plan is reviewed de
novo. See In re Orthopedic Bone Screw Prods. Liab. Litig., 350
F.3d 360, 364 (3d Cir. 2003).

24
covers all claimants, dividing potential claims into five
categories; its five corresponding parts calculate the loss amount
for each kind of claim. But the loss amount is not the same as
the net claim. Section V applies to all claimants who sold stock
acquired during the Class Period or who made profits on
Cendant stock sales. Section V does not change the way that
losses are calculated, but it provides that those losses should be
offset by any profits to arrive at the net claim amount. Both
provisions are specific within their spheres. Section IV is
specific to loss amounts (as the title “SPECIFIC LOSS
AMOUNTS” indicates), and Section V is specific to net claims
(by reducing loss amounts for claimants who have made profits
on Cendant stock sales). Moreover, because Section IV governs
the loss calculation of every claim, accepting Appellants’
argument would rob Section V of any effect.

The text of the netting provision of the Plan’s Section
V(B) (quoted above) is the only part of the Plan printed in all
caps, and its language could not be more explicit (“ALL
PROFITS SHALL BE SUBTRACTED FROM ALL LOSSES”).
Yet Appellants not only fail to offer a valid basis for arguing
that the netting provision does not apply to them, and they also
fail to explain why the Plan might be crafted to compensate
shareholders who reaped a net profit.

Section V(B)’s matching provision is also part of the
Plan’s general purpose, designed to apply to every claimant who
sold shares during the Class Period. Complementing Section

25
V(B) is Section II(B). It describes how loss amounts will be
calculated in general and provides that, “[i]n calculating the
Loss Amount for each claim, a sale of a security during the
Class Period will be matched first against those securities in the
opening position [i.e., held before the Class Period], and then
matched chronologically against each purchase or acquisition of
that security made during the Class Period.” Plan § II(B)
(emphasis in original). This makes clear that matching will be
performed for each claimant, where that claimant sold any
shares.

Appellants’ interpretation is thus objectionable for three
reasons: it violates the principle that a legal text should be
interpreted to give effect to every provision, see Capitol Bus
Co., 478 F.2d at 560 (“A contract is to be considered as a whole,
and, if possible, all its provisions should be given effect . . . .”);
it departs from the unambiguous terms of the Plan; and it carves
out an unexplained and inexplicable exception to the netting
provision.

B. Whether Danuff and SKAT escape the netting
provision because they did not engage in multiple
transactions?

Two Appellants, Danuff and SKAT, argue that the
netting provision does not apply to them because they did not
engage in multiple transactions. In support of this claim, they
note that “both Appellants made but one sale of a portion of his

26
[its] shares, holding the remaining shares beyond the end of the
Class Period.” In other words, Danuff and SKAT contend that,
because they made only one sale, they were involved in only
one transaction. The assumption underlying this argument is
that the initial acquisition of their shares was not a transaction
within the meaning of Section V(B).12

This assumption is invalid for three reasons. First, the
text of the provision does not exclude an initial acquisition from
the phrase “purchases, acquisitions or sales.” Given that an
initial acquisition is a type of acquisition, the text of the Plan
would seem to favor its inclusion.

Second, excluding the initial acquisition does not accord
with the purpose of the netting provision—to make sure that the
calculation of compensable losses is offset by profits, many of
which were reaped because of artificially high share prices
attributable to fraudulent accounting practices. That aim is no
less on point when a claimant has only made one sale during the
Class Period. Thus, it makes no sense to think that the netting
provision is not triggered by the sales executed by Danuff and
SKAT.

12
Danuff and SKAT do not argue that the term “multiple”
means more than two. “Multiple” is commonly defined as
“more than one.” See The American Heritage Dictionary of the
English Language 1186 (3d ed. 1992).

27
 Third, if Section V(B)’s matching provision applies to
Danuff and SKAT, its netting provision also applies to them. As
noted above, Section V(B)’s matching provision applies to each
claimant who acquired securities during the Class Period and
then sold securities during the Class Period. See also Plan
§ II(B). Danuff and SKAT both acquired CUC securities during
the Class Period. The deemed date of acquisition was the
effective date of the Getko–CUC acquisition: June 27, 1995.
Plan § IV(B)(2)(a). Danuff and SKAT sold some of these
securities during the Class Period. Thus, they are subject to
Section V(B)’s matching provision. There is no sensible reason,
therefore, that they would not be subject to Section V(B)’s
netting provision as well.

Significantly, they do not identify any interest that would
be served by restricting the reach of the netting provision to
claimants who have made more than one sale. Nor do they
explain the anomaly their interpretation would yield: for
example, a claimant who sold 500 shares on one occasion would
not be subject to the netting provision, but a claimant who sold
250 shares on two separate occasions would, even though both
sold a total of 500 shares.

In sum, the text and purpose of the netting provision are
both at odds with the interpretation urged by Danuff and SKAT.

C. Whether SKAT had a net loss or gain under the

28
Plan?

Finally, Appellants argue that SKAT’s sale of its Cendant
stock during the Class Period should have no effect on its
recovery for losses from the stock it held until the end of the
Class Period. In any event, they argue, even if netting does
apply, it did not realize a net gain and should receive some
money from the settlement.

As for the first argument, the plain language of the
netting provision controls. It reads: “All profits shall be
subtracted from all losses on all transactions of CUC and
Cendant publicly-traded securities during the Class Period to
determine the net claim of each Class Member. If a Class
Member made a net profit, the value of his, her or its claim shall
be zero.” Plan § V(B) (capitalization altered). SKAT made a
sale during the Class Period, and that sale resulted in some
profits. Under the netting provision, this profit must be set off
against SKAT’s losses to determine its net claim. SKAT’s stock
sales do have an effect on its recovery for losses from unsold
stock.

Meeting the second argument requires some arithmetic.
SKAT describes itself as having a $3,188,385 profit from its
sale and a $3,407,178 loss under Section IV(B)(2). Thus, it
argues that it had a net loss (and consequently a payable claim).
The principal problem with SKAT’s calculations is that it used

29
September 6, 1995,13 as the acquisition date. As noted above,
the correct acquisition date is June 27, 1995. See Plan
§ IV(B)(2)(a).

SKAT sold 261,129 shares on January 20, 1998, at
$34.88 each—for a total of $9,108,180. The stock price on June
27, 1995, was $18.44. SKAT’s January 20, 1998 sale thus
represented a $4,292,961 profit—that is, 261,129 multiplied by
the share-price difference ($16.44) between the correct
acquisition date (June 27) and the sale date (January 20, 1998).

So we know SKAT’s profits ($4,292,961). Under the
netting provision, we must subtract these profits from all losses
on Cendant securities transactions. Plan § V(B). If SKAT is
left with a net profit, it does not get a payout from the Plan. Id.

Now we must calculate SKAT’s losses on Cendant stock.
The Plan provides that, for holders of Cendant stock acquired in
a business acquisition (like the Getko–CUC merger), we
multiply the number of unsold shares held by SKAT (2,103,196)
by the Plan’s defined per-share loss amount. Id. § IV(B)(2)(a).
This per-share loss amount is based on the amount of artificial
inflation (from the accounting irregularities) built into Cendant’s
share price. Id. § III. The Plan provides a specific per-share
loss amount for each acquisition date in the Class Period. Id.
tbl.A. The per-share loss amount for June 27, 1995, is $0.66.

13
SKAT’s brief misstates this as “September 6, 2004.”

30
Multiplying $0.66 times 2,103,196 gives us
$1,388,109—SKAT’s losses on Cendant stock. Netting
SKAT’s profit ($4,292,961) and its loss ($1,388,109) gives
SKAT almost $3 million in net profit.

The bottom line: SKAT’s profit far outweighs its loss
amount. Thus, it is not entitled to any payout.

IV. Conclusion

In sum, we reach two conclusions. As to jurisdiction, we
hold that Appellants filed a timely notice of appeal on February
13, 2004. The District Court’s final order failed to comply with
the separate-document requirement of Federal Rule of Civil
Procedure 58. Lengthy recitation of facts and procedural history
prevents an order from serving as a separate document within
the meaning of the Rule. Because the District Court’s order did
not satisfy Rule 58, the time limit for filing an appeal did not
start to run until January 19, 2004, when entry of judgment was
effected by operation of law.

As to the merits, we conclude that none of Appellants’
three arguments is meritorious. First, Sections IV and V of the
Plan are not mutually exclusive provisions; thus, Appellants are
not exempt from the netting provision of Section V(B) simply
because the method of computing their loss amount is set out in
Section IV. Second, Danuff and SKAT err in asserting that they
did not engage in multiple transactions; because the initial

31
acquisition of Cendant stock counts for purposes of the multiple
transactions provision, any subsequent sale suffices to trigger
the netting provision. Finally, SKAT is not entitled to
compensation under the Plan because, under its terms, SKAT
reaped a net gain rather than a net loss.

We thus affirm the judgment of the District Court.

32