In Re: Nine West LBO SEC. Litig.

20-3257-cv (L)
In re: Nine West LBO Sec. Litig.

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

August Term 2021
(Argued: March 10, 2022 Decided: November 27, 2023)

Docket Nos. 20-3257-cv (L), 20-3290-cv, 20-3315-cv, 20-3326-cv, 20-3327-cv, 20-
3334-cv, 20-3335-cv, 20-3941-cv, 20-3952-cv, 20-3959-cv, 20-3961-cv, 20-3964-cv,
20-3969-cv, 20-3980-cv, 20-3981-cv, 20-3992-cv, 20-3998-cv

IN RE: NINE WEST LBO SECURITIES LITIGATION

MARC S. KIRSCHNER, AS TRUSTEE FOR THE NWHI LITIGATION TRUST, WILMINGTON
SAVINGS FUND SOCIETY, FSB, AS SUCCESSOR INDENTURE TRUSTEE FOR THE 6.875%
SENIOR NOTES DUE 2019, THE 8.25% SENIOR NOTES DUE 2019, AND THE 6.125%
SENIOR NOTES DUE 2034 OF NINE WEST HOLDINGS, INC.,
Plaintiffs-Appellants,

ABC,
Plaintiff,

v.

ROBECO CAPITAL GROWTH FUNDS - ROBECO BP U.S. PREMIUM EQUITIES, FKA
BOSTON PARTNERS U.S. PREMIUM EQUITY FUND, DFA INVESTMENT DIMENSIONS
GROUP INC. U.S. CORE EQUITY 1 PORTFOLIO, DFA INVESTMENT DIMENSIONS GROUP
INC. U.S. CORE EQUITY 2 PORTFOLIO, DFA INVESTMENT DIMENSIONS GROUP INC.
U.S. MICRO CAP PORTFOLIO, DFA INVESTMENT DIMENSIONS GROUP INC. U.S.
SMALL CAP PORTFOLIO, DFA INVESTMENT DIMENSIONS GROUP INC. U.S. SMALL
CAP VALUE PORTFOLIO, DIMENSIONAL FUNDS PLC GLOBAL TARGETED VALUE
FUND, DFA INVESTMENT DIMENSIONS GROUP INC. U.S. TARGETED VALUE
 PORTFOLIO, AKA NATIONWIDE U.S. TARGETED VALUE STRATEGY, DIMENSIONAL
FUNDS PLC U.S. SMALL COMPANIES FUND, AKA IRISH U.S. SMALL CAP FUND, DFA
AUSTRALIA LIMITED GLOBAL CORE EQUITY TRUST, AKA DEFENDANT TX-1, DFA
INVESTMENT DIMENSIONS GROUP INC. TA U.S. CORE EQUITY 2 PORTFOLIO, AKA
DEFENDANT TX-2, DFA INVESTMENT DIMENSIONS GROUP INC. TAX-MANAGED U.S.
SMALL CAP PORTFOLIO, AKA DEFENDANT TX-3, DFA INVESTMENT DIMENSIONS
GROUP INC. TAX-MANAGED U.S. TARGETED VALUE PORTFOLIO, AKA DEFENDANT
TX-4, DFA INVESTMENT DIMENSIONS GROUP INC. U.S. SOCIAL CORE EQUITY 2
PORTFOLIO, AKA DEFENDANT TX-5, DFA INVESTMENT DIMENSIONS GROUP INC.
U.S. VECTOR EQUITY PORTFOLIO, AKA DEFENDANT TX-6, DFA INVESTMENT TRUST
COMPANY TAX-MANAGED U.S. MARKETWIDE VALUE SERIES, AKA DEFENDANT TX-
7, DFA U.S. CORE EQUITY FUND, AKA DEFENDANT TX-8, DFA U.S. VECTOR EQUITY
FUND, AKA DEFENDANT TX-9, AMERICAN BEACON SMALL CAP VALUE FUND, AKA
DEFENDANT TX-10, HBK MASTER FUND L.P., AKA DEFENDANT TX-11, HBK
QUANTITATIVE STRATEGIES MASTER FUND L.P., AKA DEFENDANT TX-12, KENNY
ALLAN TROUTT SEPARATE TRUST ESTATE, AKA DEFENDANT TX-13, MICRO CAP
SUBTRUST, AKA DEFENDANT TX-14, SMALL CAP VALUE SUBTRUST, AKA
DEFENDANT TX-15, TAX-MANAGED U.S. EQUITY SERIES, AKA DEFENDANT TX-16,
U.S. SMALL CAP SUBTRUST, AKA DEFENDANT TX-17, USAA EXTENDED MARKET
INDEX FUND, VARIABLE ANNUITY LIFE INSURANCE COMPANY I - SMALL CAP INDEX
FUND, VARIABLE ANNUITY LIFE INSURANCE COMPANY I - SMALL CAP SPECIAL
VALUES FUND, MARY MARGARET HASTINGS GEORGIADES, FLEXSHARES
MORNINGSTAR UNITED STATES MARKET FACTOR TILT INDEX FUND, DEFENDANT IL-
1, TELENDOS, LLC, HFR ASSET MANAGEMENT, L.L.C., NORTHERN SMALL CAP CORE
FUND, NORTHERN SMALL CAP INDEX FUND, NORTHERN SMALL CAP VALUE FUND,
NUVEEN SMALL CAP INDEX FUND, PEAK6 INVESTMENTS LLC, FKA PEAK6
INVESTMENTS, L.P., STATE FARM SMALL CAP INDEX FUND, STATE FARM VARIABLE
PRODUCTS TRUST, SMALL CAP EQUITY INDEX FUND, VOYA RUSSELL SMALL CAP
INDEX PORTFOLIO, CNH MASTER ACCOUNT, L.P., AQR ABSOLUTE RETURN MASTER
ACCOUNT, L.P., AQR DELTA MASTER ACCOUNT, L.P., AQR DELTA SAPPHIRE FUND,
L.P., AQR DELTA XN MASTER ACCOUNT, L.P., AQR FUNDS - AQR MULTI-
STRATEGY ALTERNATIVE FUND, CNH OPPORTUNISTIC PREMIUM OFFSHORE FUND,
L.P., AQR FUNDS - AQR DIVERSIFIED ARBITRAGE FUND, SCHWAB CAPITAL TRUST,

2
SCHWAB FUNDAMENTAL U.S. SMALL COMPANY INDEX FUND, SCHWAB SMALL-CAP
INDEX FUND, SCHWAB TOTAL STOCK MARKET INDEX FUND, WELLS FARGO
DISCIPLINED SMALL CAP FUND, FKA WELLS FARGO SMALL CAP OPPORTUNITIES
FUND, DEFENDANT IL-2,
Defendants-Appellees,

JOHN T MCCLAIN, GERALD C. CROTTY, TAMI FERSKO, ADVANCED SERIES TRUST
ACADEMIC STRATEGIES ALLOCATION PORTFOLIO, ADVANCED SERIES TRUST SMALL
CAP VALUE PORTFOLIO, JEFF BRISMAN, MARK DEZAO, CYNTHIA DIPIETRANTONIO,
JOHN D'SOUZA, NINIVE GIORDANO, JACK GROSS, ALISON HEMMING, PATRICIA
KENNY, IRENE A. KOUMENDOUROS, ARUNDHATI KULKARNI, DEFENDANT NJ-1,
DEFENDANT NJ-2, SUZANNE MALONEY, IRA MARGULIES, SUSAN M. MCCOY,
VINCENT MORALES, NINE CHAPTERS CAPITAL MANAGEMENT LLC, PAMELA M.
PAUL, CHARLES JOSEPH PICKETT, PGIM QMA SMALL-CAP VALUE FUND,
DEFENDANT NJ-3, PRUDENTIAL FINANCIAL, INC., THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY CO.,
QUANTITATIVE MANAGEMENT ASSOCIATES LLC, ARLENE STARR, DEFENDANT NJ-4,
ARTHUR E. LEE, NANCY L. LEE, PRIAC FUNDS, CHRISTOPHER R. CADE, IRA M.
DANSKY, IRA MARTIN DANSKY REVOCABLE TRUST, MAHMOOD HASSANI-SADI,
THOMAS NOLAN, PENTWATER CAPITAL MANAGEMENT LP, RICHARD H. HEIN,
TRUSTEE, RICHARD H. HEIN REV. TRUST U/A 06/12/95, CYNTHIA FOY RUPP,
TRANSAMERICA ASSET MANAGEMENT, INC., WOLVERINE ASSET MANAGEMENT LLC,
WESLEY R CARD, ANN MARIE C WILKINS, ARBOR PLACE LTD. PARTNERSHIP,
BOSTON PARTNERS ALL-CAP VALUE FUND, BOSTON PARTNERS ASSET
MANAGEMENT, LLC, BOSTON PARTNERS GLOBAL INVESTORS INC., BOSTON
PARTNERS, LLC, BRIGHTHOUSE FUNDS TRUST II, FKA BRIGHTHOUSE FUNDS TRUST
MET-SERIES, COLUMBIA MANAGEMENT INVESTMENT ADVISERS LLC, COLUMBIA
MULTI-MANAGER ALTERNATIVE STRATEGIES FUND, DWS INVESTMENT
MANAGEMENT AMERICAS, INC., FKA DEUTSCHE ASSET MANAGEMENT (SCUDDER),
DWS SMALL CAP INDEX VIP, GEODE DIVERSIFIED FUND, A SEGREGATED ACCOUNT
OF GEODE CAPITAL MASTER FUND LTD. FORMERLY KNOWN AS GDF1, A SEGREGATED
ACCOUNT OF GEODE CAPITAL MASTER FUND LTD., JHF II STRATEGIC EQUITY
ALLOCATION FUND, JHVIT SMALL CAP INDEX TRUST, FKA JHT SMALL CAP INDEX
TRUST, JHVIT SMALL CAP OPPORTUNITIES TRUST, FKA JHT SMALL CAP INDEX
TRUST, JHVIT STRATEGIC EQUITY ALLOCATION TRUST, AKA JOHN HANCOCK
VARIABLE INSURANCE TRUST SEA SMALL CAP, JOHN HANCOCK II STRATEGIC EQUITY

3
 ALLOCATION SMALL CAP FUND, AKA JOHN HANCOCK II SEA SMALL CAP, JOHN
HANCOCK U.S. TARGETED VALUE FUND, JOHN HANCOCK U.S. TARGETED VALUE
TRUST, LINCOLN INSTITUTE OF LAND POLICY, LONGFELLOW INVESTMENT
MANAGEMENT CO., LLC, MANULIFE FINANCIAL, MANULIFE INVESTMENT
MANAGEMENT (NORTH AMERICA) LTD., FKA MANULIFE ASSET MANAGEMENT
NORTH AMERICA LTD., PANAGORA ASSET MANAGEMENT INC., RHUMBLINE
ADVISERS LP, STATE STREET BANK MAYA ACCOUNT HOLDER, STATE STREET GLOBAL
ADVISORS, STATE STREET GLOBAL ADVISORS RUSSELL 1000 VALUE FUND CTF, STATE
STREET GLOBAL ADVISORS RUSSELL 2000 INDEX FUND, STATE STREET GLOBAL
ADVISORS RUSSELL 2000 VALUE FUND CTF, STATE STREET GLOBAL ADVISORS
RUSSELL 3000 INDEX FUND CTF, STATE STREET GLOBAL ADVISORS RUSSELL 3000
INDEX FUND, STATE STREET GLOBAL ADVISORS RUSSELL 3000 INDEX FUND SL SER
A, STATE STREET GLOBAL ADVISORS RUSSELL SMALL CAP FUND COMPLETE S/L A,
STATE STREET GLOBAL ADVISORS RUSSELL SPECIAL SMALL COMPANY FUND, STATE
STREET GLOBAL ADVISORS RUSSELL SPECIAL SMALL COMPANY FUND CTF, STATE
STREET GLOBAL ADVISORS TOTAL ETF, STATE STREET GLOBAL ADVISORS U.S.
EXTENDED MARKET INDEX FUND, AKA U.S. EXTENDED MARKET FUND SL, STATE
STREET BANK AND TRUST COMPANY, DIANNE CARD, FIAM LLC, AKA FIDELITY
INSTITUTIONAL ASSET MANAGEMENT, FKA PYRAMIS GLOBAL ADVISORS, FIDELITY
ASSET ALLOCATION CURRENCY NEUTRAL PRIVATE POOL, FIDELITY ASSET
ALLOCATION PRIVATE POOL, FIDELITY BALANCED CURRENCY NEUTRAL PRIVATE
POOL, FIDELITY BALANCED INCOME CURRENCY NEUTRAL PRIVATE POOL, FIDELITY
BALANCED INCOME PRIVATE POOL, FIDELITY BALANCED PRIVATE POOL, FIDELITY
CONCORD STREET TRUST-FIDELITY EXTENDED MARKET INDEX FUND, FIDELITY
CONCORD STREET TRUST-FIDELITY TOTAL MARKET INDEX FUND, FIDELITY INCOME
ALLOCATION FUND, FKA FIDELITY MONTHLY HIGH INCOME FUND, FIDELITY
INVESTMENTS, FIDELITY INVESTMENTS CHARITABLE GIFT FUND, FIDELITY MONTHLY
INCOME FUND, FIDELITY NORTHSTAR FUND, FIDELITY SMALL CAP INDEX FUND,
FIDELITY TOTAL MARKET INDEX FUND, SPDR S&P MIDCAP 400 ETF TRUST, THE
BANK OF NEW YORK MELLON, TRUSTEE, AKA BNY MELLON MIDCAP SPDRS, THE
BANK OF NEW YORK MELLON, TRUSTEE, AKA BNY MELLON MIDCAP SPDRS,
SIDNEY KIMMEL, THE SIDNEY KIMMEL REVOCABLE INDENTURE OF TRUST, JOHN D.
DEMSEY, MATTHEW H. KAMENS, JAMES A. MITAROTONDA, BARINGTON COMPANIES
EQUITY PARTNERS, L.P., BARINGTON COMPANIES INVESTORS, LLC, JEFFREY D.
NUECHTERLEIN, LOWELL W. ROBINSON, JOSEPH T. DONNALLEY, AIDA TEJERO-
DECOLLI, AMERICAN FAMILY MUTUAL INSURANCE CO., AMERICAN INTERNATIONAL

4
GROUP INC., BARBARA KREGER, BLUECREST CAPITAL MANAGEMENT LTD., CALVERT
VARIABLE PRODUCTS, INC., (CALVERT VP RUSSELL 2000 SMALL CAP INDEX
PORTFOLIO), CHI OPERATING INVESTMENT PROGRAM, LP, CHRYSLER WORLD IMI
EQUITY INDEX - ND, CREF EQUITY INDEX ACCOUNT, DANIEL FISHMAN, DONNA F.
ZARCONE, DREMAN CONTRARIAN FUNDS, (DREMAN CONTRARIAN SMALL CAP
VALUE FUND), EILEEN DUNN, EMERSON ELECTRIC CO., EQ ADVISORS TRUST (ATM
SMALL CAP MANAGED VOLATILITY PORTFOLIO), EQ ADVISORS TRUST (EQ/2000
MANAGED VOLATILITY PORTFOLIO), ERIC DAUWALTER, FEDERATED EQUITY FUNDS
(FEDERATED CLOVER SMALL VALUE FUND), FRANCES LUKAS, FRANCIS X CLAPS,
GABELLI INVESTOR FUNDS INC. (THE GABELLI ABC FUND), GABELLI 787 FUND, INC.
(ENTERPRISE MERGERS AND ACQUISITIONS FUND), GEORGE SHARP, GERALD HOOD,
GREGG MARKS, GREGORY CLARK, HEATHER HARLAN, HEATHER ROUSSEL, JAMES
CAPIOLA, JAMES CHAN, JAMES T. OSTROWSKI, JAMIE CYGIELMAN, JANET CARR,
JANICE BROWN, JODI G. WRIGHT, JOSEPH A. ROSATO, JOSEPH STAFINIAK, JPMORGAN
SYSTEMATIC ALPHA FUND, KATHERINE BUTLER, KATHLEEN NEDOROSTEK KASWELL,
KBC EQUITY FUND - FALLEN ANGELS, KBC EQUITY FUND - LEISURE AND TOURISM,
KBC EQUITY FUND - STRATEGIC SATELLITES, LARISSA SYGIDA, LINCOLN VARIABLE
INSURANCE PRODUCTS TRUST, (LVIP SSGA SMALL-CAP INDEX FUND), LYNNE
BERNSTOCK, MARY E. BELLE, METROPOLITAN LIFE INSURANCE CO, MITCHEL LEVINE,
MULTIMANAGER SMALL CAP VALUE PORTFOLIO, NATIONWIDE MUTUAL FUNDS,
(NATIONWIDE SMALL CAP INDEX FUND), NATIONWIDE MUTUAL FUNDS,
(NATIONWIDE U.S. SMALL CAP VALUE FUND), NATIONWIDE VARIABLE INSURANCE
TRUST, (NVIT MULTI-MANAGER SMALL CAP VALUE FUND), NATIXIS SA, NICOLETTA
PALMA, NORMAN R. VEIT, JR., ODIN HOLDINGS LP, OPPENHEIMER GLOBAL MULTI
STRATEGIES FUND, PINEBRIDGE INVESTMENTS LP, PRINCIPAL FUNDS INC.,
(SMALLCAP VALUE FUND II), PRINCIPAL VARIABLE CONTRACTS FUNDS INC.,
(SMALLCAP VALUE ACCOUNT I), PROSHARES TRUST, (PROSHARES MERGER ETF),
QUANTITATIVE MASTER SERIES LLC, (MASTER EXTENDED MARKET INDEX SERIES),
RBB FUND, INC., (WPG PARTNERS SMALL/MICRO CAP VALUE FUND), ROBYN
WHITNEY MILLS, ROSA GENOVESI, ROY CHAN, ROYCE INSTITUTIONAL, LLC,
(OPPORTUNITY PORTFOLIO), RUSSELL U.S. SMALL CAP EQUITY FUND, SCOTT
BOWMAN, SECURIAN LIFE INSURANCE CO., FKA MINNESOTA LIFE INSURANCE CO.,
SEI INSTITUTIONAL INVESTMENTS TRUST, (SIIT SMALL CAP FUND), SEI
INSTITUTIONAL MANAGED TRUST, (SIMT SMALL CAP VALUE FUND), SHARON
HARGER, STEFANI GREENFIELD, STEPHEN C. TROY, STUART WEITZMAN, SUSAN
DUFFY, SUSQUEHANNA INTERNATIONAL GROUP LLP, SUZANNE KARKUS, TALCOTT

5
 RESOLUTION LIFE INSURANCE CO., TFS CAPITAL LLC, THE ARBITRAGE EVENT-
DRIVEN FUND, THE GDL FUND, TIAA-CREF FUNDS, TIAA-CREF FUNDS (TIAA-
CREF EQUITY INDEX FUND), TIAA-CREF FUNDS (TIAA-CREF SMALL-CAP BLEND
INDEX FUND), TOUCHSTONE FUNDS GROUP TRUST (TOUCHSTONE ARBITRAGE FUND),
(TOUCHSTONE CREDIT OPPORTUNITIES II FUND), TWO SIGMA INVESTMENTS LP,
UNIFIED SERIES TRUST (SYMONS SMALL CAP INSTITUTIONAL FUND), VALUED
ADVISERS TRUST (FOUNDRY PARTNERS FUNDAMENTAL SMALL CAP VALUE FUND),
VANGUARD INDEX FUNDS (VANGUARD EXTENDED MARKET INDEX FUND),
VANGUARD INDEX FUNDS (VANGUARD SMALL-CAP INDEX FUND), VANGUARD
INDEX FUNDS (VANGUARD SMALL-CAP VALUE INDEX FUND), VANGUARD INDEX
FUNDS (VANGUARD TOTAL STOCK MARKET INDEX FUND), VANGUARD
INSTITUTIONAL INDEX FUNDS (VANGUARD INSTITUTIONAL TOTAL STOCK MARKET
INDEX FUND), VANGUARD INSTITUTIONAL TOTAL STOCK MARKET INDEX TRUST,
VANGUARD INTERNATIONAL EQUITY INDEX FUNDS (VANGUARD TOTAL WORLD
STOCK INDEX FUND), VANGUARD RUSSELL 2000 VALUE INDEX TRUST, VANGUARD
SCOTTSDALE FUNDS (VANGUARD RUSSELL 2000 INDEX FUND), VANGUARD
SCOTTSDALE FUNDS (VANGUARD RUSSELL 2000 VALUE INDEX FUND), VANGUARD
VALLEY FORGE FUNDS (VANGUARD BALANCED INDEX FUND), VANGUARD WORLD
FUND (VANGUARD CONSUMER DISCRETIONARY INDEX FUND), WAYNE KULKIN, ZINE
MAZOUZI, COMMUNITY INSURANCE COMPANY, PRINCIPAL FUNDS INC. (GLOBAL
MULTI-STRATEGY FUND), RICHARD DICKSON, ROBERT L. METTLER, BLUE CROSS OF
CALIFORNIA, DIVERSIFIED ALPHA GROUP TRUST, DT DV MARKET COMPLETION
FUND, NICOLA GUARNA, HAWAII DE LLC, GEORGE M. KLABIN, LITMAN GREGORY
MASTERS ALTERNATIVE STRATEGIES FUND, MASTER SMALL CAP INDEX SERIES OF
QUANTITATIVE MASTER SERIES LLC, AKA ISHARES RUSSELL 2000 SMALL-CAP INDEX
FUND, PG AND E CO. NUCLEAR FACILITIES QUALIFIED CPUC DECOMMISSIONING
MASTER TRUST, RESEARCH AFFILIATES EQUITY U.S. LARGE, L.P., FKA ENHANCED
RAFI U.S. LARGE LP, ROBERT RODRIGUEZ, VERICIMETRY U.S. SMALL CAP VALUE
FUND, ROBERT AND SUSAN METTLER FAMILY TRUST U/A 3/27/06, ROBERT L.
METTLER, SUSAN T. METTLER, TRUSTEES, BAM ADVISOR SERVICES, DBA LORING
WARD, BLACKROCK MSCI USA SMALL CAP EQUITY INDEX FUND, BLUE SHIELD OF
CALIFORNIA, DAGT SMALL CAP OUTLIERS, EXTENDED EQUITY MARKET FUND, AKA
BLACKROCK INSTITUTIONAL TRUST COMPANY, N.A., EXTENDED EQUITY MARKET
MASTER FUND B, ISHARES EUROPE, ISHARES MORNINGSTAR SMALL-CAP VALUE ETF,
ISHARES MSCI USA SMALL CAP UCITS ETF, ISHARES RUSSELL 2000 ETF, ISHARES
RUSSELL 3000 ETF, GEORGE M PACIFIC SELECT FUND-PD SMALL-CAP VALUE INDEX

6
PORTFOLIO, PACIFIC SELECT FUND-SMALL-CAP EQUITY PORTFOLIO, PACIFIC SELECT-
FUND-SMALL-CAP INDEX PORTFOLIO, RUSSELL 2000 ALPHA TILTS FUND B, RUSSELL
2000 INDEX FUND, RUSSELL 2000 INDEX NON-LENDABLE FUND, BLACKROCK
RUSSELL 2000 INDEX NON-LENDABLE FUND, RUSSELL 2000 VALUE FUND B, RUSSELL
2500 INDEX FUND, AKA ISHARES RUSSELL SMALL/MID-CAP INDEX FUND, RUSSELL
3000 INDEX FUND, AKA ISHARES TOTAL U.S. STOCK MARKET INDEX FUND, SA U.S.
SMALL COMPANY FUND, STATE STREET NORTH AMERICA CONFIDENTIAL CLIENT 1
DOMESTIC EQUITIES, STATE STREET NORTH AMERICA CONFIDENTIAL CLIENT 1
DOMESTIC ISHARES 405, STATE STREET NORTH AMERICA CONFIDENTIAL CLIENT 1
FOF, U.S. EQUITY MARKET FUND, U.S. EQUITY MARKET FUND B, MSCI U.S. IMI
INDEX FUND B2, AKA BLACKROCK MSCI U.S. IMI INDEX FUND B2, MERRILL LYNCH
PIERCE FENNER AND SMITH INCORPORATED, STATE STREET BANK AND TRUST CO.,
PACIFIC SELECT FUND - PD SMALL-CAP VALUE INDEX PORTFOLIO, RUSSELL 3000
INDEX NON-LENDABLE FUND, SCHWAB TOTAL STOCK M, U.S. SMALL COMPANY
FUND, THE ARBITRATE FUND, DEF, ADVISORS SERIES TRUST (KELLNER MERGER
FUND), DEFENDANT NY-1, BETH B. DORFSMAN, BROWN BROTHERS HARRIMAN AND
CO. CLIENT NO. 2, BROWN BROTHERS HARRIMAN AND CO. CLIENT NO. 3, BRYAN R.
GILLIGAN, CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., DYNAMIC
CAPITAL MANAGEMENT, LLC, DYNAMIC OFFSHORE FUND LTD., FEDEX
CORPORATION, DEFENDANT NY-8, GARDNER LEWIS EVENT DRIVEN FUND, L.P.,
GOTHAM ABSOLUTE RETURN FUND, GTE INVESTMENT MANAGEMENT CORP.,
HALLADOR BALANCED FUND LLC, HARTFORD MUTUAL FUNDS II INC. (HARTFORD
SCHRODERS U.S. SMALL CAP OPPORTUNITIES FUND), HARVEST STREET CAPITAL
LLC, DEFENDANT NY-18, DEFENDANT NY-19, LAURIE J. GENTILE, LEGG MASON
ROYCE U.S. SMALL CAP OPPORTUNITY FUND, LINDA V. KOTHE, LORI L. GRACE,
MFO MANAGEMENT COMPANY (TOWLE FUND), MICHAEL G. DEMKO, DEFENDANT
NY-24, MINNESOTA MINING AND MANUFACTURING CO., PILLSBURY, PINNACLE
WEST CORP., PRELUDE OPPORTUNITY FUND, LP, ROYCE FUND (ROYCE OPPORTUNITY
FUND), STACEY A. HARMON, THE ARBITRAGE FUND, WISDOM TREE ASSET
MANAGEMENT INC., WHITNEY L. SMITH, WCFS INC., VIRTU AMERICAS LLC, TUDOR
TRADING I, LP, TRADITION SECURITIES AND DERIVATIVES INC., TOWLE CAPITAL
PARTNERS II LP, TOWLE CAPITAL PARTNERS LP, THOMAS M. MURRAY PO N.
MURRAY JT TEN, THE HARTFORD LIFE INSURANCE COMPANY, ALLIANZ GLOBAL
INVESTORS OF AMERICA L.P, GARDNER LEWIS MERGER ARBITRAGE FUND, L.P.,
GARDNER LEWIS MERGER ARBITRAGE FUND II, L.P., ANTHEM HEALTH PLANS OF
VIRGINIA, INC., DIMENSIONAL FUNDS PLC U.S. SMALL COMPANIES FUND, AKA IRISH

7
U.S. SMALL CAP FUND, INVESTMENT MANAGERS SERIES TRUST (TOWLE DEEP VALUE
FUND), CALIFORNIA PHYSICIANS' SERVICE, DBA BLUE SHIELD OF CALIFORNIA,
TOWLE DEEP VALUE FUND, ALLIANZ ASSET MANAGEMENT OF AMERICA L.P., FKA
ALLIANZ GLOBAL INVESTORS OF AMERICA LP, COLLEGE RETIREMENT EQUITIES
FUND (CREF EQUITY INDEX ACCOUNT), TOUCHSTONE FUNDS GROUP TRUST
(TOUCHSTONE MERGER ARBITRAGE FUND), TOUCHSTONE FUNDS GROUP TRUST
(TOUCHSTONE CREDIT OPPORTUNITIES II FUND), WISDOMTREE U.S. SMALLCAP
DIVIDEND FUND, FKA WISDOMTREE SMALLCAP DIVIDEND FUND, WISDOMTREE
U.S. SMALLCAP FUND, FKA WISDOMTREE SMALLCAP EARNINGS FUND, JOHN W.
DEEM,
Defendants.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK

Before: CHIN, SULLIVAN, and BIANCO, Circuit Judges.

Consolidated appeals from a judgment and orders of the United

States District Court for the Southern District of New York (Rakoff, J.),

dismissing claims arising from the leveraged buyout of an apparel and footwear

company in 2014 and the bankruptcy filing of its successor in 2018. The

bankruptcy trustees brought suit against defendants-appellees -- officers,

directors, and shareholders of the company -- claiming breach of fiduciary duty,

aiding and abetting breach of fiduciary duty, fraudulent conveyance, unjust

enrichment, and various state law violations. The bankruptcy trustees allege that

8
the officers and directors arranged for the original company to merge with an

affiliate of a private equity company and sold off its most valuable businesses to

the private equity company's other affiliates at a fraction of their value, leaving

the surviving company with over $1.5 billion in debt, of which more than $1

billion was prior debt, and without its most successful product lines. The district

court dismissed the claims on the ground that the relevant transactions were

shielded by the Bankruptcy Code's § 546(e) safe harbor provision.

AFFIRMED IN PART, VACATED IN PART, AND REMANDED.

Judge Sullivan concurs in part and dissents in part in a separate

opinion.

EDWARD A. FRIEDMAN (Robert J. Lack, Stan Chiueh, on
the brief), Friedman Kaplan Seiler & Adelman
LLP, New York, New York, for Plaintiffs-
Appellants Marc S. Kirschner and Wilmington
Savings Fund Society, FSB, in all appeals except
Docket Numbers 20-3334 and 20-3335.

ALLAN B. DIAMOND and RYAN M. LAPINE, Diamond
McCarthy LLP, Dallas, Texas and Los Angeles,
California, for Plaintiffs-Appellants Marc S.
Kirschner and Wilmington Savings Fund Society,
FSB, in Docket Numbers 20-3257, 20-3290, 20-3334,
20-3335, 20-3964, and 20-3980.

9
GREGG L. WEINER (Adam M. Harris and Andrew G.
Devore, on the brief), Ropes & Gray LLP, New
York, New York and Boston, Massachusetts, for
Defendants-Appellees Public Shareholders (Robeco
Capital Growth Funds, et al.).

Y. DAVID SCHARF (Danielle C. Lesser, on the brief),
Morrison Cohen LLP, New York, New York, for
Defendants-Appellees Individual Shareholders Mary
E. Belle, Kathleen Nedorostek Kaswell, and Joseph
Stafiniak.

HOWARD SEIFE, Norton Rose Fulbright US LLP, New
York, New York, for Defendant-Appellee Individual
Shareholder Wayne Kulkin.

STUART KAGEN and CHRISTOPHER GREENE, Kagen,
Caspersen & Bogart, PLLC, for Defendants-
Appellees Individual Shareholders Katherine Butler,
Linda Kothe, Richard Hein, Richard H. Hein Rev.
Trust U/A 06/12/95, Mark DeZao, Janice Brown, Eric
Dauwalter, Rosa Genovesi, Charles Pickett, Susan
McCoy, Stacey Harmon, Kathleen O'Brien, James
Capiola, Laurie Gentile, and Robyn Mills.

KEVIN J. O'CONNOR and SHANNON D. AZZARO, Peckar &
Abramson, P.C., New York, New York, for
Defendants-Appellees Individual Shareholders Heather
Harlan and George Sharp.

10
CHIN, Circuit Judge:

These cases arise from the leveraged buyout and subsequent

bankruptcy of apparel and footwear company Jones Group, Inc. ("Jones Group"),

which housed brands such as Nine West, Anne Klein, Stuart Weitzman, and Kurt

Geiger. In 2014, private equity firm Sycamore Partners ("Sycamore") acquired

Jones Group through a merger with one of its subsidiaries and renamed the

surviving company Nine West Holdings, Inc. ("Nine West"). At the close of the

merger, Sycamore sold three of Nine West's brands to newly formed Sycamore

affiliates. A few years later, Nine West declared bankruptcy.

Plaintiffs-appellants Marc Kirschner, as the Litigation Trustee for the

Nine West Litigation Trust representing unsecured creditors, and Wilmington

Savings Fund, FSB, as successor Indenture Trustee for various notes issued by

Nine West (together, the "Trustees"), brought seventeen actions in different states

against Jones Group's former directors and officers for unjust enrichment and

against its former public shareholders for fraudulent conveyance, claiming that

the directors and officers arranged the merger and sold the company's most

valuable assets at a fraction of their value to consolidate debt with Nine West

and place Jones Group's most successful product lines outside the reach of Nine

11
West's creditors. The Judicial Panel on Multidistrict Litigation transferred the

cases to the Southern District of New York for coordinated or consolidated

pretrial proceedings. Both the public shareholders and the directors and officers

moved to dismiss the claims against them, arguing that payments made to them

in connection with the merger are shielded by the Bankruptcy Code's § 546(e)

safe harbor. On August 27, 2020, the district court (Rakoff, J.) granted both

motions to dismiss, holding that the payments were shielded by the safe harbor,

as interpreted by In re Tribune Co. Fraudulent Conv. Litig. (Tribune II), 946 F.3d 66,

72 (2d Cir. 2019), cert. denied sub nom. Deutsche Bank Tr. Co. Americas v. Robert R.

McCormick Found., 141 S. Ct. 2552 (2021). Plaintiffs appeal.

We AFFIRM in part, VACATE in part, and REMAND for further

proceedings.

BACKGROUND

When reviewing a district court's grant of a motion to dismiss, we

accept the material facts alleged in the complaint as true and draw all reasonable

inferences in favor of the plaintiff -- here, the Trustees. Altimeo Asset Mgmt. v.

Qihoo 360 Tech. Co., 19 F.4th 145, 147 (2d Cir. 2021).

12
I. The Facts

The following facts are drawn from the Trustees' seventeen

complaints, the exhibits attached thereto, and documents integral to and

referenced in them. See Cohen v. Rosicki, Rosicki & Assocs., P.C., 897 F.3d 75, 80 (2d

Cir. 2018). We cite, as the district court did, specifically to the amended

complaint filed in Kirschner et al. v. McClain et al., No. 20-cv-4262, Dkt. No. 110

(the "Complaint"), though all cited allegations are also found in the other

operative complaints.

A. The Merger

In 2013, Sycamore proposed to acquire Jones Group through a

leveraged buyout ("LBO") transaction (the "Merger"). In preparation for the

Merger, Sycamore created a holding company called Jasper Parent LLC ("Jasper

Parent") and another entity called Jasper Merger Sub, Inc. ("Jasper Merger Sub"),

a wholly owned subsidiary of Jasper Parent.

On December 19, 2013, Jones Group, Jasper Parent, and Jasper

Merger Sub entered into an agreement (the "Merger Agreement"), which

governed the terms of the Merger. Pursuant to the Merger Agreement, Jones

13
Group merged with Jasper Merger Sub and continued as the surviving

corporation -- Nine West.

1. The Certificate and DTC Transfers

The Merger Agreement outlined the terms for public shareholders to

receive payments upon cancelation of their shares in Jones Group. Jones Group's

former public shareholders (the "Public Shareholders") received $15 for each

share of common stock they owned when the Merger closed. To implement

those payments, the Merger Agreement called for a "paying agent" to be hired

"pursuant to a paying agent agreement in customary form." J. App'x at 383

§ 4.2(a). Jasper Parent and Jones Group hired Wells Fargo to act as a paying

agent. The Paying Agent Agreement (the "PAA") stated that the surviving

corporation -- Jones Group -- "desires that the Paying Agent act as its special

agent for the purpose of distributing the Merger Consideration" to the Public

Shareholders. J. App'x at 217. 1

The Merger Agreement further provided that Jasper Parent would

deposit with the Paying Agent -- Wells Fargo -- the aggregate amount of the

merger consideration to be paid to the Public Shareholders. The paying agent

1 Although the PAA identifies Jones Group as the surviving corporation, Jones
Group thereafter merged with subsidiaries and eventually became Nine West.
14
was to distribute these payments to the Public Shareholders. A majority of Jones

Group shares were held as of record by Depository Trust Company ("DTC") or in

electronic book-entry form, although some shareholders held physical

certificates. Accordingly, we refer to these payments as the as the "DTC

Transfers" and the "Certificate Transfers," respectively.

Pursuant to the PAA, Nine West deposited $1.101 billion in an

account at Wells Fargo for the purpose of paying the DTC Transfers and $4

million for the purpose of paying the Certificate Transfers. The PAA outlined in

detail how Wells Fargo was to effectuate the payments. Wells Fargo ultimately

distributed the payments to the Public Shareholders.

2. The Payroll Transfer

The Merger Agreement also set forth the terms for former directors,

officers, and employees of Jones Group (the "Individual Shareholders") to receive

payment for their restricted shares, share-equivalent units, and accumulated

dividends on restricted stock at the close of the merger (the "Payroll Transfer").

Pursuant to the Merger Agreement, Jones Group paid $78 million to the

Individual Shareholders for those shares "through the payroll and by other

15
means." J. App'x at 166 ¶ 135; see also id. at 385. Wells Fargo was not involved in

these transactions.

B. The Alleged Fraudulent Conveyances

At the close of the Merger, Sycamore sold three of the brands

housed by newly-renamed-Nine West -- Stuart Weitzman, Kurt Geiger, and

Jones Apparel (the "Carveout Assets") -- to then-recently formed Sycamore

affiliates (the "Carveout Transactions"). The Trustees contend that, in doing so,

Sycamore "transferred some of Jones Group's most valuable assets to Sycamore's

affiliates -- beyond the reach of Jones Group's creditors -- for substantially below

fair market value." J. App'x at 142 ¶ 61(e). These transactions rendered the

remaining Nine West business insolvent and "guaranteed that [Sycamore] would

profit handsomely . . . no matter what happened to the post-LBO [Nine West]." J.

App'x at 142 ¶ 62; see also id. at 164 ¶ 130. 2

2 As the Public Shareholders highlight in their briefing, the Trustees "do not allege
that the Public Shareholders were in any way involved in these Carveout Transactions,
which were approved by the post-LBO board after ownership of the company
transferred to Sycamore." Appellee's Br. at 10 (citing J. App'x at 143 ¶ 66, 166 ¶ 136).

16
 C. The Bankruptcy

On April 6, 2018, Nine West and several affiliate debtors filed a

Chapter 11 petition in the United States Bankruptcy Court for the Southern

District of New York. On February 27, 2019, the Bankruptcy Court confirmed a

reorganization plan (the "Plan").

Pursuant to the Plan, Sycamore paid Nine West's estate $120 million,

which covered the Carveout Transactions and thus the fraudulent transfer

claims.

II. The Proceedings Below

A. The Consolidated Cases

Beginning in February 2020, Trustees commenced nineteen actions

against more than 175 of Jones Group's former directors, officers, and

shareholders in various jurisdictions, seeking, in part, to avoid allegedly

fraudulent payments made to them in connection with the LBO. Two of the

nineteen actions were voluntarily dismissed without prejudice, and are not part

of this appeal. The suits were transferred in multidistrict proceedings to the

Southern District of New York, where they were consolidated.

17
 B. The Motions to Dismiss

On June 29, 2020, pursuant to a two-phase briefing schedule set by

the district court, the Public Shareholders filed motions to dismiss all fraudulent

conveyance claims under the Bankruptcy Code's "safe harbor" provision. See 11

U.S.C. § 546(e). The Individual Shareholders joined the motions. The safe harbor

defense limits a Chapter 11 bankruptcy trustee's power to avoid a transfer that is

a settlement payment, as defined by the Code, made by or to (or for the benefit

of) a financial institution, except in cases relating to actual fraudulent conveyance

claims under § 548(a)(1)(A). See 11 U.S.C. § 546(e).

On August 27, 2020, the district court dismissed seven of the

seventeen actions, including the Trustees' fraudulent conveyance and unjust

enrichment claims, relying in part on this Court's decision in Tribune II, 946 F.3d

66 (2d Cir. 2019). 3 It found that 11 U.S.C. § 546(e) barred plaintiffs' fraudulent

conveyance claims and, consequently, preempted their unjust enrichment

3 The dismissed actions were: 20-cv-4286, 20-cv-4289, 20-cv-4299, 20-cv-4434, 20-
cv-4440, 20-cv-4479, and 20-cv-4480. Ten of the seventeen actions remain pending
because each includes claims against directors, officers, or employees that have not been
dismissed.
18
claims. 4 On November 18, 2020, the district court granted certification pursuant

to Federal Rule of Civil Procedure 54(b) for entry of partial final judgment

dismissing the claims. These consolidated appeals followed.

STANDARD OF REVIEW

We review de novo a district court's grant of a motion to dismiss

pursuant to Federal Rule of Civil Procedure 12(b)(6), accepting all factual

allegations in the complaint as true and drawing all reasonable inferences in

favor of the plaintiff. Giunta v. Dingman, 893 F.3d 73, 78-79 (2d Cir. 2018). We

also review de novo a district court's Rule 12(b)(6) dismissal based on an

affirmative defense. See Force v. Facebook, Inc., 934 F.3d 53, 62 (2d Cir. 2019).

A district court may grant a motion to dismiss for failure to state a

claim on the basis of an affirmative defense only when facts supporting the

defense appear on the face of the complaint. See, e.g., Sewell v. Bernardin, 795 F.3d

337, 339 (2d Cir. 2015) ("Dismissal under Fed. R. Civ. P. 12(b)(6) is appropriate

when a defendant raises a statutory bar . . . as an affirmative defense and it is

clear from the face of the complaint, and matters of which the court may take

4 The district court dismissals were limited to the payments associated with
common shares, restricted shares, share equivalent units, and accumulated dividends. It
did not dismiss the unjust enrichment claims related to the change in control payments.
19
judicial notice, that the plaintiff's claims are barred as a matter of law.") (citation

omitted). For purposes of this standard, "the complaint is deemed to include any

written instrument attached to it as an exhibit or any statements or documents

incorporated in it by reference." Dixon v. von Blanckensee, 994 F.3d 95, 101 (2d Cir.

2021) (citation omitted).

DISCUSSION

The Trustees contend that the payments they seek to avoid are not

protected by the Bankruptcy Code's safe harbor and thus they ask this Court to

reverse the district court's judgment dismissing their claims.

These cases present two main questions. First, the parties disagree

as to the scope of the term "financial institution" as defined in 11 U.S.C.

§ 101(22)(A). The Trustees argue that the definition encompasses bank

customers only in transactions where the bank is acting as their agent, while

defendants argue that it applies to any transaction related to a securities contract

so long as the bank acted as their agent at one point in connection with that

contract. Second, the parties dispute whether Wells Fargo acted as Nine West's

agent in the transactions at issue. There are three relevant transactions:

(1) the Certificate Transfers -- Nine West deposited approximately
$4 million with Wells Fargo, which, pursuant to the PAA,

20
 distributed checks or wire transfers to the paper stock
shareholders in exchange for their shares;

(2) the DTC Transfers -- Nine West deposited approximately $1.101
billion with Wells Fargo, which, pursuant to the PAA, distributed
checks or wire transfers to the book-entry shareholders in
exchange for their shares; and

(3) the Payroll Transfers -- Nine West paid $78 million to Jones
Group's directors, officers, and employee shareholders through
its payroll program.

We hold that, for these purposes, "financial institution" includes

bank customers only in transactions where the bank is acting as their agent and

that Wells Fargo acted as Nine West's agent in the Certificate and DTC Transfers

but not in the Payroll Transfers. We conclude, further, that under the transfer-

by-transfer interpretation of § 101(22)(A), Nine West was a "financial institution"

with respect to the Certificate and DTC Transfers and those payments are

therefore safe harbored under § 546(e). The Payroll Transfers, however, are not

so shielded.

I. Statutory Background

The Bankruptcy Code identifies "circumstances under which a

trustee" may set aside (or avoid) "certain types of transfers and recapture the

value of those avoided transfers for the benefit of the estate." Merit Mgmt. Grp.,

21
LP v. FTI Consulting, Inc., 138 S. Ct. 883, 888 (2018) (citing 11 U.S.C. §§ 544-53)

(cleaned up). It also provides, however, "a number of limits on the exercise of

these avoiding powers." Id. at 889.

Section 546(e) of Chapter 11 of the Bankruptcy Code precludes

avoidance of "settlement payment[s] . . . made by or to (or for the benefit of) a . . .

financial institution, . . . or . . . transfer[s] made by or to (or for the benefit of) a . . .

financial institution . . . in connection with a securities contract . . . ." 11 U.S.C.

§ 546(e). The Code defines "financial institution" to include not only banks, but

also a customer of a bank "when [the bank] is acting as agent or custodian for a

customer . . . in connection with a securities contract." Id. § 101(22)(A). 5

The two leading cases interpreting the safe harbor provision are

Merit Management, 138 S. Ct. 883 (2018), and Tribune II, 946 F.3d 66 (2d Cir. 2019).

The Supreme Court held in Merit Management, 138 S. Ct. at 892, and we

recognized in Tribune II, 946 F.3d at 77, that § 546(e) does "not protect transfers in

which financial institutions served as mere conduits." In Tribune II, however, we

concluded that an agency relationship provided an "alternative basis for finding

that the payments [were] covered." 946 F.3d at 77; see also 11 U.S.C. § 101(22)(A).

5 11 U.S.C. § 741(7) defines the term "securities contract" broadly.
22
There, we held that Computershare Trust Company ("Computershare"), a trust

company and bank that the Tribune Company had hired as a depositary and

paying agent, acted as the Tribune Company's "agent" in connection with the

underlying LBO securities contract, rendering the Tribune Company a "financial

institution" and triggering the safe harbor for payments made in the LBO to the

Tribune Company's public shareholders. 946 F.3d at 77-81.

Section 546(e) has been uniformly recognized as an affirmative

defense, though not yet by this Court. 6 We have, however, held that safe harbors

in other statutory schemes are affirmative defenses. 7 Accordingly, we hold today

that 11 U.S.C. § 546(e) is an affirmative defense.

Defendants therefore bear the burden of demonstrating that the

transfers fall within the safe harbor. See, e.g., Capitol Records, 826 F.3d at 94.

6 See 3 Howard J. Steinberg & Roy S. Geiger, Bankruptcy Litigation § 17:128,
Responsive pleadings: Affirmative defenses (Oct. 2022), Westlaw BKRLIT (collecting cases);
see also In re Tronox Inc., 503 B.R. 239, 339 (Bankr. S.D.N.Y. 2013) ("Cases construing
§ 546(e) have uniformly treated it as an affirmative defense.").
7 See, e.g., Capitol Records, LLC v. Vimeo, LLC, 826 F.3d 78, 94 (2d Cir. 2016) (holding
that the Digital Millennium Copyright Act's service provider safe harbor is an
affirmative defense that "must be raised by the defendant" and explaining "[t]he
defendant undoubtedly bears the burden of raising entitlement to the safe harbor and of
demonstrating that it has the status of a service provider"); Saks v. Franklin Covey Co.,
316 F.3d 337, 350 (2d Cir. 2003) (holding that "ERISA preemption of state contract claims
in a benefits-due action is an affirmative defense that is . . . subject to waiver, if not
pleaded in the defendant's answer.").
23
Plaintiffs are under no obligation to plead facts supporting or negating an

affirmative defense in the complaint. See, e.g., Picard v. Citibank N.A. (In re

Bernard L. Madoff Inv. Sec. LLC), 12 F.4th 171, 195 (2d Cir. 2021) (first citing Fed. R.

Civ. P. 8(c); and then citing Perry v. Merit Sys. Prot. Bd., 137 S. Ct. 1975, 1987 n.9

(2017) ("An affirmative defense to a plaintiff's claim for relief is not something the

plaintiff must anticipate and negate in her pleading." (cleaned up))), cert. denied

sub nom. Citibank, N.A. v. Picard, 142 S. Ct. 1209 (2022).

II. Qualifying Participant

The payments at issue are safe harbored only if (1) Nine West, which

made the payments, was a covered entity; or (2) the shareholders, who

ultimately received the payments, were covered entities. See Tribune II, 946 F.3d

at 77. Nine West is a covered entity if it is considered a "financial institution"

under § 101(22)(A). 11 U.S.C. § 101(22)(A).

The district court interpreted section 546(e) of Chapter 11 of the

Bankruptcy Code to mean that "when a bank is acting as an agent for a customer

in connection with a securities contract, that customer counts as a 'financial

institution,' for the purposes of the § 546(e) safe harbor." 482 F. Supp. 3d 187,

199 (S.D.N.Y. 2020). It therefore held that Nine West qualified as a "financial

24
institution" and that all the transfers at issue were protected by the safe harbor.

Id.

The Trustees take issue with the district court's interpretation of 11

U.S.C. § 101(22)(A). The district court found that Wells Fargo acted as Nine

West's agent with respect to the Certificate Transfers and did not analyze the

other transfers. Rather, it employed a "contract-by-contract" interpretation of

§ 101(22)(A) and concluded that, because Wells Fargo acted as Nine West's agent

in the Certificate Transfers, and those transfers were made in connection with the

Merger Agreement, Wells Fargo must be considered Nine West's agent for every

transfer made in connection with that contract and therefore any transfer made

in connection with the LBO. Accordingly, it found that § 546(e) insulated all

transfers made in connection with the LBO from avoidance, including (1) the

DTC Transfers, in which Wells Fargo had a limited role; and (2) the Payroll

Transfers, in which Wells Fargo played no role whatsoever. The Trustees and

amici argue that this Court's holding in Tribune II does not support such a

reading of § 101(22)(A). We agree that the district court erred in applying a

"contract-by-contract" analysis, and conclude that the safe harbor applies only to

the Certificate and DTC Transfers and not to the Payroll Transfers.

25
 We hold that § 101(22)(A) must be interpreted using a "transfer-by-

transfer" approach based on: (1) the language of the statute, (2) the statutory

structure, and (3) the purpose of the safe-harbor provision.

First, the Bankruptcy Code defines a "financial institution" to include

a "customer" of a bank or other such entity "when" the bank or other such entity

"is acting as agent" for the customer "in connection with a securities contract," 11

U.S.C. § 101(22)(A) (emphasis added). It does not provide that a customer is

covered when a bank has ever acted as a customer's agent in connection with a

securities contract. In other words, the text creates a link between a bank "acting

as agent" and its customer with respect to a transaction. To satisfy that link, the

plain language of § 101(22)(A) indicates that courts must look to each transfer

and determine "when" a bank "is acting as agent" for its customer for a transfer,

assuming, of course, the transfer is made in connection with a securities contract.

To the extent the language of the statute is ambiguous, the transfer-

by-transfer approach is the more logical and reasonable interpretation. A

contract-by-contract interpretation of § 101(22)(A) would lead to the absurd

result of insulating every transfer made in connection with an LBO, as long as a

bank served as agent for at least one transfer. Courts should interpret statutes to

26
avoid absurd results. See United States v. Wilson, 503 U.S. 329, 334 (1992); United

States v. Dauray, 215 F.3d 257, 264 (2d Cir. 2000). Indeed, at oral argument,

counsel for the Individual Shareholders did not provide a clear answer when

asked when, if ever, a transaction would fall outside the scope of § 546(e).

Likewise, if this were indeed the law, we cannot imagine a circumstance in

which a debtor would choose to structure an LBO without involving a bank,

even in only a purely ministerial capacity. 8 Under the contract-by-contract

approach, the Payroll Transfers in this case would be covered by the safe-harbor

provision even though Wells Fargo had nothing to do with the $78 million in

transfers paid through the payroll program.

Second, the structure of the Bankruptcy Code supports the transfer-

by-transfer interpretation. As described above, the Code grants trustees the

authority to set aside or avoid certain transfers and recoup their value for the

estate. Merit Mgmt., 138 S. Ct. at 888. While these general avoidance powers

"help implement the core principles of bankruptcy," they are not unfettered. See

8 For examples of parties "'structur[ing]' their way out of liability under avoiding
power statutes," see Ralph Brubaker, Understanding the Scope of the § 546(e) Securities Safe
Harbor Through the Concept of the "Transfer" Sought To Be Avoided, 37 Bankr. L. Letter 1
n.4 (July 2017) (quoting Jonathan M. Landers & Sandra A. Riemer, A New Look at
Fraudulent Transfer Liability in High Risk Transactions, BUS. L. TODAY, 1, 3 (Dec. 2016)).
27
id. (citation omitted). One limitation on trustees' avoidance powers is § 546(e)'s

safe harbor provision. Id. To interpret that limitation broadly under the

contract-by-contract interpretation would be to undermine the avoidance powers

that are so crucial to the Bankruptcy Code.

Third, the purpose of the safe harbor provision further supports the

transfer-by-transfer interpretation. Congress enacted the safe harbor in 1982 to

shield certain transfers that, if avoided by trustees, could trigger systemic risk in

financial markets. See Brubaker, supra, at 1, 13; see also Merit Mgmt., 138 S. Ct. at

889-90 (citing Brubaker and providing more historical context). Interpreting the

safe harbor as broadly as defendants suggest would limit the avoidance power

even where it would not threaten the financial system -- an expansion of the safe

harbor provision likely not intended by Congress. As we noted in Tribune II,

"[t]he broad language used in Section 546(e) protects transactions rather than

firms, reflecting a purpose of enhancing the efficiency of securities markets in

order to reduce the cost of capital to the American economy." 946 F.3d at 92

(emphasis added) (citation omitted). Here, the Payroll Transfers were not paid

through Wells Fargo and Congress's concerns about the settlement of securities

transactions are not implicated. See id. at 90.

28
 The district court erred in adopting a "contract-by-contract"

approach to hold that once Wells Fargo acted as Nine West's agent in one

transaction, it is considered Nine West's agent in all the transactions. Applying

the transfer-by-transfer interpretation of 11 U.S.C. § 101(22)(A), we conclude that

the Certificate and DTC Transfers are protected by the safe harbor, but the

Payroll Transfers are not.

A. Certificate and DTC Transfers

The Public Shareholders argue that the Trustees' own pleading and

documents demonstrate that Nine West hired Wells Fargo as an agent to

effectuate payments to its shareholders in an LBO, the same role that

Computershare played in Tribune II, thereby triggering the safe harbor for all

payments made in the LBO to the Public Shareholders. We agree, but only as to

the Certificate and DTC Transfers.

The Complaint alleges and related documents show that Wells

Fargo made payments to, and received information from, the Public

Shareholders during the Certificate and DTC Transfers. It did so on behalf of

Nine West, and Nine West maintained control over the transactions. Thus,

under Tribune II, Wells Fargo acted as Nine West's agent during those

29
transactions as a matter of law. See 482 F. Supp. 3d at 202 ("Wells Fargo was

entrusted with millions of dollars of Nine West cash and was tasked with

making payments on Nine West's behalf to Shareholders upon the tender of their

stock certificates to Wells Fargo.") (cleaned up). In other words, facts supporting

the applicability of the § 546(e) defense to the Certificate and DTC Transfer

claims appear on the face of the Complaint, and the district court was correct in

dismissing those claims.

B. Payroll Transfers

The same cannot be said of the Payroll Transfers. As to those

transfers, the Complaint suggests that Wells Fargo did not make any payments

on behalf of Nine West. The Complaint alleges that the Payroll Transfers "were

processed through the payroll and by other means." J. App'x at 166 ¶ 135

(alleging that the Payroll Transfer payments "were processed through the payroll

and by other means"); 482 F. Supp. 3d at 205 ("Unlike the common share

payments, . . . which were effectuated through Wells Fargo, plaintiffs allege that

the payments for restricted shares, share equivalent units, and accumulated

dividends 'were processed through the payroll and by other means.'"). In any

event, it is undisputed that Jones Group's payroll processor, Automated Data

30
Processing, Inc. ("ADP") -- not Wells Fargo -- made the payments, which totaled

$78 million. 9 Two questions are thus presented: first, whether Wells Fargo took

any other relevant action that created an agency relationship with Nine West

during that transaction; and second, whether any such action rendered it Nine

West's agent as a matter of law.

The parties disagree about the mechanism by which the restricted

shares and share-equivalent units were canceled and, therefore, about the role

Wells Fargo played in that transaction. The Trustees argue that Wells Fargo

played little or no role in the Payroll Transfers because (1) ADP made the

payments and (2) the shares were automatically canceled by operation of law

under the Merger Agreement. 10 In contrast, the Individual Shareholders argue

9 At oral argument, counsel for the Individual Shareholders conceded that ADP in
fact made the payments. See Oral Argument at 24:52-25:00, In re Nine West LBO Sec.
Litig. (No. 20-3257 (L)), https://ww3.ca2.uscourts.gov/oral_arguments.html; see also
Appellants' Br. at 8 ("Discovery obtained while the motions to dismiss were pending
confirmed that these transfers were processed by ADP, a payroll processor, which is
neither a bank nor an agent.").
10 See Appellants' Br. at 10 ("The Merger Agreement gave the paying agent no
authority to make any payment on account of restricted stock, accumulated dividends
on restricted stock, or share equivalent units that were the subject of the Payroll
Transfers."), 13-14 (Wells Fargo "played no role" in the Payroll Transfer), 49 ("[T]he
shares were canceled and simply ceased to exist."). At oral argument, plaintiffs' counsel
argued Wells Fargo's role as a transfer agent -- what he described as stamping the word
"canceled" on a certificate -- is not indicative of Nine West controlling Wells Fargo as a
paying agent. See Oral Argument at 33:02-32.
31
that Wells Fargo completed a "critical element" that was "inherent" to the

transaction by canceling the shares and thus that it acted as Nine West's agent

during that transaction. 11 They do not elaborate on what that role entailed.

We agree with the Trustees that the face of the Complaint and

relevant documents, viewed in a light most favorable to them, do not

demonstrate the existence of an agency relationship between Wells Fargo and

Nine West during the Payroll Transfers. To the extent Wells Fargo played any

role in that transaction, the Complaint plausibly alleges the role was purely

ministerial because the shares were canceled automatically under, for example,

the Merger Agreement provision that "all Restricted Shares and Share Equivalent

Units . . . shall automatically cease to exist" at the close of the Merger. J. App'x at

386 § 4.3(c).

The Individual Shareholders ask us to ignore the Complaint and the

Merger Agreement and look instead to the PAA. They first cite PAA § 1.3, which

provides that Nine West "instructs and authorizes [Wells Fargo] to cancel all"

restricted shares upon delivery and at the close of the merger. J. App'x at 218

§ 1.3. They then point to other provisions of the PAA that indicate Wells Fargo

11 Oral Argument at 25:40, 26:11.
32
acted as Nine West's agent during the Certificate and DTC Transfers. Appellee's

Br. at 36-37. For example, PAA § 4.2 provides that Nine West will reimburse

Wells Fargo for expenses incurred in connection with its duties as paying agent,

§ 4.6 provides that Nine West will indemnify Wells Fargo for damages arising

from its role as paying agent, and § 5.3 outlines Wells Fargo's responsibilities in

handling confidential data. 12 The Individuals Shareholders do not acknowledge,

however, that Wells Fargo acted not as a paying agent with respect to the Payroll

Transfers, as it did in the Certificate and DTC Transfers, but as a transfer agent

only. 13

The Individual Shareholders argue that because the PAA (1)

"instructs" Wells Fargo "to cancel" the shares involved in the Payroll Transfers,

and (2) establishes that Wells Fargo acted as Nine West's agent during the

Certificate and DTC Transfers, it also establishes that Wells Fargo acted as Nine

West's agent during the Payroll Transfers. We disagree. The PAA does not

preclude the shares' automatic cancelation under the Merger Agreement, and it is

12 The Individual Shareholders do not cite PAA § 2.10, which provides that Wells
Fargo "shall maintain" certain records related to cancelation of the shares, as "required
by applicable law and regulation," J. App'x at 221, but that section arguably supports
their position that Wells Fargo's role was more than purely ministerial.
13 See, e.g., J. App'x at 217 (specifically excluding the Restricted Shares when
defining Wells Fargo's responsibilities as paying agent).
33
at least plausible that cancelation was automatic. At best, Wells Fargo's role in

canceling the shares, if any, is unclear. And to the extent Wells Fargo played any

role, the record suggests that it was purely ministerial.

Even assuming, however, the Complaint and related documents

establish that Wells Fargo played even a ministerial role in canceling the shares,

the next question is whether that action rendered it Nine West's agent as a matter

of law. The answer is no, at least at this juncture of the case.

The common law meaning of "agent" applies to 11 U.S.C.

§ 101(22)(A). Tribune II, 946 F.3d at 79. At common law, an agency relationship

is created when a principal manifests assent to an agent that the agent will act on

the principal's behalf and be subject to the principal's control, and the agent

manifests assent to the same. Id. (citing Restatement (Third) of Agency § 1.01

(2006)). In Tribune II, we held that an agency relationship was created when

Tribune entrusted Computershare to pay its tendering shareholders, among

other things. Id. at 79. Here, Wells Fargo took some undefined ministerial action

to cancel shares and, pursuant to PAA § 2.10, maintained related records as

"required by applicable law and regulation." J. App'x at 221 (PAA § 2.10). The

parties undoubtedly agreed that Wells Fargo would act on Nine West's behalf,

34
but, at this stage, it is not clear Nine West had any authority to control Wells

Fargo's actions in canceling the shares. Because the control element is lacking,

Wells Fargo's role as a transfer agent in the Payroll Transfers is more accurately

understood as that of an independent contractor, not an agent, as required by

§ 101(22)(A).

Congress enacted the § 546(e) safe harbor to promote finality and

certainty for investors by limiting the circumstances under which securities

transactions could be unwound by, for example, a successful fraudulent

conveyance action. 14 This Court's decision in Tribune II has already been

criticized as broadening Merit's 15 interpretation of the safe harbor. 16 Affirming

the district court's dismissal of the Payroll Transfer claims based on Wells Fargo's

role in canceling the shares would have even more drastic implications.

To further expand the scope of § 546(e) and § 101(22)(A) and

immunize transactions in which a bank took only purely ministerial action, made

no payments, and had no discretion would not further Congress's purpose.

14 See Tribune II, 946 F.3d at 92 (citing H.R. Rep. No. 101-484 (1990), reprinted in 1990
U.S.C.C.A.N. 223, 224).
15 138 S. Ct. at 888.
16 See, e.g., Amicus Br. at 3 (characterizing Tribune II's holding as a "broad
construction" of § 546(e) and § 101(22)(A), as explained in Merit).
35
Rather, it would introduce inefficiency into the securities market. As amici

explain in their Brief, such a decision would incentivize "large banks to aid and

abet corporate looters" in LBOs because they could take little-to-no action on

behalf of the debtor, "handsomely profit by collecting large structuring fees," and

rest assured they remain immune from liability. 17

Accordingly, we vacate the district court's judgment to the extent it

dismissed the Payroll Transfer claims.

III. Qualifying Transaction

As we have determined that Nine West is a qualifying participant

pursuant to § 546(e) with respect to the Certificate and DTC Transfers, we must

next determine whether these payments are qualifying transactions under the

safe harbor. A payment constitutes a qualifying transaction if it is a "settlement

payment" or a "transfer made . . . in connection with a securities contract." 11

U.S.C. § 546(e).

17 Amicus Br. at 29; see also id. ("If the District Court's decision is affirmed, it would
make it virtually impossible for a Trustee to ever bring a [fraudulent conveyance claim]
against shareholders in the context of a high-risk LBO, unless the purchaser walks into
the closing with a giant bag of cash to pay the selling shareholders. Such a result would
not only lead to the proliferation of risky and disastrous LBO's -- it would encourage
them!").
36
 The district court found "that the public shareholder transfers were

made in connection with a securities contract" for two reasons: (1) Tribune II,

which similarly involved a two-step LBO transaction, controls; and (2) the safe

harbor "covers not only contracts for the repurchase of securities but also any

other 'similar' contract or agreement." 482 F. Supp. 3d at 198. We agree.

Plaintiffs' argument that the Merger Agreement is not a "securities

contract" because it provided for the cancelation of Jones Group shares is without

merit. First, the merger agreement in the Tribune LBO similarly provided for the

cancelation of shares and, there, this Court had "no trouble" concluding that the

payments were made "in connection with a securities contract." Tribune II, 946

F.3d at 81. Second, the Bankruptcy Code defines "securities contract" with

"extraordinary breadth" to include, for example, a "contract for the purchase or

sale of a security, including any repurchase transaction on any such security," as

well as "any other agreement or transaction that is similar to an agreement or

transaction referred to in this subparagraph." Tribune II, 946 F.3d at 81 (cleaned

up); see also 11 U.S.C. § 741(7)(A)(i), (vii).

37
 The district court also correctly held, in the alternative, "that the

payments made to the shareholder defendants were 'settlement payments' -- that

is, transfers of cash made to complete the merger." 482 F. Supp. 3d at 199.

Under the Bankruptcy Code, a "settlement payment" is "a

preliminary settlement payment, a partial settlement payment, an interim

settlement payment, a settlement payment on account, a final settlement

payment, or any other similar payment commonly used in the securities trade."

11 U.S.C. § 741(8). This Court has held that a settlement payment includes a

"transfer of cash made to complete a securities transaction." Enron Creditors

Recovery Corp. v. Alfa, S.A.B. de C.V., 651 F.3d 329, 339 (2d Cir. 2011) (cleaned up).

Here, the Certificate and DTC Transfers were made pursuant to the Merger

Agreement and for the purpose of effectuating the LBO. Therefore, the district

court was correct to hold that these transfers qualified as settlement payments

within the scope of § 546(e).

IV. Preemption

The Litigation Trustee brought unjust enrichment claims against the

former directors and officers who allegedly played a key role in advocating for or

approving the Merger. The district court found these claims were preempted by

38
§ 546(e) because they seek the same remedy as the Trustees' fraudulent

conveyance claims, which it found were safe harbored under that provision. The

Litigation Trustee argues that the district court erred because the "unjust

enrichment claims -- which are asserted only against certain former Jones Group

directors and officers -- differ in nature from [the Trustees'] fraudulent

conveyance claims asserted against all shareholder defendants." Appellants' Br.

at 51.

In Tribune II, this Court addressed whether state law constructive

fraudulent conveyance claims were preempted by § 546(e). 946 F.3d at 72. We

analyzed § 546(e)'s plain language and legislative history, as well as its scope

after the Supreme Court's holding in Merit Management. 946 F.3d at 77-98. We

reasoned that § 546(e) "was intended to protect from avoidance proceedings

payments by and to commodities and securities firms in the settlement of

securities transactions or the execution of securities contracts" and, therefore,

state law claims that conflict with this purpose are preempted. 946 F.3d at 90.

Here, the Trustees' unjust enrichment claims that arise from the

Certificate and DTC Transfers conflict with the purpose of § 546(e). The claims

that arise from the Payroll Transfers, however, do not similarly conflict with the

39
statute because these payments do not fall under the safe harbor. As a result, we

hold that the Trustees' unjust enrichment claims arising from the Payroll

Transfers are not preempted.

CONCLUSION

For the reasons stated above, we VACATE the district court's

judgment as to the Payroll Transfer claims, AFFIRM the remainder of the

judgment, and REMAND for further proceedings consistent with this Court's

decision.

40
RICHARD J. SULLIVAN, Circuit Judge, dissenting in part:

I agree with the majority that the safe harbor created by section 546(e) of the

Bankruptcy Code applies to Wells Fargo’s payments to common-stock owners

under the merger agreement that facilitated Nine West’s leveraged buyout

(the “Merger Agreement”). I write separately to explain why, in my view, the safe

harbor should also apply to transfers that Nine West itself made to holders of

restricted shares under the Merger Agreement. In reaching this conclusion, I reject

the majority’s “transfer-by-transfer” approach for assessing whether “customers”

of “banks” are “financial institutions” under section 101(22)(A), which is central

to determining whether the qualifying-participant requirement under

section 546(e) is met. Instead, I believe that the district court’s “contract-by-

contract” approach better comports with the plain meaning of section 101(22)(A)’s

text and more faithfully gives effect to Congress’s purpose in enacting

section 546(e). I would therefore affirm the district court’s ruling in all respects.

I.

Under the Bankruptcy Code, trustees possess broad powers to avoid

fraudulent conveyances – that is, transfers an insolvent debtor makes for little to

no consideration to certain parties – so that fraudulently transferred property can
be recaptured for the benefit of the bankruptcy estate and its creditors.

See 11 U.S.C. §§ 548, 550(a), 551. Nevertheless, Bankruptcy Code section 546

contains provisions – known as safe harbors – that insulate from avoidance certain

transfers made by a debtor. Of particular significance here is section 546(e), which

creates a safe harbor for margin payments, settlement payments, and transfers

made in connection with securities contracts. Section 546(e) provides, in relevant

part, that “the trustee may not avoid a transfer that” (1) “is a . . . settlement

payment . . . made by or to (or for the benefit of) a . . . financial institution” or (2) “is

. . . made by or to (or for the benefit of) a . . . financial institution . . . in connection

with a securities contract.” Id. § 546(e). Thus, to invoke the section 546(e) safe

harbor, a transferee must identify both a qualifying transaction (i.e., a settlement

payment or a transfer made in connection with a securities contract) and a

qualifying participant (i.e., a financial institution). See id. § 546(e).

The Trustees seek to claw back to the bankruptcy estate a series of payments

that Nine West made to its shareholders, directors, and officers under the Merger

Agreement. First, the Trustees try to avoid transfers made to holders of common-

stock shares – held either in electronic book-entry form or as physical certificates

– that were cancelled and converted into the right to receive $15 per share

2
(the “DTC and Certificate Transfers”). Second, the Trustees attempt to avoid

payments for shares of restricted stock and stock equivalent units that were held

by the company’s directors, officers, and employees, which were also cancelled

and converted into the right to receive $15 per share, plus any unpaid dividends

(the “Restricted Shares Transfers”). 1 The issue we must decide on appeal is

whether these transfers that Nine West and its agent Wells Fargo made to

company shareholders are shielded by section 546(e) from the Trustees’ avoidance

powers.

II.

To begin, the majority and I agree that the qualifying-transaction requirement

under section 546(e) is satisfied for all of the DTC, Certificate, and Restricted Shares

Transfers, since they were “transfer payment[s] . . . made in connection with a

securities contract” or “settlement payment[s].” Id. § 546(e). Indeed, the Merger

Agreement from the Nine West leveraged buyout was, in all relevant respects,

identical to the “securities contract” in Tribune, which similarly cancelled shares

and converted them into rights to cash payments. See In re Trib. Co. Fraudulent

1Relatedly, Nine West also paid approximately $71 million in change-in-control payments to its
directors and officers. The Trustees concede that their claims relating to these change-in-control
payments are “not a subject of this appeal.” Trustees Br. at 6 & n.2.

3
Conv. Litig., 946 F.3d 66, 80–81 (2d Cir. 2019); compare also J. App’x at 488–89

(Tribune Merger Agreement § 2.1(a)), with id. at 383 (Nine West Merger

Agreement § 4.1(a)). The transfers were also “settlement payments,” since they

involved “transfer[s] of cash . . . made to complete a securities transaction.”

Enron Creditors Recovery v. Alfa, S.A.B. de C.V., 651 F.3d 329, 334–35 (2d Cir. 2011)

(alteration omitted). This is true for not only the DTC and Certificate Transfers,

see J. App’x at 383–85 (Merger Agreement §§ 4.1, 4.2), but the Restricted Shares

Transfers as well, see id. at 385–86 (Merger Agreement § 4.3).

III.

But the qualifying-participant inquiry is not so clear-cut. To identify a

qualifying participant, courts look to whether the transfer was “made by or to

(or for the benefit of) a . . . financial institution.” 11 U.S.C. § 546(e). In turn, a

“financial institution” is defined as (1) “a Federal reserve bank, or an entity that is

a commercial or savings bank, industrial savings bank, savings and loan

association, trust company, federally[ ]insured credit union, or receiver,

liquidating agent, or conservator for such entity” or (2) a “customer” of one of

these entities “when [the] entity is acting as agent or custodian for [the] customer

4
. . . in connection with a securities contract (as defined in section 741).” Id.

§ 101(22)(A). 2

The majority and I agree that the qualifying-participant inquiry is

straightforward for the DTC and Certificate Transfers. That is, these transfers

were carried out by Nine West’s agent, Wells Fargo, which was a qualifying

participant for the simple reason that a “bank” is an enumerated entity under the

first clause of section 101(22)(A). And since these transfers were also qualifying

transactions, as discussed above, they are safe from the Trustees’ avoidance

powers under the section 546(e) safe harbor.

We disagree, however, as to whether Nine West itself was a qualifying

participant when it made the Restricted Shares Transfers. This disagreement

stems from our conflicting readings of the “customer clause” of section 101(22)(A),

which states that a customer is a “financial institution” when an enumerated

covered entity under that subsection is acting as an agent for the customer in

connection with a securities contract. Put another way, we must decide whether

a customer’s status as a “financial institution” turns on whether its agent is acting

2Section 101(22)(B) also identifies a third type of “financial institution” – namely, “an investment
company registered under the Investment Company Act of 1940” that is acting “in connection
with a securities contract,” 11 U.S.C. § 101(22)(B) – which is not relevant for purposes of this
dissent.

5
in connection with the securities contract (the “contract-by-contract” approach) or

whether its agent is acting in connection with the specific transfer made by the

customer (the “transfer-by-transfer” approach). 3

A.

As is usually the case with statutory interpretation, the relevant inquiry

begins – and ends – with the plain meaning of the statutory text. See Ret. Bd. of the

Policemen’s Annuity & Ben. Fund of Chi. v. Bank of N.Y. Mellon, 775 F.3d 154, 165

(2d Cir. 2014); see also Spadaro v. United States Customs & Border Prot., 978 F.3d 34,

46 (2d Cir. 2020) (“[W]hen the language of a statute is unambiguous, judicial

inquiry is complete.” (internal quotation marks omitted)). It is appropriate then

to start where the district court did by noting that section 101(22)(A) provides that

“a customer of a bank qualifies as a financial institution ‘when [the bank] is acting

as agent . . . in connection with a securities contract.’” Sp. App’x at 39 (quoting

11 U.S.C. § 101(22)(A) (alteration in original)). Under the plain meaning of this

3To be clear, there are two “in connection with a securities contract” requirements at play here.
One is found under the qualifying-transaction prong of section 546(e) itself. See 11 U.S.C. § 546(e).
The other is found in the customer clause of section 101(22)(A), which implicates the qualifying-
participant prong of section 546(e). See id. § 101(22)(A). The “contract-by-contract” versus
“transfer-by-transfer” dispute relates to the interpretation of section 101(22)(A). It stands to
reason, of course, that the securities contract for both sections must be the same for the safe harbor
to apply, and here there is no question that all of the transfers were made pursuant to the same
Merger Agreement.

6
statutory language, it follows that once a customer is deemed a “financial

institution” because a bank is acting as its agent in connection with a securities

contract (under the qualifying-participant prong), each and every transfer the

customer makes pursuant to that securities contract (under the qualifying-

transaction prong) is shielded by the section 546(e) safe harbor.

Indeed, it is telling that Congress elected to limit the scope of a customer’s

status as a “financial institution” by inserting the “in connection with a securities

contract” language into the statute. 11 U.S.C. § 101(22)(A). Had Congress simply

omitted this language, so that a customer of a bank is a “financial institution”

“when” the “bank” “is acting as agent” of the customer, then there would be

ambiguity as to whether “is acting as agent” should be construed broadly (i.e., any

agency relationship will suffice) or narrowly (i.e., the agency relationship must

pertain to a particular transfer). Here, Congress chose to pair “is acting as agent”

with “in connection with a securities contract,” thereby limiting a customer’s

“financial-institution” status to when its agent is acting in precisely that capacity.

See United States v. Butler, 297 U.S. 1, 65 (1936) (“The[] words [of a statute] cannot

be meaningless, else they would not have been used.”).

7
 It also bears noting that, out of all the terms at its disposal, Congress settled

on the phrase “securities contract (as defined in section 741).” This defined term

is set forth in capaciously broad language under section 741(7). See 11 U.S.C.

§ 741(7)(A)(i), (vii) (defining “securities contract” as, among other things, “any . . .

agreement . . . that is similar to” an agreement “for the . . . sale[] . . . of a security”

(emphasis added)); see also Tribune, 946 F.3d at 81 (2d Cir. 2019) (acknowledging

the “extraordinary breadth” of this definition (internal quotation marks omitted)).

This indicates to me that, by incorporating this definition of “securities contract,”

Congress intended for the customer clause to be interpreted in an expansive

manner.

The majority disputes this interpretation, opting instead for a narrower

transfer-by-transfer approach to the customer clause. According to the majority,

if Congress truly intended to enact the broad reading endorsed by the district

court, it would have instead drafted section 101(22)(A) to say that a customer of a

bank qualifies as a financial institution “when a bank has ever acted as a customer’s

agent in connection with a securities contract.” Maj. Op. at 27. But Congress had

no obligation to use the majority’s proffered language, and in any event, the

language it did use – “is acting as agent . . . in connection with a securities

8
contract,” 11 U.S.C. § 101(22)(A) – is broad enough to reach the disputed transfers

in this case, without being as boundless as the majority implies. In fact, it is the

majority that effectively rewrites section 101(22)(A) so that a “customer” qualifies

as a “financial institution” only “when [the bank] is acting as agent . . . in

connection with a securities transfer.” Sp. App’x at 39 (emphasis added and

alteration in original). Tellingly, section 101(22)(A) makes no mention of the word

“transfer,” and instead grants “financial[-]institution” status to a customer when

a bank is acting as agent “in connection with a securities contract.” 11 U.S.C.

§ 101(22)(A) (emphasis added). By substituting “transfer” for “contract,” the

majority impermissibly “alter[s], rather than . . . interpret[s], the [text of

section 101(22)(A)].” Little Sisters of the Poor Saints Peter & Paul Home v.

Pennsylvania, 140 S. Ct. 2367, 2381 (2020).

Practically speaking, the majority’s transfer-by-transfer approach renders

section 101(22)(A)’s entire customer clause meaningless when read in conjunction

with section 546(e), since it would cover no ground not already covered by the first

enumerated-entities clause. Under the view espoused by the majority, the

section 546(e) safe harbor only protects transfers that are made by a bank. It is

evident, however, that sections 546(e) and 101(22)(A) contemplate that some

9
transfers “made by” the “customer” of a “bank” are also covered by the safe

harbor. 11 U.S.C. §§ 546(e), 101(22)(A). After all, if section 546(e) covered only

transfers “made by” a “financial institution” in the form of a “bank,” what would

be the point of section 101(22)(A)’s language specifying that a “financial

institution” can also be “a customer” of a “bank” in certain circumstances? Id.

The majority’s reading – which would read the entire customer clause out of the

statute – cannot be right. See Reiter v. Sototone Corp., 442 U.S. 330, 339 (1979)

(“In construing a statute[,] we are obliged to give effect, if possible, to every word

Congress used.”).

What’s more, even if we were to delve into “Congress’s intent” in enacting

section 546(e), the majority’s arguments overlook the fact that Congress clearly

balanced the goal of protecting creditors’ rights through the trustees’ avoidance

powers against the competing goal of “minimiz[ing] the displacement caused in

the commodities and securities markets in the event of a major bankruptcy

affecting those industries.” Tribune, 946 F.3d at 92 (internal quotation marks and

alteration omitted). As this Court has recognized, the former “cannot . . . trump[]”

the latter. Id. at 94. Indeed, we have acknowledged that “the legislative history’s

mention of bankrupt ‘customers’ or ‘other participants’ and . . . the broad statutory

10
language defining the transactions covered” “reflected [Congress’s] larger

purpose” in enacting the statute – namely, “to promote finality and certainty for

investors, by limiting the circumstances . . . under which securities transactions

could be unwound.” Id. (internal quotation marks and alterations omitted).

Against this legislative backdrop reflecting Congress’s intended goal of

“enhancing the efficiency of securities markets in order to reduce the cost of capital

to the American economy,” I see no reason to limit the reach of the section 546(e)

safe harbor by ignoring section 101(22)(A)’s customer clause in its entirety. Id. at

92 (quoting Bankruptcy of Commodity and Securities Brokers: Hearings Before

the Subcomm. on Monopolies and Commercial Law of the Comm. on the

Judiciary, 47th Cong. 239 (1981)); see also H. R. Rep. No. 101-484, at 2 (1990),

reprinted in 1990 U.S.C.C.A.N. 223, 224.

To be sure, the majority’s narrow reading of section 101(22)(A) would be

more plausible if Congress had expressed a limited intent to protect only

“commodities and securities firms in the settlement of securities transactions or the

execution of securities contracts.” Tribune, 946 F.3d at 90–91 (emphasis added).

But this Court has squarely rejected such an interpretation of section 546(e). See id.

at 91–92 (explaining that the “broad language” of section 546(e) – i.e., “limitations

11
on avoidance of transfers made by a ‘customer’ of a financial institution ‘in

connection with a securities contract’” – indicates that Congress “intended to

protect the [securities] process or market” as a whole, “rather than [just] firms”

(citation omitted)).

In actuality, the majority’s analysis appears to be driven by policy concerns

about how a textual reading of the statute might affect creditors, shareholders, and

other bankruptcy stakeholders in future bankruptcies that occur in the wake of

leveraged buyouts. See Maj. Op. at 27–30 & n.8. But the Supreme Court has

warned, in this very context, that concerns over matters of policy cannot be used

to justify “deviat[ions] from the plain meaning of the language used in [section]

546(e).” Merit Mgmt. Grp., LP v. FTI Consulting, Inc., 138 S. Ct. 883, 897 (2018).

At any rate, the majority fails to explain why unwinding securities

payments made by corporate entities themselves introduces any less “systemic

risk,” Maj. Op. at 29–30, than the voiding of transfers made by firms or other

market intermediaries. Each threatens the finality of securities transactions,

thereby undermining confidence in the entire securities market. See Tribune,

946 F.3d at 92 (“The broad language used in [s]ection 546(e) protects [securities]

transactions rather than [just] firms, reflecting a purpose of enhancing the efficiency

12
of securities markets in order to reduce the cost of capital to the American

economy.” (emphasis added)). And there is no doubt that if companies,

institutional investors, or large shareholders face financial instability because

securities transactions are undone years after leveraged buyouts are

consummated, this would pose significant “threat[s] [to] the financial system.”

Maj. Op. at 29–30. Likewise, the majority opinion’s cursory ipse dixit about a broad

section 546(e) safe harbor “introduc[ing] inefficienc[ies],” id. at 37 (emphasis

added), is accompanied by no reasoning as to how a textual reading of

section 546(e) yields an outcome that is less pareto efficient than the majority’s

approach. All told, the majority opinion’s vague gestures at market effects cloak

what are, in reality, nothing more than its subjective views of what is “reasonable.”

Maj. Op. at 28. But it is not the prerogative of this Court to disturb the delicate

balance struck by Congress between creditors’ interests and those of shareholders

based on what we perceive to be fair or reasonable. See Anderson v. Wilson, 289

U.S. 20, 27 (1933) (“We do not pause to consider whether a statute differently

conceived and framed would yield results more consonant with fairness and

reason. We take the statute as we find it.”).

13
 B.

Having settled on the contract-by-contract approach to defining “financial

institutions” under section 101(22)(A)’s customer clause, I would hold that the

qualifying-participant prong under section 546(e) is satisfied for not only the DTC

and Certificate Transfers, but also the Restricted Shares Transfers.

Like the majority, I have no trouble concluding that Wells Fargo was acting

as Nine West’s “agent” with regard to the DTC and Certificate Transfers.

See Tribune, 946 F.3d at 77–79 (holding that depositary that received and made

payments for tendered shares on company’s behalf in connection with a leveraged

buyout was an “agent” under section 101(22)(A)). There is no dispute that these

transfers were made by Wells Fargo, which acted as Nine West’s “agent” given

the role it played in cancelling shares and making payments to shareholders.

Specifically, the Merger Agreement provided that payments for cancelled shares

would be effectuated by a “paying agent . . . pursuant to a paying agent agreement

in customary form.” J. App’x at 383. And in turn, the paying agent agreement

designated Wells Fargo as the paying agent and empowered it to “act as

[Nine West’s] special agent for the purpose of distributing the Merger

14
Consideration,” hold funds that Nine West deposited for the shareholder

transfers, and ultimately cancel the company’s common stock. Id. at 217, 218, 221.

Unlike the majority, I am convinced that the qualifying-participant prong is

also satisfied for the Restricted Shares Transfers. Given Wells Fargo’s role in

effectuating the DTC and Certificate Transfers, Nine West meets the definition of

a “financial institution” by virtue of its status as a “customer” of a “bank” that “is

acting as agent” “in connection with a securities contract” – in this case, the Merger

Agreement. Because Nine West meets the requirements of a qualifying

participant, and because the transfers in question satisfy section 546(e)’s

qualifying-transaction prong, there can be no doubt that the Restricted Shares

Transfers are sheltered by the safe harbor. 4

IV.

For all of these reasons, I dissent from the majority’s opinion to the extent

that it permits the Trustees to claw back the Restricted Shares Transfers under the

Merger Agreement as avoidable fraudulent conveyances. While I agree with the

4Given my view that the DTC, Certificate, and Restricted Shares Transfers are protected from the
Trustees’ avoidance powers under section 546(e), it follows that all state-law constructive and
intentional fraudulent conveyance claims brought by creditors or noteholders (and thereby the
Trustees representing these individuals) and all unjust-enrichment claims against the company’s
directors and officers must be preempted. See Tribune, 946 F.3d at 90–97.

15
majority that sections 546(e) and 101(22)(A) bar the Trustees from avoiding the

payments made to shareholders via the DTC and Certificate Transfers, I cannot

agree with the majority’s interpretation of “financial institution” under

section 101(22)(A), which improperly strips the Restricted Shares Transfers of

section 546(e) immunity from the Trustees’ avoidance powers. To my mind,

Congress spoke with unmistakable clarity in fashioning the section 546(e) safe

harbor, which applies to a customer of a bank when that bank is acting as agent “in

connection with a securities contract.” 11 U.S.C. §§ 546(e), 101(22)(A). Because the

securities contract in this case – the Merger Agreement – makes clear that Wells

Fargo was acting as Nine West’s agent in connection with that contract, Nine West

meets the definition of a “financial institution” under section 101(22)(A) and its

payments for the Restricted Shares Transfers are properly subject to

section 546(e)’s safe harbor. As a result, I would affirm the judgment of the district

court in all respects.

16