RANDA'S REMANDER: SCHOOL DISTRICTS' SUIT BACK TO STATE COURT

Move Seen as Victory for Taxpayers in Five Districts;
Setback for Stifel Nicolaus and Royal Bank of Canada

Special to the Readers of Milwaukeeworld.com

By Michael Horne

And The Milwaukee World Hound Dog Team

The lawsuit of five Wisconsin school districts against Stifel Nicolaus & Company and the Royal Bank of Canada alleging a $200 million fraud in a scheme to fund employees' Other Post-Employment Benefits [OPEB] has been remanded to State court by the order of Hon. Rudolph T. Randa, Chief Judge of the United States District Court for the Eastern District of Wisconsin.
The judge issued the Decision and Order [pdf below] today, Friday, April 10th, 2009. The move to federal court had been sought by Stifel Nicolaus on the grounds that it was not a Wisconsin corporation, that its CFO, James M. Zemlyak, also a defendant in the suit, is likewise a Missouri resident, and that the complaint presented issues that could only be adjudicated in federal court.
Plaintiffs argued there was no federal question involved, and said Zemlyak was indeed a Wisconsin resident. The decision goes into a remarkable amount of detail to explain why that is. However, a $1 million mortgage on a "primary residence," a Wisconsin drivers license issued to Zemlyak, and four automobiles registered in his name here tended to support plaintiffs' contention, even as the judge noted the difficulty of "pinning down a financially-advantaged individual's domicile."
"The court finds that Zemlyak is a citizen of Wisconsin for jurisdictional purposed," Randa ruled, adding, "the court also finds that plaintiffs' third party beneficiary claim does not arise under the exclusive jurisdiction of the Exchange Act and it does not present a substantial federal question. Therefore, plaintiffs' motion for remand is granted."
This is considered a victory for the plaintiffs, and a setback for Stifel Nicolaus in a case that has received national and international attention, most recently in a segment last Saturday on ABC World News Tonight.
For more information and an exhaustive datamine on the case visit www.schoollawsuitfacts.com.

090410.School Lawsuit Case Remand to State Court.pdf