August 07, 2013

On August 7, 2013, Judge Mariana R. Pfaelzer of the United States District Court for the Central District of California granted preliminary approval of a $500 million settlement in the landmark mortgage-backed securities (MBS) class action litigation against Countrywide Financial Corporation (Maine State Retirement System et al., v. Countrywide Financial Corp. et al.). 

For information relating to the settlement and to the preliminary approval, please go to www.countrywidembssettlement.com.

For over three years, Cohen Milstein has actively litigated the Securities Act claims alleged in the Maine State case in federal court through several motions to dismiss, class certification, merits discovery and mediation.  Cohen Milstein’s efforts in this case included:

  • Filing three Amended Consolidated Class Action Complaints in July, 2010; December, 2010; and June, 2011.  The second and third complaints addressed the Court’s November 2010 and May 2011 Orders that denied, in part, Defendants’ motions to dismiss.
  • Subpoenaing documents from more than 60 custodian banks, broker dealers, market-makers and investment banks to establish pricing information for the securities at issue as well as trading histories, trading volume of the securities, and numerosity for purposes of class certification pursuant to Rule 23.
  • Engaging in motion practice in the Northern District of Illinois to compel third-party document production .
  • Responding to discovery requests on behalf of the named plaintiffs from six defendant parties, including producing responsive discovery and subsequently defending their depositions. This effort also included reviewing productions from plaintiffs’ asset managers and investment consultants.
  • Seeking to quash class certification discovery sought from absent class members. 
  • Retaining and overseeing the work of an expert who was deposed on issues pertaining to numerosity and commonality for purposes of demonstrating that class certification was appropriate. 
  • Obtaining a stipulation to class certification after filing a motion to certify the class, followed by the implementation of a comprehensive notice program to inform all potential class members of the scope of the certified class and their rights as class members. 
  • Obtaining and reviewing, in less than twelve months, the documents produced in the New York Funds Action, consisting of approximately 20 million pages.  In particular, Cohen Milstein thoroughly reviewed the documents and deposition transcripts from an additional 51 witnesses who had knowledge relevant to the claims at issue in this case, with the goal of identifying relevant search terms and custodians and also to avoid seeking duplicative discovery. This process also resulted in the identification of 33 additional Countrywide witnesses with knowledge relevant to the claims at issue here, whom had not been custodians in the New York Funds production. In addition, Cohen Milstein had to research and assure itself that testimony to the SEC and Federal Crisis Investigation Commission could be used as evidence, as if taken in the Maine State litigation.
  • Seeking, within the same time period, documents and information related to the viable MBS tranches from Defendants and numerous non-parties, including loan files and due-diligence results.  In total, Cohen Milstein reviewed over a million pages of documents related specifically to the Maine State claims and nearly a million documents from the New York Funds Litigation.
  • Conducting weekly meet-and-confer meetings with Defendants on the status of discovery, document productions, and scheduling depositions.
  • Propounding six sets of requests for production on all Defendants and on additional request for production on certain underwriter defendants, as well as follow up requests that came to light after certain depositions. 
  • Fully and completely responding to more than 115 contention interrogatories and requests for admission propounded by Defendants. 
  • Obtaining and working with five separate experts, whose reports were due in less than seven months, including experts in underwriting, investment bank due diligence, loan re-underwriting, certificate valuation, investor losses, damages and a rebuttal expert on issues of loss causation and negative causation in anticipation of expert reports that defendants would submit.
  • Drafting a mediation statement related to the eight certified tranches in the Maine State litigation and the dismissed tranches which Plaintiff’s held the right to appeal the dismissal of. 

Ultimately, on August 7, 2013, the Court signed off on preliminary approval of settlement in the amount of $500 million.  The settlement covers over 9,300 different CUSIPS in 430 Offerings issued by Countrywide and the Underwriters in this case.  For additional information on this settlement, please visit www.countrywidembesettlement.com and review the Preliminary Approval Order by clicking here