UBS AG and its lawyers at Skadden Arps Slate Meagher & Flom have failed in their attempt to sanction U.S. Bank N.A., one of the many trustees asserting “put back” claims on behalf of investors in mortgage-backed securities.
Upholding a prior ruling by a magistrate judge, Southern District Judge Harold Baer Jr. (See Profile) ruled Friday that U.S. Bank shouldn’t be sanctioned over its document retention policy. Baer rejected arguments that U.S. Bank’s conduct constituted spoliation of evidence. A Quinn Emanuel Urquhart & Sullivan team led by Philippe Selendy is pursuing U.S. Bank’s claims, along with Michael Collyard of Robins Kaplan Miller & Ciresi.
UBS moved for sanctions in June, arguing that U.S. Bank kept in place “an aggressive and indiscriminate 90-day e-mail deletion policy,” despite being on notice of potential litigation against UBS and other banks. According to UBS’s lawyers, this auto-delete policy resulted in the destruction of evidence relevant to UBS’s defenses. Skadden pointed out that a judge in North Carolina had admonished U.S. Bank over its auto-delete policy in 2010.
Baer delegated the discovery fight to Southern District Magistrate Judge James Francis IV (See Profile). In an Oct. 23 decision, Francis ruled that U.S. Bank had been “grossly negligent” in its failure to institute a litigation hold. Still, he found no basis for sanctions, ruling that “U.S. Bank has shown, through competent evidence, that the documents about which UBS speculates either never existed or were not deleted.”
Baer affirmed on Friday, ruling that Francis’ decision had been “well-reasoned.”
In 2006 and 2007, UBS sponsored billions of dollars worth of MBS offerings. U.S. Bank sued UBS in September 2012, alleging on behalf of investors that the bank misrepresented the riskiness of the home loans propping up four MBS securitizations. Investors argue that UBS is required to repurchase, or put back, the underlying home loans.