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Pa. Federal Judge Dismisses Subprime Securities Class Action
The American Lawyer
April 14, 2009
Last month we wondered whether a trio of recent subprime class action dismissals constituted a trend. Well, how about four? Last week, Philadelphia federal district court Judge Mary McLaughlin dismissed a case against Radian and three current and former officers of the company.
Radian, which provides mortgage insurance and other financial products to financial institutions, held a 46 percent interest in a company called Credit-Based Asset Servicing and Securitization. Plaintiffs lawyers from Coughlin Stoia Geller Rudman & Robbins alleged that in the first eight months of 2007, the defendants made false and misleading statements about C-BASS's profitability and liquidity, thus misrepresenting the value of Radian's investment in C-BASS. Specifically, the plaintiffs asserted that Radian should have written down the value of its investment in C-BASS sooner than it did.
But McLaughlin found that the plaintiffs came up short in showing scienter. "The plaintiffs' inference of scienter is neither cogent, nor compelling, nor strong in light of competing inferences, and a resonable person would not deem the inference of scienter cogent and at least as compelling as nonculpable inference," McLaughlin wrote, echoing some of the findings on scienter that we've seen in previous subprime motion to dismiss rulings.
Radian and the officers were represented by Skadden, Arps, Slate, Meagher & Flom partner Richard Brusca and associates Leslie Abrams, Teresa Alutto and Nicolas Mitchell. Brusca reiterated what we've been hearing a lot lately about these subprime cases: They're no slam dunk for plaintiffs. (For a listing of subprime litigation results to date, check out the D&O Diary's scorecard.)
"There are judges out there who are willing to dig into the public record and actually do the analysis that the Supreme Court mandated in Tellabs," he told us.
Sam Rudman of Coughlin Stoia, who represented the plaintiffs, did not return our call seeking comment.
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.
