Apparently Bank of America and its lawyers didn’t read the Shakespeare play in which Falstaff opines that discretion is the better part of valor. In seeking leave to appeal parts of a ruling that permits securities claims arising from BofA’s star-crossed merger with Merrill Lynch to proceed, the bank appears to have exasperated the judge overseeing those claims.
At the end of August, you’ll recall, Manhattan federal District Judge P. Kevin Castel produced a monumental, 140-page ruling on Bank of America’s motion to dismiss the securities class action and derivative cases arising from the 2008 Merrill merger. Castel’s decision, which kept alive some claims against the bank and certain former BofA and Merrill executives but dismissed others, was so comprehensive that, as The D&O Diary noted at the time, its table of contents alone was five pages long. Painstaking is an apt word to describe Castel’s opus.
Nevertheless, within two weeks of Castel’s ruling, BofA’s lawyers at Cleary Gottlieb Steen & Hamilton and Wachtell, Lipton, Rosen & Katz moved for leave to appeal the decision or, in the alternative, for reconsideration. In their 30-page memo, the bank’s lawyers argued that the judge’s decision raised “three controlling questions of law”: Did BofA have a duty to disclose Merrill’s (disastrous) interim financial results; do shareholders of an acquiring company have causation claims; and are covenants of a private merger agreement actionable under federal securities laws?
“The resolution of any of these questions would materially affect both cases,” the BofA lawyers wrote. “If the bank defendants are correct as to any of them, their resolution by the [2nd U.S. Circuit Court of Appeals] would result in the dismissal of a large number of the remaining claims and would substantially narrow discovery.”
On Friday, Castel disposed of the BofA motion in an opinion as terse as its predecessor was expansive. “Granting their motion would grind this action to a halt,” he wrote in the five-page decision. “Characterized with generosity, it would promote nothing more than ‘early review of difficult rulings in hard cases.’”
Castel, like the plaintiffs lawyers in their response to the bank’s motion for leave to appeal, notes repeatedly that the issues the bank raises in its motion for leave to appeal were already briefed and argued before he produced his August ruling — which, the judge says, already addresses the very points the bank raises.
Suffice to say, BofA doesn’t seem to have made a friend of Judge Castel with its attempted interlocutory appeal. We called Mitchell Lowenthal of Cleary to ask about the tactic, but he declined to comment. BofA spokesperson Bill Halldin, via an e-mail, declined to comment.
The class is represented by Bernstein Litowitz Berger & Grossmann; Kaplan Fox & Kilsheimer; and Barroway Topaz Kessler Meltzer & Check. The derivative plaintiffs have Saxena White. We left a message with Ohio Attorney General Richard Cordray, who’s a lead plaintiff in the class action, but didn’t hear back.
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.