Credit Suisse’s Motion to Dismiss Granted in RMBS Litigation

On March 29, 2013, Judge George B. Daniels of the United States District Court for the Southern District of New York granted, in its entirety, the motion to dismiss on behalf of Cravath’s clients, Credit Suisse defendants, in The Union Central Life Ins. Co. et al., v. Credit Suisse Securities (USA), LLC et al., 11 Civ. 2327.

Plaintiffs brought this action to recover alleged losses stemming from their purchase of approximately $65 million in residential mortgage‑backed securities from Credit Suisse. The Court found that plaintiffs did not allege scienter with sufficient particularity to sustain their Section 10(b) claims for fraudulent misstatements related to compliance with mortgage underwriting guidelines, appraisal practices and loan‑to‑value ratios. The Court also held that plaintiffs did not sufficiently allege fraud with regard to owner occupancy statistics and credit ratings. For similar reasons, the Court rejected plaintiffs’ control‑person claims, and their state claims for fraud, aiding and abetting fraud and unjust enrichment. The Court allowed plaintiffs to move for leave to amend, if amendment would not be futile.

The Cravath team included partners Richard W. Clary, Julie A. North and Lauren A. Moskowitz and associates Matthew H. Bloom, Gregory C. Cheyne, Zachary S. Zwillinger and Adam I. Rich.

On April 8, 2013, Cravath also obtained a partial dismissal in favor of Credit Suisse in another action, National Credit Union Administration Board v. Credit Suisse Securities (USA) LLC, et al., No. 12‑cv‑02648, in the U.S. District Court for the District of Kansas. Plaintiff brought this action in its capacity as liquidating agent of three failed federal credit unions to recover alleged losses stemming from the credit unions’ purchase of 20 residential mortgage‑backed securities from Credit Suisse for approximately $715 million. The court dismissed as time‑barred all of plaintiff’s state securities law claims and all federal securities law claims with respect to 12 of the 20 securities at issue, reducing Credit Suisse’s exposure in this case by more than two‑thirds.

The Cravath team included partners Richard W. Clary, Michael T. Reynolds and Lauren A. Moskowitz and associates Matthew H. Bloom, Austin P. Van and Jared D. Eisenberg.

Cravath’s representation of Credit Suisse as courtroom lead in these and numerous other cases is in parallel with its broader role as national coordinating counsel for Credit Suisse in all its litigation and regulatory matters concerning residential‑mortgage backed securities.