WaMu Defendants Settle for $26 Million After Winning Dismissal of $8 Billion in Mortgage Claims
On September 4, 2012, Cravath clients WaMu Asset Acceptance Corp. and WaMu Capital Corp. (“WaMu”) agreed to settle a class action lawsuit arising from the sale of residential mortgage-backed securities (“RMBS”) in the U.S. District Court for the Western District of Washington for $26 million, far below the $558 million in damages the class had sought as covering approximately $2.4 billion in securities. The settlement in this action, which preempted a jury trial scheduled to commence in September 2012, followed Cravath’s prior success in obtaining dismissal of claims concerning the vast majority of the RMBS at issue in the action. On October 21, 2011, the court dismissed all claims for 110 “tranches” of securities that the named plaintiffs did not purchase, on the basis that the named plaintiffs did not have standing to sue on those tranches, and certified a class consisting only of the remaining 13 tranches. This decision in effect removed from litigation securities with an original face value of approximately $8 billion—with a commensurate reduction in WaMu’s potential exposure. Despite the fact that a class had been certified covering the remaining tranches and that the case survived a motion for summary judgment and was only weeks away from trial, the settlement value compares favorably to other RMBS class actions that settled in the early stages of litigation.
The Cravath team included partners Evan R. Chesler, Michael A. Paskin and J. Wesley Earnhardt.
Cravath’s representation of WaMu was in connection with its broader role as national coordinating counsel for JPMorgan Chase & Co. (“JPMC”) and certain related entities, including affiliates of Bear Stearns and Washington Mutual acquired in 2008, in residential mortgage-backed securities litigation. In this role, Cravath represents JPMC in dozens of separate lawsuits filed around the country by individual investors or as purported class actions asserting claims for, among other things, the alleged violation of federal and state securities laws, common law fraud and negligent misrepresentation.
www.cravath.com/...-Dismissal-of-8-Billion-in-Mortgage-Claims/
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