The Wall St. Journal is reporting that U.S. District Judge Kevin Castel will preside over the 15 pending civil shareholder cases involving Bank of America Corp. (BAC).
The most prominent of these cases currently before the U.S. district court in Manhattan is a consolidated complaint alleging the bank failed to disclose billions in Merrill losses before shareholders approved the deal in December 2008.
In response to a letter submitted by the bank on April 22 to U.S. District Denny Chin, requesting that the 15 pending civil shareholder cases be reassigned “by lot” or “such other process determined by the Assignment Committee” and not handed to Judge Jed Rakoff.
It would be “incongruous” for the matter to be transferred “outside the random assignment process” to Judge Rakoff given his work on the SEC case, said the letter.
Judge Rakoff disappointed bank executives last year when he rejected a $30 million settlement with the Securities and Exchange Commission, which had charged the bank with misleading shareholders about bonuses paid prior to the Merrill merger. The New York judge reluctantly approved a new $150 million agreement in February but called it “half-baked justice at best.”
“The subtext of this letter clearly is Judge Rakoff has already made up his mind about Bank of America’s conduct here and therefore he is not the appropriate judge because he can’t be fair” to Bank of America said Samuel Buell, a law professor at Duke University.
The attempt to avoid Judge Rakoff comes amid a larger push by new Bank of America Chief Executive Officer Brian Moynihan to resolve the many legal entanglements resulting from the bank’s behavior during the U.S. financial crisis.
The plaintiffs in the consolidated securities cases—which include the State Teachers Retirement System of Ohio and the Ohio Public Employees Retirement System—called the bank’s April 22 request an “attempt to influence the selection” of a judge and “wholly improper,” in a separate April 22 letter to Judge Chin.
A “litigant may not determine or otherwise exert control over which judge decides its claims,” the lawyers said in the letter.
A Bank of America spokesman said the bank’s April 22 letter “simply asked that the usual procedures for assigning a case be followed.” He added that it aimed to respond to earlier court filings. The plaintiffs had drawn parallels between their cases and the SEC case and suggested that conclusions Judge Rakoff reached should apply, according to the April 22 letter.
In the end, random assignment wasn’t used. Rather, Loretta Preska, chief judge of the U.S. district court, decided to give the cases to U.S. District Judge Kevin Castel, she said in an interview. The decision was hers to make, versus random assignment, because the matter involves several cases transferred from different districts, she said.
The April 22 letter to Judge Chin, she added, didn’t influence her decision. “I don’t recall seeing it; I don’t recall hearing of it,” she said.
A copy wasn’t sent to Judge Rakoff, who declined to comment about it. Judge Chin, who came into the public eye last year as the judge who sentenced Ponzi-scheme convict Bernard Madoff to 150 years in prison, didn’t respond to a request for comment about the letter.
Cleary Gottlieb Steen & Hamilton LLP, Davis Polk & Wardwell LLP and Wachtell, Lipton, Rosen & Katz are the law firms on the letter. Lawyers at the firms declined to comment through a bank spokesman.
Bank of America is the nation’s largest bank by assets.
