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Credit Suisse Defeats Class Cert in Lawsuit Brought by Luxury Resort Homeowners

On September 24, 2013, Weil achieved a significant victory for Credit Suisse AG and several of its subsidiaries, defeating class certification in Gibson v. Credit Suisse, A.G., et al. in the United States District Court for the District of Idaho. Plaintiffs, who purchased properties at luxury resort developments in Idaho, Montana, Nevada and the Bahamas, sought to represent a class of individuals that purchased properties at these resorts. Plaintiffs claimed that the developers had promised them that various amenities would be built at these resorts, and alleged that Credit Suisse, along with its co-defendant Cushman & Wakefield, had conspired to provide the resort developers with loans, based on fraudulent appraisals, that the developers would be unable to repay. After the developers defaulted on their loans, Plaintiffs alleged that the promised amenities were not provided (or were discontinued), causing them injury. The plaintiffs sought to certify a class action.

On August 16, 2013, United States Magistrate Judge Ronald Bush denied this motion, concluding that three of the named class representatives were inadequate, a class action was not superior to other methods for adjudicating this dispute (given the average claim of $2.6 million per putative class member), and class issues did not predominate over individual issues given the individualized inquiry that was necessary to establishing that defendants had caused plaintiffs any injury.

Plaintiffs filed objections to the Magistrate Judge’s Report and Recommendation, which were rejected by District Judge Edward J. Lodge. Judge Lodge agreed that three of the named plaintiffs could not adequately represent the class or the proposed subclass. He further agreed that substantial variations in homeowners’ relevant purchase agreements rendered the homeowners differently situated, and that significant individual issues existed as to whether Defendants’ purported actions had injured the Plaintiffs or the putative class. Accordingly, Judge Lodge adopted the Report and Recommendation and denied Plaintiffs’ motion for class certification.

The Weil team includes attorneys from our New York and Dallas offices, including New York partner David Lender and associates Kevin Meade and Jennifer Oliver, and Dallas associates John O’Connor and Olivia Miller. Associates David Sillers, Jason Wright, Sandra Fusco, and Matthew Leung also provided valuable support.