Litigations and Investigations
Weil is lead counsel nationwide for AIG in shareholder class, derivative and ERISA actions arising out of AIG’s billions of dollars of subprime-related losses and its financial rescue by the U.S. government. Among our notable victories, Weil secured the widely noted dismissal of a shareholder derivative action alleging mismanagement by AIG directors and officers, and more recently obtained the dismissal of all derivative claims asserted in the lawsuit brought by Hank Greenberg’s company, Starr International, against the U.S. government for more than $50 billion arising out of the government's financial assistance to AIG during the financial crisis. Weil also reached a favorable settlement for AIG in March 2015 of the shareholder class action.
Weil also successfully defended AIG in regulatory investigations by the SEC, DOJ and U.K. authorities arising out of the financial crisis. The investigations were closed with no actions commenced.
For many years, Weil has lead the representation of Archstone in connection with nationwide securities litigation and arbitrations arising from one of the largest REIT deals in history, the 2007 $22 billion acquisition of Archstone-Smith Trust by affiliates of Lehman Brothers and Tishman Speyer Development Corporation. The $4 billion class action was originally filed in 2007 by investors in the REIT, who claimed that the structure of the acquisition diluted their interests and cost them billions of dollars in tax liability and/or inferior securities.
After more than a decade of litigation, Weil won a complete victory in August 2017 in the U.S. District Court for the District of Colorado when the Court granted summary judgment on every count as to each of the more than 20 defendants, including Lehman Brothers, Tishman-Speyer, Equity Residential, the Archstone-Smith REIT, and indemnifying parties Bank of America and Barclays. Weil represented all of the defendants. As a result of this decision, the trial that had been scheduled for January 2018 has been vacated, and all counts against all defendants have been dismissed.
Weil serves as counsel for Credit Suisse AG and certain of its affiliates in a series of real estate loan disputes in courts around the country, with billions of dollars at stake. Weil is leading all of these cases, and has obtained a number of impressive outcomes. For example, in February 2017, Weil secured a major victory for our clients when the Tenth Circuit affirmed a Colorado federal court’s dismissal in its entirety of a dispute arising out of the bankruptcy of the owners of a Montana resort, to which Credit Suisse had arranged a multi-hundred million dollar loan. Other highlights include securing a third consecutive victory for Credit Suisse in Idaho federal court in July 2016 that defeated all remaining claims in a $24 billion class action regarding loans made to developers of luxury resorts, which followed our successful defeat of class certification.
In another component case of this multi-faceted action, Weil recently secured an appellate victory on behalf of Credit Suisse AG before the Fifth Court of Appeals for the State of Texas. In this case, subsidiaries of hedge fund Highland Capital Management LP asserted claims for breach of a tolling agreement entered into with Credit Suisse that paused certain aspects of a dispute between the parties over Credit Suisse’s marketing of real estate loans. On appeal to the Fifth Court of Appeals, Highland argued, among other things, that the trial court erred in applying the res judicata doctrine, as advocated by Credit Suisse. Following oral arguments, the appellate court affirmed the lower court judgment.
Weil won a major victory for the board of iStar in a shareholder action challenging iStar’s modification of stock incentive awards and demanding iStar’s board of directors commence a litigation asserting the shareholders’ claim that the modification of the awards was not permitted by the governing plan. Weil was retained to represent a committee of iStar’s board, which investigated the claim and ultimately recommended that the board refuse the demand. iStar’s full board then refused the demand, and the shareholders commenced a shareholder derivative action in Maryland state court challenging the board’s refusal of the demand and the modification of the stock incentive awards. In October 2014, the trial court dismissed the plaintiffs’ complaint; in January 2016, the Court of Special Appeals affirmed the dismissal; and in January 2017, the Court of Appeals – Maryland’s highest court – again affirmed.
Both decisions are likely to become leading corporate law and REIT decisions in Maryland, and underscore the important protections afforded to boards and corporations by the business judgment rule and related corporate governance doctrines.
Our litigation and investigations work for Lehman Brothers is ongoing and involves a large and complex array of engagements involving a creditors, debtors and counterparties. The matters stemming from Lehman’s bankruptcy generally fall into four categories:
- multiple large criminal investigations by government agencies (including the SEC and the U.S. Attorney’s Offices for the Southern and Eastern Districts of New York, and the District of New Jersey);
- resolution of the existing – and substantial – docket of litigation to which Lehman was a party (e.g., in a series of litigations involving one of the largest land developers in the country, we are defending Lehman entities in claims against more than $2 billion worth of financings and assets);
- civil litigation, including hundreds of mediations, involving billions of dollars in disputes with Lehman’s counterparties and related parties to derivatives and structured finance transactions; and
- the Bankruptcy Court litigation that arises from such a large filing (e.g., we represent Lehman Brothers in more than thirty adversary proceedings involving assets worth many hundreds of millions of dollars).
Weil represents this client on a number of sensitive matters, including:
- An SEC investigation regarding its role as underwriter of the failed IPO of BATS, which offers an electronic trading platform.
- An SEC investigation and related class action litigation involving the underwriting of IntraLinks Holdings.
- A CFTC investigation into whether various financial institutions conspired to manipulate ISDAFix, the benchmark rate for the swaps market.
Weil successfully defended Merrill Lynch in multiple purported nationwide class actions alleging discrimination against financial advisors in all aspects of their employment.
- In McReynolds v. Merrill Lynch, Pierce Fenner & Smith Inc., we defended Merrill Lynch in a high-profile, nationwide, putative class action that attacked dozens of policies and alleged that African-American financial advisors were discriminated against in every aspect of their employment from the day they were hired until the day they left. Plaintiffs alleged both a pattern-or-practice of intentional discrimination and disparate impact, and sought injunctive relief as well as money damages in the form of back and front pay, compensatory damages and punitive damages on a class wide basis. We were successful in the district court in defeating plaintiffs’ efforts to certify a pattern-or-practice case for intentional discrimination and a disparate impact case. The Seventh Circuit affirmed the denial of class certification on a pattern-or-practice of intentional discrimination, and affirmed that liability to each class member and the class member's damages must be determined on an individual basis in non-class wide proceedings rather on a class wide formulaic basis as sought by plaintiffs. The Seventh Circuit reversed the district court in a narrow respect, ordering a class trial on whether two current policies, out of the dozens initially challenged, have a disparate impact, and only for purposes of assessing injunctive relief for the class. Subsequently, the parties agreed to settle the matter.
- In a companion case to McReynolds, we prevailed on a motion to dismiss an action claiming that the formula used by Merrill Lynch and its parent company, Bank of America, for paying retention bonuses to Merrill financial advisors (FAs) following the merger with Bank of America constituted intentional racial discrimination. The case presents an important legal question in the financial services industry, an issue on which we prevailed at the district court level in another matter against Merrill Lynch and Bank of America: whether an objective system that awards retention bonuses based solely on prior production can be intentionally discriminatory because the employer knew at the time that the bonus program was established that, as a whole, white FAs produced more than African-American FAs.
- In Goodman v. Merrill Lynch & Co., we secured a victory for Merrill Lynch/Bank of America that has significant implications for claims that may be brought by employees with respect to compensation policies. The case involved a transition “stay bonus” program that Merrill Lynch adopted in connection with its merger with Bank of America and was challenged by a female financial adviser at Merrill Lynch who sued the banks in 2009 under Title VII of the Civil Rights Act, the Equal Pay Act, New York State law and the NYC Administrative Code. A federal judge in the Southern District of New York held that a pay system that compensates people on the basis of actual production is protected from disparate impact claims under Title VII, irrespective of whether the pay system has a disparate impact on minorities or women and irrespective of whether the employer knows that it will have a disparate impact.
Weil has represented legacy Willis (pre-dating its 2016 “merger of equals” with Towers Watson) in connection with approximately 15 securities class and individual actions arising out of the heavily publicized, $8 billion Ponzi scheme orchestrated by R. Allen Stanford and his Houston-based Stanford Financial Group. The complaints in these actions, originally filed in various state and federal courts across the country and centralized in the U.S. District Court for the Northern District of Texas by the Judicial Panel on Multi-District Litigation, generally allege that Willis and other defendants aided Stanford’s fraud.
In August 2017, following motion practice, limited discovery, and appellate proceedings before the Fifth Circuit Court of Appeals and the U.S. Supreme Court, a Texas federal judge approved a settlement by Willis that favorably resolved the litigation.