In re IndyMac Mortgage-Backed Securities Litigation
286 F.R.D. 226
S.D.N.Y.2012Background
- This putative class action concerns mortgage pass-through Certificates issued by IndyMac MBS in ten offerings under Registration Statements and related Offering Documents.
- Lead Plaintiffs Wyoming State Treasurer and Wyoming Retirement System allege these Offering Documents were false or misleading in violation of Sections 11, 12(a)(2), and 15 of the Securities Act.
- The action seeks class certification, appointment of lead plaintiffs as class representatives, and appointment of class counsel.
- IndyMac MBS was the registrant; IndyMac Bank originated or acquired the mortgage loans later bundled into pools and transferred to trusts.
- The SACC alleges the Offering Documents misrepresented IndyMac Bank’s underwriting practices and that underwriting standards were abandoned, leading to loan defaults and downgrades of the certificates.
- The court ultimately granted class certification for nine of the ten offerings, while dismissing claims and denying certification for AR11 (INDX 2006-AR11).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Rule 23 class-certification proper? | Wyoming contends prerequisites (numerosity, commonality, typicality, adequacy) are satisfied. | Defendants argue individualized issues bar certification (knowledge, notice, damages). | Yes, certification granted for nine offerings (AR11 dismissed). |
| Predominance under Rule 23(b)(3) | Wyoming asserts common liability issues predominate (uniform misrepresentations). | Defendants argue knowledge, notice, and timing create individualized issues. | Predominance satisfied; common questions predominate. |
| Materiality and falsity as common questions | Material misstatements/omissions are uniform across offerings. | Materiality may vary with offering-specific contexts; issues are individualized. | Materiality and falsity treated as common proof issues supporting certification. |
| Superiority of class treatment | Class action is superior given number of investors and impracticalities of separate suits. | Foreseeable complexities and foreign-member considerations may hinder; challenge minimal. | Class action deemed superior; efficient adjudication justified. |
Key Cases Cited
- Pub. Emps.' Ret. Sys. v. Merrill Lynch & Co., Inc., 277 F.R.D. 97 (S.D.N.Y. 2010) (class certification of securities actions feasible; common issues prevail)
- In re NYSE Specialists Sec. Litig., 260 F.R.D. 55 (S.D.N.Y. 2009) (illustrates Rule 23(a) commonality/typicality overlap)
- In re Parmalat Sec. Litig., No. 04 MD 1653(LAK), 2008 WL 3895539 (S.D.N.Y. 2008) (cautionary guidance on securities class actions)