860 F. Supp. 2d 1062
C.D. Cal.2012Background
- This is Multidistrict Litigation No. 2265 concerning five Countrywide RMBS actions; four are in the MDL and Putnam was transferred under 28 U.S.C. § 1404(a).
- Plaintiffs allege misrepresentations about loan quality in RMBS offerings and seek liability against Countrywide and Bank of America entities, among others, under various theories including control person, aiding and abetting, statutory, and successor liability.
- Defendants filed consolidated motions to dismiss addressing standing, timeliness, and jurisdiction; the Court held oral argument on February 13–14, 2012.
- Putnam Bank asserts Securities Act, Exchange Act, and Connecticut Uniform Securities Act claims; American Fidelity likewise asserts Securities Act, Exchange Act, and state-law claims; Bankers, Sterling, Sealink are other named actions in the omnibus order.
- The Court applies Ninth Circuit law to federal claims and transferor-forum state law to state-law claims, with case-by-case choice-of-law analysis, and resolves threshold issues before merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are Putnam's Securities Act claims time-barred? | Putnam contends tolling under American Pipe applies to some class claims. | Tolling should extend to all class members regardless of standing; Luther lacks standing for these tranches. | Yes; American Pipe tolling limited to tranches purchased by Luther; claims dismissed with prejudice. |
| Are Putnam's Exchange Act and CUSA claims time-barred? | Claims tolled by American Pipe; similar to prior Countrywide actions. | Claims are time-barred under two-year limitations with no tolling equal to Securities Act. | Yes; Exchange Act and CUSA claims dismissed with prejudice. |
| Are American Fidelity's federal claims time-barred? | Claims mirror prior cases and should be tolled similarly. | Claims time-barred; Luther tolling not available for these claims. | Yes; Section 11, Section 12(a)(2), and related claims time-barred; cross-jurisdiction tolling rejected; dismissal with prejudice. |
| Do Bankers' Florida choice-of-law and timing issues defeat their claims? | Florida law should govern based on most-significant-relationship; borrowing statute may apply. | California ties are stronger; borrowing statute could apply through Illinois. | No dismissal; Florida four-year statute applies; bank's claims not time-barred; claims remain viable. |
| Does Sealink have standing to sue or are SPVs the proper plaintiffs? | Sealink asserts standing through SPVs via assignment. | SPVs must have standing; Sealink cannot allege injury in its own right. | Sealink lacks standing; dismissal without prejudice; potential amended pleading allowed to clarify standing. |
Key Cases Cited
- American Pipe & Construction Co. v. Utah, 414 U.S. 538 (U.S. 1974) (tolling class actions to allow later individual suits)
- Crown, Cork & Seal Co., Inc. v. Parker, 462 U.S. 345 (U.S. 1983) (American Pipe tolling extends to all class members with standing)
- Lierboe v. State Farm Mutual Automobile Ins. Co., 350 F.3d 1018 (9th Cir. 2003) (class action must have a named plaintiff with standing)
- Allstate Ins. Co. v. Countrywide Fin. Corp., 824 F. Supp. 2d 1164 (C.D. Cal. 2011) (reasonable diligence timing in tolling and discovery)
- Stichting v. Countrywide Fin. Corp., 802 F. Supp. 2d 1125 (C.D. Cal. 2011) (duty and timing of discovery for 1934 Act claims)
- Morgan Stanley Mortg. Pass-Through Certs. Litig., 810 F. Supp. 2d 650 (S.D.N.Y. 2011) (standing and tolling considerations in MBS cases)
- Maine State Ret. Sys. v. Countrywide Fin. Corp., No. 10-cv-00302-MRP (MANx), 2011 WL 439? (C.D. Cal. 2011) (2011) (American Pipe tolling applied to securities actions in MDL context)
- Genesee County Emps’ Ret. Sys. v. Thornburg Mortg. Secs. Trust 2006-3, 825 F. Supp. 2d 1082 (D.N.M. 2011) (standing considerations in MBS cases)
- Nucorp Energy Secs. Litig., 772 F.2d 1486 (9th Cir. 1985) (choice of law in federal securities cases)