The Work

May 17, 2010 2:37 PM

Wachtell, Davis Polk, Cleary: Anybody but Rakoff, Please

Posted by Zach Lowe

It looks like Bank of America and its top law firms really didn't want to see federal district court judge Jed Rakoff involved in any of the litigation surrounding the bank's ultracontroversial merger with Merrill Lynch. 

As our colleagues at The Am Law Litigation Daily suggested three weeks ago, BofA and its lawyers were probably plenty relieved when Loretta Preska, chief judge of the district court in Manhattan, reassigned about 15 pending shareholders suits involving the bank's ultracontroversial merger with Merrill Lynch to federal district court Kevin Castel.

Federal district court judge Denny Chin had been overseeing the suits, which include the largest consolidated investor claim against BofA over its alleged failure to disclose key details ahead of the December 2008 shareholder vote on the merger. But once Chin was elevated to a seat on the U.S. Court of Appeals for the Second Circuit last month, a new judge had to be picked to hear the BofA cases. And as the bank's lawyers made it clear in a late April letter to Chin, they preferred that the cases go to anybody but Rakoff, according to this piece in The Wall Street Journal.

There would have been some logic to assigning the cases to Rakoff, who has some history with litigation related to the BofA-Merrill merger. Which is precisely what concerned the bank's lawyers, the WSJ reports.

In the April 22 letter, the WSJ reports, lawyers from Wachtell, Lipton, Rosen & Katz, Cleary Gottlieb Steen & Hamilton and Davis Polk & Wardwell asked that a random-selection process be used to determine who would take the BofA cases over from Chin. The BofA lawyers, the WSJ says, wrote that it would be "incongruous" to assign the shareholder actions to Rakoff, given his rejection last year of a proposed $33 million settlement between the Securities and Exchange Commission and BofA in connection with the bank's failure to disclose key details ahead of the shareholder vote in the Merrill deal.

(For those who might not recall, Rakoff called the proposed settlement "trivial" and "absurd," and only reluctantly approved a revised settlement in February that called for the bank to pay a $150 million fine and submit to increased scrutiny of its compensation and disclosure policies. Rakoff did not hide his disdain for that deal, calling it "half-baked justice," according to our prior reporting.)

Interestingly, the bank and its lawyers decided to write to Chin outside the public record of the litigation rather than to file the letter with the court, which is why it took three weeks for the letter's existence to be made public. There's no trace of the letter on the online case docket, nor is there a trace of a reply letter from plaintiffs accusing the bank of judge-shopping. 

In the end, random assignment wasn't an option because cases from several different districts were involved. Preska told the WSJ that she didn't recall seeing the BofA letter.

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