In the Courts

The appeal raised questions about how the NCUA's deadline for filing suit was affected by a so-called extender provision in the Financial Institutions Reform, Recovery and Enforcement Act of 1989, and by a series of tolling agreements Barclays reached before the agency sued. (The impact of FIRREA's extender and similar provisions in other laws has been hotly contested in federal agencies' RMBS lawsuits. The U.S. Supreme Court recently let stand another Tenth Circuit decision that favored the NCUA on the issue.)

Before filing the Barclays suit in 2012, the NCUA entered settlement negotiations with the bank, reaching tolling agreements that purported to exclude the time spent in those talks from the calculation of any deadlines that might impact an eventual lawsuit.

U.S. District Judge John Lungstrum in Kansas City, KS, dismissed the NCUA's suit in July 2013, finding that the agency brought its claims against Barclays too late. The district judge had relied on a prior decision he made in a parallel NCUA lawsuit against Credit Suisse AG.

The NCUA, represented on appeal by David Frederick of Kellogg, Huber, Hansen, Todd, Evans & Figel, maintained that the time limit under the FIRREA extender statute was put on hold by its tolling pacts with Barclays. The NCUA also argued that as part of those agreements, Barclays had agreed not to raise a timeliness defense in any future litigation.

The Tenth Circuit rejected the NCUA's first argument in early March, ruling that the extender provision's statute of limitations cannot be lengthened by a contract. But the court nevertheless agreed to revive the NCUA's claims, ruling that the agency “relied upon the tolling promises by Barclays in continuing settlement negotiations rather than breaking off negotiations and suing within the limitations period.”

“It is appropriate to hold Barclays to its promise,” Circuit Judge David Ebel wrote for the unanimous panel.

Beyond Barclays, the Tenth Circuit's ruling will likely impact the NCUA's parallel lawsuits against Credit Suisse, UBS AG and Morgan Stanley, which remain active in front of Judge Lungstrum in Kansas.

Unlike in the Barclays suit, where Lungstrum threw out the NCUA's entire case, the judge dismissed only some of the agency's claims against Credit Suisse, UBS and Morgan Stanley. With the Tenth Circuit's decision in hand, the NCUA will likely ask to reinstate those claims.

Intellectual Ventures Must Face Antitrust Claims in Banking Patent Fight

A Maryland federal judge fanned the flames of a patent dispute between patent licensing giant Intellectual Ventures and Capital One Financial Corp. last month, ruling that Capital One can pursue claims that IV has abused its massive patent portfolio to “hold up” the banking sector.

U.S. District Judge Paul W. Grimm in Greenbelt, MD, granted a motion by Capital One to amend its counterclaims in the patent infringement lawsuit to include allegations that Intellectual Ventures has violated federal antitrust law. The decision also clears Capital One's lawyers at Latham & Watkins, Troutman Sanders and Kirkland & Ellis to argue that the bank has not infringed any of IV's patents, and that the patents are invalid.

Capital One's antitrust allegations, laid out in a proposed filing last September, take a harsh view of IV's business model. The bank's lawyers, including Latham's Matthew Moore, Troutman Sanders' Robert Angle and Kirkland's Kenneth Adamo, allege that IV targets specific industries, aggregates “hundreds upon hundreds of individually weak patents,” and then uses that patent portfolio to force successful companies to take licenses “they do not need or want.”

“IV's strategy has nothing to do with developing or licensing innovative technologies,” the bank's lawyers wrote in the amended counterclaims. “Its demands are not tied to any particular patent or technology, as would be the case in a bona fide licensing negotiation. Rather, the demand is simply for money.”

In an October opposition brief, IV's lawyers at Feinberg Day Alberti & Thompson countered that Capital One had already lost a bid to assert similar claims in an infringement suit IV filed previously against the bank. In the prior suit, which played out in Virginia federal court, Capital One eventually beat IV's infringement allegations. (We named Moore and Angle Litigators of the Week for the defense win.) An appeal in that case is pending at the U.S. Court of Appeals for the Federal Circuit.

Grimm ruled in early March that Capital One's counterclaims in the Maryland litigation aren't barred by the earlier case, since they focus on alleged antitrust violations that occurred after the Virginia judge's decision. Grimm also rejected IV's argument that it would be “futile” to allow Capital One to pursue its antitrust allegations.

The bank's antitrust allegations, the judge wrote, are solid enough to survive a “plausibility challenge and to warrant proceeding to discovery.” ' Scott Flaherty , ALM

PwC, Citco Must Face Madoff Feeder Fund Class Action

Last June, when the U.S. Court of Appeals for the Second Circuit vacated a decision certifying a class of Bernie Madoff victims suing PricewaterhouseCoopers LLP and Citco Group Ltd., we wrote that the ruling could spell big trouble for the Madoff “feeder fund” investors who brought the case. Well, the disaster has been averted, leaving PwC and Citco squarely in the plaintiffs' sights once again.

On March 3, U.S. District Judge Victor Marrero in Manhattan reaffirmed his earlier certification ruling, instantly reigniting what looks to be the largest remaining investor class action sparked by Madoff's Ponzi scheme. The judge concluded that PwC and Citco can't escape claims related to services they provided to Fairfield Greenwich Group, a manager of funds that funneled billions of dollars into Madoff's fraud-ridden investment firm.

Marrero's ruling is a victory for co-lead plaintiffs counsel at Boies, Schiller & Flexner, Wolf Popper and Lovell Stewart Halebian Jacobson, who have been fighting for more than six years to keep the case on track. The plaintiffs previously reached settlements worth $90 million with Fairfield and one of its affiliates. But thanks to their vastly deeper pockets, the key defendants are Citco, which acted as fund administrator and custodian for Fairfield, and the Dutch and Canadian arms of accounting giant PwC, which provided auditing services. Citco is one of the world's largest hedge fund administrators, with a reported $579 billion in assets under administration as of last year.

Judge Marrero originally certified the class in 2013, though he excluded investments originating in more than two dozen countries. Last June, however, the Second Circuit vacated the certification order as to PwC and Citco. The appeals court found that Marrero's analysis was too narrowly focused on the claims against Fairfield, which had already agreed to settle, and it remanded the case with instructions for the judge to determine whether there was enough common evidence to sustain a class action against Citco and PwC.

On March 3, Marrero ruled that there was. He agreed with the plaintiffs that both Citco's statements as to the value of Fairfield's assets and PwC's audit opinions were key decision points for Fairfield investors, making class treatment appropriate for both defendants. (After prior rulings in the case, PwC is facing claims of negligence and negligent misrepresentation, and Citco faces various federal securities law and common law claims.)

The defendants can once again seek to challenge the class certification order, which would require either Marrero or the Second Circuit to allow an immediate appeal. ' David Bario , ALM

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NCUA Win in Barclays Case May Hurt Credit Suisse, Other Banks

In a decision likely to have a spillover effect on other big banks, a federal appeals court has reinstated claims by the National Credit Union Administration (NCUA) against Barclays PLC over the sale and underwriting of allegedly shoddy mortgage-backed securities.

The U.S. Court of Appeals for the Tenth Circuit last month revived an NCUA lawsuit alleging that Barclays' residential mortgage-backed securities (RMBS) business played a role in the collapse of two major federal credit unions. Barclays, defended by Sullivan & Cromwell, is one of several banks the NCUA has accused of misrepresenting the quality of RMBS they sold prior to the financial crisis.

The appeal raised questions about how the NCUA's deadline for filing suit was affected by a so-called extender provision in the Financial Institutions Reform, Recovery and Enforcement Act of 1989, and by a series of tolling agreements Barclays reached before the agency sued. (The impact of FIRREA's extender and similar provisions in other laws has been hotly contested in federal agencies' RMBS lawsuits. The U.S. Supreme Court recently let stand another Tenth Circuit decision that favored the NCUA on the issue.)

Before filing the Barclays suit in 2012, the NCUA entered settlement negotiations with the bank, reaching tolling agreements that purported to exclude the time spent in those talks from the calculation of any deadlines that might impact an eventual lawsuit.

U.S. District Judge John Lungstrum in Kansas City, KS, dismissed the NCUA's suit in July 2013, finding that the agency brought its claims against Barclays too late. The district judge had relied on a prior decision he made in a parallel NCUA lawsuit against Credit Suisse AG.

The NCUA, represented on appeal by David Frederick of Kellogg, Huber, Hansen, Todd, Evans & Figel, maintained that the time limit under the FIRREA extender statute was put on hold by its tolling pacts with Barclays. The NCUA also argued that as part of those agreements, Barclays had agreed not to raise a timeliness defense in any future litigation.

The Tenth Circuit rejected the NCUA's first argument in early March, ruling that the extender provision's statute of limitations cannot be lengthened by a contract. But the court nevertheless agreed to revive the NCUA's claims, ruling that the agency “relied upon the tolling promises by Barclays in continuing settlement negotiations rather than breaking off negotiations and suing within the limitations period.”

“It is appropriate to hold Barclays to its promise,” Circuit Judge David Ebel wrote for the unanimous panel.

Beyond Barclays, the Tenth Circuit's ruling will likely impact the NCUA's parallel lawsuits against Credit Suisse, UBS AG and Morgan Stanley, which remain active in front of Judge Lungstrum in Kansas.

Unlike in the Barclays suit, where Lungstrum threw out the NCUA's entire case, the judge dismissed only some of the agency's claims against Credit Suisse, UBS and Morgan Stanley. With the Tenth Circuit's decision in hand, the NCUA will likely ask to reinstate those claims.

Intellectual Ventures Must Face Antitrust Claims in Banking Patent Fight

A Maryland federal judge fanned the flames of a patent dispute between patent licensing giant Intellectual Ventures and Capital One Financial Corp. last month, ruling that Capital One can pursue claims that IV has abused its massive patent portfolio to “hold up” the banking sector.

U.S. District Judge Paul W. Grimm in Greenbelt, MD, granted a motion by Capital One to amend its counterclaims in the patent infringement lawsuit to include allegations that Intellectual Ventures has violated federal antitrust law. The decision also clears Capital One's lawyers at Latham & Watkins, Troutman Sanders and Kirkland & Ellis to argue that the bank has not infringed any of IV's patents, and that the patents are invalid.

Capital One's antitrust allegations, laid out in a proposed filing last September, take a harsh view of IV's business model. The bank's lawyers, including Latham's Matthew Moore, Troutman Sanders' Robert Angle and Kirkland's Kenneth Adamo, allege that IV targets specific industries, aggregates “hundreds upon hundreds of individually weak patents,” and then uses that patent portfolio to force successful companies to take licenses “they do not need or want.”

“IV's strategy has nothing to do with developing or licensing innovative technologies,” the bank's lawyers wrote in the amended counterclaims. “Its demands are not tied to any particular patent or technology, as would be the case in a bona fide licensing negotiation. Rather, the demand is simply for money.”

In an October opposition brief, IV's lawyers at Feinberg Day Alberti & Thompson countered that Capital One had already lost a bid to assert similar claims in an infringement suit IV filed previously against the bank. In the prior suit, which played out in Virginia federal court, Capital One eventually beat IV's infringement allegations. (We named Moore and Angle Litigators of the Week for the defense win.) An appeal in that case is pending at the U.S. Court of Appeals for the Federal Circuit.

Grimm ruled in early March that Capital One's counterclaims in the Maryland litigation aren't barred by the earlier case, since they focus on alleged antitrust violations that occurred after the Virginia judge's decision. Grimm also rejected IV's argument that it would be “futile” to allow Capital One to pursue its antitrust allegations.

The bank's antitrust allegations, the judge wrote, are solid enough to survive a “plausibility challenge and to warrant proceeding to discovery.” ' Scott Flaherty , ALM

PwC, Citco Must Face Madoff Feeder Fund Class Action

Last June, when the U.S. Court of Appeals for the Second Circuit vacated a decision certifying a class of Bernie Madoff victims suing PricewaterhouseCoopers LLP and Citco Group Ltd., we wrote that the ruling could spell big trouble for the Madoff “feeder fund” investors who brought the case. Well, the disaster has been averted, leaving PwC and Citco squarely in the plaintiffs' sights once again.

On March 3, U.S. District Judge Victor Marrero in Manhattan reaffirmed his earlier certification ruling, instantly reigniting what looks to be the largest remaining investor class action sparked by Madoff's Ponzi scheme. The judge concluded that PwC and Citco can't escape claims related to services they provided to Fairfield Greenwich Group, a manager of funds that funneled billions of dollars into Madoff's fraud-ridden investment firm.

Marrero's ruling is a victory for co-lead plaintiffs counsel at Boies, Schiller & Flexner, Wolf Popper and Lovell Stewart Halebian Jacobson, who have been fighting for more than six years to keep the case on track. The plaintiffs previously reached settlements worth $90 million with Fairfield and one of its affiliates. But thanks to their vastly deeper pockets, the key defendants are Citco, which acted as fund administrator and custodian for Fairfield, and the Dutch and Canadian arms of accounting giant PwC, which provided auditing services. Citco is one of the world's largest hedge fund administrators, with a reported $579 billion in assets under administration as of last year.

Judge Marrero originally certified the class in 2013, though he excluded investments originating in more than two dozen countries. Last June, however, the Second Circuit vacated the certification order as to PwC and Citco. The appeals court found that Marrero's analysis was too narrowly focused on the claims against Fairfield, which had already agreed to settle, and it remanded the case with instructions for the judge to determine whether there was enough common evidence to sustain a class action against Citco and PwC.

On March 3, Marrero ruled that there was. He agreed with the plaintiffs that both Citco's statements as to the value of Fairfield's assets and PwC's audit opinions were key decision points for Fairfield investors, making class treatment appropriate for both defendants. (After prior rulings in the case, PwC is facing claims of negligence and negligent misrepresentation, and Citco faces various federal securities law and common law claims.)

The defendants can once again seek to challenge the class certification order, which would require either Marrero or the Second Circuit to allow an immediate appeal. ' David Bario , ALM

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