National Credit Union Administration Board v. RBS Securities, Inc. et al

Filing 28

ORDER DENYING TRANSFER re: pldg. (18 in KS/2:11-cv-02340, 18 in KS/2:11-cv-02649, 19 in KS/2:12-cv-02591, 19 in KS/2:12-cv-02648, 21 in KS/2:13-cv-02418, 33 in MDL No. 2505, 21 in NYS/1:13-cv-06705, 18 in NYS/1:13-cv-06719, 17 in NYS/1:13-cv-06726, 19 in NYS/1:13-cv-06727, 19 in NYS/1:13-cv-06731, 19 in NYS/1:13-cv-06736), ( 1 in MDL No. 2505) The motion to transfer, pursu ant to 28 U.S.C. 1407, is DENIEDSigned by Judge John G. Heyburn II, Chairman, PANEL ON MULTIDISTRICT LITIGATION, on 2/12/2014. Associated Cases: MDL No. 2505, KS/2:11-cv-02340, KS/2:11-cv-02649, KS/2:12-cv-02591, KS/2:12-cv-02648, KS/2:13-cv-02418, NYS/1:13-cv-06705, NYS/1:13-cv-06719, NYS/1:13-cv-06726, NYS/1:13-cv-06727, NYS/1:13-cv-06731, NYS/1:13-cv-06736 (JG)

UNITED STATES JUDICIAL PANEL
on
MULTIDISTRICT LITIGATION

IN RE: NATIONAL CREDIT UNION ADMINISTRATION
BOARD MORTGAGE-BACKED SECURITIES LITIGATION

MDL No. 2505

ORDER DENYING TRANSFER

Before the Panel:* Pursuant to 28 U.S.C. § 1407, defendants Credit Suisse Securities (USA)
LLC; Credit Suisse First Boston Mortgage Securities Corp.; Barclays Capital Inc.; UBS Securities,
LLC; RBS Securities Inc.; RBS Acceptance Inc.; Wachovia Capital Markets, LLC; Morgan Stanley
& Co., Inc.; and Morgan Stanley Capital I Inc. move to centralize this litigation in the District of
Kansas.1 This litigation currently consists of five actions pending in the District of Kansas and six
actions pending in the Southern District of New York, as listed on Schedule A.2
The cases in this litigation were brought by the National Credit Union Administration Board
(NCUA) on behalf of four liquidated credit unions against several underwriters and issuers of some
200-plus residential mortgage-backed securities (“RMBS”) purchased by the credit unions. NCUA
generally alleges that the offering documents for the RMBS certificates at issue contained
misstatements concerning: (1) compliance with the underwriting guidelines pursuant to which the
underlying mortgage loans were originated; (2) compliance with “reduced documentation” standards;
and (3) the disclosed “loan-to-value” ratios. NCUA opposes centralization, and alternatively, if the
Panel deems centralization appropriate, suggests that the Southern District of New York be selected
as the transferee forum.
On the basis of the papers filed and hearing session held, we conclude that Section 1407
centralization will not serve the convenience of the parties and witnesses or further the just and
efficient conduct of this litigation. While these actions share some general common factual questions
as to several RMBS offerings, they involve different RMBS certificates purchased by different credit
unions from different defendants. Defendants’ focus on NCUA as the common factor uniting these

*

Judges Paul J. Barbadoro and Lewis A. Kaplan took no part in the decision of this matter.

1

Defendants J.P. Morgan Securities LLC, J.P. Morgan Acceptance Corporation I, and Bear,
Stearns & Co., Inc., were among the proponents of centralization. However, the actions involving
these defendants were subsequently dismissed.
2

The Section 1407 motion initially included five additional actions in the District of Kansas
and the Southern District of New York, but these actions were subsequently dismissed. The parties
have informed the Panel of three additional potentially-related actions pending in the Central District
of California and the Southern District of New York.

-2cases is misplaced. The actions pending in the District of Kansas (with the exception of one claim
pertaining to one RMBS certificate) are brought by NCUA on behalf of U.S. Central Federal Credit
Union, based in Kansas, and Western Corporate Federal Credit Union, based in California. In
contrast, the actions pending in the Southern District of New York are brought on behalf of two
different credit unions: Members United Corporate Federal Credit Union, based in Illinois; and
Southwest Corporate Federal Credit Union, based in Texas. Additionally, there are relatively few
RMBS offerings in common between the Kansas and New York actions. The parties generally agree
that only around 14 out of some 120 or more RMBS offerings are common among the actions.3
Accordingly, as between the actions in Kansas and those in New York (and, indeed, as between
actions within each district), different representations made to different purchasers of RMBS will be
at issue, involving different discovery and motion practice. The proponents of centralization have
failed to convince us that any common questions of fact among these actions are sufficiently complex
and/or numerous to justify centralization at this time. See In re Auction Rate Sec. (ARS) Mktg. Litig.,
581 F. Supp. 2d 1371, 1372-73 (J.P.M.L. 2008) (denying centralization of securities fraud actions
arising out of widespread failure in the market for auction rate securities).
The procedural posture of these actions also counsels against centralization. Several of the
actions in the District of Kansas and the Central District of California have been pending since 2011
and subject to multiple appeals to the Ninth and Tenth Circuits. Critically, all of the related actions
have been coordinated within each district before a single district judge, such that the actions are
pending before only three district judges. Thus, alternatives to centralization exist, in particular
informal cooperation among the involved attorneys and coordination between the involved courts,
that may minimize whatever possibilities there may be of duplicative discovery or inconsistent pretrial
rulings. See, e.g., In re Eli Lilly & Co. (Cephalexin Monohydrate) Patent Litig., 446 F. Supp. 242,
244 (J.P.M.L. 1978); see also Manual for Complex Litigation, Fourth, § 20.14 (2004).
IT IS THEREFORE ORDERED that the motion, pursuant to 28 U.S.C. § 1407, for
centralization of these actions is denied.

PANEL ON MULTIDISTRICT LITIGATION

__________________________________________
John G. Heyburn II
Chairman
Marjorie O. Rendell
Sarah S. Vance
3

Charles R. Breyer
Ellen Segal Huvelle

The actual number of common offerings may be even smaller as a result of dismissal orders
in the various actions.

IN RE: NATIONAL CREDIT UNION ADMINISTRATION
BOARD MORTGAGE-BACKED SECURITIES LITIGATION

MDL No. 2505

SCHEDULE A

District of Kansas
National Credit Union Administration Board v. RBS Securities, Inc. et al.,
C.A. No. 2:11-02340
National Credit Union Administration Board v. Wachovia Capital Markets, LLC,
C.A. No. 2:11-02649
National Credit Union Administration Board v. UBS Securities, LLC, et al.,
C.A. No. 2:12-02591
National Credit Union Administration Board v. Credit Suisse Securities (USA) LLC
et al., C.A. No. 2:12-02648
National Credit Union Administration Board v. Morgan Stanley & Co. Inc., et al.,
C.A. No. 2:13-02418
Southern District of New York
National Credit Union Administration Board v. Morgan Stanley & Co., Inc., et al.,
C.A. No. 1:13-06705
National Credit Union Administration Board v. Wachovia Capital Markets, LLC,
C.A. No. 1:13-06719
National Credit Union Administration Board v. RBS Securities, Inc., et al.,
C.A. No. 1:13-06726
National Credit Union Administration Board v. Barclays Capital, Inc.,
C.A. No. 1:13-06727
National Credit Union Administration Board v. UBS Securities, LLC,
C.A. No. 1:13-06731
National Credit Union Administration Board v. Credit Suisse Securities (USA) LLC
et al., C.A. No. 1:13-06736