Last week, when I wrote about the impact of Syncora's $375 million settlement with Bank of America, I had a bit of an
existential crisis. Sources kept telling me that the
mortgage-backed securities litigation between the bond insurer
and Countrywide was more of a sideshow than the main event, and
that business considerations, not developments in the
breach-of-contract case, drove the settlement. You can imagine
how that made me feel, considering the brain cells I've
sacrificed to coverage of monoline put-back litigation. Has all
this fulmination -- not just by me, but by dozens of lawyers
getting paid millions for their trouble -- been for naught?
I still don't know the answer, but I've perked up again,
thanks to a letter MBIA's lawyers at Quinn Emanuel Urquhart &
Sullivan sent to New York State Supreme Court Justice Eileen
Bransten on Wednesday afternoon. Quinn Emanuel wants Bransten's
permission to file a motion to lift the seal on expert reports,
deposition testimony by bank executives and the documents
accompanying the reports and depositions. It's a purely tactical
play by MBIA, but the letter is a reminder that litigation
occasionally shines a megawatt light on information that
businesses would rather keep locked away in a dark closet.
That's assuming MBIA's unsealing campaign succeeds, which is
far from a sure thing. MBIA and the banks signed an order back in 2009 agreeing that both sides should have broad power to
designate discovery as confidential, which means that it stays
under seal. The agreement calls for all deposition transcripts,
for instance, to be sealed. Disputes over confidentiality,
meanwhile, are supposed to be resolved by asking the court to
declassify particular documents. The confidentiality agreement
offers such potent protection that MBIA has even referred to it
at vario u s points in the litigation, arguing that Countrywide or
BofA should be ordered to produce confidential material.
But MBIA argued in Wednesday's letter to Bransten that much
of the information under seal is stale, is not really
competitively sensitive or is wrongly identified as
confidential. There's no reason for such material to be kept
secret, MBIA asserted. "As we approach the filing of summary
judgment papers and then trial, the liberal use of these
confidentiality designations threatens to create unnecessary
burdens for both the parties and the court," the letter said.
MBIA argues that there's a public interest in releasing material
that doesn't meet the criteria for confidentiality.
Let's be brutally frank: In requesting that wide swaths of
the record be made public, MBIA knows it's asking Bransten, in
effect, to ignore the 2009 protective order, which requires it
to ask for document-by-document unsealing. That's what Bank of
America's lawyers at O'Melveny & Myers informed Quinn Emanuel
when MBIA pushed for lifting the seal on deposition transcripts,
expert witness reports and related documents. MBIA is hoping
that Bransten, who has talked about the importance of an open
record and an open court, will nevertheless agree to unseal what
it calls "a limited collection of documents and transcripts."
MBIA's goal is partly to embarrass Bank of America and
Countrywide, whose executives -- including CEO Brian Moynihan --
have sat for depositions in the case. (Depositions of third
parties, such as former employees who testified about
Countrywide's underwriting standards, don't fall under the MBIA
unsealing request.) Beyond that, the bond insurer knows that
BofA doesn't want everyone else who's suing Countrywide to see
documents it produced to MBIA. The bank also doesn't want
Bransten to set precedent on confidentiality that other
plaintiffs can point to.
MBIA counsel Peter Calamari of Quinn Emanuel and Bank of
America spokesman Lawrence Grayson declined to comment.
(Reporting by Alison Frankel)
Follow us on Twitter @AlisonFrankel, @ReutersLegal | Like us on Facebook