While stopping the class action claims over the merger, Pfaelzer ruled that the derivative claims, accusing the directors and officers of reaping hundreds of millions of dollars through alleged insider trading, could go forward in her court. A similar suit is pending in Los Angeles Superior Court but had been stayed until Pfaelzer's ruling. The judge did not grant the speedy discovery that the plaintiffs had requested or rule on their request that she try the derivative claims before the $3.7 billion merger closes after June 30 -- an event they say would nullify the claims.Pfaelzer also denied a motion by Arkansas Teacher Retirement System to set up a trust to preserve separate shareholder derivative claims, saying that BofA would acquire the suit from Countrywide; expert sources suggested to HW that this particular ruling may end up being significant as BofA and Countrywide sort through any indemnifications tied to the acquisition. Bank of America announced January 11 that it would purchase Countrywide Financial Corp. in a deal worth an estimated $4 billion; some shareholders have revolted at the purchase price -- essentially $7/share -- saying the price is too low for the nation's largest independent mortgage lender.
Countrywide, BofA See Some Merger Class-Action Claims Halted
A federal judge in Los Angeles has halted some class-action claims seeking to prevent a merger between Countrywide Financial Corp. and Bank of America, until other similar claims are litigated in the Delaware court system, Reuters reported Monday morning. Courts in Delaware and Los Angeles have served to consolidate many outstanding shareholder lawsuits tied to the pending merger, given the corporate domiciles of each company, and there are numerous suits seeking class-action status. The decision by U.S. District Judge Mariana Pfaelzer essentially means the Delaware court will decide on any class-action claims surrounding the proposed merger. Reuters reports on other aspects of the ruling: