in re bankamerica corporation securities litigation...
TRANSCRIPT
UNITED STATES DISTRICT COURTEASTERN DISTRICT OF MISSOURI
Eastern Division
IN RE ) MDL No. 1264BANKAMERICA CORP. ) Senior Judge NangleSECURITIES LITIGATION ) ALL CASES
DECLARATION OF MARTIN M. GREEN IN SUPPORT OF FINALAPPROVAL OF PROPOSED SETTLEMENT, PLAN OF ALLOCATION AN D
NATIONSBANK CLASS COUNSELS' APPLICATION FOR ATTORNEYS'FEES AND REIMBURSEMENT OF EXPENSE S
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Commencement of the Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Appointment of Lead Plaintiffs and Lead Counsel . . . . . . . . . . . . . . . . . . . . . 3
Plaintiffs ' Amended Complaints and Defendants' Challenges . . . . . . . . . . . 4
Class Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Partial Lifting of Discovery Stay, Stipulated Protective Orderand Agreed-Upon Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Injunction Barring Prosecution o fPurported State Court Class Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Class Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5
Third Party Discovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Depositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1
NationsBank Plaintiffs ' Written Discovery to Defendants . . . . . . . . . . . . . 27
NationsBank Plaintiffs' Motions to Compel Discovery . . . . . . . . . . . . . . . . . 28
Forensic Computer Discovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1
NationsBank Plaintiffs' Responses to Defendants' Written Discovery . . . 32
NationsBank Plaintiffs ' Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Meeting in Savannah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Defendants' Motion to Stay Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Requests for Admissions and Joint Stipulation of Facts . . . . . . . . . . . . . . . 46
Pre-Trial and Summary Judgment Motions . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Defendants' Designated Expert John Dubinsky . . . . . . . . . . . . . . . . . . . . . . 53
Florida State Board of Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Settlement Negotiations, Mediation and Stipulation of Settlement . . . . . 54
The Settlement is Fair, Reasonable and Adequate . . . . . . . . . . . . . . . . . . . . 56
Counsel for the NationsBank Plaintiffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Counsel for Defendants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
UNITED STATES DISTRICT COURTEASTERN DISTRICT OF MISSOURI
Eastern Division
IN RE ) MDL No. 1264BANKAMERICA CORP. ) Senior Judge NangleSECURITIES LITIGATION ) ALL CASE S
DECLARATION OF MARTIN M . GREEN IN SUPPORT OF FINALAPPROVAL OF PROPOSED SETTLEMENT, PLAN OF ALLOCATION AN D
NATIONSBANK CLASS COUNSELS' APPLICATION FOR ATTORNEYS'FEES AND REIMBURSEMENT OF EXPENSE S
I, Martin M. Green, declare under penalty of perjury that the following is tru e
and correct :
1 . I am an attorney and president of Green Schaaf & Jacobson P .C ., the law
firm appointed by the Court to serve as lead and liaison counsel for the NationsBank
Classes. This declaration is submitted in support of final approval of the propose d
settlement, plan of allocation and NationsBank Class counsels' application for
attorneys' fees and reimbursement of expenses . I actively participated in the
prosecution of this action, and I have personal knowledge of the matters describe d
below and am competent to testify thereto .
INTRODUCTION
2. Through the NationsBank plaintiffs' diligent and aggressive prosecutio n
of this action, as more fully discussed below, a $490 million cash settlement has bee n
obtained from the defendants for the NationsBank Classes and BankAmerica Classes .
The settlement, achieved after three and a half years of unprecedented litigation jus t
90 days before trial, provides for cash payments by defendant BankAmerica of $333 . 2
million to the NationsBank Classes and $156 .8 million to the BankAmerica Classes .
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This case has presented some of the most challenging legal questions and factua l
issues that I have encountered during more than forty years of practice . Speaking for
the NationsBank Class counsel, and as discussed more fully below, I believe th e
proposed settlement represents a fair, reasonable, and adequate result for th e
NationsBank and BankAmerica Classes . As lead counsel of the NationsBank Classes ,
I strongly urge the Court to grant final approval of the settlement and plan of
allocation and to approve the NationsBank Class counsels' application for attorneys'
fees and reimbursement of expenses .
3. In support of the proposed settlement, this declaration sets forth generally
the history of the litigation, the scope of plaintiffs' prosecution and settlement efforts ,
and many of the significant risks and complexities involved .
COMMENCEMENT OF THE LITIGATIO N
4. This litigation arose from the defendants' knowing issuance and filing o f
misleading proxy materials in connection with the September 30, 1998 merger betwee n
NationsBank and Old BankAmerica to form New BankAmerica ("BankAmerica") .
Following the merger closing on October 14, 1998, BankAmerica disclosed that it ha d
lost and was writing down $372 million related to a financial alliance it had with D .E .
Shaw . This loss, and the subsequent resignation of BankAmerica President Davi d
Coulter, prompted former shareholders of both merged banks to file multiple clas s
action securities fraud suits alleging, inter alia, that BankAmerica fraudulently failed
to make timely disclosure of the losses relating to D .E .Shaw.
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5 .. Between October 15 through November 18, 1998, twenty-four class
actions were filed in six federal district courts . Seven substantially similar class
actions were filed in California state court .
6 . On February 11, 1999, the Judicial Panel on Multi-District Litigation
consolidated the federal securities class action suits and transferred them for discovery
to this District, the Hon. John F. Nangle, presiding.
7 . The California state court actions were consolidated in part under two
separate styles, Giorgetti vs . BankAmerica Corporation and Desmond vs. BankAmerica
Corporation, in California Superior Court for the County of San Francisco .
APPOINTMENT OFLEAD PLAINTIFFS AND LEAD COUNSE L
8 . On March 16, 1999, the Court held a conference with counsel to discuss
the selection of the most adequate plaintiff and lead counsel for plaintiffs and other
issues. Pursuant to the Court's February 12, 1999 Order, counsel prepared and
submitted before the conference a preliminary joint report summarizing the factual
and legal issues critical to plaintiffs and defendants in a case that both sides agreed
should be characterized as complex litigation .
9. On April 20, 1999, after receiving plaintiffs' revised proposed Order
appointing lead plaintiffs and lead counsel, the Court, for the proposed NationsBank
Classes, appointed Earl J . Gates, Joseph Hempen, Robert Hepworth, John M . Koehler,
David P. Oetting, and Pamela Wootton lead plaintiffs ; and Green Schaaf & Jacobson,
P.C., lead counsel and liaison counsel; Chitwood & Harley and Stull Stull & Brody
co-lead counsel ; and Entwistle & Cappucci, LLP, and Wolf Haldenstein Adler Freema n
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& Herz, LLP, executive committee members. For the proposed BankAmerica Classes ,
the Court appointed David Fike, Selma Kaiser, Brian Markee, Elizabeth Menkes ,
Walter E. Ryan, Jr., and Patricia A . Thomas lead plaintiffs ; and Abbey Gardy, LLP
(through its predecessor firm , Abbey, Gardy & Squitieri, LLP) lead counsel with
Krislov & Associates, Ltd ., as executive committee member . On July 1, 1999, the Court
amended the lead plaintiff appointments to add Kevin Kloster as a lead plaintiff for the
NationsBank Purchaser Class .
PLAINTIFFS' AMENDED COMPLAINTS ANDDEFENDANTS' CHALLENGE S
10. On April 9, 1999, following additional research of events surrounding the
merger and the D .E . Shaw losses, plaintiffs filed their First Consolidated and Amende d
Class Action Complaint . The First Amended Complaint named as individua l
defendants certain control persons of NationsBank and Old BankAmerica as well as
certain officers and directors of both banks, including those who signed th e
Proxy/Prospectus and the Registration Statement filed with the SEC on August 4 ,
1998.
11. In their Amended Complaint, plaintiffs alleged that the joint prox y
materials issued by the defendants to gain shareholder approval of the Merger faile d
to disclose to all class members that the combined entity, BankAmerica, would inheri t
Old BankAmerica's failed investment in a high-risk joint venture with D .E . Shaw, Inc.
("Shaw"), a New York City-based hedge fund, and failed to disclose the risk of loss an d
actual material losses stemming from that joint venture . With shareholders unaware
of the f acts, the merger was overwhelmingly approved and later completed o n
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September 30, 1998. On October 14, 1998 the defendants admitted that New
BankAmerica's third quarter 1998 earnings dropped 50 percent, in part due to a
$372 million write-off on a $1 .4 billion unsecured "loan" for the joint venture with D .E.
Shaw, and the reversal of $70 million in income related thereto. The BankAmerica
plaintiffs also alleged the Proxy/Prospectus failed to disclose that the merger was not ,
in fact, a merger of equals .
12. The NationsBank Classes brought claims against defendants unde r
Sections 10(b), 14(a) and 20(a) of the Exchange Act and Rules 10b-5 and 14a-9, and
for breach of fiduciary duty . The BankAmerica Classes also asserted claims unde r
Sections 10(b), 14(a), 20(a) and Rules 10b-5 and 14a-9 as well as Sections 11, 12(a)(2)
and 15 of the Securities Act and for breach of fiduciary duty .
13. On May 21, 1999, defendants served their motion to dismiss all counts o f
the First Amended Complaint and supporting memorandum . Defendants argued that
the Complaint failed to state any claim and lacked the requisite particularity . They
argued that there was no duty to disclose the D.E . Shaw financing relationship or
related losses, that the "merger of equals" characterization was not actionable, that
plaintiffs' Exchange Act claims failed to satisfy the requirements of Rule 9(b) or the
PSLRA, and that the state law claims for breach of fiduciary duty should be dismisse d
on various grounds .
14. On July 2, 1999 , the NationsBank plaintiffs served their Brief in
Opposition to Defendants' Motion to Dismiss . Plaintiffs pointed to facts alleged in th e
First Amended Complaint establishing Old BankAmerica's mischaracterization of th e
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Shaw relationship, defendants' actual knowledge of the Shaw crisis, the absence of any
disclosure in the Proxy/Prospectus of Old BankAmerica's losses related to the Shaw
relationship, the exposure to further losses, or the true nature of the Shaw
relationship, defendants' continued concealment of the Shaw relationship and eventual
admission of the Shaw relationship and the losses . Plaintiffs' brief in opposition also
demonstrated that the Complaint adequately alleged each and every element required
to establish the claims of the NationsBank Classes . With regard to the Section 14(a)
and Rule 14a-9 claims, plaintiffs pointed out that the Complaint made the requisite
allegations of materiality and causation and that one need only demonstrat e
negligence, not scienter, on defendants' part . With regard to the Section 10(b) and Rule
10b-5 claims, plaintiffs showed they had made the required allegation of scienter and
showing of causation . Plaintiffs also explained why defendants' factual arguments did
not defeat their claims. The Amended Complaint alleged that defendants knew of th e
Shaw relationship before the merger, the losses suffered by Shaw, and the impact those
losses would have on Old BankAmerica and that the Shaw losses and their impact on
Old BankAmerica were not common knowledge prior to defendants' post-merger
disclosures. The NationsBank plaintiffs also showed that defendants' boilerplate
disclosures were not proper risk disclosures and not protected as forward-looking
statements. Plaintiffs showed in their opposition brief that the Amended Complaint
met the requirements of the PSLRA and Rule 9(b) requiring the pleading of allegations
of fraud with particularity, and that NationsBank's charter provisions did not shield
defendants who signed the registration statement from liability. Finally, Plaintiffs
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also pointed to the allegations supporting their claims under Section 20(a) against the
individual defendants .
15 . On July 2, 1999, the BankAmerica plaintiffs served defendants and th e
NationsBank plaintiffs with their Memorandum in Opposition to Defendants' Motio n
to Dismiss . These plaintiffs emphasized, inter alia, the materiality of defendants '
alleged misrepresentation of the merger as a "merger of equals" with shared control o f
the combined entity .
16 . On December 15, 1999, the Court issued a 47 page Order that in large
part denied defendants' motion to dismiss and granted leave to plaintiffs to replea d
certain Counts. Only Counts IX and X brought by the BankAmerica plaintiffs wer e
dismissed.
17 . On January 20, 2000, defendants filed their Answer to the First Amende d
Complaint .
18. Upon submission of the NationsBank Classes' Motion to Amend the Firs t
Consolidated and Amended Class Action Complaint by Interlineation , filed January
11, 2000 and opposed by defendants, the Court issued its Order March 9, 2000 deemin g
Counts V and VIII, but not Count II, amended . On March 23, 2000, defendants filed
an Answer by Interlineation to the Complaint Amended by Interlineation.
19. On August 4, 2000, the NationsBank and BankAmerica Classes jointl y
filed a Motion to Amend by Interlineation . Plaintiffs sought to amend the complain t
to include California state law claims under California Corporate Code §§ 25400 an d
25500.
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20 . On August 18, 2000, defendants filed their Opposition to Motion to Amen d
by Interlineation and on August 30, 2000, plaintiffs filed a Reply .
21. On March 6, 2001, the Court issued an Order staying plaintiffs' motio n
to amend the complaint by interlineation to add California state law claims until the
Eighth Circuit decided the Desmond plaintiffs' appeal from the Court's injunctio n
issued April 25, 2000, as discussed more fully below .
22 . On December 14, 2001, after the Eighth Circuit affirmed the issuance of
the injunction, the Court issued an Order granting in part plaintiffs' motion to amen d
the complaint by interlineation to add the California state law claims asserted by th e
NationsBank plaintiffs . On January 14, 2002, defendants filed their Answer to tha t
amended complaint .
CLASS CERTIFICATIO N
23. On June 21, 1999, the NationsBank and BankAmerica plaintiffs move d
unopposed for class certification and appointment of class representatives . Plaintiffs
sought to certify the following classes : NationsBank Holder Class; NationsBank
Purchaser Class; BankAmerica Holder Class ; and Bank America Purchaser Class . On
June 30, 1999, defendants filed their Statement of Position Concerning Plaintiffs'
Motion to Certify Classes .
24. On July 6, 1999, the Court issued its Order certifying plaintiffs' propose d
classes and appointing the following class representatives : NationsBank Holder Class :
Joseph Hempen, John M. Koehler, and David P . Oetting; NationsBank Purchaser
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Class : Kevin Kloster; BankAmerica Holder Class : Selma Kaiser and Walter E . Ryan,
Jr.; BankAmerica Purchaser Class : Brian Markee .
PARTIAL LIFTING OF DISCOVERY STAY,STIPULATED PROTECTIVE ORDER AND
AGREED-UPON PRODUCTION
25. On June 21, 1999, plaintiffs filed a Motion to Lift Stay of Discovery and
informed the Court that the parties in the purported class actions in California state
court were jointly filing a proposed discovery coordination order and would seek relief
from the discovery stay. Plaintiffs herein pointed out that a discovery order issued in
California would permit the state-court plaintiffs to receive many of the core
documents in the case and to continue with additional discovery, while freezing out the
federal plaintiffs who were under the PSLRA automatic discovery stay . Plaintiffs
informed the Court that research revealed only two reported cases that analyzed the
issue of when the automatic stay on discovery may be lifted by the Court to "prevent
undue prejudice" during the pendency of a motion to dismiss . Plaintiffs also reminded
the Court that, as reflected by the Court's prior order appointing lead plaintiffs and by
the letters requested by the Court about the number of shares represented by each law
firm, plaintiffs in the federal action had a financial interest in the outcome of this cas e
that so greatly outweighed the financial interest represented by the state-court
plaintiffs that they would be unfairly prejudiced if they were prevented from engaging
in discovery. On June 25, 1999, defendants filed their Memorandum in Opposition to
Plaintiffs' Motion to Lift Stay of Discovery, and on July 19, 1999, the Court issued its
Order granting plaintiffs' Motion to Lift Stay of Discovery .
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26. Defendants insisted on maintaining the confidentiality of information
disclosed in discovery . The competing concerns of defendants protecting the
confidentiality of information about the bank and plaintiffs' ability to obtain exper t
advice and seek testimony concerning this information required negotiations betwee n
the parties over the scope of a protective order. On November 8, 1999, followin g
considerable negotiations between the parties, the Court issued a Stipulated Protective
Order.
27 . In October, 1999, defendants produced ten boxes containin g
approximately 30, 000 pages of documents . These documents were produced in respons e
to an agreed upon list of discovery requests between the bank and the state-cour t
plaintiffs . We began reviewing and analyzing this initial production and familiarize d
ourselves with the names of numerous individuals at Old BankAmerica and D .E .
Shaw who were involved in managing the D .E. Shaw alliance . It soon became apparen t
that the D.E. Shaw losses were a topic of considerable discussion and concern amon g
senior management at Old BankAmerica before the merger. Moreover, the document s
tended to also establish that NationsBank management was aware before the merge r
of the problems Old BankAmerica was facing with D .E. Shaw.
INJUNCTION BARRING PROSECUTIO NOF PURPORTED STATE COURT CLASS ACTIONS
28. As parallel litigation against BankAmerica began to unfold in federal an d
state courts, it became obvious that the Desmond plaintiffs and Milberg Weiss were
trying to finagle a quick and cheap settlement with the bank on behalf of a nationwide
class without ever obtaining class certification . In response, we spent a considerable
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amount of time analyzing how to protect the rights of the federal plaintiffs to contro l
this important litigation against BankAmerica . The time spent dealing with this issu e
was time we could not spend developing and efficiently pursuing the action before this
Court. On November 22, 1999, in light of the activities in Desmond vs. BankAmerica
Corporation, the NationsBank plaintiffs filed a Motion and Brief for an Injunctio n
Barring Prosecution of State Court Actions . '
29. In support of the motion for an injunction, we emphasized that permitting
the California state court class actions to proceed concurrently with the federal clas s
action would interfere with the federal lead plaintiffs' control of the case contrary to
Congress' direction in the PSLRA that security class actions are to be controlled by the
plaintiffs with the largest financial interest in the case, thus preventing the PSLRA
from being given its intended scope. We also detailed the activities in California tha t
threatened to undermine plaintiffs' orderly prosecution of the federal case .
Additionally, we showed that the requested injunction was authorized by the All-Writs
Act and was not prohibited by the Anti-Injunction Act in that the PSLRA provide s
express authorization to stay state court proceedings when the requested injunctio n
was necessary both in aid of the Court's jurisdiction and to protect or effectuate it s
judgments . Finally, we showed that the Eighth Circuit's holding in In re Federal
Skywalk Cases, 680 F.2d 1175 (8th Cir . 1982), would not preclude or adversely affec t
the injunction being sought .
'In or around November, 1999, plaintiffs learned that the court in Giorgetti hadgranted defendants' demurrer, holding that the petition filed on behalf of a class of OldBankAmerica shareholders failed to state a cognizable claim for relief .
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30. On December 13, 1999, the Desmond plaintiffs filed their Response to our
Motion. A declaration, with multiple exhibits, of Reed Kathrein, counsel for the
Desmond plaintiffs accompanied the Response . Also on that date, the plaintiffs i n
Giorgetti specially appeared to file their Memorandum of Points and Authorities i n
Opposition to the Motion .
31 . On April 10, 2000, we filed a Request for Oral Argument on the motio n
and a Brief in Support as well as a Reply Brief in Support of the Motion . We advised
the Court that recent events in the California state court had made it clear that a n
injunction must be issued without delay . A few days earlier, Milberg Weiss, counsel t o
the Desmond plaintiffs, and BankAmerica had sought and obtained approval from th e
California court to delay consideration of class certification and to enter into mediation .
We pointed out that the purported mediation was a further attempt to undermine th e
proceedings in federal court where classes had already been certified and discovery had
begun. On April 13, 2000, the BankAmerica plaintiffs filed a Notice to join the Motion
for an Injunction.
32 . On April 18, 2000, the Court denied the Request for Oral Argument, an d
on April 25, 2000, the day before mediation was set to begin in California, issued it s
Order granting the substantive parts of plaintiffs' motion .
33. On April 28, 2000, the Desmond plaintiffs filed a Notice of Appeal, and o n
May 19, 2000, they filed a Motion to Stay, Suspend or Modify Orders of April 25 an d
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May 9, 2000.2 Their motion was accompanied by a 7 page declaration of Bjorn Steinholt
in Support of Motion to Stay with exhibits and a three volume Declaration of Chri s
Seefer , attorney for the Desmond plaintiffs . On May 31, 2000, the Court denied the
motion to stay .
34. On May 25, 2000, the Desmond appellants filed with the Eighth Circuit
an Emergency Motion for Expedited Appeal . On June 5, 2000, the NationsBank an d
BankAmerica Classes filed their Opposition to the Desmond appellants' Motion ;
meanwhile, the defendants filed Suggestions in Support of the Desmond appellants '
Motion. On June 8, 2000, the Desmond appellants filed with the Eighth Circuit thei r
Motion to Stay, Suspend or Modify Orders of April 25 and May 9, 2000, and on Jun e
26, 2000, the Eighth Circuit denied this Motion to Stay .
35 . On July 3, 2000, the Desmond appellants filed their Opening Brief .
36. On August 22, 2000, the NationsBank Classes filed their Appellees' Brief.
We pointed out that the factual statements in the Desmond plaintiffs' brief wer e
inaccurate, not factual in nature, relied on declarations not part of the record o n
appeal, were immaterial to the issues before the Court, and, further, that the Desmon d
plaintiffs in their brief failed to include the factual bases for the injunction. We also
presented reasons why the Court was correct in issuing the injunction . These included
showing that the All-Writs Act authorizes the injunction of persons not party to the
pending action if they are in a position to frustrate the implementation of a court orde r
or the administration of justice and that because the California group was assertin g
'On May 9, 2000, the Court , as discussed more fully below, ordered publicationof the Notice to class members of the pendency of the class action .
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control over the litigation contrary to the rights of the Lead Plaintiffs to control the
litigation, and that the PSLRA expressly authorizes the enjoining of state court
proceedings under the first exception in the Anti-Injunction Act . We argued that the
injunction was expressly authorized because the federal statutory rights granted the
lead plaintiff under the PSLRA can only be given their intended meaning if a federal
court has the power to prevent others from seizing control of the litigation from the
federal lead plaintiffs through a competing state court class action. Further we showed
that the injunction was also authorized by the third exception to the Anti-Injunction
Act to protect the district court's order appointing Lead Plaintiffs, and that this Cour t
properly exercised its discretion in determining an injunction was needed to protect the
rights of the Lead Plaintiffs and the interests of the classes certified by the district
court. We also pointed out that the Court was correct in entering its May 9 class notice
order because the notice satisfied all legal requirements even though the notice failed
to recite the California group's contentions about purported differences in the damages
potentially available in the different forums. On September 8, 2000, appellants filed
a Reply.
37 . On February 12, 2001, the Eighth Circuit heard oral arguments, and on
August 24, 2001, issued its Opinion affirming the Court's issuance of an injunction . On
November 8, 2001, the Desmond appellants' motion for rehearing, which the
NationsBank Classes opposed and briefed in opposition, was denied .
38. On January 24, 2002, the Desmond appellants filed with the United
States Supreme Court their Petition for Writ of Certiorari and Brief in Support .
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39. On February 25, 2002, we served a Brief in Opposition to the Petition for
Certiorari . We pointed out that the Eighth Circuit's decision is the only decision by an y
Court of Appeals considering whether the lead plaintiff provisions of the PSLRA
qualify as an "expressly authorized" exception to the Anti-Injunction Act, and thus, th e
decision of the Court of Appeals for the Eighth Circuit was not in conflict with th e
decision of another appellate court . The NationsBank Classes showed that even in the
event of a conflict, the injunction was issued under a statutory framework which n o
longer exists, and that a decision by the Supreme Court would affect, at most, th e
parties to this case and no one else . Finally, we argued that even a decision by the
court would not affect the parties to this case because the federal class actions ha d
been settled, subject to final court approval, and the injunction could nonetheless be
sustained on the uncontroversial grounds of protecting the settlement . On March 8 ,
2002, the Desmond appellants filed a Reply .
40 . On April 1, 2002, the Supreme Court denied the Petition for Certiorari .
This ruling brought an end to an issue that required a considerable amount of our time
in this case. Nevertheless, by obtaining an injunction that was upheld on appeal, we
eliminated the significant danger of a cheap settlement .
CLASS NOTICES
41. Plaintiffs published two class notices in this case . The first, a notice of
pendency dated May 9, 2000, advised class members of the lawsuit, defined the variou s
classes, and advised potential class member of their rights, including the right t o
exclude themselves from the class . The second, a notice of settlement dated April 5 ,
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2002, advised class members of the proposed settlement and hearing to consider fina l
approval of the settlement and allocation as well as applications for attorneys' fees an d
expenses .
42. On April 6, 2000, we filed a Motion for Entry of Order Authorizin g
Plaintiffs to Publish Attached Proposed Notice . On April 18, 2000, the Court issued it s
Order to publish the initial class notice .
43. On May 9, 2000, plaintiffs fled a Motion to Amend Initial Class Notice .
Plaintiffs informed the Court of their desire to amend the notice to reflect the Court' s
recent granting in part of the NationsBank plaintiffs' motion to stay State Court
proceedings and to reflect the current status of the State Court proceedings, including
the Milberg Weiss notice of appeal . On the day this motion was filed, the Court granted
plaintiffs leave to amend the notice and issued its Order to publish the amended initia l
class notice .
44. On March 8, 2002, after the parties reached a settlement, as discusse d
more fully below, plaintiffs filed a motion to mail and publish a class notice o f
settlement . This notice was later amended and on April 5, 2002, the Court issued its
Order to mail and publish the class notice of settlement .
45 . Since the Notice of Settlement was published, we have responded t o
numerous shareholders calling with questions about the settlement and how to
complete the claim form .
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THIRD PARTY DISCOVERY
46 . One of the significant issues in this case is the undisclosed losses arisin g
out of Old BankAmerica's strategic alliance with D.E. Shaw. The dramatic drop in the
market price of BankAmerica's stock when news of the losses was announced i n
October, 1998 indicated that these losses were a surprise to the market . In support of
our case, it was important to obtain discovery on this issue from market analysts and
investment bankers as well as D .E. Shaw for this and other issues. Any disclosures by
Old BankAmerica or NationsBank about D.E. Shaw to their accountants or financia l
advisors in connection with the merger was also an important area of discovery.
47. In October 1999, we began third party discovery as permitted by the
Court's Initial Case Management Order issued May 3, 1999 . On October 18, 1999, we
began issuing subpoenas duces tecum to D.E. Shaw, the investment advisors and
accountants of NationsBank and Old BankAmerica, and numerous investment broker s
and brokerage firms believed to have analysts who followed the stock of both banks as
well as BankAmerica . A list of the third parties who were served with a subpoen a
duces tecum is set forth below :
CompanyArgus ResearchArthur AndersenBarclays BankBear StearnsCIBC OppenheimerD .E . ShawDonaldson Lufkin & JenretteErnst & YoungFirst BostonFirst UnionFox-Pitt Kelton
Subpoena Issued05/01/0004/28/0012/20/0005/01/00, 12/20/0004/28/0010/18/9905/01/0010/18/9905/01/0004/28/0005/01/00
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Gen Re Corp .Goldman SachsJ .P . MorganKPMG, LLPLehman Brother sKeefe, Bruyette & WoodsMerrill LynchMorgan Stanley Dean WitterPaineWebberPricewaterhouse CoopersPrudential SecuritiesRaymond James
12/20/0012/06/9905/01/00, 12/20/0006/19/0012/20/0005/01/0010/18/9904/28/00, 12/20/0004/28/0010/18/9904/28/0004/28/00
48 . The information obtained from these sources was critical to development ,
prosecution and ultimate resolution of this litigation . For example, virtually all th e
analyst reports produced reflected a lack of knowledge about the true nature of th e
D .E . Shaw alliance and many of the reports reacted to the October disclosure of th e
D.E . Shaw losses with complete surprise . These documents supported plaintiffs '
allegation that defendants failed to disclose D .E . Shaw properly and refuted
defendants' claims, as well as testimony offered by their principal damage expert, tha t
the market was sufficiently aware of the D .E. Shaw losses . The financial analysis and
use of the price earnings ratio in a number of the analyst reports also supported our
theory of damages. Documents from D.E. Shaw provided a wealth of information an d
when compared with documents produced by Old BankAmerica's accountants, reveale d
important information about the losses disclosed in October, 1998 .
49. We had to expend considerable effort obtaining these documents . Almost
without exception, the third parties or their counsel contacted us seeking to negotiat e
the scope of the document production . For some, particularly D .E . Shaw, we had to
negotiate extensively on the scope of production . Once these negotiations were
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concluded and after the Court denied in large part defendants' motion to dismiss, thes e
third parties, in response to the subpoenas, produced more than 75,000 pages o f
documents . Although most of the third parties produced their responsive document s
and materials by mail, plaintiffs' counsel in March and April, 2000 spent several day s
at the offices of counsel for D .E . Shaw in New York to review and select documents fo r
copying. In addition to these documents, counsel for D .E. Shaw produced several
thousand documents on two CD-ROM disks, and they delivered two privilege and
redaction logs totaling 98 pages which we reviewed and discussed with opposin g
counsel. Discussions and negotiations with counsel for third parties, primarily D .E .
Shaw, regarding production of documents continued through May, 2001 . This discovery
was obtained through considerable effort and it produced a great deal of helpfu l
information. Many documents were critical in helping to establish several allegation s
in the Amended Complaint .
50 . It was important for us to establish what the individual defendants and
both banks knew of the problems and losses in the D .E. Shaw alliance before th e
merger . Although many of the documents defendants produced were helpful on this
subject, we looked for sources of information outside the bank . In June 2000, we issued
a subpoena duces tecum to Ross Yockey, author of a biography of defendant Hug h
McColl entitled McColl: The Man with America's Money published shortly after the
1998 merger. We primarily sought documents reflecting any conversations between Mr .
Yockey and Mr . McColl relating to the merger or D .E . Shaw. On July 6, 2000, counsel
for Mr. Yockey filed a Rule 45 (c) Objection to the subpoena in the United States
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District Court for the Western District of North Carolina . Over the next several
months , we tried to negotiate with Mr. Yockey's lawyer to resolve the objections and
negotiate an agreement on document production but were unsuccessful .
51 . We retained local counsel in Charlotte, North Carolina and on April 19 ,
2001 filed a Motion and Brief to Compel Compliance with the Subpoena. We showed
the Court that Mr. Yockey's First Amendment objection should not be sustained
because he did not have journalist status in connection with the McColl biography an d
because plaintiffs had a compelling interest in obtaining the subpoenaed material s
which outweighed any limited journalist privilege he may have had . We also
demonstrated that the objections asserted under North Carolina law should not b e
sustained. On May 1, 2001, Mr. Yockey filed his Memorandum of Law in Opposition
to the Motion, and we filed a Reply .
52. On May 9, 2001, the Hon . Graham Mullen, Chief Judge for the Wester n
District of North Carolina, heard oral arguments on the Motion to Compel . Judge
Mullen granted our motion, in part , and ordered Mr. Yockey to produce those portion s
of his interview notes and tapes that dealt specifically with D .E. Shaw. Through this
discovery effort we obtained previously undisclosed details about Mr. McColl' s
knowledge of and reactions to the D .E. Shaw fiasco .
53. On September 26, 2001, we provided the Court with a copy of Judg e
Mullen's Order issued May 9, 2001 and a transcript of the hearing on the Motion t o
Compel .
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DEPOSITIONS
54 . Extensive depositions of defendants and BankAmerica witnesses, thir d
party witnesses and expert witnesses were conducted in this action throughout the
country. We conducted and defended 79 separate videotaped depositions of thes e
witnesses, many of which were multi-day depositions . This case presented extremely
sophisticated factual and legal issues and preparing for the depositions required a n
extensive review and knowledge of the documents and the case overall . Thorough
preparation for the depositions was also important particularly because many of th e
BankAmerica and third party witnesses might not be available in person for trial . In
addition to reviewing and analyzing the documents that had been produced , we also
consulted extensively with our experts who also spent considerable time reviewing th e
documents and information produced by defendants and third parties . They helped to
identify specific areas of inquiry and need for information that would allow them t o
offer an informed opinion . Most of the depositions revealed a tremendous amount o f
useful information and helped clarify and explain information in documents produce d
by defendants . The witnesses were well prepared, many of the depositions were littere d
with objections, and extracting useful testimony required skill .
55. The depositions we took of market analysts, counterparties to transaction s
made in connection with the D .E . Shaw alliance, the investment bankers an d
accountants for both banks, and individuals at D .E . Shaw resulted in the discovery of
important information that supported the NationsBank plaintiffs' allegations an d
assisted plaintiffs in responding to defendants' motion for summary judgment .
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56 . We also deposed the seven experts designated by defendants, the two
experts designated by the BankAmerica plaintiffs and the expert designated by th e
FSBA.3 These experts, in addition to their reports, produced thousands of pages o f
documents that they reviewed or were offering in support of their opinions . These
depositions, especially those of defendants' experts, required considerable preparation
and skill, and we consulted extensively with each of our experts in order to prepare
adequately for these depositions. A list of the depositions taken on behalf of the
NationsBank plaintiffs is set forth below :
Defendant and BankAmerica Witnesse s
DeponentJoel BeanPeter BedfordB .A. BridgewaterKathleen BurkeNeil CottyDavid CoulterAndrew CraigNancy CrooksGreg CurlJanice Decker
Alvaro DeMolina
Frank GentryJames HanceJohn HigginsCarl HolmanW.W. "Hootie" JohnsonKenneth LewisGene LockhartRobert McBain
Date(s) Location03/14/01 San Francisc o02/14/01 San Francisc o04/12/01 St. Louis01/19/01 San Francisc o05/02/01 New York05/11/01, 05/12/01 Los Angeles11/15/00 St. Louis05/10/01 San Francisc o03/28/01 Charlotte11/06/01, 11/07/01 New York and12/19/01, 12/20/01 San Francisco02/07/01, 02/08/01 Charlotte and04/30/01 New York03/27/01 Charlotte03/07/01, 03/08/01, 03/09/01 Charlotte04/17/01 San Francisco11/10/00 St. Louis05/15/01 Columbia, SC04/04/01 New York12/18/00 Purchase, NY04/05/01, 04/06/01 New York
30n October 23, 2001, in response to defendants' discovery requests, the FSBAincluded in its expert designation "all experts designated by the NationsBank Class asits expert witnesses ."
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Hugh McColl 04/12/01, 04/13/01 CharlotteJack Meyers 12/14/01, 12/15/01 Los AngelesMichael Murray 04/26/01, 04/27/01 San Francisco
Nigel Murtagh 06/07/01 San FranciscoMarc Oken 03/14/01 CharlotteMichael O'Neill 05/07/01, 05/08/01 San FranciscoBarry Pyle 04/24/01 San FranciscoRobert Qutub 05/03/01, 01/17/02 New YorkSanford Robertson 05/18/01 San FranciscoJames Roethe 04/19/01 New YorkRichard Rosenberg 02/13/01, 05/02/01 San FranciscoFrank Ryan 05/08/01 San FranciscoNikolai Safavi 04/17/01 San FranciscoJohn Shannahan 05/04/01 San FranciscoRandall Shearer 03/01/01, Charlotte and
05/01/01 New YorkCheryl Sorokin 02/22/01 San FranciscoMartin Stein 10/18/00 San FranciscoLewis "Woody" Teel 11/16/01, 11/17/01 San FranciscoBryan Thomas 11/02/01, 11/03/01 New YorkCarmen Tilgner 10/26/01, 10/27/01, New York
11/21/02, 11/22/01, 12/22/0 1Joseph Vaez 04/19/01 San FranciscoWilliam Vandiver 03/29/01, 03/30/01 CharlotteTerrence Watson 03/22/01, 03/23/01 San Francisco
Third Party Witnesse s
Deponent Date(s) LocationMichael Barry 04/25/01, 05/15/01 New YorkRichard Bove 05/07/01 St. Petersburg, FLMichael Coye 04/19/01 New YorkSally Pope Davis 05/23/01 New YorkAnne Dinning 01/30/01 New YorkGreg Farish 05/08/01 BostonLucinda Gargano 05/03/01 New YorkDavid Hilder 03/30/01 New YorkMelissa Kemlitz 04/26/01, 04/27/01, 04/30/01 New YorkRichard Kleinberg 02/27/01, 04/24/01 New York
William Koster 04/17/01 New YorkJudah Kraushaar 06/06/01 New YorkDenis LaPlante 04/27/01 New YorkMichael Leibrock 05/09/01 New YorkDayton Lierley 05/10/01 New York
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Michael Lloyd 05/02/01 San FranciscoAnn Loeb 05/02/01 New YorkJohn Mahoney 04/27/01 New YorkThomas McCandless 04/10/01 New YorkMelissa Moore 05/15/01 CharlotteJoseph Morford 03/20/01 San FranciscoEdward Najarian 06/20/01 New YorkMikal Schank 05/03/01 San FranciscoDavid Shaw 04/19/01, 04/20/01 New YorkSteven Sonnick 05/08/01 New YorkStuart Steckler 02/06/01, 02/09/01, 03/06/01 New York
06/22/01Max Stone 01/09/01, 01/10/01 New York
Expert Witnesses
Deponent Date(s) LocationJohn Dubinsky 09/11/01, 09/12/01, 09/14/01 St. LouisJoseph Fitzgerald 09/04/01, 09/05/01 New YorkKarin French 09/06/01, 09/07/01, 09/10/01 New YorkChristopher James 10/01/01, 10/02/01, 10/03/01 New York
10/29/01, 10/30/01, 11/08/01 ,12/03/0 1
Paul Marcus 10/12/01, 10/13/01, 11/12/01 Boston11/13/01, 12/06/0 1
Alan Miller 07/26/01, 07/27/01, 12/06/01 New YorkWilber Ross 07/26/01, 07/27/01, 12/03/01 New YorkAndrew Senchak 09/10/01, 10/29/01 New YorkRichard Singer 09/06/01, 09/07/01 New YorkRichard Wines 09/19/01, 09/20/01 New York
09/24/01, 09/25/0 1
57. In addition to taking the deposition of these 79 witnesses, NationsBank
plaintiffs' counsel also defended 59 named plaintiffs in the NationsBank Classes a t
their videotaped depositions taken by defendants . These depositions were held in St .
Louis and throughout the country as listed below :
Depositions of Plaintiffs
Deponent Date(s) LocationPhyllis Belman 05/03/01 W. Palm Beach, FL
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Herbert Braker 05/07/01 PhiladelphiaJohn Brouk 02/27/01 St. LouisCordis Butts 03/27/01 St. LouisShirley Chess 05/07/01 PhiladelphiaJoe Clooney 04/12/01 Naples, FLShirley Clooney 04/12/01 Naples, FLEarl Gates, Jr . 02/26/01 St. LouisEarl Gates, Sr . 04/09/01 St. LouisGreg Gates 04/30/01 St . LouisJan Gates 04/30/01 St . LouisNellie Gates 04/09/01 St. LouisRichard Goldman 04/18/01 New YorkJoan Hamilton 04/16/01 Daytona Beach, FLRobert Hamilton 04/16/01 Daytona Beach, FLLewis Hardy 05/11/01 St. LouisJoseph Hempen 04/20/99 St. LouisRobert Hepworth 06/08/01 PhiladelphiaEugene Howard 04/02/01 MiamiKathryn Johnston 04/19/01 New YorkEdwin Kadlec 04/20/01 St . LouisGeorge Kloster 04/04/01 St. LouisKevin Kloster 04/28/99, 04/23/01 St. LouisPatricia Kloster 04/04/01 St. LouisCarol Klostermann 03/02/01 St . LouisRichard Kostermann 03/02/01 St. LouisJohn Koehler 06/21/99, 05/02/01 DallasJerry Krim 05/15/01 Washington, D CCarol Lawson 05/10/01 New YorkDavid B. Lichtenstein 03/26/01 St. LouisDouglas Ludeman 04/13/01 W. Palm Beach, FLChristopher Masselink 03/01/01 St. LouisJoan Masselink 03/01/01 St. LouisCorinne McClure 03/13/01 St. LouisGeorge McClure 03/13/01 St. LouisJoane Minnihan 03/22/01 St. LouisKevin Minnihan 03/22/01 St. LouisCarl Mondello 04/23/01 New YorkBruce Montague 05/09/01 New YorkRobert Moynihan 03/12/01 St. LouisElizabeth Mueller 05/01/01 St. LouisFred Neustadt 03/14/01 St. LouisMerle Neustadt 03/14/01 St. LouisDavid P . Oetting 04/16/99, 04/03/01 St. LouisCarol Parkin 04/17/01 St. Louis
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Robert Parkin 04/17/01 St. LouisSylvia Piven 04/26/01 BaltimoreAnthony Ribaudo 04/09/01 St. LouisEllen Ribaudo 04/09/01 St . LouisJohn Roob 03/29/01 MiamiMargaret Rosenthal 04/30/01 St. LouisRobert Rosenthal 04/30/01 St . LouisWalter Ryan 04/15/99 PhoenixGene Schneider 03/06/01 St . LouisElise Silverstein 03/07/01 St . LouisTerry Silverstein 03/07/01 St . LouisT. Robert Verkouteren 04/26/01 BaltimorePamela Wotton 04/10/01 St . LouisMurray Zucker 05/10/01 New York
58. We learned through the course of discovery that the SEC had depose d
several Old BankAmerica and D.E. Shaw employees in connection with it s
investigation of BankAmerica and the D .E. Shaw situation . After much wrangling, w e
obtained copies of these deposition transcripts and exhibits from defendants' counse l
and counsel for D .E . Shaw and Ernst & Young . We thoroughly reviewed and analyze d
the testimony these witnesses provided before the SEC and it proved extremely useful
in understanding some of the liability issues and in preparing to depose some of thes e
witnesses . The following is a list of the SEC deposition transcripts obtained an d
analyzed by counsel for the NationsBank plaintiffs :
SEC Deposition Transcript s
DeponentJohn HigginsRichard KleinbergChristine LarsonDayton LierleyKathleen MaloneyJames RoetheRandy ShearerMax Stone
Date(s)07/0/0012/05/00, 12/06/0 005/24/0004/18/00, 07/26/0004/07/0006/21/0006/14/00, 06/15/0012/19/00, 12/20/00
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Thomas Taylor 10/05/00, 10/06/00
NATIONSBANK PLAINTIFFS'WRITTEN DISCOVERY TO DEFENDANT S
59 . In January 2000, we began conducting written discovery directed t o
defendants. On January 8, 2000, plaintiffs served defendants with their Firs t
Interrogatories, First Request to Produce and First Request to Inspect . On March 16 ,
2000, defendants served their response to the NationsBank plaintiffs' First Request t o
Produce and First Request to Inspect . On May 24, 2000, defendants served their
responses and objections to NationsBank plaintiffs' First Set of Interrogatories .
60 . On April 19, 2000 , in a letter directed to defendants' counsel , we made a
supplemental document request . Additional document requests were sent to
defendants' counsel on August 5, 2000 and October 31, 2000 . In follow-up responses
to these requests, the NationsBank plaintiffs' counsel negotiated at length wit h
defendants' counsel on an appropriate scope of response and production schedule . O n
June 6-8, 2000, after we reached agreement with defendants' counsel, we visited the
offices of Wachtell Lipton and reviewed approximately 125 boxes of documents, alon g
with a computer data base containing additional documents, that BankAmerica ha d
produced to the SEC in connection with its investigation of the bank .
61 . On January 25, 2001, we served defendants with a Second Set o f
Interrogatories . Defendants served their responses and objections to this discovery o n
February 26, 2001, and additional responses and objections on April 30 and May 8 ,
2001 . On March 7, 2001, we served defendants with Third Interrogatories and Secon d
Request for Production of Documents . Defendants served their responses an d
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objections to the NationsBank plaintiffs' Second Interrogatories on April 20, 2001 an d
their additional responses and objections to those discovery requests, as well as thei r
responses and objections to the NationsBank plaintiffs' Third Interrogatories, on Apri l
30, 2001 . On May 8, 2001, defendants again served supplemental responses and
objections to the NationsBank plaintiffs' Second and Third Interrogatories .
62 . In total response to plaintiffs' discovery requests, defendants produce d
over one million pages of documents and we either selected for copying or receive d
approximately 300,000 pages of documents . Additional documents were produced b y
defendants on CD-ROM. These were reviewed, analyzed and utilized by plaintiffs '
counsel to optimum effect . Approximately 2,300 "key" documents were fed through a
scanner, checked, and indexed in-house by lead counsel . We also scanned all deposition
exhibits. Copies of the key document database and deposition exhibits, were provide d
to members of the litigation team, including expert witnesses and consultants . The
ability to search the electronic data base of these documents by key word increased ou r
efficiency tremendously. Our thorough review, analysis and knowledge of th e
documents and ability to access most of them with relative ease proved critical in many
ways to our prosecution of this action including the planning and preparing fo r
depositions and preparing motions and briefs in support as well as opposin g
defendants' motions .
NATIONSBANK PLAINTIFFS'MOTIONS TO COMPEL DISCOVER Y
63 . Not all of the discovery we obtained in this case was voluntarily provide d
in response to discovery requests . Several discovery items that proved important t o
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plaintiffs' case were obtained through motions to compel . On August 14, 2000, we filed
a joint motion to compel production of recorded conversations of certain Ol d
BankAmerica employees that the bank had identified as relating to D.E. Shaw.
Plaintiffs showed that the conversations between the Bank and D .E. Shaw were
essential to the preparation of their cases because information exchanged betwee n
these parties before the Merger was important to discovering the extent of the Bank' s
awareness of the problems at D .E . Shaw and its obligation to make the appropriate
disclosures. Plaintiffs also successfully rebutted BankAmerica's objection on the
grounds of work product . Defendants filed their Opposition to the motion on August 14 ,
2000. On September 28, 2000, following a hearing on September 12, 2000, the Court
issued its Order compelling defendants to produce the tapes requested . We spent a
considerable amount of time listening and analyzing these recordings for information
relevant to the issues in this case .
64. On February 20, 2001, we filed a Joint Motion to Compel Discovery of
Assertedly Privileged Documents . Before filing the motion, we spent a considerabl e
amount of time reviewing the defendants' description of privilege for hundreds o f
documents in the privilege log produced by defendants . After lengthy discussions with
defendants' counsel, we narrowed the debate to eleven documents which became the
subject of a motion to compel . We demonstrated that those documents that did not
contain a clear indication of an attorney client communication should be produced an d
certain documents which were privileged should nonetheless be produced under the
fraud exception and Garner exception to the attorney client privilege, as set out in
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Garner v. Wolfinbarger, 430 F .2d 1093,1103-04 (5th Cir . 1970) . Defendants filed thei r
Opposition to this motion to compel on March 9, 2001 . On April 11, 2001, after a
hearing on March 16, the Court issued its Order that the fraud exception applied under
the facts and ordered defendants to produce the eleven documents . On April 19, 2001 ,
the Court denied defendants' Motion to Stay the April 11 Order .
65. Defendants petitioned the Eighth Circuit for a writ of mandamus and, o n
October 25, 2001, the appellate court directed the Court to vacate and reconsider it s
April 11, 2001 Order. On November 7, 2001, the Court issued its Order vacating it s
earlier Order and requiring defendants to produce the eleven assertedly privilege d
documents under seal to the Court for in camera review. On or about November 9,
2001, defendants filed a Motion for Reconsideration or in the Alternative a Stay of th e
Court's Order of November 7, 2001 . The Court on November 14, 2001 granted the
motion for reconsideration and ordered plaintiffs to file a brief in further support o f
their Joint Motion to Compel Discovery of Assertedly Privileged Documents . In our
brief, we discussed the legal standard for an in camera review of assertedly privilege d
documents and showed that defendants had fraudulently failed to disclose the D .E .
Shaw losses and the nature of the Shaw Alliance . Plaintiffs also discussed in detail the
reasons why the documents should be produced for review under the crime fraud
exception to the attorney client privilege . Defendants also filed a further memorandum ,
and this issue was pending at the time the parties filed their proposed Joint
Stipulation of Settlement .
-30-
66. On February 20, 2001, we filed a motion to compel production of tw o
documents that Old BankAmerica provided to NationsBank during the 1998 merge r
due diligence related to the D.E. Shaw alliance . In response to defendants' assertion
that the documents were protected by the attorney client privilege, we showed that Old
BankAmerica waived that privilege when it disclosed the potentially privilege d
documents to NationsBank during merger due diligence . We also demonstrated that
the "common interest" exception to the waiver rule did not apply because it is limite d
in scope and does not extend to communications about a joint business strategy that
happens to include a concern about litigation . Finally, we established that the tw o
documents in question were not protected work product because they had not bee n
prepared in anticipation of litigation or for trial . On April 11, 2001, following a hearin g
on March 16, the Court granted the motion and ordered defendants to produce the tw o
documents.
FORENSIC COMPUTER DISCOVERY
67. On January 8, 2000, the NationsBank plaintiffs served defendants wit h
a request to inspect computer files of certain individual defendants and key individuals
at BankAmerica . To aid in this specialized discovery, we retained and consulted with
a leading computer forensics firm in Portland, Oregon . On March 16, 2000, defendants
served their response and objections to this discovery request. During the next severa l
months, counsel for the parties spent considerable time conferring on defendants'
objections to reach agreement on the appropriate scope of this discovery . Counsel also
participated in several conference calls, together with their computer consultants, to
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discuss the technical details of which computer files would be examined and how th e
examination would proceed . In April, 2001, the parties reached agreement on thes e
issues and the number of computers to be searched and on April 5, 2001 filed a join t
motion to appoint Ontrack International, Inc . an officer of the Court to conduct thi s
discovery . On April 11, 2001, the Court granted the motion. Ontrack completed it s
examination of the computers and was in the process of preparing its final report when
the parties filed their proposed Joint Stipulation of Settlement .
NATIONSBANK PLAINTIFFS' RESPONSESTO DEFENDANTS' WRITTEN DISCOVERY
68. Defendants served multiple discovery requests directed to all name d
plaintiffs in this lawsuit . On April 14, 1999, defendants served their First Request fo r
Inspection and/or Production of Documents directed to individuals proposed to b e
designated as lead plaintiffs. On October 19, 2000, defendants served their Secon d
Request for Inspection and/or Production of Documents Directed to A ll Named
Plaintiffs and First Interrogatories Directed to All Named Plaintiffs Individually .
69. We reviewed defendants' discovery requests and drafted approriat e
objections . Counsel also contacted each of the named plaintiffs and spent considerable
time assisting them with their document responses and interrogatory answers . The
following is a list of the responses by and on behalf of NationsBank plaintiffs t o
defendants' written discovery :
Response Date
Plaintiffs' Responses and Objections to Defendants' 05/14/99Request for Production of Document s
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Plaintiff's Joint Objections to Defendants' Second 11/17/00Request for Production of Documents
Plaintiffs' Joint Objections to Defendants' First Set of 11/17/00Interrogatories
NationsBank Plaintiffs' Joint Disclosure to Certain of 01/17/0 1Defendants' First Set of Interrogatories
Plaintiff Joseph Hemken's Response to Defendants' 01/16/0 1Interrogatories
Plaintiff Joseph Hemken's Response to Defendants' 01/16/01Second Request for Production
Plaintiff Margaret Rosenthal's Response to Defendants' 01/16/0 1First Interrogatorie s
Plaintiff Beverly Govreau's Response to Defendants' 01/22/0 1First Interrogatorie s
Plaintiff Elizabeth Mueller's Response to Defendants' 01/16/0 1First Interrogatorie s
Plaintiff Robert Hepworth's Objections & Responses to 01/16/0 1Defendants' First Interrogatories
Plaintiff John Michael Koehler's Response to 01/17/01Defendants' First Interrogatories and Supplemental 04/20/01Response
Plaintiff Robert Moynihan's Responses to Defendants' 01/13/0 1First Interrogatorie s
Plaintiffs Chris and Joan Masselink's Responses to 01/23/01Defendants' First Interrogatories
Plaintiff B . Eugene Schneider's Responses to 01/19/01Defendants' First Interrogatories
Plaintiffs Harold and Joyce Srencos' Responses to 01/190 1Defendants' First Interrogatorie s
Plaintiff David P . Oetting's Responses to Defendants' 01/17/01First Interrogatorie s
Plaintiff Terry and Elise Silversteins' Responses to 01/1901Defendants' First Interrogatories
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Plaintiffs Kevin and Joanne Minnihans' Responses to 01/1901Defendants' First Interrogatories
Plaintiff Walter Ryan's Response to Defendants' First 01/16/01Interrogatorie s
Plaintiff Murray Zucker's Response to Defendants' 01/17/01First Interrogatories and Supplemental Response 05/09/0 1
Plaintiffs Pamela and John Wootons' Responses to 01/19/0 1Defendants' First Interrogatorie s
Plaintiff David B. Lichtenstein's Responses to 01/18/0 1Defendants' First Interrogatories
Answers of Plaintiff Richard Klostermann to 01/16/0 1Defendants' First Interrogatories
Answers of Plaintiff Joseph Robert Clooney, Jr. to 01/12/01Defendants' First Interrogatories
Answers of Plaintiff Shirley Mae Clooney to Defendants' 01/12/01First Interrogatorie s
Answers of Plaintiff Cordis Ellis Butts to Defendants' 01/16/0 1First Interrogatories
Answers of Plaintiff George McClure to Defendants' 01/16/0 1First Interrogatorie s
Answers of Plaintiff Marion Butts to Defendants' First 01/16/0 1Interrogatories
Answers of Plaintiff Ellen Ribaudo, Trustee of the Ellen 01/16/0 1Ribaudo Rev. Living Trust, to Defendants' Firs tInterrogatories
Answers of Plaintiff Anthony Ribaudo, Trustee of the 01/16/01Anthony Ribaudo Rev . Living Trust, to Defendants'First Interrogatorie s
Answers of Plaintiff Ellen Ribaudo to Defendants' First 01/16/01Interrogatories
Answers of Plaintiff Anthony Ribaudo to Defendants' 01/16/0 1First Interrogatorie s
Answers of Plaintiff Carol Klostermann to Defendants' 01/16/0 1First Interrogatories
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Answers of Plaintiff Earl Gates, Trustee of the Thomas 12/28/00Lee Parkin Trust, to Defendants' First Interrogatories 02/23/01and Answers of Earl Gates, Jr . as the correct Truste e
Answers of Plaintiff Earl Gates, Trustee of the Jacob P . 12/28/00Gates Trust, to Defendants' First Interrogatories and 02/23/01Answers of Earl Gates, Jr . as the correct Truste e
Answers of Plaintiff Earl Gates, Trustee of the Lena 12/28/00Danielle Gates Trust, to Defendants' First 02/23/01Interrogatories and Answers of Earl Gates, Jr . as thecorrect Truste e
Answers of Plaintiff Earl Gates, Trustee of the Sarah 12/28/00Colleen Parkin Trust, to Defendants' First 02/23/01Interrogatories and Answers of Earl Gates, Jr . as thecorrect Trustee
Answers of Plaintiff Earl Gates, Trustee of the Megan 12/28/00Lyn Gates Trust, to Defendants' First Interrogatories 02/23/01and Answers of Earl Gates, Jr . as the correct Truste e
Answers of Plaintiff Earl Gates, Trustee of the Robert 12/28/00Lee Parkin, III Trust . to Defendants' First 02/23/01Interrogatories and Answers of Earl Gates, Jr ., as thecorrect Trustee
Answers of Plaintiff Earl Gates, Trustee of the Gregory 12/28/00Scott Gates Trust, to Defendants' First Interrogatories 02/23/01and Answers of Earl Gates, Jr ., as the correct Trustee
Answers of Plaintiff Earl Gates, Trustee of the Brian 12/28/00David Mazur Trust, to Defendants' First Interrogatories 02/23/01and Answers of Earl Gates, Jr., as the correct Trustee
Answers of Plaintiff Earl Gates, Trustee of the Michael 12/28/00Kevin Mazur Trust, to Defendants' First Interrogatories 02/23/0 1and Answers of Earl Gates, Jr ., as the correct Trustee
Answers of Plaintiff Earl Gates, Trustee of the Christi 12/28/00Lyn Gates Trust, to Defendants' First Interrogatories 02/23/0 1and Answers of Earl Gates, Jr . as the correct Truste e
Answers of Plaintiff Earl Gates, Trustee of the Earl 12/28/00Joseph Gates, III Trust, to Defendants' First 02/23/01Interrogatories and Answers of Gregory S . Gates as thecorrect Trustee
-35-
Answers of Plaintiff Earl Gates, Trustee of the 12/28/00Courtney Lee Gates Trust, to Defendants' First 02/23/01Interrogatories and Answers of Earl Gates, Jr . as thecorrect Truste e
Answers of Plaintiff Earl J . Gates, Jr . to Defendants' 02/23/0 1First Interrogatorie s
Answers of Plaintiff Janis A. Gates to Defendants' First 02/23/01Interrogatories
Supplemental Answers of Plaintiff Earl Gates to 02/26/0 1Defendants' First Interrogatories (re : his answering asTrustee of the Trusts when Earl Gates, Jr . and GregoryGates are correct Trustees )
Answers of Plaintiff Kevin Kloster, Custodian for 12/28/00Katherine E . Kloster, to Defendants' Firs tInterrogatories
Answers of Plaintiff Kevin Kloster, Custodian for Kyle 12/28/00A. Kloster, to Defendants' First Interrogatories
Answers of Plaintiff Kevin Kloster to Defendants' First 12/28/00Interrogatories
Answers of Plaintiff Kevin Kloster, Custodian for Kevin 12/28/00W. Kloster, to Defendants' First Interrogatorie s
Answers of Plaintiff Merle Neustadt to Defendants' 01/17/01First Interrogatorie s
Answers of Plaintiff Fred Neustadt to Defendants' First 01/17/0 1Interrogatories
Answers of Plaintiff Edwin Kadlec to Defendants' First 01/17/0 1Interrogatories
Answers of Plaintiff Earl Gates, Trustee of the 12/28/00Revocable Living Trust of Earl Gates, to Defendants'First Interrogatorie s
Plaintiff Herbert Braker's Joint Objections and Answers 01/23/0 1to Defendants' First Interrogatorie s
Plaintiff Shirley Chess' Joint Objections and Answers to 01/23/01Defendants' First Interrogatories
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Answers of Plaintiff Robert Hamilton to Defendants' 01/22/01First Interrogatorie s
Plaintiff Kathryn Johnston's Responses and Objections 01/23/01to Defendants' First Interrogatorie s
Answers of Plaintiff John Brouk to Defendants' First 01/19/01Interrogatories
Answers of Plaintiff Joan Hamilton to Defendants' First 01/22/01Interrogatories
Plaintiff Jerry Krim's Answers and Objections to 01/0 1Defendants' First Interrogatories
Plaintiff Douglas Ludeman's Response to Defendant's 02/22/01First Set of Interrogatorie s
Plaintiff Phyllis Belman's Objections to Defendants' 02/08/01Second Request for Production of Documents
Plaintiff Phyllis Belman's Objections to Defendants' 02/08/0 1First Set of Interrogatorie s
Plaintiff Carl Mondello's Answers and Objections to 02/0 1Defendants' First Set of Interrogatorie s
Plaintiff John Roob's Responses to Defendants' First Set 02/01of Interrogatories
Plaintiff John Roob's Responses to Defendants' Second 02/01Request for Production of Document s
Plaintiff Carol Lawson's Responses and Objections to 01/31/01Defendants' First Set of Interrogatories
Plaintiff Carol Lawson's Responses and Objections to 01/31/01Defendants' Second Request for Production o fDocuments
Plaintiff Richard Goldman's Response to Defendants' 02/01First Set of Interrogatorie s
Plaintiff Brian Butler Trust's Responses to Defendants' 01/30/01Second Request for Production of Documents
Plaintiff Brian Butler Trust's Response to Defendants' 01/30/01First Set of Interrogatories
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Plaintiff Sylvia Piven's Responses to Defendants' 01/30/01Second Request for Production of Documents
Plaintiff Sylvia Piven's Response to Defendants' First 01/30/0 1Set of Interrogatories
Plaintiff Eugene J . Howard's Responses to Defendants' 01/30/0 1Second Request for Production of Document
Plaintiff Eugene J. Howard's Response to Defendants' 01/30/0 1First Set of Interrogatorie s
Plaintiff William Summer's Answers to Defendants' 01/12/0 1First Interrogatorie s
Non-Lead Plaintiff Bruce Montague's Objections and 02/16/01Responses to Defendants' First Set of Interrogatorie s
Plaintiff Walter E. Ryan Jr .'s Response to Defendants' 02/20/0 1First Set of Interrogatorie s
Answers of Plaintiff Patricia Kloster to Defendants' 03/09/0 1First Interrogatories and Supplemental Answers 03/27/0 1
Answers of Plaintiff George Kloster to Defendants' First 03/09/0 1Interrogatories
Answers of Plaintiff Greg Gates to Defendants' First 03/09/01Interrogatories
Answers of Plaintiff Corinne McClure to Defendants' 03/09/01First Interrogatorie s
Answers of Plaintiff Corinne McClure, Co-Trustee 03/09/01under the Will of Ralph Emmendorfer, to Defendants 'First Interrogatorie s
Answers of Plaintiff Robert L. Parkin to Defendants' 03/14/0 1First Interrogatorie s
Answers of Plaintiff Carol G . Parkin to Defendants' 03/14/0 1First Interrogatorie s
Answers of Plaintiff Greg S . Gates and Janis A. Gates 03/16/01as Joint Tenants to Defendants' First Interrogatorie s
Answers of Nell Gates to Defendants' First 03/27/01Interrogatories
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Answers of Plaintiff Daniel Walden to Defendants' First 03/27/0 1Interrogatories
Answers of Plaintiff Robert Hamilton to Defendants' 04/05/0 1Second Request for Production
Answers of Plaintiff Janis Gates to Defendants' Second 04/05/0 1Request for Production
Answer of Plaintiff Gregory Gates to Defendants' 04/05/0 1Second Request for Production
Answers of Plaintiff Joan Hamilton to Defendants' 04/05/01Second Request for Production
Answers of Plaintiff George Kloster to Defendants' 04/05/01Second Request for Production
Answers of Plaintiff Kevin Kloster to Defendants' 04/05/01Second Request for Production
Answers of Plaintiff Shirley Gates Walden to 04/05/0 1Defendants' First Interrogatorie s
Answers of Plaintiff Lewis Hardy to Defendants' First 04/05/0 1Interrogatories
Responses and Objections of Plaintiff T . Robert 04/20/0 1Verkouteren, Trustee, to Defendants' Firs tInterrogatories
Answers of Plaintiff Ellen Ribaudo to Defendants' 04/20/0 1Second Request for Production
Answers of Plaintiff Anthony M. Ribaudo, Trustee of 04/20/01Anthony Ribaudo Trust, to Defendants' Second Reques tfor Production
Answer of Plaintiff Anthony Ribaudo to Defendants' 04/20/01Second Request for Production
Answer of Plaintiff Ellen Ribaudo and Anthony 04/20/01Ribaudo, Trustees of the Trust of Ellen and Anthon yRibaudo, to Defendants' Second Request for Productio n
Plaintiff Kathryn Johnston's Response to Defendants' 04/20/01Second Request for Production
Plaintiff Carl Mondello's Response to Defendants' 04/20/01Second Request for Production
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Plaintiff Pamela Wooton's Supplemental Response to 04/20/01Defendants' Second Request for Production
Plaintiff Richard Klosterman's Privilege Log 04/24/01
Plaintiff Edwin Kadlec's Response to defendants' 05/01/01Second Request for Production of Documents
Plaintiff Masselinks' Response to Defendants' Second 05/01/01Request for Production of Documents
Herbert Braker's Response to Defendants' Second 05/01/01Request for Production of Document s
Shirley Chess' Response to Defendants' Second Request 05/01/01for Production of Documents
Robert Moynihan's Supplemental Response to 05/01/01Defendants' Second Request for Production o fDocuments
David Lichtenstein's Supplemental Response t 05/01/01Defendants' Second Request for Production ofDocuments
Responses and Objections of Plaintiff T. Robert 05/04/01Verkouteren, Trustee, to Defendants' Second Reques tfor Production
Douglas Ludeman's Supplemental Response to 05/09/01Defendants' Second Request for Productio n
Murray Zucker's Production of Documents 05/09/01
Kevin and Joanne Minnihans' Response to Defendants' 05/10/01Second Request for Prod .
Robert Hepworth's Response to Defendants' Second 05/18/01Request for Production
NATIONSBANK PLAINTIFFS' EXPERT S
70. As an aid to understanding the facts surrounding the issues of liability
and damages in the case, we retained and conferred extensively with eleven different
experts in the areas of accounting, economics, valuation, finance, computer forensics ,
and federal banking regulation . Five of these individuals provided expertise as
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consultants, and the remaining six were designated on July 1, 2001 and October 31,
2001 as experts and rebuttal experts expected to testify at trial .
71 . Two of the consulting experts, an economist from Houston and a valuation
consultant from Los Angeles, provided knowledgeable insights and views on damages,
and both prepared reports detailing their findings and conclusions . Another consulting
expert, an experienced tax accountant with St . Louis' Rubin Brown Gornstein & Co .,
LLP, gave invaluable insights and guidance throughout the case on accounting,
liability and damage issues . A fourth consulting expert provided essential stock
research and analysis as a financial analyst . The fifth consulting expert in Portland
provided unparalleled expertise in the area of computer forensics and assisted
plaintiffs in pursuing specialized computer discovery as discussed more fully above .
72. The six testifying experts designated by the NationsBank plaintiffs were
retained relatively early in the case and we consulted with them extensively
throughout the litigation . Their expertise and assistance helped sharpen the
NationsBank plaintiffs' focus on important issues within the areas of liability and
damages. All of these experts spent considerable time at our offices going through the
documents produced by defendants and third parties . We provided them with copies
of the scanned documents and any others that they selected from reviewing the file .
Copies of the deposition transcripts were also provided to each of them . After the
experts reviewed the documents we furnished them, we continued to confer with them
regularly. Based upon their review of the file, these experts suggested areas of
deposition inquiry, helped identify additional areas for discovery, and continually
provided counsel with insights and information based on their areas of expertise . Their
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involvement in this case was extensive and ongoing throughout the litigation . On July
23, 2001, we provided the Court with a copy of the report of each of these experts an d
the exhibits to each report. On December 17, 2001, defendants supplied the Court with
a copy of each of our expert's rebuttal report as exhibits to their motions to strike .
73 . We began consulting with Owen Carney in January, 1999 . Mr. Carney' s
33 years of experience as a national bank examiner and senior advisor for investmen t
securities to the chief national bank examiner at the OCC provided valuable insight
into federal regulatory and oversight issues. Morever, Mr. Carney knew and had
worked with not only some of the former OCC examiners who were working for Old
BankAmerica prior to the 1998 merger, but he also knew and had worked wit h
defendants' expert formerly with the OCC and whose opinions Mr . Carney rebutted .
His knowledge of two former OCC regulators who worked for Old BankAmerica an d
who testified at deposition, and his expertise in the area of federal bank regulator y
procedure provided us with unique and valuable insights . We consulted with Mr .
Carney extensively throughout the litigation . He prepared a 42 page report in rebutta l
to opinions offered by one of the experts designated by defendants and was deposed b y
defendants on December 27 and 28, 2001 .
74. Alan Wetzel, former head of mergers and acquisitions at A.G. Edwards
& Sons, Inc . was first retained by the NationsBank plaintiffs in June 1999 . He
provided expertise and advice on both liability and damage issues from the point of
view of an investment banker with 30 years experience . He consulted with counsel
regularly in preparing for depositions, and he prepared for and attended a conferenc e
with the Court in Savannah, Georgia on December 6 and 7, 2000, where the issue of
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damages was considered. Mr. Wetzel submitted a 46 page report accompanied by 13 8
documents from the file and three volumes of analyst and earnings reports for th e
period January, 1997 to May, 2001 . Defendants deposed Mr . Wetzel on July 24, 25 and
26, 2001 . Mr. Wetzel also submitted a 33 page rebuttal report and was deposed agai n
on November 27, 2001 .
75. Michael Normile, former chief accounting officer for 15 years wit h
Mercantile Bank n/k/a US Bank, N .A. in St. Louis was initially retained in July 2000 .
He reviewed the documents in the file and read the majority of depositions taken o f
defendants and the bank and third party witnesses . We consulted with Mr. Normile
throughout the litigation and he made invaluable suggestions on deposition inquiry
and additional discovery . He submitted a 61 page report and was deposed by
defendants on July 18 and 19, 2001 . Mr. Normile submitted a rebuttal report and was
deposed again on November 15, 2001 .
76. Thomas Myers , a Denver , Colorado CPA and advisor to government
regulators from the OCC, the SEC and the FRB, was retained in August, 2000 .
Drawing on his 24 years of experience, he provided extremely important insights into
examining the loan vs. investment issues, the financial structure of the D .E. Shaw
credits, the amount of the D .E . Shaw losses, and the bank's accounting treatment o f
the D .E . Shaw credits. We consulted with Mr . Myers in preparing for a number o f
depositions of bank personnel and third parties alike, and for two Old BankAmeric a
employees who had analyzed and been closely involved with the D .E . Shaw alliance ,
he prepared an extensive list of topics and documents to cover with the witnesses . Mr .
Myers submitted a 43 page report and was deposed on August 1, 2 and 3, 2001 . He
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prepared a 27 page rebuttal report and was deposed again on November 19 and 20,
2001 .
77. Michael Wagner and Greg Hallman, Ph.D ., Mountain View, California,
were retained in March, 2001 to examine the issue of damages . Their opinions on
damages in this case were based on an event study analysis and statistical modeling .
We consulted with them regularly, and their insights were tremendously helpful in
debunking the opinion of defendants' primary damage expert . Dr. Hallman and Mr .
Wagner submitted a 26 page joint report accompanied by four volumes of supporting
data and analysis . Defendants deposed Mr. Wagner on July 30 and 31, 2001, and Dr .
Hallman on August 1, 2001 . These experts submitted a 26 page joint rebuttal report
with two volumes of supporting data . Defendants took a second deposition of Dr .
Hallman on December 3, 2001 and of Mr . Wagner on December 5, 2001 .
78 . Throughout discovery, NationsBank plaintiffs' counsel consulted and
conferred with both the consulting and designated experts to carefully examine the
issues in this case . Their expertise increased the efficiency of plaintiffs' discovery
efforts .
MEETING IN SAVANNAH
79. The Court scheduled an informal meeting for December 6 and 7, 2000 in
Savannah, Georgia to a discuss damages in this case . The purpose of the meeting was
to provide information to the Court through an exchange of views on damages .
80. In preparation for this conference, we spent considerable time meeting
with Mr. Wetzel and researching and preparing a letter to the Court outlining the
NationsBank plaintiffs' theory of damages . On August 4, 2000, we sent a letter to th e
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Court outlining the damages recoverable by the NationsBank plaintiffs and theorie s
of recovery . The two-day conference in Savannah provided us an opportunity to
disclose to the Court plaintiffs' theory of damages and to receive some insights int o
defendants' theories and views on the subject from their principal expert, Prof .
Christopher James .
DEFENDANTS ' MOTION TO STAY PROCEEDINGS
81 . On or about July 3, 2001, BankAmerica filed a Motion to Stay Proceedings
for At Least 60 Days pursuant to a Pennsylvania state court order staying action s
involving insureds of Reliance Insurance Company, one of the bank's insuranc e
companies, then under a Rehabilitation Order . In our Opposition to the Motion we
pointed out that defendants were seeking to stay a federal nationwide class action o f
public importance and to postpone the trial so that the rehabilitator could have tim e
to examine the company and evaluate her position . We presented reasons why the
motion should be denied, including the following : the order of the Pennsylvania court
was not binding on the Court ; the stay would not benefit the defendants or th e
rehabilitator; the stay would prejudice the plaintiff classes already certified by th e
Court; and the timing of the request was suspicious . Although the rehabilitation order
had been in effect for over a month, defendants delayed filing their stay motion until
after they had received service of plaintiffs ' experts' reports . The timing of the motio n
suggested to plaintiffs that defendants were seeking to manipulate the schedule of
discovery and trial in this case to their own advantage . Defendants filed a Reply on o r
about July 13, 2001 . On July 20, 2001, the Court issued its Order denyin g
BankAmerica's Motion for a Stay of the Proceeedings .
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REQUESTS FOR ADMISSIONSAND JOINT STIPULATION OF FACTS
82 . On April 13, 2001, we served defendants with our First and Secon d
Requests for Admissions. The two sets of requests totaled 133 pages and included jus t
over 1,000 requests for admissions . These discovery requests, the result of many hour s
of careful review of the documents and deposition testimony, were intended to
eliminate or identify questions of fact relating to key issues in the case . On or about
May 4, 2001, defendants filed a Motion for a Protective Order seeking to strik e
plaintiffs' requests for admissions, or alternatively, granting defendants an additiona l
three months to respond . According to defendants' counsel, the task of responding to
the requests for admissions exceeded "all of their available resources [which were bein g
devoted to] preparing for and staffing" depositions, and they urged the Court not t o
permit plaintiffs to "overwhelm" defendants with the requests for admission .
Defendants urged the Court to make any requests for admission part of the pre-trial
stipulation process contemplated by the Court . On May 9, 2001, the Court issued an
Order stating it "would find a response helpful in deciding how to rule" on defendants'
motion for a protective order .
83. On May 11, 2001, we filed our Response to Defendants' Motion . We
pointed out that the requests for admissions were intended to narrow the issues for
trial relating to Old BankAmerica's strategic alliance with D .E . Shaw as well as
defendants' knowledge of, and failure to disclose material information to shareholders .
We also pointed out that defendants had not satisfied their burden of showing that th e
requests for admissions were unduly burdensome . On or about May 14, 2001,
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defendants filed their Reply . After defendants filed their Reply, the Court on May 14,
2001, issued its Order conditionally granting defendants' motion for a protective orde r
and ordering the parties to attempt to resolve this dispute during the stipulatio n
process. The Order contemplated allowing additional discovery regarding dispute d
items should the parties be unable to stipulate to all relevant facts contained in
plaintiffs' requests for admissions .
84. On May 11, 2001, the Court issued its Order that the parties prepare and
file no later than June 14, 2001 a comprehensive stipulation as to all uncontested facts .
The NationsBank plaintiffs conferred with defendants' counsel regarding a plan t o
coordinate the stipulation process and began preparing plaintiffs' propose d
stipulations. On June 4, 2001, the Court issued its Order extending the filing deadlin e
to June 21,2002 . On June 8, 2001, in response to an oral request for more time mad e
during a conference call between the Court and lead counsel for the parties earlier tha t
day, the Court issued its Order extending the filing deadline to July 11, 2001 . On July
9, 2001, the parties filed a joint motion to extend the time for filing the parties '
stipulations. The parties advised the Court that the counsel for all parties had been
working diligently, including during very extended hours over the July 4 holiday, ha d
prepared proposed stipulations numbering in the thousands, but despite best efforts ,
found themselves unable to meet the July 11 filing deadline and asked the Court for
an additional 14 days. On July 10, 2001, the Court issued its Order extending the date
for filing the stipulations to July 25, 2001 .
85 . On July 26, 2001, after counsel had spent huge amounts of time and effor t
drafting, reviewing and negotiating the stipulations, the parties filed their Join t
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Consolidated Stipulation of Fact with the Court and a copy was hand-delivered b y
counsel to chambers in Savannah. The Joint Stipulation contained more than 1,80 0
paragraphs of facts to which the parties stipulated . There were many other proposed
stipulations offered by the NationsBank plaintiffs to which defendants could no t
stipulate . There were also many proposed stipulations offered by defendants to whic h
plaintiffs could not stipulate after careful review and discussion .
86 . On September 7, 2001, the NationsBank plaintiffs filed a Motion fo r
Sanctions against defendants which was denied by the Court .
PRE-TRIAL AND SUMMARY JUDGMENT MOTIONS
87. This class action presented some complex sets of facts and questions o f
law on the issues of liability, damages and trial structure . Among these were theI
admissibility of the SEC's Order dated July 30, 2001, separate trials for th e
NationsBank and BankAmerica Classes and the opt-out plaintiff, the Florida Stat e
Board of Administration ("FSBA"), the possible res judicator and collateral estoppel
effect of separate trials, and whether there should be bifurcated trials . At the Court' s
instruction, the parties prepared briefs discussing these important issues .
88 . On October 12, 2001, we submitted a brief in support of the admissibilit y
of the SEC Order. Plaintiffs established that the SEC Order was a report of a publi c
agency resulting from an investigation made pursuant to lawful authority . We showed
that the Order contained factual findings, which together with any opinions ar e
admissible under FRE 803(8)(C). Further, plaintiffs presented arguments why the SE C
Order should not be excluded as evidence of settlement negotiations under FRE 40 8
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or for irrelevance or prejudice under Rules 401, 402, and 403 . On October 22, 2001, the
NationsBank Classes submitted a Reply Brief to defendants' response .
89. On October 12, 2001, the NationsBank plaintiffs also filed a brie f
analyzing whether separate trials for the Nationsbank Classes and the FSBA would
create any res judicator or collateral estoppel issues . Plaintiffs demonstrated that
separate trials would have no res judicata implications unless the NationsBan k
Classes and the FSBA are held to be in privity with each other and that althoug h
privity probably did not exist due to the opt-out rights embodied in Rule 23 of the
Federal Rules, certain language in Eighth Circuit cases applying the concept of "virtual
representation" suggested the possibility that the Classes and the FSBA were i n
privity. Plaintiffs also argued that under the doctrine of collateral estoppel ,
BankAmerica and the other defendants would be bound by any unfavorable judgment
on the issues that were litigated and decided in the first-tried case . Plaintiffs also
presented the Court with reasons why defendants would be so bound even though the y
would not be permitted in a subsequent trial with the NationsBank Classes to take re s
judicata advantage of any favorable rulings made in the first-tried case .
90. On October 22, 2001, we filed a Brief opposing a consolidated trial of the
NationsBank and FSBA claims . Plaintiffs argued that since the FSBA had opted out
of the NationsBank holder class in order to try its claims separately, the right t o
opt-out would be cheapened if the opting-out party could not get a separate trial i n
which to present its claims . Plaintiffs also argued that a consolidated trial posed th e
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risk of jury confusion and resulting prejudice to both the NationsBank Classes and the
FSBA.
91 . On November 13, 2001, the Court heard oral argument regarding the
admissibility of the SEC Order and whether the FSBA's claims should be tried
separately or consolidated with the NationsBank claims . The Court also indicated in
chambers following the hearing its intention to try the FSBA claims, the NationsBan k
Class claims and the BankAmerica Class claims separately . Defendants asked to brief
the issue of separate trials . On November 21, 2001, the Court issued its Order
prohibiting use of the SEC Order to prove liability but reserved consideration of it s
admissibility for rebuttal. Additionally, the Court granted the FSBA leave to serv e
requests for admissions relating to the factual findings in the SEC Order, allowed th e
parties another opportunity to brief the bifurcation issue and set a briefing schedule
for summary judgment motions and motions in limine . Subsequently, the Cour t
granted the NationsBank plaintiffs ' motion to join in the FSBA's request for
admissions concerning the SEC Order .
92. On November 30, 2001, we filed a Brief which analyzed the issue o f
separate trials . Plaintiffs showed that the NationsBank plaintiffs' claims and the
BankAmerica holders' claims should be tried separately because they do not involv e
common questions of law and fact . We provided the Court with reasons why
consolidation of these claims for trial would unfairly prejudice the NationsBan k
plaintiffs and provide defendants with an unwarranted advantage . In a letter dated
December 21, 2001, we responded to defendants' brief in support of a consolidated trial
and provided reasons why defendants' contentions had no merit . On January 9, 2002 ,
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the Court issued its Order staying the claims of the FSBA and the BankAmeric a
plaintiffs .
93 . On December 14, 2001, we filed a Motion and Brief for Partial Summary
Judgment on the issue of liability . We also filed a supplementary motion for Partia l
Summary Judgment on liability with respect to our California state claims .
Defendants also filed motions for summary judgment that day .
94 . On January 7, 2002, the NationsBank plaintiffs filed a Reply to
defendants' motion for summary judgment . In the Reply, plaintiffs detailed that the
bank's omissions relating to D .E . Shaw were material, including the failure to disclose
the D .E . Shaw losses; that the D.E. Shaw credit and relationship were not part of the
total mix of information available to shareholders, and that the D .E . Shaw losses were
anticipated, could be measured, and were not speculative . Plaintiffs also demonstrate d
that the claimed merger benefits did not provide a defense to plaintiffs' claims, an d
that the NationsBank Classes would be able to establish substantial damages . The
cross-motions for summary judgment were pending at the time the parties filed thei r
proposed Stipulation of Settlement.
95 . On December 17, 2001, defendants filed a motion to strike the testimony
of each of the NationsBank plaintiffs' expert witnesses based on Daubert v. Merrel l
Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) and its progeny. On December 27 ,
2001, we filed our 40 page brief in opposition . By reviewing each expert's qualifications ,
opinions and testimony, plaintiffs provided detailed reasons why each expert wa s
qualified and competent to offer his opinions, why his testimony would be useful to th e
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jury, and why his analysis in this case was the product of reliable principles and
methods under the Federal Rules and prevailing case law. This motion was also
pending at the time the parties filed their proposed Stipulation of Settlement .
96. On December 17, 2001, in anticipation of trial, plaintiffs filed 13 motions
in limine requesting that certain testimony be excluded from evidence at trial . Among
these were motions for an order that the 90-day "bounce-back" provision of the PSLRA
was inapplicable ; to exclude evidence concerning the comments and opinions of the
Office of the Comptroller of the Currency; to exclude evidence of the existence of th e
BankAmerica Holder Class's claims at trial; to bar defendants from denying any
factual admissions they made in the SEC Order or creating the impression that the
Order was without factual basis; to exclude any evidence of reliance by the
NationsBank Class members; to exclude evidence of the Classes' Representatives'
investment experience and sophistication ; and to exclude any evidence that a judgment
in favor of the NationsBank Classes would create a financial hardship on defendants
or BankAmerica shareholders or employees . The motions in limine were also pending
at the time the parties filed their proposed Stipulation of Settlement .
97. In preparation for trial we also devoted considerable time to analyzing
and drafting proposed jury instructions . Given the complexity of this case and the
alternative trial structures the Court was considering, this was not an easy task,
especially, for example, with respect to a damages instruction and whether the issues
of the "bounce-back" under the PSLRA or an offset for individuals holding stock i n
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both banks would be in. evidence. Many questi ons concerning jury instruction s
remained unanswered when the proposed Stipulation of Settlement was filed .
DEFENDANTS' DESIGNATED EXPERT JOHN DUBINSK Y
98 . On December 17, 2001, the NationsBank plaintiffs also filed a motion t o
strike one of defendants' seven designated expert witnesses, John Dubinsky, former
president of Mercantile Bank n/k/a U.S. Bank, N.A. Plaintiffs informed the Court by
motion and affidavit that Mr . Dubinsky had previously agreed to serve as a consultant
to plaintiffs, and that on January 2, 2001, he attended a six hour meeting wit h
NationsBank plaintiffs' counsel and one other NationsBank expert during which ther e
were extensive discussions concerning the lawsuit .
99. In support of the motion to strike Mr . Dubinsky as an expert, I filed an
affidavit setting out in detail the discussions at the January meeting . Plaintiffs argued
that Mr. Dubinsky should be disqualified from acting as an expert witness for
defendants. This motion was pending at the time the parties filed their proposed Joint
Stipulation of Settlement .
FLORIDA STATE BOARD OF ADMINISTRATION
100. On November 28, 2000, after it opted out of the NationsBank Holde r
Class, the FSBA filed a complaint against BankAmerica setting forth allegation s
virtually identical to those asserted in the NationsBank First Amended Consolidate d
Complaint. The FSBA elected to remain a member of the BankAmerica Holder Class .
101 . On January 8, 2001, defendants filed a Motion to Consolidate the FSB A
action with this proceeding . The Court issued an Order on January 23, 2001 grantin g
the motion to consolidate . On January 24, 2001, the FSBA filed a Motion to Vacate and
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for Reconsideration of January 23, 2001 Order Consolidating Cases . On January 30,
2001, the Court issued its Order requiring plaintiffs to file a joint response to th e
FSBA's motion to vacate . On February 2, 2001, we filed a brief in opposition to
consolidation for discovery and trial of the NationsBank Classes and the FSBA. We
explained that consolidation for discovery would cause unnecessary delay of the trial .
We also presented reasons why consolidation for trial would prejudice the NationsBan k
Classes; and given the FSBA's decision to opt-out of the NationsBank Class, was
contrary to the policy of class certification . On February 6, 2001, the FSBA filed a
Supplemental Memorandum in Opposition to Motion to Consolidate . On April 3, 2001 ,
based on the pleadings and testimony offered at a hearing held March 16, 2001, the
Court issued its Order denying the motion to vacate or for reconsideration of the
Consolidation Order and ordered the FSBA to participate in discovery in thi s
proceeding.
SETTLEMENT NEGOTIATIONS, MEDIATIONAND STIPULATION OF SETTLEMENT
102 . At different times throughout this litigation, the subject of settlement wa s
discussed between counsel for the NationsBank plaintiffs and defendants' counsel . On
June 17, 1999, for example, counsel met in New York to discuss settlement an d
exchange preliminary damage analyses. These initial discussions were informative, bu t
they did not result in any serious settlement discussions . Following that meeting ,
informal discussions concerning settlement were held from time to time throughout th e
course of the litigation .
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103 . In early January, 2002, after discovery had been completed and the
parties had filed their summary judgment motions and motions in limine, including
expert witness motions, lead counsel for the NationsBank plaintiffs and defendants '
counsel discussed the idea of trying to reach a settlement by mediation .
104. On January 29, 30 and 31, 2002, counsel met in New York to participate
in a mediation with a retired federal judge . Attending for the NationsBank plaintiffs
were lead and co-lead counsel and three class representatives, David Oetting, Michae l
Koehler, and Kevin Kloster. In advance of the mediation, we provided each of these
representatives with two large binders of relevant documents and pleadings . We also
discussed with them what we perceived as the strengths and weaknesses of our case .
Attending for the defendants were their outside and in-house counsel, a company
representative and representatives from the bank's several insurance companies . Lead
counsel for the BankAmerica plaintiffs attended the mediation on January 30 and 31 ,
2002.
105 . Each of the parties was represented by experienced counsel and each side
came with an understanding of the facts supporting the separate allegations of th e
NationsBank and BankAmerica Classes' as well as allegations, facts and argument s
supporting the bank's defenses. Reaching an agreement with defendants on a
settlement amount, which ultimately required an agreement between the Nation s
Bank Classes and the BankAmerica Classes on how they would divide a tota l
settlement amount, was no easy accomplishment .
106. We believe the event at mediation most responsible for the significan t
amount of the settlement was the agreement reached between the NationsBank
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Classes and the BankAmerica Classes on how the proposed settlement amount woul d
be allocated between them . As counsel for defendants stated at the hearing before th e
Court on March 15, 2002 :
MR STERN: Your Honor, if I may be heard very briefly on this questionthat Arthur raised. I hope this is helpful to the process, but I want toconfirm that it was defendants' position that the optimal settlement herewas a global settlement, and that, in fact, our willingness to - it wasnever clear to me that our client would ever authorize a separatesettlement with one group or the other . But I do know that if they did, itwould have likely have been at lower amounts than the amounts that weultimately agreed to pay. I think the fact is that the fact that Mr . Greenand Mr. Abbey and their colleagues on their side were ultimately able tocome together, agree on an allocation, actually added value to thesettlement to the benefit of everyone .
Transcript of Motion Hearing (March 15, 2002) ("Transcript") at 51.
107. The proposed settlement was reached a little more than two month s
before trial was scheduled to begin and more than three years after the litigation was
filed. After the parties signed a memorandum of understanding on January 31, 2002 ,
defendants' counsel drafted a Stipulation of Settlement which we reviewed and revised .
Following the exchange of several drafts among counsel, a Stipulation of Settlement
was signed and filed with the Court on March 8, 2002 . After Mr. Oetting expressed
concerns about the form of the proposed settlement agreement at a hearing before th e
Court on March 15, 2001, the Stipulation was revised and resubmitted .
THE SETTLEMENT IS FAIR, REASONABLE, AND ADEQUATE
108. On behalf of the NationsBank plaintiffs' counsel, it is my opinion that the
settlement achieved in this case is fair, reasonable, and adequate under the
circumstances and should be approved by the Court . While we were always confident
in our ability to take this case to trial, the reality is that the outcome at trial or o n
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appeal is anything but certain . As the pending summary judgment motions an d
motions in limine reflect, this case presented complex legal questions, some of firs t
impression. A trial, or an adverse ruling on any one of the pending motions, offered a n
array of potential outcomes that might result in no recovery for the classes . Even if the
NationsBank plaintiffs prevailed on all pending motions, damages would have to be
proven based on the difference between what they received in the merger and what
they would have received had the proxy materials and defendants' statements been
truthful and complete . The amount the NationsBank plaintiffs would have receive d
under those circumstances would be the subject of dispute between experts, a disput e
whose outcome was impossible to predict . Moreover success at trial would virtually
guarantee the NationsBank plaintiffs a lengthy appeal with an uncertain outcome .
109 . The terms of the settlement were fairly, honestly and aggressively
negotiated by all parties and we believe that the settlement is reasonable .
110. The number and complexity of the issues that remained in dispute
between the parties at mediation further demonstrates the reasonableness of th e
proposed settlement ; these include: (a) the appropriate economic and statistical model s
for determining the amount the market price of Old BankAmerica and BankAmeric a
stock was allegedly artificially inflated (if at all) during the relevant Class Periods, an d
the amount of any such inflation; (b) the appropriate economic and statistical model s
for determining the extent that the market price of BankAmerica stock dropped, if a t
all, in reaction to its announcement of a $372 million loss on the D .E . Shaw credits ,
and the dollar amount of any such drop ; (c) the appropriate accounting standards an d
regulatory asset classifications to be applied to the D .E . Shaw credits from time to time
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to determine the correct amount and appropriate time for disclosure of BankAmerica's
loss related to D.E. Shaw; (d) whether the D .E. Shaw credits should have been
accounted for as a loan or an investment or otherwise ; (e) the extent to which Class
members who held both NationsBank stock and BankAmerica stock suffered any
damages, specifically whether these cross shareholdings were offsetting for purposes
of calculating damages; (f) the extent to which the NationsBank Class claims stand in
direct contradiction to the BankAmerica Class claims so that none of the members o f
any of the Classes suffered any damages ; (g) the extent to which defendants' allegedly
materially false and misleading statements affected the market price of BankAmerica
stock, if at all, at various times during the Class Period ; (h) the extent to which the
Joint Proxy-Prospectus and other filings by BankAmerica with the SEC, including the
August 28 and September 15, 1998 forms 8-K, were materially false and misleading,
if at all ; (i) whether D.E . Shaw's trading losses would have been material to the
NationsBank shareholders voting on the Merger ; (j) the extent to which the non-
disclosure of D.E. Shaw's trading losses influenced the market price of Old Bank-
America and BankAmerica stock, if at all, during the Class Period; (k) whether and
when the officers and directors of NationsBank were aware of D .E . Shaw's trading
losses and the associated market risk, if any, to BankAmerica prior to the merger ; (1)
the applicability of California law to the Class claims and the impact of California law
on the "bounce back" provision of the PSLRA ; and (m) the proper measure of damages,
if any, for plaintiffs' claims brought under the federal securities laws .
111 . The defendants were represented by lawyers who, in the Court's view,
"are about as good as lawyers get in this field" and they have demonstrated throughou
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this litigation their ability to raise and maintain a vigorous defense . Transcript at 14 .
Also, given the complex nature of the issues and analysis required to calculate
damages, there was a real risk that the jury would have had difficulty understanding
plaintiffs' damage theory .
112. For the reasons outlined above, as well as those stated in my affidavit in
support of applications for attorneys' fees and reimbursement of expenses, we believe
the settlement is fair, reasonable, and adequate under the circumstances and should
be approved by the Court .
COUNSEL FOR THE NATIONSBANK PLAINTIFFS
113. The NationsBank plaintiffs are represented by five law firms comprising
lead and liaison counsel, co-lead counsel and executive committee members .' Green
Schaaf & Jacobson, P .C., lead and liaison counsel, is the successor to a law firm in
Clayton, Missouri, originally formed in 1960. The firm's practice focuses primarily on
business litigation and business transactions . Members of the firm, including myself,
have extensive experience in complex litigation, including the prosecution and defense
of class actions in numerous state and federal courts . I believe we are highly regarded
in the St . Louis legal community and frequently are counsel in the most significant
matters pending in federal and state courts in the St . Louis area .
114. Chitwood & Harley, Atlanta, Georgia co-lead counsel, whose members,
including its senior partner Martin D . Chitwood, concentrate their practice as
4Copies of these firm's biographies have all been filed previously .
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plaintiffs' counsel in complex class actions on a national basis, including securities an d
antitrust litigation , derivative and consumer actions .
115 . Stull Stull& Brody, New York co-lead counsel, led by its principal Jule s
Brody, has successfully litigated many stockholder, class and derivative actions for
violations of securities laws in federal and state courts for more than 25 years .
116. Entwistle & Cappucci, LLP, a member of the executive committee , has its
principal offices in New York . It traces its roots to firms founded more than 30 year s
ago and whose members, including its managing partner Andrew Entwistle, have a
well-known national practice in complex securities, commercial litigation an d
commercial matters .
117 . Wolf Haldenstein Adler Freeman & Herz LLP, New York, is a member of
the executive committee whose members, including Daniel W. Krasner, a senior
partner, have a nationally recognized practice involving the prosecution and defens e
of class actions and other complex business-related lawsuits .
COUNSEL FOR DEFENDANTS
118. Together, defendants were represented by four nationally recognized law
firms with excellent reputations who skillfully and vigorously defended this lawsuit .
BankAmerica and the individual defendants are represented by Wachtell Lipton Rose n
& Katz in New York and Bryan Cave LLP in St . Louis . Wachtell Lipton has over 150
lawyers and an international reputation as one of the most prominent business la w
firms in the country . Defendants' lead counsel at Wachtell Lipton in this case is
Warren Stern . Bryan Cave has over 522 lawyers and 18 offices around the world an d
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is one of the country's largest corporate, transactional and litigation law firms .
Defendants' primary Bryan Cave attorney is J . Michael Clear .
119. The individual defendants were represented by Munger Tolles & Olso n
based in Los Angeles and St . Louis' Lewis Rice & Fingersh. Munger Tolles has over 14 0
lawyers and a reputation as a preeminent corporate and litigation firm . The individual
defendants' primary attorney at Munger Tolles was Kristin Linsley Myles . Lewis Rice
has over 170 lawyers and enjoys a reputation as a first-rate litigation and defense firm .
The individual defendants were primarily represented at Lewis Rice by Barry A . Short ,
the former U.S. Attorney for the Eastern District of Missouri .
CONCLUSION
120. A significant settlement was reached by the parties after more than three
years of hard fought litigation and on the eve of what promised to be complicated an d
lengthy trial . The settlement results were obtained after the claims and defense s
asserted by the parties had been fully presented and analyzed and are the product o f
lengthy, tough and good faith negotiations . Based upon the foregoing, we are convince d
that the proposed settlement is an excellent result and that it should be approved by
the Court and that our applications for attorneys' fees and reimbursement of expense s
should be granted .
Dated this 0 day of May, 2002 .
&,~~ /~, AAe~Martin M. Green
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