Cases & Investigations
Merrill Lynch and Bank of America Opt-Out Litigation

In the State of New Jersey, Department of Treasury, Division of Investment v. Merrill Lynch & Co., Inc. and Bank of America Corp., Docket No. L 3855 09 (New Jersey Superior Court, Hudson County), Wolf Popper represented the State of New Jersey, Division of Investment (“NJ DOI”) in an individual action against Merrill Lynch.  On January 16, 2009, Bank of America Corp. (“BAC”) announced that Merrill Lynch & Co., Inc. (“Merrill”), BAC’s subsidiary, reported a net loss after taxes for the fourth quarter of 2008 of $15.3 billion.  In researching potential claims against Merrill, Wolf Popper learned that NJ DOI had invested $300 million in January 2008 in a private placement of Merrill preferred stock and that NJ had converted those preferred shares to common stock pursuant to an exchange agreement in July 2008.  Further investigation revealed that a different investor, at that same time, had converted its preferred shares to a new series of preferred on terms that were preferential to the terms Merrill had offered to NJ DOI.  Prior to filing the Complaint, Wolf Popper was able to obtain discovery with respect to a class action settlement of claims against Merrill then pending in the Southern District of New York for purposes of advising NJ DOI whether to opt out of the class action and file an individual complaint.  N DOI J, subsequent to that discovery, determined to opt out of the class settlement.  Wolf Popper filed an individual complaint on NJ DOI’s behalf on July 28, 2009, in state court in New Jersey asserting claims against Merrill Lynch for breach of contract, breach of the covenant of good faith and fair dealing, and negligent misrepresentation.  After defendants removed the case to federal court, the U.S. Court of Appeals for the Third Circuit unanimously affirmed the remand of the action back to the New Jersey state court on May 18, 2011.  The New Jersey Superior Court thereafter denied defendants’ motion to dismiss in its entirety.  Following merits and expert discovery, the Court on September 29, 2012, denied in all material respects Merrill’s motion for summary judgment.  The action settled in April 2013 for $45 million, approximately one month before trial.  New Jersey Attorney General Jeffrey S. Chiesa stated, in announcing the settlement, that “this is a fair and equitable outcome, and we are pleased to be recovering a substantial amount of dollars on behalf of New Jersey taxpayers.”
 
That opt-out litigation resulted in a settlement of $45 million for the State, or approximately 375 times what the State would have recovered as part of the class settlement.

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