United States District Court, S.D. New York
Philippe Z. Selendy, QUINN EMANUEL URQUHART & SULLIVAN, LLP, New York, NY, for Plaintiff FHFA.
Amanda F. Davidoff, SULLIVAN & CROMWELL LLP, Washington, DC for defendants Nomura Holding America Inc., Nomura Asset Acceptance Corp., Nomura Home Equity Loan, Inc., Nomura Credit & Capital, Inc., Nomura Securities International, Inc., David Findlay, John McCarthy, John P. Graham, Nathan Gorin, and N. Dante LaRocca.
Thomas C. Rice, SIMPSON THACHER & BARTLETT LLP, New York, NY, for defendant RBS Securities Inc.
OPINION & ORDER
DENISE COTE, District Judge.
By Joint Order of November 5, 2012, discovery in the abovecaptioned action (the "Nomura Action") was coordinated with discovery in the related action FHFA v. Royal Bank of Scotland PLC, 11cv1383 (D. Conn.) (AWT) (the "RBS Action"), as both concern similar securities claims brought by plaintiff Federal Housing Finance Agency ("FHFA") against defendant RBS Securities Inc. ("RBS") relating to residential mortgage-backed securities ("RMBS") sponsored, packaged, or underwritten by RBS or its affiliates. RBS was an underwriter of securitizations offered by affiliates of Nomura Holding America, Inc. (collectively, "Nomura") and is a codefendant in the FHFA action brought against Nomura.
By letter of August 22, 2014, FHFA requests that the schedule in the Nomura Action be adjusted. Although summary judgment motions in the Nomura Action were due June 20, 2014, FHFA did not file any summary judgment motion in that action addressed to the RBS affirmative defenses of due diligence and reasonable reliance (collectively, "Due Diligence"). FHFA now asks that it be given an opportunity to bring motions for summary judgment concerning Nomura's and RBS's Due Diligence practices. FHFA explains that it was unable to bring these motions by the June 20 deadline because it has not yet been able to take any depositions of RBS witnesses as RBS has delayed its production of documents in the RBS Action. For the following reasons, FHFA's request to adjust the schedule in the Nomura Action is granted.
The Nomura Action is one of sixteen related actions prosecuted in the Southern District of New York by FHFA, as conservator for the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") (together, the Government-Sponsored Enterprises or "GSEs"), alleging misstatements in the offering documents for certain RMBS certificates purchased by the GSEs between 2005 and 2007 (the "New York Actions"). Two of these actions remain pending, including the Nomura Action, which includes claims against RBS for underwriting certificates linked to four of the securitizations assembled by Nomura and its affiliates. As noted above, FHFA filed a similar action in the District of Connecticut against RBS and its affiliates concerning securitizations sponsored, created, and marketed by them. The total dollar amount of the securities at issue in the RBS Action is many times greater than the amount at issue in Nomura.
On August 17, 2012, the Honorable Alvin W. Thompson of the District of Connecticut granted FHFA's motion to commence discovery in the RBS Action. At that time, discovery had recently commenced in the New York Actions, following a May 4, 2012 Opinion granting in part and denying in part a motion to dismiss in a coordinated New York Action. FHFA v. UBS Americas, Inc. , 858 F.Supp.2d 306 (S.D.N.Y. 2012). Pursuant to an Order of May 15, 2012, defendants in the New York Actions were, collectively, permitted to take 20 depositions of FHFA and the GSEs. A Scheduling Order of June 14, 2012 required discovery to be completed in one of the New York Actions (the UBS Action) by June 14, 2013, and to be completed in the remaining New York Actions by December 6, 2013. The sixteen New York Actions were scheduled to be tried in four tranches, with the UBS Action to be tried on January 13, 2014, and the remaining actions to be tried in descending order of their size on June 2, 2014 (two actions), September 29, 2014 (three actions), and beginning January 2015 (the remainder). The Nomura Action fell in the fourth tranche. Under this schedule, FHFA and UBS were required to undergo fact discovery first.
By letter of October 5, 2012, jointly submitted to Judges Thompson and Cote, FHFA proposed that discovery in the Nomura and RBS Actions be coordinated given "the likely substantial overlap between discovery in the S.D.N.Y. Actions and the RBS Action." As of that time, RBS was a defendant in four of the sixteen pending New York Actions. FHFA explained that in its initial disclosures in the New York and RBS Actions, RBS identified 27 of the same individuals as persons likely to have discoverable information. FHFA further explained that it had "served nearly identical document requests" in these actions.
On October 9, 2012, Judge Cote, acting with the authorization of Judge Thompson, instructed the parties in the RBS Action and New York Actions to submit by October 12, 2012 proposed coordination orders. The parties conferred and were unable to reach an agreement. They made separate submissions on October 12. FHFA explained that it had proposed a schedule "that would permit the RBS Action to be tried on the same timetable as the second tranche of the S.D.N.Y. Actions, " that is, June of 2014. As of October 12, FHFA and RBS had already exchanged initial disclosures, and FHFA had served document requests on RBS in both the four New York Actions in which it was a party and in the RBS Action. FHFA proposed, inter alia, that depositions applicable to both the New York and RBS Actions begin on January 22, 2013, and that all fact and expert discovery in these actions be completed by December 6, 2013.
RBS largely opposed coordination, stating "it is just not feasible for the RBS Action to somehow catch up' with the S.D.N.Y. Actions." Of particular relevance here, it opposed the "[c]oordination of deposition discovery" on the schedule proposed by FHFA, explaining that FHFA's proposed schedule would leave RBS without "an adequate opportunity to review the produced documents" to participate in the depositions in the New York Actions due to begin in January of 2013, in particular the depositions of FHFA witnesses. RBS advocated for a period of 18 months of discovery in the RBS Action. It also opposed being bound by the 20-deposition limit adopted in the New York Actions.
Coordination was discussed at a court conference in the New York Actions on October 15, 2012, and at a court conference in Connecticut in the RBS Action on October 25. At the October 15 conference, RBS stated that "[w]e would like, if it were feasible, to have a rule that says deponents are only taken once in a case." RBS noted that "[t]he problem with that" is that RBS "will not be ready to take depositions" of FHFA in the RBS Action on the timetable of the New York Actions. FHFA voiced "concern... that [RBS] [is] trying to create a scenario that makes it impossible to get coordinated, that makes it impossible to spare witnesses multiple depositions."
Also at the October 15 conference, the Court explained that dates for summary judgment practice, trial dates, and document production in the RBS Action were "for Judge Thompson to decide" and thus did not need to be part of a coordination order. But, the court reminded RBS that it had to be prepared to begin deposition discovery of FHFA in January 2013, for the four New York Actions in which it was a party. Based on the Court's conversations with Judge Thompson, it advised RBS that it believed that was also true for the RBS Action. As reflected in the transcript of that conference and in orders issued by the judges, Judges Cote and Thompson had been in communication with each other and had agreed to work cooperatively with each other. The Court assured RBS that no coordination order would be signed without RBS and FHFA having an opportunity to be heard by Judge Thompson and without Judge Thompson deciding whether to agree to any proposed coordination. The Court requested a proposed coordination order that "provides for no deponent being deposed twice, documents produced in one of the 17 litigations being produced in all, [and] the 20-deposition limit being ...