FirstMerit Bank obtains reversal of class certification and ultimate dismissal in Ponzi scheme case
Client(s) FirstMerit Bank, N.A.
Jones Day represented FirstMerit Bank, N.A. in a lawsuit arising out of the collapse of large Ponzi scheme allegedly orchestrated by Joanne Schneider, a well-known Cleveland-area businesswoman involved in various real estate and retail enterprises. As part of the alleged scheme, Schneider sold investors promissory notes guaranteeing annual interest as high as 18%, and then deposited the proceeds and paid "interest" from a checking account at FirstMerit. After the scheme collapsed and Schneider was indicted, several investors in the scheme brought a putative class action against FirstMerit in the Common Pleas Court for Cuyahoga County. The plaintiffs alleged that the bank should have known that Schneider's activities were illegal and should be held liable to the investors for participating in Schneider's note sales under the Ohio Securities Act, and for aiding and abetting and conspiring with Schneider to commit fraud. Plaintiffs sought a class judgment on behalf of about 750 investors in over 20 states. Jones Day made its appearance in the case after the trial court granted the plaintiffs' motion for class certification. Jones Day, as new counsel for FirstMerit, immediately appealed the trial court's class certification order, and, on February 10, 2011, obtained a reversal of that order from the Ohio Court of Appeals. The appellate court concluded that class certification had been improper because the facts and circumstances of each investor's purchase of a promissory note were highly individualized, and FirstMerit's liability to the class, if any, therefore could not be established in a single adjudication. Accordingly, the appellate court held that the predominance requirement for class certification could not be satisfied and that the trial court had abused its discretion in certifying a class.
Young v. FirstMerit Bank, N.A., 2011-Ohio-614, 2011 WL 494893 (Ohio Ct. App. 8th Dist. Feb 10, 2011)