CBIZ and Mayer Hoffman McCann obtain Ninth Circuit affirmance of dismissal of $900 million lawsuit
Clients CBIZ, Inc. and Mayer Hoffman McCann P.C.
On February 23, 2015, the United States Court of Appeals for the Ninth Circuit ruled in favor of Jones Day clients CBIZ, Inc. and Mayer Hoffman McCann P.C. in a case filed on behalf of a putative class of investors alleging $900 million in losses from the collapse of Mortgages Ltd., a commercial real estate lender. Plaintiff-investors alleged, among other things, violations of the Arizona securities laws and negligent misrepresentation. The district court dismissed CBIZ and Mayer Hoffman from the case, while allowing the case to proceed as a class action against outside securities counsel for Mortgages Ltd. and its primary lender. The investors appealed the dismissal, and the Ninth Circuit affirmed. The Court held, among other things, that no reasonable inference could be drawn that Mayer Hoffman acted outside of the ordinary course of the auditing profession when it issued audit reports on Mortgages Ltd.'s financial statements. The Court also held that, absent a claim against Mayer Hoffman, plaintiffs could not allege secondary liability against CBIZ, a public company with which Mayer Hoffman has an alternative-practice-structure arrangement. Taking the lead on the case were David Adler of Jones Day's Financial Institutions Litigation and Regulation practice and Louis Chaiten (who argued the appeal) of Jones Day's Issues and Appeals practice.
Facciola, et al. v. Greenberg Traurig, et al., No. 12-17761 (9th Cir.)