Cases & Deals

U.S. Bank prevails on appeal and obtains settlement in putative class action alleging tens of billions in class-wide losses in connection with residential mortgage-backed securities

Client(s) U.S. Bank National Association

Jones Day represented U.S. Bank National Association in putative class actions filed in New York state court seeking tens of billions of dollars in alleged class-wide losses in connection with investments in certificates and notes issued by over 800 residential mortgage-backed securities trusts for which U.S. Bank served as trustee. The named plaintiffs, a group of sophisticated investment funds and insurance companies, alleged that U.S. Bank breached its duties under the trusts' governing agreements by, among other things, failing to investigate and remedy defective mortgage loans collateralizing the securities.

After the trial court granted in part and denied in part U.S. Bank's motion to dismiss, U.S. Bank filed an appeal to the New York Appellate Division, First Department. The First Department reversed in part, holding that additional, high-value claims should have been dismissed. Contemporaneously, in a parallel proceeding against U.S. Bank in New York federal court filed by many of the same plaintiffs, the court denied the plaintiffs' motion for class certification. In the aftermath of U.S. Bank's prevailing on both fronts, the plaintiffs agreed to settle all of the plaintiffs' individual claims.

Blackrock Balanced Capital Portfolio (FI), et al. v. U.S. Bank National Association, Nos. 7396 (N.Y. App., 1st Dep't), 652204/2015 (Sup. Ct., N.Y. Cty.); Blackrock Core Bond Portfolio, et al. v. U.S. Bank National Association, No. 654285/2018 (Sup. Ct., N.Y. Cty.)