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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

BEVERLY ADKINS, CHARMAINE WILLIAMS, REBECCA PETTWAY, RUBBIE McCOY, WILLIAM YOUNG, on behalf ofthemselves and all others similarly situated, and MICHIGAN LEGAL SERVICES,

INDEX NO.

Plaintiffs,

-against-

MORGAN STANLEY, MORGAN STANLEY & CO. LLC, MORGAN STANLEY ABS CAPITAL I INC., MORGAN STANLEY MORTGAGE CAPITAL INC., and MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC,

Defendants.

Plaintiffs bring this Class Action Complaint ("Complaint") against the Defendants, Morgan Stanley entities identified herein ("Morgan Stanley"), on behalf of themselves and all other similarly situated African Americans in the Detroit, Michigan metropolitan area (the "Class").
NATURE OF THE ACTION 1. The members of the Class allege that Morgan Stanley has discriminated against them on the basis of their race. Morgan Stanley deployed policies and practices that enabled the origination of exceedingly high-cost and high-risk residential mortgage loans for the purpose of purchasing, pooling, and securitizing those loans at a profit. Morgan Stanley's aggressive development of these loan pools disproportionately impacted members of the Class, who were more likely to receive these categorically harm:fulloans than white borrowers. As a result, the members of the Class faced a greater risk of default and foreclosure.
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2. Between 2004 and 2007, Morgan Stanley ramped up its syndication of mortgagebacked securities, becoming the principal financer for New Century Mortgage Company ("New Century"). The now-bankrupt New Century was among the most notoriously predatory of the subprime lenders operating at that time. Morgan Stanley purchased the lion's share ofthe loans New Century sold to Wall Street firms during this period. Morgan Stanley, in tum, packaged and securitized the New Century loans, syndicating the resulting securities for sale to investors, and receiving significant fees in the process.
3. Morgan Stanley went well beyond the role of a passive consumer or conventional securitizer in its relationship with New Century. Morgan Stanley provided crucial funding to New Century that facilitated New Century's ability to make mortgage loans. Morgan Stanley effectively dictated the types ofloans that New Century issued, requiring as a condition ofthe companies' lucrative business relationship that a large percentage of New Century's loans have certain dangerous characteristics. What made these loans especially hazardous for borrowers was the combination of multiple high-risk features. Though profitable for Morgan Stanley, these Combined-Risk Loans put borrowers on a path toward default and foreclosure.
4. Pursuant to this arrangement, New Century - at Morgan Stanley'S directionissued large volumes of Combined-Risk Loans during the relevant time period, including thousands of these loans to borrowers in the metropolitan Detroit area. In order to satisfy Morgan Stanley'S demand for loans it could pool and securitize, New Century targeted AfricanAmerican communities and borrowers in the Detroit area.
5. Morgan Stanley caused these Combined-Risk Loans to be extended to members of the Class without regard to their economic viability for the homeowners who received them.
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Instead, Morgan Stanley's policies were designed solely for the purpose of pooling and securitizing these Combined-Risk Loans for profit.
6. Morgan Stanley's policies and practices have resulted in considerable racial disparities. They caused New Century borrowers in the metropolitan Detroit region to be significantly more likely to receive Combined-Risk Loans, and thus to suffer the harms associated with such loans, ifthey were African-American.
7. The individual named Plaintiffs and the members of the proposed Class they seek to represent in this action are African-American Detroit-area borrowers who received CombinedRisk Loans from New Century as a result of Morgan Stanley's discriminatory policies and practices. Plaintiffs seek, through this action, to obtain injunctive relief preventing Morgan Stanley from engaging in this discriminatory conduct in the future. They also seek to disgorge unjust enrichment Morgan Stanley derived from its discriminatory conduct and to remedy economic harms suffered as a result of the policies challenged in this lawsuit.
8. Morgan Stanley'S discrimination violates the Fair Housing Act, 42 U.S.C. § 3601 et seq. ("FHA"), the Equal Credit Opportunity Act, 15 U.S.C § 1691 et seq. ("ECOA"), and Michigan's Elliot-Larsen Civil Rights Act, MCL § 37.2101 et seq. ("ELCRA").
JURISDICTION AND VENUE 9. This Court has original subject matter jurisdiction over the FHA and ECOA claims pursuant to 28 U.S.C. § 1331,42 U.S.C. § 3613(a)(1)(A), and 15 U.S.C. § 1691e(f). 10. This Court has original jurisdiction over the Michigan ELCRA claims under the Class Action Fairness Act, 28 U.S.C. § 1332(d). This is a putative class action in which: (a) there are 100 or more members in the Class; (b) at least some members of the proposed Class have different citizenship from at least one Defendant; and (c) the claims of the proposed Class members exceed $5,000,000.00 in the aggregate.
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11. In addition, this Court has supplemental jurisdiction over the Michigan ELCRA claims under 28 U.S.C. § 1367, because they arise from a common nucleus of operative facts with the federal claims alleged herein and are so related to the federal claims as to form part of the same controversy under Article III of the United States Constitution.
12. Venue is proper in this judicial district under 28 U.S.C. § 1391 because Defendants conduct business and can be found in this district, and a substantial part of the events or omissions giving rise to the claims alleged herein occurred in this district.
PARTIES 13. Plaintiff Beverly Adkins is an African-American homeowner who resides in Detroit, MI. She is a United States citizen and citizen of the State of Michigan. 14. Plaintiff Charmaine Williams is an African-American homeowner who resides in Westland, MI. She is a United States citizen and citizen of the State of Michigan. 15. Plaintiff Rebecca Pettway is an African-American homeowner who resides in Detroit, MI. She is a United States citizen and citizen ofthe State of Michigan. 16. Plaintiff Rubbie McCoy is an African-American homeowner who resides in Detroit, MI. She is a United States citizen and citizen ofthe State of Michigan. 17. Plaintiff William Young is an African-American homeowner who resides in Detroit, MI. He is a United States citizen and citizen of the State of Michigan. 18. Plaintiff Michigan Legal Services is a nonprofit corporation based in Detroit, MI and incorporated in the State of Michigan. 19. Defendant Morgan Stanley was, at all relevant times, a Delaware corporation with its principal place of business at 1585 Broadway, New York, New York 10036. Morgan Stanley'S business units include its Institutional Securities division, which, among other things, acts as an underwriter of residential mortgage-backed securities, provides warehouse lending to
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subprime and other mortgage originators, trades, makes markets and takes proprietary positions in mortgage-backed securities, and structures debt securities and derivatives involving mortgagerelated securities. Defendant Morgan Stanley acted through several of its wholly-owned subsidiaries in effecting the transactions giving rise to this action.
20. Defendant Morgan Stanley & Co. LLC, is a New York limited liability company, with its principal executive offices at 1585 Broadway, New York, New York 10036. At all times relevant, Defendant Morgan Stanley & Co. LLC was operating as Morgan Stanley & Co., Inc., and was owned by Morgan Stanley. Effective May 31,2011, Morgan Stanley & Co., Inc. converted from a corporation to a limited liability company and changed its name to Morgan Stanley & Co. LLC. In connection with the conversion, Morgan Stanley & Co. LLC became a wholly-owned subsidiary of Morgan Stanley Domestic Holdings, Inc., a wholly-owned subsidiary of Morgan Stanley Capital Management, LLC, which is a wholly-owned subsidiary of Morgan Stanley. Morgan Stanley & Co. LLC served as an underwriter for all of the residentialmortgage-backed securities which incorporated New Century mortgages.
21. Defendant Morgan Stanley ABS Capital I Inc. is a direct, wholly-owned subsidiary of Morgan Stanley and has its executive offices at 1585 Broadway, 2d Floor, New York, New York 10036. Morgan Stanley ABS Capital I Inc. served as a depositor in all of the residential-mortgage-backed securities which incorporated New Century mortgages.
22. Defendant Morgan Stanley Mortgage Capital Inc. was aNew Yode corporation until 2007, when it was merged into Morgan Stanley Mortgage Capital Holdings LLC, which is Morgan Stanley Mortgage Capital Inc.'s successor-in-interest. Morgan Stanley Mortgage Capital Inc. provided warehouse and repurchase financing to mortgage lenders and purchased residential mortgage loans for securitization or resale, or for its own investment. Morgan Stanley
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Mortgage Capital Inc. acquired residential mortgage loans through bulk purchases and also through purchases of single loans through Morgan Stanley Mortgage Capital Inc. 's conduit loan purchase program. Morgan Stanley Mortgage Capital Inc. also conducted underwriting review.
Morgan Stanley Mortgage Capital Inc. served as a sponsor of residential-mortgage-backed
securities which incorporated New Century mortgages. 23. Defendant Morgan Stanley Mortgage Capital Holdings LLC, a New York limited
liability company, is a successor-in-interest by merger to Morgan Stanley Mortgage Capital Inc.
and has its principal executive offices at 1585 Broadway, 2d Floor, New York, New York 10036. Morgan Stanley Mortgage Capital Holdings LLC served as a sponsor of residential-mortgage-
backed securities which incorporated New Century mortgages. 24. Defendants are collectively referred to herein as "Defendants" or "Morgan
Stanley." Morgan Stanley continues to transact in securities.
FACTUAL ALLEGATIONS I. Mortgage Securitization: A General Background.
25. During the relevant time period, the primary connection between large investment
firms like Morgan Stanley and individual home mortgages was through the creation of mortgage-
backed securities. This process, referred to as "securitization," is defined by one leading text as
follows: [A] process of packaging individual loans and other debt instruments,
converting the package into a security or securities, and enhancing their credit status or rating to further their sale to third-party investors. The process converts illiquid individual loans or debt instruments which cannot be sold readily to thirdparty investors into liquid, marketable securities. These new debt instruments are often termed "asset-backed securities" because each pool is backed by a specific collateral rather than by the general obligation ofthe issuing corporation or instrumentality. Investors purchase a proportionate share of the assets and the bundle of rights linked to the assets, not a general obligation typical of traditional corporate debt. The asset-backed security is structured under applicable laws to
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stand on its own and pass through timely payment of interest and principal to investors. Leon T. Kendall, Securitization: A New Era in American Finance, in A PRIMER ON SECURITIZATION 1, 1-2 (Leon T. Kendall & Michael J. Fishman eds., 1996). 26. Individuals seeking mortgage loans constitute the first link in the securitization chain. They enter the market by interacting with lenders, such as New Century, who originate mortgage loans. Borrowers may deal directly with the lender or work with a mortgage broker who serves as an agent of the lender and effectuates the lender's uniform policies. 27. Investment firms, like Morgan Stanley, then purchase mortgage loans from lenders to be packaged and sold as securities. Mortgage loans are typically purchased in large pools. In some instances, a securitization deal (i.e., a package) will consist exclusively ofloans originated by one lender, while in other instances it will consist ofloans originated by multiple lenders. As the sponsor of a mortgage-backed security, the investment firm is typically responsible for selecting the type of loan products that will be included in the package, reviewing the lending practices of the originator(s) and the quality of the loan products to be included in the package, and assessing the risks associated with the loans in the package. 28. The investment finn sponsoring the securitization creates a trust, referred to as a "special purpose entity" or a "special purpose vehicle," and assigns the loans purchased for the security to that trust. A separate investment firm will sometimes serve as the trustee for the special purpose entity. These special purpose entities are established pursuant to the Tax Reform Act of 1986, which created a new kind of tax vehicle, a Real Estate Mortgage Investment Conduit ("REMIC"). REMICs allow for the tax-free pass-through of cash flows from home loans to mortgage-backed securities. When the mortgage loans are purchased from the lender, the special purpose vehicle becomes the mortgage holder, thereby obtaining the right to enforce
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the terms of the mortgage, including through foreclosure. The special purpose vehicle will then hire a servicer to perform tasks such as collecting payments and taking enforcement actions against borrowers.
29. When an investment firm sponsors a mortgage-backed security, it typically receives fees in connection with the sale of shares in the security. It receives such fees regardless of how the security performs (i.e., regardless of whether the borrowers whose loans are included in the package continue making payments on their mortgages). II. Subprime Lending and Combined-Risk Loans.
30. There is no legal definition of "subprime loan," although the federal government
has provided guidance on how to identify subprime loans. For example, the u.s. Department of
Housing and Urban Development ("HUD") has published lists oflenders deemed "subprime." Its most recent list was published in 2005. New Century was among the entities listed as a "subprime" lender. Similarly, in 2007 the Treasury Department, Office ofthe Comptroller ofthe Currency, Federal Reserve System, Federal Deposit Insurance Corporation, Office of Thrift Supervision, and National Credit Union Administration jointly promulgated an interagency "Statement on Subprime Mortgage Lending." See Dep't of the Treas., et aI., Statement on Subprime Lending, 72 FED. REG. 37569, 37572 (July 10, 2007). The interagency guidance explains that certain loan features associated with subprime lending placed borrowers at serious risk of delinquency or foreclosure. Id. at 37572-73.
31. The Home Mortgage Disclosure Act ("HMDA") requires mortgage lenders to disclose certain information about each mortgage loan originated or purchased in a fiscal year. Pursuant to regulations promulgated by the Federal Reserve Board, since 2004 the HMDA data has included a designation for "high-cost" loans. Identifying certain loans as "high-cost" operates as a proxy for identifying subprime loans. A "high-cost" loan is defined as a first-lien
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loan with an arumal percentage rate and borrowing costs that exceed by more than 3 percentage points Treasury securities of comparable maturity, or a subordinate lien loan that exceeds the Treasury benchmark by more than five points.
32. Although the distinction between prime and subprime lending ostensibly tracks differences in a borrower's creditworthiness, in fact many lenders and brokers simply tried to maximize the share ofloans they originated on subprime terms. One analysis conducted for the Wall Street Journal found that, in 2005, 55% of subprime mortgages were given to borrowers with sufficiently high credit scores to qualify for prime loans. See Rick Brooks & Ruth Simon, Subprime Debacle Traps Even Very Credit-Worthy, WALL STREET JOURNAL, Dec. 3,2007, at AI.
33. Not all subprime loans are predatory, but nearly all predatory loans are subprime. Most fundamentally, predatory loans place the borrower at an elevated risk of default or foreclosure. The interagency Statement on Subprime Mortgage Lending enumerates certain tactics that may indicate predatory lending. Nonprofit groups have also published widely accepted guidance on the kinds of practices that may constitute predatory lending. See, e.g., NAT'L COMMUNITY REINVESTMENT COAL., THE BROKEN CREDIT SYSTEM: DISCRIMINATION AND UNEQUAL ACCESS TO AFFORDABLE LOANS BY RACE AND AGE 4 (2004). Like the Combined-Risk Loans at issue in this complaint, predatory loans typically combine risky loan features, thereby placing the borrower at an excessive risk of default or foreclosure.
34. For purposes of this Complaint, "Combined-Risk Loans" are loans that meet the definition of high-cost loan under HMDA and also contain two or more of the following highrisk terms: (a) the loan was issued based upon the "stated income," rather than the verified income, of the borrower; (b) the debt-to-income ratio exceeds 55%; (c) the loan-to-value ratio is
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at least 90%; (d) the loan has an adjustable interest rate; (e) the loan has "interest only" payment features; (f) the loan has negative loan amortization features; (g) the loan has "balloon" payment features; and/or (h) the loan imposes prepayment penalties.
35. Individually, these loan features make mortgage loans riskier and costlier to the borrower. When multiple such features are layered within the same loan, the riskiness and costliness of the loans increase dramatically. III. Morgan Stanley's Discriminatory Policies and Practices.
36. The racial disparities giving rise to this action were a direct consequence of Morgan Stanley's policies for securitizing New Century loans. Morgan Stanley's securitization of New Century loans was implemented through at least five interrelated and centralized policies and practices, which are enumerated below. Further, Morgan Stanley was in a position to implement and direct those policies and practices due to the power it enjoyed as New Century's principal source of financing and as the primary purchaser of its loans.
A. Morgan Stanley Was the Principal Financer to One of the Most Aggressive and Dangerous Predatory Lenders, New Century.
37. New Century was among the most aggressive subprime lenders in the industry between 2004 and 2007. Indeed, its intensive focus on subprime loans increased steadily over the relevant period. In 2004, approximately 44% of New Century's loans were classified as "high-cost" under HMDA. By 2005,86% ofNew Century's loans met the definition ofhighcost, and in 2006,88% of its loans were high-cost. (Data for 2007 is not available because New Century folded its business before the reporting deadline.) In 2008, the Office of the Comptroller ofthe Currency published a document identifying the "Worst Ten in the Worst Ten," i.e., a list ofthe subprime lenders with the highest number ofloans (based on 2005-2007 originations) in foreclosure in the ten metropolitan areas experiencing the highest rates of
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foreclosure. New Century ranked at the top of this list. In 2010, the acc published an updated
Worst Ten in the Worst Ten list based on more recent foreclosure data; once again, it identified New Century as the subprime lender responsible for the greatest share of foreclosures in the worst-hit metropolitan areas. New Century declared bankruptcy in March 2007.
38. Morgan Stanley was New Century's principal financer during the relevant time period. In 2005, Morgan Stanley bought and securitized approximately 48% of the loans sold by New Century; it purchased 34% of New Century's loans in 2006, and 41 % in 2007. In each of those years, Morgan Stanley purchased a greater proportion of New Century's loans than any other institution.
39. Morgan Stanley securitized some loan packages consisting entirely ofloans that were originated by New Century and purchased by Morgan Stanley, as well as loan packages consisting ofloans Morgan Stanley purchased from New Century and one or more other lenders.
40. In connection with the securitization of New Century loans and the sale ofthe corresponding securities, Morgan Stanley received significant fees.
41. Morgan Stanley relied heavily on New Century's origination of Combined-Risk Loans in its efforts to ramp up its trading of mortgage-backed securities. Because its receipt of fees had little or no connection to how the securities performed, and because it saw financial advantages for itself in buying and packaging Combined-Risk Loans in particular, Morgan Stanley focused heavily on increasing the volume of Combined-Risk Loans it purchased. Between 2004 and 2006 - years when it was purchasing more of the loans New Century sold than any other securitizer - Morgan Stanley expanded its subprime underwriting business by 25%. According to a 2007 New York Times article, Morgan Stanley agreed to pay above-market prices for loans in return for a steady supply of mortgages. A former New Century executive
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told the Times that "Morgan would be aggressive and say, 'We want to lock you in for $2 billion a month. '" New Century, in turn, structured its lending practices to meet Morgan Stanley's demand for Combined-Risk Loans. In its 2004 annual report, New Century stated:
We seek to maximize our premiums on whole loan sales by closely monitoring requirements of institutional purchasers and focusing on originating or purchasing the types of loans that meet those requirements and for which institutional purchasers tend to pay higher premiums. During the year ended December 31, 2004, we sold $14.1 billion ofloans to Morgan Stanley and $5.2 billion ofloans to DLJ Mortgage Capital, which represented 46.4% and 17.2%, respectively, of total loans sold. 42. Similarly, the examiner's report created in connection with New Century's 2007 bankruptcy describes the preeminence of the secondary mortgage market in shaping the company's lending practices: "Instead of focusing on whether borrowers could meet their obligations under the terms of the mortgages, a number ofmembers of the Board of Directors and Senior Management told the Examiner that their predominant standard for loan quality was whether the loans New Century originated could be initially sold or securitized in the secondary market." Morgan Stanley understood the key role that securitization played in shaping the practices of lenders like New Century. In prospectuses for its securitization deals, Morgan Stanley stated: "All ofthe mortgage loans in the mortgage pool[s] were also underwritten with a view toward the resale of the mortgage loans in the secondary mortgage market." B. Morgan Stanley Ensured that New Century Originated Combined-Risk
Loans. 43. During the relevant time period, Morgan Stanley required New Century, as a condition of the companies' lucrative business relationship, to issue large volumes of CombinedRisk Loans. The high-risk features of these loans increased the costs of the loans for borrowers and placed them at greater risk of default, delinquency, and foreclosure.
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1. Morgan Stanley's Policies ofPurchasing New Century Loans with Unreasonably High Debt-to-Income Ratios and Prioritizing "Stated Income" Loans.
44. A loan's debt-to-income ratio ("DTI") is a primary bellwether of the borrower's ability to meet the loan's terms. According to Morgan Stanley'S own DTI analysis, 45% of the loans it purchased from New Century had excessive DTI ratios, meaning they were issued to borrowers who could not afford them. This problem was exacerbated significantly by Morgan Stanley'S preference for "stated income" loans - i.e., loans where the borrower provides no verification of her income when submitting the loan application. This method was routinely and knowingly abused by New Century and its brokers to artificially inflate borrowers' income and thereby decrease the apparent DTIs, making it appear as if borrowers could afford loans that they could not afford given their actual income. Excessive DTI ratios and the prevalence of "stated income" loans placed New Century borrowers at a significantly increased risk of default and foreclosure.
45. According to the complaint filed in Allstate v. Morgan Stanley ("Allstate"), a securities fraud case currently pending in New York Supreme Court, a former Morgan Stanley employee stated that Morgan Stanley was aware of the extraordinarily high DTI levels of loans it purchased for securitization. This employee also said that Morgan Stanley staff agreed that a DTI of55% meant that borrower's income was fully allocated to paying debt, after accounting for all of a borrower's nonnal expenses. Nevertheless, the same employee stated, Morgan Stanley routinely purchased loans with DTls of 60% or higher for securitization, a feature of many loans that Morgan Stanley purchased from New Century.
46. The level of risk associated with high DTls was exacerbated by the prevalence of adjustable rate mortgages ("ARMs"). For many ARMs, a borrower's interest rates - and thus her monthly debt obligations - increased considerably after the first few years of the loan. An
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appropriate measure of DTI would consider the debt a borrower would face after the initial period, once the mortgage reached its adjusted interest rate. However, New Century's SEC filings stated: "We use a qualifying interest rate that is equal to the initial interest rate on the loan to determine the applicant's ability to repay an adjustable-rate loan. For our interest-only adjustable rate mortgage, or ARM, loans we generally use the initial interest-only payment for determining the borrowers' repayment ability." Thus, the already high apparent DTls for New Century loans purchased by Morgan Stanley actually understated the loans' true DTls by failing to take into account the adjusted interest rates applicable to ARMs or the fully amortizing principal and interest payment borrowers inevitably would need to make on loans with interestonly payment options.
47. Moreover, large percentages of the loans that Morgan Stanley purchased from New Century were "stated income" loans. According to Morgan Stanley prospectuses relating to securities composed exclusively of New Century loans, between 2004 and 2007, stated income loans comprised between 30.56% and 47.70% ofthe New Century loans purchased by Morgan Stanley. For at least three such securities, stated income loans constituted the majority of the loans originated by New Century and packaged by Morgan Stanley.
48. As alleged in an Assurance of Discontinuance filed by the Attorney General of Massachusetts, based on the description of one of Morgan Stanley'S own employees, the stated income method employed by New Century was "overused to the point of abuse." To approximate the true DTI levels for the stated income loans, based on borrowers' approximated actual incomes, the Massachusetts Attorney General conducted an analysis that predicted what the pattern of actual incomes among stated income borrowers would be if they followed the pattern of incomes in fully documented loans. Using this method, according to the Assurance of
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Discontinuance, a "substantial number" of these borrowers would have DTI ratios exceeding 55% (i.e., that are excessive by Morgan Stanley's own admission).
49. It was readily apparent to traders at Morgan Stanley that purchasing a large volume of stated income loans encouraged loan applications with systematically inflated income levels. A fonner executive director on Morgan Stanley's residential mortgage trading desk candidly described the situation in a radio broadcast in 2008: "No income no asset loans, that's a liar's loan. We are telling you to lie to us... we're hoping you don't lie... tell us what you make. Tell us what you have in the bank. But we're not going to actually verify it? We're setting you up to lie. Something about that transaction feels very wrong. It felt wrong way back when. And I wish we had never done it."
50. In some instances, the inflation of borrower income apparently involved outright fraud by the lender or broker. According to National Public Radio, a fonner mortgage broker who worked with New Century described one New Century account executive who encouraged brokers to use fraudulent means to complete loan applications with false incomes listed.
2. Morgan Stanley's Policy ofPurchasing New Century Loans with Unreasonably High Loan-to-Value Ratios.
51. Another basic measure of the riskiness of a mortgage loan is the loan-to-value ratio ("LTV"), which compares the amount of the loan to the subject home's value. Borrowers with loans that have high LTV ratios generally face a higher probability of delinquency or foreclosure, especially when the ratio approaches or exceeds 100%. It was Morgan Stanley'S stated policy not to securitize loans with LTV ratios greater than 100%. Nevertheless, in contravention of its own stated policy, Morgan Stanley did regularly purchase and securitize mortgage loans from New Century where the LTV, based on the broker-checked home value, exceeded 100%.
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52. An analysis conducted by the Massachusetts Attorney General reveals that Morgan Stanley packaged securities consisting ofNew Century loans with extremely high LTV levels. According to the Assurance of Discontinuance filed by the Massachusetts Attorney General, 31 % of the New Century loans securitized by Morgan Stanley in 2006 and 2007 had LTV ratios that were greater than 100%. Of those loans with an LTV ratio in excess of 100%, 60% of the New Century loans had LTV ratios greater than 105%; and about 19% ofthose loans had ratios greater than 120%.
53. Securities fraud litigation brought by the Federal Housing Finance Agency ("FHFA") alleges similarly unsustainable LTV levels. Based on a loan-level analysis of Morgan Stanley securities composed of New Century loans, the FHFA alleges a pattern of extremely high LTV ratios. While every Morgan Stanley prospectus reported 0% ofloans with an LTV of over 100%, the lowest percentage of such loans for New Century/Morgan Stanley securities was actually 11.96%. At the same time, according to the FHFA complaint, Morgan Stanley's prospectuses for these securities overstated the percentage of loans with an LTV below 80%. The total number of loans for which the reported LTV was inaccurate is striking. In one security, for example, approximately 44% of loans seriously understated the LTV. The data also shows that roughly 60-70% ofloans in each Morgan Stanley-New Century security had an LTV of over 80%.
54. Exacerbating the problem, Morgan Stanley purchased New Century loans which Morgan Stanley knew suffered from inflated appraisals, which skewed the LTV levels to appear lower than they actually were. According to the Allstate complaint, one fonner Morgan Stanley employee explained that Morgan Stanley would not require New Century to conduct a second appraisal on the mortgaged property because Morgan Stanley feared that a second appraisal
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would reflect the true, un-inflated value of the property and impede the flow ofloans for securitization.
3. Morgan Stanley's Policy ofRequiring Loans With Multiple High-Risk Factors.
55. An unreasonably high DTI or LTV level, standing alone, placed borrowers at higher risk of delinquency and foreclosure. Morgan Stanley exacerbated such risks by requiring that New Century's loans include other Combined-Risk Loan features.
56. Morgan Stanley specifically required that New Century loan pools be comprised largely ofloans with risky and costly terms. For example, according to the "Bid Terms" of a 2005 deal between Morgan Stanley and New Century, Morgan Stanley required that 79.54% of the loans have adjustable rates (i.e., that they be ARMs). In 2005, 73.3% of all New Century loans were ARMs (and 29.60% of all originations were interest-only ARMs).
57. New Century issued, and Morgan Stanley purchased, Combined-Risk Loans that New Century itself had expressly identified as potentially abusive. For example, Morgan Stanley required that the majority ofloans it purchased from New Century include prepayment penalties, despite the known riskiness of this loan feature. In the 2005 Morgan Stanley-New Century Bid Terms, Morgan Stanley required that no less than 73.11 % of loans contain prepayment penalties. Pursuant to Morgan Stanley's requirements, New Century issued large numbers ofloans with prepayment penalties.
58. Similarly, in its 2004 annual report to shareholders, New Century stated that, in an effort to avoid abusive lending, it did not make loans containing "balloon" payments (i.e., loans with a major portion due in one lump sum) or negative amortizations (i.e., loans in which the monthly payment level leads the total balance to increase). Yet, within a year, New Century began offering balloon loans and introduced "pay-option loans," allowing borrowers to make
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negatively amortizing payments. New Century stated that it was increasing its origination of these high-risk products in response to "greater demand in the secondary market."
59. With respect to balloon payment loans, Morgan Stanley knew that such loans placed borrowers in an untenable position. As Morgan Stanley stated in its securities prospectuses, "[m]ortgage loans with balloon payments involve a greater degree of risk because the ability of a borrower to make a balloon payment typically will depend upon the borrower's ability either to timely refinance the loan or to timely sell the related mortgaged property." In other words, balloon payment loans were never designed to allow borrowers to make affordable payments to payoff their mortgages.
60. Despite the known riskiness of these loans, Morgan Stanley purchased and securitized large numbers ofNew Century mortgage loans with balloon payment features. Loans with balloon payments regularly made up over 34% of the loans in Morgan Stanley securities comprised ofNew Century loans. For the vast majority of these loans, balloon payments added an additional layer of risk on top of adjustable rates and other high-risk and high-cost features.
4. Morgan Stanley's Policy ofProviding Lines of Credit that Enabled New Century's High-Risk Lending.
61. Using a variety of credit channels, Morgan Stanley provided New Century with the funds necessary to originate loans with exceedingly high-risk features, which were issued in anticipation of securitization. This support took several forms: (a) warehouse lending, pursuant to which New Century borrowed funds from Morgan Stanley secured by home mortgages that would be originated in the future; (b) pre-commitments from Morgan Stanley to purchase loans from New Century; and (c) "wet-funding," whereby Morgan Stanley provided New Century with funds needed to close pending mortgage originations.
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62. Morgan Stanley was New Century's primary source of warehouse funding, providing billions of dollars in credit per year from 2004 through 2007. This relationship was so important to Morgan Stanley that, according to the Massachusetts Attorney General's investigation, Morgan Stanley's traders frequently referred to New Century as a "partner."
63. From Morgan Stanley's perspective, its warehouse lending relationship with New Century took on special significance. As of February 2007, the quarter-end balance in Morgan Stanley's warehouse loans totaled over $2.6 billion, with over $1.5 billion of that amount earmarked for New Century's use in originating loans. Between November 2003 and February 2007, a period in which Morgan Stanley made over $57 billion in warehouse credit available to subprime lenders, New Century received more than a quarter of those funds.
64. Morgan Stanley's funding constituted an indispensable element of New Century's business model. The examiner's report completed in connection with New Century's bankruptcy noted the significance of these credit streams: "To finance and carry the mortgage loans New Century originated and purchased, pending their sale or securitization in the secondary mortgage market, [New Century] maintained credit facilities, typically in the form of master repurchase agreements, with multiple warehouse lenders, which were large banking and investment institutions." In its annual statements to shareholders, New Century also identified its "primary sources of cash" for loan origination activities as "warehouse and aggregation credit facilities, [ ] asset backed commercial paper facility, and the proceeds from the sales and securitizations of [ ] loans." Indeed, New Century observed that if access to warehouse financing and sales on the secondary market were constricted, the company "would be forced to suspend or curtail our operations. "
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65. Warehouse lines of credit were so critical to New Century's business that it literally could not originate loans without them. Patricia Lindsay, a former wholesale underwriter at New Century, submitted written testimony to the Congressional Financial Crisis Inquiry Commission, in which she testified that, through the provision of warehouse credit lines, Wall Street investors "made sure we had enough money to close the loans that they were waiting in the wings to buy.... New Century did not have the liquidity to make these loans without the use of warehouse lines of credit. When New Century's lines were shut down in March of2007, business stopped." In her live testimony to the Commission, Ms. Lindsay further emphasized the indispensable role of warehouse lending: "New Century was not able to originate loans without the use of warehouse credit. We didn't have our own funds to loan, we were not a banking institution, we did not take deposits. So we got our money from warehouse lenders. These warehouse lenders provided us the ability to make these loans, and they were usually provided by the same people who would purchase our loans on Wall Street."
66. The warehouse lines of credit were indispensable to New Century's ability to originate and close loans in the metropolitan Detroit area in particular. On March 27,2007, New Century and its subsidiary Home123 entered a consent cease and desist order with the State of Michigan Office of Financial and Insurance Services, which provided that "[o]n or about March 13, 2007, Respondents substantially lost their ability to fund loans through their warehouse line(s) of credit and, as a result, Respondents were unable to fund their mortgage loans."
67. Morgan Stanley sometimes committed to buy loans with certain pre-specified features so far in advance that the loans that were the subject of the agreement had not yet been originated. Under Morgan Stanley'S "early purchase" program, it would provide New Century
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and other originators with a line of credit before it would purchase loans from them. As a result, . New Century was often originating loans for the purpose of fulfilling its commitment to Morgan
Stanley. 68. Morgan Stanley routinely purchased and securitized Combined-Risk Loans
because those very loans secured the warehouse lines of credit that Morgan Stanley extended. According to one former Morgan Stanley employee referenced in the Allstate complaint, Morgan Stanley provided warehouse lines of credit that essentially locked Morgan Stanley into buying New Century's loans.
69. Morgan Stanley also provided crucial funding aimed at individual loans that New Century originated. In early March 2007, just before New Century's banlcruptcy, Morgan Stanley "wet-funded" New Century loans, in effect providing cash to New Century borrowers at the closing table. Morgan Stanley'S wet-funding permitted New Century to close millions of dollars in Combined-Risk Loans in March 2007, even as New Century was hurtling toward bankruptcy.
5. To Ensure the Continued Sale of Combined-Risk Loans. Morgan Stanley Circumvented Standard Underwriting Processes.
70. Morgan Stanley ensured that it was purchasing high-cost loans from New Century by actively undermining sound underwriting practices.
71. For example, Morgan Stanley frequently and knowingly purchased loans that failed due diligence review, the process in which loans purchased for securitization are examined to ensure their compliance with underwriting standards.
72. According to the Allstate complaint, in some instanqes where Morgan Stanley's due diligence firm, Clayton Holdings, asked to review further documentation on a loan because the information in the loan file did not fit the description provided by the seller, Morgan Stanley
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told Clayton Holdings not to perform the more rigorous review because they could rely on the seller's representations and warranties in the loan pool agreement. However, Morgan Stanley knew that any such reliance was misplaced. In a 2007 securities prospectus, Morgan Stanley acknowledged that New Century's financial difficulties "may have adversely affected the application, .. of their underwriting standards in a manner that would have an adverse effect on the default and loss experience of the mortgage loans in the future."
73. Morgan Stanley was on notice that the loans it was purchasing from New Century deviated substantially from basic underwriting standards, yet it pressed ahead to purchase them and include them in the mortgage-backed securities it assembled. According to a trending report prepared by Clayton Holdings, over one-third of the loans Morgan Stanley evaluated for purchase and securitization from 2006 through mid-2007 failed to meet Morgan Stanley's own underwriting guidelines. Yet Morgan Stanley purchased and securitized over half of the loans that Clayton Holdings detennined did not meet Morgan Stanley's own underwriting guidelines.
74. Indeed, Morgan Stanley acknowledged that its mortgage-backed securities composed of New Century loans were comprised largely ofloans that substantially deviated from basic underwriting guidelines. In a prospectus for securities composed of New Century loans, Morgan Stanley cautioned that a "substantial proportion" of securitized mortgage loans constituted "exceptions" to New Century's underwriting guidelines.
75. Morgan Stanley actively encouraged lending tactics that increased the levels of risk associated with individual loans. The complaint in the Allstate litigation refers to a former business analyst at one of New Century's affiliate companies who stated that Morgan Stanley placed at least two employees onsite at New Century full-time when conducting due diligence on loans it would purchase for securitization. That complaint also refers to a former Morgan
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Stanley employee who reports that, when a full documentation loan showed that the borrower's income was insufficient, Morgan Stanley would shred the documentation and tell the originator to get a new, "stated income" loan that made the loan appear more reasonable (i.e., less risky). IV. As a Direct Result of Morgan Stanley's Policies. New Century Originated Large
Volumes of Combined-Risk Loans. 76. In response to Morgan Stanley's policies and practices described herein, New Century needed to maximize the volume of Combined-Risk Loans it originated to meet Morgan Stanley's requirements and demand and to maximize the overall volume of loans it originated, regardless of the levels of risk imposed on borrowers. Patricia Lindsay, the former New Century wholesale underwriter, submitted written testimony to the Financial Crisis Inquiry Commission stating that the "definition of a good loan changed from, 'One that pays' to 'One that can be sold. '" Lindsay further testified: At the end of the day, we had a system that went into a downward spiral because of layering risk rather than offsetting the risk because there was such a huge demand for the products. Our loans were sold before we even made them, which put more pressure on the production groups to get loans closed. Wall Street packaged and sold the Residential Mortgage Backed Securities to unsophisticated bond buyers/investors. By unsophisticated, I mean they did not understand the true risk of the underlying loan product. 77. Not coincidentally, the time period during which Morgan Stanley ramped up its business with New Century occurred in tandem with a spike in the riskiness of New Century's loan products. The bankruptcy examiner's report anatomizing New Century's collapse in 2007 noted that, between 2004 and late 2006, "non-traditional mortgage loan products, such as interest-only loans and 40-year-amortizing loans, became a larger part ofNew Century's loan mix" and during that period interest-only ARMs jumped from representing 19% of all New Century loans originated to nearly 30%. Similarly, between 2003 and 2006, the share of New Century originations composed of 80120 loans (i.e., loans in which the borrower receives a pair
23

ofloans that in combination equal the value of the home and allows the borrower to put no money down) rose steadily. According to the bankruptcy examiner's report, "New Century continued in 2004 and 2005 to concentrate originations in the layered risk products that presented the greatest risks, particularly the Stated Income and 80/20 products."
78. During this same period, New Century structured its business practices in a way that did not depend on the loans it originated being economically viable for borrowers. As the bankruptcy examiner found, "data available to New Century Senior Management in September 2005 indicated that the 80/20 loan product was, in the words of one employee, 'performing worse than the other [New Century] products.' ... [B]ut the volume of growth of the 80/20 product continued." While 80/20 products represented 9.10% of New Century's originations at the end of2003, that proportion grew to 23.54% a year later and 35.24% by the end of2005.
79. The Combined-Risk Loan products that New Century emphasized during this period, pursuant to Morgan Stanley's requirements and encouragement, predictably exposed borrowers to elevated and spiraling risk that put many on a path to foreclosure. The bankruptcy examiner's report quotes one New Century employee presciently describing this dynamic in 2005:
The most common subprime product is a loan that is fixed for 2 or 3 years and then becomes adjustable. The initial rate is far below the fully-indexed rate, but the loan is underwritten to the start payment. At month 25 the borrower faces a major payment shock, even if the underlying index has not changed. This forces the borrower into a refinance, likely with another subprime lender or broker. The borrower pays another 4 or 5 points (out of their equity), and rolls into another 2/28 loan, thereby buying 2 more years oflife, but essentially perpetuating a cycle of repeated refinance and loss of equity to greedy lenders. Inevitably, the borrower lacks enough equity to continue this cycle (absent rapidly rising property values) and ends up having to sell the house or face foreclosure.
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80. New Century acknowledged that the focus on ever-increasing volumes of Combined-Risk Loans compromised its ability to adhere to applicable regulatory requirements. In a 2004 statement to investors, the company stated: "[we] may [ ] be forced to expand our operations at a pace that does not allow us to attract a sufficient number of employees with the capability to ensure we are in compliance with the numerous complex regulations applicable to our business as well as to enable us to provide high quality customer service." The following year, Morgan Stanley increased its funding for New Century loan originations by one billion dollars.
81. New Century aggressively sought, as a matter of company policy, to originate Combined-Risk Loans in order to meet Morgan Stanley's demand. To that end, New Century aggressively targeted African-American borrowers and communities as targets for the Combined-Risk Loans. New Century specifically targeted certain metropolitan areas for these loans, with the metro Detroit area being one of its primary targets.
82. New Century's efforts were aided by its use of a computerized system for defining the range ofloan products that a New Century loan officer or broker could offer to any prospective borrower. Specifically, New Century used a proprietary online underwriting system called FastQual. The system was developed by New Century during the 2002 fiscal year, and, on infonnation and belief, was used at all times relevant to this Complaint. According to New Century's securities disclosures, FastQual "provide[d] all loan products for which the borrower qualifies." In other words, once a broker entered a prospective borrower's infonnation into FastQual, the system generated a menu ofthe New Century loan products available for that borrower, including loans with Combined-Risk tenns. It thereby circumscribed the range of loans that the borrower might receive, superseding the discretion of the loan officer or broker to
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define the list of possible loan products. To the extent that borrowers received loans with tenns

characteristic of Combined-Risk Loans, those tenns originated in the company's centralized

FastQual system.

83. New Century also centralized its efforts to originate loans responsive to Morgan

Stanley'S demands by providing training programs, directed to mortgage brokers originating

New Century loans, that inculcated tactics and strategies associated with Combined-Risk Loans.

For example, in or around 2003, New Century organized an event called "Close More

University" in several cities. At Close More University events, New Century presented speakers

who addressed topics related to its lending business, including instruction on how to achieve

success as a mortgage broker. Video footage of one such tutorial has been posted on the Internet

and is available on www.youtube.com.

84. In the Close More University presentation, New Century instructed its affiliated

brokers on several tactics associated with originating Combined-Risk Loans. Among other

things, the New Century presentation included the following instructions:

•

"Qualify borrowers. There's all kinds of ways to qualify borrowers and

you need to know all ofthem to be a top producer. Stated, no stated, personal

bank statement, business bank statement, alt doc, VOD, no ratio, no employment

stated, no income, no asset. When you can qualify borrowers with all kinds of

loan programs there will always be business in any kind of rate environment and

in any conditions."

•

"New Century has programs with no money down, less-than-perfect

credit, stated income, unusual circumstances, and all ofthem at once on one

deal." (Emphasis added.)

85. New Century's policies also encouraged fraud. Specifically, the mix of high-risk

loan products that New Century specialized in - with its emphasis on, inter alia, stated income

applications and 100% financed loans - enabled loan originations grounded in fraud. In her

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written testimony to the Financial Crisis Inquiry Committee, fonner New Century underwriter
Patricia Lindsay explained this connection:
People who may not have committed fraud before did so by making material misrepresentations to buy a property. The 100% financing products on purchase money transactions provided a vehicle for people to enter into buying a property without putting forth any money. The stated income product eliminated the ability to prove fraud without supporting documentation. When previous products required some supporting documentation in order to get a higher LTV, it was easier to identify the fraud and stop it. Straw buyers were recruited for their credit scores specifically to avoid having to provide income documentation. And they would also claim that the property was to be owner occupied, as 100% financing was not offered on non-owner occupied properties. V. The Combined-Risk Loans Resulting From Morgan Stanley's Policies and Practices Placed Borrowers at Elevated Risk of Foreclosure, Particularly in the Detroit Area. 86. The characteristics of the New Century loans packaged and securitized by
Morgan Stanley reflect New Century's successful efforts to produce loans that met Morgan
Stanley's demands. Measured against the outcome for borrowers - i. e., rates of foreclosure -
those loans exposed borrowers to the excessive levels of risk that define Combined-Risk lending.
87. Prevailing rates of foreclosure - both before and during the recent collapse of the
housing market - provide a useful reference point. Between 1950 and 1997, foreclosure rates on
conventional loans typically remained below 1%, even as foreclosures increased dramatically
during the 1980s. Peter J. Elmer & Steven A. Seelig, The Rising Long-Term Trend a/Single
Family Mortgage Foreclosure Rates 1,21 (Fed. Deposit Ins. Corp., Working paper No. 98-2).
Moreover, foreclosure rates on FHA-insured loans, categorized by their low down payments, low
closing costs, and easy credit qualifying, generally remained well below 2% during the same
time period. ld. Even during the unprecedented housing market collapse associated with the
subprime bubble, white borrowers who took out loans during the years leading up to the collapse
have faced a foreclosure rate of about 4.5%, while African-American and Latino borrowers have
experienced foreclosure rates above 8%.
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88. Foreclosure rates for the Morgan Stanley-New Century loans were significantly higher than prevailing foreclosure rates in the market. Although loan-level data for all loans originated by New Century and securitized by Morgan Stanley is not publicly available, data for a subset of those loans is publicly available. Those records are maintained in the Columbia Collateral File. The Columbia Collateral File is a database of information about mortgagebacked securities operated by Wells Fargo Bank, N.A. in connection with various securities administered by the Corporate Trust Services group of Wells Fargo Bank, N.A. The Columbia Collateral File can be accessed via the Internet at www.ctslink.com.
89. The Columbia Collateral File contains loan-level information for seven Morgan Stanley securities that consist exclusively of New Century loans. Those securities have the following loan pool identifiers: MS07-NC2-1, MS07-NC2-2, MS07-NC2-3, MS07-NC2-4, MS07-NC4-1, MS07-NC4-2, MS07-NC4-3, MS07-NC4-4. On information and belief, this is the entire universe of publicly-available, non-proprietary loan-level data for securities that were packaged by Morgan Stanley and comprised of New Century loans.
90. The data in the Columbia Collateral File contains information about the characteristics of individual loans, including, inter alia, the borrower's FICO score, the reported LTV ratio, whether the loan application involved documentation ofborrower income, and whether the loan had gone into foreclosure as of December 31, 2008. It does not, however, contain information about borrower race/ethnicity or census tract. It is possible to augment the data in the Columbia Collateral File with that information by merging the Columbia Collateral File with data assembled pursuant to the HMDA. By matching overlapping data fields, it is possible to determine the loan in the HMDA data corresponding with each loan in the Columbia
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Collateral File. While that merge process does not identify matches for 100% ofthe loans in the Columbia Collateral File, it is possible to match approximately 60% of the loan files.
91. Once the Columbia Collateral File is merged with HMDA data and further filtered to include only first-lien loans associated with owner-occupied single family dwellings, it is possible to analyze over 3,500 loans originated by New Century and securitized by Morgan Stanley. Approximately 90% of those loans were originated in the fourth quarter of2006. Because that period represented a high point in tenns of New Century's overall lending volume, as well as in the volume ofloans New Century sold to Morgan Stanley, it provides a useful snapshot of the kinds of New Century loans that Morgan Stanley purchased during the relevant time period.
92. Analysis ofthis sample of Morgan Stanley-New Century loans shows rates of foreclosure that far exceeded both historical norms and the more recent foreclosure rates stemming from subprime lending. For all of these Morgan Stanley-New Century loans in the sample, the foreclosure rate as of December 31,2008 was 20.2%. In at least four metro areas, the foreclosure rate for these loans as of December 31, 2008 was over 30%, and the rate was over 20% in ten metro areas.
93. The probability of foreclosure was even more pronounced for these Morgan Stanley-New Century loans in cities that were the focus of New Century's lending, especially Detroit. Indeed, loans in these Morgan Stanley-New Century pools that were originated in the Detroit area had exceptionally high foreclosure rates: Detroit borrowers represented in these securities had a foreclosure rate of 35.7%. At the metro level, this rate was second only to Oakland, California, where borrowers represented in the Morgan Stanley-New Century pools had a foreclosure rate of 42.2%.
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94. These astronomically high rates of foreclosure followed naturally from the characteristics ofthese loans. For borrowers in Detroit, loans in these Morgan Stanley-New Century securities had an average LTV ratio of98.1 %; 80% of the loans originated in Detroit included adjustable rates, while almost 40% were stated income loans. Each of these loan features, standing alone, signifies a high level of risk. In combination, they create the kind of risk-layering, required and encouraged by Morgan Stanley, that placed borrowers at extreme peril.
95. It is important to note that the available data only indicates foreclosures that had occurred by December 31,2008. Because the data does not account for foreclosures that have occurred since that time, the data understates rates of foreclosure associated with the loans in these Morgan Stanley-New Century securities pools. The actual rate of foreclosure for these loans, through the present, is likely significantly higher.
96. The data also reflects significant racial disparities in the foreclosure rates of these Morgan Stanley-New Century loans. Among all borrowers represented in the sample, the rate of foreclosure among African Americans was 28.57% greater than the rate of foreclosure among white borrowers. Racial disparities with respect to New Century loans are discussed further below. VI. Morgan Stanley's Policies and Practices Had a Disparate Impact on African-
American Borrowers Because African-American Borrowers Were Disproportionately Likely to Receive Combined-Risk Loans. A. History of Discrimination in Residential Lending.
1. "Redlining. " 97. The historical roots of contemporary disparities in access to credit can be traced to the 1930s, when the federal government developed a rating system purporting to assess risks associated with lending in specific neighborhoods. On rating system maps, integrated or
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predominately African-American neighborhoods were marked in red. Loans were virtually never made to households located in the "red" neighborhoods. This neighborhood-based discrimination in access to credit took hold more broadly over the coming decades. As a result, the phrase "red1ining" came to describe practices that allocated access to credit according to the racial composition of neighborhoods or other geographic spaces. For decades, red1ining occurred without any meaningfu11egal constraint. Since 1968, however, red1ining has been prohibited by the Fair Housing Act.
98. Despite the illegality of redlining, credit opportunities remained scarce in communities of color throughout the 1970s and 1980s.
2. "Reverse Redlining. " 99. Redlining, and the disparities in access to credit it created, set the stage for new forms of discriminatory lending that became common in the 1990s and crested in the years leading up to the 2008 financial crisis. 100. Longstanding discrimination in access to credit made minority neighborhoods especially attractive to subprime lenders. In neighborhoods and communities that had been excluded from traditiona11ending opportunities, few institutions existed that offered more favorable "prime" loan products. As a result, subprime lenders faced little or no competition in those communities. This gave rise to a phenomenon that has become known as ''reverse redlining." Reverse redlining describes the practice oftargeting borrowers in predominately minority communities for loans with less favorable terms than those available in predominately white communities. 101. The prominence of reverse redlining can be seen in the disproportionate share of subprime or high-cost loans channeled to African-American and Latino borrowers. A joint report from HUD and the u.S. Department of Treasury issued in 2000 found that "borrowers in
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black neighborhoods [were] five times as likely to refinance in the subprime market than borrowers in white neighborhoods," even when controlling for income. Indeed, that report found that "borrowers in upper-income black neighborhoods were twice as likely as homeowners in low-income white neighborhoods to refinance with a subprime loan." Similarly, research from the Harvard Joint Center for Housing Studies shows that, in 1998, subprime lenders issued 14.1 % of home purchase loans and 42.3% of refinance loans originated in predominately minority neighborhoods, compared to 3.8% of new home purchase loans and 8.8% of refinance loans originated in predominately white neighborhoods. See JOINT CTR. FOR Hous. STUDIES OF HARVARD UNIV., THE STATE OF THE NATION'S HOUSING 2000, at Table A-II (June 10,2000). And a 2003 study found that, in nine of the ten cities it examined, rates of subprime lending for refinance loans were tied to the proportion of African Americans living in a neighborhood, even after controlling for credit risk and housing stock characteristics. See THE BROKEN CREDIT SYSTEM, supra, at 37.
102. This trend continued as the prevalence of subprime loans grew. A study released in 2006 found that, within the subprime market, "borrowers of color ... were more than 30% more likely to receive a higher [interest] rate loan than white borrowers, even after accounting for differences in risk." DEBBIE GRUENSTEIN BOCIAN ET AL., CTR. FOR RESPONSIBLE LENDING, UNFAIR LENDING: THE EFFECT OF RACE AND ETHNICITY ON THE PRICE OF SUBPRIME MORTGAGES 3 (2006). Another study found that African Americans and Latinos were much more likely to receive subprime loans, and that "the disparities were especially pronounced for borrowers with higher credit scores." DEBBIE GRUENSTEIN BOCIAN ET AL., CTR. FOR RESPONSIBLE LENDING, LOST GROUND, 2011: DISPARITIES IN MORTGAGE LENDING AND FORECLOSURES 5 (2011). That study also found, more generally, that "borrowers in minority groups were much more likely to
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receive loans with product features associated with higher rates of foreclosures," i.e., loans with higher interest rates or with risky terms. Id. at 21. These high disparities persisted even after controlling for credit score. Id.
103. Reverse redlining has resulted in significant racial disparities in rates of foreclosures. One recent study found that, nationally, "African Americans and Latinos are, respectively, 47% and 45% more likely to be facing foreclosure than whites." DEBBIE GRUEN STEIN BOCIAN ET AL., CTR. FOR RESPONSIBLE LENDING, FORECLOSURES BY RACE AND ETHNICITY: THE DEMOGRAPHICS OF A CRISIS 10 (2010). These disparities persist within income categories. Id. at 9-10.
104. Empirical research demonstrates that these outcomes result from reverse redlining, which led subprime lenders to channel the riskiest loans to minority communities. Researchers at Princeton University, for example, studied the statistical links between neighborhood racial composition, subprime lending, and foreclosure rates, and found "strong empirical support for the hypothesis that residential segregation constitutes an important contributing cause of the current foreclosure crisis, that segregation's effect is independent of other economic causes of the crisis, and that segregation's explanatory power exceeds that of other factors hitherto identified as key causes (e.g., overbuilding, excessive subprime lending, housing price inflation, and lenders' failure to adequately evaluate borrowers' creditworthiness)." Jacob S. Rugh & Douglas S. Massey, Racial Segregation and the American Foreclosure Crisis, 75 AM. SOCIOLOGICAL REVIEW 629, 644 (2010). "Simply put, the greater the degree of Hispanic and especially black segregation a metropolitan area exhibits, the higher the number and rate of foreclosures it experiences." Id.
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B. The Economics of Mortgage Finance Created the Incentive Structure that Led Lenders to Channel Combined-Risk Loans to Minority Communities and Borrowers.
105. The history of housing segregation and credit discrimination created the conditions in which reverse redlining could flourish. For a lender seeking to originate a large volume of high-risk loans, those conditions generated clear economic incentives. Loans with high levels of risk were inherently more difficult to market in communities with well-established credit economies, because few borrowers would select a Combined-Risk Loan if they also had access to better loan products. Combined-Risk lending thus required unscrupulous lenders to exploit preexisting disparities in access to credit, a strategy that in many parts of the country led naturally to reverse redlining.
106. Economic incentives to engage in reverse redlining were especially pronounced for lenders who intended to sell most of the loans they originated to investment finns, like Morgan Stanley, to be packaged in mortgage-backed securities. In contrast to traditional lending - in which banks held onto mortgages, bearing the risk and reward of payment obligations for the life of the loan - securitization allowed lenders to quickly dispose of the loans they originated. See William Apgar & Allegra Calder, The Dual Mortgage Market: The Persistence ofDiscrimination in Mortgage Lending, in THE GEOGRAPHY OF OPPORTUNITY: RACE AND HOUSING CHOICE IN METROPOLITAN AMERICA 101, 104 (Xavier de Souza Briggs, ed., 2005). This process allowed lenders to rapidly replenish their funds, enabling a cycle of origination, sale, and securitization. Because these loans could be quickly sold, lenders had incentives to maximize the volume of loans produced without regard to the levels of risk they entailed. For these reasons, as noted by researchers at Princeton University, "[t]he invention of securitized mortgages ... changed the calculus of mortgage lending and made minority households very desirable as clients." Rugh & Massey, supra, at 631.
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107. These economic forces gave rise to what many scholars and economists have characterized as a "dual mortgage market." In this dual mortgage market, different communities were offered "a different mix of products and by different types of lenders" and subprime lenders "disproportionately target[ed] minority, especially African-American, borrowers and communities, resulting in a noticeable lack of prime loans among even the highest-income minority borrowers." Apgar & Calder, supra, at 102.
c. Residential Segregation and Lending Discrimination in Metropolitan Detroit.
108. By the time the subprime lending boom began in the 1990s, longstanding housing patterns and lending discrimination left communities in the city of Detroit highly vulnerable to reverse redlining. Decades of discriminatory housing and lending practices had given rise to intensive residential segregation. African-American communities, facing a dearth of conventional lending opportunities, could be readily targeted for Combined-Risk Loans.
109. African Americans began moving to the city of Detroit in large numbers by the 1940s. By the end ofthat decade, racially segregated neighborhoods began to solidify: the majority of African-American Detroiters lived in "a densely populated, sixty-square-block section of the city's Lower East Side." THOMAS J. SUGRUE, THE ORIGINS OF THE URBAN CRISIS: RACE AND INEQUALITY IN POSTWAR DETROIT 23-24 (2d ed. 2005).
110. Residential segregation in the city of Detroit resulted from private and public policies and practices denying equal housing opportunity to African Americans. For example, in 1947, only 47,000 ofthe 545,000 housing units in Detroit were available to African Americans. See HOUSING AND HOME FINANCE AGENCY, THE HOUSING OF NEGRO VETERANS: THEIR HOUSING PLANS AND LIVING ARRANGEMENTS IN 32 AREAS, at Table 8B (1948). This disparity arose, in part, from explicit redlining: during the period when the Home Owners' Loan Corporation ("HOLC") marked "undesirable" communities in red, all of Detroit's African-
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American communities were so designated, thus classifying them as unsuitable for federal housing and loan subsidies. Sugrue, supra, at 38,43-44. Appraisers and brokers provided more favorable loan terms to homes in areas with white-only racially restrictive covenants. Id. at 44. These covenants severely restricted housing opportunities for African Americans in Detroit. Of the 186,000 single-family homes constructed in Detroit in the 1940s, only 1,500 were available to black buyers. Id. According to one leading scholar, "HOLC appraisals of Detroit neighborhoods became self-fulfilling prophesies in the hands of real estate brokers. A web of interlocking real estate interests - brokers, speculators, developers, and banks - built on the base of racial animosity to perpetuate racial divisions in the housing market." Id. at 46.
111. In the following decades, these patterns intensified, driven in part by "blockbusting" practices in which unscrupulous real estate agents intentionally sparked panic by white residents when African Americans began moving into their neighborhoods. During the 1980s, as segregation rates began to slowly decline nationally, the rate of segregation in the Detroit region increased by 2.6 percentage points. JOHNR. LOGAN & BRIAN STULTS, PROJECT US2010, THE PERSISTENCE OF SEGREGATION IN THE METROPOLIS: NEW FINDINGS FROM THE 2010 CENSUS 6 (2011).
112. By 1990, Detroit was the most racially-segregated major metropolitan area in the United States. Reynolds Farley, et al., Detroit Divided, THE MULTI-CITY STUDY OF URBAN INEQUALITY 161 (2000). While African Americans made up 22% of the greater metropolitan area in 1990, the typical African American lived in a neighborhood where 83% of residents were also African American. Id. at 162-63. Similarly, an average white resident lived in a neighborhood where 92% of the other residents were white. Id. While federal fair housing laws yielded modest declines in racial segregation in many cities, Detroit was the only major
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metropolitan area where racial segregation was just as extensive in 1990 as it was ten years earlier. Id.
113. This baseline of residential segregation led directly to the patterns of subprime lending that appeared over the last decade. In 2000, African Americans composed 82% of the population in the city of Detroit. Robert Mark Silverman, Redlining in a Majority Black City?: Mortgage Lending and the Racial Composition o/Detroit Neighborhoods, 29 W.J. BLACK STUDIES 531, 533 (2005). As a majority-minority city where African Americans have historically faced a dearth of credit opportunities, "Detroit is a critical case study for the importance ofrace in mortgage lending." Id. Analysis of2000 HMDA and U.S. Census data demonstrate that patterns of segregation correlated with the availability of conventional credit. On average, the African-American population was larger in census tracts where loan-denial rates outstripped loan originations. Id. at 534-35. While other factors (such as educational attainment and the relative age of housing stock) are significant to the analysis, "race is the strongest predictor of mortgage outcomes." Id. at 537.
114. These dynamics led to a strong correlation in Detroit between race and subprime loans. Whereas Detroit previously lagged behind larger metropolitan areas such as Chicago and Los Angeles in overall volume of subprime loans originated, by 2004 it was second nationally in "subprime market penetration." Philip Ashton, CRA's "Blind Spots": Community Reinvestment and Concentrated Subprime Lending in Detroit, 32 J. URBAN AFFAIRS 579,586-87 (2010). "Detroit emerged as the largest of 30 metro areas with the highest subprime lending rates occurring alongside high rates of mortgage denials to minority applicants." Id. at 587. Moreover, subprime lenders had higher odds oflending to African-American borrowers relative
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to white borrowers in Detroit, even though African-American buyers accounted for only 32% of homes purchased in Wayne County between 2004 and 2007. Id. at 601.
D. New Century's Lending in the Detroit Region Reveals Stark Racial Disparities.
115. HMDA requires mortgage lenders to disclose certain information about each mortgage loan originated or purchased in a fiscal year. Among other information, lenders must disclose information about the race and ethnicity of the borrowers, as well as certain information about the characteristics of each loan (e.g., loan amount and lien status) and the census tract in which the home associated with each mortgage loan is located. At all times relevant to this Complaint, New Century was subject to the requirements ofHMDA.
116. Pursuant to regulations promulgated by the Federal Reserve Board, since 2004 the HMDA data has included a designation for "high-cost" loans. Analysis of the HMDA data makes it possible to detect discriminatory lending patterns, including reverse redlining practices in which lenders focus on minority neighborhoods to originate high-cost loans. The presence of significant disparities in the race of borrowers, or the racial compositions of neighborhoods, receiving high-cost loans is probative of reverse redlining. In order to accurately discern these dynamics in Detroit, it is necessary to examine the nine counties composing the Detroit
metropolitan area: Genesee, Lapeer, Livingston, Macomb, Monroe, Oakland, st. Clair,
Washtenaw, and Wayne (collectively, the "Detroit region"). 117. Although New Century's overall business in the Detroit region emphasized high-
cost loans, its focus on high-cost lending to the African-American community in the region was stark. While white borrowers received 3.7 times as many high-cost loans (4,416) as non-highcost loans (1,190), black borrowers received nearly ten times more high-cost loans (4,291) than non-high-cost loans (435). African-American borrowers constituted 21.8% of New Century's
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non-high-cost business in the Detroit region (receiving 435 of the 1,994 of non-high-cost loans) but made up 44.3 % ofNew Century's high-cost volume in the region (4,291 of 9,679 high-cost loans).
118. Similar patterns emerge when one focuses on the racial composition of a borrower's neighborhood. For non-high-cost loans issued by New Century in the Detroit region, the median minority population of a borrower's census tract was 10%. By contrast, for high-cost loans, the median minority percentage of a borrower's census tract was 35.2%.
119. New Century's concentration on African-American neighborhoods in the Detroit region outpaced the larger mortgage market significantly. About 40% of New Century's highcost loans in the Detroit region went to neighborhoods that were 70% or more minority. This concentration is more than five times greater than the overall share ofloans originated by all lenders in those same neighborhoods. Conversely, for the entire Detroit region, 57% of all loans went to borrowers in census tracts that were at least 90% white, but only 33% of New Century's high-cost loans were originated in those neighborhoods. While New Century originated 32.4% of its high-cost loans in census tracts that were at least 90% minority, only 5.36% of all loans originated in the Detroit region were issued in those neighborhoods. In other words, a high-cost loan originated by New Century was more than six times as likely to be in a 90%-plus minority neighborhood than the average loan originated in the Detroit region. This concentration was also disproportionate to overall residency patterns: only 14.1% of the Detroit region lives in 90%plus census tracts, which means that the 32.4% share of New Century's high-cost business in those neighborhoods is more than double what the population patterns would predict.
120. New Century's concentration on minority neighborhoods also surpassed other high-cost lenders in the Detroit region. The share ofNew Century's high-cost business in 90%-
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plus minority neighborhoods was 2.3 times greater than the share of high-cost business in such neighborhoods for all lenders: 32.4% of New Century's high-cost loans were in census tracts with at least 90% minority residents, whereas only 13.99% of all high-cost loans were originated in those neighborhoods. Similarly, among all lenders, 49% of high-cost loans made to African Americans went to neighborhoods that were at least 90% minority, but for New Century, 62% of its high-cost loans to African-American borrowers went to such neighborhoods.
121. Racial disparities in New Century's lending patterns in the Detroit region remain visible even when statistically controlling for certain factors related to creditworthiness. Controlling for income, loan amount, and other loan features reported pursuant to HMDA, an African-American borrower was 70% more likely than a white borrower to obtain a high-cost loan from New Century.
122. The data also provides useful information regarding the interaction between a borrower's race and the racial composition of her neighborhood. For example, the data shows that for New Century's loans in the Detroit region, an African-American borrower in a minority neighborhood had a 21 % greater chance of receiving a high-cost loan than a similarly-situated white borrower in a white neighborhood. VII. The Named Plaintiffs.
A. Beverly Adkins 123. Plaintiff Beverly Adkins is an African-American homeowner who resides in Detroit. 124. Ms. Adkins was subject to Morgan Stanley's discriminatory policies and practices identified herein. Ms. Adkins received a Combined-Risk Loan from New Century pursuant to Morgan Stanley'S discriminatory policies and practices identified herein.
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125. Ms. Adkins was harmed by Morgan Stanley's discriminatory policies and practices identified herein, including by being subjected to excessive fees and costs and . excessive risk of default and foreclosure.
126. At the time of her New Century transaction at issue, Beverly Adkins resided with her husband Leroy Adkins, now deceased, at 9625 McKinney Street, Detroit, Michigan 48224, a home they owned.
127. In 2004, the Adkinses sought to refinance their existing home loan. 128. The Adkinses first learned ofNew Century when they received advertisements sent to their home, to which they responded. 129. On Apri128, 2004, the Adkinses refinanced their existing home loan by obtaining a Combined-Risk Loan from New Century. 130. The Adkinses' loan (Loan No. 0001528902) was a 30-year, adjustable rate loan. The loan amount was $104,400.00. According to the Adjustable Rate Rider to their mortgage, the loan had a two-year fixed interest rate of 8.4000%, after which, on June 1,2006 and every six months thereafter, the interest rate would reset, adjusting by a maximum increase or decrease of 1.500 percentage points from the previous effective rate and rounded to the nearest 0.125%. According to the Adjustable Rate Rider Addendum, the loan had a minimum interest rate of 8.4000% and a maximum interest rate of 15.4000%. The interest rate at each reset date was to be calculated by adding a spread of 5.3000% to the six-month U.S. dollar LIBOR, as of the first business day of the month immediately preceding the reset month. 131. The index rate and spread contained in the Adkinses' mortgage documents would have yielded a fully-indexed rate of 6.50% at the time the loan was originated.
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132. According to the Prepayment Rider to the Adkinses' mortgage, any prepayments made during the first two years of the loan, which within any 12-month period reached a cumulative amount in excess of20% of the original principal amount, would be subject to a prepayment penalty. The prepayment penalty assessed would be 1% of the amount paid in excess of 20% of the original principal amount.
133. According to their Settlement Statement, the Adkinses' paid $5,675 in closing costs and fees in connection with their New Century loan, including fees for processing and underwriting paid to New Century and the New Century-authorized broker totaling $1,410.40, an origination fee of$3,900, and a $275 appraisal fee. These costs and fees were about 5.44% of the total value of the Adkinses' mortgage. Their Settlement Statement also noted that New Century paid a yield spread premium or broker fee of $3,132 to its broker.
134. An appraisal conducted when the loan was originated valued the Adkinses' house at $116,000. Accordingly, the loan-to-value ratio of the mortgage loan was 90%. As of 2006, Wayne County appraised the home for tax purposes at $35,736. Using this appraisal, the loanto-value ratio ofthe Adkinses' loan would be almost 300%.
135. Initial payments on the Adkinses' loan began at $795.36, and the payments increased over the life of the loan.
136. Their New Century loan required the Adkinses to pay for six months of homeowner's insurance. The cost of this insurance policy was financed through the home loan, and therefore subject to financing costs. The loan also required the Adkinses to continue carrying the insurance policy beyond that initial six month period. Consequently, after the first six months, the Adkinses' monthly payments increased as the cost of insurance was added to the monthly mortgage payment.
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137. The Adkinses continued to make payments on their loan until at least December 1,2009.
138. At least as recently as July 17, 2012, Mrs. Adkins has continued to receive monthly account statements seeking payment on the loan.
139. The City of Detroit is foreclosing on Mrs. Adkins' home due to delinquent property taxes.
140. Mrs. Adkins did not know, and could not have known, that Morgan Stanley's policies and practices caused a disparate impact on her and other African-American borrowers in Detroit, in violation of federal and state law. This information only became apparent after consultation with attorneys, in 2012, leading up to the filing of this action.
B. Charmaine Williams 141. Plaintiff Charmaine Williams is an African-American homeowner residing in Westland, MI. 142. Ms. Williams was subject to Morgan Stanley's discriminatory policies and practices identified herein. Ms. Williams received a Combined-Risk Loan from New Century pursuant to Morgan Stanley's discriminatory policies and practices identified herein. 143. Ms. Williams was harmed by Morgan Stanley's discriminatory policies and practices identified herein, including by being subjected to excessive fees and costs and excessive risk of default and foreclosure. 144. At the time of her first New Century transaction at issue, Ms. Williams resided at 11615 Rossiter Street, Detroit, Michigan 48224, a home she owned. 145. On May 9,2003, Ms. Williams refinanced her existing home loan by obtaining a Combined-Risk Loan from New Century.
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146. Ms. Williams' first New Century loan (Loan No. 0000902234) was a 30-year, adjustable rate loan. The loan amount was $82,450.00. According to the Adjustable Rate Rider to her mortgage, the loan had a two-year fixed interest rate of 8.9000%, after which, on June 1, 2005 and every six months thereafter, the interest rate would reset, adjusting by a maximum increase or decrease of 1.500 percentage points from the previous effective rate and rounded to the nearest 0.125%. According to the Adjustable Rate Rider Addendum, the loan had a minimum interest rate of 8.9000% and a maximum interest rate of 15.9000%.
147. According to the Prepayment Rider to Ms. Williams' mortgage, any prepayments made during the first two years of the loan, which within any 12-month period reached a cumulative amount in excess of20% of the original principal amount, would be subject to a prepayment penalty. The prepayment penalty assessed would be 1% of the amount paid in excess of20% of the original principal amount.
148. The loan-to-value ratio ofthe mortgage loan was approximately 91.60% at the time the loan was originated, with the home's value appraised at approximately $90,000.
149. On or around January 4,2005, New Century sent Ms. Williams a letter captioned "NOTICE OF INTENT TO FORECLOSE." The letter referenced missed payments due on and after December 1, 2004, and requested payment of$1649.58 in certified funds to cure the delinquency. The letter warned that failure to cure the delinquency within 30 days could result in acceleration of the debt and the sale of the property.
150. After Ms. Williams received the notice of intent to foreclose, a New Century employee called her and suggested that she refinance her mortgage loan.
151. On April 22, 2005, under the threat ofthis Notice of Intent to Foreclose letter, Ms. Williams took out a second refinance loan from New Century (Loan No. 1001615997) with
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a principal balance of $99,900.00. This refinance increased the loan-to-value ratio for her loan to at least 111 %.
152. Ms. Williams' second loan from New Century was a Combined-Risk Loan as defined in this Complaint.
153. This second loan was not beneficial to Ms. Williams, as it resulted in an increased interest rate, with the introductory rate rising by 0.59 percentage points and a corresponding increase in both the minimum and maximum rates that could be applied over the life of the loan. The margin to be added to the LIBOR index rate remained at 5.75%.
154. In addition to closing fees and points associated with originating her 2005 New Century loan, Ms. Williams was subjected to a prepayment penalty due to the payoff of her 2003 New Century loan within two years of its origination. Had the refinance occurred one month later, the two-year prepayment penalty period on her first loan would have expired. However, Ms. Williams was informed by New Century that she had a limited time to refinance, and that dictated the timing of her decision to apply for a new loan. By refinancing within that period, Ms. Williams was subject to a prepayment penalty of at least $648.11.
155. As a result of the second refinance, Ms. Williams' fully-amortizing monthly principal and interest payment increased by $145.61 to $803.10 per month.
156. The second New Century loan also had a more onerous prepayment penalty than the 2003 loan, removing the protection for 20% of the original principal balance (meaning any subsequent refinances within two years would be more expensive).
157. Ms. Williams later received a loan modification, but the required monthly principal and interest payment was still higher than the monthly payment she had owed before the 2005 refinance.
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158. Ms. Williams' most recent loan payment was made in or about June 2011. 159. The City of Detroit foreclosed on Ms. Williams' property in 2011 due to delinquent property taxes, and Ms. Williams expects the house to be sold at a sheriff's auction. 160. Ms. Williams did not know, and could not have known, that Morgan Stanley's policies and practices caused a disparate impact on her and other African-American borrowers in Detroit, in violation of federal and state law. This information only became apparent after consultation with attorneys, in 2012, leading up to the filing of this action.
c. Rebecca Pettway
161. Plaintiff Rebecca Pettway is an African-American homeowner who resides at 15400 Lindsay Street, Detroit, Michigan 48227.
162. Ms. Pettway was subject to Morgan Stanley'S discriminatory policies and practices identified herein. Ms. Pettway received a Combined-Risk Loan from New Century pursuant to Morgan Stanley'S discriminatory policies and practices identified herein.
163. Ms. Pettway was harmed by Morgan Stanley's discriminatory policies and practices identified herein, including by being subjected to excessive fees and costs and excessive risk of default and foreclosure.
164. On May 13, 2004, Ms. Pettway received from New Century a Combined-Risk Loan as defined in this Complaint.
165. Ms. Pettway's New Century loan (Loan No. 0001557094) was a 30-year, adjustable rate loan. The loan amount was $84,000.00. According to the Adjustable Rate Rider to her mortgage, the loan had a two-year fixed interest rate of 8.7500%, after which, on June 1, 2006 and every six months thereafter, the interest rate would reset, adjusting by a maximum increase or decrease of 1.500 percentage points from the previous effective rate and rounded to the nearest 0.125%. According to the Adjustable Rate Rider Addendum, the loan had a minimum
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interest rate of 8.7500% and a maximum interest rate of 15.7500%. The initial rate of Ms. Pettway's New Century loan was 1.25% higher than the effective rate on her prior loan.
166. Although Ms. Pettway's mortgage loan amount was $84,000, and only about $45,000 ofthat went to pay offher existing mortgage, she received only about $30,000. The remainder ofthe loan amount, about $9,000, went to closing costs and fees.
167. The interest rate at each reset date was to be calculated by adding a spread of
6.7000% to the six-month u.s. dollar LIBOR, as of the first business day of the month
immediately preceding the reset month. 168. The index rate and spread contained in Ms. Pettway's mortgage documents would
have yielded a fully-indexed rate of 8.125% at the time the loan was originated. 169. According to the Prepayment Rider to Ms. Pettway's mortgage, any prepayments
made during the first two years of the loan, which within any 12-month period reached a cumulative amount in excess of 20% ofthe original principal amount, would be subject to a prepayment penalty. The prepayment penalty assessed would be 1% of the amount paid in excess of 20% of the original principal amount.
170. The loan-to-appraised-value ratio of the mortgage loan was approximately 56% at the time the loan was originated, based on an appraisal done by the brokerage company's appraiser which valued the home at $150,000. Ms. Pettway had another home appraisal conducted in 2006 or 2007 for purposes of determining property taxes, and that appraisal valued the home between $60,000 and $70,000.
171. Although the New Century-authorized broker told Ms. Pettway she could get a loan with a monthly payment of $700 to $800 that would include taxes and insurance, she ultimately had to make monthly payments of approximately $900, not including insurance.
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172. The interest rate on Ms. Pettway's New Century loan increased steadily and substantially, which caused the monthly payments to rise to an unaffordable level. Ms. Pettway declared bankruptcy in 2005. Foreclosure proceedings were instituted against her in 2009. In 2010, Pettway's bankruptcy was dismissed due to default. She re-filed for bankruptcy on March 3,2010. Foreclosure proceedings were stayed as the result of Ms. Pettway's bankruptcy proceedings, but she continues to face the threat of foreclosure.
173. Ms. Pettway's most recent loan payment was made in 2009. 174. Ms. Pettway's mortgage was assigned by New Century to the Morgan Stanley ABS Capital I Inc. Trust 2004-HE7, Mortgage Pass-Through Certificates, Series 2004-HE7. The assignment of the mortgage was registered with the Wayne County Register of Deeds on January 4,2010. 175. Ms. Pettway did not know, and could not have known, that Morgan Stanley's policies and practices caused a disparate impact on her and other African-American borrowers in Detroit, in violation of federal and state law. This information only became apparent after consultation with attorneys, in 2012, leading up to the filing ofthis action. D. Rubbie McCoy 176. Plaintiff Rubbie McCoy is an African-American homeowner who resides at 2688 Columbus Street, Detroit, MI 48206. 177. Ms. McCoy was subject to Morgan Stanley'S discriminatory policies and practices identified herein. Ms. McCoy received a Combined-Risk Loan from New Century pursuant to Morgan Stanley'S discriminatory policies and practices identified herein. 178. Ms. McCoy was harmed by Morgan Stanley's discriminatory policies and practices identified herein, including by being subjected to excessive fees and costs and excessive risk of default and foreclosure.
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179. Ms. McCoy rented her house until her landlord sought to sell it to her in 2006. Ms. McCoy first learned of New Century when her landlord put her in touch with a representative from a New Century-approved broker. The broker told Ms. McCoy she had to buy the house within 30 days or else she and her six children would be forced to leave. The broker repeatedly pressured her to purchase the house or face eviction. On or about July 31, 2006, Ms. McCoy purchased her home using a $79,200.00 loan from New Century.
180. Ms. McCoy's loan from New Century was a Combined-Risk Loan as defined in this Complaint.
181. The broker inflated Ms. McCoy's income on her loan application by listing her part-time employment as full-time employment, increasing her child support benefits from $30 per week to $100 per week, and including her daughter's father's disability payments as part of Ms. McCoy's earnings.
182. Ms. McCoy's New Century loan (Loan No. 1009117966) was a 30-year, adjustable rate loan, with a disclosed APR of 12.144%. According to the Adjustable Rate Rider on her mortgage, the loan had a three-year fixed interest rate of 10.750%, after which, on August 1,2009 and every six months thereafter, the interest rate would reset, adjusting by a maximum increase or decrease of 1.500 percentage points from the previous effective rate and rounded to the nearest 0.125%. The loan had a minimum interest rate of 10.750% and a maximum interest rate of 17.750%.
183. The interest rate at each reset date was to be calculated by adding a spread of
6.300% to the six-month u.s. dollar LIBOR, as ofthe first business day ofthe month
immediately preceding the reset month.
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184. According to the Prepayment Rider to Ms. McCoy's mortgage, any prepayments made during the first three years of the loan are assessed a fee equaling 1% of the prepayment amount.
185. According to the Settlement Statement, Ms. McCoy paid $3,665 in costs and fees in connection with her New Century loan, including fees for processing and underwriting totaling $1,125, an origination fee of$I,751, an appraisal fee of$400 appraisal fee, an $825 in processing fees, a $300 underwriting fee, and a $300 document preparation fee. The settlement fees were about 4.63% of the total value of Ms. McCoy's mortgage. The Settlement Statement also noted that New Century paid a yield spread premium or broker fee of $1 ,584.00.
186. Ms. McCoy was required to pay for one year of homeowner's insurance and six months of property taxes at the time the loan originated. The cost of these tax and insurance payments was financed through the loan, and therefore subject to financing costs. Consequently, after the first six months, Ms. McCoy's monthly payments increased as the cost oftaxes were added to the monthly mortgage payment, and at the end ofthe first year her monthly payments increased again as the cost of insurance was added.
187. According to the Uniform Residential Appraisal Report provided by the appraiser hired by the New Century-approved broker, the home was valued at $89,000 as of May 12, 2006. This appraisal included several misrepresentations about the condition of the home, and incorrectly stated that, because the home was not in need of any updates or repairs, it could not be compared to other homes recently sold in the immediate neighborhood; instead, the appraisal was based on the value of recent home sales selected from other areas.
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188. At the initial appraisal value of$89,000, the loan-to-value ratio for Ms. McCoy's loan was 89%. However, since the appraisal inflated the home's value, the actual loan-to-value ratio of her loan was substantially higher.
189. Initial payments on Ms. McCoy's New Century loan began at $739.32, and the payments increased over the life of the loan. The initial monthly payment amount represented approximately 58.2% of her true estimated average gross monthly income of $1 ,270 a month. Ms. McCoy was provided with a form purporting to require her signature as acknowledgement that "if [her] gross monthly income [was] less than $2,100.00, it may be difficult for [her] to afford the monthly payments."
190. Ms. McCoy's most recent loan payment was made in or around May 201l. 191. Ms. McCoy did not know, and could not have known, that Morgan Stanley'S policies and practices caused a disparate impact on her and other African-American borrowers in Detroit, in violation of federal and state law. This information only became apparent after consultation with attorneys, in 2012, leading up to the filing ofthis action. E. William Young 192. Plaintiff William Young is an African-American homeowner who resides at 9215 Whitcomb Street, Detroit, MI 48228. 193. Mr. Young was subj ect to Morgan Stanley'S discriminatory policies and practices identified herein. Mr. Young received a Combined-Risk Loan from New Century pursuant to Morgan Stanley'S discriminatory policies and practices identified herein. 194. Mr. Young was harmed by Morgan Stanley'S discriminatory policies and practices identified herein, including by being subjected to excessive fees and costs and excessive risk of default and foreclosure.
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195. Mr. Young first learned of New Century in or around November 2005, when he sought to purchase a home for himself and his wife. The broker told Mr. Young that his FICO score was not high enough to be offered a loan, but that the broker would "pull some strings." The broker told Mr. Young that he could fix his income to seem as though he had enough earnings to afford the home. On his loan application, the broker reported Young's gross monthly income and value of assets as greater than they actually were.
196. On or about November 3, 2005, Mr. Young purchased his home using a $99,000.00 Combined-Risk Loan from New Century.
197. Mr. Young's loan from New Century was a Combined-Risk Loan as defined in this Complaint. Mr. Young's New Century loan (Loan No. 1004213229) was a 30-year, adjustable rate loan, with a disclosed APR of 10.781 %. According to the Adjustable Rate Balloon Note on his mortgage, the loan had a two-year fixed interest rate of 9.225%, after which, on December 1, 2007 and every six months thereafter, the interest rate would reset, adjusting by a maximum increase or decrease of 1.500 percentage points from the previous effective rate and rounded to the nearest 0.125%. The loan had a minimum interest rate of 9.225% and a maximum interest rate of 16.225%.
198. The interest rate at each reset date was to be calculated by adding a spread of 5.950% to the six-month U.S. dollar LIBOR, as ofthe first business day of the month immediately preceding the reset month.
199. According to the Prepayment Rider to Mr. Young's mortgage, any prepayments made during the first two years of the loan are assessed a fee equaling 1% of the prepayment amount.
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200. According to the Settlement Statement, Mr. Young paid $6,144.00 in costs and fees in connection with the loan, including fees for processing and underwriting paid to New Century and the New Century-authorized broker totaling $1,660.00, an attorney's fee of$100.00, and a mortgage broker fee of $750.00. The settlement fees were about 6.2% ofthe total value of Mr. Young's mortgage according to the Settlement Statement. The Settlement Statement also noted that New Century paid a yield spread premium or broker fee of$1,980.00.
201. Initial payments on Mr. Young's New Century loan began at $780.84, and the payments increased over the life of the loan. At the time the New Century loan was executed, Mr. Young's initial payments were at least 42% of his estimated gross monthly income.
202. The loan required Mr. Young to pay six months of city and county taxes, and one year's worth of insurance, prior to or at closing. Consequently, after the first six months, Mr. Young's monthly payment increased when he was required to pay taxes, and increased again after one year when he was required to cover monthly insurance premiums.
203. Mr. Young has continued to make mortgage payments. His most recent payment was submitted in May 2012. At least as recently as July 2012, Mr. Young has received demands seeking payment on the loan, including back-payments and accumulated charges and fees.
204. Mr. Young did not know, and could not have known, that Morgan Stanley's policies and practices caused a disparate impact on him and other African-American borrowers in Detroit, in violation of federal and state law. This information only became apparent after consultation with attorneys, in 2012, leading up to the filing of this action.
VIII. Organizational Plaintiff 205. Michigan Legal Services ("MLS") is a nonprofit legal services corporation
dedicated to eliminating systemic causes of poverty in the areas of housing, health, public
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benefits, and community economic development. MLS has been serving low-income communities across the state for nearly thirty years. The majority of its clients are AfricanAmerican residents of Detroit. For the past decade, MLS has focused its efforts in the metropolitan Detroit area, where the organization is based, in a concerted effort to support and help stabilize the City of Detroit.
206. MLS engages in impact-oriented litigation, legislative and administrative advocacy, and client community education.
207. MLS's mission has been and will continue to be frustrated by Morgan Stanley's discriminatory policies and practices identified herein, and MLS has been harmed by Morgan Stanley's policies and practices identified herein. Because MLS has had to focus on clients facing foreclosure in Detroit, it has diverted scarce resources away from other, pressing antipoverty work and allocated significant resources and attention towards the effects of the housing crisis.
208. Over the last decade, MLS has redoubled its efforts on behalf oflow-income Detroit residents facing foreclosure. This reallocation ofMLS's scarce resources is a direct consequence of the unprecedented surge of foreclosures in the last several years. Because of the clientele MLS has historically served, its clients in foreclosure-related matters are overwhelmingly African-American residents ofDetroit who received subprime loans.
209. MLS's work on foreclosure prevention stems from its ongoing advocacy on behalf oflow-income residents of the Detroit metro area. While loans to low-income borrowers account for 8.1 % ofloans originated in the Detroit Metropolitan Area between 2004 and 2008, these loans account for 30.3% ofthe area's foreclosures. See DEBBIE GRUENSTEIN BOCIAN ET AL., CTR. FOR RESPONSIBLE LENDING, Lost Ground 2011: Disparities in Mortgage Lending and
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Foreclosures Table 2.1, App. 2 (2011). Thus, over the past 10 years, MLS has devoted significant time, labor, and other resources towards the legal needs of people at risk of, or facing, foreclosure in Detroit so that, currently, virtually all its work centers on mortgage and tax foreclosure. For example, MLS runs two programs that specifically address the needs of people in Detroit who are facing homelessness and/or the loss oftheir homes: first, MLS runs a pilot anti-homelessness project in collaboration with three other agencies to address the urgent legal needs of this destitute population; second, it operates a program through the United Community Housing Coalition to provide direct representation in, inter alia, tax foreclosure and land contract forfeiture cases.
210. Before the subprime lending boom and resulting foreclosure crisis, MLS did not spend significant resources on issues relating to predatory lending or foreclosure prevention. From 1990 to 2000, MLS' s work was focused on issues pertaining to public benefits, such as access to medical care, and some advocacy on homesteading programs. MLS engaged in virtually no legal or advocacy work on predatory lending, mortgage redlining, or foreclosure prevention during that time.
211. In 2003, MLS engaged in a tri-county predatory lending project, coordinated by the Detroit Chapter of the NAACP. In conjunction with the lending project, MLS participated in a task force directed at reviewing educational efforts and remedial legislation at the local, state, and federal level to address predatory lending practices at that time. That year MLS also commenced the Tax Foreclosure Prevention Project to address 1,800 tax foreclosures conducted pursuant to new state statutory amendments designed to expedite the property tax foreclosure process.
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212. Also in 2003, MLS started to coordinate and host community workshops on foreclosure. At each workshop, the number of audience members escalated dramatically, and so, in response to this obvious and growing need for foreclosure education and assistance, MLS significantly reallocated its services and resources towards foreclosure-related services.
2l3. Between 2005 to 2008, MLS shifted more than 50% of its resources into tax and mortgage foreclosure prevention advocacy and legal services. This concentration of resources reflected the accelerating foreclosure crisis in Detroit. The shift in resources at MLS has mirrored the rate of foreclosure in the Detroit region. In October 2006, The Detroit News reported that in four Detroit metro area counties (Oakland, Macomb, Livingston, and Wayne) foreclosures had increased by l37% in the first eight months of the year, as compared to the same period in 2005. Tom Watkins, There's Pain and Gain in Foreclosure Surge, THE DETROIT NEWS, October 5, 2006. That year, MLS began working with the Chicago-based National Training & Information Center (NTIC) in a mortgage foreclosure prevention project directed at certain servicing agents active in Detroit. MLS also created outreach and educational materials for victims of predatory lending schemes and tax and mortgage foreclosure; conducted numerous community trainings; and increased its intake for foreclosure counseling and litigation.
214. By the first quarter of2007, continuing a trend started in 2006, Detroit had the highest foreclosure rate of any of the top 100 metropolitan areas in the United States. See Press Release, RealtyTrac, More Than 430,000 Foreclosures Filings Reported in Q1, (April 25, 2007), available at http://www.realtytrac.comlcontentlpress-releases/more-than-430000-foreclosurefilings-reported-in-ql-2007-2551 ?accnt=64847. With a reported 16,351 foreclosure filings during the quarter, Detroit had a foreclosure rate five times the national average with one filing for every 51 households. ld. By mid-2007, the Detroit Metropolitan Area's foreclosure rate of
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one foreclosure filing for every 29 households was the second highest in the country. Top Metro Foreclosure Rates, ForeclosurePulse (Aug. 15,2007, 12:46 PM), http://www.foreclosurepulse.com. That same year, while MLS's collaborative work with NTIC expanded, MLS also successfully prevented the tax foreclosure and auction of nearly 6,700 Detroit occupied homes. The number of occupied homes in Detroit facing foreclosure has not slowed, however. By January 2011, the number of occupied houses in Detroit facing tax foreclosure had multiplied to 11,000, yet MLS (and its partner organization, the United Community Housing Coalition) remains the only nonprofit legal organization providing tax and mortgage foreclosure services.
215. In 2007, MLS requested a grant from the State Bar of Michigan to assist in their foreclosure work. The Bar agreed to provide $90,000 over a two-year period to fund one staff attorney so long as MLS covered the attorney's benefits and coordinated with the Ford Foundation, which assisted in funding the attorney in 2008.
216. By 2008, nearly 60% ofMLS resources were focused on predatory lending and foreclosure-related work. As part of that advocacy, MLS was actively participating in three subcommittees fonned by a state-wide foreclosure prevention network managed by the Community Economic Development Advocates of Michigan. The committees were designed to address foreclosure counseling, neighborhood impact, and foreclosure policy issues. Scarce staff time has been dedicated to participating on these committees.
217. From 2009 through 2010, MLS collaborated with community organizations and private attorneys representing consumers and with the lending industry to develop a program to retain occupancy of foreclosed properties. This advocacy led to the creation of two additional projects designed to enable fonner homeowners to continue in occupancy following foreclosure
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and the expiration of the redemption period. MLS also began representing tenants of foreclosed mortgagors (in addition to homeowners) in efforts to enforce tenants' rights under the newly enacted federal Protecting Tenants At Foreclosure Act of2009. In addition, MLS was actively involved in lobbying efforts to defeat state proposals to abbreviate redemption periods. Also in 2009, MLS hired additional staffto operate a new Mortgage Foreclosure Prevention Project in tandem with a state-wide coordinated legal services and housing counseling effort.
218. Between 2009 and 2011, approximately 75% ofMLS's resources went to foreclosure-related work. As of2011, through its joint Mortgage Foreclosure and Tax Foreclosure Prevention Projects, MLS and UCHC are handling nearly half of the foreclosure litigation on behalf of homeowners in the state.
219. MLS continues to devote significant resources and many uncompensated hours to defending the rights of low-income minority homeowners and tenants in Detroit because of the ongoing effects of the foreclosure crisis.
220. Although MLS provides services to individuals affected by the lending practices of many lenders, New Century's predatory loans account for a disproportionate share of the foreclosures in Detroit. According to a study conducted by the Office of the Comptroller of the Currency in 2008, based on 2005-2007 originations, New Century was the lender with the thirdhighest number of foreclosure starts (1894) in the Detroit metro area. That number has surely increased significantly in the four years since that study was conducted.
TOLLING OF THE STATUTE OF LIMITATIONS DUE TO INHERENT UNKNOWABILITY, CONCEALMENT, AND CONTINUING VIOLATIONS 221. Plaintiffs and the Class did not know, and could not have known, that Morgan Stanley's policies and practices caused a disparate impact on them and other African-American borrowers in Detroit, in violation of federal and state law. This information, which requires an
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examination of data in the aggregate, only became apparent after consultation with attorneys, in 2012, leading up to the filing ofthis action.
222. Further, any applicable statutes of limitation have been tolled by Morgan Stanley's knowing and active concealment of the facts as alleged herein. Plaintiffs and members of the Class have been kept ignorant of vital information essential to the pursuit of these claims, including Morgan Stanley'S role in creating the policies under which their loans were originated and Morgan Stanley'S failure to disclose its deviation from its true underwriting standards, without any fault or lack of diligence on their part. Plaintiffs and members of the Class could not reasonably have discovered the true nature of Morgan Stanley'S conduct.
223. Morgan Stanley is and has been under a continuing duty to disclose to the Plaintiffs and the Class the true character, quality, and nature of its polices, practices and conduct alleged herein. Because of its knowing, affirmative, and/or active concealment of this information, Morgan Stanley is estopped from relying on any statutes oflimitation in its defense of this action.
224. In addition, the allegations in this Complaint present continuing violations ofthe statutes providing causes of action in this lawsuit. Accordingly, no applicable statute of limitation would begin to run until the termination of each act of discrimination, including each act undertaken pursuant to, in furtherance of, or as a consequence of Defendant's discrimination.
CLASS ACTION ALLEGATIONS 225. The Named Plaintiffs bring this action on their own behalf and on behalf of a class of all other persons similarly situated (the "Class"), pursuant to Rule 23 of the Federal Rules of Civil Procedure. 226. Specifically, Plaintiffs seek to certify a class for purposes of detennining liability (including the detennination of whether the challenged practices caused an unjustified adverse
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impact), as well as crafting appropriate injunctive and declaratory relief, pursuant to Federal

Rules of Civil Procedure 23(a), (b)(2), and (c)(4).

227. Plaintiffs also bring this class action pursuant to Federal Rules of Civil Procedure

23(a) and (b)(3) seeking disgorgement and other equitable relief on behalf ofthe Class.

228. This action satisfies the numerosity, commonality, typicality, adequacy,

predominance, and superiority requirements ofthe Federal Rules of Civil Procedure Rule 23(a)

and (b).

229. Plaintiffs seek certification of the following Class: "All African-American

individuals who, between 2004 and 2007, resided in the Detroit region (as defined herein) and

received Combined-Risk Loans from New Century."

a. Plaintiffs reserve the right to modify or amend the definition of the

proposed Class before the Court determines whether certification is appropriate.

b. Excluded from the Class are:

1.

Morgan Stanley and any entities in which Morgan Stanley has a

controlling interest;

11. Any entities in which Morgan Stanley's officers, directors, or

employees are employed and any of the legal representatives,

heirs, successors or assigns of Morgan Stanley;

111. The Judge to whom this case is assigned and any member of the

Judge's immediate family and any other judicial officer assigned to

this case; and

iv. Any attorneys representing the Plaintiffs or the Class.

60

230. Numerosity-Fed. R. Civ. P. 23(a)(1). The exact number or identification ofthe

Class members is presently unknown. On information and belief the Class includes more than

5,000 individuals. The identity ofthe Class members is ascertainable and can be detennined

based on available records.

231. Predominance of Common Questions-Fed. R. Civ. P. 23(a)(2), 23(b)(3). The

questions oflaw and fact common to the Class predominate over questions affecting only

individual Class members, and include, but are not limited to, the following:

a. whether Morgan Stanley'S policies with respect to purchasing New

Century loans for securitization included requirements for loans with high-risk features,

including but not limited to high debt-to-income ratios, high loan-to-value ratios, stated income

loans, adjustable-rate loans, loans with negatively amortizing tenns, and risk-layering;

b. whether Morgan Stanley'S securitization policies and practices required or

caused New Century to focus its lending business on Combined-Risk Loans;

c. whether Morgan Stanley'S mortgage securitization policies and practices

had an adverse disparate impact on African-American borrowers in the Detroit region by

inducing New Century to target African-American borrowers and communities in the Detroit

region for Combined-Risk Loans;

d. whether Morgan Stanley is a creditor for purposes of the ECOA when it

engages in mortgage securitization;

e. whether Morgan Stanley's policies and practices were justified by

business necessity or legitimate business interest;

f.

whether there is a less discriminatory alternative to those policies and

practices;

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g. whether equitable remedies including injunctive relief and disgorgement are warranted and the nature of such relief.
232. Typicality-Fed. R. Civ. P. 23(a)(3). Plaintiffs' claims are typical of the claims ofthe Class because Plaintiffs and all Class members were subject to, and affected by, Morgan Stanley's policies and practices alleged herein.
233. Adequacy-Fed. R. Civ. P. 23(a)(4); 23(g)(1). Plaintiffs are adequate representatives of the Class because they fit within the class definition and their interests do not conflict with the interests of the members of the Class they seek to represent. Plaintiffs are represented by experienced Class Counsel. Class Counsel have litigated numerous class actions, including but not limited to civil rights, fair housing, consumer, ECOA, and mortgage-lending cases. Plaintiffs' counsel intends to prosecute this action vigorously for the benefit of the entire Class. Plaintiffs and Class Counsel can fairly and adequately protect the interests of all of the members of the Class.
234. Superiority-Fed. R. Civ. P. 23(b)(3). The class action is the best available method for the efficient adjudication of this litigation because individual litigation of Class members' claims would be impracticable and individual litigation would be unduly burdensome to the courts. Without the class action vehicle, the Class would have no reasonable remedy and would continue to suffer losses. Further, individual litigation has the potential to result in inconsistent or contradictory judgments. A class action in this case presents fewer management problems and provides the benefits of single adjudication, economies of scale, and comprehensive supervision by a single court.
235. Class Certification is appropriate under Federal Rules of Civil Procedure 23(b)(2)/(c)(4) because Morgan Stanley has acted or refused to act on grounds generally
62

applicable to the Class, making appropriate declaratory and injunctive relief with respect to Plaintiffs and the Class.
COUNT ONE RACE DISCRIMINATION IN VIOLATION OF THE FAIR HOUSING ACT
(42 U.S.C. §§ 3601-3619) 236. Plaintiffs restate and reallege the preceding paragraphs of this Complaint as though set out here word for word. 237. Under the Fair Housing Act, it is unlawful "for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because ofrace ...." 42 U.S.C. § 3605(a). A residential real estate transaction is defined to include, inter alia, the "purchasing ofloans ... secured by residential real estate." Id. at§ 3605(b)(1). 238. Federal regulations promulgated under the Fair Housing Act confirm that discriminatory policies and practices in connection with the purchase and securitization of mortgage loans are unlawful under 42 U.S.C. § 3605. See 24 C.F.R. § 100.125 (2010). 239. At all relevant times, Morgan Stanley was, and continues to be, an entity "engaging in residential real estate-related transactions" under 42 U.S.C. § 3605. 240. A covered entity violates 42 U.S.C. § 3605 when its policies or practices have an adverse disparate impact on members of a racial group. 241. Morgan Stanley's policies and practices alleged herein (namely, its policy of orchestrating the sale of Combined-Risk Loans for securitization) had, and continue to have, a disparate impact on African-American borrowers in the Detroit region, including Plaintiffs and the Class. Morgan Stanley's policies led New Century to target African-American communities
63

and borrowers in order to originate large volumes ofthe high-risk and high-cost loans that Morgan Stanley was demanding and requiring, and more generally, led New Century to aggressively market Combined-Risk Loans that were disproportionately more likely to be issued to, and harm, African-American borrowers.
242. Morgan Stanley's common practices cannot be justified by business necessity or legitimate business interest, as evidenced by, among other things, Morgan Stanley's ignoring standard underwriting. There were less discriminatory alternatives available to Morgan Stanley than these policies.
243. Morgan Stanley's policies and practices alleged herein constitute discrimination "against any person in making available [real estate-related transactions], or in the tenns or conditions of such a transaction, because of race" in violation of 42 U.S.C. § 3605.
244. Plaintiffs and the members ofthe Class were subject to Morgan Stanley's discriminatory policies and practices alleged herein.
245. Plaintiffs and the members of the Class were harmed by, and continue to be harmed by, Morgan Stanley's discriminatory policies and practices alleged herein, in that, inter alia, they have been subjected to excessive fees and costs and default or foreclosure or excessive risk of default, delinquency, and foreclosure of their homes.
246. Morgan Stanley has been unjustly enriched as a result of its discriminatory policies and practices alleged herein, including, but not limited to, through its receipt of fees in connection with the securitization ofloans and the sale of the corresponding securities.
247. Morgan Stanley's discriminatory policies and practices alleged herein represent continuing violations of the Fair Housing Act because, inter alia: (a) Plaintiffs and members of the Class continue to receive demands for payment under the terms of their Combined-Risk
64

Loans and remain subject to excessive costs and penalties associated with their Combined-Risk Loans; (b) Plaintiffs and members of the Class have continued making mortgage payments under the tenns of their Combined-Risk Loans; and/or (c) Plaintiffs and members ofthe Class have been, and continue to be, subject to foreclosure proceedings and the increased risk thereof.
248. Plaintiffs, on behalf of themselves and the Class, request relief as hereinafter described.
COUNT TWO RACE DISCRIMINATION IN VIOLATION OF
THE EQUAL CREDIT OPPORTUNITY ACT (15 U.S.c. §§ 1691-1691f)
249. Plaintiffs restate and reallege the preceding paragraphs of this Complaint as though set out here word for word.
250. Under the Equal Credit Opportunity Act ("ECOA"), it is unlawful for "any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction ... on the basis of race." 15 U.S.C. § 1691(a). The ECOA's prohibition against discrimination applies to securitizers of residential mortgage loans.
251. The ECOA defines the term "creditor" to mean, inter alia, "any assignee of an original creditor who participates in the decision to extend, renew, or continue credit." Id. at § 1691a(e).
252. Federal regulations promulgated under the ECOA confirm that the ECOA's definition of "creditor" includes participants in the secondary mortgage market such as Morgan Stanley. See 12 CFR § 202.2(1) ("Creditor means a person who, in the ordinary course of business, regularly participates in a credit decision, including setting the terms of the credit. The term creditor includes a creditor's assignee, transferee, or subrogee who so participates."); see
65

also Official Staff Commentary, 12 C.F.R. pt. 202, Supp. L § 202.2(1) (stating that a creditor may include "a potential purchaser of the obligation who influences the credit decision by indicating whether or not it will purchase the obligation if that transaction is consummated").
253. At all relevant times, Morgan Stanley was, and continues to be, a "creditor" under 15 U.S.C. § 1691.
254. A creditor violates 15 U.S.C. § 1691 when its policies and practices have an adverse disparate impact on members of a racial group.
255. Morgan Stanley's policies and practices alleged herein had, and continue to have, a disparate impact on African-American borrowers, including Plaintiffs and the Class. Morgan Stanley's policies led New Century to target African-American communities and borrowers in order to originate large volumes ofthe high-risk and high-cost loans that Morgan Stanley was demanding and requiring, and more generally, led New Century to aggressively market
,
Combined-Risk Loans that were disproportionately more likely to be issued to, and harm, African-American borrowers.
256. Morgan Stanley'S common practices cannot be justified by business necessity or legitimate business interest, as evidenced by, among other things, Morgan Stanley'S ignoring standard underwriting. There were less discriminatory alternatives available to Morgan Stanley than these policies.
257. Morgan Stanley'S policies and practices alleged herein constitute discrimination "against any applicant, with respect to any aspect of a credit transaction ... on the basis of race" in violation of 15 U.S.C. § 1691.
258. Plaintiffs and the members of the Class were subject to Morgan Stanley'S discriminatory policies and practices alleged herein.
66

259. Plaintiffs and the members of the Class were harmed by, and continue to be harmed by, Morgan Stanley's discriminatory policies and practices alleged herein, in that, inter alia, they have been subj ected to excessive fees and costs and default and foreclosure or excessive risk of default, delinquency, and foreclosure of their homes.
260. Morgan Stanley has been unjustly enriched as a result of its discriminatory policies and practices alleged herein, including, but not limited to, through its receipt of fees in connection with the securitization of loans and the sale of the corresponding securities.
261. Morgan Stanley's discriminatory policies and practices alleged herein represent continuing violations of the ECOA because, inter alia: (a) Plaintiffs and members ofthe Class continue to receive demands for payment under the terms of their Combined-Risk Loans and remain subject to excessive costs and penalties associated with their Combined-Risk Loans; (b) Plaintiffs and members of the Class have continued making mortgage payments under the terms of their Combined-Risk Loans; and/or (c) Plaintiffs and members of the Class have been and continue to be subject to foreclosure proceedings and the increased risk thereof.
262. Plaintiffs, on behalf of themselves and the Class, request relief as hereinafter described.
COUNT THREE
RACE DISCRIMINATION IN VIOLATION OF THE MICHIGAN ELLIOTT-LARSEN CIVIL RIGHTS ACT
(MICH. COMPo LAWS § 37.2101, ET SEQ.) 263. Plaintiffs restate and reallege the preceding paragraphs of this Complaint as though set out here word for word. 264. Under the Michigan Elliott-Larsen Civil Rights Act, any person or entity "engaging in a real estate transaction ... shall not on the basis of ... race ... [d]iscriminate against a person in the terms, conditions, or privileges of a real estate transaction or in the
67

furnishing of facilities or services in connection with a real estate transaction." Mich. Compo Law § 37.2502.
265. The Michigan Elliott-Larsen Civil Rights Act additionally provides that "[a] person whose business includes engaging in real estate transactions shall not discriminate against a person because of ... race ... in the ... making or purchasing of loans or the provision of other financial assistance secured by residential real estate." Mich. Law Compo § 37.2504.
266. Morgan Stanley's policies and practices alleged herein violated, and continue to violate, Mich. Compo Law §§ 37.2502 and 37.2504 in that they have a disparate discriminatory impact on African-American borrowers, including Plaintiffs and the Class.
267. Morgan Stanley's policies and practices alleged herein constitute discrimination on the basis ofrace in violation of Mich. Compo Law §§ 37.2502 and 37.2504.
268. Morgan Stanley'S policies and practices alleged herein constitute discrimination in the "making or purchasing of loans or the provision of other financial assistance secured by residential real estate" in violation of Mich. Law Compo § 37.2504.
269. Plaintiffs and the members of the Class were subject to Morgan Stanley's discriminatory policies and practices alleged herein.
270. Plaintiffs and the members of the Class were harmed by, and continue to be harmed by, Morgan Stanley's discriminatory policies and practices alleged herein, in that, inter alia, they have been subjected to excessive fees and costs and excessive risk of default, delinquency, and foreclosure of their homes.
271. Morgan Stanley has been unjustly enriched as a result of its discriminatory policies and practices alleged herein, including, but not limited to, through its receipt of fees in connection with the securitization of loans and the sale of the corresponding securities.
68

272. Morgan Stanley's discriminatory policies and practices alleged herein represent continuing violations of the Michigan Elliott-Larsen Civil Rights Act because, inter alia: (a) Plaintiffs and members of the Class continue to receive demands for payment under the terms of their Combined-Risk Loans and remain subject to excessive costs and penalties associated with their Combined-Risk Loans; (b) Plaintiffs and members of the Class have continued making mortgage payments under the terms of their Combined-Risk Loans; and/or (c) Plaintiffs and members of the Class have been, and continue to be, subject to foreclosure proceedings and the increased risk thereof.
273. Plaintiffs, on behalf ofthemselves and the Class, request relief as hereinafter described.
PRAYER FOR RELIEF WHEREFORE, Plaintiffs, on behalf of themselves and the Class, pray for relief as follows: 1. That the Court determine that it has jurisdiction over this action. 2. That the Court determine that this action may be maintained as a class action under Rule 23 of the Federal Rules of Civil Procedure and designate the Plaintiffs as the Class Representatives and their counsel as Class Counsel; 3. That judgment be entered against Morgan Stanley and in favor of Plaintiffs and the Class on the Causes ofAction in this Complaint, for injunctive relief and declaratory relief, and for equitable monetary relief in the nature of disgorgement, in amounts to be determined at trial; 4. That the Court award damages for the Named Plaintiffs;
69

5. That the Court appoint a monitor to ensure that Morgan Stanley complies with the injunction provisions of any decree that the Court orders and an order retaining jurisdiction over this action to ensure that Morgan Stanley complies with such a decree;
6. That the Court award attorneys' fees and litigation costs; 7. That the Court award pre-judgment and post-judgment interest, to the extent allowable by law; and 8. That the Court grant for all other and further relief as this Court may deem necessary and appropriate. Plaintiffs request a jury on the claims so triable.
70

Dated this 15th day of October, 2012.

Respectfully submitted by,
D~..4~=,==E=:::S:;:::Q~~2~~=----~IZABETH J. CABRASER, ESQ. (Cal.

LAURENCE M. SCHWARTZTOL, ESQ. RACHEL E. GOODMAN, ESQ.* AMERICAN CIVIL LIBERTIES UNION FOUNDATION 125 Broad St., 18th Floor New York, NY 10004 Telephone: (212) 549-2500 Facsimile: (212) 549-2651

SBN 083151,pro hac vice pending) MICHAEL W. SOBOL, ESQ. (Cal. SBN 194857, pro hac vice pending) LIEFF, CABRASER, HEIMANN & BERNSTEIN, LLP Embarcadero Center West 275 Battery St., 29th Floor San Francisco, CA 94111-3339 Telephone: (415) 956-1000 Facsimile: (415) 956-1008

STUART T. ROSSMAN, ESQ. (BBO #430640, pro hac vice pending) CHARLES M. DELBAUM, ESQ.* (BBO #543225) ARIELLE COHEN, ESQ.* The National Consumer Law Center 7 Winthrop Square, 4th Floor Boston, MA 02110 Telephone: (617) 542-8010 Facsimile: (617) 542-8028

RACHEL J. GEMAN, ESQ. (NY Bar No. RG 0998) LIEFF CABRASER HEIMANN & BERNSTEIN, LLP 250 Hudson Street, 8th Floor New York, NY 10013-1413 Telephone: (212) 355-9500 Facsimile: (212) 355-9592

MICHAEL J. STEINBERG, ESQ. (pro hac vice pending) KARY L. MOSS, ESQ. SARAH L. MEHTA, ESQ. (pro hac vice pending) AMERICAN CIVIL LIBERTIES UNION FUND OF MICHIGAN 2966 Woodward Ave Detroit, MI 48201 Telephone: (313) 578-6814 Facsimile: (313) 578-6811

*Not admitted in the Southern District ofNew York

71

 
 Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 1 of 39

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
--------------------------------------------------------------)(
In re: Pilot Project Regarding Case Management

USOCSONY

DOCUMENT

ELECTRONICALLY FILED

DOC# DATE FILED:

iIt I ( 11

STANDING ORDER

Techniques for Complex Civil Cases in the

M10-468

Southern District of New York

11 MIse 00 388

-------------------------------------------------------------)(

I.

This case is hereby designated for inclusion in the Pilot Project Regarding Case

Management Techniques for Complex Civil Cases in the Southern District of New York (the

"Pilot Project"), unless the judge to whom this case is assigned determines otherwise.

2. This case is designated for inclusion in the Pilot Project because it is a class

action, an MOL action, or is in one of the following Nature of Suit categories: 160, 245, 315,

355,365, 385,410, 830, 840, 850, 893, or 950.

3. The prcsidingjudge in a case that does not otherwise qualify for inclusion in the

Pilot Project may nevertheless designate the case for inclusion in the Pilot Project by issuing an

order directing that the case be included in the Pilot Project.

4. The description of the Pilot Project, including procedures to be followed, is

attached to this Order.

Dated: October .J( , 2011
New York, New York

SO ORDERED:
- ,v1- ,·~ ~~U ~&
Loretta A. Preska Chief United States District Judge

Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 2 of 39
REPORT OF THE JUDICIAL IMPROVEMENTS COMMITTEE PILOT PROJECT REGARDING CASE MANAGEMENT TECHNIQUES FOR COMPLEX CIVIL CASES
October 2011

Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 3 of 39
TABLE OF CONTENTS Page
Preface................................................................................................................................. ii JIC Advisory Committee Roster ........................................................................................ iii Subcommittee Rosters ....................................................................................................... iv Initial Pretrial Conference Procedures ................................................................................. 1 Discovery Procedures ..........................................................................................................4 Motion Procedures ...............................................................................................................8 Final Pretrial Conference Procedures ................................................................................ 10
Exhibits: A. Initial Pretrial Conference Checklist 15 B. Joint Electronic Discovery Submission 18 C. Order of Reference to a Magistrate Judge 30
-i-

Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 4 of 39
PREFACE
Beginning in early 2011, the Judicial Improvements Committee of the Southern District of New York ("JIC"), 1 chaired by Judge Shira A. Scheindlin, began to consider a pilot project to improve the quality ofjudicial case management. The impetus for this project was the "Duke Conference" sponsored by the Judicial Conference Advisory Committee on Civil Rules. Judge John O. Koeltl, a member of the Advisory Committee, was Chair of the Planning Committee for the Duke Conference. The JIC decided to focus on complex cases and to develop procedures that would be implemented by the judges of the Court for an eighteenmonth trial period. To assist in this effort the Chair of the JIC appointed an Advisory Committee of experienced attorneys, representing a broad diversity of the bar to develop proposals. The Advisory Committee, joined by members of the JIC, formed four subcommittees to consider and recommend best practices for the management of complex civil cases. Each of the four subcommittees submitted a report to the JIC which was adopted in substance by the JIC. The JIC then presented its proposal to the Board of Judges. On September 28, the Board of Judges approved the proposal, albeit with some suggestions for implementing the final version of the pilot project. The following report is the pilot project that the Court has adopted. It will take effect on November 1, 2011. The Court is deeply grateful to all of the JIC Members and Advisory Committee members who worked so hard to bring this project to fruition.
The members of the Judicial Improvements Committee include: Judge Denise Cote, Judge Thomas Griesa, Judge Kenneth Karas, Judge John Koeltl, Judge Victor Marrero, Judge Shira Scheindlin, Judge Sidney Stein, Judge Robert Sweet, Judge James Cott, Judge Theodore Katz, Judge Henry Pitman and Judge Lisa Smith.
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 5 of 39
JIC ADVISORY COMMITTEE ROSTER Samuel F. Abernethy Menaker & Herrmann LLP
James Batson Liddle & Robinson, LLP
Steven Bennett Jones Day
James Bernard Stroock & Stroock & Lavan LLP
John Boston Legal Aid Society
Vince (Vernon) Broderick Wei!, Gotshal & Manges LLP
Susanna Buergel Paul, Weiss, Rifkind, Wharton & Garrison LLP
Dale Cendali Kirkland & Ellis LLP
Melanie Cyganowski Otterbourg, Steindler, Houston & Rosen, P.e.
Maura Grossman Wachtel!, Lipton, Rosen & Kat=
Gregory Joseph Gregory P. Joseph Law Offices LLC
Gregg Kanter Sprague & Sprague Marilyn Kunstler Boies, Schiller & Flexner LLP
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 6 of 39
Mei Lin Kwan-Gett Wi/We Farr & Gallagher LLP
Sara Moss Estee Lauder
Tai Park Park & Jensen LLP
Jon Pines Deputy Chief, General Litigation Division of NY City Law Department
Debra Raskin Vladeck. Waldman. Elias & Engelhard. P.e.
Theodore O. Rogers, Jr. Sullivan & Cromwell LLP
Scott Rosenberg Legal Aid Society. General Counsel
Susan Saltzstein Skadden Arps Slate Meagher & Flom
Paul Saunders Cravath. Swaine & Moore LLP
Andrew Schilling Chief ofthe Civil Division. US Attorneys Office. SDNY
Lorna Schofield Debevoise & Plimpton LLP
Amy Schulman Pji::er Corporation
Penny Shane Sullivan & Cromwell LLP
-JY-

Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 7 of 39
Kent Stauffer Executive Deputy Attorney General Guy Miller Struve Davis Polk & Wardwell LLP Steve Susman Susman Godfrey LLP Ariana Tadler Milberg, LLP Mary Kay Vyskocil Simpson, Thacher & Bartlett LLP Peter Wang Foley & Lardner LLP
-y-

Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 8 of 39
SUBCOMMITTEE ROSTERS
Initial Pretrial Case Management Subcommittee Co-Chairs: Amy Schulman, Paul Saunders Committee Members: Judge John Koeltl, Judge Sidney Stein, Judge Henry Pitman, John Boston, Marilyn Kunstler, Sara Moss, Andrew Schilling, Penny Shane, Kent Stauffer, Sam Abernethy Also participating: Judge Shira Scheindlin
Discovery Subcommittee Co-Chairs: Greg Joseph, Debra Raskin Committee Members: Judge Thomas Griesa, Judge James Cott, Judge Lisa Smith, Jim Batson, Steven Bennett, Mei Lin Kwan-Gett, Maura Grossman, Jon Pines, Theodore Rogers, Scott Rosenberg, Kent Stauffer, Ariana Tadler Also participating: Judge Shira Scheindlin
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 9 of 39
Motions Subcommittee Co Chairs: Susan Saltzstein, James Bernard Committee Members: Judge Victor Marrero, Judge Robert Sweet, Gregg Kanter, Tai Park, Guy Struve, Dale Cendali, Susanna Buergel, Melanie Cyganowski, Lorna Schofield Also participating: Judge Shira Scheindlin Final Pretrial Conference Subcommittee Co-Chairs: Steve Susman, Mary Kay Vyskocil Committee Members: Judge Denise Cote, Judge Kenneth Karas, Judge Theodore Katz, Vernon Broderick, Peter Wang, Guy Struve, Andrew Schilling, Paul Saunders Also participating: Judge Shira Scheindlin
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 10 of 39

I. Initial Pretrial Case Management Procedures

A.

Initial Report of Parties before Pretrial Conference. No later than 7

days before the initial pretrial conference, the parties shall file an Initial Report

that includes the following:

1. The parties' positions on the applicable topics of the "Initial Pretrial Conference Checklist" (see Exhibit A, annexed hereto) including whether initial disclosures pursuant to Rule 26(a)(1) should be made in whole or in part and whether there is some readily identifiable document or category of documents that should be produced immediately in lieu of initial disclosures.

2. The parties' proposed schedule for fact and expert discovery including:

a. Any recommendations for limiting the production of documents, including electronically stored information.

b. .Any recommendations for limiting depositions, whether by numbers or days of depositions, 2 and by the elimination of expert
depositions.

c. A protocol and schedule for electronic discovery, including a brief description of any disputes regarding the scope of electronic discovery.

d. Whether the parties recommend that expert discovery precede or follow any summary judgment practice.

e. Whether the parties agree to allow depositions preceding trial of trial witnesses not already deposed.

3. Whether the parties propose to engage in settlement discussions or mediation and, if so, when would be the best time to do so. The parties should also identify what discovery should precede such discussions.

B. Pretrial Conference Procedures. The Court shall make its best effort to hold an in-person, initial pretrial conference within 45 days of service on any defendant of the complaint. If the Government is a defendant, the Court shall make its best effort to schedule the initial conference within 60 days of service. If a motion to dismiss is pending, the Court may consider postponing the initial pretrial conference until the motion is decided.

2

Note: In some complex cases the parties have limited depositions by agreeing on a maximum

number of days a party may depose witnesses. The party may use those days to take two half-day or one

full-day deposition per witness.

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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 11 of 39
1. Lead counsel for each party must attend.
2. The Court should address the contents ofthe Initial Report and the applicable topics contained in the "Initial Pretrial Conference Checklist" (see attached Exhibit A) with the parties.
3. The parties shall provide the Court with a concise overview ofthe essential issues in the case and the importance of discovery in resolving those issues so that the Court can make a proportionality assessment and limit the scope of discovery as it deems appropriate. The Court may also wish to consider the possibility of phased or staged discovery.
4. The Court should consider setting a deadline for any amendments to the pleadings and joinder of additional parties.
5. The Court should set a schedule for the completion of fact discovery, the filing of the Joint Preliminary Trial Report, the Case Management Conference (see Final Pretrial Conference Procedures), and the exchange of expert reports. If appropriate, the Court should also consider setting dates for the filing of dispositive motions and the filing of the Joint Final Trial Report.
6. If appropriate, the Court should set a trial-ready date or a trial date contingent on the resolution of dispositive motions.
7. If appropriate, the Court should schedule any motion for class certification and associated discovery.
8. The Court should consider setting a maximum limit for any adjournment requests, both as to length and number, whether or not the parties jointly request an adjournment.
9. If the parties agree, the Court should confirm that prior to trial the parties will be permitted to depose any trial witnesses who were not deposed prior to the filing ofthe Joint Final Pretrial Report. Ifthe parties cannot agree on this procedure, the Court should consider whether to issue such an order.
10. The District Judge shall advise the parties if it will be referring the case to a Magistrate Judge and, if so, for what purposes. If the District Judge makes such a referral for the purpose of pretrial supervision (as opposed to settlement or the disposition of dispositive motions), the District Judge and the Magistrate Judge are encouraged to communicate and coordinate regarding the pretrial progress ofthe case.
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 12 of 39
11. The Court shall determine whether and when additional pretrial conferences should be held to address the issues raised in items 4 through 8 above.
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 13 of 39
II. Discovery Procedures A. Stay of Certain Discovery upon Service of Dispositive Motion. Unless the
Court orders otherwise, following service of a motion to dismiss pursuant to Rule 12(b)(6) or 12(c) (ifmade immediately after the filing of an answer) of the Federal Rules of Civil Procedure, discovery of documents, electronically stored information and tangible things may proceed pursuant to Rule 34 but all other discovery with respect to any claim that is the subject of the motion is stayed pending the Court's decision on the motion. B. Discovery Disputes Not Involving Assertion of Privilege or Work Product. Unless the Court determines otherwise, any discovery dispute - other than a dispute arising in the course of a deposition or involving invocation of a privilege or work product protection - will be submitted to the Court by letter as follows:
1. The movant will submit to the Court, in a manner permitted by the Judge's Individual Practices, and to opposing counsel by hand delivery, fax or email, a letter of not more than 3 single-spaced pages setting forth its position and certifying that the movant has in good faith conferred or attempted to confer with the party or person failing to make discovery in an effort to obtain it without court action. All disputes that the movant intends to raise at that time must be submitted in a single letter.
2. The responding party or person may submit a responsive letter of no more than 3 single-spaced pages within 3 business days with a copy to opposing counsel.
3. Ifthe Court permits a reply, it should not exceed 2 single-spaced pages and should be submitted within 2 business days of the responding letter.
4. The Court will make its best effort to render a decision no later than fourteen days from its receipt of the final letter. The Court may resolve the dispute prior to its receipt of the responsive letter if it has otherwise provided the person or party an opportunity to be heard.
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 14 of 39
C. In Camera Sampling of Assertions of Privilege. A party or person who raises a question as to the assertion of a privilege or work product protection with respect to documents (including electronically stored information) may request a ruling from the Court as follows: 1. The requesting party or person will submit to the Court, in a manner permitted by the Judge's Individual Practices, and to opposing counsel by hand delivery, fax or email, a letter of not more than 3 singlespaced pages (a) setting forth its position, (b) certifying that it has in good faith conferred with the opposing party or person in an effort to resolve the issues without court action, and (c) indicating whether there is consent to in camera inspection. 2. If the requestor is the party or person invoking privilege or work product protection, it may attach to its letter to the Court no more than 5 representative documents that are the subject of its request. The documents are to be attached only to the copy of the letter directed to the Court, for in camera review, and not to the copy ofthe letter directed to the opposing party or person. 3. Any opposing party or person may submit a responsive letter of no more than 3 single-spaced pages within 3 business days with a copy to opposing counsel. 4. If the Court permits a reply, it should not exceed 2 single-spaced pages and should be submitted within 2 business days of the responding letter. 5. Unless the Court requires a more extensive submission, within fourteen days from its receipt of the responsive letter or, ifiater, its receipt of the documents, the Court will make its best effort to determine whether the submitted documents must be produced. The Court may issue its decision prior to its receipt of the responsive letter if it has otherwise provided any opposing party or person an opportunity to be heard.
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 15 of 39
D. Documents Presumptively Not to Be Logged on Privilege Log. The following documents presumptively need not be included on a privilege log:
I. Communications exclusively between a party and its trial counsel.
2. .Work product created by trial counsel, or by an agent of trial counsel other than a party, after commencement of the action.3
3. Internal communications within (a) a law firm, (b) a legal assistance organization, (c) a governmental law office or (d) a legal department of a corporation or of another organization.
4. .In a patent infringement action, documents authored by trial counsel for an alleged infringer even if the infringer is relying on the opinion of other counsel to defend a claim of willful infringement.4
E. Privilege Log Descriptions of Email Threads. For purposes of creation of a privilege log, a party need include only one entry on the log to identify withheld emails that constitute an uninterrupted dialogue between or among individuals; provided, however, that disclosure must be made that the e-mails are part of an uninterrupted dialogue. Moreover, the beginning and ending dates and times (as noted on the emails) of the dialogue and the number of emails within the dialogue must be disclosed, in addition to other requisite privilege log disclosure, including the names of all of the recipients of the communications.
See D. Conn. Local Rule 26(e) ("This rule requires preparation of a privilege log
with respect to all documents *** except the following: *** the work product material
created after commencement of the action"). D. Colo. Local Rule 26. 1(g)(3)(c), S.D. Fla. Local Rules Gen Rule 26.I(g)(3)(C), E.D. Okla. Local Rule 26.2(b), and N.D. Okla. Local Rule 26.2(b) are substantively identical D. Conn. Local Rule 26(e). Note that this proposal is more limited than these local rules because it does not exempt from logging documents created by the client at counsel's suggestion, to avoid abuse.
See In re Seagate Tech., 497 F.3d 1360 (Fed. Cir. 2007) (en banc) (reliance on opinion of counsel does not waive the privilege or work product protection of trial counsel on the same subject matter); N.D. Cal. Local Patent Rule 3-7(c) ("Serve a privilege log identifying any other documents, except those authored by counsel acting solely as trial counsel, relating to the subject matter of the advice which the party is withholding on the grounds of attorney-client privilege or work product protection."). D.NJ. Local Patent Rule 3.8(c), E.D. Mo. Local Patent Rule 3-9(c), W.D. Wash. Local Patent Rule 140, S.D. Tex. Patent Rule 3-8, E.D. Tex. L. Patent Rule 3-7(b), D. Idaho L. Patent Rule 3.8, S.D. Cal. Local Patent Rule 3.8(b) and other local patent rules are substantively identical to N.D. Cal. Local Patent Rule 3-7(c).
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 16 of 39
F. Requests for Admission. Unless otherwise stipulated or ordered by the Court, a party may serve on any other party no more than 50 requests for admission pursuant to Federal Rule of Civil Procedure 36(a)(l)(A); no such request for admission may exceed 25 words in length; except that no limit is imposed on requests for admission made pursuant to Rule 36(a){l)(B) relating to the genuineness of any described documents.
G. Subpoenaed Material. Unless the Court orders otherwise, whenever documents, electronically stored information, or tangible things are obtained in response to a subpoena issued pursuant to Rule 45 of the Federal Rules of Civil Procedure, the party responsible for issuing and serving the subpoena shall promptly produce them to, or make them available for inspection and copying by, all parties to the action.
H. Joint Electronic Discovery Submission. A joint electronic discovery submission and proposed Order is annexed as Exhibit B. Among other things, it includes a checklist of electronic discovery issues to be addressed at the Rule 26(f) conference.
I. Revised Order of Reference to Magistrate Judge. A revised form of Order of Reference to Magistrate Judge is annexed as Exhibit C. Among other things, it provides that in the case of urgent discovery disputes - e.g., in mid-deposition - litigants may approach the assigned Magistrate Judge when the District Judge is unavailable.
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 17 of 39
Motion Procedures
A. Pre-Motion Conferences.
1. Pre-motion conferences should be held for all motions except motions for reconsideration, motions for a new trial, and motions in limine. For discovery disputes, see the procedures set forth at Part II. B, supra.
2. A party intending to file a motion governed by the preceding paragraph (other than Rule 12(b) motions) must request by letter no longer than 3 single-spaced pages, a pre-motion conference in advance of filing any such motion. The moving party's letter shall be submitted at least 7 business days prior to a proposed or scheduled conference date, or at any time ifno such date has been proposed or scheduled. Within 3 business days of receipt of the letter, each opposing party may submit a written response of no more than 3 single-spaced pages in length. No further letters will be accepted by the Court. The Court will, as soon as possible thereafter, hold the pre-motion conference.
3. The filing of a pre-motion letter shall automatically stay the time by which the motion must be made. In the event the law imposes a filing deadline, the requirement of a pre-motion letter and conference will not apply, unless the Court extends the deadline for filing a motion.
4. Motions pursuant to Rule 12(b) are subject to a different procedure. The Court may consider one of the following options: (a) Not requiring a pre-motion conference; (b) requiring the parties to exchange letters (with or without a copy to the court) prior to filing a motion to dismiss, addressing any deficiencies in the complaint, in the hope that such deficiencies might be cured by the filing of an amended complaint; or (c) holding a conference after the motion is made at which the plaintiff will be given an opportunity to either amend the complaint or oppose the motion. If plaintiff does not choose to amend, the plaintiff shall be given no further opportunity to amend the complaint to address the issues raised by the pending motion. In the event there is no amendment, the Court will determine whether any discovery shall proceed during the pendency of the motion. The time for opposing the Rule 12(b) motion will be stayed until the conference, at which time the Court will schedule the further briefing of the motion.
B. Page Length for Motions. No memorandum of law in support of or in opposition to a motion may exceed 25 pages (double-spaced). Any memorandum in excess of 10 double-spaced pages shall also include a table of contents and table of authorities. Reply memoranda may not exceed 10 pages.
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 18 of 39
Any party may request additional pages by seeking leave ofthe Court after having sought the consent of the adverse party or parties. C. Oral Argument. Oral arguments should be held where practicable and in the Court's view useful, on all substantive motions, unless the parties agree otherwise. Five calendar days in advance of oral argument, the Court should consider notifYing the parties ofthose issues of particular concern. D. 56.1 Statements (Statement of Material Fact). At the request of the parties, and if approved by the Court, no Local Rule 56.1 Statement shall be filed in connection with motions made pursuant to Rule 56 of the Federal Rules of Civil Procedure. If the Court requires that the parties file Rule 56.1 statements, such statements shall not exceed 20 pages per party.
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 19 of 39

IV. Final Pretrial Conference Procedures

A. Joint Preliminary Trial Report on Close of Fact Discovery. Within 14 days after the completion of fact discovery, the parties shall file a Joint Preliminary Trial Report, unless the Court concludes that such a report is not necessary in a particular case, which shall include the following:

1. The full caption of the action.

2. The name, address, telephone number, fax number and email address of each principal member of the trial team, and an identification of each party's lead trial counsel.

3. A brief statement identifying the basis for subject matter jurisdiction, and, if that jurisdiction is disputed, the reasons therefore.

4. A list of each claim and defense that will be tried and a list of any claims and defenses asserted in the pleadings that are not to be tried.

5. An identification of the governing law for each claim and defense that will be tried and a brief description of any dispute regarding choice oflaw.

6. The number of days currently estimated for trial and whether the case is to be tried with or without ajury.

7. A statement indicating whether all parties have consented to trial by a magistrate judge, without identifying which parties do or do not consent.

8. A brief description of any summary judgment motion a party intends to file, including a statement identifying whether expert testimony will be offered in support of the motion.

B. Case Management Conference Procedure. Within 14 days ofthe filing ofthe Joint Preliminary Trial Report, the Court should make its best effort to hold a Case Management Conference to discuss the contents ofthe Joint Preliminary Trial Report and to finalize the schedule for the remainder of the litigation.

1.

Lead trial counsel for each party must attend.

2. The parties should be prepared to discuss the substance of any summary judgment motion any party intends to file. During the

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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 20 of 39

conference, the Court will determine whether any existing schedule should be modified, including whether the period for summary judgment motions will precede or follow expert disclosures and discovery.

3.

If it has not already done so, the Court should set a schedule for

expert disclosures and discovery, the briefing of any summary

judgment motions, the briefing of any Daubert motions, the date

for the filing of the Joint Final Trial Report and a firm trial date.

a. In the event summary judgment motions will be filed, the Court should consider providing the parties with its best estimate of the date by which it expects to render a decision on the motions and should advise the parties whether there will be a further opportunity for settlement discussions or mediation following the decision. The date that the Court selects during the Case Management Conference for the filing ofthe Joint Final Trial Report shall be no earlier than 28 days following the Court's decision on the summary judgment motions. Similarly, the firm trial date set by the Court at the Case Management Conference shall be no earlier than 8 weeks following the Court's decision on summary judgment motions.

4.

The Court shall encourage (and, in appropriate cases, may order)

the parties to participate in settlement discussions or mediation

before a forum and by a date chosen by the Court based on its

consultations with the parties during the conference. Such

settlement discussions or mediation efforts shall not stay the

schedule for the completion ofthe litigation.

C. Joint Final Trial Report. On the date set at the Case Management Conference, but in any event not later than 28 days preceding the date set for the commencement of the trial, the parties shall file a Joint Final Trial Report, unless the Court concludes that such a report is not necessary in a particular case, which shall include the following:

1.

In the event that there has been a ruling on summary judgment

motions, a list of any claims and defenses from the Joint

Preliminary Trial Report that the parties had intended to try but

that they will no longer try.

2.

A list by each party of its trial witnesses that it, in good faith,

presently expects to present. The list shall indicate whether the

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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 21 of 39

witness will testify in person or by deposition, and the general subject matter areas of the witness's testimony. In the event that any such witness has not been deposed, and provided the Court has previously approved (see Initial Pretrial Case Management Procedures at 2 ~ 9), the witness will be made available for deposition before the commencement of trial. The parties will also provide an agreement as to how and when they will give notice to each other of the order of their trial witnesses.

3.

A list by each party of exhibits that it, in good faith, presently

expects to offer in its case in chief, together with any specific

objections thereto other than on grounds of relevancy. Any

objection not included on this list will be deemed waived, other

than for good cause shown. Prior to filing the Joint Final Trial

Report the parties will meet and confer in order to eliminate or

narrow disputes about the admissibility of exhibits, to agree upon

exhibits that can be utilized during opening statements at the

trial, and to facilitate the filing of any in limine motions.

4.

In the case of bench trials, the parties' recommendation on

whether the direct testimony of fact and expert witnesses who

testify in person at trial will be submitted by affidavit to the

Court in advance of trial.

5.

The parties' recommendation on the time limits for the length of

the trial, and, if appropriate, the division of time between or

among the parties and the protocol for tracking the time.

6.

All stipulations or statements of fact or law on which the parties

have agreed and which will be offered at trial shall be appended

to the Joint Final Trial Report as exhibits.

7.

An agreed schedule by which the parties will exchange

deposition designations and counter-designations, notify each

other of objections to such designations, consult with each other

regarding those objections, and notify the Court of any remaining

disputes. In any event, the parties must notify the Court of any

remaining dispute no later than 48 hours before the deposition

testimony is offered at trial.

8.

An agreed schedule by which the parties will exchange all

demonstratives not otherwise listed in Paragraph C.3 that the

parties intend to use at trial during opening statements or

otherwise, notify each other of any objections thereto, consult

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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 22 of 39

with each other regarding those objections and notify the Court of any remaining disputes.

9.

The parties' recommendation on the number ofjurors and any

agreement on whether a verdict can be rendered by fewer than all

jurors.

10. A brief report on whether the outcome of any settlement discussions or mediation ordered at the Case Management Conference impacts any of the claims or issues remaining to be tried.

11. All other matters that the Court may have ordered at the Case Management Conference or that the parties believe are important to the efficient conduct of the trial, such as bifurcation or sequencing of issues to be tried, or use of interim summations, etc.

D. Filings to Accompany Joint Final Trial Report. The Joint Final Trial Report shall be accompanied by the following documents:

1.

In all bench trials, unless directed otherwise at the Case

Management Conference, each party shall submit a trial

memorandum.

2.

Any motions in limine. An in limine motion does not include a

motion for summary judgment or a Daubert motion, which must

be filed pursuant to the schedule fixed under Paragraph B.3.

Opposition to in limine motions must be filed within 7 days; no

reply will be allowed absent leave of court.

3.

Any proposed juror questionnaire.

4.

Any requested questions to be asked by the Court during the

voir dire.

5.

Ajoint description ofthe case to be provided to the venire

during the voir dire.

6.

Any proposed substantive instructions on the issues to be tried to

be given by the Court to the jury prior to opening statements.

E. Final Pretrial Conference Procedures. Subsequent to the filing ofthe Joint Final Trial Report, and in no event less than 7 days before the commencement of trial, the Court shall hold a Final Pretrial Conference which must be attended

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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 23 of 39

by lead trial counsel for each party. At that Conference the Court shall take the following actions:

1.

Determine the length ofthe trial and the division oftime

between or among the parties.

2.

Determine the method by which the jury will be selected,

including whether a juror questionnaire will be used and its

contents.

3.

Rule on any disputes among the parties identified in the Joint

Final Trial Report.

4.

Rule, if possible, on any motions in limine that remain

outstanding.

5.

Advise the parties of any substantive instructions it will give to

the jury prior to opening statements.

6.

Notify counsel of a schedule for submission of proposed final

jury instructions.

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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 24 of 39

EXHIBIT A

INITIAL PRETRIAL CONFERENCE CHECKLIST
Proportionality assessment of "the needs of the case, amount in controversy, the parties' resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues" (see Rule 26(b)(2)(C) (iii»

1.

Possible limitations on document preservation (including

electronically stored information)

2. Appropriateness of initial disclosures pursuant to Rule 26(a)(1)

a. Is there some readily identifiable document or category of documents that should be produced immediately in lieu of initial disclosures?

3. Possibility of a stay or limitation of discovery pending a dispositive motion

4. Possibility of communication/coordination between the Magistrate Judge and District Judge with respect to pretrial matters

5. Preliminary issues that are likely to arise that will require court intervention

6. Discovery issues that are envisioned and how discovery disputes will be resolved

7. Proposed discovery including:

a. limitations on types of discovery beyond those in the Rules (i.e., waiver of interrogatories, requests for admission, expert depositions)

b. limitations on scope of discovery

c. limitations on timing and sequence of discovery

d. limitations on restoration of electronically-stored information

e. agreement to allow depositions oftrial witnesses named if not already deposed

f.

preservation depositions

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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 25 of 39

g. foreign discovery and issues anticipated

8. Schedule (as appropriate and possibly excluding public agency cases) including:

a. date(s) for completion of discovery

b. date(s) for dispositive motions

c. date(s) for exchange for expert reports

d. date(s) for exchange of witness lists

e. date (s) for Joint Preliminary Trial Reports and Final Joint Trial Reports

f.

date for Case Management Conference

9. Issues to be tried

a. ways in which issues can be narrowed to make trial more meaningful and efficient

b. whether there are certain issues as to which a mini-trial would be helpful

10. Bifurcation

11. Class certification issues

12. ADRImediation

13. Possibility of consent to trial before a Magistrate Judge

14. Pleadings, including sufficiency and amendments, and the likelihood and timing of amendments

15. Joinder of additional parties, and the likelihood and timing ofjoinder of additional parties

16. Expert witnesses (including necessity or waiver of expert depositions)

17. Damages (computation issues and timing of damages discovery)

18. Final pretrial order (including possibility of waiver of order)

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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 26 of 39
19. Possible trial-ready date 20. Court logistics and mechanics (e.g., communication with the court,
streamlined motion practice, pre-motion conferences, etc.) 21. The need for additional meet and confer sessions, to continue to discuss
issues raised at the initial conference among counsel.
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 27 of 39

EXHIBITB
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

-against-

Plaintiff(s)

No.: _ _CV_ _ __ Joint Electronic Discovery Submission No. _ and [Proposed) Order

Defendant( s)

One or more of the parties to this litigation have indicated that they believe that relevant information may exist or be stored in electronic format, and that this content is potentially responsive to current or anticipated discovery requests. This Joint Submission and [Proposed] Order (and any subsequent ones) shall be the governing document(s) by which the parties and the Court manage the electronic discovery process in this action. The parties and the Court recognize that this Joint Electronic Discovery Submission No. _ and [Proposed] Order is based on facts and circumstances as they are currently known to each party, that the electronic discovery process is iterative, and that additions and modifications to this Submission may become necessary as more information becomes known to the parties.

(1)

Brief Joint Statement Describing the Action, [e.g., "Putative

securities class action pertaining to the restatement of earnings for the

period May 1,2009 to May 30, 2009"]:

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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 28 of 39

(a)

Estimated amount of Plaintiff(s)' Claims:

_ Less than $100,000 _ Between $100,000 and $999,999 _ Between $1,000,000 and $49,999,999 _ More than $50,000,000 _ Equitable Relief _ Other (if so, specify) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __

(b) Estimated amount of Defendant(s)' Counterclaim/Cross-Claims:

_ Less than $100,000 _ Between $100,000 and $999,999 _ Between $1,000,000 and $49,999,999 _ More than $50,000,000 _ Equitable Relief _ Other (if so, specify) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __

(2) Competence. Counsel certify that they are sufficiently knowledgeable in matters relating to their clients' technological systems to discuss competently issues relating to electronic discovery, or have involved someone competent to address these issues on their behalf.

(3) Meet and Confer. Pursuant to Fed. R. Civ. P. 26(f), counsel are required to meet and confer regarding certain matters relating to electronic discovery before the Initial Pretrial Conference (the Rule 16 Conference). Counsel hereby certify that they have met and conferred to discuss these issues.

Date(s) of parties' meet-and-confer conference(s): ______________

(4) Unresolved Issues: After the meet-and-confer conference(s) taking place on the

aforementioned date(s), the following issues remain outstanding and/or require court

intervention: _ Preservation; _ Search and Review; _ Source(s) of Production; _

Form(s) of Production; _ Identification or Logging of Privileged Material;

_ Inadvertent Production of Privileged Material; _ Cost Allocation; and/or _ Other (if

so, specify)

. To the extent specific details are needed

about one or more issues in dispute, describe briefly below.

As set forth below, to date, the parties have addressed the following issues:
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 29 of 39
(5) Preservation. (a) The parties have discussed the obligation to preserve potentially relevant electronically stored information and agree to the following scope and methods for preservation, including but not limited to: retention of electronic data and implementation ofa data preservation plan; identification of potentially relevant data; disclosure of the programs and manner in which the data is maintained; identification of computer system(s) utilized; and identification of the individual(s) responsible for data preservation, etc. Plaintiff(s):
Defendant(s):
(b) State the extent to which the parties have disclosed or have agreed to disclose the dates, contents, and/or recipients of "litigation hold" communications.
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 30 of 39
(c) The parties anticipate the need for judicial intervention regarding the following issues concerning the duty to preserve, the scope, or the method(s) of preserving electronically stored information:
(6) Search and Review (a) The parties have discussed methodologies or protocols for the search and review of electronically stored information, as well as the disclosure of techniques to be used. Some of the approaches that may be considered include: the use and exchange of keyword search lists, "hit reports," and/or responsiveness rates; concept search; machine learning, or other advanced analytical tools; limitations on the fields or file types to be searched; date restrictions; limitations on whether back-up, archival, legacy, or deleted electronically stored information will be searched; testing; sampling; etc. To the extent the parties have reached agreement as to search and review methods, provide details below. Plaintiff(s):
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 31 of 39
Defendant(s):
(b) The parties anticipate the need for judicial intervention regarding the following issues concerning the search and review of electronically stored information:
(7) Production (a) Source(s) of Electronically Stored Information. The parties anticipate that discovery may occur from one or more of the following potential source(s) of electronically stored information [e.g., email, word processing documents, spreadsheets, presentations, databases, instant messages, web sites, blogs, social media, ephemeral data, etc.]:
Plaintiff(s):
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 32 of 39
Defendant( s):
(b) Limitations on Production. The parties have discussed factors relating to the scope of production, including but not limited to: (i) number of custodians; (ii) identity of custodians; (iii) date ranges for which potentially relevant data will be drawn; (iv) locations of data; (v) timing of productions (including phased discovery or rolling productions); and (vi) electronically stored information in the custody or control of non-parties. To the extent the parties have reached agreements related to any of these factors, describe below: Plaintiff(s):
Defendant( s):
(c) Form(s) of Production:
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 33 of 39 (1) The parties have reached the following agreements regarding the form(s) of production:
Plaintiff(s):
Defendant(s):
(2) Please specify any exceptions to the form(s) of production indicated above (e.g., word processing documents in TIFF with load files, but spreadsheets in native form):
(3) The parties anticipate the need for judicial intervention regarding the following issues concerning the form(s) of production:
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 34 of 39
(d) Privileged Material. (1) Identification. The parties have agreed to the following method(s) for the identification (including the logging, if any, or alternatively, the disclosure of the number of documents withheld), and the redaction of privileged documents:
(2) Inadvertent Production / Claw-Back Agreements. Pursuant to Fed R. Civ. Proc. 26(b)(5) and F.R.E. 502(e), the parties have agreed to the following concerning the inadvertent production of privileged documents (e.g. "quick-peek" agreements, on-site examinations, nonwaiver agreements or orders pursuant to F.R.E. 502(d), etc.):
(3) The parties have discussed a 502(d) Order. Yes _; No_
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 35 of 39
The provisions of any such proposed Order shall be set forth in a separate document and presented to the Court for its consideration. (e) Cost of Production. The parties have analyzed their client's data repositories and have estimated the costs associated with the production of electronically stored information. The factors and components underlying these costs are estimated as follows: (1) Costs: PJaintiff(s):
Defendant(s):
(2) Cost Allocation. The parties have considered cost-shifting or costsharing and have reached the following agreements, if any:
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 36 of 39 (3) Cost Savings. The parties have considered cost-saving measures, such as the use of a common electronic discovery vendor or a shared document repository, and have reached the following agreements, if any:
(t) The parties anticipate the need for judicial intervention regarding the following issues concerning the production of electronically stored information:
(8) Other Issues:
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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 37 of 39

The preceding constitutes the agreement(s) reached, and disputes existing, (if any) between the parties to certain matters concerning electronic discovery as of this date. To the extent additional agreements are reached, modifications are necessary, or disputes are identified, they will be outlined in subsequent submissions or agreements and promptly presented to the Court.

Party:

By:

Party:

By:

Party:

By:

Party:

By:

Party:

By:

The next scheduled meet-and-confer conference to address electronic discovery issues, including the status of electronic discovery and any issues or disputes that have arisen since the last conference or Order, shall take place on: _ _ _ _ __

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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 38 of 39

The next scheduled conference with the Court for purposes of updating the Court on

electronic discovery issues has been scheduled for

. Additional conferences,

or written status reports, shall be set every 3 to 4 weeks, as determined by the parties and

the Court, based on the complexity of the issues at hand. An agenda should be submitted

to the Court four (4) days before such conference indicating the issues to be raised by the

parties. The parties may jointly seek to adjourn the conference with the Court by

telephone call 48 hours in advance of a scheduled conference, if the parties agree that there

are no issues requiring Court intervention.

_ Check this box if the parties believe that there exist a sufficient number of e-discovery issues, or the factors at issue are sufficiently complex, that such issues may be most efficiently adjudicated before a Magistrate Judge.

Additional Instructions or Orders, if any:

Dated: _ _ _ _"20_

SO ORDERED: United Stated District Judge

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Case 1:12-cv-07667-HB Document 2 Filed 10/15/12 Page 39 of 39

EXHIBITC

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------------ x Plaintiff,
v.
Defendant,

ORDER OF REFERENCE TO A MAGISTRATE JUDGE
( )( )

----------------------------------- x
The above entitled action is referred to the designated Magistrate Judge for the following

purpose(s):
o General Pretrial (includes scheduling, discovery, non -dispositive pretrial motions, and settlement)
o Specific Non-Dispositive Motion/Dispute*

o Consent under 28 U.S.c. §636(c) for all
purposes (including trial)
o Consent under 28 U.S.c. §636(c)
for limited purpose (e.g., dispositive motion, preliminary injunction) Purpose: _________

0 If referral is for discovery disputes for a specific period when the District Judge is unavailable, the time period of the referral:
0 Referral for discoven: disputes reguirinll; prompt attention at an::\: time when the District Judll;e is not immediatel::\: available (e.g. on trial or out of town)
0 Settlement*
0 Inquest After DefaultlDamages Hearing

0 Habeas Corpus
0 Social Security
0 Dispositive Motion (i.e., motion requiring a Report and Recommendation) Particular Motion:
0 All such motions:

*00 not check if already referred for general pretrial. Dated ______

SO ORDERED: United States District Judge

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 Case 1:12-cv-07667-HB Document 67 Filed 12/13/13 Page 1 of 5

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------- - - ------------x
BEVERLY ADKINS, CHARMAINE WILLIAMS, REBECCA PETTWAY RUBBlE McCOY, WILLIAM YOUNG, on behalf of themselves and all others similarly situated, and MICHIGAN LEGAL SERVICES,

._--­
USDSSDNY

DOCUMENT

ELECTRONICALLY FILED

DOC#: ____.-.~~~_

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Plaintiffs,
- against-
MORGAN STANLEY, MORGAN STANLEY & CO. LLC, MORGAN STANLEY ADS CAPITAL I INC., MORGAN STANLEY MORTGAGE CAPITAL INC., and MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC,

12 Civ. 7667 (HB) MEMORANDUM ORDER

Defendants.
---------------------------------------------x
Hon. HAROLD BAER, JR., District Judge: On July 25, 2013, the Court granted in part and denied in part Defendants' motion to
dismiss the complaint in this action. Adkins v. Morgan Stanley, No. 12. Civ. 7667,2013 WL 3835198 (S.D.N.Y. July 25, 2013). Familiarity with that opinion is assumed. Defendants now seek immediate review of that decision pursuant to 28 U.S.C. § 1292(b). Specifically, Defendants ask the Court to certify for review (1) whether the Fair Housing Act ("FHA") excludes a discovery rule, (2) whether mortgage loan purchasers like Defendants can be liable under the FHA for discrimination measured only in a different party's book of business, and (3) whether mortgage loan purchasers can be liable under the FHA for discrimination in the terms and conditions ofloans that they did not purchase. For the reasons stated below, Defendants' motion for certification of an immediate appeal is DENIED. Defendants also moved to stay this case following the Supreme Court's grant of certiorari in Township ofMount Holly v. Mount Holly Gardens Citizens in Action, Inc., No. 11-1507. But Defendants withdrew that application following the subsequent settlement in that action. See Mt. Holly Garden Citizens in Action, Inc. v. Township ofMount Holly, No. 08-cv-02584 (D.N.J. Nov. 15,2013).

1 


Case 1:12-cv-07667-HB Document 67 Filed 12/13/13 Page 2 of 5

DISCUSSION 


The Court "may certify an immediate appeal of an interlocutory order if the court finds

that the 'order involves a controlling question oflaw as to which there is substantial ground for

difference of opinion and that an immediate appeal from the order may materially advance the

ultimate termination of the litigation.'" Century Pac., Inc. v. Hilton Hotels Corp., 574 F. Supp.

2d 369,370 (S.D.N.Y. 2008) (quoting § 1292(b)). But even if each of these statutory criteria are

met, the Court still has "broad discretion to deny certification." SPL Shipping Ltd v. Gujarat

Cheminex Ltd., No. 06 Civ. 15375,2007 WL 1119753, at *1 (S.D.N.Y. Apr. 12,2007) (quoting

Nat 'I Asbestos Workers Med. Fundv. Philip Morris, Inc., 71 F. Supp. 2d 139, 166 (E.D.N.Y.

1999)). Here, none of Defendants' proposed issues are appropriate for interlocutory review.

A. Whether the Discovery Rule Applies to FHA Claims

First, there is not a "substantial ground for difference of opinion" in the Second Circuit as

to whether the FHA excludes a discovery rule. Indeed, Defendants focus much of their energy

on reasserting their interpretation of the Supreme Court's decision in TRW Inc. v. Andrews, 534

U.S. 19 (2001). But "[a] mere claim that a district court's decision was incorrect does not suffice

to establish substantial ground for a difference of opinion." Aristocrat Leisure Ltd v. Deutsche

Bank Trust Co. Ams., 426 F. Supp. 2d 125, 129 (S.D.N.Y. 2005). Indeed, as the Court noted in

denying Defendants' motion to dismiss, district courts within the Second Circuit have not

hesitated in applying a discovery rule to FHA claims. See, e.g., Clement v. United Homes, LLC,

914 F. Supp. 2d 362, 371-72 (E.D.N.Y. 2012) ("Claims under the FHA ... are subject to the

discovery rule ....").

While Defendants rely upon authority from other jurisdictions that declined to apply the

discovery rule to FHA actions, see, e.g., Garcia v. Brockway, 526 F3d 456, 465 (9th Cir. 2008),

"[d]isagreement among courts outside the circuit ... does not alone support the certification of

u.s. an interlocutory appeal."

ex rei. Colucci v. Beth Israel Med. Ctr., No. 06 Civ. 5033,2009

WL 4809863, at *1 (S.D.N.Y. Dec. 15,2009) (citing Ryan, Beck & Co. v. Fakih, 275 F. Supp. 2d

393,398 (E.D.N.Y. 2003)). Instead, the Court must analyze "the strength of the arguments in

opposition to the challenged ruling." Id (quoting In re Flor, 79 F.3d 281, 284 (2d Cir. 1996».

And in that regard, Defendants' recitation of case law does not alter the Court's conclusion that

the text and structure of the FHA supports a discovery rule.

2

Case 1:12-cv-07667-HB Document 67 Filed 12/13/13 Page 3 of 5
Indeed, the primary authority upon which Defendants' rely, Garcia v. Brockway, leaves unaddressed other authority requiring an expansive interpretation of the FHA. See Huntington Branch, NAACP v. Town ofHuntington, 844 F.2d 926,935 (2d Cir. 1988) (noting that Title VII and Title VIII "are part of a coordinated scheme of federal civil rights laws enacted to end discrimination" and "the Supreme Court has held that both statutes must be construed expansively to implement that goal" (citing Trafficante v. Metro. Life Ins. Co., 409 U.S. 205, 211-12 (1972))); Garcia, 526 F.3d at 475 (Fisher, J., dissenting) ("[T]he Supreme Court has frequently instructed that the FHA should be interpreted flexibly in order to effectuate Congress' ambitious remedial goals in passing the statute ...." (citing City ofEdmonds v. Oxford House, Inc., 514 U.S. 725, 731 (1995))). Nor was the Ninth Circuit's interpretation of the FHA provided in the context of a racial disparate impact claim. Compare Garcia, 526 F. 3d at 465 (considering design-and-construction claim) with Davidson v. Bd. ofGovernors ofState Colis. & Univs. for WIll. Univ., 920 F.2d 441, 445 (7th Cir. 1990) (describing statute of limitations concerns facing disparate impact plaintiffs). Thus, to the extent other courts might reach a different conclusion, that disagreement does not present the '''exceptional circumstances' ... justify[ing] a departure from the basic policy of postponing appellate review until after the entry of a final judgment." Colucci, 2009 WL 4809863, at *2. B. Defendants' Remaining Issues for Certification
Defendants next ask the Court to certify for review whether a mortgage loan purchaser can be liable under the FHA for discrimination brought about only through a loan originator. Similarly, Defendants seek interlocutory review of whether their liability extends to loans that they did not purchase from New Century. But both of these issues challenge the factual premise of Plaintiffs' claims and can be developed only through discovery. Accordingly, they do not pose controlling questions of law and certification of an appeal is inappropriate.
Defendants' assertion that they cannot be liable for causing a disparate impact because of New Century's role in originating the actual loans to borrowers misconstrues what is required to prove a disparate impact claim. As the Second Circuit has made clear, "to make out a prima facie case under the FHA on a theory of disparate impact, a plaintiff must demonstrate that an outwardly neutral practice actually or predictably has a discriminatory effect; that is, has a significantly adverse or disproportionate impact on minorities, or perpetuates segregation." Fair Hous. in Huntington Comm. Inc. v. Town ofHuntington, NY., 316 F.3d 357,366 (2d Cir. 2003).
3 


Case 1:12-cv-07667-HB Document 67 Filed 12/13/13 Page 4 of 5
Therefore, under traditional principles of disparate impact liability, Defendants' theory here is inextricably bound together with the facts of causation. Particularly given that Defendants challenge the Court's order following a motion to dismiss and not a motion for summary judgment, these circumstances do not pose a controlling question of law that can be certified for appeal. See Century Pac., Inc., 574 F. Supp. 2d at 371 ("The 'question oflaw' certified for interlocutory appeal 'must refer to a pure question of law that the reviewing court could decide quickly and cleanly without having to study the record. '" (internal quotation marks omitted) (quoting In re Worldcom, Inc., No. M-47 HB, 2003 WL 21498904, at *10 (S.D.N.Y. June 30, 2003))).
Nor is there substantial ground for a difference of opinion on this issue. Defendants' proposal in effect asks the Court to certify for appeal whether to graft a new requirement upon the framework describe above: specifically, a requirement that a defendant must be the last party to act for it to be liable for the effects of its transactions. But Defendants cite no case law adopting this departure from established disparate impact case law. And without support for their position beyond their own argument, no substantial ground for a difference of opinion
exists. See Colucci, 2009 WL 4809863, at *1 ("The 'mere presence of a disputed issue that is a
question of first impression, standing alone, is insufficient to demonstrate substantial ground for difference of opinion.'" (quoting In re Flor, 79 F.3d at 284)).
Defendants' final issue for which they seek certification fares no better. Limiting this action to only those loans that Defendants actually purchased would not terminate this action, nor would it materially advance the ultimate termination of the litigation. Indeed, it is undisputed that Defendants allegedly purchased the loan of at least one ofthe named plaintiffs. Thus, even a successful appeal would still require substantial additional litigation and discovery. See Century Pac., Inc., 574 F. Supp. 2d at 373 (interlocutory appeal unavailable where movant "failed to demonstrate that the immediate appeal of this action would result in the saving of judicial resources or otherwise 'avoid protracted litigation'" (quoting In re World Trade Ctr. Disaster Site Litig., 460 F. Supp. 2d 134, 144 (S.D.N.Y. 2007))). And determining whether Defendants' policies resulted in a disparate impact even with regard to loans they did not purchase cannot be resolved without a detailed review of the record. See In re World Trade Ctr. Disaster Site Litig., 460 F. Supp. 2d at 145 (declining to certify where question "cannot be
4 


Case 1:12-cv-07667-HB Document 67 Filed 12/13/13 Page 5 of 5

answered without consideration of a developed record"). Accordingly, the Court declines to certify any of Defendants' proposed issues for appeal.
CONCLUSION I have considered Defendants' remaining arguments and find them meritless. For the foregoing reasons, Defendants' motion for a certification of appeal is DENIED. The Clerk of Court is instructed to close this motion and remove it from my docket.

------"~I SO ORDERED.

Date:

p

HAROLD BAER, JR. United States District Judge

5 


 
 Case 1:12-cv-07667-VEC-GWG Document 120 Filed 06/19/14 Page 1 of 2

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

------------------------------------------------------------ X

BEVERLY ADKINS, CHARMAINE

:

WILLIAMS, REBECCA PETTWAY, RUBBIE :

McCOY, WILLIAM YOUNG, on behalf of

:

themselves and all others similarly situated, and :

MICHIGAN LEGAL SERVICES,

:

Plaintiffs, :

:

-against-

:

:

MORGAN STANLEY, MORGAN STANLEY & :

CO. LLC, MORGAN STANLEY ABS CAPITAL:

I INC., MORGAN STANLEY MORTGAGE :

CAPITAL INC., and MORGAN STANLEY :

MORTGAGE CAPITAL HOLDINGS LLC, :

Defendants. :

------------------------------------------------------------ X

USDC SDNY DOCUMENT ELECTRONICALLY FILED DOC #: DATE FILED: 6/19/2014
12-CV-7667 (VEC) ORDER

VALERIE CAPRONI, District Judge:

WHEREAS the parties appeared for a conference before the Court on June 19, 2014; it is

hereby ORDERED: 1. Plaintiffs’ response to Defendants’ objections to Magistrate Judge Gorenstein’s May 27, 2014 discovery order shall be filed by July 2, 2014. Defendants’ reply in further support

of their objections shall be filed by July 14, 2014.

2. As previously ordered, Plaintiffs shall move for class certification and disclose expert

witnesses by June 27, 2014. Plaintiffs shall also make their experts and declarants not

previously identified as potential witnesses available for deposition by July 18, 2014. Defendants’ opposition to class certification and disclosure of expert witnesses is due

September 11, 2014. Defendants shall make their experts and declarants not previously identified as potential witnesses available for deposition by October 1, 2014. Plaintiffs’

reply in further support of class certification is due November 26, 2014. Page limits for

Case 1:12-cv-07667-VEC-GWG Document 120 Filed 06/19/14 Page 2 of 2

briefing class certification are extended to 35 pages for Plaintiffs’ opening brief, 35 pages for Defendants’ opposition brief, and 20 pages for Plaintiffs’ reply brief. Plaintiffs’ submission of exhibits under seal in connection with their class certification motion because of Defendants’ confidentiality designations shall not prejudice a later application challenging that designation and the basis for sealing. 3. The deadline for summary judgment motions and the trial-ready date are adjourned sine die. Defendants shall move for summary judgment only after Plaintiffs’ class certification motion is resolved. 4. Defendants’ motion to seal certain exhibits filed in connection with their opposition to Plaintiffs’ motion to amend the scheduling order in this case (ECF No. 82) is DENIED without prejudice to renewal. Defendants shall publicly file those exhibits on ECF by June 27, 2014 unless they have renewed their motion to seal by that date. 5. Defendants shall review their previous submissions to the Court and any confidentiality designations applied to those submissions to confirm the necessity of filing under seal. Defendants shall submit a letter to the Court by July 18, 2014 confirming that they have done so and indicating whether any documents shall be unsealed pursuant to this reevaluation.

SO ORDERED.
Date: June 19, 2014 New York, NY Unite

_________________________________ VALERIE CAPRONI
d States District Judge

2

 
 Case 1:12-cv-07667-VEC-GWG Document 125 Filed 06/27/14 Page 1 of 2

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

BEVERLY ADKINS, CHARMAINE WILLIAMS, REBECCA PETTWAY, RUBBIE McCOY, WILLIAM YOUNG, on behalf of themselves and all others similarly situated, and MICHIGAN LEGAL SERVICES,
Plaintiffs,

1:12-cv-7667-VEC-GWG

v.

MORGAN STANLEY, MORGAN STANLEY & CO. LLC, MORGAN STANLEY ABS CAPITAL I INC., MORGAN STANLEY MORTGAGE CAPITAL INC., and MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC,

Defendants.

DEFENDANTS’ MEMORANDUM OF LAW IN OPPOSITION TO PLAINTIFFS’ MOTION TO CONFORM AND AMEND THE SCHEDULING ORDER PURSUANT TO
THE COURT’S DECEMBER 26, 2013 ORDER AND TO FEDERAL RULE OF CIVIL PROCEDURE 16(b)(4)*

* In accordance with the Court’s order dated June 19, 2014, Defendants herewith file the exhibits to the above-captioned memorandum that were subject to the Defendants’ motion to seal (ECF No. 82).

Case 1:12-cv-07667-VEC-GWG Document 125 Filed 06/27/14 Page 2 of 2

Dated: June 27, 2014

Respectfully submitted,
/s/ David W. Ogden
Noah A. Levine WILMER CUTLER PICKERING HALE
AND DORR LLP 7 World Trade Center 250 Greenwich Street New York, NY 10007 Tel.: (212) 230-8800 Fax: (212)230-8888 noah.levine@wilmerhale.com
David W. Ogden (admitted pro hac vice) Brian M. Boynton (admitted pro hac vice) Skye L. Perryman (admitted pro hac vice) Jonathan A. Bressler (admitted pro hac vice) WILMER CUTLER PICKERING HALE
AND DORR LLP 1875 Pennsylvania Avenue, NW Washington, DC 20006 Tel.: (202) 663-6000 Fax: (202) 663-6363 david.ogden@wilmerhale.com brian.boynton@wilmerhale.com skye.perryman@wilmerhale.com jonathan.bressler@wilmerhale.com

1

 
 Case 1:12-cv-07667-VEC-GWG Document 163 Filed 08/13/14 Page 1 of 7

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

-------------------------------------------------------------X

BEVERLY ADKINS, CHARMAINE

:

WILLIAMS, REBECCA PETTWAY, RUBBIE :

McCOY, WILLIAM YOUNG, on behalf of

:

themselves and all others similarly situated, and :

MICHIGAN LEGAL SERVICES,

:

Plaintiffs, :

:

-against-

:

:

MORGAN STANLEY, MORGAN STANLEY & :

CO. LLC, MORGAN STANLEY ABS CAPITAL:

I INC., MORGAN STANLEY MORTGAGE :

CAPITAL INC., and MORGAN STANLEY :

MORTGAGE CAPITAL HOLDINGS LLC, :

Defendants. :

------------------------------------------------------------ X

USDC SDNY DOCUMENT ELECTRONICALLY FILED DOC #: DATE FILED: 8/13/2014
12-CV-7667 (VEC)
MEMORANDUM ORDER

VALERIE CAPRONI, District Judge:

On May 27, 2014, Magistrate Judge Gabriel Gorenstein granted Plaintiffs’ motion to

compel the production of deposition transcripts generated in connection with an investigation

into Morgan Stanley’s conduct by the Massachusetts Attorney General (“the MAAG”).1 Adkins

v. Morgan Stanley, No. 12-CV-7667 (S.D.N.Y. May 27, 2014) (“Mem. Order”). Morgan

Stanley objects to that order and seeks this Court’s review. For the reasons stated below, the

magistrate judge’s order is REVERSED to the extent that it fails, as a matter of comity, to

require Plaintiffs first to seek the requested deposition transcripts from a Massachusetts

commonwealth court before determining whether their production can and should be compelled

in this action. If Plaintiffs wish to obtain copies of deposition transcripts generated during the

MAAG’s investigation, they must first apply in Massachusetts commonwealth court.

1

This dispute was referred to Judge Gorenstein on April 1, 2014 following Plaintiffs’ letter of March 31,

2014, ECF No. 81.

Case 1:12-cv-07667-VEC-GWG Document 163 Filed 08/13/14 Page 2 of 7
BACKGROUND On behalf of a putative class comprised of Detroit-area African-American borrowers, Plaintiffs bring claims under the Fair Housing Act, 42 U.S.C. § 3601 et seq., alleging a racially disparate impact from Defendants’ securitization policies related to mortgages originated by New Century Mortgage Company. Prior to the inception of this litigation, in 2009 and 2010, the MAAG investigated Morgan Stanley’s “financing, purchasing, and securitization of allegedly unfair residential mortgage loans during the period 2005 through the first half of 2007.” Assurance of Discontinuance ¶ 1, ECF No. 92, Ex. A. In connection with that investigation, the MAAG deposed ten current and former Morgan Stanley employees, eight of whom have been deposed by Plaintiffs in this action. At the time the MAAP was conducting its depositions, Morgan Stanley requested copies of the transcripts. Swift Decl. ¶¶ 5–7, ECF No. 109, Ex. A. The MAAG denied the request for copies, but granted Morgan Stanley permission to review the transcripts in the MAAG’s offices.2 Plaintiffs now seek transcripts of those depositions. The MAAG has represented to Plaintiffs that “if the [MAAG] receives Morgan Stanley’s consent to produce the relevant deposition transcripts to counsel for Plaintiffs in this case, it will do so.” Pls.’ Mar. 31, 2014 Ltr. at 2, ECF No. 81. Based on that representation, the magistrate judge granted Plaintiffs’ motion to compel production, and ordered Defendants to obtain the transcripts from the MAAG and produce them to Plaintiffs. Mem. Order at 5. In doing so, the magistrate judge concluded that the transcripts were relevant to this litigation and, because MAAG would produce them if Morgan Stanley consented, that they were

2

Ironically, had MAAG acquiesced in Morgan Stanley’s request for copies of the deposition transcripts

during the course of its investigation, this entire dispute would be a non-issue. Morgan Stanley would have actually

possessed the transcripts so that plaintiffs could have obtained them through a request pursuant to Fed. R. Civ. P. 34.

2

Case 1:12-cv-07667-VEC-GWG Document 163 Filed 08/13/14 Page 3 of 7
within Morgan Stanley’s “possession, custody, or control” for the purposes of Rule 34(a)(1) of the Federal Rules of Civil Procedure. Id. at 2-4. The magistrate judge also rejected Defendants’ argument that a Massachusetts statute limiting the circumstances under which the MAAG may release such transcripts shields them from disclosure here. Id. at 4. See also Mass. Gen. Laws Ann. ch. 93A, § 6(6) (West). Defendants now object to Magistrate Judge Gorenstein’s application of Fed. R. Civ. P. 34(a)(1) and his finding that the transcripts are not protected from disclosure under Massachusetts General Laws, chapter 93A, § 6(6).
DISCUSSION A. Standard of Review
Under Rule 72(a) of the Federal Rules of Civil Procedure, a district court may refer nondispositive matters to a magistrate judge for resolution. “Matters concerning discovery generally are considered ‘nondispositive of the litigation.’” Arista Records, LLC v. Doe 3, 604 F.3d 110, 116 (2d Cir. 2010) (quoting Thomas E. Hoar, Inc. v. Sara Lee Corp., 900 F.2d 522, 525 (2d Cir. 1990)). Upon a timely objection, the Court must “modify or set aside any part of the [magistrate judge’s] order that is clearly erroneous or contrary to law.” Fed. R. Civ. P. 72(a). The parties disagree as to the standard to be applied when reviewing a magistrate judge’s order. Defendants contend that even when reviewing nondispositive matters, determining whether a magistrate judge’s legal conclusions were “contrary to law” is synonymous with de novo review, see PowerShare, Inc. v. Syntel, Inc., 597 F.3d 10, 15 (1st Cir. 2010), while Plaintiffs argue that “magistrate judges are afforded broad discretion” when resolving discovery disputes and “reversal is appropriate only if that discretion is abused.” Highland Capital Mgmt., L.P. v. Schneider, 551 F. Supp. 2d 173, 178 (S.D.N.Y. 2008) (quoting Commodity Futures Trading Comm’n v. Standard Forex, Inc., 882 F. Supp. 40, 42 (E.D.N.Y. 1995)). The Court need not
3

Case 1:12-cv-07667-VEC-GWG Document 163 Filed 08/13/14 Page 4 of 7
resolve this dispute, however, because even under Plaintiffs’ deferential standard of review, the magistrate judge’s analysis was contrary to law. B. Principles of Comity as Applied to the Massachusetts Statute
“[I]n cases presenting federal questions, such as here, discoverability, privileges, and confidentiality are governed by federal law, not state law.” Crosby v. City of N.Y., 269 F.R.D. 267, 274 (S.D.N.Y. 2010). Nevertheless, “as a matter of comity federal courts accord deference to state-created privileges.” United States v. One Parcel of Prop. Located at 31-33 York St., Harftord, Conn., 930 F.2d 139, 141 (2d Cir. 1991). This deference is not without limits; in federal question cases, state privileges “are construed narrowly and must yield when outweighed by a federal interest in presenting relevant information to a trier of fact.” Id. (internal citations omitted). See also Crosby, 269 F.R.D. at 274 (quoting Daniels v. City of N.Y., No. 99-CV-1695, 2001 WL 228091, at *1 (S.D.N.Y. Mar. 8, 2001)). At this time, the Court need not determine whether the Massachusetts statute creates an independent privilege, balance any such privilege against federal interests in liberal discovery, or determine whether Morgan Stanley’s ability to consent to the release of the transcripts is legally equivalent to possession of the transcripts for purposes of Fed. R. Civ. P. Rule 34, because the statute plainly provides an alternate avenue through which any conflict between state and federal interests might be avoided in the first instance.
Under the commonwealth consumer protection statute pursuant to which MAAG conducted its investigation:
[a]ny documentary material or other information produced by any person pursuant to this section shall not, unless otherwise ordered by a court of the commonwealth for good cause shown, be disclosed to any person other than the authorized agent or representative of the attorney general, unless with the consent of the person producing the same; provided, however, that such material or information may be disclosed by the attorney general in court pleadings or other papers filed in court.
4

Case 1:12-cv-07667-VEC-GWG Document 163 Filed 08/13/14 Page 5 of 7

Mass. Gen. Laws Ann. ch. 93A, § 6(6) (West) (emphasis added). Massachusetts law thus provides three circumstances under which certain MAAG materials may be disclosed to thirdparties: (1) upon a finding of good cause by a commonwealth court; (2) with the consent of the producing party; or (3) as submitted by the MAAG in court pleadings or other filings. Defendants have not consented to production of the requested transcripts and it appears that the MAAG has not filed any of the relevant materials in court. See Defs.’ Obj. to Magistrate Judge Gorenstein’s May 27, 2014 Order Granting Pls.’ Mot. to Compel at 2, 5, 7. Plaintiffs have not sought an order from a Massachusetts court, which is statutorily authorized to grant disclosure of the transcripts “for good cause shown,” and thus have not exhausted the procedures available to obtain the transcripts under Massachusetts law. Mass. Gen. Laws Ann. ch. 93A, § 6(6) (West).
Because this alternative provides an avenue for the disclosure of MAAG materials that protects Massachusetts’s interests therein and does not prejudice federal interests,3 the magistrate judge erred in granting Plaintiffs’ Motion to Compel without requiring in the first instance that, as a matter of comity, Plaintiffs seek the documents from a commonwealth court. Cf. Anilao v. Spota, 918 F. Supp. 2d 157, 170 (E.D.N.Y. 2013) (“[A]s a matter of comity, a party seeking disclosure of materials from a state grand jury proceeding for purposes of a federal civil lawsuit should ‘first make [its] application to the state court supervising the grand jury at issue.’” (quoting Ruther v. Boyle, 879 F. Supp. 247, 250 (E.D.N.Y. 1995)). See also Ligon v. City of N.Y., No. 12-CV-2274, 2012 WL 2125989, at *2 (S.D.N.Y. June 12, 2012) (“[A] strong policy of comity between state and federal sovereignties impels federal courts to recognize state privileges

3

This avenue also allows the Court to avoid determining what appears to be a novel question: specifically,

whether under the circumstances of this case, Morgan Stanley “possesses” the transcripts. See Batson v. Kentucky,

476 U.S. 79, 111 n. 5 (1986) (Stevens, J., concurring) (“[T]he Court should only address issues necessary to the

disposition of the case or petition.”); cf. Anderson v. United States, 417 U.S. 211, 218 (1974) (directing that it is

“inadvisable . . . to reach out . . . to pass on important questions of statutory construction when simpler, and more

settled, grounds are available for deciding the case at hand”).

5

Case 1:12-cv-07667-VEC-GWG Document 163 Filed 08/13/14 Page 6 of 7
where this can be accomplished at no substantial cost to federal substantive and procedural policies.” (quoting King v. Conde, 121 F.R.D. 180, 187 (E.D.N.Y. 1988))); Unger v. Cohen, 125 F.R.D. 67, 69 (S.D.N.Y. 1989) (Even where the state statute creates no independent evidentiary privilege, the state’s interest in protecting the confidentiality of certain files is “a proper consideration to be balanced against the plaintiff’s interest in disclosure pursuant to Rule 26.” (citing King, 121 F.R.D. at 190-91; Martin v. Lamb, 122 F.R.D. 143, 146 (W.D.N.Y.1988))). If Plaintiffs exhaust this avenue without success, they may reassert their motion to compel production from Morgan Stanley. Cf. Frederick v. N.Y.C., No. 11-CV-469, 2012 WL 4947806, at *11 (S.D.N.Y. Oct. 11, 2012) (“[I]n cases where a state court denies access to grand jury transcripts, ‘the burden falls on this Court to make an independent determination of whether the grand jury transcripts should be released.’” (quoting Palmer v. Estate of Stuart, 2004 WL 2429806, at *2 (S.D.N.Y. Nov. 1, 2004)).
CONCLUSION For the reasons stated above, the magistrate judge’s discovery ordered issued on May 27, 2014 is REVERSED to the extent that it fails, as a matter of comity, to require Plaintiffs first to seek the requested deposition transcripts from a Massachusetts commonwealth court before determining whether their production can and should be compelled in this action. Because the magistrate judge’s order was contrary to law on that ground, the Court need not determine whether Massachusetts General Laws, chapter 93A, § 6(6), creates a privilege held by Morgan Stanley that is recognizable by this court or whether the transcripts fall within Morgan Stanley’s
6

Case 1:12-cv-07667-VEC-GWG Document 163 Filed 08/13/14 Page 7 of 7

control for the purposes of Rule 34 of the Federal Rules of Civil Procedure. SO ORDERED.

Date: August 13, 2014 New York, NY

_________________________________ VALERIE CAPRONI United States District Judge

7

 
 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

------------------------------------------------------------ X

BEVERLY ADKINS, CHARMAINE

:

WILLIAMS, REBECCA PETTWAY, RUBBIE :

McCOY, WILLIAM YOUNG, on behalf of

:

themselves and all others similarly situated, and :

MICHIGAN LEGAL SERVICES,

:

:

Plaintiffs, :

:

-against-

:

:

MORGAN STANLEY,* MORGAN STANLEY :

& CO. LLC, MORGAN STANLEY ABS

:

CAPITAL I INC., MORGAN STANLEY

:

MORTGAGE CAPITAL INC., and MORGAN :

STANLEY MORTGAGE CAPITAL

:

HOLDINGS LLC,

:

:

Defendants. X

------------------------------------------------------------

VALERIE CAPRONI, United States District Judge:

USDC SDNY DOCUMENT ELECTRONICALLY FILED DOC #: DATE FILED: 5/14/2015
12-CV-7667 (VEC) OPINION & ORDER

This is one of many cases arising out of the collapse of the housing market. This one

comes with a twist: homeowners in Detroit who received subprime loans seek to hold a single

investment bank responsible under the Fair Housing Act (“FHA”) for discriminating against

African-American borrowers, based on their claim that African-Americans were more likely than

similarly-situated white borrowers to receive so-called “Combined-Risk loans.” Plaintiffs allege

that Morgan Stanley1 so infected the market for residential mortgages – and for mortgages

written by the New Century Mortgage Company, a now-defunct loan originator, in particular –

*

The Court is aware that Westlaw (but not LexisNexis) has chosen to caption the case “Adkins v. Stanley.”

See Adkins v. Morgan Stanley, No. 12-CV-7667, 2013 WL 3835198, 2013 U.S. Dist. LEXIS 104369 (S.D.N.Y. July

25, 2013) (“Adkins I”). Although this misnomer may be inevitable, the Court nevertheless notes that Morgan

Stanley is a corporation (and a well-known one at that), not an individual. Indeed, Henry Morgan and Harold

Stanley were two different people, further confirming the inaccuracy of the “Stanley” moniker.

1

Although a number of corporate entities are named as Defendants, the Court refers to all Defendants as

“Morgan Stanley.”

that it bears responsibility for the disparate impact of New Century’s lending practices. Although Plaintiffs advance creative theories, their class action lawsuit founders on the requirements of Federal Rule of Civil Procedure 23.
Plaintiffs seek to certify a class of “[a]ll African-American individuals who, between 2004 and 2007, resided in the Detroit2 area . . . and received Combined-Risk Loans from New Century.” Compl. ¶ 229. Plaintiffs define “Combined-Risk loans”3 as loans that are “high-cost” as defined by the Home Mortgage Disclosure Act (“HMDA”), 12 U.S.C. § 2801 et seq.,4 and contain two or more of eight risk factors that, they allege, increase the risk of default. Compl. ¶ 34. Defendants oppose class certification, arguing that individual questions will predominate over questions common to the class.
The Court concludes that this class action lawsuit is an inappropriate vehicle to rectify the wrong that Plaintiffs allege Morgan Stanley perpetrated. The subprime mortgage crisis undoubtedly damaged our economy and may have – as Plaintiffs contend – exacerbated preexisting racial disparities in socioeconomic status. While the Court is not unsympathetic to Plaintiffs’ claims, the harmfulness of the terms that Plaintiffs claim that Morgan Stanley caused New Century to include in loans and the role that Morgan Stanley played in causing the terms of specific Plaintiffs’ loans differ considerably within the proposed class; accordingly, Plaintiffs’ proposed class is unworkable.5 Plaintiffs’ motion for class certification is therefore DENIED.

2

Plaintiffs include nine counties in defining “the Detroit metropolitan area: Genesee, Lapeer, Livingston,

Macomb, Monroe, Oakland, St. Clair, Washtenaw, and Wayne.” Compl. ¶ 116.

3

The definition of a “Combined-Risk loan” was created by Plaintiffs for the purpose of this litigation; it is

not a generally-accepted term in either the world of residential lending or the world of investment banking.

4

The HMDA defines “high-cost” loans as “first lien loan[s] with an annual percentage rate and borrowing

costs that exceed by more than 3 percentage points Treasury securities of comparable maturity, or [] subordinate lien

loan[s] that exceed[] the Treasury benchmark by more than five points.” Compl. ¶ 31.

5

For ease of reference, this opinion refers to the risk factors the Plaintiffs focus on as loan “terms” even

though several of the factors are not loan terms at all (e.g., high loan-to-value ratios or stated-income loans).

2

Defendants’ motion to preclude some opinions in Plaintiffs’ experts’ reports is DISMISSED as moot.
BACKGROUND6 I. The Parties
A. Plaintiffs Beverly Adkins, Charmaine Williams, Rebecca Pettway, Rubbie McCoy, and William Young are African-Americans who purchased or refinanced homes with loans written by New Century, a non-party entity. For example, using an independent broker, Adkins refinanced her and her husband’s home via a 30-year, adjustable rate loan with a substantial prepayment penalty and a 90 percent loan-to-value ratio (“LTV”) (based on an inflated appraisal). Compl. ¶ 129-34; see also Sugnet Decl. Ex. 74, Dkt. 129; Reardon Decl. Ex. 28, Dkt. 169; Adkins Dep. at 63-65.7 When New Century attempted to sell Adkins’ loan to Morgan Stanley, Morgan Stanley “kicked [the loan] out” of the bundle of loans it would buy – meaning that its due diligence efforts flagged the loan and rejected it as undesirable. Gilly Decl. ¶ 10 & Ex. E, Dkt. 175. New Century ultimately sold the Adkins’s loan to Credit Suisse First Boston. Expert Report of Timothy J. Riddiough, Ph.D. (“Riddiough”), Dkt. 206, ¶ 124. The other individual named plaintiffs have similar stories. Michigan Legal Services, the final plaintiff, alleges that it has been serving low-income communities in Michigan – primarily African-American residents of

6

Findings of fact are drawn from the depositions, declarations, expert reports, and other exhibits that the

parties submitted in connection with the motion for class certification. At this stage, the Court does “not resolve

factual assertions related to the merits but state[s] them as the parties’ assertions.” Sykes v. Mel S. Harris & Assocs.,

LLC, 780 F.3d 70, 75 (2d Cir. 2015) (internal quotation marks and alterations omitted).

7

Both parties included excerpts from depositions in advocating for and against class certification and

separately included the full deposition transcripts of each witness. Accordingly, the Court cites to the full deposition

transcripts, which the parties are directed to file (as discs if necessary) on the public docket, in redacted form if

necessary pursuant to the Protective Order.

3

Detroit – by engaging “in impact-oriented litigation, legislative and administrative advocacy, and client community education.” Compl. ¶¶ 205-20.
B. New Century New Century, a California-based lender, originated approximately 250,000 subprime mortgage loans per year during the period from 2004 through 2006 (although the number of loans it originated dropped precipitously in the months before its 2007 bankruptcy). Riddiough ¶ 31, FINANCIAL CRISIS INQUIRY COMM’N, FINANCIAL CRISIS INQUIRY REPORT (Jan. 2011) (“FCIC”) 71. Plaintiffs allege that New Century was “the second largest originator of subprime residential loans (in terms of loan amounts) each year from 2003 to 2006.” Expert Op. of Ian Ayres in Support of Class Certification (“Ayres”) ¶ 21. New Century was an “especially aggressive” independent mortgage company that ranked among the leaders in subprime loan originations. FCIC 89. Historically loan originators “avoided making unsound loans because they would be stuck with them in their loan portfolios.” Id. at 7. But like other originators, by the mid-2000s New Century regularly made subprime loans based on questionable underwriting and then sold those loans to investment banks and other secondary market purchasers, including Morgan Stanley, which securitized them. Licata Dep. at 47, Lindsay Dep. at 93. Like many loan originators, New Century relied on three “channels” to originate loans – the retail, correspondent, and broker channels. Riddiough ¶ 32.8 The vast majority of New Century’s loans were originated through the broker channel, which “originated loans through a network of independent mortgage brokers.” Id. In 2005, the broker

8

The retail channel, operating under the name Home123 Corporation, directly lent to consumers and to

builders. Riddiough ¶ 32. New Century’s Wholesale Division ran the correspondent and the broker channels.

Through the correspondent channel, the Wholesale Division “purchased loans that had already been funded by other

entities known as ‘correspondent lenders.’” Id.

4

channel accounted for approximately 71 percent of New Century’s loans. Id. ¶ 33; see also Ayres ¶¶ 39-40.
Brokers who originated loans were truly “independent,” meaning that after they had written a loan with particular terms, they could shop the loan around to find an originator willing to fund it. See Reardon Decl. Ex. 9, McKay Dep. at 99. Brokers could determine whether a loan would likely meet New Century’s guidelines by entering data regarding the borrower and the loan into a computer program known as “FastQual,” which would apply “automated underwriting rules” set by New Century. Id. at 51; see also id. at 131 (“It was really designed to make sure that the underwriting guidelines were being applied consistently.”). When brokers had a loan with terms that were not available on FastQual – for example, when they wanted to qualify a borrower for a loan with an 85 percent LTV but FastQual only provided options up to 80 percent – they could seek an exception from a New Century account executive. Id. at 128-29. While brokers and internal account managers (who generated direct loans) could be “aggressive” with respect to underwriting guidelines, an underwriter from New Century approved every loan that New Century originated, id. at 123-24; the New Century underwriter’s review ranged from ensuring that the documentation matched the data input into the FastQual system, id. at 124, to determining whether a particular loan was worth the risk associated with its terms, id. at 129. Defendants allege that approximately 10 to 25 percent of New Century loans received some sort of an exception to New Century’s underwriting guidelines. Tr. at 60.9
In order to originate a loan – through any channel – New Century had to be able to fund the loan. Like most originators, New Century relied on “short-term lines of credit, or ‘warehouse lines,’ from commercial or investment banks.” FCIC 68; see Reardon Decl. Ex. 1 (identifying

9

References to “Tr.” refer to the transcript of the April 9, 2015 evidentiary hearing and oral argument.

5

the banks that provided warehouse loans to New Century, including Bank of America, Barclays Bank, Bear Stearns, Citigroup, Credit Suisse First Boston, Deutsche Bank, Morgan Stanley, and UBS).10 The terms of its warehouse loans permitted New Century to make a loan and assign it to the credit facility, which would then free assets on the facility for New Century’s use. After New Century had sold the loan (either through a whole loan sale or a securitization), it would be removed from the ledger of the warehouse line against which it had been assigned. Tr. at 11314. The parties appear to dispute the extent to which New Century depended on Morgan Stanley’s warehouse line in particular, but in general New Century relied on the existence of warehouse facilities to fund most of the loans that it originated. Cf. Riddiough ¶¶ 40-41, Expert Op. of Patricia A. McCoy in Support of Class Certification (“McCoy”) 22.
C. Morgan Stanley Morgan Stanley, like many other large investment banks, was heavily involved in the securitization and sale of residential mortgage-backed securities (“RMBSs”), both as an investor and as a seller.11 Morgan Stanley was one of a number of banks that had extensive dealings with

10

Both parties’ experts agree that New Century has substantial credit capacity from Wall Street generally and

from Morgan Stanley specifically. See Riddiough ¶ 38 (“New Century’s total credit capacity (including its

warehouse loans and its asset-backed commercial paper facility) increased during the proposed class period, from

$7.4 billion at the beginning of 2004 to $16.9 billion at the time of its final quarterly SEC filing for the period ended

September 30, 2006.”); Expert Op. of Patricia A. McCoy in Support of Class Certification (“McCoy”) 22 (“New

Century relied so heavily on warehouse loans that it had approximately $8.5 billion in warehouse lines from Morgan

Stanley and other Wall Street firms at the end of third quarter 2006.”).

11

Morgan Stanley’s involvement with RMBSs has led to a bevy of lawsuits (many unsuccessful) asserting

claims arising from the collapse of the housing market. See, e.g., Stratte-McClure v. Morgan Stanley, 776 F.3d 94,

96 (2d Cir. 2015) (affirming dismissal of a claim that Morgan Stanley misled its investors by understating its

exposure to the RMBS market); In re Morgan Stanley Mortg. Pass-Through Certificate Litig., 23 F. Supp. 3d 203,

205 (S.D.N.Y. 2014) (describing “alleged violations of the Securities Act of 1933 . . . in connection with purchases

of certain issuances, including purchases of certificates from [a] Morgan Stanley Mortgage Loan Trust”); Nat’l

Credit Union Admin. Bd. v. Morgan Stanley & Co., No. 13-CV-6705(DLC), 2014 WL 241739, at *1 (S.D.N.Y. Jan.

22, 2014); Emps. Ret. Sys. of Gov’t of V.I. v. Morgan Stanley & Co., 814 F. Supp. 2d 344, 348-49 (S.D.N.Y. 2011)

(describing plaintiffs’ allegations that “Morgan Stanley had direct, inside, non-public information regarding the

deteriorating quality of New Century’s loans” but failed to downgrade the credit ratings of affected collateralized

debt obligations (“CDOs”)); In re MBIA, Inc., Sec. Litig., 700 F. Supp. 2d 566, 572 (S.D.N.Y. 2010); Abu Dhabi

Commercial Bank v. Morgan Stanley & Co., 651 F. Supp. 2d 155, 165-66 (S.D.N.Y. 2009). In connection with

allegations regarding the bank’s sale of RMBSs, Morgan Stanley announced in February 2015 “that it had reached a

6

New Century, as a lender, underwriter of the New Century securitizations, and as purchaser of New Century’s loans.
The parties sharply dispute the relative significance to New Century’s lending practices of Morgan Stanley as compared to the other banks. Plaintiffs’ expert, Patricia McCoy, asserted that Morgan Stanley exerted “singular influence” over New Century. McCoy 22. Defendants’ expert, Timothy Riddiough, disagreed, noting that Professor McCoy did not supply a standard against which to evaluate the claim of “singular influence,” Riddiough ¶¶ 55-56, and that even she conceded that other banks were the “cause” or “principal cause” of some of the so-called Combined-Risk loans that New Century made during the class period, id. ¶ 56 (citing Reardon Decl. Ex. 17, McCoy Dep. at 50, 100-05).
The relationship between Morgan Stanley and New Century was indisputably close, although it is not clear how it compares to New Century’s relationships with similar banks. Morgan Stanley officials wrote at the time that “[w]hile they don’t keep specific metrics, we are clearly [New Century’s] largest and most important counterparty.” Sugnet Decl. Ex. 7. Other Morgan Stanley-authored materials described Morgan Stanley’s goal “to continue its relationship with New Century in 2005 by maintaining its status as the #1 whole loan purchaser, #1 warehouse lender, and #1 underwriter on a market share basis.” Sugnet Decl. Ex. 2 at MS00834840; see also Ex. 3 at MS02685210 (“New Century has approached Morgan Stanley because we are their number one relationship and they would like to keep us their number one relationship.”).
The parties dispute the significance of these self-congratulatory documents, but regardless of whether other banks enjoyed similar relationships with New Century, the record
$2.6 billion settlement with the Justice Department over the sale of mortgage securities before the financial crisis.” Nathaniel Popper, Bank Settles Federal Case over Crisis in Mortgages, N.Y. TIMES, Feb. 26, 2015, at B3.
7

makes clear that at least some Morgan Stanley officials believed that their preferences had a significant impact on New Century’s practices. Morgan Stanley officials described New Century as “extremely open to our advice and involvement in all elements of their operation,” Sugnet Decl. Ex. 9, and internal Morgan Stanley documents asserted that “Morgan Stanley is involved in almost every strategic decision that New Century makes in securitized products” and described in detail the bank’s “mutually beneficial” relationship with New Century, Sugnet Decl. Ex. 11 at 6. The synergistic relationship between Morgan Stanley and New Century included the placement of Morgan Stanley due diligence staff onsite at New Century. Sugnet Decl. Ex. 13 at 387-99; Ex. 14 at 23-24. Contemporaneous Morgan Stanley documents demonstrated some employees’ understanding that New Century “incorporated many of Morgan Stanley’s best practices into [its] origination practices,” apparently “[b]ecause Morgan Stanley is such a large purchaser of loans from New Century.” Sugnet Decl. Ex. 12 at 4.
New Century was receptive to the advice of “investors” writ large, see, e.g., Sugnet Decl. Ex. 28 at MJM-001152, and was under pressure from the market “to make sales and fund loans,” id. at MJM-001156. New Century had regular meetings “with Wall Street . . . to obtain their feedback: what kind of products they wanted, what things New Century was doing that they did or did not like[,] etc.” Id. at MJM-001158; see also id. at MJM-001161 (New Century officials would “go to Wall Street and match their products and their loan pools with Wall Street’s expectations. They would not make any changes internally without making sure [they] complied with what Wall Street wanted.”). The role of Morgan Stanley in particular, as opposed to investor demand in general, is a hotly-contested area not suitable for resolution at this stage of the case.
8

II. Residential Mortgage-Backed Securities and Subprime Loans
A. RMBSs
By 2015, most readers are surely familiar with the acronym “RMBS” for “residential
mortgage-backed security.”
RMBS[s] are “a type of asset-backed security – that is, a security whose value is derived from a specified pool of underlying assets. Typically, an entity (such as a bank) will buy up a large number of mortgages from other banks, assemble those mortgages into pools, securitize the pools (i.e., split them into shares that can be sold off), and then sell them, usually as bonds, to banks or other investors.” City of Pontiac Policemen’s & Firemen’s Ret. Sys. v. UBS AG, 752 F.3d 173, 177 n.7 (2d Cir.
2014) (quoting Litwin v. Blackstone Grp., L.P., 634 F.3d 706, 710 n.3 (2d Cir. 2011)).
RMBSs can be aggregated into [collateralized debt obligations (“CDOs”)] which are sold in “tranches” based on priority of entitlement to the cash flow. Each tranche of a given RMBS is exposed to the same pool of mortgages, but lower tranches sustain losses before higher tranches in the event that mortgages in the pool default or do not meet payment deadlines. CDOs are similarly divided into higher and lower tranches. Stratte-McClure v. Morgan Stanley, 776 F.3d 94, 97 n.2 (2d Cir. 2015).
During the so-called “housing bubble,” Wall Street banks exhibited a “quenchless
appetite for high-priced, [risky] loans for use in residential mortgage-backed securitization.”
McCoy 17; see also Riddiough ¶ 14 (“[T]he aggregate value of non-Agency residential mortgage
loan securitizations increased from $50 million in 1995 to $1.2 billion in 2005.”). Loan
originators – the entities that made mortgage loans to homeowners – sold residential mortgage
loans to investment banks (such as Morgan Stanley); the investment banks in turn bundled the
loans into RMBSs that were sold on the secondary market. McCoy 17-18.
Plaintiffs claim that “Wall Street’s insatiable demand for high-priced loans caused
lenders to cut corners to qualify borrowers however they could.” Id. at 19 (citing Clifford V.
Rossi, Anatomy of Risk Management Practices in the Mortgage Industry: Lessons for the Future
9

36 (Research Institute for Housing America 2010)). Regardless of whether the originators “cut corners,” the demand for RMBSs, among other factors, “led to a significant expansion in the U.S. mortgage market generally, and the subprime mortgage loan market specifically.” Riddiough ¶ 26. Plaintiffs postulate that satisfying the appetite for RMBSs “required expanding mortgage lending to borrowers who could not repay.” McCoy 19; see also id. at 24 (“During the housing bubble, investors including Morgan Stanley also pressed [loan originators] to deliver increasingly higher volumes of subprime loans.”).12
At least in part to accommodate prospective homeowners who could less clearly afford the homes that they wished to buy, loan originators increased the number of offerings with terms designed to lower the initial cost of a home; these offerings typically offset their lower initial cost by passing the risk of increases in interest rates onto the homeowners. Id. at 24-25. Although they would not make loans to people whom the originators knew to be unable to repay, loan originators “evaluated [people’s] ability to repay based solely on the initial payment, without regard to subsequent payment shock,” “used stated-income and other types of reduced documentation underwriting to mask weak income or assets,” “relied on inflated appraisals as a way to artificially inflate loan-to-value ratios,” “stretch[ed] [their] underwriting guidelines, . . . approv[ed] exceptions to [their] underwriting guidelines and . . . approv[ed] loans that did not make ‘sense.’” Id. at 25; see also Reardon Decl. Ex. 3, Shane M. Sherlund, The Past, Present, and Future of Subprime Mortgages 2 (Fin. & Econ. Discussion Series Divs. of Research & Stats. and Monetary Affairs, Fed. Reserve Bd., Washington, D.C., Working Paper No. 2008-63, Nov. 2008) (“Sherlund”).

12

Of course, purchasers of RMBSs would undoubtedly argue that there would not have been such an outsized

demand had the purchasers known of the poor quality of the loans that were being bundled into RMBSs.

10

B. “Combined-Risk” Loans
The Plaintiffs seek to certify a class of borrowers who received what they describe as
“Combined-Risk” loans. They further define these loans as:
loans that meet the definition of high-cost loan under [the] HMDA and also contain two or more of the following high-risk terms: (a) the loan was issued based upon the “stated income,” rather than the verified income, of the borrower; (b) the debtto-income ratio exceeds 55%; (c) the loan-to-value ratio is at least 90%; (d) the loan has an adjustable interest rate; (e) the loan has “interest only” payment features; (f) the loan has negative loan amortization features; (g) the loan has “balloon” payment features; and/or (h) the loan imposes prepayment penalties. Compl. ¶ 34. Each of the potential components of a Combined-Risk loan bears some
explanation.
1. High-Cost Loans
During the relevant time period, the HMDA defined “high-cost loans” as loans whose
annual percentage rate was at least 3 percentage points (for loans secured by a first lien on a
dwelling) or 5 percentage points (for loans secured by a subordinate lien on a dwelling) higher
than the yield on Treasury securities having comparable maturity periods. Home Mortgage Disclosure, 67 Fed. Reg. 43218, 43223 (June 27, 2002) (amending 12 C.F.R. § 203.4(a)).13
Essentially, the “high-cost” component of a “combined-risk loan” means that the interest rate on
the loan is substantially higher than the market interest rate on loans made to well-qualified
borrowers.
In isolation, high “interest rates increase the risk of default and foreclosure because they
raise the borrowers’ monthly payments, putting added strain on often tight family budgets.”
McCoy 8. While borrowers who were deemed poor risks qualified only for very high interest
rates, a substantial portion of homebuyers who obtained subprime loans were actually eligible for

13

The regulation currently in force includes loans with rates only 1.5 percentage points higher than the prime

rate for first liens and 3.5 percentage points higher for subordinate liens. See 12 C.F.R. § 203.4(a)(12)(i).

11

prime rates but were steered to more expensive subprime loans. Id. at 8 n.15 (collecting sources identifying the percentage of subprime borrowers who qualified for prime loans at somewhere between 10 and 55 percent). The value to lenders of high interest rate loans is obvious – controlling for other factors (such as the risk that the borrower would default), the higher the interest rate, the higher the return for risking the same capital.
2. Stated-Income Loans “Stated-income” loans were “known to the knowing as ‘liars’ loans’ because in a statedincome loan the lender accepts the borrower’s statement of his income without trying to verify it.” United States v. Phillips, 731 F.3d 649, 651 (7th Cir. 2013) (en banc); see also Black’s Law Dictionary 1079 (10th ed. 2014). Requiring little or no documentation to support a borrower’s claimed income “opens the mortgage window to large numbers of borrowers who would not qualify ordinarily.” McCoy 10 (quoting Michael LaCour-Little and Jing Yang, Taking the Lie out of Liar Loans: The Effect of Reduced Documentation on the Performance and Pricing of AltA and Subprime Mortgages 26 (working paper, Annual AREUEA Conference Paper, 2010)). Not requiring a borrower to supply documentation verifying his or her income has no effect on the risk of default if the borrower is truthful, but the practice permits borrowers who exaggerate or lie about their income to obtain mortgages that exceed their means (and for which they might otherwise be ineligible). Accordingly, Plaintiffs contend that “low-documentation loans substantially raised default rates during the housing bubble.” Id. (collecting sources); but see Reardon Decl. Ex. 5, Morgan J. Rose, Predatory Lending Practices and Subprime Foreclosures: Distinguishing Impacts by Loan Category, 60 J. ECON. & BUS. 13, 28 (2008) (“Low- or nodocumentation for refinances is generally associated with significantly greater probabilities of foreclosure. In contrast, low- or no-documentation is associated with lesser probabilities of
12

foreclosure for purchase [Fixed Rate Mortgages (‘FRMs’)], and has no significant effects for purchase [Adjustable Rate Mortgages (‘ARMs’)]”).
Unlike high interest rates, which have an intuitive appeal to the lenders and to the secondary market, stated income loans lack any features that recommend them to lenders or the secondary market, and the risks associated with such loans make them generally less desirable than a fully documented loan. See Sherlund 16. Accordingly, some investment banks sought to minimize the percentage of no- or low-documentation loans that could be included in a pool of loans being purchased. Riddiough ¶ 97. Still, “the share of fully documented subprime variablerate mortgages declined from around 75 percent in 2000 to around 60 percent in 2005-2006.” Sherlund 2.
3. Debt-to-Income Ratios over 55 Percent The debt-to-income (“DTI”) ratio “is the ratio of the borrower’s monthly debt obligations to his or her monthly income.” McCoy 9. Plaintiffs offer strong evidence that “higher DTI ratios are positively correlated with higher defaults.” Id. The 55 percent threshold is quite high – in 2013, in the wake of the housing crisis, the federal government imposed a rule that, for qualified mortgages, a “consumer’s total monthly debt payments [including not only mortgage debt, but all debt] cannot exceed 43 percent of the consumer’s total monthly income.” Abilityto-Repay and Qualified Mortgage Standards under the Truth in Lending Act, 78 Fed. Reg. 6408, 6505 (Jan. 30, 2013);14 see also McCoy 9-10 (citing, inter alia, the Federal Reserve Board of Governors for the proposition “that loans exceeding a debt-to-income ratio of 55% are inherently risky”). There is no intuitive reason for a lender or the secondary market to prefer high-DTI

14

This rule actually raised the maximum DTI, which had previously been 36 percent. Ability-to-Repay and

Qualified Mortgage Standards under the Truth in Lending Act, 78 Fed. Reg. at 6416.

13

loans to the same loan with a lower DTI; in fact, a rational lender or investor would be expected to prefer a low-DTI loan to an identical loan with a higher DTI ratio.
4. Loan-to-Value Ratios over 90 Percent The LTV ratio of a residential mortgage loan is the ratio of the principle amount of the loan to the value of the home. When LTV ratios are low, borrowers “usually do not default . . . because they can retire their mortgages by selling their houses.” McCoy 11. “But as their LTV ratios mount and approach 100%, their ability to pay off their mortgage by selling their house diminishes once transaction costs are taken into account.” Id.; see also Sherlund 16 (“Assuming the mortgage had a higher loan-to-value ratio . . . default rates would be higher.”). Insofar as LTV ratios affect default rates, it is not because the LTV ratio, standing in isolation, affects borrowers’ ability to make monthly payments; for the subset of borrowers who ultimately want to sell or refinance their mortgages, however, a high LTV ratio can prevent refinance and can make a sale difficult or impossible. When the mortgages on a particular home exceed the value of the home (i.e., the combined LTV ratio exceeds 100 percent), the borrower is said to be “underwater.” “Starting in 2007, virtually no lender was willing to refinance an underwater mortgage.” McCoy 11. Nevertheless, “average combined loan-to-value (CLTV) ratios on subprime variable-rate mortgages rose from less than 80 percent in 2000 to over 85 percent in 2005-2006, partly as a result of the more widespread use of piggyback mortgages.” Sherlund 2.15 As with high DTI ratios, there is no intuitive reason for a lender or the secondary market to prefer high-LTV loans to the same loan with a lower LTV. Because LTV ratios depend on the value of the collateral held by the lender – the more valuable the home, the lower the ratio given

15

Of course, other factors – notably, stagnating or falling housing values – greatly exacerbated the risk

inherent in a loan with a high CLTV ratio. Sherlund 3.

14

the same loan amount – given a choice between otherwise-identical loans, lenders and the secondary market would choose a loan with a lower LTV ratio. See McCoy 11; Riddiough ¶ 97.
5. Adjustable Interest Rates Whereas FRMs maintain the same interest rate throughout the term of the loan, ARMs adjust the interest rate based on a pre-specified index. “During the period at issue in this case, the most common type of [ARM] was a hybrid ARM,” such as a so-called 2/28 or 3/27 loan. McCoy 12. In a 2/28 loan, the interest rate would be fixed for the first two years and periodically adjustable for the remaining 28. Id. “Hybrid ARMs put the interest rate risk on the borrower, with the attendant hidden risk of payment shock – the risk that monthly payments will rise dramatically upon rate reset. During the housing bubble, many subprime hybrid ARMs had initial rate resets of three percentage points, resulting in increased monthly payments of as much as fifty percent.” Id. As long as housing prices were rising, borrowers could offset any “payment shock” by selling or refinancing their home. Id. But “[i]n an environment of stagnant to falling house prices and stricter underwriting standards, households facing potentially higher mortgage payments due to a mortgage rate reset [found] prepayment [to be] more difficult, thereby increasing the ultimate chances of default.” Sherlund 10. In general, “[b]orrowers with variable-rate loans have riskier characteristics than those with fixed-rate loans, and riskier loans are more likely to default than to prepay.” Id. at 8. Perhaps because ARMs placed the risk of rising interest rates on the borrowers, they were a preferred product for Wall Street; investment banks purchasing loans from originators would include conditions requiring a minimum percentage of loans in a pool to be ARMs. Riddiough ¶ 100 (a Barclays bid sheet specified that “at least 77.66% of the loans were be ARMs,” while Morgan Stanley’s specified that “77.91% of the loans were to be ARMs,” and DLJ Mortgage Capital’s provided that “at least 78% of the loans were to be ARMs.”).
15

6. “Interest Only” Payment Features Loans with “interest only” features do not fully amortize the principal over the term of the loan; borrowers pay only interest during an initial period (usually six months to three years). McCoy 12. “Interest only” features were pitched as “affordability features” that lowered the initial cost of a loan so that it would be accessible to people who might otherwise not be able to obtain a loan. FCIC 111. Of course, the “interest only” period ultimately ended, and at that point the payments would increase because amortized portions of the principal were then included. McCoy 13. Borrowers who calculated whether they could afford to obtain a particular loan were at risk of agreeing to a loan with manageable payments initially, only to be unable to make the larger payments required once the initial interest-only period expired. This problem was exacerbated when an ARM with an artificially low rate for the initial period took on “interest only” attributes. Id.; FCIC 111. Accordingly, Plaintiffs contend that “interest-only loans originated during the housing bubble had much higher default propensities following recast than comparably seasoned traditional fixed-rate and adjustable-rate loans.” McCoy 13. “Interest only” loans decreased a secondary market purchaser’s liquidity; accordingly, investment banks and secondary market purchasers sought to limit the percentage of “interest only” loans that they purchased. See Sugnet Decl. Ex. 46.
7. Negative Amortization In a negative amortization loan, the borrower makes no payments towards the principal (and sometimes part of the interest) during a specified introductory period. After the conclusion of the introductory period, the unpaid balance would be re-capitalized, “the amortization schedule [would be] reset[,] and the borrower [could be] left with potentially unaffordable minimum payments that reflect[ed] the capitalization of unpaid interest, as well as a principal balance that potentially exceed[ed] the value of the real estate used as security.” Wallace v.
16

Midwest Fin. & Mortg. Servs., Inc., 714 F.3d 414, 417 (6th Cir. 2013); see also Wyo. State Treasurer v. Moody’s Investors Serv., Inc. (In re Lehman Bros. Mortg.-Backed Sec. Litig.), 650 F.3d 167, 173 n.2 (2d Cir. 2011). Because of the re-capitalization after the introductory period, the principal could exceed the value of the property at the time of the initial purchase; even steady housing prices could leave a borrower underwater. Plaintiffs’ expert found that “[r]esearchers who have studied the question agree that nonamortizing and negative amortization features increase the chance of default.” McCoy 13 (collecting sources). The parties do not discuss whether investment banks and secondary market purchasers sought to purchase or to avoid negative amortization loans.
8. “Balloon” Payment Features In so-called “balloon loans,” a borrower does not fully amortize the principal while making regular payments; instead, either at the end of the term or periodically throughout the loan, the borrower must make a “balloon payment” that is “much larger than earlier [monthly] payments” to cover the portions of the principal not amortized up to that point. Black’s Law Dictionary 1078 (10th ed. 2014).16 Plaintiffs allege that these loans were “used to qualify cashstrapped borrowers during the subprime boom due to their lower payments.” McCoy 13. Borrowers who were only able to afford a loan because of the artificially low initial cost could be expected to struggle when faced with making a one-time payment of the difference between the apparent cost of the loan (as reflected in the monthly payments) and the actual cost of the loan. Id. Accordingly, “[b]alloon loans are also associated with a higher risk of default and foreclosure.” Id. Balloon payments are viewed as an “abusive feature” of subprime loans.

16

One common type of “balloon loan” was the 40/30 loan, in which the loan was amortized over a 40-year

period, but the borrower would make regular payments for only the first 30 years, at which point the borrower would

owe a “balloon payment” that would extinguish the remaining principal balance of the loan. Adam J. Levitin &

Susan M. Wachter, Explaining the Housing Bubble, 100 GEO. L.J. 1177, 1200 n.70 (2012).

17

Reardon Decl. Ex. 4, Wei Li & Keith S. Ernst, The Best Value in the Subprime Market: State Predatory Lending Reforms 2 (Ctr. for Responsible Lending Feb. 23, 2006) (“Li & Ernst”). Balloon payments were typically due ten years after a loan’s origination. Rose 28. While there is a clear incentive for borrowers facing a balloon payment to refinance the loan, borrowers who could not refinance – because of declining housing prices, their lower viability as a borrower, or for any other reason – would face a large payment shock. On the other hand, banks preferred balloon loans to traditional loans with similar terms, believing that balloon loans led to greater liquidity. Sugnet Decl. Ex. 37.
9. Prepayment Penalties One of the better-known features of many subprime loans written during the housing bubble, a prepayment penalty is a “charge assessed against a borrower who elects to pay off a loan before it is due.” Black’s Law Dictionary 1314 (10th ed. 2014). With a prepayment penalty, the lender was guaranteed a period of time – typically one to five years – during which the borrower could not refinance or pay off the loan without incurring a one-time cost. Borrowers would be “lock[ed] into [such] loans.” McCoy 14. Defendants claim that this feature was present in approximately 99.5 percent of the loans in the putative class. Tr. at 148. The parties dispute the effects of prepayment penalties on an individual borrower’s likelihood of default. Plaintiffs assert that prepayment penalties increased the risk of default by preventing refinancing, which was a common borrower maneuver to avoid default, id., while Defendants point to authority indicating that – perhaps because such penalties were associated with more favorable interest rates – prepayment penalties did not cause defaults, see, e.g., Sherlund 10; Rose 28. Defendants also note that even Plaintiffs’ expert found only that large prepayment penalties increased the likelihood of default, Report of Martha Courchane (“Courchane”), Dkt.
18

205, ¶ 60 (citing McCoy Dep. at 171-72), and that Michigan law forbade prepayment penalties that were “large” under McCoy’s definition, id.; see also Tr. at 150.
Because prepayment penalties provided a degree of stability and certainty as to the schedule of repayment, lenders sought to ensure that any pool of loans that they purchased would include a high percentage of loans – often around 75 percent – that included prepayment penalties. See Riddiough ¶ 100.
C. Secondary Market for Subprime Loans During the period leading up to the collapse of the housing market, low interest rates and low inflation led to an increasing demand for mortgage loans. Although loan originators mostly sold whole loans, they also securitized a rapidly-increasing percentage of the loans that they originated. Riddiough ¶ 14. Investment banks – including (but not exclusively) Morgan Stanley – would underwrite these offerings. McCoy 28, Shapiro Dep. at 167. Whether securitized by the originators or sold to investment banks that securitized them, most of the subprime loans that were originated during the housing boom were sold to third party financial institutions. Cf. City of Ann Arbor Emps. Ret. Sys. v. Citigroup Mortg. Loan Trust Inc., 703 F. Supp. 2d 253, 255 (E.D.N.Y. 2010). Banks that bought whole loans typically securitized the loans and sold the components to investors that “rang[ed] from small cities in Norway to large Chinese banks.” McCoy 17. Plaintiffs assert that Morgan Stanley “was the largest purchaser of whole loans originated by New Century” during the relevant period. Id. at 27 (citation omitted); see also Sugnet Decl. Ex. 23, Shapiro Dep. at 167. While the parties do not agree as to the best method of measuring influence, it is clear that Morgan Stanley purchased many fewer loans in 2005 than in the immediately preceding years (and the following year). See Riddiough ¶¶ 43-47. Defendants ascribe this downturn to competition in the marketplace, asserting that Morgan Stanley was
19

unwilling to pay what its competitors paid for New Century’s loans during that time period. Shapiro Dep. at 48-50, Tr. at 67-69.
“Forward sales” accounted for over 90 percent of the whole loans that New Century sold. Sugnet Decl. Ex. 4, Licata Dep. at 24. In a “forward sale,” an investment bank would agree with New Century on a price for a pool of whole loans (many of which may not yet have been written) that would contain specific characteristics as set forth in a “bid sheet.” Id. at 23-29. The parties would reach an agreement on price either through “open bids,” pursuant to which New Century would reveal the characteristics of a loan pool and allow the banks to bid on the pool, or through “reverse inquiries,” pursuant to which an investment bank would indicate what sort of loans it wanted and how much it was willing to pay for such a pool. Id. at 28-29. The purchasing investment bank and New Century would finalize an agreement and terms; those terms generally set ceilings or floors on certain terms being represented in the loans in the pool (e.g., at least 85 percent of the loans must be adjustable rate loans; no more than 42.5 percent could be no-documentation loans). See Sugnet Decl. Exs. 46, 48; Kaplan Dep. at 127.
Because forward sales accounted for such a high proportion of New Century’s transactions, New Century had an incentive to originate loans the terms of which were desirable to the purchasing investment banks. Cf. FCIC 105 (“‘The definition of a good loan changed from ‘one that pays’ to ‘one that could be sold,’’ Patricia Lindsay, formerly a fraud specialist at New Century, told the FCIC.”).
III. Disparate Impact of New Century’s Practices While it is not the focus of the pending dispute, the parties also disagree as to the effects
of the lending practices in which New Century engaged. In a comprehensive regression analysis controlling for borrower characteristics, Plaintiffs’ expert, Professor Ian Ayres, found that “[i]n the Detroit region, the [likelihood] that an African-American borrower would receive a
20

Combined-Risk Loan was 1.347 times greater than that of a non-Hispanic white borrower in the Detroit region with similar characteristics;” this conclusion was “statistically significant at the 99% confidence level.” Ayres ¶ 12. Moreover, Plaintiffs assert that “[t]hese disparities persist when measured only for New Century loans purchased by Morgan Stanley.” Id. ¶ 14. Ayres controlled for fifteen variables “that might provide business justified, non-discriminatory explanations for the product placement (such as credit score, loan-to-value ratio, loan purpose, and the occupancy and property type),” id. ¶ 73, and determined that – as to New Centuryoriginated loans purchased by Morgan Stanley and as to all New Century-originated loans – African-American borrowers were statistically more likely to receive a Combined-Risk loan.
IV. Procedural History of this Case Plaintiffs initiated this action in October 2012, and it was assigned to Judge Harold Baer,
Jr. In December 2012 Defendants moved to dismiss the case, asserting that the case was barred by the statute of limitations and challenging the viability of Plaintiffs’ theory of the case. Judge Baer granted the motion in part but permitted Plaintiffs’ FHA claims to proceed on the theory that Morgan Stanley’s policies caused New Century to make Combined-Risk loans. Adkins v. Morgan Stanley, No. 12-CV-7667, 2013 WL 3835198, at *3 (S.D.N.Y. July 25, 2013) (“Adkins I”). The case was reassigned to the Undersigned following Judge Baer’s death in 2014.
DISCUSSION In June 2014, Plaintiffs moved for class certification, seeking to certify a class of “all African-American individuals who, between 2004 and 2007, resided in the Detroit region . . . and received Combined-Risk Loans from New Century,” Compl. ¶ 229, for the purposes of determining liability and “crafting appropriate injunctive and declaratory relief,” id. ¶ 226. Although the Complaint left doubt as to what type of class the Plaintiffs sought to certify, Plaintiffs’ briefing makes clear that they seek to certify a class under Rule 23(b)(3).
21

I. Class Certification under Rule 23(b)(3) A. Legal Standard “‘The class action is an exception to the usual rule that litigation is conducted by and on
behalf of the individual named parties only.’” Sykes v. Mel S. Harris & Assocs., LLC, 780 F.3d 70, 79 (2d Cir. 2015) (quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. ---, ---, 131 S. Ct. 2541, 2550 (2011) (other quotation marks omitted)). “A district court may only certify a class if it determines that each Rule 23 requirement is met.” Levitt v. J.P. Morgan Sec., Inc., 710 F.3d 454, 464 (2d Cir. 2013). “The party seeking class certification bears the burden of establishing by a preponderance of the evidence that each of Rule 23’s requirements have been met.” Johnson v. Nextel Commc’ns Inc., 780 F.3d 128, 137 (2d Cir. 2015).
A district court may certify a class only if the class meets all of the requirements of Rule 23(a) and the relevant requirements of Rule 23(b) – in this case, the requirements of predominance and superiority set out in Rule 23(b)(3). “Regardless of whether class certification is contested, a court may not certify a putative class unless it has performed a ‘rigorous analysis’ and determined that each of Rule 23’s requirements has been met.” Animal Science Prods. v. Hebei Welcome Pharm. Co. Ltd. (In re Vitamin C Antitrust Litig.), 279 F.R.D. 90, 98 (E.D.N.Y. 2012) (quoting Gen. Tel. Co. of SW v. Falcon, 457 U.S. 147, 161 (1982)). This “rigorous analysis” sets a higher standard than “a mere pleading standard,” Ohio Public Emps. Ret. Sys. v. Gen. Reinsurance Corp. (In re AIG Sec. Litig.), 689 F.3d 229, 237 (2d Cir. 2012) (quotation marks omitted).
A class action is appropriate: only if (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.
22

Fed. R. Civ. P. 23(a). In addition to meeting the requirements of Rule 23(a), to certify a class pursuant to Rule 23(b)(3), a plaintiff must establish that “both (1) ‘questions of law or fact common to class members predominate over any questions affecting only individual members,’ and (2) ‘a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.’” Roach v. T.L. Cannon Corp., 778 F.3d 401, 405 (2d Cir. 2015) (quoting Fed. R. Civ. P. 23(b)(3)). “‘While the text of Rule 23(b)(3) does not exclude from certification cases in which individual damages run high, the Advisory Committee had dominantly in mind vindication of the rights of groups of people who individually would be without effective strength to bring their opponents into court at all.’” Sykes, 780 F.3d at 81 (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997)). Although Rule 23(b)(3) “‘does not require a plaintiff seeking class certification to prove that each element of her claim is susceptible to classwide proof,’” id. (quoting Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 568 U.S. ---, ---, 133 S. Ct. 1184, 1196 (2013) (alterations omitted, emphasis in original)), it “imposes a ‘far more demanding’ inquiry into the common issues which serve as the basis for class certification” than does Rule 23(a), id. (quoting Amchem, 521 U.S. at 623-24).
Determining whether to certify a class under Rule 23 will frequently require some evaluation of the merits of the plaintiffs’ underlying claim. Comcast Corp. v. Behrend, 569 U.S. ---, ---, 133 S. Ct. 1426, 1432 (2013). “But the office of a Rule 23(b)(3) certification ruling is not to adjudicate the case; rather, it is to select the ‘method’ best suited to adjudication of the controversy ‘fairly and efficiently.’” Amgen, 133 S. Ct. at 1191; see also Fezzani v. Bear, Stearns & Co., 777 F.3d 566, 570 (2d Cir. 2015) (“‘Merits questions may be considered to the extent – but only to the extent – that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied.’”) (quoting Amgen, 133 S. Ct. at 1194-95).
23

B. Plaintiffs’ Motion for Class Certification Is Denied Plaintiffs’ motion to certify a class of African-American borrowers in the Detroit area who received Combined-Risk loans suffers from Plaintiffs’ delineation of such loans. Plaintiffs’ definition of a Combined-Risk loan is essentially a fast-food-menu approach (requiring a highcost mortgage as defined in the HDMA from Column A and two or more risk factors from Column B). This definition yields 247 different potential combinations of the factors identified by Plaintiffs (the “risk factors”), 33 of which actually existed in at least one loan made by New Century to a putative class member, see Tr. at 55. The risk factors on which Plaintiff has chosen to focus are clearly distinct and each affects borrowers differently – and the manner in which each risk factor affects a borrower is context-dependent. Moreover, the “context” that informs the harm (or benefit) caused by a particular risk factor includes the presence or absence of other risk factors. The reality of how the risk factors combine means that each of the 33 combinations of risk factors that actually appeared in a Combined-Risk loan requires a separate analysis with respect to the merits of Plaintiffs’ action. The multiplicity of categories of loans presents a number of obstacles to class certification, not least of which is the difficulty in identifying plaintiffs whose claims are “typical” of the 33 differently-situated subsets of borrowers that exist in Plaintiffs’ class and the difficulty in identifying common questions that predominate over individualized inquiries.17 The Court also doubts “whether ‘law or fact questions common to the class predominate over questions affecting individual members.’” Fezzani, 777 F.3d at 569

17

As discussed infra, the number of relevant subsets may substantially exceed 33, particularly if the Court

were to view as differently-situated borrowers whose loans were included, for example, in a reverse-bid initiated by

Morgan Stanley, in a forward sale pursuant to a standard bid won by Morgan Stanley, or in a sale to Morgan Stanley

after the loan was made. Furthermore, each permutation could have different subgroups, depending on the timing of

the purchase – Morgan Stanley may have exerted greater influence over New Century’s practices, for example, in

2004 than it did in the first half of 2005 (when it did not win a single bid to purchase mortgages from New Century).

Every additional meaningful distinction could yield another 33 subgroups of differently-situated borrowers.

24

(quoting Miles v. Merrill Lynch & Co. (In re Initial Public Offerings Sec. Litig.), 471 F.3d 24, 32 (2d Cir. 2006)). Ultimately, the Court has concluded that a class action is inappropriate.
1. Rule 23(a) Factors a. Plaintiffs Are Sufficiently Numerous
“To meet the requirements of Rule 23(a)(1), the class must be so large that joinder of all members would be impracticable.” McIntire v. China MediaExpress Holdings, 38 F. Supp. 3d 415, 423 (S.D.N.Y. 2014) (quotation marks omitted). “Numerosity is presumed for classes larger than forty members.” Penn. Public Sch. Emps. Ret. Sys. v. Morgan Stanley & Co., 772 F.3d 111, 120 (2d Cir. 2014). This requirement, however, “is not strictly mathematical but must take into account the context of the particular case, in particular whether a class is superior to joinder based on other relevant factors including: (i) judicial economy, (ii) geographic dispersion, (iii) the financial resources of class members, (iv) their ability to sue separately, and (v) requests for injunctive relief that would involve future class members.” Id. In this case, Plaintiffs have proven that the class will likely exceed 4,600 individuals with minimal financial resources; the numerosity requirement is clearly satisfied.
b. There May Be Common Questions of Law and Fact The commonality “element requires the existence of both at least one question common to the class, and also that a class action ‘has the capacity to generate common answers apt to drive the resolution of the litigation.’” Gulino v. Bd. of Educ. of City Sch. Dist. of City of N. Y., No. 96-CV-8414(KMW), 2013 WL 4647190, at *6 (S.D.N.Y. Aug. 29, 2013) (quoting Dukes, 131 S. Ct. at 2556) (alteration omitted, emphasis in original), aff’d 555 F. App’x 37 (2d Cir. 2014). Commonality requires a “‘common contention [that] must be of such a nature that it is capable of classwide resolution – which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.’” Id.
25

(quoting Dukes, 131 S. Ct. at 2251) (emphasis in Sykes). Nevertheless, “Rule 23(a)’s requirement of commonality is a low bar, and courts have generally given it a ‘permissive application.’” Brown v. Am. Honda (In re New Motor Vehicles Can. Export Antitrust Litig.), 522 F.3d 6, 19 (1st Cir. 2008) (quoting 7A Charles Alan Wright, Arthur R. Miller, Mary Kay Kane, Federal Practice and Procedure § 1763, at 221 (3d ed. 2005)).
In this case, Plaintiffs have identified a number of material questions that they believe are susceptible to generalized answers. Questions pertaining to Morgan Stanley’s influence in shaping New Century’s lending decisions, for example, may be susceptible to resolution as to the class as a whole.18 This does not mean that Morgan Stanley will be liable to the entire class, but it means that the questions whether and to what extent Morgan Stanley controlled New Century and therefore is liable for its loans may be susceptible to classwide resolution. Plaintiffs’ theory of Morgan Stanley’s liability is essentially a market-based approach, analogous to the Basic presumption in securities fraud actions; their claims are thus likely to rise or fall as a class. Cf. Halliburton v. Erica P. John Fund, Inc., 573 U.S. ---, ---, 134 S. Ct. 2398, 2416 (2014). Similarly, Plaintiffs believe that any disparate impact of New Century’s lending practices on African-Americans is likely to be subject to one (or several) proofs across the class, and the disparate impact analysis will not hinge on the varying circumstances pertaining to individual loans. See Ayres ¶¶ 12, 82. The existence of such a large-scale disparate impact study – irrespective of whether its results are ultimately accepted by the factfinder – can be a powerful argument in support of commonality. See, e.g., Stockwell v. City & Cnty. of S.F., 749 F.3d 1107, 1115 (9th Cir. 2014) (“If those effects amount to a disparate impact . . . it will be so for all class members or for none; their claims rise and fall together.”).

18

The existence of some individualized issues is irrelevant to the question of commonality, although it

weighs heavily in the predominance inquiry.

26

Defendants do not address the question of commonality head-on; they argue instead that any common questions do not “predominate” over the individual questions at issue in the case; the Court agrees, as discussed in Part II.B.2.a. The Court addresses commonality further in the context of its predominance discussion.
c. Plaintiffs’ Claims Are Not Typical of the Putative Class19 “Typicality requires that the claims or defenses of the class representatives be typical of the claims or defenses of the class members.” Brown v. Kelly, 609 F.3d 467, 475 (2d Cir. 2010) (citing Fed. R. Civ. P. 23(a)(3)). “Rule 23(a)(3) is satisfied when ‘the claims of the class representatives are typical of those of the class, and when each class member’s claim arises from the same course of events, and each class member makes similar legal arguments to prove the defendant’s liability.’” Vincent v. Money Store, 304 F.R.D. 446, 455 (S.D.N.Y. 2015) (quoting Marisol A. v. Giuliani, 126 F.3d 372, 376 (2d Cir. 1997)) (alteration omitted). “The central feature for typicality is that plaintiffs assert ‘that defendants committed the same wrongful acts in the same manner, against all members of the class,’ and the court looks ‘not at the plaintiffs’ behavior, but rather at the defendant’s actions.’” Fort Worth Emps. Ret. Fund v. J.P. Morgan Chase & Co., 301 F.R.D. 116, 132 (S.D.N.Y. 2014) (quoting Tsereteli v. Residential Asset Securitization Trust 2006-A8, 283 F.R.D. 199, 208 (S.D.N.Y. 2012)). Defendants assert two bases for their claim that the five representative plaintiffs are not typical of the class. First, they assert that each of the plaintiffs is subject to a particularly strong

19

“[T]he Supreme Court has acknowledged that, in certain ‘contexts, the commonality and typicality

requirements of Rule 23(a) tend to merge.’” Sykes, 780 F.3d at 84 n.2 (quoting Dukes, 131 S. Ct. at 2551 n.5)

(alterations omitted). In this case, as in some other cases, the typicality inquiry is also intertwined with adequacy

under Rule 23(a)(4), see, e.g., Bishop v. N.Y. City Dep’t of Hous. Preservation & Dev., 141 F.R.D. 229, 240

(S.D.N.Y. 1992), and with predominance under Rule 23(b)(3), see, e.g., Stream Sicav v. Wang, No. 12-CV-

6682(PAE), 2015 WL 268855, at *5 (S.D.N.Y. Jan. 21, 2015).

27

defense.20 The Court is unpersuaded. Certainly the typicality requirement is intended to “ensure that ‘the class representative is not subject to a unique defense which could potentially become the focus of the litigation.’” Kelen v. World Fin. Network Nat’l Bank, 302 F.R.D. 56, 65 (S.D.N.Y. 2014) (quoting Steinberg v. Nationwide Mut. Ins. Co., 224 F.R.D. 67, 72 (E.D.N.Y. 2004)). But “[t]here is little risk here that ‘[the] putative class representative[s] [are] subject to unique defenses which threaten to become the focus of the litigation.’” In re Smith Barney Transfer Agent Litig., 290 F.R.D. 42, 46 (S.D.N.Y. 2013) (quoting Baffa v. Donaldson, Lufkin & Jenrette Sec. Corp., 222 F.3d 52, 59 (2d Cir. 2000)); see, e.g., Fort Worth, 301 F.R.D. at 133-34 (rejecting defendants’ arguments that the class representatives were subject to unique defenses because of their exposure “to public information that would have had the same effect on all class members”).
More persuasively, Defendants argue that the representative plaintiffs reflect only a small subset of the risk factors. Plaintiffs have not established at this stage that Defendants’ conduct “harmed each class member in the same way.” Wallace v. IntraLinks, 302 F.R.D. 310, 315 (S.D.N.Y. 2014). Plaintiffs, who had 3/27 ARM loans with prepayment penalties (both characteristics of loans that Morgan Stanley affirmatively sought, see Riddiough ¶ 100), face drastically different proof challenges than Plaintiffs who received stated income loans with a 55 percent DTI (features that Morgan Stanley would have preferred to avoid). The proof required for the first group might focus largely on whether making a loan with favorable terms for three years constitutes a sufficient harm to confer standing, particularly because the class is defined without regard to the outcome of the mortgage (i.e., whether the borrower defaulted, refinanced

20

Specifically, Defendants assert that (1) Adkins, McCoy, and Young will face difficulties establishing

Morgan Stanley’s responsibility for their loans in light of the fact that Morgan Stanley due diligence officials

rejected their loans for purchase by Morgan Stanley; (2) Williams faces a similar causation challenge insofar as New

Century originated her loan during a period in which Morgan Stanley did not purchase any loans from New Century;

and (3) Pettway will face unique difficulties in establishing that equitable tolling is appropriate in her case.

28

or sold before the expiration of the three year introductory rate, or paid the loan on schedule despite the more costly payments after the first interest rate adjustment). The second group, conversely, would likely seek to show that Morgan Stanley’s allegedly insatiable appetite for subprime loans caused New Century to originate no-documentation loans with high DTI ratios. The challenges to proving such a claim are different (both in scale and in type) from those plaguing the first group. Morgan Stanley might have purchased loans that led in some convoluted way to New Century’s making such loans, but Morgan Stanley did not affirmatively seek them. Moreover, the harmfulness of the stated income risk factor in particular hinges entirely on whether the borrower misrepresented his or her income. It is therefore difficult to conclude that this is a case in which “‘each class member’s claim arises from the same course of events and each class member makes similar legal arguments to prove the defendant[s’] liability.’” Fort Worth, 301 F.R.D. at 132 (quoting Loftin v. Bande (In re Flag Telecom Holdings, Ltd. Sec. Litig.), 574 F.3d 29, 35 (2d Cir. 2009)).
Even if the complicated class described by Plaintiffs could be appropriately certified, the putative class representatives in this case do not represent a broad enough swath of the possible risk-factor permutations to be characterized as “typical” of the putative class. The representative plaintiffs “all had ARM loans, with prepayment penalties, which may have lowered the interest rate on their loans from what they might otherwise have received.” Courchane ¶ 64. McCoy had a stated income loan, and Young had a balloon payment. Id. Pettway had no other combined risk factors. Id. Adkins and Williams had LTV ratios above 90 percent. Compl. ¶¶ 134, 148. “None of the named Plaintiffs had interest only [loans], Option ARM loans, or loans with DTI ratios above 55%.” Courchane ¶ 64. Put more succinctly, the representative plaintiffs’ loans contain only four of the 33 permutations of risk factors that are known to exist within the
29

putative class. Two or three21 of the risk factors are entirely unaccounted-for within the representative plaintiffs. Plaintiffs have not established that, under these circumstances, they are “typical” of a putative class that includes borrowers with interest-only loans with high DTI ratios but none of the other risk factors.
This is not a case in which Plaintiffs’ “‘injuries derive from a unitary course of conduct by a single system.’” Smith Barney, 290 F.R.D. at 46 (quoting Marisol A., 126 F.3d at 377). Plaintiffs did not all receive identical letters from a debt collector, cf. Kalkstein v. Collecto, Inc., 304 F.R.D. 114, 121 (E.D.N.Y. 2015), or invest in the same security, cf. McIntire, 38 F. Supp. 3d at 424. Instead, this is a case in which differently-situated plaintiffs assert that numerous different Morgan Stanley policies drove the decisions of numerous third parties, leading the plaintiff class to suffer a racially disparate adverse impact. Cf. Bolden v. Walsh Const. Co., 688 F.3d 893, 898 (7th Cir. 2012) (declining to certify a class in a race discrimination case against a large company in which “[t]he 12 plaintiffs did not experience the working conditions at all 262 sites either individually or collectively, and a given plaintiff’s bad experience with one of the five supervisors . . . named does not present any question about the conduct of . . . many other superintendents and foremen.”). It is not immediately apparent that “by prosecuting [their] own case[s], the named plaintiff[s] ‘[would] simultaneously advance[] the interests of the absent class members.’” Vitamin C Antitrust Litig., 279 F.R.D. at 105 (quoting 1 Joseph M. McLaughlin, McLaughlin on Class Actions § 4:16 (8th ed. 2011)). In short, the Court lacks “a concrete, nonspeculative basis” on which to conclude that determining defendants’ liability to the representative plaintiffs would resolve defendants’ liability to the broadly-defined class. Stream Sicav v. Wang, No. 12-CV-6682(PAE), 2015 WL 268855, at *5 (S.D.N.Y. Jan. 21, 2015).

21

Plaintiffs do not allege that any representative had a negative amortization loan, but Courchane did not list

it among the features absent from the putative representatives’ loans. See Compl. ¶¶ 123-204, Courchane ¶ 64.

30

Accordingly, Plaintiffs have not carried their burden of showing that their claims are typical of the claims of the class.
d. Named Plaintiffs Are Adequate Representatives of the Putative Class Rule “23(a)(4) requires that in a class action, ‘the interests of the class’ must be ‘fairly and adequately protected.’” Charron v. Wiener, 731 F.3d 241, 249 (2d Cir. 2013) (quoting Fed. R. Civ. P. 23(a)(4)) (alteration omitted). “Determination of adequacy typically ‘entails inquiry as to whether: 1) plaintiff’s interests are antagonistic to the interest of other members of the class and 2) plaintiff’s attorneys are qualified, experienced and able to conduct the litigation.’” Cordes & Co. Fin. Servs. v. A.G. Edwards & Sons, Inc., 502 F.3d 91, 99 (2d Cir. 2007) (quoting Baffa, 222 F.3d at 60).22 “‘A class representative must be part of the class and possess the same interest and suffer the same injury as the class members.’” Amchem, 521 U.S. at 625 (quoting E. Tex. Motor Freight Sys., Inc. v. Rodriguez, 431 U.S. 395, 403 (1977) (alteration and other quotation marks omitted)). The fact that plaintiffs might seek relief pursuant to different statutes – for example, when some members of the class are time-barred from asserting some otherwiserelevant claims – does not mean the representative is inadequate if the gestalt of the plaintiffs’ claims is the same. Sykes, 780 F.3d at 89-90. Moreover, Courts are “‘wary of [defendants’] efforts to defeat representation of a class on grounds of inadequacy’ where, as here, the effect of an inadequacy finding would be to ‘eliminate any class representation.’” Vitamin C Antitrust Litig., 279 F.R.D. at 100 (quoting Kline v. Wolf, 702 F.2d 400, 402 (2d Cir. 1983)). In this case Defendants advance two arguments why Plaintiffs are inadequate class representatives. First, they argue that Plaintiffs seek to collect damages on their own behalf

22

Defendants do not identify any inadequacies of the proposed class counsel, and the Court finds none.

Plaintiffs’ proposed counsel would more than adequately represent the class, notwithstanding the Court’s other

reservations regarding the suitability of this case for class certification.

31

while only seeking disgorgement on behalf of the putative class. Defendants allege that res judicata principles that prohibit claim-splitting would foreclose any subsequent recovery by absent class members. See, e.g., In re Methyl Tertiary Butyl Ether (“MTBE”) Prods. Liability Litig., 209 F.R.D. 323, 339 (S.D.N.Y. 2002); Reppert v. Marvin Lumber & Cedar Co., 359 F.3d 53, 56 (1st Cir. 2004). There are, however, “several exceptions to the claim-splitting principle, one of which arises when ‘the court in the first action has expressly reserved the plaintiff’s right to maintain the second action.’” Vitamin C Antitrust Litig., 279 F.R.D. at 115-16 (quoting Restatement (2d) of Judgments § 26(1)(b) (1982) (alteration omitted)). Moreover, “courts generally allow plaintiffs in class actions to sue for injunctive relief on behalf of the class and then bring damages claims in subsequent individual actions.” MTBE, 209 F.R.D. at 339 (collecting cases).23 Because disgorgement, like injunctive relief, is an equitable remedy, Plaintiffs contend that the remedy they seek is analogous to the injunctive relief sought in Vitamin C.24
It is not clear that disgorgement is appropriately analogized to injunctive relief in a class action context because disgorgement, like damages, must be sought under Rule 23(b)(3), while injunctive and declaratory relief are both available under Rule 23(b)(2). See Randall v. Rolls-

23

See also Vitamin C Antitrust Litig., 279 F.R.D. at 114-15 (“‘[E]very federal court of appeals that has

considered the question has held that a class action seeking only declaratory or injunctive relief does not bar

subsequent individual suits for damages.’”) (quoting Hiser v. Franklin, 94 F.3d 1287, 1291 (9th Cir. 1996)

(emphasis from Vitamin C Antitrust Litig.)).

24

Defendants, as an aside and without seeking relief, challenge the availability of disgorgement as a remedy

in this case. Disgorgement traditionally “is a distinctly public-regarding remedy, available only to government

entities seeking to enforce explicit statutory provisions.” F.T.C. v. Bronson Partners, LLC, 654 F.3d 359, 372 (2d

Cir. 2011). The FHA permits courts to award actual and punitive damages as well as injunctive relief. 42 U.S.C.

§ 3613(c). The Ninth Circuit has held that disgorgement is unavailable to a private party seeking to enforce the

FHA. Smith v. Pac. Props. & Dev. Corp., 358 F.3d 1097, 1106 (9th Cir. 2004) (“[T]he remedy of disgorgement

only arises where a prior relationship between the parties subject to and benefitting from disgorgement originally

resulted in unjust enrichment.”). Even if disgorgement is not available at this stage, however, if class treatment were

otherwise appropriate, the Court could certify the class for the limited purpose of determining Morgan Stanley’s

liability. Fed. R. Civ. P. 23(c)(4); Johnson, 780 F.3d at 138 (“Common issues – such as liability – may be certified,

consistent with Rule 23, even where other issues – such as damages – do not lend themselves to classwide proof.”).

32

Royce Corp., 637 F.3d 818, 820 (7th Cir. 2011). Unlike damages, however, “‘the primary purpose of disgorgement orders is to deter violations of the laws by depriving violators of their ill-gotten gains.’” F.T.C. v. Bronson Partners, LLC, 654 F.3d 359, 373 (2d Cir. 2011) (quoting S.E.C. v. Fischbach Corp., 133 F.3d 170, 175 (2d Cir. 1997) (alteration omitted)). Because disgorgement serves a different purpose from damages, principles of res judicata would probably not bar any plaintiff from asserting a separate claim for damages. Of course, “[a] judgment in favor of either side is conclusive in a subsequent action between them on any issue actually litigated and determined, if its determination was essential to that judgment.” Cooper v. Fed. Reserve Bank of Richmond, 467 U.S. 867, 874 (1984). Accordingly, while absent class members risk losing on the merits and being precluded from separately asserting, for example, a claim that Morgan Stanley is culpable for their loans, if the class were to win on the merits they would be able to pursue separate claims for damages. Because the putative class representatives have not needlessly compromised the ability of the class to secure its relief, Defendants’ argument that they are inadequate class representatives on that basis is unpersuasive.
Defendants’ second argument relative to Plaintiffs’ adequacy hinges on the possibility that disgorgement would be available for some, but not all, members of Plaintiffs’ proposed class. While this dispute might speak to the questions of predominance and superiority of the class format, it does not speak to the adequacy of the putative class representatives. See Amchem, 521 U.S. at 625-26 (“The adequacy inquiry under Rule 23(a)(4) serves to uncover conflicts of interest between named parties and the class they seek to represent.”). Defendants have not shown that the “‘plaintiff[s’] interests are antagonistic to the interest of other members of the class,’” even if some plaintiffs may ultimately advance claims that are unavailable to other members of the class. Sykes, 780 F.3d at 90 (quoting Baffa, 222 F.3d at 60). The named representatives’ “interests in maximizing the class recovery” are aligned with those of the class.
33

Kalkstein, 304 F.R.D. at 121. Accordingly, the putative class representatives would be adequate class representatives of the proposed class.
2. Rule 23(b)(3) Factors “Rule 23(b)(3) imposes two additional burdens on plaintiffs attempting to proceed by class action, namely, predominance and superiority.” Sykes, 780 F.3d at 81. “Predominance is satisfied ‘if resolution of some of the legal or factual questions that qualify each class member’s case as a genuine controversy can be achieved through generalized proof, and if these particular issues are more substantial than the issues subject only to individualized proof.’” Roach, 778 F.3d at 405 (quoting Catholic Healthcare W. v. U.S. Foodservice Inc. (In re U.S. Foodservice Inc. Pricing Litig.), 729 F.3d 108, 118 (2d Cir. 2013)). “The superiority requirement reflects the goal of class actions to achieve economies of time, effort and expense, and promote uniformity of decision as to persons similarly situated, without sacrificing procedural fairness.” N.J. Carpenters Health Fund v. DLJ Mortg. Cap., Inc., No. 08-CV-5653(PAC), 2014 WL 1013835, at *11 (S.D.N.Y. Mar. 17, 2014) (quotation marks and alterations omitted). Four other factors – individual control of litigation, prior actions involving the parties, the desirability of the forum, and manageability – should also be considered in making these determinations. Fed. R. Civ. P. 23(b)(3); Sykes, 780 F.3d at 82. Although structurally these factors “apply to both predominance and superiority, they more clearly implicate the superiority inquiry.” Sykes, 780 F.3d at 82 (collecting cases); but see AIG Sec. Litig., 689 F.3d at 242 (district court erred by “view[ing] manageability and predominance as two independent inquiries”); Seijas v. Republic of Arg., 606 F.3d 53, 58 (2d Cir. 2010) (“[W]hether the court is likely to face difficulties managing a class action bears on whether the proposed class satisfies the predominance and superiority requirements.”). Of the four factors that inform the Court’s predominance and superiority inquiries, “manageability ‘is, by [] far, the most critical concern in determining whether a class
34

action is a superior means of adjudication.’” Sykes, 780 F.3d at 82 (quoting 2 William B. Rubenstein, Newberg on Class Actions § 4.72 (5th ed. West 2014)).
a. Common Questions Do Not Predominate over Individual Questions To determine whether Plaintiffs have met their burden on predominance, a court “must assess (1) the ‘elements of the claims and defenses to be litigated’; and (2) ‘whether generalized evidence could be offered to prove those elements on a class-wide basis or whether individualized proof will be needed to establish each class member’s entitlement to relief.” Johnson, 780 F.3d at 138 (quoting 1 Joseph M. McLaughlin, McLaughlin on Class Actions § 5:23 (11th ed. 2014)). The mere existence of individual inquiries does not doom a potential class; Rule 23(b)(3) “anticipates the existence of individual issues.” Sykes, 780 F.3d at 87. What will doom a class, however, is the determination that common issues will be overwhelmed by individual issues. While Rule 23(a)(2) requires commonality, the predominance requirement of Rule 23(b)(3) “imposes a ‘far more demanding’ inquiry.” Id. (quoting Amchem, 521 U.S. at 62324). In order to satisfy the predominance requirement, the proposed class must be “‘sufficiently cohesive to warrant adjudication by representation.’” AIG Sec. Litig., 689 F.3d at 239-40 (quoting Amchem, 521 U.S. at 623).
The predominance inquiry frequently hinges on whether elements of each class member’s case can be proven through generalized proof, and whether the issues that can be so proven are more substantial than the issues subject only to individualized proof. UFCW Local 1776 v. Eli Lilly & Co., 620 F.3d 121, 131 (2d Cir. 2010). If, in order to prove causation or liability, a trial will need to address the facts of each individual claim, then the Plaintiffs have not carried their burden. See, e.g., Bolden, 688 F.3d at 896; Mata v. Citimortgage, Inc., No. 10-CV9167(DSF), 2012 WL 7985175, at *2 (C.D. Cal. July 20, 2012).
35

In order to determine predominance, the Court must start with the elements of the underlying cause of action. Erica P. John Fund, Inc. v. Halliburton Co., 563 U.S. ---, ---, 131 S. Ct. 2179, 2184 (2011) (internal quotation marks omitted). To establish a prima facie case of discrimination based on disparate impact under the FHA,25 the plaintiff must prove that the defendant is covered by the FHA,26 that the defendant engaged in an outwardly neutral practice, and that the defendant’s facially neutral act or practice produced “a significantly adverse or disproportionate impact on persons of a particular type.” Tsombanidis v. W. Haven Fire Dep’t, 352 F.3d 565, 574-75 (2d Cir. 2003) (quotation marks and emphasis omitted); Keller v. City of Fremont, 719 F.3d 931, 949 (8th Cir. 2013) (identifying two other elements of a disparate impact claim under the FHA as whether the defendant can show that the act or practice had a “manifest relationship to a legitimate, non-discriminatory policy objective and was necessary to [attain] that objective, and if so whether plaintiffs can show that a viable alternative means was available to achieve the legitimate policy objective without discriminatory effects”) (quotation marks omitted).
Common issues do not “predominate” over individual issues in this case for a number of reasons. First, although Plaintiffs attempt to cast this case as a straightforward one – did Morgan Stanley exert a “singular influence” over New Century and thereby cause it to make “toxic loans” that had a detrimental effect on borrowers who were disproportionately African-American – no element of their theory is susceptible to one generalized proof. The amount of influence

25

The Supreme Court will soon decide whether FHA provides a cause of action for housing discrimination

based on disparate impact. See Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc., No. 13-1371.

26

Loan purchasers and mortgage securitizers are covered by the FHA; they are prohibited from imposing

different terms or conditions for those purchases because of race. Adkins I, 2013 WL 3835198, at *9 (quoting 24

C.F.R. § 100.125); see also 42 U.S.C. § 3605(a). Thus, Morgan Stanley is plainly covered by the FHA’s text insofar

as it purchased or securitized mortgages. The Court expresses no view whether that coverage extends as far as

Plaintiffs’ theory, which seeks to hold Morgan Stanley responsible under the FHA for loans that it neither purchased

nor securitized.

36

that Morgan Stanley exerted over New Century, for example, requires proof along a number of different axes. The Court need not examine the merits of Plaintiffs’ causation theory to note that the extent to which Morgan Stanley caused New Century’s lending practices could vary based on the risk factors present in a particular loan27 and Morgan Stanley’s financial involvement in the particular loan.28 Plaintiffs’ claim that Morgan Stanley’s lax due diligence affirmatively caused New Century to issue Combined-Risk loans (an illogical proposition in the first place) may be even less persuasive in the context of loans that were caught and rejected by Morgan Stanley’s due diligence process. Similarly, putative class members whose loans were made as “exceptions” to New Century’s underwriting guidelines would need to prove that the basis for the exception was Morgan Stanley’s preference, not the borrowers’; these borrowers would be differently-situated from those who obtained loans pursuant to the guidelines that allegedly “baked in” Morgan Stanley’s preferences.
These concerns are not akin to the existence of individualized defenses – these are real differences among class members that result in arguments’ being available to some on issues of causation that will be unavailable to others. In short, the question of causation is simply not subject to a classwide proof. This is itself sufficient to establish that common questions do not predominate. See, e.g., IPO Sec. Litig., 471 F.3d at 43 (reversing class certification because

27

For example, although Defendants concede that Morgan Stanley sought loans with prepayment penalties,

Riddiough ¶ 100, there is no evidence that Morgan Stanley affirmatively sought no-documentation loans.

Accordingly, Plaintiffs’ proof as to Morgan Stanley’s role in New Century’s making no-documentation loans will

depend on their ability to establish that Morgan Stanley’s desires as a secondary market purchaser of loans was

driving the larger market for residential mortgage loans. That contention could be stronger in the context of

Combined-Risk loans that had risk factors affirmatively sought by Morgan Stanley than it would be in the context of

Combined Risk loans that have only risk factors that were not desired by Morgan Stanley (say, no-documentation

loans or loans with a high LTV).

28

For example, when Morgan Stanley made a purchase “based on expected loan characteristics of a pool

without necessarily having the actual loans,” Vanacker Dep. at 43-44, and before the actual loans were made, the

argument that Morgan Stanley “dictated” the terms on which New Century made its loan would be discernably

different from the same argument in the context of a loan that was never touched by Morgan Stanley (e.g., a loan

originated by New Century, sold to Barclays, and securitized by HSBC).

37

questions related to plaintiffs’ knowledge of allegedly concealed information could not be determined on a classwide basis).
But other aspects of Plaintiffs’ case are also not subject to classwide proof. Plaintiffs’ theory that Morgan Stanley exerted “singular influence” over New Century, for example, is stronger with respect to borrowers who obtained loans in 2004, when Morgan Stanley may well have been the proverbial 800-pound gorilla in the room, rather than with respect to borrowers who obtained loans in the first half of 2005, during which time Morgan Stanley did not win a single bid to purchase bulk loans from New Century. See Shapiro Dep. at 48-49. Insofar as the basis for Plaintiffs’ claim that Morgan Stanley dictated the terms of New Century’s loans is predicated largely on Morgan Stanley’s position in the marketplace, there is ample reason to conclude that the proof will be different relative to a loan written during a five-month period during which New Century sold no loans to Morgan Stanley than it will be relative to a loan written during a period when Morgan Stanley accounted for almost half of New Century’s business. Cf. Riddiough Figure 7. Thus, questions of Morgan Stanley’s influence over New Century are not “common” across time.
Nor is the claim that Combined-Risk loans (as opposed to, say, high-cost loans without any of the risk factors) are per se harmful susceptible to class-wide proof. Even assuming, arguendo, that Professor McCoy’s testimony that each risk factor in isolation increases the risk of default is both admissible and persuasive to the fact finder, Defendants have nevertheless established that the effect of any given risk factor depends on the presence vel non of other risk factors,29 and on externalities, such as the general real estate market and oil prices, see Sherlund

29

See, e.g., Rose 24 (prepayment penalties, balloon payments, and stated income loans “each affect the

probability of foreclosure differently, depending on [whether a loan’s rate is fixed or adjustable]”), id. at 26 (finding

that purchase FRMs with reduced documentation and either a long prepayment penalty period or a balloon payment

(but not both) are associated with substantially lower probability of foreclosure).

38

11. While this does not mean that Defendants would necessarily prevail on the merits, it does mean that each of the 33 different categories of Combined-Risk loan included in Plaintiffs’ proposed class would need to establish the harmfulness of that particular combination of risk factors.30 Each potential combination of risk factors might also yield different results with respect to a disparate impact analysis.31
Furthermore, each combination of factors might need a separate study to determine the likelihood that loans of that type were caused by Morgan Stanley’s policies or practices. See Riddiough 62 Figure 13 (depicting Morgan Stanley’s share of New Century’s loans with various combinations of risk factors, ranging from loans with DTI over 55 percent and LTV ratios over 90 percent, in which Morgan Stanley had a minimal share, to those loans containing balloon payments and prepayment penalties, of which Morgan Stanley had a considerably greater share). Morgan Stanley’s relationship with New Century evolved over time, and the putative class varies wildly with regard to the types of loans and the various roles that Morgan Stanley played in each. A large number of Morgan Stanley’s “policies and practices” affected the putative class in different ways. Cf. D.L. v. Dist. of Columbia, 713 F.3d 120, 127 (D.C. Cir. 2013). The need to conduct separate analyses for hundreds of combinations simply to determine whether Morgan

30

The complexity of the use of multiple risk factors that can be mixed and matched many different ways to

define membership in the class is underscored, for example, by Professor Ayres’ decision to control for three of the

eight risk factors in his regression analysis assessing the probability that a borrower would obtain a Combined-Risk

loan. See Ayres 48 Table 12.

31

Plaintiffs’ description of the Combined-Risk loan “as a ‘proxy for the type of layered-risk loans associated

with high rates of default and foreclosure,’” Reply at 11-12 (quoting McCoy 16), is creative but ultimately

unpersuasive. The Court recognizes that many Combined-Risk loans were “bad loans” that created a heightened

risk of default beyond what was likely given the borrower’s creditworthiness and income. But Plaintiffs have

combined a hodge-podge of factors that have different effects on the borrowers and varying desirability to investors.

Even if this class were a reasonable proxy for recipients of “bad” loans by some measure – and Plaintiffs have not

shown that it is – the proof necessary to establish the elements of the cause of action differs considerably as to

Plaintiffs whose participation in the makeshift class was brought about by the presence of different terms of their

loans. Accordingly, even if the class were defined in an “accurate” way by some measure, it is not defined in a

manner that is susceptible to classwide proof that predominates over individualized questions.

39

Stanley caused harm to the Plaintiff is enough to cause individual issues to predominate over common issues.32
The Court recognizes that Plaintiffs do not need to be identically situated in order for their claims to be susceptible to generalized proof that predominates over individual questions. See, e.g., Anwar, --- F.R.D. ---, ---, No. 09-CV-118(VM), 2015 WL 935454, at *11 (S.D.N.Y. Mar. 3, 2015) (finding that “common issues predominate[d]” “even assuming Defendants’ claims that certain communications to class members may not have been uniform” because they were “uniformly misleading”) (internal quotation marks and citations omitted); Public Emps. Ret. Sys. of Miss. v. Goldman Sachs Grp., 280 F.R.D. 130, 139 (S.D.N.Y. 2012) (common issues predominated despite the existence of different certificates because the misrepresentations on which each investor was alleged to rely were the same; “questions of materiality and loss causation [were thus] subject to objective standards and generalized proof”). But Plaintiffs’ case would involve many issues that are “generalized” only as to a small subsection of the proposed class; such inquiries are simply not subject to a common, classwide resolution. The existence of so many different groups of Plaintiffs, differentiated by the nature of their loans and by the role that Morgan Stanley played vis-à-vis those loans is fatal to Plaintiffs’ claim of predominance.
The final blow to Plaintiffs’ claim that common questions predominate is the role of New Century’s brokers in the origination process. When considering whether discretion afforded to third parties defeats the existence of common questions of law or fact, the court’s inquiry must focus on whether “there was a common and unlawful mode by which the [parties] exercised their discretion.” Rodriguez v. Nat’l City Bank, 726 F.3d 372, 385 (3d Cir. 2013); see Dukes, 131 S.

32

Cf. Johnson, 780 F.3d at 148; UCFW Local 1776, 620 F.3d at 135 (“[S]howing injury by general proof is

precluded by uncertainty about what the alternatives . . . [to the alleged harm] would have been, and how they would

have been distributed amongst the plaintiffs.”); Stream Sicav, 2015 WL 268855, at *4 (“Absent a concrete

presentation of the evidence on which such a finding could be made in this case, the Court cannot find that [] injury

to all class members can be established by a common proof.”).

40

Ct. at 2554.33 “On this point, Dukes is clear: class members must unite acts of discretion under a single policy or practice, or through a single mode of exercising discretion, and the mere presence of a range within which acts of discretion take place will not suffice to establish commonality.” Miller v. Countrywide Bank, N.A. (In re Countrywide Fin. Corp. Mortg. Lending Practices Litig.), 708 F.3d 704, 708 (6th Cir. 2013).34 Accordingly, when Merrill Lynch maintained policies that permitted brokers in the same office to form “teams” based on whatever criteria they chose and assigned accounts within an office to high performers – thereby permitting them to earn more money and to advance in the company – the Seventh Circuit held that plaintiffs had asserted common questions as to whether those policies caused a disparate impact above and beyond what would exist absent those policies. McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, 672 F.3d 482, 488-90 (7th Cir. 2012). The Court found there to be a logical tie between the challenged policy (which exacerbated inequalities existing in the status quo) and the racial disparity that resulted. Id. at 489; see also Calibuso v. Bank of Am. Corp., 893 F. Supp. 2d 374, 389 (E.D.N.Y. 2012).
On the other hand, when a claim rests on the discretion of a loan officer, even if the loan officer is making loans against the backdrop of facially race-neutral underwriting criteria, courts

33

The Dukes Court analyzed the question of discretion afforded to managers at Wal-Mart stores throughout

the country as a commonality issue; because the predominance inquiry subsumes the commonality inquiry, however,

that distinction is of no moment here.

34

Plaintiffs rely heavily on one case in which brokers’ discretion was held not to defeat commonality. See

Ramirez v. Greenpoint Mortg. Funding, Inc., 268 F.R.D. 627, 632-35 (N.D. Cal. 2010). That case, however, relied

heavily on the Ninth Circuit’s en banc decision in Dukes v. Wal-Mart, 603 F.3d 571 (9th Cir. 2010), which was

reversed by the Supreme Court, 131 S. Ct. 2541. The Ramirez decision specifically quoted language from the

intermediate court’s opinion indicating that a policy of subjective discretion “is a ‘ready mechanism for

discrimination’” bearing particularly heavy scrutiny. 268 F.R.D. at 634 (quoting Dukes v. Wal-Mart Stores Inc., 603

F.3d at 612). This theory was soundly rejected by the Supreme Court. Dukes, 131 S. Ct. at 2554. But even if it did

not rely on a reversed Ninth Circuit decision, the Ramirez case involved fewer discretionary decisions because the

defendant was the loan originator. Policies established by the originator could be the basis for liability in Ramirez

but could be the basis for a defense verdict here, where the originator is not the defendant.

41

have held that their discretion prevents a finding of commonality or predominance. 35 In
Rodriguez, for example, the Third Circuit held:
Even if Plaintiffs had succeeded in controlling for every objective credit-related variable . . . the regression analyses do not even purport to control for individual, subjective considerations. A loan officer may have set an individual borrower’s interest rate and fees based on any number of non-discriminatory reasons, such as whether the mortgage loans were intended to benefit other family members who were not borrowers, whether borrowers misrepresented their income or assets, whether borrowers were seeking or had previously been given favorable loan-tovalue terms not warranted by their credit status, whether the loans were part of a beneficial debt consolidation, or even concerns the loan officer may have had at the time for the financial institution irrespective of the borrower.
726 F.3d at 384.
When discretion is concentrated in “upper-level, top-management personnel,” that
discretion may not defeat commonality, while “the exercise of discretion by lower-level
employees” generally will. Scott v. Family Dollar Stores, Inc., 733 F.3d 105, 114 (4th Cir.
2013). In this case, the “discretion” at issue was exercised by mid-level New Century employees
and myriad independent brokers who made independent decisions in selecting terms for a
particular loan. Finley Decl. ¶ 4, Dkt. 209. Moreover, every New Century loan (including those
written by brokers) was underwritten by a New Century employee who exercised discretion
when the loan did not adhere to New Century’s (unchallenged) guidelines.36 Id. ¶ 8; McKay

35

See, e.g., Countrywide, 708 F.3d at 708 (“The plaintiffs claim that the discretion Countrywide has given its

sales force is exercised in a common way – by limited variation of the par rate. . . . [P]laintiffs [do not] demonstrate

that this range, rather than discretionary decisions made within this range, disparately impacted the proposed class.”)

(internal quotation marks omitted); Barrett v. Option One Mortg. Corp., No. 08-CV-10157, 2012 WL 4076465, at

*2-3 (D. Mass. Sept. 18, 2012) (“[Although] African-American borrowers on average spent about $134 more per

year on their mortgages than similarly situated white borrowers,” plaintiffs did not “point to any common mode of

exercising discretion that was shared by all of Option One’s brokers . . . [such as] claim[ing] that Option One’s

brokers uniformly exercised their discretion by considering specific attributes that produce disparate impact – such

as ‘scores on general aptitude tests or educational achievements.’”) (quoting Dukes, 131 S. Ct. at 2254); In re Wells

Fargo Residential Mortg. Lending Discrimination Litig., No. 08-MD-1930(MMC), 2011 WL 3903117, at *3-5

(N.D. Cal. Sept. 6, 2011) (evidence that discretion afforded to “loan officers and mortgage brokers” yielded a

disparate impact was insufficient to demonstrate commonality).

36

The FastQual system permitted independent brokers to learn quickly whether specific terms would comply

with New Century’s underwriting guidelines (although it did not bind New Century to make the loan) but did not

42

Dep. at 96-97; cf. Rodriguez, 726 F.3d at 384. The connection between Morgan Stanley’s
desires (seeking loans with particular features) and the disparate impact on the African-American
community in Detroit could – consistent with Plaintiffs’ theory of the case – be entirely explained by brokers’ exercise of discretion in writing loans.37
The existence of some common questions of fact does not establish that such questions
“predominate.” In this case, the number of meaningful variations among the putative class
would require mini-trials as to many, maybe hundreds, of groups of borrowers; these variations
prevent a finding that classwide issues predominate.
b. A Class Action Is Not a Superior Vehicle for This Action
Plaintiffs seeking to certify a class under Rule 23(b)(3) must also establish “that a class
action is superior to other available methods for fairly and efficiently adjudicating the
controversy.” Fed. R. Civ. P. 23(b)(3). Rule 23(b)(3) lists four factors that “clearly implicate the
superiority inquiry.” Sykes, 780 F.3d at 82. These factors include:
(A) the class members’ interests in individually controlling the prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and
(D) the likely difficulties in managing a class action.
Id. at 81 (quoting Fed. R. Civ. P. 23(b)(3)). Of the four factors, the most critical issue in
determining whether a class action is a superior means of adjudication is manageability. Id. at

eliminate the broker’s discretion in selecting which terms to include in a loan or when to deviate from the guidelines. Finley Decl. ¶ 8; cf. Countrywide, 708 F.3d at 708.

37

Plaintiffs’ argument that brokers’ discretion was minimal is unpersuasive, particularly in light of their

discussion of “steering,” a process by which brokers or loan officers would write Combined-Risk or other subprime

loans for borrowers who were eligible for prime loans. McCoy 8 & n15.

43

82. “[M]anageability is an issue peculiarly within a district court’s discretion.” Seijas, 606 F.3d at 58 (citations omitted).
In this case, no other litigation is pending, and Plaintiffs have sufficiently demonstrated that the Southern District of New York, where Morgan Stanley is based, is a desirable forum. Also on Plaintiffs’ side of the ledger is the impracticability of expecting thousands of class members (who are unlikely to be wealthy or sophisticated) to pursue expensive litigation requiring expert statistical analyses tending to show a disparate impact. “In such circumstances, the class action device is frequently superior to individual actions.” Id.; see also U.S. Foodservice Pricing, 729 F.3d at 130 (“Rule 23(b)(3) class actions can be superior . . . where the costs of bringing individual actions outweigh the expected recovery.”); Kalkstein, 304 F.R.D. at 123. But the determination of superiority must look to the evidence on the record and to the class that plaintiffs actually seek to certify. See Parker v. Time Warner Entm’t Co., L.P., 331 F.3d 13, 22 (2d Cir. 2003).
The class that Plaintiffs seek to certify is unmanageable. As noted previously, Plaintiffs’ proposed algorithm (high cost plus two or more risk factors) yields 33 permutations that actually appeared in at least one borrower’s loan. The various factors have different effects on borrowers and lenders in combination than they have in isolation; that reality would require the factfinder to consider separately the way that each unique permutation affected the borrowers and the extent to which Morgan Stanley caused loans to be written with that particular combination of risk factors. The various roles that Morgan Stanley (and other banks) played with regards to different categories of loans at different periods of time will also require separate factfinding as to the banks’ relative culpability in different contexts. Cf. UFCW Local 1776, 620 F.3d at 135 (describing “the unworkable complexity of joining as a single class of plaintiffs some individuals who [plaintiffs] argue should never have been prescribed [the drug at issue] and some individuals
44

who they argue were properly prescribed [the drug], but paid too much for it.”). When there is no uniform trial that could address the discrete issues presented, a case “fails the predominance and superiority criteria of Rule 23(b)(3).” Johnson, 780 F.3d at 140. Such is the case here; accordingly, Plaintiffs’ Motion for Class Certification is DENIED.
C. No Alternative Class Would Cure the Defects Identified in Plaintiffs’ Motion During oral argument on the class certification motion, Plaintiffs for the first time asserted that “at minimum . . . there are sufficient common questions with common evidence as to the loans that Morgan Stanley bought.” Tr. at 26-27. The Court is not persuaded. Plaintiffs’ case is certainly stronger on the merits for that set of loans, see 42 U.S.C. § 3605(b) – indeed, that is one of the many differences within Plaintiffs’ proposed class that undercuts class certification. But even if Plaintiffs might more easily prove Morgan Stanley’s culpability for disparate impact as to such a plaintiff class, they would still need to overcome many of the other impediments to class certification previously discussed. Notably, Plaintiffs would still need to overcome the challenges presented by the complex Combined-Risk definition, which would still yield class members whose loans do not appear to be inherently harmful and class members whose loans have only Combined-Risk factors that Morgan Stanley did not seek. Such a class would still include individuals whose loans went through vastly different processes (including some whose loans may have initially been placed on a different bank’s warehouse line, or been made with an eye towards a different bank’s forward sale, before being included in a pool that Morgan Stanley purchased). Finally, in contrast to the late-in-the-game suggestion that the Court consider certifying a different class than the one proposed, Plaintiffs’ theory of the case has been consistent since it was filed three years ago: Morgan Stanley’s preferences dictated New Century’s behavior; New Century wrote loans based on Morgan Stanley’s preferred terms even when it did not intend to
45

sell the loan to Morgan Stanley; and, therefore, the damage wrought by New Century was caused by Morgan Stanley. That theory is a necessary component of Plaintiffs’ class definition, which was included in their initial pleadings in this action. See Compl. ¶ 231(a)-(g) (identifying the “common question” of “whether Morgan Stanley’s policies with respect to purchasing New Century loans for securitization included requirements for loans with high-risk features”). To change the theory now would unfairly prejudice Defendants, who have spent considerable time and money litigating Plaintiffs’ initial theory. While the evidence on which Plaintiffs would rely may, as they asserted at oral argument, already be in the record, none of the briefing has focused on the alternative theory, and Defendants have not been given an opportunity to develop or produce evidence regarding Plaintiffs’ newly-proposed class.
II. Exclusion of Plaintiffs’ Experts In support of their motions, Plaintiffs submitted a number of expert reports. Most
critically, Professor Patricia McCoy submitted a report describing the effects of the risk factors on borrowers and the “singular influence” that Morgan Stanley exerted over New Century. Sugnet Decl. Ex. 4. Professor Ian Ayres submitted a statistical regression analysis that, he claims, proves that Combined-Risk loans had a disparate impact on the African-American community in Detroit. Sugnet Decl. Ex. 5. Defendants have moved to exclude all of the McCoy Report and limited language in the Ayres Report.38 Defendants also submitted a number of dueling expert reports in opposition to class certification, most notably including the report of Professor Timothy Riddiough, submitted to counter the McCoy Report’s conclusions.
“Under Daubert v. Merrell Dow Pharmaceuticals Inc., expert testimony is admissible if the expert is proposing to testify to (1) scientific knowledge that (2) will assist the trier of fact to

38

Plaintiffs submitted other expert reports that are not the subject of Defendants’ motion to preclude,

including those of Geoffrey Oliver and Professor Thomas Sugrue. Sugnet Decl. Exs. 6-7.

46

understand or determine a fact or issue.” U.S. Foodservice Pricing, 729 F.3d at 129 n.12 (citing 509 U.S. 579, 592 (1993)). “Under [Federal Rule of Evidence] 702, an expert witness, unlike a lay witness, is ‘permitted wide latitude to offer opinions, including those that are not based on firsthand knowledge or observations.’” Major League Baseball Props., Inc. v. Salvino, Inc., 542 F.3d 290, 310 (2d Cir. 2008) (quoting Daubert, 509 U.S. at 592). The role of district courts as gatekeepers of expert testimony under Rule 702 is well-established. See Nimely v. City of N.Y., 414 F.3d 381, 396 (2d Cir. 2005).
“Neither the Supreme Court nor the Second Circuit has definitely decided whether the Daubert standard governs the admissibility of expert evidence submitted at the class certification stage.” Chen-Oster v. Goldman, Sachs & Co., No. 10-CV-6950(AT)(JCF), 2015 WL 1035350, at *1 (S.D.N.Y. Mar. 10, 2015); see U.S. Foodservice Pricing, 729 F.3d at 129 (same, but noting that Dukes “offered limited dicta suggesting that a Daubert analysis may be required at least in some circumstances”). In this case, the Court need not determine whether the challenged experts’ reports should be excluded under Fed. R. Evid. 702. The Court has fully considered the opinions of Professors McCoy and Ayres in its class certification analysis and has nonetheless determined that class certification is inappropriate. Accordingly, Defendants’ Motion to Preclude is dismissed without prejudice if the Plaintiffs are ultimately able to certify a class.
The Court nevertheless notes numerous concerns about McCoy’s report. First, in offering her opinion as to Morgan Stanley’s responsibility for New Century’s loans, McCoy offers no expert analysis – instead, she simply marshals evidence unrelated to her expertise in consumer mortgages. Based on her understanding of New Century’s reliance on Wall Street in general, McCoy concludes ipse dixit that Morgan Stanley had a “singular influence” on New Century’s practices. McCoy 22-25. Her analysis lacks any benchmarks or comparators; McCoy refused to admit or deny the possibility that “there were other singular influences as to New
47

Century,” including “other secondary market participants, banks, [or] other institutions.” McCoy Dep. at 40-41. Because she conducted neither a scientific study nor a qualitative comparison with meaningful benchmarks, McCoy’s opinion as to Morgan Stanley’s influence over New Century would not be admissible under Rule 702.39 The same holds true for her related conclusions regarding Morgan Stanley’s role as a purchaser, underwriter, and securitizer; McCoy’s speculation regarding the role that Morgan Stanley played lacks any metrics or benchmarks against which it could be appraised (like, for example, comparing the role that other banks played in generating similar loans). Because her methodology is unreliable,40 Rule 702 would not countenance her testimony as to Morgan Stanley’s influence on New Century. This is true irrespective of the validity or invalidity of her conclusion. “‘The focus of the admissibility inquiry . . . must be solely on principles and methodology, not on the conclusions that they generate.’” SR Int’l Bus. Ins. Co. Ltd. v. World Trade Ctr. Props., LLC, 467 F.3d 107, 134 (2d Cir. 2006) (quoting Daubert, 509 U.S. at 595) (alteration omitted). Plaintiffs would, of course, be permitted to summarize the relevant documentary evidence describing the relationship between Morgan Stanley and New Century, but “factual testimony about matters that require[] no specialized knowledge” is not the province of experts. United States v. Mejia, 545 F.3d 179, 196 (2d Cir. 2008).
Defendants’ motion likely would be denied, on the other hand, as to at least some of McCoy’s testimony regarding the effects of the risk factors on a borrower’s likelihood of default.

39

It is likely that McCoy’s analysis regarding Morgan Stanley’s relationship with New Century satisfies

“none of the four factors identified in Daubert” – she has not tested her methodology, subjected her qualitative

descriptions of one company’s singular influence over another to peer review or publication, analyzed it through any

method susceptible to evaluation for known error rates, or shown a general acceptance of her methodologies.

Zaremba v. Gen. Motors Corp., 360 F.3d 355, 358 (2d Cir. 2004).

40

It is a stretch to describe what McCoy did as a “methodology.” Essentially, she summarized a number of

internal emails that appear to have been hand-picked by Plaintiffs’ counsel and speculatively devised a narrative for

the nature of Morgan Stanley’s interactions with New Century therefrom.

48

McCoy’s report is replete with citations to scholarly reports, and her qualitative reasoning as to causality expresses opinions informed by her significant relevant experience. Cf. United States v. Farhane, 634 F.3d 127, 158-59 (2d Cir. 2011). The Court is not persuaded by all of McCoy’s testimony as to the role of the risk factors, but the “gaps or inconsistencies in [her] testimony . . . ‘go to the weight of the evidence, not its admissibility.’” SR Int’l, 467 F.3d at 134 (quoting Campbell v. Metro. Prop. & Cas. Ins. Co., 239 F.3d 179, 186 (2d Cir. 2001)).
Finally, Defendants’ motion would likely be granted as to the Ayres Report but to almost no effect. The Ayres Report focuses on the disparate impact of the Combined-Risk loans that New Century made. Insofar as one stray clause suggests that Ayres believes these loans to have been caused by Morgan Stanley, that clause would be inadmissible opinion unrelated to the subject of Ayres’ study. The balance of Ayres’ report would be admissible.
Defendants’ motion is DISMISSED without prejudice to renewal. CONCLUSION
For the foregoing reasons, Plaintiffs’ Motion for Class Certification is DENIED and Defendants’ Motion to Exclude All Opinions Contained in the Report of Patricia A. McCoy and One Opinion Contained in the Report of Ian Ayres is DISMISSED as moot. While the Plaintiffs’ April 16, 2015 letter did not fully address the effect that a denial of class certification would have on the Plaintiffs’ practical ability to pursue this lawsuit (notwithstanding the fact that they would not legally be barred from doing so), the Court recognizes the likelihood that this ruling constitutes a “death knell” for Plaintiffs’ lawsuit, cf. Sumitomo Copper Litig. v. Credit Lyonnais Rouse, Ltd., 262 F.3d 134, 140-41 (2d Cir. 2001), and that appellate review pursuant to Rule 23(f) may therefore be appropriate, see Levitt v. PriceWaterhouseCooper LLP, No. 07-
49

3334-mv, 2007 WL 4060136 (2d Cir. Nov. 7, 2007). The Clerk of the Court is respectfully directed to terminate Dkt. 127 and Dkt. 188.

SO ORDERED.
Date: May 14, 2015 New York, NY

_________________________________ VALERIE CAPRONI United States District Judge

50

 
 UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

---------------------------------------------------------------------------x

BEVERLY ADKINS, CHARMAINE

:

WILLIAMS, REBECCA PETTWAY

:

RUBBIE McCOY, WILLIAM YOUNG,

:

on behalf of themselves and all others similarly :

situated, and MICHIGAN LEGAL SERVICES, :

:

Plaintiffs,

:

:

- against -

:

:

MORGAN STANLEY, MORGAN STANLEY :

& CO. LLC, MORGAN STANLEY ABS

:

CAPITAL I INC., MORGAN STANLEY

:

MORTGAGE CAPITAL INC., and MORGAN :

STANLEY MORTGAGE CAPITAL

:

HOLDINGS LLC,

:

:

Defendants.

:

---------------------------------------------------------------------------x

Hon. HAROLD BAER, JR., District Judge:

12 CV 7667 (HB) OPINION & ORDER

Plaintiffs are five African-American homeowners and Michigan Legal Services, a

nonprofit organization that provides legal services to Michigan’s low-income communities

(collectively, “Plaintiffs”). Plaintiffs claim that Morgan Stanley’s policies and practices caused New Century Mortgage Company to target borrowers in the Detroit, Michigan region1 for loans

that had a disparate impact upon African-Americans. According to Plaintiffs, these policies were

racially discriminatory in violation of the Fair Housing Act, 42 U.S.C. § 3601 et seq. (“FHA”),

the Equal Credit Opportunity Act, 15 U.S.C § 1691 et seq. (“ECOA”), and Michigan’s Elliot-

Larsen Civil Rights Act, MCL § 37.2102 et seq. (“ELCRA”). Plaintiffs also seek to represent a

similarly-situated class of African-American borrowers in the Detroit region. The above-

captioned Defendants (collectively, “Morgan Stanley”) bring this motion to dismiss the

complaint. For the reasons stated below, Morgan Stanley’s motion to dismiss Plaintiffs’ FHA

claims is DENIED. But Morgan Stanley’s motion to dismiss Plaintiffs’ ECOA and ELCRA

claims is GRANTED.

1 Plaintiffs seek to represent African-Americans residing in nine Detroit counties: Genesee, Lapeer, Livingston, Macomb, Monroe, Oakland, St. Clair, Washtenaw, and Wayne. (Compl. ¶¶ 116, 229.)
1

BACKGROUND From 2004 to 2007, “New Century was among the most notoriously predatory of the subprime lenders operating at that time.” (Compl. ¶ 2.) Plaintiffs’ theory here is that Morgan Stanley discriminated against African Americans when New Century issued predatory loans and that they did so as a result of Morgan Stanley’s conduct. That conduct consisted of “five interrelated and centralized policies and practices” to securitize New Century’s loans. (Id. ¶ 36.) First, Morgan Stanley “routinely purchased loans” with excessive debt-to-income (“DTI”) ratios. (Id. ¶¶ 44–45.) High DTI ratios indicate that the loan is larger than the borrower can afford. Second, Morgan Stanley “regularly purchase[d] and securitize[d] mortgage loans from New Century where the [loan-to-value ratio] . . . exceeded 100%.” (Id. ¶ 51.) High loan-to-value ratios, which compare the amount of the loan to the value of the home, are loans where the borrower faces a greater risk of delinquency or foreclosure. Third, Morgan Stanley required New Century to issue loans with adjustable rates and prepayment penalties. Morgan Stanley also “purchased and securitized large numbers of New Century mortgage loans with balloon payment features,” exacerbating a borrower’s financial risk. (Id. ¶ 60.) Fourth, Morgan Stanley provided necessary funding—in the form of warehouse lending, precommittments to purchase loans, and funding for loan closings—to New Century that allowed it to remain in business. Once New Century’s funding dried up in 2007, the firm entered bankruptcy. (Id. ¶ 69.) Fifth, Morgan Stanley purchased loans that “deviated substantially from basic underwriting standards,” going so far as to “encourage[] lending tactics that increased the levels of risk associated with individual loans.” (Id. ¶¶ 73, 75.) According to Plaintiffs, by creating the conditions under which New Century originated toxic loans, Morgan Stanley caused African-American borrowers to fall prey to those loans at a disproportionate rate, or put another way, to make this homeowner nightmare come true. As a result of these policies, Plaintiffs allege that they suffered financial harm. Many of the loans New Century issued were predatory and placed borrowers at “an elevated risk of default or foreclosure.” (Id. ¶ 33.) And according to Plaintiffs, Morgan Stanley had a direct hand in inflicting that harm. Indeed, Morgan Stanley “required New Century, as a condition of the companies’ lucrative business relationship, to issue large volumes of Combined-Risk Loans.” (Id. ¶ 43.) As defined in the complaint, Combined-Risk Loans are “high-cost” loans with at least two of the following risk-enhancing features: “(a) the loan was issued based upon the ‘stated
2

income,’ rather than the verified-income, of the borrower; (b) the debt-to-income ratio exceeds 55%; (c) the loan-to-value ratio is at least 90%; (d) the loan has an adjustable interest rate; (e) the loan has ‘interest only’ payment features; (f) the loan has negative amortization features; (g) the loan has ‘balloon’ payment features; and/or (h) the loan imposes prepayment penalties.” (Id. ¶ 34.) While any one of these features is both risky and costly to the borrower, combining those features in the same loan “dramatically” increases the loan’s financial hazards. (Id. ¶ 35.)
Plaintiffs also spell out how the conduct of this alleged icon of the free enterprise system affected the lives of its African-American borrowers. For example, an analysis of a subset of New Century loans that Morgan Stanley purchased reveals “rates of foreclosure that far exceeded both historical norms and the more recent foreclosure rates stemming from subprime lending.” (Id. ¶ 92.) Moreover, with regard to these loans, “the rate of foreclosure among African Americans was 28.57% greater than the rate of foreclosure among white borrowers.” (Id. ¶ 96.) According to the complaint, these disproportionate financial harms were the result of New Century’s lending practices and the targeting of African Americans that Morgan Stanley’s policies brought about. Indeed, as a result of Morgan Stanley’s policies, “a high-cost loan originated by New Century was more than six times as likely to be in a 90%-plus minority neighborhood than the average loan originated in the Detroit region.” (Id. ¶ 119.) Further, “an African-American borrower in a minority neighborhood had a 21% greater chance of receiving a high-cost loan than a similarly-situated white borrower in a white neighborhood.” (Id. ¶ 122.) According to Plaintiffs, these statistical allegations demonstrate a disparate impact.
Detroit’s recent bankruptcy filing only emphasizes the broader consequences of predatory lending and the foreclosures that inevitably result. Indeed, “[b]y 2012, banks had foreclosed on 100,000 homes [in Detroit], which drove down the city’s total real estate value by 30 percent and spurred a mass exodus of nearly a quarter million people.” Laura Gottesdiener, Detroit’s Debt Crisis: Everything Must Go, Rolling Stone, June 20, 2013. The resulting blight stemming from “60,000 parcels of vacant land” and “78,000 vacant structures, of which 38,000 are estimated to be in potentially dangerous condition” has further strained Detroit’s already taxed resources. Kevyn D. Orr, Financial and Operating Plan 9 (2013). And as residents flee the city, Detroit’s shrinking ratepayer base renders its financial outlook even bleaker. Id. Given these conditions, it is not difficult to conclude that Detroit’s current predicament, at least in part, is an outgrowth of the predatory lending at issue here. See Monica Davey & Mary Williams Walsh, Billions in
3

Debt, Detroit Tumbles Into Insolvency, N.Y. Times, July 18, 2013, at A1 (listing Detroit’s “shrunken tax base but still a huge, 139-square-mile city to maintain” as one factor contributing to the city’s financial woes).
DISCUSSION On a motion to dismiss pursuant to Rule 12(b)(6), I must “accept all factual allegations in the complaint as true.” State Univs. Retirement Sys. of Ill. v. Astrazeneca PLC, 334 F. App’x 404, 406 (2d Cir. 2009) (quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)), see Fed. R. Civ. P. 12(b)(6). But while a “complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations,” the level of detail “must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). To state a claim, Plaintiffs must “plead[ ] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Turkmen v. Ashcroft, 589 F.3d 542, 546 (2d Cir. 2009) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). A. Article III Standing I turn first to the threshold issue of Plaintiffs’ Article III standing. To demonstrate constitutional standing, “a plaintiff must show (1) it has suffered an ‘injury in fact’ that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” Pac. Capital Bank, N.A. v. Connecticut, 542 F.3d 341, 350 (2d Cir. 2008) (quoting Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180–81 (2000)). Statutory standing under the FHA is also coextensive with the boundaries of Article III. Comer v. Cisneros, 37 F.3d 775, 788–89) (2d Cir. 1994) (“[T]he sole requirement for standing to sue under [the FHA] is the Art. III minima of injury in fact . . . .’” (second alteration in original) (quoting Havens Realty Corp. v. Coleman, 455 U.S. 363, 372 (1982))). Here, Plaintiffs have suffered a cognizable injury. As alleged, Morgan Stanley’s policies and practices caused New Century to target Plaintiffs for toxic loans. These loans placed Plaintiffs at “greater risk of default, delinquency, and foreclosure.” (Compl. ¶ 43.) Here, these high-risk loans as opposed to better loans or even no loan at all caused Plaintiffs a concrete injury. See Baur v. Veneman, 352 F.3d 625, 633 (2d Cir. 2003) (“[A]n unreasonable exposure to risk may itself cause cognizable injury.” (citing Friends of the Earth, Inc. v. Gaston Copper
4

Recyling, Corp., 204 F.3d 149, 160 (4th Cir. 2000))). And regardless of whether Plaintiffs qualified for better loan terms, they are subject to higher mortgage payments and fees over a longer period of time than they would have been had they not been targeted for these toxic loans. The fact that there was a benefit to Plaintiffs, i.e., it allowed the purchase of a home, is not relevant to the constitutional standing inquiry. See Ross v. Bank of America, N.A. (USA), 524 F.3d 217, 222 (2d Cir. 2008) (“[T]he fact that an injury may be outweighed by other benefits . . . does not negate standing.” (quoting Denney v. Deutsche Bank AG, 443 F.3d 253, 265 (2d Cir. 2006))). Thus, Plaintiffs have adequately pled injury in fact.
As to traceability, the complaint also passes muster. To satisfy this requirement, “there must be a causal connection between the injury and the conduct complained of.” Natural Res. Def. Council, Inc. v. U.S. Food & Drug Admin., 710 F.3d 71, 84 (2d Cir. 2013) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). But “a plaintiff need not allege that ‘the defendant’s actions [were] the very last step in the chain of causation’ to demonstrate that the defendant’s actions caused the claimed injury.” Carver v. City of N.Y., 621 F.3d 221, 226 (2d Cir. 2010) (alteration in original) (quoting Bennett v. Spear, 520 U.S. 154, 169 (1997)). Rather, causation is shown “if the defendants’ actions had a ‘determinative or coercive effect’ on the action that produced the injury.” Id. (quoting Bennett, 520 U.S. at 169). In their complaint, Plaintiffs allege inter alia that “Morgan Stanley required New Century, as a condition of the companies’ lucrative business relationship, to issue large volumes of Combined-Risk Loans.” (Compl. ¶ 43.) Given that Plaintiffs’ injuries derive from these high-risk loans, the complaint’s allegations clearly meet the traceability requirement. Plaintiffs thus have standing to seek monetary relief based on this past harm.
Finally as to standing, Morgan Stanley challenges whether Plaintiffs’ injury is redressable through injunctive relief. Standing to pursue an injunction requires that “the injury alleged . . . be capable of being redressed through injunctive relief at that moment.” MacIssac v. Town of Poughkeepsie, 770 F. Supp. 2d 587, 594 (S.D.N.Y. 2011) (quoting Robidoux v. Celani, 987 F.2d 931, 938 (2d Cir. 1993)) (internal quotation marks omitted). But the misconduct here centers upon the effect Morgan Stanley’s policies had on Plaintiffs via New Century’s lending. Yet as the complaint acknowledges, New Century stopped originating loans and filed for bankruptcy in 2007. (Compl. ¶¶ 37, 69.) And nowhere in the complaint do Plaintiffs allege that Morgan Stanley’s policies have had a similar effect on other loan originators. Thus, even if Plaintiffs’
5

allegations demonstrate that they will reenter the housing market, their allegations do not demonstrate that Morgan Stanley’s policies pose a threat of future injury. See White v. First Am. Registry, 230 F.R.D. 365, 367 (S.D.N.Y. 2005) (“[W]here, as here, a plaintiff challenges an allegedly wrongful policy, he or she must allege credibly a ‘realistic threat from the policy.’” (quoting Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 184 (2000))). Accordingly, Plaintiffs lack standing to pursue injunctive relief. B. Statute of Limitations
Morgan Stanley also challenges the timeliness of Plaintiffs claims. Plaintiffs commenced this action on October 15, 2012. And as noted above, New Century stopped originating loans as of 2007. Without tolling, Plaintiffs’ claims would be untimely. See 42 U.S.C. § 3613(a)(1)(A) (two-year statute of limitations under FHA from “the occurrence or the termination of an alleged discriminatory housing practice”); Mich. Comp. Laws § 600.5805(10) (three-year period for ELCRA claims); Cottrell v. Vilsack, No. 11-1511, 2013 WL 49569, at *7 & n.7 (D.D.C. Jan. 4, 2013) (applying two-year statute of limitations to ECOA claims arising prior to amendment extending limitations period to five years). Thus, Plaintiffs urge that the discovery rule, equitable tolling, and a continuing violations theory govern their claims.
1. Discovery Rule a. The FHA
I examine first the application of the discovery rule to Plaintiffs’ claims. Under the discovery rule, Plaintiffs’ claims did not accrue—and the statute did not begin to run—until Plaintiffs “kn[ew] or ha[d] reason to know of the injury that serves as the basis for the action.” Clement v. United Homes, LLC, No. 10 Civ. 2122, 2012 WL 6720701, at *8 (E.D.N.Y. Dec. 27, 2012) (quoting Dombrowski v. City of N.Y., 116 F.3d 465, *1 (2d Cir. 1997)). While Congress did not expressly adopt a discovery rule for FHA actions, the FHA also does not expressly preclude a discovery rule. And it is well-established that express adoption of the discovery rule is not required for such a rule to apply. Compare 28 U.S.C. § 2401(b) (under FTCA, “[a] tort claim against the United States shall be forever barred unless it is presented in writing to the appropriate Federal agency within two years after such claim accrues”) with A.C.Q. ex rel. Castillo v. United States, 656 F.3d 135, 140 (2d Cir. 2011) (implying “diligence-discovery rule of accrual” in FTCA claims (quoting Kronisch v. United States, 150 F.3d 112, 121 (2d Cir. 1998))). Indeed, the Supreme Court has also recognized that the discovery rule need not be
6

express. Compare 45 U.S.C. § 56 (under FELA, “[n]o action shall be maintained under this chapter unless commenced within three years from the day the cause of action accrued”), with Urie v. Thompson, 337 U.S. 163, 170 (1949) (applying discovery rule to FELA actions), and TRW Inc. v. Andrews, 534 U.S. 19, 27 (2001) (recognizing Urie’s continued viability). Thus, rather than looking only to whether Congress expressly adopted a discovery rule, the discovery rule may apply “by implication from the structure or text of the particular statute.” TRW Inc., 534 U.S. at 28.
With these principles in mind, I find that the discovery rule applies to Plaintiffs’ FHA claims. In that regard, Congress enacted the FHA “to provide, within constitutional limitations, for fair housing throughout the United States.” 42 U.S.C. § 3601. Further, as the Second Circuit has observed, the FHA “[is] part of a coordinated scheme of federal civil rights laws enacted to end discrimination” and “must be construed expansively to implement that goal.” Huntington Branch, N.A.A.C.P. V. Town of Huntington, 844 F.2d 926, 935 (2d Cir. 1988); see also Hack v. President & Fellow of Yale Coll., 237 F.3d 81, 87 (2d Cir. 2000) (“The Supreme Court has repeatedly directed the courts to give a ‘generous construction’ to the Fair Housing Act.”), abrogated on other grounds by Swierkiewicz v. Sorema N.A., 534 U.S 506 (2002). There can be little doubt then that unlawful discrimination under the FHA includes practices resulting in a disparate impact—the theory Plaintiffs press here. See Reg’l Econ. Cmty. Action Program, Inc. v. City of Middletown, 294 F.3d 35, 48 (2d Cir. 2002) (“Plaintiffs who allege violations under . . . the FHA . . . may proceed under any or all of three theories: disparate treatment, disparate impact, and failure to make reasonable accommodation.”).
But the disparate impact of a facially neutral policy may not become immediately apparent upon its adoption. See Davidson v. Bd. of Governors of State Colls. & Univs. for W. Ill. Univ., 920 F.2d 441, 445 (7th Cir. 1990) (in disparate impact case, “[w]hat prevents [a plaintiff’s] suing right off is not that the practice of which he complains has not been adopted as yet . . . but that he does not have enough evidence to determine whether the practice is unlawful”). Giving full effect to the FHA’s language and the policy behind the language requires a discovery rule recognizing that Plaintiffs’ claim here did not accrue until they knew or had reason to know that Morgan Stanley’s policies were discriminatory.
To the extent that Morgan Stanley relies on TRW Inc. to foreclose the discovery rule, that reliance is inapposite with regard to the FHA. In that case, the Supreme Court held that
7

incorporating a discovery rule into the Fair Credit Reporting Act (“FCRA”) would contradict the statutory scheme. TRW, Inc., 534 U.S. at 28–29. And indeed, when TRW Inc. was decided, FCRA expressly provided for a limited discovery rule based upon a defendant’s concealment of its liability. Id. at 28 (citing 15 U.S.C. § 1681p).2 Given this limited discovery rule, to read a general discovery rule into that statute would render that statute’s express language a nullity. Id. at 29. But unlike FCRA, the FHA does not speak directly to whether a discovery rule applies. See 42 U.S.C. § 3613(a)(1)(A) (“An aggrieved person may commence a civil action in an appropriate United States district court or State court not later than 2 years after the occurrence or the termination of an alleged discriminatory housing practice . . . .”). Nor does the FHA provide for any exceptions that would conflict with a discovery rule. Accordingly, I conclude that Plaintiffs’ FHA claims are subject to that rule here.
And applying that rule, Plaintiffs’ FHA claims are timely. Taking the complaint’s factual allegations as true, Plaintiffs “did not know, and could not have known, that Morgan Stanley’s policies and practices caused a disparate impact on her and other African-American borrowers in Detroit, in violation of federal and state law.” (Compl. ¶¶ 140, 160, 175, 191, 204.) Instead, Plaintiffs assert that only after consultation with attorneys in 2012 was the nature of their injury revealed. (Id.) And while certain underlying facts related to this action were made publicly available over time, whether this public knowledge may be imputed to Plaintiffs to render their claims “discovered” is a question of fact that is inappropriate to resolve on a motion to dismiss. See Phillips v. Better Homes Depot, Inc., No. 02 Civ. 1168, 2003 WL 25867736, at *25 (E.D.N.Y. Nov. 12, 2003) (“There is a difference between being aware that you got a bad deal and being aware that you were discriminated against in a systematic fashion.”); cf. Thompson v. Metro. Life Ins. Co., 149 F. Supp. 2d 38, 49 (S.D.N.Y. 2001) (whether plaintiffs exercised “reasonable diligence” for purposes of discovery rule is question of fact). Accordingly, Plaintiffs’ allegations are sufficient and their FHA claims are not time-barred.
b. ECOA But Plaintiffs’ ECOA claims suffer a different fate. Like the FHA, ECOA also does not speak directly to the discovery rule. But unlike the FHA, ECOA does embrace exceptions to its limitations period allowing for a limited discovery rule that the FHA does not. See 15 U.S.C. § 1691e(f)(1)–(2). Thus, to imply a general discovery rule for ECOA claims “would in practical
2 The statute of limitations for FCRA actions has been revised since TRW, Inc. was decided. See 15 U.S.C. § 1681p.
8

effect render [those] exception[s] entirely superfluous in all but the most unusual circumstances.” TRW Inc., 534 U.S. at 28. ECOA’s text thus does not support a discovery rule.
c. ELCRA Finally, Michigan law is clear that the discovery rule does not apply to Plaintiffs’ ELCRA claims. Indeed, Michigan courts have expressly rejected a broad discovery rule. See Mich. Comp. Laws § 600.5805(10); Trentadue v. Buckler Automatic Lawn Sprinkler Co., 738 N.W.2d 664, 670 (Mich. 2007) (rejecting implication of discovery rule). Accordingly, the discovery rule will not save Plaintiffs’ ELCRA claims here. 2. Continuing Violations Plaintiffs also urge that their ECOA and ELCRA claims are timely under a continuing violations theory. But this theory does not apply to Plaintiffs’ ELCRA claims. See Garg v. Macomb Cnty. Cmty. Mental Health Servs., 696 N.W.2d 646, 658 (Mich. 2005) (“Nothing in these provisions permits a plaintiff to recover for injuries outside the limitations period when they are susceptible to being characterized as ‘continuing violations.’”). This leaves application of a continuing violations theory to Plaintiffs’ ECOA claims. But here, Plaintiffs’ ECOA claims also founder. Plaintiffs point to Lewis v. City of Chicago in support of their claims, but that case serves only to confirm that Plaintiffs’ theory lacks merit. In Lewis, the Supreme Court held that new claims may arise “[i]f petitioners could prove that the [defendant] ‘use[d]’ the ‘practice’ that ‘causes a disparate impact.’” Lewis v. City of Chicago, Ill., 560 U.S. 205, 130 S. Ct. 2191, 2199 (2010) (third alteration in original). In other words, even for disparate impact claims, Plaintiffs “must show a present violation within the limitations period.” Id. (quoting United Air Lines, Inc. v. Evans, 431 U.S. 553, 558 (1977)) (internal quotation marks omitted). But here, the policy that Plaintiffs seek to challenge is Morgan Stanley’s policy that purportedly caused New Century to issue discriminatory loans. That policy ended at least as of 2007—when New Century stopped issuing loans entirely. That Plaintiffs continue to suffer the effects of their toxic loans, while unfortunate, does not suffice to revive their claims on the basis of a continuing violation where implementation of the challenged policy has long ceased. See Chin v. Port Auth. of N.Y. & N.J., 685 F.3d 135, 158 n.12 (2d Cir. 2012) (“Lewis, however, makes clear that a disparate impact claim requires plaintiffs to plead and prove that defendants, within the limitations period, used an employment practice that had a disparate impact. In other words, the cause—not merely the effect—must
9

occur within the limitations period.” (internal citation omitted)); Harris v. City of N.Y., 186 F.3d 243, 250 (2d Cir. 1999) (“[A] continuing violation cannot be established merely because the claimant continues to feel the effects of a time-barred discriminatory act.”). Under these circumstances, Plaintiffs have not alleged a “present violation” within the limitations period.
3. Equitable Tolling Plaintiffs next urge that their claims are timely pursuant to equitable tolling. Equitable tolling recognizes that “where the court finds that ‘extraordinary circumstances’ prevented the party from timely performing a required act, and that the party ‘acted with reasonable diligence through the period he sought to toll,’” a plaintiff may assert an otherwise untimely claim. Grimes v. Fremont Gen. Corp., 785 F. Supp. 2d 269, 286 (S.D.N.Y. 2011) (quoting Williams v. Aries Fin., LLC, No. 09 Civ. 1816, 2009 WL 3851675, at *6 (E.D.N.Y. Nov. 18, 2009)). One way to meet this standard is to demonstrate that “the complainant has been induced or tricked by his adversary’s misconduct into allowing the filing deadline to pass.” Id. (quoting Coveal v. Consumer Home Mortg., Inc., No. 04 Civ. 4755, 2005 WL 704835, at *4 (E.D.N.Y. Mar. 29, 2005)). Not this case. Here, Plaintiffs’ allegations of concealment are entirely conclusory. Indeed, Plaintiffs allege only that Morgan Stanley “knowing[ly] and active[ly] conceal[ed] . . . the facts” of the complaint and that “Plaintiffs and members of the Class have been kept ignorant of vital information.” (Compl. ¶¶ 222.) Plaintiffs also claim in similarly vague terms that Morgan Stanley violated a “continuing duty to disclose” its discriminatory policies to Plaintiffs. (Compl. ¶ 223.) These allegations cannot support equitable estoppel under either ECOA or ELCRA. See Singh v. Wells, 445 F. App’x 373, 378 (2d Cir. 2011) (“Generalized or conclusory allegations of fraudulent concealment are insufficient to toll a statute of limitations.”). Plaintiffs allege other theories but they fail to clear the high hurdle required for equitable estoppel and thus equitable estoppel is unavailable on these allegations. C. Disparate Impact Under the FHA Thus, only Plaintiffs’ FHA claims are timely. Accordingly, I now turn to the merits of Plaintiffs’ FHA allegations. The FHA makes it unlawful “for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race.” 42 U.S.C. § 3605(a). And under the statute, “[r]esidential real estate-related transaction” includes “[t]he making or purchasing of loans or providing other
10

financial assistance . . . (A) for purchasing, constructing, improving, repairing, or maintaining a dwelling; or (B) secured by residential real estate.” § 3605(b)(1)(A)–(B).
Plaintiffs here have successfully alleged a disparate impact under the FHA. A claim will survive a motion to dismiss so long as that claim is “facially plausible and . . . give[s] fair notice to the defendants of the basis for the claim.” Barbosa v. Continuum Health Partners, Inc., 716 F. Supp. 2d 210, 215 (S.D.N.Y. 2010). Further, while the elements of a prima facie case of discrimination are relevant as to whether Plaintiffs have pled a plausible claim, Plaintiffs need not satisfy the prima facie case’s requirements at the pleading stage. Shallow v. Scofield, No. 11 Civ. 6028, 2012 WL 4327388, at *3 (S.D.N.Y. Sept. 21, 2012). Nevertheless, a prima facie case under the FHA on a disparate impact theory requires only that Plaintiffs allege “that an outwardly neutral practice actually or predictably has a discriminatory effect; that is, has a significantly adverse or disproportionate impact on minorities, or perpetuates segregation.” Fair Hous. in Huntington Comm. Inc. v. Town of Huntington, N.Y., 316 F.3d 357, 366 (2d Cir. 2003).
Plaintiffs here have met their pleading burden. First, they have identified the policy that they allege has a disproportionate impact on minorities. That policy consisted of Morgan Stanley (1) routinely purchasing both stated income loans and loans with unreasonably high debt-to-income ratios, (2) routinely purchasing loans with unreasonably high loan-to-value ratios, (3) requiring that New Century’s loans include adjustable rates and prepayment penalties as well as purchasing loans with other high-risk features, (4) providing necessary funding to New Century, and (5) purchasing loans that deviated from basic underwriting standards. Plaintiffs go on to state that these policies resulted in “New Century aggressively target[ing] AfricanAmerican borrowers and communities . . . for the Combined-Risk Loans.” (Compl. ¶ 81.) Indeed, Plaintiffs allege in detail the effect that New Century’s lending had upon the AfricanAmerican community in the Detroit area. (Compl. ¶¶ 115–122). That lending, according to Plaintiffs, was a direct result of Morgan Stanley’s policies. And while Plaintiffs do not allege that they qualified for better loans, they allege discrimination based only upon the receipt of these predatory, toxic loans that placed them at high financial risk. These risks exist regardless of Plaintiffs’ qualifications. On a motion to dismiss, these allegations are sufficient to demonstrate a disparate impact.
Morgan Stanley argues that the FHA does not reach Plaintiffs’ theory here. But as an entity “engage[d] in residential real estate-related transactions,” Morgan Stanley—as a loan
11

purchaser and mortgage securitizer—falls within the scope of the FHA. 42 U.S.C. § 3605(a). And as such, the FHA prohibits Morgan Stanley both from discriminating in “making available” real-estate related transactions as well as discriminating “in the terms or conditions of such a transaction.” § 3605(a); see also 24 C.F.R. § 100.125 (“It shall be unlawful for any . . . entity engaged in the purchasing of loans or other debts or securities . . . to impose different terms or conditions for such purchases, because of race . . . .”). To give the FHA full effect, this language is to be given a “generous construction.” Hack, 237 F.3d at 87.
As explained above, Morgan Stanley’s policies themselves resulted in Plaintiffs suffering a disparate impact. Indeed, Morgan Stanley’s policies set the terms and conditions on which it would purchase loans from New Century. For example, “Morgan Stanley placed at least two employees onsite at New Century full-time when conducting due diligence on loans it would purchase for securitization.” (Compl. ¶ 75.) When a “full documentation loan” indicated that a borrower could not afford a particular loan, “Morgan Stanley would shred the documentation and tell the originator to get a new, ‘stated income’ loan.” (Id.) This stated income loan would appear less risky and permit the borrower to qualify, but would do nothing to change the fact that the borrower could not afford the loan.
Thus the terms and conditions governing Morgan Stanley’s loan purchases directly resulted in a disparate impact when they caused New Century to issue toxic loans to Plaintiffs. While Morgan Stanley disputes whether it could have caused New Century to issue these loans, that factual inquiry is appropriately reserved for a later stage of this litigation. At this stage, as with Morgan Stanley’s traceability argument, Plaintiffs’ allegations that Morgan Stanley “required” New Century to issue discriminatory loans are more than sufficient to make Plaintiffs’ claims plausible. Further, whether Morgan Stanley ultimately purchased all of the toxic loans that New Century issued is not relevant at the pleading stage. Instead, Plaintiffs allege a simpler theory: Morgan Stanley’s policies were the cause of all the toxic loans that New Century issued. Nothing more is needed to support Plaintiffs’ claims at this stage.
Similarly, that Plaintiffs focused on the impact of Morgan Stanley’s policies on borrowers in Detroit as opposed to borrowers nationwide is not fatal to their complaint. Nor are their statistical allegations related to high-cost loans as opposed to Combined-Risk loans deficient. As explained above, Plaintiffs’ statistical allegations need not definitively establish causation at this stage. Rather, Plaintiffs’ allegations, though focused upon high-cost loans in
12

Detroit, are sufficient to give notice to Morgan Stanley of a plausible claim of disparate impact. Whether those statistics may prove insufficient at a later date is not now a question before this
Y.c. court. See Jenkins v. N Transit Auth., 646 F. Supp. 2d 464,469 (S.D.N.Y. 2009) ("It would
be inappropriate to require a plaintiff to produce statistics to support her disparate impact claim before the plaintiff has had the benefit of discovery."). Indeed, Morgan Stanley supports its theory with case law involving different procedural postures, not motions to dismiss. See, e.g., Greater New Orleans Fair Hous. Action Ctr. v. US. Dep't ofHous. & Urban Dev, 639 F.3d 1078, 1080 (D.C. Cir. 2011) (preliminary injunction); Tsombanidis v. W. Haven Fire Dep't, 352 F.3d 565, 573 (2d Cir. 2003) (posttrial appeal); Smith v. Xerox Corp., 196 F.3d 358, 369 (2d Cir. 1999) (summary judgment), overruled on other grounds by Meacham v. Knolls Atomic Power Lab., 461 F.3d 134 (2d Cir. 2006). Accordingly, I deny Morgan Stanley's motion to dismiss Plaintiffs' FHA claims.
CONCLUSION For the foregoing reasons, Morgan Stanley'S motion to dismiss is GRANTED as to Plaintiffs' ELCRA and ECOA claims. The motion is DENIED with respect to Plaintiffs' FHA claims. The Clerk of Court is directed to close this motion and remove it from my docket.

SO ORDERED.
Date: K{z.,5(1,A) IJ
New York, New York

HAROLD BAER, JR. United States District Judge

13 


 
 Case 1C:1a2s-ecv1-50-72636978-,VDEoCc-uGmWeGnt 1D65o,cu0m8/e0n4t/2204156, F18ile3d310886/0, 4P/a1g6e1Poafg5e 1 of 5

15-2398
MANDATE Adkins v. Morgan Stanley UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

N.Y.S.D. Case # 12-cv-7667(VEC)

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

1

At a stated term of the United States Court of Appeals

2 for the Second Circuit, held at the Thurgood Marshall United

3 States Courthouse, 40 Foley Square, in the City of New York,

4 on the 14th day of July, two thousand sixteen.

5

6 PRESENT: DENNIS JACOBS,

7

REENA RAGGI,

8

DENNY CHIN,

9

Circuit Judges.

10

11 - - - - - - - - - - - - - - - - - - - -X

12 BEVERLY ADKINS, CHARMAINE WILLIAMS, 13 REBECCA PETTWAY, RUBBIE MCCOY, and 14 WILLIAM YOUNG, on behalf of 15 themselves and all others similarly 16 situated, and MICHIGAN LEGAL

USDC SDNY DOCUMENT ELECTRONICALLY FILED DOC #: _________________

17 SERVICES,

DATE FILED: _A_u_g_u_st_4_,_2_0_1_6___

18

Plaintiffs-Appellants,

19

20

-v.-

15-2398

21

22 MORGAN STANLEY, MORGAN STANLEY & CO.

23 LLC, MORGAN STANLEY ABS CAPITAL I

24 INC., MORGAN STANLEY MORTGAGE CAPITAL

25 INC., and MORGAN STANLEY MORTGAGE

26 CAPITAL HOLDINGS LLC,

27

Defendants-Appellees.

28 - - - - - - - - - - - - - - - - - - - -X

1

MANDATE ISSUED ON 08/04/2016

Case 1C:1a2s-ecv1-50-72636978-,VDEoCc-uGmWeGnt 1D65o,cu0m8/e0n4t/2204156, F18ile3d310886/0, 4P/a1g6e2Poafg5e 2 of 5

1 FOR APPELLANTS:

RACHEL E. GOODMAN (with Dennis

2

D. Parker on the brief),

3

American Civil Liberties Union

4

Foundation, New York, NY,

5

6

Stuart T. Rossman, on the brief,

7

The National Consumer Law

8

Center, Boston, MA,

9

10

Elizabeth J. Cabraser, on the

11

brief, Lieff Cabraser Heimann &

12

Bernstein, LLP, San Francisco,

13

CA; Rachel J. Geman, on the

14

brief, Lieff Cabraser Heimann &

15

Bernstein, LLP, New York, NY.

16

17 FOR APPELLEES:

NOAH A. LEVINE (with Colin T.

18

Reardon and John Paredes on the

19

brief), Wilmer Cutler Pickering

20

Hale and Dorr LLP, New York, NY;

21

David W. Ogden and Jonathan A.

22

Bressler, on the brief, Wilmer

23

Cutler Pickering Hale and Dorr

24

LLP, Washington, DC.

25

26

Appeal from an order of the United States District

27 Court for the Southern District of New York (Caproni, J.).

28

29

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED

30 AND DECREED that the order of the district court be

31 AFFIRMED.

32

33

The plaintiffs, a putative class of African-American

34 homeowners in the Detroit area, appeal from an order of the

35 United States District Court for the Southern District of

36 New York (Caproni, J.), denying class certification. The

37 plaintiffs allege a disparate impact under the Fair Housing

38 Act (“FHA”), 42 U.S.C. § 3605, by certain alleged policies

39 and practices of defendants Morgan Stanley, Morgan Stanley &

40 Co. LLC, Morgan Stanley ABS Capital I Inc., Morgan Stanley

41 Mortgage Capital Inc., and Morgan Stanley Mortgage Capital

42 Holdings LLC (collectively “Morgan Stanley”). Specifically,

43 the plaintiffs allege that Morgan Stanley’s purchases of

44 home loans from New Century induced New Century to make

45 costly, high-risk loans to the class at a higher rate than

46 comparable white borrowers. We assume the parties’

2

Case 1C:1a2s-ecv1-50-72636978-,VDEoCc-uGmWeGnt 1D65o,cu0m8/e0n4t/2204156, F18ile3d310886/0, 4P/a1g6e3Poafg5e 3 of 5

1 familiarity with the underlying facts, the procedural

2 history, and the issues presented for review.

3

4

1. We review a district court’s class certification

5 determination for abuse of discretion. See Johnson v.

6 Nextel Commc’ns, 780 F.3d 128, 137 (2d Cir. 2015). Under

7 that standard, review of legal conclusions is de novo, while

8 factual findings are reviewed for whether they are clearly

9 erroneous. Myers v. Hertz Corp., 624 F.3d 537, 547 (2d Cir.

10 2010). “In reviewing findings for clear error,” we will not

11 “second-guess . . . the trial court’s . . . choice between

12 permissible competing inferences.” Arch Ins. v. Precision

13 Stone, Inc., 584 F.3d 33, 39 (2d Cir. 2009) (internal

14 quotation marks omitted). “Inherent in this deferential

15 standard of review is a recognition of the district court’s

16 inherent power to manage and control pending litigation.”

17 Johnson, 780 F.3d at 137 (internal quotation marks omitted).

18

19

2. The district court here concluded that the

20 plaintiffs failed to satisfy the typicality requirement of

21 Fed. R. Civ. P. 23(a)(3), as well as the predominance and

22 superiority requirements of Fed. R. Civ. P. 23(b)(3). With

23 respect to predominance, the district court concluded that

24 common issues do not predominate over individual issues

25 because, among other things, (1) within the proposed class

26 there are 33 different combinations of risk factors, each of

27 which affected the plaintiffs’ loans differently and would

28 thus require individual proof to establish a particular

29 combination’s harmfulness;1 and (2) causation is not subject

30 to class-wide proof because the extent to which Morgan

31 Stanley caused the loans that the plaintiffs received would

32 depend on the risk factors present and Morgan Stanley’s

33 involvement in each particular loan. See Myers, 624 F.3d at

34 547 (explaining that predominance requirement is satisfied

35 “if resolution of some of the legal or factual questions

36 that qualify each class member’s case as a genuine

37 controversy can be achieved through generalized proof, and

38 if these particular issues are more substantial than the

1 The risk factors include (1) stated income where the income of the borrower was not verified; (2) debt-toincome ratio exceeding 55%; (3) the loan-to-value ratio exceeding 90%; (4) adjustable interest rates; (5) “interest only” payment features; (6) negative loan amortization features; (7) “balloon” payment features; and (8) prepayment penalties.
3

Case 1C:1a2s-ecv1-50-72636978-,VDEoCc-uGmWeGnt 1D65o,cu0m8/e0n4t/2204156, F18ile3d310886/0, 4P/a1g6e4Poafg5e 4 of 5

1 issues subject only to individual proof” (internal quotation

2 marks omitted)).

3

4

On appeal, the plaintiffs do not meaningfully challenge

5 the conclusion that common questions do not predominate over

6 individual issues. In any event, we identify no abuse of

7 discretion in the district court’s predominance conclusion.

8 Thus, we need not consider the plaintiffs’ challenges to the

9 district court’s typicality and superiority determinations.

10 See id. at 548 (concluding, where district court denied

11 class certification on basis of typicality, commonality, and

12 predominance, that “[w]e need only address the

13 ‘predominance’ requirement”); see also Fed. R. Civ. P.

14 23(b)(3) (requiring finding that “questions of law or fact

15 common to class members predominate over any questions

16 affecting only individual members, and that a class action

17 is superior to other available methods for fairly and

18 efficiently adjudicating the controversy” (emphasis added)).

19

20

21

3. The plaintiffs argue that the district court did

22 not consider certification of issue classes or its proposed

23 alternative class. However, the plaintiffs did not move for

24 certification of issue classes and did not propose an

25 alternative class until oral argument before the district

26 court.

27

28

While the district court “is empowered under Rule

29 23(c)(4) to carve out an appropriate class,” it is “not

30 obligated to implement Rule 23(c)(4) on its own initiative.”

31 Lundquist v. Security Pac. Auto. Fin. Servs. Corp., 993 F.2d

32 11, 14 (2d Cir. 1993); see also U.S. Parole Comm’n v.

33 Geraghty, 445 U.S. 388, 408 (1980).

34

35

The plaintiffs’ proposed alternative class is to limit

36 the class to only those borrowers whose loans Morgan Stanley

37 actually purchased.2 The district court ruled that

38 permitting the plaintiffs to change their theory at a late

39 stage would “unfairly prejudice” the defendants. Adkins v.

2 The current class definition includes all loans originated by New Century to African-American homeowners in the Detroit area, regardless of whether Morgan Stanley actually purchased that loan. Indeed, only one of the five named plaintiff has a loan that was purchased by Morgan Stanley.
4

Case 1C:1a2s-ecv1-50-72636978-,VDEoCc-uGmWeGnt 1D65o,cu0m8/e0n4t/2204156, F18ile3d310886/0, 4P/a1g6e5Poafg5e 5 of 5

1 Morgan Stanley, 307 F.R.D. 119, 147-48 (S.D.N.Y. 2015). We

2 agree. The district court further ruled that, even if the

3 alternative class had been timely proposed, the class still

4 could not overcome the problems with the risk factors as

5 used in the original class definition: the class would still

6 include individuals whose loans had vastly different

7 features from one another. Accordingly, the district court

8 did not abuse its discretion in failing to certify the

9 proposed alternative class.

10

11

For the foregoing reasons, and finding no merit in the

12 plaintiff’s other arguments, we hereby AFFIRM the order of

13 the district court.

14

15

FOR THE COURT:

16

CATHERINE O’HAGAN WOLFE, CLERK

17

5

 
 Morgan Stanley Sued for Racial Discrimination in Pushing Predatory Loans to Black Homeowners
October 15, 2012
Landm ark Lawsuit First to Link Bundling of Mortgage-Backed Securities and Racial Discrim ination; Suit Charges Violation of Fair Housing Act
FOR IMMEDIA TE RELEASE CONTACT: (21 2) 549-2666; media@aclu.org
NEW Y ORK – Morgan Stanley discriminated against black homeowners and v iolated federal civ il rights laws by prov iding strong incentiv es to a subprime lender to originate mortgages that were likely to be foreclosed on, according to a groundbreaking lawsuit filed today .
The lawsuit, filed in U.S. District Court in New Y ork, is the first that connects racial discrimination to the securitization of mortgage-backed securities, which were sold to institutional inv estors and pension funds. It is also the first case where a prospectiv e class of v ictimized homeowners is suing an inv estment bank directly rather than the subprime lender whose loans the bank bought.
The lawsuit was filed by the American Civ il Liberties Union, the ACLU of Michigan, the National Consumer Law Center, and Lieff Cabraser Heimann & Bernstein, a San Francisco-based law firm, on behalf of fiv e Detroit residents and Michigan Legal Serv ices. The complaint asks the court to certify the case as a class action. As many as 6,000 black homeowners in the Detroit area may hav e suffered similar discrimination.
While the case concerns lending abuses in Detroit, these practices were common throughout the financial serv ices industry and v ictimized black and Latino neighborhoods nationwide, according to A nthony D. Romero, A CLU ex ecutiv e director.
"With this lawsuit, real v ictims of the subprime lending scandal are stepping forward to hold inv estment banks like Morgan Stanley accountable for the dev astation the banks wrought in their liv es and in our economy ,” Romero said. “Illegal practices surrounding mortgage-backed securities robbed people of their homes, v iolated our civ il rights laws and left all A mericans holding the bag as our economy teetered on the brink of another Great Depression.”
The fiv e homeowners in the suit receiv ed their loans from now-defunct New Century Mortgage Corp., a one-time major play er in subprime lending. A s Morgan Stanley ramped up its mortgage-backed securities business starting in 2004, it became New Century ’s largest buy er of subprime loans.
Morgan Stanley prov ided funds to New Century to originate the loans, and dictated the terms of the loans it wanted and ultimately purchased for its securitized pools. It pushed New Century to issue certain ty pes of loans with no concern about risk, because it made its profit at the outset, when the securities were created and sold. Because minority residents of the Detroit region hav e been subjected to decades of housing and lending discrimination, and had fewer alternativ e sources of credit, they were natural targets for these predatory loans.

“Morgan Stanley activ ely encouraged the proliferation of irresponsible subprime mortgage loans, the complaint charges, in order to feed its hunger for purchasing, pooling, and securitizing mortgage debt for sale to inv estors,” said Elizabeth J. Cabraser, a partner at Lieff Cabraser Heimann & Bernstein, and cocounsel for the plaintiffs. “The targeting of communities of color for loans that unfairly raises the risk of default and foreclosure is the quintessential ‘rev erse-redlining’ outlawed by the Federal Fair Housing A ct.”
First enacted in 1 968, the Fair Housing Act prohibits discrimination in housing transactions, including unfair lending practices. The lawsuit also alleges v iolations of the Equal Credit Opportunity Act, which bans discrimination for credit transactions, including consumer loans such as mortgages.
“Congress enacted these civ il rights statutes to require that banks like Morgan Stanley are responsible for ensuring that their policies and practices do not perpetuate historical patterns of discrimination and banks hav e the duty to prov ide a lev el play ing field for all consumers,” noted Stuart Rossman, director of litigation at the National Consumer Law Center. “Ultimately , economic justice is a civ il right in our country . This landmark case brought on behalf of African-American homeowners asserts their rights under those laws and seeks to protect the greater Detroit community from continuing to be burdened because of past acts and patterns of discrimination.”
Among those affected is Rubbie McCoy , who said her mortgage broker falsified information on her loan application ev en though she objected. The broker also omitted critical details, including the fact that after two y ears, New Century would no longer pay the tax es or insurance on her loan. Those added costs hav e prev ented her from making a pay ment since 201 1 .
“I’v e seen firsthand the dev astation banks like Morgan Stanley hav e caused in communities like mine. When I first mov ed into my home, I knew ev ery neighbor and most of the homes were occupied. Today , the majority of homes stand abandoned and stripped,” McCoy said. “I don’t like to say that I am losing my home, instead I tell my family that I’m fighting for my home. The truth is I’m afraid that today will be the day a sheriff kicks us out. No one should liv e with this fear.”
To see the complaint, go to: www.aclu.org/racial-justice/adkins-et-al-v s-morgan-stanley -0
Published on A merican Civil Liberties Union (http://www.aclu.org) Source URL: http://www.aclu.org/racial-justice/morgan-stanley -sued-racial-discrimination-pushingpredatory -loans-black-homeowners

 
 Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 1 of 44
CLOSED,CASREF,COMPLEX−CSMGMT,ECF
U.S. District Court Southern District of New York (Foley Square) CIVIL DOCKET FOR CASE #: 1:12−cv−07667−VEC−GWG

Adkins et al v. Morgan Stanley et al Assigned to: Judge Valerie E. Caproni Referred to: Magistrate Judge Gabriel W. Gorenstein Cause: 28:1331 Fed. Question
Plaintiff

Date Filed: 10/15/2012 Date Terminated: 07/19/2017 Jury Demand: Plaintiff Nature of Suit: 443 Civil Rights: Accommodations Jurisdiction: Federal Question

Beverly Adkins on behalf of herself and all others similarly situated TERMINATED: 07/19/2017

represented by Michael W. Sobol Lieff Cabraser Heimann & Bernstein, LLP 275 Battery Street, 29th Floor San Francisco, CA 94111 (415)−956−1000 Fax: (415)−956−1008 LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Rachel Geman Lieff Cabraser Heimann & Bernstein, LLP 250 Hudson Street 8th Floor New York, NY 10013−1413 (212) 355−9500 Fax: (212)−355−9592 Email: rgeman@lchb.com LEAD ATTORNEY ATTORNEY TO BE NOTICED

Brooke A. Merriweather−Tucker American Civil Liberties Union Fund of Michigan 2966 Woodward Avenue Detroit, MI 48201 (313)−578−6823 Fax: (313)−578−6811 Email: btucker@aclumich.org TERMINATED: 06/08/2016 PRO HAC VICE

Dennis David Parker New York State Department of Law (EPB) Environmental Protection Bureau The Capitol Albany, NY 12224 212−416−8240 Fax: (212)−416−8074 Email: dparker@aclu.org ATTORNEY TO BE NOTICED

Elizabeth J. Cabraser Lieff, Cabraser, Heimann & Bernstein, L.L.P. 275 Battery Street Embarcadero Center W. San Francisco, CA 94111 (415) 956−1000 Fax: (415)−956−1008

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 2 of 44
PRO HAC VICE ATTORNEY TO BE NOTICED
Laurence Michael Schwartztol American Civil Liberties Union Foundation (NYC) 125 Broad Street 18th Floor New York, NY 10004 (212) 519−7849 Fax: (212) 549−2680 Email: lschwartztol@aclu.org TERMINATED: 06/02/2015
Michael J. Steinberg American Civil Liberties Union Fund of Michigan 2966 Woodward Avenue Detroit, MI 48201 (313) 578−6814 Fax: (313) 578−6811 Email: msteinberg@aclumich.org PRO HAC VICE ATTORNEY TO BE NOTICED
Nicole Diane Sugnet Lieff Cabraser Heimann & Bernstein, LLP 275 Battery Street, 29th Floor San Francisco, CA 94111 415−956−1000 Fax: 415−956−1008 Email: nsugnet@lchb.com TERMINATED: 02/14/2017
Peter W. Beauchamp American Civil Liberties Union 125 Broad Street New York, NY 10004 (212)−549−2690 Email: pbeauchamp@aclu.org TERMINATED: 09/25/2014
Rachel Elizabeth Goodman American Civil Liberties Union Foundation (NYC) 125 Broad Street 18th Floor New York, NY 10004 (212)−549−2663 Fax: (212)−549−2651 Email: rgoodman@aclu.org ATTORNEY TO BE NOTICED
Sarah Mehta American Civil Liberties Union Fund of Michigan 2966 Woodward Avenue Detroit, MI 48201 (313) 578−6823 Fax: (313) 578−6811 Email: smehta@aclumich.org TERMINATED: 05/03/2013 PRO HAC VICE ATTORNEY TO BE NOTICED

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 3 of 44

Stuart T. Rossman National Consumer Law Center 18 Tremont Street Boston, MA 02108 (617) 523−8010 Fax: (617) 542−8028 Email: srossman@nclc.org PRO HAC VICE ATTORNEY TO BE NOTICED

Plaintiff
Charmaine Williams on behalf of herself and all others similarly situated TERMINATED: 07/19/2017

represented by Michael W. Sobol (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Rachel Geman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Brooke A. Merriweather−Tucker (See above for address) TERMINATED: 06/08/2016 PRO HAC VICE

Dennis David Parker (See above for address) ATTORNEY TO BE NOTICED

Elizabeth J. Cabraser (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Laurence Michael Schwartztol (See above for address) TERMINATED: 06/02/2015

Michael J. Steinberg (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Nicole Diane Sugnet (See above for address) TERMINATED: 02/14/2017

Peter W. Beauchamp (See above for address) TERMINATED: 09/25/2014

Rachel Elizabeth Goodman (See above for address) ATTORNEY TO BE NOTICED

Sarah Mehta (See above for address) TERMINATED: 05/03/2013 PRO HAC VICE ATTORNEY TO BE NOTICED

Stuart T. Rossman

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 4 of 44

(See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Plaintiff
Rebecca Pettway on behalf of herself and all others similarly situated TERMINATED: 07/19/2017

represented by Michael W. Sobol (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Rachel Geman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Brooke A. Merriweather−Tucker (See above for address) TERMINATED: 06/08/2016 PRO HAC VICE

Dennis David Parker (See above for address) ATTORNEY TO BE NOTICED

Elizabeth J. Cabraser (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Laurence Michael Schwartztol (See above for address) TERMINATED: 06/02/2015

Michael J. Steinberg (See above for address) ATTORNEY TO BE NOTICED

Nicole Diane Sugnet (See above for address) TERMINATED: 02/14/2017

Peter W. Beauchamp (See above for address) TERMINATED: 09/25/2014

Rachel Elizabeth Goodman (See above for address) ATTORNEY TO BE NOTICED

Sarah Mehta (See above for address) TERMINATED: 05/03/2013 PRO HAC VICE ATTORNEY TO BE NOTICED

Stuart T. Rossman (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Plaintiff
Rubbie McCoy on behalf of herself and all others

represented by Michael W. Sobol (See above for address)

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 5 of 44

similarly situated TERMINATED: 07/19/2017

LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Rachel Geman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Brooke A. Merriweather−Tucker (See above for address) TERMINATED: 06/08/2016 PRO HAC VICE

Dennis David Parker (See above for address) ATTORNEY TO BE NOTICED

Elizabeth J. Cabraser (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Laurence Michael Schwartztol (See above for address) TERMINATED: 06/02/2015

Michael J. Steinberg (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Nicole Diane Sugnet (See above for address) TERMINATED: 02/14/2017

Peter W. Beauchamp (See above for address) TERMINATED: 09/25/2014

Rachel Elizabeth Goodman (See above for address) ATTORNEY TO BE NOTICED

Sarah Mehta (See above for address) TERMINATED: 05/03/2013 PRO HAC VICE ATTORNEY TO BE NOTICED

Stuart T. Rossman (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Plaintiff
William Young on behalf of himself and all others similarly situated TERMINATED: 07/19/2017

represented by Michael W. Sobol (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Rachel Geman (See above for address)

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 6 of 44

LEAD ATTORNEY ATTORNEY TO BE NOTICED

Brooke A. Merriweather−Tucker (See above for address) TERMINATED: 06/08/2016 PRO HAC VICE

Dennis David Parker (See above for address) ATTORNEY TO BE NOTICED

Elizabeth J. Cabraser (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Laurence Michael Schwartztol (See above for address) TERMINATED: 06/02/2015

Michael J. Steinberg (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Nicole Diane Sugnet (See above for address) TERMINATED: 02/14/2017

Peter W. Beauchamp (See above for address) TERMINATED: 09/25/2014

Rachel Elizabeth Goodman (See above for address) ATTORNEY TO BE NOTICED

Sarah Mehta (See above for address) TERMINATED: 05/03/2013 PRO HAC VICE ATTORNEY TO BE NOTICED

Stuart T. Rossman (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Plaintiff
Michigan Legal Services TERMINATED: 09/26/2016

represented by Michael W. Sobol (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Rachel Geman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Brooke A. Merriweather−Tucker (See above for address) TERMINATED: 06/08/2016

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 7 of 44
PRO HAC VICE
Dennis David Parker (See above for address) ATTORNEY TO BE NOTICED
Elizabeth J. Cabraser (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED
Laurence Michael Schwartztol (See above for address) TERMINATED: 06/02/2015
Michael J. Steinberg (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED
Nicole Diane Sugnet (See above for address) TERMINATED: 02/14/2017
Peter W. Beauchamp (See above for address) TERMINATED: 09/25/2014
Rachel Elizabeth Goodman (See above for address) ATTORNEY TO BE NOTICED
Sarah Mehta (See above for address) TERMINATED: 05/03/2013 PRO HAC VICE ATTORNEY TO BE NOTICED
Stuart T. Rossman (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

V. Defendant Morgan Stanley

represented by Brian M. Boynton Wilmer Cutler Pickering Hale and Door LLP 1875 Pennsylvania Avenue, Nw Washington, DC 20006 (202)−663−6044 Fax: (202)−663−6363 Email: brian.boynton@wilmerhale.com TERMINATED: 09/23/2014 PRO HAC VICE
Colin Reardon Wilmerhale 7 World Trade Center New York, NY 10007 (212)−295−6406 Fax: (212)−230−8888 Email: colin.reardon@wilmerhale.com

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 8 of 44
TERMINATED: 12/29/2016
Danielle Conley Wilmer Cutler Pickering Hale and Dorr LLP 1875 Pennsylvania Avenue, Nw Washington, DC 20006 (202)−663−6006 Fax: (202)−663−6363 Email: danielle.conley@wilmerhale.com TERMINATED: 05/28/2015 PRO HAC VICE
David William Ogden Wilmer Cutler Pickering Hale and Door LLP 1875 Pennsylvania Avenue, Nw Washington, DC 20006 (202)−663−6440 Fax: (202)−663−6363 Email: david.ogden@wilmerhale.com PRO HAC VICE ATTORNEY TO BE NOTICED
Emily Stark Wilmer Cutler Pickering Hale & Dorr L.L.P. (DC) 1801 Pennsylvania Avenue, NW Washington, DC 20006 (202)−663−6237 Email: emily.stark@wilmerhale.com PRO HAC VICE ATTORNEY TO BE NOTICED
Jonathan Adam Bressler Wilmer Cutler Pickering Hale and Dorr LLP 1875 Pennsylvania Avenue, Nw Washington, DC 20006 (202) 663−6008 Fax: (202) 663−6363 Email: jonathan.bressler@wilmerhale.com PRO HAC VICE ATTORNEY TO BE NOTICED
Noah Adam Levine Wilmer Cutler Pickering Hale and Dorr LLP (NYC) 7 World Trade Center 250 Greenwich St. New York, NY 10007 (212)−230−8875 Fax: (212)−230−8888 Email: noah.levine@wilmerhale.com ATTORNEY TO BE NOTICED
Skye Perryman Wilmer Cutler Pickering Hale & Dorr L.L.P. (DC) 1801 Pennsylvania Avenue, NW Washington, DC 20006 (202)−663−6031 Fax: (202) 663−6363 Email: skye.perryman@wilmerhale.com TERMINATED: 07/14/2017

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 9 of 44

Defendant Morgan Stanley & Co. LLC
Defendant Morgan Stanley Abs Capital I Inc.

represented by Brian M. Boynton (See above for address) TERMINATED: 09/23/2014 PRO HAC VICE
Colin Reardon (See above for address) TERMINATED: 12/29/2016
Danielle Conley (See above for address) TERMINATED: 05/28/2015 PRO HAC VICE
David William Ogden (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED
Emily Stark (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED
Jonathan Adam Bressler (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED
Noah Adam Levine (See above for address) ATTORNEY TO BE NOTICED
Skye Perryman (See above for address) TERMINATED: 07/14/2017
represented by Brian M. Boynton (See above for address) TERMINATED: 09/23/2014 PRO HAC VICE
Colin Reardon (See above for address) TERMINATED: 12/29/2016
Danielle Conley (See above for address) TERMINATED: 05/28/2015 PRO HAC VICE
David William Ogden (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED
Emily Stark (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 10 of 44

Jonathan Adam Bressler (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Noah Adam Levine (See above for address) ATTORNEY TO BE NOTICED

Skye Perryman (See above for address) TERMINATED: 07/14/2017

Defendant Morgan Stanley Mortgage Capital Inc.

represented by Brian M. Boynton (See above for address) TERMINATED: 09/23/2014 PRO HAC VICE

Colin Reardon (See above for address) TERMINATED: 12/29/2016

Danielle Conley (See above for address) TERMINATED: 05/28/2015 PRO HAC VICE

David William Ogden (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Emily Stark (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Jonathan Adam Bressler (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Noah Adam Levine (See above for address) ATTORNEY TO BE NOTICED

Skye Perryman (See above for address) TERMINATED: 07/14/2017

Defendant
Morgan Stanley Mortgage Capital Holdings LLC

represented by Brian M. Boynton (See above for address) TERMINATED: 09/23/2014 PRO HAC VICE

Colin Reardon (See above for address) TERMINATED: 12/29/2016

Danielle Conley (See above for address) TERMINATED: 05/28/2015

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 11 of 44
PRO HAC VICE
David William Ogden (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED
Emily Stark (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED
Jonathan Adam Bressler (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED
Noah Adam Levine (See above for address) ATTORNEY TO BE NOTICED
Skye Perryman (See above for address) TERMINATED: 07/14/2017
Interested Party
c/o AMJ Advisors The New Century Liquidating Trust and Reorganized New Century Warehouse Corporation The New Century Liquidating Trust and Reorganized New Century Warehouse Corporation

Date Filed 10/15/2012
10/15/2012
10/15/2012 10/15/2012 10/15/2012

# Docket Text
1 COMPLAINT against Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc. (Filing Fee $ 350.00, Receipt Number 1050796)Document filed by Rubbie McCoy, William Young, Michigan Legal Services, Beverly Adkins, Charmaine Williams, Rebecca Pettway.(mro) (Entered: 10/16/2012)
SUMMONS ISSUED as to Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc. (mro) (Entered: 10/16/2012)
Magistrate Judge Gabriel W. Gorenstein is so designated. (mro) (Entered: 10/16/2012)
Case Designated ECF. (mro) (Entered: 10/16/2012)
2 STANDING ORDER IN RE PILOT PROJECT REGARDING CASE MANAGEMENT TECHNIQUES FOR COMPLEX CIVIL CASES IN THE SOUTHERN DISTRICT OF NEW YORK (See M−10−468 Order filed November 1, 2011). This case is hereby designated for inclusion in the Pilot Project Regarding Case Management Techniques for Complex Civil Cases in the Southern District of New York (the Pilot Project), unless the judge to whom this case is assigned determines otherwise. This case is designated for inclusion in the Pilot Project because it is a class action, an MDL action, or is in one of the following Nature of Suit categories: 160, 245, 315, 355, 365, 385, 410, 830, 840, 850, 893, or 950. The presiding judge in a case that does not otherwise qualify for inclusion in the Pilot Project may nevertheless designate the case for inclusion in the Pilot Project by issuing an order directing that the case be included in the Pilot Project. The description of the Pilot Project, including procedures to be followed, is attached to this Order. (Signed by Judge Loretta A. Preska on 10/31/2011) (mro) (Entered: 10/16/2012)

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 12 of 44

10/16/2012 10/17/2012 10/17/2012 10/17/2012 10/17/2012 10/17/2012 10/17/2012 10/17/2012 10/17/2012 10/17/2012 10/17/2012 10/17/2012

3 NOTICE OF APPEARANCE by Rachel Geman on behalf of Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young (Geman, Rachel) (Entered: 10/16/2012)
4 AFFIDAVIT OF SERVICE. Morgan Stanley served on 10/15/2012, answer due 11/5/2012. Service was accepted by Mara Velasco − CT Corporation Systems. Document filed by Rubbie McCoy; William Young; Michigan Legal Services; Beverly Adkins; Charmaine Williams; Rebecca Pettway. (Schwartztol, Laurence) (Entered: 10/17/2012)
5 AFFIDAVIT OF SERVICE. Morgan Stanley Abs Capital I Inc. served on 10/15/2012, answer due 11/5/2012. Service was accepted by Mara Velasco − CT Corporation Systems. Document filed by Rubbie McCoy; William Young; Michigan Legal Services; Beverly Adkins; Charmaine Williams; Rebecca Pettway. (Schwartztol, Laurence) (Entered: 10/17/2012)
6 AFFIDAVIT OF SERVICE. Morgan Stanley Mortgage Capital Holdings LLC served on 10/15/2012, answer due 11/5/2012. Service was accepted by Mara Velasco − CT Corporation Systems. Document filed by Rubbie McCoy; William Young; Michigan Legal Services; Beverly Adkins; Charmaine Williams; Rebecca Pettway. (Schwartztol, Laurence) (Entered: 10/17/2012)
7 AFFIDAVIT OF SERVICE. Morgan Stanley & Co. LLC served on 10/15/2012, answer due 11/5/2012. Service was accepted by Mara Velasco − CT Corporation Systems. Document filed by Rubbie McCoy; William Young; Michigan Legal Services; Beverly Adkins; Charmaine Williams; Rebecca Pettway. (Schwartztol, Laurence) (Entered: 10/17/2012)
8 MOTION for Michael Jay Steinberg to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−7913628. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit Certificate of Good Standing, # 2 Text of Proposed Order)(Steinberg, Michael) (Entered: 10/17/2012)
>>>NOTICE REGARDING PRO HAC VICE MOTION. Regarding Document No. 8 MOTION for Michael Jay Steinberg to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−7913628. Motion and supporting papers to be reviewed by Clerk's Office staff.. The document has been reviewed and there are no deficiencies. (pgu) (Entered: 10/17/2012)
9 MOTION for Sarah Lila Mehta to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−7913966. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit, # 2 Text of Proposed Order)(Mehta, Sarah) (Entered: 10/17/2012)
>>>NOTICE REGARDING PRO HAC VICE MOTION. Regarding Document No. 9 MOTION for Sarah Lila Mehta to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−7913966. Motion and supporting papers to be reviewed by Clerk's Office staff.. The document has been reviewed and there are no deficiencies. (pgu) (Entered: 10/17/2012)
10 FILING ERROR − DEFICIENT DOCKET ENTRY − MOTION for Stuart T. Rossman to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−7914816. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young.(Rossman, Stuart) Modified on 10/18/2012 (pgu). (Entered: 10/17/2012)
11 AFFIDAVIT of Stuart Rossman in Support re: 10 MOTION for Stuart T. Rossman to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−7914816. Motion and supporting papers to be reviewed by Clerk's Office staff.. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Rossman, Stuart) (Entered: 10/17/2012)
12 AFFIRMATION of Maura Doyle, Clerk MA SJC in Support re: 10 MOTION for Stuart T. Rossman to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 13 of 44

10/18/2012
10/18/2012 10/18/2012 10/18/2012 10/19/2012 10/22/2012 10/22/2012 10/22/2012 10/22/2012 10/22/2012

0208−7914816. Motion and supporting papers to be reviewed by Clerk's Office staff.. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Rossman, Stuart) (Entered: 10/17/2012)
>>>NOTICE REGARDING DEFICIENT MOTION TO APPEAR PRO HAC VICE. Notice regarding Document No. 10 MOTION for Stuart T. Rossman to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−7914816. Motion and supporting papers to be reviewed by Clerk's Office staff.. The filing is deficient for the following reason(s): Missing Certificate of Good Standing.Missing Proposed Order. Re−file the document as a Corrected Motion to Appear Pro Hac Vice and attach a valid Certificate of Good Standing, issued within the past 30 days.Re−file the document as a Corrected Motion to Appear Pro Hac Vice and attach a Proposed Order. (pgu) (Entered: 10/18/2012)
13 AMENDED MOTION for Stuart T. Rossman to Appear Pro Hac Vice. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit MA SJC Certificate of Good Standing, # 2 Exhibit Proposed Form of Order)(Rossman, Stuart) (Entered: 10/18/2012)
>>>NOTICE REGARDING PRO HAC VICE MOTION. Regarding Document No. 13 AMENDED MOTION for Stuart T. Rossman to Appear Pro Hac Vice. Motion and supporting papers to be reviewed by Clerk's Office staff.. The document has been reviewed and there are no deficiencies. (bwa) (Entered: 10/18/2012)
14 MOTION for Michael W. Sobol to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−7919613. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Certificate of Good Standing, # 2 Proposed Order)(Sobol, Michael) (Entered: 10/18/2012)
>>>NOTICE REGARDING PRO HAC VICE MOTION. Regarding Document No. 14 MOTION for Michael W. Sobol to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−7919613. Motion and supporting papers to be reviewed by Clerk's Office staff.. The document has been reviewed and there are no deficiencies. (bcu) (Entered: 10/19/2012)
15 ORDER FOR ADMISSION PRO HAC VICE OF MICHAEL W. SOBOL granting 14 Motion for Michael W. Sobol to Appear Pro Hac Vice. Endorsement: Application for Pro Hac Vice GRANTED. The Clerk is instructed to close this motion. (Signed by Judge Harold Baer on 10/22/2012) (ja) (Entered: 10/22/2012)
16 ORDER FOR ADMISSION PRO HAC VICE granting 8 Motion for Michael J. Steinberg, to Appear Pro Hac Vice. Endorsement: Application for Pro Hac Vice GRANTED. The Clerk is instructed to close this motion. (Signed by Judge Harold Baer on 10/22/2012) (ja) (Entered: 10/22/2012)
17 ORDER FOR ADMISSION PRO HAC VICE OF STUART ROSSMAN granting 13 Motion for Stuart T. Rossman, to Appear Pro Hac Vice. Endorsement: Application for Pro Hac Vice GRANTED. The Clerk is instructed to close this motion. (Signed by Judge Harold Baer on 10/22/2012) (ja) (Entered: 10/22/2012)
18 MOTION for Elizabeth J. Cabraser to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−7927957. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Certificate of Good Standing, # 2 [Proposed] Order for Admission Pro Hac Vice of Elizabeth J. Cabraser)(Cabraser, Elizabeth) (Entered: 10/22/2012)
>>>NOTICE REGARDING PRO HAC VICE MOTION. Regarding Document No. 18 MOTION for Elizabeth J. Cabraser to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−7927957. Motion and supporting papers to be reviewed by Clerk's Office staff.. The document has been reviewed and there are

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 14 of 44

10/25/2012 10/26/2012 11/05/2012 11/05/2012 11/06/2012 11/06/2012
11/07/2012
11/08/2012 11/08/2012 11/08/2012

no deficiencies. (bwa) (Entered: 10/23/2012)
19 ORDER FOR ADMISSION PRO HAC VICE granting 9 Motion for Sarah Lila Mehta to Appear Pro Hac Vice. Application for Pro Hac Vice GRANTED. The Clerk is instructed to close this motion. (Signed by Judge Harold Baer on 10/24/2012) (lmb) (Entered: 10/25/2012)
20 ORDER FOR ADMISSION PRO HAC VICE OF ELIZABETH J. CABRASER granting 18 Motion for Elizabeth J. Cabraser to Appear Pro Hac Vice. Application for Pro Hac Vice GRANTED. The Clerk is instructed to close this motion. (Signed by Judge Harold Baer on 10/26/2012) (cd) (Entered: 10/26/2012)
21 Letter addressed to Ms. Geman from Linda Eckhouse, Judicial Assistant to the Honorable Harold Baer, Jr dated 10/26/12 re: There will be a Pre−Trial Conference on the above case at 2:45 PM on Thursday, December 13, 2012, in Chambers Room 2230. It is your responsibility to notify your adversary(ies) of the date and time of the Pre−Trial Conference with a copy to us and to forward to your adversary(ies) a copy of Judge Baer's individual rules. (mro) (tp). (Entered: 11/05/2012)
Set/Reset Hearings: Pretrial Conference set for 12/13/2012 at 02:45 PM before Judge Harold Baer. (mro) (Entered: 11/05/2012)
22 NOTICE OF APPEARANCE by Noah Adam Levine on behalf of Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc. (Levine, Noah) (Entered: 11/06/2012)
23 RULE 7.1 CORPORATE DISCLOSURE STATEMENT. Identifying Other Affiliate Morgan Stanley for Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC; Other Affiliate Chiyoda−ku, Other Affiliate 7−1 Marunouchi 2−chome, Other Affiliate Tokyo 100−8330, Other Affiliate Mistubishi UFJ Financial Group, Inc. for Morgan Stanley; Other Affiliate Morgan Stanley Mortgage Capital Holdings LLC for Morgan Stanley Mortgage Capital Inc.; Other Affiliate Morgan Stanley Domestic Holdings, Inc. for Morgan Stanley & Co. LLC. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Levine, Noah) (Entered: 11/06/2012)
24 STIPULATION AND ORDER EXTENDING TIME FOR DEFENDANTS TO RESPOND TO COMPLAINT: NOW, therefore the Parties listed below. by their undersigned attorneys. hereby stipulate and agree that, subject to the approval of the Court. 1. Defendants' time to answer, move, or otherwise respond to the Complaint in the above action shall be extended through and including December 21, 2012. 2. Plaintiffs time to oppose or otherwise respond to Defendants' response shall be extended through and including January 20, 2013. 3. Defendants time to file a reply shall be extended through and including February 10, 2013. ENDORSEMENT: I trust all the listed attorneys are admitted here or will be shortly −I never sign blank signature pages −for future reference. (Signed by Judge Harold Baer on 11/7/2012) (js) (Entered: 11/07/2012)
25 MOTION for Brian Matthew Boynton to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−7962051. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit CA Certificate of Good Standing, # 2 Exhibit DC Certificate of Good Standing, # 3 Text of Proposed Order)(Boynton, Brian) (Entered: 11/08/2012)
26 MOTION for David William Ogden to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−7962340. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit DC Certificate of Good Standing, # 2 Text of Proposed Order)(Ogden, David) (Entered: 11/08/2012)
>>>NOTICE REGARDING PRO HAC VICE MOTION. Regarding Document No. 25 MOTION for Brian Matthew Boynton to Appear Pro Hac Vice. Filing fee

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 15 of 44

11/15/2012 11/15/2012 11/15/2012 12/06/2012 12/10/2012
12/10/2012
12/11/2012 12/12/2012
12/13/2012 12/13/2012 12/18/2012

$ 200.00, receipt number 0208−7962051. Motion and supporting papers to be reviewed by Clerk's Office staff., 26 MOTION for David William Ogden to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−7962340. Motion and supporting papers to be reviewed by Clerk's Office staff.. The document has been reviewed and there are no deficiencies. (bcu) (Entered: 11/08/2012)
27 NOTICE OF APPEARANCE by Rachel Elizabeth Goodman on behalf of Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young (Goodman, Rachel) (Entered: 11/15/2012)
28 ORDER FOR ADMISSION PRO HAC VICE granting 26 Motion for David W. Ogden to Appear Pro Hac Vice. Application for Pro Hac Vice GRANTED. The Clerk is instructed to close this motion. (Signed by Judge Harold Baer on 11/14/2012) (djc) Modified on 11/15/2012 (djc). (Entered: 11/15/2012)
29 ORDER FOR ADMISSION PRO HAC VICE granting 25 Motion for Brian M. Boynton to Appear Pro Hac Vice. Application for Pro Hac Vice GRANTED. The Clerk is instructed to close this motion. (Signed by Judge Harold Baer on 11/14/2012) (djc) Modified on 11/15/2012 (djc). (Entered: 11/15/2012)
30 INITIAL REPORT OF PARTIES BEFORE PRETRIAL CONFERENCE. Joint Initial Report and Proposed Pretrial Scheduling Order Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young.(Geman, Rachel) (Entered: 12/06/2012)
31 FILING ERROR − DEFICIENT DOCKET ENTRY − MOTION for Danielle Yvette Conley to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−8048982. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Text of Proposed Order, # 2 Exhibit DC Certificate of Good Standing, # 3 Exhibit NY Certificate of Good Standing)(Conley, Danielle) Modified on 12/10/2012 (bcu). (Entered: 12/10/2012)
>>>NOTICE REGARDING DEFICIENT MOTION TO APPEAR PRO HAC VICE. Notice regarding Document No. 31 MOTION for Danielle Yvette Conley to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−8048982. Motion and supporting papers to be reviewed by Clerk's Office staff.. The filing is deficient for the following reason(s): Expired Certificate of Good Standing. Re−file the document as a Corrected Motion to Appear Pro Hac Vice and attach a valid Certificate of Good Standing, issued within the past 30 days. (bcu) (Entered: 12/10/2012)
32 NOTICE OF APPEARANCE by Colin Reardon on behalf of Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc. (Reardon, Colin) (Entered: 12/11/2012)
33 MOTION for Danielle Yvette Conley to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−8057645. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Text of Proposed Order, # 2 Exhibit Certificate of Good Standing: DC, # 3 Exhibit Certificate of Good Standing: NY)(Conley, Danielle) (Entered: 12/12/2012)
>>>NOTICE REGARDING PRO HAC VICE MOTION. Regarding Document No. 33 MOTION for Danielle Yvette Conley to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−8057645. Motion and supporting papers to be reviewed by Clerk's Office staff.. The document has been reviewed and there are no deficiencies. (bcu) (Entered: 12/13/2012)
Minute Entry for proceedings held before Judge Harold Baer: Initial Pretrial Conference held on 12/13/2012. (rjm) (Entered: 12/17/2012)
34 ORDER FOR ADMISSION PRO HAC VICE granting 33 Motion for Danielle Yvette Conley to Appear Pro Hac Vice for all purposes as counsel for Defendants in the

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 16 of 44

12/18/2012
12/18/2012 12/21/2012 12/21/2012 01/03/2013 01/03/2013 01/03/2013 01/04/2013 01/08/2013 01/25/2013

above entitled action in the United States District Court for the Southern District of New York. Additional relief as set forth in this Order. Application for Pro Hac Vice GRANTED. The Clerk is instructed to close this motion. (Signed by Judge Harold Baer on 12/18/2012) (pl) (Entered: 12/18/2012)
35 JOINT PROPOSED ORDER REGARDING PROTOCOL FOR ELECTRONICALLY STORED INFORMATION AND OTHER DISCOVERY: This Joint Proposed Order Regarding Protocol for Electronically Stored Information and Other Discovery shall be the governing document(s) by which the parties and the Court manage the discovery process in this action. The parties and the Court recognize that this Proposed Order is based on facts and circumstances as they are currently known to each party, that the electronic discovery process is iterative, and that additions and modifications to this Proposed Order may become necessary as more information becomes known to the parties. The parties have agreed that the most efficient course is to proceed with only limited discovery between the parties and certain third−party discovery pending resolution of a motion to dismiss to be filed by Defendants on December 21, 2012. Additional relief as set forth in this Order. (Signed by Judge Harold Baer on 12/18/2012) (pl) (Entered: 12/18/2012)
Set/Reset Deadlines: Motions due by 12/21/2012. (pl) (Entered: 12/18/2012)
36 MOTION to Dismiss (Notice of Defendants' Motion to Dismiss). Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Levine, Noah) (Entered: 12/21/2012)
37 MEMORANDUM OF LAW in Support re: 36 MOTION to Dismiss (Notice of Defendants' Motion to Dismiss). MOTION to Dismiss (Notice of Defendants' Motion to Dismiss). (Memorandum in Support of Defendants' Motion to Dismiss). Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Appendix)(Levine, Noah) (Entered: 12/21/2012)
38 STIPULATED PROTECTIVE ORDER...regarding procedures to be followed that shall govern the handling of confidential material...; ENDORSEMENT: "Sealed" and "Confidential" documents may be opened upon notice to the parties pursuant to further order of the court. (Signed by Judge Harold Baer on 1/2/2013) (djc) (Entered: 01/03/2013)
39 MOTION for Jonathan Adam Bressler to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−8109226. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Text of Proposed Order, # 2 Exhibit Certificate of Good Standing: NY)(Bressler, Jonathan) (Entered: 01/03/2013)
>>>NOTICE REGARDING PRO HAC VICE MOTION. Regarding Document No. 39 MOTION for Jonathan Adam Bressler to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−8109226. Motion and supporting papers to be reviewed by Clerk's Office staff.. The document has been reviewed and there are no deficiencies. (bcu) (Entered: 01/03/2013)
40 STIPULATED PRETRIAL SCHEDULING ORDER. Plaintiffs' Opposition to the Motion to Dismiss (Responses) due by 1/25/2013 (30 pages). Defendant's Reply in Support of the Motion to Dismiss due by 2/20/2013 (15 pages). Oral Argument on Motion to Dismiss set for 3/13/2013 at 10:30 AM before Judge Harold Baer, and as further set forth. (Signed by Judge Harold Baer on 1/3/2013) (rjm) (Entered: 01/04/2013)
41 ORDER FOR ADMISSION PRO HAC VICE granting 39 Motion for Jonathan A. Bressler to Appear Pro Hac Vice. ENDORSEMENT: Application for Pro Hac Vice GRANTED. The Clerk is instructed to close the motion. (Signed by Judge Harold Baer on 1/8/2013) (cd) (Entered: 01/08/2013)
42 MEMORANDUM OF LAW in Opposition re: 36 MOTION to Dismiss (Notice of Defendants' Motion to Dismiss). MOTION to Dismiss (Notice of Defendants' Motion to Dismiss).. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 17 of 44

02/20/2013 03/13/2013 03/25/2013 05/01/2013 05/03/2013 07/25/2013
08/05/2013 08/05/2013
08/06/2013 08/08/2013

Services, Rebecca Pettway, Charmaine Williams, William Young. (Schwartztol, Laurence) (Entered: 01/25/2013)
43 REPLY MEMORANDUM OF LAW in Support re: 36 MOTION to Dismiss (Notice of Defendants' Motion to Dismiss). MOTION to Dismiss (Notice of Defendants' Motion to Dismiss). (Reply Memorandum in Support of Defendants' Motion to Dismiss). Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Levine, Noah) (Entered: 02/20/2013)
Minute Entry for proceedings held before Judge Harold Baer: Oral Argument held begun & completed on 3/13/2013. Oral argument on Defts. motion to dismiss #36 − Decision reserved. (rjm) (Entered: 03/14/2013)
44 STIPULATED AMENDED PROTECTIVE ORDER: Regarding procedures to be followed that shall govern the handling of confidential material. ENDORSEMENT: "Sealed" and "Confidential" documents may be opened upon notice to the parties pursuant to further order of the court. SO ORDERED. (Signed by Judge Harold Baer on 3/25/2013) (ama) (Entered: 03/25/2013)
45 MOTION for Sarah L. Mehta to Withdraw as Attorney. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young.(Schwartztol, Laurence) (Entered: 05/01/2013)
46 ORDER granting 45 Motion to Withdraw as Attorney. Attorney Sarah Mehta terminated. (Signed by Judge Harold Baer on 5/03/2013) (ama) (Entered: 05/03/2013)
47 OPINION AND ORDER #103418: re: 36 MOTION to Dismiss (Notice of Defendants' Motion to Dismiss). MOTION to Dismiss (Notice of Defendants' Motion to Dismiss). filed by Morgan Stanley & Co. LLC, Morgan Stanley, Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Inc. For the foregoing reasons, Morgan Stanley's motion to dismiss is GRANTED as to Plaintiffs' ELCRA and ECOA claims. The motion is DENIED with respect to Plaintiffs' FHA claims. The Clerk of Court is directed to close this motion and remove it from my docket. SO ORDERED.(Signed by Judge Harold Baer on 7/25/2013) (ama) Modified on 7/26/2013 (sdi). (Entered: 07/25/2013)
48 MOTION to Stay (Notice of Defendants' Motion to Stay Proceedings Pending a Decision by the Supreme Court in Mount Holly or, in the Alternative, to Certify an Appeal Pursuant to 28 U.S.C. 1292(b).). Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Levine, Noah) (Entered: 08/05/2013)
49 MEMORANDUM OF LAW in Support re: 48 MOTION to Stay (Notice of Defendants' Motion to Stay Proceedings Pending a Decision by the Supreme Court in Mount Holly or, in the Alternative, to Certify an Appeal Pursuant to 28 U.S.C. 1292(b).). MOTION to Stay (Notice of Defendants' Motion to Stay Proceedings Pending a Decision by the Supreme Court in Mount Holly or, in the Alternative, to Certify an Appeal Pursuant to 28 U.S.C. 1292(b).). (Memorandum in Support of Defendants' Motion to Stay Proceedings Pending a Decision by the Supreme Court in Mount Holly or, in the Alternative, to Certify an Appeal Pursuant to 28 U.S.C. 1292(b).). Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A)(Levine, Noah) (Entered: 08/05/2013)
50 MOTION to Amend/Correct 40 Stipulation and Order, Set Deadlines, Set Hearings,,, Joint Motion for Adoption of Revised Scheduling Order. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc., Rebecca Pettway, Charmaine Williams, William Young.(Schwartztol, Laurence) (Entered: 08/06/2013)
51 ANSWER to 1 Complaint,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Ogden, David) (Entered:

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 18 of 44

08/14/2013 08/14/2013 08/21/2013 08/21/2013 08/21/2013
08/21/2013 08/22/2013
08/30/2013 09/03/2013

08/08/2013)
52 TRANSCRIPT of Proceedings re: ARGUMENT held on 3/13/2013 before Judge Harold Baer. Court Reporter/Transcriber: Corinne Blair, (212) 805−0300. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 9/9/2013. Redacted Transcript Deadline set for 9/19/2013. Release of Transcript Restriction set for 11/15/2013.(McGuirk, Kelly) (Entered: 08/14/2013)
53 NOTICE OF FILING OF OFFICIAL TRANSCRIPT Notice is hereby given that an official transcript of a ARGUMENT proceeding held on 3/13/13 has been filed by the court reporter/transcriber in the above−captioned matter. The parties have seven (7) calendar days to file with the court a Notice of Intent to Request Redaction of this transcript. If no such Notice is filed, the transcript may be made remotely electronically available to the public without redaction after 90 calendar days...(McGuirk, Kelly) (Entered: 08/14/2013)
54 JOINT MOTION FOR ADOPTION OF REVISED SCHEDULING ORDER: Pursuant to Federal Rule of Civil Procedure 16(b)(4), the Parties respectfully request that the Court amend the Pretrial Scheduling Order entered on January 4, 2013, in order to correct a drafting error and to reallocate time within the existing discovery period. 1 The grounds for this motion are set forth below: See Order. SO ORDERED (Signed by Judge Harold Baer on 8/21/2013) (rdz) (Entered: 08/21/2013)
Set/Reset Deadlines: Amended Pleadings due by 10/23/2013. Joinder of Parties due by 8/26/2013. (rdz) (Entered: 08/21/2013)
55 STIPULATION AND ORDER FOR ADOPTION OF REVISED PROTOCOL FOR ELECTRONICALLY STORED INFORMATION AND OTHER DISCOVERY: IT IS HEREBY STIPULATED AND AGREED by the Parties, and it is ORDERED by the Court that: 1. The deadline to comply with ESI Protocol § 2.c.ii, requiring exchange of lists of keyword search terms and hosting platforms, shall be extended until August 16, 2013; 2. The Parties shall comply with ESI Protocol § 2.c.iii, which requires the exchange any edits and/or additions to the proposed lists of search terms, by August 21, 2013; and 3. The Parties shall hold a meet−and−confer, as contemplated in ESI Protocol § 2.c.iv, on August 23, 2013. (Signed by Judge Harold Baer on 8/20/2013) (rdz) Modified on 8/23/2013 (rdz). (Entered: 08/21/2013)
Set/Reset Deadlines: Motions due by 3/25/2014. Responses due by 6/9/2014 Replies due by 7/24/2014. (rdz) (Entered: 08/23/2013)
56 MEMORANDUM OF LAW in Opposition re: 48 MOTION to Stay (Notice of Defendants' Motion to Stay Proceedings Pending a Decision by the Supreme Court in Mount Holly or, in the Alternative, to Certify an Appeal Pursuant to 28 U.S.C. 1292(b).). MOTION to Stay (Notice of Defendants' Motion to Stay Proceedings Pending a Decision by the Supreme Court in Mount Holly or, in the Alternative, to Certify an Appeal Pursuant to 28 U.S.C. 1292(b).).. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit)(Goodman, Rachel) (Entered: 08/22/2013)
57 FILING ERROR − ELECTRONIC FILING OF NON−ECF DOCUMENT − NOTICE of Plaintiffs' Notice of Supplemental Authority Relevant to Plaintiffs' Opposition to Defendants' Motion to Stay re: 56 Memorandum of Law in Opposition to Motion,,. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit)(Schwartztol, Laurence) Modified on 9/4/2013 (db). (Entered: 08/30/2013)
58 REPLY MEMORANDUM OF LAW in Support re: 48 MOTION to Stay (Notice of Defendants' Motion to Stay Proceedings Pending a Decision by the Supreme Court in Mount Holly or, in the Alternative, to Certify an Appeal Pursuant to 28 U.S.C. 1292(b).). MOTION to Stay (Notice of Defendants' Motion to Stay Proceedings Pending a Decision by the Supreme Court in Mount Holly or, in the Alternative, to Certify an Appeal Pursuant to 28 U.S.C. 1292(b).).. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 19 of 44

10/15/2013 10/15/2013 10/16/2013 10/18/2013 10/23/2013 11/15/2013 11/18/2013 12/10/2013 12/13/2013
12/13/2013

(Attachments: # 1 Exhibit A, # 2 Exhibit B)(Levine, Noah) (Entered: 09/03/2013)
59 MOTION for Brooke A. Tucker to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−8973309. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Supplement Order, # 2 Supplement Certificate of Good Standing)(Merriweather−Tucker, Brooke) (Entered: 10/15/2013)
>>>NOTICE REGARDING PRO HAC VICE MOTION. Regarding Document No. 59 MOTION for Brooke A. Tucker to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−8973309. Motion and supporting papers to be reviewed by Clerk's Office staff.. The document has been reviewed and there are no deficiencies. (bcu) (Entered: 10/15/2013)
60 ORDER FOR ADMISSION PRO HAC VICE: granting 59 Motion for Brooke A. Tucker to Appear Pro Hac Vice. Application for Pro hac Vice GRANTED. The Clerk is instructed to close this motion. SO ORDERED.(Signed by Judge Harold Baer on 10/16/2013) (ama) (Entered: 10/16/2013)
61 LETTER addressed to Judge Harold Baer from David W. Ogden dated October 18, 2013 re: Updating the Court regarding developments relevant to Defendants' motion to stay these proceedings. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Ogden, David) (Entered: 10/18/2013)
62 LETTER addressed to Judge Harold Baer from Rachel Geman dated 10/23/2013 re: Response to Defendants' Letter dated October 18, 2013 (relating to Dkt. No. 61). Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit Doc. 23 Order Denying MTD)(Geman, Rachel) (Entered: 10/23/2013)
63 LETTER addressed to Judge Harold Baer from David W. Ogden dated November 15, 2013 re: Updating the Court regarding developments relevant to Defendants' motion to stay these proceedings.. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Ogden, David) (Entered: 11/15/2013)
64 LETTER addressed to Judge Harold Baer from Rachel E. Goodman dated November 18, 2013 re: Defendants' November 15 letter. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young.(Goodman, Rachel) (Entered: 11/18/2013)
65 LETTER addressed to Judge Harold Baer from Rachel E. Goodman dated December 10, 2013 re: Stipulation and Proposed Order for Adoption of Revised Scheduling Order. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit Stipulation and Proposed Order for Adoption of Revised Scheduling Order)(Goodman, Rachel) (Entered: 12/10/2013)
66 MEMO ENDORSEMENT on STIPULATION AND ORDER FOR ADOPTION OF REVISED SCHEDULING ORDER: ENDORSEMENT: Sorry but this is far far more time than necessary, try again and bring it to trial month by November or December of 2014. −otherwise or until a realistic PTSO is submitted and signed by me the current order you all signed is in effect. I will only be in Chambers through the end of the year so work fast. SO ORDERED. (Signed by Judge Harold Baer on 12/13/2013) (ama) Modified on 12/16/2013 (ama). (Entered: 12/13/2013)
67 MEMORANDUM ORDER denying 48 Motion to Stay. I have considered Defendants' remaining arguments and find them meritless. For the foregoing reasons, Defendants' motion for a certification of appeal is DENIED. The Clerk of Court is instructed to close this motion and remove it from my docket.(Signed by Judge Harold Baer on 12/13/2013) (ama) (Main Document 67 replaced on 12/16/2013) (ama). (Entered: 12/13/2013)

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 20 of 44

12/17/2013 12/17/2013 12/17/2013 12/20/2013 12/23/2013 12/26/2013
02/25/2014 02/25/2014 03/03/2014 03/13/2014

68 TRANSCRIPT of Proceedings re: ARGUMENT held on 3/13/2013 before Judge Harold Baer. Court Reporter/Transcriber: Corinne Blair, (212) 805−0300. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 1/10/2014. Redacted Transcript Deadline set for 1/21/2014. Release of Transcript Restriction set for 3/20/2014.(McGuirk, Kelly) (Entered: 12/17/2013)
69 NOTICE OF FILING OF OFFICIAL TRANSCRIPT Notice is hereby given that an official transcript of a ARGUMENT proceeding held on 3/13/13 has been filed by the court reporter/transcriber in the above−captioned matter. The parties have seven (7) calendar days to file with the court a Notice of Intent to Request Redaction of this transcript. If no such Notice is filed, the transcript may be made remotely electronically available to the public without redaction after 90 calendar days...(McGuirk, Kelly) (Entered: 12/17/2013)
70 LETTER addressed to Judge Harold Baer from Rachel E. Goodman and Noah A. Levine dated December 17, 2013 re: Parties request a status conference. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young.(Goodman, Rachel) (Entered: 12/17/2013)
Minute Entry for proceedings held before Judge Harold Baer: Telephone Conference held on 12/20/2013. (sc) (Entered: 12/23/2013)
71 LETTER addressed to Judge Harold Baer from Rachel E. Goodman dated December 23, 2013 re: Stipulation and Proposed Order for Adoption of Revised Scheduling Order. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Text of Proposed Order Stipulation and Proposed Order for Adoption of Revised Scheduling Order)(Goodman, Rachel) (Entered: 12/23/2013)
72 STIPULATION AND ORDER FOR ADOPTION FOR REVISED SCHEDULING ORDER: I've signed the Stipulation but to tighten the schedule for your benefit and mine we will have oral argument on class cert motion last week in August and fully briefed summary judgment motions (assuming certification) no later than October 15 and plan for trial in December −this is all tentative unlike your schedule but this is or will be a 3 year old case under your schedule and that's not my choice −if it turns out I have a choice. Let's plan on pre trial conference either the day before or preferably directly following oral argument on class cert motion and see where we are. SO ORDERED.( Deposition due by 9/11/2014., Motions due by 5/13/2014., Responses due by 7/28/2014, Replies due by 9/11/2014., Ready for Trial by 3/23/2015.) (Signed by Judge Harold Baer on 12/26/2013) (ama) Modified on 12/30/2013 (ama). (Entered: 12/26/2013)
73 MOTION for Skye L. Perryman to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−9388816. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Certificate of Good Standing − District of Columbia, # 2 Certificate of Good Standing − Texas, # 3 Text of Proposed Order)(Perryman, Skye) (Entered: 02/25/2014)
>>>NOTICE REGARDING PRO HAC VICE MOTION. Regarding Document No. 73 MOTION for Skye L. Perryman to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−9388816. Motion and supporting papers to be reviewed by Clerk's Office staff.. The document has been reviewed and there are no deficiencies. (wb) (Entered: 02/25/2014)
74 ORDER FOR ADMISSION PRO HAC VICE granting 73 Motion for Skye L. Perryman to Appear Pro Hac Vice. (Signed by Judge Harold Baer on 3/3/2014) (ajs) (Entered: 03/03/2014)
75 MOTION to Amend/Correct TO CONFORM AND AMEND THE SCHEDULING ORDER PURSUANT TO THE COURT'S DECEMBER 26, 2013 ORDER AND TO FEDERAL RULE OF CIVIL PROCEDURE 16(b)(4). Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Text of Proposed Order)(Geman,

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 21 of 44

03/13/2014
03/26/2014 03/27/2014
03/27/2014 03/27/2014 03/27/2014 03/27/2014 03/31/2014 03/31/2014

Rachel) (Entered: 03/13/2014)
76 MEMORANDUM OF LAW in Support re: 75 MOTION to Amend/Correct TO CONFORM AND AMEND THE SCHEDULING ORDER PURSUANT TO THE COURT'S DECEMBER 26, 2013 ORDER AND TO FEDERAL RULE OF CIVIL PROCEDURE 16(b)(4). MOTION to Amend/Correct TO CONFORM AND AMEND THE SCHEDULING ORDER PURSUANT TO THE COURT'S DECEMBER 26, 2013 ORDER AND TO FEDERAL RULE OF CIVIL PROCEDURE 16(b)(4).. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Geman, Rachel) (Entered: 03/13/2014)
77 FILING ERROR − DEFICIENT DOCKET ENTRY − MOTION for Nicole D. Sugnet to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−9500349. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Affidavit, # 2 Text of Proposed Order)(Sugnet, Nicole) Modified on 3/27/2014 (wb). (Entered: 03/26/2014)
>>>NOTICE REGARDING DEFICIENT MOTION TO APPEAR PRO HAC VICE. Notice regarding Document No. 77 MOTION for Nicole D. Sugnet to Appear Pro Hac Vice. Filing fee $ 200.00, receipt number 0208−9500349. Motion and supporting papers to be reviewed by Clerk's Office staff.. Certificate of Good Standing Must be issued from Supreme Court of California with a Clerk of Court Signature. Re−file the document as a Corrected Motion to Appear Pro Hac Vice and attach a valid Certificate of Good Standing, issued within the past 30 days. (wb) (Entered: 03/27/2014)
78 FILING ERROR − DEFICIENT DOCKET ENTRY − MOTION for Nicole Diane Sugnet to Appear Pro Hac Vice −− CORRECTED MOTION for Nicole D. Sugnet to Appear Pro Hac Vice. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young.(Sugnet, Nicole) Modified on 3/27/2014 (wb). (Entered: 03/27/2014)
>>>NOTICE REGARDING DEFICIENT MOTION TO APPEAR PRO HAC VICE. Notice regarding Document No. 78 MOTION for Nicole Diane Sugnet to Appear Pro Hac Vice −− CORRECTED MOTION for Nicole D. Sugnet to Appear Pro Hac Vice. Motion and supporting papers to be reviewed by Clerk's Office staff.. The filing is deficient for the following reason(s): Missing Proposed Order. Re−file the document as a Corrected Motion to Appear Pro Hac Vice and attach a Proposed Order. (wb) (Entered: 03/27/2014)
79 MOTION for Nicole Diane Sugnet to Appear Pro Hac Vice −− CORRECTED MOTION for Nicole D. Sugnet to Appear Pro Hac Vice. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Affidavit of Nicole D. Sugnet in Support of Motion for Pro Hac Vice Admission, # 2 Text of Proposed Order for Admission Pro Hac Vice of Nicole D. Sugnet)(Sugnet, Nicole) (Entered: 03/27/2014)
>>>NOTICE REGARDING PRO HAC VICE MOTION. Regarding Document No. 79 MOTION for Nicole Diane Sugnet to Appear Pro Hac Vice −− CORRECTED MOTION for Nicole D. Sugnet to Appear Pro Hac Vice. Motion and supporting papers to be reviewed by Clerk's Office staff.. The document has been reviewed and there are no deficiencies. (wb) (Entered: 03/27/2014)
80 ORDER FOR ADMISSION PRO HAC VICE OF NICOLE D. SUGNET: granting 79 Motion for Nicole D. Sugnet to Appear Pro Hac Vice. Application for Pro Hac Vice GRANTED. The Clerk is instructed to close this motion. (Signed by Judge Harold Baer on 3/28/2014) (djc) (Entered: 03/31/2014)
81 LETTER MOTION for Local Rule 37.2 Conference addressed to Judge Harold Baer from Rachel E. Goodman dated March 31, 2014. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young.(Goodman, Rachel) (Entered: 03/31/2014)

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 22 of 44

03/31/2014 03/31/2014
04/01/2014 04/03/2014 04/03/2014 04/11/2014 04/11/2014

82 MOTION to Seal Exhibits 1, 2, 5, 6, 7, 9, 10, 12, 13, and 14 to Defendants' Memorandum of Law in Opposition to Plaintiffs' Motion to Conform and Amend the Scheduling Order Pursuant to the Court's December 26, 2013 Order and to Federal Rule of Civil Procedure 16(b)(4). Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Text of Proposed Order)(Levine, Noah) (Entered: 03/31/2014)
83 MEMORANDUM OF LAW in Opposition re: 75 MOTION to Amend/Correct TO CONFORM AND AMEND THE SCHEDULING ORDER PURSUANT TO THE COURT'S DECEMBER 26, 2013 ORDER AND TO FEDERAL RULE OF CIVIL PROCEDURE 16(b)(4). MOTION to Amend/Correct TO CONFORM AND AMEND THE SCHEDULING ORDER PURSUANT TO THE COURT'S DECEMBER 26, 2013 ORDER AND TO FEDERAL RULE OF CIVIL PROCEDURE 16(b)(4). (Defendants' Memorandum of Law in Opposition to Plaintiffs' Motion to Conform and Amend the Scheduling Order Pursuant to the Court's December 26, 2013 Order and to Federal Rule of Civil Procedure 16(b)(4)). Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14)(Levine, Noah) (Entered: 03/31/2014)
84 ORDER REFERRING CASE TO MAGISTRATE JUDGE. Order that case be referred to the Clerk of Court for assignment to a Magistrate Judge for Specific Non−Dispositive Motion/Dispute: Discovery dispute (see docket #81). Referred to Magistrate Judge Gabriel W. Gorenstein. Judge Baer will decide the motion to amend the scheduling order including the proposed extension of discovery (docket #75). The Hiatus issue. Do not change trial month without a chat. Motions referred to Gabriel W. Gorenstein. (Signed by Judge Harold Baer on 4/1/2014) (lmb) (Entered: 04/01/2014)
85 REPLY MEMORANDUM OF LAW in Support re: 75 MOTION to Amend/Correct TO CONFORM AND AMEND THE SCHEDULING ORDER PURSUANT TO THE COURT'S DECEMBER 26, 2013 ORDER AND TO FEDERAL RULE OF CIVIL PROCEDURE 16(b)(4). MOTION to Amend/Correct TO CONFORM AND AMEND THE SCHEDULING ORDER PURSUANT TO THE COURT'S DECEMBER 26, 2013 ORDER AND TO FEDERAL RULE OF CIVIL PROCEDURE 16(b)(4).. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams. (Goodman, Rachel) (Entered: 04/03/2014)
86 LETTER RESPONSE in Opposition to Motion addressed to Judge Harold Baer from David W. Ogden dated 4/3/2014 re: 81 LETTER MOTION for Local Rule 37.2 Conference addressed to Judge Harold Baer from Rachel E. Goodman dated March 31, 2014.. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 04/03/2014)
87 LETTER addressed to Magistrate Judge Gabriel W. Gorenstein from Rachel Goodman dated April 11, 2014 re: Adkins et al. v. Morgan Stanley et al., No. 1:12−cv−7667 (HB). Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young.(Goodman, Rachel) (Entered: 04/11/2014)
88 MEMO ENDORSEMENT on re: 87 Letter, filed by Rubbie McCoy, Charmaine Williams, Rebecca Pettway, William Young, Michigan Legal Services, Beverly Adkins. ENDORSEMENT: The Court's clerk contacted counsel because of the statement in plaintiffs' letter that they planned to supply "greater detail" on their application orally at a conference. But inasmuch as the Court may elect to decide this application based only on written submissions, the parties should provide all arguments in writing. The schedule for submissions proposed in this letter is acceptable. There are no page limitations, however −− notwithstanding the agreement of the parties to the contrary −− as it is critical that all relevant arguments be contained in the parties' written submissions. SO ORDERED. (Signed by Magistrate Judge Gabriel W. Gorenstein on 4/11/2014) (kgo) (Entered: 04/11/2014)

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 23 of 44

04/11/2014 04/11/2014 04/11/2014 04/15/2014 04/15/2014
04/15/2014
04/15/2014 04/16/2014 04/17/2014 04/18/2014 04/21/2014 04/22/2014
04/22/2014

89 ORDER granting 75 Motion to Amend/Correct. It is hereby ORDERED that the current schedule shall be amended as further set forth in this order. (Signed by Judge Harold Baer on 4/10/2014) (lmb) (Entered: 04/11/2014)
Set/Reset Scheduling Order Deadlines: Motions due by 11/1/2014. Responses due by 7/14/2014. Replies due by 8/20/2014. Discovery due by 6/30/2014. Ready for Trial by 1/15/2014. (lmb) (Entered: 04/11/2014)
Set/Reset Deadlines: Deposition due by 8/20/2014. (lmb) (Entered: 04/11/2014)
90 NOTICE OF APPEARANCE by Peter W. Beauchamp on behalf of Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Beauchamp, Peter) (Entered: 04/15/2014)
91 MOTION to Seal Exhibits B and C to Plaintiffs' Letter in Further Support of Plaintiffs' Application Regarding the Production of Deposition Transcripts in the Possession of the Massachusetts Attorney General. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Text of Proposed Order Proposed Order Granting Plaintiffs' Motion to File Exhibits Under Seal)(Schwartztol, Laurence) (Entered: 04/15/2014)
92 LETTER addressed to Magistrate Judge Gabriel W. Gorenstein from Laurence M. Schwartztol dated April 15, 2014 re: further support of Plaintiffs' application (ECF No. 81) regarding the production of deposition transcripts in the possession of the Massachusetts Attorney General. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C)(Schwartztol, Laurence) (Entered: 04/15/2014)
ORDER granting 91 Motion to Seal (HEREBY ORDERED by Magistrate Judge Gabriel W. Gorenstein)(Text Only Order) (Gorenstein, Gabriel) (Entered: 04/16/2014)
93 SEALED DOCUMENT placed in vault.(nm) (Entered: 04/16/2014)
94 LETTER addressed to Judge Harold Baer from David W. Ogden dated April 17, 2014 re: Court's April 10, 2014 amendments to the Scheduling Order. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Text of Proposed Order)(Ogden, David) (Entered: 04/17/2014)
95 LETTER addressed to Magistrate Judge Gabriel W. Gorenstein from David W. Ogden dated April 18, 2014 re: Reply to Plaintiffs' April 15, 2014 letter. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Ogden, David) (Entered: 04/18/2014)
96 LETTER addressed to Judge Harold Baer from Rachel Geman dated April 21, 2014 re: Dkt 94 re Court's 4/10/2014 amendments to the Scheduling Order. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young.(Geman, Rachel) (Entered: 04/21/2014)
97 ORDER: Oral argument on the pending motion to compel (Docket # 81) will take place on May 7, 2014, at 4:00 p.m. in Courtroom 6−B, United States Courthouse, 500 Pearl Street, New York, New York. This is the only matter scheduled for this date and time. Please be sure to arrive sufficiently in advance so that the argument may begin promptly. Each attorney or unrepresented party is directed to ensure that all other attorneys or unrepresented parties on the case are aware of the oral argument date and time. In addition, any requests for an adjournment must be made in compliance with Judge Gorenstein's rules (available at:http://nysd.uscourts.gov/judge/Gorenstein). SO ORDERED. (Oral Argument set for 5/7/2014 at 04:00 PM in Courtroom 6B of the United States Courthouse, 500 Pearl Street, New York, NY 10007 before Magistrate Judge Gabriel W. Gorenstein.) (Signed by Magistrate Judge Gabriel W. Gorenstein on 4/22/2014) (kgo) (Entered: 04/22/2014)
98 MEMO ENDORSEMENT on re: 94 Letter, filed by Morgan Stanley & Co. LLC, Morgan Stanley, Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Inc. ENDORSEMENT: Denied − this letter probably cost several hours of time, I'd spend it on substance if I were you.

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04/25/2014
05/09/2014
05/12/2014 05/12/2014 05/12/2014 05/12/2014 05/13/2014 05/13/2014
05/15/2014

(Signed by Judge Harold Baer on 4/22/2014) (lmb) (Entered: 04/22/2014)
99 ORDER: The date of the oral argument on the pending motion to compel (Docket # 81) is adjourned to Monday, May 12, 2014, at 4:00 p.m. in Courtroom 6−B, United States Courthouse, 500 Pearl Street, New York, New York. This is the only matter scheduled for this date and time. Please be sure to arrive sufficiently in advance so that the argument may begin promptly. And as set forth herein. SO ORDERED. ( Oral Argument set for 5/12/2014 at 04:00 PM in Courtroom 6B, 500 Pearl Street, New York, NY 10007 before Magistrate Judge Gabriel W. Gorenstein.) (Signed by Magistrate Judge Gabriel W. Gorenstein on 4/25/2014) (ama) (Entered: 04/25/2014)
100 ORDER: The parties are directed to be prepared to discuss at the oral argument on Monday the impact of the following cases, including their reasoning, on the arguments they have made in support of or in opposition to the motion to compel: Flagg v. City of Detroit, 252 F.R.D. 346 (E.D. Mich. 2008); Preservation Prods., LLC v. Nutraceutical Clinical Labs. Intern., Inc., 214 F.R.D. 494 (N.D. Ill. 2003); In Re Legato Sys., Inc., 204 F.R.D. 167 (N.D. Cal 2001). In addition, the defendants should determine whether any of their current or former attorneys actually have custody of the documents at issue.While no further submissions are required, each side is permitted to file a letter addressing these topics. Any such letter should be filed 2:00 p.m. on Monday. SO ORDERED. (Signed by Magistrate Judge Gabriel W. Gorenstein on 5/09/2014) (ama) (Entered: 05/09/2014)
101 LETTER addressed to Magistrate Judge Gabriel W. Gorenstein from David W. Ogden dated May 12, 2014 re: The Court's May 9, 2014 Order concerning custody of the documents at issue. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Ogden, David) (Entered: 05/12/2014)
102 LETTER addressed to Magistrate Judge Gabriel W. Gorenstein from Rachel E. Goodman dated May 12, 2014 re: The Court's May 9, 2014 Order concerning custody of the documents at issue. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young.(Goodman, Rachel) (Entered: 05/12/2014)
103 LETTER addressed to Magistrate Judge Gabriel W. Gorenstein from Laurence M. Schwartztol dated May 12, 2014 re: Additional Submissions Pursuant to the May 12, 2014 Motion to Compel Argument. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young.(Schwartztol, Laurence) (Entered: 05/12/2014)
Minute Entry for proceedings held before Magistrate Judge Gabriel W. Gorenstein: Oral Argument held on 5/12/2014 (Gonzalez, Sylvia) (Entered: 05/14/2014)
104 LETTER addressed to Magistrate Judge Gabriel W. Gorenstein from David W. Ogden dated May 13, 2014 re: agreeing with the schedule Plaintiffs have proposed for additional submissions in furtherance of Plaintiffs' pending motion to compel. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Ogden, David) (Entered: 05/13/2014)
105 MEMO ENDORSEMENT on re: 103 Letter, filed by Rubbie McCoy, Charmaine Williams, Rebecca Pettway, William Young, Michigan Legal Services, Beverly Adkins. by Thursday, May 15, 2014, Plaintiffs will file a letter responding to the new legal arguments contained in Defendants' May 12, 2014 letter and appending additional supporting materials along the lines discussed today in court; by Tuesday, May 20, 2014, Defendants will file any response to the supporting material appended to Plaintiffs' opening letter. ENDORSEMENT: This schedule is accepted. SO ORDERED. (Signed by Magistrate Judge Gabriel W. Gorenstein on 5/13/2014) (ama) (Entered: 05/13/2014)
106 MOTION to Seal Unredacted Version of Plaintiffs' Letter and Eight Supporting Exhibits. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Text of Proposed Order)(Goodman, Rachel) (Entered: 05/15/2014)

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05/15/2014
05/20/2014 05/20/2014
05/21/2014 05/21/2014 05/21/2014 05/22/2014 05/27/2014 06/02/2014 06/03/2014
06/10/2014 06/11/2014
06/12/2014 06/13/2014

107 LETTER addressed to Magistrate Judge Gabriel W. Gorenstein from Rachel E. Goodman dated May 15, 2014 re: Additional Submission as Discussed at May 12, 2014 Oral Argument [Redacted]. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit, # 2 Exhibit, # 3 Exhibit, # 4 Exhibit, # 5 Exhibit, # 6 Exhibit, # 7 Exhibit, # 8 Exhibit, # 9 Exhibit)(Goodman, Rachel) (Entered: 05/15/2014)
108 MOTION to Seal (Defendants' Motion to File Letter and Exhibits Under Seal). Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Ogden, David) (Entered: 05/20/2014)
109 LETTER addressed to Magistrate Judge Gabriel W. Gorenstein from David W. Ogden dated May 20, 2014 re: responding to the Court's requests at the May 12, 2014 hearing. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J)(Ogden, David) (Entered: 05/20/2014)
ORDER granting 106 Motion to Seal (HEREBY ORDERED by Magistrate Judge Gabriel W. Gorenstein)(Text Only Order) (Gorenstein, Gabriel) (Entered: 05/21/2014)
ORDER granting 108 Motion to Seal (HEREBY ORDERED by Magistrate Judge Gabriel W. Gorenstein)(Text Only Order) (Gorenstein, Gabriel) (Entered: 05/21/2014)
110 SEALED DOCUMENT placed in vault.(mps) (Entered: 05/21/2014)
111 SEALED DOCUMENT placed in vault.(nm) (Entered: 05/22/2014)
112 MEMORANDUM ORDER granting 81 Letter Motion for Local Rule 37.2 Conference. Plaintiffs' motion to compel defendants to produce the requested deposition transcripts (Docket # 81) is granted. Morgan Stanley shall take the steps necessary to obtain the materials forthwith. SO ORDERED. (Signed by Magistrate Judge Gabriel W. Gorenstein on 5/26/2014) (ama) (Entered: 05/27/2014)
113 JOINT LETTER addressed to Judge John F. Keenan from Noah Levine and Laurence M. Schwartztol dated 6/2/2014 re: seeking time−sensitive relief in this civil case. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Levine, Noah) (Entered: 06/02/2014)
114 MEMO ENDORSEMENT on re: 113 Letter, filed by Morgan Stanley & Co. LLC, Morgan Stanley, Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Inc. ENDORSEMENT: Class certification briefing and expert disclosure deadlines are extended to June 20 without prejudice to application to the transferee judge., ( Motions due by 6/20/2014.) (Signed by Judge Loretta A. Preska on 6/2/2014) (lmb) (Entered: 06/03/2014)
NOTICE OF CASE REASSIGNMENT to Judge Valerie E. Caproni. Judge Harold Baer is no longer assigned to the case. (pgu) (Entered: 06/10/2014)
115 ORDER: Counsel are to review and comply with the Court's Individual Practices in Civil Cases. Counsel are further directed to submit a joint letter to the Court no later than 6/17/2014 and appear for a Status Conference set for 6/19/2014 at 10:00 AM in Courtroom 443, 40 Centre Street, New York, NY 10007 before Judge Valerie E. Caproni. (Signed by Judge Valerie E. Caproni on 6/11/2014) (tro) (Entered: 06/12/2014)
116 LETTER addressed to Judge Valerie E. Caproni from Laurence M. Schwartztol dated June 12, 2014 re: requesting extension of deadline to file motion for class certification and to disclose expert reports, and requesting enlargement of page limits. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young.(Schwartztol, Laurence) (Entered: 06/12/2014)
117 Objection re: 112 Order on Motion for Local Rule 37.2 Conference, . Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc.,

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06/16/2014 06/16/2014 06/17/2014 06/19/2014 06/19/2014
06/19/2014 06/25/2014 06/25/2014

Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 06/13/2014)
118 MEMO ENDORSEMENT on re: 116 Letter, filed by Rubbie McCoy, Charmaine Williams, Rebecca Pettway, William Young, Michigan Legal Services, Beverly Adkins. ENDORSEMENT: Plaintiffs' deadline to disclose expert reports and move for class certification is extended to June 27, 2014. All other requested relief will be discussed at the conference on June 19, 2014. (Signed by Judge Valerie E. Caproni on 6/16/2014) (djc) (Entered: 06/16/2014)
Set/Reset Deadlines: Motions due by 6/27/2014. (djc) (Entered: 06/16/2014)
119 LETTER addressed to Judge Valerie E. Caproni from Laurence Schwartztol dated June 17, 2014 re: Joint Letter in Advance of June 19, 2014 Status Conference. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc., Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit Complaint, # 2 Exhibit Scheduling Order)(Schwartztol, Laurence) (Entered: 06/17/2014)
Minute Entry for proceedings held before Judge Valerie E. Caproni: Status Conference held on 6/19/2014(see order for scheduling and deadlines), (Court Reporter Denise Richards) (Brantley, Michael) (Entered: 06/19/2014)
120 ORDER denying 82 Motion to Seal: Plaintiffs' response to Defendants' objections to Magistrate Judge Gorenstein's May 27, 2014 discovery order shall be filed by July 2, 2014. Defendants' reply in further support of their objections shall be filed by July 14, 2014. Plaintiffs shall move for class certification and disclose expert witnesses by June 27, 2014. Plaintiffs shall also make their experts and declarants not previously identified as potential witnesses available for deposition by July 18, 2014. Defendants' opposition to class certification and disclosure of expert witnesses is due September 11, 2014. Defendants shall make their experts and declarants not previously identified as potential witnesses available for deposition by October 1, 2014. Plaintiffs' reply in further support of class certification is due November 26, 2014. The deadline for summary judgment motions and the trial−ready date are adjourned sine die. Defendants shall move for summary judgment only after Plaintiffs' class certification motion is resolved. Defendants' motion to seal certain exhibits filed in connection with their opposition to Plaintiffs' motion to amend the scheduling order in this case (ECF No. 82) is DENIED without prejudice to renewal. Defendants shall publicly file those exhibits on ECF by June 27, 2014 unless they have renewed their motion to seal by that date. Defendants shall review their previous submissions to the Court and any confidentiality designations applied to those submissions to confirm the necessity of filing under seal. Defendants shall submit a letter to the Court by July 18, 2014 confirming that they have done so and indicating whether any documents shall be unsealed pursuant to this reevaluation. (Signed by Judge Valerie E. Caproni on 6/19/2014) (tn) (Entered: 06/19/2014)
Set/Reset Deadlines: Deposition due by 10/1/2014. Motions due by 6/27/2014. Responses due by 9/11/2014. Replies due by 11/26/2014. (tn) (Entered: 06/19/2014)
121 TRANSCRIPT of Proceedings re: CONFERENCE held on 6/19/2014 before Judge Valerie E. Caproni. Court Reporter/Transcriber: Denise Richards, (212) 805−0300. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 7/21/2014. Redacted Transcript Deadline set for 7/31/2014. Release of Transcript Restriction set for 9/26/2014.(Rodriguez, Somari) (Entered: 06/25/2014)
122 NOTICE OF FILING OF OFFICIAL TRANSCRIPT Notice is hereby given that an official transcript of a CONFERENCE proceeding held on 6/19/14 has been filed by the court reporter/transcriber in the above−captioned matter. The parties have seven (7) calendar days to file with the court a Notice of Intent to Request Redaction of this transcript. If no such Notice is filed, the transcript may be made remotely electronically available to the public without redaction after 90 calendar days...(Rodriguez, Somari) (Entered: 06/25/2014)

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 27 of 44

06/26/2014
06/26/2014
06/27/2014
06/27/2014 06/27/2014 06/27/2014 06/27/2014 06/27/2014 06/27/2014 06/27/2014 06/27/2014

123 TRANSCRIPT of Proceedings re: CIVIL CAUSE FOR HEARING held on 5/12/2014 before Magistrate Judge Gabriel W. Gorenstein. Court Reporter/Transcriber: Shari Riemer/Mary Greco, (518) 581−8973. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 7/21/2014. Redacted Transcript Deadline set for 7/31/2014. Release of Transcript Restriction set for 9/29/2014.(ca) (Entered: 06/26/2014)
124 NOTICE OF FILING OF OFFICIAL TRANSCRIPT Notice is hereby given that an official transcript of a CIVIL CAUSE FOR HEARING proceeding held on 05/12/2014 has been filed by the court reporter/transcriber in the above−captioned matter. The parties have seven (7) calendar days to file with the court a Notice of Intent to Request Redaction of this transcript. If no such Notice is filed, the transcript may be made remotely electronically available to the public without redaction after 90 calendar days...(ca) (Entered: 06/26/2014)
125 MEMORANDUM OF LAW in Opposition re: 75 MOTION to Amend/Correct TO CONFORM AND AMEND THE SCHEDULING ORDER PURSUANT TO THE COURT'S DECEMBER 26, 2013 ORDER AND TO FEDERAL RULE OF CIVIL PROCEDURE 16(b)(4). (Defendants' Memorandum of Law in Opposition to Plaintiffs' Motion to Conform and Amend the Scheduling Order Pursuant to the Court's December 26, 2013 Order and to Federal Rule of Civil Procedure 16(b)(4)). Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 5, # 4 Exhibit 6, # 5 Exhibit 7, # 6 Exhibit 9, # 7 Exhibit 10, # 8 Exhibit 12, # 9 Exhibit 13, # 10 Exhibit 14)(Ogden, David) (Entered: 06/27/2014)
126 LETTER addressed to Judge Valerie E. Caproni from David W. Ogden dated June 27, 2014 re: notifing the Court of defendants' compliance with June 19, 2014 order. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Ogden, David) (Entered: 06/27/2014)
127 MOTION to Certify Class Notice of Plaintiffs' Motion and Motion for Class Certification. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. Responses due by 9/11/2014(Geman, Rachel) (Entered: 06/27/2014)
128 MEMORANDUM OF LAW in Support re: 127 MOTION to Certify Class Notice of Plaintiffs' Motion and Motion for Class Certification. (provisionally submitted under seal). Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Geman, Rachel) (Entered: 06/27/2014)
129 DECLARATION of Nicole D. Sugnet in Support re: 127 MOTION to Certify Class Notice of Plaintiffs' Motion and Motion for Class Certification.. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Geman, Rachel) (Entered: 06/27/2014)
130 AFFIDAVIT of Patricia A. McCoy in Support re: 127 MOTION to Certify Class Notice of Plaintiffs' Motion and Motion for Class Certification.. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Geman, Rachel) (Entered: 06/27/2014)
131 AFFIDAVIT of Ian Ayres in Support re: 127 MOTION to Certify Class Notice of Plaintiffs' Motion and Motion for Class Certification.. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Geman, Rachel) (Entered: 06/27/2014)
132 AFFIDAVIT of Geoffrey A. Oliver in Support re: 127 MOTION to Certify Class Notice of Plaintiffs' Motion and Motion for Class Certification.. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Geman, Rachel) (Entered: 06/27/2014)
133 AFFIDAVIT of Thomas J. Sugrue in Support re: 127 MOTION to Certify Class Notice of Plaintiffs' Motion and Motion for Class Certification.. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway,

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06/27/2014 06/27/2014 06/27/2014 06/27/2014 07/02/2014 07/14/2014 07/18/2014 07/21/2014
07/21/2014 07/21/2014 07/21/2014 07/21/2014 07/21/2014

Charmaine Williams, William Young. (Geman, Rachel) (Entered: 06/27/2014)
134 DECLARATION of Rachel Geman in Support re: 127 MOTION to Certify Class Notice of Plaintiffs' Motion and Motion for Class Certification.. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Geman, Rachel) (Entered: 06/27/2014)
135 DECLARATION of Dennis D. Parker in Support re: 127 MOTION to Certify Class Notice of Plaintiffs' Motion and Motion for Class Certification.. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Geman, Rachel) (Entered: 06/27/2014)
136 DECLARATION of Stuart T. Rossman in Support re: 127 MOTION to Certify Class Notice of Plaintiffs' Motion and Motion for Class Certification.. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Geman, Rachel) (Entered: 06/27/2014)
137 DECLARATION of Robert W. Hunter in Support re: 127 MOTION to Certify Class Notice of Plaintiffs' Motion and Motion for Class Certification.. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Geman, Rachel) (Entered: 06/27/2014)
138 OPPOSITION BRIEF re: 117 Objection (non−motion), Plaintiffs' Response. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit Exhibit A, Excerpts from May 12, 2014 Hearing Transcript)(Goodman, Rachel) (Entered: 07/02/2014)
139 REPLY re: 117 Objection (non−motion), (Defendants' Reply In Further Support of Their Objections to Magistrate Judge Gorenstein's May 27, 2014 Order). Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 07/14/2014)
140 LETTER addressed to Judge Valerie E. Caproni from David W. Ogden dated 07/18/2014 re: Confidentiality of Non−Merit Filings. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Ogden, David) (Entered: 07/18/2014)
141 MEMO ENDORSEMENT on re: 140 Letter filed by Morgan Stanley & Co. LLC, Morgan Stanley, Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Inc. ENDORSEMENT: The Clerk of Court is directed to unseal the documents filed at ECF Nos. 93, 110, and 111. SO ORDERED. (Signed by Judge Valerie E. Caproni on 7/21/2014) (ama) (Entered: 07/21/2014)
Transmission to Sealed Records Clerk. Transmitted re: 141 Memo Endorsement, Set Deadlines/Hearings,to the Sealed Records Clerk for the sealing or unsealing of document or case. (ama) (Entered: 07/21/2014)
142 EXHIBIT B from Shapiro Deposition (CD form). (This document was previously filed under seal in envelope #93 and unsealed on 7/21/2014.) (mro) (Entered: 07/21/2014)
143 EXHIBIT C from Telesca Deposition (CD form). (This document was previously filed under seal in envelope #93 and unsealed on 7/21/2014.) (mro) (Entered: 07/21/2014)
144 LETTER addressed to Magistrate Judge Gabriel W. Gorenstein from Rachel E. Goodman dated 5/15/14 re: Plaintiffs respectfully request that Morgan Stanley be ordered to expeditiously produce the relevant transcripts. (CD Form) (This document was previously filed under seal in envelope #110 and unsealed on 7/21/2014.) (mro) (Entered: 07/21/2014)
145 EXHIBIT B (re: Docket Entry 107 ): Deposition of Steven Shapiro. (CD Form) (This document was previously filed under seal in envelope #110 and unsealed on 7/21/2014.) (mro) (Entered: 07/21/2014)

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07/21/2014 07/21/2014 07/21/2014 07/21/2014
07/21/2014 07/21/2014
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07/21/2014 07/21/2014 07/21/2014

146 EXHIBIT C (re: Docket Entry 107 ): Deposition of Francis Telesca. (CD Form) (This document was previously filed under seal in envelope #110 and unsealed on 7/21/2014.) (mro) (Entered: 07/21/2014)
147 EXHIBIT D (re: Docket Entry 107 ): Deposition of Vanessa Vanacker. (CD Form) (This document was previously filed under seal in envelope #110 and unsealed on 7/21/2014.) (mro) (Entered: 07/21/2014)
148 EXHIBIT E (re: Docket Entry 107 ): Deposition of Bradley Eugene Davis. (CD Form) (This document was previously filed under seal in envelope #110 and unsealed on 7/21/2014.) (mro) (Entered: 07/21/2014)
149 EXHIBIT F (re: Docket Entry 107 ): Deposition of Anton Lee Peterson. (CD Form) (This document was previously filed under seal in envelope #110 and unsealed on 7/21/2014.) (mro) (Main Document 149 replaced on 2/24/2016) (mro). (Entered: 07/21/2014)
150 EXHIBIT G (re: Docket Entry 107 ): Deposition of Andrew Neuberger. (CD Form) (This document was previously filed under seal in envelope #110 and unsealed on 7/21/2014.) (mro) (Entered: 07/21/2014)
151 EXHIBIT H (re: Docket Entry 107 ): Deposition of Deborah Goodman. (CD Form) (This document was previously filed under seal in envelope #110 and unsealed on 7/21/2014.) ***The PDF provided was too large to be attached to this docket entry.(mro) (Entered: 07/21/2014)
152 EXHIBIT I (re: Docket Entry 107 ): Deposition of Eric Kaplan. (CD Form) (This document was previously filed under seal in envelope #110 and unsealed on 7/21/2014.) (mro) (Entered: 07/21/2014)
153 LETTER addressed to Magistrate Judge Gabriel W. Gorenstein from David W. Ogden dated 5/20/14 re: Defendants respond to the Court's requests as the May 12, 2014 hearing. (This document was previously filed under seal in envelope #111 and unsealed on 7/21/2014.)(mro) (mro). (Entered: 07/24/2014)
154 EXHIBIT B: Shapiro Testimony (Pgs 1, 193−195). (This document was previously filed under seal in envelope #111 and unsealed on 7/21/2014.) (mro) (Entered: 07/24/2014)
155 EXHIBIT C: Shapiro Deposition Exhibit 20. (This document was previously filed under seal in envelope #111 and unsealed on 7/21/2014.)(mro) (Entered: 07/24/2014)
156 EXHIBIT D: Vanacker Deposition Exhibit 4. (This document was previously filed under seal in envelope #111 and unsealed on 7/21/2014.)(mro) (Entered: 07/24/2014)
157 EXHIBIT E: David FHTA Testimony Exhibit 11, 715. (This document was previously filed under seal in envelope #111 and unsealed on 7/21/2014.)(mro) (Entered: 07/24/2014)
158 EXHIBIT F: Master Loan and Security Agreement. (This document was previously filed under seal in envelope #111 and unsealed on 7/21/2014.) ***No PDF attached; PDF supplied on CD was too large to attach. (mro) (Entered: 07/24/2014)
159 EXHIBIT G: Goodman Testimony (Ps 1, 23−25, 37, 43−44, 49, 50−55, 66, 76−77, 84−85, 87−88, 96, 99−100, 173−175, 184, etc). (This document was previously filed under seal in envelope #111 and unsealed on 7/21/2014.) ***No PDF attached; PDF supplied on CD was too large to attach.(mro) (Entered: 07/24/2014)
160 EXHIBIT H: Neuberger Testimony (Pgs 1, 17, 122−126). (This document was previously filed under seal in envelope #111 and unsealed on 7/21/2014.) (mro) (Entered: 07/24/2014)
161 EXHIBIT I: Kaplan Testimony (Pgs 1, 97, 193−196, 292−294, 329−330). (This document was previously filed under seal in envelope #111 and unsealed on 7/21/2014.) (mro) (Entered: 07/24/2014)
162 EXHIBIT J. (This document was previously filed under seal in envelope #111 and unsealed on 7/21/2014.) (mro) (Entered: 07/24/2014)

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 30 of 44

08/13/2014
08/19/2014 08/19/2014 08/26/2014 09/11/2014 09/11/2014 09/11/2014 09/11/2014 09/11/2014 09/11/2014 09/11/2014

163 MEMORANDUM ORDER re: 112 Memorandum Order. For the reasons stated in this Memorandum Order, the magistrate judge's discovery ordered issued on May 27, 2014 is REVERSED to the extent that it fails, as a matter of comity, to require Plaintiffs first to seek the requested deposition transcripts from a Massachusetts commonwealth court before determining whether their production can and should be compelled in this action. Because the magistrate judge's order was contrary to law on that ground, the Court need not determine whether Massachusetts General Laws, chapter 93A, § 6(6), creates a privilege held by Morgan Stanley that is recognizable by this court or whether the transcripts fall within Morgan Stanley's control for the purposes of Rule 34 of the Federal Rules of Civil Procedure. (Signed by Judge Valerie E. Caproni on 8/13/2014) (tro) (Entered: 08/13/2014)
164 MOTION for Emily L. Stark to Appear Pro Hac Vice . Filing fee $ 200.00, receipt number 0208−10013153. Motion and supporting papers to be reviewed by Clerk's Office staff. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Certificate of Good Standing − DC, # 2 Text of Proposed Order)(Stark, Emily) (Entered: 08/19/2014)
>>>NOTICE REGARDING PRO HAC VICE MOTION. Regarding Document No. 164 MOTION for Emily L. Stark to Appear Pro Hac Vice . Filing fee $ 200.00, receipt number 0208−10013153. Motion and supporting papers to be reviewed by Clerk's Office staff.. The document has been reviewed and there are no deficiencies. (sdi) (Entered: 08/19/2014)
165 ORDER FOR ADMISSION PRO HAC VICE granting 164 Motion for Emily L. Stark to Appear Pro Hac Vice. (Signed by Judge Valerie E. Caproni on 8/26/2014) (ama) (Entered: 08/26/2014)
166 LETTER addressed to Judge Valerie E. Caproni from Laurence Schwartztol dated September 11, 2014 re: Requesting Unsealing of Documents Filed in Support of Class Certification. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F)(Schwartztol, Laurence) (Entered: 09/11/2014)
167 NOTICE of Filing of Defendants' Opposition to Plaintiffs' Motion for Class Certification Provisionally Under Seal. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 09/11/2014)
168 MEMORANDUM OF LAW in Opposition re: 127 MOTION to Certify Class Notice of Plaintiffs' Motion and Motion for Class Certification. . Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 09/11/2014)
169 DECLARATION of Colin Reardon in Support re: 168 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 09/11/2014)
170 NOTICE of Filing of Expert Report of Marsha J. Courchane re: 168 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 09/11/2014)
171 NOTICE of Filing of Expert Report of Timothy J. Riddiough, Ph.D. re: 168 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 09/11/2014)
172 NOTICE of Filing of Expert Report of Professor Stephen G. Ryan re: 168 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 31 of 44

09/11/2014 09/11/2014 09/11/2014 09/11/2014 09/11/2014 09/11/2014 09/11/2014 09/18/2014 09/23/2014 09/24/2014 09/25/2014
09/30/2014

Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 09/11/2014)
173 DECLARATION of Bradley Davis in Support re: 168 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 09/11/2014)
174 DECLARATION of Kelly Finley in Support re: 168 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 09/11/2014)
175 DECLARATION of Kristine Gilly in Support re: 168 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 09/11/2014)
176 DECLARATION of Eric Kaplan in Support re: 168 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 09/11/2014)
177 DECLARATION of Anton Peterson in Support re: 168 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 09/11/2014)
178 DECLARATION of Francis Telesca in Support re: 168 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 09/11/2014)
179 DECLARATION of Vanessa Vanacker in Support re: 168 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 09/11/2014)
180 MOTION for Peter W. Beauchamp to Withdraw as Attorney . Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Text of Proposed Order)(Goodman, Rachel) (Entered: 09/18/2014)
181 MEMO ENDORSEMENT on NOTICE OF WITHDRAWAL OF BRIAN M. BOYNTON AS COUNSEL FOR DEFENDANTS AND ORDER. ENDORSEMENT: The Clerk of Court is respectfully requested to update the docket to reflect Mr. Boynton's withdrawal from the action. SO ORDERED. (Signed by Judge Valerie E. Caproni on 9/23/2014) (mro) (Entered: 09/23/2014)
182 LETTER addressed to Judge Valerie E. Caproni from Maria Arnott, Esq. dated September 18, 2014 re: Adkins et al. v. Morgan Stanley et al.. Document filed by c/o AMJ Advisors The New Century Liquidating Trust and Reorganized New Century Warehouse Corporation.(Arnott, Maria) (Entered: 09/24/2014)
183 ORDER GRANTING LEAVE TO WITHDRAW AS COUNSEL granting 180 Motion to Withdraw as Attorney. Before the Court is the Motion for Leave to Withdraw as Counsel for Plaintiffs by Peter W. Beauchamp. After considering the Motion and the arguments in regard thereto, the Court is of the opinion that the Motion should be granted. It is therefore ORDERED, ADJUDGED, AND DECREED that Peter W. Beauchamp has withdrawn as counsel for Plaintiffs in this action. Attorney Peter W. Beauchamp terminated. (Signed by Judge Valerie E. Caproni on 9/25/2014) (mro) (Entered: 09/26/2014)
184 JOINT LETTER addressed to Judge Valerie E. Caproni from Noah A. Levine and Laurence M. Schwartztol dated 9/30/2014 re: Intent to file a Daubert motion and briefing schedule. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Levine, Noah) (Entered: 09/30/2014)

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 32 of 44

10/02/2014
10/02/2014 10/23/2014
11/05/2014 11/05/2014 11/05/2014

185 MEMO ENDORSEMENT on re: 166 Letter, filed by Rubbie McCoy, Charmaine Williams, Rebecca Pettway, William Young, Michigan Legal Services, Beverly Adkins. ENDORSEMENT: Except with respect to Exhibits 21 and 28−32 to the Declaration of Nicole D. Sugnet in Support of Plaintiffs' Motion for Class Certification (the "Sugnet Declaration") (ECF. No 129), all Exhibits to the Sugnet Declaration shall be publicly filed on the docket subject to Defendants' minor proposed redactions. Exhibits 21 and 28−32 to the Sugnet Declaration should also be filed publicly, but only after redacting any personal or biographical information concerning matters outside the scope of the respective interviewees' employment at New Century Financial Corporation or New Century Mortgage Company. The Affidavits of Ian Ayers and Geoffery A. Oliver (ECF Nos. 131−132) should be filed publicly on the docket subject to Defendants' minor proposed redactions. Plaintiffs' Memorandum of Law in Support of Class Certification (ECF No. 128), and the supporting Affidavit of Patricia A. McCoy (ECF No. 130) shall be publicly filed in unredacted form, except as necessary to preserve any of the permitted redactions described in this order. (Signed by Judge Valerie E. Caproni on 10/2/2014) (djc) Modified on 10/2/2014 (djc). (Entered: 10/02/2014)
186 MEMO ENDORSEMENT on re: 184 Letter, filed by Morgan Stanley & Co. LLC, Morgan Stanley, Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Inc. ENDORSEMENT: Application GRANTED. Defendants shall file their Daubert motion and opening brief in support of their motion by November 5, 2014. Plaintiffs shall file their opposition by November 26, 2014. Defendants shall file their reply by December 10, 2014. (Motions due by 11/5/2014, Responses due by 11/26/2014, Replies due by 12/10/2014.) (Signed by Judge Valerie E. Caproni on 10/2/2014) (ja) (Entered: 10/03/2014)
187 LETTER addressed to Judge Valerie E. Caproni from Laurence Schwartztol dated October 23, 2014 re: Filing of Unsealed Versions of Previously Sealed or Substantially Redacted Documents in Support of Plaintiffs' Motion for Class Certification. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit, # 2 Exhibit, # 3 Exhibit, # 4 Exhibit, # 5 Exhibit, # 6 Exhibit, # 7 Exhibit, # 8 Exhibit, # 9 Exhibit, # 10 Exhibit, # 11 Exhibit, # 12 Exhibit, # 13 Exhibit, # 14 Exhibit, # 15 Exhibit, # 16 Exhibit, # 17 Exhibit, # 18 Exhibit, # 19 Exhibit, # 20 Exhibit, # 21 Exhibit, # 22 Exhibit, # 23 Exhibit, # 24 Exhibit, # 25 Exhibit, # 26 Exhibit, # 27 Exhibit, # 28 Exhibit, # 29 Exhibit, # 30 Exhibit, # 31 Exhibit, # 32 Exhibit, # 33 Exhibit, # 34 Exhibit, # 35 Exhibit, # 36 Exhibit, # 37 Exhibit, # 38 Exhibit, # 39 Exhibit, # 40 Exhibit, # 41 Exhibit, # 42 Exhibit, # 43 Exhibit, # 44 Exhibit, # 45 Exhibit, # 46 Exhibit, # 47 Exhibit, # 48 Exhibit, # 49 Exhibit, # 50 Exhibit, # 51 Exhibit, # 52 Exhibit, # 53 Exhibit, # 54 Exhibit, # 55 Exhibit, # 56 Exhibit, # 57 Exhibit, # 58 Exhibit, # 59 Exhibit, # 60 Exhibit, # 61 Exhibit, # 62 Exhibit, # 63 Exhibit, # 64 Exhibit, # 65 Exhibit, # 66 Exhibit, # 67 Exhibit, # 68 Exhibit, # 69 Exhibit, # 70 Exhibit, # 71 Exhibit, # 72 Exhibit, # 73 Exhibit, # 74 Exhibit, # 75 Exhibit, # 76 Exhibit, # 77 Exhibit, # 78 Exhibit, # 79 Exhibit, # 80 Exhibit, # 81 Exhibit, # 82 Exhibit, # 83 Exhibit, # 84 Exhibit, # 85 Exhibit)(Schwartztol, Laurence) (Entered: 10/23/2014)
188 MOTION to Exclude All Opinions Contained in the Report of Patricia A. McCoy and One Opinion Contained in the Report of Ian Ayres . Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Ogden, David) (Entered: 11/05/2014)
189 MEMORANDUM OF LAW in Support re: 188 MOTION to Exclude All Opinions Contained in the Report of Patricia A. McCoy and One Opinion Contained in the Report of Ian Ayres . . Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 11/05/2014)
190 DECLARATION of Jonathan Bressler in Support re: 188 MOTION to Exclude All Opinions Contained in the Report of Patricia A. McCoy and One Opinion Contained in the Report of Ian Ayres .. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 11/05/2014)

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 33 of 44

11/14/2014 11/25/2014 11/25/2014
11/26/2014 11/26/2014 11/26/2014 11/26/2014 12/01/2014 12/08/2014

191 REMARK: JUDGMENT: This particularly true here where the plaintiffs may comply with the August 13, 2014 Order of the U.S. District Court, Southern District of New York, by seeking their requested relief from a trial court in the Commonwealth. Therefore, it is ORDERED that the petition be and the same hereby is, dismissed without prejudice. Signed by Spina, J. on November 4, 2014. (ama) (Entered: 11/14/2014)
192 LETTER addressed to Judge Valerie E. Caproni from David W. Ogden dated November 25, 2014 re: Redacted Exhibits. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2)(Ogden, David) (Entered: 11/25/2014)
193 LETTER addressed to Judge Valerie E. Caproni from David W. Ogden dated November 25, 2014 re: Publicly filing previously sealed documents. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10)(Ogden, David) (Entered: 11/25/2014)
194 MEMORANDUM OF LAW in Opposition re: 188 MOTION to Exclude All Opinions Contained in the Report of Patricia A. McCoy and One Opinion Contained in the Report of Ian Ayres . . Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Declaration of Nicole D. Sugnet)(Sugnet, Nicole) (Entered: 11/26/2014)
195 REPLY MEMORANDUM OF LAW in Support re: 127 MOTION to Certify Class Notice of Plaintiffs' Motion and Motion for Class Certification. . Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Schwartztol, Laurence) (Entered: 11/26/2014)
196 DECLARATION of Rachel E. Goodman in Support re: 127 MOTION to Certify Class Notice of Plaintiffs' Motion and Motion for Class Certification.. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10)(Schwartztol, Laurence) (Entered: 11/26/2014)
197 DECLARATION of Robert W. Hunter in Support re: 127 MOTION to Certify Class Notice of Plaintiffs' Motion and Motion for Class Certification.. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7)(Schwartztol, Laurence) (Entered: 11/26/2014)
198 LETTER addressed to Judge Valerie E. Caproni from Maria Arnott dated December 1, 2014 re: Adkins et al. v. Morgan Stanley et al.. Document filed by c/o AMJ Advisors The New Century Liquidating Trust and Reorganized New Century Warehouse Corporation.(Arnott, Maria) (Entered: 12/01/2014)
199 MEMO ENDORSEMENT on re: 192 Letter, filed by Morgan Stanley & Co. LLC, Morgan Stanley, Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Inc. ENDORSEMENT: Defendant Morgan Stanley shall file unredacted and unsealed versions of all documents filed in support of its opposition to Plaintiffs' Motion for Class Certification subject to the following exclusions: (1) Exhibit A to the Declaration of Brad Davis (ECF No. 173) shall be redacted to remove individual borrower names and addresses; (2) Exhibit D to the Declaration of Francis Telesca (ECF No. 178) shall be redacted to remove bank account information; (3) the bankruptcy Examiner's interview memoranda of William McKay (ECF No. 169, Ex. 21) and the transcript of the June 30, 2014 deposition of William McKay (ECF. No. 169, Ex. 9) shall be redacted to remove personal or biographical information concerning matters beyond the scope of the interviewee's employment with the Debtors, in accordance with the Court's prior order of October 2, 2014; (4) the December 16, 2005 letter agreement between New Century and Sutton Funding LLC (ECF No. 169, Ex. 20) shall be redacted to remove

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 34 of 44

12/10/2014 12/10/2014
12/17/2014 12/17/2014 12/17/2014
12/17/2014 12/17/2014 12/17/2014 12/17/2014 12/17/2014

all mortgage loan pricing information in accordance with the letter agreement's confidentiality provision; and (5) Plaintiffs' loan files (ECF. No. 169, Exs. 29−30) shall be redacted to remove any personal or confidential information relating to individuals other than the named Plaintiffs in this litigation. (Signed by Judge Valerie E. Caproni on 12/8/2014) (mro) (Entered: 12/08/2014)
200 REPLY MEMORANDUM OF LAW in Support re: 188 MOTION to Exclude All Opinions Contained in the Report of Patricia A. McCoy and One Opinion Contained in the Report of Ian Ayres . . Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 12/10/2014)
201 DECLARATION of Skye Perryman in Support re: 188 MOTION to Exclude All Opinions Contained in the Report of Patricia A. McCoy and One Opinion Contained in the Report of Ian Ayres .. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F part 1 of 4, # 7 Exhibit F part 2 of 4, # 8 Exhibit F part 3 of 4, # 9 Exhibit F part 4 of 4, # 10 Exhibit G)(Ogden, David) (Entered: 12/10/2014)
202 LETTER addressed to Judge Valerie E. Caproni from David W. Ogden dated 12/17/2014 re: Filing Redacted Documents. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Ogden, David) (Entered: 12/17/2014)
203 MEMORANDUM OF LAW in Opposition re: 127 MOTION to Certify Class Notice of Plaintiffs' Motion and Motion for Class Certification. . Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 12/17/2014)
204 DECLARATION of Colin Reardon in Support re: 203 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14, # 15 Exhibit 15, # 16 Exhibit 16, # 17 Exhibit 17, # 18 Exhibit 18, # 19 Exhibit 19, # 20 Exhibit 20, # 21 Exhibit 21, # 22 Exhibit 22, # 23 Exhibit 23, # 24 Exhibit 24, # 25 Exhibit 25, # 26 Exhibit 26, # 27 Exhibit 27, # 28 Exhibit 28, # 29 Exhibit 29, # 30 Exhibit 30)(Reardon, Colin) (Entered: 12/17/2014)
205 NOTICE of (Report of Marsha J. Courchane). Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 12/17/2014)
206 NOTICE of (Expert Report of Timothy J. Riddiough, Ph.D.). Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 12/17/2014)
207 NOTICE of (Expert Report of Professor Stephen G. Ryan). Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 12/17/2014)
208 DECLARATION of Bradley Davis in Support re: 203 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A)(Ogden, David) (Entered: 12/17/2014)
209 DECLARATION of Kelly Finley in Support re: 203 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co.

Case: 1:12-cv-7667 As of: 11/12/2017 04:29 PM EST 35 of 44

12/17/2014 12/17/2014 12/17/2014 12/17/2014 12/17/2014
02/18/2015 02/19/2015 02/24/2015

LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Ogden, David) (Entered: 12/17/2014)
210 DECLARATION of Kristine Gilly in Support re: 203 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I)(Ogden, David) (Entered: 12/17/2014)
211 DECLARATION of Vanessa Vanacker in Support re: 203 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A)(Ogden, David) (Entered: 12/17/2014)
212 DECLARATION of Francis Telesca in Support re: 203 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D)(Ogden, David) (Entered: 12/17/2014)
213 DECLARATION of Anton Peterson in Support re: 203 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B − Part 1, # 3 Exhibit B − Part 2, # 4 Exhibit B − Part 3)(Ogden, David) (Entered: 12/17/2014)
214 DECLARATION of Eric Kaplan in Support re: 203 Memorandum of Law in Opposition to Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A − Part 1, # 2 Exhibit A − Part 2, # 3 Exhibit B − Part 1, # 4 Exhibit B − Part 2, # 5 Exhibit C − Part 1, # 6 Exhibit C − Part 2, # 7 Exhibit C − Part 3, # 8 Exhibit D, # 9 Exhibit E, # 10 Exhibit F, # 11 Exhibit G, # 12 Exhibit H, # 13 Exhibit I)(Ogden, David) (Entered: 12/17/2014)
215 LETTER addressed to Judge Valerie E. Caproni from Laurence Schwartztol dated February 18, 2015 re: Letter Notifying Court of Supplemental Authority. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit Sykes et al Decision)(Schwartztol, Laurence) (Entered: 02/18/2015)
216 LETTER addressed to Judge Valerie E. Caproni from Stuart Rossman dated February 19, 2015 re: New Suit in the Massachusetts Superior Court for Suffolk County, Civil Action No. 15−0083, against Morgan Stanley and the Commonwealth of Massachusetts. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Attachment 1, # 2 Attachment 2, # 3 Attachment 3, # 4 Attachment 4, # 5 Attachment 5)(Schwartztol, Laurence) (Entered: 02/19/2015)
217 ORDER: The parties are directed to appear for an evidentiary hearing on March 11, 2015, at 10:00 a.m., in Courtroom 443 of the Thurgood Marshall United States Courthouse, 40 Foley Square, New York, NY 10007. At the hearing the parties are directed to address the question of causation; specifically, whether (1) common questions predominate as to the adverse effect of so−called "combined risk" loans; and (2) common questions predominate as to the role that Morgan Stanley played in causing New Century to issue Plaintiffs' loans. Insofar as Plaintiffs intend to rely on the opinions (either written or in live testimony) of experts whose testimony is the subject of Defendants' motion to exclude, the parties are directed to be prepared to discuss the merits of Defendants' motion. ( Evidentiary Hearing set for 3/11/2015 at 10:00 AM in Courtroom 443, 40 Centre Street, New York, NY 10007 before Judge Valerie E. Caproni.) (Signed by Judge Valerie E. Caproni on 2/24/2015) (mro) (Entered: 02/25/2015)

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02/27/2015 02/27/2015 03/03/2015 03/03/2015 04/07/2015
04/07/2015 04/10/2015 04/16/2015 04/16/2015

218 LETTER MOTION to Adjourn Conference set for Wednesday March 11, 2015, addressed to Judge Valerie E. Caproni from David W. Ogden dated 2/27/2015. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Ogden, David) (Entered: 02/27/2015)
219 ORDER granting 218 Letter Motion to Adjourn Conference. Based on defense counsel's unavailability as discussed in this letter and in a joint phone call with Chambers, the hearing previously scheduled for March 11, 2015, is adjourned until April 9, 2015, at 10:00 a.m., in Courtroom 443 of the Thurgood Marshall United States Courthouse, 40 Foley Square, New York, NY 10007. (Evidentiary Hearing set for 4/9/2015 at 10:00 AM in Courtroom 443, 40 Centre Street, New York, NY 10007 before Judge Valerie E. Caproni.) (Signed by Judge Valerie E. Caproni on 2/27/2015) (spo) (Entered: 02/27/2015)
220 LETTER addressed to Judge Valerie E. Caproni from David W. Ogden dated 3/3/2015 re: in response to Plaintiffs' February 18, 2015 letter. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Ogden, David) (Entered: 03/03/2015)
221 LETTER addressed to Judge Valerie E. Caproni from David W. Ogden dated 3/3/2015 re: pending action in Massachusetts State Court. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Ogden, David) (Entered: 03/03/2015)
222 ORDER: The following attorney(s) are authorized to bring the Personal Electronic Device(s) and/or the General Purpose Computing Device(s) (collectively, "Devices") listed below into the Courthouse for use in a proceeding or trial in the action captioned Beverly Adkins et al. v. Morgan Stanley et al. No. 12cv7667. The date(s) for which such authorization is provided is (are) April 8−9, 2015. Attorney: 1. Sky Perryman Device(s): Laptop; iPhone; laser pointer; USB flash drive. Attorney: 2. John DeGenova. Device(s): Laptop; iPhone; laser pointer; USB flash drive. Attorney 3. Colin Reardon. Device(s): Laptop; iPhone; Blackberry; USB flash drive. The attorney(s) identified in this Order must present a copy of this Order when entering the Courthouse. Bringing any authorized Device(s) into the Courthouse or its Environs constitutes a certification by the attorney that he or she will comply in all respects with the restrictions and obligations set forth in Standing Order M10−468, as Revised. Attorney: David W. Ogden. Device(s): Laptop; cellular phone, Blackberry; iPad. Attorney: Noah L. Levine. Device(s): Laptop; cellular phone, Blackberry. Attorney: Danielle Conley. Device(s): Laptop; cellular phone, Blackberry. (Signed by Judge Valerie E. Caproni on 4/7/2015) (spo) (Entered: 04/07/2015)
223 ORDER: It is hereby ORDERED that the following attorney(s) are authorized to bring the Personal Electric Device(s) and/or the General Purpose Computing Device(s) (collectively, "Devices") listed below into the Courthouse for use in a proceeding or trial in the action captioned Beverly Adkins et al. v. Morgan Stanley et al., No. 12cv7667−VEC. The date(s) for which such authorization is provided are April 8−9, 2015, as set forth in this order. (Signed by Judge Valerie E. Caproni on 4/7/2015) (kko) (Entered: 04/07/2015)
Minute Entry for proceedings held before Judge Valerie E. Caproni: Evidentiary Hearing held on 4/10/2015. Court instructed the parties to brief the issue on how class certification will impact their case. (Court Reporter Kristen Sellin and Sam Mauro) (Brantley, Michael) (Entered: 04/10/2015)
224 LETTER addressed to Judge Valerie E. Caproni from David W. Ogden dated 04/16/2015 re: Response to Courts question at last weeks hearing. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Ogden, David) (Entered: 04/16/2015)
225 LETTER addressed to Judge Valerie E. Caproni from Rachel Geman, Rachel E. Goodman, Stuart T. Rossman, Laurence M. Schwartztol dated April 16, 2015 re: Response to Court's question at April 9 Hearing. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams,

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William Young.(Geman, Rachel) (Entered: 04/16/2015)
226 LETTER addressed to Judge Valerie E. Caproni from David W. Ogden dated April 21, 2015 re: Response to Plaintiffs' letter dated 4/16/15. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A)(Ogden, David) (Entered: 04/21/2015)
227 MEMO ENDORSEMENT on re: 226 Letter response to Plaintiffs' letter dated 4/16/15, filed by Morgan Stanley & Co. LLC, Morgan Stanley, Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Inc. ENDORSEMENT: If the Court determines that it should consider an alternative class structure, the parties will be given ample opportunity to brief that issue. No additional letters should be submitted regarding that issue at this time. (Signed by Judge Valerie E. Caproni on 4/22/2015) (spo) (Entered: 04/22/2015)
228 TRANSCRIPT of Proceedings re: hearing held on 4/9/2015 before Judge Valerie E. Caproni. Court Reporter/Transcriber: Khristine Sellin, (212) 805−0300. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 5/18/2015. Redacted Transcript Deadline set for 5/29/2015. Release of Transcript Restriction set for 7/27/2015.(McGuirk, Kelly) (Entered: 04/24/2015)
229 NOTICE OF FILING OF OFFICIAL TRANSCRIPT Notice is hereby given that an official transcript of a hearing proceeding held on 4/9/15 has been filed by the court reporter/transcriber in the above−captioned matter. The parties have seven (7) calendar days to file with the court a Notice of Intent to Request Redaction of this transcript. If no such Notice is filed, the transcript may be made remotely electronically available to the public without redaction after 90 calendar days...(McGuirk, Kelly) (Entered: 04/24/2015)
230 OPINION & ORDER re: 127 MOTION to Certify Class Notice of Plaintiffs' Motion and Motion for Class Certification. filed by Rubbie McCoy, Charmaine Williams, Rebecca Pettway, William Young, Michigan Legal Services, Beverly Adkins, 188 MOTION to Exclude All Opinions Contained in the Report of Patricia A. McCoy and One Opinion Contained in the Report of Ian Ayres , filed by Morgan Stanley & Co. LLC, Morgan Stanley, Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Inc. Plaintiffs' Motion for Class Certification is DENIED and Defendants' Motion to Exclude All Opinions Contained in the Report of Patricia A. McCoy and One Opinion Contained in the Report of Ian Ayres is DISMISSED as moot. While the Plaintiffs' April 16, 2015 letter did not fully address the effect that a denial of class certification would have on the Plaintiffs' practical ability to pursue this lawsuit (notwithstanding the fact that they would not legally be barred from doing so), the Court recognizes the likelihood that this ruling constitutes a "death knell" for Plaintiffs' lawsuit, cf. Sumitomo Copper Litig. v. Credit Lyonnais Rouse, Ltd., 262 F.3d 134, 140−41 (2d Cir. 2001), and that appellate review pursuant to Rule 23(f) may therefore be appropriate, see Levitt v. PriceWaterhouseCooper LLP, No. 07−3334−mv, 2007 WL 4060136 (2d Cir. Nov. 7, 2007). The Clerk of the Court is respectfully directed to terminate Dkt. 127 and Dkt. 188. (Signed by Judge Valerie E. Caproni on 5/14/2015) (spo) (Entered: 05/14/2015)
231 NOTICE OF WITDRAWAL OF DANIELLE CONLEY AS COUNSEL OF RECORD AND ORDER: Attorney Danielle Y. Conley hereby withdraws as counsel for Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Inc., and Morgan Stanley Mortgage Capital Holdings LLC ("Morgan Stanley") in this action. As of May 29, 2014, Ms. Conley will no longer be associated with the law firm of Wilmer Cutler Pickering Hale and Dorr LLP ("WilmerHale"). Morgan Stanley continues to be represented by other counsel from WilmerHale. Ms. Conley is not asserting a retaining or charging of lien. The Clerk of the Court is respectfully directed to terminate Ms. Conley from the docket. (Attorney Danielle Conley terminated.) (Signed by Judge Valerie E. Caproni on 5/28/2015) (spo) (Entered: 05/28/2015)
232 ORDER: The parties are directed to appear for a status conference June 26, 2015, at 10:30 a.m., in Courtroom 443 of the Thurgood Marshall United States Courthouse, 40

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08/14/2015 08/17/2015 08/18/2015
09/30/2015

Foley Square, New York, NY 10007. (Status Conference set for 6/26/2015 at 10:30 AM in Courtroom 443, 40 Centre Street, New York, NY 10007 before Judge Valerie E. Caproni.) (Signed by Judge Valerie E. Caproni on 6/1/2015) (spo) (Entered: 06/01/2015)
233 LETTER addressed to Judge Valerie E. Caproni from Rachel E. Goodman dated June 1, 2015 re: Filing of Petition for Review Under Fed. R. Civ. P. 23(f). Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit, # 2 Exhibit)(Goodman, Rachel) (Entered: 06/01/2015)
234 MOTION for Laurence M. Schwartztol to Withdraw as Attorney . Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young.(Goodman, Rachel) (Entered: 06/02/2015)
235 ORDER GRANTING LEAVE TO WITHDRAW LAURENCE M. SCHWARTZTOL AS COUNSEL granting 234 Motion to Withdraw as Attorney. Laurence M. Schwartztol has withdrawn as counsel for Plaintiffs in this action. (Attorney Laurence Michael Schwartztol terminated.) (Signed by Judge Valerie E. Caproni on 6/2/2015) (spo) (Entered: 06/02/2015)
236 LETTER MOTION to Adjourn Conference set for June 26, 2015 addressed to Judge Valerie E. Caproni from Rachel Geman dated June 4, 2015. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young.(Geman, Rachel) (Entered: 06/04/2015)
237 ORDER granting 236 Letter Motion to Adjourn Conference. The conference previously scheduled for June 26, 2015, is adjourned until July 10, 2015, at 10:30 a.m. SO ORDERED. Status Conference set for 7/10/2015 at 10:30 AM before Judge Valerie E. Caproni. (Signed by Judge Valerie E. Caproni on 6/4/2015) (mro) (Entered: 06/05/2015)
Minute Entry for proceedings held before Judge Valerie E. Caproni: Status Conference held on 7/10/2015. (Court Reporter Pat Kaneshiro−Miller) (Brantley, Michael) (Entered: 07/10/2015)
238 ORDER: IT IS HEREBY ORDERED that this action be STAYED pending decision of the United States Court of Appeals for the Second Circuit regarding Plaintiffs' motion for an interlocutory appeal pursuant to Federal Rule of Civil Procedure 23(f). (As is further set forth in this Order.) (Signed by Judge Valerie E. Caproni on 7/10/2015) (spo) (Entered: 07/10/2015)
239 ORDER of USCA (Certified Copy). USCA Case Number 15−1748. Petitioners move, pursuant to Federal Rule of Civil Procedure 23(f), for leave to appeal the district court's order denying Petitioners= motion for class certification. Upon due consideration, it is hereby ORDERED that the petition for immediate appeal is GRANTED. Catherine O'Hagan Wolfe, Clerk USCA for the Second Circuit. Certified: 07/30/2015. [New Case No. 15−2398; $505.00 APPEAL FEE DUE] (nd) (Entered: 07/30/2015)
Appeal Record Sent to USCA (Electronic File). Certified Indexed record on Appeal Electronic Files for 239 USCA Order, USCA Case Number 15−2398, were transmitted to the U.S. Court of Appeals. (tp) Modified on 9/2/2015 (nd). (Entered: 08/14/2015)
USCA Appeal Fees received $ 505.00 receipt number 465401132244 on 08/13/2015 re: 239 Order granting FRCP 23(f). [USCA CASE NO. 15−2398]. (nd) (Entered: 08/17/2015)
240 MANDATE of USCA (Certified Copy). USCA Case Number 15−1748. Petitioners move, pursuant to Federal Rule of Civil Procedure 23(f), for leave to appeal the district court's order denying Petitioners' motion for class certification. Upon due consideration, it is hereby ORDERED that the petition for immediate appeal is GRANTED. Catherine O'Hagan Wolfe, Clerk USCA for the Second Circuit. Issued As Mandate: 08/18/2015. (nd) (Entered: 08/18/2015)
241 LETTER addressed to Judge Valerie E. Caproni from Nicole D. Sugnet dated September 30, 2015 re: Filing redacted deposition transcripts pursuant to the Court's Opinion and Order (relating to Dkt. No. 230). Document filed by Beverly Adkins,

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Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13 Part 1, # 14 Exhibit 13 Part 2, # 15 Exhibit 13 Part 3, # 16 Exhibit 13 Part 4, # 17 Exhibit 13 Part 5, # 18 Exhibit 13 Part 6, # 19 Exhibit 13 Part 7, # 20 Exhibit 14, # 21 Exhibit 15, # 22 Exhibit 16, # 23 Exhibit 17, # 24 Exhibit 18, # 25 Exhibit 19, # 26 Exhibit 20, # 27 Exhibit 21, # 28 Exhibit 22, # 29 Exhibit 23, # 30 Exhibit 24, # 31 Exhibit 25, # 32 Exhibit 26, # 33 Exhibit 27)(Sugnet, Nicole) (Entered: 09/30/2015)
242 LETTER addressed to Judge Valerie E. Caproni from Rachel J. Geman dated November 9, 2015 re: Filing redacted deposition transcripts pursuant to the Court's Opinion and Order (relating to Dkt. No. 230); supplement to 241 letter dated September 30, 2015. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3)(Geman, Rachel) (Entered: 11/09/2015)
First Supplemental ROA Sent to USCA (Electronic File). USCA Case Number 15−2398, Certified Supplemental Indexed record on Appeal Electronic Files for 242 Letter, filed by Rubbie McCoy, Charmaine Williams, Rebecca Pettway, William Young, Michigan Legal Services, Beverly Adkins, 241 Letter,,,, filed by Rubbie McCoy, Charmaine Williams, Rebecca Pettway, William Young, Michigan Legal Services, Beverly Adkins were transmitted to the U.S. Court of Appeals. (nd) (Entered: 11/12/2015)
243 MOTION for Brooke A. Merriweather−Tucker to Withdraw as Attorney . Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young.(Goodman, Rachel) (Entered: 06/07/2016)
244 ORDER GRANTING LEAVE TO WITHDRAW AS COUNSEL granting 243 Motion for Brooke A. Merriweather−Tucker to Withdraw as Attorney. Before the Court is the Motion for Leave to Withdraw as Counsel for Plaintiffs by Brooke A. Merriweather−Tucker. After considering the Motion and the arguments in regard thereto, the Court is of the opinion that the Motion should be granted. It is therefore ORDERED, ADJUDGED, AND DECREED that Brooke A. Merriweather−Tucker has withdrawn as counsel for Plaintiffs in this action. Attorney Brooke A. Merriweather−Tucker terminated. (Signed by Judge Valerie E. Caproni on 6/8/2016) (kl) (Entered: 06/08/2016)
245 MANDATE of USCA (Certified Copy) USCA Case Number 15−2398. UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that the order of the district court be AFFIRMED. Catherine O'Hagan Wolfe, Clerk USCA for the Second Circuit. Issued As Mandate: 08/04/2016. (nd) (Entered: 08/04/2016)
246 ORDER. IT IS HEREBY ORDERED that this action is no longer stayed, and the parties must appear for a conference on August 26, 2016, at 10:00 a.m. in courtroom 443 of the Thurgood Marshall Courthouse to discuss setting a briefing schedule for Defendants anticipated motion for summary judgment. No later than August 18, 2016, the parties must submit a joint letter proposing a motion for summary judgment briefing schedule. SO ORDERED. (Conference set for 8/26/2016 at 10:00 AM in Courtroom 443, 40 Centre Street, New York, NY 10007 before Judge Valerie E. Caproni.) (Signed by Judge Valerie E. Caproni on 8/5/2016) (rjm) (Entered: 08/05/2016)
247 LETTER addressed to Judge Valerie E. Caproni from Dennis Parker dated August 18, 2016 re: Summary Judgment Briefing Schedule. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young.(Goodman, Rachel) (Entered: 08/18/2016)
248 LETTER addressed to Judge Valerie E. Caproni from David W. Ogden dated August 18, 2016 re: in response to Court Order of August 5, 2016,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Ogden, David) (Entered: 08/18/2016)

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Minute Entry for proceedings held before Judge Valerie E. Caproni: Status Conference held on 8/26/2016. Order to follow. (Court Reporter Karen Gorlawski) (Brantley, Michael) (Entered: 08/26/2016)
249 ORDER: IT IS HEREBY ORDERED that no later than October 7, 2016, Defendants must file their motion for summary judgment. Plaintiffs must respond no later than November 11, 2016. Defendants must reply no later than November 30, 2016, or, if Plaintiffs opposition to Defendants motion includes expert reports, Defendants must reply no later than December 16, 2016. Moreover, if Plaintiffs make a request for discovery under Rule 56(d), they may request to amend this briefing schedule. ( Motions due by 10/7/2016., Responses due by 11/11/2016, Replies due by 12/16/2016.) (Signed by Judge Valerie E. Caproni on 8/26/2016) (cla) (Entered: 08/26/2016)
250 TRANSCRIPT of Proceedings re: conference held on 7/10/2015 before Judge Valerie E. Caproni. Court Reporter/Transcriber: Patricia Kaneshiro−Miller, (212) 805−0300. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 9/22/2016. Redacted Transcript Deadline set for 10/3/2016. Release of Transcript Restriction set for 12/1/2016.(McGuirk, Kelly) (Entered: 08/29/2016)
251 NOTICE OF FILING OF OFFICIAL TRANSCRIPT Notice is hereby given that an official transcript of a conference proceeding held on 7/10/16 has been filed by the court reporter/transcriber in the above−captioned matter. The parties have seven (7) calendar days to file with the court a Notice of Intent to Request Redaction of this transcript. If no such Notice is filed, the transcript may be made remotely electronically available to the public without redaction after 90 calendar days...(McGuirk, Kelly) (Entered: 08/29/2016)
252 LETTER MOTION for Leave to File Excess Pages addressed to Judge Valerie E. Caproni from David W. Ogden dated September 21, 2016. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Ogden, David) (Entered: 09/21/2016)
253 ORDER granting 252 Letter Motion for Leave to File Excess Pages. Application GRANTED. (Signed by Judge Valerie E. Caproni on 9/22/2016) (mro) (Entered: 09/22/2016)
254 TRANSCRIPT of Proceedings re: Conference held on 8/26/2016 before Judge Valerie E. Caproni. Court Reporter/Transcriber: Karen Gorlaski, (212) 805−0300. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 10/17/2016. Redacted Transcript Deadline set for 10/27/2016. Release of Transcript Restriction set for 12/27/2016.(Grant, Patricia) (Entered: 09/22/2016)
255 NOTICE OF FILING OF OFFICIAL TRANSCRIPT Notice is hereby given that an official transcript of a Conference proceeding held on 08/26/2016 has been filed by the court reporter/transcriber in the above−captioned matter. The parties have seven (7) calendar days to file with the court a Notice of Intent to Request Redaction of this transcript. If no such Notice is filed, the transcript may be made remotely electronically available to the public without redaction after 90 calendar days...(Grant, Patricia) (Entered: 09/22/2016)
256 LETTER addressed to Judge Valerie E. Caproni from Dennis D. Parker dated September 23, 2016 re: Stipulation of Voluntary Dismissal by Plaintiff Michigan Legal Services. Document filed by Beverly Adkins, Rubbie McCoy, Michigan Legal Services, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit Stipulation of Voluntary Dismissal by Plaintiff Michigan Legal Services)(Parker, Dennis) (Entered: 09/23/2016)
257 STIPULATION OF VOLUNTARY DISMISSAL BY PLAINTIFF MICHIGAN LEGAL SERVICES PURSUANT TO RULE 41(A)(1)(A)(ii): IT IS HEREBY STIPULATED AND AGREED by and between the parties and their respective counsel that all claims of Plaintiff Michigan Legal Services in the above−captioned

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action are DISMISSED with prejudice pursuant to Rule 41(a)(1)(A)(ii) of the Federal Rules of Civil Procedure. Parties to bear their own costs. Michigan Legal Services terminated. (Signed by Judge Valerie E. Caproni on 9/26/2016) (mro) (Entered: 09/26/2016)
258 MOTION for Summary Judgment . Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Ogden, David) (Entered: 10/07/2016)
259 MEMORANDUM OF LAW in Support re: 258 MOTION for Summary Judgment . . Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 10/07/2016)
260 RULE 56.1 STATEMENT. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 10/07/2016)
261 DECLARATION of Colin Reardon in Support re: 258 MOTION for Summary Judgment .. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14, # 15 Exhibit 15, # 16 Exhibit 16, # 17 Exhibit 17, # 18 Exhibit 18, # 19 Exhibit 19, # 20 Exhibit 20, # 21 Exhibit 21, # 22 Exhibit 22, # 23 Exhibit 23, # 24 Exhibit 24, # 25 Exhibit 25, # 26 Exhibit 26, # 27 Exhibit 27, # 28 Exhibit 28, # 29 Exhibit 29, # 30 Exhibit 30, # 31 Exhibit 31, # 32 Exhibit 32, # 33 Exhibit 33, # 34 Exhibit 34, # 35 Exhibit 35, # 36 Exhibit 36 (Part 1 of 4), # 37 Exhibit 36 (Part 2 of 4), # 38 Exhibit 36 (Part 3 of 4), # 39 Exhibit 36 (Part 4 of 4), # 40 Exhibit 37, # 41 Exhibit 38, # 42 Exhibit 39, # 43 Exhibit 40, # 44 Exhibit 41, # 45 Exhibit 42)(Ogden, David) (Entered: 10/07/2016)
262 DECLARATION of Bradley Davis in Support re: 258 MOTION for Summary Judgment .. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A (Part 1 of 4), # 2 Exhibit A (Part 2 of 4), # 3 Exhibit A (Part 3 of 4), # 4 Exhibit A (Part 4 of 4))(Ogden, David) (Entered: 10/07/2016)
263 DECLARATION of Kelly Finley in Support re: 258 MOTION for Summary Judgment .. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Ogden, David) (Entered: 10/07/2016)
264 DECLARATION of Kristine Gilly in Support re: 258 MOTION for Summary Judgment .. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I)(Ogden, David) (Entered: 10/07/2016)
265 DECLARATION of Eric Kaplan in Support re: 258 MOTION for Summary Judgment .. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I)(Ogden, David) (Entered: 10/07/2016)
266 DECLARATION of Anton Peterson in Support re: 258 MOTION for Summary Judgment .. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Ogden, David) (Entered: 10/07/2016)

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267 DECLARATION of Francis Telesca in Support re: 258 MOTION for Summary Judgment .. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D)(Ogden, David) (Entered: 10/07/2016)
268 LETTER addressed to Judge Valerie E. Caproni from Dennis D. Parker dated 10/18/2016 re: Extension of Time to Respond to Defendants' Motion for Summary Judgment. Document filed by Beverly Adkins, Rubbie McCoy, Rebecca Pettway, Charmaine Williams, William Young.(Parker, Dennis) (Entered: 10/18/2016)
269 MEMO ENDORSEMENT on re: 268 Letter, filed by Rubbie McCoy, Charmaine Williams, Rebecca Pettway, William Young, Beverly Adkins. ENDORSEMENT: Application GRANTED. Plaintiffs' deadline to oppose Defendants' motion for summary judgment is adjourned to December 2, 2016. Defendants' deadline to reply is held in abeyance pending the parties' joint recommendation of a new reply deadline. SO ORDERED. (Responses due by 12/2/2016) (Signed by Judge Valerie E. Caproni on 10/18/2016) (kl) (Entered: 10/18/2016)
270 MEMORANDUM OF LAW in Opposition re: 258 MOTION for Summary Judgment . . Document filed by Beverly Adkins, Rubbie McCoy, Rebecca Pettway, Charmaine Williams, William Young. (Goodman, Rachel) (Entered: 12/02/2016)
271 COUNTER STATEMENT TO 260 Rule 56.1 Statement. Document filed by Beverly Adkins, Rubbie McCoy, Rebecca Pettway, Charmaine Williams, William Young. (Goodman, Rachel) (Entered: 12/02/2016)
272 DECLARATION of Rachel E. Goodman in Opposition re: 258 MOTION for Summary Judgment .. Document filed by Beverly Adkins, Rubbie McCoy, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14, # 15 Exhibit 15, # 16 Exhibit 16, # 17 Exhibit 17, # 18 Exhibit 18, # 19 Exhibit 19, # 20 Exhibit 20, # 21 Exhibit 21, # 22 Exhibit 22, # 23 Exhibit 23, # 24 Exhibit 24, # 25 Exhibit 25, # 26 Exhibit 26, # 27 Exhibit 27, # 28 Exhibit 28, # 29 Exhibit 29, # 30 Exhibit 30, # 31 Exhibit 31, # 32 Exhibit 32, # 33 Exhibit 33, # 34 Exhibit 34, # 35 Exhibit 35, # 36 Exhibit 36, # 37 Exhibit 37, # 38 Exhibit 38, # 39 Exhibit 39, # 40 Exhibit 40, # 41 Exhibit 41, # 42 Exhibit 42, # 43 Exhibit 43, # 44 Exhibit 44, # 45 Exhibit 45, # 46 Exhibit 46, # 47 Exhibit 47, # 48 Exhibit 48, # 49 Exhibit 49, # 50 Exhibit 50, # 51 Exhibit 51, # 52 Exhibit 52, # 53 Exhibit 53, # 54 Exhibit 54, # 55 Exhibit 55, # 56 Exhibit 56, # 57 Exhibit 57, # 58 Exhibit 58, # 59 Exhibit 59, # 60 Exhibit 60)(Goodman, Rachel) (Entered: 12/02/2016)
273 ORDER: IT IS HEREBY ORDERED that no later than December 12, 2016, the parties must jointly propose a new reply deadline. (Signed by Judge Valerie E. Caproni on 12/6/2016) (kgo) (Entered: 12/06/2016)
274 LETTER addressed to Judge Valerie E. Caproni from Noah Levine dated December 9, 2016 re: Reply Brief Due Date. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Levine, Noah) (Entered: 12/09/2016)
275 MEMO ENDORSEMENT on re: 274 Letter, filed by Morgan Stanley & Co. LLC, Morgan Stanley, Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Inc. ENDORSEMENT: Application GRANTED. Set Deadlines/Hearing as to 258 MOTION for Summary Judgment: Replies due by 1/13/2017. (Signed by Judge Valerie E. Caproni on 12/9/2016) (tn) (Entered: 12/09/2016)
276 NOTICE OF WITHDRAWAL OF COLIN REARDON AS COUNSEL OF RECORD AND ORDER: Colin T. Reardon hereby withdraws as counsel for the Morgan Stanley Defendants listed herein. Morgan Stanley continues to be represented by other counsel from WilmerHale. Attorney Colin Reardon terminated. (Signed by Judge Valerie E. Caproni on 12/29/2016) (kgo) (Entered: 12/29/2016)

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277 REPLY MEMORANDUM OF LAW in Support re: 258 MOTION for Summary Judgment . . Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 01/13/2017)
278 COUNTER STATEMENT TO Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Ogden, David) (Entered: 01/13/2017)
279 DECLARATION of Noah Levine in Support re: 277 Reply Memorandum of Law in Support of Motion,. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc.. (Attachments: # 1 Exhibit 43, # 2 Exhibit 44, # 3 Exhibit 45, # 4 Exhibit 46, # 5 Exhibit 47, # 6 Exhibit 48, # 7 Exhibit 49, # 8 Exhibit 50, # 9 Exhibit 51)(Ogden, David) (Entered: 01/13/2017)
280 MOTION for NICOLE D. SUGNET to Withdraw as Attorney . Document filed by Beverly Adkins, Rubbie McCoy, Rebecca Pettway, Charmaine Williams, William Young. (Attachments: # 1 [Proposed] Order)(Sugnet, Nicole) (Entered: 02/10/2017)
281 ORDER GRANTING LEAVE TO WITHDRAW AS COUNSEL granting 280 Motion to Withdraw as Attorney. It is ORDERED, ADJUDGED, AND DECREED that Nicole D. Sugnet has withdrawn as counsel for Plaintiffs in this action. Attorney Nicole Diane Sugnet terminated. (Signed by Judge Valerie E. Caproni on 2/14/2017) (kgo) (Entered: 02/14/2017)
282 SUGGESTION OF DEATH upon the record as to Rebecca Pettway on 3/31/2017 . Document filed by Beverly Adkins, Rubbie McCoy, Rebecca Pettway, Charmaine Williams, William Young(Goodman, Rachel) (Entered: 06/01/2017)
283 ORDER: WHEREAS on June 9, 2017, counsel for Plaintiffs informed the Court that Ms. Pettway had died on March 31, 2017 (Dkt. 282), IT IS HEREBY ORDERED that no later than June 30, 2017, counsel for Plaintiffs must submit a letter informing the Court whether they intend to substitute a party for Ms. Pettway, and if not, why the Court should not dismiss Ms. Pettway's claim as moot prior to the 90 days provided in Federal Rule of Civil Procedure 25(a)(1). (Signed by Judge Valerie E. Caproni on 6/22/2017) (kgo) (Entered: 06/22/2017)
284 LETTER addressed to Judge Valerie E. Caproni from Rachel E. Goodman dated 6/30/2017 re: June 22, 2017 Order (ECF No. 283). Document filed by Beverly Adkins, Rubbie McCoy, Charmaine Williams, William Young.(Goodman, Rachel) (Entered: 06/30/2017)
285 ORDER: WHEREAS the parties have requested oral argument on Defendants' motion for summary judgment, IT IS HEREBY ORDERED that no later than July 7, 2017, the parties must submit three proposed dates in July or August for oral argument. (Signed by Judge Valerie E. Caproni on 6/30/2017) (kgo) (Entered: 06/30/2017)
286 JOINT LETTER addressed to Judge Valerie E. Caproni from Noah A. Levine dated July 6, 2017 re: Proposed Dates for Oral Argument on Defendants' Motion for Summary Judgement. Document filed by Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Mortgage Capital Inc..(Levine, Noah) (Entered: 07/06/2017)
287 MEMO ENDORSEMENT on re: 286 Letter Submitting Proposed Dates for Oral Argument on Defendants' Motion for Summary Judgement, filed by Morgan Stanley & Co. LLC, Morgan Stanley, Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley Abs Capital I Inc., Morgan Stanley Mortgage Capital Inc. ENDORSEMENT: Oral argument in this matter is scheduled for August 9, 2017, at 10:00 a.m. in Courtroom 443 of the Thurgood Marshall Courthouse, 40 Foley Square, New York, NY 10007. So Ordered., (Oral Argument set for 8/9/2017 at 10:00 AM in Courtroom 443, 40 Centre Street, New York, NY 10007 before Judge Valerie E. Caproni.) (Signed by Judge Valerie E. Caproni on 7/6/17) (yv) (Entered: 07/06/2017)
288 MEMO ENDORSEMENT on NOTICE OF WITHDRAWAL AS COUNSEL OR RECORD AND ORDER. ENDORSEMENT: SO ORDERED. Attorney Skye Perryman terminated. (Signed by Judge Valerie E. Caproni on 7/14/2017) (kgo)

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(Entered: 07/14/2017)
289 LETTER addressed to Judge Valerie E. Caproni from Rachel E. Goodman dated 7/14/2017 re: June 22, 2017 Order (ECF No. 283). Document filed by Beverly Adkins, Rubbie McCoy, Charmaine Williams, William Young. (Attachments: # 1 Exhibit A)(Goodman, Rachel) (Entered: 07/14/2017)
290 LETTER addressed to Judge Valerie E. Caproni from Dennis D. Parker dated July 19, 2017 re: Stipulation of Voluntary Dismissal. Document filed by Beverly Adkins, Rubbie McCoy, Charmaine Williams, William Young. (Attachments: # 1 Exhibit A)(Parker, Dennis) (Entered: 07/19/2017)
291 JOINT LETTER addressed to Judge Valerie E. Caproni from Dennis D. Parker and David W. Ogden dated July 19, 2017 re: August 9, 2017 Oral Argument. Document filed by Beverly Adkins, Rubbie McCoy, Charmaine Williams, William Young.(Parker, Dennis) (Entered: 07/19/2017)
292 MEMO ENDORSEMENT on re: 291 Letter filed by Rubbie McCoy, Charmaine Williams, William Young, Beverly Adkins. ENDORSEMENT: Given Ms. Pettway's heir does not intend to pursue Ms. Pettway's claim in this matter and given that counsel for both parties agree to the dismissal of Ms. Pettway's claims, her claims are dismissed. Given that the remaining Plaintiffs have separately stipulated to dismiss their claims voluntarily, oral argument on Defendants' motion for summary judgment is cancelled. The Clerk of Court is respectfully directed to close all open motions and to terminate the case. (Signed by Judge Valerie E. Caproni on 7/19/2017) (kgo) (Entered: 07/19/2017)
Terminate Transcript Deadlines (kgo) (Entered: 07/19/2017)
293 JOINT STIPULATION OF VOLUNTARY DISMISSAL BY PLAINTIFFS BEVERLY ADKINS, RUBBIE MCCOY, CHARMAINE WILLIAMS, AND WILLIAM YOUNG PURSUANT TO RULE 41(A)(1)(A)(ii): IT IS HEREBY STIPULATED AND AGREED by and between the parties and their respective counsel that all claims of Plaintiffs Beverly Adkins, Rubbie McCoy, Charmaine Williams, and William Young in the above−captioned action are DISMISSED with prejudice pursuant to Rule 41(a)(1)(A)(ii) of the Federal Rules of Civil Procedure. Parties to bear their own costs. Charmaine Williams (on behalf of herself and all others similarly situated), William Young (on behalf of himself and all others similarly situated), Beverly Adkins (on behalf of herself and all others similarly situated) and Rubbie McCoy (on behalf of herself and all others similarly situated) terminated. (Signed by Judge Valerie E. Caproni on 7/19/2017) (ap) (Entered: 07/19/2017)