4836-7031-1912.v1 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

LEE CHRISTAKIS, Individually and on 

Behalf of All Others Similarly Situated, 

Plaintiff, 

vs. 

FIFTH THIRD BANCORP, et al., 

Defendants. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

Case No. 1:20-cv-02176 

CLASS ACTION 

Judge Sara L. Ellis 

LEAD PLAINTIFF’S MOTION FOR RECONSIDERATION OF THE COURT’S ORDER ON 

DEFENDANTS’ MOTION TO DISMISS (ECF NO. 66) 

Case: 1:20-cv-02176 Document #: 67 Filed: 05/11/21 Page 1 of 12 PageID #:1126
- 1 - 

4836-7031-1912.v1 

Pursuant to Federal Rules of Civil Procedure Rule 54(b), Lead Plaintiff Heavy & General 

Laborers’ Local 472 & 172 Pension and Annuity Funds respectfully moves this Court to reconsider 

its April 27, 2021 Opinion and Order granting Defendants’ motion to dismiss Plaintiff’s 

Consolidated Complaint for Violations of the Federal Securities Laws. Specifically, Plaintiff seeks 

reconsideration of the Court’s finding that the Complaint failed to allege facts that give rise to a 

strong inference of scienter as to defendant Greg D. Carmichael. ECF No. 66 (“MTD Order”). 

I. INTRODUCTION 

The Court’s order granting Defendants’ motion to dismiss for lack of scienter as to 

Carmichael reflects an error that warrants reconsideration. While Plaintiff appreciates the Court’s 

time and effort considering this case, in finding that “all that the allegations concerning the CIDs 

demonstrate at this stage is that Carmichael knew of the investigation, not necessarily of the problem 

itself,” the Court appears to have overlooked a critical and well-pleaded fact in support of Plaintiff’s 

Section 10(b) claim that adequately alleges that Carmichael acted with scienter in connection with 

certain misleading statements he made. MTD Order at 29. 

The Court and Defendants acknowledge that Carmichael received a Civil Investigative 

Demand (“CID”) from the Consumer Financial Protection Bureau (“CFPB”) just days before the 

start of the Class Period. And this CID notified Carmichael not just that the CFPB was investigating 

Fifth Third, but that the CFPB was investigating the bank for unauthorized transactions on behalf of 

the Company’s customers, including opening accounts and providing services without customer 

consent or knowledge. ¶21; MTD Order at 2-3.1

 Further, Defendants admit that bank employees 

opened unauthorized accounts from at least 2010-2016 and do not deny that they knew about these 

 

1

 All “¶_” and “¶¶_” references are to the Consolidated Complaint for Violations of the Federal 

Securities Laws (ECF No. 53). All citations are omitted and emphasis is added unless otherwise noted. 

Case: 1:20-cv-02176 Document #: 67 Filed: 05/11/21 Page 2 of 12 PageID #:1127
- 2 - 

4836-7031-1912.v1 

unauthorized accounts and the specific problems identified in the CID when Carmichael spoke to 

investors. ECF Nos. 59-6, 60 at 27-28. 

The Court, however, failed to provide Plaintiff the benefit of the plausible inference that—

based on the CID, the other investigative demands that followed, and Defendants’ admission that 

bank employees opened unauthorized accounts from 2010-2016—Carmichael knew of the specific 

problems underlying the CFPB investigation regarding the unauthorized accounts and predatory 

consumer practices at Fifth Third by the start of the Class Period but knowingly failed to disclose 

that information to investors. This failure to disclose made Carmichael’s Class Period statements 

about Fifth Third’s risk disclosures, risk management practices, Code of Business Conduct and 

Ethics and consumer business knowingly misleading. Accordingly, for the reasons set for the below, 

Plaintiff respectfully requests that the Court exercise its discretion to reconsider its MTD Order as to 

Carmichael. 

II. STANDARD FOR MOTION FOR RECONSIDERATION UNDER RULE 

54(b) 

Since the MTD Order was issued without prejudice and granted Plaintiff leave to file an 

amend complaint, a motion to reconsider the Order is properly governed by Rule 54(b), which 

provides that non-final orders “may be revised at any time before the entry of a judgment 

adjudicating all the claims and all the parties’ rights and liabilities.” Fed. R. Civ. P. 54(b); Galvan v. 

Norberg, 678 F.3d 581, 587 n.3 (7th Cir. 2012) (stating “Rule 54(b) governs non-final orders and 

permits revision at any time prior to the entry of judgment”); see also Patrick v. City of Chicago, 103 

F. Supp. 3d 907, 911-12 (N.D. Ill. 2015) (Under Rule 54(b) “the Court may, at its discretion, 

reconsider its ruling on Defendants’ motions to dismiss.”).2

 

2

 Should the Court find that Rule 54(b) does not apply, Plaintiff respectfully requests that the Court 

alternatively consider Plaintiff’s motion for reconsideration under Rule 59(e). Both Rules “are judged by 

largely the same standards.” See Johnke v. Espinal-Quiroz, 2018 WL 3361888, at *3 (N.D. Ill. July 9, 2018) 

Case: 1:20-cv-02176 Document #: 67 Filed: 05/11/21 Page 3 of 12 PageID #:1128
- 3 - 

4836-7031-1912.v1 

The basic function of a motion to reconsider under Rule 54(b) is to ‘“correct manifest errors 

of law or fact or to present[] newly discovered evidence.’” Caisse Nationale de Credit Agricole v. 

CBI Indus., Inc., 90 F.3d 1264. 1269 (7th Cir. 1996). A motion for reconsideration is proper where 

the court ‘“has patently misunderstood a party, or has made a decision outside the adversarial issues 

presented to the Court by the parties, or has made an error not of reasoning but of apprehension.”’ 

Bank of Waunakee v. Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir. 1990); Swervo 

Entm’t Grp., LLC v. Mensch, 2017 WL 11562550, at *2 (N.D. Ill. Oct. 16, 2017) (Reconsideration is 

appropriate where the Court has “misunderstood a party or made an error of apprehension, or to 

correct an error of law or fact.”). Whether to grant a motion for reconsideration is “entrusted to the 

sound judgment of the district court.” Matter of Prince, 85 F.3d 314, 324 (7th Cir. 1996); see also 

United States v. Resnick, 594 F.3d 562, 568 (7th Cir. 2010). 

As discussed below, at issue here is the clear error in dismissing Plaintiff’s claims against 

Carmichael on the basis of scienter without providing Plaintiff all plausible inferences that 

Carmichael acted with scienter because he knew of the CFPB investigation and its specific 

allegations regarding the unauthorized accounts and predatory consumer practices at Fifth Third by 

the start of the Class Period (an uncontested fact), which made his public statements knowingly 

misleading. ¶¶21-26; 56, 63, 69, 81; MTD Order at 8-16. 

III. THE COURT’S DISMISSAL OF PLAINTIFF’S CLAIMS AGAINST 

CARMICHAEL WAS CLEAR ERROR WARRANTING 

RECONSIDERATION UNDER RULE 54(b) 

One of the Complaint’s critical allegations supporting scienter that Plaintiff believes the 

Court overlooked is Carmichael’s knowledge at the start of the Class Period of the CFPB 

 

(“The Court may grant a Rule 59(e) motion to alter or amend the judgment if the movant presents newly 

discovered evidence that was not available at the time of trial, points to evidence in the record that clearly 

establishes a manifest error of law or fact, or if the Court previously misunderstood a party’s arguments.”). 

Case: 1:20-cv-02176 Document #: 67 Filed: 05/11/21 Page 4 of 12 PageID #:1129
- 4 - 

4836-7031-1912.v1 

investigation and its specific allegations regarding the unauthorized accounts and predatory 

consumer practices at Fifth Third, which made his Class Period statements knowingly misleading. 

¶¶22, 56, 63, 69, 81. While the MTD Order correctly acknowledges that “Carmichael knew of the 

investigation,” it wrongly assumes that he did “not necessarily [know] of the problem itself.” MTD 

Order at 29. But, as alleged, the CID Carmichael received on November 3, 2016, and the five other 

CFPB investigative demands that followed, apprised Carmichael of the “Specific Sales Practices” at 

Fifth Third that the CFPB was investigating, which included unauthorized accounts and predatory 

consumer practices at Fifth Third. ¶21. This alone supports a plausible inference of scienter that 

Carmichael knew about the investigation and the alleged unauthorized conduct that was taking place 

at Fifth Third, along with the serious risks and legal consequences the investigation posed to the 

Company, particularly in light of an industry-wide government crack-down on such conduct that 

started with similar misconduct at Wells Fargo. Despite knowing about the CFPB investigation and 

the basis for it, Carmichael caused Fifth Third to issue materially misleading statements concerning 

the Company’s risk disclosures, risk management practices, Code of Business Conduct and Ethics 

and consumer business that concealed the CFPB investigation. ¶¶52-55, 58-62, 65-68, 70-76, 79-80. 

Higginbotham v. Baxter Int’l, Inc., 495 F.3d 753, 756 (7th Cir. 2007) (the required state of mind 

under the PSLRA “is an intent to deceive, demonstrated by knowledge of the statement’s falsity or 

reckless disregard of a substantial risk that the statement is false”).3

 

3

 In the MTD Order, the Court cites Higginbotham in support of its finding that Carmichael 

did not act with scienter. MTD Order at 29. But the scienter analysis in Higginbotham is 

distinguishable from this case because the Complaint’s allegations of scienter here are based on 

knowledge of the CID itself and its specific basis in the unauthorized accounts and predatory 

consumer practices at Fifth Third and its concealment by Defendants, which made Defendants’ Class 

Period statements false and materially misleading. See ¶¶56, 63, 69, 81. Moreover, the facts alleged 

in Higginbotham are materially different from those alleged here. In Higginbotham, the plaintiffs 

alleged that defendants “had been notified of fraud by an employee in Brazil ‘sometime in the May 

time frame’ and that an anonymous source supposedly told [the company’s] CEO about the fraud 

during the first half of May. The court concluded that these two ‘tidbits’ of information did not 

Case: 1:20-cv-02176 Document #: 67 Filed: 05/11/21 Page 5 of 12 PageID #:1130
- 5 - 

4836-7031-1912.v1 

For example, the Complaint alleges that even though the CFPB investigation (and its specific 

allegations regarding the unauthorized accounts and predatory consumer practices at Fifth Third) 

was already known to Carmichael, he knowingly caused Fifth Third to issue misleading risk 

disclosures that stated “a violation of law or regulation by another financial institution may give rise

to an inquiry or investigation by regulators or other authorities of the same or similar practices by 

Fifth Third,” and “Fifth Third is also subject to risk from potential employee misconduct, including 

non-compliance with policies and improper use . . . of confidential information,” when in fact these 

risks had already materialized. ¶¶24, 52-56. Similarly, the Complaint alleges that statements 

contained in Fifth Third’s Code of Business Conduct and Ethics, which included a message from 

Carmichael, were knowingly misleading because of the ongoing CFPB investigation into 

unauthorized accounts and predatory consumer practices at Fifth Third, which was targeting the very 

practices the Code identified as unethical. ¶¶64-69. Likewise, the Complaint alleges that the 

statements in Fifth Third’s SEC filings about its risk management practices were knowingly 

misleading because they omitted any mention of the CFPB investigation and its specific allegations 

regarding the unauthorized accounts and predatory consumer practices at Fifth Third. ¶¶58-62, 63 

(“The statements identified in ¶¶58-62, were materially false and misleading and omitted material 

facts because Defendants failed to disclose that Fifth Third was already in receipt of an Investigative 

Demand from the CFPB, which informed Defendants that CFPB was investigating Fifth Third for its 

unauthorized account practices . . . .”). 

 

qualify as ‘compelling’ evidence that the individuals who had signed the company’s 10-Q report had 

actual knowledge that a fraud had occurred in the company’s Brazilian operation.” Sec. & Exch. 

Comm’n v. AgFeed Indus., Inc., 2016 WL 10934942, at *13 (M.D. Tenn. July 21, 2016) 

(distinguishing Higginbotham and noting, “[a]s Higginbotham makes clear, managers cannot tell 

lies”). As in AgFeed, Plaintiffs here “allege[s] facts showing that the defendants knew or were 

reckless in not knowing that [their public statements] were false at the time they were made,” 

including facts in the CID and other facts Carmichael has not disputed concerning their knowledge 

of the unauthorized accounts. Id. at *13. See also supra at 5-6 (citing ECF Nos. 59-6, 60 at 27-28). 

Case: 1:20-cv-02176 Document #: 67 Filed: 05/11/21 Page 6 of 12 PageID #:1131
- 6 - 

4836-7031-1912.v1 

Thus, the allegation that Carmichael received the CID before the Class Period, and therefore 

knew of the CFPB’s investigation and its specific allegations regarding the unauthorized accounts 

and predatory consumer practices at Fifth Third, by itself demonstrates that Carmichael knew these 

statements were materially misleading because they implicated but concealed the CFPB 

investigation and its substantive problems underlying the investigation. The court in In re BioScrip, 

Inc. Sec. Litig., 95 F. Supp. 3d 711 (S.D.N.Y. 2015), considered a nearly identical circumstance and 

found that Defendants’ failure to disclose a CID not only rendered its statements about potential 

investigations and compliance misleading, but that “Plaintiffs have therefore plausibly alleged 

scienter regarding omission of the CID in relation to the legal compliance statements” because 

compliance statements are necessarily statements of opinion, and under Omnicare, “[w]here 

plaintiffs allege a false statement of opinion, ‘the falsity and scienter requirements are essentially 

identical’ because ‘a material misstatement of opinion is by its nature a false statement, not about the 

objective world, but about the defendant’s own belief”: 

BioScrip had the CID in hand when it made the legal compliance statements, yet 

elected not to disclose the CID’s existence in order to make fully clear the basis for 

its opinions. . . . This satisfies scienter under both Fait and Omnicare. First, it means 

that Plaintiffs have plausibly alleged that BioScrip subjectively knew about the CID, 

which identified conduct potentially implicating BioScrip in the Government’s 

investigation, yet nonetheless stated publicly that they were in legal compliance. 

Second, it provides an adequate allegation that BioScrip was reckless in electing to 

withhold knowledge of the CID, despite its significant role in formulating a basis of 

belief that BioScrip was in legal compliance. 

BioScrip, 95 F. Supp. 3d at 725-31; see also Flynn v. Sientra, Inc., 2016 WL 3360676, at *1-*2, *4, 

*11 (C.D. Cal. June 9, 2016) (warnings that risk of regulatory requirements “could impair” 

company’s financial condition were actionable under Rule 10(b) because plaintiffs alleged that 

“serious regulatory issues had already transpired by the time these statements were made and that 

[defendants] knew or recklessly disregarded the existence of these issues”). 

Plaintiff’s allegations regarding the substance of the CID, and Carmichael’s knowledge of the 

Case: 1:20-cv-02176 Document #: 67 Filed: 05/11/21 Page 7 of 12 PageID #:1132
- 7 - 

4836-7031-1912.v1 

problem underlying the CFPB investigation are bolstered by Defendants’ admission that bank 

employees opened unauthorized accounts from 2010-2016 and their concession that they knew about 

these unauthorized accounts or the CID when Carmichael spoke, as both the CFPB and Plaintiff 

allege. See ECF No. 59-6 (acknowledging that bank employees opened 1,100 unauthorized accounts 

“between 2010 and 2016” involving “improper customer charges that were ultimately waived or 

reimbursed to customers years ago”); see also ECF No. 60 at 27-28 (“Defendants do not dispute that 

‘[b]y 2010, at the latest, Fifth Third was aware that employees were opening products and services in 

consumers’ names without those consumers’ knowledge or consent in order to achieve sales goals or 

obtain incentive rewards.’ ¶¶35-36.”). 

By dismissing Plaintiff’s Complaint on the basis of scienter, Plaintiff respectfully submits 

that the Court erred in that it overlooked the well-pleaded allegation that Carmichael knew not only 

of the CFPB investigation, but its specific allegations regarding the unauthorized accounts and 

predatory consumer practices at Fifth Third. When viewed in totality with the other scienter 

allegations (¶¶98-125), this critical allegation supports Plaintiff’s claim that Carmichael acted with 

the requisite scienter when he caused the Company to issues materially misleading statements about 

Fifth Third’s purported risk disclosures, risk management practices, Code of Business Conduct and 

 

Case: 1:20-cv-02176 Document #: 67 Filed: 05/11/21 Page 8 of 12 PageID #:1133
- 8 - 

4836-7031-1912.v1 

Ethics and consumer business. Thus, Plaintiff’s motion for reconsideration should be granted.4

DATED: May 11, 2021 ROBBINS GELLER RUDMAN 

 & DOWD LLP 

TOR GRONBORG 

LAURIE L. LARGENT 

CHRISTOPHER R. KINNON 

s/ Christopher R. Kinnon 

 CHRISTOPHER R. KINNON 

655 West Broadway, Suite 1900 

San Diego, CA 92101 

Telephone: 619/231-1058 

619/231-7423 (fax) 

torg@rgrdlaw.com 

llargent@rgrdlaw.com 

ckinnon@rgrdlaw.com 

ROBBINS GELLER RUDMAN 

 & DOWD LLP 

BRIAN E. COCHRAN (IL Bar # 6329016) 

200 South Wacker Drive, 31st Floor 

Chicago, IL 60606 

Telephone: 312/674-4674 

312/674-4676 (fax) 

bcochran@rgrdlaw.com 

Lead Counsel for [Proposed] Lead Plaintiff 

 

4

 If the Court finds scienter as to Carmichael, then the Court should also find Fifth Third acted with 

scienter. See Order at 28 (“the scienter of their agents must be imputed to [corporations]”) (quoting Mizzaro 

v. Home Depot, Inc., 544 F.3d 1230, 1254 (11th Cir. 2008)). 

Case: 1:20-cv-02176 Document #: 67 Filed: 05/11/21 Page 9 of 12 PageID #:1134
4836-7031-1912.v1 

CERTIFICATE OF SERVICE 

I hereby certify under penalty of perjury that on May 11, 2021, I authorized the electronic 

filing of the foregoing with the Clerk of the Court using the CM/ECF system which will send 

notification of such filing to the e-mail addresses on the attached Electronic Mail Notice List, and I 

hereby certify that I caused the mailing of the foregoing via the United States Postal Service to the 

non-CM/ECF participants indicated on the attached Manual Notice List. 

 s/ Christopher R. Kinnon 

 CHRISTOPHER R. KINNON 

ROBBINS GELLER RUDMAN 

 & DOWD LLP 

655 West Broadway, Suite 1900 

San Diego, CA 92101-8498 

Telephone: 619/231-1058 

619/231-7423 (fax) 

E-mail: ckinnon@rgrdlaw.com

Case: 1:20-cv-02176 Document #: 67 Filed: 05/11/21 Page 10 of 12 PageID #:1135
5/11/2021 CM/ECF LIVE, Ver 6.3.3 - U.S. District Court, Northern Illinoishttps://ecf.ilnd.uscourts.gov/cgi-bin/MailList.pl?380213046938417-L_1_0-1 1/2

Mailing Information for a Case 1:20-cv-02176 Heavy & General

Laborers' Local 472 & 172 Pension and Annuity Funds et al v. Fifth

Third Bancorp et al

Electronic Mail Notice List

The following are those who are currently on the list to receive e-mail notices for this case.

Brian E. Cochran 

BCochran@rgrdlaw.com,e_file_sd@rgrdlaw.com

Anthony Fata

afata@caffertyclobes.com

Carol V Gilden 

cgilden@cohenmilstein.com,lhoeksema@cohenmilstein.com,efilings@cohenmilstein.com

Tor Gronborg 

torg@rgrdlaw.com,e_file_sd@rgrdlaw.com

J. Alexander Hood , II

ahood@pomlaw.com

Christopher R. Kinnon 

Ckinnon@rgrdlaw.com

Marcella Louise Lape 

marcella.lape@skadden.com,chdocket@skadden.com

Laurie Largent 

LLargent@rgrdlaw.com

Jeremy Alan Lieberman 

jalieberman@pomlaw.com,tcrockett@pomlaw.com,disaacson@pomlaw.com,abarbosa@pomlaw.com

Katherine Fletcher Morgan 

katherine.morgan@skadden.com,chdocket@skadden.com

Danielle S. Myers 

dmyers@rgrdlaw.com,dmyers@ecf.courtdrive.com,e_file_sd@rgrdlaw.com

Daniel James Scime 

daniel.scime@skadden.com,chdocket@skadden.com

Elizabeth Anne Simon 

elizabeth.simon@skadden.com,chdocket@skadden.com

Charles F. Smith , Jr

cfsmith@skadden.com,chdocket@skadden.com

Manual Notice List

Case: 1:20-cv-02176 Document #: 67 Filed: 05/11/21 Page 11 of 12 PageID #:1136
5/11/2021 CM/ECF LIVE, Ver 6.3.3 - U.S. District Court, Northern Illinoishttps://ecf.ilnd.uscourts.gov/cgi-bin/MailList.pl?380213046938417-L_1_0-1 2/2

The following is the list of attorneys who are not on the list to receive e-mail notices for this case (who therefore

require manual noticing). You may wish to use your mouse to select and copy this list into your word processing

program in order to create notices or labels for these recipients.

(No manual recipients)

Case: 1:20-cv-02176 Document #: 67 Filed: 05/11/21 Page 12 of 12 PageID #:1137