On January 11, 2006, an Oklahoma state court granted summary judgment in favor of J.P. Morgan Securities Inc. (“JPMSI”) in an action brought against it by Commercial Financial Services, Inc. (“CFS”). CFS is the former high-flying collections firm that was said to have revolutionized the business of collecting on bad debt, specifically charged-off credit card receivables, which were purchased from banks that issued credit cards to consumers. CFS financed these purchases using lines of credit and asset-backed securitizations. CFS collapsed into bankruptcy after an anonymous letter exposed a massive fraud at CFS.
CFS’s bankruptcy estate sued JPMSI and its other professionals, including Mayer, Brown, Rowe & Maw LLP and Arthur Andersen LLP, seeking $1.3 billion in damages based on those professionals’ alleged professional negligence and breach of fiduciary duty in connection with work for CFS. Motions to dismiss were denied and discovery was conducted, following which the other professionals settled with CFS. JPMSI, however, sought summary judgment on the grounds that the undisputed facts developed in discovery belied CFS’s allegations of the existence of a fiduciary duty or the breach of any duty, fiduciary or otherwise, owing to CFS, and that, in any event, CFS’s claims were barred by the wrongdoing of CFS’s former employees that JPMSI established on the motion. After briefing and argument, the Court granted the motion. The action had been set for jury trial commencing on April 17. 2006.
The Simpson Thacher team includes Tom Rice, Joe Wayland, Michael Nathan, Joe Tringali, Mark Thompson, Linda Martin, Christine Ford, Julie Rikelman, Tinu Awe, Nicole Friedlander, Bill Ferullo, Charlie Divine, Ryan Kane, Matthew Katz and Jeremy Saks. The team was ably assisted by paralegals Doug Henderson, Ariel Risinger, Tracy Williams, Joseph Law, Mollie Kornreich, Katherine Mardy and Arden Wilkinson.