Litovich v. Bank Of America Corporation
- Valerie Caproni
- 1:20-cv-03154
- U.S. District Court · Southern District of New York
- 5
In Litovich v. Bank Of America Corporation, Judge Caproni denied a request to recommend undoing the judgment because the issues were already on appeal.
The plaintiffs’ request to undo the earlier dismissal and file a second amended complaint was denied; the antitrust appeal remained pending.
What happened
Litovich v. Bank Of America Corporation is an antitrust case brought by investors and a pension fund against financial institutions accused of restraining competition in the secondary corporate-bond market. Judge Lewis J. Liman had dismissed the case for failing to state a legal claim, and the plaintiffs appealed.
After the appeal began, the court disclosed that Judge Liman’s wife had owned stock in Bank of America while he presided over the case. The plaintiffs asked Judge Valerie Caproni to say that, if the appeal returned jurisdiction to the district court, she would cancel Judge Liman’s judgment and allow a second amended complaint.
Judge Valerie Caproni denied the request. She concluded that the appeal already presented the relevant issues—including the dismissal and Judge Liman’s possible need to step aside—and that the appeals court could resolve them from the existing record.
The detailed version
- Litovich v. Bank Of America Corporation · No. 1:20-cv-03154
- Valerie Caproni
- Nov. 10, 2022
Background
The plaintiffs are investors who bought and sold odd-lots of corporate bonds in the secondary market directly from and to the defendants, including Bank of America Corporation. They alleged that the defendants conspired to restrain electronic advances in the secondary corporate-bond marketplace, which allegedly would have reduced the plaintiffs’ transaction costs and the defendants’ trading profits.
The plaintiffs filed the action on April 21, 2020. After the plaintiffs filed an amended complaint, the defendants moved to dismiss it. On October 25, 2021, Judge Lewis J. Liman granted the motion under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. The judgment dismissed the case with prejudice. The plaintiffs filed a notice of appeal on November 23, 2021.
While Judge Liman presided over the case, his wife owned Bank of America stock. The Clerk of Court informed the parties that the ownership was attributed to Judge Liman and would have required him to step aside under the judicial code of conduct. The Clerk also reported that the stock ownership had not affected his decisions. The stock was fully sold in July 2021, before the October 2021 dismissal. The case was reassigned to Judge Valerie Caproni on March 2, 2022.
Motion for an Indicative Ruling
Because the appeal was pending, the district court generally lacked authority over issues presented in the appeal. Federal Rule of Civil Procedure 62.1 allows a district court in that situation to defer action, deny the motion, or state that it would grant the requested relief if the appeals court sent the matter back for that purpose. Such a statement is called an indicative ruling.
The plaintiffs asked Judge Caproni to issue an indicative ruling that she would vacate Judge Liman’s judgment and allow them to file a second amended complaint. They argued primarily that doing so could eliminate the need for the appeal. Their appeal raised both the merits of the dismissal and whether Judge Liman’s failure to step aside required the judgment to be vacated.
Court’s Reasoning
Judge Caproni declined to issue the requested ruling because the same issues were already before the U.S. Court of Appeals for the Second Circuit. The appeals court had declined to pause the appeal and would review the dismissal’s legal sufficiency independently. The appeal also concerned whether Judge Liman’s failure to recuse himself required vacating the dismissal.
Both sides agreed that the appellate issues could be resolved using undisputed facts already in the record. Judge Caproni therefore concluded that the district court was not better positioned than the Second Circuit to decide those issues and that an indicative ruling would not assist the appeal.
Disposition
Judge Valerie Caproni denied the plaintiffs’ motion for an indicative ruling that the court would vacate Judge Liman’s judgment and grant leave to file a second amended complaint. The Clerk of Court was directed to close the motion at Docket 160. This order did not decide the pending appeal or revisit the merits of the earlier dismissal.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.