Free Letter - District Court of Delaware - Delaware

Case 1:05-cv—00327-G|\/IS Document 79 Filed 09/18/2007 Paget of3
Chrmrcles 8 Trkellls LLP
ATTORNEYS AT L AW
One Rodney Square
PO. Box 1035
Wilmington, DE IQSQQ
Telephone: (302) 656.2500
Telecopier: (302) 656.9053
September 18, 2007 E-mml; [email protected]
Nicholas E. Chimicles
Pamela S. Tikellis *
Jemee R— Mel<>¤e» Je VIA E—FILING AND HAND DELIVERY
Michael D. Gottsch
i Chief Judge Gregory M. Sleet
Kimberly M. Donaldson United States District Judge
M Katherine Meermeee J. Caleb Boggs Federal Building
lege? fgzedi 844 N. King stmet
,,,m;“;F_ Buféy Room 4324, Lockbox 19
Kimberly Litman Kimmel Wilmington, Delaware 19801
Timothy N. Mathews
if; igjlm; ii Re: In re MBNA Corp. Class and Derivative Lit.,
Benjamin
Scott M. Tucker *
Dear Chief Judge Sleet:
OF COU NSE,) I write on behalf of plaintiffs Lemon Bay Partners and Malcolm
1v1mm1vr.slmmmr Rosenwald, who today filed a class and derivative complaint captioned,
Deeiee Davie Sehweleemeli Lemon Bay Partners, et al. v. Bruce L. Hammonds, et al., 07 CV 562 (the
t;‘l"l;?“Y f¥“;?yil“ "Lemon Bay Complaint"), and plaintiff Donald Benoit who today also
im ICE I I (ix Us filed a class and derivative complaint captioned, Benoit v. Bruce L.
*A1mmeyl·lnimma/in Hammonds, et al., 07 CV 561 (the "Benoit Complaint"). The Lemon Bay
ti‘<~‘ti¢‘e it De/were and Benoit complaints, copies of` which are enclosed, are similar but not
identical to the previous consolidated complaint in In re MBNA Corp.
Class and Derivative Lit., 05 CV 0327 (GMS) (the "Consolidated
Complaint"). The Lemon Bay and Benoit complaints assert that MBNA
shareholders at the time of a 2005 merger (the "Merger") between MBNA
and Bank of America Corp. (the "Class") were harmed by a fraudulent
proxy solicitation and state law breaches of fiduciary duty which resulted
in an unfair merger price. The complaints also assert derivative claims on
behalf of Bank of America, as Bank of America has inherited the
responsibility to pay damages or amounts in settlement pertaining to
claims that MBNA executives committed a securities fraud prior to the
Merger.] Plaintiffs assert that the Merger and the merger—related fraud are
‘ These securities claims are asserted in Baker v. MBNA Corp., 2007 U.S.
Dist. LEXIS 48892 (D. Del. July 6, 2007), in which this Court denied a
motion to dismiss by former MBNA CEO Bruce L. Hammonds, former
HAVERFORD OFFICE
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Case 1:05-cv—00327-Gl\/IS Document 79 Filed 09/18/2007 Page 2 of 3
The Honorable Gregory M. Sleet
September 18, 2007
Page -2-
an outgrowth of the earlier securities fraud, which motivated the Merger.
The fraudulent financial statements issued at the end of 2004 were
republished in the proxy statement which solicited approval of the Merger.
The key difference between the Lemon Bay and Benoit complaints is that
Lemon Bay asserts federal question jurisdiction, while Benoit asserts both
federal question and diversity jurisdiction.
As the Court will recall, the Consolidated Complaint attempted to
assert many of these same claims, but was dismissed by Order of this
Court dated June 26, 2007 for failure to adequately plead subject matter
jurisdiction. See Lemon Bay Partners LLP v. Hammonds, 2007 U.S. Dist.
LEXIS 46143 (D. Del. June 26, 2007). On July 11, 2007, plaintiffs moved
for reconsideration of this Order contending, inter alia, that the existing
federal claims were sufficient to confer subject matter jurisdiction, and
that the Court overlooked plaintiffs’ request to tile an amended complaint
that would allege additional federal claims, including claims as to the
negligent dissemination of a false proxy under Section l4(a) of the
Securities Exchange Act of 1934 (the "Exchange Act"). This Motion is
pending decision.
Because the allegedly false Proxy Statement at issue was dated
September 19, 2005, today’s filing of the Lemon Bay and Benoit
complaints preserves certain of plaintiffs’ claims and, even though a
motion for reconsideration is pending, it is consistent with plaintiffs’
concurrent and overlapping right to file a new complaint following a
dismissal Order that is based solely on jurisdictional grounds. See eg.,
Smith v. Pittsburgh Gage & Supply C0., 464 F.2d 870, 874 (3d Cir.
l972)(‘jurisdictional dismissals do not bar further litigation of the cause of
action when the subsequent complaint cures the jurisdictional defect."),
citing, Etten v. Lovell Manufacturing Company, 225 F.2d 844, 846 (3d
Cir. 1955).
Certain claims that could be asserted in an amended pleading in the
previously—tiled action cannot be asserted in the new Lemon Bay and
Benoit actions. For example, both the passage of time and a very recent
Third Circuit opinion appear to foreclose any assertion of Section l4(a)

CFO Kenneth A. Vecchione, former Vice Chairman Charles C. Krtrlak,
and MBNA itself

Case 1:05-cv—00327-G|\/IS Document 79 Filed 09/18/2007 Page 3 of 3
The Honorable Gregory M. Sleet
September 18, 2007
Page -3-
claims. See In re Exxon Mobil Corp. Sec. Litig., 2007 U.S. App. LEXIS
20460 (3d Cir. Aug. 27, 2007). Because of this, plaintiffs respectfully
request that the motion for reconsideration in the previously—filed action
be granted, so that all claims can be asserted by plaintiffs and the Class in
an amended complaint. Should this Court grant the right to amend the
previous pleading, plaintiffs would of course seek to consolidate the new
Lemon Bay and Benoit complaints with the pre—existing action, and
hopefully coordinate discovery efforts at some point in the future with the
plaintiff in Baker, as there are many overlapping issues of fact and law
among all of these actions.
Plaintiffs’ counsel is available to address any questions the Court
may have at such time as may be convenient for the Court.
Respectfully,
A. Zach o
cc: Clerk of the Court (by e—filing)
Richard H. Morse, Esquire (by e-filing)
Edward P. Welch, Esquire (by e—filing)
Laurence D. Paskowitz, Esquire (by e-mail)
Jeffrey P. Fink, Esquire (by e-mail)