An Update as to King County, Washington's Federal Court lawsuit against many of the Financial dealers in the Western World, from the post here on May 3, 2010, "Fraud Claims Disguise Fiduciary Breach Claims Only Lawyers Can Describe?"

   King County, Washington's Complaint has so many words that its lawyers filed the Complaint with a Table of Contents:  Download King County, Washington v. IKB, Moody's, Standard & Poor's, Fitch, et al (S.D.N.Y. Case No. 09cv8387, Complaint Filed October 2, 2009).  King County sued IKB, Moody's, McGraw-Hill d/b/a Standard & Poor's, Fitch, and also two individual Defendants for good measure.  King County's Complaint contained Class Action Allegations (Paragraphs 170-173) of an alleged "Claim for Common Law Fraud Against All Defendants" (id., paragraphs 176-190), althought the front page of the Complaint contains the description that it is a "Complaint for Violations of New York State Law".  King County did not need to, but it expressly reserved the right to amend and in fact announced a present intention to amend its Complaint "to include causes of action [sic]" in this Federal Court action for "negligence and negligent misrepresentation".  (Id., n.1.)

   A similar Federal Class Action Complaint was filed in what became a companion case, by the Iowa Student Loan Liquidity Corporation against the identical Defendants based upon what seem to be the same or similar allegations of Fraud, in Iowa Student Loan Equity Corporation v. IKB, Moody's, McGraw-Hill d/b/a Standard & Poor's, Fitch, et al. (S.D.N.Y. Case No. 09cv08822 Complaint Filed October 16, 2009) .

   The allegations of Fraud do not include allegations or Claims of Breaches of Fiduciary Duties, as I expected.  They contain the language of Fiduciary Relations, however.  For example, King County alleged in its Complaint (paragraph 187) that all the Defendants "were in possession of material non-public information," that IKB "was in a superior position" (paragraph 188), and that the "defendant Rating Agencies were in a superior position". (Paragraph 189.)

   In an Opinion and Order filed on April 26, 2010, the United States District Judge denied Motions to Dismiss in both Cases, King County and Iowa Student Loan Liquidity Corporation, which were based on arguments that the Complaints failed to state Claims upon which relief could be granted.  Download King County, Washington v. IKB, Moody's, Standard & Poor's, Fitch, et al (S.D.N.Y. Case No. 09cv8387, Order Filed April 26, 2010), also published as King County v. IKB Deutsche Industriebank, 2010 WL 1702196 (S.D.N.Y. April 26, 2010) (Westlaw subscription required to access Westlaw).  Certain Defendants also made arguments that Dismissal was warranted based on various jurisdictional concerns, which the Federal Court addressed and rejected in a separate  Opinion and Order filed on the day before this post, which was May 4, 2010:  Download King County, Washington v. IKB, Moody's, Standard & Poor's, Fitch, et al (S.D.N.Y. Case No. 09cv8387, Order Filed May 4, 2010) (not yet reported in Westlaw).

   It remains to be seen whether the amendments to the Complaints in these cases will go beyond "negligence" and "negligent misrepresentation" to include alleged Claims for Breach of Fiduciary Duties at Common Law or by Statute.

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Postscript of Thursday, May 6, 2010:

As we know from today's post, New York Law recognizes a Cause of Action for alleged breach of the implied covenant of Good Faith and Fair Dealing.