Not a Lexis+ subscriber? Try it out for free.
LexisNexis® CLE On-Demand features premium content from partners like American Law Institute Continuing Legal Education and Pozner & Dodd. Choose from a broad listing of topics suited for law firms, corporate legal departments, and government entities. Individual courses and subscriptions available.
Possibly as a result of a barrage of recent press
criticism for its nonpublic settlements, the FDIC has launched a page on its
website to publish details regarding the settlements it has reached in failed
bank claims. The page, which can be found here, acknowledges
that it is not yet complete. Even in its incomplete state it does reflect
information about at least three settlements that as far as I am aware had not
previously been publicly available.
First, the background about the questions surrounding the
FDIC's nonpublic settlements. In a March 11, 2013 Los Angeles Times
article entitled "In a Major Policy Shift, Scores of FDIC Settlements Go
critical of the agency, E. Scott Rickard noted that the FDIC has "opted to
settle cases while helping banks avoid bad press, rather than trumpeting
punitive actions as a deterrent to others." The article notes the agency's
willingness to agree, in connection with claims settlements, that the details
of the settlements would not be disclosed except in response to a specific
inquiry. As a result, claims defendants were able to avoid having settlement
details made public.
Indeed, there have been settlements in FDIC failed bank
lawsuits that are not publicly available. In report
on FDIC litigation as of December 31, 2012, Cornerstone Research noted in
connection with failed bank lawsuits that have settled so far, the details of
at least two of the six settled cases had not been made publicly available.
In addition, I have been advised by many participants in the failed bank
claim process that there have been other settlements in which the parties
resolved failed bank claims without the FDIC actually filing suit. Details
regarding these pre-suit settlements have also not been publicly disclosed.
Perhaps as a reaction to the adverse publicity following
the Los Angeles Times article, the FDIC has now added to its website a
page on which it has listed at least some settlements with the apparent
intention of having the page complete by the end of this month. The page (here) lists only
three settlement agreements, all from the state of Florida. As far as I am
aware, the details regarding these three settlements previously were not
publicly available. At least one of the settlements directly involves the thee
settling defendants D&O insurer. None of the three settlements listed
relate to the two cases for which Cornerstone Research had been unable to
obtain settlement information.
The first of the three settlement agreements posted on
the site involves a July 2012 settlement between the FDIC as receiver for the
failed BankUnited of Coral Gables, Florida and Michael Orlando. BankUnited failed in May
2009. In May 2012, the FDIC in its capacity as BankUnited's Receiver filed
an action against Orlando and others in the Northern District of California
alleging fraud and other misconduct in connection with certain loan
transactions. According to the settlement agreement posted on the FDIC's
website, Orlando agreed to settle the FDIC's claim for payments totaling $1
million. The settlement agreement does not specify whether or not Orlando
served as a director or officer of the bank, but certain details of the
settlement suggest that he was not. The settlement agreement does not mention
The second settlement agreement that the FDIC has posted
on its website involves the failed First Priority Bank of Bradenton, Florida.
First Priority, which closed
in April 2008, was one of the first bank's to fail as part of the current
bank failure wave. The settlement agreement, which is dated in April 2012,
states that the FDIC as First Priority's receiver asserted claims against
certain former directors and officers of First Priority in connection with
certain of the bank's loans. It does not appear that the agency actually filed
a lawsuit against the individuals; rather, it appears that the settlement was
negotiated without a suit being filed. In a detail that will be of interest to
readers of this blog, it appears that First Priority's D&O insurer is a
party to the settlement agreement and that the insurer, despite apparently
disputing whether there was coverage under its policy for the FDIC's claim,
agreed to fund the settlement in the amount of $1,750,000. The insurer
apparently received a policy release for its payment, subject to certain
The third settlement agreement list on the FDIC's website
involves the failed Ocala National Bank of Ocala, Florida, which failed in January
2009. The agreement is between the FDIC in its capacity as the bank's
receiver and an entity identified only as The Willoughby Corporation. The FDIC
apparently filed a lawsuit against Willoughby, which Willoughby apparently
agreed to settle for its payment of $40,000. The settlement agreement does
not identify the nature of the FDIC's claims against Willoughby.
It isn't clear from the FDIC's website why all three of
the matters referenced on t he website page involve failed Florida banks, nor
is it clear why these three particular matters are the ones included on the
site - frankly, the three seem like a rather odd assortment, and the absence of
information relating to the settlements of the litigated cases seems odd. An
optimistic assessment of the information would be that this page is still under
construction and the obviously missing information to be added in order to
complete the page.
Indeed, the page itself says that the "initial posting of
past settlements will occur on a rolling basis as they are processed with the
goal to have recent settlement agreements posted by March 31, 2013." The page
also says that "will publish the terms and conditions of all settlements as
they become available and the material will be updated on a monthly basis." It
will be interesting to monitor the page as the agency updates it in the coming
days, in particular to see whether the agency posts the previously unavailable
information about the litigates case settlements, and to see the extent to
which the agency includes information regarding pre-litigation settlements.
The agency's apparently new found interest in settlement
transparency could pose some challenges. The agency could face certain
constraints in disclosing past settlements to the extent the parties to the
settlements had reached understandings that the settlement would remain
confidential. Future settlement negotiations could be complicated to the extent
that parties to the negotiations want to try to make confidentiality a
condition of any possible settlement. Negotiations could also be complicated as
information becomes more readily available that might serve as settlement
benchmarks or at least reference points. On the other hand, greater
transparency will allow a more accurate assessment of what the FDIC's claims
have accomplished and could even afford some insight into the impact of the
settlements on D&O insurers. Some observers may also contend that greater
settlement transparency will provide deterrent effects as well.
Special thanks to a loyal reader for providing a link to
the settlement page on the FDIC's website.
NERA Releases 2012 Wage and Hour Settlements
Report: On March 12, 2013, NERA Economic Consulting released its
2012 report on settlements of wage and hour cases. The report, which is
entitled "Trends in Wage and Hour Settlements: 2012 Update," can be found here.
The report contains a number of interesting observations
about wage and hour settlements. Among other things, the report notes that on
average, companies paid $4.8 million to resolve wage and hour cases in 2012, up
slightly from the $4.6 million observed in 2011, but lower than the overall
average of $7.5 million for the 2007 to 2012 period. The median settlement
value for 2012 of $1.7 million was also slightly higher than the $1.6 million
median in 2011. (Although it is not expressly stated in the report, it appears
that the settlement analysis is solely with respect to class action wage and
hour litigation, not individual actions.)
other items of interest from the world of directors & officers liability,
with occasional commentary, at the D&O Diary, a blog by Kevin LaCroix.
For more information about LexisNexis
products and solutions connect with us through our corporate site.