No UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT. In Re BANKAMERICA CORPORATION SECURITIES LITIGATION

Transcription

1 No UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT In Re BANKAMERICA CORPORATION SECURITIES LITIGATION CAROL MACKAY Intervenor-Objector-Appellant vs. HUGH McCOLL, JR., et al., Defendants-Appellees JOHN M. KOEHLER, DAVID P. OETTING, Plaintiffs-Objectors-Appellants, vs. HUGH L. McCOLL, JR., et al., Defendants-Appellees Appeal from the United States District Court for the Eastern District of Missouri MDL Docket No The Honorable John F. Nangle APPELLANT CAROL MACKAY S INITIAL BRIEF Edward W. Cochran, Esq. OH Bar NO Broxton Road Shaker Heights, OH Frank H. Tomlinson, Esquire AL Bar No. ASB-7042-T66F Pritchard, McCall & Jones, LLC 505 N. 20 th Street, Suite 800 Birmingham AL Attorneys for Intervenor-Objector-Appellant Carol Mackay

2 SUMMARY OF THE CASE AND REQUEST FOR ORAL ARGUMENT On April 10, 1998, BankAmerica Corporation entered into a merger agreement with NationsBank Corporation. This merger of equals would result in the creation of a new BankAmerica Corp. The merger agreement provided that NationsBank stockholders would receive one share of stock in the new BankAmerica Corporation for each share of NationsBank stock they owned. Old BankAmerica Corporation stockholders would receive shares of new BankAmerica Corporation stock. The merger was completed on September 30, Shortly thereafter on October 14, 1998, it was disclosed that the new BankAmerica Corporation was taking a $372 million charge-off (and was reversing 70 million in related income) as the result of a bad loan to D.E.Shaw, a New York investment firm, and that the bank s investment was $1 billion dollars after the charge off. Not surprisingly, on the day of the disclosure, the price of shares in the new BankAmerica dropped $5-5/16. Between October 15 and November 18, 1998, twenty-four class actions were filed in six federal district courts by stockholders of the predecessor companies, the pre-merger NationsBank and the old BankAmerica Corporation. The cases were consolidated by order of the Multidistrict Litigation Panel, and transferred to the Eastern District of Missouri, where responsibility for the MDL action came to rest with District Judge John F. Nangle. ii

3 Eventually, on January 31, 2002 during mediation before retired District Judge Nicholas H. Politan, class counsel and the defendants reached an agreement in principle on a proposed settlement. The agreement provided that the defendants would pay $490 million plus interest to members of the four plaintiff subclasses. $333 million plus interest was allocated to NationsBank stockholders and $156.8 million plus interest was allocated to old BankAmerica Corporation stockholders. After notice to the class, a fairness hearing was held on May 30, Subsequently, Judge Nangle approved both the settlement agreement and payment of fees to class counsel. This consolidated appeal arises out of the objections of Appellant MacKay and others to the class action settlement and concomitant attorney s fees approved by the district court below. Appellant Mackay requests oral argument of thirty (30) minutes per side. Appellant believes such argument would assist the panel in determining whether the trial judge committed error in approving the settlement as fair, adequate and reasonable. iii

4 TABLE OF CONTENTS SUMMARY OF THE CASE AND REQUEST FOR ORAL ARGUMENT.. ii TABLE OF CONTENTS... iv TABLE OF AUTHORITIES...v STATEMENT OF ISSUES...1 STATEMENT OF THE CASE AND FACTS...2 SUMMARY OF ARGUMENT...3 ARGUMENT...5 I. The notice to the class was misleading because important material information was omitted from the Notice....5 II. The Settlement should not have been approved as fair and adequate because the strength of plaintiffs case far outweighs the amount recovered in the Settlement....7 IIa. Other Settlements:...13 III. The Amount of Attorney s Fees is Grossly Excessive...14 IV. Adoption of other arguments...15 CONCLUSION...15 CERTIFICATE OF COMPLIANCE...15 iv

5 TABLE OF AUTHORITIES CASES: Behrens v. Wometco Enterprises, Inc., 118 FRD 534 (DCFL 1988)...13 Blum v. Stenson, 465 U.S. 886, , 104 S.Ct. 1541, 79 L.Ed. 891 (1984). 2, 15 Feinberg v. Aiberilia Corp. 966 F. Supp. 442 (DCLA 1997)...13 Grunin v. Int l House of Pancakes, 513 F.2d 114 (8th Cir. 1975)...13 In re BankAmerica Corp. Securities Litigation, 78 F.Supp.2d 976 (E.D. Missouri, 1999)...2 In Re Bausch & Lomg., Inc. Securities Litigation, 183 ERD 78 (DCNY 1998)...14 In re Cendant Corp. Securities Litigation, 109 F. Supp. 3d 235 (DCNY 2000)...14 In Re McDonnell Douglas Equipment Leasing Securities Litigation, 838 F. Supp. 729 (DCNY 1993)...14 In Re: Mego Financial Corp. Securities Litigation, 213 F3d 454 (9th Cir. 2000)...13 Lowenschuss v. C.G. Bluhdorn, 82 FRD 712 (DCNY 1979)...14 Lyons v. Scitex Corp., 987 F. Supp. 271 (DCNY 1997)...13 National Super Spuds, Inc. v. New York Mercantile Exchange, 660 F.2d 9 (2d Cir. 1981)...6 Ohio Public Interest Campaign v. Fisher Foods. Inc., 546 F Supp. l (DC Ohio 1982)...1, 12 v

6 Petrovic, et. al. vs. Amoco Oil Company, 200 F.3d 1140 (8th Cir. 1999)...6, 7 Reed v. General Motors Corp., 703 F 2d 170 (5 th Cir. 1983)...1, 12 Reynolds v. Beneficial National Bank, 288 F.3d 277 (7 th Cir. 2002)...8, 9, 13 Reynolds vs. National Football League, 584 F.2d 280 (8th Cir. 1978)...1, 6 Slade v. Shearson Hammill Co., Inc. 79 FRD 309 (DCNY 1978)...14 vi

7 JURISDICTION The lower court had jurisdiction pursuant to 28 U.S.C and 28 U.S.C District Judge Nangle entered an Order approving the proposed settlement agreement and the revised plan of allocation on September 30, The Order approving attorneys fees was entered on October 15, Mackay timely filed her Notice of Appeal on October 30, This appeal is from those final orders which disposed of all issues. This court has jurisdiction pursuant to 28 U.S.C to review final decisions of the district court. STATEMENT OF ISSUES I. Whether the notice to the class was misleading because important material information was omitted from the Notice. Petrovic, et. al. vs. Amoco Oil Company, 200 F.3d 1140, 1151 (8th Cir. 1999); Reynolds vs. National Football League, 584 F.2d 280, 285 (8th Cir. 1978); National Super Spuds, Inc. v. New York Mercantile Exchange, 660 F.2d 9, 31 (2d Cir. 1981) II. Whether the Settlement should not have been approved as fair and adequate because the strength of plaintiffs case far outweighs the amount recovered in the Settlement. Petrovic vs. Amoco Oil Company, 200 F.3d 1140, 1150 (8th Cir. 1999); Reynolds v. Beneficial National Bank, 288 F.3d 277 (7 th Cir. 2002); Reed v. General Motors Corp., 703 F 2d 170, 172, (5 th Cir. 1983); Ohio 1

8 Public Interest Campaign v. Fisher Foods. Inc., 546 F Supp. l, 5, (DC Ohio 1982). III. Whether the Amount of Attorney s Fees is Grossly Excessive. Blum v. Stenson, 465 U.S. 886, , 104 S.Ct. 1541, 79 L.Ed. 891 (1984) STATEMENT OF THE CASE AND FACTS Intervenor/Objector/Appellant Carol Mackay ( Mackay ) adopts the background information set forth in In re BankAmerica Corp. Securities Litigation, 78 F.Supp.2d 976 (E.D. Missouri, 1999), pages 982 to 986, as her statement of the facts and to the extent relevant, her statement of the case up to that point in time. This court s decision of the same name at 263 F.3d 795 and the history of the case set forth in IV of the notice, beginning on page 3, complete the picture up to the proposed settlement. Mackay, as the executrix of her father s estate, filed her Preliminary Objections to the Proposed Settlement Agreement on May 16, The Fairness Hearing on the proposed settlement agreement was held on May 30, 2002 before the Honorable John F. Nangle. Mackay appeared through counsel and urged the court to reject the proposed settlement (Tr ). District Judge Nangle entered an Order approving the proposed settlement agreement and the revised plan of allocation on September 30, The Order approving attorneys fees was entered on October 15, Mackay timely filed her Notice of Appeal on October 30,

9 SUMMARY OF ARGUMENT I The notice to the Class was misleading. For one, it misstates a material fact in that it states that one of the class representatives is opposed to the settlement when in fact all of the class representatives are opposed to the settlement. It also gives the impression that the plaintiff class case is weak although the contrary is true and the facts reflect a strong plaintiffs case. The misleading nature of the notice renders it ineffective as a tool to inform absent class members about the nature of the case in a way to make it sufficient for them to make a decision as to whether to accept the settlement, object, or opt out. II The settlement is grossly inadequate. Although class members have recoverage damages of $5.88 per share, under the settlement the recovery to class members is either $0.34 or $0.22 per share. The plaintiffs case is exceptionally strong in light of the SEC s findings of falsity and scienter, which are the main elements of the plaintiffs case. The strength of the SEC s findings suggest that plaintiffs were likely to prevail on the merits. A $0.22 recovery against losses of $5.88 per share is plainly inadequate where the SEC has already concluded that defendants made misleading 3

10 statements and were aware of the concealed information. At the Fairness Hearing, Judge Nangle acknowledged that he thought Plaintiffs had a 50 to 66 2/3% chance for recovery. Yet, the value of the settlement approved clearly does not reflect anything like those percentages. As Reed Kathrein stated, The lowest numbers they have given us today... is 2.6 billion for NationsBank. If you give 40 percent of that, you are still over one billion dollars. III The settlement provides a recovery of only 4% of recoverable damages. The settlement is out of line with similar settlements in securities fraud cases. In cases where a low percentage recovery has been approved, a number of factors are usually present, including a) insolvency of defendant, b) weakness of Plaintiffs' case either based on theory or proof or availability of defenses and/or c) the absence of objections to the settlement. This case involves a strong plaintiffs case, a solvent defendant, and objections by all of the class representatives. In securities cases where these factors are present, the percentage of recovery is typically much higher than in the instant case. IV The amount of attorneys fees awarded, 18% of the total recovery, is grossly excessive, considering the strength of the case and the low percentage of recovery. 4

11 The attorneys fees amount is approximately three times the lodestar. The U.S. Supreme Court has established a strong presumption that the unenhanced lodestar is the reasonable statutory fee. The facts do not support such a departure from the lodestar. ARGUMENT I. The notice to the class was misleading because important material information was omitted from the Notice. The court views notice to the class de novo to determine whether notice meets the requirements of constitutional due process. On page six of the notice to the class (hereinafter Notice) it states: David P. Oetting, a lead plaintiff and one of the class representatives for the NationsBank Holder Class, has indicated that he plans to object to the settlement on the ground that the amount to be paid to the NationsBank Classes is inadequate, both as a percentage of the settlement amount and in absolute terms. The statement was misleading because class counsel and defendants knew that neither Mackay nor any other stockholder was given the opportunity to consider the repudiation of the proposed settlement by all the NationsBanks class representatives. In fact, all of the NationsBank class representatives were opposed to the settlement. The omission of this somewhat basic information is at best misleading. The omission clearly renders the Notice ineffective in providing class 5

12 members with the basic information necessary for them to make an informed decision as to whether to accept or reject the proposed settlement. Information provided by notice to class members must be so structured that class members are rationally able to decide whether they should intervene in the settlement proceedings or otherwise make their views known. Petrovic, et. al. vs. Amoco Oil Company, 200 F.3d 1140, 1151 (8th Cir. 1999); Reynolds vs. National Football League, 584 F.2d 280, 285 (8th Cir. 1978). The omission in the notice of the fact that all of the NationsBank class representatives had repudiated the settlement was compounded by the failure of the Notice to disclose that the hundreds of millions of dollars in potential damages were being released without payment of damages as consideration and, that there was the gross disparity between the actual recovery of $0.22 and $0.34 per share before fees and the potential recovery of up to $5.88 per share. Omission of material facts in a notice of proposed settlement is grounds for reversal of a District Court s Order approving that settlement. In National Super Spuds, Inc. v. New York Mercantile Exchange, 660 F.2d 9, 31 (2d Cir. 1981), the Second Circuit reversed approval of a settlement where the notice did not apprize the class, consisting of members with both liquidated and unliquidated contract claims, that unliquidated claims would be settled without compensation while 6

13 releasing the defendant from liability from all claims. Because only the class members with liquidated claims would benefit, the Second Circuit found the omission of that key fact in the notice to be fatally defective. Here, the class notice goes beyond mere omission, actually containing misinformation which states that only one NationsBank class representative objected to the settlement when, in fact, all the NationsBank class representatives objected. This misinformation violates process due under a class action notice of proposed settlement because it makes it impossible for absent class members to make an informed decision whether to approve, object to or to opt out of the proposed settlement. II. The Settlement should not have been approved as fair and adequate because the strength of plaintiffs case far outweighs the amount recovered in the Settlement. The standard of review for this issue is abuse of discretion. The most important consideration in determining the fairness and adequacy of a class action settlement is the strength of the case for the plaintiffs on the merits, balanced against the amount offered in settlement. Petrovic vs. Amoco Oil Company, 200 F.3d 1140, 1150 (8th Cir. 1999). The Seventh Circuit s recent decision in Reynolds v. Beneficial National Bank, 288 F.3d 277 (7 th Cir. 2002) supplies a useful analysis regarding settlement 7

14 value. The Court wrote in part: A high degree of precision cannot be expected in valuing a litigation, especially regarding the estimation of the probability of particular outcomes. Still, much more could have been done here without (what is obviously to be avoided) turning the fairness hearing into a trial of the merits. For example, the judge could have insisted that the parties present evidence that would enable four possible outcomes to be estimated: call them high, medium, low, and zero. High might be in the billions of dollars, medium in the hundreds of millions, low in the tens of millions. Some approximate range of percentages, reflecting the probability of obtaining each of these outcomes in a trial (more likely a series of trials), might be estimated, and so a ballpark valuation derived. Some arbitrary figures will indicate the nature of the analysis that we are envisaging. Suppose a high recovery were estimated at $5 billion, medium at $200 million, low at $10 million. Suppose the midpoint of the percentage estimates for the probability of victory at trial was.5 percent for the high, 20 percent for the medium, and 30 percent for the low (and thus 49.5 percent for zero). Then the net expected value of the litigation, before discounting, would be $68 million;discounting, depending on an estimate of the likely duration of the litigation, would bring this figure down, though probably not to $25 million--and any discounting might be inappropriate, as we explained. These figures are arbitrary; our point is only that the judge made no effort to translate his intuitions about the strength of the plaintiffs' case, the range of possible damages, and the likely duration of the litigation if it was not settled now into numbers that would permit a responsible evaluation of the reasonableness of the settlement. Reynolds, 285. It is also noteworthy that the Court decided in Reynolds that 8

15 Circuit Rule 36 would apply on remand. Seventh Circuit Rule 36, entitled Reassignment of Remanded Cases, provides: Whenever a case tried in a district court is remanded by this court for a new trial, it shall be reassigned by the district court for trial before a judge other than the judge who heard the prior trial unless the remand order directs or all parties request that the same judge retry the case. In appeals which are not subject to this rule by its terms, this court may nevertheless direct in its opinion or order that this rule shall apply on remand. Applying the Seventh Circuit s Reynolds analysis to this case can only result in the conclusion that the settlement should have been rejected by Judge Nangle. No reasonable discount rate exists to bridge the gap between the net expected value of this litigation and the meager 1 value of this settlement. Mackay s counsel at the fairness hearing, attorney N. Albert Bacharach, Jr., (Tr ) argued to the Court: 1. That a Reynolds analysis applied to the agreed settlement range of roughly, $.50 to $2.00 per share results in a settlement value in the neighborhood of $.50 per share; 2. That the old BankAmerica was falsely representing the nature of its relationship with D. E. Shaw in its SEC filings in 1998 and 1999 by delineating them as loans when, in fact, the 1 Meager is of course reflective. A young lawyer with a client with a strong case who has been damaged to the tune of $588,000, who nevertheless proposed settling for $29,000, is proposing recovery of a meager value. Just because the numbers in this matter are larger does not make a 5% recovery adequate. 9

16 bank was in an equity situation with Shaw; and 3. That the defendants clearly had the ability to pay appropriate damages in this matter. That the BankAmerica 10K for December 2001 shows: $622 billion in assets; $3.5 billion in revenue; and a net on that of $6.8 billion. Pursuant to Mr. Bacharach s analysis: the $490 million settlement found adequate in this matter by Judge Nangle clearly is not; that fairness and adequacy would require the defendants to pay at least $980 million; that there is a compelling case to be made that the old BankAmerica actions constitute fraud; and that the defendant s assets and revenue should have precluded class counsel from discounting the value of the settlement because there was no risk of nonpayment of damages. At the fairness hearing, Judge Nangle acknowledged that he thought plaintiffs percentage chances for recovery ranged between 50 and 66-2/3. Transcript 190, 197. As Attorney Reed R. Kathrein of Milberg, Weiss, Bershad, Hynes and Lerach, LLP, one of the attorneys for Intervenors Gumapas, Sorkin, and Shyken, stated at the hearing, The lowest number they have given us today and that s excluding the merger of equals is 2.6 billion for the Nationsbank. If you give 40 percent of that you re still over one billion dollars... something in the magnitude of million or 800 million for the Bank of America class, 10

17 just based on the proportions. Transcript That s a heck of a yawn from the settlement amounts of $333.2 million and $156.8 million, respectively. Additionally, on the issue of fair and adequate value this Court should also note: (a) The trial court had denied defendants' Motion for Summary Judgment as to the NationsBank classes; (b) The defendants had entered into a July 30, 2001 Consent Decree with the Securities and Exchange Commission following the commission s investigation of the old BankAmerica violations; 2 (c) The potential recovery according to plaintiffs expert was $7.5 billion; (d) The defendant is strong and solvent 3 ; and, (e) Prior to reaching the settlement in this matter, plaintiffs' attorneys had repeatedly commented about the strength of the case. 4 2 On July 30, 2001, the Securities and Exchange Commission ("SEC") concluded an extensive investigation of defendants' misconduct. The investigation resulted in a cease-and-desist order ("SEC Order"). In the order, the SEC has already found that BankAmerica made "materially misleading" statements during the class period, failed to conform to Generally Accepted Accounting Principles ( GAAP") and "was aware on an ongoing basis" of the risk of the D. E. Shaw relationship, i.e., that BankAmerica was aware of the concealed information. SEC Order at 4-5, 7. In other words, the SEC has already determined that substantial evidence exists to demonstrate falsity and scienter, the principal elements of plaintiffs' claims. 3 One need only look at the severance package given to CEO David Coulter as part of the merger. Mr. Coulter alone received a reported approximately One Hundred Million Dollars ($100,000,000) or one-third (1/3) of what the roughly 160,000 NationsBank shareholders together will share under the proposed settlement. See Exhibit A attached hereto and incorporated by reference. 4 The attorneys' comments are borne out by the recent settlement of a case with similar theories of this one. In a case against Bank of America the Plaintiffs' settlement was 100 cents on 11

18 In deciding whether to approve a proposed settlement, the Court is not called upon to conduct a mini-trial on the merits of the case. Reed v. General Motors Corp., 703 F 2d 170, 172, (5 th Cir. 1983); Ohio Public Interest Campaign v. Fisher Foods. Inc., 546 F Supp. l, 5, (DC Ohio 1982). However, in this case, a mini-trial to a great extent has already occurred. The Securities and Exchange Commission had made significant determinations and rulings. While the SEC determination may not be directly admitted in evidence in a jury trial, it cannot be ignored in the context of settlement. It serves as a reasonable milepost on the issue of liability for the NationsBank Classes. The SEC s findings strongly suggested that plaintiffs had a strong the dollar as opposed to 5 cents on the dollar here. See Exhibit B attached hereto and incorporated by reference. Additionally, the proposed settlement was reached close in time to the scheduled trial date of April 8, Many rulings of the Court had been made previously and the Court indicated on March 15, 2002 that, at the time of the mediation, it was about to issue certain other rulings which would have affected the mediation. All of these factors would have affected the outcome of the mediation and the Court's rulings thus far would be characterized as favorable to the Nationsbank Classes. The notion that the settlement was "strong-armed" is supported by the fact that the Bank had decided what it was going to pay at least a month before the mediation ) and that's what they paid ) Three Hundred Thirty-Four Million Dollars ($334,000,000). This amount, it was revealed, was the amount the Bank had charged to earnings and taken as a reserve in the fourth quarter of There was no negotiation or change of position on the Bank's part. The only apparent negotiation was between the Bank and the insurance company. After that was established, the only discussion left was to divvy the already inadequate amount between Mr. Abbey's clients and Mr. Green's clients. 12

19 likelihood of prevailing on the merits. A $0.22 recovery against losses of $5.88 per share is patently inadequate in this context wherein the SEC has already concluded that defendants made misleading statements and were aware of the concealed information. This settlement clearly fails to pass the fairness and adequacy standards discussed by the Eighth Circuit in Grunin v. Int l House of Pancakes, 513 F.2d 114, 120 (8th Cir. 1975), and the Seventh Circuit in Reynolds v. Beneficial National Bank, 288 F.3d 277 (7 th Cir. 2002). This woefully inadequate settlement of $490 million (which amounts to only 4% of the maximum recovery value of plaintiffs claims) was established by defendant as a reserve for the settlement a month before mediation. IIa. Other Settlements: The sub-set of class actions involving securities, in which settlements have been approved, can be further distinguished by whether they are a high percentage settlement or a low percentage settlement. In cases where there is a low percentage settlement, a number of factors typically are present: a) an insolvency of defendant; b) weakness of plaintiffs' case either based on theory or proof or availability of defenses; and/or c) the absence of objections to the settlement. Examples of these include: In Re: Mego Financial Corp. Securities Litigation, 213 F3d 454, (9th Cir. 2000) (16.7%); Lyons v. Scitex Corp., 987 F. Supp. 13

20 271, 277 (DCNY 1997) (6-11%); Behrens v. Wometco Enterprises, Inc., 118 FRD 534, (DCFL 1988) (57%); Feinberg v. Aiberilia Corp., 966 F. Supp. 442, 444 (DCLA 1997). On the other hand, when such factors are not present, the settlements are not so low. Examples of these include: In Re McDonnell Douglas Equipment Leasing Securities Litigation, 838 F. Supp. 729, (DCNY 1993) (50%); In Re Bausch & Lomg., Inc. Securities Litigation, 183 ERD 78, (DCNY 1998) (42%); In re Cendant Corp. Securities Litigation, 109 F. Supp. 3d 235, (DCNY 2000) (37%); Slade v. Shearson Hammill Co., Inc. 79 FRD 309, 313 (DCNY 1978) (75% and 30%); and Lowenschuss v. C.G. Bluhdorn, 82 FRD 712, (DCNY 1979) (51-63%). In this matter it is clear that the Court approved as fair and adequate a low percentage settlement even though none of the low settlement factors set forth above were present. III. The Amount of Attorney s Fees is Grossly Excessive The standard of review for this issue is abuse of discretion. The district court below awarded fees of 18% to counsel for both the NationsBank and BankAmerica classes on a settlement of $490 million. Mackay has shown the settlement amount is grossly inadequate in light of the strength of 14

21 the case and the potential recovery. Yet the maximum attorneys fees to the NationsBank classes is $83.3 million, and the maximum total attorneys fees to be paid to the BankAmerica classes is $39.2 million, neither of which reflect the adequacy of the settlement. 5 Additionally, the U.S. Supreme Court has established a strong presumption that the unenhanced lodestar is the reasonable statutory fee. Blum v. Stenson, 465 U.S. 886, , 104 S.Ct. 1541, 79 L.Ed. 891 (1984). The award of 18% of the common fund is more than three times the lodestar. In light of the inadequacy of the settlement, the fee award is clearly excessive. IV. Adoption of other arguments Appellant Mackay adopts the arguments of appellants Koehler and Oetting with regard to all issues arising under the Private Securities Litigation Reform Act (PSLRA) as if set forth fully herein. CONCLUSION For the foregoing reasons, Appellant Mackay, a member of the NationsBank Classes, requests that this Court reverse the District Court s Orders approving the proposed settlement and granting attorneys fees, and remand for further 5 As Mackay has previously shown, the low end of a fair and adequate settlement in this matter is over $980 million. In a common fund case such as this, it is only equitable to pay the lawyers $0.50 on the dollar since they were willing to take $0.50 on the dollar on behalf of the class members. Under the circumstances, 9% is more than adequate. 15

22 proceedings before a new district judge. CERTIFICATE OF COMPLIANCE I certify that pursuant to Fed. R. App. P. 32(a)(7)(C) and Eighth Circuit Rule 28A(c), the attached initial brief is proportionately spaced, has a typeface of 14 points or more and contains 4,939 words. The brief was prepared using WordPerfect 10. DATED: January 15, 2003 CERTIFICATE OF SERVICE The undersigned certifies that a true and complete copy of the foregoing was served by mailing the same by the U.S. Mail, first-class postage prepaid, this 16 th day of January, 2003, to each counsel of record at the addresses of record noted below: Mitchell A. Margo Curtis Oetting Heinz Garrett & Soule,P.C. 130 South Bemiston, Suite 200 Clayton, MO Fax: (314) Counsel for appellants Koehler and Oetting Martin M. Green Jonathan F. Andres Joe D. Jacobson Green, Schaff & Jacobson, P.C Forsyth Boulevard, Suite 700 Clayton, MO Fax: (314) Liaison Counsel and Lead Counsel for the NationsBank Classes Arthur N. Abbey Abbey Gardy, LLP 212 East 39 th Street New York, NY Fax: (212) Counsel for plaintiffs-appellees BankAmerica Classes 16

23 Warren R. Stern Wachtell Lipton Rosen & Katz 51 West 52 nd Street New York, NY Fax: (212) Counsel for defendants-appellees Bank of America Corp., et al. John Michael Clear Bryan Cave, L.L.P. 211 North Broadway, Suite 3600 St. Louis, MO Fax: (314) Counsel for defendants-appellees Bank of America Corp., et al. Ronald L. Olson Munger, Tolles & Olson, LLP 355 S. Grand Avenue, 35 th Floor Los Angeles, CA Fax: (213) Counsel for defendants-appellees Coulter, Higgins, and O Neill Barry A. Short Lewis Rice & Fingersh 500 North Broadway, Suite 2000 St. Louis, MO Fax: (314) Counsel for defendants-appellees Coulter, O Neill, and Higgins Edward W. Cochran, Esq. OH Bar No Broxton Road Shaker Heights OH Telephone: (216) Facsimile: (216) Respectfully submitted, Frank H. Tomlinson, Esq. AL Bar No. ASB-7042-T66F Pritchard, McCall & Jones, LLC 505 N. 20 th Street, Suite 800 Birmingham, AL Telephone: (205) Facsimile: (205) N. Albert Bacharach, Jr. Florida Bar Number: Northeast 6 th Avenue Gainesville, Florida Telephone: (352) Facsimile: (352)

24 Paul S. Rothstein Florida Bar Number: NE 1 st Street Gainesville, FL Telephone: (352) Facsimile: (352) Attorneys for Appellant Mackay 18