Practice Areas & Industries: Winston & Strawn LLP

Practice/Industry Group Overview

Winston & Strawn’s litigators counsel various financial institutions, including investment banks, mortgage lenders, and commercial lending and finance companies.  Our attorneys have successfully represented many large commercial lenders in major lender liability and RICO claims, and in suits against borrowers.  Over the years, Winston & Strawn attorneys have been involved in actions on behalf of lenders in various kinds of litigation.  These have included the defense of “lender liability” claims or other allegations of lender misconduct, actions to recover unpaid obligations from principals and guarantors, foreclosure actions, and assertion of claims for fraud on the part of borrowers or their principals.  Other matters in which Winston & Strawn attorneys have represented financial institutions include breach of contract, federal banking regulation, securities fraud, and class action suits.

Representative Matters:

Van Arkel v. Discover Financial Services LLC
Morgan Stanley
 
Winston & Strawn litigators obtained a victory for client Discover Financial Services LLC in an adversary proceeding filed in the U.S. Bankruptcy Court for the Northern District of Illinois. This is also being hailed as a victory for credit card issuers against the litany of “billing error notice” cases that have been filed around the country. The plaintiff, a former Discover cardholder, alleged that our client violated the Fair Credit Billing Act (FCBA) by not properly investigating billing error notices she had sent to Discover, and claimed Discover did not have the right to assess her late fees and other financing charges because it had failed to provide her with all required disclosures prior to the opening of the account. Judge Black granted Discover’s motion to dismiss, concluding that any alleged deficiencies in providing disclosures did not result in billing errors that triggered the duty to investigate or any other protections under the FCRA. During oral argument on the motion to dismiss, Winston attorneys dissuaded the court from following a recent ruling in the Southern District of Texas that had reached the opposite conclusion. On appeal, the U.S. District Court for the Northern District of Illinois affirmed the dismissal.

National Foreign Trade Council, et al. v. Giannoulias
National Foreign Trade Council Inc.
 
Winston & Strawn represented the National Foreign Trade Council, eight municipal fire and police pension funds, and eight individual beneficiaries of public pension funds in a lawsuit challenging the constitutionality of the 2005 Illinois Act to End Atrocities and Terrorism in the Sudan (the Illinois Sudan Act). The Act prohibited the deposit of Illinois state funds in any financial institution failing to certify that neither it nor any of its borrowers did business related to the country of Sudan. It also prohibited public pension funds from investing in any company that has direct or indirect commercial connections to that country. Winston attorneys argued that the Illinois Sudan Act intruded on the federal government’s exclusive power over foreign affairs, violated the clause of the Constitution that vests in Congress the power to legislate regarding foreign commerce, and is preempted by the federal government’s own trade sanctions against Sudan and by the National Bank Act. On February 23, 2007, a Northern District of Illinois judge ruled that the Illinois Sudan Act is unconstitutional and permanently enjoined its enforcement. The defendants have appealed the decision, but briefing on the appeal has been stayed pending passage of a new, narrower bill.

Zawacki v. Discover Financial Services, Inc.
Discover Financial Services
 
Winston & Strawn obtained dismissal of a putative class action complaint brought against client Discover Financial in the Northern District of Illinois alleging that our client accessed credit reports in violation of the Fair Credit Reporting Act (FCRA). The named plaintiff alleged that a mailer from Discover offering a home equity loan failed to include a "firm offer of credit" as required by the FCRA and therefore her credit report was obtained without her consent. Based on the language of the mailer at issue, the court rejected the plaintiff's arguments and dismissed the claims against Discover prior to any discovery.

Morgan, et al. v. American General Finance, Inc.
American General Finance, Inc.
 
Winston & Strawn litigators recently obtained a victory for client American General Financial Services, Inc. in a putative class action filed in Alameda County, California (Oakland), alleging concealment and fraud in originating consumer loans when Judge Sabraw granted summary judgment on all claims of each of the four named plaintiffs. The plaintiffs sought to represent the massive group of every person who borrowed money from AGFS over a six-year period, but the class certification motion was averted when we obtained summary judgment. This case had seen two removals to the federal court and two interlocutory appeals — one to the Ninth Circuit on jurisdiction under the Class Action Fairness Act and one to the California Appellate Court on a "class discovery" issue.

Smith v. Arthur Andersen LLP, et al.
General Electric Capital Corporation
 
We won summary judgment on behalf of our client as a third-party defendant in Smith v. Arthur Andersen et al., a lawsuit filed in the District of Arizona that arose from the bankruptcy of Boston Chicken. Certain defendants filed fraud, indemnity, contribution, negligent misrepresentation, and related claims against our client with potential damages of more than $200 million.
 
In re Bank One Securities Litigation - First Chicago Shareholder Claims
 
On March 16, 2006, the Northern District of Illinois approved a favorable settlement achieved by Winston & Strawn behalf of JP Morgan Chase & Co. in a shareholder class action lawsuit against the former Bank One Corporation and certain former officers and directors. The case arose out of the June 1998 merger of Banc One Corporation and First Commerce Corporation. The plaintiff class was seeking more than $1 billion in damages, and the matter ultimately settled for $39 million.

Frank P. Slattery, Jr., et al. v. United States (No. 93-280C)
Slattery, Jr. Frank P.
 
Winston & Strawn attorneys obtained a $371 million judgment in the Court of Federal Claims on behalf of the shareholders of Meritor Savings Bank in Slattery et al v. United States. When Meritor was seized by the Federal Deposit Insurance Company in December 1992, the shareholders sued the United States alleging breach of contract and unconstitutional taking. The Court of Federal Claims found that the FDIC had breached its contract with and unlawfully seized Meritor.

Payler v. HSH Nordbank AG
HSH Nordbank AG
 
HSH Nordbank retained the firm to defend it against a trademark infringement action brought by the owner of a U.S. registration for the mark HSH for financial publications. The plaintiff sought an injunction barring all use of the HSH Nordbank name in the United States. The matter was settled favorably to our client, which obtained complete freedom to operate under the HSH Nordbank name.

Wells Fargo Bank Minnesota v. Wachovia Bank, National Association 
Wachovia Bank
 
Winston & Strawn attorneys defended Wachovia Bank in the two-week bench trial of a lawsuit brought in the Northern District of Texas by ORIX Capital Markets and Wells Fargo Bank Minnesota in connection with the document delivery protocols for a $3 billion commercial mortgage securitization trust. ORIX, the special servicer to the trust, contended that the failure of Wachovia to maintain and deliver loan origination documents that it had destroyed impaired the value of the trust and resulted in increased loan losses. In May 2005, the judge ruled that ORIX had failed to prove any damages.

Comdisco bankruptcy litigation
JPMorgan Chase Bank, N.A.
 
On behalf of JPMorgan Chase Bank, N.A., we obtained the allowance of a $123 million claim as part of the bankruptcy of Comdisco, Inc., which had objected to our client's claim. Our attorneys obtained a dismissal of the objection as well as an award of attorneys' fees. The bankruptcy court's judgment in favor of JPMorgan was affirmed on appeal, and the matter ultimately was resolved through a favorable settlement.

Reorganized Farmer's Cooperative Association, FCA Post-Confirmation Trust v. CoBank
CoBank, ACB (Legal Division)
 
Winston & Strawn attorneys won summary judgment on behalf of CoBank in a lender liability matter before the District of Kansas that arose from the collapse of the Farmers Cooperative Association of Lawrence, Kansas. CoBank, which is part of the FarmCredit System, is headquartered in Denver and has $27 billion in assets. The summary judgment decision was upheld by the Tenth Circuit Court of Appeals.
 
Sanders Confectionery v. Heller Financial
Heller Financial, Inc.
 
We represented Heller in the Eastern District of Michigan in connection with a lender liability claim for approximately $150 million raising various causes of action, including fraud, RICO, and various securities violations. The matter also included a shareholder class action. Heller obtained the dismissal of the case, which was affirmed by the U.S. Court of Appeals for the Sixth Circuit. This case represents an important precedent in the area of the final res judicata effect of bankruptcy orders. The United States Supreme Court denied cert in this matter.

Heller Financial, Inc. v. Freehold, et. al.
Heller Financial, Inc.
 
We represented Heller Financial in a breach of contract action relating to a failed co-generation project in New Jersey. Heller Financial provided developmental financing on the project, but refused to proceed with a request for permanent subordinated financing due to material adverse changes to the project. The owners of the project received a cash settlement from the utility. Heller filed claims for payments of $56 million due under the financing agreements and Freehold counterclaimed for $75 million in damages. After extensive discovery, injunction proceedings, and several months of trial hearings, the case was settled on favorable terms by the parties.