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Federated Management Co. v. Coopers & Lybrand5/2/2000
Rendered on
APPEAL from the Franklin County Court of Common Pleas.
On January 24, 1997, Federated Management Company, Federated Research Corp., Federated Advisers, Federated Investment Counseling (collectively referred to as "Federated"), Oaktree Capital Management, LLC ("Oaktree"), TCW Funds Management, Inc., TCW Asset Management Company, Trust Company of the West (collectively referred to as "TCW"), W.R. Huff Asset Management Co., L.L.C. ("W.R. Huff"), and numerous other trustees filed a complaint in the Franklin County Court of Common Pleas against Coopers & Lybrand, a general partnership; Coopers & Lybrand, L.L.P. (collectively referred to as "Coopers & Lybrand"); Donaldson, Lufkin & Jenrette Securities Corporation ("DL & J"), NatWest Capital Markets Limited ("NW Markets"); and certain individual defendants. Federated, Oaktree, TCW and W.R. Huff are investment advisers, investment managers, and/or attorneys-in-fact who filed suit on behalf of certain trustees an/or beneficial owners of 12-1/4 % Senior Subordinated Notes ("Notes"). The Notes were issued by Mid-American Waste Systems, Inc. ("MAW"), an integrated solid waste management company and a publicly-traded company. On May 17, 1994, MAW issued such Notes in the aggregate principal amount of $175 million ("Note Offering") pursuant to a prospectus of the same date. The plaintiffs, on behalf of their clients, purchased certain of such Notes.
As to the original defendants, the plaintiffs made the following averments. Coopers & Lybrand audited MAWS financial statements in relevant years and rendered consulting services to MAW. DL & J and NW Markets acted as lead underwriters in the issuance of the Notes and as MAW's financial advisers. The individual defendants included certain executives of MAW. The plaintiffs averred that each defendant knew or disregarded that certain practices, statements and omissions would materially affect and artificially inflate the financial condition of MAW and induce the plaintiffs to purchase the Notes, which were worth significantly less than represented.
The plaintiffs asserted the following claims against each defendant, violation of R.C. 1707.41, violation of R.C. 1707.43, common law fraud, aiding and abetting common law fraud, negligent misrepresentation, breach of fiduciary duty/acting in concert, negligence, violations of Sections 11 and 15 of the Securities Act of 1933, violations of Section 12(2) of the Securities Act of 1933, and violations of Section 17 of the Securities Act of 1933. In addition, the plaintiffs asserted a claim for breach of contract against NW Markets and DL & J.
On April 14, 1997, the plaintiffs filed a first amended compliant, adding as plaintiff, Credit Suisse First Boston Corp.
On November 17, 1997, the plaintiffs filed a second amended complaint, adding defendants National Westminster Bank, PLC ("NW PLC") and Fleet Bank of New York, N.A. ("Fleet Bank"). The plaintiffs averred that NW PLC acted as a financial adviser and underwriter as to the Notes. The plaintiffs further averred that Fleet Bank was the successor by merger to NatWest Bank, N.A., who was the successor to National Westminster Bank USA ("NatWest USA"). NatWest USA was the agent bank for a $75 million line of credit to MAW that was a condition to the issuance of the Notes. The plaintiffs averred that NatWest USA participated directly or indirectly in placing and offering the Notes and in the underwriting of such Notes. All of the same original claims for relief were asserted against Fleet Bank.
On January 30, 1998, NatWest USA filed a motion to dismiss pursuant to Civ. R. 12(B)(2), (4), (5) and (6) assert
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