Judge Certifies Class in MBS Litigation

Southern District Judge Paul A. Crotty last week certified a class of investors who bought securities issued by Credit Suisse First Boston Mortgage Securities Organization in August 2006. Judge Crotty rejected defense arguments that he should not certify a class because several of the class members are sophisticated, have large claims, and could bring individual claims. “Sophistication and size of certain class members are not bars to a finding of numerosity,” wrote Judge Crotty in New Jersey Carpenters Health Fund v. DLJ Mortgage Capital Inc, 08 civ. 5653.

Plaintiffs lawyer Joel Laitman of Cohen Milstein Sellers & Toll, said Judge Crotty refused to assume that because some potential class members were sophisticated investors, they fully understood the risks of these securities. “You have to show evidence of actual knowledge,” Mr. Laitman said. Credit Suisse, represented by Bingham McCutchen, declined to comment. Bingham had earlier narrowed the scope of the case through a motion to dismiss, eliminating three of the four offerings cited in the original complaint.