Plaintiffs holding out hope that they could hold credit rating agencies liable for slapping AAA ratings on doomed mortgage-backed securities on the theory that the agencies acted as underwriters got some bad news on Wednesday.

The Blog at Legal Times reports on a qualified loss for tobacco companies in their appeal of the government's massive RICO case, United States v. Philip Morris. Reporter Mike Scarcella writes that the D.C. Court of Appeals upheld D.C. federal district court judge Gladys Kessler's landmark ruling and found Big Tobacco liable in a decades-long conspiracy to deceive consumers about the adverse health effects of smoking. The appeals court, however, rejected the government's request to seize billions of dollars in corporate profit.

After crying foul over Bank of America's settlement with state AG's earlier this year, co-lead class counsel from Susman Godfrey; Boies, Schiller & Flexner; and Hausfeld now say they've been sidelined by UBS's $160 million bid-rigging settlement with 25 states last week.

Defending its $75 million settlement with Citigroup to a skeptical federal judge, the Securities and Exchange Commission called Citigroup's disclosure process "deeply flawed." But it said no executives intended to mislead shareholders about the extent of the bank's subprime exposure. The filing sheds no light on the role of Citi's lawyers in making disclosure decisions.

Deutsche Bank and Citigroup agreed to pay up rather than join Goldman Sachs, Royal Bank of Scotland, and JPMorgan Chase on the list of banks sued by the National Credit Union Administration and its lawyers at Korein Tillery and Kellogg Huber.

Is the pendulum swinging in favor of plaintiffs in subprime cases? Bernstein Litowitz represents a class of bondholders whose claims that Citi failed to disclose its exposure to toxic mortgages have (mostly) survived a motion to dismiss.