Court Denies in Part Motions to Dismiss New Jersey Municipal Bond Underpricing Lawsuit
On July 18, 2018, Judge Douglas Hurd of the Superior Court of New Jersey, Mercer County, granted in part and denied in part Defendants’ motions to dismiss Relators’ qui tam claims. The case, State of New Jersey, ex rel. Hayes and Heppenstall v. Bank of America Corp., et al., alleges that Defendant-underwriters knowingly engaged in routine and systematic violations of the New Jersey False Claims Act in connection with their underwriting and issuance of the State’s municipal bonds.
The Court allowed all but one of Relators’ claims against Morgan Stanley to proceed. After finding Relators had sufficiently stated their qui tam allegations against Morgan Stanley, the Court went on to reject Defendants’ arguments that (1) Relators’ claims were subject to the public disclosure bar; and (2) Relators’ failed to sufficiently allege the fraudulent statements at issue were material to the State’s payment decisions.
As to the Relators’ claims against the other Defendants, the Court granted the motion to dismiss without prejudice—finding that Relators had not stated their claims with the requisite particularity as to those Defendants. Relators intend to amend their Complaint to add additional specificity to their allegations of fraudulent conduct by those Defendants.
Relators in this case are represented by Kenneth A. Wexler, Mark R. Miller, Bethany R. Turke, and Bryan D. Pasciak of Wexler Wallace LLP, Daniel E. Gustafson and Karla M. Gluek of Gustafson Gluek PLLC, and Jeffrey Herrmann of Cohn Lifland Pearlman Herrmann & Knopf LLP.