In the class action alleging that Bank of America’s proxy statement for the Merrill merger failed to disclose massive expected losses at Merrill, the plaintiffs filed on Friday a 102-page omnibus opposition to the series of summary judgment motions we covered previously. In response to the principal defense argument — that any failure to disclose the extent of Merrill’s expected losses was an injury to the company that must be brought, if at all, derivatively — the plaintiffs argued as follows:

Defendants also argue that Plaintiffs have not established that all of BoA’s stock price decline following the corrective disclosures represents harm to the shareholders, and that some unidentified portion of that decline may represent harm to BoA itself. See BoA Mem. at 2-3, 8- 12, 20-21. While this argument misconstrues the Court’s decisions in this case, as well as the relevant law, it also raises fact issues that cannot be resolved at this stage. BoA does not, and cannot, point to a single piece of evidence showing that BoA, as opposed to its shareholders, was harmed by the conduct at issue. To the contrary, Defendants have consistently asserted in this litigation that BoA was not harmed by the Merger, and their own experts have now affirmatively opined that the Merger was at all times “value-enhancing” to BoA. CS ¶¶ 301-08, 312. Accordingly, Defendants cannot credibly contend that BoA’s stock price decline does not reflect shareholder harm – and, at minimum, the jury must weigh these contested facts.

The plaintiffs responded as follows to the motion of then-CEO Ken Lewis, who argued that he reasonably believed disclosure questions were being handled by then-CFO Joe Price and counsel: 

Lewis’s thinly disguised “reliance on counsel” defense rests on a fiction. Lewis took no steps to ensure that counsel was informed of the relevant facts. CS ¶¶ 100-11, 134-48. BoA’s then-General Counsel, Timothy Mayopoulos, has testified that he was not informed before the vote of the true magnitude of Merrill’s losses and their impact on Merrill, and that such information would have been significant to him. CS ¶¶ 113-28. Further, Defendant Price himself has directly contradicted Lewis’s testimony about what Price supposedly told him. While Lewis claims that Price told him on or about December 3, 2008, that BoA’s outside counsel, Wachtell Lipton Rosen & Katz (“Wachtell”), had informed Price that no disclosure of Merrill’s losses was required, Price testified that he did not tell Lewis he had spoken with Wachtell at that time – and the record is clear that no one at BoA ever spoke with Wachtell about the increasing losses between November 20 and December 12. CS ¶¶ 128-38. Only a jury can decide whether Price or Lewis is telling the truth.