Munger, Tolles & Olson Named Litigators of the Week by Am Law Litigation Daily For Appellate Victory Knocking Out $1 Billion Judgment Against BMO Bank N.A.
Munger, Tolles & Olson successfully secured the reversal of a $1 billion judgment against BMO Bank N.A. (f/k/a BMO Harris Bank N.A.), the U.S. subsidiary of the Bank of Montreal, when the U.S. Court of Appeals for the Eighth Circuit ruled that a federal court erroneously rejected a critical and dispositive defense.
The lawsuit, filed on behalf of the Petters Company estate by a bankruptcy trustee, arose out of the $3.8 billion Petters Ponzi scheme, one of the largest Ponzi schemes in U.S. history. At trial, a federal jury found that a regional bank subsequently acquired by BMO had aided and abetted breaches of fiduciary duty by high-level Petters executives. The trustee sought billions of dollars in damages and, in 2022, was awarded a $563 million judgment. With pre-judgment interest, the total award exceeded $1 billion.
After being retained as appellate counsel to handle BMO’s appeal to the Eighth Circuit, MTO successfully argued before a three-judge panel, in May 2024, that the federal court should not have rejected BMO’s “in pari delicto” defense, which states that a plaintiff that bears the majority of responsibility for wrongdoing cannot hold another party liable for that wrongdoing. The panel concluded that even though the trustee himself did not commit any wrongdoing relating to the Petters Ponzi scheme, he had filed the lawsuit against BMO on behalf of the Petters Company, which engineered and carried out the scheme. Deeming the in pari delicto defense dispositive in this case without further district-court consideration, the Eighth Circuit ordered the district court to enter judgment in favor of BMO, thus concluding the case.
The MTO appellate team included Don Verrilli, Elaine Goldenberg, Rachel Miller-Ziegler, Ben Barokh, Andra Lim and Daniel Kane.
The Am Law Litigation Daily recognized MTO as Litigators of the Week for their excellent work on this appeal. When asked what she will remember most about the matter, Ms. Goldenberg replied: “Two things stand out in this case. First, this was an extraordinary team. There were a lot of lawyers that all worked together incredibly smoothly, productively, and without ego… Second, in our view, the bankruptcy and district courts got things very wrong here, and it was gratifying to see the court of appeals take a fresh look at the case and correct those errors. That’s of course how the appellate system is supposed to work, but it’s unusual to have such a resounding and total reversal, particularly in a case this sprawling.”
The case also garnered significant media coverage in AP News, Bloomberg Law, Reuters, Law360 and many others. (Subscriptions may be required)