Sixth Circuit Affirms Dismissal of Claims Against Fitch

The United States Court of Appeals for the Sixth Circuit affirmed a ruling of the United States District Court for the Southern District of Ohio dismissing with prejudice all claims brought by the Ohio Attorney General against our client, Fitch, Inc., and two other national credit rating agencies in Ohio Police & Fire Pension Fund, et al., v. Standard & Poor's Financial Services, LLC, et al.

The Ohio Attorney General brought suit on behalf of five state investment funds, seeking to recover over $450 million in losses in over 300 different investments in residential and commercial mortgage-backed securities following the financial crisis in 2007 and 2008. The Ohio funds alleged that they bought the securities in reliance on the defendants' credit ratings and that those ratings were false and negligently assigned. The complaint asserted claims for violations of the Ohio Securities Act and for common law negligent misrepresentation. Adopting the arguments presented by Fitch and the other credit rating agencies, the district court dismissed the complaint with prejudice on September 26, 2011.

The Court of Appeals affirmed the district court's decision in its entirety. The court affirmed dismissal of the Ohio Securities Act claims because the rating agencies were not sellers of the securities at issue, as required for liability under the statute, and affirmed dismissal of the negligent misrepresentation claims because the defendants did not owe plaintiffs a duty, as required to support a claim for negligent misrepresentation under either New York or Ohio law, and because the credit ratings at issue were statements of opinion, not statements of fact, and, therefore, were not actionable on a negligence theory.

The Paul, Weiss team included, among others, litigation partner Martin Flumenbaum.