CONFIDENTIAL MATERIAL SUBJECT TO STIPULATION AND …

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK

MBIA INSURANCE CORPORATION,

Plaintiff,

-against-

COUNTRYWIDE HOME LOANS, INC., COUNTRYWIDE SECURITIES CORP., COUNTRYWIDE FINANCIAL CORP., COUNTRYWIDE HOME LOANS SERVICING, L.P. and BANK OF AMERICA CORP.,

Defendants.

Index No. 602825/2008IAS Part 3

Hon. Eileen Bransten

Motion Sequence No. 54

CONFIDENTIAL MATERIAL SUBJECT TO STIPULATION AND ORDER FOR THE

PRODUCTION AND EXCHANGE OF CONFIDENTIAL INFORMATION

The Countrywide Defendants’ Memorandum of Law in Opposition to Plaintiff MBIA Insurance Corporation’s Motion to Remove Confidentiality Restrictions will be filed under seal pursuant to the Stipulation and Order for the Production and Exchange of Confidential Information, so ordered April 22, 2009.

This envelope, containing documents which are filed in this case by Countrywide Home Loans, Inc., Countrywide Securities Corp., Countrywide Financial Corp., and Bank of America, N.A., solely in its capacity as successor by July 2, 2011 de jure merger to BAC Home Loans Servicing, L.P. (f/k/a Countrywide Home Loans Servicing, L.P.), is not to be opened nor are the contents thereof to be displayed or revealed other than to the Court, the parties and their counsel of record, except by order of the Court or consent of the parties. Violation hereof may be regarded as contempt of the Court.

Pursuant to the Stipulation and Order for the Production and Exchange of Confidential Information, so ordered April 22, 2009: Confidential Materials shall be returned by the Part Clerk upon disposition of the motion or other proceeding for which they were submitted.

FILED: NEW YORK COUNTY CLERK 08/16/2012 INDEX NO. 602825/2008

NYSCEF DOC. NO. 1926 RECEIVED NYSCEF: 08/16/2012

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK

MBIA INSURANCE CORPORATION,

Plaintiff,

v.

COUNTRYWIDE HOME LOANS, INC., COUNTRYWIDE SECURITIES CORP., COUNTRYWIDE FINANCIAL CORP., COUNTRYWIDE HOME LOANS SERVICING, L.P. and BANK OF AMERICA CORP.,

Defendants.

Index No. 602825/2008IAS Part 3

Hon. Eileen Bransten

Motion Sequence No. 54

THE COUNTRYWIDE DEFENDANTS’ MEMORANDUM OF LAW IN OPPOSITION TO PLAINTIFF MBIA INSURANCE CORPORATION’S

MOTION TO REMOVE CONFIDENTIALITY RESTRICTIONS

GUNSTER YOAKLEY & STEWART, P.A. One Enterprise Center 225 Water Street, Suite 1750 Jacksonville, FL 32202 Telephone: (904) 354-1980

August 10, 2012

GOODWIN PROCTER LLP The New York Times Building 620 Eighth Avenue New York, NY 10018 Telephone: (212) 813-8800

Attorneys for Defendants Countrywide Home Loans, Inc., Countrywide Securities Corp., Countrywide Financial Corp., and Bank of America, N.A., solely in its capacity as successor by July 2, 2011 de jure merger to BAC Home Loans Servicing, L.P. (f/k/a Countrywide Home Loans Servicing, L.P.)

REDACTED

MBIA Ins. Corp. v. Countrywide Home Loans, Inc. Countrywide Opp’n (Mot. Seq. No. 54) Index No. 602825/08

i

TABLE OF CONTENTS

PRELIMINARY STATEMENT ................................................................................................. 1

ARGUMENT ................................................................................................................................. 3

I. THERE IS NO LEGITIMATE BASIS FOR THE RELIEF MBIA SEEKS. ............. 3

A. The Materials MBIA Seeks to De-Designate Are Private Discovery Materials, Not Judicial Records. .............................................................................................. 3

B. MBIA’s Motion Attempts to Circumvent the Protective Order’s “Use” Restrictions. ............................................................................................................ 5

II. COUNTRYWIDE DESIGNATED DOCUMENTS AS CONFIDENTIAL AND HIGHLY CONFIDENTIAL IN GOOD FAITH AND IN RELIANCE ON THE PROTECTIVE ORDER. .................................................................................................. 7

A. Countrywide’s Designation of Documents and Testimony as Confidential and Highly Confidential Was in Good Faith. ................................................................ 7

B. Countrywide Is Entitled to the Benefit of Its Bargain and to Rely on the Protective Order. ...................................................................................................................... 9

III. MBIA FAILS TO IDENTIFY THE DOCUMENTS AT ISSUE WITH SUFFICIENT PARTICULARITY. ............................................................................... 12

IV. MBIA’S REQUESTED RELIEF IS OVERBROAD AND UNDULY BURDENSOME. ............................................................................................................. 15

V. CONCLUSION. .............................................................................................................. 17


ii

TABLE OF AUTHORITIES

Page(s)CASES

Alpha Funding Group v. Continental Funding, LLC,17 Misc. 3d 959 (Sup. Ct. Kings County 2007).........................................................................8

D’Amour v. Ohrenstein & Brown, LLP,17 Misc. 3d 1130A (Table; text at 2007 WL 4126386 (Sup. Ct. N.Y. County Aug. 13, 2007) ..........................................................................................................................................5

Danco Labs. v. Chem. Works of Gedeon Richter, Ltd.,274 A.D.2d 1 (1st Dep’t 2000) ..................................................................................................4

Marks v. Global Mortg. Group, Inc.,218 F.R.D. 492 (S.D. W. Va. 2003)...........................................................................................8

McLaughlin v. G.D. Searle, Inc.,38 A.D.2d 810 (1st Dep’t 1972) ................................................................................................7

Mosallem v. Berenson,76 A.D.3d 345 (1st Dep’t 2010) ................................................................................................4

Oscarsson v. Joe Ginsberg, Inc.,No. 600067/09, 2009 N.Y. Misc. LEXIS 4367 (Sup. Ct. N.Y. County Aug. 4, 2009) .............6

Oxxford Information Technology, Ltd. v. Novantas LLC,78 A.D.3d 499 (1st Dep’t 2010) ............................................................................................5, 9

Rice v. Rice,288 A.D.2d 112 (1st Dep’t 2001) ......................................................................................5, 6, 9

Snyder v. Parke, Davis & Co.,56 A.D.2d 536 (1st Dep’t 1977) ................................................................................................7

Tymko v. K-Mart Discount Stores, Inc.,75 A.D.2d 987 (4th Dep’t 1980) ................................................................................................7

Valley Bank of Nev. v. Super. Ct.,15 Cal. 3d 652 (Cal. 1975) .........................................................................................................8

Visentin v. DiNatale,4 Misc. 3d 1018A (Table; text at 2004 WL 1900407 (Sup. Ct. Putnam County Feb. 12, 2004)) ...................................................................................................................................4

In re Will of Hofmann,284 A.D.2d 92 (1st Dep’t 2001) ................................................................................................4


iii

STATUTES

15 U.S.C. §§ 6801-6810 ..................................................................................................................8

Cal. Fin. Code §§ 4050-4060 ...........................................................................................................8

CPLR § 3103(a) ...........................................................................................................................6, 7

RULES OF COURT

22 NYCRR § 216.1 ...................................................................................................................... 3-4


Page 1 of 13

PRELIMINARY STATEMENT1

For over 3½ years—in reliance on the protections this Court expressly afforded the

parties in the February 24, 2009 Stipulation and Order for the Production and Exchange of

Confidential Information (“Protective Order”)—Countrywide has produced to MBIA tens of

millions of pages of documents; has offered 69 current and former employees of Countrywide

for 86 days of deposition; and has submitted 16 initial and rebuttal expert reports, relying on

thousands of documents comprising over 100,000 pages, from 13 experts. The extensive

discovery produced by Countrywide to MBIA concerns the most sensitive and confidential of

borrower and employee personal and financial information; Countrywide’s trade secrets,

proprietary business information, systems, and processes; detailed financial and reserves

information; responses to regulatory inquiries; internal audits and quality control documents;

Board materials; and other competitively sensitive information, the public disclosure of which

would be detrimental to Countrywide. Although this Court has limited much of the discovery in

this case to the loans in the Securitizations at issue, to expedite production to MBIA,

Countrywide also has produced—without redaction—scores of internal repurchase-related

analyses that concern not just MBIA and the loans in the Securitizations, but also other

counterparties, many of whom have sued Countrywide, and several of whom are represented by

MBIA’s counsel, Quinn Emanuel. Countrywide made these productions in good faith reliance

1 As used in this brief, “MBIA” means plaintiff MBIA Insurance Corporation. The “Countrywide Defendants” and/or “Countrywide” refer to defendants Countrywide Home Loans, Inc. (“CHL”), Countrywide Securities Corp. (“CSC”), Countrywide Financial Corp. (“CFC”), and Bank of America, N.A., solely in its capacity as successor by July 2, 2011 de jure merger to BAC Home Loans Servicing, L.P. (f/k/a Countrywide Home Loans Servicing, L.P. (“CHLS”)). “BAC” means defendant Bank of America Corporation. “MBIA Br.” refers to the July 30, 2012 Memorandum of Law in Support of Plaintiff’s Motion to Remove Confidentiality Restrictions. “Oblak Aff.” refers to the Affirmation of Jonathan B. Oblak, dated July 30, 2012. “BAC Opp.” refers to BAC’s concurrently-filed Memorandum of Law in Opposition to Plaintiff’s Motion to Remove Confidentiality Restrictions, which Countrywide incorporates herein by reference.


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on both the Court’s Protective Order and MBIA’s express representations that it would hold

confidential the materials produced by Countrywide.

Now, only after Countrywide has completed its production of documents and fact

discovery has concluded, MBIA has reversed course and attacked the Court’s Protective Order,

seeking to make public thousands of documents and hundreds of hours of testimony produced by

Countrywide. MBIA’s attack on the Protective Order takes the form of a motion that

deliberately obfuscates the identity, nature, and volume of documents MBIA seeks to make

public, and attempts to shift the burdens the Court imposed upon MBIA under the Protective

Order to Countrywide. Countrywide repeatedly has indicated its willingness to work with MBIA

to discuss the de-designation of specific documents and information on which MBIA intends to

rely at summary judgment and trial, and merely has asked that MBIA identify those documents

so that Countrywide can review and respond to MBIA’s request on a particularized basis. MBIA

has refused to do so, and instead brings this motion.

This Court should deny MBIA’s motion. First, there is no legitimate purpose for

MBIA’s motion, which concerns private Discovery Material, not judicial records, and is a thinly-

veiled attempt to use documents produced by Countrywide in other cases. Second, for more than

three years, both Countrywide and numerous third parties have relied on the Protective Order

and MBIA’s express representations—including assurances MBIA made to expert witnesses

even after it filed this motion—that it would abide by designations of documents and transcripts

as confidential. Third, MBIA has not met its burden under the Protective Order to identify—for

the Court and Countrywide—the specific documents and information that it seeks to make

public. Finally, MBIA’s motion is overbroad and unduly burdensome.


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FACTUAL BACKGROUND

Countrywide incorporates by reference the facts as set forth in BAC’s opposition. See

BAC Opp. at 3-6. In the fall of 2011, MBIA requested wholesale and categorical de-designation

by Countrywide of documents and testimony in this action, and reiterated this request in July

2012. See Holland Aff. Exs. A-C (Letter from M. Sheth to S. Concannon (Sept. 16, 2011);

Letter from C. Statfield to S. Concannon (Oct. 21, 2011); Letter from J. Oblak to S. Concannon

and D. Cantor (July 18, 2012)). Countrywide responded to each of these demands by offering to

meet and confer with MBIA to discuss specific documents that MBIA believes should be de-

designated. See id. Exs. D, E (Letter from S. Concannon to M. Sheth (Oct. 21, 2011); Letter

from S. Concannon to J. Oblak (July 24, 2012)). MBIA did not accept this proposal and instead

filed this motion.

ARGUMENT

I. THERE IS NO LEGITIMATE BASIS FOR THE RELIEF MBIA SEEKS.

The blanket de-designation MBIA seeks is premature and unnecessary. MBIA has not

yet filed its motion for summary judgment. The documents at issue are private Discovery

Material, not judicial records. The parties have filed numerous other pleadings under seal, have

then agreed on redactions prior to public filing (as recently as in connection with this motion),

and have reached numerous agreements enabling unfettered argument in open court—often

before packed courtrooms—without difficulty. MBIA’s motion offers no reason for this Court to

order the parties to depart from these successful past practices.

A. The Materials MBIA Seeks to De-Designate Are Private Discovery Materials, Not Judicial Records.

MBIA’s motion seeks disclosure of documents, transcripts, and expert reports and

materials produced as part of the private discovery between the parties in this case. Such private


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4

Discovery Materials are not judicial records under 22 NYCRR § 216.1 and are not properly

subject to disclosure under that rule. By its terms, Section 216.1(a), on which MBIA incorrectly

relies, applies only to “court records”:

[A] court shall not enter an order in any action or proceeding sealing the court records, whether in whole or in part, except upon a written finding of good cause, which shall specify the grounds thereof.

22 NYCRR § 216.1(a). As Section 216.1(b) makes clear, “court records” includes documents

and records “filed with the clerk in connection with the action,” and expressly excludes

“[d]ocuments obtained through disclosure and not filed with the clerk,” which “shall remain

subject to protective orders.” Id. § 216.1(b).

Here, MBIA requests wholesale de-designation of five broad categories of documents,

which would require Countrywide to remove the confidentiality designations from scores of

documents “obtained through disclosure” that have not yet been—and may never be—“filed with

the clerk in connection with the action.” Id. Under the plain language of Section 216.1(b),

unless and until these Discovery Materials are “filed with the clerk” they are not “court records”

and “shall remain subject to” the Protective Order. And, unless and until the documents are filed

with the clerk in connection with the action and become court records, neither Section 216.1(a)

nor the cases cited by MBIA2 provide a right of access.3

2 Mosallem v. Berenson, 76 A.D.3d 345 (1st Dep’t 2010) involved an opposition to a motion to seal filed by a journalist, not a motion (as here) by a party seeking to de-designate whole categories of confidential material, before anything is filed with the Court, under an existing confidentiality order to which that party had already stipulated. See id. at 347-48. In Danco Labs. v. Chem. Works of Gedeon Richter, Ltd., 274 A.D.2d 1 (1st Dep’t 2000), the appellant was The Washington Post, a newspaper that was not a party to the litigation. See id. at 4. The Post challenged an order denying its motion to vacate a sealing order, meaning the documents had already been filed and sealed. See id. at 4-6. Visentin v. DiNatale, 4 Misc. 3d 1018A (Table; text at 2004 WL 1900407 (Sup. Ct. Putnam County Feb. 12, 2004)) also involved news media intervening in a civil action to unseal records, which had already been submitted to the court on a summary judgment motion. See id. at *1-*2. In re Will of Hofmann, 284 A.D.2d 92 (1st Dep’t 2001) concerned a motion in Surrogate’s Court to seal a record from Supreme Court that, despite a confidentiality agreement, was never actually sealed. See id. at 93-94.


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The Protective Order details two separate procedures for inclusion of Confidential and

Highly Confidential information in Court filings. See Protective Order ¶ 12. Throughout this

case, the parties have worked cooperatively in connection with both motions and hearings to

facilitate the filing of confidential materials under seal, the public filing of redacted documents,

and open and unrestricted arguments in Court. Nothing has changed warranting any alteration to

the procedures set forth in the Protective Order and previously employed by the parties.

B. MBIA’s Motion Attempts to Circumvent the Protective Order’s “Use” Restrictions.

There is no legitimate reason in this case for the broad de-designation MBIA seeks.

Rather, MBIA appears to be attempting to circumvent the Protective Order’s express restriction

on the use of Discovery Material in other actions. This Court should not countenance this goal.

The Protective Order limits the parties’ use of Confidential and Highly Confidential

Information “only for purposes of this litigation and for no other purpose.” Protective Order ¶ 6

(emphasis added). MBIA has brought similar claims against other mortgage lenders,4 and

numerous other counterparties—including other monoline insurers, mortgage insurers,

Government Sponsored Entities, and investors—have brought separate actions against

Countrywide.5 Notably, counsel to MBIA in this action, Quinn Emanuel, represents at least four

3 See, e.g., D’Amour v. Ohrenstein & Brown, LLP, 17 Misc. 3d 1130A (Table; text at 2007 WL 4126386, at *21 (Sup. Ct. N.Y. County Aug. 13, 2007)) (maintaining terms of interim confidentiality order, as plaintiffs “failed to adequately identify any genuine, substantial public interest which would be furthered by public access to the private information submitted by defendants, and which would outweigh the legitimate interest of defendants in maintaining the privacy of their financial and other confidential information”); see also Oxxford Info. Tech., Ltd. v. Novantas LLC, 78 A.D. 3d 345, 499-500 (1st Dep’t 2010); Rice v. Rice, 288 A.D.2d 112, 112-13 (1st Dep’t 2001).

4 See, e.g., MBIA Ins. Corp. v. Residential Funding Co., LLC, Index. No. 603552/2008 (Sup. Ct. N.Y. County); MBIA Ins. Corp. v. Credit Suisse Securities (USA) LLC, et al., Index No. 603751/2009 (Sup. Ct. N.Y. County); MBIA Ins. Corp. v. FDIC ex rel. IndyMac Federal Bank, F.S.B., No. 1:09-cv-01011 (D.D.C); Appeal No. 11-5317 (D.C. Cir.).


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other clients—Mass Mutual, Allstate, AIG, and FHFA—in actions against Countrywide.6

Neither the other actions pending against Countrywide nor Quinn Emanuel’s dual

representation of MBIA and other clients would necessarily be of concern if the Protective

Order’s use restrictions are enforced, and MBIA and its counsel’s use of the Discovery Material

is limited to this case. If, however, this Court grants MBIA’s motion, then it will enable both

MBIA and its counsel to use documents that were produced in this case in reliance on the

Court’s Protective Order in their other litigation, in some instances circumventing the discovery

orders of other courts. See Holland Aff. ¶ 5. This is an abuse of the Protective Order and should

not be allowed. See Rice v. Rice, 288 A.D.2d 112, 112-13 (1st Dep’t 2001) (upholding

confidentiality designation of material that plaintiff intended to use in separate legal action);

Oscarsson v. Joe Ginsberg, Inc., No. 600067/09, 2009 N.Y. Misc. LEXIS 4367, at *7 (Sup. Ct.

N.Y. County Aug. 4, 2009) (upholding plaintiff’s designation of material as confidential, which

defendant exploited for commercial purposes, rejecting “blatant opportunism which this court

will not countenance pendente lite” and restricting defendant under CPLR § 3103(a) from using

the material outside the litigation).

5 See, e.g., Financial Guaranty Ins. Co. v. Countrywide Home Loans, Inc., et al., Index No. 650736/2009 (Sup. Ct. N.Y. County); Ambac Assurance Corp., et al. v. Countrywide Home Loans, Inc., et al., Index No. 651612/2010 (Sup. Ct. N.Y. County); Maine State Retirement System v. Countrywide Financial Corp., et al., No. 2:2010-cv-00302 (C.D. Cal.); In re Countrywide Financial Corp. Mortgage-Backed Securities Litigation, No. 2:11-ML-02265-MRP (MANx) (C.D. Cal.); Luther et al. v. Countrywide Financial Corp., et al., No. 12-CV-05125 MRP (MANx) (C.D. Cal.).

6 See, e.g., Massachusetts Mutual Life Insurance Co. v. Countrywide Financial Corp., et al., No. 11-CV-10414-MP (C.D. Cal.); Allstate Life Insurance Co. v. Countrywide Financial Corp., et al., No. CV 11-05236-MRP (C.D. Cal.); American International Group, Inc. et al. v. Countrywide Financial Corp., et al., No. 2:11-CV-10549 MRP (MANx) (C.D. Cal.); Federal Housing Finance Agency v. Countrywide Financial Corp., et al., No. 12-CV-01059-MRP (MANx) (C.D. Cal.).


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II. COUNTRYWIDE DESIGNATED DOCUMENTS AS CONFIDENTIAL AND HIGHLY CONFIDENTIAL IN GOOD FAITH AND IN RELIANCE ON THE PROTECTIVE ORDER.

A. Countrywide’s Designation of Documents and Testimony as Confidential and Highly Confidential Was in Good Faith.

A protective order “limiting, conditioning or regulating the use of” discovery material is

“designed to prevent unreasonable annoyance, expense, embarrassment, disadvantage, or other

prejudice to any person or the courts.” CPLR 3103(a). In a complex commercial matter such as

this one, the purpose of a protective order is to safeguard not only the private non-public

information of a business’ customers, but also proprietary business information and any other

material that could compromise the business competitively if made public. See id.; see also

Protective Order ¶ 3(a). It is well-established that “material confidential in nature, or

information which is subject to abuse if widely disseminated, shall be accorded judicial

safeguards where possible.” McLaughlin v. G.D. Searle, Inc., 38 A.D.2d 810, 811 (1st Dep’t

1972); see also Tymko v. K-Mart Discount Stores, Inc., 75 A.D.2d 987 (4th Dep’t 1980); Snyder

v. Parke, Davis & Co., 56 A.D.2d 536 (1st Dep’t 1977).

Here, MBIA contends that over 150 deposition transcripts, 4,000 deposition exhibits,

thirty expert reports, and the “voluminous materials” supporting the expert reports, MBIA Br. at

9, categorically contain “ no trade secrets, proprietary business information, or other

competitively sensitive information,” and that dissemination of their contents “would not present

any competitive or economic harm to Countrywide or BAC,” id. at 4. MBIA offers the Court no

basis whatsoever for this audacious assertion. Moreover, MBIA’s unsubstantiated assertion that

Countrywide “over-designat[ed]” documents as Confidential is meritless. The Protective Order

entered by the Court provides that a party may designate as Confidential not only “trade secrets,

proprietary business information, [and] competitively sensitive information,” but also “other


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information the disclosure of which would, in the good faith judgment of the party designating

the material as confidential, be detrimental to the conduct of that party’s business or the

business of any of that party’s customers or clients.” Protective Order ¶ 3(a) (emphasis added).

Not only are the documents designated as Confidential and Highly Confidential by Countrywide

highly sensitive, with the potential to cause harm to Countrywide if made public, but they also

include loan files and loan-level data containing personal information of borrowers, which

Countrywide is obligated under state and federal law to keep private.7 To the extent MBIA has

identified, in connection with its motion, a handful of documents that might appropriately be de-

designated in whole or part (e.g., expert curriculum vitae8), see MBIA Br. at 10-11, these are

precisely the types of particularized challenges contemplated by paragraph 4 to the Protective

Order, and do not justify—let alone require—the indiscriminate de-designation of entire

categories of Discovery Material. See Protective Order ¶ 4.

7 See, e.g., Gramm-Leach-Bliley Act (“GLBA”), 15 U.S.C. §§ 6801-6810; California Financial Information Privacy Act (“FIPA,” or “SB1”), Cal. Fin Code §§ 4050-4060. GLBA, after which a number of state laws including FIPA are modeled, protects customers of financial institutions from having their private personal information publicly disclosed. Although the law provides a “judicial process” exception, courts typically have required protective orders to facilitate civil discovery while protecting individual privacy. See, e.g., Alpha Funding Group v. Continental Funding, LLC, 17 Misc. 3d 959, 966-67 (Sup. Ct. Kings County 2007) (financial institution may disclose customer information in civil discovery, “subject to an appropriate protective order”); see also Marks v. Global Mortg. Group, Inc., 218 F.R.D. 492, 497 (S.D. W. Va. 2003) (“Congress has expressed a strong interest in protecting the privacy of consumers’ financial information. For that reason, it is appropriate for a court to exercise its broad discretion to fashion protective orders.”); accord Valley Bank of Nev. v. Super. Ct., 15 Cal. 3d 652, 658 (1975) (financial institution must seek “an appropriate protective order” before disclosing customer information in litigation).

8 MBIA’s argument that expert curriculum vitae are not properly confidential, MBIA Br. at 10-11, ignores the fact that these documents often contain confidential and private information, including the expert’s home address, the names of other clients, and other cases in which the expert has provided reports and/or testimony. More importantly, had MBIA asked Countrywide to de-designate these documents in whole or part, Countrywide would have promptly responded, as it did when MBIA asked Countrywide to agree that the identities of experts in this case need not be held confidential. See Holland Aff. ¶ 6.


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B. Countrywide Is Entitled to the Benefit of Its Bargain and to Rely on the Protective Order.

Where, as here, the parties have bargained for the protection of confidential and

proprietary information that they disclose to one another in litigation, and have relied on that

bargain in conducting discovery, they are entitled to the benefit of that bargain. See Oxxford

Information Technology, Ltd. v. Novantas LLC, 78 A.D.3d 499, 499-500 (1st Dep’t 2010)

(denying motion to modify confidentiality order as plaintiffs’ cost of compliance did not

outweigh defendants’ bargained-for interest in nondisclosure); Rice, 288 A.D.2d at 112-13

(denying motion to modify confidentiality order where “[p]laintiff has not demonstrated that the

purpose of the Confidentiality Order has expired and defendant is entitled to the benefit of his

bargain[.]”). Not only did Countrywide and MBIA negotiate and agree to the terms of the

Protective Order, but Countrywide has relied on the Protective Order throughout three years of

fact discovery. Countrywide’s substantial production of discovery to MBIA in this action was

based on its reasonable expectation that documents and information designated as Confidential

and Highly Confidential would remain confidential “unless and until the Court rules otherwise,”

Protective Order ¶¶ 3-4, and would not be “furnished, shown or disclosed” to any person not

connected with this litigation. Id. ¶¶ 5-6.

MBIA also provided Countrywide with express assurances that certain material would be

kept confidential, and Countrywide produced documents based on those assurances. See Holland

Aff. ¶ 5. For example, in connection with its production of repurchase-related documents,

Countrywide raised its concerns with MBIA regarding the production of unredacted documents,

noting that many of the repurchase-related documents contain information relating to other

counterparties, including FHFA, which is represented by MBIA counsel, Quinn Emanuel, in an


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action against Countrywide in which discovery was expressly stayed. See id. In response,

MBIA stated:

We have considered your request and concluded that the protective order adequately addresses your client’s concerns that documents produced in the MBIA v. Countrywide Action will not be used in any other action, including in the action commenced by FHFA against Countrywide. Moreover, the protective order allows Countrywide to designate documents as “Highly Confidential” to address any competitive concerns.

Holland Aff. Ex. F (Email from M. Sheth to S. Concannon (Apr. 26, 2012, 8:25 PM)) (emphasis

added). MBIA now attempts, without any basis, to disavow its prior assurances. After a follow-

up inquiry from Countrywide, MBIA’s counsel further assured Countrywide that:

[N]o documents produced in the MBIA v. CW matter will be used in the FHFA v. CW matter (unless they are separately produced in that matter or publicly available).

Holland Aff. Ex. G (Email from M. Sheth to S. Concannon (Apr. 26, 2012, 9:45 PM)) (emphasis

added). Again, MBIA’s representation is completely inconsistent with its present motion.

Based on these representations and the existence of the Protective Order, Countrywide

produced the repurchase-related documents without redaction of other counterparty information,

stating:

Our production to you of these documents without redactions is based on your acknowledgement that Countrywide’s designation of these documents as “Highly Confidential” under the Protective Order precludes both MBIA and Quinn Emanuel from any use of these documents in connection with other litigation. Our production is further based on your express representation that “no documents produced in this action will be used in the FHFA v. Countrywide action unless they are produced in that matter or otherwise publicly available.”

Holland Aff. Ex. H (Letter from S. Concannon to M. Sheth (May 2, 2012)).


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Holland Aff. Ex. J (Godfrey Dep. Tr. at 15:13-22, 22:11-18 (Aug. 2, 2012)) (emphasis added).

In a classic bait-and-switch, MBIA now asks this Court to ignore both the Protective Order and

its own express assurances.

III. MBIA FAILS TO IDENTIFY THE DOCUMENTS AT ISSUE WITH SUFFICIENT PARTICULARITY.

MBIA challenges Countrywide’s confidentiality designations for five broad categories of

documents comprising tens of thousands of pages: (i) party deposition transcripts; (ii) documents

used as exhibits in party depositions; (iii) expert reports; (iv) documents used as exhibits to

expert reports; and (v) materials relied on by experts. See MBIA Br. at 1. MBIA does not

identify—as it must under the Protective Order entered by the Court—the specific documents

and portions of documents it seeks to make public or offer any individualized argument as to

why Countrywide’s designation of specific documents as Confidential and Highly Confidential

is incorrect. MBIA has not met its burden under the Protective Order, and its motion should be

denied.

The Protective Order, entered by the Court more than three years ago, establishes the

following procedure for challenges to designations of documents as Confidential and Highly

Confidential:

The Receiving party may, at any time, notify the Producing party that the Receiving party does not concur in the designation of Discovery Material as Confidential Information. If the Producing party does not agree to declassify such Discovery Material, the Receiving party may move the Court for an order declassifying that Discovery Material. If no such motion is filed, such documents or materials shall continue to be treated as Confidential Information. If such motion is filed, the Discovery Material shall be deemed Confidential Information unless and until the Court rules otherwise.

Protective Order ¶ 4 (emphasis added). MBIA’s motion turns this procedure on its head,


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making no attempt to identify the specific documents MBIA seeks to make public, and instead

claiming it “does not concur in the designation of” whole categories of Discovery Material,

thereby shifting to Countrywide the burden of proving which specific documents and portions of

documents deserve to “keep” their confidentiality designations, or to the Court the burden to

review and evaluate hundreds of thousands of pages.

MBIA’s failure to follow the Protective Order’s procedure for challenging Countrywide’s

assertion of confidentiality as to specific documents renders its motion unintelligible. It is

impossible for either Countrywide or the Court to determine exactly which documents and

transcripts, from the voluminous discovery conducted in this case, are at issue. For example,

MBIA seeks to de-designate “party deposition transcripts,” as well as “documents used as

exhibits in party depositions,” MBIA Br. at 5, but nowhere explains whether it intends “party

depositions” to include dozens of depositions conducted of former Countrywide employees, who

are not parties to this action and often individually represented. See Holland Aff. ¶ 7. Further,

many of these former employee depositions were cross-noticed in MBIA’s parallel action in

California state court, MBIA Insurance Co. v. Bank of America et al., Case No. BC417572 (Cal.

Super. Ct.), and were designated as Confidential under both this Protective Order and the

protective order in the California action. See Holland Aff. Ex. K (MBIA Insurance Co. v. Bank

of America et al., Case No. BC417572 (Cal. Super. Ct.) (“MBIA-CA”), Joint Stipulation and

Protective Order for the Production and Exchange of Confidential Information, February 18,

2011); id. Ex. L ( MBIA-CA, Joint Stipulation and Order Re Third Party Depositions, December

5, 2011); see id. Ex. M (Designation Letters from this matter and MBIA-CA). Yet MBIA does

not explain how this Court can enter an order that would remove the protections afforded these


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transcripts by another court, or do so without the participation of counsel whose clients’

testimony is implicated by the motion.

MBIA similarly seeks wholesale de-designation of expert reliance materials, MBIA Br. at

1, which include, among other things, transcripts of testimony of current and former

Countrywide employees from a number of other matters—including Syncora Guarantee, Inc. v.

Countrywide Home Loans, Inc., et al., Index No. 650042/09 (Sup. Ct. N.Y. County) (“Syncora”),

Financial Guaranty Ins. Co. v. Countrywide Home Loans, Inc., et al., Index No. 650736/2009

(Sup. Ct. N.Y. County) (“FGIC”), In re Countrywide Fin. Corp. Sec. Litig., No. CV-07-05295-

MRP (MANx) (C.D. Cal) (“NY Funds”), and SEC v. Mozilo et al., No. CV09-03994 VBF (C.D.

Cal) (“SEC”)—as well as numerous non-party depositions9 of former contract employees of the

due diligence firms. See Holland Aff. Ex. Q (Consolidated Countrywide Expert Reliance

Materials Lists); Ex. R (Butler MBIA Expert Reliance Materials List). The depositions in other

actions were conducted under the terms of the protective orders entered in those matters. See id.

¶¶ 9, 10; Ex. N (Syncora Protective Order); Ex. O (FGIC Protective Order); Ex. P (NY Funds

Protective Order). Again, MBIA does not explain how this Court can enter an order removing

the protections afforded these materials by other courts in other cases without the participation of

counsel to each of the parties in those actions.10

9 Although MBIA purports to exclude from its request depositions of non-parties, MBIA Br. at 1, it does not explain whether it intends to exclude such depositions in their entirety, even where, as here, they are included among the expert reliance materials.

10 MBIA likewise states that it does not seek to de-designate “portions of documents that reveal personal information about witnesses or third parties (including borrowers),” MBIA Br. at 1, but does not define “personal information” and offers no explanation as to how, when, or by whom such information is to be identified, redacted, and kept private.


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IV. MBIA’S REQUESTED RELIEF IS OVERBROAD AND UNDULY BURDENSOME.

Finally, MBIA’s motion also should be denied because it is overbroad and unduly

burdensome. Although MBIA purports to seek de-designation of just five categories of

documents, its motion touches nearly every type of document produced in this case and

encompasses tens of thousands of pages of documents and testimony. MBIA even argues out of

both sides of its mouth with respect to the volume of information it seeks to make public—on the

one hand, claiming that the volume of material that it seeks to file publicly is so large that “it

threatens to make the impending briefing and argument of summary judgment unmanageable,”

MBIA Br. at 9, while on the other, stating that the much larger volume of material it wants

Countrywide to de-designate is so small that it would not burden Countrywide to review all of

the documents at issue again, make a second determination as to each document’s

confidentiality, and make new redactions, see id. at 9-10. MBIA’s motion grossly overstates its

burden of complying with the Protective Order and grossly understates the burden to

Countrywide if this Court were to grant MBIA’s motion.

To date, nearly 70 current and former Countrywide employees have been deposed,

spanning hundreds of hours and covering topics such as internal Countrywide policy;

Countrywide’s deliberations about business practices, strategies, and goals; competitive

assessments; internal investigations and audits; and proprietary systems. See Holland Aff. ¶ 7.

MBIA has marked over 2,200 documents as exhibits at these depositions, comprising (among

other documents and information) internal e-mail communications, executive memoranda,

committee minutes and materials, Board presentations, management reports, internal audits and

quality control findings, summaries of contacts with regulators, Human Resources and Employee

Relations files of current and former employees, Fraud Risk Management documents, and


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numerous databases containing borrower information and loan-level data. See Holland Aff. ¶ 8.

The deposition exhibits also include loan files containing confidential borrower financial and

identifying information, as well as numerous documents from other actions, including deposition

transcripts (which are subject to the protective orders in those actions), documents produced in

other actions subject to protective orders in those actions, settlement agreements, affidavits,

declarations, and witness statements. See id. ¶ 8, Ex. S (Mozilo Dep. Tr. pp. 41-48 and Mozilo

Dep. Exs. 1395, 1396). No category of sensitive document is left untouched by MBIA’s request

for de-designation of all “exhibits [used] in party depositions.” MBIA Br. at 1.

MBIA’s categories of “exhibits to expert reports” and “materials relied on by expert

witnesses” expand the universe of documents even further. The latter category alone

encompasses an enormous amount of testimony and documents—well over 100,000 pages—

including materials from other cases on which Countrywide’s experts relied. See Holland Aff.

Ex. Q (Consolidated Countrywide Expert Report Reliance Materials Lists); Ex. R (Butler Expert

Report Reliance Materials List). The expert reliance materials include even more deposition

transcripts and exhibits, including third-party and former-employee depositions, as well as

depositions taken in the Syncora, FGIC, NY Funds, and SEC matters, loan files, loan tapes,

internal policy documents, underwriting guidelines, proprietary systems, and internal and third-

party due diligence reviews, as well as internal email correspondence on all of these and other

topics. See id. MBIA has not offered this Court any reason to require de-designation of such

large swaths of material at this time.


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V. CONCLUSION.

For the foregoing reasons and those set forth in BAC’s concurrently-filed opposition,

Countrywide respectfully requests that the Court deny MBIA’s motion.

Dated: New York, New York August 10, 2012

By: /s/ Mark Holland Mark Holland

Mark Holland Jason O. Braiman GOODWIN PROCTER LLP The New York Times Building 620 Eighth Avenue New York, New York 10018 (212) 813-8800

Paul F. Ware, Jr. Sarah Heaton Concannon GOODWIN PROCTER LLP 53 State Street Boston, MA 02109 (617) 570-1000

Attorneys for Defendants Countrywide Home Loans, Inc., Countrywide Securities Corp., Countrywide Financial Corp., Bank of America, N.A., solely in its capacity as successor by July 2, 2011 de jure merger to BAC Home Loans Servicing, L.P. (f/k/a Countrywide Home Loans Servicing, L.P.)

Of Counsel:David M. WellsWilliam E. Adams, Jr. GUNSTER, YOAKLEY & STEWART, P.A. One Enterprise Center225 Water Street, Suite 1750 Jacksonville, Florida 32202 (904) 354-1980

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