"Here is the status of our case.  Opening briefs have been filed in the United States Court of Appeals for the Federal Circuit by the government, the shareholders and the Federal Deposit Insurance Corporation on behalf of Benj. Franklin.  The government's answering brief is now due on December 17th and our reply brief is due on December 31st.   Requests for time extension can then be made which are usually granted if good cause is shown.  The major issues are:

1. Whether the government's 1989 retroactive removal of the goodwill acquired by Benj. Franklin when it took over Equitable Savings and Loan in 1982 was a breach of contract which resulted in the seizure of Benj.  This is called "liability".  We won this issue in the Claims Court.

2. Whether the $52 million damages awarded by the trial court in 2002 and 2006 is correct.  This was based on $35 million for the market value of Benj. at the time of the passage of the law retroactively removing the goodwill, plus an additional $17 million for a “change in control" premium which is often awarded for the value of obtaining the entire institution rather than just minority shares of stock.  We won this issue in the Claims Court.

3. Whether the $52 million damages should be offset by the $31 million received by the shareholders in 2006 from the tax settlement.  We won this issue in the Claims Court and retained the $52 million judgment, with the help of the FDIC.

4. Whether the $50 million paid to the government in the 2006 tax settlement should be added to the damages because this tax related to events which occurred after the seizure of Benj. Franklin, and damages should be fixed at the time of the breach of contract and resulting seizure.  We lost this issue in the Claims Court.

After all of the briefs are filed, the United States Court of Federal Claims will set a hearing date for short oral argument before a three judge panel.  No new evidence can be introduced.  The appeal is decided on the record made in the Claims Court plus the written briefs.  Oral argument should take place in 2008, hopefully soon.  Thereafter, the three judge panel will prepare a written decision.

I have also been asked about the money which is still held by the FDIC after the tax settlement.  After the $50 million was paid to the Internal Revenue Service $44 million remained in the Receivership.  Out of this sum, about $31 million was paid to the shareholders as a first partial distribution, and about $3 million was paid to me as Trustee of the Benj. Franklin Shareholders Litigation Fund for distribution to the contributors to the fund.  These two payments reduce the balance to about $10 million.

We asked the Federal Court in the District of Columbia to instruct the FDIC to pay interest on the $3 million of contributions to be distributed to the contributors.  The court ruled against us, deciding that no interest could be owed from the dates of the original contributions, but only possibly from the date of the Fairness Hearing in late 2006 when the return of the contributions was authorized by the court and the contributions were released promptly thereafter.  We did not appeal that ruling.

The only issue left is the application for attorneys' fees filed by each of the attorneys who participated in reducing the tax claim from $1.2 billion to $50 million. The arbitration/mediation phase is over and the next step is a status report to Judge Sullivan which is due on December 14th.  There will be more information available after December 4th."

“Here is a copy of my earlier report about the loss of the case seeking interest on shareholder contributions:

“District of Columbia Federal Judge Sullivan has denied our claim for interest on the contributions made by shareholders to the Litigation fund.

We have argued that interest is frequently paid by FDIC on claims against a receivership, including FDIC routinely paying interest to itself. The FDIC responded that it believes that this is an administrative claim and there is no regulation allowing interest on administrative claims. We argued that there is no prohibition on paying interest on our claim and it would be appropriate to do so here, to compensate the contributing shareholders for the time value of their money. If we won, the contributing shareholders would receive more money and there would be somewhat less available for ultimate distribution to these shareholders who never paid any money for the costs of suit.

Judge Sullivan accepted neither argument. He decided that the payment of the contributors’ claim for interest did not start to accrue when the contributions were made, but if at all, only when return of the contributions was approved as part of the tax settlement in 2006. He then held that since the contributions were promptly returned, thereafter by FDIC to the Trustee of the Litigation Fund, no interest could be due. Washington, D.C. attorney Rosemary Stewart who handled the case for the Litigation Fund wrote good briefs.

We are considering the feasibility of appealing this decision to the United States Court of Appeals for the District of Columbia Circuit, and will give you a further report after more analysis.”

- posted August 21, 2007

Our attorney for the case seeking interest, Rosemary Stewart, recommends against an appeal and I agree. Although we disagree with the decision of Judge Sullivan, we believe the appeals court would be reluctant to overrule him, and the appeals process would take two more years.

In the event we defeat the government’s pending appeal from our $52 million claims court judgment, or increase it, we have the right to seek costs, expenses, and fees for the Claims Court case. At that time, we can renew our request for interest on the shareholder contributions in the Claims’ Court.”

We, the plaintiffs committee, agree with the recommendation of our attorneys not to appeal from Judge Sullivan’s ruling.

Plaintiffs’ Committee Statement

Here is a report from our attorney, Don Willner:

“The Federal Circuit has granted a time extension to August 31^st, 2007 to file the shareholder opening brief. Much work is being done.”

Peter Baker
Richard Green
Donald McIntyre
Leo Sherry

Plaintiffs’ Committee Statement

Here is a report from our attorney, Don Willner:

"The government has filed a motion for a three-week extension within which to file its opening brief with the Federal Circuit Court of Appeals, without opposition by the other attorneys. The government brief will now be due on June 19th."

Peter Baker
Richard Green
Donald McIntyre
Leo Sherry

Plaintiffs’ Committee Statement

Here is a report from our attorney, Don Willner:

“On the previous website posting I reported that the government filed its Notice of Appeal and now on February 20, 2007 date we filed our Cross-Appeal. These documents get filed in the Court of Federal Claims which sends them to the Federal Circuit where they are “docketed” by the appellate court upon receipt (although this process takes a few days). The parties will receive notice of day of docketing.

The government’s Opening Appellate brief must then be filed within 60 days after docketing occurs, although the government might request an extension. Our Opening Brief must be served and filed within 40 days after the government’s brief is filed, although it is possible we too might need an extension. Then the government gets 40 days to file its Reply Brief. Finally, we get 14 days to file our final Reply Brief which must be limited to the subjects of our Cross-Appeal. Here too, there might be short extensions sought, and granted, since these are relatively short time deadlines.

The United States Court of Federal Circuit has many judges, but three judges will hear the appeal. It is not possible for me to predict how long, after the filing of all the briefs, the court will set oral argument. Nor is it possible for me to estimate how long it will take the court to reach a decision. My best estimate is that a decision by the Federal Circuit is approximately two years from now.”

 

Peter Baker
Richard Green
Donald McIntyre
Leo Sherry

Plaintiffs’ Committee Statement

Here is a report from our attorney, Don Willner:

“We have received many complaints from shareholders who tell us that their stockbrokers wrote off their stock without their knowledge or consent. I put a notice on the website asking for specific complaints and received many. I then forwarded a fair sample of these complaints to the United States Securities and Exchange Commission (SEC), and then with the help of Senator Gordon Smith of Oregon talked to SEC officials. The letter which follows is the result. SEC may or may not be writing to the stockbrokers but we will not be told.

The Honorable Gordon H. Smith
United States Senate
404 Russell Senate Office Building
Washington, DC 20510-3704

Dear Senator Smith:

This responds to your communication of November 17, 2006, to Jane Cobb of the SEC on behalf of Mr. Don S. Willner. Mr. Willner had previously written to both Chairman Cox of the Commission and to you concerning problems between shareholders of Benjamin Franklin Federal Savings and Loan Association and their securities brokers, who held Ben Franklin shares in question in “street name” at the broker.

On December 19, staff of the Commission (Catherine Moore and myself of the Division of Market Regulation and Peter Kiernan, Deputy Director of the Office of Legislative Affairs) had a telephone conference with Mr. Willner to discuss his concerns. It became clear during the course of that conference that Mr. Willner was not seeking our technical advice about possible application of the securities laws to these matters; instead, he was suggesting that the Commission staff institute an inquiry into the matter to see if the brokers involved might have violated the federal securities laws in their handling of the Benjamin Franklin stock in their customers’ accounts.

We have advised Mr. Willner that we will forward the information which he provided to appropriate SEC staff responsible for such inquiries. We also advised him that it is the SEC’s policy to conduct any investigation on a confidential basis. This is done to protect the integrity of any investigation from premature disclosure and to protect persons with respect to whom unfounded charges may be made. Thus subject to applicable provisions of the Freedom of Information Act, as amended, the existence or nonexistence of an investigation or any related information is generally not disclosed unless and until it is made a matter of public record in proceedings instituted before the Commission or in the courts. Accordingly, I am not in a position to provide any further information to you or Mr. Willner concerning this matter.

Thank you for bringing Mr. Willner’s concerns and the information he provided to our attention.

Sincerely,

Jerry Carpenter
Assistant Director, SEC

I suggest that all of you who believe that your stockbroker treated you unfairly with the write off of your Benj. Franklin stock write detailed information about your complaint to the following address:

Honorable Christopher Cox
Chairman
Securities and Exchange Commission Headquarters
100 F Street NE
Washington, DC 20549

Since Merrill-Lynch handled the Benj. Franklin Employee Stock Purchase Plan (ESPP), please mail the copies of any complaints about Merrill Lynch to Chairman Cox and me, and if there is anything further that I can do I will write to those Merrill-Lynch customers who write to me.

This is all I can do to be of help.

 

Peter Baker
Richard Green
Donald McIntyre
Leo Sherry

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Last modified: February 13, 2012