NEW YORK (May 4, 2010) — For the second time in less than a month, McDermott Will & Emery LLP has secured summary judgment for Firm client Merrill Lynch Capital Services, Inc., in a derivatives case. On March 19, 2010, the Firm reported McDermott’s victory in Merrill Lynch Capital Markets AG, et al. v. Controladora Comercial Mexicana S.A.B. de C.V. (CCM). On April 8, 2010, Justice Richard B. Lowe III of the Supreme Court of the State of New York, relying on CCM, granted summary judgment on Merrill’s breach of contract claims against Vitro Envases Norteamerica, S.A. de C.V. (VENA) and Compania Vidriera, S.A. de C.V. (Covisa).
VENA is a subsidiary of one of the world’s largest glass makers. Covisa is a wholly owned subsidiary of VENA. VENA entered into numerous derivatives transactions with Merrill and several other financial institutions. VENA’s obligations to Merrill were guaranteed by Covisa. In January 2009, following a precipitous drop in the value of the euro to the dollar during the financial crisis, VENA defaulted on its derivatives obligations.
Merrill and other financial institutions filed suit in related actions, collectively seeking approximately $293 million. In response to Merrill’s claims, VENA and Covisa sought to void the transactions by asserting numerous affirmative defenses and counterclaims, including violations of the Commodity Exchange Act, illegality under Mexican law and unconscionability.
Justice Lowe granted Merrill pre-discovery summary judgment, holding, as Justice Bransten had in CCM, that the derivatives transactions were enforceable under governing New York law.
The McDermott team was led by John T. Lutz and Andrew B. Kratenstein. Mr. Lutz and Mr. Kratenstein were assisted by associate Audrey Lu.
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