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Fallo de La Corte de Apelaciones Contra Griesa Por La Demanda de Henry Brecher
Fallo de La Corte de Apelaciones Contra Griesa Por La Demanda de Henry Brecher
Brecherv.RepublicofArgentina
UNITEDSTATESCOURTOFAPPEALS
FORTHESECONDCIRCUIT
______________
AugustTerm,2015
(Argued:August21,2015Decided:September16,2015)
DocketNo.144385
____________
HENRYH.BRECHER,
individuallyandonbehalfofallotherssimilarlysituated,
PlaintiffAppellee,
v.
REPUBLICOFARGENTINA,
DefendantAppellant.
______________
Before:
CALABRESI,RAGGI,ANDWESLEY,CircuitJudges.
______________
AppellanttheRepublicofArgentinaappealsfromanorderenteredon
August29,2014,intheUnitedStatesDistrictCourtfortheSouthernDistrictof
NewYork(Griesa,J.),modifyingtheclassdefinition.OnNovember25,2014,a
panelofthisCourtgrantedpermissiontoappealpursuanttoFederalRuleof
CivilProcedure23(f).AppellantarguesthattheDistrictCourtsnewclass
definitionviolatestherequirementsofascertainabilitycontainedinRule23ofthe
FederalRulesofCivilProcedure.Weagreeandholdthattheclassdefinitions
referencetoobjectivecriteriaisinsufficienttoestablishanidentifiableand
administrativelyfeasibleclass.WethereforeVACATEandREMANDthecase
foranevidentiaryhearingondamages.
CARMINED.BOCCUZZI(JonathanI.Blackman,DanielJ.
Northrop,JacobH.Johnston,onthebrief),Cleary
GottliebSteen&HamiltonLLP,NewYork,NY,for
DefendantAppellant.
JASONA.ZWEIG(SteveW.Berman,onthebrief),Hagens
BermanSobolShapiroLLP,NewYork,NY,forPlaintiff
Appellee.
______________
WESLEY,CircuitJudge:
DefiningthepreciseclasstowhichArgentinaowesdamagesforitsrefusal
tomeetitsbondpaymentobligationsandcalculatingthosedamageshave
proventobeexasperatingtasks.Inthis,thefourthtimethisCourthasaddressed
themethodsbywhichdamagesmustbecalculatedandthemannerinwhichthe
classisdefinedinthiscaseandseveralsimilarmatters,seeSeijasv.Republicof
Argentina(SeijasI),606F.3d53(2dCir.2010);HickorySec.Ltd.v.Republicof
Argentina(SeijasII),493F.Appx156(2dCir.2012)(summaryorder);Puricelliv.
RepublicofArgentina(SeijasIII),No.142104cv(L),2015WL4716474(2dCir.Aug.
10,2015),weagainmustvacatetheDistrictCourtsorderandremandforspecific
proceedings.
Bynow,thefactualbackgroundofthesecasesisalltoofamiliar.After
Argentinadefaultedonbetween$80and$100billionofsovereigndebtin2001,
seeSeijasI,606F.3dat55,numerousbondholders,includingAppelleehereand
thoseintherelatedSeijascases,filedsuit.InAppelleessuit,theDistrictCourt
enteredanorderonMay29,2009,thatcertifiedaclassunderacontinuousholder
requirement,i.e.,theclasscontainedonlythoseindividualswho,likeAppellee,
possessedbeneficialinterestsinaparticularbondseriesissuedbytheRepublic
ofArgentinafromthedateofthecomplaintDecember19,2006throughthe
dateoffinaljudgmentintheDistrictCourt.Cf.SeijasI,606F.3dat56(same
requirementinclassdefinition).
AfterthisCourtheldinSeijasIandIIthattheDistrictCourtsmethodof
calculatingdamageswasinflatedandremandedwithinstructionstoconductan
evidentiaryhearing,seeSeijasI,606F.3dat5859;SeijasII,493F.Appxat160,
theAppelleeinthiscaseofferedtheDistrictCourtanalternativesolutiontoits
difficultiesinassessingdamagessimplymodifyingtheclassdefinitionby
removingthecontinuousholderrequirementandexpandingtheclasstoall
holdersofbeneficialinterestsintherelevantbondserieswithoutlimitationasto
timeheld.TheDistrictCourtgrantedthemotion,Argentinapromptlysought
leavetoappealunderRule23(f)oftheFederalRulesofCivilProcedure,andon
November25,2014,apanelofthisCourtgrantedleavetoappeal.
DISCUSSION
Wereviewadistrictcourtsclasscertificationrulingsforabuseof
discretion,butwereviewdenovoitsconclusionsoflawinformingthatdecision.
InrePub.OfferingsSecs.Litig.,471F.3d24,32(2dCir.2006).TheDistrictCourt
belowneitherarticulatedastandardforascertainabilityofitsnewclassnormade
anyspecificfindingundersuchastandard.Absentthatanalysis,wemust
determinewhethertheDistrictCourtsultimatedecisiontomodifytheclass
restsonanerroroflaw...[or]cannotbelocatedwithintherangeof
permissibledecisions.Parkerv.TimeWarnerEntmtCo.,331F.3d13,18(2dCir.
2003)(internalquotationmarksomitted).TheDistrictCourtsdecisionrests
uponanerroroflawastoascertainability;theresultingclassdefinitioncannotbe
locatedwithintherangeofpermissibleoptions.
LikeoursisterCircuits,wehaverecognizedanimpliedrequirementof
ascertainabilityinRule23oftheFederalRulesofCivilProcedure.InrePub.
OfferingsSecs.Litig.,471F.3dat30;accord,e.g.,Marcusv.BMWofN.Am.,LLC,687
F.3d583,59293(3dCir.2012);DeBremaeckerv.Short,433F.2d733,734(5thCir.
1970).Whilewehavenotedthisrequirementisdistinctfrompredominance,see
InrePub.OfferingsSecs.Litig.,471F.3dat45,wehavenotfurtherdefinedits
content.Wehereclarifythatthetouchstoneofascertainabilityiswhetherthe
classissufficientlydefinitesothatitisadministrativelyfeasibleforthecourtto
determinewhetheraparticularindividualisamember.7ACHARLESALAN
WRIGHT&ARTHURR.MILLERETAL.,FEDERALPRACTICE&PROCEDURE1760(3d
ed.1998);seealsoWeinerv.SnappleBeverageCorp.,No.07Civ.8742(DLC),2010
WL3119452,at*12(S.D.N.Y.Aug.5,2010)(aclassmustbereadilyidentifiable,
suchthatthecourtcandeterminewhoisintheclassand,thus,boundbythe
ruling(internalquotationmarksomitted)).Aclassisascertainablewhen
definedbyobjectivecriteriathatareadministrativelyfeasibleandwhen
identifyingitsmemberswouldnotrequireaminihearingonthemeritsofeach
case.Charronv.PinnacleGrp.N.Y.LLC,269F.R.D.221,229(S.D.N.Y.2010)
(citationsandinternalquotationmarksomitted).
Onappeal,Appelleearguesthataclassdefinedbyreferencetoobjective
criteria...isallthatisrequiredtosatisfyascertainability.AppelleeBr.at19.
Wearenotpersuaded.Whileobjectivecriteriamaybenecessarytodefinean
ascertainableclass,itcannotbethecasethatanyobjectivecriterionwilldo.1A
classdefinedasthosewearingblueshirts,whileobjective,couldhardlybe
calledsufficientlydefiniteandreadilyidentifiable;ithasnolimitationontimeor
context,andtheeverchangingcompositionofthemembershipwouldmake
determiningtheidentityofthosewearingblueshirtsimpossible.Inshort,the
useofobjectivecriteriacannotalonedetermineascertainabilitywhenthose
criteria,takentogether,donotestablishthedefiniteboundariesofareadily
identifiableclass.2
Thiscasepresentsjustsuchacircumstancewhereanobjectivestandard
owningabeneficialinterestinabondseriesisinsufficientlydefinitetoallow
EvenAppelleesprincipalsourcesforthisstandardusetherequirementincontextto
observethatsubjectivecriteriaareinappropriateand,thus,anycriteriausedindefining
aclassneedtobeobjective.AppelleeBr.at20(citingFearsv.WilhelminaModel
Agency,Inc.,No.02Civ.4911HB,2003WL21659373,at*2(S.D.N.Y.July15,2003);Inre
MethylTertiaryButylEther(MBTE)Prods.Liab.Litig.,209F.R.D.323,337(S.D.N.Y.2002);
MANUALFORCOMPLEXLITIGATION(FOURTH)21.222,at270(2004)).Thisapproach
accordswithourpriordiscussionsofobjectivecriteria.SeeInreInitialPub.Offerings
Secs.Litig.,471F.3dat4445.
1
Ofcourse,identifiabledoesnotmeanidentified;ascertainabilitydoesnotrequire
acompletelistofclassmembersatthecertificationstage.See1MCLAUGHLINONCLASS
ACTIONS4:2(11thed.2014)(Theclassneednotbesofinelydescribed,however,that
everypotentialmembercanbespecificallyidentifiedatthecommencementofthe
action;itissufficientthatthegeneralparametersofmembershiparedeterminableatthe
outset.).
2
readyidentificationoftheclassorthepersonswhowillbeboundbythe
judgment.SeeWeiner,2010WL3119452,at*12.Thesecondarymarketfor
Argentinebondsisactiveandhascontinuedtradingafterthecommencementof
thisandotherlawsuits.SeeNMLCapitalLtd.v.RepublicofArgentina,699F.3d
246,251(2dCir.2012);SeijasII,493F.Appxat160.Thenatureofthebeneficial
interestitselfandthedifficultyofestablishingaparticularinterestsprovenance
maketheobjectivecriterionusedhere,withoutmore,inadequate.SeeBakalarv.
Vavra,237F.R.D59,6566(S.D.N.Y.2006)(necessityofindividualizedinquiries
intoprovenanceofartworkmadeclassinsufficientlyprecise,objectiveand
presentlyascertainable(internalquotationmarksomitted)).
Appelleearguesthattheclasshereiscomparabletothosecasesinvolving
giftcards,whicharefullytransferableinstruments.However,giftcardsare
qualitativelydifferent:Forexample,theyexistinaphysicalformandpossessa
uniqueserialnumber.Bycontrast,anindividualholdingabeneficialinterestin
Argentinasbondseriespossessesarighttothebenefitofthebondbutdoesnot
holdthephysicalbonditself.Thus,tradingonthesecondarymarketchanges
onlytowhomthebenefitenures.Further,allbondsfromthesameserieshave
thesametradingnumberidentifier(calledaCUSIP/ISIN),makingitpractically
impossibletotracepurchasesandsalesofaparticularbeneficialinterest.Thus,
whenitbecomesnecessarytodeterminewhoholdsbondsthatoptedinto(orout
of)theclass,itwillbenearlyimpossibletodistinguishbetweenthemoncetraded
onthesecondarymarket.SeeEbinv.KangadisFoodInc.,297F.R.D.561,567
(S.D.N.Y.2014)(observingthatascertainabilityrequirementprevent[s]the
certificationofaclasswhosemembershipistrulyindeterminable(internal
quotationmarksomitted)).
Ahypotheticalillustratesthisproblem.TwobondholdersAandBeach
holdbeneficialinterestsin$50,000ofbonds.Aoptsoutoftheclass,whileBopts
in.BothAandBthenselltheirinterestsonthesecondarymarkettoathird
party,C.Cnowholdsabeneficialinterestin$100,000ofbonds,halfinsidethe
classandhalfoutsidetheclass.IfCthensellsabeneficialinterestin$25,000of
bondstoafourthparty,D,neitherthepurchasernorthecourtcanascertain
whetherDsbeneficialinterestfallsinsideoroutsideoftheclass.3Evenifthere
wereamethodbywhichthebeneficialinterestscouldbetraced,determining
classmembershipwouldrequirethekindofindividualizedminihearingsthat
Thishypotheticalwasposedbythepanelatoralargument;counselforAppelleewas
unabletoofferamethodbywhichtheDistrictCourtwouldbeabletomakethis
determination.
3
runcontrarytotheprincipleofascertainability.SeeCharron,269F.R.D.at229;
Bakalar,237F.R.D.at6466.Thefeaturesofthebondsinthiscasethusmakethe
modifiedclassinsufficientlydefiniteasamatteroflaw.Althoughtheclassas
originallydefinedbytheDistrictCourtmayhavepresenteddifficultquestionsof
calculatingdamages,itdidnotsufferfromalackofascertainability.TheDistrict
Courterredinattemptingtoaddressthosequestionsbyintroducingan
ascertainabilitydefectintotheclassdefinition.
Thereremainsthequestionofdeterminingdamagesonremand.Given
thatAppelleehereisidenticallysituatedtotheSeijasplaintiffsandthisCourthas
alreadyaddressedtherequirementsfordeterminingdamagesinthosecases,we
concludethattheDistrictCourtshouldapplythesameprocessdictatedbySeijas
IIforcalculatingtheappropriatedamages:
Specifically, it shall: (1) consider evidence with respect
to the volume of bonds purchased in the secondary
marketafterthestartoftheclassperiodsthatwerenot
tendered in the debt exchange offers or are currently
heldbyoptoutpartiesorlitigantsinotherproceedings;
(2) make findings as to a reasonably accurate, non
speculative estimate of that volume based on the
evidence provided by the parties; (3) account for such
volumeinanysubsequentdamagecalculationsuchthat
an aggregate damage award would roughly reflect
the loss to each class,seeSeijas I,606 F.3d at 5859;and
(4) if no reasonably accurate, nonspeculative estimate
CONCLUSION
BecauseweconcludetheDistrictCourtsorderviolatedtherequirementof
ascertainabilitycontainedinRule23,itisnotnecessaryforustoreachthe
remainingissuesraisedbyAppellant.Therefore,forthereasonsstatedabove,
theorderoftheDistrictCourtisVACATED,andthecaseisREMANDEDforan
evidentiaryhearingondamages.
10