Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca2-14-02109/USCOURTS-ca2-14-02109-0/pdf.json

Parties Involved:
Anibal Campo
Appellee
Ruben Chorny
Appellee
Maria Copati
Appellee
Republic of Argentina
Appellant
Emilio Romano
Appellee
Silvia Seijas
Appellee
Ruben Weiszman
Appellee

Document Text:

14‐2104‐cv(L)

Puricelli v. Republic of Argentina

1 In the 

2 United States Court of Appeals 

3 For the Second Circuit 

4

5 August Term, 2014

6 Nos. 14‐2104‐cv(L), 14‐2105‐cv(CON), 14‐2106‐cv(CON),

7 14‐2107‐cv(CON), 14‐2108‐cv(CON), 14‐2109‐cv(CON),

8 14‐2111‐cv(CON), 14‐2112‐cv(CON)

9 EDUARDO PURICELLI, RUBEN CHORNY, HICKORY SECURITIES LTD.,

10 RODOLFO VOGELBAUM, ELIZABETH ANDREA AZZA, CLAUDIA

11 FLORENCIA VALLS, SILVIA SEIJAS, HEATHER M. MUNTON, THOMAS L.

12 PICO ESTRADA, EMILIO ROMANO, RUBEN WEISZMAN, ANIBAL CAMPO,

13 MARIA COPATI, CESAR RAUL CASTRO,

14 Plaintiffs‐Appellees,

15 v.

16 REPUBLIC OF ARGENTINA,

17 Defendant‐Appellant.

18

19 Appeal from the United States District Court

20 for the Southern District of New York.

21 Nos. 04‐cv‐2117, 04‐cv‐2118, 04‐cv‐1085, 04‐cv‐937, 04‐cv‐400,

22 04‐cv‐401, 04‐cv‐936, 04‐cv‐506 ― Thomas P. Griesa, Judge.

23

24    

Case 14-2109, Document 102-1, 08/10/2015, 1572269, Page1 of 15
PURICELLI V. REPUBLIC OF ARGENTINA

‐2‐ 

1 ARGUED: JUNE 17, 2015

2 DECIDED: AUGUST 10, 2015

3

4

5 Before: LEVAL, STRAUB, and RAGGI, Circuit Judges.

6

7

8 Appeal from orders of the United States District Court for the

9 Southern District of New York (Thomas P. Griesa, Judge), on remand

10 from a previous appeal, certifying expanded plaintiff classes.  We

11 hold that the District Court contravened the mandate issued on

12 appeal by failing to follow the prior panel’s specific instructions.  

13 Accordingly, we VACATE and REMAND.

14

15

16 CARMINE D. BOCCUZZI (Jonathan I. Blackmun,

17 Daniel J. Northrop, Jacob H. Johnston, on the

18 brief), Cleary Gottlieb Steen & Hamilton LLP,

19 New York, NY, for Republic of Argentina.

20 JENNIFER R. SCULLION, Proskauer Rose LLP, New

21 York, NY (M. Todd Mobley, Proskauer Rose LLP,

22 New York, NY; Michael Diaz, Jr., Carlos F.

23 Gonzalez, Marta Colomar‐Garcia, Diaz Reus &

24 Targ LLP, Miami, FL; Saul Roffe, Law Offices of

25 Saul Roffe, Esq., Marlboro, NJ, on the brief), for

26 Eduardo Puricelli, Ruben Chorny, Hickory

27 Securities Ltd., Rodolfo Vogelbaum, Elizabeth

28 Andrea Azza, Claudia Florencia Valls, Silvia

29 Seijas, Heather M. Munton, Thomas L. Pico

30 Estrada, Emilio Romano, Ruben Weiszman,

Case 14-2109, Document 102-1, 08/10/2015, 1572269, Page2 of 15
PURICELLI V. REPUBLIC OF ARGENTINA

‐3‐ 

1 Anibal Campo, Maria Copati, and Cesar Raul

2 Castro.

3

4 STRAUB, Circuit Judge:

5 After previous panels of this Court twice vacated aggregate

6 judgments entered by the District Court in favor of plaintiff classes,

7 we remanded with specific instructions.  Rather than follow our

8 instructions, the District Court certified expanded plaintiff classes.  

9 Because doing so was foreclosed by the mandate issued on the prior

10 appeal, we VACATE and REMAND.

11 BACKGROUND

12 In 2001, the Republic of Argentina defaulted on roughly $80 to

13 $100 billion of sovereign debt.  Seijas v. Republic of Argentina, 606 F.3d

14 53, 55 (2d Cir. 2010) [hereinafter Seijas I].  Numerous actions by

15 holders of Argentina’s bonds were filed, including the eight (each

16 pertaining to a different series of Argentina’s bonds) appealed here.   

Case 14-2109, Document 102-1, 08/10/2015, 1572269, Page3 of 15
PURICELLI V. REPUBLIC OF ARGENTINA

‐4‐ 

1 In 2004, the plaintiffs‐appellees (“Plaintiffs”) filed for class

2 certification in these eight actions, proposing that the classes be

3 defined as all holders of Argentina’s bonds in each of the eight

4 respective bond series.  Over the objection of Defendant‐Appellant

5 Argentina, the District Court granted Plaintiffs’ motions for class

6 certification, see id. at 55–56, but it rejected Plaintiffs’ proposed class

7 definition.  Instead, the District Court certified eight class actions

8 using Argentina’s narrower proposed class, which included only

9 those who continuously held bonds from the date of class filing

10 through entry of judgment.

11 The continuous‐holder requirement was a significant

12 restriction on the scope of the classes because Argentina’s bonds

13 trade in a secondary market.  See id. at 56; see also NML Capital, Ltd. v.

14 Republic of Argentina, 699 F.3d 246, 251 (2d Cir. 2012) (noting that

15 some investors bought bonds, not when Argentina originally

16 marketed them, but “on the secondary market at various times and

Case 14-2109, Document 102-1, 08/10/2015, 1572269, Page4 of 15
PURICELLI V. REPUBLIC OF ARGENTINA

‐5‐ 

1 as recently as June 2010”), cert. denied, 134 S. Ct. 201 (2013).  Hence,

2 some investors who held bonds as of the date of class filing might

3 later have sold their interests.  And some investors who currently

4 hold bonds could have acquired their interests after the date of class

5 filing.  So long as bond interests continue to be traded, the identity

6 of investors holding bonds can shift, with each trade possibly

7 reducing the number of investors who have held their interests

8 continuously since the date of class filing.

9 After certifying the classes, the District Court granted

10 summary judgment for Plaintiffs.  Seijas I, 606 F.3d at 56.  No

11 significant questions existed concerning Argentina’s liability,

12 because Argentina conceded that it defaulted on the bonds and

13 owed money to the bondholders.  Id. at 56–57.   

14 The District Court then entered aggregate judgments for the

15 classes.  Id. at 56.  The District Court did not explain how it

16 calculated the class‐wide awards, and it acknowledged that its

Case 14-2109, Document 102-1, 08/10/2015, 1572269, Page5 of 15
PURICELLI V. REPUBLIC OF ARGENTINA

‐6‐ 

1 estimates were likely inflated.  Id. at 58.  But it reasoned that

2 granting inflated judgments was justifiable given Argentina’s refusal

3 to pay any judgment against it.  Id.

4 Argentina appealed, contesting both the use of the class action

5 device and the aggregate judgments.  See id. at 57–58.  In Seijas I, we

6 affirmed the certification of classes but vacated the aggregate

7 judgments.  Id. at 57–59.  We held that the continuous‐holder class

8 satisfied Rule 23’s requirements, but we concluded that the District

9 Court’s inflated estimations of aggregate judgments were improper.  

10 Id.  We explained that “[e]stimating gross damages for each of the

11 classes as a whole, without using appropriate procedures to ensure

12 that the damages awards roughly reflect the aggregate amount

13 owed to class members, enlarges plaintiffs’ rights by allowing them

14 to encumber property to which they have no colorable claim.”  Id.

15 at 58–59 (citing McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 231 (2d

16 Cir. 2008) (holding that an aggregate determination that “bears little

Case 14-2109, Document 102-1, 08/10/2015, 1572269, Page6 of 15
PURICELLI V. REPUBLIC OF ARGENTINA

‐7‐ 

1 or no relationship to the amount of economic harm actually caused”

2 violates the Rules Enabling Act), abrogated on other grounds by Bridge

3 v. Phx. Bond & Indem. Co., 553 U.S. 639 (2008)).  We remanded for the

4 District Court to “consider alternative approaches that will set

5 damages awards that more closely reflect the losses class members

6 experienced.”  Id. at 59.

7 On remand, the District Court entered revised aggregate

8 damage awards that deducted for bonds tendered in Argentina’s

two debt exchange offers, 9 1 but did not otherwise account for bonds

10 purchased in the secondary market after the start of the class periods

11 (i.e., bonds that had not been held continuously).  Hickory Sec. Ltd. v.

12 Republic of Argentina, 493 F. App’x 156, 158–59 (2d Cir. 2012)

13 [hereinafter Seijas II] (summary order).  Plaintiffs relied on an expert

                                              

1 In 2005, and again in 2010, Argentina permitted bondholders to exchange their

defaulted debt for new debt (at a substantial markdown in value).  NML Capital,

699 F.3d at 252–53.  

Case 14-2109, Document 102-1, 08/10/2015, 1572269, Page7 of 15
PURICELLI V. REPUBLIC OF ARGENTINA

‐8‐ 

1 to assert that the “overwhelming majority” of such bonds had likely

2 been sued on in separate proceedings or tendered in one of

3 Argentina’s debt exchange offers and were thus already excluded

4 from the proposed aggregate judgments.  Id. at 158 (internal

5 quotation marks omitted).   

6 Argentina appealed, and in Seijas II we again vacated the

7 aggregate judgments, concluding that they remained insufficiently

8 tied to Argentina’s liability to the classes.  Id. at 159–60.  Even

9 though the classes comprised only those who had held their bond

10 interests continuously since the classes’ filing, the aggregate

11 judgments contained no such limitation.  Id. at 160.  Because the

12 District Court had still not adequately addressed “the volume of

13 bonds purchased in the secondary market after 2004,” we found

14 “little difference” between the calculation of the aggregate

15 judgments in Seijas I and Seijas II.  Id.  Nothing in the record

16 indicated that the District Court had considered Plaintiffs’ expert’s

Case 14-2109, Document 102-1, 08/10/2015, 1572269, Page8 of 15
PURICELLI V. REPUBLIC OF ARGENTINA

‐9‐ 

1 analysis, which, in any event, was unconvincing; the expert

2 acknowledged that the bonds traded in a secondary market and that

3 he could not determine the volume of such trading or the

4 bondholders involved.  Id.   

5 We remanded with specific instructions for the District Court:

6 [O]n remand, the district court shall conduct an eviden‐

7 tiary hearing to resolve these issues.    Specifically, it

8 shall: (1) consider evidence with respect to the volume

9 of bonds purchased in the secondary market after the

10 start of the class periods that were not tendered in the

11 debt exchange offers or are currently held by opt‐out

12 parties or litigants in other proceedings; (2) make find‐

13 ings as to a reasonably accurate, non‐speculative esti‐

14 mate of that volume based on the evidence provided by

15 the parties; (3) account for such volume in any subse‐

16 quent damage calculation such that an aggregate

17 damage award would “roughly reflect” the loss to each

18 class, see Seijas I, 606 F.3d at 58–59; and (4) if no reason‐

19 ably accurate, non‐speculative estimate can be made,

20 then determine how to proceed with awarding damages

21 on an individual basis.  Ultimately, if an aggregate ap‐

22 proach cannot produce a reasonable approximation of

23 the actual loss, the district court must adopt an individ‐

24 ualized approach.

Case 14-2109, Document 102-1, 08/10/2015, 1572269, Page9 of 15
PURICELLI V. REPUBLIC OF ARGENTINA

‐10‐ 

1 Id.; see also id. at 160 n.2 (explaining that “first entering aggregate

2 judgments inconsistent with the foregoing and then moving forward

3 with an individual claims process would not allay our concerns”).

4 Following remand, the District Court expressed reluctance to

5 holding the evidentiary hearing ordered in Seijas II but nevertheless

6 stated that it would “try to obey the Court of Appeals and have that

7 hearing.”  App’x 3749–50.  Despite this intention, the District Court

8 neither held the evidentiary hearing nor adopted an individualized

9 approach for awarding damages.  Plaintiffs had complained that the

10 discovery necessary for the evidentiary hearing would be

11 “inefficient” and “rife with legal and logistical pitfalls.”  Letter from

12 Plaintiffs’ Counsel to the District Court 1 (June 27, 2013), App’x 3733.  

13 Rather than pursue this discovery, Plaintiffs moved to modify the

14 classes by “returning to the class definitions originally requested by

15 the Plaintiffs—classes of all ‘holders’ of still outstanding bonds.”  Id.  

16 The District Court granted Plaintiffs’ request to modify the

Case 14-2109, Document 102-1, 08/10/2015, 1572269, Page10 of 15
PURICELLI V. REPUBLIC OF ARGENTINA

‐11‐ 

1 continuous‐holder classes to all‐holder classes, and it entered orders

2 modifying the classes in the eight actions on appeal here.

3 Following the District Court’s orders modifying the class

4 definitions and granting class certification, we granted Argentina’s

5 petition for permission to appeal pursuant to Federal Rule of Civil

6 Procedure 23(f).

7 DISCUSSION

8 Typically, a district court has discretion under Rule 23 to

9 amend a class certification.  Here, however, that discretion was

10 cabined by the mandate in Seijas II.  We review de novo whether the

11 District Court has complied with our mandate, see Carroll v. Blinken,

12 42 F.3d 122, 126 (2d Cir. 1994), and we conclude that the District

13 Court erred in reconsidering Plaintiffs’ proposed all‐holder class on

14 remand.  The mandate in Seijas II gave the District Court specific

15 instructions that did not permit expanding the plaintiff classes.

16 A district court must follow the mandate issued by an

17 appellate court.  Ginett v. Comput. Task Grp., Inc., 11 F.3d 359, 360–61

Case 14-2109, Document 102-1, 08/10/2015, 1572269, Page11 of 15
PURICELLI V. REPUBLIC OF ARGENTINA

‐12‐ 

1 (2d Cir. 1993); Soto‐Lopez v. N.Y.C. Civil Serv. Comm’n, 840 F.2d 162,

2 167 (2d Cir. 1988).  The discretion that a district court has under Rule

3 23 to amend certification decisions “cannot be exercised in conflict

4 with an appellate ruling,” In re Initial Pub. Offering Sec. Litig., 483

5 F.3d 70, 73 (2d Cir. 2007), because a “district court has no discretion

6 in carrying out the mandate.”  In re Ivan F. Boesky Sec. Litig., 957 F.2d

7 65, 69 (2d Cir. 1992); accord Briggs v. Pa. R. Co., 334 U.S. 304, 306

8 (1948) (“[A]n inferior court has no power or authority to deviate

9 from the mandate issued by an appellate court.”).

10 Where a mandate limits the issues open for consideration on

11 remand, a district court ordinarily cannot consider additional issues.  

12 Sompo Japan Ins. Co. of Am. v. Norfolk S. Ry. Co., 762 F.3d 165, 175 (2d

13 Cir. 2014); e.g., United States v. Ben Zvi, 242 F.3d 89, 95 (2d Cir. 2001)

14 (stating that the mandate was “unambiguously limited in scope”

15 where it directed the district court to “reconsider sentencing” and

16 “its order of restitution” and thus did not permit resolution of issues

Case 14-2109, Document 102-1, 08/10/2015, 1572269, Page12 of 15
PURICELLI V. REPUBLIC OF ARGENTINA

‐13‐ 

1 related to the underlying merits of the conviction (internal quotation

2 marks omitted)).  And where a mandate directs a district court to

3 conduct specific proceedings and decide certain questions, generally

4 the district court must conduct those proceedings and decide those

5 questions.  See 18B Charles Alan Wright, et al., Federal Practice and

6 Procedure § 4478.3, at 753–54 (2d ed. 2002).  We consider both the

7 express terms and broader spirit of the mandate to ensure that its

8 terms have been “scrupulously and fully carried out.”  Ginett, 11

9 F.3d at 361 (internal quotation marks omitted).

10 In Seijas II, after having twice been presented with the District

11 Court’s efforts to resolve the difficulty of identifying class members

12 by issuing inflated aggregate judgments, we provided explicit

13 instructions conclusively addressing the matter.  We stated that the

14 District Court “shall conduct an evidentiary hearing,” and if an

15 aggregate approach could still not work, the District Court “must

16 adopt an individualized approach.”  Seijas II, 493 F. App’x at 160

Case 14-2109, Document 102-1, 08/10/2015, 1572269, Page13 of 15
PURICELLI V. REPUBLIC OF ARGENTINA

‐14‐ 

1 (emphases added).  The District Court, however, did not hold an

2 evidentiary hearing, and when Plaintiffs explained that the

3 discovery process required for the aggregate approach was

4 unworkable, instead of following our order and adopting an

5 individualized approach to damages, the District Court resurrected

6 Plaintiffs’ original class definition.

7 Our directive in Seijas II was clear.  Even though it did not

8 expressly preclude recertification, it cannot be read to have

9 permitted the District Court to disregard our instructions and

10 expand the plaintiff classes as a solution to a problem for which we

11 had already prescribed a specific response.  And whereas we may

12 reconsider our prior rulings, we do so sparingly and only when

13 presented with cogent and compelling reasons.  United States v.

14 Quintieri, 306 F.3d 1217, 1230 (2d Cir. 2002), cert. denied sub nom.

15 Donato v. United States, 539 U.S. 902 (2003); Soto‐Lopez, 840 F.2d

16 at 168.  We discern no such reasons on the record here.  Hence, we

Case 14-2109, Document 102-1, 08/10/2015, 1572269, Page14 of 15
PURICELLI V. REPUBLIC OF ARGENTINA

‐15‐ 

1 conclude that the District Court erred in not following Seijas II’s

2 mandate.

3 CONCLUSION

4 For the foregoing reasons, the District Court’s orders dated

5 April 24, 2014, certifying all‐holder classes in the eight actions at

6 issue here, are VACATED and the cases are REMANDED.  On

7 remand, the District Court must follow our specific instructions in

8 Seijas II, 493 F. App’x at 160.

Case 14-2109, Document 102-1, 08/10/2015, 1572269, Page15 of 15