Court Opinion

ID: 3179512
Source: CourtListenerOpinion
Date Created: 2016-02-23 16:06:32.113817+00
Date Added: 2024-06-11T07:38:53.930039
License: Public Domain

13-2095-cv(L)
     Commonwealth of Pa. Public School Emps.’ Retirement System v. Morgan Stanley & Co., Inc.

 1                            UNITED STATES COURT OF APPEALS
 2
 3                                FOR THE SECOND CIRCUIT
 4
 5                                    August Term, 2015
 6
 7   (Argued: June 20, 2014                              Decided: February 23, 2016)
 8
 9      Docket Nos. 13-2095-cv(L), 13-2283-cv(XAP), 13-2286-cv(XAP),
10                             13-2287-cv(XAP)
11   - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
12   COMMONWEALTH OF PENNSYLVANIA PUBLIC SCHOOL EMPLOYEES’ RETIREMENT
13   SYSTEM, together and on behalf of all others similarly situated,
14   COMMERZBANK AG, together and on behalf of all others similarly
15   situated,
16
17                Plaintiffs-Appellants-Cross-Appellees,
18
19   ABU DHABI COMMERCIAL BANK, individually and on behalf of all
20   others similarly situated, KING COUNTY, WASHINGTON, together and
21   on behalf of all others similarly situated, SEI INVESTMENTS
22   COMPANY, together and on behalf of all others similarly situated,
23   THE BANK OF N.T. BUTTERFIELD & SON LIMITED, SFT COLLECTIVE
24   INVESTMENT FUND, DEUTSCHE POSTBANK AG, GLOBAL INVESTMENT SERVICES
25   LIMITED, GULF INTERNATIONAL BANK B.S.C., NATIONAL AGRICULTURAL
26   COOPERATIVE FEDERATION, together and on behalf of all others
27   similarly situated, STATE BOARD OF ADMINISTRATION OF FLORIDA,
28   together and on behalf of all others similarly situated, BANK
29   SINOPAC, together and on behalf of all others similarly situated,
30   BANK HAPOALIM B.M., together and on behalf of all others similarly
31   situated, KBL EUROPEAN PRIVATE BANKERS S.A.,
32
33                Plaintiffs,
34
35                       v.
36
37   MORGAN STANLEY & CO., INCORPORATED, MORGAN STANLEY & CO.
38   INTERNATIONAL LIMITED, MOODY’S INVESTOR SERVICE, INC., MOODY’S
39   INVESTOR SERVICE, LTD., THE MCGRAW-HILL COMPANIES, INC., STANDARD
40   & POOR’S RATING SERVICES,
41
42                Defendants-Appellees-Cross-Appellants,
43
44
45   CHEYNE CAPITAL MANAGEMENT LIMITED, CHEYNE CAPITAL MANAGEMENT (UK)
46   LLP, CHEYNE CAPITAL INTERNATIONAL LIMITED,
47
48             Defendants.
49   - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

                                                1
 1
 2   B e f o r e:   WINTER, LEVAL, and LYNCH, Circuit Judges.
 3
 4        Appeal from a judgment entered in the United States District

 5   Court for the Southern District of New York (Shira A. Scheindlin,

 6   Judge) denying class certification, dismissing appellant

 7   Commerzbank’s fraud claims for lack of standing, and dismissing

 8   appellant Commonwealth of Pennsylvania Public School Employees’

 9   Retirement System’s (“PSERS”) claims for lack of diversity

10   jurisdiction. In a previous opinion, we affirmed the denial of

11   class certification and the dismissal of PSERS’s claim, and we

12   certified questions dispositive of Commerzbank’s appeal to the New

13   York Court of Appeals.    See Pa. Pub. Sch. Emps.’ Ret. Sys. v.

14   Morgan Stanley & Co., 772 F.3d 111, 116-25 (2d Cir.), as amended

15   (Nov. 12, 2014).   We have now received an answer. On the basis of

16   that answer, we affirm.

17                              LUKE O. BROOKS (Joseph D. Daley & Daniel
18                              S. Drosman, San Diego, CA) Robbins Geller
19                              Rudman & Dowd LLP, San Francisco, CA, for
20                              Plaintiffs-Appellants-Cross-Appellees.
21
22                              JAMES P. ROUHANDEH (Antonio J. Perez-
23                              Marques, Paul S. Mishkin, Jessica L.
24                              Turner, on the joint brief) Davis Polk &
25                              Wardwell LLP, New York, NY, for
26                              Defendants-Appellees-Cross-Appellants
27                              Morgan Stanley & Co. Inc. and Morgan
28                              Stanley & Co. Int’l Ltd.
29
30                              Dean Ringel, Jason M. Hall, Roxana
31                              Labatt, Cahill Gordon & Reindel LLP, New
32                              York, NY, on the joint brief,
33                              for Defendants-Appellees-Cross-Appellants
34                              Standard & Poor’s Ratings Services and
35                              The McGraw-Hill Companies, Inc.

                                                    2
 1                              Joshua M. Rubins, James J. Coster, Mario
 2                              Aieta, James I. Doty, Satterlee Stephens
 3                              Burke & Burke LLP, New York, NY; Mark A.
 4                              Perry, Gibson, Dunn & Crutcher LLP,
 5                              Washington, DC, on the joint brief, for
 6                              Defendants-Appellees-Cross-Appellants
 7                              Moody’s Investors Service, Inc. and
 8                              Moody’s Investors Service, Ltd.
 9
10   PER CURIAM:
11
12        Commerzbank AG (“Commerzbank”) appealed from Judge

13   Scheindlin’s denial of class certification and dismissal of the

14   claims asserted by certain investors for lack of standing,

15   including Commerzbank.   In a previous decision, familiarity with

16   which is assumed, we affirmed the district court in part and

17   certified to the New York Court of Appeals the question of whether

18   a reasonable trier of fact could, on the record of this case,

19   conclude that Commerzbank was validly assigned the right to bring

20   a common-law fraud claim, and therefore had standing to sue

21   various defendants.   See Pa. Pub. Sch. Emps.’ Ret. Sys. v. Morgan

22   Stanley & Co., 772 F.3d 111, 116-25 (2d Cir.), as amended, (Nov.

23   12, 2014).    The New York Court of Appeals has since resolved that,

24   under New York law, Commerzbank does not have standing to pursue

25   its fraud claim.   Pa. Pub. Sch. Emps.’ Ret. Sys. v. Morgan Stanley

26   & Co., 25 N.Y.3d 543, 553 (2015).

27        Our prior opinion did not reach the question of whether the

28   District Court properly denied Commerzbank’s Fed. R. Civ. P.

                                       3
 1   17(a)(3) motion as untimely.1       Rule 17(a)(3) permits ratification

 2   of a claim within a "reasonable time" after a standing objection

 3   is raised.    That issue is now ripe for decision.          We review a

 4   district court's decision whether to dismiss pursuant to Rule

 5   17(a) for abuse of discretion.        Stichting Ter Behartiging Van de

 6   Belangen Van Oudaandeelhouders In Het Kapitaal Van Saybolt Int’l

 7   B.V. v. Schreiber, 407 F.3d 34, 43-44 (2d Cir. 2005).

 8   Commerzbank's Rule 17(a) motion was made on September 10, 2012,

 9   after summary judgment was entered against it and even after the

10   filing of its motion to reconsider, whereas the issue was raised

11   in defendants' pleadings in March 2011 and again in the motion for

12   summary judgment.     Given Commerzbank's delay in filing the motion,

13   the district court acted well within its discretion in denying

14   Commerzbank's ratification motion as untimely.

15         In light of the New York Court of Appeals decision and our

16   affirmance of the denial of the Fed. R. Civ. P. 17(a) motion, we

17   affirm.

18

           1
             Given our disposition of this matter, we may assume, for purposes of
     this case, that Commerzbank’s 17(a)(3) Notice of Ratification Pursuant to Fed.
     R. Civ. P. 17(a)(3) would have afforded the relief sought.

                                            4