Second Circuit Court of Appeals Rejects Claim by Argentina That U.S. District Court Improperly Certified Eight Classes of Plaintiffs Seeking More than 2.2 Billion Dollars in Damages, But Remands So That District Court Can Set Damages Awards That More Closely Reflect Losses Class Members Experienced.
In appeals from eight grants of class certification in eight putative class action lawsuits and eight final judgments of the United States District Court for the Southern District of New York granting relief to eight classes consisting of tens of thousands of investors who held defaulted Argentine bonds as a result of Argentina’s severe economic crisis during the 1990s that led to its 2001 default on roughly $80 to $100 billion of sovereign debt, the U.S. Court of Appeals for the Second Circuit (in Puricelli v. The Republic of Argentina, Appeal No. 09-0332-cv -L) affirmed in part and remanded in part.
The district court held that the eight classes satisfied Rule 23(b)(3)’s requirements (1) numerosity; (2) commonality; (3) typicality; (4) adequacy of representation (5) predominance, and (6) superiority. On appeal, Argentina contended that the eight classes failed to satisfy Rule 23(b)(3)’s adequacy of representation, predominance, and superiority requirements. The district court’s order of class certification was affirmed in part since the fact that damages may have to be ascertained on an individual basis was not sufficient to defeat class certification and since the district court correctly determined that proceeding individually would be prohibitive for class members with small claims.
Argentina also argued that the district court erred by entering aggregate class-wide judgments based on estimates of Argentina’s liability that the district court acknowledged “were likely inflated.” The district court’s order was remanded in part by the 2nd Circuit Court of Appeals since ” estimating gross damages for each of the classes as a whole, without using appropriate procedures to ensure that the damages awards roughly reflect the aggregate amount owed to class members, enlarges plaintiffs’ rights by allowing them to encumber property to which they have no colorable claim.”
For more information on the Republic of Argentina bond default class action lawsuit, read the 2nd Circuit’s class action appeal decision.