Commonwealth of Pa. Public School Emps.' Retirement System v. Morgan , 814 F.3d 641 ( 2016 )

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)
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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.
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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