Universities Superannuation Scheme Ltd. v. Petróleo Brasileiro S.A. Petrobras (In re Petrobras Sec. )
| Decision Date | 07 July 2017 |
| Docket Number | Docket No. 16-1914-cv,August Term, 2016 |
| Citation | 862 F.3d 250 |
| Parties | IN RE PETROBRAS SECURITIES Universities Superannuation Scheme Limited, Employees Retirement System of the State of Hawaii, North Carolina Department of State Treasurer, Plaintiffs-Appellees, Peter Kaltman, individually and on behalf of all others similarly situated, Dimensional Emerging Markets Value Fund, DFA Investment Dimensions Group Inc., on behalf of its series Emerging Markets Core Equity Portfolio, Emerging Markets Social Core Equity Portfolio and T.A. World ex U.S. Core Equity Portfolio, DFA Investment Trust Company, on behalf of its series The Emerging Markets Series, DFA Austria Limited, solely in its capacity as responsible entity for the Dimensional Emerging Markets Trust, DFA International Core Equity Fund and DFA International Vector Equity Fund by Dimensional Fund Advisors Canada ULC solely in its capacity as Trustee, Dimensional Funds PLC, on behalf of its sub-fund Emerging Markets Value Fund, Dimensional Funds ICVC, on behalf of its sub-fund Emerging Markets Core Equity Fund, Skagen AS, Danske Invest Management A/S, Danske Invest Management Company, New York City Employees' Retirement System, New York City Police Pension Fund, Board of Education Retirement System of the City of New York, Teachers' Retirement System of the City of New York, New York City Fire Department Pension Fund, New York City Deferred Compensation Plan, Forsta AP-fonden, Transamerica Income Shares, Inc., Transamerica Funds, Transamerica Series Trust, Transamerica Partners Portfolios, John Hancock Variable Insurance Trust, John Hancock Funds II, John Hancock Sovereign Bond Fund, John Hancock Bond Trust, John Hancock Strategic Series, John Hancock Investment Trust, JHF Income Securities Trust, JHF Investors Trust, JHF Hedged Equity & Income Fund, Aberdeen Emerging Markets Fund, Aberdeen Global Equity Fund, Aberdeen Global Natural Resources Fund, Aberdeen International Equity Fund, each a series of Aberdeen Funds, Aberdeen Canada Emerging Markets Fund, Aberdeen Canada Socially Responsible Global Fund, Aberdeen Canada Socially Responsible International Fund, Aberdeen Canada Funds Eafe Plus Equity Fund and Aberdeen Canada Funds Global Equity Fund, each a series of Aberdeen Canada Funds, Aberdeen EAFE Plus Ethical Fund, Aberdeen EAFE Plus Fund, Aberdeen EAFE Plus SRI Fund, Aberdeen Emerging Markets Equity Fund, Aberdeen Fully Hedged International Equities Fund, Aberdeen International Equity Fund, Aberdeen Global Emerging Markets Equity Fund, Aberdeen Global Ethical World Equity Fund, Aberdeen Global Responsible World Equity Fund, Aberdeen Global World Equity Dividend Fund, Aberdeen Global World Equity Fund, Aberdeen Global World Resources Equity Fund, Aberdeen Emerging Markets Equity Fund, Aberdeen Ethical World Equity Fund, Aberdeen Multi-Asset Fund, Aberdeen World Equity Fund, Aberdeen Latin America Equity Fund, Inc., AAAID Equity Portfolio, Alberta Teachers Retirement Fund, Aon Hewitt Investment Consulting, Inc., Aurion International Daily Equity Fund, Bell Aliant Regional Communications Inc., BMO Global Equity Class, City of Albany Pension Plan, Desjardins Dividend Income Fund, Desjardins Emerging Markets Fund, Desjardins Global All Capital Equity Fund, Desjardins Overseas Equity Value Fund, Devon County Council Global Emerging Market Fund, Devon County Council Global Equity Fund, DGIA Emerging Markets Equity Fund L.P., Erie Insurance Exchange, First Trust/Aberdeen Emerging Opportunity Fund, GE UK Pension Common Investment Fund, Hapshire County Council Global Equity Portfolio, London Borough o Hounslow Supperannuation Fund, Mackenzie Universal Sustainable Opportunities Class, Marshfield Clinic, Mother Theresa Care and Mission Trust, MTR Corporation Limited Retirement Scheme, Myria Asset Management Emergence, National Pension Service, NPS Trust Active 14, Ohio Public Employees Retirement System, Washington State Investment Board, Aberdeen Latin American Income Fund Limited, Aberdeen Global ex Japan Pension Fund PPIT, FS International Equity Mother Fund, Nn Investment Partners B.V., acting in the capacity of management company of the mutual fund NN Global Equity Fund and in the capacity of management company of the mutual fund NN Institutioneel Dividend Aandelen Fonds, NN Investment Partners Luxembourg S.A., acting in the capacity of management company SICAV and its Sub-Funds and NN (L) SICAV, for and on behalf of NN (L) Emerging Markets High Dividend, NN (L) First, Aura Capital Ltd., WGI Emerging Markets Fund, LLC, Bill and Melinda Gates Foundation Trust, Board of Regents of the University of Texas System, Trustees of the Estate of Bernice Pauahi Bishop, Louis Kennedy, individually and on behalf of all others similarly situated, Ken Ngo, individually and on behalf of all others similarly situated, Jonathan Messing, individually and on behalf of all others similarly situated, City of Providence, individually and on behalf of all others similarly situated, Union Asset Management Holding AG, Plaintiffs, v. Petróleo Brasileiro S.A. Petrobras, BB Securities Ltd., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of China (Hong Kong) Limited, Banca IMI, S.p.A., Scotia Capital (USA) Inc., Theodore Marshall Helms, Petrobras Global Finance B.V., Petrobras America Inc., Citigroup Global Markets Inc., Itau BBA USA Securities, Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Mitsubishi UFJ Securities (USA), Inc., HSBC Securities (USA) Inc., Standard Chartered Bank, Banco Bradesco BBI S.A., Defendants-Appellants, Jose Sergio Gabrielli, Silvio Sinedino Pinheiro, Paulo Roberto Costa, Jose Carlos Cosenza, Renato De Souza Duque, Guillherme De Oliveira Estrella, Jose Miranda Formigl Filho, Maria Das Gracas Silva Foster, Almir Guilherme Barbassa, Mariangela Mointeiro Tizatto, Josue Christiano Gome Da Silva, Daniel Lima De Oliveira, Jose Raimundo Branda Pereira, Servio Tulio Da Rosa Tinoco, Paulo Jose Alves, Gustavo Tardin Barbosa, Alexandre Quintao Fernandes, Marcos Antonio Zacarias, Cornelis Franciscus Joze Looman, PricewaterhouseCoopers Auditores Independentes, Defendants. |
| Court | U.S. Court of Appeals — Second Circuit |
Jeremy A. Lieberman , Mark I. Gross, Emma Gilmore, John A. Keho & Brenda F. Szydlo (on the brief), Pomerantz LLP, New York, NY, for the Plaintiffs-Appellees.
Lewis J. Liman , Jared Gerber & Mitchell A. Lowenthal (on the brief), Cleary Gottlieb Steen & Hamilton LLP, New York, NY, for Defendants-Appellants Petróleo Brasileiro S.A.—Petrobras, Theodore Marshall Helms, Petrobras Global Finance B.V., and Petrobras America Inc.
Jay B. Kasner , Boris Bershteyn, Scott D. Musoff & Jeremy A. Berman (on the brief), Skadden, Arps, Slate, Meagher & Flom LLP, New York NY, for Defendants-Appellants BB Securities Ltd., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of China (Hong Kong) Limited, Banca IMI, S.p.A., Scotia Capital (USA) Inc., Citigroup Global Markets Inc., Itau BBA USA Securities, Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Mitsubishi UFJ Securities (USA), Inc., HSBC Securities (USA) Inc., Standard Chartered Bank, and Banco Bradesco BBI S.A.
Before: Hall, Livingston, Circuit Judges, and Garaufis, District Judge.*
This expedited appeal arises out of an order entered in the United States District Court for the Southern District of New York (Rakoff, J. ) certifying two classes in this securities fraud action against Petróleo Brasileiro S.A.—Petrobras ("Petrobras") and various other defendants. See In re Petrobras Sec. Litig. (the "Certification Order "), 312 F.R.D. 354 (S.D.N.Y. 2016).
Petrobras is a multinational oil and gas company headquartered in Brazil and majority-owned by the Brazilian government. Though Petrobras was once among the largest companies in the world, its value declined precipitously after the exposure of a multi-year, multi-billion-dollar money-laundering and kickback scheme, prompting a class action by holders of Petrobras equity and debt securities ("Plaintiffs") against multiple defendants ("Defendants"): Petrobras and certain wholly owned subsidiaries (the "Subsidiaries"; collectively with Petrobras, the "Petrobras Defendants"1 ); former officers and directors of the Petrobras Defendants; several underwriters of Petrobras debt securities (the "Underwriter Defendants"2 ); and Petrobras's independent auditor.
The district court certified two classes (the "Classes") for money damages under Federal Rule of Civil Procedure 23(b)(3) : the first asserts claims under the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. §§ 78a et seq. ; and the second asserts claims under the Securities Act of 1933 (the "Securities Act"), 15 U.S.C. §§ 77a et seq .3 On appeal, the Petrobras Defendants and the Underwriter Defendants (collectively, "Appellants") contest the Certification Order on two grounds.
First, Appellants challenge both class definitions insofar as they include all otherwise eligible persons who purchased Petrobras debt securities in "domestic transactions." Because Petrobras's debt securities do not trade on a domestic exchange, the district court must assess each class member's over-the-counter transactions for markers of domesticity under Morrison v. National Australia Bank Ltd. , 561 U.S. 247, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010). Appellants assert that the need for such assessments precludes class certification, particularly in light of concerns over the availability and content of the necessary transaction records. We first address Appellants' arguments regarding the "implied" Rule 23 requirement of "ascertainability," taking this opportunity to clarify the scope of the contested ascertainability doctrine: a class is ascertainable if it is defined using objective criteria that establish a membership with definite boundaries. That threshold requirement is met here. However, we next hold that the district court committed legal...
To continue reading
Request your trial
-
Anderson v. Credit One Bank, N.A. (In re Anderson)
...individual is a member.’ " de Lacour v. Colgate-Palmolive Co. , 338 F.R.D. 324, 339 (S.D.N.Y. 2021), quoting In re Petrobras Securities Litig ., 862 F.3d 250, 260 (2d Cir. 2017), cert. dismissed , ––– U.S. ––––, 140 S. Ct. 338, 205 L.Ed.2d 210 (2019). Ascertainability is "a modest threshold......
-
In re McCormick & Co., Inc., Pepper Prods. Mktg. & Sales Practices Litig.
...be defined clearly and ... by objective criteria rather than by, for example, a class member's state of mind."); In re Petrobras Sec. , 862 F.3d 250, 257 (2d Cir. 2017) (class should be "defined using objective criteria that establish a membership with definite boundaries"); 1 Newberg on Cl......
-
In re Libor-Based Fin. Instruments Antitrust Litig., 11 MD 2262 (NRB)
...into account the weight and significance of common and individual issues rather than simply their numbers. See, e.g., In re Petrobras Sec., 862 F.3d 250, 268 (2d Cir. 2017) ("[P]redominance is a comparative standard."). The existence of a single common question suffices to establish commona......
-
Betances v. Fischer
...into a certified class for liability followed by decertification for purposes of determining damages. See, e.g., In re Petrobras Securities , 862 F.3d 250, 276 (2d Cir. 2017) ("[D]istrict courts can ... bifurcate the proceedings to home in on threshold class-wide inquiries; sever claims not......
-
Unintended Consequences of Repealing the Direct Purchaser Rule
...RUBENSTEIN, CONTE & NEWBERG, supra note 15, § 20:12). The analysis is “more [ ] qualitative than quantitative.” In re Petrobas Sec., 862 F.3d 250, 271 (2d Cir. 2017) (alteration in original) (citing RUBENSTEIN, CONTE & NEWBERG, supra note 15, § 4:50); see also Butler v. Sears, Roebuck & Co.......
-
The government's power to bring transnational securities fraudsters to account: dodd-frank rendered Morrison irrelevant
...of the location of the transaction. 85 Nonetheless, the Second Circuit’s rule has taken hold, 81. See, e.g ., In re Petrobras Secs., 862 F.3d 250, 262 (2d Cir. 2017), cert. denied , 140 S. Ct. 338 (2019); In re Satyam Computer Servs. Ltd. Secs. Litig., 915 F Supp. 2d 450, 475 (S.D.N.Y. 2013......
-
FRAUD ON THE CRYPTO MARKET.
...Court has suggested that the burden required to establish market efficiency 'is not an onerous one.'" (quoting In re Petrobras Sec., 862 F.3d 250, 278 (2d Cir. (170.) See infra note 242 and accompanying text. (171.) See, e.g., In re Teva, 2021 WL 872156, at *24 ("According to the Defendants......
-
Class Actions
...at 1304.17. Id. at 1299-1301.18. Id. at 1300; 28 U.S.C. §§ 1711-1715 (2005).19. Cherry, 986 F.3d at 1305. 20. In re Petrobras Sec. Litig., 862 F.3d 250, 267 (2d Cir. 2017); Rikos v. P&G, 799 F.3d 497, 525 (6th Cir. 2015); Mullins, 795 F.3d at 662; Sandusky Wellness Ctr. v. MedTox Sci., 821 ......