142104cv(L)

Puricelliv.RepublicofArgentina

142104cv(L)
Puricelliv.RepublicofArgentina

In the

United States Court of Appeals

For the Second Circuit

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AugustTerm,2014
Nos.142104cv(L),142105cv(CON),142106cv(CON),
142107cv(CON),142108cv(CON),142109cv(CON),
142111cv(CON),142112cv(CON)

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EDUARDOPURICELLI,RUBENCHORNY,HICKORYSECURITIESLTD.,
RODOLFOVOGELBAUM,ELIZABETHANDREAAZZA,CLAUDIA
FLORENCIAVALLS,SILVIASEIJAS,HEATHERM.MUNTON,THOMASL.
PICOESTRADA,EMILIOROMANO,RUBENWEISZMAN,ANIBALCAMPO,
MARIACOPATI,CESARRAULCASTRO,
PlaintiffsAppellees,

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v.

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REPUBLICOFARGENTINA,
DefendantAppellant.

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AppealfromtheUnitedStatesDistrictCourt
fortheSouthernDistrictofNewYork.
Nos.04cv2117,04cv2118,04cv1085,04cv937,04cv400,
04cv401,04cv936,04cv506ThomasP.Griesa,Judge.

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ARGUED:JUNE17,2015
DECIDED:AUGUST10,2015

Before:LEVAL,STRAUB,andRAGGI,CircuitJudges.

AppealfromordersoftheUnitedStatesDistrictCourtforthe
SouthernDistrictofNewYork(ThomasP.Griesa,Judge),onremand
fromapreviousappeal,certifyingexpandedplaintiffclasses.We
holdthattheDistrictCourtcontravenedthemandateissuedon
appealbyfailingtofollowthepriorpanelsspecificinstructions.
Accordingly,weVACATEandREMAND.

CARMINED.BOCCUZZI(JonathanI.Blackmun,
DanielJ.Northrop,JacobH.Johnston,onthe
brief),ClearyGottliebSteen&HamiltonLLP,
NewYork,NY,forRepublicofArgentina.

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JENNIFERR.SCULLION,ProskauerRoseLLP,New
York,NY(M.ToddMobley,ProskauerRoseLLP,
NewYork,NY;MichaelDiaz,Jr.,CarlosF.
Gonzalez,MartaColomarGarcia,DiazReus&
TargLLP,Miami,FL;SaulRoffe,LawOfficesof
SaulRoffe,Esq.,Marlboro,NJ,onthebrief),for
EduardoPuricelli,RubenChorny,Hickory
SecuritiesLtd.,RodolfoVogelbaum,Elizabeth
AndreaAzza,ClaudiaFlorenciaValls,Silvia
Seijas,HeatherM.Munton,ThomasL.Pico
Estrada,EmilioRomano,RubenWeiszman,

PURICELLIV.REPUBLICOFARGENTINA
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AnibalCampo,MariaCopati,andCesarRaul
Castro.

STRAUB,CircuitJudge:

AfterpreviouspanelsofthisCourttwicevacatedaggregate

judgmentsenteredbytheDistrictCourtinfavorofplaintiffclasses,

weremandedwithspecificinstructions.Ratherthanfollowour

instructions,theDistrictCourtcertifiedexpandedplaintiffclasses.

Becausedoingsowasforeclosedbythemandateissuedontheprior

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appeal,weVACATEandREMAND.
BACKGROUND

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In2001,theRepublicofArgentinadefaultedonroughly$80to

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$100billionofsovereigndebt.Seijasv.RepublicofArgentina,606F.3d

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53,55(2dCir.2010)[hereinafterSeijasI].Numerousactionsby

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holdersofArgentinasbondswerefiled,includingtheeight(each

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pertainingtoadifferentseriesofArgentinasbonds)appealedhere.

PURICELLIV.REPUBLICOFARGENTINA
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In2004,theplaintiffsappellees(Plaintiffs)filedforclass

certificationintheseeightactions,proposingthattheclassesbe

definedasallholdersofArgentinasbondsineachoftheeight

respectivebondseries.OvertheobjectionofDefendantAppellant

Argentina,theDistrictCourtgrantedPlaintiffsmotionsforclass

certification,seeid.at5556,butitrejectedPlaintiffsproposedclass

definition.Instead,theDistrictCourtcertifiedeightclassactions

usingArgentinasnarrowerproposedclass,whichincludedonly

thosewhocontinuouslyheldbondsfromthedateofclassfiling

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throughentryofjudgment.

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Thecontinuousholderrequirementwasasignificant

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restrictiononthescopeoftheclassesbecauseArgentinasbonds

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tradeinasecondarymarket.Seeid.at56;seealsoNMLCapital,Ltd.v.

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RepublicofArgentina,699F.3d246,251(2dCir.2012)(notingthat

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someinvestorsboughtbonds,notwhenArgentinaoriginally

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marketedthem,butonthesecondarymarketatvarioustimesand

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asrecentlyasJune2010),cert.denied,134S.Ct.201(2013).Hence,

someinvestorswhoheldbondsasofthedateofclassfilingmight

laterhavesoldtheirinterests.Andsomeinvestorswhocurrently

holdbondscouldhaveacquiredtheirinterestsafterthedateofclass

filing.Solongasbondinterestscontinuetobetraded,theidentity

ofinvestorsholdingbondscanshift,witheachtradepossibly

reducingthenumberofinvestorswhohaveheldtheirinterests

continuouslysincethedateofclassfiling.

Aftercertifyingtheclasses,theDistrictCourtgranted

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summaryjudgmentforPlaintiffs.SeijasI,606F.3dat56.No

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significantquestionsexistedconcerningArgentinasliability,

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becauseArgentinaconcededthatitdefaultedonthebondsand

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owedmoneytothebondholders.Id.at5657.

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TheDistrictCourtthenenteredaggregatejudgmentsforthe

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classes.Id.at56.TheDistrictCourtdidnotexplainhowit

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calculatedtheclasswideawards,anditacknowledgedthatits

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estimateswerelikelyinflated.Id.at58.Butitreasonedthat

grantinginflatedjudgmentswasjustifiablegivenArgentinasrefusal

topayanyjudgmentagainstit.Id.

Argentinaappealed,contestingboththeuseoftheclassaction

deviceandtheaggregatejudgments.Seeid.at5758.InSeijasI,we

affirmedthecertificationofclassesbutvacatedtheaggregate

judgments.Id.at5759.Weheldthatthecontinuousholderclass

satisfiedRule23srequirements,butweconcludedthattheDistrict

Courtsinflatedestimationsofaggregatejudgmentswereimproper.

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Id.Weexplainedthat[e]stimatinggrossdamagesforeachofthe

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classesasawhole,withoutusingappropriateprocedurestoensure

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thatthedamagesawardsroughlyreflecttheaggregateamount

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owedtoclassmembers,enlargesplaintiffsrightsbyallowingthem

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toencumberpropertytowhichtheyhavenocolorableclaim.Id.

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at5859(citingMcLaughlinv.Am.TobaccoCo.,522F.3d215,231(2d

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Cir.2008)(holdingthatanaggregatedeterminationthatbearslittle

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ornorelationshiptotheamountofeconomicharmactuallycaused

violatestheRulesEnablingAct),abrogatedonothergroundsbyBridge

v.Phx.Bond&Indem.Co.,553U.S.639(2008)).Weremandedforthe

DistrictCourttoconsideralternativeapproachesthatwillset

damagesawardsthatmorecloselyreflectthelossesclassmembers

experienced.Id.at59.

Onremand,theDistrictCourtenteredrevisedaggregate

damageawardsthatdeductedforbondstenderedinArgentinas

twodebtexchangeoffers,1butdidnototherwiseaccountforbonds

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purchasedinthesecondarymarketafterthestartoftheclassperiods

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(i.e.,bondsthathadnotbeenheldcontinuously).HickorySec.Ltd.v.

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RepublicofArgentina,493F.Appx156,15859(2dCir.2012)

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[hereinafterSeijasII](summaryorder).Plaintiffsreliedonanexpert

1In2005,andagainin2010,Argentinapermittedbondholderstoexchangetheir

defaulteddebtfornewdebt(atasubstantialmarkdowninvalue).NMLCapital,
699F.3dat25253.

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toassertthattheoverwhelmingmajorityofsuchbondshadlikely

beensuedoninseparateproceedingsortenderedinoneof

Argentinasdebtexchangeoffersandwerethusalreadyexcluded

fromtheproposedaggregatejudgments.Id.at158(internal

quotationmarksomitted).

Argentinaappealed,andinSeijasIIweagainvacatedthe

aggregatejudgments,concludingthattheyremainedinsufficiently

tiedtoArgentinasliabilitytotheclasses.Id.at15960.Even

thoughtheclassescomprisedonlythosewhohadheldtheirbond

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interestscontinuouslysincetheclassesfiling,theaggregate

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judgmentscontainednosuchlimitation.Id.at160.Becausethe

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DistrictCourthadstillnotadequatelyaddressedthevolumeof

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bondspurchasedinthesecondarymarketafter2004,wefound

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littledifferencebetweenthecalculationoftheaggregate

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judgmentsinSeijasIandSeijasII.Id.Nothingintherecord

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indicatedthattheDistrictCourthadconsideredPlaintiffsexperts

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analysis,which,inanyevent,wasunconvincing;theexpert

acknowledgedthatthebondstradedinasecondarymarketandthat

hecouldnotdeterminethevolumeofsuchtradingorthe

bondholdersinvolved.Id.

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WeremandedwithspecificinstructionsfortheDistrictCourt:
[O]nremand,thedistrictcourtshallconductaneviden
tiary hearing to resolve these issues. Specifically, it
shall: (1)consider evidence with respect to the volume
of bonds purchased in the secondary market after the
start of the class periods that were not tendered in the
debt exchange offers or are currently held by optout
parties or litigants in other proceedings; (2)make find
ings as to a reasonably accurate, nonspeculative esti
mateofthatvolumebasedontheevidenceprovidedby
the parties; (3)account for such volume in any subse
quent damage calculation such that an aggregate
damageawardwouldroughlyreflectthelosstoeach
class,seeSeijasI,606F.3dat5859;and(4)ifnoreason
ably accurate, nonspeculative estimate can be made,
thendeterminehowtoproceedwithawardingdamages
on an individual basis. Ultimately, if an aggregate ap
proach cannot produce a reasonable approximation of
theactualloss,thedistrictcourtmustadoptanindivid
ualizedapproach.

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Id.;seealsoid.at160n.2(explainingthatfirstenteringaggregate

judgmentsinconsistentwiththeforegoingandthenmovingforward

withanindividualclaimsprocesswouldnotallayourconcerns).

Followingremand,theDistrictCourtexpressedreluctanceto

holdingtheevidentiaryhearingorderedinSeijasIIbutnevertheless

statedthatitwouldtrytoobeytheCourtofAppealsandhavethat

hearing.Appx374950.Despitethisintention,theDistrictCourt

neitherheldtheevidentiaryhearingnoradoptedanindividualized

approachforawardingdamages.Plaintiffshadcomplainedthatthe

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discoverynecessaryfortheevidentiaryhearingwouldbe

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inefficientandrifewithlegalandlogisticalpitfalls.Letterfrom

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PlaintiffsCounseltotheDistrictCourt1(June27,2013),Appx3733.

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Ratherthanpursuethisdiscovery,Plaintiffsmovedtomodifythe

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classesbyreturningtotheclassdefinitionsoriginallyrequestedby

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thePlaintiffsclassesofallholdersofstilloutstandingbonds.Id.

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TheDistrictCourtgrantedPlaintiffsrequesttomodifythe

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continuousholderclassestoallholderclasses,anditenteredorders

modifyingtheclassesintheeightactionsonappealhere.

FollowingtheDistrictCourtsordersmodifyingtheclass

definitionsandgrantingclasscertification,wegrantedArgentinas

petitionforpermissiontoappealpursuanttoFederalRuleofCivil

Procedure23(f).

DISCUSSION

Typically,adistrictcourthasdiscretionunderRule23to

amendaclasscertification.Here,however,thatdiscretionwas

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cabinedbythemandateinSeijasII.Wereviewdenovowhetherthe

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DistrictCourthascompliedwithourmandate,seeCarrollv.Blinken,

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42F.3d122,126(2dCir.1994),andweconcludethattheDistrict

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CourterredinreconsideringPlaintiffsproposedallholderclasson

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remand.ThemandateinSeijasIIgavetheDistrictCourtspecific

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instructionsthatdidnotpermitexpandingtheplaintiffclasses.

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Adistrictcourtmustfollowthemandateissuedbyan
appellatecourt.Ginettv.Comput.TaskGrp.,Inc.,11F.3d359,36061
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(2dCir.1993);SotoLopezv.N.Y.C.CivilServ.Commn,840F.2d162,

167(2dCir.1988).ThediscretionthatadistrictcourthasunderRule

23toamendcertificationdecisionscannotbeexercisedinconflict

withanappellateruling,InreInitialPub.OfferingSec.Litig.,483

F.3d70,73(2dCir.2007),becauseadistrictcourthasnodiscretion

incarryingoutthemandate.InreIvanF.BoeskySec.Litig.,957F.2d

65,69(2dCir.1992);accordBriggsv.Pa.R.Co.,334U.S.304,306

(1948)([A]ninferiorcourthasnopowerorauthoritytodeviate

fromthemandateissuedbyanappellatecourt.).

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Whereamandatelimitstheissuesopenforconsiderationon

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remand,adistrictcourtordinarilycannotconsideradditionalissues.

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SompoJapanIns.Co.ofAm.v.NorfolkS.Ry.Co.,762F.3d165,175(2d

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Cir.2014);e.g.,UnitedStatesv.BenZvi,242F.3d89,95(2dCir.2001)

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(statingthatthemandatewasunambiguouslylimitedinscope

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whereitdirectedthedistrictcourttoreconsidersentencingand

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itsorderofrestitutionandthusdidnotpermitresolutionofissues

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relatedtotheunderlyingmeritsoftheconviction(internalquotation

marksomitted)).Andwhereamandatedirectsadistrictcourtto

conductspecificproceedingsanddecidecertainquestions,generally

thedistrictcourtmustconductthoseproceedingsanddecidethose

questions.See18BCharlesAlanWright,etal.,FederalPracticeand

Procedure4478.3,at75354(2ded.2002).Weconsiderboththe

expresstermsandbroaderspiritofthemandatetoensurethatits

termshavebeenscrupulouslyandfullycarriedout.Ginett,11

F.3dat361(internalquotationmarksomitted).

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InSeijasII,afterhavingtwicebeenpresentedwiththeDistrict

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Courtseffortstoresolvethedifficultyofidentifyingclassmembers

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byissuinginflatedaggregatejudgments,weprovidedexplicit

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instructionsconclusivelyaddressingthematter.Westatedthatthe

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DistrictCourtshallconductanevidentiaryhearing,andifan

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aggregateapproachcouldstillnotwork,theDistrictCourtmust

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adoptanindividualizedapproach.SeijasII,493F.Appxat160

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(emphasesadded).TheDistrictCourt,however,didnotholdan

evidentiaryhearing,andwhenPlaintiffsexplainedthatthe

discoveryprocessrequiredfortheaggregateapproachwas

unworkable,insteadoffollowingourorderandadoptingan

individualizedapproachtodamages,theDistrictCourtresurrected

Plaintiffsoriginalclassdefinition.

OurdirectiveinSeijasIIwasclear.Eventhoughitdidnot

expresslyprecluderecertification,itcannotbereadtohave

permittedtheDistrictCourttodisregardourinstructionsand

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expandtheplaintiffclassesasasolutiontoaproblemforwhichwe

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hadalreadyprescribedaspecificresponse.Andwhereaswemay

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reconsiderourpriorrulings,wedososparinglyandonlywhen

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presentedwithcogentandcompellingreasons.UnitedStatesv.

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Quintieri,306F.3d1217,1230(2dCir.2002),cert.deniedsubnom.

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Donatov.UnitedStates,539U.S.902(2003);SotoLopez,840F.2d

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at168.Wediscernnosuchreasonsontherecordhere.Hence,we

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concludethattheDistrictCourterredinnotfollowingSeijasIIs

mandate.

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CONCLUSION
Fortheforegoingreasons,theDistrictCourtsordersdated

April24,2014,certifyingallholderclassesintheeightactionsat

issuehere,areVACATEDandthecasesareREMANDED.On

remand,theDistrictCourtmustfollowourspecificinstructionsin

SeijasII,493F.Appxat160.

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