Plumbers' Union Local No. 12 Pension Fund v. Nomura Asset Acceptance Corp.
632 F.3d 762
| 1st Cir. | 2011Background
- Plaintiffs are three union pension and welfare funds alleging Securities Act violations in connection with eight mortgage-backed securities trusts organized by Nomura Asset Acceptance Corp as depositor.
- Nomura Asset transferred mortgages to eight trusts; each trust issued certificates and worked with underwriters to sell them to investors.
- Two shelf registration statements (July 22, 2005 for AP1/AR1/AR2; April 19, 2006 for AF1/AF2/AR3/AR4/WF1) required prospectus supplements; offerings themselves were not filed until supplements updated the statements.
- Plaintiffs purchased certificates in two trusts (AP1 and AF1); Moody’s downgraded all eight trusts on November 13, 2007, reducing their value.
- The district court dismissed claims at the pleading stage for lack of standing and for statutory grounds, and no class was certified; the First Circuit addresses standing and the remaining merits, with some claims remanded for AF1 and AP1 based on underwriting practices.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue for trusts not purchased | Named plaintiffs lack a direct injury for six trusts they did not buy | Claims should be barred for those trusts under Article III standing | Six trusts dismissed; remaining claims narrowed to AP1/AF1 underwriting issues |
| Adequacy of claims under Sections 11 and 12(a)(2) | Allegations about underwriting/appraisal/rating misstatements are plausible | Many allegations are conclusory or lacking link to specific lenders | Some claims survive; underwriting-lending practices statements revived for AP1 and AF1; others dismissed; Section 15 control liability follows if 11/12 claims stated |
Key Cases Cited
- Barry v. St. Paul Fire & Marine Ins. Co., 555 F.2d 3 (1st Cir. 1977) (standing principles and class action scope importing personal stake)
- Blum v. Yaretsky, 457 U.S. 991 (U.S. 1982) (Article III injury requires personal participation; broad class actions require adequate stake)
- Lewis v. Casey, 518 U.S. 343 (U.S. 1996) (personal injury requirement governs standing limits in class actions)
- Ortiz v. Fibreboard Corp., 527 U.S. 815 (U.S. 1999) (class certification issues may be antecedent to standing concerns in some contexts)
- Amchem Products, Inc. v. Windsor, 521 U.S. 591 (U.S. 1997) (class action framework; important considerations for standing and certification)
- Gratz v. Bollinger, 539 U.S. 244 (U.S. 2003) (illustrates limitations of class actions when plaintiffs lack parity with class members)
- Payton v. Cnty. of Kane, 308 F.3d 673 (7th Cir. 2002) (identity of issues may permit class treatment despite limitations on named plaintiffs’ claims)
- Fallick v. Nationwide Mut. Ins. Co., 162 F.3d 410 (6th Cir. 1998) (permissible to permit class-wide claims where gravamen is common, with attention to individual stakes)