297 F.R.D. 218
S.D.N.Y.2013Background
- Plaintiffs (investors and putative class) sued BNYM as trustee for Countrywide-backed mortgage-backed securities, alleging BNYM failed to enforce repurchase/curative obligations and protect investors across many Countrywide trusts.
- Plaintiffs originally sought class relief covering securities they did and did not purchase; the district court held plaintiffs lacked standing to assert claims for trusts they did not invest in and found the Trust Indenture Act (TIA) applied to trusts they did invest in.
- The district court certified the April 3, 2012 order for interlocutory appeal under 28 U.S.C. § 1292(b); both parties appealed different aspects and the Second Circuit accepted review.
- After appeal was docketed, plaintiffs sought leave to file a Third Amended Complaint adding factual allegations (discovered in discovery) to bolster class standing; BNYM consented to most amendments but opposed the class-standing additions.
- Plaintiffs argued recent Second Circuit precedent (NECA and related decisions) and newly discovered facts change the legal landscape and warranted an indicative ruling under Fed. R. Civ. P. 62.1 so the district court could state it would grant amendment if the Second Circuit remanded.
- The district court concluded it lacked jurisdiction to grant the motion because the order is on appeal, declined to issue an indicative ruling reconsidering the same issue on appeal, found the Second Circuit is the proper forum to decide the class-standing question, and deferred ruling until the appeal concludes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May the district court grant leave to amend while an interlocutory appeal of the order is pending? | Leave to amend should be freely granted; recent facts and law warrant amendment now. | Appeal divests the district court of jurisdiction over issues on appeal; district court cannot grant amendment on those issues. | Appeal divests the court of jurisdiction; court deferred ruling until appeal concludes. |
| Does Rule 62.1 permit an indicative ruling (stating it would grant amendment if remanded) on issues already on interlocutory appeal? | Rule 62.1 allows district court to state it would grant the motion if the court of appeals remands, aiding efficient resolution. | Indicative ruling would improperly ask district court to reverse its own decision while the same issue is before the appellate court and would impede the appellate process. | Rule 62.1 framework applies, but an indicative ruling reconsidering the same issue on appeal is inappropriate here; court declined to issue one. |
| Do newly discovered factual allegations and intervening Second Circuit decisions (NECA) alter class-standing analysis enough to avoid futility? | New facts and NECA materially change the legal landscape and support class standing; the appeal is being decided on a stale record. | The district decision imposed a categorical bar unrelated to pleading detail; NECA was available pre-appeal and the Second Circuit will review de novo. | Court found plaintiffs’ original standing ruling was categorical, NECA would not change need for appellate resolution, and plaintiffs could have raised NECA earlier; hence reconsideration now is improper. |
| Does the motion raise a "substantial issue" warranting a remand or indicative ruling? | The motion raises the same substantial class-standing issue the Second Circuit is considering and therefore merits indication. | The substantial issue is precisely what is before the Second Circuit; district court should not duplicate appellate review. | Class standing is a substantial issue, but the proper forum for resolution is the Second Circuit; no remand/indicative ruling will be issued. |
Key Cases Cited
- NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145 (2d Cir. 2012) (defines test for class standing in securities cases)
- N.J. Carpenters Health Fund v. Royal Bank of Scotland Grp., 709 F.3d 109 (2d Cir. 2013) (vacated and remanded in light of NECA)
- Griggs v. Provident Consumer Discount Co., 459 U.S. 56 (U.S. 1979) (interlocutory appeal generally divests district court of jurisdiction over appealed issues)
- Ruotolo v. City of New York, 514 F.3d 184 (2d Cir. 2008) (leave to amend may be denied if amendment would be futile)
- Ins. Co. of North Am. v. Pub. Serv. Mut. Ins. Co., 609 F.3d 122 (2d Cir. 2010) (de novo review standard for legal questions on appeal)
- N.Y. State Nat’l Org. for Women v. Terry, 886 F.2d 1339 (2d Cir. 1989) (duplicative concurrent consideration by district and appellate courts is wasteful)