TURNER v. CREDIT SUISSE GROUP AG
1:23-cv-05874
S.D.N.Y.Jul 7, 2025Background:
- Multiple federal securities class actions were filed against Credit Suisse after its March 2023 collapse, with different plaintiffs seeking lead plaintiff status and class definitions.
- The lead plaintiff in the consolidated class action was chosen as Diabat, not Core Capital, after findings that Core Capital was subject to unique defenses related to the AT1 Bonds.
- Plaintiff Diabat’s class action focused on Credit Suisse American Depository Shares (ADS), certain company notes, and options, explicitly excluding AT1 Bonds, while Core Capital commenced a parallel action focused on AT1 Bondholder claims.
- Motions were filed: PWC moved to dismiss, the Credit Suisse (CS) Defendants moved to dismiss and to consolidate, and Diabat moved to certify a class.
- The opinion examined multiple motions, resolving all pending issues across both the Diabat and Core Capital actions; the cases were administratively consolidated for discovery and pre-trial, but not for trial or substantive claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| PWC Dismissal | PWC should be dismissed as they were voluntarily dropped by Core Capital | PWC filed a motion anyway after being voluntarily dismissed | Motion to dismiss denied as moot; PWC terminated as a party |
| Pleading Section 10(b)/Rule 10b-5 Claims | Core Capital relies on statements and pleadings parallel to Diabat’s, meets pleading standards | Claims are duplicative, fail to plead actionable misstatements, several defendants not served | Motion to dismiss granted for unserved/undisputed defendants, but viable 10b-5 claims survive as to several misstatements |
| Scienter & Loss Causation | Fraud was pled with sufficient particularity; losses tied to disclosures and write-down were proximately caused by fraud | Any losses stem from independent events, e.g., FINMA write-down, not fraud; risk was disclosed | Complaint plausibly alleges loss causation and scienter, survives dismissal |
| Class Certification (Diabat) | Plaintiff’s claims satisfy Rule 23 requirements; commonality, typicality, adequacy, and predominance established | Diabat not typical; damages model lacks class-wide applicability; distinct security price movements | Class certification granted for Diabat’s defined class excluding AT1 Bonds |
| Consolidation of Actions | Claims not identical; parallel action needed to protect AT1 Bondholders’ interests and avoid prejudice | Cases should be fully consolidated for efficiency as issues overlap | Consolidation denied for substantive claims, but granted administratively for discovery/pre-trial |
Key Cases Cited
- ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87 (2d Cir. 2007) (heightened pleading standard applies to securities fraud; Rule 9(b) and PSLRA)
- Tellabs, Inc. v. Makor Issues & Rts., Ltd., 551 U.S. 308 (2007) (pleading scienter standard in securities fraud cases)
- Ernst & Ernst v. Hochfelder, 425 U.S. 185 (1976) (scienter required for Section 10(b) claims)
- Basic Inc. v. Levinson, 485 U.S. 224 (1988) (fraud-on-the-market presumption of reliance)
- Comcast Corp. v. Behrend, 569 U.S. 27 (2013) (class damages model must match theory of liability for Rule 23)
- General Tel. Co. of Nw. v. EEOC, 446 U.S. 318 (1980) (Rule 23 requirements for class certification)