Defendant-appellant appeals from eight grants of class certification and eight final judgments of the United States District Court for the Southern District of New York (Griesa, J.). The district court granted class-wide, but not individualized, monetary relief to holders of defaulted bonds issued by the Republic of Argentina. Affirmed in part. Remanded in part.
The opinion of the court was delivered by: Barrington D. Parker, Circuit Judge
Before: LEVAL, B.D. PARKER, AND LIVINGSTON, Circuit Judges.
The Republic of Argentina appeals from eight final judgments of the United States District Court for the Southern District of New York (Griesa, J.) granting relief to eight classes consisting of holders of defaulted Argentine bonds. Argentina raises two issues. First, it contends that the district court, when certifying the classes, misapplied Rule 23 of the Federal Rules of Civil Procedure. Second, Argentina contends that the district court erroneously granted aggregate, class-wide, as opposed to individualized, relief. We agree with the second contention but not the first. Therefore, we affirm in part and remand in part.
During the 1990s, Argentina experienced a severe economic crisis resulting in its 2001 default on roughly $80 to $100 billion of sovereign debt. See Martin Feldstein, Argentina's Fall:
Lessons from the Latest Financial Crisis, 81 FOREIGN AFF. 8 (2002). Beginning in 2002, holders of the bonds, including the fourteen plaintiffs-appellees in this action, filed eight putative class actions and eventually moved for class certification.
Argentina resisted class certification on the ground (among others) that because overlapping counsel represented the eight classes, conflicts of interest existed with respect to the apportionment of any monetary judgments that might be awarded. The district court granted class certification, concluding straightforwardly that the requirements of Rule 23 had been met. The district court concluded that because of the substantial improbability that judgment creditors could ever reach assets belonging to Argentina, the possibility of real conflicts over the allocation of recoveries was "highly speculative." See Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1604 (stating that a foreign state is "immune from the jurisdiction of the courts of the United States and of the States" unless one of several statutorily defined exceptions applies). The court stated that if, at a later date, the conflict became more immediate, it could be revisited. Accordingly, the court certified eight classes of plaintiffs who purchased bonds prior to the date the class actions were filed and who held them continuously until the time of final judgment. The court appointed three firms as co-lead counsel in the eight cases.
Plaintiffs subsequently moved for summary judgment. No significant questions existed concerning liability because it was clear that Argentina had defaulted on the bonds and owed money to the bondholders. Complicated questions existed, however, as to which bondholders were class members and as to how much each class member could recover. Class members bought at different times. Some class members purchased their bonds from Argentina, while others bought their bonds in the secondary market. Some class members accelerated their bonds, while others did not.
Because of these complexities, class counsel contended that the district court had the authority to award aggregate judgments based on reasonable estimates of the total amount of damages the classes might ultimately recover. Accurate aggregate damages calculations could be arrived at, class counsel argued, with the assistance of expert testimony, particularly where, as here, a large proportion of the relevant information concerning the bonds could come from public filings. Once these estimations were made and the judgments were entered, class members could apply to receive individualized awards. Each would be required to establish that they continuously held their bonds and to prove the amount of their claim. Should this approach, for any reason, prove unworkable, Rule 60(b) would, according to class counsel, permit the court to revisit its previously authorized procedures. This approach, class counsel argued, would afford some possibility of relief to the many holders of small claims who lacked the incentive or ability to pursue claims individually.
Argentina, on the other hand, took the position that aggregate judgments were inappropriate because they would lead to bloated, inaccurate judgments based on insufficient information that could not be squared with Rule 23 or Rule 60(b). Just as in any other case, Argentina argued, judgments in class actions such as these actions must be established by individualized proof, not by global estimates based on expert opinions.
The district court agreed with class counsel. It concluded that it had the "power and discretion" to enter aggregate judgments in each case and was inclined to do so because they were based on "very good estimates." The court also noted that although the estimates were high, they could be revisited under Rule 60(b). Accordingly, the court granted plaintiffs summary judgment and agreed to enter aggregate class judgments in accordance with their estimates. However, the district court did not explain the basis for its calculations. This appeal *fn1 followed.
If the district court has applied the proper legal standards in deciding whether to certify a class, we review for abuse of discretion. Caridad v. Metro-North Commuter R.R., 191 F.3d 283, 291 (2d Cir. 1999), overruled on other grounds by Miles v. Merrill Lynch & Co. (In re Initial Pub. Offering Sec. Litig.), 471 F.3d 24, 40 (2d ...