United States District Court, S.D. New York
Royal Park Investments SA/NV, Individually and on Behalf of All Others Similarly Situated, Plaintiff,
Deutsche Bank National Trust Company, as Trustee, Defendant.
MEMORANDUM & ORDER
J. NATHAN UNITED STATES DISTRICT JUDGE
Royal Park Investments SA/NV ("Royal Park") brings
this putative class action against Defendant Deutsche Bank
National Trust Company ("Deutsche Bank"), asserting
claims for breach of contract and breach of trust in
connection with Deutsche Bank's service as trustee often
residential mortgage-backed securities ("RMBS")
trusts of which Royal Park and the putative class members are
or were beneficiaries (the "Trusts"). Before the Court
is Royal Park's motion to certify this matter as a class
action pursuant to Federal Rules of Civil Procedure 23(a) and
23(b)(3), to appoint Royal Park as class representative, and
to appoint Royal Park's counsel, Robbins Geller Rudman
& Dowd LLP ("Robbins Geller"), as class
counsel. Dkt. No. 185. As set forth further below, because
the Court cannot conclude on the record before it that Royal
Park's proposed class, as currently defined, satisfies
the ascertainability requirement as recently explicated by
the Second Circuit Court of Appeals, Royal Park's motion
is DENIED without prejudice and with leave to renew the
motion so as to propose an appropriately redefined class.
Court assumes familiarity with the factual background in this
matter as set forth in its previous Orders.
the ten subject Trusts,  formed between 2006 and 2007, issued
bond-like instruments referred to as RMBS certificates (the
"Certificates"), in which Royal Park and other
investors acquired beneficial interests. Comp. ¶¶
4, 30, 33-35, 40-42. The Certificates are collateralized by
thousands of mortgage loans held in the Trusts, and
Certificate holders are entitled to the cash flows generated
by those loans. Id. ¶¶ 4 & n.l, 42. As
is typical in this context, the loans were transferred to the
Trusts by institutional entities known as "Depositors,
" which had in turn acquired them in large pools from
entities - often referred to as "Sponsors" or
"Sellers" - that had either purchased the loans
directly or indirectly from originating lenders and
aggregated them or originated the loans themselves.
Id. ¶¶ 36-37, 39-40.
Trusts are governed by Pooling and Servicing Agreements (the
"PSAs") running between, as applicable, the
Trustee, relevant Depositors, Sponsors and/or Sellers, and
other interested parties, as well as by certain related
agreements. Id. ¶¶ 5; 37-38, 44; see
also Id. Ex. A. (exemplar Pooling and Service Agreement
governing First Franklin Mortgage Loan Trust 2006-FF9). Among
other things, the PSAs set forth or incorporate by reference
certain representations and warranties (the
"R&Ws") made by the relevant Sponsors/Sellers
(or, as applicable, by other loan-originating or transferring
entities) as to the credit quality and characteristics of the
loans held by the Trusts and as to the accuracy of the data
conveyed about such loans, and require the warranting
entities to cure, substitute and/or repurchase any loans
failing to conform to the R&Ws. See, e.g., Id.
¶¶ 7-8 & n.3, 38, 47-48. The PSAs also
establish certain rights and duties of Deutsche Bank as
Trustee, to be discharged for the benefit of Certificate
holders. See, e.g., Id. ¶¶ 8-13, 44, 46.
Deutsche Bank's responsibilities include:
(i) the duty to provide prompt notice to the contracting
parties of breaches of R&Ws discovered by the Trustee
and, if such breaches are not timely cured, to enforce the
breaching warrantors' obligations to repurchase or
substitute the defective loans; and
(ii) the obligation to take certain actions upon discovery of
a so-called "Event of Default" by a "Master
Servicer" or "Servicer" (an entity designated
by the relevant PSA to service mortgage loans held in Trust),
including notifying the relevant Master Servicer or Servicer
and demanding timely cure, giving notice to Trust
beneficiaries of uncured Events of Default, taking further
remedial steps as necessary (such as termination of the
Servicer or institution of litigation), and, more broadly,
exercising the Trustees' rights and powers to protect
investors' interests as a "reasonably prudent
person" would to protect its own.
Id. ¶¶ 8-13, 41, 44-60
the Court's February 23, 2016 resolution of Deutsche
Bank's motion to dismiss, Royal Park is left with two
operative claims. One asserts that Deutsche Bank breached the
express contractual obligations set forth above. The other
avers that Deutsche Bank breached its common law duty of
trust to avoid conflicts of interest with the Trust
beneficiaries by, among other things, maintaining
"ongoing and prospective business relationships"
with many of the Sponsors/Sellers, Master
Servicers/Servicers, and others, whose own contractual
obligations it was required to enforce. Id.
¶¶ 19-24, 61, 206-219. Royal Park now seeks to
certify the following class to further prosecute these
All persons and entities who held Certificates in the
[Trusts] and were damaged thereby. Excluded from the class
are defendant, the loan originators, the Warrantors, the
Master Servicers and the Servicers to the [Trusts], and their
officers and directors, their legal representatives,
successors, or assigns, and any entity in which they have or
had a controlling interest.
See Plaintiff Royal Park's Memorandum of Law in
Support of Its Motion for Class Certification and Appointment
of Class Representative and Class Counsel, Dkt. No. 185
("Br.") at 1.
order to qualify for class certification, a plaintiff must
first demonstrate that the class it proposes satisfies the
four prerequisites of Federal Rule of Civil Procedure 23(a).
Those requirements are:
(1) the class is so numerous that joinder of all members is
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are
typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately
protect the interests of the class.
Fed. R. Civ. P. 23(a). These "four requirements -
numerosity, commonality, typicality, and adequate
representation - effectively limit the class claims to those
fairly encompassed by the named plaintiffs claims."
Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 349
(2011) (internal quotation marks omitted). "A class may
be certified only if, 'after a rigorous analysis, '
the ... court is satisfied that the prerequisites of [Rule
23(a)] are met." Roach v. T.L. Cannon Corp.,
778 F.3d 401, 405 (2d Cir. 2015) (quoting Comcast Corp.
v. Behrend, U.S. __, 133 S.Ct. 1426, 1432(2013)).
the requirements of Rule 23(a) are met, a plaintiff must then
establish that certification is appropriate for one of the
three reasons set forth in Rule 23(b). Here, Royal Park seeks
certification pursuant to Rule 23(b)(3), under which a court
must "find that the questions of law or fact common to
class members predominate over any questions affecting only
individual members, and that a class action is superior to
other available methods for fairly and efficiently
adjudicating the controversy." Fed.R.Civ.P. 23(b).
"The matters pertinent to these findings include: (A)
the class members' interests in individually controlling
the prosecution or defense of separate actions; (B) the
extent and nature of any litigation concerning the
controversy already begun by or against class members; (C)
the desirability or undesirability of concentrating the
litigation of the claims in the particular forum; and (D) the
likely difficulties in managing a class action."
particular importance here, independent of the express
requirements of Rule 23, the Court of Appeals has recognized
that the Rule includes '"an implied requirement of
ascertainability.'" Brecher v. Republic of
Argentina, 806 F.3d 22, 24 (2d Cir. 2015) (quoting
In re Initial Pub. Offering Sec. Litig, 471 F.3d 24,
30 (2d Cir. 2006) ("In re IPO")). As
discussed further below, that implied requirement mandates
that the class be "sufficiently definite so that it is
administratively feasible for the court to determine whether
a particular individual is a member." Brecher,
806 F.3d at 24 (internal quotation marks omitted).
party seeking class certification bears the burden of
establishing by a preponderance of the evidence that each of
Rule 23's requirements have been met." Johnson
v. Nextel Comma 'ns Inc.,780 F.3d 128, 137 (2d Cir.
2015); see also Dukes, 564 U.S. at 350 ("Rule
23 does not set forth a mere pleading standard. A party
seeking class certification must affirmatively demonstrate
his compliance with the Rule - that is, he must be prepared
to prove that there are in fact sufficiently
numerous parties, common question of law or fact, etc.")
(emphasis in original). Accordingly, although a Rule 23
inquiry should not "extend into a protracted mini-trial
of substantial portions of the underlying litigation, "
the "district judge must receive enough evidence, by
affidavits, documents, or testimony, " including expert
evidence as appropriate, to "be satisfied" that the
necessary elements of class certification have been
established. In re IPO,471F.3dat 41; see also