Bass, Berry & Sims attorney Chris Lazarini reviewed a court decision dismissing a putative class action for lack of Article III standing. To qualify as a “case” or “controversy,” the plaintiff must establish that it suffered an injury-in-fact fairly traceable to defendant’s conduct and likely to be redressed by the court’s ruling. Since the plaintiffs did not meet this criteria and standing did not exist when the case was originally filed, the case was dismissed.
Chris provided the analysis for Securities Online Litigation Alert (SOLA). The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the SOLA, please visit the SOLA website to sign up for the newsletter.
Sonterra Capital Master Fund, Ltd. vs. Credit Suisse Group AG, No. 15-CV-871 (S.D. N.Y., 9/16/19)
*Article III of the United States Constitution limits federal courts’ jurisdiction to resolving “cases” and “controversies.”
**To qualify as a “case” or “controversy,” a plaintiff must establish that it has suffered an injury-in-fact fairly traceable to defendant’s conduct and likely to be redressed by the court’s ruling.
***Standing must exist when the case is filed.
The Court dismisses this putative class action for lack of Article III standing and tells Plaintiffs any effort to amend would be futile. Sonterra, an investment fund, initially filed this case against several banks for their participation in an alleged scheme to fix the prices of derivatives based on the Swiss franc London InterBank Offered Rate, a daily interest rate benchmark reflecting the cost at which banks can borrow Swiss francs. Sonterra later filed its first amended complaint (“FAC”) through which it was joined by several other Plaintiffs. The district court dismissed the matter, but allowed Plaintiffs the opportunity to cure. In response, and joined by CalSTRS (the California State Teachers’ Retirement System) and others, Plaintiffs filed their second amended complaint (“SAC”). In the SAC, Plaintiffs disclosed Sonterra and other Plaintiffs that joined in the FAC had been dissolved, but had assigned their interests in the claims to a third party (“FLH”). Defendants moved to dismiss, arguing Plaintiffs lacked standing under Article III and the Court lacked subject matter jurisdiction under FRCP 12(b)(1).
Granting the motion, the Court first finds Sonterra and the other Plaintiffs who joined in the FAC did not have Article III standing to sue because they had been dissolved. The Court rejects Plaintiffs’ argument that FLH brought the case in their names. The Court notes the original complaint and FAC described Plaintiffs in the present tense and never mentioned FLH, and the SAC, which referenced FLH, did not allege that FLH was suing in the name of the dissolved entities.
Next, the Court examines whether FLH could be substituted into the action to pursue the purportedly assigned claims. While substitution is liberally allowed, the Court finds it cannot be done in this case because Sonterra did not have standing when the original complaint was filed. Without standing at the outset, the Court states, Sonterra’s original filing was a nullity which FLH’s substitution could not cure. For the same reason, the Court finds the joinder of CalSTRS and others with Article III standing does not create subject matter jurisdiction where it originally did not exist.
Finally, the Court signals to CalSTRS and the other existing Plaintiffs that yet another amendment would be futile on timeliness ground. The Court states the relation back doctrine would not apply; the original case being a nullity means there is nothing to relate back to. Further, the Court states, a new filing by those Plaintiffs would not be protected by American Pipe tolling, because tolling cannot be used to revive an action over which jurisdiction never attached.