Today the Seventh Circuit deflected a barrage of darts from an order that certified class treatment of Commodity Exchange Act claims.
The plaintiffs alleged that Pacific Investment Management Company drove up the price of 10-year U.S. Treasury notes. PIMCO did the deed by buying more than 40 percent of the note inventory. The cornering strategy hurt the plaintiffs because they'd speculated on the price of the notes — guessing it would fall — by selling them short. The plaintiffs lost $600 million, they said, when they covered the difference between the "short" price — $100, say — and the market price on the delivery date — $150 or so, perhaps.
PIMCO could hardly contain its outrage at the district court's decision to grant class certification. It insisted that plaintiffs had to, but failed to, show that all class members sustained injury. Their Honors didn't agree:
Pressed at argument, PIMCO's counsel retreated, conceded or at least seemed to concede that the issue was not jurisdictional, and clarified that his argument was only that the class members lacked "statutory standing." Then he took back his concession, arguing that if any class member would have no jurisdiction over that class member, who would therefore not be bound by any judgment or settlement and so could bring his own suit for damages. That is to say that if a plaintiff loses his case, this shows that he had no standing to sue and therefore can start over. That would be an absurd result, and PIMCO need not fear it.
Kohen v. Pacific Investment Management Co. LLC, No. 08-1075, slip op. at 8-9 (7th Cir. July 7, 2009) (citations, including one involving ex-Governor Blagojevich, omitted).
The court also rebuffed PIMCO's "repeated, indeed obsessive, citations to the Supreme Court's decision in Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (2005), a case that does not involve class certification", noting that the tack "suggests desparation." Id. at 12.
Nor did the panel favor PIMCO's point that the interests of class members could lead them to prefer different arguments about when the effects of PIMCO's illegal conduct ended. Blawgletter doesn't understand the point and so can only say we agree with the outcome.