Panel Consolidates S&P Rating Cases Before Judge Furman

The U.S. Judicial Panel on Multidistrict Litigation today granted Standard & Poor's motion to consolidate seventeen state law consumer fraud and securities actions brought against it in fifteen different states.  The cases, brought by the states' attorneys general, challenge S&P's "representations about its impartiality and objectivity in the rating of structured finance securities."  The panel moved the cases to the SDNY over the states' objections, rejecting the states' argument that centralizing the case in New York would inconcenience the states and be unprecedented for litigation of this type.

Even though we have never centralized litigation comprised solely of sovereign enforcement actions such as these, centralization is appropriate in light of the significant factual overlap among all actions. The inconvenience to S&P of litigating in numerous different districts, as well as state courts, is high, and centralization allows for all parties to obtain substantial efficiencies in dealing with common issues.  If the actions were properly removed to federal court – a question which we are neither empowered nor inclined to answer – then S&P could be subjected to conflicting pretrial schedules and, perhaps, discovery and other dispositive motion rulings. There is also the risk, despite plaintiffs’ current assurances of cooperation, that they may individually seek overlapping discovery or relitigation of rulings with which they disagree in the various courts. Relatedly, the plaintiffs’ promises of cooperation are belied by their filing of fifteen separate, albeit similar, briefs regarding the relatively narrow issue of centralization. Judicial efficiency will be enhanced by allowing a single judge – as opposed to fifteen – to rule on the remand motions and other pretrial matters, if necessary.

The case has been assigned to Judge Furman.