* U.S. says federal court lacks jurisdiction
* S&P accused of inflating ratings to win business
By Jonathan Stempel
Aug 2 The U.S. government, which is pursuing a
$5 billion lawsuit accusing Standard & Poor's of misleading
investors by inflating its credit ratings, on Friday asked a
federal judge move similar cases by 15 U.S. states and the
District of Columbia back to state courts.
In a filing in the U.S. District Court in Manhattan, the
U.S. Department of Justice said federal courts do not have
jurisdiction to hear the states' cases, which it said turn on
alleged violations of their respective laws against unfair
consumer practices or deceptive business practices.
The Justice Department said S&P had argued that the cases
belong in federal court because they touch on the meaning of the
First Amendment to the U.S. Constitution and a 2006 federal law
governing credit rating agencies.
But it said these issues touch on potential federal defenses
to the states' claims, and are not inherent in the claims
"Assertions of federal defenses cannot provide a basis for
removal of properly pleaded state-law claims," the Justice
S&P spokeswoman Catherine Mathis did not immediately respond
to a request for comment. The rating agency is a unit of
McGraw-Hill Financial Inc.
U.S. District Judge Jesse Furman in Manhattan has scheduled
an Oct. 4 hearing over the states' effort to move their lawsuits
back to various state courts, and S&P's effort to dismiss the
states' litigation altogether.
Consolidating the state cases may help S&P avoid multiple
judgments or conflicting rulings, and reduce its legal bills.
The lawsuits were consolidated before Furman in June to decide
whether to send them back to state court.
The cases before the judge represent the bulk of the 17
lawsuits state attorneys general have filed against S&P. Most
were filed on the same February day that the Justice Department
sued the rating agency for $5 billion.
The Justice Department won a ruling on July 17 by U.S.
District Judge David Carter in Santa Ana, California allowing it
to continue pursuing its own lawsuit over S&P's
The cases are In re: Standard & Poor's Rating Agency
Litigation, U.S. District Court, Southern District of New York,
No. 13-md-02446; and U.S. v. McGraw-Hill Cos et al, U.S.
District Court, Central District of California, No. 13-00779.