NEW YORK (Reuters) - A U.S. appeals court on Wednesday rebuked the federal judge overseeing litigation stemming from Argentina’s sovereign debt default nearly 14 years ago, and threw out his expansion of one class action of bondholders suing the country.
By a 3-0 vote, the 2nd U.S. Circuit Court of Appeals in New York said U.S. District Judge Thomas Griesa erred in enlarging a euro-denominated bond class action to cover investors who held the bonds at any time, not just for a continuous defined period.
The appeals court ordered Griesa to make specific findings as to which bondholders are entitled to damages and how much, or else to consider awarding damages individually.
Circuit Judge Richard Wesley said the decision marked the fourth time the appeals court reviewed, and rejected, Griesa’s methods of calculating damages or defining bondholder classes.
He said the latest expansion would have made it too hard to determine who belonged in the class because the bonds are traded frequently, and because some investors may decide to “opt out,” or not join, any class action.
“Defining the precise class to which Argentina owes damages for its refusal to meet its bond payment obligations and calculating those damages have proven to be exasperating tasks,” Wesley wrote.
Wednesday’s decision is part of litigation by Argentina bondholders seeking full repayment after the country’s roughly $100 billion default at the start of 2002. Argentina defaulted again on some bonds in July 2014.
Plaintiffs led by Henry Brecher were seeking damages of about 68 million euros ($77 million) in the eurobond case.
“We’re very pleased with the court’s ruling,” Carmine Boccuzzi, a lawyer for Argentina, said in an interview. “The 2nd Circuit makes clear that plaintiffs cannot use the class mechanism to avoid their obligation to prove actual damages.”
Jason Zweig, a lawyer for the bondholders, was not immediately available for comment.
The case is Brecher v. Argentina, 2nd U.S. Circuit Court of Appeals No. 14-4385.