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Case: 11-2762Document: 43Page: 109/28/201140353078Oral Argument Requested11-2762-cvdIN THEUnited States Court of AppealsFOR THE SECOND CIRCUITNECA-IBEW HEALTH & WELFARE FUND, INDIVIDUALLY ANDON B EHALF OF A LL O THERS S IMILARLY S ITUATED ,Plaintiff-Appellant,—against—GOLDMAN, SACHS & CO., GOLDMAN SACHS MORTGAGE CO., DANIEL L.SPARKS, MICHELLE GILL, GS MORTGAGE SECURITIES CORP., KEVIN GASVODA,Defendants-Appellees,(CAPTIONCONTINUED ON FOLLOWING PAGE )ON APPEAL FROM THE UNITED STATES DISTRICT COURTFOR THE SOUTHERN DISTRICT OF NEW YORKBRIEF FOR DEFENDANTS-APPELLEESRichard H. KlapperTheodore EdelmanMichael T. Tomaino, Jr.David M.J. ReinSULLIVAN & CROMWELL LLP125 Broad StreetNew York, New York 10004-2498(212) 558-4000September 28, 2011Attorneys for Defendants-Appellees
Case: 11-2762Document: 43Page: 209/28/201140353078GS MORTGAGE SECURITIES CORP., GSAA HOME EQUITY TRUST 2007-3, GSAAHOME EQUITY TRUST 2007-4, GSAMP TRUST 2007-HE2, GSAMP TRUST 2007FM2, GSAA HOME EQUITY TRUST 2007-5, GSAA HOME EQUITY TRUST 2007-6,GSAA HOME EQUITY TRUST 2007-7, GSAA HOME EQUITY TRUST 2007-8, GSRMORTGAGE LOAN TRUST 2007-4F, GSAMP TRUST 2007-HSBC1, GSAMPTRUST 2007-HEI, STARM MORTGAGE LOAN TRUST 2007-4, GSAA HOMEE QUITY T RUST 2007-10, GSR M ORTGAGE L OAN T RUST 2007-5F, GSRMORTGAGE LOAN TRUST 2007-3F, GSR MORTGAGE LOAN TRUST 2007-OA2,SUNTRUST ROBINSON HUMPHREY, INC.,Defendants,THE POLICE AND FIRE RETIREMENT SYSTEMOF THECITY OF DETROIT,Intervenor.
Case: 11-2762Document: 43Page: 309/28/201140353078CORPORATE DISCLOSURE STATEMENTPursuant to Federal Rule of Appellate Procedure 26.1, DefendantsAppellees Goldman, Sachs & Co., Goldman Sachs Mortgage Company and GSMortgage Securities Corp. state that they are directly or indirectly wholly-ownedsubsidiaries of The Goldman Sachs Group, Inc. (―GS Group‖), which is acorporation organized under the laws of Delaware and whose shares are publiclytraded on the New York Stock Exchange. GS Group has no parent corporation,and to the best of GS Group‘s knowledge, no publicly held company owns 10% ormore of the common stock of GS Group.
Case: 11-2762Document: 43Page: 409/28/201140353078TABLE OF CONTENTSPageTABLE OF AUTHORITIES .ivTABLE OF ABBREVIATIONS . xiiiJURISDICTIONAL STATEMENT .1STATEMENT OF THE ISSUES PRESENTED .1STATEMENT OF THE CASE .2STATEMENT OF FACTS .4A.The Parties and Claims .4B.The Certificates NECA Purchased .5C.Alleged Misrepresentations in the Offering Documents .7SUMMARY OF ARGUMENT .8STANDARD OF REVIEW . 11ARGUMENT. 12I.THE DISTRICT COURT CORRECTLY RULED THAT NECADOES NOT HAVE STANDING TO BRING CLAIMS WITHRESPECT TO CERTIFICATES IT DID NOT PURCHASE. . 12A.NECA Does Not Have Standing to Bring a Claim RegardingOfferings from Which It Did Not Purchase Certificates. . 121.Courts Have Unanimously Held That Standing Must BeEstablished at Least at the Offering Level for MBS-RelatedClaims. 132.NECA Cannot Establish Standing by Reference to a CommonShelf Registration. . 163.The Non-MBS Cases Cited by NECA Are Inapposite. 19-i-
Case: 11-2762Document: 43Page: 509/28/201140353078PageB.C.II.NECA Has Standing to Bring Claims Based Only onCertificates That It Actually Purchased. . 211.Sections 11 and 12 Confer Standing Only for the SpecificSecurity Plaintiff Purchased. . 212.The Nature and Structure of MBS Require a Certificate-LevelStanding Inquiry. . 22A Determination of Standing Is Appropriate on a Motion toDismiss and Should Not Be Deferred. . 25THE DISTRICT COURT CORRECTLY RULED THAT NECAFAILED TO ALLEGE ADEQUATELY A ―COGNIZABLEINJURY‖ UNDER SECTION 11. . 27A.Under Section 11, Plaintiff Must Plead a Cognizable Loss. . 29B.NECA Has Not Suffered Any Actual Loss from MissedPayments Under the Certificates. . 30C.NECA Failed to Allege Facts Supporting a PermissibleInference That the Value of the Certificates Had Declined. 311.No Liquid Secondary Market Exists for the Certificates. . 332.NECA Failed to Allege Facts to Support Its Assertion That theValue of the Certificates Had Declined. . 34III.THE DISMISSAL MAY BE AFFIRMED ON THE ALTERNATEGROUND THAT NECA‘S CLAIMS ARE TIME BARRED. . 37IV.THE DISMISSAL MAY BE AFFIRMED ON THEALTERNATIVE GROUND THAT THE COMPLAINT FAILSTO ALLEGE ANY MATERIAL MISSTATEMENTS OROMISSIONS. . 43A.NECA Does Not Allege a Violation of Any Duty toDisclose. . 44B.Disclosures in the Offering Documents Render the AllegedMisrepresentations Not False or Misleading As a Matter ofLaw. . 47-ii-
Case: 11-2762Document: 43Page: 609/28/201140353078PageC.V.1.The Offering Documents Extensively Disclosed theOriginators‘ Underwriting Guidelines and Possible ExceptionsThereto. . 482.The Offering Documents Disclosed the Involvement ofIndependent Mortgage Brokers and Appraisers. . 513.The Offering Documents Did Not Make AnyMisrepresentations About Borrowers‘ Loan Documents. . 534.The Offering Documents Disclosed the Calculation of Loan-toValue Ratios. . 545.The Offering Documents Accurately Disclosed the Certificates‘Ratings. . 546.Defendants Disclosed That Goldman Sachs May Have HeldOther Investments. . 55NECA Did Not Adequately Allege Materiality. . 55THE DISTRICT COURT DID NOT ABUSE ITS DISCRETIONIN DENYING NECA LEAVE TO FILE A FOURTH AMENDEDCOMPLAINT. . 56CONCLUSION . 59-iii-
Case: 11-2762Document: 43Page: 709/28/201140353078TABLE OF AUTHORITIESPage(s)CASESAdirondack Transit Lines, Inc. v. United Transportation Union,Local 1582,305 F.3d 82 (2d Cir. 2002) . 37Alteram S.A. v. Beacon Hill Asset Management, LLC,No. 03 Civ. 2387 (LAK),2004 WL 367709 (S.D.N.Y. Feb. 27, 2004) . 32Ashcroft v. Iqbal,129 S. Ct. 1937 (2009) . 28, 35Babaev v. Grossman,312 F. Supp. 2d 407 (E.D.N.Y. 2004) . 41Bell Atlantic Corp. v. Twombly,550 U.S. 544 (2007) .28, 34, 37Blackman v. New York City Transit Authority,491 F.3d 95 (2d Cir. 2007) . 8, 11Blackmoss Investments Inc. v. ACA Capital Holdings, Inc.,No. 07 Civ. 10528,2010 WL 148617 (S.D.N.Y. Jan. 14, 2010) .11, 45, 46Blue Chip Stamps v. Manor Drug Stores,421 U.S. 723 (1975) . 21Boilermakers National Annuity Trust v. WaMu Mortgage PassThrough Certificates, Series AR1,748 F. Supp. 2d 1246 (W.D. Wash. 2010). 50Burch v. Pioneer Credit Recovery, Inc.,551 F.3d 122 (2d Cir. 2008) . 11Central States Southeast & Southwest Areas Health & WelfareFund v. Merck-Medco Managed Care, LLC,504 F.3d 229 (2d Cir. 2007) . 27-iv-
Case: 11-2762Document: 43Page: 809/28/201140353078Page(s)City of Ann Arbor Employees’ Retirement System v. CitigroupMortgage Loan Trust Inc.,703 F. Supp. 2d 253 (E.D.N.Y. 2010) .14, 22, 23Clarry v. United States,85 F.3d 1041 (2d Cir. 1996) . 15Comer v. Cisneros,37 F.3d 775 (2d Cir. 1994) . 27DeBenedictis v. Merrill Lynch & Co.,492 F.3d 209 (3d Cir. 2007) . 39Denny v. Barber,576 F.2d 465 (2d Cir. 1978) . 58Dodds v. Cigna Securities, Inc.,12 F.3d 346 (2d Cir. 1993) . 38Employees’ Retirement System of the Government of the VirginIslands v. J.P. Morgan Chase & Co., No. 09 Civ 3701 (JGK),2011 WL 1796426 (S.D.N.Y. May 10, 2011) .14, 15, 27Fait v. Regions Financial Corp., No. 10-2311-cv,2011 WL 3667784 (2d Cir. Aug. 23, 2011) . 52Fifty Associates v. Prudential Insurance Co. of America,450 F.2d 1007 (9th Cir. 1971) . 52Finkel v. Stratton Corp.,962 F.2d 169 (2d Cir. 1992) . 17First Nationwide Bank v. Gelt Funding Corp.,27 F.3d 763 (2d Cir. 1994) . 35, 51Fraternity Fund Ltd. v. Beacon Hill Asset Management LLC,376 F. Supp. 2d 385 (S.D.N.Y. 2005) . 32Garber v. Legg Mason, Inc.,537 F. Supp. 2d 597 (S.D.N.Y. 2008) . 45Grasty v. Amalgamated Clothing & Textile Workers Union,828 F.2d 123 (3d Cir. 1987) . 27-v-
Case: 11-2762Document: 43Page: 909/28/201140353078Page(s)Green v. Wolf Corp.,406 F.2d 291 (2d Cir. 1968) . 26Hoffman v. UBS-AG,591 F. Supp. 2d 522 (S.D.N.Y. 2008) . 25, 26In re AIG Advisor Group Securities Litigation,No. 06 CV 1625 (JG),2007 WL 1213395 (E.D.N.Y. Apr. 25, 2007) . 26In re Alstom SA Securities Litigation,406 F. Supp. 2d 402 (S.D.N.Y. 2005) . 38, 39In re American International Group, Inc. 2008 SecuritiesLitigation,741 F. Supp. 2d 511 (S.D.N.Y. 2010) . 20In re AOL Time Warner Securities & “ERISA” Litigation,381 F. Supp. 2d 192 (S.D.N.Y. 2004) . 27In re Broderbund/Learning Co. Securities Litigation,294 F.3d 1201 (9th Cir. 2002) . 29In re Citigroup Inc. Bond Litigation,723 F. Supp. 2d 568 (S.D.N.Y. 2010) . 20In re Countrywide Financial Corp. Securities Litigation,588 F. Supp. 2d 1132 (C.D. Cal. 2008) . 19, 20In re Enron Corp. Securities Litigation,206 F.R.D. 427 (S.D. Tex. 2002) . 27In re First Union Corp. Securities Litigation,128 F. Supp. 2d 871 (W.D.N.C. 2001) . 36In re Flag Telecom Holdings, Ltd. Securities Litigation,618 F. Supp. 2d 311 (S.D.N.Y. 2009) . 53In re IndyMac Mortgage-Backed Securities Litigation,718 F. Supp. 2d 495 (S.D.N.Y. 2010) .14, 52, 54-vi-
Case: 11-2762Document: 43Page: 1009/28/201140353078Page(s)In re IndyMac Mortgage-Backed Securities Litigation,No. 09 Civ. 4583 (LAK),2011 WL 2508254 (S.D.N.Y. June 21, 2011) . 38In re Initial Public Offering Securities Litigation,544 F. Supp. 2d 277 (S.D.N.Y. 2008) . 29, 41In re Integrated Residential Real Estate Ltd. PartnershipsSecurities Litigation,850 F. Supp. 1105 (S.D.N.Y. 1993) . 41In re Lehman Brothers Securities & ERISA Litigation,684 F. Supp. 2d 485 (S.D.N.Y. 2010) .15, 46, 55In re Merrill Lynch & Co. Research Reports SecuritiesLitigation,273 F. Supp. 2d 351 (S.D.N.Y. 2003) . 51In re Merrill Lynch Investment Management Funds SecuritiesLitigation,434 F. Supp. 2d 233 (S.D.N.Y. 2006) . 26In re Morgan Stanley Mortgage Pass-Through CertificatesLitigation, No. 09 Civ. 2137 (LTS),2011 WL 4089580 (S.D.N.Y. Sept. 15, 2011) . 54In re Morgan Stanley Technology Fund Securities Litigation,643 F. Supp. 2d 366 (S.D.N.Y. 2009) . 44In re Mutual Funds Investment Litigation,384 F. Supp. 2d 845 (D. Md. 2005). 29, 30In re N2K, Inc. Securities Litigation,82 F. Supp. 2d 204 (S.D.N.Y.) . 44In re Paracelsus Corp.,6 F. Supp. 2d 626 (S.D. Tex. 1998) . 22In re Salomon Smith Barney Mutual Fund Fees Litigation,441 F. Supp. 2d 579 (S.D.N.Y. 2006) . 26-vii-
Case: 11-2762Document: 43Page: 1109/28/201140353078Page(s)In re Thornburg Mortgage, Inc. Securities Litigation,No. CIV 07-0815 JB/WDS,2011 WL 2429189 (D.N.M. June 2, 2011) . 46In re Wachovia Equity Securities Litigation,753 F. Supp. 2d 326 (S.D.N.Y. 2011) .18, 22, 25In re Washington Mutual, Inc. Securities, Derivative & ERISALitigation,259 F.R.D. 490 (W.D. Wash. 2009) . 15In re Wells Fargo Mortgage-Backed Certificates Litigation,712 F. Supp. 2d 958 (N.D. Cal. 2010) . 15, 17, 18, 26In re XM Satellite Radio Holdings Securities Litigation,237 F.R.D. 13 (D.D.C. 2006) . 27J&R Marketing, SEP v. General Motors Corp.,549 F.3d 384 (6th Cir. 2008) .11, 45, 54Jackson National Life Co. v. Ligator,949 F. Supp. 200 (S.D.N.Y. 1996) . 29, 35Korwek v. Hunt,646 F. Supp. 953 (S.D.N.Y. 1986) . 39LC Capital Partners, LP v. Frontier Insurance Group, Inc.,318 F.3d 148 (2d Cir. 2003) . 38Lewis v. Casey,518 U.S. 343 (1996) . 13, 25Luminent Mortgage Capital, Inc. v. Merrill Lynch & Co.,652 F. Supp. 2d 576 (E.D. Pa. 2009) . 30, 35Maine State Retirement System v. Countrywide Financial Corp.,722 F. Supp. 2d 1157 (C.D. Cal. 2010) . passimMaine State Retirement System v. Countrywide FinancialCorp., No. 2:10-CV-0302 MRP,2011 WL 4389689 (C.D. Cal. May 5, 2011) .9, 21, 22, 24-viii-
Case: 11-2762Document: 43Page: 1209/28/201140353078Page(s)Massachusetts Bricklayers & Masons Fund v. Deutsche Alt-ASecurities, No. CV 08-3178,2010 WL 1370962 (E.D.N.Y. Apr. 6, 2010) . 15McMahan & Co. v. Wherehouse Entertainment, Inc.,65 F.3d 1044 (2d Cir. 1995) . 37Merck & Co. v. Reynolds,130 S. Ct. 1784 (2010) . 38Metz v. United Counties Bancorp,61 F. Supp. 2d 364 (D.N.J. 1999). 29, 30New Jersey Carpenters Health Fund v. Novastar Mortgage, Inc.,No. 08 Civ. 5310 (DAB),2011 U.S. Dist. LEXIS 36363 (S.D.N.Y. Mar. 31, 2011) . 15New Jersey Carpenters Health Fund v. Residential Capital, LLC,Nos. 08 CV 8781 (HB), 08 CV 5093 (HB),2011 WL 2020260 (S.D.N.Y. May 19, 2011) . 38New Jersey Carpenters Health Fund v. Residential Capital, LLC,No. 08 CV 8781 (HB),2010 WL 1257528 (S.D.N.Y. Mar. 31, 2010) . 46, 55New Jersey Carpenters Health Fund v. DLJ MortgageCapital, Inc., No. 08 Civ 5653 (PAC),2010 WL 1473288 (S.D.N.Y. Mar. 29, 2010) . passimNew Jersey Carpenters Vacation Fund v. Royal Bank ofScotland Group, PLC,720 F. Supp. 2d 254 (S.D.N.Y. 2010) . passimNewman v. Warnaco Group, Inc.,335 F.3d 187 (2d Cir. 2003) . 38Nicholas v. Davis,74 F. App‘x 131 (2d Cir. 2003) . 57Panther Partners, Inc. v. Ikanos Communications, Inc.,538 F. Supp. 2d 662 (S.D.N.Y. 2008) . 43-ix-
Case: 11-2762Document: 43Page: 1309/28/201140353078Page(s)Parker v. Columbia Pictures Industries,204 F.3d 326 (2d Cir. 2000) . 12, 56Plumbers’ Union Local No. 12 Pension Fund v. Nomura AssetAcceptance Corp.,632 F.3d 762 (1st Cir. 2011) . passimPublic Employees’ Retirement System of Mississippi v.Goldman Sachs Group, Inc., No. 09 CV 1110 (HB),2011 WL 135821 (S.D.N.Y. Jan. 12, 2011) . 15, 46Public Employees’ Retirement System of Mississippi v. MerrillLynch & Co.,714 F. Supp. 2d 475 (S.D.N.Y. 2010) . 14, 25Resnik v. Swartz,303 F.3d 147 (2d Cir. 2002) . 55Silverstrand Investments v. AMAG Pharmaceuticals, Inc.,C.A. No. 10–10470–NMG,2011 WL 3566990 (D. Mass. Aug. 11, 2011) . 46Staehr v. Hartford Financial Services Group, Inc.,547 F.3d 406 (2d Cir. 2008) . 39Stark Trading v. Falconbridge Ltd.,552 F.3d 568 (7th Cir. 2009) . 29, 30State Trading Corp. of India, Ltd. v. Assuranceforeningen Skuld,921 F.2d 409 (2d Cir. 1990) . 58Steckman v. Hart Brewing, Inc.,143 F.3d 1293 (9th Cir. 1998) . 11, 45Stichting Pensioenfonds ABP v. Countrywide Financial Corp.,No. 10-CV-07275 MRP,2011 WL 3558173 (C.D. Cal. Aug. 9, 2011) . 8, 22Tsereteli v. Residential Asset Securitization Trust 2006-A8,692 F. Supp. 2d 387 (S.D.N.Y. 2010) .52, 54, 55-x-
Case: 11-2762Document: 43Page: 1409/28/201140353078Page(s)Warth v. Seldin,422 U.S. 490 (1975) . 13Yu v. State Street Corp.,686 F. Supp. 2d 369 (S.D.N.Y. 2010) . 32STATUTES, RULES AND REGULATIONSU.S. Constitution art. 3 .3, 13, 15, 26Section 11 of the Securities Act of 1933, 15 U.S.C. § 77k(a) . passimSection 12 of the Securities Act of 1933, 15 U.S.C. § 77l . passimSection 13 of the Securities Act of 1933, 15 U.S.C. § 77m . 37, 38Section 15 of the Securities Act of 1933, 15 U.S.C. § 77o . passimSection 10 of the Securities Exchange Act of 1934,15 U.S.C. § 78j . 26, 27, 38, 3928 U.S.C. § 1658. 3817 C.F.R. § 229.303 . 11, 4517 C.F.R. § 229.512 . 1717 C.F.R. § 229.1100 . 1017 C.F.R. § 229.1110 . 4717 C.F.R. § 229.1111 . 45, 4717 C.F.R. § 230.415 . 1617 C.F.R. § 230.430B . 1647 Fed. Reg. 39,799 . 1670 Fed. Reg. 44,722 . 1670 Fed. Reg. 1506-01 . 44Fed. R. App. P. 32. 60-xi-
Case: 11-2762Document: 43Page: 1509/28/201140353078Page(s)Fed. R. Civ. P. 8. 37Fed. R. Civ. P. 9. 47Fed. R. Civ. P. 12 . 11, 51Fed. R. Civ. P. 23 . 26-xii-
Case: 11-2762Document: 43Page: 1609/28/201140353078TABLE OF ABBREVIATIONSCertificatesGSAA Home Equity Trust 2007-5 Class 1AV1 andGSAA Home Equity Trust 2007-10 Class A2AComplaint or TACThird Amended Complaint in NECA-IBEWHealth & Welfare Fund v. Goldman, Sachs & Co.,No. 08 Civ. 10783 (MGC) (S.D.N.Y.), datedMarch 31, 2010CDCivil Docket in NECA-IBEW Health & WelfareFund v. Goldman, Sachs & Co., No. 08 Civ. 10783(MGC) (S.D.N.Y.)JAJoint AppendixGoldman SachsGoldman, Sachs & Co.GSAA 2007-5GSAA Home Equity Trust 2007-5GSAA 2007-10GSAA Home Equity Trust 2007-10GSMCGoldman Sachs Mortgage Co.GS MortgageGS Mortgage Securities Corp.MBSMortgage-backed securityNECAPlaintiff-Appellant NECA-IBEW Health & WelfareFundNECA Br.Plaintiff-Appellant‘s Opening BriefSASpecial AppendixSECUnited States Securities and Exchange CommissionSecond AmendedComplaintSecond Amended Complaint in NECA-IBEWHealth & Welfare Fund v. Goldman, Sachs & Co.,No. 08 Civ. 10783 (MGC) (S.D.N.Y.), datedNovember 9, 2009Section 11Section 11 of the Securities Act of 1933-xiii-
Case: 11-2762Document: 43Page: 1709/28/2011403530Section 12Section 12 of the Securities Act of 1933Securities ActSecurities Act of 1933-xiv-78
Case: 11-2762Document: 43Page: 1809/28/201140353078JURISDICTIONAL STATEMENTThis Court has jurisdiction pursuant to 28 U.S.C. § 1291.STATEMENT OF THE ISSUES PRESENTED1.Did the district court correctly conclude that NECA lacks standing to sueunder Sections 11(a) and 12(a)(2) of the Securities Act of 1933 (a) withrespect to 15 offerings of mortgage-backed securities from which NECA didnot purchase any certificates, and (b) with respect to tranches of mortgagebacked securities other than those that NECA actually purchased?2.Did the district court correctly hold that NECA failed adequately to allege acognizable economic loss under Sections 11(a) and 12(a)(2) as to MBScertificates it purchased and held at the time of suit because NECA did notallege any facts to support its conclusory assertion that the value of thecertificates had decreased?3.Should the Court affirm the district court‘s dismissal of NECA‘s claims onthe alternative grounds that:a. all claims are barred by the statute of limitations because NECA was oninquiry, if not actual, notice of the conduct underlying its claims morethan one year before bringing this action, as evidenced by NECA‘s own
Case: 11-2762Document: 43Page: 1909/28/201140353078allegations in this action and in its earlier complaint in a similar MBSaction; orb. the Complaint failed to state any claim because the Complaint (i) did notallege that Defendants had a duty to disclose any of the allegedly omittedinformation; (ii) did not plead any actionable misrepresentation in therelevant offering documents, which provided investors with detailsregarding the underlying loans and disclosed the inherent risks of thoseloans; or (iii) did not allege the materiality of any allegedmisrepresentation?4.Did the district court act within its discretion when it denied NECA‘suntimely request to amend its Complaint for a fourth time?STATEMENT OF THE CASENECA-IBEW Health & Welfare Fund appeals from the dismissal ofits Third Amended Complaint in a putative securities class action involvingmortgage pass-through certificates. In a series of rulings, the United States DistrictCourt for the Southern District of New York (Cedarbaum, J.) scaled back theclaims on well-established standing grounds, and ruled that NECA failed—despitefour opportunities—to state a claim under Sections 11, 12(a)(2) and 15 of theSecurities Act with respect to MBS certificates that it purchased.-2-
Case: 11-2762Document: 43Page: 2009/28/201140353078NECA admittedly purchased only two certificates—GSAA HomeEquity Trust 2007-5 Class 1AV1 and GSAA Home Equity Trust 2007-10 ClassA2A—but its initial, first amended and second amended complaints purported toassert claims on behalf of a putative class of purchasers of all certificates in morethan seventeen separate MBS offerings. The district court followed numerousother recent decisions when it dismissed NECA‘s claims with respect to the fifteenMBS offerings from which NECA did not purchase any certificates on the groundthat NECA did not have Article III or statutory standing to bring those claims. Thedistrict court further held that NECA could bring claims only with respect to thespecific tranches, or Certificates, it did purchase. In the same ruling, the districtcourt found that NECA failed to allege a cognizable loss for the Certificates itpurchased and held at the time, but granted NECA an opportunity to amend itscomplaint with respect to those two offerings.NECA‘s Third Amended Complaint fared no better. The district courtdismissed NECA‘s Section 11 claims for failure to allege a cognizable loss. Thedistrict court observed that NECA had not suffered any actual damages because itstill held the Certificates and continued to receive its promised monthly principaland interest payments. The district court also found that NECA‘s conclusoryassertion that the Certificates had diminished in value was insufficient to plead acognizable loss in the unique context of MBS transactions.-3-
Case: 11-2762Document: 43Page: 2109/28/201140353078After the district court dismissed the Section 11 claims and denied itsmotion to certify that dismissal as a final judgment or for interlocutory appeal,N
11-2762-cv IN THE United States Court of Appeals FOR THE SECOND CIRCUIT NECA-IBEW HEALTH & WELFARE FUND, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, Plaintiff-Appellant, —against— GOLDMAN, SACHS & CO., GOLDMAN SACHS MORTGAGE CO., DANIEL L. SPARKS, MICHELLE GILL, GS MORTGAGE SECURITIES CORP., KEVIN GASVODA, Defendants-Appellees, (CAPTION CONTINUED ON FOLLOWING PAGE)
