By Mica Rosenberg and Marta Nogueira
NEW YORK/RIO DE JANEIRO (Reuters) – A U.S. appeals court on Tuesday put a class action case against Brazil’s state-controlled oil company Petroleo Brasileiro SA
The order granted a bid by Petrobras, as the company is commonly known, to postpone a case brought by investors seeking to recoup billions of dollars in losses stemming from a bribery, contract-fixing and political kickback scandal in Brazil.
The company had appealed a ruling by U.S. District Judge Jed Rakoff in Manhattan that certified two classes of plaintiffs, saying their claims are similar enough to be pursued as groups. Rakoff had set a trial for Sept. 19 but now the appeals court will have to rule on the class certification before that can go forward.
“We were eager to go to trial against Petrobras since we have an excellent case against them,” said Jeremy Lieberman of the law firm Pomerantz who is representing the shareholders. He said the appeal is on a technical issue and he is confident that the class certification will be upheld.
Petrobras said “it will continue to vigorously defend its rights,” in a securities filing about the court order on Tuesday.
The Brazilian firm is at the center of a massive corruption investigation in Brazil known as Operation Car Wash, which prompted U.S. shareholders to file the case after company shares lost value.
Prosecutors in Brazil have said more than $2 billion in bribes were paid over a decade, mainly to Petrobras executives from construction and engineering companies and there have been dozens of arrests in Brazil.
The scandal has contributed to a plunge in Petrobras’ market value to below $20 billion from nearly $300 billion fewer than eight years ago, Reuters data show.
One class of shareholders that had been certified by Rakoff applied to purchasers of various Petrobras securities from January 2010 to July 2015 and was being led by Universities Superannuation Scheme of Liverpool, England. The other bought debt securities from offerings in 2013 and 2014, and was led by North Carolina’s treasurer and the Employees’ Retirement System of Hawaii.
Class certification can make it easier for investors to recoup larger sums than if they sued individually, though it does not guarantee they will be recovered.
The appeal is In re: Petrobras Securities, case number 16-1914, in the U.S. Court of Appeals for the Second Circuit.
(Reporting by Marta Nogeira in Rio de Janeiro and Mica Rosenberg in New York; Additional reporting by Jonathan Stempel; Editing by Jonathan Oatis, Bernard Orr)