S&P Wins Delay of Pennsylvania Lawsuit Over RatingsKaren Gullo
McGraw-Hill Cos. persuaded a judge to postpone Pennsylvania’s lawsuit over its Standard & Poor’s unit’s securities ratings while a judicial panel considers whether to transfer it and similar state suits to another court.
U.S. District Judge Christopher Conner in Harrisburg put the case on hold yesterday over objections by lawyers for Pennsylvania who are seeking to have the case returned to state court. McGraw-Hill moved the lawsuit, filed Feb. 5 in state court, to federal district court last month, saying the claims are governed by federal law.
Company lawyers asked Conner on March 11 to put the Pennsylvania case on hold, and asked a federal judicial panel on March 18 to consolidate all the state cases and transfer them to federal court in Manhattan for pretrial matters. State lawyers said Conner should first rule on their request to send the case back to state court.
The Pennsylvania case is one of 16 state complaints against S&P filed around the same time the U.S. Justice Department sued the company in Los Angeles federal court for allegedly disregarding the credit risks of mortgage bonds during the housing boom to win business rating securities.
Conner said the issue of whether to return cases to state courts is common to all the state lawsuits, and the matter should be left to the court that is eventually assigned all the cases.
“The court concludes that it would be a waste of judicial resources to proceed” with the Pennsylvania case “when the Judicial Panel on Multidistrict Litigation is considering the consolidation of 17 identical cases,” Conner said.
Not putting the case on hold would prejudice S&P, which would be forced to litigate 16 separate actions simultaneously, he said.
The judicial panel is expected to rule in 60 days to 90 days on whether and where to consolidate the cases. Conner halted the case until the panel decides.
The case is Commonwealth of Pennsylvania v. McGraw-Hill Cos., 13-605, U.S. District Court, District of Pennsylvania (Harrisburg).