FTC Capital GMBH et al v. Credit Suisse Group AG et al
MEMORANDUM AND ORDER in case 1:11-cv-02613-NRB; granting in part and denying in part (1480) Motion to Dismiss in case 1:11-md-02262-NRB. For the reasons stated below, defendants' motion to dismiss is granted in part and denied in part. We gr ant the moving defendants' motion to dismiss for lack of personal jurisdiction, although such a result means we retain personal jurisdiction over the non-moving defendants. 1 We grant the defendants' motion to dismiss the putative Bondhold er class's claims because they are not efficient enforcers of the antitrust laws. While we deny the defendants' motion to dismiss on efficient enforcer grounds as to all other antitrust claims, those claims are circumscribed as set forth in this opinion. After applying the personal jurisdiction and efficient enforcer holdings in this opinion, the antitrust claims that remain are set out in the accompanying appendix. The Court anticipated before the briefing on this motion that its deci sion would be informative with regard to any proposed additional motion. Accordingly, any party wishing to pursue a motion previewed in June and derived from Gelboim should submit a pre-motion letter by January 6, 2017. Any letters in opposition to a ny such proposal should be filed by January 13, 2017. This Memorandum and Order resolves MDL docket entry 1480. (Signed by Judge Naomi Reice Buchwald on 12/20/2016) Filed In Associated Cases: 1:11-md-02262-NRB et al. (cf) Modified on 12/20/2016 (cf).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
LIBOR-Based Financial Instruments
MEMORANDUM AND ORDER
11 MDL 2262 (NRB)
This Document Applies to:
CASES LISTED IN APPENDIX
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE
Following an unusual, if not unique, appellate journey, we
once again address the antitrust claims in this multi-district
litigation (“MDL”) arising from the alleged manipulation of the
dismissed for lack of antitrust standing in March 2013.
LIBOR-Based Fin. Instruments Antitrust Litig., 935 F. Supp. 2d 666
(S.D.N.Y. 2013) (“LIBOR I”).
On this motion, defendants present two bases for dismissal of
the antitrust claims:
first, that this Court lacks personal
jurisdiction over some defendants; and second, that plaintiffs
lack antitrust standing because they are not efficient enforcers
of the antitrust laws.
Defendants have properly preserved their
request to move for dismissal on other bases after the resolution
of this motion.
For the reasons stated below, defendants’ motion to dismiss
is granted in part and denied in part.
We grant the moving
defendants’ motion to dismiss for lack of personal jurisdiction,
although such a result means we retain personal jurisdiction over
the non-moving defendants.1
We grant the defendants’ motion to
dismiss the putative Bondholder class’s claims because they are
not efficient enforcers of the antitrust laws.
While we deny the
defendants’ motion to dismiss on efficient enforcer grounds as to
all other antitrust claims, those claims are circumscribed as set
forth in this opinion.
The nature of LIBOR, its alleged manipulation, and the parties
in this case have been explored in our prior opinions.2
assume familiarity with the facts.
Whether a defendant is a movant or non-movant is case-dependent in this MDL.
Defendants’ Notice of Motion lists the relevant cases and movants. Notice of
Defs.’ Joint Mot. to Dismiss App’x B, ECF No. 1480.
E.g., In re LIBOR-Based Fin. Instruments Antitrust Litig., No. 11 MDL 2262
(NRB), 2015 WL 6696407, 2015 U.S. Dist. LEXIS 149629 (S.D.N.Y. Nov. 3, 2015)
(“LIBOR V”); In re LIBOR-Based Fin. Instruments Antitrust Litig., No. 11 MDL
2262 (NRB), 2015 WL 6243526, 2015 U.S. Dist. LEXIS 147561 (S.D.N.Y. Oct. 20,
2015) (“LIBOR IV”); In re LIBOR-Based Fin. Instruments Antitrust Litig., 27 F.
Supp. 3d 447 (S.D.N.Y. 2014) (“LIBOR III”); In re LIBOR-Based Fin. Instruments
Antitrust Litig., 962 F. Supp. 2d 606 (S.D.N.Y. 2013) (“LIBOR II”); LIBOR I,
935 F. Supp. 2d 666.
In LIBOR I, we dismissed the antitrust claims brought by
For a plaintiff to have antitrust standing,
it must allege that it (1) has experienced antitrust injury and
(2) is an efficient enforcer of the antitrust laws; we concluded
that the plaintiffs lacked standing because they failed to allege
an antitrust injury. As the Bondholders had only brought antitrust
claims, their dismissal effectively dismissed the Bondholders’
The Bondholder and Schwab plaintiffs appealed LIBOR I to the
Second Circuit, which dismissed the appeal sua sponte for lack of
appellate jurisdiction on the grounds that we had not issued a
final order and LIBOR I did not dispose of all claims in the MDL.
In re LIBOR-Based Fin. Instruments Antitrust Litig., No. 13-3565L, 2013 WL 9557843, at *1 (2d Cir. Oct. 30, 2013).
The Bondholders sought and were granted certiorari.
Supreme Court unanimously reversed, holding that the Bondholders’
right to appeal ripened when we dismissed their case, and not at
the eventual completion of the MDL proceedings.
of Am. Corp., 135 S. Ct. 897, 900 (2015).
Gelboim v. Bank
The Supreme Court
remanded to the Second Circuit for consideration of the merits.
The Second Circuit issued its merits decision in May 2016.
(“Gelboim”). The Circuit reversed LIBOR I, holding that plaintiffs
sufficiently pled an antitrust conspiracy3 and the first prong of
antitrust standing, that is, the existence of antitrust injury.4
It remanded to us for further consideration of the second prong of
antitrust standing, whether plaintiffs are efficient enforcers.
The defendants’ motion followed on a schedule set by the Court in
a letter order dated June 7, 2016.
III. Personal Jurisdiction
The Second Circuit’s holding that the plaintiffs adequately
pled a conspiracy requires an analysis of that conspiracy and the
consequent impact, if any, on whether this Court has personal
jurisdiction over the moving defendants.
This Court observes the
teaching of Gelboim and proceeds on the premise that the conspiracy
had an impact on price.
Plaintiffs make much of the Second
Circuit’s statement that their “allegations evince a common motive
to conspire -- increased profits and the projection of financial
soundness,” Gelboim, 823 F.3d at 781-82.
Plaintiffs focus on
“increased profits” as the object of the conspiracy and thus argue
Gelboim did not revive an alternative theory of antitrust violation, as
advanced by some plaintiffs, that defendants fixed the market for benchmark
rates. We have already rejected the viability of this theory. See LIBOR IV,
2015 WL 6243526, at *89-90.
Therefore, the attempt of some plaintiffs to
resuscitate this theory in the briefing on the present motions to dismiss was
The defendants filed a petition for a writ of certiorari on October 20, 2016.
that personal jurisdiction may be obtained over all panel banks
because of the banks’ economic activity in the United States.
Plaintiffs misread and overread Gelboim.
It is far from clear that Gelboim should be read to mean that
plaintiffs have sufficiently alleged “increased profits” as a goal
Id. at 782.
Regardless, the premise that the primary
goal of the conspiracy was to increase profits by lowering the
interest rate the banks had to pay when they were in the role of
borrower is not plausible, as Gelboim itself noted: “[C]ommon sense
dictates that the Banks operated not just as borrowers but also as
lenders in transactions that referenced LIBOR. . . . It seems
strange that this or that bank (or any bank) would conspire to
gain, as a borrower, profits that would be offset by a parity of
losses it would suffer as a lender.”
Id. at 783.5
court continued this observation as follows: “On the other hand,
the record is undeveloped and it is not even established that the
Banks used LIBOR in setting rates for lending transactions.”
However, the record is developed.6
rely on common knowledge or common sense.
Nor is there a need to
There were complaints
Contrary to plaintiffs’ argument that the profit-motivated goal should be
assumed simply because “a person intends the natural and probable consequences
of his actions,” Oct. 27, 2016 Hr’g Tr. 23:4-5 (“Tr.”), a conspiracy requires
an agreement to achieve a particular goal, which cannot be assumed.
We have always permitted the plaintiffs to rely on information resulting from
government investigations here and abroad in their submissions without requiring
brought on behalf of student loan holders who asserted that LIBOR
manipulation resulted in lowered LIBOR-based borrowing costs.
These complaints were dismissed precisely because under such an
arrangement the loanholders benefited and the defendant banks lost
LIBOR V, 2015 WL 6696407, at *2, *6.
Shakespeare’s advice, “Neither a borrower nor a lender be,” the
defendant banks are both.
motivated, it would have required all of the sixteen panel banks
to have made a parallel decision to be net borrowers of money over
the suppression period in the LIBOR-based lending market.
five years of voluminous discovery in both civil litigation and
government investigations, plaintiffs have not offered evidence
that the panel banks made such a decision or were in fact net
recognized and which meets the plausibility test is the projection
of financial soundness.
Without question, if implemented, a
conspiracy with such an object would, under Gelboim’s analysis of
formal amendments to complaints.
Plaintiffs have had the benefits of the
findings from “wide-ranging investigations of LIBOR since at least 2011 by the
Securities Exchange Commission, the Commodities Futures Trading Commission, the
Department of Justice, the New York State Attorney General, and numerous foreign
regulators, and  public settlements and plea agreements involving Barclays,
Citi, Deutsche Bank, JPMorgan, Rabobank, RBS, Societe Generale, UBS, and brokers
. . . .” LIBOR IV, 2015 WL 6243526, at *43.
antitrust injury, have an impact on price.
However, as we have
previously held, such an object is not sufficiently directed to
the United States such as would support the exercise of personal
jurisdiction over all panel banks.
Plaintiffs argue in the alternative that if this Court has
specific personal jurisdiction over at least one panel bank, it
follows that this Court has personal jurisdiction over all panel
plaintiffs have failed to establish that any defendant committed
an act in furtherance of the conspiracy in or directed at the
United States, this Court has only general personal jurisdiction
over certain panel banks as to the antitrust claims, and therefore
the conspiracy jurisdiction argument has no purchase.
Since the Supreme Court decided Daimler AG
v. Bauman, 134 S. Ct. 746 (2014), and the Second Circuit decided
Gucci America, Inc. v. Weixing Li, 768 F.3d 122 (2d Cir. 2014),
when the antitrust claims were winding their way up to the Supreme
Court on an issue of appellate procedure, defendants had no
opportunity to address this personal jurisdiction defense until
they properly preserved it in their Second Circuit briefing in the
spring of 2015.
Scope of the Conspiracy
The first step in evaluating personal jurisdiction in a
conspiracy case is to define the scope of the conspiracy, because
only acts taken pursuant to that conspiracy are jurisdictionally
For overt acts . . . are meaningful only if they are
within the scope of the conspiratorial agreement. If
that agreement did not, expressly or impliedly,
contemplate that the conspiracy would continue in its
efforts to [achieve a particular goal], then the scope
of the agreement cannot be broadened retroactively by
the fact that the conspirators took steps after the
conspiracy which incidentally had that effect.
consequence is that “when questions arise concerning matters such
as venue or the statute of limitations, which depend on the
formation of the agreement or the occurrence of overt acts, it
becomes crucial to determine the scope of the conspiratorial
United States v. Rosenblatt, 554 F.2d 36, 39 (2d Cir.
1977) (internal quotation marks and citations omitted).
This approach applies equally to civil cases and to questions
concerning personal jurisdiction. See, e.g., In re Sumitomo Copper
Litig., 120 F. Supp. 2d 328, 340, 342 (S.D.N.Y. 2000) (personal
jurisdiction attached in New York over foreign defendants because
“Plaintiffs allege that [the defendants] engaged in a scheme to
defraud the copper market, including copper traded on New York’s
Comex,” and “committed tortious acts in New York in furtherance of
As an example of the necessary analysis, in
the price-fixing case United States v. Socony-Vacuum Oil Co., 310
U.S. 150 (1940), the Supreme Court explained that absent “evidence
that the conspiracy was formed within the Western District of
Wisconsin, the trial court was without jurisdiction unless some
act pursuant to the conspiracy took place there.”
Id. at 252.
The Court then inquired into the “chief end and objective” of the
maintenance of Mid-Western prices at higher levels.”
Id. at 253.
Sales of price-fixed products were therefore jurisdictionally
relevant to the conspiracy:
[T]he objectives of the conspiracy would fail if
respondents did not by some formula or method relate
their sales in the Mid-Western area to the spot market
prices . . . [or] if respondents, contrary to the
philosophy of all the stabilization efforts, indulged in
price cutting and price wars. . . . In sum, the
conspiracy contemplated and embraced, at least by clear
implication, sales to jobbers and consumers in the MidWestern area at the enhanced prices. The making of those
sales supplied part of the continuous cooperation
necessary to keep the conspiracy alive.
Id. (internal quotation marks omitted).
With these facts, the
Court found that personal jurisdiction in the Western District of
Sales of price-fixed products are not a necessary element of a violative
price-fixing conspiracy. “[I]t is . . . well settled that conspiracies under
the Sherman Act are not dependent on any overt act other than the act of
It is the contract, combination or conspiracy, in restraint of
trade or commerce which [Section] 1 of the Act strikes down, whether the
concerted activity be wholly nascent or abortive on the one hand, or successful
on the other.” Socony-Vacuum Oil, 310 U.S. at 224 n.59 (internal quotation
Despite plaintiffs’ protestations at oral argument, it should
be uncontroversial that the jurisdictional relevance of an act
depends on the goal of the conspiracy.
In fact, plaintiffs
themselves implicitly recognize this principle, which is why they
exert such effort to define the conspiracy as one with a profit
See, e.g., Pls.’ Joint Mem. of Law in Opp’n 1, ECF No.
1524 (arguing that given the reference to “increased profits” in
jurisdictional analysis of Plaintiffs’ antitrust claims a wider
conspiratorial ‘data fraud’ claims”).
We reject plaintiffs’ attempt to read the Second Circuit’s
sufficiently alleged that the goal of the antitrust conspiracy was
the projection of financial soundness.
The Circuit’s examples of
the allegations that “evince a common motive to conspire” pertained
only to the banks’ reputational concerns, not an independent motive
to reap profits on persistently suppressed LIBOR by maintaining
one bank-wide position throughout the class period.
Id. at 782
More importantly, the Circuit went on to observe that a
marks and citations omitted); see also United States v. Milikowsky, 896 F. Supp.
1285, 1288 (D. Conn. 1994) (in a “conspiracy to fix prices for violation of the
Sherman Antitrust Act, the agreement itself constitutes the complete offense”),
aff’d, 65 F.3d 4 (2d Cir. 1995). Additional overt acts in furtherance of the
conspiracy are not needed.
operated not just as borrowers but also as lenders in transactions
that referenced LIBOR.
Banks do not stockpile money, any more
than bakers stockpile yeast.
It seems strange that this or that
bank (or any bank) would conspire to gain, as a borrower, profits
that would be offset by a parity of losses it would suffer as a
Id. at 783.
The only conclusion to be drawn is that the
Circuit meant “increased profits and the projection of financial
soundness” to describe collectively a single, reputation-based
In fact, taking the Circuit’s observation one step further,
the defendant banks could not have profited on transactions in the
This understanding of the Circuit’s observation is consistent with this Court’s
comments in LIBOR III and LIBOR IV about the motivations of defendants,
rejecting as implausible any suggestion that defendants engaged in the
persistent suppression of LIBOR to increase transactional profits. E.g., LIBOR
III, 27 F. Supp. 3d at 469 (“[I]t is implausible that all defendants would
maintain parallel trading positions . . . across the Class Period and that those
positions, in turn, motivated their daily LIBOR submissions. . . . The far more
likely explanation is that, to the extent all defendants engaged in parallel
manipulation of LIBOR, the conduct was motivated by reputational concerns, not
by the banks’ positions . . . .”) (internal alterations omitted). To be clear,
what we have found plausible is that defendants engaged in trader-based
manipulation were motivated by the prospect of increased profits. E.g., LIBOR
IV, 2015 WL 6243526, at *6 (“[I]ndividual traders received money, promotions,
and adulation based on their personal profit and loss. To gain profits or avoid
losses, therefore, a trader would sometimes ask his bank’s LIBOR submitter to
engage in what we call trader-based manipulation. The submitter would send a
false quote in whichever currency and tenor suited the trader’s book.”).
Profit-motivated trader-based manipulation, which was sporadic and would result
in both the inflation and deflation of LIBOR submissions, id. at *32, has
nothing to do with the persistent suppression conspiracy that is at issue in
the antitrust claims, Gelboim, 823 F.3d at 764.
course of a persistent suppression conspiracy unless each bank
borrowed more money using a LIBOR-based interest rate than the
amount it lent using a LIBOR-based interest rate throughout the
class period. The corollary is that for a transaction-based profit
motive to exist, the panel banks would have had to fix LIBOR with
the parallel intent to be a net borrower across the suppression
Both propositions are implausible.
In re Commodity Exchange, Inc., Gold Futures and Options
(S.D.N.Y. Oct. 3, 2016) (“Gold”), is instructive.
Like in this
case, the plaintiffs in Gold asserting antitrust claims alleged
both persistent suppression and trader-based manipulation of gold
prices (although these theories are not so labeled in that case).
Id. at *5-6.
Like in this case, the Gold court found a profit
motive in the trader-based conspiracy to be plausible, because
banks could “predictably  cause gold prices to rise or fall at
the Gold Fixing” and therefore “strategically buy low and sell
high in ways that other non-Fixing market participants could not.”
Id. at *19. In contrast, the Gold court found implausible a profit
motive in the persistent suppression of gold prices, which would
have required plaintiffs to show that defendants “held net short
gold futures positions on COMEX, which allowed them to profit when
the price of gold fell . . . .”
Id. at *18.
Even after evaluating
plaintiffs’ data showing that large bullion banks were “as a whole”
net short on gold futures and options throughout the class period,
the court concluded that “the data does not plausibly support an
allegation that any particular bank was net short at any particular
throughout the alleged conspiratorial period)” and that the data
fatally excluded defendants’ positions in other relevant markets.
Allegations that defendants were net borrowers in the LIBOR
persistent suppression conspiracy are even less availing.
in Gold, where the plaintiffs at least presented data showing an
aggregate net short position, the plaintiffs here are emptyhanded.
To the extent the complaints say anything about net
borrowing at all,9 they rely on information regarding interest
rates generally, not USD LIBOR specifically;10 draw conclusions
The relevant allegations are generally uniform across all of the complaints,
so we cite to representative examples in the following footnotes.
E.g., Mayor and City Council of Balt. v. Credit Suisse Grp. AG, Second
Consolidated Am. Compl. ¶ 78, No. 11-md-2262 (NRB), ECF No. 406 (“OTC Compl.”)
(“Illustrating Defendants’ motive to artificially suppress LIBOR, in 2009
Citibank reported it would make $936 million in net interest revenue if rates
would fall by 25 bps per quarter over the next year and $1.935 billion if they
fell 1% instantaneously. JPMorgan Chase likewise reported significant exposure
to interest rates in 2009: The bank stated that if interest rates increased by
1%, it would lose over $500 million. HSBC and Lloyds also estimated they would
earn hundreds of millions of additional dollars in 2008-2009 in response to
lower interest rates and would lose comparable amounts in response to higher
rates.”); Fed. Home Loan Mortg. Corp. v. Bank of Am. Corp., Am. Compl. ¶ 89,
No. 13-cv-3952 (NRB), ECF No. 61 (“Freddie Mac Compl.”) (“Bank of America
further stated that it held a notional amount of more than $50 billion in
receive fixed/pay floating interest-rate swaps that would mature in 2008 or
2009 with no offsetting pay fixed/receive floating interest-rate swaps.”).
suppression;11 and advance unsupported assertions.12
conceivable and plausible, Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 570 (2007), is that of plaintiffs FDIC and Freddie Mac,
who quote from Bank of America’s 2008 Annual Report that Bank of
America is “liability sensitive to LIBOR.” Fed. Deposit Ins. Corp.
v. Bank of Am. Corp., Am. Compl. ¶ 81, No. 14-cv-1757 (NRB), ECF
No. 23 (“FDIC Compl.”) (quoting Bank of Am., 2008 Annual Report,
Mac Compl. ¶ 89 (same).
Taken in context, however, this statement
is not sufficient. The full sentence in the Annual Report includes
E.g., OTC Compl. ¶ 78 (“Deutsche Bank reportedly earned more than $650 million
in profit during 2008 from trades tied to LIBOR because LIBOR was low.”) (citing
Jean Eglesham, Bank Made Huge Bet, and Profit, on Libor, Wall St. J., Jan. 10,
The cited article describes profits made not on LIBOR suppression but
rather on “trades pegged to the interest rates” such as bets regarding “the gap
between different rates related to Libor and the euro interbank offered rate”
and “each hundredth of a percentage point that the three-month U.S. dollar Libor
increased compared with the one-month U.S. dollar Libor.”
E.g., OTC Compl. ¶ 78 (“These banks collectively earned billions in net
revenues between August 2007 and May 2010 from suppressed USD LIBOR.”); Metzler
Inv. GmbH v. Credit Suisse Grp. AG, Corrected Second Am. Consolidated Compl. ¶
268, No. 11-md-2262 (NRB), ECF No. 438 (“Exchange-Based Compl.”) (“Because their
interest earning assets, as compared to their funding mix, generally included
more longer-term and more fixed-rate instruments, suppression of LIBOR would
tend to reduce Defendants’ funding costs more than it would reduce their
interest income. Thus, by suppression of LIBOR, Defendants would contribute to
increasing, maintaining, or mitigating deterioration of their net interest
margins.”); Freddie Mac Compl. ¶ 89 (“During this time, many of the Bank
Defendants were net borrowers, meaning that they financially benefited from
reductions in short-term interest rates.”).
an important modifier:
“We are typically asset sensitive to
Federal Funds and Prime rates, and liability sensitive to LIBOR.”
Bank of Am., 2008 Annual Report, at 88 (emphasis added).
paragraph goes on to say, “At December 31, 2008, the spread between
the three-month LIBOR rate and the Federal Funds target rate had
significantly widened since December 31, 2007. . . . As the Federal
Funds and LIBOR dislocation widens, the benefit to net interest
income from lower rates is limited.
Subsequent to December 31,
2008, the spread between the three-month LIBOR rate and the Federal
Funds target rate has narrowed.”
assistance to plaintiffs:
This paragraph offers no
as in Gold, it does not plausibly
support an allegation that Bank of America was a net borrower on
LIBOR-based products at a particular time, much less that Bank of
America was a net borrower throughout the class period, and even
less that all defendants were net borrowers throughout the class
Cf. Gold, 2016 WL 5794776, at *18.
When pressed at oral
argument for evidence that the banks were in fact net borrowers,
plaintiffs had none.
After oral argument, plaintiffs submitted an academic paper that suggested
that “banks mostly take pay-floating positions in interest-rate derivatives,
which are positions that gain in value from a surprise fall in interest rates.”
Carmody Letter 2, ECF No. 1638. As plaintiffs acknowledge, the study relates
only to U.S. banks, id. at 2 n.3; the study examines interest rates generally,
not LIBOR specifically; and LIBOR suppression does not mean that LIBOR
experienced a surprise fall, only that LIBOR was lower than it otherwise would
have been. The paper therefore does not save plaintiffs’ theory.
As to the necessary parallel intent to be net borrowers,
parallel intent existed or would be logical.
allegations and evidence -- is a conspiracy aimed at the projection
of financial soundness.14
The plaintiffs’ complaints are replete
with admissions from defendant banks that, for example:
The instructions at UBS to suppress USD LIBOR to stay
within the pack and err on the low side “were issued, at
least in significant part, because of concerns that if
UBS submitted higher LIBOR rates relative to other
banks, UBS could attract negative attention in the
In so acting, UBS “sought to avoid negative
media attention and, relatedly, sought to avoid creating
an impression that it was having difficulty obtaining
To the extent those directions from UBS
management “were motivated by reputational concerns,”
they “were inconsistent with the definition of LIBOR.”
OTC Compl. ¶ 69 (quoting Non-Prosecution Agreement between the
United States Department of Justice, Criminal Division, Fraud
Section and UBS AG, App’x A, Statement of Facts ¶ 100, Dec. 18,
2012 (“UBS DOJ SOF”)); and
[O]n September 22, 2008, a UBS employee wrote in an
electronic chat that “the real cash market isn’t trading
anywhere near LIBOR,” and he suspected the reason was
that Banks “undervalue LIBOR in times like this so as
Two prominent economists tasked with reforming LIBOR came to the same
conclusion about the motivations for LIBOR manipulation. See Darrell Duffie &
Jeremy C. Stein, Reforming LIBOR and Other Financial Market Benchmarks, 29 J.
Econ. Persp. 191, 191 (2015) (“Banks had incentives to announce biased interest
rates, for two reasons. First, in times of economic stress, reporting a lower
interest rate would signal that the bank is more creditworthy, all else equal.
Second, some of the bank’s trading positions would be more profitable if LIBOR
could be pushed one way or the other, depending on the position taken.”).
to not show where they really pay in case it creates
headlines about that bank being desperate for cash.”
Because  managers “sought to avoid what they believed
would be an inaccurate perception that Barclays was not
in good financial shape when compared to its peers,”
Barclays “engaged in this misconduct in order to reduce
the reputational risk associated with proper, higher
LIBOR submissions.” In other words, the DOJ explained
-- borrowing from Barclays employees’ comments in
internal communications -- “the purpose of the strategy
of under-reporting Dollar LIBORs was to keep Barclays’s
‘head below the parapet’ so that it did not get ‘shot’
Id. ¶ 71(c) (quoting Non-Prosecution Agreement between the United
States Department of Justice, Criminal Division, Fraud Section and
Barclays Bank PLC, App’x A, Statement of Facts ¶ 40, June 26, 2012)
Because the projection of financial soundness is the only
sufficiently pled goal of the persistent suppression conspiracy,
we adhere to our earlier ruling that the contacts relevant to
specific jurisdiction are only those in the “forum containing the
office from which a defendant determined, or transmitted, a false
LIBOR IV, 2015 WL 6243526, at *32.
In this context, plaintiffs entreat us to rely on the sales
of LIBOR-based financial products in the United States regardless
of the motive of the defendants.
Such reliance would be misplaced
since “defendants need not engage in any market transactions at
all . . . to affect the LIBOR fix . . . .”
Mem. & Order, 2016 WL
1558504, at *7 (S.D.N.Y. Apr. 15, 2016), ECF No. 1380.
is different from Socony-Vacuum Oil, in which the Supreme Court
reasoned that goal of the conspiracy -- the raising and maintenance
of high prices -- would have been vitiated had the defendants
engaged in “price cutting and price wars”; the result was that the
conspiracy necessarily involved selling price-manipulated products
into the jurisdiction.
310 U.S. at 253.
Here, the goal of the
defendants based their products on LIBOR and regardless of whether
any defendant bank increased or decreased the margin on their
The sales of LIBOR-based products are not
meaningful in a jurisdictional analysis because they were not
“within the scope of the conspiratorial agreement”; and the scope
of the agreement “cannot be broadened retroactively by the fact
incidentally had [a particular] effect.”
Grunewald, 353 U.S. at
Due Process Analysis
On a Rule 12(b)(2) motion to dismiss for lack of personal
jurisdiction, the plaintiff bears the burden of showing that the
court has jurisdiction over each defendant.
Metro. Life Ins. Co.
v. Robertson–Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996).
the court has jurisdiction over a defendant is “governed by a
combination of state law, federal statute, and principles of due
process,” but the due process analysis must be undertaken in every
In re Aluminum Warehouse Antitrust Litig., 90 F. Supp. 3d
219, 223 (S.D.N.Y. 2015).
Plaintiffs’ prima facie showing of jurisdiction “must include
an averment of facts that, if credited by the ultimate trier of
fact, would suffice to establish jurisdiction over the defendant.”
In re Terrorist Attacks on Sept. 11, 2001, 714 F.3d 659, 673 (2d
The court has “considerable procedural leeway.
may determine the motion on the basis of affidavits alone; or it
may permit discovery in aid of the motion; or it may conduct an
evidentiary hearing on the merits of the motion.”
Sec., Inc. v. Banco BRJ, S.A., 722 F.3d 81, 84 (2d Cir. 2013).
the absence of an evidentiary hearing, the court must “construe
the pleadings and affidavits in the light most favorable to
plaintiffs, resolving all doubts in their favor,” Porina v. Marward
Shipping Co., 521 F.3d 122, 126 (2d Cir. 2008), although it may
not “draw argumentative inferences in the plaintiff’s favor,”
Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d
Cir. 1994) (internal quotation marks omitted).
The due process analysis of specific personal jurisdiction
requires the court to evaluate first, whether the defendant has
purposefully established minimum contacts within the forum, and
unreasonable as to offend traditional notions of fair play and
Walden v. Fiore, 134 S. Ct. 1115, 1121
“Due process limits on [a court’s] adjudicative authority
principally protect the liberty of the nonresident defendant -not the convenience of plaintiffs or third parties.”
Id. at 1122.
affiliation between the forum and the underlying controversy,” and
therefore “the defendant’s suit-related conduct must have created
a substantial connection with the forum.”
LIBOR IV, 2015 WL
The relevant forum for the assessment of
minimum contacts is the United States as a whole.
Id. at *23.
We reject any suggestion that Bank Brussels Lambert v. Fiddler
Gonzalez & Rodriguez, 305 F.3d 120 (2d Cir. 2002), relaxed the
minimum contacts standard to a mere “relatedness” standard.
Brussels itself explained that, in that case, the jurisdictionally
relevant activities proximately caused the engagement of the law
firm at issue. Id. at 128.
We repeat our prior holding that
specific jurisdiction requires “no less than a ‘but for’ connection
between the defendant’s forum-directed activities and the claim.”
LIBOR IV, 2015 WL 6243526, at *28.
Therefore, any allegations of
forum-related contacts that “relate to” the antitrust conspiracy
but that are not causally connected to actual LIBOR submissions
are jurisdictionally insufficient.
Plaintiffs have failed to show that overt acts in furtherance
of the reputation-driven antitrust conspiracy occurred in or were
aimed at the United States.
Plaintiffs have inundated this Court
discovery, including some made at the eleventh hour immediately
prior to oral argument and even some made after oral argument.
While the volume makes it impossible to address every individual
allegation, generally speaking the submissions pertain to traderbased
activities -- everything but what the plaintiffs are actually
plaintiffs’ many jurisdictional allegations as true, we find them
Most of the allegations fail to address
submission from the United States; the few allegations that attempt
to do so are unavailing.
First, defendants’ sales and trades of LIBOR-based products
to plaintiffs in the United States are not within the scope of the
reputation-motivated antitrust conspiracy. Likewise, trader-based
allegations have no relevance here.
It bears repeating that
defendants’ sales of LIBOR-based products to plaintiffs in a forum
contract claims, unjust enrichment claims, and fraud claims, and
plaintiffs may seek recovery for damages under those theories.
Sunward Elecs., Inc. v. McDonald, 362 F.3d 17, 24 (2d Cir. 2004)
establish the court’s jurisdiction with respect to each claim
asserted”) (emphasis in original); e.g., LIBOR IV, 2015 WL 6243526,
at *31 (“[S]wap agreements support personal jurisdiction in the
plaintiffs’ home forums over claims (whether pleaded in contract,
relationships that they embody.”); id. at *37 (“[W]e also uphold
jurisdiction where [a] bond was issued” in such claims against
Second, plaintiffs allege that defendants aimed their conduct
at the United States under the Calder effects test.
effects test requires plaintiffs to show “purposeful direction,
where the defendant took intentional, and allegedly tortious,
actions expressly aimed at the forum.”
LIBOR IV, 2015 WL 6243526,
at *27 (internal quotation marks and citations omitted).15
of plaintiffs’ voluminous submissions persuade us to alter our
prior holdings that there is “no suggestion, and it does not stand
[persistent suppression] conduct at the United States or any
Plaintiffs’ allegation that defendants “intentionally directed their unlawful
conspiracy at the United States” is conclusory and thus insufficient to meet
their burden. Pls.’ Joint Mem. of Law in Opp’n 15.
particular forum state.”
Id. at *32.
As plaintiffs acknowledge,
it would be necessary to disturb that holding only if plaintiffs
sufficiently pled a profit-motivated conspiracy, Pls.’ Joint Mem.
of Law in Opp’n 14-15,16 which they have not, supra.
present case is to be contrasted with the antitrust cases on which
jurisdiction in the United States under the effects test. In those
cases, the court expressly or impliedly found that the conspiracy’s
countries such as the United States,” In re Vitamin C Antitrust
Litig., No. 05-CV-453 BMC JO, 2012 WL 12355046, at *12 (S.D.N.Y.
Aug. 8, 2012), thus making sales of price-fixed products relevant
-- which is not the case here.
See also In re Fasteners Antitrust
Litig., No. 08-MD-1912, 2011 WL 3563989, at *13 (E.D. Pa. Aug. 12,
2011) (co-conspirators agreed to “future price increases in North
America”); In re Cathode Ray Tube (CRT) Antitrust Litig., 27 F.
Supp. 3d 1002, 1012 (N.D. Cal. 2014) (co-conspirators “coordinated
Plaintiffs write, “While this Court previously declined to apply Calder to
assert personal jurisdiction for data fraud claims, concluding that persistent
suppression was not designed to ‘benefit Defendants’ trading position’ and ‘it
did not stand to reason, that foreign defendants aimed their manipulative
conduct at the United States or any particular forum state,’ Plaintiffs
respectfully submit that this Court’s conclusions on data fraud do not apply to
the antitrust allegations that Defendants had a ‘common motive to conspire’ to
suppress USD LIBOR for ‘increased profits,’ Gelboim, 823 F.3d at 781-82. Viewed
in that light, Plaintiffs satisfy every element of the Calder analysis for their
antitrust claims.” Pls.’ Joint Mem. of Law in Opp’n 14-15 (internal alterations
“suffer[ing] the brunt of the harm” in the United States alone is
sufficient for jurisdiction, Pls.’ Joint Mem. of Law in Opp’n 1920, under the due process inquiry “it is the defendant’s conduct
that must form the necessary connection . . . .”
Walden, 134 S.
Ct. at 1122; see also Mobile Anesthesiologists Chi., LLC v.
Anesthesia Assocs. of Houston Metroplex, P.A., 623 F.3d 440, 445
n.1 (7th Cir. 2010) (Calder focuses on “whether the defendant
intentionally aimed its conduct at the forum state rather than on
the possibly incidental and constitutionally irrelevant effects of
that conduct on the plaintiff.”).
Third, as we have already held, marketing activities are
“[T]hat a panel bank defendant engaged in LIBOR
‘marketing’ activities which reached a given forum state does not
mean that the same defendant is subject to personal jurisdiction
in that state on the basis of the defendant’s manipulation of
LIBOR. . . . It is incontrovertible that the importance of LIBOR
particular state, and plaintiffs do not plead otherwise.”
IV, 2015 WL 6243526, at *30.
Fourth, plaintiffs rely on allegations regarding panel banks’
subsidiaries and affiliates in the United States, but “have not
pleaded facts or submitted supporting material that suggests that
any panel bank’s United States-based affiliate played a role in
that bank’s alleged suppression of LIBOR.”
Mem. & Order, 2016 WL
1733463, at *3 (S.D.N.Y. Apr. 29, 2016), ECF No. 1396 (“April 29
plaintiffs must first show a “merging [of] parent and subsidiary
comparable to the corporate law question of piercing the corporate
Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S.
915, 930 (2011) (internal quotation marks omitted).
must then show that the defendants’ affiliates or subsidiaries
took jurisdictionally relevant acts consistent with the principles
we have set out for the panel bank defendants.
have done neither; they merely allege that defendants’ affiliates
LIBOR-based instruments in the United States.
in Opp’n 10.17
Pls.’ Mem. of Law
To reiterate, “the fact of significant activity,
For example, plaintiffs allege, “In a 2007 internal email sent to Barclays’
former CEO Robert Diamond, BCI [Barclays Capital Inc., a wholly owned subsidiary
of Barclays] Director and Executive Officer Jerry del Missier, who was based in
New York, wrote that the USD LIBOR submissions for all of the Panel Banks were
‘fantasy rates.’ Del Missier has admitted that he instructed subordinates to
submit artificially low USD LIBOR rates.” Pls.’ Supp. Statement of Additional
Jurisdictional Facts ¶ 26, ECF No. 1517 (citing Jill Treanor, Former Barclays
executive insists Bob Diamond instructed him to cut Libor, The Guardian, July
First, the “fantasy rates” comment offers nothing more than market color.
Second, the article on which plaintiffs rely makes clear that the direction to
submit low LIBOR rates came from CEO Bob Diamond, not from Del Missier. Id.
by a defendant or affiliates, in this country, combined with some
evidence of LIBOR manipulation in London, provides no indication
that the LIBOR determination and submission process occurred any
place other than outside the United States.”
April 29 Order, 2016
WL 1733463, at *3.
transmitted to Thomson Reuters in New York, as stated by former
Rabobank trader Lee Stewart in his plea allocution in United States
v. Stewart, Case No. 1:14-cr-00272-JSR (S.D.N.Y.), Tr. at 15:3-6,
Apr. 1, 2015, ECF No. 46 (“Stewart Tr.”).18
As defendants point
submitter, had personal knowledge of the location from which
Thomson Reuters received LIBOR submissions.19
Furthermore, it is
implausible that Thomson Reuters in New York would be in the role
(“In evidence to MPs following his resignation as chief operating officer of
Barclays, Del Missier was adamant that Diamond instructed him to cut the Libor
rate following a conversation with Paul Tucker, deputy governor of the Bank of
England. . . . Asked if he was acting on an instruction from Diamond, Del
Missier said: ‘Yes it [sic] was.’”).
Carmody Letter 1, Oct. 20, 2016, ECF No. 1600. Plaintiffs also rely on the
testimony of former Rabobank trader Takayuki Yagami, even though Yagami traded
products tied to Yen LIBOR.
Id. at 2.
We do not understand plaintiffs’
continued, stubborn refusal to comply with our simple admonition that only
allegations pertaining to USD LIBOR are potentially relevant to this case.
LIBOR IV, 2015 WL 6243526, at *45 (“We continue to reject the impermissible
inference that defendants’ reprehensible behavior in one product (or even many
products: Yen LIBOR, TIBOR, Swiss Franc LIBOR, EURIBOR, . . . and so on) suffices
to overcome deficiencies in the pleading of actionable bad behavior in USD
Stewart’s statement itself suggests that he lacked personal knowledge: “I
also understand that someone at Rabobank, first in London and later in Utrecht,
would submit a Rabobank LIBOR rate each day to Thomson Reuters in New York by
means of an electronic wire submission.”
Stewart Tr. at 15:3-6 (emphasis
of accepting LIBOR submissions at around 11:00 a.m. London time
(6:00 or 7:00 a.m. New York time).
In any event, an allegation
that the submissions were sent to New York, without additional
allegations that any person or entity did anything further with
the submissions in the United States, is insufficient to support
Laydon v. Mizuho Bank, Ltd., No. 12 CIV.
(“Communications that passed through and/or were stored within the
United States are insufficient to assert personal jurisdiction
over a defendant.”) (internal quotation marks omitted).
The few allegations that do address the forum in which a
defendant determined or transmitted a false LIBOR submission are
easily discounted, especially in light of the moving defendants’
declarations stating that they did not determine or transmit their
LIBOR submissions from the United States.
Kurtzberg Decl. Ex. 1,
ECF No. 1484; Connors Decl., ECF No. 1590.
Taking these allegations seriatim, plaintiffs misleadingly
suggest that one of Citibank’s USD LIBOR submitters requested a
submission from New York, Pls.’ Joint Mem. of Law in Opp’n 8, but
defendants have put forward a sworn document stating that this
individual was no longer Citibank’s USD LIBOR submitter at the
time that plaintiffs allege he was present in New York, Kurtzberg
Reply Decl., Ex. 2 at 10, ECF No. 1546.
Plaintiffs also allege that a senior JPMorgan executive in
New York directed JPMorgan’s LIBOR submissions, OTC Pls.’ Supp.
Mem. of Law in Opp’n 3, ECF No. 1508, but the substance of the
regarding the executive’s thoughts on LIBOR levels, see LIBOR IV,
2015 WL 6243526, at *60 (such individuals do not “purport to do
anything more than to state a sincere opinion based on publicly
Department of Justice to argue that UBS has “admitted that an
currencies stay low and instituted a policy that submissions for
all currencies stay within the pack.”
Opp’n 9 (citing UBS DOJ SOF ¶ 108).
Pls.’ Joint Mem. of Law in
UBS’s actual admission reads:
“[T]he manager of the Yen trading desk understood that this
direction to submit low LIBOR contributions was issued by the
senior manager of Group Treasury based in Stamford in order to
make the bank appear more creditworthy, and that it applied to all
UBS DOJ SOF ¶ 108.
to the breaking point.
Plaintiffs stretch the admission
The admission regards a Yen LIBOR trader’s
understanding as to the source of the policy, but the Statement of
Facts itself explains that the actual source of the policy was “an
ALM senior manager in Zurich.”
Id. ¶ 102.
Thus, the Statement of
Facts does not contradict UBS’s sworn statement to the Court that
“[n]o UBS employee in the United States determined or submitted
USD LIBOR to the British Bankers Association (‘BBA’) during the
relevant time, . . . 2005 to 2012.”
Connors Decl. ¶ 3, ECF No.
Finally, plaintiffs allege that New York-based entity Credit
Suisse First Boston made USD LIBOR submissions on behalf of Credit
OTC Pls.’ Supp. Mem. of Law in Opp’n 4.
The document on
which plaintiffs rely is nothing more than a high-level market
commentary e-mail from the Royal Bank of Scotland, sent to a host
of third parties, that makes a stray reference to Credit Suisse
Joint Decl. of Kovel & Hausfeld, Ex. 60 at 11, ECF
This document does not credibly support the allegation.
When the allegations are evaluated soberly, plaintiffs fail
to carry their burden of making a prima facie showing of minimum
Plaintiffs protest that “[a]t its core, Defendants’
Motion rests on the absurd premise that domestic victims of a
price-fixing cartel should be precluded from bringing suit in the
U.S. against the members of that cartel, some of whom are domiciled
in the U.S., for harm caused by the cartel’s conduct in or aimed
at the U.S.”
Pls.’ Joint Mem. of Law in Opp’n 3.
rhetoric is unconvincing. Of course, defendants that are domiciled
in the relevant forum are subject to general personal jurisdiction,
and neither the Court nor the non-moving defendants20 contest that
principle; it is black-letter law that harm experienced in a forum
is not sufficient to establish specific personal jurisdiction; and
the plaintiffs have not shown that the persistent suppression
conspiracy, as distinguished from the trader-based conspiracy, is
aimed at the United States.
We hold that plaintiffs have failed to carry their burden
under the first prong, purposeful availment, of the due process
analysis as to all moving defendants. Therefore, we need not reach
the second prong, whether the exercise of personal jurisdiction
would comport with traditional notions of fair play and substantial
We also need not reach defendants’ arguments regarding
lack of venue.
personal jurisdiction over them as to the relevant federal and
state antitrust claims, so we need not address pendent jurisdiction
as to the state antitrust claims.
In contrast, we decline to exercise pendent jurisdiction over
antitrust claims, whether they be federal or state, based on forum
selection clauses in particular contracts or based on the location
from which a bond was issued.
We repeat that not all claims
See supra note 1.
“against a counterparty may be brought in a contractually selected
The claim must relate to the particular contractual
Thus, for example, we will not uphold jurisdiction
over a counterparty for all fraud claims that a plaintiff might
bring against that counterparty on the basis of the forum selection
LIBOR IV, 2015 WL 6243526, at *34; see also Mem. & Order,
2016 WL 4773129, at *2 (S.D.N.Y. Sept. 12, 2016), ECF No. 1557.
Likewise, we will not uphold jurisdiction over a counterparty for
antitrust claims simply on the basis of a forum selection clause
or the location from which a bond was issued.
personal jurisdiction, we have personal jurisdiction over all of
jurisdiction on the basis of conspiracy have required plaintiffs
to (1) make a prima facie factual showing of a conspiracy; (2)
allege specific facts warranting the inference that the defendant
was a member of the conspiracy; and (3) show that the defendant’s
co-conspirator committed a tortious act pursuant to the conspiracy
in the forum.”
LIBOR IV, 2015 WL 6243526, at *34 (internal
quotation marks and alterations omitted).
Given that plaintiffs have not plausibly alleged that any
defendant committed an act pursuant to the pled conspiracy in the
United States, conspiracy jurisdiction does not apply here.
making this ruling, we do not express an opinion as to whether
conspiracy jurisdiction survives as a doctrine after the Supreme
Court’s ruling in Walden v. Fiore, 134 S. Ct. 1115 (2014), and
after recent opinions in the Southern District of New York, such
as In re Alumnium Warehousing Antitrust Litigation, 90 F. Supp. 3d
219 (S.D.N.Y. 2015), and Laydon v. Mizuho Bank, Ltd., No. 12 CIV.
3419 GBD, 2015 WL 1515358 (S.D.N.Y. Mar. 31, 2015).
personal jurisdiction arguments on the antitrust claims through
defendants’ availment of the United States courts.
precisely what types of appearances and filings qualify” to forfeit
a personal jurisdiction defense, it is evident that “not all do.”
Gerber v. Riordan, 649 F.3d 514, 519 (6th Cir. 2011).
touchstone is that to forfeit a personal jurisdiction defense, “a
defendant must give a plaintiff a reasonable expectation that it
will defend the suit on the merits or must cause the court to go
to some effort that would be wasted if personal jurisdiction is
Integral v. Pemex-Exploracion Y Produccion (“Pemex”), 832 F.3d 92,
102 (2d Cir. 2016). The rationale is that “defendants should raise
such preliminary matters before the court’s and parties’ time is
consumed in struggle over the substance of the suit.”
of Congo v. FG Hemisphere Assocs., LLC, 508 F.3d 1062, 1064 (D.C.
objections or defenses which were not known to be available at the
time they could first have been made, especially when it does raise
the objections as soon as their cognizability is made apparent.”
Holzsager v. Valley Hosp., 646 F.2d 792, 796 (2d Cir. 1981).
We initially dismissed plaintiffs’ antitrust claims in March
LIBOR I, 935 F. Supp. 2d 666.
Certain plaintiffs appealed
the dismissal; in October 2013, the Second Circuit sua sponte
dismissed the appeal for lack of appellate jurisdiction.
LIBOR-Based Fin. Instruments Antitrust Litig., Nos. 13-3565-L &
13-3636(Con), 2013 WL 9557843 (2d Cir. Oct. 30, 2013).
2014, the Bondholder plaintiffs appealed that decision to the
Supreme Court, presenting the question, “Is the right to appeal
secured by [28 U.S.C.] § 1291 affected when a case is consolidated
for pretrial proceedings in multidistrict litigation (or MDL)
authorized by 28 U.S.C. § 1407?”.
135 S. Ct. 897, 901 (2015).
Gelboim v. Bank of Am. Corp.,
That question was fully briefed by
Between the time the Second Circuit dismissed the appeal and
the completion of briefing in the Supreme Court, jurisdictional
defenses became available to the defendants:
the Supreme Court
decided Daimler, 134 S. Ct. 746, in January 2014 and the Second
Circuit decided Gucci, 768 F.3d 122, in September 2014. Defendants
raised Daimler-based jurisdictional defenses in the cases still
pending before this Court.
Kurtzberg Letter, Aug. 13, 2014, ECF
In January 2015, the Supreme Court reversed the Second Circuit
and remanded for a decision on the merits.
In April 2015 (before
merits briefing began in May 2015), defendants noted to the Second
personal jurisdiction as to all matters on appeal.”
Appellees’ Mot. to Consolidate Appeals 5 n.4, Gelboim v. Bank of
Am. Corp., 823 F.3d 759 (2d Cir. 2015) (No. 13-3565), ECF No. 221.
Additionally, in the merits briefing in May 2015, defendants noted
that “[t]wenty of the twenty-five actions on appeal are subject to
motions to dismiss for lack of personal jurisdiction pending in
the district court, . . . and in the remaining actions, certain
defendants intend to assert personal jurisdiction defenses before
the district court at an appropriate time, if necessary.”
Br. for Defs.-Appellees 28 n.23, Gelboim v. Bank of Am. Corp., 823
F.3d 759 (2d Cir. 2015) (No. 13-3565), ECF No. 464.
statements were sufficient to put the plaintiffs on notice that,
if the antitrust claims were to be reinstated, defendants would
move for dismissal on this basis.21
We firmly reject plaintiffs’ attempt to spin their own appeal as a “tactical
choice” by the defendants “to take the merits up on appeal . . . by affirmatively
plaintiffs can make is that the defendants should have preserved
their newfound personal jurisdictional defense as to the antitrust
claims in their opposition to plaintiffs’ petition for certiorari
on May 27, 2014, or in their opposition brief in the Supreme Court
on October 15, 2014, because those briefs are the only substantive
submissions that defendants had the opportunity to make in any
court in the Bondholder case between March 2013 and April 2015.22
We conclude that defendants’ failure to mention the personal
jurisdiction defense in their Supreme Court briefs in no way
created “a reasonable expectation that [they would] defend the
suit on the merits” or “cause[d] the court to go to some effort
that would be wasted if personal jurisdiction is later found
lacking,” Pemex, 832 F.3d at 102.
There is no reason to think
that the Supreme Court’s decision on the writ of certiorari would
have been affected by an inchoate personal jurisdiction defense
that had not been raised in or evaluated by a lower court.
asking the Second Circuit . . . to affirm on the merits,” OTC Pls.’ Suppl. Mem.
of Law in Opp’n 5. Defendants, of course, were not the appellants.
Plaintiffs argue that the Bondholder case returned to the district court
between the Second Circuit’s dismissal in October 2013 and the Bondholder
plaintiffs’ appeal to the Supreme Court in March 2014, and so the defendants
should have raised the defense then. Bondholder Pls.’ Supp. Mem. in Opp’n 23, ECF No. 1499. This argument is beyond comprehension. Until the Supreme
Court granted certiorari in June 2014, there simply was no Bondholder case: it
had been dismissed in the district court and dismissed in the Second Circuit.
Plaintiffs would have us create a rule requiring defendants to raise defenses
in cases that do not exist.
Furthermore, the Supreme Court granted certiorari limited to the
scope of the Second Circuit’s power to take an appeal in a
briefing on questions on which it has not granted certiorari.
Supreme Court Rule 24.1(a) (“[T]he brief may not raise additional
questions or change the substance of the questions” that have been
suggest that defendants should have (1) asked the Supreme Court to
remand so that the defendants could move the district court to
district court had already dismissed or (2) asserted the defense
despite the Supreme Court’s rules.
Opp’n 3, ECF No. 1499.
Bondholder Pls.’ Supp. Mem. in
These suggestions only serve to highlight
how groundless the plaintiffs’ position is.
In Pemex, the defendant lost in the district court and
appealed to the Second Circuit on several grounds, including for
lack of personal jurisdiction.
832 F.3d at 101.
After a new
appellant asked the Second Circuit to remand to the Southern
District so that the district court could consider the merits of
Once the Southern District ruled against the defendant-
appellant, the defendant-appellant reasserted its challenge of
personal jurisdiction. The Second Circuit held that the defendantappellant waived its personal jurisdiction defense because it had
affirmatively asked the Second Circuit to send the case back to
the Southern District in hopes of a favorable merits ruling below.
Defendants have done nothing of the sort here.
Supreme Court’s decision, defendants appropriately preserved the
subsequently moved on personal jurisdiction grounds in this Court
at the first opportunity they could post-Daimler, and so have not
forfeited the defense.23
Thus, we apply here our prior holding
that “[i]n light of the change in the law of personal jurisdiction
as applied to foreign banks under Daimler and Gucci, and finding
no prejudice to plaintiffs from a successive motion, we do not
LIBOR V, 2015 WL 6696407, at *18.
This ruling applies equally to defendant UBS, which did not waive its personal
jurisdiction defense as to the antitrust claims when it consented to personal
jurisdiction in New York as to other claims. Sunward Elecs., Inc. v. McDonald,
362 F.3d 17, 24 (2d Cir. 2004) (a plaintiff “must establish the court’s
jurisdiction with respect to each claim asserted”) (emphasis in original).
Similarly, defendants without New York branches did not forfeit their
personal jurisdictional defense in failing to assert the defense in 2012. As
defendants point out, Daimler cast significant doubt on other avenues of
establishing personal jurisdiction, such as the Second Circuit’s theory of
jurisdiction under Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88 (2d Cir.
2000). See Sonera Holding B.V. v. Cukurova Holding A.S., 750 F.3d 221, 224-26
(2d Cir. 2014).
Request for Jurisdictional Discovery
Despite the tomes of submissions, plaintiffs have not made a
“threshold showing that there is some basis for the assertion of
Daval Steel Prods. v. M.V. Juraj Dalmatinac, 718
F. Supp. 159, 162 (S.D.N.Y. 1989).
We therefore exercise our
discretion to deny jurisdictional discovery.
Frontera Res. Azer.
Corp. v. State Oil Co. of Azer. Republic, 582 F.3d 393, 401 (2d
(“[P]laintiffs’ submissions do not identify facts that indicate
determined or submitted LIBOR in forums that would allow this Court
to exercise personal jurisdiction.”).
“The four efficient enforcer factors are: (1) the directness
or indirectness of the asserted injury, which requires evaluation
of the chain of causation linking appellants’ asserted injury and
the Banks’ alleged price-fixing; (2) the existence of more direct
appellants’ damages claim is highly speculative; and (4) the
importance of avoiding either the risk of duplicate recoveries on
the one hand, or the danger of complex apportionment of damages on
Gelboim, 823 F.3d at 778 (quoting Associated Gen.
Contractors of Cal., Inc. v. Cal. State Council of Carpenters
(“AGC”), 459 U.S. 519, 540–45 (1983)) (internal quotation marks
These factors are meant to guide a court in exploring the
fundamental issue of “whether the putative plaintiff is a proper
party to perform the office of a private attorney general and
thereby vindicate the public interest in antitrust enforcement.”
Gelboim, 823 F.3d at 780 (internal quotation marks omitted). After
all, “[i]t is common ground that the judicial remedy cannot
encompass every conceivable harm that can be traced to alleged
AGC, 459 U.S. at 536.
Indeed, “[t]here is a
similarity between the struggle of common-law judges to articulate
a precise definition of the concept of ‘proximate cause,’ and the
determine whether a party injured by an antitrust violation may
recover treble damages.”
Id. at 535-36.
In both situations, the
court must draw a line beyond which a defendant will not be held
responsible for harm experienced by a plaintiff.
See id. at 534.
And in both situations, no black-letter rule exists; a court must
“exercise [its] judgment in deciding whether the law affords a
remedy in specific circumstances.”
Id. at 536-37.
efficient enforcer analyses require the exercise of judgment, the
task before us is particularly challenging because, as the Second
Circuit recognized in Gelboim, “there are features of this case
that make it like no other . . . .”
823 F.3d at 778.
In this regard, it is clear that the Second Circuit believed
that not all plaintiffs should survive the efficient enforcer
Of particular concern was the specter that “[r]equiring
the Banks to pay treble damages to every plaintiff who ended up on
the wrong side of an independent LIBOR-denominated derivative swap
would . . . not only bankrupt 16 of the world’s most important
financial institutions, but also vastly extend the potential scope
instruments have proliferated.”
Id. at 779.
Though the Circuit’s
preliminary views were offered in dicta, we are deferential to
In their papers on this motion, defendants note the failure
of plaintiffs to plead specifics about particular transactions.
While we likewise observe the manifest deficiencies in many of the
pleadings despite multiple opportunities to amend or supplement
them, we do not find that these deficiencies prevent us from
deficiencies may affect other antitrust issues or the adequacy of
the pleadings more broadly.
We consider each of the efficient enforcer factors in turn.
Under the first factor, courts examine “whether the violation
was a direct or remote cause of the injury.”
Gelboim, 823 F.3d at
The concern associated with remote causation -- particularly
in the present case -- is that defendants will face “damages
disproportionate to wrongdoing . . . .”
Id. at 779.
plaintiffs transacted with defendants directly.
See 2A Areeda &
Hovenkamp, Antitrust Law ¶ 335c(3) (2014) (“Beyond the actual
customers, most other plaintiffs would be classified as ‘remote’
and denied standing even though they have suffered injury-infact.”).
Plaintiffs who purchased products from non-defendants
but allege that defendants’ actions raised their prices are called
Some courts reject standing of umbrella
purchasers because “‘significant intervening causative factors,’
most notably, the ‘independent pricing decisions of non-conspiring
retailers,’” attenuate the causal connection between the violation
and the injury.
Gold, 2016 WL 5794776, at *13 (quoting Gross v.
New Balance Athletic Shoe, Inc., 955 F. Supp. 242, 245-47 (S.D.N.Y.
In such circumstances, “the defendants secured no illegal
benefit at [the plaintiffs’] expense,” and permitting recovery in
There exists a circuit split on whether umbrella purchasers have antitrust
standing. Gelboim, 823 F.3d at 778. Among the district courts there seems to
be broader agreement:
“The overwhelming majority of recent court decisions
that have addressed the viability of the ‘umbrella’ theory after [AGC] have
rejected ‘umbrella’ claims.” In re Vitamins Antitrust Litig., No. 99CIV5134,
2001 WL 855463, at *4 (D.D.C. July 2, 2001).
illegally-earned profits . . . .”
Mid-West Paper Prods. Co. v.
Cont’l Grp., Inc., 596 F.2d 573, 583, 586 (3d Cir. 1979).
Although “[t]he antitrust laws do not require a plaintiff to
have purchased directly from a defendant in order to have antitrust
standing,” In re Foreign Exch. Benchmark Rates Antitrust Litig.
(“FOREX”), No. 13 CIV. 7789 (LGS), 2016 WL 5108131, at *9 (S.D.N.Y.
Sept. 20, 2016), a determination of standing in an individual
antitrust case is highly fact-specific, AGC, 459 U.S. at 536-37.
In this case, we are persuaded to draw a line between plaintiffs
who transacted directly with defendants and those who did not.
plaintiff and a third party could, and did, easily incorporate
LIBOR into a financial transaction without any action by defendants
Their independent decision to do so breaks the chain
of causation between defendants’ actions and a plaintiff’s injury.
Counsel for the Bondholder plaintiffs effectively conceded as
much at oral argument.
Tr. 47:15-48:1 (“[I]magine that I walk
into . . . Citibank, and say I want to borrow $100,000.
negotiate over the terms and one of the terms that we put in is
LIBOR . . . .
[I]t is not proximately caused because we made the
independent decision, the banker and I, to put LIBOR in.”); id.
53:19-22 (“If we were just saying anybody who has LIBOR in their
price could come in and be a plaintiff in this case, then you would
have a real question of proximate causation.”).
to distinguish those hypothetical plaintiffs from the Bondholder
impermissibly broad “worldwide market for money,” whereas the
latter concerns only “the LIBOR-denominated bond market.”
This artificial market delineation is unrelated to the
causation question and has no analytical force.
Even if we
accepted that the relevant market should be “the LIBOR-denominated
defendants continue to face the same hurdle:
they made their own
decisions to incorporate LIBOR into their transactions, over which
defendants had no control, in which defendants had no input, and
from which defendants did not profit.
To hold defendants trebly
disproportionate to wrongdoing . . . .”
Gelboim, 823 F.3d at 779.
Therefore, where a plaintiff’s counterparty is reasonably
ascertainable and is not a defendant bank,25 a plaintiff is not an
Accordingly, the Bondholder plaintiffs lack
antitrust standing, and their antitrust claims are dismissed.
Eurodollar futures market.
Tr. 84:21-24 (“The [Chicago Mercantile
Exchange], legally, at its clearing house, takes the role of
intermediary[,] removing counter-party risk from the buyer and the
There remains an open question about the treatment of plaintiffs who
transacted with a subsidiary or affiliate of a panel bank. We do not resolve
that question here, but note that the parties should consider this question at
the class certification stage.
So, the CME is the counter-party to both contracts.”).
Therefore, the approach utilized by Judge Schofield in FOREX is
In FOREX, Judge Schofield examined the portion of
the FX market that the defendants controlled, concluding that the
causation factor had been met because of the allegation that the
defendants “dominated the FX market with a combined market share
of over 90% as significant participants in both OTC and exchange
2016 WL 5108131, at *9 (internal alterations
This approach essentially may be viewed as a proxy for
the question of direct causation:
if defendants “control[led]
only a small percentage of the ultimate identified market,” then
Gelboim, 823 F.3d at 779.
standard by alleging that from October 2008 through December 2010,
all 16 panel bank defendants or their affiliates were “large
traders” of Eurodollar futures and options, and large traders
comprised 70 to 90 percent of that market.
Kovel & Hausfeld Joint
Decl. Ex. 1, ECF No. 1510; Lovell & Kovel Letter 3 n.2, ECF No.
We reject plaintiffs’ attempt to turn the question of market control into a
question of “price control . . . over . . . the entire Eurodollar futures market
by virtue of their authorship of LIBOR,” Exchange-Based Pls.’ Mem. of Law in
Opp’n 7, ECF No. 1504.
The thrust of the umbrella purchaser concept is to
distinguish between those plaintiffs who dealt with price-fixing defendants
directly and other plaintiffs whose prices were affected by price-fixing
defendants’ actions. Plaintiffs’ approach would nullify the causation question
in all antitrust cases.
1650. They neglected to mention that the number of defendant banks
was dwarfed by the total population of over 2,900 large traders in
that market during the same time period.
ECF No. 1661.27
Gluckow Letter 5 n.12,
Even so, it remains possible that the panel banks,
which included some of the world’s largest financial institutions,
together controlled a large percentage of the market, measured by
number of trades or by dollar amount.
As of now, there is simply
not a sufficient record on the issue of market control.
we are skeptical that the Exchange-Based plaintiffs can ultimately
show that the defendants controlled the market, we defer that
determination to a later stage.
Existence of More Direct Victims
Under this factor, courts examine whether there exists a class
that suffered an antitrust injury more directly than the present
class and therefore would be more suited to bring an antitrust
AGC, 459 U.S. at 542.
The Second Circuit expressly recognized that even though
“appellants allege status as consumers,” in this case “directness
may have diminished weight” because “one peculiar feature of this
The Court was not informed of this fact until defendants’ letter of December
2, 2016, which is particularly striking given the Court’s question on this very
issue at oral argument on October 27, 2016. Tr. 102:22-103:14 (“THE COURT: How
many large traders are there all together[?] . . . [I]f there were 400 large
traders and there are 16 banks, the percentage is low in terms of the analysis
that was utilized in FOREX. That’s what I am trying to learn. [COUNSEL FOR
EXCHANGE-BASED PLAINTIFFS]: We don’t know what the percentage is. It may be
low , it might not be low.”).
case is that remote victims (who acquired LIBOR-based instruments
from any of thousands of non-defendant banks) would be injured to
the same extent and in the same way as direct customers of the
Gelboim, 823 F.3d at 779.
We agree that this factor must carry diminished weight.
other result would vitiate the first prong of causation.
Daniel v. Am. Bd. of Emergency Med., 428 F.3d 408, 443 (2d Cir.
2005) (“[T]he weight to be given the various [efficient enforcer]
factors will necessarily vary with the circumstances of particular
While “the wrongdoer shall bear the risk of the uncertainty
which his own wrong has created,” In re DDAVP Direct Purchaser
Antitrust Litig., 585 F.3d 677, 689 (2d Cir. 2009), at the same
time “highly speculative damages is a sign that a given plaintiff
is an inefficient engine of enforcement,” Gelboim, 823 F.3d at
The Second Circuit expressed skepticism that some of the
present antitrust claims could survive this factor, opining, “Any
damages estimate would require evidence to support a just and
reasonable estimate of damages, and it is difficult to see how
appellants would arrive at such an estimate, even with the aid of
In evaluating standing in price-fixing cases, damages may be
unduly speculative for several reasons.
One reason is that the damages claim is conclusory.
AGC, 459 U.S. at 542-43 (damages were speculative because there
was “no allegation that any collective bargaining agreement was
terminated as a result of the coercion, no allegation that the
aggregate share of the contracting market controlled by union firms
has diminished, no allegation that the number of employed union
members has declined, and no allegation that the Union’s revenues
in the form of dues or initiation fees have decreased”).
A second reason is that the injury is so far down the chain
of causation from defendants’ actions that it would be impossible
to untangle the impact of the fixed price from the impact of
intervening market decisions.
This rationale tends to dovetail
with the first factor of direct causation.
E.g., Reading Indus.,
Inc. v. Kennecott Copper Corp., 631 F.2d 10, 13 (2d Cir. 1980).
A third reason is that, due to external market factors, there
is no relationship between the fixed price and the price that the
plaintiffs ultimately paid.
E.g., Gold, 2016 WL 5794776, at *14
(“[T]he Court is concerned that at least some Plaintiffs’ alleged
injuries are highly speculative. . . . Plaintiffs cannot deny that
other market variables may have affected gold prices before and
after the PM fixing.”).
In Gelboim, the Second Circuit offered a fourth:
be speculative where the non-fixed components of a transaction
were heavily negotiated between the parties in relation to the
823 F.3d at 780.
To summarize, plaintiffs’ damages theory will not be held to
be speculative if it is credible.
The relevant question is
“whether the putative plaintiff is a proper party to perform the
office of a private attorney general and thereby vindicate the
public interest in antitrust enforcement.”
The question is
not one of damages calculation, which forms the essence of the two
broad arguments advanced by defendants:
first, that the parties
would need to reconstruct but-for LIBOR, and second, that damages
would need to be netted.
As to the first argument, the estimation
of but-for LIBOR is the job of the parties’ competing experts.
While this case might involve more relevant numbers than most -numbers “for each of 16 panel banks across 15 maturities, for a
total of 240 quotes per business day,” Defs.’ Joint Mem. of Law
18, ECF No. 1481 -- that is not a sufficient reason to deem the
As to the second argument, we agree that plaintiffs may
ultimately recover only to the extent of their net injury, given
that plaintiffs may well have benefited from LIBOR suppression in
the same transaction or in a different transaction.
(S.D.N.Y. 1987) (“[A]n award of damages should put a plaintiff
forward into the position it would have been [in] ‘but for’ the
defendant’s violation of the law. . . . An antitrust plaintiff may
recover only to the ‘net’ extent of its injury; if benefits accrued
to it because of an antitrust violation, those benefits must be
deducted from the gross damages caused by the illegal conduct.”)
(quoting L.A. Mem’l Coliseum Comm’n v. Nat’l Football League, 791
F.2d 1356, 1367 (9th Cir. 1986)).
Again, however, netting in and
of itself does not render the damages unduly speculative.
We now turn to an analysis of whether the different groups of
plaintiffs have articulated a non-speculative theory of damages
As discussed below, there are issues with each group
To the extent that any plaintiffs sue under
transactions not specifically addressed herein, the principles of
each category of transaction should be applied accordingly.
Non-Negotiated Transactions Such As Bonds
The first group of plaintiffs is those who entered into nonnegotiated transactions such as bonds.28
These plaintiffs argue
disagree, as the effect of a change in LIBOR cannot be isolated in
Although the Bondholder class -- comprised of plaintiffs who did not transact
directly from defendants -- is dismissed under the first factor of causation,
there remain plaintiffs within the OTC class who allege that they purchased
bonds directly from defendants, such as plaintiff SEIU. The analysis in this
section pertains to such plaintiffs.
the same way as the overcharge of a typical price-fixed product
such as a book, as explained in the following paragraph.
We have already made two fundamental observations regarding
bonds consistent with “common economic experience,” Twombly, 550
U.S. at 565.
First, the purchase price of a bond is “equal to the
payments . . . .”
LIBOR IV, 2015 WL 6243526, at *70.
LIBOR was suppressed at the time the bondholder purchased the bond,
then both the expected future interest payments and the purchase
price of the bond would have reflected that lower LIBOR level.
That is, for a bond, the future interest payments equal the
interest rate (LIBOR plus perhaps a spread) multiplied by the
notional value of the bond.
If the notional value is held
constant, and if the spread represents issuer risk that is not
affected by LIBOR, Tr. 83:1-7, then when LIBOR falls the purchase
price must fall correspondingly; any other result would defy basic
Generally speaking, this interaction would
The Schwab plaintiffs submitted declarations arguing the following:
I do not agree that [LIBOR suppression] would have somehow been
reflected in a lower price to the Treasury Entities, thereby
In initial offerings the Treasury Entities
simply bought at par. In secondary markets the Treasury Entities
sometimes bought at a discount or premium to par -- but any discount
or premium would have reflected underlying changes in interest rates
or credit-worthiness of the issuer, not ‘compensation’ for LIBOR
suppression. Whether in the primary or secondary market, Schwab
systematically caused the risk of the investment to be understated
also be reflected in the purchase price of other LIBOR-based, nonnegotiated financial instruments such as asset-backed securities.
Therefore, bondholders would be harmed from lowered coupon
correspondingly lowered in absolute dollars.
An example is a
bondholder who purchased a bond prior to the suppression period
and then received suppressed returns. A more complicated situation
is presented by a bondholder who purchased a bond during LIBOR
If the level of LIBOR suppression remained constant
over the life of the bond, then that bondholder did not experience
damages flowing from the defendants’ actions and the measure of
damages would be zero.
But if the suppression level increased
over the life of the bond, then the bondholder has experienced
damages in the amount of the “extra” suppression.
As an example,
if the LIBOR suppression level was 15 basis points below but-for
LIBOR at the time the plaintiff purchased the bond, and then the
suppression level increased to 45 basis points below but-for LIBOR
at the time of the first coupon payment, the bondholder was damaged
compared to the interest rate being offered and reduced the Treasury
Decl. of Dennis Goldman ¶ 10, ECF No. 1512.
Whether a bond is purchased at par value is immaterial to the question of
whether the purchase price is equal to the present value of the expected
Purchasing a new-issue bond at par simply means that the future
payments are set at a level that reflects a present value of par. As to the
secondary market, it would seem that the point of the Schwab plaintiffs is the
same as our point: a discount or premium on the purchase price “reflect[s]
underlying changes in interest rates,” such as LIBOR suppression.
to the tune of 30 basis points on that coupon payment.
And if on
a later coupon payment the suppression level became 5 basis points
below but-for LIBOR, then the benefit of 10 basis points on that
coupon payment should be netted against the measure of damages.
These scenarios present issues of proof, and not ones of standing.
Negotiated Transactions Such As Swaps
The second group of plaintiffs is those who entered into
negotiated transactions such as interest rate swaps.
rate swap is an instrument in which “two parties agree to exchange
interest rate cash flows, based on a specified notional amount
from a fixed rate to a floating rate (or vice-versa) or from one
floating rate to another.
These are highly liquid financial
Interest rate swaps are commonly used for both
hedging and speculating.”
OTC Compl. ¶ 35(f).30
The interest rate
derivatives market in which these instruments were created and
[D]ealers active in this market custom-tailor agreements to meet
the specific needs of their customers.”
Freddie Mac Compl. ¶ 207.
The named plaintiffs of the proposed OTC class only purchased interest rate
swaps, but the OTC complaint lists other types of instruments on which it would
sue on behalf of the class. The instruments “include but are not limited to
asset swaps, collateralized debt obligations, credit default swaps, forward
rate agreements, inflation swaps, interest rate swaps, total return swaps, and
options.” OTC Compl. ¶ 35.
The Second Circuit expressed skepticism about the measure of
damages in such highly negotiated transactions.
Gelboim, 823 F.3d
In response, plaintiffs argue that courts do not consider
the presence of negotiation to be fatal to the calculation of
OTC Pls.’ Mem. of Law in Opp’n 10 n.12, ECF No. 1511.
Defendants, meanwhile, argue that the presence of negotiation
“means greater opportunity for changes in the but-for world -i.e.,
Defs.’ Reply Mem. of Law 25, ECF No. 1544.
of these arguments miss the mark.
When parties enter into bespoke swaps, they do so to effect
a financial goal -- to exchange risk for safety, to achieve a
balance in their holdings, or to make a bet on a belief that LIBOR
will move in a certain direction. Gaining or trading away exposure
to LIBOR is the point of the swap.
Thus, in entering into a swap
transaction the parties take into consideration the present level
of LIBOR and their view of how LIBOR will change in the future.
The parties respond to these considerations when they set the nonLIBOR portions of the swap.
As direct action plaintiffs agree,
“[T]he fixed rate was designed to be the net present value of what
LIBOR was [at the time of the transaction].”
in our view, the point of the Second Circuit’s observation is that
when swaps were entered into during the suppression period, the
negotiated components absorbed the effects of LIBOR suppression.
Plaintiffs cite to Loeb Industries, Inc. v. Sumitomo Corp.,
306 F.3d 469 (7th Cir. 2002), to support their view that damages
should simply be measured from the but-for level even in negotiated
Loeb actually cuts against their argument.
case, the price of a contract for copper cathode futures was
comprised of (1) a number equivalent to the average of Comex copper
prices, and (2) a negotiated premium set on a quarterly or monthly
Id. at 476, 487.
The court held that the negotiated
premium did not render the damages speculative, for the reason
that “the evidence show[ed] that as the Comex price increased, the
premium also increased.
Thus, there [wa]s no possibility that the
two components ‘offset’ or that the premium somehow compensated
for the defendants’ manipulated price inflation.”
Id. at 487-88.
Here, the circumstances are different, as the Second Circuit
recognized, and there is every expectation that the negotiated
component compensated for manipulated LIBOR.
Cf. FOREX, 2016 WL
5108131, at *8 (LIBOR is distinguishable from the FX market, which
“does not entail the same level of ‘negotiation’ between parties
in selecting the ultimate rates for their transactions.”).31
Plaintiffs also rely heavily on New York v. Hendrickson Brothers, Inc., 840
F.2d 1065 (2d Cir. 1988), which said that “antitrust treble-damage actions
should not be complicated by a need to trace the effects of the overcharge with
respect to such matters as prices, costs, and the potentially different behavior
of all the pertinent variables in the absence of the overcharges.” Id. at 1079.
Plaintiffs use this quotation out of context. The court in Hendrickson was
explaining why indirect purchasers are routinely denied antitrust standing -that is, because allowing recovery by indirect purchasers would require courts
to trace all of the effects of an overcharge.
suppression period may recover for suppressed payments relative to
And plaintiffs who entered into swaps during the
suppression period may recover for any super-suppressed payments,
netted against any less-suppressed payments.
See Tr. 78:11-15
(where counsel for the direct action plaintiffs stated, “There may
be transactions where damages are zero if they’re late in the time
There are going to be [damages] for sure, if they enter
a swap in 2007 before the suppression really starts going down.”).
iii. Futures Contracts
Eurodollar futures contracts on an exchange.
Relying on the
undisputed fact that the settlement price of a Eurodollar future
is 100 minus the three-month USD LIBOR fix on the contract’s last
trading day,32 Exchange-Based plaintiffs allege that defendants
“affected Eurodollar futures prices directly by manipulating the
index that was directly incorporated into the formula for those
LIBOR II, 962 F. Supp. 2d at 612.
settlement price of Eurodollar futures contracts does not address
Metzler Inv. GmbH v. Credit Suisse Grp. AG, Corrected Second Am. Compl.
¶ 433, No. 11-md-2262 (NRB), ECF No. 438 (“Exchange-Based Compl.”).
the relationship, if any, between LIBOR and the trading price of
The trading price reflects the market’s prediction
for what the price will be at settlement, which could be years
away -- not what LIBOR is at the present moment.
Based Compl. ¶ 431 (“[I]n practice, Eurodollar futures are a proxy
omitted); Tr. 90:20, 98:19-20 (settlement can occur five or ten
years in the future).
Therefore, it will only be possible to
determine the effect of LIBOR on trading prices if the two are in
fact closely related.
In FOREX, such a relationship -- where the
“exchange price . . . [and] the FX spot prices . . . move virtually
in tandem” -- was demonstrated by empirical data provided in the
complaint as well as acknowledgments in settlements with the U.S.
Commodity Futures Trading Commission that “exchange rates in many
actively traded CME foreign exchange futures contracts track rates
in foreign exchange markets at near parity.”
2016 WL 5108131, at
*9 (internal alterations omitted). By contrast, in Gold, the court
expressed skepticism that such a relationship could be shown
because “Plaintiffs cannot deny that other market variables may
have affected gold prices before and after the PM Fixing. (Indeed,
were it otherwise, pricing across gold markets would essentially
be flat, varying only twice a day).”
2016 WL 5794776, at *14.
Here, the Exchange-Based plaintiffs have not sufficiently
pled that the LIBOR level on a given day moves in tandem with the
trading price of Eurodollar futures contracts.
positions before settlement are still affected by LIBOR mispricing
because the Eurodollar futures contracts trade based on what LIBOR
is expected to be in the future.
To the extent that LIBOR is
mispriced in the present, expectations of what LIBOR will be in
the future will also be skewed.”
Exchange-Based Compl. ¶ 439.
settlement prices of CME Eurodollar futures contracts created
participants.” Id. ¶ 447. This hardly pleads a sufficiently close
relationship between LIBOR and trading prices.
Exchange-Based plaintiffs offer one example in their attempt
to show a relationship between LIBOR and Eurodollar futures prices.
Their complaint presents data on LIBOR and Eurodollar futures
contracts in the days surrounding “the events on April 17, 2008.
. . . LIBOR jumped on that day following the BBA’s announcement
that it would investigate the authenticity of LIBOR reporting.”
Id. at ¶ 444.
Figure 21 of the complaint purports to show the
“sharp decrease in the Eurodollar futures price on April 17,
2008[,] . . . [as well as] the behavior of LIBOR during the same
The price shown in the graph is the price of the
“nearby Eurodollar futures contract . . . .”
Figure 21 presents two graphs.
each graph, a two-day period in the middle of April 2008 is
relationship between LIBOR and Eurodollar contract prices.
graph shows a sharp increase in LIBOR over the course of two days
in the middle of April 2008 (the “LIBOR Increase”), and the other
graph shows a sharp decline in Eurodollar contract prices over the
course of two days in the middle of April 2008 (the “Eurodollar
If LIBOR truly caused a linear movement in Eurodollar
contract prices, one would expect to see either that the LIBOR
Increase and the Eurodollar Decrease occurred during the same two
days or that the LIBOR Increase occurred shortly before the
There is little reason to believe that the graphs are mislabeled. Although
the complaint provides no information as to the source of the data in the
graphs, publicly available data suggests that the date labels are correct. See,
e.g., Federal Reserve Bank of St. Louis, 3-Month London Interbank Offered Rate
https://fred.stlouisfed.org/series/USD3MTD156N; Quandl, Eurodollar Futures,
August 2008, EDQ2008, CME, https://www.quandl.com/data/CME/EDQ2008-EurodollarFutures-August-2008-EDQ2008-CME (Tab TABLE, which provides, inter alia, a drop
in prices from April 15 to April 17, 2008 that approximates the amount of the
drop provided in Figure 21 of the complaint). Exchange-Based plaintiffs have
also submitted a proposed amended complaint and a post-oral argument letter,
both relying on the same graph and providing no other empirical examples.
Metzler Inv. GmbH v. Credit Suisse Grp. AG, Proposed Third Amnded Compl. ¶ 622,
No. 11-cv-2613 (NRB), ECF No. 292; Lovell & Kovel Letter App’x B, MDL ECF No.
What Figure 21 shows instead is that the LIBOR Increase
occurred after the Eurodollar Decrease:
the Eurodollar Decrease
occurred from April 15 to April 17, 2008, but the LIBOR Increase
occurred from April 16 to April 18, 2008.
The graphs suggest that
Eurodollar futures prices moved unconnected to the actual LIBOR
Even putting aside the movements over these three days, the
plaintiffs’ claim of a causal relationship.
The relative flatness
of LIBOR levels (1) between April 4, 2008 and April 15, 2008 and
(2) between April 18, 2008 and April 28, 2008 appear to have no
relationship to (1) falling Eurodollar contract prices between
April 4, 2008 and April 15, 2008 and (2) rising Eurodollar contract
prices between April 18, 2008 and April 28, 2008.
And given that
the graph purports to show the prices of the nearby Eurodollar
expire further out must be even more attenuated.
The graphs do
not credibly support the notion that Exchange-Based plaintiffs
will be able to show that LIBOR suppression of a particular amount
would have caused a corresponding, determinable change in trading
This is not a case where information pertaining to the
supposed causal relationship is uniquely in defendants’ hands.
Notably, despite the apparent availability of the data, Exchange59
Based plaintiffs offer no other empirical information showing that
Eurodollar futures prices move in tandem with LIBOR -- no other
Exchange-Based plaintiffs have not cited to any official findings
that Eurodollar futures trading prices track LIBOR at near parity.
Without demonstrating such a relationship, plaintiffs cannot prove
A separate reason to dismiss claims of intermediate traders
is that there is good reason to doubt that they suffered damages
in any event.
After all, these traders made the decision to
purchase a futures contract at a particular price and made the
decision to sell it back to the market at a particular price.
precise amount of money that they would make or lose on the market
was known to them at the time they made the decision to sell, and
LIBOR suppression did not change this knowledge. Cf. Dura Pharms.,
Inc. v. Broudo, 544 U.S. 336, 342 (2005) (“Normally, in cases such
proximately cause the relevant economic loss.
For one thing, as
a matter of pure logic, at the moment the transaction takes place,
the plaintiff has suffered no loss; the inflated purchase payment
is offset by ownership of a share that at that instant possesses
Moreover, the logical link between the inflated
share purchase price and any later economic loss is not invariably
Shares are normally purchased with an eye toward a later
But if, say, the purchaser sells the shares quickly before
the relevant truth begins to leak out, the misrepresentation will
not have led to any loss.”).
Therefore, a damages theory predicated on a direct link
between an act of LIBOR suppression and an impact on Eurodollar
futures trading prices in a particular amount is speculative.
only Exchange-Based plaintiffs with a non-speculative theory are
contracts that were held to settlement during the suppression
Such plaintiffs would be able to rely on an unmanipulated
selling price as well as a settlement price demonstrably impacted
by LIBOR suppression, as set forth in the example in Paragraph 440
of the Exchange-Based plaintiffs’ complaint.
Duplicative Recovery and Complex Apportionment
The last factor reflects a “strong interest . . . in keeping
the scope of complex antitrust trials within judicially manageable
AGC, 459 U.S. at 543.
Under this factor courts are traditionally concerned with the
prospect of different groups of plaintiffs attempting to recover
for the same exact injury, id., which plaintiffs do not do here.
Courts are not traditionally concerned with considerations that
defendants have raised, namely, whether governments have conducted
investigations concerning the conduct at issue, and whether the
plaintiffs assert alternative theories of recovery.
“necessarily foreclosed from . . . relief by the mere pendency of
the government and direct purchaser suits for similar remedies.
Generally, they may proceed simultaneously or in disregard of each
other . . . .”) (internal quotation marks and citation omitted);
Alaska Elec. Pension Fund v. Bank of Am. Corp. (“ISDAFix”), No. 14
Civ. 7126, 2016 WL 1241533, at *8 (S.D.N.Y. Mar. 28, 2016) (“[T]he
damages at issue are tied to particular transactions and contracts,
obviating the danger of duplicative recovery.”).
Clearly, the Second Circuit in Gelboim was concerned with the
scope of government recovery, as “the ramified consequences are
823 F.3d at 780.
As of now, there has been
no showing that certain plaintiffs have been made whole through
the receipt of restitution payments made to governments; if such
a showing is made in the future, we will take the steps necessary
to avoid duplicative recovery.
Moreover, defendants suggest no
substitute avenue of recovery for plaintiffs who transacted with
a panel-bank defendant that is not under government investigation.
We are also unaware of any authority foreclosing plaintiffs
pursuing non-antitrust claims.
While plaintiffs cannot recover
twice for the same injury, they are permitted to assert alternative
theories of liability.
State Law Claims
Some plaintiffs have asserted state antitrust law claims in
addition to their federal law claims.
Defendants argue that
antitrust standing in the state claims also turns on the AGC
“In addressing unsettled areas of state law, . . . our role
as a federal court . . . is not to adopt innovative theories that
may distort established state law.
Instead we must carefully
uncertainties that we have identified.
In making this prediction,
we give the fullest weight to pronouncements of the state’s highest
court, . . . while giving proper regard to relevant rulings of the
state’s lower courts.
We may also consider decisions in other
jurisdictions on the same or analogous issues.”
Co. v. Carpenter, 411 F.3d 323, 329 (2d Cir. 2005) (internal
judgment of an intermediate appellate state court is a ‘datum for
ascertaining state law which is not to be disregarded by a federal
court unless it is convinced by other persuasive data that the
highest court of the state would decide otherwise.’”
New York v.
Nat’l Serv. Indus., Inc., 460 F.3d 201, 210 (2d Cir. 2006) (quoting
Comm’r v. Estate of Bosch, 387 U.S. 456, 465 (1967)).
We only address those state law claims that remain after our
personal jurisdiction rulings:
California Cartwright Act claims
in Bay Area Toll Authority v. Bank of America Corp., No. 14-cv3094, and New York Donnelly Act claims in Federal Deposit Insurance
Corp. v. Bank of America Corp., No. 14-cv-1757; Principal Financial
Group, Inc. v. Bank of America Corp., No. 13-cv-6014; and Principal
Funds Inc. v. Bank of America Corp., No. 13-cv-6013.
below, we conclude that the AGC factors should apply to the
standing analyses set forth above apply equally to the state law
California Cartwright Act Claims
California’s highest court has not considered the application
instructive, not conclusive, when construing the Cartwright Act .
. . .”
Aryeh v. Canon Bus. Sols., Inc., 292 P.3d 871, 877 (Cal.
Prior to the California Supreme Court’s decision in Aryeh,
a California intermediate appellate court applied the AGC factors
to a Cartwright Act claim, Vinci v. Waste Mgmt., Inc., 43 Cal.
Rptr. 2d 337, 338-39 (Cal. Ct. App. 1995), as did the Ninth
Circuit, Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979,
987 (9th Cir. 2000)34.
Plaintiffs argue that Aryeh nullified the standing analyses
in Vinci and Knevelbaard.
We are not so persuaded.
Aryeh -- a
case ultimately about California’s unfair competition law -- did
not analyze antitrust standing, and did not indicate that the
California Supreme Court disapproved of the application of the AGC
Indeed, a recent case in the Eastern District of New
York concluded that “because there is no California law contrary
to the state appellate court’s application of the AGC factors in
Vinci, the Court applies the AGC factors to Plaintiffs’ [Cartwright
The decision of both an intermediary court and the
Ninth Circuit remain the best predictor of the state’s highest
court’s action on the issue, and the Court is not convinced to
disregard this data by any other indication that the highest court
of the state would decide otherwise.”
Salveson v. JP Morgan Chase
& Co., 166 F. Supp. 3d 242, 258 (E.D.N.Y. 2016) (internal quotation
We agree with this analysis and conclude that the
AGC factors apply to plaintiffs’ Cartwright Act claims.
The Ninth Circuit noted that antitrust standing is more permissive under
Cartwright Act claims than under federal law in that the Cartwright Act permits
suits by both direct and indirect purchasers. Knevelbaard Dairies, 232 F.3d at
987, 991. That fact does not impact the analysis in this case.
New York Donnelly Act Claims
New York’s highest court has not opined on the applicability
of the AGC factors.
However, a New York intermediate appellate
court has quoted AGC approvingly in considering a Donnelly Act
Cont’l Guest Servs. Corp. v. Int’l Bus Servs., Inc., 939
N.Y.S.2d 30, 30 (N.Y. App. Div. 1st Dep’t 2012).
Continental Guest Services Corp., the Second Circuit subsequently
held that “[w]e see no reason . . . to interpret the Donnelly Act
Gatt Comm’ns, Inc. v. PMC Assocs., L.L.C., 711 F.3d
68, 81 (2d Cir. 2013).
We conclude that the AGC factors apply to
plaintiffs’ Donnelly Act claims.
enforcer holdings in this opinion, the antitrust claims that remain
are set out in the accompanying appendix.
The Court anticipated
before the briefing on this motion that its decision would be
Accordingly, any party wishing to pursue a motion previewed in
June and derived from Gelboim should submit a pre-motion letter by
January 6, 2017.
Any letters in opposition to any such proposal
should be filed by January 13, 2017.
GmbH v. Credit
Suisse Grp. AG,
Mayor and City
of Baltimore v.
Bank, N.A. v.
Bank of Am.
Mkt. Fund v.
Bank of Am.
Schwab ShortTerm Bond Mkt.
Fund. v. Bank of
Amabile v. Bank
of Am. Corp.,
Bay Area Toll
Auth. v. Bank of
City of Houston
v. Bank of Am.
dismissed on efficient
dismissed on personal
dismissed on personal
Bank of America Corp.
JPMorgan Chase & Co.
Bank of America Corp.
Bank of America, N.A.
JPMorgan Chase & Co.
JPMorgan Chase Bank, N.A.
John Does 1-5
Bank of America Corp.
Bank of America, N.A.
JPMorgan Chase & Co.
JPMorgan Chase Bank, N.A.
dismissed on personal
dismissed on personal
City of Phila.
v. Bank of Am.
Ins. Corp. v.
Bank of Am.
JPMorgan Chase & Co.
JPMorgan Chase Bank, N.A.
Fed. Home Loan
Mortg. Corp. v.
Bank of Am.
Union Admin. Bd.
v. Credit Suisse
Grp., Inc, v.
Bank of Am.
Inc. v. Bank of
Bank of America Corp.
Bank of America, N.A.
Bear Stearns Capital
JPMorgan Chase & Co.
JPMorgan Chase Bank, N.A.
HSBC Bank USA, N.A.
Merrill Lynch & Co.
Merrill Lynch Capital
HSBC Bank USA, N.A.
dismissed on personal
JPMorgan Securities LLC
Merrill Lynch, Pierce,
Fenner & Smith Inc.
RBS Securities Inc.
JPMorgan Securities LLC
Merrill Lynch, Pierce,
Fenner & Smith Inc.
RBS Securities Inc.
Portfolios 2 v.
Bank of Am.
Regents of the
Univ. of Cal.
Bank of Am.
Salix Capital US
Inc. v. Banc of
Am. Sec. LLC,
HSBC Finance Corp.
HSBC Securities (USA)
HSBC USA Inc.
JPMorgan Securities LLC
RBS Securities Inc.
dismissed on personal
Bank of America Corp.
Bank of America, N.A.
JPMorgan Chase & Co.
JPMorgan Chase Bank, N.A.
JPMorgan Securities LLC
Citigroup Global Markets
Citigroup Global Markets
Credit Suisse Securities
Deutsche Bank Securities
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