Bank of New York Mellon Corporation False Claims Act Foreign Exchange Litigation v. Bank of New York Mellon Corporation

Filing 71

ORDER TRANSFERRING CASE. Case transferred to the Southern District of New York. Signed by Acting Chairman of the MDL Panel Kathryn H. Vratil. MDL No. 2335. (wsn, COURT STAFF) (Filed on 4/17/2012) [Transferred from California Northern on 4/19/2012.]

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DL No. 2335 Document 69 Filed 04/16/12 Page 1 of 5

UNITED STATES JUDICIAL PANEL
on
MUL TIDISTRICT LITIGATION

IN RE: BANK OF NEW YORK MELLON CORP.
FOREIGN EXCHANGE TRANSACTIONS LITIGATION

MDL No. 2335

TRANSFER ORDER

Before the Panel:* Defendant Bank ofNew York Mellon entities 1 (collectively BNY Mellon)
move to centralize this litigation in the Southern District of New York. The litigation presently
comprises eight actions- three pending in the Southern District ofNew York, two in the Northern
District of California, two in the Western District ofPennsylvania, and one in the Eastern District of
Pennsylvania, as listed on Schedule A. The Panel has been notified of one additional related federal
action. 2

Responding individual defendants in the three Southern District ofNew York actions support
centralization in the Southern District ofNew York. Plaintiff in the Southern District of New York
Louisiana Municipal Police Employees' Retirement System (LAMPERS) action, which is the only
action involving alleged violations of the federal securities laws, agrees that the Southern District of
New York is the most suitable district for LAMPERS and any related, subsequently-filed securities
class action. 3 Plaintiffs in the two Northern District of California actions, the Eastern District of
Pennsylvania Southeastern Pennsylvania Transportation Authority (SEPTA) action, and the two
Western District ofPennsylvania actions oppose centralization. If the Panel grants BNY Mellon's
Section 1407 motion over their objections, then plaintiffs in the two Northern District of California
actions argue that the Panel should select the Northern District of California as transferee district,
while the Eastern District ofPennsylvania SEPTA plaintiff supports selection of either the Southern

Judge John G. Heyburn II and Judge Marjorie 0. Rendell took no part in the decision of this
matter.
The Bank ofNew York Mellon Corp., Mellon Bank N.A., The Bank ofNew York Mellon,
The Bank ofNew York Company, Inc., The Bank ofNew York, and The Bank ofNew York Mellon
Trust Company National Association.
The related action was brought by the United States of America (the Government), and is
pending in the Southern District ofNew York. The Panel's understanding is that the Government's
action was not included in the Section 1407 motion because the Government indicated that it is
op osed to the action's inclusion in an MDL. That action and any other related actions are
nev rtheless potential tag-along actions. See Rules 1.1 (h), 7.1, and 7 .2.
The LAMPERS plaintiff takes no position as to whether related actions premised on different
cau es of action should be centralized.

Case MDL No. 2335 Document 69 Filed 04/16/12 Page 2 of 5

- 2District of New York or the Eastern District of Pennsylvania, and also asks that the Panel defer
transfer of its action until a ruling on a motion to dismiss pending therein.
Plaintiffs opposing centralization argue that the theories of recovery differ significantly from
action to action, 4 and that certain actions are brought against not only BNY Mellon but also
defendants not named in other of the actions. Where common factual issues exist, however, the
presence of different legal theories among the subject actions is not a bar to centralization. See In
re: M3Power Razor Sys. Mktg. &Sales PracticesLitig., 398 F. Supp. 2d 1363, 1364 (J.P.M.L. 2005)
("The presence of differing legal theories is outweighed when the underlying actions, such as the
actions here, arise from a common factual core."); see also In re: Zimmer NexGen Knee Implant
Prods. Liab. Litig., 802 F. Supp. 2d 1374, 1376-77 (J.P.M.L. 2011) ("[C]entralization under Section
1407 does not require a complete identity or even a majority of common factual or legal issues as a
prerequisite to transfer."). Centralization also does not require a complete identity of parties. In re:
Navistar 6.0 L Diesel Engine Prods. Liab. Litig., 777 F. Supp. 2d 1347, 1348 (J.P.M.L. 2011).
Indeed, we typically have included securities, derivative, and ERISA actions in a single docket, even
where the cast of defendants varies from action to action. See, e.g., In re: BP Sec., Derivative and
Emp't Retirement Income Sec. Act (ERISA) Litig., 734 F. Supp. 2d 1380 (J.P.M.L. 2010); In re:
Federal Nat'! Mortg. Ass'n Sec. Derivative & "ERISA" Litig., 370 F. Supp. 2d 1359 (J.P.M.L.
2005).
Opposing plaintiffs also argue that centralization would work only an incomplete fix, given
the pendency of not only the Government's action in the Southern District ofNew York (which, as
noted, BNY Mellon elected not to include in its motion) but also related state court cases. Our
decision to centralize this litigation in the Southern District ofNew York, however, obviates any need
for the Panel to determine whether the Government's action should be formally included in the MDL
(over the Government's apparent objections), while, at the same time, enabling the transferee judge
to coordinate proceedings in that action with those in the MDL to the extent that he deems
necessary. 5 The pendency of related state court litigation cannot be deemed a valid bar to
centralization, as transferee judges routinely coordinate their MDLs with related state court
proceedings.

4

The eight actions encompass, inter alia, California statutory claims, common law breach of
contract, fraud, and breach of fiduciary duty claims, shareholder derivative claims, claims for violation
of the federal securities laws, and claims for violation ofERISA.
5

Plaintiff in Northern District of California International Union of Operating Engineers,
Stationary Engineers Local 39 Pension Trust Fund also argues that its action is significantly
advanced, and that transfer to another district will delay its resolution. We note, however, that the
scheduled trial of that action is almost a year away, and that BNY Mellon has vigorously disputed
plaintiffs characterization of the action's status. (Plaintiff filed an amended complaint in the action
on January 5, 2012.)

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-3On the basis of the papers filed and hearing session held, we find that these eight actions
involve common questions of fact, and that centralization under Section 1407 in the Southern District
of New York will serve the convenience of the parties and witnesses and promote the just and
efficient conduct of the litigation. All actions share factual issues arising from allegations concerning
BNY Mellon's provision of foreign exchange (FX) services to its clients. Specifically, plaintiffs'
allegations involve BNY Mellon's "standing instruction" service- through which a customer gives
an order to the bank to execute FX transactions. 6 Centralization will avoid duplicative discovery,
eliminate the risk of inconsistent pretrial rulings, and conserve the resources of the parties, their
counsel, and the judiciary.
We conclude that the Southern District ofNew York is an appropriate transferee district for
pretrial proceedings in this litigation. BNY Mellon is headquartered in that district and conducts FX
operations there. In addition, three of the eight constituent actions are pending in the district, as is
the Government's action. A related action brought by the State ofNew York is also pending in New
York state court, and thus centralization in the Southern District of New York may facilitate any
needed coordination between the transferee judge and the presiding state court judge.
We decline the SEPTA plaintiff's request for an open-ended delay in the transfer of its action
until the issuance of a ruling on a motion to dismiss pending therein. The transferee court is fully
capable of addressing that motion. See In re ClassicStar Mare Lease Litig., 528 F. Supp. 2d 1345,
1347 (J.P.M.L. 2007) (denying defendant's request that transfer be delayed until transferor court
ruled on defendant's motion to dismiss).

According to plaintiffs, BNY Mellon stated that it used "best execution" standards in
processing "standing instruction" FX transactions, but then manipulated those transactions to extract
improper fees at the client's expense. Rather than charging the client the prevailing FX rate at the
time the trade was executed, BNY Mellon would note the high and low exchange rates of that trading
day, and then, depending on the nature of the transaction (buy or sell), it would charge the client the
least favorable rate that occurred during that day. In this manner, BNY Mellon would profit from
the spread - or so it is alleged.

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-4IT IS THEREFORE ORDERED that, pursuant to 28 U.S.C. § 1407, the actions listed on
Schedule A and pending outside the Southern District ofN ew York are transferred to the Southern
District ofNew York and, with the consent of that court, assigned to the Honorable Lewis A Kaplan
for coordinated or consolidated pretrial proceedings with the actions pending in that district and listed
on Schedule A

PANEL ON MULTIDISTRICT LITIGATION

athryn H. Vratll
Acting Chairman
W. Royal Furgeson, Jr.
Paul J. Barbadoro

Barbara S. Jones
Charles R. Breyer

Case MDL No. 2335 Document 69 Filed 04/16/12 Page 5 of 5

IN RE: BANK OF NEW YORK MELLON CORP.
FOREIGN EXCHANGE TRANSACTIONS LITIGATION

MDL No. 2335

SCHEDULE A

Northern District of California
International Union of Operating Engineers, Stationary Engineers Local 39 Pension
Trust Fund v. The Bank ofNew York Mellon Corporation, et al.,
C.A. No. 3:11-03620
Bank ofNew York Mellon Corporation False Claims Act Foreign Exchange Litigation v.
Bank ofNew York Mellon Corporation, C.A. No. 3:11-05683
Southern District of New York
Iron Workers Mid-South Pension Fund v. Gerald L. Hassell, et al., C.A. No. 1:11-08471
Marilyn Clark v. Gerald L. Hassell, et al., C.A. No. 1:11-08810
Louisiana Municipal Police Employees' Retirement System v. The Bank of New York
Mellon Corporation, et al., C.A. No. 1:11-09175
Eastern District of Pennsylvania
Southeastern Pennsylvania Transportation Authority v. The Bank ofNew York Mellon
Corporation, C.A. No. 2:11-01628
Western District of Pennsylvania
Isabel F. Sansano v. The Bank ofNew York Mellon Corporation, et al.,
C.A. No. 2:11-01412
Joan Terrazas, et al. v. The Bank ofNew York Mellon Corporation, et al.,
C.A. No. 2:11-01461