The Berkshire Bank v. Bank of America Corporation et al

Filing 335

MEMORANDUM AND ORDER: Lender plaintiffs' settlements with Barclays, Citi, and HSBC are preliminarily approved, and a class is certified for purposes of effectuating these settlements. JND Legal Administration is approved as the Claims Administra tor for all three settlements, and Huntington Bank is approved as Escrow Agent. Lender plaintiffs shall propose revisions to the long form notice and amended publication notice that reflect the Second Circuit's denial of their Rule 23 (f) motion for interlocutory review of LIBOR VII's denial of certification of a Lender class. An order establishing a schedule for the dissemination of notice, the filing of objections and exclusions, and the process of final approval (including the holdi ng of a fairness hearing) will issue following the receipt of revisions to the Court's satisfaction. SO ORDERED.,, Motions terminated: (2506 in 1:11-md-02262-NRB) LETTER MOTION for Conference addressed to Judge Naomi Reice Buchwald from Jeremy A. Lieberman dated May 4, 2018 filed by Government Development Bank for Puerto Rico, The Berkshire Bank. (Signed by Judge Naomi Reice Buchwald on 7/18/2018) Filed In Associated Cases: 1:11-md-02262-NRB, 1:12-cv-05723-NRB(ama)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
--------------------------------------X
In re:
MEMORANDUM AND ORDER
LIBOR-Based Financial Instruments
Antitrust Litigation.

11 MD 2262 (NRB)

This Document Applies to:
12 Civ. 5723

Lender Action
--------------------------------------X
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE

I.
This

order

addresses

INTRODUCTION
Lender

plaintiffs’

motion

for

preliminary approval of their settlements with (1) Citibank, N.A.
and Citigroup Inc. (collectively, “Citi”); (2) HSBC Bank plc; and
(3) Barclays Bank PLC.

See Letter from Jeremy Lieberman to the

Court, May 4, 2018, ECF No. 2506.

We held a conference regarding

the proposed settlements on June 18, 2018, and Lender plaintiffs
have submitted updated materials in support of their motion that
provide greater clarity to notice recipients regarding the current
status of this action.

See Letter from Jeremy Lieberman to the

Court, July 3, 2018, ECF No. 2609.

Since then, the Second Circuit

has denied Lender plaintiffs’ motion for interlocutory review of
our decision denying certification of a Lender class for litigation
purposes.

See Berkshire Bank v. Bank of Am. Corp., No. 18-718 (2d

Cir. July 10, 2018).

1

We proceed to consider whether preliminary approval of the
pending settlements is warranted in light of this procedural
posture, and conclude that it is.
II.

PRELIMINARY APPROVAL

“Preliminary approval of a proposed settlement is the first
in a two-step process required [by Federal Rule of Civil Procedure
23(e)] before a class action may be settled.”

In re NASDAQ Mkt.-

Makers Antitrust Litig., 176 F.R.D. 99, 102 (S.D.N.Y. 1997).

At

this stage, we need only decide whether the terms of the Proposed
Settlement

are

“at

least

sufficiently

fair,

reasonable

and

adequate to justify notice to those affected and an opportunity to
be heard.”

Id.

This analysis is “a determination that there is

what might be termed ‘probable cause’ to submit the proposal to
class members and hold a full-scale hearing as to its fairness.”
In re Traffic Exec. Ass’n E. R.Rs., 627 F.2d 631, 634 (2d Cir.
1980).
1.

Class Certification
“Before approving a class settlement agreement, a district

court must first determine whether the requirements for class
certification in Rule 23(a) and (b) have been satisfied.”

In re

Am. Int’l Grp., Inc. Sec. Litig. (“In re AIG”), 689 F.3d 229, 238
(2d Cir. 2012).

Considering a putative class defined identically

to the one proposed here in LIBOR VII, 299 F. Supp. 3d 430 (S.D.N.Y.
2018), Rule 23(f) appeal denied in relevant part sub nom. Berkshire
2

Bank v. Bank of Am. Corp., No. 18-718 (2d Cir. July 10, 2018), we
found

that

the

Lender

class

satisfied

the

Rule

23(a)(1)-(3)

requirements of numerosity, commonality, and typicality, id. at
563-65.

We adhere to these conclusions here.

We

also

held

that

Berkshire

Bank

was

not

an

adequate

representative as required by Rule 23(a)(4), id. at 565-68, and
that

the

proposed

class

did

not

meet

the

predominance

and

superiority requirements of Rule 23(b)(3) based on individualized
issues

of

reliance,

statutes

of

limitations,

damages,

and

variations in state substantive law, id. at 569-79. These findings
regarding the litigation class sought to be certified in LIBOR VII
do not, however, preclude the certification of a settlement class
in this context.
As to adequacy of representation, any concerns regarding
Berkshire Bank’s inadequacy are addressed by the participation of
an additional named plaintiff, the Government Development Bank for
Puerto Rico (GDB), in the settlement process.

While we do not

depart from our earlier finding that Berkshire Bank is not an
adequate representative given the relationship between Berkshire
Bank, Mordchai Krausz, and his father and Berkshire Bank CEO Moses
Krausz and given Mordchai Krausz’s contractual entitlement to 15%
of any attorneys’ fees that might be awarded to class counsel, id.
at

565-68,

these

concerns

do

not

extend

to

GDB.

While

we

previously dismissed GDB’s claims as being barred by the applicable
3

statute of limitations, see LIBOR V, 2015 WL 6696407, at *12-13
(S.D.N.Y. Nov. 3, 2015); see also July 2, 2018 Order, 2018 WL
3222518 (S.D.N.Y. July 2, 2018), ECF No. 2607, that dismissal does
not render GDB an inadequate representative.

Cf. LIBOR VII, 299

F. Supp. 3d at 589 (reasoning that a defense applicable to many
class members does not render a named plaintiff’s claim atypical).
We conclude, based only on GDB’s participation in the settlement
process, that the adequacy of representation requirement of Rule
23(a)(4) is met. 1
As to predominance and superiority, we find that the context
of settlement is sufficient to tip the predominance balance.
“Confronted

with

a

request

for

settlement-only

class

certification, a district court need not inquire whether the case,
if

tried,

would

present

intractable

management

problems”

precluding findings of predominance under Rule 23(b)(3).

Amchem

Prods.,

“Those

Inc.

v.

Windsor,

521

U.S.

591,

620

(1997).

manageability concerns do not stand in the way of certifying a
settlement class.”

In re AIG, 689 F.3d at 242.

Accordingly,

individual issues of reliance and variations in state law weigh
less heavily against predominance, see, e.g., id. at 241 (“[W]ith
a settlement class, the manageability concerns posed by numerous

1 Accordingly, Lender plaintiffs should clarify the language in question
4 of the long form notice to reflect that while Berkshire Bank and GDB
represented the class in negotiating the settlements, the Court found -- and
continues to find -- that Berkshire Bank is not an adequate class
representative.

4

individual questions of reliance disappear.”); LIBOR VII, 299 F.
Supp. 3d at 601 n.183 (discussing the different treatment of
variations in state law in the settlement and litigation contexts),
and can be manageably addressed through the plan of distribution.
Accordingly, the following class will be certified as to all
three settlements: 2
All lending institutions headquartered in the United
States, including its fifty (50) states and United
States territories, that originated loans, held loans,
held interests in loans, owned loans, owned interests in
loans, purchased loans, purchased interests in loans,
sold loans, or sold interests in loans with interest
rates based upon U.S. Dollar LIBOR between August 1,
2007 and May 31, 2010 (the “Class Period”). 3
2.

Settlement Fairness
“In

considering

preliminary

approval,

courts

make

a

preliminary evaluation of the fairness of the settlement, prior to

2

Lender plaintiffs and the settling defendants have agreed that this
class certification “is only for purposes of effectuating a settlement and for
no other purpose.” Each defendant “retains all of its objections, arguments,
and defenses with respect to class certification, and reserves all rights to
contest class certification, if the settlement set forth in this Agreement does
not receive the Court’s final approval, if the Court’s approval is reversed or
vacated on appeal, if this Agreement is terminated as provided herein, or if
the settlement set forth in this Agreement otherwise fails to become effective
for any reason.” Barclays Settlement Agreement ¶ 3(c), ECF No. 2506-3; Citi
Settlement Agreement ¶ 3(c), ECF No. 2506-4; HSBC Settlement Agreement ¶ 3(c),
ECF No. 2506-5. The parties have also agreed that their respective settlement
agreements and other settlement-related statements may not be cited regarding
the certification of litigation classes. Id.
3 The specific wording of the settlement agreements differ slightly, but
the settlement class excludes the following defendants and other parties
released by the settlements, coconspirators, entities “in which any Defendant,
Released Party, or co-conspirator has a controlling interest; and any affiliate,
legal representative, heir, successor, or assign of any Defendant, Released
Party, or co-conspirator and any person acting on their behalf.”
“[A]ny
judicial officers presiding over the Lender Action and the members of his/her
immediate families and judicial staff” are also excluded.
See Barclays
Settlement Agreement ¶ 3(b); Citi Settlement Agreement ¶ 3(b); HSBC Settlement
Agreement ¶ 3(b).

5

notice.

Where the proposed settlement appears to be the product

of serious, informed, non–collusive negotiations, has no obvious
deficiencies, does not improperly grant preferential treatment to
class representatives or segments of the class and falls within
the range of possible approval, preliminary approval is granted.”
In re Nasdaq, 176 F.R.D. at 102.
We find this standard met here. This particular action, first
filed in 2012, has been vigorously litigated over the last six
years.

Accordingly, we have no reason to doubt that both sides

have been well-informed regarding the strengths and weaknesses of
the case, and particularly so given the volume of our opinions
addressing the substantive issues at hand.

While the Court would

have appreciated a more detailed description of the process by
which the settlements were negotiated, see Lieberman Decl. ¶¶ 3544, we nonetheless conclude that there is no suggestion thus far
that the negotiation process was anything other than serious and
non-collusive.

Further, the settlements entitle all members of

the class to participate on a pro rata basis and bear no obvious
deficiencies.

Therefore, we conclude that the settlements bear

sufficient indicia of legitimacy such that preliminary approval is
warranted.
III.

CONCLUSION

Lender plaintiffs’ settlements with Barclays, Citi, and HSBC
are preliminarily approved, and a class is certified for purposes
6

of effectuating these settlements.

JND Legal Administration is

approved as the Claims Administrator for all three settlements,
and Huntington Bank is approved as Escrow Agent.
Lender plaintiffs shall propose revisions to the long form
notice

and

Circuit's

amended
denial

of

publication
their

notice

Rule

23 (f)

that
motion

reflect
for

the

Second

interlocutory

review of LIBOR VII's denial of certification of a Lender class.
An order establishing a schedule for the dissemination of notice,
the filing of objections and exclusions, and the process of final
approval

(including the holding of a fairness hearing) will issue

following the receipt of revisions to the Court's satisfaction. 4
SO ORDERED.

Dated:

New Yo!}, New York
July tf, 2018

,:P¥{ii~~c~~

£iAMIREICEHwALD
UNITED STATES DISTRICT JUDGE

4 Other
issues raised by the Lender plaintiffs in their motion, such as
(1) the procedural and substantive fairness of the settlements;
(2) the
compliance of the proposed class notice with the requirements of Rule 23(c) (2),
Rule 23(e) (l), and due process; and (3) the propriety of the proposed plan of
distribution are deferred until the final approval stage.

7