The Berkshire Bank v. Bank of America Corporation et al

Filing 425

MEMORANDUM AND ORDER: For the foregoing reasons, the Court finds that the Second Circuit's recent decisions in Schwab II and Berkshire leave undisturbed this Court's ruling in LIBOR VIII with respect to the BBA. SO ORDERED. (Signed by Judge Naomi Reice Buchwald on 11/18/2022) Filed In Associated Cases: 1:11-md-02262-NRB, 1:12-cv-05723-NRB, 1:14-cv-01757-NRB, 1:14-cv-03094-NRB. (mml)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------X
IN RE LIBOR-BASED FINANCIAL INSTRUMENTS
ANTITRUST LITIGATION
---------------------------------------X
THIS DOCUMENT RELATES TO:
BAY AREA TOLL AUTHORITY
Plaintiff,
- against -

MEMORANDUM AND ORDER

BANK OF AMERICA CORPORATION, et al.
Defendants.
---------------------------------------X
THE BERKSHIRE BANK, et al.,

11 MDL 2262 (NRB)
14 Civ. 3094 (NRB)
12 Civ. 5723 (NRB)
14 Civ. 1757 (NRB)

Plaintiffs,
- against BANK OF AMERICA CORPORATION, et al.,
Defendants.
---------------------------------------X
FEDERAL DEPOSIT INSURANCE CORPORATION
as Receiver for Amcore Bank, N.A.,
et al.,
Plaintiff,
- against BANK OF AMERICA CORPORATION, et al.,
Defendants.
---------------------------------------X
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE
Following the issuance of two opinions by the Second Circuit
in this MDL, Schwab Short-Term Bond Market Fund v. Lloyds Banking
1

Group PLC, 22 F.4th 103 (2d Cir. Dec. 30, 2021) (“Schwab II”) and
Berkshire Bank v. Lloyds Banking Group plc, et al., 20-1987-cv,
2022

WL

569819

(2d

Cir.

Feb.

25,

2022)

(summary

(“Berkshire”), this Court received several letters.

order)

The British

Bankers’ Association, BBA Enterprises Ltd., and BBA LIBOR Ltd.
(collectively, the “BBA”) sought leave to file renewed motions to
dismiss amended complaints of the Bay Area Toll Authority (“BATA”)
and the Berkshire Bank and Government Development Bank for Puerto
Rico (“Lender Plaintiffs”).

See ECF 3369, 3410. 1

The Federal

Deposit Insurance Corporation as Receiver for 20 Closed Banks
(“FDIC”) sought reconsideration of the Court’s dismissal of its
claims against the BBA.

See ECF 3389.

Underlying each of these

potential motions was a common issue, namely, whether either of
the recent decisions of the Second Circuit impact, in any way,
this Court’s rulings in In re LIBOR-Based Financial Instruments
Antitrust Litig., No. 11 MDL 2262 (NRB), 2019 WL 1331830, at *15
(S.D.N.Y. Mar. 25, 2019) (“LIBOR VIII”), with respect to the BBA.
Accordingly, we directed the BATA, Lender Plaintiffs, and FDIC
(collectively, “plaintiffs”) and the BBA to brief that single
issue, with the plaintiffs submitting their briefs first.

See ECF

No. 3424.

1

Unless otherwise noted, all ECF citations refer to the MDL, 11-md-2262 (NRB).

2

On August 1, 2022, plaintiffs filed a joint brief.
Br., ECF 3450.

See Pl.

The BBA filed a response on August 15, 2022.

Def. Br., ECF 3459.

See

Plaintiffs filed a reply on August 17, 2022,

see Pl. Reply, ECF 3464, and the BBA filed a sur-reply on August
23, 2022,

see Def. Sur-Reply, ECF 3471-1.

In their submissions, plaintiffs assert that Schwab II and
Berkshire “reversed LIBOR VIII’s finding that plaintiffs failed to
allege facts sufficient to show the BBA was a member of the
plausibly pled conspiracy and that the BBA’s acts in furtherance
of the conspiracy were jurisdictionally relevant.”

Pl. Br. at 1.

Plaintiffs’ position is without foundation and is analytically
flawed.
To

rely

on

conspiracy

jurisdiction

to

assert

personal

jurisdiction, a plaintiff must establish that: “(1) a conspiracy
existed; (2) the defendant participated in the conspiracy; and (3)
a co-conspirator’s overt acts in furtherance of the conspiracy had
sufficient contacts with a state to subject that co-conspirator to
jurisdiction in that state.”

Charles Schwab Corp. v. Bank of

America Corp., 883 F.3d 68 (2d Cir. 2018) (“Schwab I”) (adopting
the three-factor test for alleging a conspiracy theory of personal
jurisdiction set forth in Unspam Technologies, Inc. v. Chernuk,
716 F.3d 322, 329 (4th Cir. 2013)). 2
This Court had previously dismissed the BBA, which is based in the United
Kingdom, on traditional personal jurisdiction grounds. See In re LIBOR Based
Fin. Instruments Antitrust Litig., 2015 WL 6243526, at *20, *29, *38 (S.D.N.Y.
2

3

Plaintiffs slide over the first and second requirements for
reliance on conspiracy jurisdiction, focusing instead on acts that
the BBA allegedly took in the United States.
8.

See Pl. Br. at 2, 5-

Significantly, however, the only conspiracy that has been held

to be adequately pled is the 16-bank antitrust conspiracy upheld
in Gelboim v. Bank of Am. Corp., 823 F.3d 759, 782 (2d Cir. 2016)
(“Gelboim”).
appellants

There, the Second Circuit held that the plaintiffs-

“plausibly

alleged

the

existence

of

an

inter-bank

conspiracy” through “allegations [that] evince[d] a common motive
to conspire—increased profits and the projection of financial
soundness—as well as a high number of interfirm communications.”
Id. at 781-82.

However, the Second Circuit cautioned that the

“decision is of narrow scope,” recognizing that “further [factual]
development” may undermine its conclusions:
[C]ommon sense dictates that the Banks 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 lender. On the other hand,
the record is undeveloped and it is not even established
Oct. 20, 2015) (“LIBOR IV”) (holding allegations that the BBA made false
representations about the quality of LIBOR in the United States to induce
continued reliance on LIBOR (labeled by plaintiffs as the “charm offensive”)
were insufficient for personal jurisdiction purposes, but potentially relevant
to plaintiffs’ statute of limitations argument); see also In re LIBOR-Based
Fin. Instruments Antitrust Litig., 2016 WL 7378980, at *12 (S.D.N.Y. Dec. 20,
2016) (“LIBOR VI”); In re LIBOR Based Fin. Instruments Antitrust Litig., 2015
WL 6696407, at *9 (S.D.N.Y. Nov. 3, 2015)(“LIBOR V”), 2015 WL 6696407 (S.D.N.Y.
Nov. 3, 2015).
These holdings have not been reversed.
To assert personal
jurisdiction over the BBA, plaintiffs must therefore be able to successfully
rely on conspiracy jurisdiction.

4

that the Banks used LIBOR in setting rates for lending
transactions. Nevertheless, the potential of a wash
requires further development and can only be properly
analyzed at later stages of the litigation.
Id. at 782-83.
In any event, the BBA was indisputably not a member of the
“inter-bank conspiracy” upheld in Gelboim.

Id. at 782.

As

described by the Circuit, the members of the pled conspiracy were
the 16 panel banks that “determined LIBOR each business day based,
in part, on the Banks’ individual submissions.”
Indeed, it could not be otherwise:

Id. at 764.

not only was the BBA not a

panel bank, the BBA was not even a named defendant in the Gelboim
complaint.

See No. 12-cv-1025 (NRB), ECF 12.

Following Gelboim and Schwab I, this Court considered motions
for leave to amend filed by six different plaintiffs.
VIII, 2019 WL 1331830, at *5.

See LIBOR

One motion sought to expand the

conspiracy to include the BBA as a co-conspirator with the 16 panel
banks.

Id. at *15.

That motion was, however, rejected in LIBOR

VIII on the merits, not simply on personal jurisdiction grounds:
As a threshold matter, we reject FFP plaintiffs’ attempt
to cast the BBA as a member of the plausibly pled
conspiracy and thereby reject their efforts to rely on
the BBA’s acts in the United States for jurisdictional
purposes. Even FFP plaintiffs point out that the BBA’s
incentive was “to portray LIBOR as a reliable benchmark,
to appease its constituent members and to profit from
the licensing of LIBOR,” Pls.’ Joint PJ Br., at 21. Thus,
the BBA is not a financial institution whose main concern
is to project financial soundness, and any act of
5

assurance that the BBA allegedly took did not further
the alleged conspiracy.
Id. at *15.
Indeed, administering the USD LIBOR benchmark in London is a
small part of the BBA’s many day-to-day functions, which primarily
include “lobbying on behalf of the U.K. banking industry on policy
matters and providing training and commercial services to its more
than 150 member institutions.”

Def. Br. at 3.

The BBA’s motives

do not align with those of the 16 panel banks included in the
antitrust

conspiracy

upheld

in

Gelboim.

823

F.3d

at

781-82.

Therefore, the BBA did not share the object of the conspiracy with
the 16 panel banks (regardless of any debate concerning the
object).

See Gelboim, 823 F.3d 759, 782 (finding “the Banks” had

“a common motive to conspire—increased profits and the projection
of financial soundness”).
Remarkably, despite the fact that no appeal from LIBOR VIII
was ever filed, plaintiffs contend that Schwab II and Berkshire
reversed this Court’s holding in LIBOR VIII, consistent with
Gelboim, that the adequately pled conspiracy did not include the
BBA.

See Pl. Br. at 1.

Indeed, Schwab II was an appeal from LIBOR

VI, which was taken by the BATA and other plaintiffs before LIBOR
VIII was even decided.

See ECF 2142.

And Berkshire arose from

the Lender Plaintiffs’ appeal of jurisdictional and statute of
limitations rulings in LIBOR IV; LIBOR V; LIBOR VI; the Court’s
6

February 2, 2017 Memorandum and Order; and the Court’s May 26,
2020 Final Judgment and Order of Dismissal with Prejudice.

See

ECF 3109.
To avoid the obvious consequences of their failure to appeal,
plaintiffs now argue that, although the Lender Plaintiffs did not
include LIBOR VIII in its Berkshire notice of appeal, LIBOR VIII
was nevertheless considered by the Second Circuit in Berkshire.
See Pl. Reply at 2-4.

According to plaintiffs, a December 1, 2021

amendment to Federal Rule of Appellate Procedure 3—which became
effective 18 months after the Lender Plaintiffs filed their notice
of

appeal—made

designate

it

LIBOR

unnecessary

VIII

in

encompassed in Berkshire.

its

for

the

Lender

Plaintiffs

to

of

appeal

for

be

notice

See id. at 2.

it

to

Following the amendment,

however, the Lender Plaintiffs never asked the Second Circuit to
retroactively apply the amendment to broaden the scope of the
Berkshire appeal.

See Def. Sur-reply at 2-3.

Even after the

Second Circuit issued an order on December 13, 2021 inviting letter
briefs on the applicability of Schwab II to the issues presented
in Berkshire, the Lender Plaintiffs did not mention the amendment.
See ECF 3450-5. 3

As the BBA correctly observes, the “Lender

In their January 19, 2021 letter to the Circuit, the Lender Plaintiffs briefly
attempted to rebut a footnote in the BBA’s appellate brief, which states that
the Court found in LIBOR VIII that the BBA is not a member of the inter-bank
conspiracy upheld in Gelboim. See ECF 3450-1 at 34 n.12; ECF 3450-5 at 5. In
doing so, however, the Lender Plaintiffs do not cite to or even mention this
Court’s holding in LIBOR VIII—let alone ask the Circuit to consider LIBOR VIII
in the scope of its appeal. See ECF 3450-5 at 5.
3

7

Plaintiffs remained entirely silent about the amendments from the
inception of their appeal through its conclusion—and indeed until
now.”

See Def. Sur-reply at 3.

Of greatest significance, the

Second Circuit clearly did not understand LIBOR VIII to be subject
to the Berkshire appeal.

Consistent with the notice of appeal,

the Second Circuit in Berkshire listed the “series of district
court decisions” that the plaintiffs-appellants challenged on
appeal.

See Berkshire, 2022 WL 569819, at *1.

(citing LIBOR VI;

LIBOR V; LIBOR VI; and the Court’s February 2, 2017 Memorandum and
Order).

That list does not include LIBOR VIII.

Moreover,

a

reading

of

the

two

Second

provides no support for plaintiffs’ position.

See id.
Circuit

opinions

Schwab II does not

mention the BBA, except for an introductory description of it as
a named defendant and a footnote stating that it “do[es] not
address” whether acts allegedly taken by the BBA in the United
States “amount to overt conspiratorial acts in the forum.”
F.4th at 109, 112, 123 n.9.

22

Similarly, there are no references to

the BBA in Berkshire.
Unable to establish that any language in the Circuit’s recent
opinions reversed this Court’s ruling that the BBA was not a member
of the Gelboim conspiracy, plaintiffs reference their own, and not
the Circuit’s, discussion of alleged acts by the BBA in furtherance
of an unestablished conspiracy.

See e.g., Pl. Br. at 5-8.

For

example, Plaintiffs highlight the Second Circuit’s citation in
8

Berkshire to a six-page section of their appellate brief, which
describes, in part, alleged overt acts taken by BBA staff in New
York.

See id. at 7-8.

However, directly after that citation, the

Second Circuit includes a footnote, not mentioned by plaintiffs,
which states that it “need not analyze whether every purported act
or communication proffered by Plaintiffs-Appellants ‘amount[s] to
overt conspiratorial acts in the forum’ because the ones detailed
[in Schwab II] sufficiently allege overt acts in New York.”
Berkshire, 2022 WL 569819, at *3 n.2 (citing Schwab II, 22 F.4th
at 123 n.9).

In that same footnote, the Second Circuit cites to

the footnote in Schwab II, where it stated that it does not need
to address whether the BBA’s alleged acts were in furtherance of
the conspiracy.
Second

Circuit’s

Id.

Contrary to the plaintiffs’ argument, the

citation

to

the

plaintiffs’

appellate

brief

cannot be construed as evidence that the Second Circuit considered
at all the alleged acts taken by the BBA, let alone reversed this
Court’s ruling in LIBOR VIII.
Even assuming arguendo that the Second Circuit did consider
acts allegedly taken by the BBA in the United States, the Second
Circuit did not consider or discuss the first two prongs of
conspiracy jurisdiction in either Schwab II or Berkshire.

See

Schwab II, 22 F.4th at 122–23 (“Only Schwab [I]’s third prong is
at issue here.”); Berkshire, 2022 WL 569819, at *2 (“As in Schwab
II, the parties here contest the third element of the due process
9

analysis for conspiracy-based personal jurisdiction.”).

Indeed,

in Schwab II, the Second Circuit specifically declined to consider
whether

the

first

two

factors

of

the

test

for

conspiracy

jurisdiction were established as defendants had “forfeited” those
arguments by “stat[ing] [them] for the first time in their surreply.”

22 F.4th at 123 n.8. 4

Meanwhile, Berkshire merely states

that “[i]n prior appeals arising from the LIBOR MDL, this Court
recognized that there were plausible allegations that a conspiracy
existed and that defendants participated in it” and cites to
Gelboim

as

conspiracy.”

shorthand

for

the

adequately

pled

Berkshire, 2022 WL 569819, at *2.

“inter-bank

As noted, the

Gelboim conspiracy is limited to the 16 panel banks and does not
include

the

BBA.

Any

focus

on

whether

the

third

prong

of

conspiracy jurisdiction has been met, when the first two prongs
have not been addressed, is without significance.
For the foregoing reasons, the Court finds that the Second
Circuit’s

recent

decisions

in

Schwab

II

and

Berkshire

leave

undisturbed this Court’s ruling in LIBOR VIII with respect to the
BBA.

Plaintiffs’ argument that the “mandate rule” prohibits the Court from
considering these “forfeited” arguments on remand is meritless. See Pl. Br. at
12. The “mandate rule” only applies to issues decided by the appellate court.
See e.g., New England Ins. Co. v. Healthcare Underwriters Mut. Ins. Co., 352
F.3d 599, 606 (2d Cir. 2003) (“[T]he law of the case does not extend to issues
an appellate court did not address.”). Moreover, it is undisputed that LIBOR
VIII was not appealed in Schwab II or even argued in the underlying briefing.
See Pl. Br. at 4; Def. Br. at 20.
4

10

SO ORDERED.
Dated:

New York, New York
November 18, 2022
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____________________________
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE

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