Sonterra Capital Master Fund Ltd. v. Credit Suisse Group AG et al

Filing 170

OPINION AND ORDER: re: 74 MOTION to Dismiss filed by Bluecrest Capital Management LLP, 63 MOTION to Dismiss Notice of Defendants' Motions to Dismiss the Amended Class Action Complaint filed by UBS AG. For the foregoing reasons, defendant s' motions to dismiss each count in the Complaint are granted. Specifically, Count One is dismissed for lack of constitutional standing because plaintiffs have not alleged that they were injured by defendants' bid-ask spread manipulation. C ount Two is dismissed as to each defendant because plaintiffs lack antitrust standing to sue RBS, the only defendant that has been plausibly alleged to have violated the antitrust laws. Counts Three, Four, and Five are dismissed as to each defendant because the Complaint fails to plausibly allege that Divitto suffered actual injury from defendants' alleged manipulation. Counts Six and Seven are dismissed as to each defendant as impermissibly extraterritorial. Counts Eight and Nine are dism issed because the Court declines to exercise supplemental jurisdiction over these state law claims. In addition to plaintiffs' failure to state a claim uponwhich relief can be granted, defendants' motion to dismiss for lack of personal juri sdiction is granted as to DB Group Services and BlueCrest, but denied as to the Credit Suisse Defendants, Deutsche Bank AG, RBS, and UBS. If plaintiffs intend to file a second amended complaint, the last date to do so is October 16, 2017. Defendants must answer or otherwise respond to that complaint on or before October 30, 2017. If plaintiffs do not file a second amended complaint by October 16, 2017, their claims will be dismissed with prejudice. SO ORDERED., ( Amended Pleadings due by 10/16/2017.) (Signed by Judge Sidney H. Stein on 9/25/2017) (ama)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SONTERRA CAPITAL MASTER FUND
LTD., FRONTPOINT EUROPEAN FUND,
L.P., FRONTPOINT FINANCIAL
SERVICES FUND, L.P., FRONTPOINT
HEALTHCARE FLAGSHIP ENHANCED
FUND, L.P., FRONTPOINT
HEALTHCARE FLAGSHIP FUND, L.P.,
FRONTPOINT HEALTHCARE
HORIZONS FUND, L.P., FRONTPOINT
FINANCIAL HORIZONS FUND, L.P.,
FRONTPOINT UTILITY AND ENERGY
FUND L.P., HUNTER GLOBAL
INVESTORS FUND I, L.P., HUNTER
GLOBAL INVESTORS FUND II, L.P.,
HUNTER GLOBAL INVESTORS
OFFSHORE FUND LTD., HUNTER
GLOBAL INVESTORS OFFSHORE FUND
II LTD., HUNTER GLOBAL INVESTORS
SRI FUND LTD., HG HOLDINGS LTD.,
HG HOLDINGS II LTD., and FRANK
DIVITTO, on behalf of themselves and all
others similarly situated,
Plaintiffs,
-againstCREDIT SUISSE GROUP AG, CREDIT
SUISSE AG, JPMORGAN CHASE & CO.,
THE ROYAL BANK OF SCOTLAND PLC,
UBS AG, BLUECREST CAPITAL
MANAGEMENT LLP, DEUTSCHE BANK
AG, DB GROUP SERVICES UK LIMITED,
AND JOHN DOE NOS. 1-50,
Defendants.

1:15-cv-00871 (SHS)
OPINION & ORDER

Table of Contents
I. Background ......................................................................................... 7
A. Summary of CHF LIBOR .......................................................... 8
B.
Relationship between CHF LIBOR and Swiss Franc
Derivatives ................................................................................. 8
C.
The Parties and the Types of Swiss Franc Derivatives ......... 9
D. Alleged CHF LIBOR Manipulation....................................... 11
1. Daily Fixes and Longer-Term Bias ..................................... 12
2. Specific Instances of Manipulation .................................... 12
a. Intra-Defendant Manipulation........................................ 13
b. Inter-Defendant Collusion .............................................. 13
3. Systemic Nature of Manipulation ...................................... 15
E.
Bid-Ask Manipulation ............................................................ 16
F.
Regulatory Investigations and Settlements with
Defendants ............................................................................... 17
G. The Complaint, Plaintiffs’ Claims, and the Proposed
Class .......................................................................................... 18
II. Article III Standing ........................................................................... 19
A. Standard .................................................................................... 19
B.
Plaintiffs Lack Article III Standing to Bring Their
Bid-Ask Spread Claims .......................................................... 20
C.
Plaintiffs Have Article III Standing to Bring Their CHF
LIBOR Manipulation Claims with Respect to CHF
Futures and FX Forwards ...................................................... 23
D. Plaintiffs Have Class Standing to Bring Their CHF
LIBOR Manipulation Claims with Respect to Interest
Rate Swaps and NYSE LIFFE Exchange Futures
Contracts .................................................................................. 27
III. Standard of Review for Motion to Dismiss for Failure to
State a Claim ..................................................................................... 29
IV. Antitrust Claim (Count Two) ......................................................... 31
A. Conduct in Violation of Section One .................................... 32
1. The Alleged Conduct Constitutes a Restraint of
Trade ...................................................................................... 32
2. Plaintiffs Allege a Plausible Antitrust Conspiracy
Against Only RBS ................................................................ 33
B.
Antitrust Standing ................................................................... 40

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1.
2.

Plaintiffs Adequately Allege Antitrust Injury .................. 40
Only the Direct Transaction Plaintiffs Are Efficient
Enforcers ............................................................................... 42
a. Directness of Causation of the Injury............................. 43
b. Existence of More Direct Victims ................................... 48
c. Speculative Damages........................................................ 50
d. Duplicative Recovery and Complex
Apportionment ................................................................. 53
C.
Statute of Limitations .............................................................. 54
1. The Complaint Fails to Allege Antitrust Violations
Within the Four-Year Statute of Limitations.................... 55
2. Count Two is Timely Because the Statute of
Limitations is Tolled by the Fraudulent Concealment
Doctrine ................................................................................. 56
D. The FTAIA Does Not Bar Count Two .................................. 59
V. CEA Claims (Counts Three, Four, and Five) ................................ 60
A. The CEA Does Not Cover CHF FX Forwards ..................... 61
B.
Counts Three, Four, and Five Fail Because Plaintiffs
Lack CEA Standing................................................................. 61
C.
While Plaintiffs Lack CEA Standing, They Have
Plausibly Alleged Manipulation by the Deutsche Bank
Defendants, RBS, and UBS .................................................... 64
D. While Plaintiffs Lack CEA Standing, They Have
Plausibly Alleged Principal-Agent Liability Against the
Deutsche Bank Defendants, RBS, and UBS ......................... 67
E.
While Plaintiffs Lack CEA Standing, They Have
Plausibly Alleged Aiding and Abetting Liability
Against RBS ............................................................................. 68
F.
The CEA Claims Are Timely Against All Defendants
Except UBS ............................................................................... 68
VI. RICO Claims (Counts Six and Seven) .......................................... 70
A. Plaintiffs Have RICO Standing .............................................. 71
B.
The Complaint Adequately Alleges Conduct that
Violates RICO Only as to RBS .............................................. 72
1. The Complaint Adequately Alleges an Association-inFact RICO Enterprise Only as to RBS ............................... 72

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2.

The Complaint Adequately Alleges Two Predicate
Acts of Wire Fraud by RBS ................................................. 73
3. The Complaint Adequately Alleges that RBS Engaged
in a Pattern of Racketeering Activity ................................ 75
C.
The Complaint Adequately Alleges a RICO Conspiracy
Only as to RBS ......................................................................... 76
D. The RICO Claims Are Dismissed in Full as
Impermissibly Extraterritorial .............................................. 76
E.
Plaintiffs’ RICO Claims Are Timely ...................................... 81
VII. The Court Declines to Exercise Supplemental Jurisdiction
over the State Law Claims (Counts Eight and Nine) ............... 82
VIII. Personal Jurisdiction ..................................................................... 83
A. Defendants’ Operations and U.S. Connections ................... 84
1. BlueCrest ................................................................................ 84
2. The Credit Suisse Defendants ............................................. 84
3. Deutsche Bank AG ............................................................... 85
4. DB Group Services ............................................................... 85
5. RBS .......................................................................................... 85
6. UBS ......................................................................................... 85
B.
Personal Jurisdiction Standard .............................................. 86
C.
No Defendant Has Consented to the Court’s General
Jurisdiction ............................................................................... 86
D. Specific Jurisdiction ................................................................. 89
1. Standard ................................................................................. 90
2. The National Contacts Test Applies to Plaintiffs’
Federal Claims ...................................................................... 91
3. Bloomberg Chats Transmitted Through Servers in
New York Do Not Constitute Meaningful Contacts
with the Forum ..................................................................... 92
4. Defendants Causing Thomson Reuters To Disseminate
False CHF LIBOR into the United States Does Not
Itself Create Sufficient Contacts ......................................... 93
5. The Court Has Personal Jurisdiction Over RBS, UBS,
the Credit Suisse Defendants and Deutsche Bank AG
Because Manipulating CHF LIBOR for the Purpose of
Profiting from Transactions in CHF LIBOR-Based

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Derivatives within the United States Constitutes
Purposeful Availment of the Forum ................................. 94
6. The Court Lacks Personal Jurisdiction Over DB Group
Services and BlueCrest Because They Are Not
Plausibly Alleged to Have Transacted in CHF
LIBOR-Based Derivatives in the United States.............. 102
7. RBS’s Conspiracy from Abroad with JPMorgan in the
Forum Reinforces the Conclusion that RBS Is Subject
to the Court’s Jurisdiction ................................................. 103
E.
Fair Play and Substantial Justice ......................................... 106
F.
Jurisdictional Discovery ....................................................... 106
IX. Leave to Replead ............................................................................ 107
X. Conclusion ....................................................................................... 108

SIDNEY H. STEIN, U.S. District Judge.
This putative class action is based primarily on allegations that
defendants unlawfully manipulated the Swiss franc London InterBank
Offered Rate (“CHF LIBOR”), a daily interest rate benchmark designed to
reflect the cost at which large banks are able to borrow Swiss francs.
According to plaintiffs’ First Amended Complaint (the “Complaint”),
changes in CHF LIBOR affect the prices of numerous Swiss franc currency
derivatives, such as Swiss franc foreign exchange forwards (“CHF FX
forwards”) and Swiss franc futures contracts (“CHF futures contracts”).
The Complaint alleges that from at least January 1, 2001 through at least
December 31, 2011 (the “Class Period”) defendants – eight large financial
institutions – conspired to manipulate CHF LIBOR, and thereby the prices
of those derivatives, to benefit their own trading positions in Swiss franc
currency derivatives. The essence of plaintiffs’ claims is that they and
others similarly situated were on the losing end of that manipulation,
transacting in Swiss franc derivatives with defendants and third parties
during the Class Period on terms made less favorable by (1) defendants’
fixing of CHF LIBOR and (2) certain defendants’ collusion to increase the
“bid-ask spread” on transactions in those derivatives. Based on this
alleged misconduct, the Complaint asserts claims against all defendants
under the Sherman Antitrust Act, 15 U.S.C. § 1, et seq., the Commodities

5

Exchange Act (“CEA”), 7 U.S.C. §§ 1, et seq., and the Racketeer Influenced
and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961, et seq., as well
as state law claims against defendants Credit Suisse AG, Credit Suisse
Group AG, and UBS AG for unjust enrichment and breach of the implied
covenant of good faith and fair dealing.
The Complaint draws its allegations largely from the statements of
fact accompanying numerous settlements, for an aggregate value of over
$7 billion, that defendants have reached with U.S. and European
regulators arising from their alleged manipulation of LIBOR for Swiss
francs and several other currencies. Allegations of LIBOR manipulation,
and the resulting regulatory investigations and settlements, have received
widespread media coverage. In recent years, several purported class
actions have also been filed in this judicial district alleging similar
manipulation of LIBOR rates for other currencies. See, e.g., In re: LIBORBased Fin. Instruments Antitrust Litig. (“LIBOR I”), 935 F. Supp. 2d 666
(S.D.N.Y. 2013) (U.S. dollars); Laydon v. Mizuho Bank, Ltd., No. 12-cv-3419,
2014 WL 1280464 (S.D.N.Y. Mar. 28, 2014) (Yen); Sullivan v. Barclays PLC,
No. 13-cv-2811, 2017 WL 685570 (S.D.N.Y. Feb. 21, 2017) (Euros).
Currently before the Court are defendants’ motions to dismiss the
Complaint.1 While these motions were pending, plaintiffs and defendant
JPMorgan Chase & Co. (“JPMorgan”) executed an agreement to settle all
claims against JPMorgan on a class-wide basis. See Doc. 146. Accordingly,
the motions to dismiss are deemed withdrawn as to JPMorgan without
prejudice to refiling in the event the Court does not approve the class
settlement with JPMorgan, and allegations against JPMorgan will be
recounted only as relevant to the remaining defendants. Each of the
remaining seven defendants move to dismiss the Complaint for lack of
subject matter jurisdiction, lack of personal jurisdiction, and failure to state
Two separate motions are addressed in this opinion: (1) the motion of Credit Suisse
Group AG, Credit Suisse AG, The Royal Bank of Scotland PLC, UBS AG, Deutsche
Bank AG, and DB Group Services UK Limited to dismiss for lack of subject matter
jurisdiction and failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(1), (b)(2), and
(b)(6) [Doc. 63]; and (2) the motion of BlueCrest Capital Management Group, LLP, to
dismiss for lack of subject matter jurisdiction, lack of personal jurisdiction, and failure
to state a claim pursuant to Fed. R. Civ. P. 12(b)(1), (b)(2), and (b)(6) [Doc. 74].
1

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a claim. See Fed. R. Civ. P. 12(b)(1), 12(b)(2), and 12(b)(6). These motions
encompass a variety of challenges to the Complaint: ranging from
standing, timeliness, extraterritoriality, and personal jurisdiction to nearly
each element of every claim.
The Court concludes that the Complaint fails to state any claim for
which relief can be granted. As an initial matter, plaintiffs lack Article III
standing to sue for the manipulation of bid-ask spreads because they have
not alleged that they were injured by that manipulation. With respect to
plaintiffs’ antitrust claim for manipulation of CHF LIBOR, the Complaint
fails to plausibly allege an antitrust conspiracy against any defendant
except RBS. While the Complaint makes numerous detailed allegations
that several defendants independently manipulated CHF LIBOR, it is
devoid of specific or plausible allegations that defendants other than RBS
conspired with each other to do so. Moreover, plaintiffs’ antitrust claim
against RBS fails for lack of antitrust standing because plaintiffs did not
transact in CHF LIBOR-based derivatives with RBS and therefore are not
“efficient enforcers” of the antitrust laws. Plaintiffs’ CEA claims fail
because they have not provided sufficient details about their transactions
to plausibly allege that they were injured by defendants’ alleged
manipulation of CHF LIBOR. Plaintiffs’ RICO claims are dismissed as
impermissibly extraterritorial because the alleged scheme to manipulate
CHF LIBOR was, with limited exceptions, centered in Europe and touched
the United States only as part of a global scheme. Because the Complaint
fails to state a viable claim under federal law, the Court declines to exercise
its supplemental jurisdiction over the state law claims.
For these reasons and those provided below, defendants’ motions
to dismiss are granted, and plaintiffs’ claims are dismissed in full with
leave to replead.
I.

BACKGROUND

The following facts are as alleged in the Complaint and are taken as
true solely for the purpose of these motions.

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A.

Summary of CHF LIBOR

CHF LIBOR is determined and disseminated by the British Bankers
Association (“BBA”) in London. To set CHF LIBOR, each trading day
twelve “contributor panel banks” – including five of the eight defendants
in this case – submit to the BBA the interest rate at which they could
borrow Swiss francs “in a reasonable market size just prior to 11:00 A.M.
London time.” Compl. ¶ 71. The twelve contributor banks submit quotes
for fifteen different borrowing durations, or “tenors,” ranging from
overnight to twelve months. Id. ¶ 72. Acting as an agent for the BBA,
Thomson Reuters calculates CHF LIBOR for each tenor by ranking the
quotes in numerical order and then averaging the middle 50% of the
quotes, disregarding the bottom 25% and top 25%.2 The resulting number,
referred to as the “fix,” becomes the official CHF LIBOR for each tenor and
is disseminated globally, along with each bank’s submission, by Thomson
Reuters and other financial services platforms, including into the United
States through U.S. wires. Id. ¶ 73. To ensure the integrity of the rate
setting process, BBA guidelines require that contributor banks submit
quotes without regard for any factor unrelated to their cost of borrowing
Swiss francs.
B.

Relationship between CHF LIBOR and Swiss Franc
Derivatives

The Complaint identifies several types of Swiss franc currency
derivatives as “Swiss franc LIBOR-based derivatives” that it maintains are
each “priced, benchmarked, and/or settled using a mathematical formula
that incorporates Swiss franc LIBOR as one of its terms.” Compl. ¶ 86.
Because of this incorporation, the Complaint alleges, the values of these
derivatives are manipulated when CHF LIBOR is manipulated. For
example, both CHF futures contracts and CHF FX forwards “are
agreements to buy or sell a certain amount of Swiss francs in terms of
another currency, e.g., U.S. Dollars, on some future date,” and the “cost of

For example, if all twelve contributor banks submitted quotes, the bottom three and
top three quotes would be discarded, with CHF LIBOR set as the average of the
middle six quotes.
2

8

buying or selling Swiss francs in the future is determined using an
industry standard formula that incorporates Swiss franc LIBOR.” Id. ¶ 87.
According to the Complaint, a decline in CHF LIBOR causes an increase in
the future price of Swiss francs, which increases the value of CHF futures
contracts and CHF FX forwards. See id. ¶¶ 194-95.
The Complaint purports to demonstrate that CHF LIBOR was
artificial throughout the Class Period through a statistical analysis
comparing CHF LIBOR to the rate of borrowing Swiss francs in “actual
money market transactions.” Id. ¶ 181. While there should have been little
to no difference between CHF LIBOR and the actual cost of borrowing,
plaintiffs allege, their analysis revealed a substantial discrepancy.
C.

The Parties and the Types of Swiss Franc Derivatives

Five of the defendants – UBS AG (“UBS”), The Royal Bank of
Scotland PLC (“RBS”), JPMorgan Chase & Co. (“JPMorgan”), Credit Suisse
Group AG (“Credit Suisse Group”), and Deutsche Bank AG (collectively,
the “Contributor Bank Defendants”) – are among the twelve “contributor
banks” whose quotes set CHF LIBOR.3 Compl. ¶ 4. Defendants Credit
Suisse AG and DB Group Services UK Limited (“DB Group Services”) are
subsidiaries of Credit Suisse Group4 and Deutsche Bank AG,5 respectively.
The last defendant, BlueCrest Capital Management LLP (“BlueCrest”), is
an investment advisory services firm alleged to have requested that
Deutsche Bank AG submit an artificial CHF LIBOR quote.

According to defendants, “JPMorgan Chase & Co. is a financial holding company
that was never a member of the panel of banks that submitted or contributed to Swiss
franc LIBOR, though its affiliate was a panel bank. Similarly, Credit Suisse Group AG
is a financial holding company that was never a member of the panel of banks that
submitted or contributed to Swiss franc LIBOR, though its affiliate, Credit Suisse AG,
was a panel bank.” Doc. 73 at 3 n.2.
3

Credit Suisse Group AG and Credit Suisse AG are collectively referred to as the
“Credit Suisse Defendants.”
4

Deutsche Bank AG and DB Group Services UK Limited are collectively referred to
as the “Deutsche Bank Defendants.”
5

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JPMorgan is a Delaware financial holding company with its
headquarters in New York, NY. Each of the other defendants are
headquartered and incorporated in Europe but are alleged to have
substantial operations within the United States or affiliates and/or
subsidiaries with substantial operations within the United States (the
“Foreign Defendants”). See id. ¶¶ 38-66.
Plaintiffs are investment funds, financial services companies, and
one individual who allege that during the Class Period they suffered
injury by entering into U.S.-based transactions for two types of Swiss franc
LIBOR-based derivatives – (1) Swiss franc currency futures contracts, and
(2) Swiss franc FX forwards – at artificial prices caused by defendants’
manipulation of CHF LIBOR. While plaintiffs themselves transacted in
only these two types of derivatives, they seek to represent a class of those
who transacted in any type of “Swiss franc LIBOR-based derivatives,”
defined to encompass “over-the-counter instruments, such as interest rate
swaps, forward rate agreements, foreign exchange forwards, crosscurrency swaps, overnight index swaps, and tenor basis swaps, as well as
exchange-traded futures and options, such as the three-month Euro Swiss
franc futures contract traded on the NYSE LIFFE Exchange and the Swiss
franc currency futures contract traded on the CME.” Id. ¶ 75.
Plaintiff Frank Divitto, an Ohio resident, alleges that he transacted
in Swiss franc currency futures contracts traded on the Chicago Mercantile
Exchange (“CME”). Id. ¶ 37. The Complaint does not provide any details
of these transactions, beyond stating that they occurred “[d]uring the Class
Period.” Id. According to the Complaint, Swiss franc futures contracts are
“standardized bilateral agreements that call for the purchase or sale of an
underlying commodity on a certain future date.” Id. ¶ 76. “For example,
a June 2015 CME Swiss franc currency futures contract is an agreement for
the purchase or sale of CHF 125,000 in exchange for U.S. Dollars on the
third Wednesday of June 2015. This futures contract is ‘standardized’ and
trades in accordance with the rules specified by the CME, a Designated
Contract Market pursuant to Section 5 of the CEA (7 U.S.C. § 7).” Id. For a
futures contract traded on an exchange such as the CME the exchange
functions as the intermediary, and there is no identifiable counterparty, as
there would be for an “over the counter” (“OTC”) transaction.

10

Aside from Divitto, each plaintiff claims to have transacted in Swiss
franc FX forwards. Whereas Swiss Franc futures contracts are traded on
an exchange, other types of Swiss franc based derivatives trade over the
counter in transactions directly between private parties. A CHF FX
forward agreement is “the OTC equivalent to a currency futures contract,”
under which the parties “agree to buy or sell a custom amount of Swiss
francs at a specified price on a certain date.” Id. ¶ 81. FX forwards can be
attractive because they provide “similar functionality to the standardized
exchange-traded contracts but with greater flexibility, allowing the parties
to customize certain terms such as duration of their agreement, the
‘notional amount,’ i.e., total value, of the contract, and the settlement
date.” Id.
Plaintiffs FrontPoint Healthcare Flagship Enhanced Fund, L.P.,
FrontPoint Healthcare Flagship Fund, L.P., and FrontPoint Healthcare
Horizons Fund, L.P. (the “Direct Transaction Plaintiffs”) allege that they
transacted in FX forwards “directly with Defendants UBS and Credit
Suisse.” Id. ¶¶ 23-25. According to the Complaint, the Direct Transaction
Plaintiffs entered into “over 400 Swiss franc currency forwards with Credit
Suisse and over 1,300 Swiss franc currency forwards with UBS.” Id. ¶ 310.
The Complaint provides specific dates and amounts for some of these
transactions, in contrast with the Divitto allegations. See id. ¶¶ 202-04.
The remaining plaintiffs allege that they transacted in Swiss franc
FX forwards with third parties at prices that were artificial due to
defendants’ manipulation. According to the Complaint, trillions of dollars
in Swiss franc LIBOR-based derivatives were traded within the United
States during the Class Period. Id. ¶ 80.
D.

Alleged CHF LIBOR Manipulation

Plaintiffs allege that defendants abused their control over CHF
LIBOR to move the price of these Swiss franc LIBOR-based derivatives in
whatever direction benefited their own trading positions or those of their
coconspirators. According to the Complaint, “[t]he Contributor Bank
Defendants made false Swiss franc LIBOR submissions in response to
requests from their own Swiss franc LIBOR-based derivatives traders,
including traders in the United States, as well as those made by co-

11

conspirator banks, hedge funds, and inter-dealer brokers, some of which
are based in the United States.” Compl. ¶ 99.
1.

Daily Fixes and Longer-Term Bias

The Complaint alleges two forms of CHF LIBOR manipulation.
First, defendants’ traders allegedly requested “fixings” on specific “days
where one or more of the Defendants had a Swiss franc LIBOR-based
derivatives position that was going to be priced, benchmarked and/or
settled based on Swiss franc LIBOR.” Compl. ¶ 100. Second, “Defendants
also requested false Swiss franc LIBOR submissions to inject a certain ‘bias’
into the Swiss franc LIBOR fixing, permanently manipulating specific
tenors higher or lower by making false submissions over long periods of
time.” Id. ¶ 101.
As will be significant in assessing the plausibility of the alleged
conspiracy, both the “daily fixes” and the longer-term “bias” are alleged to
have manipulated CHF LIBOR “higher or lower” depending on which
would profit whatever defendants’ derivatives positions were at that time,
rather than in any consistent direction. Id. ¶¶ 101, 129. This is in contrast
to some of the other recent cases alleging LIBOR manipulation based on a
theory of persistent suppression, in which contributor banks made
“submission[s] reporting an artificially low cost of borrowing” in order to
“project financial health.” Gelboim v. Bank of America Corp., 823 F.3d 759,
766 (2d Cir. 2016).
2.

Specific Instances of Manipulation

The Complaint provides specific examples of defendants’ requests
for manipulation taken from government regulators’ statements of fact
accompanying their settlements with defendants. These examples include
both requests to a defendant to submit false LIBOR quotes made by a
defendant’s own trader (which the Court will refer to as “intra-defendant
manipulation”) and requests to a defendant to submit false LIBOR quotes
made by a different defendant (which the Court will refer to as “interdefendant collusion”). Because the distinction between intra-defendant
manipulation and inter-defendant collusion will be quite significant for

12

plaintiffs’ antitrust and RICO claims, the specific allegations concerning
the two are summarized separately.
a.

Intra-Defendant Manipulation

With respect to intra-defendant manipulation, the Complaint is
replete with specific instances of UBS, RBS, and Deutsche Bank AG
manipulating their own submissions to benefit their own trading
positions. For example, on July 5, 2006, a UBS submitter agreed to a UBS
Swiss franc derivative trader’s request “for high 1 month fix.” Compl. ¶
103. Similarly, on October 3, 2008, a Deutsche Bank AG submitter agreed
to a Deutsche Bank AG trader’s request for “very low 1 month please.” Id.
¶ 109. And on October 21, 2008, the “primary submitter” for RBS
accommodated an RBS Swiss franc trader’s request that “we need that
libor down fast.” Id. ¶ 191.
These specific instances are alleged to be emblematic of a systemic
pattern of conduct throughout the Class Period. The Complaint claims
that, “[s]tarting at least as early as 2001, and continuing until at least
September 1, 2009, on each trading day on which UBS had Swiss franc
trading positions, UBS’s Swiss franc LIBOR submitters rounded UBS’s
Swiss franc LIBOR submissions to benefit UBS’s global Swiss franc trading
positions.” Id. ¶ 117. According to the Complaint, Deutsche Bank AG
“had a similar policy in place, focused on policing the ‘spread’ or
difference between certain tenors of LIBOR, including Swiss franc LIBOR.”
Id. ¶ 119. “Deutsche Bank’s LIBOR submitters, including those who made
Swiss franc LIBOR submissions, routinely built this spread ‘bias’ into
Deutsche Bank’s LIBOR submissions, pushing the spread between
different tenors of LIBOR wider, even in the absence of written
communications from traders requesting a specific false rate.” Id. ¶ 120.
And the Complaint alleges that RBS traders requested false CHF LIBOR
submissions “continuously during Class Period . . . as often as several
times each week.” Id. ¶ 102.
b.

Inter-Defendant Collusion

Turning to the claims of inter-defendant collusion, the specific
allegations as to several defendants are sparse. Indeed, the Complaint

13

itself characterizes these allegations as the “handful of examples of interDefendant communications released in the government settlements to
date.”6 Compl. ¶ 123. BlueCrest – which was not a contributor bank and
therefore would have had to collude with a contributor bank in order to
manipulate CHF LIBOR – is alleged to have requested a false one-month
CHF LIBOR submission from Deutsche Bank AG on February 10, 2005,
stating: “Can’t you ask your fft to contribute 1m chf libor very low
today?? I have 10 yr of fix, 8 of which against ubs, and they’re getting on
my nerves.” Id. ¶ 131. The Complaint does not allege that Deutsche Bank
AG responded to this request, much less that it submitted a false CHF
LIBOR quote in response to the request. And, in something of a hybrid of
intra-defendant manipulation and inter-defendant collusion, the
Complaint alleges that Deutsche Bank AG manipulated CHF LIBOR at the
request of derivative traders at DB Group Services, its affiliate. See id. ¶¶
111-13.
The allegations of inter-defendant collusion are strongest against
RBS. The Complaint contains multiple specific allegations of RBS traders
discussing manipulation of CHF LIBOR with an unidentified “Bank E.” Id.
¶¶ 124, 213, & App’x. Additionally, the European Commission found that
“RBS and JPMorgan operated a cartel aimed at manipulating Swiss franc
LIBOR to ‘distort the normal pricing of interest rate derivatives
denominated in Swiss franc.’” Id. ¶ 139. In a supplemental brief, plaintiffs
allege that documents JPMorgan recently produced pursuant to its
settlement of this action further corroborate that a JPMorgan trader in
New York conspired with an RBS trader in Europe to repeatedly
manipulate CHF LIBOR.
The Complaint also alleges that RBS manipulated CHF LIBOR
through a “hub and spoke” conspiracy in which “inter-dealer brokers”
accepted “requests for false LIBOR submissions from panel banks and

The Complaint attempts to supplement this “handful” through instances of
defendants manipulating LIBOR for other currencies, such as Yen. See, e.g., Compl. ¶
136. But plaintiffs cannot rely on manipulation of a separate currency to make out
their claims here. See In re Libor-Based Fin. Instruments Antitrust Litig. (“LIBOR IV”),
No. 11-MDL-2262, 2015 WL 4634541, at *38 (S.D.N.Y. Aug. 4, 2015).)
6

14

other market participants and coordinated the submissions of other panel
members to move the market in the agreed upon direction.” Id. ¶¶ 133-34.
The Complaint cites a United Kingdom Financial Services Authority
finding of “at least five requests for Swiss franc LIBOR submissions made
by an external trader and inter-dealer broker that RBS followed during the
Class Period.” Id. ¶ 137. The Complaint alleges generally that other
defendants participated in this “hub and spoke” conspiracy as well, but
lacks any specific allegations because “the banks and brokers on the other
side of these requests have not been identified and the communications
associated with these requests for false submissions have not been
released.” Id.
The Complaint contains no specific allegations that UBS colluded
with any other entity to manipulate Swiss franc LIBOR submissions or that
the Credit Suisse Defendants manipulated CHF LIBOR at all, either alone
or through collusion.
3.

Systemic Nature of Manipulation

Plaintiffs maintain that these specific instances of manipulation
were not isolated incidents or the actions of a few rogue traders, but rather
part of a widespread scheme that was facilitated and encouraged by
defendants as institutions.
The Complaint alleges that defendants
facilitated their LIBOR manipulation through various structural decisions,
such as “(1) making structural changes to their money markets and
LIBOR-based derivatives trading desks to create an environment where
LIBOR manipulation, including the coordination of requests for false
submissions between traders and submitters, was encouraged; [and] (2)
implementing lax compliance standards that failed to detect any
misconduct.” Compl. ¶ 140.
As with the allegations of specific instances of manipulation, the
adequacy of the allegations of systemic facilitation of manipulation varies
widely from defendant to defendant. The Complaint alleges that Deutsche
Bank AG and UBS allowed CHF LIBOR derivative traders, who had a
financial stake in CHF LIBOR, to submit quotes, and that RBS reorganized
its trading desk to place CHF derivative traders next to CHF LIBOR
submitters for the express purpose of allowing traders to share financial

15

positions with the submitters. See id. ¶¶ 141, 146, 150. Deutsche Bank AG
allegedly “even held weekly meetings to ensure that its Swiss franc
LIBOR-based derivative traders and submitters were on the same page
and manipulated the rate in a direction that helped the bank.” Id. ¶ 110.
According to the Complaint, RBS, UBS, and Deutsche Bank AG failed to
conduct investigations of misconduct or placed submitters themselves in
charge of such investigations. See id. ¶¶ 154, 160, 164. The Complaint is
devoid of any allegations that BlueCrest, DB Group Services, or the Credit
Suisse Defendants engaged in any similar structural facilitation of CHF
LIBOR manipulation.
E.

Bid-Ask Manipulation

The Complaint alleges that defendants, in addition to manipulating
CHF LIBOR, colluded during the Class Period to increase the “bid-ask
spread” that they charged as market makers in the over-the-counter
LIBOR-based derivatives market. Compl. ¶ 90. The bid-ask spread is the
difference between the “bid” price at which a market maker, such as the
defendants, offers to buy LIBOR-based derivatives, and the “ask” price at
which the market maker will sell that same derivative. Id. ¶ 3. The alleged
purpose of this conspiracy was “to quote wider, fixed bid-ask spreads to
all non-members for over-the-counter Swiss franc LIBOR-based
derivatives, while agreeing to maintain a narrower bid-ask spread for
trades amongst themselves.” Id. ¶ 93. Essentially, widening the bid-ask
spread would increase defendants’ profits on every transaction “because it
allows them to buy derivatives from Class members at an artificially lower
bid price and then resell them to other Class members at an artificially
higher ask price.” Id. ¶ 94.
While the Complaint at times suggest that this conspiracy included
“defendants” collectively, its only specific allegations are based on a
settlement between the European Commission and RBS, UBS, JPMorgan,
and Credit Suisse Group AG – referred to in the Complaint as the “EC
Cartel Defendants.” The EC Commission’s decision accompanying the
settlement found that the EC Cartel Defendants manipulated bid-ask
spreads for specific types of Swiss franc currency derivatives between May
and September 2007. The Complaint does not individually accuse any

16

defendant other than the EC Cartel Defendants of participating in the bidask spread conspiracy.
F.

Regulatory
Defendants

Investigations

and

Settlements

with

As noted, defendants’ alleged manipulation of CHF LIBOR and the
bid-ask spreads for certain types of CHF LIBOR-based derivatives led to a
number of enforcement actions and settlements between defendants and
regulators in the United States and Europe, and the findings of those
actions provide the core allegations to the Complaint. The first of these
actions was made public on December 18 and 19, 2012, when UBS reached
settlements with the U.S. Department of Justice (“DOJ”), the U.S.
Commodities Futures Trading Commission (“CFTC”), and the United
Kingdom’s Financial Services Authority (“FSA”) for widespread
manipulation of CHF LIBOR.
The second round of these actions was made public on February 2,
2013, when RBS likewise reached settlements with the DOJ, CFTC, and
FSA for repeated manipulation of CHF LIBOR between 2006 and 2010.
And on October 21, 2014, RBS and JPMorgan reached a settlement with the
European Commission for, in the words of the statement accompanying
the settlement, colluding to “distort the normal course of pricing of
interest rate derivatives denominated in Swiss franc” between March 2008
and July 2009. Id. ¶ 55. Also on October 21, 2014, the EC Cartel
Defendants reached a settlement with the European Commission for
manipulation of the bid-ask spread for certain Swiss franc currency
derivatives between May 2007 and September 2007. Id. ¶ 92.
Last, on April 23, 2015, Deutsche Bank AG reached settlements with
the DOJ, CFTC, the United Kingdom’s Financial Conduct Authority, and
the New York State Department of Financial Services. The DOJ statement
of facts accompanying the settlement states that “[f]rom at least 2003
through at least 2010, DB derivatives traders requested and obtained
benchmark interest rate submissions that benefited their trading

17

positions.”7 DB Group Services likewise entered a settlement with the DOJ
on April 23, 2015, based partly on its employment of traders in London
requesting false CHF LIBOR quotes. See id. ¶ 53.
G.

The Complaint, Plaintiffs’ Claims, and the Proposed Class

On February 5, 2015, plaintiffs filed a complaint against Credit
Suisse Group AG, JPMorgan Chase & Co., RBS, UBS AG, and John Doe
Nos. 1-50. On June 19, 2015, plaintiffs filed their First Amended
Complaint (again, the “Complaint”) to add Credit Suisse AG, the Deutsche
Bank Defendants, and BlueCrest as defendants, as well as additional
allegations. Plaintiffs bring this action pursuant to Fed. R. Civ. P. 23 and
seek to represent “[a]ll persons or entities that engaged in U.S.-based
transactions in financial instruments that were priced, benchmarked,
and/or settled to Swiss franc LIBOR at any time from at least January 1,
2001, through at least December 31, 2011 (the ‘Class’).” Compl. ¶ 224.
The Complaint asserts nine causes of action. Plaintiffs bring two
antitrust claims against all defendants for violations of § 1 of the Sherman
Act, 15 U.S.C. § 1, et seq. – one based on collusion to manipulate Swiss
franc derivative bid-ask spreads (“Count One”), and one based on
collusion to manipulate CHF LIBOR (“Count Two”). Plaintiffs also assert
three claims against all defendants under the CEA, 7 U.S.C. §§ 1, et seq. –
one for violations of the CEA based on manipulation of CHF LIBOR
(“Count Three”), one for principal-agent liability for those violations
(“Count Four”), and one for aiding and abetting other defendants’
violations (“Count Five”). Next, plaintiffs assert claims against each
defendant for violation of RICO, 18 U.S.C. §1962(c) (“Count Six”) based on
their intentional manipulation of CHF LIBOR through the use of U.S.
wires, and for RICO conspiracy in violation of 18 U.S.C. § 1962(d), (“Count
Seven”). Last, plaintiffs assert state law claims of unjust enrichment
(“Count Eight”) and breach of the implied covenant of good faith and fair
dealing (“Count Nine”) against the Credit Suisse Defendants and UBS for

DOJ Deferred Prosecution Agreement and Attachment A Statement of Facts with
Deutsche Bank AG at 9, USA v. Deutsche Bank AG, No. 15-cr-61, Dkt. No. 6 (D. Conn.
Apr. 23, 2015); see also Compl. ¶ 106.
7

18

transacting with plaintiffs in Swiss franc FX forwards at artificial prices
caused by their manipulation.
II.

Article III Standing

Defendants move to dismiss the Complaint for lack of subject
matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) on
the grounds that plaintiffs have not alleged an injury in fact and therefore
lack Article III standing to bring their claims. With respect to the claims
based on the alleged manipulation of bid-ask spreads (the “Bid-Ask
Spread Claims”), defendants contend that plaintiffs have failed to allege
that plaintiffs transacted in the types of derivatives they allege were
affected. With respect to claims based on the alleged manipulation of CHF
LIBOR (the “CHF LIBOR Manipulation Claims”), defendants argue that
plaintiffs have not plausibly alleged that any manipulation of CHF LIBOR
affects the price of the Swiss franc currency derivatives, and that plaintiffs
lack standing to sue for manipulation of types of Swiss franc currency
derivatives in which they did not themselves transact. For the reasons
below, the Court concludes that plaintiffs have standing to pursue their
CHF LIBOR Manipulation Claims, with certain exceptions, but not their
Bid-Ask Spread Claims.
A.

Standard

“Standing is the threshold question in every federal case,
determining the power of the court to entertain the suit.” Ross v. Bank of
Am., N.A. (USA), 524 F.3d 217, 222 (2d Cir. 2008). “A case is properly
dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when
the district court lacks the statutory or constitutional power to adjudicate
it.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). As the
parties invoking federal jurisdiction, plaintiffs bear the burden of
establishing standing to bring their claims, and thus the Court’s
jurisdiction to hear those claims. Keepers, Inc. v. City of Milford, 807 F.3d 24,
39 (2d Cir. 2015). “To establish Article III standing, a plaintiff must . . .
allege, and ultimately prove, that he has suffered an injury-in-fact that is
fairly traceable to the challenged action of the defendant, and which is
likely to be redressed by the requested relief.” Baur v. Veneman, 352 F.3d
625, 632 (2d Cir. 2003). The alleged injury in fact must be “concrete and

19

particularized, actual or imminent, and fairly traceable to the challenged
action.” WC Capital Mgmt., LLC v. UBS Secs., LLC, 711 F.3d 322, 329 (2d
Cir. 2013) (citations omitted).
Article III’s “injury in fact” requirement “is a low threshold.” Ross,
524 F.3d at 222. The alleged injury “need not be capable of sustaining a
valid cause of action” to establish standing, so long as it is “likely
redressable by a favorable decision.” Id. “When we assess a lack-ofstanding argument on the basis of the pleadings, moreover, we take as
true the factual allegations contained in the complaint.” WC Capital Mgmt.,
LLC, 711 F.3d at 329.
Ordinarily, standing requires that a plaintiff “personally suffered
an injury” from the challenged conduct. W.R. Huff Asset Mgmt. Co., LLC v.
Deloitte & Touche, LLP, 549 F.3d 100, 107 (2d Cir. 2008). However, “in a
putative class action, a plaintiff has class standing if he plausibly alleges
(1) that he personally has suffered some actual injury as a result of the
putatively illegal conduct of the defendant, and (2) that such conduct
implicates the same set of concerns as the conduct alleged to have caused
injury to other members of the putative class by the same defendants.”8
NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145,
162 (2d Cir. 2012) (internal quotation marks, alterations, and citations
omitted). This “class standing” “does not turn on whether [plaintiffs]
would have statutory or Article III standing.” Id. at 158.
B.

Plaintiffs Lack Article III Standing to Bring Their Bid-Ask
Spread Claims

With respect to the alleged “bid-ask spread” conspiracy, defendants
emphasize that the European Commission decision on which all of the
Complaint’s allegations are based states that the “specific types” of
derivatives “concerned by the infringement were limited to: (i) forward
“NECA’s two-part test, which derives from constitutional standing principles, is …
distinct from the criteria that govern whether a named plaintiff is an adequate class
representative under Rule 23(a).” Ret. Bd. Of the Policemen’s Annuity & Benefit Fund of
the City of Chicago v. Bank of New York Mellon, 775 F.3d 154, 161 (2d Cir. 2014).
8

20

rate agreements (referenced to Swiss Franc LIBOR) and (ii) swaps, which
include overnight index swaps (referenced to the Swiss Franc TOIS) and
interest rate swaps (referenced to Swiss Franc LIBOR).”9 But plaintiffs
claim to have transacted in only two types of CHF currency derivatives –
Swiss franc FX forwards and Swiss franc currency futures contracts.
Compl. ¶¶ 20-37. That is, plaintiffs have not alleged that they transacted
in any of the specific types of derivatives covered by the European
Commission settlement – forward rate agreements, overnight index swaps,
and interest rate swaps. Instead, the Complaint seeks to lump all of these
derivatives together under the umbrella definition of “Swiss franc LIBORbased derivatives.” See id. ¶ 75.
It then alleges that defendants
manipulated the “bid-ask spread” for “Swiss franc LIBOR-based
derivatives” generally without ever alleging manipulation for Swiss franc
FX forwards and Swiss franc currency futures contracts specifically. Thus,
defendants argue, plaintiffs have failed to allege that they were injured by
any bid-ask spread manipulation.
Tellingly, plaintiffs do not contradict defendants’ observation that
the Complaint fails to allege bid-ask spread manipulation for the specific
types of derivatives in which plaintiffs transacted. Instead, plaintiffs seek
to excuse that failure by protesting that “[l]ittle can be judged at the
pleading stage concerning why the EC limited its bid-ask findings to a
specified period and specified instruments,” and nakedly asserting that “it
is plausible that Defendants’ misconduct extended well beyond the
bounds of their deal with the EC.” Doc. 86 at 33-34. But mere speculation
that defendants’ misconduct extended beyond the scope of the European
Commission settlement does not satisfy plaintiffs’ burden to allege such
conduct. The only attempt to show such manipulation is a cryptic
comment in plaintiffs’ briefing that “these instruments . . . constituted one
integrated Swiss franc LIBOR-based derivatives market.”10 Doc. 86 at 22-

European Commission Decision at 5-6, Case AT.39924, Swiss Franc Interest Rate
Derivatives (Bid Ask Spread Infringement) (Oct. 21, 2014),
http://ec.europa.eu/competition/antitrust/cases/dec_docs/39924/39924_1156_3.pdf.
9

The conclusory suggestion in plaintiffs’ brief (not the Complaint) that the various
derivatives constitute “one integrated . . . market” as to bid-ask spreads – presumably
to imply that manipulation of the spread for one derivative will affect the spread of
10

21

23. That vague, isolated assertion in the briefing is no substitute for a clear
allegation that the bid-ask spreads for plaintiffs’ derivatives were affected
by defendants’ manipulation.
Absent such an allegation, plaintiffs cannot show an injury in fact
and therefore lack standing to sue on behalf of the proposed class for
manipulation of other types of derivatives. As explained in NECA-IBEW
Health & Welfare Fund, a plaintiff has standing to pursue class members’
separate injuries implicating “the same set of concerns” only if it
“personally has suffered some actual injury as a result of the putatively
illegal conduct.” 693 F.3d at 162 (internal quotation marks and alterations
omitted).11 Accordingly, Count One is dismissed for lack of standing, and
no other claim can be supported by allegations relating to bid-ask spread
manipulation.12

the others – is far from evident. Unlike CHF LIBOR, which the Complaint alleges is a
price input for every derivative, the bid-ask spreads are essentially alleged to be a
transaction fee for the market making of specific derivative products. These
derivatives are alleged to be distinct products that are sold separately, and the
Complaint does not explain why manipulating the spread for one of these products
necessarily or even plausibly manipulates the spread as to other separately sold types.
Nor can plaintiffs bootstrap any harm suffered through CHF LIBOR manipulation
into standing to represent a class affected by bid-ask spread manipulation, because
the Complaint does not plausibly allege that these two alleged patterns of
manipulation were part of the same conspiracy. That is, a group of defendants could
have agreed to fix bid-ask spreads regardless of the CHF LIBOR rate, and vice versa,
and there is no indication that the two conspiracies were part of one interwoven plot,
as opposed to two separate sets of misconduct allegedly committed by the same
entities.
11

The Court reads the Complaint to allege bid-ask spread manipulation only in
support of Count One, one of its two antitrust claims. But to the extent plaintiffs seek
support from these allegations for their other claims as well, they lack standing to do
so. And because plaintiffs lack Article III standing to sue for bid-ask spread
manipulation, their arguments that this Court has personal jurisdiction over
defendants likewise cannot be based on allegations of bid-ask spread manipulation.
See Sunward Electronics, 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.”); In re
LIBOR-Based Financial Instruments Antitrust Litigation, (“LIBOR VI”), No. 11-mdl-2262,
2016 WL 7378980, at *3 (S.D.N.Y. Dec. 20, 2016) (“The first step in evaluating personal
12

22

C.

Plaintiffs Have Article III Standing to Bring Their CHF
LIBOR Manipulation Claims with Respect to CHF Futures
and FX Forwards

Defendants also contend that plaintiffs lack Article III standing to
pursue their CHF LIBOR Manipulation Claims because they have failed to
plausibly allege a connection between CHF LIBOR and the price of the
derivatives in which they transacted. Without such a connection, no injury
in fact would exist that is fairly traceable to defendants’ alleged
manipulation. (This argument is also central to defendants’ claims that
plaintiffs have not adequately pleaded a cognizable injury under the
Sherman Act, the CEA, or RICO.)
According to the Complaint, “[t]he cost of buying or selling Swiss
francs in the future is determined using an industry standard formula that
incorporates Swiss franc LIBOR” which “applies to both CME Swiss franc
futures contracts and OTC Swiss franc foreign exchange forwards.”
Compl. ¶¶ 87-88. The “industry standard formula” that the complaint
references is drawn from an FX futures tutorial published by the CME in
April 2013. This formula is:

The formula “involves taking the ‘spot price’ of Swiss francs for
immediate delivery, and adjusting it to account for the ‘cost of carry,’ i.e.,
the amount of interest paid or received on Swiss franc deposits, for the
duration of the agreement. Swiss franc LIBOR, the benchmark rate of
interest for Swiss franc deposits, is incorporated into the formula as either
‘Rbase’ or ‘Rterm’ depending on whether Swiss francs are being purchased
or sold in the transaction.” Id. ¶ 88. Thus, if the CHF LIBOR input is
manipulated, “so is the cost of buying or selling Swiss francs in the future
and the prices of both CME Swiss franc currency futures contracts and
jurisdiction in a conspiracy case is to define the scope of the conspiracy, because only
acts taken pursuant to that conspiracy are jurisdictionally relevant.”).

23

OTC Swiss franc foreign exchange forwards.” Id. Because the pricing
formula incorporates CHF LIBOR, the Complaint asserts, “the CFTC
classifies Swiss franc foreign exchange forwards as LIBOR-based
derivatives.” Id.
Defendants raise a number of issues with the Complaint’s reliance
on this “industry standard formula” to establish that CHF LIBOR is a
component of the price of Swiss franc futures and FX forwards. First,
defendants note that the CME tutorial does not use the term “LIBOR,” let
alone state that LIBOR is used in the formula. Second, they emphasize
that the Complaint does not allege that defendants actually used the
generic formula to price FX forwards and futures or that plaintiffs actually
used or relied on the generic formula in buying or selling the derivatives.
Third, because the generic formula uses an interest rate for a period of
time equal to the duration of the forwards or futures contracts, defendants
argue that CHF LIBOR cannot be mechanically used to price these
derivatives because they do not have a maturity equal to any of the CHF
LIBOR tenors. Indeed, the four specific futures or forwards transactions
alleged in the Complaint had maturities of 4, 42, and 77 days, which are
not equal to any of the LIBOR tenors, thus plaintiffs could not have
mechanically applied CHF LIBOR in pricing their derivatives. See Compl.
¶¶ 199, 204, 212. Last, defendants point to other CME publications which
state that prices of FX futures are negotiated through an auction process,
and therefore one cannot simply assume that plaintiffs relied on or
incorporated an industry standard formula for their specific transactions.
As an initial matter, the Court doubts that Article III standing is the
correct framework for evaluating defendants’ argument. At the pleading
stage, the Court assumes the truth of the Complaint’s factual allegations
when assessing a standing challenge. WC Capital Management, LLC, 711
F.3d at 329. The Complaint alleges that CHF LIBOR affects the price of
certain Swiss franc currency derivatives according to a standard
mathematical formula, and that defendants used their control over CHF
LIBOR to manipulate the price of those derivatives to plaintiffs’ financial
disadvantage. Taking those allegations as true, plaintiffs have clearly
alleged an injury in fact. Indeed, defendants do not contend otherwise;
they merely dispute that those allegations have been plausibly made. But

24

that challenge collapses the standing and Rule 12(b)(6) analyses. Under
defendants’ approach, a plaintiff would lack Article III standing any time
the connection between defendants’ conduct and plaintiffs’ harm had been
inadequately alleged. This conflating of the standing analysis with the
Twombly plausibility analysis is improper because allegations of an injury
“need not be capable of sustaining a valid cause of action” to demonstrate
standing. Ross, 524 F.3d at 222 (citation omitted).
In any event, whether evaluated as a standing challenge or a Rule
12(b)(6) challenge in the guise of a standing challenge, defendants’
argument fails because plaintiffs have adequately alleged at the pleading
stage a link between CHF LIBOR and the price of Swiss franc futures and
FX forwards. Notably, an order by the CFTC accompanying its settlement
with defendant RBS states “Swiss franc derivatives traders traded various
derivatives instruments that were priced based on . . . Swiss franc LIBOR . . .
includ[ing] . . . foreign exchange ‘FX’ forward.” Compl. ¶ 88 n. 63
(emphasis added). And defendants do not dispute plaintiffs’ assertion
that FX forwards and futures are priced in the same manner for our
purposes. Moreover, the Complaint offers a detailed, non-conclusory
theory of the relationship between CHF LIBOR and the price of Swiss
franc futures and FX forwards, including a statistical analysis purporting
to show how this relationship and defendants’ manipulation affected
derivative prices throughout the Class Period. Whatever holes defendants
may poke in this theory cannot be resolved at the pleading stage. See Baur
v. Veneman, 352 F.3d 625, 631 (2d Cir. 2003) (“[A]t the pleading stage,
standing allegations need not be crafted with precise detail, nor must the
plaintiff prove his allegations of injury.”).
Last, a plausible connection between CHF LIBOR and the price of
Swiss franc currency derivatives is supported by the alleged words and
conduct of defendants themselves. For example, in a July 24, 2007
conversation an RBS trader tells another trader “[I] moaned too . . . they
had 6m libor at 85. I was gonna lose 1.25 bps on 2k futs.” Compl. App’x at
2. And in another conversation between an RBS Swiss franc derivative
trader and a trader at an unidentified bank, a request for a manipulated
CHF LIBOR quote immediately follows a discussion of “fx” (apparently
foreign exchange forwards) basis. Id. ¶ 189. Indeed, it is hard to make

25

sense of defendants’ traders’ specific requests to raise or lower CHF LIBOR
quoted in the Complaint without concluding that the traders believed that
CHF LIBOR affected the value of the traders’ derivative positions.
Of course, none of this definitively establishes a connection
between CHF LIBOR and the price of plaintiffs’ derivatives. As Judge P.
Kevin Castel recently explained in rejecting this precise challenge by the
defendants in a similar case concerning Euribor manipulation, “[i]f
defendants are correct and the Complaint inaccurately describes [LIBOR’s]
role in these transactions, the issue could likely be resolved through a
summary judgment motion at the proper juncture.” Sullivan, 2017 WL
685570, at *9 (S.D.N.Y. Feb. 21, 2017). But at the pleading stage, plaintiffs
have adequately alleged injury from the alleged manipulation of CHF
LIBOR with respect to CHF futures and FX forwards. 13

Plaintiffs argue in their briefing, but fail to allege in the Complaint, that CHF
LIBOR, if nothing else, provided a “starting point” from which the interest rates used
in the “generic formula” and negotiated between the contracting parties were
calculated. Doc. 109 at 6. A similar argument was recently accepted by the Second
Circuit in vacating and remanding a decision that plaintiffs who had transacted in
various LIBOR-based securities had failed to allege antitrust injury based on the
defendants’ LIBOR manipulation. See Gelboim v. Bank of Am., 823 F.3d 759, 776 (2d
Cir. 2016). There, “the district court observed that LIBOR did not necessarily
correspond to the interest rate charged for any actual interbank loan.” Id. (citation
omitted). The Second Circuit concluded that “[t]his is a disputed factual issue that
must be reserved for the proof stage,” but reasoned that “even if none of the
appellants’ financial instruments paid interest at LIBOR” they might nonetheless
suffer antitrust injury “based on the influence that a conspiracy exerts on the starting
point for prices.” Id. Thus, showing that LIBOR is not a mechanical and inflexible
input into the price of a derivative does not necessarily foreclose a sufficient link
between the LIBOR rate and the price of a derivative. But because this “baseline”
theory was not advanced in the Complaint, and because the Court finds that a
relationship between CHF LIBOR and the price of plaintiffs’ derivatives has been
adequately alleged without reference to that theory, the Court need not consider it
here.
13

26

D.

Plaintiffs Have Class Standing to Bring Their CHF LIBOR
Manipulation Claims with Respect to Interest Rate Swaps
and NYSE LIFFE Exchange Futures Contracts

Having concluded that plaintiffs have standing to bring CHF
LIBOR Manipulation Claims for the types of Swiss franc currency
derivatives in which they transacted – currency futures and FX forwards –
the Court must now consider whether that standing extends to the other
types of “Swiss franc LIBOR-based derivatives” identified in the
Complaint in which plaintiffs did not transact – “interest rate swaps,
forward rate agreements, . . . cross-currency swaps, overnight index
swaps, and tenor basis swaps . . . as well as exchange-traded futures and
options, such as the three-month Euro Swiss franc futures contract traded
on the NYSE LIFFE Exchange.” Compl. ¶ 75.
As noted, plaintiffs may have standing to sue on behalf of a class
for injuries they did not personally suffer, so long as they have “suffered
some actual injury as a result of the putatively illegal conduct” and that
“conduct implicates the same set of concerns as the conduct alleged to
have caused injury to other members of the putative class by the same
defendants.” NECA-IBEW Health & Welfare Fund, 693 F.3d at 162 (internal
quotation marks and alterations omitted). Plaintiffs have alleged injury
from defendants’ CHF LIBOR manipulation by alleging a mathematical
relationship between CHF LIBOR and the price of the CHF currency
futures and FX forwards in which they transacted. That standing would
extend to other types of Swiss franc currency derivatives in which
plaintiffs did not transact if plaintiffs allege that those other derivatives
were affected in a similar way by defendants’ manipulation of CHF
LIBOR, because defendants’ conduct would then implicate the same set of
concerns for both categories. See Fernandez v. UBS AG, 222 F. Supp. 3d 358,
373 (S.D.N.Y. 2016) (plaintiffs had standing because “if defendants’
systematic conduct is tortious with respect to one fund, it is also tortious
with respect to another fund, and does not depend on the individualized
circumstances of each Fund”).
But it is not clear from the Complaint that CHF LIBOR affects the
price of each of the “Swiss franc LIBOR-based derivatives” in the same

27

way. To be sure, the Complaint generally alleges that the price of each of
these types of derivatives is affected by CHF LIBOR. However, the
“industry standard formula” discussed above is alleged to apply only to
Swiss franc FX forwards and Swiss franc currency futures. It is incumbent
on plaintiffs to provide at least some minimal description of these other
derivatives and how CHF LIBOR factors into their pricing before the Court
can conclude that they implicate the same set of concerns as those
derivatives in which plaintiffs transacted.
Plaintiffs have met that burden with respect to interest rate swaps
and NYSE LIFFE Exchange Futures Contracts by making non-conclusory
allegations that the prices of these derivatives would be affected by
manipulation of CHF LIBOR in a manner similar to that of Swiss franc
futures and FX forwards, by providing the following descriptions:


Interest Rate Swaps:
[A]n interest rate swap is an over-the-counter Swiss franc
LIBOR-based derivative in which one party agrees to pay
the other a fixed rate of interest (e.g., 5%) on some
underlying notional amount (e.g., CHF 1,000,000) in
exchange for receiving payments based on a “floating” or
“variable” interest rate, i.e., a specific tenor Swiss franc
LIBOR. Every fixing date, e.g., once every three months, the
fixed interest rate owed by one party is compared to the
specific tenor of Swiss franc LIBOR referenced in the
contract.

Compl. ¶ 82.


NYSE LIFFE Exchange Futures Contracts:
[T]he LIFFE three-month Euro Swiss franc futures contract,
which trades on the NYSE LIFFE Exchange, represents the
rate of interest paid on a three-month deposit of CHF
1,000,000. The price and settlement values of this futures
contract are equal to 100 minus three-month Swiss franc
LIBOR. Because of this formulaic pricing relationship, if

28

Swiss franc LIBOR is artificial and does not reflect the rate
of interest being paid on three-month inter-bank deposits of
Swiss francs, the price of this futures contract will also be
artificial.
Id. ¶ 86.14
But there is no comparable description for the remaining types of
“Swiss franc LIBOR-based derivatives”: forward rate agreements, crosscurrency swaps, overnight index swaps, and tenor basis swaps. Indeed,
the Complaint makes no effort whatsoever to define these derivatives or
explain how they are affected by CHF LIBOR. The Court therefore cannot
conclude that these derivatives implicate the same concerns as the Swiss
franc futures and FX forwards in which plaintiffs transacted.
In summary, plaintiffs have Article III standing to pursue their CHF
LIBOR Manipulation Claims with respect to Swiss franc futures, FX
forwards, interest rate swaps, and NYSE LIFFE Exchange futures
contracts, but have failed to demonstrate standing as to forward rate
agreements, cross-currency swaps, overnight index swaps, and tenor basis
swaps.
III.

Standard of Review for Motion to Dismiss for Failure to State a
Claim

Defendants move to dismiss each of the counts for failure to state a
claim pursuant to Fed. R. Civ. P. 12(b)(6).15 When ruling on such a motion,
Plaintiffs’ description of these derivatives is cursory, and just as additional
information may cast doubt on plaintiffs’ claim that CHF LIBOR affects the price of
CHF futures and FX forwards, so too may it undermine plaintiffs’ claim that the
different types of derivatives are affected by CHF LIBOR in similar ways and thus
implicate the same set of concerns. But that is a question for another day. See
Fernandez, 222 F. Supp. 3d at 373.
14

As noted, the Foreign Defendants also move to dismiss the Complaint for lack of
personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2). Courts “traditionally treat
personal jurisdiction as a threshold question to be addressed prior to consideration of
the merits of a claim,” but “that practice is prudential and does not reflect a restriction
on the power of the courts to address legal issues.” ONY, Inc. v. Cornerstone
15

29

a court accepts the truth of the facts alleged in the complaint and draws all
reasonable inferences in the plaintiff’s favor. Wilson v. Merrill Lynch & Co.,
Inc., 671 F.3d 120, 128 (2d Cir. 2011). However, “conclusory allegations or
legal conclusions masquerading as factual conclusions will not suffice to
prevent a motion to dismiss.” Smith v. Local 819 I.B.T. Pension Plan, 291
F.3d 236, 240 (2d Cir. 2002) (internal quotation marks omitted). To survive
a motion to dismiss, plaintiffs must allege “enough facts to state a claim to
relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007). “A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged,” meaning there is
“more than a sheer possibility that a defendant has acted unlawfully.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). If plaintiffs “have not nudged
their claims across the line from conceivable to plausible, their complaint
must be dismissed.” Twombly, 550 U.S. at 570.
On a motion to dismiss, the court “do[es] not look beyond facts
stated on the face of the complaint, . . . documents appended to the
complaint or incorporated in the complaint by reference, and . . . matters of
which judicial notice may be taken.” Goel v. Bunge, Ltd., 820 F.3d 554, 559
(2d Cir. 2016) (citation omitted).

Therapeutics, Inc., 720 F.3d 490, 498 n.6 (2d Cir. 2013). Here, as in Sullivan v. Barclays,
“[d]efendants’ arguments as to personal jurisdiction turn in part on the substance of
their motion to dismiss for failure to state a claim.” 2017 WL 685570, at *11 (S.D.N.Y.
Feb. 21, 2017). For example, whether plaintiffs have plausibly alleged that the Foreign
Defendants conspired within the United States bears on not only the personal
jurisdiction analysis, but also whether an antitrust claim has been adequately stated
and whether plaintiffs’ RICO claims are impermissibly extraterritorial. Moreover, the
Court has received full briefing on the motions to dismiss for both lack of personal
jurisdiction and failure to state a claim. Many of the Complaint’s deficiencies on both
fronts may possibly be corrected through an opportunity to amend, and it would be a
waste of judicial resources for such opportunity to be afforded as to personal
jurisdiction without any analysis on the other issues presented for the Court’s
consideration. Accordingly, the Court addresses both the personal jurisdiction and
12(b)(6) arguments, and concludes that the analysis is better structured by tackling the
latter first.

30

IV.

Antitrust Claim (Count Two)

Count Two alleges that defendants colluded to manipulate CHF
LIBOR, and thereby the price of CHF LIBOR based derivatives, in
violation of section one of the Sherman Act, which provides: “Every
contract, combination in the form of trust or otherwise, or conspiracy, in
restraint of trade or commerce among the several States, or with foreign
nations, is declared to be illegal.” 15 U.S.C. § 1. Section 4 of the Clayton
Act provides a private right of action, with recovery of treble damages, to
“any person who [has been] injured in his business or property by reason
of anything forbidden in the antitrust laws,” including section one of the
Sherman Act. 15 U.S.C. § 15(a); see also Concord Associates, L.P. v.
Entertainment Properties Trust, 817 F.3d 46, 52 (2d Cir. 2016).
To survive a motion to dismiss this claim, plaintiffs must (1) allege
anticompetitive conduct by defendants that violates section one, and (2)
demonstrate antitrust standing, which depends on a showing of antitrust
injury and that plaintiffs are “efficient enforcers” of the antitrust laws.
Gelboim, 823 F.3d at 770-72.
Defendants argue that plaintiffs have fallen short at each of these
steps.
According to defendants, the Complaint fails to allege
anticompetitive conduct in violation of section one because setting CHF
LIBOR was a cooperative, not competitive, process, and in any event there
has been no plausible showing of a conspiracy among defendants to
manipulate CHF LIBOR. Further, defendants contend that plaintiffs have
not suffered antitrust injury because plaintiffs have not shown a
connection between CHF LIBOR and the price of their derivatives, or
because any such connection is too attenuated to give rise to a cognizable
injury under the antitrust laws. Defendants also maintain that plaintiffs
are not efficient enforcers of these alleged violations because, among other
reasons, damages would be highly speculative and difficult to calculate.
Last, defendants assert that plaintiffs’ claim is barred by the Foreign Trade
Antitrust Improvements Act of 1982 (“FTAIA”), 15 U.S.C. § 6a, and by the
statute of limitations.
Count Two is dismissed against all defendants because the
Complaint alleges a plausible antitrust conspiracy only as to RBS, yet the

31

plaintiffs have antitrust standing to sue only UBS and the Credit Suisse
Defendants, those defendants with whom they directly transacted.
A.

Conduct in Violation of Section One
1.

The Alleged Conduct Constitutes a Restraint of
Trade

In their briefing, defendants maintain that plaintiffs have not
alleged any competition-reducing conduct because “LIBOR-setting was an
inherently cooperative process and not a competitive one,” and thus any
manipulation did not constitute “any restraint of trade whatsoever.” Doc.
73 at 2, 14. However, this argument has been essentially disclaimed in
subsequent letters due to intervening developments in the case law.
Whether benchmark manipulation constitutes anticompetitive
conduct was a question that formerly divided courts in this district,16 but
the Second Circuit resolved that question last year in Gelboim v. Bank of
America, 823 F.3d 759 (2d Cir. 2016). Gelboim involved an appeal from a
dismissal of antitrust claims based on, inter alia, a finding that LIBOR
setting was not a competitive process and thus any collusion in that
process could not support a Section One claim. The Second Circuit
reversed the district court, holding that such collusion constitutes a per se
“illegal anticompetitive practice” of horizontal price fixing by distorting a
“joint process . . . into collusion.” 823 F.3d at 775. That holding applies
here, and accordingly the Court concludes that collusion to manipulate
CHF LIBOR constitutes anticompetitive conduct that could give rise to a
claim under section one of the Sherman Act.

Compare LIBOR I, 935 F. Supp. 2d at 687-96 (dismissing antitrust claim for lack of
competitive injury because LIBOR is a cooperative process); Laydon, 2014 WL 1280464,
at *7-8 (same), with In re Foreign Exchange Benchmark Rates Antitrust Litig., 74 F. Supp.
3d 581, 596 (S.D.N.Y. 2015) (rejecting motion to dismiss on this ground).
16

32

2.

Plaintiffs Allege a Plausible Antitrust Conspiracy
Against Only RBS

Defendants next argue that Count Two fails because the Complaint
fails to allege a plausible antitrust conspiracy. “In order to establish a
conspiracy in violation of § 1 . . . proof of joint or concerted action is
required; proof of unilateral action does not suffice.” Anderson News,
L.L.C. v. Am. Media, Inc., 680 F.3d 162, 183 (2d Cir. 2012). To allege a
conspiracy sufficient to survive a motion to dismiss, a plaintiff must
“allege enough facts to support the inference that a conspiracy actually
existed,” which can be done in two ways. Mayor & City Council of
Baltimore, Md. v. Citigroup, Inc., 709 F.3d 129, 136 (2d Cir. 2013). “First, a
plaintiff may, of course, assert direct evidence that the defendants entered
into an agreement in violation of the antitrust laws.” Id. But because “this
type of ‘smoking gun’ can be hard to come by, especially at the pleading
stage,” a complaint may instead “present circumstantial facts supporting
the inference that a conspiracy existed.” Id. “The line separating
conspiracy from parallelism is indistinct, but may be crossed with
allegations of interdependent conduct, accompanied by circumstantial
evidence and plus factors. These plus factors include: (1) a common
motive to conspire; (2) evidence that shows that the parallel acts were
against the apparent individual economic self-interest of the alleged
conspirators; and (3) evidence of a high level of interfirm
communications.” Gelboim, 823 F.3d at 781 (internal quotation marks
omitted).
“Collusion within a bank will not support a claim pursuant to
section 1 of the Sherman Act.” In re Libor-Based Financial Instruments
Antitrust Litig. (“LIBOR IV”), No. 11-mdl-2262, 2015 WL 4634541, at *39
(S.D.N.Y. Aug. 4, 2015) (citing Copperweld Corp. v. Independence Tube Corp.,
467 U.S. 752, 771 (1984)). Nor will collusion between a parent and a
wholly-owned subsidiary. Copperweld, 467 U.S. at 771.
At the pleading stage, “the plaintiff need not show that its
allegations suggesting an agreement are more likely than not true or that
they rule out the possibility of independent action, as would be required at
later litigation stages such as a defense motion for summary judgment, or

33

a trial.” Anderson News, L.L.C. v. Am. Media, Inc., 680 F.3d 162, 184 (2d Cir.
2012) (citations omitted). Instead, “[b]ecause plausibility is a standard
lower than probability, a given set of actions may well be subject to
diverging interpretations, each of which is plausible,” and the “choice
between two plausible inferences that may be drawn from factual
allegations is not a choice to be made by the court on a Rule 12(b)(6)
motion.” Id. at 184-85 (citations omitted).
“[E]ach defendant is entitled to know how he is alleged to have
conspired, with whom and for what purpose. Mere generalizations as to
any particular defendant – or even defendants as a group – are
insufficient.” In re Zinc Antitrust Litig., 155 F. Supp. 3d 377, 384 (S.D.N.Y.
2016) (citation omitted).
In defendants’ view, the Complaint’s specific allegations consist of
a “smattering of instant messages drawn from some of the Defendants’
regulatory settlements” and are entirely insufficient to support an
inference that defendants engaged in a widespread, decade-long
conspiracy. Doc. 73 at 20-21. Moreover, defendants emphasize, most of
the specific allegations of manipulation do not demonstrate collusion
because they are between employees of the same bank and thus involve
unilateral conduct. Indeed, the specific allegations of inter-defendant
collusion consist of communications between RBS and an unidentified
bank in 2008 and 2009 and a single request from BlueCrest to Deutsche
Bank AG for a single tenor on a single day that may never have been
responded to, let alone acted upon.
Plaintiffs respond that this “smattering” of messages is itself
sufficient to plead an antitrust claim, as each act could itself constitute a
violation, and that plaintiffs are not required to demonstrate the precise
scope and duration of market manipulation at the pleading stage. Further,
plaintiffs contend that it is plausible to infer that this handful of
communications is just the tip of the iceberg, given the alleged structural
steps defendants took to facilitate this conduct.
Gelboim and Judge Naomi Buchwald’s decisions that preceded and
followed it are highly relevant to the antitrust claims here and especially to
the adequacy of the conspiracy allegations, and accordingly are recounted

34

at some length. In LIBOR I, from which the Gelboim appeal arose, plaintiffs
alleged that several banks “collusively and systematically suppressed
LIBOR” between 2007 and 2010, motivated by a desire (1) “to portray
themselves as economically healthier than they actually were” and (2) “to
pay lower interest rates on LIBOR-based financial instruments that
Defendants sold to investors.” 935 F. Supp. 2d at 679. It bears immediate
emphasis that those plaintiffs alleged persistent suppression of LIBOR;
that is, during the relevant period, all manipulation was in the same
direction – down. The district court, while dismissing the antitrust claims
for lack of antitrust injury, suggested that an antitrust conspiracy had not
been plausibly alleged because “each defendant, acting independently,
could rationally have submitted false LIBOR quotes to the BBA.” Id. at
691.
Judge Buchwald also addressed similar claims in LIBOR IV, 2015
WL 4634541. As in LIBOR I, the plaintiffs alleged that defendant banks
manipulated the U.S. Dollar LIBOR rate for two separate purposes. The
first motive, as in the instant case, was “trader-based manipulation,” in
which a “derivatives trader ask[ed] a LIBOR submitter to alter the bank’s
LIBOR quote to suit the trader’s book.” 2015 WL 4634541, at *37. The
district court found that an antitrust conspiracy had been adequately
alleged against one defendant, Barclays, based on sporadic examples of
Barclays submitting manipulated LIBOR rates to benefit traders at another
(unidentified) financial institution and asking submitters at other
institutions to submit manipulated LIBOR rates to benefit Barclays traders.
But as to the remaining defendants, the allegations did not support the
existence of a broad-based conspiracy. The second motive, “persistent
suppression” of LIBOR in order to convey financial soundness, likewise
did not support the existence of a conspiracy because “parallel conduct
need not imply a conspiracy, and certainly not where each supposed
conspirator independently had the same motive (namely, to protect its
own reputation for creditworthiness) to engage independently in the same
misconduct.” Id. at 41.
On appeal from LIBOR I but also explicitly referencing LIBOR IV,
the Second Circuit in Gelboim concluded that an antitrust conspiracy had
been adequately alleged, stating that “close cases abound on this issue, but

35

this is not one of them.” 823 F.3d at 781. The Second Circuit found that
the “allegations evince a common motive to conspire — increased profits
and the projection of financial soundness — as well as a high number of
interfirm communications” and “plus factors plausibly suggesting a
conspiracy.” Id. at 781-82. While “pack behavior” might have been
“equally consistent with parallelism,” at the motion to dismiss stage
plaintiffs “must only put forth sufficient factual matter to plausibly
suggest an inference of conspiracy, even if the facts are susceptible to an
equally likely interpretation.” Id. at 782. As for the profit based
conspiracy, the Second Circuit noted that the defendant banks “operated
not just as borrowers but also as lenders in transactions that referenced
LIBOR,” and thus 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. But “the potential
of a wash” required factual development and could not be resolved on a
motion to dismiss. Id.
In LIBOR VI, on remand from Gelboim, the district court interpreted
the Second Circuit’s conclusion of an adequately alleged antitrust
conspiracy to extend only to a suppression-based conspiracy to project
financial soundness and that any profit was incidental from the financial
soundness goal. In re LIBOR-Based Financial Instruments Antitrust Litig.
(“LIBOR VI”), No. 11-mdl-2262, 2016 WL 7378980 (S.D.N.Y. Dec. 20, 2016).
Judge Buchwald wrote that “[i]t is far from clear that Gelboim should be
read to mean that plaintiffs have sufficiently alleged ‘increased profits’ as a
goal independent of a conspiracy to ‘project financial soundness.’” Id. at
*2. But in any case, Judge Buchwald found, “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,” because, as Gelboim noted, banks are lenders in LIBOR-based
transactions as well as borrowers. Id. Thus, LIBOR VI reasoned, “[t]he
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 motive to conspire, where increased profits followed
from a positive reputation.” Id. at *5 (quoting Gelboim, 823 F.3d at 782).
“If, as plaintiffs suggest, the conspiracy were profit-motivated, it would
have required all of the sixteen panel banks to have made a parallel

36

decision to be net borrowers of money over the suppression period in the
LIBOR-based lending market.” Id. at *3. While the circuit in Gelboim
stated that the conspiracy allegations could not be dismissed because the
record was undeveloped, the district court on remand concluded that the
record had been developed and did not support a profit-based conspiracy
even after extensive discovery.
Here, plaintiffs allege only one of the two theories at issue in
Gelboim and the LIBOR district court opinions – namely, “trader based”
manipulation, rather than “financial soundness” suppression. As noted in
LIBOR VI and suggested in Gelboim, it is harder to infer a conspiracy from
individual acts of trader-based manipulation because large financial
institutions are both buyers and sellers of derivative products, and thus
any changes may well offset each other. But assuming that an upward or
downward shift would provide a net increase in profit to a particular
bank, one would need to further assume that the same shift would benefit
each member of the conspiracy. Unless the banks are similarly situated in
this respect, there would be no evident common motive to conspire. And
this particularly undermines the inference of a conspiracy when the
simpler explanation is that the banks may have been independently
engaging in intra-defendant manipulation by submitting false CHF LIBOR
quotes through requests from their own traders to those in the same bank
who submit the quote to the BBA.
At least in the case of the goal of “persistent suppression” that was
at issue in Gelboim and the district court decisions, where LIBOR rates are
consistently manipulated downward, the banks would all conceivably
know which way LIBOR would be manipulated into the future and could
plan accordingly. Here, the case of a shared motive is far weaker because
plaintiffs do not allege a conspiracy to manipulate CHF LIBOR in any
consistent direction, but rather a conspiracy to “suppress, inflate, maintain,
or otherwise alter Swiss franc LIBOR.” Compl. ¶ 246. In other words, not
only must we assume that conspirators would all benefit from the same
change in CHF LIBOR, but that those directions would change for
defendants at the same time.

37

Such a scenario is hardly plausible. See In re LIBOR Based Fin.
Instruments Antitrust Litig. (“LIBOR III”), 27 F. Supp. 3d 447, 469 (S.D.N.Y.
2014) (“[I]t is implausible that all defendants would maintain parallel
trading positions in the Eurodollar futures market across the Class Period
and that those positions, in turn, motivated their daily LIBOR
submissions.”). Simply put, the Complaint offers no reason whatsoever to
believe that the defendant banks’ interests would consistently align such
that defendants would all benefit from manipulation in a given direction.
Without such an explanation, it is not plausible that defendants shared a
motive to conspire. See id. (“[I]f defendants held different positions, then
it is implausible that their motives regarding the Eurodollar futures
market were uniformly aligned.”) It is far more likely that the defendant
Contributor Banks independently manipulated their own CHF LIBOR
submissions based on what would be most advantageous for their own
trading positions, which cannot support claims of an antitrust conspiracy.
The implausibility of a conspiracy involving all defendants over the
Class Period is well illustrated by one of the Complaint’s few specific
examples of inter-bank manipulation. On February 10, 2005 a BlueCrest
trader allegedly asked a Deutsche Bank AG trader to request a false onemonth Swiss franc LIBOR submission, asking “Can’t you ask your fft to
contribute 1m chf libor very low today?? I have 10 yr of fix, 8 of which
against ubs, and they’re getting on my nerves.” Compl. ¶ 131. Leaving
aside that the Complaint does not provide a response from Deutsche Bank
AG, this at first glance supports plaintiffs’ claims of a conspiracy. But
notably, the counterparty identified in the BlueCrest position is fellow
codefendant UBS. In other words, every supracompetitive profit earned by
BlueCrest from the manipulation would come at the expense of UBS, a
supposed coconspirator.
This specific instance of inter-defendant
collusion – one of the few that the Complaint alleges – illustrates the
fundamental flaw with plaintiffs’ theory of the conspiracy. With no
consistent preference between a higher and a lower CHF LIBOR rate,
plaintiffs fail to explain why it is plausible to think that defendants would
consistently share a preference at any given time, particularly over the
course of a decade, and why one defendant’s interests might not be
adverse to another’s.

38

The above analysis rejects plaintiffs’ attempts to shoehorn each of
defendants into a broad-based antitrust conspiracy even in the absence of
detailed allegations of collusion. For instance, plaintiffs assert Count Two
against UBS and the Credit Suisse Defendants without a single
communication indicating that they conspired with another defendant to
manipulate CHF LIBOR (or that the Credit Suisse Defendants manipulated
CHF LIBOR at all, for that matter). Given the lack of a coherent
explanation for each defendants’ participation in the alleged conspiracy,
an antitrust claim can stand only against those defendants as to whom the
Complaint offers some specific, individual showing of CHF LIBOR
manipulation through collusion with third parties. The Court now turns to
the few specific instances of such collusion alleged in the Complaint.
The Complaint adequately alleges an antitrust conspiracy as to
RBS. First, RBS allegedly colluded with an unidentified bank on multiple
occasions to lower CHF LIBOR submissions. See Compl. ¶¶ 127, 192. This
sort of collusion with an unidentified bank was found sufficient to state a
conspiracy involving Barclays in LIBOR IV, where the court stated, “[i]f the
other bank in each of these instances can be identified through discovery,
then both Barclays and the other bank will be jointly liable for both banks’
manipulation of LIBOR on these dates.” 2015 WL 4634541, at *39. Second,
RBS and JPMorgan settled with the European Commission for
“participat[ing] in an illegal bilateral cartel aimed at influencing the Swiss
franc Libor benchmark interest rate between March 2008 and July 2009.”18
Plaintiffs’ claims of collusion between RBS and JPMorgan have been
further supported by communications produced by JPMorgan pursuant to
17

While these allegations do not cover the entire Class Period, with respect to RBS,
questions of “the conspiracy’s scope may be raised later in litigation, but do not merit
dismissal at this phase.” See In re Foreign Exchange Benchmark Rates Antitrust Litig.
(“FOREX”), No. 13-cv-7789, 2016 WL 5108131, at *4 (S.D.N.Y. Sept. 20, 2016).
17

See Press Release, European Commission, Antitrust: Commission Settles RBSJPMorgan Cartel In Derivatives Based on Swiss franc LIBOR; Imposes €61.6 million
fine on JPMorgan (Oct. 21, 2014), http://europa.eu/rapid/press-release_IP-141189_en.htm.
18

39

its settlement agreement with plaintiffs and submitted to the Court in
plaintiffs’ supplemental memorandum addressing personal jurisdiction.
The only specific inter-defendant communication involving a
defendant other than RBS is BlueCrest’s alleged request to Duetsche Bank.
But that allegation amounts ultimately to a single isolated request to
manipulate CHF LIBOR for one tenor on one day, for which no response is
provided in the Complaint, much less an indication that Deutsche Bank
AG submitted a false quote in response to the request, and still less that
the false quote actually affected the “fix” for that day. That sole allegation
is simply insufficient to support a claim against BlueCrest and is even less
sufficient with respect to Deutsche Bank AG.19
In sum, because an overarching CHF LIBOR manipulation
conspiracy involving all defendants has not been plausibly alleged and
specific instances of inter-bank collusion have been offered only as to RBS,
a plausible antitrust conspiracy has been alleged only against RBS.
B.

Antitrust Standing

In addition to constitutional standing, a plaintiff asserting a claim
under the Sherman Act must show antitrust standing. Gelboim, 823 F.3d at
770. “Two issues bear on antitrust standing: (1) have [plaintiffs] suffered
an antitrust injury?” and “(2) are [plaintiffs] efficient enforcers of the
antitrust laws?” Id. at 772. Defendants contend that plaintiffs have failed
to satisfy either requirement.
1.

Plaintiffs Adequately Allege Antitrust Injury

“Generally, when consumers, because of a conspiracy, must pay
prices that no longer reflect ordinary market conditions, they suffer ‘injury
of the type the antitrust laws were intended to prevent and that flows from
that which makes defendants’ acts unlawful.’” Gelboim, 823 F.3d at 772
(quoting Brunswick Corp. v. Pueblo Bowl–O–Mat, Inc., 429 U.S. 477, 489
The Complaint also alleges that Deutsche Bank submitted artificial quotes at the
request of traders at DB Group Services, but a section one violation cannot be based
on collusion between a parent and a subsidiary. See Copperweld, 467 U.S. at 771.
19

40

(1977)). “The antitrust injury requirement ensures that a plaintiff can
recover only if the loss stems from a competition-reducing aspect or effect
of the defendant’s behavior.” Atlantic Richfield Co. v. USA Petroleum Co.,
495 U.S. 328, 344 (1990).
Defendants first maintain that plaintiffs have failed to allege
antitrust injury because they have not shown any plausible connection
between CHF LIBOR and the price of the derivatives in which they
transacted, and thus have not alleged any injury whatsoever. That
argument fails for the reasons provided in the Article III standing analysis.
Second, defendants argue that, even assuming plaintiffs have
alleged a sufficient connection between CHF LIBOR on the one hand, and
the price of their derivatives to confer Article III standing on the other, that
connection remains too attenuated to constitute a cognizable antitrust
injury because there are numerous links between the alleged conduct and
plaintiffs’ purported injury, including several other inputs into plaintiffs’
mathematical equation and any price negotiation between the parties.
Doc. 73 at 15.
Gelboim precludes this argument on a motion to dismiss. There, the
Second Circuit held that plaintiffs had adequately alleged an antitrust
injury by maintaining – as plaintiffs do here – that LIBOR manipulation
caused them to transact in LIBOR-based derivatives on artificial, less
favorable terms by “warping of market factors affecting the prices for
LIBOR-based financial instruments.” 823 F.3d at 776. This was so even
though the plaintiffs “remained free to negotiate the interest rates attached
to particular financial instruments,” so long as LIBOR provided a “starting
point” for those negotiations. Id. at 773.
The reasoning of Gelboim applies here: plaintiffs have alleged an
antitrust injury by claiming that they received worse prices for their CHF
LIBOR-based derivatives due to defendants’ manipulation. The fact that
many other factors also affect the price of these derivatives, or the
possibility that parties might deviate to some degree from the CHF LIBOR
input, does not compel a different result. Defendants may, at the
appropriate stage, renew their argument that any causal relationship
between CHF LIBOR and these derivatives is too removed to be

41

actionable, but that is not a basis to defeat plaintiffs’ claim at the pleading
stage.
2.

Only the Direct Transaction Plaintiffs Are Efficient
Enforcers

Even if plaintiffs have alleged conduct that violates section 1 and an
antitrust injury arising from that conduct, that is not the end of the inquiry.
To have standing to sue under the antitrust laws, private plaintiffs must be
“efficient enforcers,” which turns on: “(1) whether the violation was a
direct or remote cause of the injury; (2) whether there is an identifiable
class of other persons whose self-interest would normally lead them to sue
for the violation; (3) whether the injury was speculative; and (4) whether
there is a risk that other plaintiffs would be entitled to recover duplicative
damages or that damages would be difficult to apportion among possible
victims of the antitrust injury.” Gelboim, 823 F.3d at 772. These factors
reflect a “concern about 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.” Gatt Commc’ns v. PMC Assocs.,
L.L.C., 711 F.3d 68, 80 (2d Cir. 2013) (internal quotation marks omitted).
This test is not mechanical, and “the weight to be given the various factors
will necessarily vary with the circumstances of particular cases.” Daniel v.
Am. Bd. of Emergency Med., 428 F.3d 408, 443 (2d Cir. 2005).
According to defendants, plaintiffs fail the efficient enforcer test.
As argued under the antitrust injury prong, defendants assert that any
damages suffered from the alleged CHF LIBOR manipulation are indirect
and inherently speculative, given the number of other factors that
influence the price of currency derivatives. Moreover, defendants argue,
assessing damages would be incredibly complex, placing the Court “in the
position of trying to reconstruct multiple submissions for up to fifteen
separate tenors of Swiss franc LIBOR for each day of the eleven-year class
period, and then determine the impact of those hypothetical submissions
and the other relevant market factors Plaintiffs have alleged.” Doc. 73 at
16. Plaintiffs respond that the directness of their injuries and the
complexity of quantifying them are not appropriate issues for resolution
on the pleadings.

42

Again, Gelboim provides the most applicable and recent appellate
guidance on the efficient enforcer analysis. Because the district court in
LIBOR I dismissed the antitrust claims for lack of antitrust injury and did
not reach the “efficient enforcer” issue, Gelboim remanded for the district
court’s consideration in the first instance. However, the Second Circuit
discussed at length how the four factors might apply and left a strong hint
that the efficient-enforcer requirement would pose a tall hurdle on
remand.
As set forth below, the Court concludes that the Direct Transaction
Plaintiffs are efficient enforcers but that the remaining plaintiffs are not.
Conferring antitrust standing on those plaintiffs who did not transact
directly with defendants would open the door to highly speculative and
difficult to calculate damages that would far exceed the wrongful profit
made or harm caused by defendants, whereas the Direct Transaction
Plaintiffs’ damages would be more easily calculated and proportional to
the misconduct. However, the Direct Transaction Plaintiffs claim to have
transacted only with the Credit Suisse Defendants and UBS, and the
Complaint has alleged a plausible conspiracy only against RBS.
Accordingly, Count Two fails to state a claim because plaintiffs have not
alleged an antitrust violation by any defendant for which they have
antitrust standing to sue.
a.

Directness of Causation of the Injury

Under the first efficient-enforcer factor, the Court considers
“whether the violation was a direct or remote cause of the injury.”
Gelboim, 823 F.3d at 772. This question “requires evaluation of the chain of
causation linking [plaintiffs’] asserted injury and the [defendants’] alleged
price fixing.” Id. at 778 (quotation marks omitted). “One consideration in
determining causation is whether plaintiffs transacted with defendants
directly.” In re LIBOR-Based Financial Instruments Antitrust Litigation
(“LIBOR VI”), No. 11-mdl-2262, 2016 WL 7378980, at *15 (S.D.N.Y. Dec. 20,
2016) (citing 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.”)). However, “[t]he antitrust laws do not require a plaintiff to have

43

purchased directly from a defendant in order to have antitrust standing.”
In re Foreign Exch. Benchmark Rates Antitrust Litig. (“FOREX”), No. 13-cv7789, 2016 WL 5108131, at *9 (S.D.N.Y. Sept. 20, 2016). “Plaintiffs who
purchased products from non-defendants but allege that defendants’
actions raised their prices are called ‘umbrella purchasers.’” LIBOR VI,
2016 WL 7378980, at *15.
In Gelboim the Second Circuit observed that “at first glance . . . there
appears to be no difference in the injury alleged by those who dealt in
LIBOR denominated instruments, whether their transactions were
conducted directly or indirectly with the [defendant] Banks.” 823 F.3d at
779. But while the injury of the direct and indirect transactions may be the
same, “if the [defendant] Banks control only a small percentage of the
ultimate defined market,” imposing liability for transactions to which they
were not a party would result in “damages disproportionate to
wrongdoing.” Id. This posed a special concern given the scale of the
ultimate defined market: “Requiring the Banks to pay treble damages to
every plaintiff who ended up on the wrong side of an independent LIBORdenominated derivative swap would, if appellants’ allegations were
proved at trial, not only bankrupt 16 of the world’s most important
financial institutions, but also vastly extend the potential scope of antitrust
liability in myriad markets where derivative instruments have
proliferated.” Id. Applying this word of caution, Judge Castel in Sullivan
observed that “[d]amages theoretically could accrue into the trillions of
dollars,” and reasoned that “[s]uch extraordinary sums weigh heavily on
the causation analysis and the importance that plaintiffs function as
efficient enforcers.” 2017 WL 685570, at *16.
The same concerns are present in this case. Plaintiffs seek to
represent a class that includes “[a]ll persons or entities that engaged in
U.S.-based transactions in financial instruments that were priced,
benchmarked, and/or settled to Swiss franc LIBOR” over a ten-year period.
Compl. ¶ 224. According to the complaint, “trillions of dollars in Swiss
franc LIBOR-based derivatives were traded over-the-counter within the
United States during the Class Period.” Id. ¶ 80. The damages could be
truly astronomical, and an unknown but undoubtedly large percentage of
those damages would arise from transactions to which defendants were

44

not a party. In every transaction in CHF LIBOR based derivatives to
which defendants were not a party, one side would benefit from an
artificially high or low CHF LIBOR, and one side would be harmed.
Under plaintiffs’ theory, defendants would owe damages to every party
harmed, without any offset or contribution from the equally large number
of third parties who benefited from the CHF LIBOR manipulation.
When addressing the issue of proportionality – as well as for some
other “efficient enforcer” factors – it is useful to conceive of plaintiffs as
falling into one of three categories: (1) the “Direction Transaction
Plaintiffs,” who transacted in CHF FX forwards directly with UBS and the
Credit Suisse Defendants; (2) plaintiffs who transacted in CHF FX
forwards directly with third parties other than defendants; and (3) Divitto,
who transacted in CHF currency futures on the CME, and thus has no
identifiable counterparty.
The first of these groups, the Direct Transaction Plaintiffs, are
obviously the most efficient enforcers of the three. They present little
concern of disproportionate damages because any losses suffered from
defendants’ manipulation would have resulted in wrongful profits to
defendants. See FOREX, 2016 WL 5108131, at *7 (noting that these direct
transactions “do not pose the same threat of indirect and therefore
disproportionate liability” addressed in Gelboim). Moreover, if some of the
plaintiffs happened to benefit from the manipulation as to certain
transactions, that amount could be netted against the losses, further
reducing the possibility of damages disproportionate to defendants’
benefit. Unfortunately for plaintiffs, as explained above, the Complaint
fails to allege a plausible antitrust conspiracy as to the Credit Suisse
Defendants and UBS, the two defendants with whom plaintiffs directly
transacted.
The second of these groups, who transacted with identifiable
counterparties other than defendants, is most poorly positioned to serve as
an efficient enforcer. This group is at the core of the concerns expressed in
Gelboim regarding potentially astronomical damages totally untethered
from any wrongful profits made by defendants. As to this group,
plaintiffs seek to impose liability for transactions for which defendants did

45

not control and of which they were likely not even aware. See Sullivan,
2017 WL 685570, at *17 (“A defendant may have had no knowledge of the
existence of a particular transaction, and the plaintiff may have had no
dealings with the defendant, but, provided the derivative product
incorporated [LIBOR] as a price term, it would fall within the scope of
plaintiffs’ claims.”). And it bears repeating that the net effect of any
manipulation would be neutral as to two transacting third parties.
This group distinction was made in LIBOR VI, which “dr[ew] a line
between plaintiffs who transacted directly defendants and those who did
not.” 2016 WL 7378980, at *16. This line was drawn on two related bases.
First, plaintiffs and third parties could “easily incorporate LIBOR into a
financial transaction without any action by defendants whatsoever,” and
that “independent decision to do so breaks the chain of causation between
defendants’ actions and a plaintiff’s injury.” Id. Second, to hold
defendants trebly responsible for “transactions, over which defendants
had no control, in which defendants had no input, and from which
defendants did not profit . . . would result in ‘damages disproportionate to
wrongdoing.’” Id. (quoting Gelboim, 823 F.3d at 779). Thus, “where a
plaintiff’s counterparty is reasonably ascertainable and is not a defendant
bank, a plaintiff is not an efficient enforcer.” Id. That reasoning was
adopted in Sullivan, which also found that conferring standing on
plaintiffs who transacted with third parties would “enlarge[] the scope of
private antitrust enforcement beyond the Sherman Act’s intent.” 2017 WL
685570, at *17.
This Court too adopts that reasoning, finding that the first efficient
enforcer factor favors the Direct Transaction Plaintiffs but strongly
disfavors those plaintiffs who transacted with an identifiable third party.
As a practical matter, the effect on all third parties who did not transact
with defendants is neutral. For each party that was harmed by CHF
LIBOR manipulation, their counterparty benefited commensurately. But
here defendants would have to compensate each loser without any setoff
for the winners. As discussed above, considering the scale of the market –
trillions of dollars in transactions over an eleven-year period – the
potential damages appear astronomical and disproportional to the
cumulative harm caused by defendants’ conduct.

46

The last group, who transacted on an exchange without an
identifiable counterparty, presents a more difficult question.
The
framework of dividing plaintiffs between those who transacted with
defendants and those who did not in OTC transactions “is not readily
transferable to the . . . futures market,” because a clearinghouse such as the
CME, rather than any identifiable third party, serves essentially as the
counterparty. LIBOR VI, 2016 WL 7378980 at *16. Thus, there is simply no
way to tailor the standing analysis to those who dealt directly with
defendants, thereby rendering plaintiffs’ recovery essentially proportional
to defendants’ ill-gotten gains. In a sense, the choice is between underenforcement and over-enforcement (at least as to private enforcement).
As explained in two recent derivative manipulation cases, which of
these imperfect options is preferable depends primarily on the extent of
defendants’ control of the market for the product traded on the exchange.
In FOREX, Judge Lorna Schofield found that the efficient-enforcer analysis
favored the plaintiffs because the defendant banks allegedly “dominated
the FX market with a combined market share of over 90% as significant
participants in both OTC and exchange transactions.” 2016 WL 5108131, at
*9. Thus, there was “little difference regarding the proportionality of
damages suffered by the OTC Class, which dealt directly with Defendants,
and the Exchange Class, which did not,” because “[i]n both cases, the
damages allegedly occurred in markets Defendants controlled and as a
direct result of their collusive activities.” Id.
Judge Buchwald adopted the FOREX approach in LIBOR VI,
reasoning that control of an exchange-based market “may be viewed as a
proxy for the question of direct causation” and as a way of ensuring that
damages would not be greatly disproportionate to wrongdoing. 2016 WL
7378980, at *16. In LIBOR VI, the plaintiffs attempted to show this control
by alleging that each of the 16 defendant banks was a “large trader” of
Eurodollar futures and options and that together “large traders”
controlled 70-90% of that market. Id. at *17. That argument was not very
convincing to Judge Buchwald because over 2,900 entities fell within the
definition of “large trader.” Although the court was “skeptical that the
Exchange-Based plaintiffs can ultimately show that the defendant [banks]
controlled the market,” the defendant banks were “some of the world’s

47

largest financial institutions,” and at that early stage of the litigation there
was “simply not a sufficient record on the issue of market control.” Id. at
*17.
This Court similarly follows the “market control” standard as
consistent with Gelboim and the most sensible means of determining
whether conferring standing on plaintiffs would best vindicate the
antitrust laws. The Complaint makes no detailed allegations regarding
defendants’ control of the market, let alone the control of RBS itself – the
only defendant against whom plaintiffs have alleged a plausible antitrust
conspiracy. The Complaint does allege that defendants, including RBS, are
“some of the largest market makers in the foreign exchange and interest
rate derivatives markets,” some of the “largest and most sophisticated
participants in the Swiss franc LIBOR-based derivatives market,” and
“some of the world’s largest banks.” Compl. ¶¶ 1, 92, 96.
If plaintiffs had adequately alleged an antitrust conspiracy
involving all or nearly all of defendants, the extent of defendants’ control
of the exchange markets for Swiss franc currency futures would require
factual development and would not be a basis for dismissal. But the only
plausibly alleged antitrust conspiracy involves RBS, and there is simply no
basis in the Complaint to infer that RBS singlehandedly controls a
sufficient share of the market to warrant holding them responsible for the
harms of all derivatives traded on those markets. Accordingly, the first
efficient enforcer factor favors standing only as to the Direct Transaction
Plaintiffs and not as to the umbrella plaintiffs, either OTC or exchangetraded.
b.

Existence of More Direct Victims

The second efficient-enforcer factor is whether there exist “more
direct victims of the alleged conspiracy.” Gelboim, 823 F.3d at 778. “This
consideration seems to bear chiefly on whether the plaintiff is a consumer
or a competitor, and in this litigation appellants allege status as
consumers.” Id. at 779. Here, as in Gelboim, plaintiffs bring their antitrust
claims as consumers, making them a superior enforcer compared to a
competitor. “But consumer status is not the end of the inquiry; the
efficient enforcer criteria must be established irrespective of whether the

48

plaintiff is a consumer or a competitor.” Id. That is because the inquiry
recognizes “that not every victim of an antitrust violation needs to be
compensated under the antitrust laws in order for the antitrust laws to be
efficiently enforced.” Id. In Gelboim, the Second Circuit concluded that
“directness may have diminished weight” in the LIBOR manipulation
context because “one peculiar feature of this case is that remote victims
(who acquired LIBOR-based instruments from any of thousands of nondefendant banks) would be injured to the same extent and in the same
way as direct customers of the Banks.” Id.
As in Gelboim, plaintiffs who did not transact with defendants
would have been affected in the same way by defendants’ LIBOR
manipulation as those plaintiffs who did transact with defendants. Thus,
relying solely on a distinction between consumers and competitors would
undermine the warning in Gelboim that holding the banks liable for
transactions between third parties could result in disproportionate
liability. In LIBOR VI, Judge Buchwald followed Gelboim in affording this
factor less weight, reasoning that “[a]ny other result would vitiate the first
prong of causation” by failing to distinguish between transactions
involving defendants and transactions between third parties. 2016 WL
7378980, at *17.
One could also conceive of the Direct Transaction Plaintiffs as a
“more direct” victim than the umbrella plaintiffs, even assuming both
groups suffered the same harm from the manipulation. In Sullivan, Judge
Castel concluded that plaintiffs who transacted directly with defendants
“were in the immediate impact zone of the defendant’s unlawful conduct,”
whereas the “other plaintiffs who had no such dealings with a defendant
[were] not.” 2017 WL 685570, at *18.
In either case, the second factor favors the Direct Transaction
Plaintiffs but provides little support for the umbrella plaintiffs, as either
this factor should be assigned reduced weight in this context or the
umbrella plaintiffs should be categorized as less direct victims.

49

c.

Speculative Damages

The third efficient-enforcer factor is “whether the damages would
necessarily be ‘highly speculative.’” Gelboim, 823 F.3d at 780 (quoting
Associated Gen. Contractors of Calif., Inc. v. Calif. State Council of Carpenters,
459 U.S. 519, 542 (1983)). “[S]ome degree of uncertainty stems from the
nature of antitrust law,” id., and “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) (alteration and
internal quotation marks omitted). At the same time, “highly speculative
damages is a sign that a given plaintiff is an inefficient engine of
enforcement.” Gelboim, at 823 F.3d at 779. And calculating damages
caused by LIBOR manipulation for derivatives transactions “presents
some unusual challenges” – namely, “[t]he disputed transactions were
done at rates that were negotiated, notwithstanding that the negotiated
component was the increment above LIBOR. And the market for money is
worldwide, with competitors offering various increments above LIBOR, or
rates pegged to other benchmarks, or rates set without reference to any
benchmark at all.” Id. at 780. For this reason, the Second Circuit found it
“difficult to see how [plaintiffs] would arrive at such an estimate [of
damages], even with the aid of expert testimony.” Id.
Damages claims may also be too speculative where: (1) “the
damages claim is conclusory”; (2) “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”; or (3) “due to external market factors, there is no relationship
between the fixed price the price that the plaintiffs ultimately paid.”
LIBOR VI, 2016 WL 7378980, at *17-18. (The second of these factors helps
explain why the speculative damages analysis is closely intertwined with
the causation analysis.)
While a computation of antitrust damages always entails the
reconstruction of a hypothetical market absent the unlawful manipulation,
the task in this case would be particularly daunting. Even assuming
plaintiffs are able to show a clear and predictable causal relationship
between CHF LIBOR and the price of their derivatives, calculating

50

damages would require hypothesizing the manipulation-free submissions
of several banks for fifteen different tenors over thousands of days. Given
that the Complaint offers only a handful of specific instances of
manipulation and alleges that the manipulation was varied and episodic,
even determining the days on which manipulation occurred at all may
prove quite difficult. Moreover, any damages would need to be netted out
as to each plaintiff to offset any benefit from defendants’ manipulation in
other transactions.20
District courts assessing similar LIBOR antitrust claims have
disagreed as to whether these difficulties deprive plaintiffs of efficient
enforcer status. In the context of Yen LIBOR-based derivatives, Judge
George Daniels dismissed plaintiffs’ claims as “too remote and
speculative” because they “would require the reconstruction of
hypothetical ‘but-for’ . . . LIBOR benchmark rates” during the relevant
period and then require the court to “hypothesize the impact of these ‘butfor’ benchmark rates on the perceptions of the market participants whose
activities would have influenced” the prices of plaintiffs’ derivatives
contracts. Laydon, 2014 WL 1280464, at *10. The court therefore concluded
that the plaintiffs were not “efficient enforcers” of antitrust law, noting
that the “speculative nature of the derivatives market, based on what the
interest rate is and where it will be in the future, compounded with
consumers' own beliefs of where they expect the interest will be in the
future make the but-for test difficult.” Id.
In LIBOR VI, Judge Buchwald confronted the same concerns but
concluded they were insufficient to warrant dismissal. That court
emphasized that the speculative damages factor is “not one of damages
calculation” but instead whether the plaintiff is a proper party to vindicate
the public interest in antitrust enforcement. 2016 WL 7378980, at *18. The
task of “reconstruct[ing] but-for LIBOR” was “the job of the parties’
“[P]laintiffs 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.” LIBOR VI, 2016 WL 7378980, at *18. “[I]f benefits accrued
to [a plaintiff] because of an antitrust violation, those benefits must be deducted from
the gross damages caused by the illegal conduct.” Id. (quoting Minpeco S.A. v.
Conticommodity Servs., Inc., 676 F. Supp. 486, 489 (S.D.N.Y. 1987)).
20

51

competing experts,” and although that task “might involve more relevant
numbers than most . . . that is not a sufficient reason to deem the damages
speculative.” Id.
Here, the Court concludes that the speculative damages factor
weighs strongly against the standing of the umbrella plaintiffs but less
strongly as to the Direct Transaction Plaintiffs. Where “the damages
would be determined based on transactions with non-parties, the
calculation and apportionment of damages would be exceptionally
complex and have aspects that can fairly be described as speculative.”
Sullivan, 2017 WL 685570, at *15. Thus, those plaintiffs who transacted
with non-parties fall short under the efficient enforcer analysis under both
the causation and the speculative damages factors. The decision to
incorporate CHF LIBOR absent any participation by defendants not only
arguably breaks the chain of causation and leads to disproportionate
damages, but it also makes it even harder to determine what role, if any,
LIBOR played in the ultimate price.21 The admittedly still difficult effort
will be simplified considerably by confining it to those transactions in
which defendants actually took part.
As Gelboim noted, determining the effect of market manipulation
may be particularly challenging for claims of this kind. But, to some
extent, reconstructing a hypothetical manipulation-free market is routinely
required in antitrust litigation. “The vagaries of the marketplace usually
deny us sure knowledge of what plaintiff's situation would have been in
the absence of the defendant's antitrust violation.” J. Truett Payne Co., Inc.
v. Chrysler Motors Corp., 451 U.S. 557, 566 (1981). Where a mathematical
relationship between the manipulated CHF LIBOR rate and the price of
the derivative has been plausibly alleged, and where plaintiffs and
defendants transacted with each other in those derivatives, the difficulty of
Plaintiffs do not even explain where this information would come from. They seek
to sue on behalf of a class of every entity who bought trillions of dollars’ worth of
Swiss franc derivatives over the span of a decade through numerous different
channels, including countless direct transactions that involved neither the named
plaintiffs nor the defendants. It is not clear how information for all these transactions
would either be gathered or analyzed to determine the effect of defendants’ alleged
manipulation.
21

52

calculating damages is not itself sufficient to deprive plaintiffs of antitrust
standing. The Direct Transaction Plaintiffs “ought to be able to identify
specific transactions in which a . . . defendant was a counterparty and that
defendant, based on its own records, ought to be able to intelligently
respond.” Sullivan, 2017 WL 685570, at *19. At the same time, the
efficient-enforcer factors are not mechanical, and the difficulty of
calculating damages, while not alone disqualifying, is still highly relevant
to the overall analysis.
d.

Duplicative
Recovery
Apportionment

and

Complex

The final efficient-enforcer factor is “whether there is a risk that
other plaintiffs would be entitled to recover duplicative damages or that
damages would be difficult to apportion among possible victims of the
antitrust injury.” Gelboim, 823 F.3d at 772. The Second Circuit in Gelboim
stated that it was “unclear” how this factor could be assessed on the record
before it, but it noted that the “transactions that are the subject of
investigation and suit are countless,” and “[s]ome of those government
initiatives may seek damages on behalf of victims . . . fines, injunctions,
disgorgement, and other remedies.” 823 F.3d at 780. While government
fines and other penalties would not necessarily lead to duplicative
damages, Gelboim still strongly suggested that these “other enforcement
mechanisms” were relevant to the efficient enforcer analysis, stating that
the fact that the defendants’ alleged manipulation was “under scrutiny by
government organs, bank regulators and financial regulators . . . bears
upon the need for [the plaintiffs] as instruments for vindicating the
Sherman Act.” Id. at 778.
There is no indication that any of defendants’ settlement payments
to regulators relating to CHF LIBOR manipulation have flowed to
plaintiffs or others who bought or sold CHF LIBOR-based derivatives.
Thus, there is no apparent risk of duplicative recovery. And “[c]ourts are
not traditionally concerned with . . . whether governments have conducted
investigations concerning the conduct at issue.” LIBOR VI, 2016 WL
7378980, at *23. Yet in this context, particularly in light of Gelboim, it is
relevant to the efficient enforcer inquiry that other “enforcement

53

mechanisms” – i.e., government regulators – can (and indeed, have)
policed the alleged misbehavior. See Sullivan, 2017 WL 685570, at *20
(finding that “actions of government regulators lessen the need for
plaintiffs to function as private attorneys general and vindicators of the
public interest”). Defendants’ alleged manipulation of LIBOR for various
currencies has already been the subject of at least five government
investigations in the United States and Europe and has led to over $7
billion in fines.
To be sure, regulatory fines and other punishments do not
necessarily foreclose the possibility of recovery by injured private
plaintiffs. But the entire purpose of the efficient enforcer analysis is to
determine whether a plaintiff – even one who has alleged a cognizable
injury – is a “proper party to perform the office of a private attorney
general and thereby vindicate the public interest in antitrust enforcement.”
Gatt Commc’ns, 711 F.3d at 75 (citations omitted). This inquiry rests on the
premise that not every antitrust violation demands a private remedy.
Where, as here, plaintiffs’ injuries appear likely to be extraordinarily
difficult to calculate and could lead to benumbing damages amounts that
far exceed the aggregate harm to third parties, it is appropriate to consider
whether the alleged misconduct would be better redressed and deterred
through regulatory action.22 This consideration does not eliminate
antitrust standing for the Direct Transaction Plaintiffs, but it does reinforce
the conclusion that the remaining plaintiffs are not efficient enforcers of
the antitrust laws.
C.

Statute of Limitations

Count Two fails because plaintiffs are not efficient enforcers to sue
for the only antitrust violation that they have adequately alleged because
they did not transact directly with RBS. Therefore, it is not strictly
necessary to evaluate defendants’ argument that Count Two is also barred

While the Court does not assign substantial weight to this fact, it is notable also that
the Complaint essentially piggybacks on regulatory settlements and statements of
fact. Plaintiffs are manifestly not uncovering misconduct that went undiscovered or
unaddressed by public enforcement mechanisms.
22

54

by the statute of limitations and the FTAIA. Nevertheless, the Court
considers these arguments for the sake of completeness.
1.

The Complaint Fails to Allege Antitrust Violations
Within the Four-Year Statute of Limitations

Defendants argue that the antitrust claims are untimely. “The lapse
of a limitations period is an affirmative defense that a defendant must
plead and prove,” Staehr v. Hartford Fin. Servs. Grp., Inc., 547 F.3d 406, 425
(2d Cir. 2008), but dismissing claims on statute of limitations grounds at
the pleading stage “is appropriate only if a complaint clearly shows the
claim is out of time,” Harris v. City of New York, 186 F.3d 243, 250 (2d Cir.
1999).
A four-year statute of limitations applies to private antitrust
actions. See 15 U.S.C. § 15b. “Antitrust law provides that, in the case of a
continuing violation, say, a price-fixing conspiracy that brings about a
series of unlawfully high priced sales over a period of years, each overt act
that is part of the violation and that injures the plaintiff . . . starts the
statutory period running again, regardless of the plaintiff’s knowledge of
the alleged illegality at much earlier times.” Klehr v. A.O. Smith Corp., 521
U.S. 179, 189 (1997) (internal quotation marks omitted). “But the
commission of a separate new overt act generally does not permit the
plaintiff to recover for the injury caused by old overt acts outside the
limitations period.” Id.
Plaintiffs filed this lawsuit on February 5, 2015. Leaving aside
issues relating to continuing violations or tolling, conduct occurring on or
after February 5, 2011 would fall within the four-year statute of limitations.
The Complaint alleges that the CHF LIBOR manipulation conspiracy
continued “through at least December 31, 2011.” Compl. at 1. Thus,
crediting that allegation, at least the last approximately eleven months of
the Class Period would fall within the statute of limitations.
Defendants correctly maintain that the Complaint does not
plausibly allege an antitrust conspiracy that continued until at least
February 5, 2011. For the reasons discussed above, the allegations in the
Complaint do not support the inference that a conspiracy existed between

55

all defendants throughout the Class Period. Plaintiffs provide no coherent
explanation of why defendants’ incentives would all align such that they
would all benefit from the same manipulation, and as to some of
defendants they offer not a single detailed allegation of inter-bank
manipulation.
Without support for an overarching conspiracy throughout the
decade-long Class Period encompassing all of defendants, plaintiffs can
only base their antitrust claims on narrower acts of collusion for which
there are detailed supporting allegations. As defendants emphasize, the
last specific instance of inter-defendant collusion alleged in the complaint
occurred on May 14, 2009, between RBS and unidentified “Bank E.” See
Compl. App’x. And the settlement agreement with the European
Commission cited in the Complaint covers a similar timeframe, stating
that RBS and JPMorgan colluded to manipulate CHF LIBOR “from at least
March 2008 through at least July 2009.” Id. ¶ 55. Indeed, the Complaint
does not even explain why December 31, 2011 – nearly two and a half
years after the last specific allegation of collusion – should mark the end of
the alleged antitrust conspiracy. Thus, the timeliness of the antitrust
claims turns on plaintiffs’ argument that defendants’ fraudulent
concealment tolled the statute of limitations.
2.

Count Two is Timely Because the Statute of
Limitations is Tolled by the Fraudulent
Concealment Doctrine

Plaintiffs contend that, even if the Complaint fails to allege an
antitrust violation within the four-year statute of limitations, their claims
are nevertheless timely under the fraudulent concealment doctrine.
Plaintiffs maintain that, while they “generally followed public news, the
markets, and financial developments,” Compl. ¶ 231, they could not have
known of defendants’ manipulation until it was brought to light by
disclosure of the various regulatory investigations and settlements.
“[A]n antitrust plaintiff may prove fraudulent concealment
sufficient to toll the running of the statute of limitations if he establishes (1)
that the defendant concealed from him the existence of his cause of action,
(2) that he remained in ignorance of that cause of action until some point

56

within four years of the commencement of his action, and (3) that his
continuing ignorance was not attributable to lack of diligence on his part.”
New York v. Hendrickson Bros., Inc., 840 F.2d 1065, 1083 (2d Cir. 1988).
Fraudulent concealment may be alleged by “showing either that the
defendant took affirmative steps to prevent the plaintiff’s discovery of his
claim or injury or that the wrong itself was of such a nature as to be selfconcealing.” Id.
In Hendrickson, the Second Circuit found that a bid-rigging
conspiracy was “an inherently self-concealing fraud” and that, therefore,
“proof of the conspiracy itself sufficed to prove concealment by the coconspirators.” Id. at 1084. That reasoning applies here because “plaintiffs
have plausibly alleged that the alleged conspiracy was inherently selfconcealing, for by its very nature, the conspiracy could not succeed unless
kept a secret.” FrontPoint Asian Event Driven Fund, L.P. v. Citibank, N.A.,
No. 16-cv-5263, 2017 WL 3600425, at *13 (S.D.N.Y. Aug. 18, 2017). The
Contributor Banks were supposed to make honest submissions, and it is
not obvious how market participants could have known that the
Contributor Banks were not doing so. Indeed, while defendants make a
one-sentence assertion that there should be no “discovery” rule here at all,
they primarily dispute at what point plaintiffs were on notice.
Defendants argue that plaintiffs were put on notice of facts to
support their claims “by the numerous articles appearing in the spring and
summer of 2008 . . . indicating that LIBOR rates, including Swiss franc
LIBOR, may have been artificial.” Doc. 73 at 25. While defendants allude
to “numerous articles” from 2008, they reference only one in particular: a
Dow Jones Capital Markets report dated June 19, 2008 stating that market
participants “agreed that Libor wasn’t reflective of market rates” and
“pointed to off-market Libor fixings for the Swiss franc.” Id. (quoting
Sullivan Decl. Ex. 8). Defendants also rely heavily on LIBOR I, in which
Judge Buchwald found that plaintiffs were put on inquiry notice for their
CEA claims once “seven articles published in prominent national news
sources, along with one report referenced in several of those articles,
suggested that LIBOR had been at artificial levels” for nearly a year. 935 F.
Supp. 2d at 700. While Judge Buchwald acknowledged that “none of the
articles definitively established that LIBOR was being manipulated,” they

57

were found sufficient “to suggest to a person of ordinary intelligence the
probability that LIBOR had been manipulated.” Id. at 704.
As an initial matter, the notice analysis in LIBOR I is of limited
relevance because it addressed claims brought under the CEA, for which
intra-defendant manipulation could suffice, rather than under the
Sherman Act, which requires a showing of inter-defendant collusion. That
is, reports of “inaccurate” LIBOR submissions would more easily provide
notice that banks were themselves submitting false quotes than that they
were coordinating with each other to do so. Even supposing notice that
the Contributor Banks were submitting manipulated LIBOR rates, that
would not necessarily establish an antitrust conspiracy if the banks were
merely acting in parallel, as defendants themselves repeatedly emphasize.
The one article specifically referenced in defendants’ briefing is
wholly insufficient to put plaintiffs on inquiry notice, whether of interdefendant collusion or intra-defendant manipulation. See Lentell v. Merrill
Lynch & Co., 396 F.3d 161, 170 (2d Cir. 2005) (finding, in securities fraud
context, that “numerous generic articles on the subject of structural
conflicts appear[ing] in the financial press” were insufficient to trigger
inquiry notice). CHF LIBOR is based on the Contributor Banks’ estimates
and predictions, so unreliability is not necessarily indicative of
manipulation. For this reason, the Court doubts whether even multiple
reports of “off-market Libor fixings for the Swiss franc” would suffice, but
in this case, only one such report is cited. That one report is insufficient to
put plaintiffs on inquiry notice.
There is a breathtaking inconsistency in defendants maintaining
that plaintiffs should have known to bring their claims upon the first scent
of CHF LIBOR inaccuracy in a market report, while at the same time
asserting that defendants’ numerous and substantial regulatory
settlements, entered into years after the supposed notice of the 2008 Dow
Jones report, still do not raise a plausible inference that defendants
conspired to manipulate CHF LIBOR. Based on the materials cited by the
parties, the Court finds that plaintiffs were on inquiry notice of their
antitrust claims no earlier than December 18, 2012, when the first
regulatory settlement against a defendant (UBS, specifically) was

58

announced.
Because plaintiffs have satisfied the three factors for
fraudulent concealment under Hendrickson, the statute of limitations was
tolled, and the antitrust claims are timely because they were brought
within four years of the date on which that tolling ceased.
D.

The FTAIA Does Not Bar Count Two

Defendants argue that Count Two is barred by the FTAIA because
the alleged misconduct lacks a sufficient nexus to the United States. The
FTAIA “lays down a general rule placing all (nonimport) activity
involving foreign commerce outside the Sherman Act’s reach.” F.
Hoffmann–La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 162 (2004). “It then
brings such conduct back within the Sherman Act’s reach provided that the
conduct both (1) sufficiently affects American commerce, i.e., it has a
‘direct, substantial, and reasonably foreseeable effect’ on American
domestic, import, or (certain) export commerce, and (2) has an effect of a
kind that antitrust law considers harmful, i.e., the ‘effect’ must ‘give rise to
a [Sherman Act] claim.’” Id. (quoting 15 U.S.C. §§ 6a(1), (2)) (alterations
omitted). “[F]oreign anticompetitive conduct can have a statutorily
required ‘direct, substantial, and reasonably foreseeable effect’ on U.S.
domestic or import commerce even if the effect does not follow as an
immediate consequence of the defendant’s conduct, so long as there is a
reasonably proximate causal nexus between the conduct and the effect.”
Lotes Co., Ltd. v. Hon Hai Precision Industry Co., 753 F.3d 395, 398 (2d Cir.
2014) (citation omitted). “In adopting the FTAIA, Congress expressly
endorsed an extraterritorial application of the Sherman Act.” Sullivan,
2017 WL 685570, at *22.
Defendants emphasize that the alleged CHF LIBOR manipulation is
centered abroad. Except for JPMorgan, which has entered into a
settlement agreement with plaintiffs, the defendants are each based in
Europe; the Contributor Bank Defendants submitted their quotes to the
BBA in London, from where CHF LIBOR fixes are disseminated; and the
alleged manipulation concerned a foreign currency. Even assuming the
alleged manipulation had some effect on the price of plaintiffs’ derivatives
in the United States, defendants maintain that “the entire sequence of
events required to arrive at this point is far too attenuated to establish the

59

‘reasonably proximate’ effect required under the FTAIA.” Doc. 73 at 18.
Plaintiffs respond that the manipulation, wherever it occurred, was
intended to, and had the foreseeable effect of, generating wrongful profits
within the United States, including by transacting directly with plaintiffs
in the United States.
The FTAIA does not bar plaintiffs’ antitrust claim because the Class
is limited to “U.S. based transactions.” Compl. ¶ 224. The FTAIA has
been held to bar claims of LIBOR manipulation brought by plaintiffs for
trades occurring on an overseas exchange or between two parties
operating abroad. See In re Foreign Exchange Benchmark Rates Antitrust
Litig., 74 F. Supp. 3d 581, 599-601 (S.D.N.Y. 2015). But notably, none of the
numerous decisions in this district addressing LIBOR manipulation have
invoked the FTAIA to bar claims based on transactions occurring in the
United States. See, e.g., FOREX, 2016 WL 5108131, at *11 (bank defendants
did “not challenge the Sherman Act’s reach over transactions in the United
States or on a U.S. exchange”).
“In a situation where a U.S. entity
operating in the United States trades FX with a foreign desk of a
Defendant, the FTAIA does not apply and the claim is not barred because
of the statute’s import commerce exclusion (or exception).” Id. at *13.
The contention that the causal relationship between defendants’
manipulation and plaintiffs’ harm is too attenuated fares no better in this
context than in the constitutional and antitrust standing contexts, where it
has already been rejected. And, as Judge Castel explained in rejecting a
similar challenge under the FTAIA, “[d]efendants also point to the Europebased conduct of defendants, even though the FTAIA’s express language
and the decisions applying it focus on the anti-competitive effects within
the United States.” 2017 WL 685570, at *22. There can be no serious
dispute that the manipulation of a benchmark that is globally
disseminated and serves as a pricing component of derivatives sold widely
in the United States, as plaintiffs have plausibly alleged, would have a
foreseeable effect within the United States.
V.

CEA Claims (Counts Three, Four, and Five)

Count Three asserts that each defendant violated sections 6(c), 9,
and 22 of the CEA, 7 U.S.C. §§ 9, 13, and 25, based on their “manipulation

60

of Swiss franc LIBOR and the prices of Swiss franc LIBOR-based
derivatives that were priced, benchmarked, and/or settled based on Swiss
franc LIBOR,” Compl. ¶ 253. Plaintiffs also bring claims against each
defendant in Count Four for principal-agent liability for these violations
under section 2(a)(1)(B) of the CEA, 7 U.S.C. § 2(a)(1)(B), and in Count Five
for aiding and abetting other defendants’ violations under section 22(a)(1)
of the CEA, 7 U.S.C. § 25(a)(1).
A.

The CEA Does Not Cover CHF FX Forwards

Plaintiffs appear to be asserting violations of the CEA for both
types of derivatives in which they transacted: Divitto’s transactions in
CHF currency futures and the remaining plaintiffs’ transactions in CHF FX
forwards. But FX forwards are excluded from regulation under the CEA.
See, e.g., CFTC v. Erskine, 512 F.3d 309, 314-15 (6th Cir. 2008) (“Expressly
excluded from … CFTC regulation[] is ‘any sale of any cash commodity for
deferred shipment or delivery,’ commonly referred to as a forward
contract.”) (quoting 7 U.S.C. § 1(a)(19)). Thus, plaintiffs’ CEA claims may
only be based on Divitto’s transacting in CHF futures on the CME.
B.

Counts Three, Four, and Five Fail Because Plaintiffs Lack
CEA Standing

“In order to avoid dismissal, the plaintiffs ‘not only must allege the
elements of a commodities manipulation claim, but also must show that
they have standing to sue.’” Harry v. Total Gas & Power N. Am., Inc., No.
15-cv-9689, 2017 WL 1134851, at *6 (S.D.N.Y. Mar. 27, 2017) (quoting
LIBOR I, 962 F. Supp. 2d at 620). “Under section 22(a) of the CEA, a
plaintiff has standing to bring a commodities manipulation action only if
he has suffered ‘actual damages’ as a result of defendant’s manipulation.”
Id. (quoting 7 U.S.C. § 25(a)(1)). “The term ‘actual damages’ has been
applied by courts in a straightforward manner to require a showing of
actual injury caused by the violation.” Id. (citation omitted).
Divitto lacks CEA standing because the Complaint fails to plead
facts that would support a reasonable inference that he suffered actual
damages by transacting at times when defendants manipulated CHF
LIBOR. The Complaint alleges only that “[d]uring the Class Period,

61

[Divitto] engaged in U.S.-based transactions for Swiss franc LIBOR-based
derivatives, including Swiss Franc currency futures contracts traded on the
[CME] at artificial prices proximately caused by Defendants’ unlawful
manipulation.” Compl. ¶ 37. No other details are provided; no specific
dates, no number of transactions, not whether Divitto bought or sold, not
which direction of CHF LIBOR manipulation allegedly harmed him. For
all that can be gleaned from the Complaint, Divitto may have sold only
one CHF futures contract on the CME on January 2, 2001. Meanwhile, the
Complaint makes specific allegations of manipulation for only 32 days out
of the approximately 4,000 days in the Class Period.
Divitto’s failure to identify the specific dates of his transactions is
especially problematic because the Complaint’s stronger allegations of
CHF LIBOR manipulation are concentrated in certain portions of the Class
Period. Indeed, the earliest of the 32 specific acts of alleged manipulation
occurs in February 2005 – four years after the Class Period began and
when Divitto conceivably made his only CHF futures transaction. See id.
App’x. And while the various regulatory settlements referenced in the
Complaint cover a wider period of time than the 32 specific acts, those
periods similarly do not cover the entirety of the Class Period as to most
defendants. As the Complaint notes, UBS entered a settlement with the
DOJ for repeatedly manipulating CHF LIBOR “as early as 2001” and
continuing until at least 2009.23 Id. ¶ 64. But, as will be discussed below,
Divitto’s CEA claims against UBS are untimely.
The settlement
agreements as to the other defendants appear to cover conduct occurring
no earlier than 2003.24 Thus, again assuming that Divitto sold only one
The DOJ Statement of Facts states that “[s]tarting at least as early as 2001, and
continuing at least until September 1, 2009, on each trading day on which UBS had
Swiss Franc trading positions, UBS’s Swiss Franc LIBOR submitters rounded UBS’s
Swiss Franc LIBOR submissions to benefit UBS’s global Swiss Franc trading
positions.” United States Department of Justice, Criminal Division, Fraud Section
Non-Prosecution Agreement and Appendix A Statement of Facts with UBS AG (Dec.
18, 2012) at 30.
23

See DOJ Deferred Prosecution Agreement and Attachment A Statement of Facts
with Deutsche Bank AG, USA v. Deutsche Bank AG, No. 15cr61, Dkt. No. 6 (D. Conn.
Apr. 23, 2015).
24

62

CHF futures contract on the CME on January 2, 2001, none of the
regulatory settlements with those defendants against whom Divitto may
have a timely claim covers misconduct during the time of Divitto’s
transaction.
Last, even assuming manipulation occurred during periods in
which Divitto transacted, without any details of his transactions it is just as
likely he was a beneficiary of defendants’ misconduct – substantially
reducing the already questionable likelihood of harm from manipulation
on the dates of Divitto’s transactions. See In re LIBOR-Based Fin.
Instruments Antitrust Litig., 962 F. Supp. 2d 606, 620-21 (S.D.N.Y. 2013)
(finding CEA claims inadequate where plaintiffs made no “allegations that
make plausible (1) that they transacted in . . . futures contracts on days on
which . . . futures contract prices were artificial as a result of trader-based
manipulation of LIBOR, or (2) that their positions were such that they
were injured”).
To be sure, at the pleading stage Divitto need “not trace the dates of
defendants’ alleged manipulations to each of plaintiffs’ individual
transactions.” Sullivan, 2017 WL 685570, at *31. However, he must at
minimum provide some details regarding his transactions that are within
his knowledge and bear on the plausibility that the alleged manipulation
caused actual damage to his trading positions. See Harry, 2017 WL
1134851, at *9; LIBOR II, 962 F. Supp. 2d at 620. Where plaintiffs seek to
sue over an eleven-year class period, based on episodic acts of
manipulation in varying directions that are concentrated in certain subsets
of the class period, the unelaborated allegation that plaintiffs transacted in
the affected market at some point during the class period is not sufficient
to “nudge[] their claims across the line from conceivable to plausible.”
Twombly, 550 U.S. at 570. 25

Section 22 of the CEA grants a private plaintiff who purchased or sold a futures
contract standing to sue for “manipulation of the price of any such contract . . . or the
price of the commodity underlying such contract.” 7 U.S.C. § 25(a)(1)(D)(ii).
Defendants argue that Divitto lacks standing to sue because the CHF LIBOR “is not
the commodity underlying the CME futures contracts;” rather, the “commodity
underlying these futures is a contract to exchange 125,000 Swiss francs for U.S.
25

63

Divitto’s lack of standing is fatal to each of plaintiffs’ CEA claims as
to all defendants because he is the only plaintiff who claims to have
transacted in a derivative covered by the CEA. Counts Three, Four, and
Five are therefore dismissed on this ground alone, and it is not strictly
necessary to address the parties’ remaining arguments. Nevertheless,
given the parties’ full briefing of the issues and the fact that plaintiffs may
well plead additional facts regarding Divitto’s transactions in a second
amended complaint, the Court will proceed to address the other grounds
for dismissal urged in defendants’ motions.
C.

While Plaintiffs Lack CEA Standing, They Have Plausibly
Alleged Manipulation by the Deutsche Bank Defendants,
RBS, and UBS

Count Three asserts that each defendant is liable under the CEA for
manipulating the price of CHF LIBOR and thereby the price of derivatives
priced based on CHF LIBOR, including CHF futures traded on the CME.
“While the CEA itself does not define the term, a court will find
manipulation where (1) Defendants possessed an ability to influence
market prices; (2) an artificial price existed; (3) Defendants caused the
artificial prices; and (4) Defendants specifically intended to cause the
artificial price.” In re Amaranth Natural Gas Commodities Litig., 730 F.3d 170,
173 (2d Cir. 2013) (internal quotation marks omitted).
Although Divitto lacks standing to sue for any manipulation under
the CEA because he has not plausibly alleged actual injury, the Complaint
adequately alleges manipulation of the price of CHF futures contracts in
violation of the CEA by the Deutsche Bank Defendants, RBS, and UBS. As
recounted above, the Complaint plausibly alleges that CHF LIBOR affects
dollars.” Doc. 73 at 30. But that is of no matter because standing may be conferred
based on not only manipulation of “the price of the commodity underlying such
contract,” but also on “manipulation of the price of any such contract” itself. 7 U.S.C.
§ 25(a)(1)(D)(ii). Had Divitto adequately alleged that he was injured by manipulation
of the price of the CHF FX futures contract through manipulation of CHF LIBOR, he
would have standing under the CEA. See LIBOR I, 935 F. Supp. 2d at 715 (“Plaintiffs
have stated a [CEA] claim for commodities manipulation based on manipulation of
the price of Eurodollars futures contracts.”).

64

the price of CHF futures contracts and that the Deutsche Bank Defendants,
RBS, and UBS abused their ability to influence CHF LIBOR for the purpose
of profiting from their CHF derivative positions, including CHF futures
contracts. The Complaint contains multiple detailed instances of the
Deutsche Bank Defendants, RBS, and UBS manipulating CHF LIBOR
submissions at the request of derivative traders. Further, allegations in the
Complaint regarding structural facilitation of this conduct support the
inference that these detailed instances are not the full extent of the
manipulation.26 At the pleading stage, such allegations suffice to claim
that the Deutsche Bank Defendants, RBS, and UBS with specific intent
caused an artificial price for CHF futures on the CME.
In arguing to the contrary, defendants first maintain that plaintiffs
have not alleged that any manipulation of CHF LIBOR proximately caused
artificial prices of CHF futures contracts traded on the CME. See In re
Commodity Exch., Inc., Silver Futures & Options Trading Litig., No. 11-md2213, 2012 WL 6700236, at *16-18 (S.D.N.Y. Dec. 21, 2012) (dismissing price
manipulation claim because “[t]he causation element [of a CEA claim]
requires that a defendant be the proximate cause of the price artificiality”).
This argument has essentially already been rejected under the Article III
standing and antitrust analyses. While proximate cause may pose a higher
bar than a standing requirement, in this case the same response answers
both: plaintiffs have plausibly alleged a relationship between CHF LIBOR
and the price of CHF futures contracts, and the argument that such a
relationship is not supported by the evidence or is insufficiently direct to
find proximate causation cannot be resolved at the pleading stage.
Next, defendants contend that the Complaint fails to allege that
any manipulation was undertaken with specific intent to manipulate the
price of CHF futures traded on the CME. “[I]n order to prove the intent
element of a manipulation . . . it must be proven that the accused acted (or
failed to act) with the purpose or conscious object of causing or effecting a

The Complaint fails to plausibly allege manipulation in violation of the CEA
against the Credit Suisse Defendants or BlueCrest because it does not plausibly allege
that these defendants caused any manipulated CHF LIBOR submission, and thereby
artificial prices of CHF futures contracts.
26

65

price or price trend in the market that did not reflect the legitimate forces
of supply and demand.” In the Matter of Indiana Farm Bureau Coop. Assoc.,
No. 75-14, 1982 CFTC LEXIS 25, at *17 (C.F.T.C. Dec. 17, 1982). “Plaintiffs
may demonstrate scienter either (a) by alleging facts to show that
Defendants had both motive and opportunity to commit fraud, or (b) by
alleging facts that constitute strong circumstantial evidence of conscious
misbehavior or recklessness.” Laydon, 2014 WL 1280464, at *5. Rule 9(b)’s
heightened pleading standard “is generally relaxed in the context of
manipulation-based claims, where the complaint must simply specify
what manipulative acts were performed, which defendants performed
them, when the manipulative acts were performed, and what effect the
scheme had on the market for the securities at issue.” In re London Silver
Fixing, Ltd., Antitrust Litig., 213 F. Supp. 3d 530, 566 (S.D.N.Y. 2016).
The specific intent element is not a basis for dismissal at this stage.
Plaintiffs have met the requirements for manipulation-based claims by
alleging what manipulative acts were performed and by whom, and how
those acts affected CHF futures. Plaintiffs have alleged defendants’ motive
to manipulate CHF LIBOR to profit their derivative positions and
opportunity to do so through their influence on the rate-setting process.
See Laydon, 2014 WL 1280464, at *5 (“On motive, the Complaint contains
sufficient allegations that Defendants stood to gain tremendous profits
from manipulating Euroyen TIBOR and Yen–LIBOR.”). The Complaint
also alleges structural facilitation by RBS, UBS, and Deutsche Bank AG –
such as rearranging desks to place traders next to submitters and oversight
failures – suggestive of recklessness or conscious misbehavior.
The entire thrust of plaintiffs’ claims is that defendants
manipulated CHF LIBOR for the precise purpose of affecting the prices of
CHF LIBOR-based derivatives, including CHF futures. And this specific
intent is further supported by defendants’ own statements, with an RBS
trader stating, “i moaned too.. they had 6m libor at 85.. i was gonna lose
1.25 bps on 2k futs.” Compl. App’x at 2.27

Defendants also urge that specific intent has been inadequately alleged because
“Plaintiffs do not even claim to have bought or sold Swiss franc futures from the
Defendants, and therefore fail to demonstrate that Defendants had a motive to
27

66

D.

While Plaintiffs Lack CEA Standing, They Have Plausibly
Alleged Principal-Agent Liability Against the Deutsche
Bank Defendants, RBS, and UBS

Count Four claims that each defendant is liable for the CEA
violations of its employees. Under Section 2(a)(1)(B) of the CEA, 7 U.S.C. §
2(a)(1)(B), “a claim for principal-agent liability requires that the agent was
acting in the capacity of an agent when he or she committed the unlawful
acts and that the agent’s actions were within the scope of his or her
employment.” In re London Silver Fixing, Ltd., Antitrust Litig., 213 F. Supp.
3d 530, 571 (S.D.N.Y. 2016). “[P]laintiffs must allege that the principal
manifested an intent to grant the agent authority, the agent agreed, and
the principal maintain[ed] control over key aspects of the undertaking.” In
re Amaranth Natural Gas Commodities Litig., 587 F. Supp. 2d 513, 546
(S.D.N.Y. 2008) (internal quotation marks omitted).
That claim fails against all defendants because plaintiffs lack
standing to sue for manipulation under the CEA and thus for principalagent liability based on that manipulation. However, to the extent that
plaintiffs have sufficiently alleged primary CEA violations by the
Deutsche Bank Defendants, RBS, and UBS, they have likewise sufficiently
alleged principal-agent liability for those violations. “There is no
indication, at this stage, that these employees acted on a lark or in any way
outside the scope of their employment.” In re London Silver Fixing, Ltd.,
Antitrust Litig., 213 F. Supp. 3d at 571; see also FOREX, 2016 WL 5108131, at

manipulate the prices of such contracts.” Doc. 73 at 34-35. That argument is specious
because – as defendants are well aware, and as discussed above – these derivatives
were traded on an exchange instead of directly with any counterparty. As plaintiffs
note, accepting defendants’ position would mean that “no plaintiff could bring a CEA
manipulation claim, as ‘[b]uyers and sellers of commodity futures do not deal directly
with each other, but instead interact with a commodities exchange, which serves as a
clearing house.’” Doc. 86 at 43 (quoting In re Natural Gas, 337 F. Supp. 2d 498, 502
(S.D.N.Y. 2004)). Defendants cite no support for this proposition; rather, their own
authorities confirm that CEA claims may be based on manipulation of derivatives
sold on an exchange. See Hershey v. Energy Transfer Partners L.P., 610 F.3d 239, 249
(5th Cir. 2010) (holding that evidence defendants intended to “impact the NYMEX
natural gas futures market” would be sufficient to establish manipulative intent).

67

*25 (principal-agent CEA claims could proceed where there was no
indication that “any trader was operating outside the scope of his
employment when engaging in the alleged conduct”). Indeed, the
Complaint alleges that defendants manipulated CHF LIBOR to increase
their institutions’ global profits and that this misconduct was systemic.
E.

While Plaintiffs Lack CEA Standing, They Have Plausibly
Alleged Aiding and Abetting Liability Against RBS

Count Five alleges that defendants aided and abetted other
defendants’ CEA violations by colluding to manipulate CHF LIBOR and
thereby the price of derivatives priced based on CHF LIBOR, including
CHF futures traded on the CME. “To recover on an aiding and abetting
claim under the CEA, a Plaintiff must prove that the Defendant (1) had
knowledge of the principal’s intent to violate the CEA; (2) intended to
further that violation; and (3) committed some act in furtherance of the
principal's objective.” Laydon, 2014 WL 1280464, at *4. To recover against
a secondary party for aiding and abetting a CEA violation, “a plaintiff
must first prove that a primary party committed a commodities violation.”
Tatum v. Legg Mason Wood Walker, Inc., 83 F.3d 121, 123 n.3 (5th Cir. 1996).
Again, Count Five fails against all defendants because plaintiffs
lack standing to sue for manipulation under the CEA and thus for
secondary aiding and abetting liability based on that primary
manipulation. Moreover, as discussed in the antitrust analysis, RBS is the
only defendant plausibly alleged to have manipulated CHF LIBOR
through collusion with another party. Thus, even apart from the question
of plaintiffs’ standing, Count Five would fail against all defendants except
RBS for failure to show defendants “committed some act in furtherance of
the principal’s objective.” Laydon, 2014 WL 1280464, at *4.
F.

The CEA Claims Are Timely Against All Defendants
Except UBS

Defendants argue that plaintiffs’ CEA claims should be dismissed
as untimely. A claim under the CEA must “be brought no later than two
years after the date the cause of action arises.” 7 U.S.C. § 25(c). “A cause of
action ‘arises’ under the CEA when a party is placed on inquiry notice of

68

the violation.” In re Natural Gas Commodity Litig., 337 F. Supp. 2d 498, 512
(S.D.N.Y. 2004). “A plaintiff will be deemed to have inquiry notice when
there are ‘storm warnings,’ i.e., ‘when the circumstances would suggest to
an investor of ordinary intelligence the probability that she has been
defrauded.’” In re Polaroid Corp. Sec. Litig., 465 F. Supp. 2d 232, 242
(S.D.N.Y. 2006) (quoting LC Capital Partners v. Frontier Ins. Grp., Inc., 318
F.3d 148, 154 (2d Cir. 2003)). Thus, for the CEA claims to be timely,
plaintiffs must have been on inquiry notice no earlier than February 5,
2013 – two years before the original complaint was filed.
Defendants first reiterate their antitrust statute of limitations
argument that plaintiffs were put on inquiry notice of their claims by news
articles in 2008 reporting that LIBOR rates, including in one case CHF
LIBOR, had ceased to reflect the actual cost of borrowing. This argument
fares somewhat better in the CEA context than in the antitrust context,
because the Sherman Act requires a showing of collusion whereas the CEA
does not. Nevertheless, this handful of articles merely notes a discrepancy
between LIBOR and actual borrowing rates, most of which did not even
specifically mention CHF LIBOR. This is simply insufficient to trigger
inquiry notice. See Sullivan, 2017 WL 685570, at *28.
Next, defendants argue that plaintiffs were on inquiry notice as to
all defendants no later than December 18, 2012, the date that the DOJ
announced a non-prosecution agreement with UBS. That agreement
stated that, “[s]tarting at least as early as 2001, and continuing at least until
September 1, 2009, on each trading day on which UBS had Swiss Franc
trading positions, UBS’s Swiss Franc LIBOR submitters rounded UBS’s
Swiss Franc LIBOR submissions to benefit UBS’s global Swiss Franc
trading positions.” Doc. 77-10, Sullivan Decl., Ex. 9, at ¶ 73.
The Court agrees that the non-prosecution agreement provided
plaintiffs with inquiry notice as to UBS and thus plaintiffs’ CEA claims
against UBS are time barred. A statement in a government settlement of
frequent and systemic manipulation of CHF LIBOR is clearly sufficient to
put plaintiffs on notice of claims based on this precise misconduct, and

69

indeed the Complaint draws its detailed allegations against UBS in large
part from this non-prosecution agreement.28 See, e.g., Compl. ¶ 64.
However, the UBS non-prosecution agreement did not put
plaintiffs on inquiry notice with respect to CEA claims against defendants
other than UBS. With respect to Swiss francs, the agreement states only
that UBS “would round [their] proposed submission up or down by ¼ to
½ a basis point to benefit the entire global Swiss Franc desk’s daily net
position in the Swiss Franc LIBOR-related derivatives markets,” and that
on a “handful of occasions in between July 2006 and May 2007, a Zurichbased UBS Group Treasury employee asked the Swiss Franc LIBOR
submitters to contribute LIBOR submissions to benefit his/her trading
book of derivatives tied to Swiss Franc LIBOR.” Doc. 77-10, Sullivan Decl.,
Ex. 9, at ¶¶ 73, 75. Nothing in the CHF LIBOR manipulation discussion
indicates that other parties participated in UBS’s misconduct.
Accordingly, the CEA claims are timely as to all defendants except UBS.29
VI. RICO Claims (Counts Six and Seven)
Count Six asserts that each defendant violated RICO §1962(c),
which makes it unlawful “for any person employed by or associated with
any enterprise engaged in, or the activities of which affect, interstate or
foreign commerce, to conduct or participate, directly or indirectly, in the
conduct of such enterprise’s affairs through a pattern of racketeering
activity.” 18 U.S.C. § 1962(c). “RICO recognizes a private right of action
At oral argument on the motions to dismiss, plaintiffs maintained that the UBS
non-prosecution agreement did not put them on inquiry notice for CEA violations
occurring after September 1, 2009, the last date covered by the agreement. But a nonprosecution agreement based on frequently recurring misconduct over a more than
eight-year period is clearly sufficient to alert an investor of ordinary intelligence that
the misconduct might have continued beyond the period covered by the agreement.
This is only reinforced by the agreement’s statement that this misconduct “continued
at least until September 1, 2009.” Doc. 77-10, Sullivan Decl., Ex. 9, at ¶ 73 (emphasis
added).
28

The first regulatory settlement concerning CHF LIBOR manipulation by a
defendant other than UBS was not announced until February 6, 2013, which falls
within the two-year CEA statute of limitations.
29

70

when a defendant commits a predicate act that is ‘indictable’ under
specified federal criminal statutes.” Sullivan, 2017 WL 685570, at *32.
Here, the RICO claims are based solely on alleged violations of the wire
fraud statute. See 18 U.S.C. § 1343. Specifically, the Complaint alleges that
defendants formed an association-in-fact enterprise that engaged in a
pattern of racketeering through predicate acts of wire fraud by making
false CHF LIBOR submissions and sending confirmations into the United
States for derivatives transactions incorporating manipulated CHF LIBOR.
Count Seven alleges that each defendant conspired to violate RICO based
on this same misconduct. See 18 U.S.C. § 1962(d).
Defendants move to dismiss these claims on the grounds that the
Complaint does not adequately allege that plaintiffs have RICO standing,
that defendants formed a RICO enterprise or conspired to do so, that each
defendant either committed or aided and abetted at least two RICO
predicate acts, or that the alleged predicate acts constitute a pattern of
racketeering activity. Further, defendants argue that the RICO claims are
impermissibly extraterritorial and untimely.
The RICO claims are dismissed in full as impermissibly
extraterritorial because the Complaint does not allege a sufficient
connection between the alleged acts of wire fraud and the United States.
Moreover, the RICO claims fail against each defendant except RBS because
only RBS has been plausibly alleged to have joined a RICO enterprise.
A.

Plaintiffs Have RICO Standing

A private plaintiff has standing to assert a RICO claim only if the
plaintiff was “injured in his business or property by reason of a violation
of section 1962,” 18 U.S.C. § 1964(c). To satisfy this requirement, there
must be a “direct relation between the injury asserted and the injurious
conduct alleged.” Holmes v. Sec. Inv. Protection Corp., 503 U.S. 258, 268
(1992). Because “Congress modeled § 1964(c) on the civil-action provision
of the federal antitrust laws,” the same requirements of proximate
causation to establish standing apply to both types of claims. Id. at 267-69.
According to defendants, plaintiffs’ alleged injuries are too indirect and
speculative to support standing for their RICO claims. That argument fails
for the reasons given in the antitrust standing analysis above.

71

B.

The Complaint Adequately Alleges Conduct that Violates
RICO Only as to RBS

A plaintiff asserting a RICO claim under § 1962(c) must plausibly
allege “(1) that the defendant (2) through the commission of two or more
acts (3) constituting a ‘pattern’ (4) of ‘racketeering activity’ (5) directly or
indirectly invests in, or maintains an interest in, or participates in (6) an
‘enterprise’ (7) the activities of which affect interstate or foreign
commerce.” Town of West Hartford v. Operation Rescue, 915 F.2d 92, 100 (2d
Cir. 1990) (quoting 18 U.S.C. § 1962(a)–(c)). These elements “must be
established as to each individual defendant.” U.S. Fire Ins. Co. v. United
Limousine Serv., Inc., 303 F. Supp. 2d 432, 451 (S.D.N.Y. 2004). Here, they
are established only as to RBS.
1.

The Complaint Adequately Alleges an Associationin-Fact RICO Enterprise Only as to RBS

The RICO statute defines an “enterprise” as “any individual,
partnership, corporation, association, or other legal entity, and any union
or group of individuals associated in fact although not a legal entity.” 18
U.S.C. § 1961(4).
“[A]n association-in-fact enterprise is simply a
continuing unit that functions with a common purpose.” Boyle v. United
States, 556 U.S. 938, 948 (2009). “While the group must function as a
continuing unit and remain in existence long enough to pursue a course of
conduct, nothing in RICO exempts an enterprise whose associates engage
in spurts of activity punctuated by periods of quiescence.” Id.
The Complaint alleges that defendants formed an association-infact enterprise by systemically colluding to manipulate CHF LIBOR for the
common purpose of increasing their CHF LIBOR-based derivative profits.
That allegation suffers from the same deficiency as plaintiffs’ allegation
that defendants formed an antitrust conspiracy for the same purpose. As
discussed in the antitrust analysis, the Complaint alleges that CHF LIBOR
was manipulated sometimes upward and other times downward, but does
not explain why each defendant would profit from manipulation in the
same direction at the same time. Further, the Complaint contains specific
allegations of inter-defendant collusion only against RBS. Without an
explanation of how defendants’ incentives would align or references to

72

specific instances of collusion, it is not plausible to infer that defendants
shared a common purpose to conspire to manipulate CHF LIBOR.
Accordingly, only RBS has been adequately alleged to have joined an
association-in-fact enterprise to manipulate CHF LIBOR.30
2.

The Complaint Adequately Alleges Two Predicate
Acts of Wire Fraud by RBS

To state a claim under section 1962(c), plaintiffs must adequately
allege that “a defendant personally committed or aided and abetted the
commission of two predicate acts.” 4 K & D Corp. v. Concierge Auctions,
LLC, 2 F. Supp. 3d 525, 537 (S.D.N.Y. 2014) (quoting McLaughlin v.
Anderson, 962 F.2d 187, 192 (2d Cir. 1992)). Plaintiffs allege that defendants
committed the predicate act of wire fraud on numerous occasions by
coordinating their manipulation through the Bloomberg chat terminals
that use U.S. wires, by causing the transmission of false CHF LIBOR fixes
on a daily basis to the U.S. financial markets through U.S. wires, and by
transacting in CHF LIBOR-based derivatives in the United States through
U.S. wires at prices they manipulated through their control of the CHF
LIBOR setting process.
Because plaintiffs’ RICO claims are based on wire fraud predicates,
the heightened pleading requirements of Fed. R. Civ. P. 9(b) apply. See
Mills v. Polar Molecular Corp., 12 F.3d 1170, 1176 (2d Cir. 1993).
“[A]llegations of predicate . . . wire fraud acts should state the contents of
the communications, who was involved, where and when they took place,
and explain why they were fraudulent.” Id. The elements of a wire fraud
claim are: “(1) the formation of a scheme to defraud victims (2) of money
or other property (as the object of the scheme), and (3) the use of . . .
interstate or foreign wire communications in furtherance of the scheme.”
Chevron Corp. v. Donziger, 871 F. Supp. 2d 229, 249 (S.D.N.Y. 2012). “Where
multiple defendants are asked to respond to allegations of fraud, the
complaint should inform each defendant of the nature of his alleged
While the Complaint alleges that the Deutsche Bank Defendants colluded to
manipulate CHF LIBOR, a RICO association-in-fact enterprise generally cannot be
comprised of solely a parent and a subsidiary. See U1IT4less, Inc. v. FedEx Corp., 157 F.
Supp. 3d 341, 350-52 (S.D.N.Y. 2016).
30

73

participation in the fraud.” DiVittorio v. Equidyne Extractive Indus., Inc., 822
F.2d 1242, 1247 (2d Cir. 1987).
As an initial matter, only RBS may be adequately alleged to have
committed predicate acts in furtherance of an enterprise because only it
has been adequately alleged to have joined an association-in-fact
enterprise at all. The Complaint contains at least two specific instances of
each of UBS and the Deutsche Bank Defendants manipulating CHF
LIBOR, but only through intra-defendant manipulation and not through
the inter-defendant collusion that could occur as part of an association in
fact. As for Blue Crest and the Credit Suisse Defendants, the Complaint
lacks two specific allegations of CHF LIBOR manipulation of either sort.
With respect to RBS, the Complaint identifies two specific instances of its
collusion with unidentified “Bank E” to manipulate CHF LIBOR on April
15, 2008 and May 14, 2009, see Compl. ¶¶ 124-26, which as to RBS satisfies
the requirement to identify two wire fraud predicate acts with
particularity.
Defendants also contend that the Complaint fails to allege a
“scheme to defraud,” an element of a wire fraud claim that “has been
construed liberally to include any plan consummated by the use of”
interstate or foreign wire communications “in which artifice or deceit is
employed to obtain something of value with the intention of depriving the
owner of his property.” Chevron, 871 F. Supp. 2d at 249 (internal quotation
marks omitted). Plaintiffs “must demonstrate that the defendant had a
conscious knowing intent to defraud and that the defendant contemplated
or intended some harm to the property rights of the victim.” United States
v. Guadagna, 183 F.3d 122, 129 (2d Cir. 1999) (alterations and internal
quotation marks omitted).
While defendants contend that the Complaint fails to show a
“purpose of depriving Plaintiffs of anything at all,” Doc. 73 at 44, the
Complaint plausibly alleges that RBS manipulated CHF LIBOR in order to
benefit its derivatives positions, which would necessarily come at the
expense of others transacting in the CHF LIBOR-based derivative markets.
This suffices to allege that RBS abused its influence over the CHF LIBOR
rate to deprive those transacting in CHF LIBOR-based derivatives of

74

something of value through deceit.31 And RBS is alleged to have colluded
with Bank E through the use of Bloomberg chats, which plaintiffs allege on
information and belief, based on the structure of the Bloomberg network,
“are located within the United States and were transmitted into the United
States, crossing U.S. wires, through servers located in the United States.”
Compl. ¶ 123 n.101.
3.

The Complaint Adequately Alleges that RBS
Engaged in a Pattern of Racketeering Activity

To constitute a “pattern of racketeering activity,” the two or more
predicate acts “must be related, and either amount to or pose a threat of
continuing criminal activity.” Spool v. World Child Intern. Adoption Agency,
520 F.3d 178, 183 (2d Cir. 2008) (internal quotation marks and alterations
omitted). According to defendants, the Complaint fails to adequately
plead that the purported acts of wire fraud amounted to a continuous
pattern of racketeering activity, rather than isolated or sporadic acts. But
the Complaint plausibly alleges that the two specific instances of collusion
between RBS and “Bank E” are merely a “small sample” of their CHF
LIBOR manipulation. Compl. ¶ 128. Plaintiffs note that a CFTC order
found that RBS and Bank E colluded through “near daily” Bloomberg
chats. Id. The Complaint also points to the European Commission’s
finding that between March 2008 and July 2009, RBS and JPMorgan
colluded to “distort the normal pricing of interest rate derivatives
denominated in Swiss franc” by manipulating CHF LIBOR. Id. ¶ 139.
That collusion is further supported by allegations in plaintiffs’
supplemental memorandum regarding personal jurisdiction that draw
from documents produced by JPMorgan pursuant to its settlement
agreement with plaintiffs. Taken together, these allegations suffice to
plead the requisite continuity to constitute a pattern of racketeering
activity, and any challenge to the sufficiency of the scheme’s relatedness
and duration cannot be resolved at the pleading stage.

Allegations that defendants other than RBS manipulated CHF LIBOR to profit from
their transactions in CHF LIBOR-based derivatives at the expense of other market
participants would also suffice to allege a scheme to defraud as to those defendants to
the extent that the other elements of a RICO claim had been adequately pled.
31

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C.

The Complaint Adequately Alleges a RICO Conspiracy
Only as to RBS

Section 1962(d) provides for a separate RICO violation against any
person who conspires to violate Section 1962(c). See 18 U.S.C. § 1962(d).
To state a RICO conspiracy claim, plaintiffs must allege “the existence of
an agreement to violate RICO’s substantive provisions” – that is, that
defendants “agreed to form and associate themselves with a RICO
enterprise and that they agreed to commit two predicate acts in
furtherance of a pattern of racketeering activity in connection with the
enterprise.” Cofacredit, S.A. v. Windsor Plumbing Supply Co., Inc., 187 F.3d
229, 244 (2d Cir. 1999) (internal quotation marks omitted). The parties
treat the question of a RICO conspiracy as essentially dependent on the
substantive RICO claim, with the same allegations and arguments at issue
for both. Because the Complaint sufficiently pleads a substantive RICO
violation only against RBS, it similarly pleads a RICO conspiracy claim
only against RBS.
D.

The RICO Claims Are Dismissed in Full as Impermissibly
Extraterritorial

Under the presumption against extraterritoriality, “[w]hen a statute
gives no clear indication of an extraterritorial application, it has none.”
Morrison v. National Australia Bank Ltd., 561 U.S. 247, 255 (2010).
“Congress’s incorporation of . . . extraterritorial predicates into RICO gives
a clear, affirmative indication that § 1962 applies to foreign racketeering
activity – but only to the extent that the predicates alleged in a particular
case themselves apply extraterritorially.” RJR Nabisco, Inc. v. European
Community, 136 S. Ct. 2090, 2102 (2016). Accordingly, a RICO claim may
be based on foreign racketeering activity only if its predicate acts apply
extraterritorially.
Here, plaintiffs’ RICO claims are based on predicate acts of wire
fraud. In European Community v. RJR Nabisco, the Second Circuit held that
Congress had not “manifested an intent that the wire fraud statute” apply
extraterritorially, and thus the presumption against extraterritorial
application had not been overcome. 764 F.3d 129, 140-41 (2d Cir. 2014),
rev’d and remanded on other grounds, 136 S. Ct. 2090. Thus, to state a RICO

76

claim based on wire fraud, plaintiffs must allege that the racketeering
activity was domestic in nature.
In RJR Nabisco, the defendant RJR was alleged to have “essentially
orchestrated a global money laundering scheme from the United States by
sending employees and communications abroad” to sell cigarettes to crime
organizations, with the “proceeds ultimately being returned to RJR in the
United States.” 764 F.3d at 141-42 (internal quotation marks and alteration
omitted). The complaint further alleged that the money laundering
scheme was “intertwined with organized crime and narcotics trafficking in
New York City, that much of the money laundering through cigarette sales
occurs in New York City, and that millions of dollars’ worth of real estate
have been purchased within New York in conjunction with the scheme.”
Id. at 142. The Second Circuit found these allegations sufficient to state a
domestic RICO claim based on wire fraud predicates, explaining that “[i]f
domestic conduct satisfies every essential element to prove a violation of a
United States statute that does not apply extraterritorially, that statute is
violated even if some further conduct contributing to the violation
occurred outside the United States.” Id.
By contrast, the Second Circuit’s summary order in Petroleos
Mexicanos v. SK Engineering & Const. Co. Ltd. concluded that limited
connections to the United States were insufficient to support domestic
application for a RICO claim based on wire fraud predicates. 572 F. App’x
60 (2d Cir. 2014). There, a foreign oil company, Pemex, brought a RICO
claim against its contractors for bribing Pemex executives to approve
certain cost overruns for a project outside the United States. Pemex
alleged three contacts between the bribery scheme and the United States:
“the financing was obtained here, the invoices were sent to the bank for
payment, and the bank issued payment.” 572 F. App’x at 61. But Pemex
did not allege “that the scheme was directed from (or to) the United
States,” and the “activities involved in the alleged scheme – falsifying the
invoices, the bribes, the approval of the false invoices – took place outside
of the United States.” Id. Given the foreign focus of the alleged scheme,
the Second Circuit ruled that “simply alleging that some domestic conduct
occurred cannot support a claim of domestic application.” Id. (citing Norex
Petroleum Ltd. v. Access Indus., Inc., 631 F.3d 29, 32-33 (2d Cir. 2010)).

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Applying the holdings of RJR Nabisco and Petroleos Mexicanos, three
courts in this district have recently dismissed similar RICO claims based
on wire fraud predicates relating to LIBOR manipulation as impermissibly
extraterritorial. See FrontPoint Asian Event Driven Fund, 2017 WL 3600425,
at *14-15; Sullivan, 2017 WL 685570, at *33; Laydon, 2015 WL 1515487, at *89. In those cases, as here, the alleged U.S. connections included
transmitting false quotes through servers located in the United States,
causing Thomson Reuters and the BBA to publish manipulated LIBOR
fixes into the United States, coordinating their derivative positions with
their LIBOR submissions in electronic chat rooms through servers located
in the United States, and sending trade confirmations based on
manipulated LIBOR rates to counterparties in the United States.32 In each
case, those contacts were found to create only a minimal nexus to the
United States that was insufficient to overcome the presumption against
extraterritoriality because manipulative communications occurred
between defendants located abroad and the manipulated LIBOR quotes
were submitted to an organization abroad. These cases contrasted with
RJR Nabisco, “where the scheme was allegedly both managed from and
directed at the U.S.” Laydon, 2015 WL 1515487, at *8.
In arguing that their RICO claims are not extraterritorial, plaintiffs
rely entirely on United States v. Hayes, a criminal prosecution for wire
fraud. There, a former UBS trader alleged to have manipulated YenLIBOR moved to dismiss the indictment on the ground that, as “a foreign
national charged with conspiring to manipulate a foreign financial
benchmark, for a foreign currency, while working for a foreign bank, in a
foreign country, he lacks a sufficient nexus to the United States and did
not have constitutionally adequate notice that his alleged conduct was
criminal.” 99 F. Supp. 3d 409, 412 (S.D.N.Y. 2015) (internal quotation
marks and alterations omitted), adopted in part 118 F. Supp. 3d 620
(S.D.N.Y. 2015). That argument was rejected because “the co-conspirators
purportedly caused the manipulated LIBOR to be published to servers in
the United States and used United States wires to memorialize trades
Indeed, as defendants demonstrate in Appendix A to their memorandum in law in
support of their motion to dismiss, many of the allegations track almost verbatim the
allegations found insufficient in Laydon. See Doc. 73 App’x A.
32

78

affected by that rate” and “culpable conduct underlying the substantive
count therefore occurred in the United States.” Id. at 421. “The
presumption against extraterritoriality [was] thus irrelevant to both the
wire fraud and the conspiracy.” Id.
According to plaintiffs, the logic of Hayes applies here: because
defendants “purportedly caused the manipulated LIBOR to be published
to servers in the United States and used United States wires to
memorialize trades affected by that rate,” their conduct “occurred in the
United States” and thus the wire fraud claims are not extraterritorial. Id.
But Hayes itself took pains to distinguish the reach of the criminal wire
fraud laws from questions of civil law and personal jurisdiction, noting
that “criminal law and civil law serve different purposes and have
different sources and constraints.” Id. at 423 n.4. As Judge Daniels
explained in rejecting a similar invocation of Hayes, “[t]o be ‘within the
domestic reach of the wire fraud statute’ is not the same as overcoming the
presumptions against extraterritoriality in the RICO context.” Laydon v.
Mizuho Bank, Ltd., No. 12-cv-3419, Doc. No. 491, at *3 n.3 (S.D.N.Y. July 24,
2015) (internal quotation marks omitted); see also FrontPoint Asian Event
Driven Fund, 2017 WL 3600425, *15 (“Plaintiffs’ reliance on criminal RICO
cases is unfounded, for extraterritorial application of RICO in civil cases
presents distinct considerations absent in the criminal context.”). Plaintiffs
contend that causing a manipulated rate LIBOR to be broadcast
worldwide, including through U.S. wires, from abroad overcomes the
presumption against extraterritoriality.
That contention is plainly
inconsistent with the Second Circuit’s determination that “[s]imply
alleging that some domestic conduct occurred cannot support a claim of
domestic application” of RICO. Petroleos Mexicanos, 572 F. App’x at 61
(citing Norex Petroleum Ltd. v. Access Indus., Inc., 631 F.3d 29, 32-33 (2d Cir.
2010)).
Plaintiffs’ RICO claims are dismissed as impermissibly
extraterritorial. As in FrontPoint Asian Event Driven Fund, Laydon, and
Sullivan, defendants are based abroad, their allegedly manipulated quotes
were submitted from abroad to a banking association located abroad, and
the LIBOR rate at issue is the LIBOR rate for a foreign currency. That the
alleged goal of the conspiracy was to increase worldwide profits, including

79

profits generated in the United States, cannot render “domestic” a scheme
that was otherwise centered abroad. Nor can the fact that the CHF LIBOR
fixes were distributed worldwide, including into the United States, or that
defendants carried out their manipulation from abroad through servers
that happened to route their communications in the United States. The
Supreme Court doggedly underscored this point when it wrote that “the
presumption against extraterritorial application would be a craven
watchdog indeed if it retreated to its kennel whenever some domestic
activity is involved in the case.” Morrison, 561 U.S. at 266.
Further, the only acts of wire fraud alleged with the particularity
required by Rule 9(b) are Bloomberg chat messages that appear to have
been between parties outside the United States whose only connection to
the United States is the happenstance of allegedly being routed through
computer servers into New York. Such minimum contacts do not
constitute the sort of “direct[ion] from (or to) the United States” that is
required to render plaintiffs’ RICO claims domestic in nature. Petroleos
Mexicanos, 572 F. App’x at 61; see also FrontPoint Asian Event Driven Fund,
2017 WL 3600425, at *14 (RICO claims impermissibly extraterritorial where
the “only well-plead allegation concerning defendants’ use of U.S. wires to
manipulate [LIBOR] is that defendants submitted rates to Thomson
Reuters, which then disseminated the daily rate throughout the United
States”). While RJR Nabisco explained that a RICO claim may be
sufficiently domestic even if it includes conduct abroad, so long as
“domestic conduct satisfies every essential element,” 764 F.3d at 142, that
requirement has not been met here. Accordingly, plaintiffs’ RICO claims
are dismissed in full.
The question of extraterritoriality becomes more complex as to RBS
in light of plaintiffs’ supplemental brief regarding personal jurisdiction
that makes detailed allegations, based on documents received from
JPMorgan pursuant to their settlement agreement, that RBS conspired to
manipulate CHF LIBOR with a JPMorgan trader based in New York.33

The new documents affect the analysis only as to RBS because only RBS was
alleged to have colluded with JPMorgan in New York to manipulate CHF LIBOR,
and, as explained above, the Complaint does not plausibly allege that the remaining
33

80

However, those detailed allegations, based on recently discovered
documents, were not included in the Complaint. And although the Court
granted plaintiffs leave to include those allegations in a supplemental
brief, that brief addressed solely whether this Court has personal
jurisdiction over defendants and did not so much as mention RICO
extraterritoriality. The parties (including plaintiffs) will be better served
by the Court reserving analysis on what implications these new allegations
have on the RICO extraterritoriality issue until they are incorporated into
an amended complaint and the parties have had an opportunity to fully
brief the Court.
E.

Plaintiffs’ RICO Claims Are Timely

The four-year statute of limitations applicable to Clayton Act claims
also applies to civil RICO claims. Agency Holding Corp. v. Malley-Duff &
Associates, Inc., 483 U.S. 143, 156 (1987); Cohen v. S.A.C. Trading Corp., 711
F.3d 353, 361 (2d Cir. 2013). The statute of limitations for RICO claims
“may be tolled due to the defendant’s fraudulent concealment if the
plaintiff establishes that: (1) the defendant wrongfully concealed material
facts relating to defendant’s wrongdoing; (2) the concealment prevented
plaintiff’s discovery of the nature of the claim within the limitations
period; and (3) the plaintiff exercised due diligence in pursuing the
discovery of the claim during the period plaintiff seeks to have tolled.”
Tho Dinh Tran v. Alphonse Hotel Corp., 281 F.3d 23, 36-37 (2d Cir. 2002)
(internal quotation marks omitted), overruled on other grounds by Slayton v.
American Exp. Co., 460 F.3d 215 (2d Cir. 2006).
Plaintiffs’ RICO claims are timely because the statute of limitations
was tolled pursuant to the fraudulent concealment doctrine until within
four years of plaintiffs filing this lawsuit. As discussed for the antitrust
claims, defendants’ alleged collusion and manipulation by its very nature
was concealed from the public, which prevented plaintiffs from having
notice of their claims until at earliest December of 2012.

defendants joined any conspiracy between RBS and JPMorgan to manipulate CHF
LIBOR.

81

VII.

The Court Declines to Exercise Supplemental Jurisdiction over
the State Law Claims (Counts Eight and Nine)

The Direct Transaction Plaintiffs also assert in Count Eight a
common-law claim for unjust enrichment and in Count Nine, in the
alternative, a common-law claim for breach of the implied covenant of
good faith and fair dealing against UBS and the Credit Suisse Defendants.
According to the Complaint, the Direct Transaction Plaintiffs “entered into
over 400 Swiss franc currency forwards with Credit Suisse and over 1,300
Swiss franc currency forwards with UBS.” Compl. ¶ 310. The Complaint
alleges that these transactions were made pursuant to contracts between
the Direct Transaction Plaintiffs and UBS and the Credit Suisse
Defendants, but it does not provide any relevant details regarding the
terms of those contracts. The Direct Transaction Plaintiffs essentially
argue that, in entering these contracts, they “reasonably expected Swiss
franc LIBOR to be set according to BBA guidelines,” Doc. 86 at 52, and
thus defendants by manipulating CHF LIBOR either breached their
implied warranty of good faith and fair dealing (if this misconduct fell
within the scope of the contract) or were unjustly enriched (if this
misconduct fell outside the scope of the contract).
The Complaint itself does not specify which state’s law governs
Counts Eight and Nine, but plaintiffs’ briefing utilizes New York law in its
analysis. Defendants also brief these claims under New York law, but
contend that the Complaint lacks “sufficient facts to determine what law
likely applies (e.g., where the alleged dealings occurred, whether all of the
Transacting Plaintiffs’ dealings with Defendants were governed by
contracts and, to the extent contracts exist, if those contracts contained
choice of law provisions.” Doc. 73 at 45 n.23.
“District courts have jurisdiction over state-law claims that are ‘so
related to claims in the action within [the district court's] original
jurisdiction that they form part of the same case or controversy.’” Sefovic v.
Memorial Sloan Kettering Cancer Center, 2017 WL 3668845, at *8 (S.D.N.Y.
Aug. 23, 2017) (citing 28 U.S.C. § 1367(a)). A district court may decline to
exercise that supplemental jurisdiction over a state-law claim where it “has
dismissed all claims over which it has original jurisdiction.” 28 U.S.C. §

82

1367(c)(3). “[W]hen all federal claims are eliminated in the early stages of
litigation, the balance of factors generally favors declining to exercise
pendent jurisdiction over remaining state law claims and dismissing them
without prejudice.” Tops Mkts., Inc. v. Quality Mkts., Inc., 142 F.3d 90, 103
(2d Cir. 1998).
As discussed above, the Complaint has failed to adequately state a
federal claim against any defendant. The Court declines to exercise its
supplemental jurisdiction over Counts Eight and Nine, and they are
accordingly dismissed without prejudice. See 28 U.S.C. § 1367(c)(3).
VIII. Personal Jurisdiction
Each defendant moves to dismiss the Complaint for lack of
personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2). Defendants
emphasize that they are each based in Europe, that they are alleged to
have submitted false CHF LIBOR quotes in Europe, and that the
Complaint does not allege that their traders and submitters involved in the
alleged manipulation acted from the United States. Thus, defendants
contend, any connection between the alleged manipulation and the United
States – including defendants’ transactions of CHF LIBOR-based
derivatives in the United States – is insufficient to subject them to suit in
the Southern District of New York.
In response, plaintiffs argue that defendants are subject to suit here
because they manipulated CHF LIBOR in part for the purpose of profiting
from transactions in CHF LIBOR-based derivatives within the forum and
conspired with JPMorgan within the forum. Further, plaintiffs contend
that defendants conducted their scheme through U.S. wires by using
Bloomberg chat terminals and by causing Thomson Reuters to distribute
manipulated CHF LIBOR quotes into the United States. Last, plaintiffs
urge that Credit Suisse AG, Deutsche Bank AG, RBS, and UBS have
consented to jurisdiction by registering under federal or state banking
laws.
The Court concludes that it may exercise personal jurisdiction over
Deutsche Bank AG, RBS, UBS, and the Credit Suisse Defendants because
their alleged manipulation of CHF LIBOR for the purpose of profiting

83

from transactions for CHF LIBOR-based derivatives within the United
States constitutes suit-related purposeful availment of the forum. But
personal jurisdiction is lacking as to DB Group Services and BlueCrest
because there is no allegation that either of them transacted in CHF
LIBOR-based derivatives in the United States, and thus no allegation that
such transactions were the aim of their alleged manipulation.
A.

Defendants’ Operations and U.S. Connections
1.

BlueCrest

BlueCrest is an investment advisory services limited liability
partnership formed under the laws of England and Wales. Compl. ¶ 38.
BlueCrest operates within the United States through various sub-entities,
including BlueCrest Capital Management (New York) LP, a Delaware
limited partnership with its principal place of business in New York. The
Complaint does not allege that BlueCrest itself has operations in the
United States. Id.
2.

The Credit Suisse Defendants

Credit Suisse Group is a Swiss banking and financial services
company incorporated in Switzerland. Compl. ¶ 42. One of its six
primary offices is located in New York. Id. Credit Suisse AG, a wholly
owned subsidiary of Defendant Credit Suisse Group, also maintains an
office in New York. Id. ¶ 43. Referring to Credit Suisse Group and Credit
Suisse AG collectively as “Credit Suisse,” the Complaint alleges that
Credit Suisse in 2013 “ranked first in overall fixed income trading in the
United States” and that “Credit Suisse’s U.S.-based dealers trade in the
over-the-counter foreign exchange and derivatives markets, which
includes interest rate swaps, forward rate agreements, foreign exchange
swaps, and currency swaps, priced, benchmark and/or settled based on
Swiss franc LIBOR.” Id. ¶ 44. Additionally, during the Class Period Credit
Suisse “directly transacted Swiss franc LIBOR-based derivatives with U.S.
counterparties, including the FrontPoint Plaintiffs, which are located in
Greenwich, Connecticut.” Id. ¶ 47.

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3.

Deutsche Bank AG

Deutsche Bank AG is a German financial services company
headquartered in Frankfurt, Germany with U.S. headquarters located in
New York. Compl. ¶¶ 50-51. Its New York branch employs more than
1,700 people and is licensed, supervised, and regulated by the NYSDFS to
do business in New York. Id. ¶ 51. “From 2006 through 2011, Deutsche
Bank AG operated its Global Finance and Foreign Exchange (‘GFFX’) desk
– which includes its Global Finance FX Forwards (‘GFF’) and foreign
exchange (‘FX’) units – from several offices around the world, including in
New York.” Id.
4.

DB Group Services

DB Group Services is a wholly owned subsidiary of Deutsche Bank
AG incorporated in and with its principal place of business in the United
Kingdom. Compl. ¶ 53. The Complaint does not allege that DB Group
Services has any operations in the United States.
5.

RBS

RBS is a British banking and financial services company
headquartered in the United Kingdom. Compl. ¶ 56. It operates a New
York branch that is licensed, supervised, and regulated by the NYSDFS to
do business in New York. Id. “RBS’ U.S.-based dealers trade in the overthe-counter foreign exchange and interest rate derivatives markets, which
includes interest rate swaps, forward rate agreements, foreign exchange
swaps, and currency swaps,” and “RBS transacted in Swiss franc LIBORbased derivatives with U.S.-based counterparties during the Class Period.”
Id. ¶ 58.
6.

UBS

UBS is a Swiss banking and financial services company
headquartered in Zurich and Basel, Switzerland. Compl. ¶ 61. UBS
maintains branches in several U.S. states, including New York, and has its
U.S. headquarters in New York and Stamford, Connecticut. During the
class period, UBS traders in Stamford “managed UBS’ interest rate risk

85

and short-term cash position by engaging in interest rate derivative
transactions and transactions in the money markets for each currency,
including the Swiss franc.” Id. ¶ 63. Also during the class period, “UBS
directly transacted Swiss franc LIBOR-based derivatives with U.S.
counterparties, including the FrontPoint Plaintiffs, which are located in
Greenwich, Connecticut.” Id. ¶ 65.
B.

Personal Jurisdiction Standard

On a Rule 12(b)(2) motion, plaintiffs must allege facts that, if true,
would support a prima facie case of personal jurisdiction
“notwithstanding any controverting presentation by the moving party.”
Dorchester Fin. Sec, Inc. v. Banco BRJ, S.A., 722 F.3d 81, 86 (2d Cir. 2013)
(emphasis omitted). A prima facie showing entails (1) proper service –
which is not in dispute here – (2) a statutory basis for personal jurisdiction;
and (3) that “the exercise of personal jurisdiction . . . comport[s] with
constitutional due process principles.” Licci ex rel. Licci v. Lebanese Canadian
Bank, SAL, 673 F.3d 50, 59-60 (2d Cir. 2012). Pleadings and affidavits
should be construed “in the light most favorable to plaintiffs, resolving all
doubts in their favor.” Dorchester, 722 F.3d at 85.
Personal jurisdiction over a defendant may be general or specific.
In re Terrorist Attacks on September 11, 2001, 714 F.3d 659, 673 (2d Cir. 2013).
“Specific personal jurisdiction exists when a forum exercises personal
jurisdiction over a defendant in a suit arising out of or related to the
defendant’s contacts with the forum; a court’s general jurisdiction, on the
other hand, is based on the defendant’s general business contacts with the
forum and permits a court to exercise its power in a case where the subject
matter of the suit is unrelated to those contacts.” Id. at 673-74 (alterations
and internal quotation marks omitted). “A plaintiff must establish the
court’s jurisdiction with respect to each claim asserted.”
Sunward
Electronics, Inc. v. McDonald, 362 F.3d 17, 24 (2d Cir. 2004).
C.

No Defendant Has Consented to the Court’s General
Jurisdiction

Plaintiffs disclaim any argument that defendants have sufficient
contacts to be “essentially at home” in this forum and thus subject to

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general personal jurisdiction in this forum under Daimler AG v. Bauman,
134 S. Ct. 746, 761 (2014). See Doc. 89 at 2. Rather, plaintiffs contend that
Credit Suisse AG, Deutsche Bank AG, RBS, and UBS consented to general
personal jurisdiction in this forum by registering under federal or state
banking laws.
Plaintiffs contend that Credit Suisse AG, Deutsche Bank AG, and
RBS consented to personal jurisdiction in New York for “any action” by
registering with the New York State Department of Financial Services
pursuant to New York Banking Law §§ 200 and 200-b. Under that statute,
to do business in New York a branch of a foreign bank must file a written
instrument with the office of the superintendent “appointing the
superintendent and his or her successors its true and lawful attorney,
upon whom all process in any action or proceeding against it on a cause of
action arising out of a transaction with its New York agency or agencies or
branch or branches . . . may be served.” N.Y. Banking Law § 200(3)
(McKinney 2006) (emphasis added).
An identical argument has been rejected by five courts in this
district addressing similar LIBOR claims against foreign banks, and for
good reason. See FrontPoint Asian Event Driven Fund, 2017 WL 3600425, at
*4; Sullivan, 2017 WL 685570, at *40; In re: LIBOR-Based Fin. Instruments
Antitrust Litig., No. 11-mdl-2262, 2016 WL 1558504, at *7 (S.D.N.Y. Apr. 15,
2016); In re Foreign Exch. Benchmark Rates Antitrust Litig., 2016 WL 1268267,
at *2 (S.D.N.Y. Mar. 31, 2016); 7 W. 57th St. Realty Co., LLC v. Citigroup, Inc.,
No. 13-cv-981, 2015 WL 1514539, at *11 (S.D.N.Y. Mar. 31, 2015). Section
200(3) provides for service of process “on a cause of action arising out of a
transaction with [the foreign bank’s] New York agency or agencies or
branch or branches.” N.Y. Banking Law § 200(3) (McKinney 2006). “[T]he
most natural reading of the provision does not provide general
jurisdiction,” In re: LIBOR-Based Fin. Instruments Antitrust Litig., 2016 WL
1558504, at *7, but rather “is limited to claims arising out of transactions
with the [defendants’] New York agencies or branches,” In re Foreign Exch.
Benchmark Rates Antitrust Litig., 2016 WL 1268267, at *2. Moreover, an

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interpretation allowing general jurisdiction “would likely raise serious due
process concerns.” Sullivan, 2017 WL 685570, at *40.34
Similarly, plaintiffs maintain that UBS has consented to general
personal jurisdiction in New York by registering to do business under the
International Banking Act of 1978 (“IBA”), which provides that a foreign
bank operating a federal branch or agency shall conduct those operations
“with the same rights and privileges as a national bank at the same
location and shall be subject to all the same duties, restrictions, penalties,
liabilities, conditions, and limitations that would apply under the National
Bank Act to a national bank doing business at the same location.” 12 U.S.C.
§ 3102(b) (2015). The rules promulgated by the Comptroller of the
Currency provide that a “foreign bank operating at any Federal branch or
agency is subject to service of process at the location of the Federal branch
or agency.” 12 C.F.R. § 28.21. Hence, plaintiffs argue, a foreign bank is
subject to service of process at any federal branch or agency.
But that text deals only with where process may be served and says
nothing as to the type of suits that a foreign bank may be required to
answer in a forum. And the statute’s aim of placing foreign banks on an
equal footing with domestic banks would not be served by allowing
general jurisdiction anywhere a foreign bank operates, as national banks
are not subject to such broad general jurisdiction. See Freedman v. Suntrust
Plaintiffs rely primarily on Matter of B&M Kingstone, LLC v. Mega Int’l Commercial
Bank Co., Ltd., 15 N.Y.S.3d 318 (1st Dep’t App. Div. 2015), in which a bank with a New
York branch agreed to provide information with respect to that branch in response to
an information subpoena, but refused to produce similar information as to its
branches outside of New York. The First Department held that “the court’s general
personal jurisdiction over the bank’s New York branch permits it to compel that
branch to produce any requested information that can be found through electronic
searches performed there.” Id. at 267. While plaintiffs seize on the First Department’s
use of the phrase “general personal jurisdiction,” B&M Kingstone explicitly recognized
that “New York does not have general jurisdiction over [a registered bank’s]
worldwide operations.” 15 N.Y.S.3d at 264. B&M held simply that a New York
branch may be required to provide information available through that branch, not
that New York Banking Law § 200(3) provides a court with general jurisdiction over a
foreign bank.
See In re: LIBOR-Based Fin. Instruments Antitrust Litig., 2016 WL
1558504, at *7.
34

88

Banks, Inc., 139 F. Supp. 3d 271, 279 (D.D.C. 2015). Tellingly, plaintiffs fail
to cite a single case holding that a foreign bank by registering under the
IBA consents to general personal jurisdiction anywhere in the United
States. Moreover, as with New York Banking Law § 200(3), adopting
plaintiffs’ interpretation of the IBA would raise serious due process
concerns. The Second Circuit’s decision in Gucci Am., Inc. v. Bank of China,
768 F.3d 122 (2d Cir. 2014), stands for the proposition that “mere operation
of a branch office in a forum — and satisfaction of any attendant licensing
requirements — is not constitutionally sufficient to establish general
jurisdiction.” Motorola Credit Corp. v. Uzan, 132 F. Supp. 3d 518, 521
(S.D.N.Y. 2015). In sum, no defendant has consented to the Court’s
general jurisdiction.
D.

Specific Jurisdiction

Having failed to show that the Court has general jurisdiction over
defendants, plaintiffs must instead demonstrate specific jurisdiction if they
are to prevail on the issue of personal jurisdiction. “[S]pecific jurisdiction
cases are limited to those involving issues deriving from, or connected
with, the very controversy that establishes jurisdiction.” In re Roman
Catholic Diocese Inc., 745 F.3d 30, 38 (2d Cir. 2014) (internal quotation marks
omitted).
Plaintiffs contend that specific jurisdiction may be exercised over
defendants because they used U.S. wires to manipulate CHF LIBOR,
directed their manipulation at the United States by causing Thomson
Reuters to disseminate the manipulated CHF LIBOR rate into the United
States, purposefully availed themselves of the forum by transacting in
CHF LIBOR-based derivatives within the forum after manipulating CHF
LIBOR to affect those transactions, and conspired with JPMorgan within
the forum.
The Court concludes that it has personal jurisdiction over RBS,
UBS, Deutsche Bank AG, and the Credit Suisse Defendants based on
allegations that they manipulated CHF LIBOR for the purpose of profiting
from transactions for CHF LIBOR-based derivatives within the United
States. However, the Court lacks personal jurisdiction over BlueCrest and
DB Group Services. Because the Complaint fails to allege that BlueCrest

89

and DB Group Services transacted in CHF LIBOR-based derivatives in the
forum, it has failed to allege that any manipulation by BlueCrest or DB
Group Services has an adequate connection to the forum, and the
plaintiffs’ other arguments for personal jurisdiction as to BlueCrest and DB
Group Services are unavailing.
1.

Standard

“Determining personal jurisdiction over a foreign defendant in a
federal-question case such as this requires a two-step inquiry.” Licci ex rel.
Licci v. Lebanese Canadian Bank, SAL, 732 F.3d 161, 168 (2d Cir. 2013). The
Court first looks to whether jurisdiction will lie under the law of the forum
state. Id. Second, if jurisdiction lies, the Court considers whether the
“exercise of personal jurisdiction over a foreign defendant comports with
due process protections established under the United States Constitution.”
Id.
New York’s long-arm statute states in relevant part that “a court
may exercise personal jurisdiction over any non-domiciliary . . . who in
person or through an agent . . . transacts any business within the state or
contracts anywhere to supply goods or services in the state.” N.Y. C.P.L.R.
302(a)(1). Defendants “do not separately address the New York long-arm
statute” because, they contend, “the exercise of personal jurisdiction here
is incompatible with [constitutional] due process.” Doc. 64, at 6 n.3.
Because defendants do not dispute jurisdiction under New York law, the
Court need address only their constitutional due process challenge.
The specific jurisdiction due process inquiry proceeds in two steps.
First, the Court evaluates the “quality and nature of the defendant’s
contacts with the forum state under a totality of the circumstances test.”
Licci, 732 F.3d at 170 (internal quotation marks omitted). The “exercise of
specific jurisdiction depends on in-state activity that ‘gave rise to the
episode-in-suit.’” Waldman v. Palestine Liberation Org., 835 F. 3d 317, 331
(2d Cir. 2016) (quoting Goodyear Dunlop Tires Ops., S.A. v. Brown, 564 U.S.
915, 923 (2011)). “For a State to exercise jurisdiction consistent with due
process, the defendant’s suit-related conduct must create a substantial
connection with the forum State.” Walden v. Fiore, 134 S. Ct. 1115, 1121
(2014).

90

There are two “independent, if conceptually overlapping, methods
of demonstrating minimum contacts.” Best Van Lines, Inc. v. Walker, 490
F.3d 239, 243 (2d Cir. 2007). The first is through “purposeful availment,”
in which “the defendant purposefully availed itself of the privilege of
doing business in the forum and could foresee being haled into court
there.” Licci, 732 F.3d at 170 (citation omitted). The second is through
“purposeful direction,” in which “the defendant took intentional, and
allegedly tortious, actions expressly aimed at the forum.” In re Terrorist
Attacks on Sept. 11, 2001, 714 F.3d 659, 674 (2d Cir. 2013) (citation and
alteration omitted). The “purposeful direction” test is also referred to as
the “effects test,” which is a “theory of personal jurisdiction typically
invoked where . . . the conduct that forms the basis for the controversy
occurs entirely out-of-forum, and the only relevant jurisdictional contacts
with the forum are therefore in-forum effects harmful to the plaintiff.”
Licci, 732 F.3d at 173. “In such circumstances, the exercise of personal
jurisdiction may be constitutionally permissible if the defendant expressly
aimed its conduct at the forum.” Id.
Second, “[o]nce it has been decided that a defendant purposefully
established minimum contacts within the forum State, these contacts may
be considered in light of other factors to determine whether the assertion
of personal jurisdiction would comport with fair play and substantial
justice.” Licci, 732 F.3d at 170 (quoting Burger King Corp. v. Rudzewicz, 471
U.S. 462, 476 (1985)).
The factors considered in assessing the
reasonableness of exercising personal jurisdiction include: “(1) the burden
that the exercise of jurisdiction will impose on the defendant; (2) the
interests of the forum state in adjudicating the case; (3) the plaintiff’s
interest in obtaining convenient and effective relief; (4) the interstate
judicial system’s interest in obtaining the most efficient resolution of the
controversy; and (5) the shared interest of the states in furthering
substantive social policies.” Metro. Life Ins. Co. v. Robertson–Ceco Corp., 84
F.3d 560, 568 (2d Cir. 1996).
2.

The National Contacts Test Applies to Plaintiffs’
Federal Claims

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The Court concludes that, when evaluating the extent of
defendants’ contacts as to the Clayton Act, CEA, and RICO claims, the
relevant forum is the United States as a whole, rather than New York in
particular. Each of these statutes permits nationwide service of process.
See 15 U.S.C. § 22 (Clayton Act); 7 U.S.C. § 25(c) (CEA); 18 U.S.C. § 1965(d)
(RICO). The Second Circuit, while “not yet [having] decided th[e] issue,”
has observed that several other circuits hold that “when a civil case arises
under federal law and a federal statute authorizes nationwide service of
process, the relevant contacts for determining personal jurisdiction are
contacts with the United States as a whole.” Gucci America, Inc. v. Weixing
Li, 768 F.3d 122, 142 n.21 (2d Cir. 2014). And several courts in this district
addressing federal claims with national service of process – including
claims based on alleged LIBOR manipulation – have applied the “national
contacts” test. See, e.g., Sullivan, 2017 WL 685570, at *42; LIBOR IV, 2015
WL 4634541, at *18; Laydon v. Mizuho Bank, Ltd., 2015 WL 1515358, at *1
(S.D.N.Y. Mar. 31, 2015); In re Amaranth Nat. Gas. Commod. Litig., 587 F.
Supp. 2d 513, 526 (S.D.N.Y. 2008). “The rationale underlying this ‘national
contacts’ approach is that ‘[w]hen the national sovereign is applying
national law, the relevant contacts are the contacts between the defendant
and the sovereign’s nation.’” LIBOR IV, 2015 WL 4634541, at *18 (quoting
In re Oil Spill by Amoco Cadiz, 954 F.2d 1279, 1294 (7th Cir. 1992)).
3.

Bloomberg Chats Transmitted Through Servers in
New York Do Not Constitute Meaningful Contacts
with the Forum

According to plaintiffs, defendants have sufficient contacts with the
forum partly because they coordinated their manipulation of CHF LIBOR
through Bloomberg terminal electronic communications transmitted
through servers located in New York. But the happenstance that the
electronic communications of defendants acting abroad were routed
through a server in the United States cannot substantially contribute to a
finding of sufficient contacts with the United States. Such contacts would
be merely “random, fortuitous, or attenuated contacts.” Walden, 134 S. Ct.
at 1123 (internal quotation marks omitted). “There is no basis to conclude
that any of the [defendants] . . . took actions ‘expressly aimed’ at the
United States by passively connecting to the United States via internet

92

protocol (“IP”) addresses.” Laydon, 2015 WL 1515358, at *3 (citing Calder v.
Jones, 465 U.S. 783, 789 (1984)). “To contend that this highly attenuated
connection constitutes ‘purposeful availment’ is unreasonable.” Id.
(alterations omitted); see also In re Platinum and Palladium Antitrust Litig.,
2017 WL 1169626, at *44 (S.D.N.Y. Mar. 28, 2017).
4.

Defendants Causing Thomson Reuters To
Disseminate False CHF LIBOR into the United
States Does Not Itself Create Sufficient Contacts

Plaintiffs also contend that defendants purposefully aimed and
directed their misconduct at the forum by submitting false CHF LIBOR
quotes to Thomson Reuters with the knowledge that Thomson Reuters
would then distribute those quotes and the CHF LIBOR fixes worldwide,
including into the United States. Because defendants knew that these
fixes would be distributed into the United States and relied on to price
CHF LIBOR-based derivatives traded in the United States, plaintiffs argue,
defendants’ manipulation had direct and reasonably foreseeable effects in
the United States.
The knowledge that these rates would be disseminated worldwide,
including into the United States, is not enough by itself to support specific
personal jurisdiction because “‘foreseeability’ alone has never been a
sufficient benchmark for personal jurisdiction under the Due Process
Clause.” Laydon, 2015 WL 1515358, at *2 (quoting WorldWide Volkswagen
Corp v. Woodson, 444 U.S. 286, 295 (1980)); see also Waldman, 835 F.3d at 339
(“[T]he fact that harm in the forum is foreseeable . . . is insufficient for the
purpose of establishing specific personal jurisdiction over a defendant.”).
It is “incontrovertible that the importance of LIBOR was its universal
significance, not its projection into any particular state.” LIBOR IV, 2015
WL 4634541 at *25. Thus, allowing the foreseeable dissemination of LIBOR
into a forum alone to establish personal jurisdiction over defendants
“would improperly create de facto universal jurisdiction.” Id. at *25
(internal quotation marks omitted).
Mere foreseeability that CHF LIBOR fixes would be distributed into
the United States and there affect the prices of CHF LIBOR-based
derivatives likewise would not be sufficient even for those defendants who

93

transacted in CHF LIBOR-based derivatives in the United States. The
effect on CHF LIBOR derivative prices in the United States cannot be
merely incidental or foreseeable. See LIBOR VI, 2016 WL 7378980, at *8
(finding no personal jurisdiction based on foreseeable effects in the United
States for defendants who transacted in derivatives because the effect on
those derivatives was not the purpose of the manipulation). Rather,
plaintiffs “must allege specific facts that plausibly suggest that the Foreign
Defendants entered into [CHF LIBOR-based derivative] transactions with
counterparties based in the United States, and that those transactions had a
nexus to the benchmark interest rate manipulation at issue in this lawsuit.”
FrontPoint Asian Event Driven Fund, 2017 WL 3600425, at *7.
5.

The Court Has Personal Jurisdiction Over RBS,
UBS, the Credit Suisse Defendants and Deutsche
Bank AG Because Manipulating CHF LIBOR for
the Purpose of Profiting from Transactions in CHF
LIBOR-Based Derivatives within the United States
Constitutes Purposeful Availment of the Forum

However, plaintiffs do not allege merely that dissemination of CHF
LIBOR into the United States and its effects on CHF LIBOR-based
derivatives in the United States were foreseeable; they claim that those
effects were the purpose of defendants’ manipulation. According to
plaintiffs, defendants manipulated CHF LIBOR in order to wrongfully
profit from their worldwide CHF LIBOR-based derivative transactions,
including in the United States. Plaintiffs argue that that conduct
constitutes “purposeful availment” of the forum and that defendants
“directed the aim and effect of their anticompetitive conduct on the United
States.” Doc. 89 at 1. In essence, plaintiffs maintain that the jurisdictional
analysis cannot focus solely on the front-end of the misconduct (the
manipulation of CHF LIBOR, which based on the Complaint occurred
almost entirely abroad), without examining the back-end of the
misconduct (profiting from that manipulation through transactions in
CHF-LIBOR based derivatives, including in the United States). The Court
agrees that transacting in CHF LIBOR-based derivatives in the United
States after manipulating CHF LIBOR for the purpose of wrongfully

94

increasing the profits of those transactions constitutes “purposeful
availment” of the forum.
“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 relevant.” LIBOR VI, 2016
WL 7378980, at *3. Applying this principle, Judge Buchwald in LIBOR VI
concluded that the fact that certain alleged LIBOR manipulators transacted
in LIBOR-based financial products in the United States was not
jurisdictionally relevant because “the object of the conspiracy . . . [was] the
projection of financial soundness.” Id. Thus, while “a conspiracy with
such an object would . . . have an impact on price” of LIBOR-based
financial products in the United States, that impact did not give rise to
personal jurisdiction because “such an object is not sufficiently directed to
the United States.” Id. Any transactions in the United States were “not
meaningful in a jurisdictional analysis because they were not within the
scope of the conspiratorial agreement,” since “defendants need not engage
in any market transactions at all to affect the LIBOR fix” for the object of
projecting financial soundness. Id. at *8 (alterations and internal quotation
marks omitted). Judge Buchwald contrasted such a “financial soundness”
conspiracy with a price-fixing conspiracy, in which the “goal of the
conspiracy – the raising and maintenance of high prices – . . . necessarily
involved selling price-manipulated products into the jurisdiction.” Id.
(citing Socony-Vacuum Oil Co., 310 U.S. 150 (1940)). In the latter case,
“[s]ales of price-fixed products [would be] therefore jurisdictionally
relevant to the conspiracy.” Id. at *4.
Here, the object of the alleged LIBOR manipulation is not to project
financial soundness – as it was in LIBOR VI – but rather to increase profits
from CHF LIBOR-based derivative transactions. Where the goal of the
manipulation is to profit wrongfully from transacting in a product, the
places where those transactions occur (not just the places where the price
manipulation took place) are jurisdictionally relevant. See Socony-Vacuum
Oil Co., 310 U.S. at 253. Plaintiffs allege that the Credit Suisse Defendants,
RBS, UBS, and Deutsche Bank AG transacted in CHF LIBOR-based
derivatives from within the United States, including, in the case of UBS
and the Credit Suisse Defendants, with the Direct Transaction Plaintiffs.

95

See Compl. ¶¶ 15, 23, 67. Defendants’ argument that “these alleged
transactions . . . are not ‘suit-related,’ i.e., they do not form the basis of
Plaintiffs’ claims,” Doc. 64 at 16, is unavailing because the transactions are
alleged to have motivated the misconduct for which plaintiffs sue.
Defendants are alleged to have systematically manipulated CHF LIBOR in
whichever direction benefitted their global CHF LIBOR-based derivative
positions, which would necessarily include their positions in the United
States. See, e.g., Compl. ¶ 117 (“[O]n each trading day on which UBS had
Swiss franc trading positions, UBS’s Swiss franc LIBOR submitters
rounded UBS’s Swiss franc LIBOR submissions to benefit UBS’s global
Swiss franc trading positions.”). Where a defendant transacted in the
United States at prices it manipulated in order to profit from those
transactions, the “Defendant purposefully availed itself of the privilege of
doing business in the forum and could foresee being haled into court
there,” Licci, 732 F.3d at 170, even if the manipulation itself occurred
abroad.
Two recent decisions in this district addressing derivatives
manipulation support that conclusion. In In re Foreign Exchange Benchmark
Rates Antitrust Litigation, the plaintiffs alleged that the foreign defendants
“conspired to fix benchmark rates” of FX contracts “for their own profit”
through the use of chat rooms from unknown locations. No. 13-cv-7789,
2016 WL 1268267, at *5 (S.D.N.Y. Mar. 31, 2016). Judge Schofield
concluded that personal jurisdiction could be exercised over the two
foreign defendants that had “extensive U.S.-based FX operations” because
the complaint “plausibly allege[d] suit-related conduct that either took
place in the United States, or had effects expressly aimed inside the
country due to the . . . [d]efendants’ substantial FX businesses here.” Id. at
*6. However, the court found no personal jurisdiction as to the foreign
defendant that did not have U.S.-based FX operations. Id. at *7.
Similarly, in In re North Sea Brent Crude Oil Futures Litigation, the
plaintiffs alleged that the defendants manipulated trading data for the
Brent crude oil market conveyed to a price reporting agency “in order to
benefit their [Brent crude oil] derivatives positions.” No. 13-md-2475, 2017
WL 2535731, at *7 (S.D.N.Y. June 8, 2017). Judge Andrew L. Carter, Jr.
ruled that the court had jurisdiction over a foreign defendant that

96

participated in the manipulation because its “employees directed futures
and derivatives trading on NYMEX [the New York Mercantile Exchange]
that could have benefited from the alleged manipulative activity,” since
that benefit in the forum was allegedly “a primary purpose of their
participation in the manipulative physical trading.” Id. at *11. Based on
this alleged purpose of the manipulation, the court concluded that the
plaintiffs had adequately alleged that that defendant “intended the effects
of its alleged conduct [abroad] to be felt in the United States, particularly
on NYMEX, where its employees executed trades.” Id. But the court held
that personal jurisdiction was lacking over another foreign defendant that
did not trade those derivatives in the United States. Id. at *8.
Here, as in In re Foreign Exchange Benchmark Rates Antitrust Litigation
and In re North Sea Brent Crude Oil Futures Litigation, defendants are
alleged to have engaged in manipulation for the purpose of profiting their
substantial derivatives operations in the United States. Here, as in those
cases, that alleged purpose creates a substantial connection between
defendants’ alleged manipulation and their derivatives trading activity in
the forum to establish specific personal jurisdiction.
In arguing for a contrary result here, defendants rely primarily on
the Supreme Court’s decision in Walden v. Fiore, which held that the
“relationship must arise out of contacts that the ‘defendant himself’ creates
with the forum,” and that the contacts must be “with the forum State itself,
not the defendant’s contacts with persons who reside there.” 134 S. Ct. at
1122 (emphasis in original) (citation omitted). According to defendants,
under Walden specific jurisdiction cannot be based on the foreseeability of
harm to the plaintiffs in the forum, even where defendants are alleged to
have harmed plaintiffs in order to profit from trading in these same
derivatives in the forum.
In Walden, the plaintiff sued a law enforcement agent in Nevada
based on the agent’s search of the plaintiff at an airport in Georgia. While
the agent knew that the plaintiff was traveling from Georgia to Nevada, it
was “undisputed that no part” of the agent’s “course of conduct occurred
in Nevada.” Id. at 1124. The agent “never traveled to, conducted activities
within, contacted anyone in, or sent anything or anyone to Nevada.” Id.

97

The Supreme Court held that the defendant’s knowledge of the plaintiff’s
connections to Nevada did not give rise to personal jurisdiction over the
defendant in Nevada because “the relationship must arise out of contacts
that the ‘defendant himself’ creates with the forum State.” Id. at 1122.
But Walden differs from our case in a crucial respect. Here,
plaintiffs do not allege merely that their injury in the forum was
foreseeable from an act that took place entirely outside the forum. Unlike
in Walden, where the agent conducted no activities within the forum, here
it is alleged that the Credit Suisse Defendants, Deutsche Bank AG, RBS
and UBS manipulated CHF LIBOR in order to profit from their
transactions in the forum, and that plaintiffs themselves were harmed in
the forum by transacting with the Credit Suisse Defendants and UBS in the
forum. Walden simply says nothing about a defendant whose business
activities within the forum (here, the purchase or sale of CHF FX forwards)
are alleged to have provided the impetus for the very wrongdoing (here,
the manipulation of CHF LIBOR) that caused plaintiffs’ injuries in the
forum.
In their supplemental brief, defendants also rely heavily on the
Second Circuit’s decision in Waldman v. Palestinian Liberation Org., which
directs a court to consider the “relationship of the defendants, the forum,
and the defendant’s suit-related conduct.” 835 F.3d at 337 (citing Walden,
134 S. Ct. at 1121). Waldman held that the Palestinian Liberation
Organization (“PLO”) was not subject to suit under the Anti-Terrorism Act
(“ATA”) in New York for its alleged support of terrorist attacks in Israel
that killed or wounded American citizens. While the PLO had some
contacts in the United States – such as a diplomatic presence, lobbying
operations, and limited commercial transactions – those contacts were
“insufficiently ‘suit-related conduct’ to support specific jurisdiction.” Id. at
344 (citing Walden, 134 S. Ct. at 1121, 1123). “The relevant ‘suit-related
conduct’ by the defendants was the conduct that could have subjected
them to liability under the ATA,” which “[o]n its face” occurred in Israel
and “did not involve the defendants’ conduct in the United States.” Id. at
335. Thus, “[t]he plaintiffs’ claims did not arise from the defendants’
purposeful contacts with the forum.” Id. at 343.

98

Here, defendants argue that their presence in the forum, including
their transactions in CHF LIBOR-based derivatives, is not sufficiently suitrelated to support personal jurisdiction because, as in Waldman, the
misconduct giving rise to plaintiffs’ claims occurred abroad. But unlike in
Waldman, here plaintiffs allege that defendants’ in-forum conduct
motivated their manipulation abroad and that defendants’ activities in the
forum harmed plaintiffs in the forum (i.e., transacting in CHF LIBORbased derivatives at artificial prices). Defendants contend that “Plaintiffs
must demonstrate that the Foreign Defendants’ suit-related conduct
creates minimum contacts with New York, however, not simply that the
Foreign Banks have a presence here or conduct business activities here in
general.” Doc. 64 at 16 (quoting 7 57th Street West Realty Co., 2015 WL
1514539, at *10). That is correct as a statement of the law, but it is of no
avail to defendants. Plaintiffs do not merely allege that defendants “have
a presence” in the United States or “conduct business activities here in
general,” but that defendants committed their wrongful conduct abroad in
part to profit from their activities within the forum, see Compl. ¶¶ 99, 289,
290, creating a substantial connection between the forum and the harm
that was absent in Waldman.35

Defendants note that Waldman also held the PLO was not subject to suit in the
forum under the “effects test,” even though the alleged misconduct “continuously hit
Americans,” because it could not be said that “the United States [was] the focal point
of the torts alleged.” 835 F.3d at 338. Here, defendants argue, the “focal point” of the
manipulation was abroad, and thus specific jurisdiction is lacking. As an initial
matter, in Waldman the Second Circuit found that the attacks were “indiscriminate”
and “random,” and thus “were not expressly aimed at the United States.” Id. at 337.
Here, by contrast, the alleged harm is not “random” and “indiscriminate” because
defendants are aware of where they transact in CHF LIBOR-based derivatives, and
thus where counterparties would be harmed by entering into such transactions.
Moreover, plaintiffs allege that their harm in the forum was not merely foreseeable,
but that profiting from transactions in the forum was in part the motivation for
defendants’ manipulation. Thus, there is a far stronger case here for finding that the
wrongful conduct was “expressly aimed at the United States” than there was in
Waldman. In any event, plaintiffs need not establish personal jurisdiction under the
“effects test,” – which is “typically invoked where . . . the conduct that forms the basis
for the controversy occurs entirely out-of-forum, and the only relevant jurisdictional
contacts with the forum are therefore in-forum effects harmful to the plaintiff,” Licci,
35

99

As defendants emphasize, their CHF LIBOR manipulation is not
alleged to be aimed at the United States exclusively, but at the United
States in addition to everywhere else defendants transacted in these
derivatives. But the fact that defendants sought to benefit from foreign
transactions as well as domestic ones does not negate that they
purposefully availed themselves of this forum by transacting in CHF
LIBOR-based derivatives affected by CHF LIBOR they manipulated to
increase their profits in those transactions at their counterparties’ expense.
Such transactions are “suit-related conduct” that “create a substantial
connection with the forum.” Walden, 134 S. Ct. at 1121. And notably,
plaintiffs seek only to represent a Class that “engaged in U.S.-based
transactions,” Compl. ¶ 224, meaning that the United States is the “nucleus
of the harm” alleged. Waldman, 835 F.3d at 340.
While several recent decisions in this district have concluded that
manipulation of a benchmark abroad did not give rise to specific
jurisdiction in New York, those decisions are distinguishable. As already
set forth, in Judge Buchwald’s LIBOR decisions the alleged goal of the
manipulation was to project financial health; thus, the defendants’
transactions in the United States in affected financial products were
outside the scope of the conspiracy and therefore were not jurisdictionally
relevant. See LIBOR VI, 2016 WL 7378980, at *8. In Laydon v. Mizuho Bank,
Ltd., cited by defendants (Doc. 64 at 1), the moving defendants had no
operations in the United States and were not alleged to have participated
in the manipulation in order to benefit from transactions in financial
products in the United States. See 2015 WL 1515358, at *4-6. And in 7 West
57th Street Realty Co., also cited by defendants (Doc. 64 at 1), the fact that a
decrease in the value of plaintiff’s municipal bond in New York was a
732 F.3d at 173 – because personal jurisdiction has been established under the
“purposeful availment” test based on the alleged conduct in the forum. In Waldman,
the jurisdictionally relevant conduct occurred entirely abroad, and thus specific
jurisdiction could only be established under the “effects test.”
Here, the
jurisdictionally relevant conduct is not simply the manipulation of CHF LIBOR
abroad but the transacting in CHF LIBOR-based derivatives within the forum that
was allegedly the purpose of the manipulation.

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foreseeable result of the defendants’ LIBOR manipulation was found to be
an insufficient basis for personal jurisdiction, but – unlike this case – there
appears to be no clear allegation that the purpose of defendants’
manipulation was to increase its profits from transactions in that type of
municipal bond also in New York. See 2015 WL 1514539, at *10-11.
Last, this past month Judge Alvin Hellerstein found there was no
personal jurisdiction over foreign defendants alleged to have manipulated
the Singapore Interbank Offer Rate (“SIBOR”) from abroad where there
were no plausible allegations that the foreign defendants engaged in U.S.
transactions for affected financial products. See Frontpoint Asian Event
Driven Fund, 2017 WL 3600425, at *6. As Judge Hellerstein wrote,
“Plaintiffs must do more than infer that the Foreign Defendants likely
were participants in the U.S. derivatives markets. They must allege
specific facts that plausibly suggest that the Foreign Defendants entered
into [SIBOR-based] transactions with counterparties based in the United
States, and that those transactions had a nexus to the benchmark interest
rate manipulation at issue in this lawsuit.” Id. at *7. That is precisely what
plaintiffs have alleged here.
To the extent that a district court decision can be read to hold that a
foreign defendant that manipulates a benchmark for the purpose of
profiting from financial transactions in the forum is not subject to suit in
the forum – either because the manipulation itself occurred abroad or
because the manipulation was for the purpose of profiting from
transactions outside the forum as well as in the forum – the Court
respectfully disagrees. Accordingly, personal jurisdiction over RBS, UBS,
Deutsche Bank AG, and the Credit Suisse Defendants is proper because
the Complaint alleges that they manipulated CHF LIBOR for the purpose
of profiting from transactions for CHF LIBOR-based derivatives within the
forum.36

This conclusion does not conflict with the Court’s conclusion that plaintiffs’ RICO
claims are impermissibly extraterritorial. The specific jurisdiction inquiry is satisfied
if a defendant has purposefully availed himself of the forum such that he “could
foresee being haled into court there,” Licci, 732 F.3d at 170. This is a less demanding
36

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6.

The Court Lacks Personal Jurisdiction Over DB
Group Services and BlueCrest Because They Are
Not Plausibly Alleged to Have Transacted in CHF
LIBOR-Based Derivatives in the United States

Plaintiffs broadly allege that “[e]ach defendant” transacted in CHF
LIBOR-based derivatives “from within the United States and with U.S.
counterparties.” Compl. ¶ 15. But plaintiffs offer no plausible allegations
that either BlueCrest or DB Group Services did so.
The Complaint says nothing about DB Group Services’s activities in
the United States. And DB Group represents that it is a service company
with its headquarters and sole place of business in the United Kingdom,
whose “principal business is to supply the services of its employees to
Deutsche Bank AG and its subsidiaries in the United Kingdom.” Bagshaw
Decl., Doc. 72, ¶ 4. It “does not provide banking services or engage in the
trading of financial instruments” and “at all relevant times . . . did not
have any operations in the United States.” Id. ¶¶ 4, 6.
The Complaint alleges that “BlueCrest operates within the United
States, including within this District through various sub-entities,
including BlueCrest Capital Management (New York) LP (‘BlueCrest New
York’).” Compl. ¶ 38. But no BlueCrest “sub-entity” is named as a
defendant, and the Complaint does not identify any operations by
BlueCrest itself within the forum. Plaintiffs make no showing why any
U.S. contacts of its subsidiaries should be imputed to BlueCrest under an
alter-ego theory, particularly where the subsidiaries are not claimed to
have engaged in any manipulation. See In re North Sea Brent Crude Oil
Futures Litigation, 2017 WL 2535731, at *8; Laydon v. Mizuho Bank, Ltd., 2015
WL 1515358, at *4 (citing Volkswagenwerk Aktiengesellschaft v. Beech Aircraft
Corp., 751 F.2d 117, 120–22 (2d Cir. 1984)).
Of course, by failing to plausibly allege that DB Group Services or
BlueCrest transacted in CHF LIBOR-based derivatives within the United
States, the Complaint has failed to plausibly allege that profiting from such
inquiry than the RICO extraterritoriality analysis, which requires that the scheme
have a domestic focus. See Petroleos Mexicanos, 572 F. App’x at 61.

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transactions was the purpose of any manipulation by them. See In re North
Sea Brent Crude Oil Futures Litigation, 2017 WL 2535731, at *8 (no personal
jurisdiction over foreign defendant not alleged to have transacted in the
affected derivatives within the United States); In re Foreign Exchange
Benchmark Rates Antitrust Litigation, 2016 WL 1268267, at *7. (same). Thus,
DB Group Services and BlueCrest are not subject to this Court’s
jurisdiction under a purposeful availment theory.
7.

RBS’s Conspiracy from Abroad with JPMorgan in
the Forum Reinforces the Conclusion that RBS Is
Subject to the Court’s Jurisdiction

Plaintiffs also allege that Credit Suisse Group, UBS, and RBS are
subject to specific jurisdiction in this forum based on their conspiracy with
JPMorgan, a corporation headquartered in New York. The only nonconclusory allegations that Credit Suisse Group and UBS conspired with
JPMorgan pertain to the manipulation of bid-ask spreads. As explained,
plaintiffs lack constitutional standing to assert claims based on bid-ask
spread manipulation, and allegations relating to that manipulation
therefore cannot provide a basis for exercising personal jurisdiction over
Credit Suisse Group and UBS with respect to claims relating to the
separate manipulation of CHF LIBOR. See Sunward Electronics, 362 F.3d at
24 (“A plaintiff must establish the court’s jurisdiction with respect to each
claim asserted.”).
RBS is the only defendant that has been plausibly alleged to have
conspired with JPMorgan to manipulate CHF LIBOR.
While the
Complaint referenced a European Commission finding that “RBS and
JPMorgan operated a cartel aimed at manipulating Swiss franc LIBOR to
‘distort the normal pricing of interest rate derivatives denominated in
Swiss franc,’” Compl. ¶ 139, the parties disputed whether the Complaint
plausibly alleged that this collusion involved any JPMorgan traders
operating from New York. According to plaintiffs’ supplemental brief
regarding personal jurisdiction, documents produced by JPMorgan as part
of its settlement with plaintiffs now make clear that RBS colluded with a
JPMorgan trader in New York to manipulate CHF LIBOR.
The
supplemental brief includes specific alleged communications appearing to

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show collusion to manipulate CHF LIBOR and alleges that an RBS trader
referred to himself and his JPMorgan counterpart in New York collectively
as “royal chasebankscotland ny.” This suffices to plausibly allege that RBS
from abroad willfully colluded with JPMorgan inside the forum.
Plaintiffs maintain that RBS, by conspiring with a JPMorgan trader
located in New York, “reached into the forum” and created contacts that
subject it to suit in the forum, particularly when coupled with allegations
that the effects of the manipulation were also directed at the forum.
“The underlying rationale for exercising personal jurisdiction on
the basis of conspiracy is that, because co-conspirators are deemed to be
each other’s agents, the contacts that one co-conspirator made with a
forum while acting in furtherance of the conspiracy may be attributed for
jurisdictional purposes to the other co-conspirators.” LIBOR IV, 2015 WL
6243526, at *29. Defendants point to Judge Daniels’ observation in Laydon
that “[c]ourts have been increasingly reluctant to extend this theory of
jurisdiction beyond the context of New York’s long-arm statute.” 2015 WL
1515358, at *3. And several courts in this district recently have rejected
conspiracy-jurisdiction arguments in benchmark manipulation cases. See,
e.g., Front Point Asian Event Driven Fund, L.P., 2017 WL 3600425, at *8;
LIBOR VI, 2016 WL 7378980, at *3; In re Platinum & Palladium Antitrust
Litig., 2017 WL 1169626, at *49; Laydon, 2015 WL 1515358, at *3.
But notably, in many of these cases the plaintiffs had failed to
plausibly allege that any act by any party in furtherance of the conspiracy
took place in the forum. See, e.g., Front Point Asian Event Driven Fund, L.P.,
2017 WL 3600425, at *8 (rejecting conspiracy jurisdiction where the
plaintiffs had “not alleged that any defendant – including those who do
not contest jurisdiction – committed any act in furtherance of the
conspiracy from within the United States or purposefully directed its
misconduct at the United States”); LIBOR VI, 2016 WL 7378980, at *3
(“Because plaintiffs have failed to establish that any defendant committed
an act in furtherance of the conspiracy in or directed at the United States
. . . the conspiracy jurisdiction argument has no purchase.”); In re Platinum
& Palladium Antitrust Litig., 2017 WL 1169626, at *49 (no conspiracy

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jurisdiction where “Plaintiffs failed to allege that any conduct relevant to
the alleged price manipulation took place in New York”).
That is quite different from the conspiracy alleged here: that the
defendant acting abroad conspired with someone it knew to be
committing the wrongful conduct within the forum. Indeed, Laydon also
noted that to establish conspiracy jurisdiction a plaintiff must “show that
the defendant’s co-conspirator committed a tort in the forum.’” 2015 WL
1515358, at *3 n.6 (quoting In re Terrorist Attacks on September 11, 2001, 349
F. Supp. 2d 765, 805 (S.D.N.Y.2005)) (alteration omitted). Here, RBS’s coconspirator is alleged to have committed a tort in the forum in furtherance
of the conspiracy with RBS’s knowledge and participation.
On this issue, defendants again rely primarily on Walden, and again
that reliance is dubious. Defendants emphasize that under Walden
personal jurisdiction must be based upon contacts that the “defendant
himself creates with the forum State . . . not the defendant’s contacts with
persons who reside there.” 134 S. Ct. at 1122. But in Walden the defendant
never “contacted anyone in, or sent anything or anyone” into the forum.
Id. at 1124. Walden simply held that personal jurisdiction was lacking over
a defendant who acted entirely outside the forum but knew that the
plaintiff had connections within the forum. It did not address whether
jurisdiction may be exercised over a defendant who from outside the
forum contacts a coconspirator inside the forum. Walden would be far
more analogous if plaintiffs were asserting “conspiracy jurisdiction” over
RBS based on its collusion with a JPMorgan trader located outside the
forum, on the ground that JPMorgan has extensive contacts within the
forum. But plaintiffs assert that RBS itself willfully and repeatedly
reached into the forum by conspiring with JPMorgan.
The Court need not decide whether specific jurisdiction over RBS
would be appropriate based solely on its contacts with a coconspirator in
the forum. That is because the Court evaluates the “quality and nature of
the defendant’s contacts with the forum state under a totality of the
circumstances test.” Licci, 732 F.3d at 170. Here, RBS is alleged not only to
have conspired with a JPMorgan trader located in the forum, but also to
have conspired for the purpose of benefitting its trading positions that

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include transactions within the forum. As explained above, this Court has
concluded that a defendant that manipulates the price of a product outside
the forum for the purpose of profiting from transactions in that product
within the forum has “purposefully availed itself of the privilege of doing
business in the forum and could foresee being haled into court there.” Id.
(citation omitted). That conclusion is only bolstered as to RBS by its
alleged collusion with a coconspirator within the forum to achieve its
purpose.
E.

Fair Play and Substantial Justice

Having concluded that the Credit Suisse Defendants, Deutsche
Bank AG, RBS and UBS have purposefully established minimum contacts
with the forum, the Court must now “determine whether the assertion of
personal jurisdiction would comport with fair play and substantial
justice.” Licci, 732 F.3d at 170 (internal quotation marks omitted). That
question need not detain us for long. Each of these defendants is alleged
to be among the world’s largest financial institutions and to maintain a
substantial and ongoing presence in the forum. To the extent that
defendants are alleged to have purposefully availed themselves of the
forum by manipulating CHF LIBOR in order to wrongfully profit from
CHF LIBOR-based derivatives, including in the forum, their answering for
that alleged misconduct in the forum clearly comports with fair play and
substantial justice.
F.

Jurisdictional Discovery

Plaintiffs argue in the alternative that, to the extent that the Court
finds the Complaint’s allegations supporting personal jurisdiction over
defendants to be insufficient, “the Court should defer ruling, and grant
leave to take limited jurisdictional discovery.” Doc. 89 at 24. The Court
has already denied plaintiffs’ request for jurisdictional discovery and ruled
that “the jurisdictional issues will be decided on a pre-discovery basis.”
Doc. 81. Plaintiffs offer no persuasive reason to stray from that ruling.
Where a plaintiff fails to establish a prima facie case that the Court
has jurisdiction over a defendant, whether to allow jurisdictional discovery
is within the Court’s discretion. Jazini v. Nissan Motor Co., Ltd., 148 F.3d

106

181, 186 (2d Cir. 1998). Exercising that discretion, “[d]istrict courts in this
circuit routinely reject requests for jurisdictional discovery where a
plaintiff’s allegations are insufficient to make out a prima facie case of
jurisdiction.” Laydon, 2015 WL 1515358, at *7. Here, while plaintiffs claim
to seek “limited” discovery, an examination of what they hope to uncover
shows that their request is in fact quite broad. For example, plaintiffs
contend that discovery will reveal “the degree of collusion between the
Bank Defendants” and the “Bank Defendants’ knowledge that they sent
false Swiss franc LIBOR quotes to Thomson Reuters in the U.S., or outside
the U.S. with knowledge the quotes would be disseminated in the U.S.”
Doc. 89 at 25. This is far from a narrow request aiming to resolve, say, a
question of whether a defendant maintains an office in the forum, but
constitutes instead an attempt to gain broad discovery that goes as much
to the heart of plaintiffs’ claims on the merits as it does the jurisdictional
issues. Jurisdictional discovery is not appropriate in these circumstances
and plaintiffs’ request is therefore denied.
IX.

Leave to Replead

At oral argument on these motions to dismiss, plaintiffs requested
leave to replead in the event that the Court finds their claims to be
inadequately stated. While plaintiffs have already once amended their
complaint, this is their first request to replead in response to a motion to
dismiss. “It is the usual practice upon granting a motion to dismiss to
allow leave to replead.” Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42,
48 (2d Cir. 1991).
Fed. R. Civ. P. 15(a)(2) provides that the
“court should freely give leave [to amend] when justice so requires.”
Under the “liberal spirit of Rule 15,” the question of whether amendment
would be futile is a “key issue.” Loreley Financing (Jersey) No. 3 Ltd. v. Wells
Fargo Securities, LLC, 797 F.3d 160, 191 (2d Cir. 2015) (internal quotation
marks omitted). Here, many of the deficiencies identified in the
Complaint may be cured by additional pleading, and there is no reason to
deny plaintiffs that opportunity based on other relevant factors such as
“bad faith, undue delay, or undue prejudice to the opposing party.”
TechnoMarine SA v. Giftports, Inc., 758 F.3d 493, 505 (2d Cir. 2014) (internal
quotation marks omitted). Plaintiffs may amend the Complaint.

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X.

Conclusion

For the foregoing reasons, defendants' motions to dismiss each
count in the Complaint are granted. Specifically, Count One is dismissed
for lack of constitutional standing because plaintiffs have not alleged that
they were injured by defendants' bid-ask spread manipulation. Count
Two is dismissed as to each defendant because plaintiffs lack antitrust
standing to sue RBS, the only defendant that has been plausibly alleged to
have violated the antitrust laws. Counts Three, Four, and Five are
dismissed as to each defendant because the Complaint fails to plausibly
allege that Divitto suffered actual injury from defendants' alleged
manipulation. Counts Six and Seven are dismissed as to each defendant
as impermissibly extraterritorial. Counts Eight and Nine are dismissed
because the Court declines to exercise supplemental jurisdiction over these
state law claims. In addition to plaintiffs' failure to state a claim upon
which relief can be granted, defendants' motion to dismiss for lack of
personal jurisdiction is granted as to DB Group Services and BlueCrest,
but denied as to the Credit Suisse Defendants, Deutsche Bank AG, RBS,
and UBS.
If plaintiffs intend to file a second amended complaint, the last date

to do so is October 16, 2017. Defendants must answer or otherwise
respond to that complaint on or before October 30, 2017. If plaintiffs do
not file a second amended complaint by October 16, 2017, their claims will
be dismissed with prejudice.
Dated: NewYork,NewYork
September 25, 2017
SO ORDERED:
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Sidney H. Stein, U.S.D.J.

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