Nypl v. JP Morgan Chase & Co. et al
OPINION AND ORDER re: 97 MOTION to Stay / Notice Of Motion to Stay Case Per In re FX Preliminary Approval Order, Or To Consolidate filed by UBS AG. For the foregoing reasons, the motion for a stay is DENIED and the motion to consolidate is GRANTED in part. The Clerk of Court is directed to close the motion at Dkt. No. 97 and consolidate this case for discovery with Case No. 13 Civ. 7789. (As further set forth in this Opinion and Order.) (Signed by Judge Lorna G. Schofield on 6/8/2016) (mro)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
JOHN NYPL, et al.,
JP MORGAN CHASE & CO., et al.,
DATE FILED: 06/08/2016
15 Civ. 9300 (LGS)
OPINION AND ORDER
LORNA G. SCHOFIELD, District Judge:
Plaintiffs, representing a putative class of consumers and end-user businesses, sue several
banks for allegedly engaging in an unlawful conspiracy to fix foreign currency exchange rates.
On January 29, 2016, Defendants moved for an order staying this case or, in the alternative,
consolidating it with a related case, In re Foreign Exchange Benchmark Rates Antitrust
Litigation (“FOREX”), No. 13 Civ. 7789 (S.D.N.Y.). For the following reasons, Defendants’
motion is denied as to the request for a stay and granted in part with respect to consolidation.
Plaintiffs are six individuals and businesses asserting injuries on behalf of a putative class
of those who paid more in bank foreign currency exchange rates due to Defendants’ alleged
conspiracy to fix rates. On May 21, 2015, John Nypl filed suit in the United States District Court
for the Northern District of California, alleging violations of the Sherman Antitrust Act, 15
U.S.C. § 1, and various other claims under California law. On November 25, 2015, the case was
transferred to the Southern District of New York pursuant to 28 U.S.C. § 1404(a), in part because
Defendants are litigating similar claims in the consolidated FOREX proceedings.
As in Nypl, the operative FOREX complaint alleges an antitrust conspiracy to manipulate
currency exchange rate benchmarks in violation of 15 U.S.C. § 1. By orders dated February 13,
2014, and August 13, 2015, various actions concerning alleged rate-fixing in the foreign
exchange markets were consolidated, and interim lead counsel were appointed. On December
15, 2015, after a conference that counsel for the Nypl plaintiffs attended, an order was issued in
the FOREX case preliminarily approving settlement agreements with nine defendant groups,
conditionally certifying settlement classes, and appointing class counsel and class representatives
for the FOREX settlement classes. Each Nypl defendant is a settling defendant in the FOREX
On January 29, 2016, Defendants filed the instant motion to stay the Nypl case or, in the
alternative, consolidate it with the FOREX action.
A. Motion for a Stay
Defendants argue that a stay is required because the Court’s December 15, 2015, order
which granted preliminarily approval of various settlement agreements in FOREX (the
“Preliminary Approval Order”), enjoins Plaintiffs from prosecuting their claims here. For the
following reasons, Defendants’ motion for a stay is denied.
In relevant part, the Preliminary Approval Order provides:
All proceedings in the Action with respect to the Settling Defendants are stayed
until further order of the Court, except as may be necessary to implement the
settlements set forth in the Settlement Agreements or comply with the terms
thereof. Pending final determination of whether the settlements set forth in the
Settlement Agreements should be approved, each Class Plaintiff and each Class
Member, either directly, representatively, or in any other capacity, shall be
enjoined from prosecuting in any forum any Released Claim against any of the
Released Parties, and shall not sue any of the Released Parties on the basis of any
Released Claims or assist any third party in commencing or maintaining any suit
against any Released Party in any way to any Released Claim.
FOREX, ECF No. 536 ¶ 21 (emphasis added).
The injunction by its terms applies only to “each Class Plaintiff and each Class Member.”
These terms are defined in the FOREX settlement agreements. In substance, “Class Plaintiff”
means the entities and individuals who are the named plaintiffs in the FOREX action. “Class
Member” means a member of one of the settlement classes who has not filed a valid exclusion.
The Preliminary Approval Order identifies two “Settlement Classes”:
The Direct Settlement Class: All Persons who, between January 1, 2003 and the
date of the Preliminary Approval Order, entered into an FX Instrument directly
with a Defendant, a direct or indirect parent, subsidiary, or division of a
Defendant, a Released Party, or co-conspirator where such Persons were either
domiciled in the United States or its territories or, if domiciled outside the United
States, transacted FX Instruments in the United States or its territories [and] . . .
The Exchange-Only Settlement Class: All Persons who, between January 1,
2003 and the date of the Preliminary Approval Order, entered into FX ExchangeTraded Instruments where such Persons were either domiciled in the United
States or its territories or, if domiciled outside the United States or its territories,
entered into FX Exchange-Traded Instruments on a U.S. exchange.
The FOREX settlement agreements define “FX Instruments” as “FX spot transactions, forwards,
swaps, futures, options, and any other FX instrument or FX transaction the trading or settlement
value of which is related in any way to FX rates;” and define “FX Exchange-Traded
Instruments” as “any and all FX Instruments that were listed for trading through an exchange,
including, but not limited to, FX futures contracts and options on FX futures contracts.”
In contrast to the FOREX action, which defines class membership based on the plaintiffs’
involvement with “FX Instruments” and “FX Exchange-Traded Instruments,” the operative
complaint in Nypl (“SAC” for Second Amended Class Action Complaint) defines its class as
“[a]ll consumers and businesses in the United States who directly purchased supracompetitive
foreign currency exchange rates from Defendants and their co-conspirators for their own end use
at least since January 1, 2007 to and including class certification.” SAC ¶ 19; see also id. ¶ 1
(describing “a nationwide class of consumers and end user businesses”).
Defendants argue that the Nypl class “is subsumed” within the FOREX Direct Settlement
Class because Nypl class members “engaged in FX spot market transactions with the
Defendants.” But Plaintiffs’ class definition does not suggest that Nypl class members transacted
with Defendants on the “FX spot market.” The Nypl class definition describes “consumers and
businesses” that purchased foreign currency “for their own end use,” and references the “FX spot
market” only to exclude from the class “competitors of the Defendants who are in the FX Spot
Market.” SAC ¶ 19. While the SAC discusses Defendants’ conduct in the FX spot market, it
does so only to describe the alleged mechanism through which Plaintiffs’ prices became
“supracompetitive,” and does not imply that the Nypl class members were themselves
participants in that market.
Consistent with this reading of the SAC, counsel for plaintiffs in both the Nypl and
FOREX actions disavow any overlap in the two cases’ classes. According to the FOREX
plaintiffs, “the Nypl Action seeks relief on behalf of a class of ‘end users’ who purchased
currencies at the retail level whereas In re FX seeks relief on behalf of a class of ‘OTC
purchasers’ who traded FX Instruments over the counter via voice or electronic means and a
class of ‘exchange purchasers’ who traded FX Instruments on exchanges, such as the Chicago
Mercantile Exchange (‘CME’).” Counsel in the Nypl action have represented to FOREX counsel
that the Nypl plaintiffs were neither “OTC purchasers” nor “exchange purchasers” as defined in
the FOREX settlement agreements, and that they did not intend for their class to overlap with
those in FOREX. Hausfeld Decl. ¶¶ 5–6. As the Nypl plaintiffs elaborate: “The Nypl end-user
purchases of foreign currency for end-uses, who take delivery of foreign currency for purchasing
goods and services are completely different from the computer generated [electronic
communication network] FX spot trading in the FX market.” Pls.’ Br. 3.
Defendants’ motion “seeks confirmation that the [Preliminary Approval] Order enjoins
Nypl from prosecuting this action pending this Court’s determination whether to finally approve
the In re FX settlements.” Defs.’ Br. 8. Based on the class definitions in the two cases and the
foregoing representations of the FOREX and Nypl plaintiffs, the Nypl plaintiffs are not included
in the FOREX settlement classes. Without any apparent overlap in membership between the
Nypl and FOREX classes, the injunction in the FOREX Preliminary Approval Order does not
extend to the Nypl plaintiffs. Defendants’ motion for a stay is therefore denied.
B. Motion to Consolidate
Alternatively, Defendants ask that this case be consolidated with the FOREX action. For
the following reasons, Defendants’ request is granted in part, and the two actions are
consolidated for discovery. The issue of whether Nypl and FOREX should be consolidated for
trial can be addressed later.
Pursuant to Federal Rule of Civil Procedure 42, “[i]f actions before the court involve a
common question of law or fact, the court may: (1) join for hearing or trial any or all matters at
issue in the actions; (2) consolidate the actions; or (3) issue any other orders to avoid
unnecessary cost or delay.” Fed. R. Civ. P. 42(a). “The Rule should be prudently employed as a
valuable and important tool of judicial administration, invoked to expedite trial and eliminate
unnecessary repetition and confusion.” Devlin v. Transp. Commc’ns Int’l Union, 175 F.3d 121,
130 (2d Cir. 1999) (internal quotation marks and citations omitted). District courts are afforded
“broad discretion” to make consolidation determinations. Johnson v. Celotex Corp., 899 F.2d
1281, 1284 (2d Cir. 1990).
The core allegations in both the FOREX and Nypl complaints describe the same conduct
by Defendants. The time period covered by the Nypl action (from January 1, 2007), falls within
the time period for the FOREX action (from January 1, 2003), and each of the Nypl defendants
are named defendants in the FOREX matter. The primary differences between the two cases are
the definitions of the classes each purports to cover, and the manner in which their respective
class members would have to establish causation. Due to the abundance of common questions of
law and fact between the two cases, pre-trial consolidation under Rule 42 is appropriate.
Plaintiffs’ arguments in opposition to consolidation are unavailing. Plaintiffs argue that
consolidation is inappropriate because preliminary approval was granted for the settlement
agreements in the FOREX action only one day after they were notified of the hearing, and due
process requires their fuller participation. To the extent Plaintiffs fear that their claims will be
released at the final fairness hearing, their continued ability to participate in the approval process
negates their due process claim. “The fundamental requirement of due process is the opportunity
to be heard ‘at a meaningful time and in a meaningful manner,’” and Plaintiffs retain the ability
to object to the settlement agreements and participate in the final fairness hearing. Mathews v.
Eldridge, 424 U.S. 319, 333 (1976) (quoting Armstrong v. Manzo, 380 U.S. 545, 552 (1965));
see also Manual for Complex Litigation § 21.634, p. 322 (4th ed. 2004) (describing procedures
for fairness hearings). As discussed above, however, the Nypl plaintiffs’ claims are unlikely to
be released by any final approval of the settlements if the classes in FOREX and Nypl are defined
so as to avoid overlapping membership.
Plaintiffs also argue that the cases should remain separate because their claims rest on
different factual allegations, and because the two cases are in different stages of preparation.
The only suggested factual differences pertain to what Plaintiffs describe as differences in “the
impact and injury” suffered by foreign exchange traders versus those who purchased foreign
currency as “end users.” While the Nypl and FOREX plaintiffs may require different proof of
causation and damages, discovery into the various co-conspirators’ conduct -- and the
determination of this conduct’s legality -- are common to both cases. Any prejudice to
consolidation may be addressed, if necessary, through separate trials. See Fed. R. Civ. P. 42(b)
(“For convenience, to avoid prejudice, or to expedite and economize, the court may order a
separate trial of one or more separate issues . . . .”).
Consolidation also will not prejudice Plaintiffs’ ability to conduct discovery or cause
undue delay. Although the Nypl defendants have reached settlements in FOREX, discovery into
the alleged conspiracy in the foreign exchange markets is ongoing, and the settling FOREX
defendants will be subject to non-party discovery if the settlement agreements gain final
approval. Finally, even if discovery in the FOREX actions has until now focused on the impact
on FX traders, discovery into end users would not delay prosecution of the Nypl plaintiffs’
claims, as they have yet to begin discovery.
For the foregoing reasons, the motion for a stay is DENIED and the motion to consolidate
is GRANTED in part. The Clerk of Court is directed to close the motion at Dkt. No. 97 and
consolidate this case for discovery with Case No. 13 Civ. 7789.
Dated: June 8, 2016
New York, New York
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