Opinion

Alison Frankel

SCOTUS Libor case, by itself, won’t revive antitrust claims

Alison Frankel
Jul 1, 2014 19:14 UTC

Don’t get too excited about the news Monday that the U.S. Supreme Court has agreed to hear the appeal of bond investors whose antitrust claims against the global banks involved in the Libor-setting process were tossed last year.

Untold billions of dollars are at stake in the Libor litigation, in which investors in all sorts of securities pegged to the London Interbank Offered Rate claim that the banks conspired to manipulate the interest rate benchmark. There are now about 60 cases consolidated in the Libor multidistrict litigation before U.S. District Judge Naomi Reice Buchwald in Manhattan, asserting a potpourri of state and federal securities, racketeering and fraud claims as well as violations of federal antitrust laws. Last year, Judge Buchwald gave the bank defendants an almost priceless gift when she concluded that U.S. antitrust laws don’t cover the sort of rate-rigging alleged in the Libor scandal because the banks’ conduct wasn’t anticompetitive. Buchwald has permitted other pieces of the litigation to move forward, most recently refusing to dismiss classwide unjust enrichment claims in an 80-page decision last week, but has refused to re-instate the big-money antitrust allegations, which offer the prospect of treble damages.

The 2nd U.S. Circuit Court of Appeals has been no help to Libor antitrust claimants either. Although Judge Buchwald entered judgment so class action lawyers could appeal her antitrust holding, the 2nd Circuit refused to take the case, holding in an unpublished order in October 2013 that it did not have jurisdiction over the appeal because Buchwald had not yet disposed of all claims in the consolidated Libor litigation.

That was another invaluable ruling for the bank defendants. Under the 2nd Circuit’s reasoning, no plaintiff could hope to revive Libor antitrust claims until Buchwald reached a final resolution of every other claim in the consolidated cases. That could take years of expensive litigation that would put plaintiffs under pressure to settle on the cheap. Moreover, with Buchwald’s antitrust ruling intact for the duration of the consolidated cases, other trial judges presiding over similar suits could adopt her controversial reasoning — as U.S. District Judge George Daniels did in March, when he dismissed an antitrust class action alleging banks colluded to manipulate two other benchmark rates.

So it’s certainly good news for Libor claimants that the U.S. Supreme Court granted a petition for certiorari by bond investors whose case Buchwald dismissed in its entirety when she bounced the Libor antitrust claims. “We are both optimistic and pleased,” said Barry Barnett of Susman Godfrey, who represents a class of investors in over-the-counter securities in the Libor litigation and filed an amicus brief urging the justices to grant the bond investors’ appeal. The cert grant, Barnett said, means that as the Libor class moves ahead with discovery on the claims that have survived Buchwald’s dismissal rulings, they have some hope that the federal antitrust claims will be revived.

N.Y. state appeals ruling opens courthouse door to foreign victims

Alison Frankel
Sep 18, 2013 20:06 UTC

In the last few months, the victims of supposed overseas human rights atrocities have begun to feel the impact of the U.S. Supreme Court’s ruling last April in Kiobel v. Royal Dutch Petroleum. As you know, the Supreme Court held that Alien Tort Statute cases cannot proceed in U.S. courts unless they have a significant connection to the United States. As a result, ATS claims by foreign citizens accusing international corporations of abetting torture and murder on foreign soil have since been dismissed against Daimler, Arab Bank, Rio Tinto and KBR. Some ATS cases have survived post-Kiobel scrutiny, as my friend Michael Goldhaber reported for The American Lawyer in August, and alleged victims can still assert claims under Other U.S. laws that specifically apply to conduct abroad. But without a doubt, Kiobel has extinguished the jurisdiction of U.S. courts over a wide swath of human rights litigation.

New York state courts, on the other hand, are ready and willing to hear the cases. Or, at least, that’s the implication of a comprehensive decision Tuesday by the state Appellate Division, First Department, that permits 50 Israeli citizens to proceed with claims that Bank of China is liable under Israeli law for facilitating bombings and rocket attacks in Israel by Hamas and Palestine Islamic Jihad. The state appeals court expressly broke with the 2nd Circuit Court of Appeals in holding that Israeli law should apply to the alleged victims’ claims because that’s where they were injured, rejecting the 2nd Circuit’s 2012 decision in a parallel terror-finance case that the laws of the defendant’s home jurisdiction should apply because those courts have the greatest interest in regulating the defendant’s conduct.

According to Robert Tolchin of The Berkman Law Office, who represents the plaintiffs in both the 2nd Circuit and New York state-court cases, the Appellate Division’s ruling opens the door to claims in New York courts by foreigners asserting the laws of their own countries against international defendants. “The Supreme Court in Kiobel knocked out the Alien Tort Statute, but here comes New York negligence law,” he said.

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