Antitrust Law Daily Wrap Up, ANTITRUST—J.P.M.L.: Schwab’s action against LIBOR banks added to multi-district litigation, (Oct 3, 2013)

By Tobias J. Gillett, J.D., LL.M.

An action by Charles Schwab Corporation and related entities against member banks of the British Bankers’ Association (BBA) dollar-based London Interbank Offer Rate (USD LIBOR) Panel for conspiring to artificially suppress LIBOR by understating their borrowing costs to the BBA has been transferred by the Judicial Panel on Multidistrict Litigation (JPML) to the Southern District of New York for inclusion in coordinated pretrial proceedings with other LIBOR actions in that district (In Re: LIBOR-Based Financial Instruments Antitrust Litigation, October 2, 2013, Heyburn, J.).

In the motion before the Panel, the Schwab entities moved to vacate the Panel’s previous conditional transfer order. Defendants JP Morgan Chase & Co. and JPMorgan Chase Bank, N.A. purportedly with the support of defendants Bank of America Corp., Bank of America, N.A., Barclays Bank plc, Citigroup, Inc., Citigroup, N.A., Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings plc, HSBC Bank plc, Lloyds Banking Group, plc, HBOS plc, Portigon AG, The Norinchukin Bank, The Royal Bank of Scotland Group plc, and UBS AG, opposed the motion.

The Panel rejected the plaintiffs’ argument that transfer would contravene a March 29, 2013, ruling of the federal district court in New York which dismissed the plaintiffs’ Sherman Act, RICO, and California Cartwright Act claims, and declined to exercise supplemental jurisdiction over further California state law claims. The Panel observed that the plaintiffs had not simply re-filed the state law claims that had been dismissed, but rather added other claims, including a federal claim under the Securities Act of 1933. In addition, five of the California claims the plaintiffs asserted were also claims in other actions already in the multi-district litigation. Finally, the Panel noted that the jurisdictional bases on which the defendants had removed the action from state court—the Edge Act and the Foreign Sovereign Immunities ACT (FSIA)—had not previously been argued or considered on the motions to dismiss. Although the plaintiffs challenged that removal, the court noted that “the pendency of a remand motion” was generally not “a sufficient reason to delay or deny transfer,” and Edge Act and FSIA remand issues were already before the Southern District of New York.

The court also found that the action involved common questions of fact with actions already transferred to the multi-district litigation, and that transfer would “serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation.”

The case is MDL No. 2262.

Attorneys: Richard Martin Heimann (Lieff Cabraser Heimann & Bernstein) for Charles Schwab Corp. Neal Alan Potischman (Davis Polk & Wardwell) for Bank of America Corp.

Companies: Charles Schwab Corp.; Bank of America Corp.; JP Morgan Chase & Co.; JPMorgan Chase Bank, N.A.; Barclays Bank plc; Citigroup, Inc.; Citigroup, N.A.; Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.; Credit Suisse Group AG; Deutsche Bank AG; HSBC Holdings plc; HSBC Bank plc; Lloyds Banking Group, plc; HBOS plc; Portigon AG; The Norinchukin Bank; The Royal Bank of Scotland Group plc; UBS AG

Cases: Antitrust