Antitrust Law Daily Wrap Up, ANTITRUST—N.Y. Sup.: Structured finance attorney’s state antitrust claims proceed against investment bank, (Apr 6, 2015)

By Linda O’Brien, J.D., LL.M.

A structured finance attorney alleged sufficient facts to pursue New York antitrust claims against an investment bank for engaging in conspiracy with other investment banks to block the use of the attorney’s patented financing structure in the underwriting of airline special facility municipal bonds, the New York Supreme Court, County of New York has decided (Williams v. Barclays Capital, Inc., March 31, 2015, Friedman, M.).

Linda Williams, a structured finance attorney, patented an innovative structure for airline special facility (ASF) municipal bonds, which are used to finance the construction and renovation of airline passenger terminals at municipal-owned airports. ASF bonds are underwritten by investment banks, which charge underwriting fees based on the credit ratings on the bonds. Williams’ structure changed the criteria by which ASF bonds were rated by permitting rating based on passenger demand for the airport terminal itself. The use of her structure ordinarily resulted in improved credit ratings, lower interest rates, and savings for the airlines.

Williams offered her structure to several investment banks, which refused to deal with her and expanded a boycott to other banks to prevent the use of her structure. Williams filed suit against one of the investment banks, Barclay’s Capital, alleging, in part, violations of New York’s Donnelly Act. Williams contended that, as a result of Barclay’s conduct in preventing the issuance of ASF bonds using her structure, she was deprived of legal and licensing fees that she would have earned by applying her structure. Barclays moved to dismiss the complaint.

The court determined that Williams set forth sufficient allegations to support a claim for conspiracy. Barclay’s argument that Williams failed to allege that she presented her structure to Barclays in connection with any bond issuance underwritten by Barclays was rejected. In this case, Williams alleged that the co-conspirator investment banks were competitors and, absent an agreement with Barclays to boycott her structure and vigilant enforcement of that agreement, those banks would be concerned that one of them would successfully syndicate and underwrite an ASF bond issuance using Williams’ structure to improve its position among the underwriters.

Additionally, Williams alleged acts in furtherance of the conspiracy —a Barclay employee threatened an individual bank at another investment bank with blacklisting if he continued to promote Williams’ structure and that bank was pressured to terminate its licensing agreement with Williams. She also alleged that the defendants separately took action internally to stop the use of her structure and pressured other parties, such as her employer, not to work with Williams. The court concluded that Williams’ allegations that Barclays acted in concert with other named co-conspirators to prevent her entry into the market were sufficient at the pleading stage to withstand a motion to dismiss.

The case is No. 653785/2012.

Attorneys: Michael A. Bowse (Browne George Ross LLP) for Linda Grant Williams. Richard Schwed (Shearman & Sterling LLP) for Barclays Capital, Inc.

Companies: Barclays Capital, Inc.

Cases: Antitrust NewYorkNews