Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Consumers seek Supreme Court review in dismissal of USD ICE LIBOR lawsuit, (Apr 28, 2025)

By Martin A. Steinberg, J.D.

The Ninth Circuit affirmed a decision that a group of consumers lacked standing to bring claims against dozens of financial institutions regarding the intra-bank interest rate exchange.

Twenty-seven borrowers and consumers of loans and credit cards sued dozens of banks and financial institutions in an antitrust action and have filed a petition for certiorari to the U.S. Supreme Court asking it to review whether lower courts erred in dismissing their claims on standing and jurisdiction grounds. The plaintiffs (Petitioners) alleged that the defendants (Respondents) conspired to fix the U.S. Dollar London Interbank Offered Rate, formerly managed by International Exchange, Inc. (USD ICE LIBOR). On December 9, 2024, the 9th Circuit affirmed the district court’s October 10, 2023, dismissal of the complaint because the plaintiffs failed to meet their burden of establishing personal jurisdiction over the foreign defendants and did not plausibly allege antitrust standing for their claims under Sections 1 and 2 of the Sherman Act against the remaining defendants. Foreign defendants included ICE Benchmark Administration Limited; Barclays Bank PLC; Credit Suisse entities; Deutsche Bank AG; HSBC entities; Lloyds Bank plc; Mitsubishi banking entities; Royal Bank of Scotland entities; National Westminster Bank plc; Sumitomo Mitsui banking entities; and UBS banking entities (McCarthy v. Intercontinental Exchange Inc., No. 24-1108 (U.S. Apr. 22, 2025)).

Background. LIBOR is a widely used benchmark for short-term interest rates. LIBOR is the ICE Benchmark Administration Ltd. (IBA) registered trademark. The Petitioners allege that The Respondents are members of a price-fixing cartel designed to eliminate price competition between and among themselves and among their coconspirators to fix the LIBOR intra-bank interest rate used as the minimum rate offered for loans to consumers and businesses, including, mortgages, student loans, credit cards, auto loans, lines of credit, contracts, and other financial instruments.

Respondents Bank of America, Barclays, Citibank, Rabobank, Credit Suisse, Deutsche Bank, HSBC, JPMorgan Chase, Lloyds Bank, MUFG Bank, Royal Bank of Scotland, Royal Bank of Canada, Sumitomo, Norinchukin, and UBS are IBA Contributor Banks for the USD LIBOR panel. The LIBOR rate is calculated based on a formula using contributor bank submissions.

The Petitioners assert that LIBOR is the rate that an exclusive group of major international Banks charges each other for short-term loans. It has been the primary benchmark for short-term interest rates to consumers globally. LIBOR is calculated for five different currencies: the US dollar, the Euro, the British pound, the Japanese yen, and the Swiss franc. Since February 1, 2014, the IBA has calculated and published the rate. As of 2019, $1.2 trillion worth of residential mortgage loans and $1.3 trillion of consumer loans had been priced using LIBOR.

Reasons for granting the writ. The Petitioners raised five grounds why the Court should grant the writ.

First, the Petitioners claim they were denied their Constitutional right to a hearing by the district court and the court of appeals on the motion to dismiss. Despite the Petitioners’ demand for a hearing, both courts denied their right to a hearing, contrary to the Due Process Clause of the Fifth Amendment to the Constitution and Fed. R. Civ. P. Rule 12(i), which requires a hearing before trial on motions brought under Rule 12(b).

Second, the lower courts ignored key facts in the complaint, which sufficiently alleged a prima facie price-fixing conspiracy among the Respondents. There was no need for Plaintiffs to show an express agreement among the Defendants to prove a conspiracy violating Section 1 of the Sherman Act. Bell Atl. v. Twombly, 550 U.S. 544, 555 (2007), does not require the Petitioners to plead evidence, as the district court appeared to suggest. In Twombly, the Court only required plaintiffs to provide factual allegations that “raise a right to relief above the speculative level” and offer more than just “a formulaic recitation of the elements of a cause of action.” Similarly, the Court in Ashcroft v. Iqbal, 556 U.S. 662 (2009), made clear that the plausibility standard is “not akin to a ‘probability requirement,’” and it required a “context-specific” analysis in which “the reviewing court draws on its judicial experience and common sense.

The Petitioners had met and exceeded the pleading standards of Twombly and Iqbal. The complaint alleged very specific, detailed, and plausible facts of conspiracy, which the court must accept as true. When proven, this will demonstrate that the Respondents have violated the law.

The Petitioners further argue that the facts alleged in the complaint are per se violations of the antitrust laws for price fixing. The Court has held that price-fixing combinations that lack congressional sanction are illegal per se. See U.S. v. Socony Vacuum Oil Co., 310 U.S. 150 (1940). It is undisputed in this case that LIBOR had not received any congressional sanction. Therefore, the LIBOR price-fixing combination is illegal per se.

Unlike the complaint found lacking in Twombly, the complaint here did not seek to draw an inference of an agreement based merely on passive parallel behavior and inaction. Instead, the complaint directly alleged an agreement that the Respondents readily admitted. Each Respondent’s participation as a co-conspirator in the agreement was specifically detailed and plausibly alleged. The Petitioners asserted that the Respondents, their co-conspirator banks, and credit card companies in the U.S. jointly set LIBOR interest rates, and agreed to use the USD LIBOR as a component of the interest charged in fixed and variable interest rate loans on credit cards.

Third, the Petitioners assert that they have standing. Contrary to the courts below, the complaint's allegations demonstrated that the Petitioners, as victims of the price-fixing agreement, have antitrust standing. The Petitioners sufficiently alleged standing both as a threat of injury and injury in fact, which is proved by the fact of the purchase of the fixed product. Standing is satisfied by the Petitioners’ purchase of any LIBOR-based consumer loans at higher-than-competitive rates from the Respondents or their co-conspirators.

The Petitioners are consumers of a LIBOR interest rate product or interest rate financial instruments. Even the district court confirmed that a single Plaintiff alleged she was a purchaser of a LIBOR rate-based note from Defendant Bank of America. Thus, the relationship between the Plaintiffs’ harm and the Defendants’ alleged wrongdoing was not too remote to be actionable.

Additionally, when LIBOR was terminated and a new measure was instituted, the Respondents nonetheless agreed that because the new measure was lower than LIBOR, a committee would add a “spread adjustment” to increase the rate to measure against LIBOR. The Petitioners’ banks intended to follow the recommendation of the “spread adjustment” increase. The Respondents combined to fix the interbank interest rate by agreeing to fix the price using a set formula that automatically eliminated price cutters, guaranteed a profit, and eliminated any visage of competition between and among themselves. The Respondents, including foreign-based banks or their subsidiaries, and IBA as the calculator and administrator of the fixed price, all agreed to adhere to the fixed price and all contributed to, profited from, and furthered the purposes, motives, and intents of the unlawful cabal.

Fourth, the Ninth Circuit ignored the existence of Section 12 of the Clayton Act and erred in affirming a lack of personal jurisdiction over the foreign defendants. The allegations in the complaint were not “conclusory, vague, and controverted.” Still, there were sufficient alleged jurisdictional facts demonstrating that the Respondents’ conspiracy was within the flow of and had a substantial effect on interstate commerce and that the Respondents “intentionally targeted and used the instrumentalities of interstate commerce, including interstate wires, in furtherance of their illegal scheme.” Moreover, the Respondents’ unlawful price-fixing agreement indisputably caused foreseeable consequences in the U.S.

The fact that the U.S. is targeted as a geographic area for USD LIBOR indicates the Respondents’ intent to effect transactions in this country. These Respondents knew or should have known that by their conduct specifically targeting the U.S. Dollar and its effect in this country, their anticompetitive conduct was prohibited by law. The complaint further alleged that numerous Respondents operate branches in San Francisco and/or are registered to do business in California.

The Petitioners also argue that the Ninth Circuit erroneously affirmed the trial court’s improper exercise of its discretion to deny their request for jurisdictional discovery. To fully meet their burden of proving jurisdiction and conclusively provide the evidence that the court was expecting, the district court should have permitted the Petitioners to conduct jurisdictional discovery by allowing them to depose the individuals who submitted the declarations regarding the foreign Defendants’ contacts with the U.S.

Finally, the lower courts improperly relied on information outside the “four corners” of the complaint and incorrectly considered the foreign Defendants’ declarations. The district court’s reliance on the foreign Defendants’ declarations was misguided. The Petitioners specifically alleged that all of the foreign Defendants’ U.S. subsidiaries aided in the publication, promulgation, implementation, and sale of the USD LIBOR rates on behalf of their parent companies. The district court erroneously adopted, and the Ninth Circuit affirmed, the foreign Defendants’ hearsay “sworn declarations denying that allegation. Under Rules 12 and 56 and the circumstances of this case, the Petitioners should be allowed to take depositions of the Respondents and their expert who filed affidavits.

The Case is No. 24-1108.

Attorneys: Joseph Michaelangelo Alioto (Alioto Law Firm) for Lisa McCarthy.

Companies: Intercontinental Exchange Inc.

News: Antitrust