Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—S.D.N.Y.: Nationwide mortgagor class allegations stricken in LIBOR case, (May 17, 2016)

By Jeffrey May, J.D.

In multi-district litigation against major banks over alleged manipulation of the London Interbank Offer Rate (LIBOR), California Unfair Competition Law (UCL) claims will not be alleged on behalf of a nationwide class of consumers who obtained a LIBOR-indexed adjustable rate mortgage loan from Bank of America, N.A. However, whether a putative class limited to California residents was appropriate was an issue to be decided at the class certification stage. The federal district court in New York City struck the nationwide class allegations in the mortgagor complaint, but refused to strike separate class allegations from over-the-counter (OTC) plaintiffs and exchange-based plaintiffs, pursuing other claims (In re LIBOR-Based Financial Instruments Antitrust Litigation, May 13, 2016, Buchwald, N.).

Bank of America moved to strike the class allegations in the putative mortgagor class’ first amended complaint. It argued that the class allegations should be stricken because (1) variations in state laws preclude class certification; (2) individual issues of actual and justifiable reliance predominate over common issues; and (3) individual issues of mitigation predominate over common issues.

In response, the representative of the putative mortgagor class limited his putative class to California residents. The court noted that the UCL claim did not require reliance, but only exposure to the allegedly fraudulent representations. Further, Bank of America’s mitigation defense did not present an issue that, as a matter of law, predominated over common issues, in the court’s view. At the class certification, the court would weigh the individual issues against the common issues the representative would be able to prove.

The court also held that a motion to strike was inappropriate for dealing with the class allegations of the OTC plaintiffs and exchange-based plaintiffs. These issues could be considered after completion of class discovery.

The case is No. 1:11-md-02262-NRB.

Attorneys: Christopher Lovell (Lovell Stewart Halebian Jacobson LLP) for FTC Capital GmbH. Arun Srinivas Subramanian (Susman Godfrey LLP) and Hilary K. Scherrer (Hausfeld LLP) for Mayor and City Council of Baltimore. Roger W. Kirby (Kirby McInerney LLP) for Metzler Investment GmbH. Arthur J. Burke (Davis Polk & Wardwell LLP) for Bank of America Corp.

Companies: Bank of America Corp.

Cases: StateUnfairTradePractices NewYorkNews