Federal District Court Allows Most of Kirby McInerney’s Exchange-Based Commodities Claims to Proceed03/29/2013
NEW YORK - On March 29, 2013, Judge Buchwald in the Southern District of New York issued her memorandum and order in In re LIBOR-Based Financial Instruments Antitrust Litigation, MDL No. 2262, No. 1:11-md-2262-NRB (S.D.N.Y.), the coordinated LIBOR litigation, on motions to dismiss the various actions. In re LIBOR is a consolidated action that consolidates various separate actions, including various proposed class actions on behalf of purchaser plaintiffs, such as exchange-based investors (e.g., investors who traded Eurodollar futures on exchanges), over-the-counter (SWAP) investors, and corporate bond investors, as well as various Charles Schwab entities (as individual plaintiffs). Aside from these four actions, all other cases have been stayed by Judge Buchwald pending her evaluation of the threshold legal issues addressed in this recent memorandum.
Kirby McInerney LLP is acting as the interim co-lead counsel on behalf of exchange-based investors in a proposed class action against 16 global banks alleging that the banks colluded to misreport and manipulate LIBOR quotes, thereby harming investors in futures, swaps, and other Libor-based derivative products between August 2007 and May 2010. Claims asserted by the exchange-based plaintiffs consist of, among others, manipulation of Eurodollar futures in violation of the Commodity Exchange Act (“CEA”), vicarious liability for and aiding and abetting such manipulation as well as a state law claim for unjust enrichment.
While Judge Buchwald’s memorandum and order dismissed the various plaintiffs’ federal antitrust claim, RICO claim, and state-law claims, she found that the exchange-based plaintiffs had adequately pleaded the CEA cause of action for manipulation of Eurodollar futures. Although the Court reduced the class period based on statute of limitations grounds, she left alive the heart of the damages period, allowing the exchange-based plaintiffs’ to proceed with their CEA claims of LIBOR manipulation that affected Eurodollar futures contracts and options on such contracts entered into between from May 2008 through May 2010, with the period from May 2008 to early 2009 subject to further review. Judge Buchwald will also allow the exchange-based plaintiffs to re-plead to include more allegations about Barclays’ manipulation of LIBOR, which was previously publicly unavailable, and to clarify statute of limitations questions related to the period from May 2008 to early 2009. As noted, Judge Buchwald has tentatively allowed the exchange-based plaintiffs to continue with their CEA claims during the largest LIBOR suppression period between May 2008 and early 2009.
Judge Buchwald fully dismissed the other three actions, which include antitrust claims, among others, brought by the over-the-counter investors, the corporate bond investors, and Charles Schwab. This decision, if it stands, may preclude most other actions of any type of purchaser, as the antitrust laws appear to be an appropriate legal tool to address the LIBOR manipulations. However, the antitrust dismissal is likely to be appealed given Judge Buchwald’s finding that plaintiffs had suffered no antitrust injury because the setting of LIBOR was not a competitive process involving a good or product in which defendants compete.