In re Foreign Exch. Benchmark Rates Antitrust Litig.

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In re FOREIGN EXCHANGE BENCHMARK RATES ANTITRUST LITIGATION

No. 13 Civ. 7789 (LGS)

United States District Court, S.D. New York

February 1, 2022

OPINION AND ORDER

LORNA G. SCHOFIELD UNITED STATES DISTRICT JUDGE

This case concerns an alleged conspiracy, or conspiracies, among banks to fix prices in the foreign exchange (“FX”) market. On September 3, 2019, a Rule 23(c)(4) class was certified on two issues: (1) the existence of a conspiracy to widen spreads in the FX spot market and (2) participation in the conspiracy by Defendants Credit Suisse Group AG, Credit Suisse AG and Credit Suisse Securities (USA) LLC (collectively, the “CS Defendants” or “Credit Suisse”). The CS Defendants move for summary judgment on the basis that there is no single conspiracy or that the CS Defendants did not participate in such a conspiracy. Plaintiffs cross-move for summary judgment on the basis that there is a conspiracy and the CS Defendants participated in it. For the reasons set forth below, both motions are denied.

In this action, Plaintiffs sued sixteen defendant banks, which are among the world's largest banks engaged in trading in the FX market. Fifteen of the sixteen banks have settled with Plaintiffs, paying over $2.31 billion, one of the largest antitrust settlements in the Sherman Antitrust Act's 125-year history. The fifteen banks settled after filing motions to dismiss. In the case of each bank, the final order approving the settlement included a term barring claims for contribution or indemnification against the settling banks for any amounts awarded in this or any other action by way of settlement, judgment or otherwise.

With only Credit Suisse remaining, Plaintiffs moved to certify two Rule 23(b)(3) classes. Plaintiffs' motion was denied -- one class because of the lack of predominance, and the other class because of the absence of adequacy. In re Foreign Exch. Benchmark Rates Antitrust Litig., 407 F.Supp.3d 422, 430, 438 (S.D.N.Y. Sept. 3, 2019). Instead, a Rule 23(c)(4) class was certified. Id. at 436. The two issues certified, and the only issues that remain on a class basis, are: (1) the existence of a conspiracy to widen spreads in the FX spot market and (2) Credit Suisse's participation in the conspiracy. Id. The decision certifying the issues noted that “if the CS Defendants are found not to have joined any conspiracy, then all of the claims against it are resolved.” Id. at 437.

The two certified issues have great financial significance because an adverse finding on both of these issues would mean that Credit Suisse is potentially liable for all of the wrongful conduct of the conspiracy, and thus Credit Suisse could be liable for all of the damages that have not already been paid through the settlements with the other banks. See New York v. Hendrickson Bros., Inc., 840 F.2d 1065, 1086 (2d Cir. 1988) (“An amount recovered by a plaintiff from a coconspirator in settlement of the former's antitrust claims is not deductible from the amount of damages determined by the jury, though it may be deductible from the damages award after it has been trebled.”); In re Foreign Exch. Benchmark Rates Antitrust Litig., No. 13 Civ. 7789, 2016 WL 5108131, at *7 (S.D.N.Y. Sept. 20, 2016) (collecting cases discussing joint and several liability in the antitrust context).

Credit Suisse moves for summary judgment on the basis that there was no “single conspiracy” to widen spreads in the FX spot market. Tellingly, it does not directly argue that no conspiracy existed.

I. BACKGROUND

The following facts are drawn from the parties' submissions including their Local Civil Rule 56.1 statements, are undisputed and provide an overview of the context of the parties' dispute.

Plaintiffs are over-the-counter (“OTC”) purchasers of foreign exchange (“FX”) spot, forward and/or swap trades who transacted directly with Defendants. Over-the-counter transactions involve counterparties who trade directly with each other without an intermediate exchange. CS Defendants participate in the FX market as dealers, market-makers or liquidity providers.

The FX market^[1] is the largest and most actively traded financial market in the world. Between December 1, 2007, and December 31, 2013 (the “Class Period”), as much as $5.3 trillion per day was traded in the FX market worldwide. Trading occurs twenty-four hours per day and over 252 trading days per year. During the Class Period, FX trading by volume was primarily conducted OTC. Currencies are bought or sold in pairs.

Trading in the FX market occurs in two tiers: (1) the interdealer or interbank tier and (2) the dealer-to-customer tier. This case concerns the dealer-to-customer tier. In that tier Defendants, large banks, acted as market makers or dealers. Market makers quote prices to customers at which they are willing to buy or sell a certain volume of a currency pair. For example, a customer contacts a salesperson at a market-making bank to request a price quote in a designated volume of a specific currency pair. The salesperson relays the request to an FX trader, who provides a two-way quote that includes the prices at which the trader is willing to buy the currency and sell the currency. The difference between the buy or ask price and the sell or offer price is the bid-ask spread.

In late 2006 and early 2007, FX traders who worked for different Defendants began using Bloomberg and Reuters chat rooms to communicate with each other. FX traders continued using chat rooms to communicate with traders at other banks through 2012 and 2013. FX traders discussed bid-ask spreads for various currency pairs in the chat rooms. Chat rooms could exist for years, and some traders communicated with other traders daily in the course of their employment. At least one trader, from Barclays, participated in five chat rooms, which provided him access to traders from ten other banks. Because individual traders participated in multiple chat rooms, eight chat rooms connected employees of all sixteen Defendant banks. At least some FX traders sometimes asked about the same spread simultaneously in different chat rooms. Some banks, including Credit Suisse, encouraged their employees to use interbank chat rooms and discuss bid-ask spreads in those chat rooms.

II. STANDARD

A. Summary Judgment

Summary judgment is proper where the record establishes that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A genuine dispute exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); accord Electra v. 59 Murray Enters., 987 F.3d 233, 248 (2d Cir. 2021). “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Liberty Lobby, 477 U.S. at 248; accord Saleem v. Corp. Transp. Grp., 854 F.3d 131, 148 (2d Cir. 2017).

Courts must construe the evidence and draw all reasonable inferences in the non-moving party's favor. Electra, 987 F.3d at 248. When evaluating cross-motions for summary judgment, the Court reviews each party's motion on its own merits and draws all reasonable inferences against the party whose motion is under consideration. Cayuga Nation v. Tanner, No. 20 Civ. 1310, 2021 WL 3160077, at *8 (2d Cir. July 27, 2021). When the movant properly supports its motion with evidentiary materials, the opposing party must establish a genuine issue of fact by citing to particular parts of materials in the record. Fed.R.Civ.P. 56(c)(1)(A).

B. Sherman Act

Section 1 of the Sherman Act provides, “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several [s]tates, or with foreign nations, is declared to be illegal.” 15 U.S.C. § 1. An antitrust plaintiff must show: (1) “a combination or some form of concerted action between at least two legally distinct economic entities” and (2) “that the agreement constitute[s] an unreasonable restraint of trade either per se or under the rule of reason.” Capital Imaging Assocs., P.C. v. Mohawk Valley Med. Assocs., Inc., 996 F.2d 537, 542 (2d Cir. 1993). “Price-fixing agreements . . . fall into the category of arrangements that are per se unlawful.” In re Vitamin C Antitrust Litig., 8 F.4th 136, 147 (2d Cir. 2021) (quoting Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006)) (explaining that “certain types of anticompetitive conduct are so plainly anticompetitive that no elaborate study of the industry is needed to establish their illegality” under the Sherman Act). “Independent action is not proscribed.” Meredith Corp. v. Sesac, LLC, 1 F.Supp.3d 180, 201 (S.D.N.Y. 2014) (quoting Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 761 (1984)).

At the summary judgment stage, “to raise a genuine issue of material fact as to an antitrust conspiracy, the plaintiff must present direct or circumstantial evidence that ‘tends to exclude the possibility that the alleged conspirators acted independently.'” Anderson News, L.L.C. v. Am. Media, Inc., 899 F.3d 87, 98 (2d Cir. 2018) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986)). A plaintiff need not “disprove all nonconspiratorial explanations for the defendants' conduct; rather the evidence need be sufficient only to allow a reasonable fact finder to infer that the conspiratorial explanation is more likely than not.” Id. (internal quotation marks omitted).

“Absent direct evidence of conspiracy, such as an admission by one of the defendants, antitrust plaintiffs must rely on circumstantial evidence to support their conspiracy claims.” Anderson News, L.L.C., 899 F.3d at 103. “One...