In re Treasury Sec. Auction Antitrust Litig.

595 F.Supp.3d 22

IN RE TREASURY SECURITIES AUCTION ANTITRUST LITIGATION

15 MD 2673 (PGG)

United States District Court, S.D. New York.

Signed March 31, 2022

MEMORANDUM OPINION & ORDER

PAUL G. GARDEPHE, United States District Judge:

In these consolidated actions, Plaintiffs allege that ten of the world's largest banks and their affiliates, along with other companies, engaged in two interrelated conspiracies to suppress competition in the multi-trillion-dollar market for U.S. Treasury securities.

On March 31, 2021, this Court granted Defendants’ motions to dismiss the Consolidated Class Action Complaint (the "Complaint") (Dkt. No. 204) pursuant to Fed. R. Civ. P. 12(b)(6), with leave to amend (the "March 31, 2021 Decision"). (Dkt. No. 373)¹

Plaintiffs filed an Amended Consolidated Class Action Complaint (the "Amended Complaint") (Dkt. No. 380), and Defendants have again moved to dismiss, pursuant to Fed. R. Civ. P. 12(b)(6). (Dkt. Nos. 403, 407)

For the reasons stated below, Defendants’ motions to dismiss will be granted.

BACKGROUND

I. PARTIES

Plaintiffs are eighteen pension, retirement, and benefit funds, banks, and companies that trade in the market for U.S. Treasury securities. (Am. Cmplt. (Dkt. No. 380) ¶¶ 34-68) The Amended Complaint names twenty-one Defendants, and assigns each to one of two categories: "Dealer Defendants" or "Platform Defendants."

The "Dealer Defendants" include:

(1) Bank of America Corporation, a Delaware corporation with its principal place of business in Charlotte, North Carolina; its predecessor by merger Merrill Lynch Government Securities Inc., a primary dealer for Treasury securities with its principal place of business in New York, New York; Bank of America, N.A., a federally chartered national banking association with its principal place of business in Charlotte, North Carolina, and branch locations in New York, New York; and Merrill Lynch, Pierce, Fenner & Smith Incorporated, formerly known as Banc of America Securities LLC, a Delaware corporation with its principal place of business in New York, New York that was a primary dealer for Treasury securities (collectively "Bank of America") (id. ¶¶ 69-72);²

(2) Barclays Bank PLC, a corporation organized and existing under the laws of England and Wales, with its principal place of business in London, England, and branch locations in New York, New York, and which in 2008 acquired the core business unit of Lehman Brothers Inc., a primary dealer for Treasury securities; and Barclays Capital Inc., a primary dealer for Treasury securities that is a Connecticut corporation, with its principal place of business in New York, New York (collectively "Barclays") (id. ¶¶ 73-76);

(3) BNP Paribas Securities Corp. ("BNP"), a primary dealer for Treasury securities that is a Delaware corporation with its principal place of business in New York, New York (id. ¶¶ 77-79);

(4) Citigroup Global Markets Inc. ("Citi"), a primary dealer for Treasury securities that is a New York corporation with its principal place of business in New York, New York (id. ¶¶ 80-83);

(5) Credit Suisse Securities (USA) LLC, formerly known as Credit Suisse First Boston LLC, a Delaware corporation with its principal place of business in New York, New York that was a primary dealer for Treasury securities; and Credit Suisse International, a bank organized and existing under the laws of England and Wales, with its principal place of business in London, England (collectively "Credit Suisse") (id. ¶¶ 84-87);

(6) Goldman Sachs & Co. LLC, a primary dealer for Treasury securities that is a Delaware corporation with its principal place of business in New York, New York; and Goldman Sachs Execution & Clearing L.P., a New York corporation with its principal place of business in New York, New York (collectively "Goldman Sachs") (id. ¶¶ 88-91);

(7) JP Morgan Securities LLC, a primary dealer for Treasury securities that is a Delaware corporation with its principal place of business in New York, New York, which in 2008 acquired Bear Stearns & Co., Inc., a primary dealer for Treasury securities; JP Morgan Chase Bank, N.A., a federally chartered national banking association with its principal place of business in New York, New York; and JP Morgan Clearing Corp., a Delaware corporation with its principal place of business in New York, New York (collectively "JP Morgan") (id. ¶¶ 92-96);

(8) Morgan Stanley & Co. LLC ("Morgan Stanley"), a primary dealer for Treasury securities that is a Delaware corporation with its principal place of business in New York, New York (id. ¶¶ 97-100);

(9) RBS Securities Inc. ("RBS"), a primary dealer for Treasury securities that is a Delaware corporation with its principal place of business in Stamford, Connecticut (id. ¶¶ 101-03); and

(10) UBS Securities LLC ("UBS"), a primary dealer for Treasury securities that is a Delaware corporation with its principal place of business in New York, New York ³ (id. ¶¶ 104-06).

The "Platform Defendants" are:

(1) Tradeweb Markets, a Delaware limited liability company with its principal place of business in New York, New York, that is the principal operating subsidiary of Tradeweb Markets Inc., a Delaware corporation, and that operates an electronic trading platform for the secondary Dealer to Customer Treasury segment called "Tradeweb," which became a publicly traded company in April 2019;

(2) Tradeweb IDB, a Delaware holding corporation that is a wholly-owned subsidiary of Tradeweb Markets and is the parent company of Dealerweb Inc.; and

(3) Dealerweb Inc., a New York corporation with its principal place of business in New Jersey that is a wholly-owned subsidiary of Tradeweb IDB, and that "commenced operating the electronic trading platform Dealerweb in the secondary on-the-run Treasury market, in the [Dealer to Dealer] segment, in mid-2014."

(Id. ¶¶ 107-14)

Plaintiffs allege that, from at least 2007 through 2015, the Dealer Defendants – which are also referred to as the "Auction Defendants" – engaged in a bid-rigging conspiracy by sharing confidential client trading information and coordinating how they would bid at Treasuries auctions in order to obtain their "desired allocation [of Treasury securities] at the optimal price." (See id. ¶¶ 216, 560) Plaintiffs refer to this alleged bid-rigging conspiracy as the "Auction Conspiracy." (Id. at 59)⁴

Plaintiffs further allege that, from at least 2013 to the present, a subset of the Auction Defendants – Goldman Sachs, JP Morgan, Barclays, Citi, Bank of America, Morgan Stanley, and Credit Suisse (collectively the "Boycott Defendants") – "exploit[ed] the market power they have as the dominant sellers of Treasuries in the secondary market .... by boycotting any new or existing electronic trading venue that plans to launch an anonymous, ‘all-to-all’ platform ... on which all market participants could execute trades [in Treasury securities] ...." (Id. ¶¶ 20, 337, 562) According to Plaintiffs, the Boycott Defendants colluded with the Platform Defendants to prevent the emergence of such all-to-all platforms. (Id. ¶ 518) Plaintiffs refer to this alleged conspiracy as the "Boycott Conspiracy." (Id. at 151)

II. PROCEDURAL HISTORY

The first complaint in these actions – State-Boston Retirement System v. Bank of Nova Scotia – was filed on July 23, 2015. (15 Civ. 5794, Dkt. No. 1) The panel on multidistrict litigation certified this case as an MDL and transferred related cases to this Court on December 16, 2015. (Dkt. No. 1)

On August 23, 2017, this Court issued an order appointing a triumvirate of Quinn Emanuel Urquhart & Sullivan, LLP, Cohen Milstein Sellers & Toll PLLC, and Labaton Sucharow LLP as interim co-lead counsel. (Aug. 23, 2017 Order (Dkt. No. 186) at 7)

The Complaint was filed on November 16, 2017. (Dkt. No. 204) On March 31, 2021, this Court granted Defendants’ motions to dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state a claim, with leave to amend. (March 31, 2021 Decision (Dkt. No. 373) at 1, 52-53)

On May 14, 2021, Plaintiffs filed the Amended Complaint. (Dkt. No. 380) The Amended Complaint – like the Complaint – pleads two causes of action against the Auction Defendants, the Boycott Defendants, and the Platform Defendants: (1) conspiracy to restrain trade, pursuant to Section 1 of the Sherman Act, 15 U.S.C. § 1 ; and (2) unjust enrichment. (Id. ¶¶ 581-600; Cmplt. (Dkt. No. 204) ¶¶ 489-508)

On August 4, 2021, the Auction Defendants and the Boycott Defendants jointly moved to dismiss the Amended Complaint under Fed. R. Civ. P. 12(b)(6). (Notice of Motion (Dkt. No. 403); Auction Def. Br. (Dkt No. 404)) The Platform Defendants separately moved to dismiss the Amended Complaint under Fed. R. Civ. P. 12(b)(6). (Notice of Motion (Dkt. No. 407); Platform Def. Br. (Dkt. No. 408)) Plaintiffs responded in an omnibus brief. (Pltf. Opp. (Dkt. No. 411)) Defendants filed reply briefs. (Auction Def. Reply Br. (Dkt. No. 406); Platform Def. Reply Br. (Dkt. No. 409)) The parties later filed supplemental letters regarding a recently issued decision that the Auction and Boycott Defendants argue supports their motion to dismiss. (Dkt. Nos. 423-24)

III. LEGAL STANDARDS

A. Rule 12(b)(6) Standard

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "In considering a motion to dismiss ... the court is to accept as true all facts alleged in the complaint," Kassner v. 2nd Ave. Delicatessen Inc., 496 F.3d 229, 237 (2d Cir. 2007) (citing Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 87 (2d Cir. 2002) ), and must "draw all reasonable inferences in favor of the plaintiff." Id. (citing Fernandez v. Chertoff, 471 F.3d 45, 51 (2d Cir. 2006) ).

Under this standard, a plaintiff is required only to set forth a "short and...