Private antitrust litigation related to LIBOR isn’t over–not by a long shot. But on Friday 16 banks accused of manipulating the benchmark global interest rate dispelled any notion that they’d be easy targets for the plaintiffs bar.
In a 161-page decision issued Friday afternoon, U.S. District Judge Naomi Reice Buchwald significantly gutted claims by four categories of plaintiffs in the consolidated LIBOR litigation. Most importantly, Buchwald dismissed core antitrust claims from three major proposed class actions–brought by bondholders, purchasers of interest rate swaps, and commodities futures traders–and tossed individual antitrust claims filed by various Charles Schwab & Co. units. Buchwald also threw out racketeering allegations and ruled that some of the plaintiffs’ commodities manipulation claims were time-barred.
Fatally for the banks, Buchwald ruled that the process for submitting LIBOR quotes to the the British Bankers Association isn’t competitive by nature, "and plaintiffs have not alleged that defendants’ conduct had an anticompetitive effect in any market in which defendants compete."
The judge noted that regulators have already scored major settlements stemming from the same antitrust allegations, and that it might seem "unexpected" for her to dismiss parallel claims. (Barclays, Royal Bank of Scotland, and UBS AG have agreed to pay a combined $2.6 billion to U.S. and U.K. regulators.) But Buchwald wrote that the bar is higher for some private claims, adding: "private actions which seek damages and attorney’s fees must be examined closely to ensure that the plaintiffs who are suing are the ones properly entitled to recover and that the suit is, in fact, serving the public purposes of the laws being invoked."
The decision counts as a major win for the phalanx of lawyers defending the banks. The lineup includes Davis Polk & Wardwell (for Bank of America Corp.); Boies, Schiller & Flexner and Sullivan & Cromwell (for Barclays); Sullivan & Cromwell (for Bank of Tokyo-Mitsubishi UFJ); Covington & Burling and Cleary, Gottlieb, Steen & Hamilton (for Citigroup); Milbank, Tweed, Hadley & McCloy (for Rabobank Group and Coöperatieve Centrale Raiffeisen-Boerenleenbank); Cahill Gordon & Reindel and Shearman & Sterling (for Credit Suisse Group); Paul, Weiss, Rifkind, Wharton & Garrison (for Deutsche Bank AG); Locke Lord (for HSBC Bank); Simpson Thacher & Bartlett (for JPMorgan Chase & Co.); Hogan Lovells (for Lloyds Banking Group and HBOS plc); Sidley Austin (for Norinchukin Bank); Katten Muchin Rosenman (for Royal Bank of Canada); Clifford Chance (for RBS); and Gibson, Dunn & Crutcher (for UBS AG).
Michael Hausfeld of Hausfeld, who represents the City of Baltimore in one of the leading LIBOR suits, told The Wall Street Journal Friday that he was still mulling whether to file an amended complaint or appeal Buchwald’s decision.