175 F. Supp. 3d 44
S.D.N.Y.2016Background
- Plaintiffs (institutional investors) allege a multi‑year conspiracy by 14 large banks and inter‑dealer broker ICAP to manipulate the U.S. Dollar ISDAfix benchmark, used to value cash‑settled swaptions and other interest‑rate derivatives, from Jan. 1, 2006 to June 30, 2013.
- ISDAfix was compiled daily by ICAP from dealer submissions and reference trades; Plaintiffs allege banks rubber‑stamped ICAP’s reference, ‘‘banged the close’’ by coordinating trades around 11:00 a.m. to move the reference, and sometimes ICAP set predetermined rates.
- Plaintiffs claim the manipulation produced supra‑competitive profits for the banks and caused purchasers tied to ISDAfix to pay more (or receive less) on swaptions and swaps; they assert a Sherman Act §1 claim plus state‑law claims (breach of contract, implied covenant, unjust enrichment, tortious interference).
- Defendants moved to dismiss under Rules 12(b)(1) and 12(b)(6), arguing lack of Article III standing, failure to plead a restraint of trade or antitrust standing (relying on LIBOR I), various state‑law defects, and statute‑of‑limitations defenses.
- The court (Furman, J.) held Plaintiffs have Article III standing, plausibly pleaded a horizontal conspiracy (parallel conduct plus plus‑factors), have antitrust standing, and that antitrust injury can arise from collusion to manipulate a benchmark that is a price component; antitrust claim survives. Several state claims were dismissed in whole or against specific defendants; some state claims survive. Statute‑of‑limitations defenses rejected at this stage due to alleged fraudulent concealment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing | Plaintiffs transacted in ISDAfix‑tied instruments and were economically harmed by false rates | No concrete injury shown | Standing satisfied; lost‑money injury plausibly alleged |
| Section 1 conspiracy plausibility | Alleged coordinated ‘‘banging the close,’’ rubber‑stamping, info‑sharing, motive, and government investigations constitute parallel conduct + plus factors | Allegations show mere cooperation or independent conduct; manipulation economically implausible without perfect alignment | Claim plausibly states a horizontal conspiracy; dismissal denied |
| Antitrust standing / antitrust injury | Manipulating a benchmark component that is incorporated into pricing causes quintessential antitrust injury to purchasers | Following LIBOR I, cooperative benchmarking is non‑competitive and misrepresentation, not antitrust injury | Plaintiffs have antitrust standing; benchmark manipulation that fixes a price component can be anticompetitive |
| State‑law contract/other claims & timeliness | Breach and quasi‑contract claims arise from payments tied to ISDAfix; limitations tolled by fraudulent concealment | Claims inadequately pleaded as to some defendants; time‑barred | Breach claims survive except against Nomura (no transactions pleaded); implied‑covenant and tortious‑interference dismissed; unjust enrichment survives for now; statute‑of‑limitations tolled plausibly |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for conspiracy pleading)
- United States v. Socony‑Vacuum Oil Co., 310 U.S. 150 (mechanism of price‑fixing immaterial to antitrust liability)
- Am. Soc’y of Mech. Eng’rs v. Hydrolevel Corp., 456 U.S. 556 (cooperative organizations present opportunities for anticompetitive activity)
- Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328 (antitrust standing doctrine explained)
- Brunswick Corp. v. Pueblo Bowl‑O‑Mat, Inc., 429 U.S. 477 (antitrust injury must correspond to the rationale for antitrust laws)
- In re LIBOR‑Based Fin. Instr. Antitrust Litig., 935 F. Supp. 2d 666 (contrasting district court view that cooperative benchmark setting may defeat antitrust injury)
- In re Foreign Ex. Benchmark Rates Antitrust Litig., 74 F. Supp. 3d 581 (holding benchmark manipulation can cause antitrust injury)
- In re DDAVP Direct Purchaser Antitrust Litig., 585 F.3d 677 (purchasers forced to pay supra‑competitive prices suffer quintessential antitrust injury)
- Knevelbaard Dairies v. Kraft Foods, 232 F.3d 979 (benchmark manipulation causing downstream price effects actionable under antitrust law)
- Ice Cream Liquidation, Inc. v. Land O’Lakes, 253 F. Supp. 2d 262 (antitrust liability where price‑component manipulation affected related product prices)