Hinds County, Miss. v. Wachovia Bank, NA
790 F. Supp. 2d 125
S.D.N.Y.2011Background
- This multidistrict litigation (MDL No. 1950) involves alleged antitrust violations in the municipal derivatives market, with BoA as a core defendant and numerous other defendants remaining in the case.
- In December 2010, twenty Settling States entered into the State Agreement with BoA to resolve claims against BoA for municipal derivatives conduct, creating a $62.5 million Settlement Fund for eligible counterparties.
- Eligible Counterparties may opt into the State Agreement and release BoA from liability for bid-rigging and related misconduct, in exchange for potential payment from the Settlement Fund.
- Class Plaintiffs object that the State Agreement was negotiated without their participation and that its opt-in mechanism could extinguish class claims in MDL 1950.
- In March 2011, the court issued an order denying most relief requested by Class Plaintiffs, but held that BoA and related parties may not disseminate any Notice Packets concerning the State Agreement without court-approved notice and a declaration that coercion was not involved.
- The March 1 Order directed the parties to propose neutral notice language to ensure accurate information to putative MDL 1950 class members.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Court's authority to regulate settlement under All Writs Act | Class Plaintiffs rely on Baldwin-United to enjoin interference by Settling States. | BoA and Settling States argue the All Writs Act does not authorize such injunction here. | All Writs Act injunction not warranted; proximity to final resolution is lacking. |
| Rule 23 pre-certification notice control | Class Plaintiffs seek to enjoin or tightly control opt-in communications under Rule 23. | Pre-certification, court approval of settlements is not required and communications may be unrestricted. | Court may regulate communications pre-certification to ensure neutral, accurate notice; not grant blanket enjoinment. |
| Sovereign immunity and injunctive relief against Settling States | Eleventh Amendment immunity bars judicial intervention affecting Settling States. | Relief targets only the procedural aspects and does not impermissibly interfere with sovereign functions. | Eleventh Amendment does not bar injunctive relief over the State Agreement portions affecting class notice and participation. |
| Joinder of Settling States under Rule 19 | Joinder of Settling States/HGAs is required to protect BoA and ensure complete relief. | Joinder unnecessary since opt-in releases prevent multiple liability and protect BoA. | Joinder not warranted; opt-in releases preclude multiple liability or inconsistent obligations. |
Key Cases Cited
- Baldwin-United Corp. v. Baldwin-United, 770 F.2d 328 (2d Cir. 1985) (All Writs Act injunctions require proximity to final resolution to affect the merits)
- SR Int'l Bus. Ins. Co. v. World Trade Ctr. Props., LLC, 445 F. Supp. 2d 356 (S.D.N.Y. 2006) (proximity to final resolution governs ancillary jurisdiction)
- Retirement Sys. of Ala. v. J.P. Morgan Chase & Co., 386 F.3d 419 (2d Cir. 2004) (considerations for class action settlements and finality)
- Gulf Oil Co. v. Bernard, 452 U.S. 89 (1981) (court may control communications to safeguard class members' rights)
- PaineWebber Ltd. P'ships Litig., 147 F.3d 132 (2d Cir. 1998) (pre-certification settlements with individual members allowed; Rule 23(e) not triggered pre-cert)
- In re Currency Conversion Fee Antitrust Litig., 224 F.R.D. 555 (S.D.N.Y. 2004) (court may regulate communications with putative class members to prevent abuse)
- In re General Motors Corp. Engine Interchange Litig., 594 F.2d 1106 (7th Cir. 1979) (remark on limits of state participation in private settlements)
- Kleiner v. First Nat'l Bank of Atlanta, 751 F.2d 1193 (11th Cir. 1985) (unbiased notice and informed consent in class actions)