In re Libor-Based Financial Instruments Antitrust Litigation
2013 U.S. Dist. LEXIS 120674
| S.D.N.Y. | 2013Background
- This multidistrict LIBOR case began with partial dismissal of antitrust and RICO claims and dismissal of some commodities claims based on contract timing; other commodities claims surviving only for contracts in certain periods were severed from state-law claims.
- Multiple rounds of motions followed: some plaintiffs sought interlocutory appeal on LIBOR as commodity underlying Eurodollar futures; some defendants sought reconsideration of the commodity manipulation denial; others sought to amend complaints to address antitrust and commodities manipulation issues.
- The court denied interlocutory appeal and denied amendments related to antitrust and trader-based manipulation; it granted leave to amend unjust enrichment and the implied covenant claim.
- The court clarified the background that Eurodollar futures settle on LIBOR, but LIBOR itself is not a commodity; manipulation could occur through LIBOR or the broader three-month U.S. dollar time-deposit market.
- The court held that trader-based manipulation did not show actual damages for standing under the CEA, but allowed a contract-based good-faith covenant claim and unjust enrichment claim to proceed.
- A stay on other related actions was continued pending further order of the Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether LIBOR is the commodity underlying Eurodollar futures under the CEA | Plaintiffs contend LIBOR is the underlying commodity underlying Eurodollar futures | Defendants argue LIBOR is a price index, not the underlying commodity | LIBOR is not the underlying commodity; it is an index used in pricing the contract |
| Whether plaintiffs adequately plead scienter for trader-based manipulation against movants | Plaintiffs allege motive and opportunity through broker-dealer trading in Eurodollar futures | Defendants contend allegations are insufficient to show specific intent or actions indicating conscious misbehavior | Motion denied for now; issues require further briefing |
| Whether exchange-based plaintiffs have standing to amend for trader-based manipulation (actual damages) | PSAC alleges damages from trader-based LIBOR manipulation | Damages not shown; manipulation episodic and not shown to have injured plaintiffs’ specific contracts | Denied; plaintiffs lack adequate proof of actual damages |
| Whether antitrust claims can be amended given standing and injury requirements | OTC and other plaintiffs seek to cure antitrust injury defects | Amendment futile; antitrust injury not plausibly alleged | Denied; amendments deemed futile in current circumstances |
| Whether state-law unjust enrichment and implied covenant claims may be added | OTC seeks unjust enrichment and good-faith implied covenant claims | Contracts govern the matters; unjust enrichment may be barred | Unjust enrichment claim allowed; implied covenant claim allowed (breach of good faith) |
Key Cases Cited
- Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328 (U.S. 1990) (antitrust injury requires a competition-reducing harm to the plaintiff)
- Kalnit v. Eichler, 264 F.3d 131 (2d Cir. 2001) (motive allegations based on general corporate ambitions may be insufficient)
- Loeb Indus., Inc. v. Sumitomo Corp., 306 F.3d 469 (7th Cir. 2002) (prices of futures track underlying commodities; analogy to LIBOR-based futures)
- Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (U.S. 2005) (loss causation principles; not all misrepresentations give rise to damages)
- In re Eaton Vance Mut. Funds Fee Litig., 403 F. Supp. 2d 310 (S.D.N.Y. 2005) (pricing-related claims and court’s handling of complex damages)
- San Leandro Emergency Med. Grp. Profit Sharing Plan v. Philip Morris Cos., Inc., 75 F.3d 801 (2d Cir. 1996) (motive/injury standards for antitrust standing)