Litovich v. Bank Of America Corporation
568 F.Supp.3d 398
S.D.N.Y.2021Background
- The suit challenged conduct in the secondary over-the-counter market for corporate bonds, focusing on odd-lot trades (generally <1,000 bonds or <$1M par) versus round-lot trades; plaintiffs alleged odd-lot spreads were materially wider.
- Defendants are ten major investment banks and affiliates that act as dealers and invested in or participated in electronic trading platforms (e.g., TradeWeb, MarketAxess, BondDesk).
- Plaintiffs alleged a long‑running group‑boycott conspiracy (since 2006) in which defendants refused to provide liquidity to or otherwise stifled electronic platforms that would increase pre‑trade transparency (and thereby narrow odd‑lot spreads), and that defendants used joint‑ventures to “catch and kill” rivals.
- Plaintiffs relied on statistical studies and transaction‑level analyses purporting to show larger odd‑lot spreads and presented several platform‑specific narratives (InterVest, TradeWeb/BondDesk, NYSE Bonds/ABS, Bonds.com, Trading Edge).
- Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(6) on four principal grounds: (1) implausible boycott conspiracy (no direct evidence; parallel conduct + plus factors insufficient), (2) impermissible group pleading/no defendant‑specific allegations, (3) statute of limitations/time‑bar, and (4) lack of antitrust standing.
- The Court granted the motion and dismissed the complaint with prejudice, finding the boycott theory not plausibly pleaded, plaintiffs failed to tie conduct to individual defendants, the claims were time‑barred, and antitrust standing was not established.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Plausibility of boycott conspiracy (Section 1) | Defendants engaged in parallel conduct (investments, refusals to support certain platforms, policing defectors) and plus factors (statistics, market concentration, communications) that make an agreement plausible. | Alleged actions are lawful, expected unilateral business decisions or joint‑venture actions; parallel conduct alone insufficient; no direct evidence of agreement. | Dismissed — plaintiffs pleaded parallel conduct but not the plus factors needed to infer an agreement; conduct was equally consistent with independent business rationales. |
| Defendant‑specific pleading (no group pleading) | Complaint alleges defendants collectively boycotted platforms and shared conduct; company ownership/board roles show involvement. | Complaint uses collective allegations and lacks particularized time/place/person allegations tying individual defendants to the boycott. | Dismissed — plaintiffs failed to connect any specific defendant plausibly to the alleged boycott. |
| Statute of limitations (4‑year) | Each sale of an odd‑lot at inflated price was a continuing violation; some enforcement acts occurred within four years; fraudulent concealment tolled limitations. | The continuing‑violation rule does not revive claims where the alleged overt acts are effects (higher prices) rather than the boycott itself; no adequate fraudulent concealment pleaded. | Dismissed — most alleged conduct predated the limitations period; plaintiffs did not plead timely overt acts or particularized fraudulent concealment; inquiry notice existed. |
| Antitrust standing | Plaintiffs were injured market‑wide by inflated odd‑lot spreads and need not show they were blocked from platforms. | Plaintiffs never alleged they attempted and were prevented from using platforms; asserted injury is conclusory and tied to abandoned price‑fixing theory. | Dismissed — complaint fails to plead antitrust injury traceable to the alleged group boycott and to show plaintiffs are efficient enforcers. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard; courts need not accept legal conclusions)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (parallel conduct requires plus factors to plead a §1 conspiracy)
- Klehr v. A.O. Smith Corp., 521 U.S. 179 (1997) (continuing violation rule in antitrust; each overt act can start limitations period when it is part of the violation)
- Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321 (1971) (limitations and continuing conspiracy principles)
- Mayor & City Council of Baltimore v. Citigroup, 709 F.3d 129 (2d Cir. 2013) (pleading direct vs. circumstantial evidence of agreement)
- In re Interest Rate Swaps Antitrust Litig., 261 F. Supp. 3d 430 (S.D.N.Y. 2017) (analyzing parallel conduct, joint‑venture conduct, and plus factors in a dealer‑platform boycott theory)
- Apex Oil Co. v. DiMaruo, 822 F.2d 246 (2d Cir. 1987) (definition and use of plus factors)
- Starr v. Sony BMG Music Ent., 592 F.3d 314 (2d Cir. 2010) (conclusory agreement allegations insufficient)
- United States v. Apple, 952 F. Supp. 2d 638 (S.D.N.Y. 2013) (interfirm communications as plus factor context)
- US Airways, Inc. v. Sabre Holdings Corp., 938 F.3d 43 (2d Cir. 2019) (contracts as manifestations of prior overt acts; limitations analysis)