Mayor and City Council of Baltimore, Maryland v. Citigroup, Inc.
709 F.3d 129
2d Cir.2013Background
- ARS market collapsed in Feb 2008; two putative classes (investors and issuers) sue major banks for a conspiracy to stop supporting ARS auctions.
- Plaintiffs allege a concerted boycott/refusal to deal in violation of Section 1 of the Sherman Act.
- District court dismissed as impliedly precluded by securities laws under Billing; plaintiffs appeal.
- ARS mechanism: auctions determine rates; failures lead to illiquidity and market shutdown in Feb 2008.
- Allegations center on defendants’ withdrawal from ARS market and alleged plus factors; court evaluates plausibility under Twombly/plus-factor framework.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Plaintiffs plausibly allege a Sherman Act conspiracy | Plaintiffs argue parallel conduct with plus factors shows agreement | Defendants contend no plausible conspiracy and, preclusion may apply | No plausible conspiracy; complaint fails to state a claim |
| Whether securities-law preclusion applies to bar the Sherman Act claim | Plaintiffs argue securities laws do not immunize the conduct | Defendants rely on Billing to preclude antitrust claim | No need to decide implied preclusion; affirmed on failure to state a claim |
| Is there sufficient evidence of parallel conduct with plus factors | Parallel exits from ARS market indicate conspiracy | Exits align with rational business decision in collapsing market | Parallel conduct alone insufficient; no plus factors establishing conspiracy |
| Do the alleged communications amount to interfirm communications showing conspiracy | Two communications allegedly show coordination | Most communications are internal; interfirm communications insufficient | Insufficient interfirm communications to imply agreement |
Key Cases Cited
- Twombly v. Bell Atl. Corp., 550 U.S. 544 (U.S. 2007) (parallel conduct alone insufficient under §1; plausibility standard for pleading)
- Starr v. Sony BMG Music Entm’t, 592 F.3d 314 (2d Cir. 2010) (plus factors required to infer conspiracy; high-level communications considered)
- Apex Oil Co. v. DiMauro, 822 F.2d 246 (2d Cir. 1987) (plus factors may point to conspiracy or independent interdependence)
- In re Insurance Brokerage Antitrust Litig., 618 F.3d 300 (3d Cir. 2010) (parallel conduct with plus factors must indicate illegal conduct beyond mere parallelism)
- Billing v. Credit Suisse Securities (USA) LLC, 551 U.S. 264 (U.S. 2007) (implied preemption/ Billing factors for securities-law preclusion)