Southeastern Pennsylvania Transp. Auth. v. Bank of New York Mellon Corp.
921 F. Supp. 2d 56
S.D.N.Y.2013Background
- SEPTA sues BNY Mellon for FX services provided under the Master Trust Agreement (MTA) governing SEPTA assets; class includes public/private pension funds,” through May 2, 2011.
- FX services were delivered via direct and indirect trades; this case concerns indirect trades executed under standing instructions.
- Key contracts include the MTA, an FX Procedure Form, FX Policies and Procedures, Daily Schedule Web Page, and Standing Instructions Web Page; terms vary across versions.
- SAC alleges breach of express contract, breach of implied covenant of good faith and fair dealing, breach of fiduciary duty, and unjust enrichment based on alleged best-execution pricing.
- Motions to dismiss focus on whether the Standing Instructions Web Page created a contractual best-execution obligation and whether a fiduciary duty extended to pricing, disclosures, or ancillary services.
- The court ultimately dismisses some counts but allows discovery on the best-execution issue and preserves others for trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Standing Instructions page was part of contract. | SEPTA alleges Standing Instructions were incorporated. | BNY Mellon argues no incorporation of best execution terms. | Fact question; standing instructions may be incorporated. |
| Whether best-execution pricing was an express contract term. | SEPTA contends best execution was an express term. | BNY Mellon contends no such express term; only DSR/3% bound. | Not dismissal; merits to be resolved after discovery. |
| Whether implied covenant of good faith applies given purported best-execution gap. | SEPTA relies on implied covenant to secure best outcomes. | Gist of the contract governs; implied term not to create new benefits. | Not a standalone benefit; claims dependent on contract scope. |
| Whether standing-instruction FX trades created a fiduciary duty extending to pricing. | SAC alleges fiduciary duty due to custodial context and disclosures. | Standing instructions were ancillary services; no fiduciary duty to price. | Standing instructions were ancillary; no fiduciary pricing obligation found at this stage. |
| Whether unjust enrichment survives given express contract. | SEPTA pleads unjust enrichment as alternative relief. | Existence of contract bars unjust enrichment as to BNY Mellon and Mellon Bank. | Unjust enrichment claim dismissed against BNY Mellon and Mellon Bank; remains for contract claims. |
Key Cases Cited
- Bohler-Uddeholm Am., Inc. v. Ellwood Group, Inc., 247 F.3d 79 (3d Cir. 2001) (fiduciary duties; contract principles; duty of care and loyalty)
- Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425 (Pa. 2004) (claims pleading; contract interpretation; ambiguity)
- In re Mushroom Transp. Co., Inc., 382 F.3d 325 (3d Cir. 2004) (discovery tolling; unjust enrichment; contract interplay)
- Abbruscato v. Empire Blue Cross and Blue Shield, 274 F.3d 90 (2d Cir. 2001) (fiduciary duties; disclosures in contract context)
- Geman v. SEC, 334 F.3d 1183 (10th Cir. 2003) (best execution; duties when acting as principal)
- Petty v. Hospital Serv. Ass’n of Ne. Pa., 611 Pa.119 (Pa. 2011) (fiduciary duties; contract interplay; disclosures)