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From Antitrust Law Daily, January 21, 2015

Dismissal of antitrust suit in LIBOR MDL was appealable order

By Jeffrey May, J.D.

Investors had a right to appeal dismissal of their antitrust suit against banks for conspiring to manipulate the London InterBank Offered Rate (LIBOR), even though other consolidated multidistrict cases against the banks remained pending before the district court, the U.S. Supreme Court ruled today. The U.S. Court of Appeals in New York City erred when it dismissed the antitrust appeal for lack of jurisdiction. The appeal of the antitrust action did not need to wait until completion of the multidistrict proceedings in all of the consolidated LIBOR cases, a unanimous Supreme Court explained (Gelboim v. Bank of America Corp., January 21, 2015, Ginsburg, R.).

The petitioners are purchasers of bonds with LIBOR-linked interest rates. On behalf of similarly-situated bond holders, they brought a class action complaint raising a single claim against the financial institutions for violating the antitrust laws. The case was consolidated with dozens of related cases for pretrial proceedings by the Judicial Panel on Multidistrict Litigation.

The LIBOR is a reference point in determining interest rates for financial instruments. Generally, the consolidated cases involved allegations that the defending banks understated their borrowing costs, thereby depressing LIBOR, and enabling the banks to pay lower interest rates on financial instruments sold to investors. Some of the related actions asserted a federal antitrust claim in addition to other federal and state claims.

The district court dismissed the plaintiffs’ antitrust claims on the ground that no plaintiff could assert a cognizable antitrust injury. The bond purchasers appealed, but the Second Circuit dismissed their appeal because the “orde[r] appealed from did not dispose of all claims in the consolidated action.”

The bond purchasers petitioned for Supreme Court review. The Court, in an opinion written by Justice Ruth Bader Ginsburg, agreed with the petitioners’ contention that the order dismissing their case in its entirety removed them from the consolidated proceeding, thereby triggering their right to appeal under 28 U.S. C. §1291. Rejected was the banks’ argument that, because consolidated cases proceed as one unit for the duration of the consolidation, there is no appeal of right from an order dismissing fewer than all consolidated claims.

“Cases consolidated for MDL pretrial proceedings ordinarily retain their separate identities, so an order disposing of one of the discrete cases in its entirety should qualify under §1291 as an appealable final decision,” according to the Court. The district court's dismissal of the bond purchasers' complaint for lack of antitrust injury, without leave to amend, “had the hallmarks of a final decision,” it was noted. In a footnote, the Court said that the dismissal order was “in no sense ‘collateral.’” The fact that the bond purchasers' action was consolidated with other cases did not “meld” that action and others in the multidistrict litigation into a single unit.

The Court also offered some practical reasons for its decision. To accept the banks' position that, in consolidated proceedings, no appeal of right accrues until the consolidation ends would leave plaintiffs in “a quandary about the proper timing of their appeals.” The Court questioned when the 30-day clock for filing an appeal would begin to run if plaintiffs whose actions had been dismissed were required to await the termination of pretrial proceedings in all consolidated cases. Further, a final judgment might not even follow the conclusion of consolidated pretrial proceedings. An order returning cases to their originating courts would not qualify as the dispositive ruling that a plaintiff might seek to overturn. “And surely would-be appellants need not await final disposition of all cases in their originating districts, long after pretrial consolidation under [28 U. S. C.] §1407 could even arguably justify treating the cases as a judicial unit,” the Court explained.

Practitioner commentary. The opinion is significant for a number of reasons, according to Richard Wolfram, an independent antitrust practitioner based in New York.

“The ruling is notable if only because it was rendered in near record time—less than two months since the oral argument,” said Wolfram. He suggested that the timing of the opinion might reflect the Supreme Court’s appreciation of the importance of issues raised in the case.

According to Wolfram, the underlying district court decision raises a number of interesting questions, including whether the plaintiffs failed to show antitrust injury and whether the cooperative nature of the LIBOR-setting process prevents the alleged collusion of the defendants distorting that process from resulting in injury of the kind that Section 1 of the Sherman Act was intended to address. He noted that antitrust injury is “a notoriously complicated issue, with a lot of courts mistaking antitrust causation or harm to competition for antitrust injury.”

In a friend-of-the-court brief, the Mayor and City Council of Baltimore, as well as other entities that filed related LIBOR actions, argued that the district court’s decision was incorrect and a radical departure from Supreme Court cases interpreting the antitrust injury requirement. “Once the antitrust injury decision is reversed, petitioners will join all parties, including amici and defendants, in redoing fact and expert discovery to take account of antitrust claims that never should have been dismissed in the first place,” the amici predicted.

The case is No. 13-1174.

Attorneys: Thomas C. Goldstein (Goldstein & Russell, P.C.) for Ellen Gelboim. Jeffrey B. Wall (Sullivan & Cromwell LLP) and Seth P. Waxman (Wilmer Cutler Pickering Hale and Dorr LLP) for Bank of America Corp. Barry C. Barnett (Susman Godfrey, L.L.P.) for Mayor and City Council of Baltimore. William M. Jay (Goodwin Procter LLP) for Retired United States District Judges. Kevin C. Newsom (Bradley Arant Boult Cummings LLP) for Chamber of Commerce of the United States of America.

Companies: Bank of America Corp.

MainStory: TopStory Antitrust

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