Iowa Public Employees' Retirement System v. Lynch

Background

This antitrust case alleges a conspiracy that prevented the U.S. stock-loan market from moving to a transparent, direct electronic exchange. The court had certified a class covering certain stock-loan transactions from January 1, 2012, through November 17, 2017. The court had also recognized that the plaintiffs might seek damages occurring after that period if those damages could be traced to conduct during the class period.

Fact discovery had closed on October 16, 2020. The plaintiffs later sought supplemental discovery covering January 1, 2018, through September 3, 2024. They requested updated information from the remaining defendants concerning six datasets, related data dictionaries and lookup tables, and profit-and-loss reports. They also sought permission to serve a subpoena on Markit for marketwide stock-loan data.

The defendants opposed reopening discovery, citing the burden and cost of producing the information and questioning how it would be used. In the alternative, they requested limited discovery concerning post-2017 market conditions and other matters relevant to defending against later damages.

Rulings on the Defendants’ Information

The court found good cause to modify the case-management schedule and reopen discovery. In this context, “good cause” means a sufficient reason to alter the court’s discovery deadlines. The court considered whether trial was imminent, possible prejudice, the plaintiffs’ diligence, whether the need for discovery was foreseeable, and whether the requested information was likely to lead to relevant evidence.

The court acknowledged that the plaintiffs had not been entirely diligent because they did not alert the court during the original discovery period that they intended to seek this information. But it declined to deny the request solely on that basis. The court reasoned that the information might not have been relevant if class certification had failed, much of the requested data did not exist while fact discovery was open, and the case involved an alleged ongoing conspiracy.

The court concluded that the plaintiffs could use the requested information to update their damages calculations by comparing defendants’ transaction spreads with estimates of prices in a hypothetical market without the alleged conspiracy. The court therefore granted the plaintiffs’ motion for supplemental discovery and ordered supplemental production from the defendants for the specified period.

The court separately ruled that Federal Rule of Civil Procedure 26(e), which generally requires a party to correct or supplement an incomplete or incorrect discovery response, did not itself require the defendants to provide this post-discovery data. The court relied instead on its finding of good cause to reopen discovery.

Markit Subpoena

The court found good cause to allow the plaintiffs to serve a second subpoena on Markit. The court determined that the requested data could help the plaintiffs account for marketwide pricing in their damages calculations. It also noted that the plaintiffs had sought Markit data during the discovery period and later attempted to purchase the data, but Markit would not permit the purchase after learning that the data would be used in litigation.

The court rejected the defendants’ objections that some information could have been sought earlier, that other sources might exist, and that Markit’s response to an earlier subpoena had taken eight months. The court directed the plaintiffs to take reasonable steps to limit the subpoena to information necessary to update their damages calculations and avoid undue burden or expense.

Defendants’ Reciprocal Discovery

The court granted the defendants the opportunity to pursue limited discovery related to their defenses to post-2017 damages. The permitted subjects include post-2017 market conditions, regulatory developments, factors affecting stock-loan prices, costs of platform trading in the hypothetical non-conspiracy market, the plaintiffs’ stock-loan activity, and market innovation and new entrants. The court directed the defendants to tailor this discovery narrowly.

Disposition

The court granted the plaintiffs’ motion for supplemental discovery concerning future damages related to alleged antitrust violations during the class period. It also granted the defendants the opportunity to pursue limited discovery related to their defenses to post-2017 damages. The parties were directed to propose a schedule for the next steps by May 30, 2025. The opinion did not decide whether the plaintiffs ultimately would recover post-2017 damages.