McCarthy v. Intercontinental Exchange, Inc.

Background

A group of consumers brought this antitrust action against banks and financial institutions, alleging a conspiracy to fix USD LIBOR, an interest rate used in some financial transactions. They asserted claims under Sections 1 and 2 of the Sherman Act and sought injunctive relief and treble damages under Sections 4 and 16 of the Clayton Act.

The court had previously dismissed the original complaint under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), while allowing an amendment. The earlier dismissal found that the plaintiffs had not established personal jurisdiction over the foreign defendants and had not plausibly alleged antitrust standing. The plaintiffs then filed a first amended complaint. The defendants again moved to dismiss.

Personal Jurisdiction

The court granted the foreign defendants’ motion to dismiss for lack of personal jurisdiction, without further leave to amend. Personal jurisdiction is the court’s authority over a defendant based on the defendant’s connections with the forum. The court said the plaintiffs had the burden to provide facts supporting that authority.

The foreign defendants submitted numerous declarations addressing their lack of relevant contacts with the United States. The plaintiffs did not submit a declaration or other contrary factual showing. The court found that the amended complaint’s allegations were conclusory, vague, and contradicted by the foreign defendants’ sworn evidence. It also rejected the plaintiffs’ arguments based on enterprise jurisdiction, conspiracy-based jurisdiction, service of process, and business registration.

The court declined the plaintiffs’ request for jurisdictional discovery. It concluded that the request rested on speculation and bare allegations that were outweighed by the foreign defendants’ specific sworn statements.

Antitrust Standing

The court dismissed the claims against the U.S. defendants because the plaintiffs still had not adequately pleaded antitrust standing. Antitrust standing is the requirement that a plaintiff show the type of injury and connection to the alleged antitrust violation that make the plaintiff an appropriate person to sue.

The court considered factors including the alleged conspirators’ specific intent, the directness of the plaintiffs’ injuries, the speculative nature of the claimed damages, the risk of duplicate recoveries, the complexity of calculating damages, the existence of more appropriate plaintiffs, and the nature of the claimed injuries.

The court found that the amended complaint did little to correct the deficiencies identified in the earlier complaint. For 23 of the 27 plaintiffs, the complaint contained no specific allegations of harm, such as interest paid on a financial instrument. The allegations concerning four other plaintiffs described LIBOR-related loans or credit products but did not explain how the rates were tied to LIBOR or what the defendants did to set the rates charged by third-party lenders or credit-card issuers. The court also found that one plaintiff’s alleged LIBOR-based note appeared to be a fixed-rate loan rather than a variable-rate loan tied to LIBOR.

The court concluded that, under the plaintiffs’ own allegations, third-party lenders and credit-card issuers set the interest rates charged to consumers. The complaint did not plausibly allege that the defendants forced those third parties to use USD LIBOR in a particular way. As a result, the alleged injuries were too indirect, and the plaintiffs had not shown that they were the most appropriate parties to challenge the alleged antitrust violations.

Disposition

The plaintiffs’ claims against the foreign defendants were dismissed without prejudice. The plaintiffs’ claims against the U.S. defendants were dismissed with prejudice for failure to adequately plead antitrust standing. The court found that another amendment was not appropriate because the plaintiffs had already amended once and the new complaint was almost identical in substance to the earlier version.

The court declined jurisdictional discovery, terminated the pending discovery-dispute letters as moot, ordered judgment to be entered, and closed the case.