Dennis v. JPMorgan Chase & Co.

Background

Plaintiffs were investors who entered into United States-based financial-derivatives transactions using the Bank Bill Swap Rate, an Australian benchmark interest rate. They alleged that JPMorgan Chase & Co. and other financial institutions conspired to manipulate that rate. Their claims invoked the Clayton Act, the Commodity Exchange Act, the Racketeer Influenced and Corrupt Organizations Act, unjust enrichment, and breach of the implied covenant of good faith and fair dealing.

The court had dismissed many claims in two earlier opinions, including claims dismissed for lack of personal jurisdiction. Plaintiffs then filed a second amended complaint. The opinion decided three defendants’ dismissal motions and plaintiffs’ motion for jurisdictional discovery.

Personal jurisdiction

The court held that all plaintiffs except the newly added Orange County Employees Retirement System (OCERS) again failed to establish personal jurisdiction over the sixteen defendants participating in the main dismissal motion. It therefore dismissed those plaintiffs’ claims against those defendants for lack of personal jurisdiction.

The court reached a different conclusion for OCERS as to nine defendants whose alleged master agreements contained provisions consenting to jurisdiction in New York for disputes connected to those agreements. OCERS made a preliminary showing that those defendants consented to jurisdiction. OCERS did not make the same showing for seven other defendants, and the court dismissed OCERS’s claims against those defendants for lack of personal jurisdiction. The court also rejected OCERS’s attempt to attribute the alleged New York contacts of related companies to three corporate-family defendants.

Timeliness of OCERS’s claims

The court rejected OCERS’s argument that adding it to the second amended complaint was a mistake about the identity of the proper party under Federal Rule of Civil Procedure 15. The court characterized the alleged mistake as a miscalculation about which plaintiff could make the best personal-jurisdiction argument, not a mistake in party identity.

The court allowed OCERS’s state-law claims to proceed because the six-year limitations period plausibly had not expired and the allegations could support a fraudulent-concealment defense. The court concluded that OCERS’s Commodity Exchange Act claim was filed nearly three years after plaintiffs conceded they knew of that claim, making fraudulent concealment implausible as a defense to the Act’s two-year limitations period.

The court nevertheless allowed OCERS to pursue that Commodity Exchange Act claim in its individual capacity under the American Pipe tolling doctrine, which can pause a limitations period for members of a proposed class after a class action is filed. The court dismissed the claim insofar as OCERS asserted it in a representative, class-based capacity. Relying on the Supreme Court’s decision in China Agritech, the court held that OCERS had not shown the diligence required to use tolling to maintain a follow-on class claim after waiting to join the case.

Other issues under the main dismissal motion

The court declined at that stage to limit the proposed class period to 2009 through 2012, treating that issue as a challenge to the class definition to be considered if plaintiffs later moved for class certification. The court also denied the defendants’ venue challenges as moot in light of its other conclusions and found that any separate challenge under the federal venue rule had been waived.

Jurisdictional discovery

The court denied plaintiffs’ motion for jurisdictional discovery. It was not persuaded that additional discovery would help establish jurisdiction or correct the pleading defects.

Morgan Stanley defendants

The court held that the second amended complaint plausibly alleged a Sherman Act Section 1 claim against Morgan Stanley. It also held that OCERS adequately pleaded unjust enrichment against Morgan Stanley and Morgan Stanley Australia Limited because the alleged relationship between the defendants and OCERS was not too attenuated and the allegations supported an inference that both defendants benefited.

The court dismissed OCERS’s claims for breach of the implied covenant of good faith and fair dealing against Morgan Stanley and Morgan Stanley Australia Limited. The complaint did not support a reasonable inference that Morgan Stanley & Co. LLC acted as either defendant’s agent in the relevant transactions, and plaintiffs cited no adequate basis for attributing the subsidiary’s conduct to those defendants for this claim.

RBC Capital Markets LLC

The court granted RBC Capital Markets LLC’s motion to dismiss. The second amended complaint redefined “RBC” to mean the Royal Bank of Canada alone, even though the earlier complaint had used that term for both the Royal Bank of Canada and RBC Capital Markets LLC. Because the court could not use the earlier complaint to interpret the second amended complaint, and most antitrust allegations were attributed only to “RBC,” the second amended complaint failed to state a Sherman Act claim against RBC Capital Markets LLC.

Disposition

In Dennis v. JPMorgan Chase & Co., Judge Lewis A. Kaplan ruled as follows:

- The defendants’ main motion was granted to the extent that the specified plaintiffs’ claims were dismissed for lack of personal jurisdiction, OCERS’s claims against seven specified defendants were dismissed for lack of personal jurisdiction, and OCERS’s representative-capacity Commodity Exchange Act claim was dismissed as untimely. The motion otherwise was denied. - Plaintiffs’ motion for jurisdictional discovery was denied. - Morgan Stanley and Morgan Stanley Australia Limited’s motion was granted to the extent that OCERS’s implied-covenant claims against them were dismissed. The motion otherwise was denied. - RBC Capital Markets LLC’s motion to dismiss was granted.