Allianz Global Investors GmbH v. Bank Of America Corporation

Background

The plaintiffs—almost 1,300 investment firms and government entities—brought claims against sixteen banks and their affiliates. They alleged that, from about 2003 to 2013, the defendants conspired to manipulate the foreign-exchange market by fixing benchmark rates, inflating bid-ask spreads, sharing confidential customer information, and coordinating trades through private chatrooms and text messages. The claims asserted violations of Section 1 of the Sherman Act and the common-law rule against unjust enrichment.

The defendants involved in this motion were HSBC Bank plc, MUFG Bank, Ltd., Royal Bank of Canada, The Royal Bank of Scotland plc, Societe Generale, Standard Chartered Bank, and UBS AG. They asked the court to dismiss under Federal Rule of Civil Procedure 12(b)(2), which allows dismissal when the court lacks personal jurisdiction—its legal power over a defendant.

Legal Standard

Because the motion was decided using the pleadings, affidavits, and other written materials, the plaintiffs needed to make a preliminary showing that personal jurisdiction existed. The court viewed the allegations and supporting materials in the light most favorable to the plaintiffs, while rejecting conclusory or nonspecific jurisdictional allegations.

The parties did not dispute service of process or whether the federal antitrust laws supplied a statutory basis for jurisdiction. Their dispute concerned constitutional due process, particularly whether the defendants had sufficient minimum contacts with the United States. The court explained that specific jurisdiction may exist when a defendant purposefully directs activity toward the forum and the lawsuit arises from that activity. It may also exist through a conspiracy when a defendant participated in the conspiracy and a co-conspirator committed acts connected to the forum.

Because the Sherman Act provides nationwide service of process, the court considered the defendants’ contacts with the entire United States rather than only New York. The court also concluded that it could exercise related jurisdiction over the unjust-enrichment claim because that claim and the federal antitrust claim arose from the same alleged facts.

Analysis

The court found a preliminary showing of specific jurisdiction over Standard Chartered, HSBC Bank, UBS AG, RBS, and SocGen. The complaint plausibly alleged an unlawful foreign-exchange conspiracy and provided fact-specific allegations connecting the conspiracy to the United States, including conduct by traders and bank offices in New York and other U.S. locations.

For Standard Chartered, the complaint relied on a regulatory order describing New York-based traders manipulating benchmark prices and coordinating customer spreads. For HSBC Bank, it alleged that conduct by an individual charged in connection with the conspiracy was carried out on behalf of HSBC Bank and occurred partly in New York. For UBS AG and RBS, the complaint cited alleged admissions and communications involving the foreign-exchange conspiracy and U.S.-based traders or conduct. For SocGen, the complaint alleged that its U.S. headquarters were in New York, that many senior foreign-exchange personnel were there, and that its traders participated in conspiracy-related chats, including a chat with a New York-based trader.

The court also found that the allegations supported conspiracy-based jurisdiction over these five defendants. Regarding SocGen specifically, the court concluded at the pleading stage that the allegations supported an inference that its traders knew some co-conspirators were based in New York. The court therefore rejected the defendants’ argument that the complaint failed to show that chat participants knew one another’s locations.

The court reached a different conclusion for MUFG Bank and RBC. Although the complaint generally alleged that both participated in the conspiracy and communicated with U.S.- or New York-based traders, it identified only one chat involving MUFG Bank traders and one involving RBC traders in support of the alleged unlawful conduct. The court said those chats did not appear to discuss fixing benchmark rates or manipulating spreads. It also found that references to “MUFG” did not clearly distinguish MUFG Bank from a separate entity, MUFG Securities Americas, Inc. The allegations therefore were not sufficiently specific and fact-based to establish personal jurisdiction over either defendant.

Disposition

The court granted the Foreign Defendants’ motion to dismiss under Rule 12(b)(2) as to MUFG Bank and RBC. It denied the motion as to HSBC Bank, RBS, SocGen, Standard Chartered, and UBS AG. The order addressed personal jurisdiction and did not decide whether the alleged antitrust conspiracy or unjust-enrichment claims ultimately had merit.