In re GSE Bonds Antitrust Litigation

Background

The plaintiffs were Joseph M. Torsella, in his official capacity as Treasurer of the Commonwealth of Pennsylvania and statutory custodian of all Commonwealth Funds; City of Birmingham Retirement and Relief System; Electrical Workers Pension Fund Local 103, I.B.E.W.; and Local 103, I.B.E.W. Health Benefit Plan. They brought the action on behalf of themselves and other members of the proposed settlement class.

The defendants covered by the judgment were BNP Paribas Securities Corp., Cantor Fitzgerald & Co., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Inc., Morgan Stanley & Co. LLC, Nomura Securities International, Inc., SG Americas Securities, LLC, TD Securities (USA) LLC, and UBS Securities LLC. The judgment refers to these entities as the “Group Defendants.”

The parties agreed to settle all claims asserted against the Group Defendants and specified related entities. The court had preliminarily approved the settlement, directed that notice be given to the settlement class, allowed class members to object or exclude themselves, and held a settlement hearing on June 9, 2020.

Settlement Class

For settlement purposes only, the court certified a class under Rules 23(a) and 23(b)(3) of the Federal Rules of Civil Procedure. The class included all persons and entities that entered into a GSE Bond Transaction with one or more defendants, or with a defendant’s direct or indirect parent, subsidiary, affiliate, or division, during the period from January 1, 2009, through January 1, 2019.

The judgment excluded the defendants and their related entities, the United States government, the judicial officers and staff involved in the action and their immediate families, jurors assigned to the action, and anyone who submitted a valid and timely exclusion request. Investment Vehicles were not excluded from the class.

The court found that the class was sufficiently numerous, that common questions existed, that the plaintiffs’ claims were typical, and that the plaintiffs and class counsel would adequately represent the class. It also found that common questions predominated and that a class action was superior to other methods for resolving the action. The court stated that this settlement-only certification did not prevent defendants from challenging a later request to certify a class in the litigation.

Notice and Final Approval

The court found that the notice and publication notice complied with the preliminary approval order, were the best notice practicable under the circumstances, and adequately informed class members about the settlement, releases, proposed attorneys’ fees and litigation expenses, objection rights, and the right to appear at the settlement hearing. The court found that the notice satisfied Rule 23, the Due Process Clause, and other applicable law and rules.

The court fully and finally approved the settlement in all respects, including its amount, releases, and dismissal of the claims against the Group Defendants. Applying the factors identified in City of Detroit v. Grinnell Corp. and Rule 23(e)(2), the court found that the settlement was fair, reasonable, and adequate to the settlement class.

Judgment and Releases

The court dismissed all claims asserted against the Group Defendants by the plaintiffs and other settlement class members with prejudice. The parties were ordered to bear their own costs and expenses except as provided in the settlement agreement.

The judgment made the settlement terms binding on the Group Defendants, other released parties, the plaintiffs, and other settling plaintiff parties, including class members who did not submit a claim form or seek a distribution from the net settlement fund. The people and entities listed in Exhibit 1 were excluded from the settlement class and were not bound by the settlement or judgment.

Upon the settlement’s effective date, the plaintiffs, settling plaintiff parties, and settlement class members released and discharged the defined “Settled Claims” against the Group Defendants and other released parties and were permanently barred from prosecuting those claims. The release did not cover claims outside the Sherman Act’s stated extraterritorial reach, claims concerning enforcement of the settlement, or claims of people and entities whose exclusion requests were accepted. The Group Defendants also released and discharged defined claims against the plaintiffs and other settling plaintiff parties.

The judgment did not bar actions to enforce or carry out the settlement or judgment. It also stated that the settlement and related proceedings were not admissions of liability, wrongdoing, or the merits of the parties’ positions.

Other Provisions and Disposition

The court found that the parties and their counsel complied with Federal Rule of Civil Procedure 11. It retained continuing and exclusive jurisdiction over settlement administration, interpretation, implementation, enforcement, the settlement fund, distribution, attorneys’ fees and litigation expenses, and matters involving settlement class members.

The court directed that separate orders would address the plan of distribution and class counsel’s request for attorneys’ fees and litigation-expense reimbursement. It entered the judgment as a final judgment and directed the clerk to enter it immediately. If the settlement were terminated or its effective date failed to occur, the judgment would be vacated and the parties would return to their positions as of December 2, 2019, as provided in the settlement agreement.