Nypl v. JP Morgan Chase & Co.

Background

Plaintiffs, a group of individuals and businesses, alleged that the defendant banks conspired to manipulate foreign-exchange benchmark rates and thereby caused consumers to pay manipulated retail prices for foreign currency. The claims were limited to foreign currency purchased with U.S. dollars and physically received at the defendants’ retail branches within the United States. Wire transfers and credit, debit, and automated teller machine card transactions were excluded.

The proposed nationwide class covered consumers and businesses in the United States who directly purchased “supracompetitive” foreign currency from the defendants or alleged co-conspirators for their own use between January 1, 2007, and December 31, 2013. Plaintiffs relied on allegations and materials concerning manipulation of the WMR London closing fix and the European Central Bank fix. The defendants presented evidence that their consumer retail rates were not calculated using those benchmarks, but instead were calculated by, or using data from, third parties.

Plaintiffs moved for class certification under Federal Rule of Civil Procedure 23(b)(3) and for appointment of class counsel. The parties also filed motions under Rule 702 and the Daubert framework, which govern whether expert testimony is sufficiently reliable and relevant to be considered. Defendants sought to exclude plaintiffs’ expert Carl S. Saba, and plaintiffs sought to exclude defendants’ rebuttal expert Bruce A. Strombom.

Expert Evidence

The court granted in part and denied in part defendants’ motion concerning Saba. The court did not consider Saba’s regression analyses because they relied on data involving wire transfers and 2017 transactions, neither of which matched the transactions and class period at issue. Plaintiffs did not provide a basis for using that data. The court did not exclude Saba’s damages opinion because it helped frame whether plaintiffs had a workable method for proving injury and damages with common evidence, but the court emphasized that this did not mean the opinion was sufficient to support certification.

The court denied plaintiffs’ motion concerning Strombom. Strombom challenged whether causation, injury, and damages could be shown with class-wide proof. The court rejected plaintiffs’ argument that Strombom was wrong to discuss offsetting benefits against losses. It explained that an antitrust plaintiff may recover only net losses if the alleged unlawful conduct caused both gains and losses. The court also found that plaintiffs’ other challenges did not show that Strombom’s opinions violated the expert-evidence rules.

Standing

The defendants argued that none of the four named plaintiffs had standing, meaning a sufficient personal injury connected to the defendants’ conduct that a court could remedy. The court held that Lisa McCarthy and Valarie Jolly had shown enough at this stage to assert the two remaining claims: price fixing under Section 1 of the Sherman Act and the California Cartwright Act. The court did not address the standing of Rubinsohn and Nypl because one named plaintiff with standing is enough for each claim. The opinion also noted that the California Unfair Competition Law claim had previously been dismissed because Nypl lacked standing to assert it.

Class Certification

The court denied class certification because plaintiffs failed to show that common questions would predominate over individual questions. The parties did not dispute that common evidence could address whether an antitrust conspiracy existed. But proving injury, causation, and damages would require examining each purchase and each transaction day.

The court reasoned that the alleged manipulation was intermittent and moved prices in different directions. Some purchasers might have been harmed, some might have benefited, and some might have experienced no effect. Plaintiffs did not offer a method for determining through common proof when manipulation occurred, which benchmark was affected, the direction of the price movement, or whether a particular purchaser paid an unlawfully high price.

The court also found that plaintiffs had not proposed a reliable class-wide damages method. Saba’s proposed use of a three-pip overcharge or another undetermined rate was not tied to evidence showing that the overcharge was consistent. An average damages estimate would not identify uninjured class members. In addition, any benefits from lower prices on some transactions would have to be offset against losses on other transactions, requiring individualized calculations.

The court separately held that the proposed class was a “fail-safe” class. A fail-safe class is defined in a way that requires deciding the merits of each person’s claim before determining whether that person belongs to the class. Because the proposed class included only people who purchased “supracompetitive” currency, determining membership would require deciding who was actually overcharged. Removing that term would make the class too broad because the evidence did not show that every purchaser was harmed.

Disposition

The court denied plaintiffs’ motion for Rule 23 class certification. Defendants’ Daubert motion was granted in part and denied in part. Plaintiffs’ Daubert motion was denied. The request for oral argument was denied as moot, and the Clerk of Court was directed to close the motions at Docket Nos. 716, 731, and 745. The order addressed class certification and expert evidence rather than deciding whether the alleged antitrust violations ultimately occurred or whether plaintiffs were entitled to damages.