In re Foreign Exchange Benchmark Rates Antitrust Litigation

Background

The plaintiffs allege that defendant banks conspired to widen spreads in the foreign-exchange spot market. A bid-ask spread is the difference between the price at which a market participant will buy a currency and the price at which it will sell it. The alleged conspiracy concerned certain currency pairs and trades involving defendant banks that provided liquidity.

On September 3, 2019, the court denied certification of an exchange class for all purposes but certified an over-the-counter class for two specific questions under Federal Rule of Civil Procedure 23(c)(4): (1) whether a conspiracy existed to widen spreads in the foreign-exchange spot market and (2) whether Credit Suisse Group AG, Credit Suisse AG, and Credit Suisse Securities (USA) LLC participated in that conspiracy. The court did not certify the class to decide all issues in the case. Individual questions remained concerning whether trades occurred in the United States, whether trades were excluded resting orders or benchmark trades, whether a defendant provided liquidity, and the injury and damages suffered by individual claimants.

Fifteen of the sixteen defendant banks had settled for more than $2.3 billion, leaving Credit Suisse as the only non-settling defendant identified in the opinion. Credit Suisse moved to decertify the issue class.

The Court’s Analysis

The court first found that Credit Suisse’s motion was an untimely request to reconsider the original certification decision rather than a timely motion based on changed circumstances. Credit Suisse argued that the class had never satisfied Rule 23, but it had not sought reconsideration within fourteen days or asked for permission to appeal. The court nevertheless addressed the arguments because courts have a special responsibility to protect absent class members.

Ascertainability. The court held that the class was ascertainable, meaning that membership could be determined using objective criteria with definite boundaries. The criteria included making at least ten foreign-exchange spot, forward, or swap trades directly with one or more defendants, involving one of 52 affected currency pairs, through voice trading or a single-bank platform, where a defendant provided liquidity, during the period from December 1, 2007, through December 31, 2013. The court held that the need for individual evidence to determine membership did not make the class definition insufficiently objective.

Predominance and standing. The court held that the two certified common questions predominated for purposes of the limited issue class because individual questions would not be decided on behalf of absent class members in the class-wide proceeding. The court also held that Article III standing was not a barrier because the class definition included customers who traded affected currency pairs with a defendant during the alleged conspiracy period. According to the court, those customers would have paid too much or received too little if the alleged conspiracy widened the spreads. Trades resulting from resting orders and trades at benchmark rates were expressly excluded from the class.

The court emphasized that the class was not certified on “liability” as a whole. The certified questions addressed part of the antitrust violation inquiry: whether there was a conspiracy and whether Credit Suisse participated. Individual questions concerning whether a particular claimant suffered injury caused by that violation would remain for later proceedings.

Superiority and trial management. The court found that deciding the two common questions in one class proceeding would materially advance the litigation. If the plaintiffs prevailed, a class-wide determination of the conspiracy’s timing and membership would avoid repeating that proof in later individual cases. If Credit Suisse prevailed on its participation, the need for later proceedings against it would be eliminated.

The court rejected Credit Suisse’s due-process concerns because the class notice identified the membership conditions and the opinion did not identify information necessary to understand whether a person was included. The court also rejected the argument that successive juries would improperly reconsider the same facts under the Seventh Amendment. The first jury would decide whether, when, and with whom Credit Suisse agreed to participate in a scheme to widen spreads. Later proceedings could address separate questions such as whether a particular claimant made an eligible trade, whether that trade was affected, and the amount of damages.

Disposition

The court denied Defendant’s motion to decertify the issue class. It also denied Defendant’s motion for oral argument as moot and directed the clerk to close the motions at Docket Numbers 1678 and 1689.