In re Foreign Exchange Benchmark Rates Antitrust Litigation

Background

The parties disputed how an earlier evidentiary order would apply at trial. The court had excluded evidence that banks later closed multi-bank chatrooms or revised policies concerning the sharing of chatroom information. Under Federal Rule of Evidence 407, evidence of later measures taken to address a problem generally cannot be used to prove culpable conduct, although it may sometimes be used for another purpose, including impeachment—evidence used to challenge a witness’s testimony.

The court had previously stated that the excluded evidence might become admissible for impeachment if Credit Suisse presented evidence that spread-sharing was a routine or legitimate practice, or that chatroom information-sharing benefited customers. Credit Suisse sought clarification because it intended to argue that spread discussions served legitimate business purposes rather than reflecting an agreement to widen spreads.

The parties’ positions

Credit Suisse argued that later policy changes and chatroom closures did not directly contradict the claim that spread discussions could serve legitimate business purposes. It maintained that banks could decide to eliminate the practice because of regulatory risk even if the practice had previously provided useful market information. Credit Suisse also argued that plaintiffs could challenge its witnesses through other evidence and cross-examination.

Plaintiffs argued that Credit Suisse could not present spread-sharing as legitimate while preventing plaintiffs from using later measures to rebut that explanation. Plaintiffs relied on the earlier order’s statement that evidence of a practice later being banned could impeach testimony that the practice was routine or legitimate. They also argued that Credit Suisse’s planned expert and trader testimony would effectively present such a justification under different wording.

Ruling

Judge Lorna G. Sarai granted Credit Suisse’s application. The court ruled that evidence of later measures closing or prohibiting chatrooms was precluded under Rule 407 because it was too attenuated to impeach Credit Suisse’s argument that spread discussions served legitimate business purposes.

The court separately ruled that evidence of later measures specifically prohibiting the sharing of spreads might qualify as impeachment evidence under Rule 407, but was precluded under Rule 403. Rule 403 permits exclusion when relevant evidence’s value is substantially outweighed by dangers such as unfair prejudice, confusing the jury, or wasting time. The court found that the evidence’s additional value was minimal because plaintiffs had substantial other evidence concerning bank policies against spread-sharing. The court also found a risk that jurors would confuse the limited impeachment use with impermissible use to prove culpable conduct, and that admitting the evidence would lead to time-consuming disputes over alternative explanations.

The opinion decides this evidentiary issue for the trial presentation. It does not state the outcome of the underlying antitrust claims.