FrontPoint Asian Event Driven Fund, Ltd. v. Citibank, N.A.

Background

The representative plaintiffs sought final approval of a class-action settlement with Hongkong and Shanghai Banking Corporation Limited (HSBC). The settlement concerned alleged conduct involving Singapore Interbank Offered Rate (SIBOR) and Singapore Swap Offer Rate (SOR) derivatives during the period from January 1, 2007, through December 31, 2011. The order defined the settlement class as people and entities that purchased, sold, held, traded, or otherwise had an interest in those derivatives during that period, with exclusions for defendants, certain related entities and alleged co-conspirators, and the United States Government.

Class Certification and Notice

For settlement purposes only, the court finally certified the settlement class under Rule 23 of the Federal Rules of Civil Procedure. The court found that the class was sufficiently numerous, that common legal and factual questions existed, that the representative plaintiffs’ claims were typical, and that their interests did not conflict with absent class members. It also found that class counsel adequately represented the class, that common issues predominated over individual issues, and that a class action was superior to other methods of resolving the dispute.

The court approved the representative plaintiffs as class representatives and appointed Lowey Dannenberg, P.C. as class counsel for the settlement. It found that mailed notice, publication, website notice, and the other parts of the notice plan were the best practicable notice and reasonably informed class members about the settlement, their rights to exclude themselves or object, the fairness hearing, the distribution plan, and the requests for fees and incentive awards. One class member validly excluded itself from the settlement with HSBC. The court stated that no objections had been submitted.

Settlement Approval

The court independently reviewed the proposed settlement and finally approved it under Rule 23. It found the settlement fair, reasonable, and adequate and in the best interests of the settlement class. The court also found that the negotiations were conducted at arm’s length, that class counsel and the representative plaintiffs adequately represented the class for settlement purposes, and that class members were treated equitably. The court approved the distribution plan and the proof-of-claim and release form.

Settling class members were bound by the settlement whether or not they submitted a proof of claim and release. To receive a share of the net settlement fund, a settling class member had to execute the release and covenant not to sue required by the settlement agreement. The order nevertheless stated that the claims were released under the settlement agreement whether or not a class member executed that document.

Dismissal, Releases, and Injunctions

The court approved the release and covenant not to sue and directed that the action be dismissed against HSBC and all released parties fully, finally, and with prejudice. The order expressly stated that this dismissal did not apply to the other defendants. The released parties included HSBC and specified related entities and persons, but did not include the named defendants other than HSBC.

The court permanently barred and enjoined releasing parties and settling class members from pursuing the released claims against HSBC or released parties in other lawsuits or proceedings, including class actions, and from assisting others in pursuing those claims. The order also addressed contribution, indemnification, setoff, and similar claims involving HSBC, released parties, and other defendants, subject to the limits stated in the order.

Other Provisions and Disposition

The order stated that the settlement, the approval order, and the final judgment were not admissions or evidence of any violation, wrongdoing, liability, damages, or manipulation of an interest-rate benchmark. The court retained exclusive jurisdiction over implementation and enforcement of the settlement and approval order, including disputes about administration, fees, and distributions. It approved the settlement fiduciary account as a qualified settlement fund and required confidentiality for information submitted by class members, subject to stated exceptions.

The court reserved class counsel’s request for attorneys’ fees, expense reimbursement, and incentive awards for a separate order. Judge Hari Alvin K. Hellerstein signed the final approval order. The order also provided that if the settlement were validly terminated, disapproved, or did not become final under its terms, the settlement-related provisions would become void and the parties would generally return to their pre-settlement positions.