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

Background

The plaintiffs were Fund Liquidation Holdings LLC, as assignee and successor-in-interest to FrontPoint Asian Event Driven Fund L.P., Moon Capital Partners Master Fund Ltd., and Moon Capital Master Fund Ltd., on behalf of themselves and others similarly situated. They sought approval of a settlement with 13 settling defendants, including Australia and New Zealand Banking Group Ltd., Bank of America, N.A., Barclays Bank PLC, BNP Paribas, S.A., Commerzbank AG, Crédit Agricole Corporate and Investment Bank, DBS Bank Ltd., MUFG Bank, Ltd., Oversea-Chinese Banking Corporation Limited, The Royal Bank of Scotland PLC, Standard Chartered Bank, UBS AG, and United Overseas Bank Limited.

The settlement concerned alleged conduct involving derivatives based on SIBOR and/or SOR. The settlement class covered all people and entities that purchased, sold, held, traded, or otherwise had an interest in those derivatives during the class period from January 1, 2007, through December 31, 2011. The court excluded defendants, their specified related entities and agents, alleged co-conspirators, and the United States Government from the settlement class.

Class certification and notice

The court certified the settlement class solely for purposes of the settlement and reconfirmed that the applicable requirements of Federal Rule of Civil Procedure 23 were satisfied. It 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 aligned with absent class members. The court also found that class counsel adequately represented the class, that common issues predominated, and that a class action was superior to other methods of resolving the dispute.

The court approved the representative plaintiffs to represent the settlement class and appointed Lowey Dannenberg, P.C. as class counsel for settlement purposes. It found that the mailed notice, publication notice, website, and other notice measures were the best practicable notice and reasonably informed class members about the action, their rights to exclude themselves or object, the fairness hearing, the distribution plan, and requests for fees and incentive awards. The court found that the notice complied with Rule 23, due process, and other applicable law. It also found that the settling defendants complied with their obligations under the Class Action Fairness Act.

One settlement class member validly requested exclusion. The court stated that the excluded member would have no rights under the settlement, would receive no settlement payment, and would be considered excluded from the action as against the settling defendants. The court found that no objections had been submitted.

Ruling

The court finally approved the settlement and found it fair, reasonable, adequate, and in the best interests of the settlement class. It found that the agreement resulted from arm’s-length negotiations between experienced counsel, that class counsel and the representative plaintiffs adequately represented the class for purposes of the settlement, and that class members would be treated fairly. The court directed the parties to carry out the agreement according to its terms.

The court approved the settlement fund’s establishment as a qualified settlement fund and retained exclusive jurisdiction over implementing and enforcing the settlement, resolving disputes concerning it, and considering administration costs, fees, and distributions. It approved the distribution plan and the proof-of-claim and release form. A settlement administrator was appointed, and class-member claim information was ordered to be kept confidential except as authorized by the order or a later court order.

The order made the settlement binding on covered class members and gave it preclusive effect for released claims. It approved the release and covenant not to sue and directed that the action be dismissed against the settling defendants and released parties fully, finally, and with prejudice, under the settlement and a final judgment entered at the same time. It did not dismiss the action against other defendants. The order also permanently barred covered parties from pursuing released claims and certain contribution or indemnification claims connected to the released claims. The order stated that the settlement was not an admission of wrongdoing, liability, or the truth of the allegations. The court stated that requests for attorneys’ fees, expense reimbursement, and incentive awards would be addressed in a separate order.

Effect on the parties

Settlement class members are bound by the settlement even if they do not submit a proof of claim and release. To receive a share of the net settlement fund, however, a settling class member must submit the required release and covenant not to sue. The order states that covered claims are released regardless of whether a class member signs that document. The settlement and its releases could become null and void if the agreement were validly terminated or failed to become final under its terms, in which event the parties would generally return to their positions before signing the agreement.