FTC Capital GMBH v. Credit Suisse Group AG

Background

The opinion concerns discovery in multidistrict litigation involving allegations that banks coordinated to suppress LIBOR. At this stage, the parties were conducting discovery on two “upstream” issues: whether a 16-bank conspiracy to persistently suppress LIBOR existed and how the Second Circuit’s decision in United States v. Connolly affected the litigation. The court stated that later discovery, if needed, would address downstream issues such as injury, notice, and reliance.

The defendants had collectively produced more than 3.4 million documents, covering 15.9 million pages and 88,000 audio files, from more than 500 custodians. The Direct Action Plaintiffs sought documents covering an additional 17 months, from June 2010 through October 2011. All plaintiffs separately sought documents responsive to more than 100 additional search terms and documents from more than 40 additional custodians.

Legal Standard

Federal Rule of Civil Procedure 26(b)(1) generally limits discovery to nonprivileged information relevant to a claim or defense and proportional to the needs of the case. Proportionality requires considering factors including the importance of the issues, the amount at stake, the parties’ access to information and resources, the importance of the discovery, and whether its burden or expense outweighs its likely benefit. The party seeking discovery bears the burden of showing relevance.

Rulings on the Discovery Applications

The court denied the Direct Action Plaintiffs’ application for documents from June 2010 through October 2011 in its entirety. The court found that extending discovery beyond the period alleged in those plaintiffs’ complaints was disproportionate. It also found that the cited evidence concerning possible LIBOR suppression after May 2010 was limited and speculative, and that establishing a “clean period” for economic models did not justify requiring defendants to review what could be millions of additional documents.

The court granted in part and denied in part the application for additional search terms and custodians. It denied requests for additional documents concerning Thomson Reuters, finding that the plaintiffs had not shown evidence that its “tolerance checks” were part of an effort to further the alleged conspiracy. It also denied requests concerning communications with the Bank of England and the Federal Reserve Bank of New York because of privilege concerns, including the bank-examination privilege, and because the burden and delay outweighed the likely benefit.

For requests involving alleged LIBOR suppression, interbank brokers, and the British Bankers Association and related committees, the court denied all additional search-term requests except those listed in Appendix 1. The court concluded that plaintiffs had not shown that most of the proposed terms would uncover unique, relevant, noncumulative documents, but found that the approved terms had sufficient relevance to justify the burden for the defendants listed in the appendix.

The court granted requests for documents from 11 specified custodians who were directly involved in LIBOR submissions, allegedly involved in LIBOR manipulation, involved in significant communications about LIBOR suppression, or involved in an internal LIBOR audit. It denied other custodian requests because the proposed custodians were too removed from the LIBOR-setting process, lacked unique information, raised privilege concerns, or would produce cumulative material. It denied two remaining custodian requests as moot because the defendants had agreed to produce responsive documents, while denying any broader production from those custodians as disproportionate. The court also declined to order production of defendants’ entire regulatory productions because plaintiffs had not shown that documents had been improperly withheld.

Disposition

Judge Naomi Reice Buchwald ordered that the Direct Action Plaintiffs’ application to compel documents from June 2010 through October 2011 was denied in its entirety. The plaintiffs’ application to compel documents responsive to additional search terms and from additional custodians was granted in part and denied in part. The order provided the complete approved search terms and custodians in its appendices and instructed the clerk to terminate the motions at ECF Nos. 3547 and 3549.