Sonterra Capital Master Fund Ltd. v. Credit Suisse Group AG

Background

The order concerns a class action brought by Fund Liquidation Holdings LLC, as assignee and successor-in-interest to Sonterra Capital Master Fund Ltd. and other named plaintiffs, against Credit Suisse Group AG and other defendants. The plaintiffs sought final approval of a settlement with JPMorgan Chase & Co. concerning allegations involving Swiss franc LIBOR-based derivatives. The order does not decide whether JPMorgan or any other defendant violated the law; it evaluates and approves the settlement with JPMorgan.

Settlement class and notice

For settlement purposes only, the court finally certified a class of all persons, including individuals and entities, who purchased, sold, held, traded, or otherwise had an interest in Swiss Franc LIBOR-Based Derivatives during the class period. The covered instruments included specified Swiss franc futures, swaps, swaptions, forward agreements, and related instruments, subject to the geographic and transaction limitations stated in the order. The United States Government and the defendants, their specified affiliates or agents, and co-conspirators were excluded.

The court reconfirmed that the requirements of Federal Rule of Civil Procedure 23 were satisfied for purposes of this settlement. It found that the class was sufficiently numerous, that common questions existed, that the plaintiffs’ claims were typical, that the representatives’ interests were aligned with absent class members, and that class counsel adequately represented the class. The court also found that common issues predominated and that a class action was the superior method for resolving the controversy.

The court found that mailed notice, publication, website notice, and the class-notice plan were the best practicable notice and adequately informed class members about the action, their rights to exclude themselves or object, the fairness hearing, the distribution plan, and requests for fees, expenses, and incentive awards. The order states that no objections were submitted and that some class members validly requested exclusion, although the reproduced text does not clearly identify the number or names of those persons.

Approval and effect of the settlement

The court finally approved the settlement under Rule 23 and found it fair, reasonable, adequate, and in the best interests of the settlement class. It found that the settlement resulted from arm’s-length negotiations between experienced counsel, that the class and its representatives were adequately represented for settlement purposes, and that class members were treated equitably. The parties were directed to perform the settlement agreement.

The settlement releases claims relating to the alleged conduct involving Swiss franc LIBOR-based derivatives, including potential claims under the Commodity Exchange Act, the Sherman Antitrust Act, the Racketeer Influenced and Corrupt Organizations Act, and other federal or state law. The release applies to JPMorgan and the defined released parties. The order states that claims against the other named defendants are not released by this settlement, subject to the specific terms stated in the settlement agreement.

The court approved the release and covenant not to sue and directed dismissal of the action against JPMorgan and any released parties fully, finally, and with prejudice. “With prejudice” means those dismissed claims cannot be brought again. The court also permanently barred and enjoined covered claims against JPMorgan and the released parties, as well as specified contribution and indemnification claims connected to the settlement.

A class member must submit the required proof of claim and release, including the release and covenant not to sue, to receive a share of the net settlement fund. The order nevertheless states that covered claims are released and barred under the settlement even if a settling class member does not execute that separate release and covenant. The court approved Epiq Class Action and Claims Solutions, Inc. as settlement administrator and approved the distribution plan and proof-of-claim form.

Other provisions and ruling

The order states that the settlement, the approval order, and the related proceedings are not admissions, adjudications, or evidence of a statutory violation, wrongdoing, liability, injury, or damages by JPMorgan or any released party. If the settlement is validly terminated, disapproved, or fails to become final under its terms, the order provides that the approval, class certification, releases, and related actions concerning the settlement will be vacated and the parties will return to their pre-settlement positions, subject to provisions that the settlement agreement says survive termination.

Judge Sidney H. Stein reserved exclusive jurisdiction over implementing and enforcing the settlement agreement and approval order, resolving disputes concerning the settlement or settlement fund, and considering administration costs, fees, and distributions. The request for attorneys’ fees, expense reimbursement, and incentive awards was deferred to a separate order. The court’s certification of the settlement class was limited to the settlement and does not control later requests to certify a class in the litigation.