Mayor and City Council of Baltimore v. Bank of America Corporation

Background

The order concerns the “OTC Action” in multidistrict litigation involving antitrust claims related to U.S. Dollar LIBOR-based financial instruments. The opinion identifies the OTC Plaintiffs as Mayor and City Council of Baltimore, City of New Britain, Vistra Energy Corp., Yale University, and Jennie Stuart Medical Center, Inc.

The plaintiffs sought final approval under Federal Rule of Civil Procedure 23(e) of a $101 million settlement with Cooperatieve Rabobank U.A.; Lloyds Banking Group plc, Lloyds Bank plc, HBOS plc, and Bank of Scotland plc, collectively called Lloyds; Royal Bank of Canada; and WestLB AG, now known as Portigon AG, and Westdeutsche Immobilienbank AG, now known as Westdeutsche Immobilien Servicing AG, collectively called Portigon.

Settlement approval

The court found that the settlement resulted from arm’s-length negotiations between experienced counsel and was fair, reasonable, adequate, and in the best interests of the settlement class. The court also found that the litigation involved serious and contested legal and factual issues, making immediate monetary and prospective relief preferable to continued litigation with an uncertain outcome.

The court finally approved the pro rata plan for distributing settlement funds, finding that it had a reasonable and rational basis and was fair and adequate. It also finally approved the class notice as adequate and sufficient under the class-action rules and due-process requirements.

Settlement class and counsel

Solely for purposes of carrying out this settlement, the court certified a class consisting of persons or entities, other than the defendants and specified related persons, that purchased in the United States directly from a defendant or its subsidiaries or affiliates a U.S. Dollar LIBOR-based instrument and owned that instrument at some point from August 2007 through May 2010.

The order states that covered instruments could include asset swaps, bonds or floating-rate notes, collateralized debt obligations, credit-default swaps, forward-rate agreements, inflation swaps, interest-rate swaps, total-return swaps, and options. It excludes instruments that only required the purchaser to pay interest based on U.S. Dollar LIBOR, such as certain loans and credit cards.

The court found that the class satisfied the requirements for settlement purposes, including numerosity, common questions, typicality, adequate representation, predominance, and superiority. It appointed Hausfeld LLP and Susman Godfrey L.L.P. as settlement-class counsel.

Release, dismissal, and opt-outs

The order binds the released parties and releasing parties, except as to individual claims of people or entities that timely and validly opted out. Opt-outs are excluded from the class, are not bound by the order as it relates to the settlement, and cannot claim settlement benefits.

The court dismissed the OTC Action and all released claims against the released parties with prejudice. The order defines released claims broadly as claims arising from or relating to conduct alleged, or that could have been alleged, in the OTC Action, subject to stated exclusions. It preserves claims outside the release’s scope, including specified claims involving instruments issued by non-panel banks, instruments not directly sold by a defendant or related entity, certain foreign-law claims, and claims involving non-U.S. Dollar LIBOR-based instruments.

Upon the settlement’s effective date, releasing parties were deemed to have fully and irrevocably released the covered claims and were barred from prosecuting those claims or assisting others in doing so. The settlement and related documents could not generally be used as evidence of liability or wrongdoing by the released parties, although the order allowed their use in proceedings to enforce or interpret the settlement or to assert certain claim-preclusion defenses.

Additional provisions and disposition

The court found that the settling defendants complied with the Class Action Fairness Act’s notice obligations. It directed implementation of all settlement terms and retained continuing jurisdiction over settlement implementation, distribution of money, fee and expense applications, service awards, and enforcement or administration of the settlement.

The order also barred, to the extent permitted by law, certain contribution and indemnification claims involving other current, former, or later-added parties to the OTC Action. The court directed immediate entry of the judgment under Rule 54(b).