Court Trims LIBOR Antitrust Suit Against Domestic and Foreign Banks

On Tuesday, a San Francisco, Calif. court ruled on threshold issues in an antitrust conspiracy case involving an intra-bank interest rate known as the USD LIBOR. Though the court dismissed the foreign bank defendants for lack of personal jurisdiction, it refused to dismiss the domestic bank defendants, including the American arms of Barclays, Rabobank, Credit Suisse, Deutsche Bank AG, and HSBC as well as Bank of America and JPMorgan, for lack of personal jurisdiction.

The court did dismiss the claims against the United States defendants for failure to allege antitrust standing.

Judge James Donato explained, in his opinion denying the plaintiffs’ motion for a preliminary injunction, that more than two dozen consumers of loans and credit cards argued that they paid artificially inflated interest rates as a result of defendants’ conspiracy to fix the USD LIBOR.

“The gravamen of the complaint is that the LIBOR formula and procedures themselves, which have been publicly known since the 1980s, are inherently anticompetitive, and that defendants’ participation in determining LIBOR is itself a conspiracy,” the opinion said. Judge Donato noted that as such, the case is wholly different from long-running litigation in other courts which allege that banks and other financial institutions manipulated the submissions used to determine the LIBOR. 

The plaintiffs brought claims against the United States defendants under Sections 1 and 2 of the Sherman Act, and sought injunctive relief and treble damages under the Clayton Act.

In his eight-page opinion Judge Donato first ruled that circuit precedent solidly supports the exercise of personal jurisdiction over the United States defendants. However, pointing to the plaintiffs’ failure to come forward with facts supporting personal jurisdiction of the foreign defendants, the court said that the claims against them could not remain in the case.

With regard to antitrust standing, Judge Donato undertook a multi-part analysis, concluding that “[o]verall, plaintiffs have not done enough to establish antitrust standing.” Lacking from the complaint were allegations of conspirators’ specific intent, and “what the defendants may have gotten out of continuing to follow the formula and method for setting LIBOR,” the opinion said.

The ruling also questioned the directness of the plaintiffs’ injury, citing conclusory and vague allegations concerning the effect of the supposed conspiracy on the plaintiffs’ interest rates. The court cited numerous questions left unanswered that it cautioned the plaintiffs to heed in crafting their amended complaint, due October 4.

The plaintiffs are represented by Alioto Law Firm,  Law Offices of Lawrence G. Papale, and Nedeau Law PC, among others.