Justia Banking Opinion SummariesArticles Posted in Antitrust & Trade Regulation
In re LIBOR-based Financial Instruments Antitrust Litigation
This case stemmed from a multidistrict litigation alleging that some of the world's largest banks and affiliated entities conspired to suppress the London Interbank Offered Rate (LIBOR). Plaintiffs appeal the district court's grant of defendants' motions to dismiss antitrust claims in 23 cases based on plaintiffs' lack of antitrust standing and/or based on lack of personal jurisdiction over defendants.The Second Circuit affirmed in part, reversed in part, and remanded for further proceedings. The court agreed with the district court that plaintiffs who purchased LIBOR‐indexed bonds from third parties lack antitrust standing. The court explained that, to have antitrust standing, plaintiff must be an "efficient enforcer" of the antitrust laws whose alleged injury was proximately caused by a defendant. In this case, the third parties' independent decisions to reference that benchmark severed the causal chain linking plaintiffs' injuries to defendants' misconduct, thereby rendering plaintiffs unsuitable as efficient enforcers.However, the court disagreed with the district court's personal jurisdiction analysis and held that jurisdiction is appropriate under the conspiracy‐based theory first articulated by the court in Charles Schwab Corp. v. Bank of Am. Corp., 883 F.3d 68 (2d Cir. 2018), which post‐dated the district court's ruling. The court concluded that the facts alleged by plaintiffs – specifically, that executives and managers for several banks were directing the suppression of LIBOR from within the United States – were sufficient to establish personal jurisdiction over the banks under a conspiracy‐based theory of jurisdiction. View "In re LIBOR-based Financial Instruments Antitrust Litigation" on Justia Law
Bratton v. Sisters of Charity of Leavenworth Health System, Inc.
The Supreme Court affirmed the district court's order granting summary judgment in favor of Sisters of Charity of Leavenworth Health System, Inc. (SCL) on Cheryl Bratton's claims, holding that the district court did not err by granting summary judgment to SCL.This case stemmed from SCL's practice of issuing refunds to its patients, for such reasons as overpayment on an account, in the form of prepaid MasterCard debit cards issued through Bank of America. Plaintiff brought this suit alleging, among other claims, constructive trust based on unjust enrichment, unfair trade practices under the Montana Consumer Protection Act (MCPA), money had and received, and declaratory judgment. During discovery, SCL asked Bank of America to issue checks to Bratton for her refunds, which Bank of America did. The district court granted summary judgment for SCL. The Supreme Court affirmed, holding that the district court did not err by granting summary judgment to SCL on Bratton's claims and by denying Bratton's cross motions for summary judgment. View "Bratton v. Sisters of Charity of Leavenworth Health System, Inc." on Justia Law
Kyle v. Strasburger
This case arose from an allegedly forged home-equity loan. Plaintiff sued the lenders, bringing several claims, including statutory fraud and violations of the Texas Finance Code and Texas Deceptive Trade Practices Act. The trial court granted summary judgment for the lenders without stating its reasons. The court of appeals affirmed. The Supreme Court affirmed in part and reversed and remanded in part, holding that the court of appeals (1) properly affirmed summary judgment on Plaintiff’s constitutional forfeiture claim; and (2) erred in holding that Plaintiff’s remaining claims were barred on statute of limitations and waiver grounds. View "Kyle v. Strasburger" on Justia Law
McGarry & McGarry, LLC v. Rabobank, N.A.
BMS provides administrative services to bankruptcy trustees. It uses Rabobank as the depositary for banking services that BMS provides through its software. Crane, the trustee in the Integrated bankruptcy, hired BMS; the contract required Crane to hire Rabobank for banking services in the proceeding. In a separate contract, Crane authorized Rabobank to withdraw its monthly fee. The plaintiff, a law firm, was a creditor of Integrated and filed a bankruptcy claim, ultimately receiving a distribution of $12,472.55. It would have received $12,666.90, but for its part of Rabobank’s fee, and more had Rabobank paid interest on the estate’s deposits. Plaintiff sued under the Bank Holding Company Act, 12 U.S.C. 1972(1)(E), which states that a bank shall not "extend credit, lease or sell property of any kind, or furnish any service, or fix or vary the consideration for any of the foregoing, on the condition … that the customer shall not obtain some other credit, property, or service from a competitor of such bank … other than a condition … to assure the soundness of the credit.” The Seventh Circuit affirmed dismissal. Had Rabobank conditioned its provision of services on the trustee never hiring any other bank in any bankruptcy proceeding, it would constitute exclusive dealing. No one forced Crane to deal with BMS and Rabobank and there was no argument that the fee was exorbitant, or would have been lower with a different bank. View "McGarry & McGarry, LLC v. Rabobank, N.A." on Justia Law
In re Payment Card Interchange Fee and Merchant Discount Antitrust
In an antitrust class action brought on behalf of approximately 12 million merchants against Visa and Mastercard, as well as other various banks, plaintiffs alleged conspiracy in violation of Section 1 of the Sherman Act, 15 U.S.C. 1. After the parties agreed to a settlement releasing all claims, the district court certified two settlement-only classes and approved the settlement. Numerous objectors and opt‐out plaintiffs appealed and argued that the class action was improperly certified and that the settlement was unreasonable and inadequate. The court concluded that class members of the (b)(2) class were inadequately represented in violation of both FRCP 23(a)(4) and the Due Process Clause. The court also concluded that procedural deficiencies produced substantive shortcomings in this class action and the settlement. Consequently, the court concluded that the class action was improperly certified and the settlement was unreasonable and inadequate. The court vacated the district court's certification of the class action and reversed the approval of the settlement. The court remanded for further proceedings. View "In re Payment Card Interchange Fee and Merchant Discount Antitrust" on Justia Law
In re: LIBOR-Based Financial Instruments Antitrust Litig.
Plaintiffs filed numerous antitrust suits alleging that the Banks colluded to depress LIBOR by violating the rate‐setting rules, and that the payout associated with the various financial instruments was thus below what it would have been if the rate had been unmolested. After consolidation into a multi-district litigation (MDL), the district court dismissed the litigation in its entirety based on failure to plead antitrust injury. The court vacated the judgment on the ground that: (1) horizontal price‐fixing constitutes a per se antitrust violation; (2) a plaintiff alleging a per se antitrust violation need not separately plead harm to competition; and (3) a consumer who pays a higher price on account of horizontal price‐fixing suffers antitrust injury. The court remanded for further proceedings on the question of antitrust standing. Finally, the court rejected the Bank's alternative argument that no conspiracy has been adequately alleged. View "In re: LIBOR-Based Financial Instruments Antitrust Litig." on Justia Law
Baker v. Goldman, Sachs & Co.
Dragon Systems, Inc. (Dragon), a voice recognition software company that faced a deteriorating financial situation, hired Goldman Sachs (Goldman) to provide financial advice and assistance in connection with a possible merger. In 2000, Lernout & Hauspie Speech Products N.V. (Lernout & Hauspie) acquired Dragon. When it was discovered that Lernout & Hauspie had fraudulently overstated its earnings, the merged company filed for bankruptcy, and the Dragon name and technology were sold from the estate. Plaintiffs, two groups of Dragon shareholders, filed suit against Goldman, alleging negligent and intentional misrepresentation, negligence, gross negligence, breach of fiduciary duty, and violations of Mass. Gen. Laws ch. 93A. A jury found in favor of Goldman on Plaintiffs’ common law claims, and district court found that Goldman had not violated chapter 93A. The First Circuit affirmed, holding (1) the district court correctly articulated the legal standard applicable to Plaintiffs’ chapter 93A claims and correctly applied that standard to its factual findings; and (2) Plaintiffs’ arguments that they were entitled to a new trial on their common law claims because of evidentiary errors and erroneous jury instructions were without merit. View "Baker v. Goldman, Sachs & Co." on Justia Law
Serra v. Quantum Servicing Corp.
Plaintiff refinanced his residential home mortgage, taking out a loan secured by his home. The mortgage listed Mortgage Electronic Registration Systems, Inc. (“MERS”) as the mortgagee of record. MERS subsequently transferred the mortgage. Wells Fargo Bank, N.A. as Trustee for RMAC Pass-Through Trust, eventually obtained the mortgage. After Wells Fargo sold Serra’s property at foreclosure, Serra brought suit in Massachusetts state court asserting, among other claims, claims for wrongful foreclosure and unfair or deceptive business practices based on his theory that MERS lacked the authority to transfer his mortgage. Serra’s suit was removed on the basis of diversity, and summary judgment as to all claims was entered against Serra. The First Circuit Court of Appeals affirmed, holding (1) under Massachusetts law, MERS may validly possess and transfer a legal interest in a mortgage; (2) subsequent mortgage assignees cannot incur liability for the allegedly predatory practices of their predecessor-in-interest; and (3) Plaintiff’s argument that his right to rescission was improperly cut short by the sale of his property was without merit. View "Serra v. Quantum Servicing Corp." on Justia Law
Bumpers v. Cmty. Bank of N. Va.
Plaintiffs obtained loans from Defendant, a bank. Plaintiffs later, on behalf of themselves and all those similarly situated, filed a complaint alleging that Defendant's loan transactions violated North Carolina's unfair and deceptive practices statute. Specifically, Plaintiffs alleged that they paid loan discount fees but did not receive discounted loans and that the fees they were charged in connection with origination of their loans were unnecessary and unreasonable. The trial court granted partial summary judgment for Plaintiffs on their loan discount claims and excessive pricing claims under N.C. Gen. Stat. 75-1.1. The court of appeals affirmed entry of summary judgment on Plaintiffs' loan discount claims but reversed the grant of summary judgment on the excessive fees claims. The Supreme Court reversed, holding (1) issues of material fact existed in regards to Plaintiffs' loan discount claims; and (2) Plaintiffs' excessive pricing claims were not recognized by section 75-1.1. Remanded. View "Bumpers v. Cmty. Bank of N. Va." on Justia Law
GE Betz, Inc. v. Zee Co., Inc.
The CEO and sole shareholder of Zee decided to expand his chemical sales business into the water treatment industry and hired employees who were currently working or had previously worked in the industry. Four employees came from GE and were bound by non-compete agreements. GE sued Zee and its former employees in North Carolina state court for breach of contract, tortious interference with contract, and unfair trade practices. The state court found the agreements enforceable and held Zee and the employees jointly and severally liable for $288,297.00 in compensatory damages as a result of unfair and deceptive trade practices and for $5,769,903.10 in attorney fees, $864,891.00 in punitive damages, and $257,931.44 in costs. GE discovered that Zee had tied up virtually all of its assets in a credit facility agreement with BMO Harris Bank before entry of judgment; registered the judgment in Illinois, Harris’s principal place of business; and served Harris with a citation to discover Zee’s assets. GE objected to removal to federal court, but the district court dismissed GE’s case entirely. The Seventh Circuit vacated, finding that GE raised a timely and sound objection to removal under the forum-defendant rule, and the district court should have remanded the case. View "GE Betz, Inc. v. Zee Co., Inc." on Justia Law