Fund Liquidation Holdings LLC v. Citibank, N.A.

• Citation: 399 F.Supp.3d 94
• Decision Date: 25 July 2019
• Docket Number: 16 Civ. 5263 (AKH)
• Parties: FUND LIQUIDATION HOLDINGS LLC, as assignee and successor-in-interest to FrontPoint Asian Event Driven Fund L.P., on behalf of itself and all others similarly situated, Plaintiff, v. CITIBANK, N.A., Bank of America N.A., JPMorgan Chase Bank, N.A., the Royal Bank of Scotland PLC, UBS AG, BNP Paribas, S.A., Oversea-Chinese Banking Corporation Ltd., Deutsche Bank AG, Credit Agricole Corporate and Investment Bank, Credit Suisse AG, Standard Chartered Bank, DBS Bank Ltd., United Overseas Bank Limited, Australia and New Zealand Banking Group, Ltd., the Bank of Tokyo-Mitsubishi UFJ, Ltd., the Hongkong and Shanghai Banking Corporation Limited, and John Does Nos. 1-50, Defendants.
• Court: U.S. District Court — Southern District of New York

399 F.Supp.3d 94

FUND LIQUIDATION HOLDINGS LLC, as assignee and successor-in-interest to FrontPoint Asian Event Driven Fund L.P., on behalf of itself and all others similarly situated, Plaintiff,

v.CITIBANK, N.A., Bank of America N.A., JPMorgan Chase Bank, N.A., the Royal Bank of Scotland PLC, UBS AG, BNP Paribas, S.A., Oversea-Chinese Banking Corporation Ltd., Deutsche Bank AG, Credit Agricole Corporate and Investment Bank, Credit Suisse AG, Standard Chartered Bank, DBS Bank Ltd., United Overseas Bank Limited, Australia and New Zealand Banking Group, Ltd., the Bank of Tokyo-Mitsubishi UFJ, Ltd., the Hongkong and Shanghai Banking Corporation Limited, and John Does Nos. 1-50, Defendants.

16 Civ. 5263 (AKH)

United States District Court, S.D. New York.

Signed July 25, 2019

Filed July 26, 2019

Geoffrey Milbank Horn, Christian Levis, Peter Dexter St. Phillip, Jr., Raymond Peter Girnys, Roland Raymond St. Louis, III, Sitso W. Bediako, Vincent Briganti, Margaret Ciavarella MacLean, Lowey Dannenberg P.C., White Plains, NY, Lee Jason Lefkowitz, Shamberg Marwell Hollis Andreycak & Laidlaw, P.C., Mt. Kisco, NY, for Plaintiff.

Alan M. Wiseman, Andrew D. Lazerow, Jamie A. Heine, Covington & Burling, L.L.P., Abram Jeremy Ellis, Simpson Thacher & Bartlett LLP, Catherine E. Creely, Pro Hac Vice, Catherine Fairley Spillman, Pro Hac Vice, Akin Gump Strauss Hauer & Feld LLP, Melissa Brooke Felder Zappala, Michael Brille, Pro Hac Vice, Boies, Schiller & Flexner LLP, Daryl Andrew Libow, Christopher Michael Viapiano, Elizabeth A. Cassady, Amanda Flug Davidoff, Sullivan & Cromwell LLP, Nowell D. Bamberger, Cleary Gottlieb Steen & Hamilton LLP, Washington, DC, Andrew Arthur Ruffino, Covington & Burling LLP, Joel Laurence Kurtzberg, Cahill Gordon & Reindel LLP, Arthur J. Burke, Lawrence Jay Portnoy, Paul Steel Mishkin, Adam Gabor Mehes, Peter John Davis, Davis Polk & Wardwell LLP, Paul Christopher Gluckow, Alan Craig Turner, Alexander Nuo Li, Eamonn Wesley Campbell, Francis John Acott, Isaac Martin Rethy, Jonathan Thomas Menitove, Mary Beth Forshaw, Michael Steven Carnevale, Omari Largos Royter Mason, Rachel Serenity Sparks Bradley, Sarah Emily Phillips, Simpson Thacher & Bartlett LLP, David Sapir Lesser, Fraser Lee Hunter, Jr, Jamie Stephen Dycus, Wilmer Cutler Pickering Hale & Dorr LLP, Joel Laurence Kurtzberg, Adam Shawn Mintz, Elai E. Katz, Herbert Scott Washer, Jason Michael Hall, Cahill Gordon & Reindel LLP, Eric Jonathan Stock, Jefferson Eliot Bell, Lawrence Jay Zweifach, Mark Adam Kirsch, Gibson, Dunn & Crutcher, LLP, Karen Patton Seymour, Amanda Flug Davidoff, David Harold Braff, Jeffrey T. Scott, Matthew Joseph Porpora, Yvonne Susan Quinn, Penny Shane, II, Corey Omer, Michael Philip Devlin, III, Sullivan and Cromwell, LLP, Jayant W. Tambe, Kelly A. Carrero, Stephen Jay Obie, Jones Day, Jonathan David Schiller, Leigh Mager Nathanson, Boies Schiller Flexner LLP, Aidan John Synnott, Moses Silverman, Hallie Suzanne Goldblatt, Paul Weiss, Andrew W. Hammond, Daniel B. Levin, Darryl S. Lew, Kimberly Anne Havlin, White & Case LLP, Marc Joel Gottridge, Benjamin Andrew Fleming, Lisa Jean Fried, Hogan Lovells US LLP, Erica S. Weisgerber, Gary W. Kubek, Debevoise & Plimpton LLP, Dale Christian Christensen, Jr, Michael Benjamin Weitman, Seward & Kissel LLP, Lewis J. Liman, Charity Eunah Lee, Cleary Gottlieb Steen & Hamilton LLP, Christopher Martin Paparella, Steptoe & Johnson, LLP, Marc Alan Weinstein, Hughes Hubbard & Reed LLP, David Robert Gelfand, Mark David Villaverde, Milbank LLP, New York, NY, Nicholas Cule Adams, Akin Gump Strauss Hauer & Feld LLP, San Francisco, CA, for Defendants.

OPINION AND ORDER DISMISSING CASE

ALVIN K. HELLERSTEIN, U.S.D.J.:

There are two primary issues raised by defendants' motion to dismiss this antitrust action charging defendants with conspiring to fix interbank rates in the Singapore market, thus affecting prices of derivative securities in New York and other cities in the United States: 1) whether the new plaintiff, Fund Liquidation Holdings LLC ("FLH" or "plaintiff"), has capacity to sue and, if not, whether the court has subject matter jurisdiction, and 2) whether, if there is no subject matter jurisdiction, the court may grant plaintiff's motion to preliminarily approve a settlement with two defendants, or allow a Fourth Amended Complaint.

In a previous October 4, 2018 decision, I found that the original plaintiffs, FrontPoint Asian Event Driven Fund, Ltd. ("FrontPoint") and Sonterra Capital Master Fund, LTD ("Sonterra") had been dissolved prior to filing suit, and dismissed their case, for they had no capacity to sue and, thus, there was no real party in interest. FrontPoint Asian Event Driven Fund, L.P. v. Citibank, N.A. , No. 16-cv-5263 (AKH), 2018 WL 4830087, at *11 (S.D.N.Y. Oct. 4, 2018) ("SIBOR II "). Plaintiffs then filed, with my permission, a Third Amended Complaint ("TAC") alleging that the two companies had assigned their claims to FLH pursuant to an Asset Purchase Agreement ("APA") executed July 13, 2011. The issue posed by defendants' motion to dismiss is whether the assignment embraces the claims in Plaintiff's complaint for, if the assignment does not, FLH, as well as Frontpoint and Sonterra, is not a real party in interest, lacking capacity to sue, and the TAC must be dismissed.

The TAC alleges a conspiracy to manipulate two interest rate benchmarks, the Singapore Interbank Offered Rate ("SIBOR") and the Singapore Swap Offer Rate ("SOR"). FLH asserts claims of conspiracy to restrain trade in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1 et seq. , against financial institutions participating in the rate setting process. Plaintiff also alleges a state law claim against two defendants, Deutsche Bank AG and Citibank N.A., for breach of implied covenant of good faith and fair dealing.

The defendants who have not entered into settlement agreements¹ move to dismiss the Third Amended Complaint ("TAC"), pursuant to Fed. R. Civ. P. 12(b)(1), (b)(2), and (b)(6), for lack of subject matter jurisdiction, for lack of personal jurisdiction as to certain defendants,² and for failure to state a claim on which relief can be granted. I grant defendants' motions because I conclude that the Court lacks subject matter jurisdiction.

Plaintiff also moves for preliminary approval of their two settlements and to file a Fourth Amended Complaint. Plaintiff's motions are denied.

Plaintiff's allegations and the procedural background are described in my earlier Opinion and Order, SIBOR II , 2018 WL 4830087, at *1–*3, and will not be repeated except as necessary to the issues now at hand.

Basically, the complaint alleges a Sherman Act conspiracy to fix two benchmark interest rates, SIBOR and SOR. The rates reflect daily averages in the Singapore market. Plaintiff alleges that defendants, by agreeing to manipulate SIBOR and SOR, intended to fix prices of derivatives traded in New York.

In SIBOR II , I granted in part and denied in part claims raised in plaintiffs' Second Amended Complaint (SAC) and granted leave to file the TAC at issue here. In particular, I dismissed the antitrust claims alleged against non-SIBOR Panel Members and all of the claims alleged by Sonterra Capital Master Fund, Ltd. ("Sonterra"). I dismissed all the RICO and RICO conspiracy claims, and I dismissed the claims against foreign defendants not serving on the SIBOR Panel for lack of personal jurisdiction.³

The capacity to sue by FrontPoint and Sonterra was addressed in my previous decision. I dismissed the plaintiffs' claims, because they were dissolved entities when the action began, on July 1, 2016. In response, plaintiffs asserted that Sonterra and FrontPoint's claims were assigned to FLH under FrontPoint's Asset Purchase Agreement ("APA"), executed July 13, 2011. ECF 320-1. I granted plaintiff leave to amend and to substitute FLH as the real party in interest, and instructed plaintiffs to "show how they got their assignment and give me an interpretation of the contract to show that they have the ability to sue. That should be in [the] pleading." SIBOR II , 2018 WL 4830087, at *12 ; Tr., ECF 282, at 48:2–5. The TAC now alleges the assignment and substitutes FLH as a party plaintiff. Defendants' motion challenges the adequacy of the assignment.

Discussion

A. Legal Standard

"The district courts of the United States ... are ‘courts of limited jurisdiction. They possess only that power authorized by Constitution and statute.’ " Exxon Mobil Corp. v. Allapattah Servs., Inc. , 545 U.S. 546, 552, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005) (quoting Kokkonen v. Guardian Life Ins. Co. of Am. , 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994) ). "A district court properly dismisses an action under Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction if the court "lacks the statutory or constitutional power to adjudicate it." Cortlandt Street Recovery Corp. v. Hellas Telecommunications , 790 F.3d 411, 416–17 (2d Cir. 2015). " ‘The party invoking federal jurisdiction bears the burden of establishing’ prudential and constitutional standing ...." Keepers, Inc. v. City of Milford , 807 F.3d 24, 39 (2d Cir. 2015) (quoting Rajamin v. Deutsche Bank Nat. Tr. Co. , 757 F.3d 79, 84 (2d Cir. 2014) ). "In assessing the plaintiff's assertion of standing, ‘we accept as true all material allegations of the complaint[ ] and ... construe the complaint in favor of the complaining party’ [and] may also rely on evidence outside the complaint." Cortlandt , 790 F.3d at 417 (internal citations omitted).

"In its constitutional dimension, standing imports justiciability: whether the plaintiff has made out a ‘case or controversy’ between himself and the defendant within the meaning of Art. III." Cortlandt , 790 F.3d at 417 (quoting Warth v. Seldin , 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975) ). "[L]awsuits by assignees ... are ‘cases and controversies of the sort traditionally amenable to, and resolved by, the judicial process.’ " Cortlandt , ...