Fund Liquidation Holdings LLC v. Bank of Am. Corp.
| Decision Date | 17 March 2021 |
| Docket Number | August Term 2020,No. 19-2719-cv,19-2719-cv |
| Citation | 991 F.3d 370 |
| 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, Sonterra Capital Master Fund, Ltd., Plaintiffs-Appellants, FrontPoint Asian Event Driven Fund, Ltd., FrontPoint Asian Event Driven Fund, L.P., Plaintiffs, v. BANK OF AMERICA CORPORATION, Bank of America, N.A, Royal Bank of Scotland PLC, The Royal Bank of Scotland Group PLC, RBS Securities Japan Limited, UBS AG, UBS Securities Japan Co., Ltd., ING Groep N.V., ING Bank N.V., BNP Paribas, S.A., BNP Paribas North America, Inc., BNP Paribas Securities Corp., BNP Paribas Prime Brokerage, Inc., Oversea-Chinese Banking Corporation Ltd., Barclays PLC, Barclays Bank PLC, Barclays Capital Inc., Deutsche Bank AG, Credit Agricole Corporate and Investment Bank, Credit Agricole S.A., Credit Suisse Group AG, Credit Suisse AG, Standard Chartered Bank, Standard Chartered PLC, DBS Bank Ltd., DBS Group Holdings Ltd., DBS Vickers Securities (USA) Inc., United Overseas Bank Limited, Australia and New Zealand Banking Group, Ltd., Bank of Tokyo-Mitsubishi UFJ, Ltd., The Hongkong and Shanghai Banking Corporation Limited, HSBC Bank USA, N.A., HSBC Holdings PLC, HSBC North America Holdings Inc., HSBC USA Inc., Macquarie Bank Ltd., Macquarie Group Ltd., Commerzbank AG, ING Capital Markets LLC, Credit Suisse International, ANZ Securities, Inc., UOB Global Capital, LLC, Defendants-Appellees, Citibank, N.A., Citigroup Inc., JPMorgan Chase & Co., JP Morgan Chase Bank, N.A., John Does, Nos. 1–50, Defendants. |
| Court | U.S. Court of Appeals — Second Circuit |
Eric F. Citron (Vincent Briganti, Margaret MacLean, Lowey Dannenberg, P.C., White Plains, NY, on the brief), Goldstein & Russell, P.C., Bethesda, MD, for Plaintiffs-Appellants Fund Liquidation Holdings LLC and Sonterra Capital Master Fund, Ltd.
Joel Kurtzberg (Herbert S. Washer, Elai Katz, Jason M. Hall, Lauren Perlgut, Adam S. Mintz, on the brief), Cahill Gordon & Reindel LLP, New York, NY, for Defendants-Appellees Credit Suisse Group AG, Credit Suisse AG, and Credit Suisse International.
Arthur J. Burke, Paul S. Mishkin, Adam G. Mehes, Davis Polk & Wardwell LLP, New York, NY, for Defendants-Appellees Bank of America Corporation and Bank of America, N.A.
Penny Shane, Corey Omer, Sullivan & Cromwell LLP, New York, NY, for Defendants-Appellees Australia and New Zealand Banking Group Limited and ANZ Securities, Inc.
Christopher M. Viapiano, Elizabeth A. Cassady, Sullivan & Cromwell LLP, Washington, DC, for Defendant-Appellee The Bank of Tokyo-Mitsubishi UFJ, Ltd., n/k/a MUFG Bank, Ltd.
Jonathan D. Schiller, Christopher Emmanuel Duffy, Leigh M. Nathanson, Boies Schiller Flexner LLP, New York, NY, for Defendants-Appellees Barclays PLC, Barclays Bank PLC, and Barclays Capital Inc.
Jayant W. Tambe, Stephen J. Obie, Kelly A. Carrero, Jones Day, New York, NY, for Defendants-Appellees BNP Paribas, S.A., BNP Paribas North America, Inc., BNP Paribas Securities Corp., and BNP Paribas Prime Brokerage, Inc.
David R. Gelfand, Mark D. Villaverde, Milbank LLP, New York, NY, for Defendant-Appellee Commerzbank AG.
Andrew Hammon, Kimberly Anne Havlin, White & Case LLP, New York, NY; Darryl S. Lew, White & Case LLP, Washington, DC, for Defendants-Appellees Crédit Agricole Corporate and Investment Bank and Crédit Agricole S.A.
Erica S. Weisgerber, Debevoise & Plimpton LLP, New York, NY, for Defendants-Appellees DBS Bank Ltd., DBS Group Holdings Ltd., and DBS Vickers Securities (USA) Inc.
Aidan Synnott, Hallie S. Goldblatt, Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, NY, for Defendant-Appellee Deutsche Bank AG.
Christopher M. Paparella, Steptoe & Johnson LLP, New York, NY, for Defendants-Appellees Macquarie Bank Ltd. and Macquarie Group Ltd.
C. Fairley Spillman, Pratik A. Shah, Akin Gump Strauss Hauer & Feld LLP, Washington, DC, for Defendant-Appellee Oversea-Chinese Banking Corporation Limited.
David S. Lesser, Jamie S. Dycus, Wilmer Cutler Pickering Hale and Dorr LLP, New York, NY, for Defendants-Appellees The Royal Bank of Scotland PLC, The Royal Bank of Scotland Group PLC, and RBS Securities Japan Limited.
Marc J. Gottridge, Lisa J. Fried, Benjamin A. Fleming, Hogan Lovells US LLP, New York, NY, for Defendants-Appellees Standard Chartered Bank and Standard Chartered PLC.
Dale C. Christensen, Jr., Noah Czarny, Seward & Kissel LLP, New York, NY, for Defendants-Appellees United Overseas Bank Limited and UOB Global Capital, LLC.
Nowell D. Bamberger, Cleary Gottlieb Steen & Hamilton LLP, Washington, DC; Charity E. Lee, Cleary Gottlieb Steen & Hamilton LLP, New York, NY, for Defendants-Appellees The Hongkong and Shanghai Banking Corporation Limited, HSBC Bank USA, N.A., HSBC Holdings PLC, HSBC North America Holdings Inc., and HSBC USA Inc.
Mark A. Kirsch, Eric J. Stock, Jefferson E. Bell, Gibson, Dunn & Crutcher LLP, New York, NY, for Defendants-Appellees UBS AG and UBS Securities Japan Co., Ltd.
Amanda F. Davidoff, Sullivan & Cromwell LLP, Washington, DC, for Defendants-Appellees ING Groep N.V., ING Bank N.V., and ING Capital Markets LLC.
Before: Sullivan, Park, and Nardini, Circuit Judges.
In 2016, two Cayman Islands investment funds filed a class action complaint against numerous banks (the "Banks"), alleging that the Banks had conspired to manipulate certain Singapore-based benchmark interest rates. It was not until a year later that the Banks discovered that the two plaintiff funds had been dissolved years earlier, and that the case was actually being prosecuted by a separate entity, Fund Liquidation Holdings LLC, which asserts that it was assigned the dissolved entities’ claims. Following that revelation, the district court (Hellerstein, J. ) dismissed the case with prejudice for lack of subject-matter jurisdiction, reasoning that, because the action was initiated by non-existent parties, the case was a legal nullity and so could not be salvaged through Federal Rule of Civil Procedure 17.
On appeal, we are primarily tasked with deciding two issues: (i) whether the dissolved entities possessed Article III standing when the case was initiated, and, if not, (ii) whether Fund Liquidation is nevertheless able to join the action through Rule 17. We conclude that, although the dissolved funds lacked standing at the time the case was commenced, Article III was nonetheless satisfied because Fund Liquidation, the real party in interest, has had standing at all relevant times and may step into the dissolved entities’ shoes without initiating a new action from scratch. As a result, we VACATE the district court's judgment, and REMAND the case for further proceedings.
The global financial system relies on a series of floating benchmark interest rates, many of which reflect the average cost that a bank incurs when borrowing money from one of its peers.1 The most well-known example is the London Interbank Offered Rate, more commonly referred to as "LIBOR." In recent years, many of the world's largest financial institutions have been accused of manipulating several of these benchmarks in their favor. The implications of such manipulation can be staggering as these rates are used as reference points in countless financial instruments across the world and affect transactions collectively worth trillions of dollars.
This case concerns an alleged conspiracy by the Banks and others to manipulate two such benchmark rates: the Singapore Interbank Offered Rate (referred to as "SIBOR") and the Singapore Swap Offered Rate (referred to as "SOR").2 The two rates are calculated by a trade group, the Association of Banks in Singapore, which is composed of various banks (including some of the defendant banks in this case). Each day, an agent of that association calculates the two rates based, in part, on interest rate quotes submitted by a panel of banks that, again, include several of the defendants in this case (the "Panel"). Between 2007 and 2011, the Banks allegedly worked together to manipulate those two benchmark rates so that they would shift in directions that favored the Banks’ financial positions. "The [alleged] effect of [the Banks’] conspiratorial price-fixing was to necessarily reduce the amount of interest paid to all holders of SIBOR- and SOR-based financial instruments." Fund Liquidation Br. at 8. Eventually, this conspiracy was uncovered in 2013 through an investigation spearheaded by the Monetary Authority of Singapore.
Three years later, on July 5, 2016, an initial class action complaint was filed against the Banks (and others) in the names of FrontPoint Asian Event Driven Fund, L.P. and Sonterra Capital Master Fund, Ltd. (together, the "Dissolved Funds"), two Cayman Islands investment funds that claimed to have held financial instruments that relied on the manipulated benchmark rates. Two critical pieces of information were omitted from this initial complaint. First, the complaint failed to disclose that the Dissolved Funds had apparently assigned (or, at least, attempted to assign) the rights to their claims to Fund Liquidation, and that it was really Fund Liquidation that was pulling the strings behind the scenes. Second, and perhaps more importantly, the pleadings failed to reflect that the Dissolved Funds were no longer in existence when the case was initiated – FrontPoint had been dissolved nearly five years earlier, in November 2011, and Sonterra had been dissolved shortly thereafter, in December 2012.
On October 31, 2016, a first amended complaint was filed, which added additional claims under the Sherman Act, the Racketeer Influenced and Corrupt Organizations Act ("RICO"), and common law. As before, this complaint made no mention of Fund Liquidation and referred to the Dissolved Funds in the present tense as if they were still in existence. See J. App'x at 137 (...
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