In re Libor-Based Fin. Instruments Antitrust Litig., 11 MD 2262 (NRB)

• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Writing for the Court: NAOMI REICE BUCHWALD, UNITED STATES DISTRICT JUDGE
• Citation: 299 F.Supp.3d 430
• Parties: IN RE: LIBOR–BASED FINANCIAL INSTRUMENTS ANTITRUST LITIGATION. This Document Applies to: Exchange–Based Plaintiff Action OTC Plaintiff Action Lender Plaintiff Action
• Docket Number: 11Civ. 2613 (NRB),11 Civ. 5450 (NRB),11 MD 2262 (NRB),12 Civ. 5723 (NRB)
• Decision Date: 28 February 2018

299 F.Supp.3d 430

IN RE: LIBOR–BASED FINANCIAL INSTRUMENTS ANTITRUST LITIGATION.

This Document Applies to:

Exchange–Based Plaintiff Action

OTC Plaintiff Action

Lender Plaintiff Action

11 MD 2262 (NRB)
11Civ. 2613 (NRB)
11 Civ. 5450 (NRB)
12 Civ. 5723 (NRB)

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

Signed February 28, 2018

299 F.Supp.3d 456

MEMORANDUM AND ORDER

NAOMI REICE BUCHWALD, UNITED STATES DISTRICT JUDGE

LIBOR V I I

Table of Contents

I. Introduction ...457

II. General Legal Standards ...458

1. Class Certification ...458

1.1. Standing ...458

1.2. Rule 23(a) ...459

1.3. Rule 23 (b) (3) ...461

1.4. Ascertainability ...463

1.5. Modifications to the Class Definition ...463

2. Expert Opinion ...465

2.1. The Daubert Standard ...465

2.2. Application at Class Certification ...470

III. Exchange–Based Action ...471

1. Rabobank's Daubert Motions ...473

1.1. Dr. Seyhun ...473

1.2. Dr. Netz....489

1.3. Mr. Beevers ...496

1.4. Mr. Miller ...508

2. Exchange Plaintiffs' Daubert Motions ...510

299 F.Supp.3d 457

2.1. Dr. Culp ...510

2.2. Dr. Hubbard ...515

2.3. Dr. Willig ...518

3. Trader–Based Manipulation Class ...528

3.1. "Fail–Safe" Class Definition ...528

3.2. Standing ...530

3.3. Ascertainability ...533

3.4. Rule 23(a) ...533

3.5. Predominance ...539

3.6. Superiority ...544

3.7. Modification of the Class Definition ...546

3.8. Conclusion ...548

4. Suppression Class ...548

4.1. Class Definition ...548

4.2. Ascertainability ...549

4.3. Rule 23(a) ...549

4.4. Predominance ...551

4.5. Superiority ...555

4.6. Conclusion ...555

IV. Lender Action ...556

1. Daubert Motions ...556

1.1. Dr. Webb ...557

1.2. Dr. Willig ...560

2. Class Certification ...563

2.1. Rule 23(a) ...563

2.2. Ascertainability ...569

2.3. Predominance ...569

2.4. Superiority ...579

2.5. Conclusion ...580

V. OTC Action ...581

1. Daubert Motion against Dr. Stiglitz ...583

2. Class Certification ...584

2.1. Standing ...584

2.2. Rule 23(a) ...585

2.3. Predominance ...590

2.4. Modification of the Class Definition ...602

2.5. Superiority ...607

2.6. Conclusion ...607

VI. Interlocutory Appealability ...608

VII. Conclusion ...609

I. INTRODUCTION

After more than six years of litigation and six substantial opinions¹ considering extensively the nature of LIBOR and its alleged manipulation,² we consider in this, our seventh major opinion, whether three of the cases consolidated into this multidistrict litigation should proceed as class actions: the Exchange–Based action, Metzler Investment GmbH v. Credit Suisse Group AG, No. 11 Civ. 2613; the Lender action, Berkshire Bank v. Bank of America Corp., No. 12 Civ. 5723; and the

299 F.Supp.3d 458

Over-the-Counter (OTC) action, Mayor of Baltimore v. Credit Suisse Group AG, No. 11 Civ. 5450. For the reasons stated below, Exchange plaintiffs' and Berkshire Bank's motions for certification of an Exchange-based class and a Lender class are denied. We grant in part and deny in part OTC plaintiffs' motion, certifying a class only as to the antitrust claims in that action.

In litigating the question of class certification, the parties have also filed ten motions to exclude expert testimony under the admissibility standards set forth in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). The only one-line summary we can provide is that some of the Daubert motions are granted, some are denied, and others are granted in part and denied in part, as set forth in extensive detail below.

II. GENERAL LEGAL STANDARDS

We first set forth the general legal standards applicable to our resolution of the pending motions.

1. Class Certification

"The class action is ‘an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.’ " Wal–Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011) (quoting Califano v. Yamasaki, 442 U.S. 682, 700–01, 99 S.Ct. 2545, 61 L.Ed.2d 176 (1979) ). "To come within the exception, a party seeking to maintain a class action ‘must affirmatively demonstrate his compliance’ with Rule 23." Comcast Corp. v. Behrend, 569 U.S. 27, 33, 133 S.Ct. 1426, 185 L.Ed.2d 515 (2013) (quoting Dukes, 564 U.S. at 350, 131 S.Ct. 2541 ). When presented with a motion for class certification, we are to "assess all of the relevant evidence admitted at the class certification stage and determine whether each Rule 23 requirement has been met, just as [we] would resolve a dispute about any other threshold prerequisite for continuing a lawsuit." In re Initial Pub. Offerings Sec. Litig. ("In re IPO"), 471 F.3d 24, 42 (2d Cir. 2006). This assessment necessarily entails the resolution of "factual disputes relevant to each Rule 23 requirement," an obligation that "is not lessened by overlap between a Rule 23 requirement and a merits issue, even a merits issue that is identical with a Rule 23 requirement." Id. at 41 ; see also Dukes, 564 U.S. at 351, 131 S.Ct. 2541 (noting that the "rigorous analysis" of the Rule 23 requirements "will entail some overlap with the merits of the plaintiff's underlying claim"). "[T]he preponderance of the evidence standard applies to evidence proffered to establish Rule 23's requirements." Teamsters Local 445 Freight Div. Pension Fund v. Bombardier Inc., 546 F.3d 196, 202 (2d Cir. 2008).

1.1. Standing

Before considering the Rule 23 requirements, we first consider threshold standing issues. "Standing" in the class action context refers to two related but analytically distinct doctrines separated by a "murky line": "traditional Article III standing" on the one hand and "so-called ‘class standing’ " on the other. Ret. Bd. of the Policemen's Annuity & Benefit Fund v. Bank of N.Y. Mellon ("RBPA"), 775 F.3d 154, 160 (2d Cir. 2014) ; see also LIBOR III, 27 F.Supp.3d at 480–82.

Article III standing is assessed using the oft-recited three-part formulation set forth by the Supreme Court: a "plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, Inc. v. Robins, ––– U.S. ––––, 136 S.Ct. 1540, 1547, 194 L.Ed.2d 635 (2016) ; see also LIBOR III, 27 F.Supp.3d at 481 (citing

299 F.Supp.3d 459

Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ). While an injury-in-fact must be "concrete and particularized" and "actual or imminent," Lujan, 504 U.S. at 560, 112 S.Ct. 2130, "an injury-in-fact need not be capable of sustaining a valid cause of action," Denney v. Deutsche Bank AG, 443 F.3d 253, 264 (2d Cir. 2006). Rather, "the fact that an injury may be outweighed by other benefits, while often sufficient to defeat a claim for damages, does not negate [Article III] standing." Id. at 265.

In the class action context, the Second Circuit has made clear that "no class may be certified that contains members lacking Article III standing" and that any "class must therefore be defined in such a way that anyone within it would have [Article III] standing." Id. at 264. However, when presented with a putative class, "[w]e do not require that each member ... submit evidence of personal standing." Id. at 263. Rather, "only one of the named Plaintiffs is required to establish standing in order to seek relief on behalf of the entire class." Cent. States Se. & Sw. Areas Health & Welfare Fund v. Merck-Medco Managed Care, L.L.C., 504 F.3d 229, 241 (2d Cir. 2007) (emphasis added). "[P]assive members need not make any individual showing of standing, because the standing issue focuses on whether the plaintiff is properly before the court, not whether represented parties or absent class members are properly before the court." Denney, 443 F.3d at 264 (alteration in original) (quoting 1 Herbert B. Newberg & Alba Conte, Newberg on Class Actions § 2:7 (4th ed. 2002) ).

While only one named plaintiff need establish Article III standing and our analysis need not consider evidence from absent class members, we must nonetheless consider Article III standing as against each defendant. "[F]or every named defendant there must be at least one named plaintiff who can assert a claim directly against that defendant." LIBOR III, 27 F.Supp.3d at 481 (emphasis omitted) (quoting NECA–IBEW Health & Welfare Fund v. Goldman Sachs & Co. ("NECA"), 693 F.3d 145, 159 (2d Cir. 2012) ).

"[A]t that point, [Article III] standing is satisfied and only then will the inquiry shift to a class action analysis" and the question of class standing, which refers to a named plaintiff's ability to assert claims on behalf of absent class members. NECA, 693 F.3d at 159 (quoting Merck–Medco, 504 F.3d at 241 ). "[I]n a putative class action, a plaintiff has class standing if he plausibly alleges (1) that he personally has suffered some...