McCarthy v. Intercontinental Exchange, Inc.

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3 UNITED STATES DISTRICT COURT

4 NORTHERN DISTRICT OF CALIFORNIA

5

6 LISA MCCARTHY, et al., Case No. 20-cv-05832-JD

7 Plaintiffs,

ORDER RE MOTIONS TO DISMISS

8 v. AND STAY

9 INTERCONTINENTAL EXCHANGE,

INC., et al.,

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Defendants.

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12 In this antitrust action, a group of consumers allege a conspiracy among the defendant

13 banks and financial institutions to fix the intra-bank interest rate known as the USD LIBOR. Dkt.

14 No. 1. The Court denied plaintiffs’ requests for a preliminary injunction. Dkt. No. 351.

15 This order resolves defendants’ motions to dismiss. The defendants jointly filed a motion

16 under Federal Rule of Civil Procedure 12(b)(2) to dismiss the complaint for lack of personal

17 jurisdiction. Dkt. No. 315. Defendants also filed a separate “merits” motion challenging

18 plaintiffs’ complaint on various grounds under Rules 12(b)(1), 12(b)(6), and 12(b)(7). Dkt.

19 No. 316. The ICE defendants separately filed a supplemental brief raising additional, individual

20 arguments for dismissal. Dkt. No. 319.1

21 The parties’ familiarity with the facts is assumed, and the complaint, Dkt. No. 1, is

22 dismissed with leave to amend.

23 DISCUSSION

24 I. PERSONAL JURISDICTION

25 Defendants seek dismissal on the ground that the Court lacks personal jurisdiction over any

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1 The United States Chamber of Commerce and others filed an unopposed motion for leave to file

1 defendant. Dkt. No. 315. Well-established standards govern the analysis of this request. In

2 opposing defendants’ motion, it is plaintiffs who “bear[] the burden of establishing that

3 jurisdiction is proper.” Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). A district

4 court has discretion to decide the mode of resolving a jurisdictional motion, and when, as here, the

5 Court determines that it will receive only written materials, “these very limitations dictate that a

6 plaintiff must make only a prima facie showing of jurisdictional facts through the submitted

7 materials in order to avoid a defendant’s motion to dismiss.” Data Disc, Inc. v. Systems

8 Technology Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977); see also Schwarzenegger v. Fred

9 Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). “When a defendant moves to dismiss for

10 lack of personal jurisdiction, the plaintiff is ‘obligated to come forward with facts, by affidavit or

11 otherwise, supporting personal jurisdiction.’” Scott v. Breeland, 792 F.2d 925, 927 (9th Cir. 1986)

12 (quoting Amba Marketing Sys., Inc. v. Jobar Int’l, Inc., 551 F.2d 784, 787 (9th Cir.1977)).

13 “Although the plaintiff cannot ‘simply rest on the bare allegations of its complaint,’

14 uncontroverted allegations in the complaint must be taken as true.” Schwarzenegger, 374 F.3d at

15 800 (quoting Amba Marketing, 551 F.2d at 787). Factual conflicts in the parties’ affidavits are to

16 be resolved in favor of the party asserting jurisdiction, namely the plaintiffs. Action Embroidery

17 Corp. v. Atlantic Embroidery, Inc., 368 F.3d 1174, 1177 (9th Cir. 2004); Gevorkyan v. Bitmain

18 Technologies Ltd., No. 18-cv-07004-JD, 2022 WL 3702093, at *1 (N.D. Cal. Aug. 26, 2022).

19 Dismissal on personal jurisdiction grounds is denied for the United States defendants.2 For

20 these entities, the relevant facts are not disputed, and controlling law warrants the exercise of

21 jurisdiction. Our circuit has concluded that in cases under Section 12 of the Clayton Act, such as

22 this one, the Court may exercise personal jurisdiction over a defendant consistent with

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2 Both sides agree that the United States defendants are: Intercontinental Exchange Inc.,

Intercontinental Exchange Holdings, Inc., ICE Data Services, Inc., ICE Pricing and Reference

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Data LLC, Bank of America, N.A., Bank of America Corporation, Barclays Capital Inc., Citibank

N.A., Citigroup Inc., Citigroup Global Markets, Inc., Credit Suisse Securities (USA) LLC,

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Deutsche Bank Securities Inc., HSBC Bank USA, N.A., HSBC Securities (USA) Inc., JPMorgan

Chase & Co., JPMorgan Chase Bank, N.A., J.P. Morgan Securities LLC, Lloyds Securities Inc.,

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MUFG Securities Americas Inc., Natwest Markets Securities Inc., SMBC Capital Markets, Inc.,

1 constitutional principles of due process so long as the defendant has minimum contacts with the

2 United States as a whole. See Go-Video, Inc. v. Akai Electric Co., Ltd., 885 F.2d 1406, 1415 (9th

3 Cir. 1989) (district court was “clearly correct . . . that the worldwide service provision of § 12

4 justifies its conclusion that personal jurisdiction may be established in any district, given the

5 existence of sufficient national contacts.”); Action Embroidery, 368 F.3d at 1180 (under a statute

6 providing for nationwide service of process, such as Section 12 of the Clayton Act, “the inquiry to

7 determine ‘minimum contacts’ is . . . ‘whether the defendant has acted within any district of the

8 United States or sufficiently caused foreseeable consequences in this country.”) (quoting

9 Securities Investor Protection Corp. v. Vigman, 764 F.2d 1309, 1316 (9th Cir. 1985)).

10 In Action Embroidery, the circuit determined that, “[a]s a Virginia professional corporation

11 operating in the United States, [the law firm] Wolcott has clearly had such minimum contacts.

12 Constitutional principles of due process are therefore satisfied, and personal jurisdiction over

13 Action and Vanguard’s antitrust claims against Wolcott is proper.” Id. So too, here. Plaintiffs’

14 allegations that each of the United States defendants “was organized in a state in these United

15 States and has its principal place of business or headquarters in a city or cities within the United

16 States” is not disputed. Dkt. No. 327 at 6. Defendants do not contest the existence of these

17 minimum contacts, but say that these do not show that any United States defendant “is ‘at home’

18 in California.” Dkt. No. 339 at 3. This misses the mark because the relevant forum here is the

19 United States, not California. See Action Embroidery, 368 F.3d at 1180. A “minimum contacts”

20 analysis is proper here, and is met for the United States defendants because each one was a United

21 States company “operating in the United States.” Id.

22 Defendants’ emphasis on the distinction between “general” and “specific” jurisdiction, see

23 Dkt. No. 339, is of no moment. Neither Action Embroidery, 368 F.3d 1174, nor Go-Video, 885

24 F.2d 1406, specified which category of personal jurisdiction it was finding to be applicable. The

25 United States Supreme Court has observed that “[t]he law of specific jurisdiction . . . seeks to

26 ensure that States with ‘little legitimate interest’ in a suit do not encroach on States more affected

27 by the controversy.” Ford Motor Co. v. Montana Eighth Judicial District Court, 141 S. Ct. 1017,

1 137 S. Ct. 1773, 1780 (2017)). It is not at all clear how, or if, that concern applies where the

2 relevant forum is the United States as a whole. In any event, the exercise of personal jurisdiction

3 over the United States defendants is solidly supported by Action Embroidery, 368 F.3d 1174.

4 A different conclusion is warranted for the foreign defendants.3 For these defendants,

5 plaintiffs have not met their obligation to “come forward with facts, by affidavit or otherwise,

6 supporting personal jurisdiction.” Scott, 792 F.2d at 927 (quotations omitted). Defendants

7 submitted an extensive set of declarations on their contacts with the United States, Dkt. No. 315-2.

8 Plaintiffs did not respond in kind. See Dkt. No. 327. The allegations plaintiffs rely on in the

9 complaint are conclusory, vague, and controverted. See id. at 11-14. This will not do for

10 plaintiffs’ burden of establishing personal jurisdiction. See Schwarzenegger, 374 F.3d at 800.

11 The foreign defendants are dismissed for lack of personal jurisdiction, and the dismissal is without

12 prejudice. See Grigsby v. CMI Corp., 765 F.2d 1369, 1372 n.5 (9th Cir. 1985) (“Plaintiffs argue

13 that although the district court was correct in determining that it had no personal jurisdiction over

14 the Torchmark defendants, the court erred in dismissing the complaint ‘with prejudice’ as to these

15 defendants. This is true.”).

16 II. ANTITRUST STANDING

17 Plaintiffs have alleged claims against the United States defendants under Sections 1 and 2

18 of the Sherman Act, 15 U.S.C. §§ 1, 2, and they seek injunctive relief and treble damages under

19 Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15, 26. Dkt. No. 1. The claims are dismissed

20 for lack of antitrust standing.

21 “The class of persons who may maintain a private damage action under the antitrust laws is

22 broadly defined in § 4 of the Clayton Act.” Associated General Contractors of Cal., Inc. v. Cal.

23 State Council of Carpenters, 459 U.S. 519, 529 (1983) (AGC) (citing 15 U.S.C. § 15). But

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3 The foreign defendants are: ICE Benchmark Administration Limited, Barclays Bank PLC,

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Coöperatieve Rabobank U.A., Credit Suisse Group AG, Credit Suisse AG, Deutsche Bank AG,

HSBC Holdings plc, HSBC Bank plc, Lloyds Bank plc, MUFG Bank, Ltd., The Bank of Tokyo-

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Mitsubishi UFG Ltd., Mitsubishi UFJ Financial Group, Inc., Royal Bank of Scotland Group plc,

Royal Bank of Scotland plc, National Westminster Bank plc, Sumitomo Mitsui Banking

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Corporation, Sumitomo Mitsui Financial Group Inc., Sumitomo Mitsui Banking Corporation

1 Section 4 is “not to be read literally so that ‘any person’ who was injured ‘by reason of anything

2 forbidden by the antitrust laws’ could maintain an action.” R.C. Dick Geothermal Corp. v.

3 Thermogenics, Inc., 890 F.2d 139, 146 (9th Cir. 1989) (en banc) (quoting AGC, 459 U.S. at 535).

4 Instead, “[t]o determine whether the plaintiff’s case falls within the intended area of statutory

5 protection, we must ‘evaluate the plaintiff’s harm, the alleged wrongdoing by the defendants and

6 the relationship between them.’” Id.

7 The Court will balance several factors, no one of which is “decisive.” Id. They include

8 “(1) the specific intent of the alleged conspirators; (2) the directness of the injury; (3) the character

9 of the damages, including the risk of duplicative recovery, the complexity of apportionment, and

10 their speculative character; (4) the existence of other, more appropriate plaintiffs; [and] (5) the

11 nature of the plaintiff’s claimed injury.” Id.; see also American Ad Mgmt., Inc. v. General

12 Telephone Co. of Cal., 190 F.3d 1051, 1054 (9th Cir. 1999) (antitrust standing factors include

13 “(1) the nature of the plaintiff’s alleged injury; that is, whether it was the type the antitrust laws

14 were intended to forestall; (2) the directness of the injury; (3) the speculative measure of the harm;

15 (4) the risk of duplicative recovery; and (5) the complexity in apportioning damages”).

16 A threshold problem for plaintiffs is the rather cavalier approach they took to this issue.

17 Antitrust standing is different from Article III standing and requires a “more demanding” showing.

18 Amarel v. Connell, 102 F.3d 1494, 1507 (9th Cir. 1997); AGC, 459 U.S. at 535 n.31 (“Harm to the

19 antitrust plaintiff is sufficient to satisfy the constitutional standing requirement of injury in fact,

20 but the court must make a further determination whether the plaintiff is a proper party to bring a

21 private antitrust action.”). Consequently, the Court’s prior rejection of defendants’ Article III

22 standing challenge, see Dkt. No. 351 at 3-5, was not the end of the matter. In addition, standing is

23 an ongoing inquiry, and the “need to satisfy the requirements of Article III persists throughout the

24 life of the lawsuit, with the later stages of the case requiring more of plaintiffs than is required at

25 this early stage.” Id. at 4-5 (quotations and citations omitted).

26 It was plaintiffs’ burden to plausibly allege antitrust standing. See City of Oakland v.

27 Oakland Raiders, 20 F.4th 441, 448 (9th Cir. 2021) (“To plead a Sherman Act claim, a private

1 standing.”). “The doctrine of antitrust standing requires an inquiry beyond that performed to

2 determine standing in a constitutional sense. If standing is not found, an essential element of the

3 plaintiff’s case is missing and the plaintiff’s case fails. To score a home run the plaintiff must first

4 have touched first base.” Dick Geothermal, 890 F.2d at 145 (internal quotations and citation

5 omitted). But plaintiffs made only a passing mention of antitrust standing: “Defendants argue

6 that plaintiffs lack antitrust standing. This argument ignores the fact that the antitrust laws

7 prohibit price-fixing, and any loans which contain the illegal price is the very kind of damage that

8 flows from the price-fixing.” Dkt. No. 328 at 2. This was not a serious effort to demonstrate the

9 adequacy of plaintiffs’ antitrust standing allegations under the case law.

10 The Court’s independent review of the complaint confirmed the absence of antitrust

11 standing. The complaint says nothing about the “specific intent of the alleged conspirators,” Dick

12 Geothermal, 890 F.2d at 146, and what the defendants may have gotten out of continuing to

13 follow the formula and method for setting LIBOR, which are well-known to the public, as

14 demonstrated by plaintiffs’ allegations. See, e.g., Dkt. No. 1 ¶¶ 42-43, 49-52. The “directness of

15 the injury” is also questionable, as are the “nature of the plaintiff’s claimed injury” and the

16 “existence of other, more appropriate plaintiffs.” Dick Geothermal, 890 F.2d at 146. Plaintiffs

17 offer conclusory and vague allegations to the effect that “numerous plaintiffs, including plaintiffs

18 Lisa McCarthy, Jose Brito, Jan-Marie Brown, Brenda Davis, Gabriel Garavanian, Harry

19 Garavanian, Bill Rubinsohn, Sandy Russell, Gary Talewsky, are consumers of credit cards issued

20 by unnamed co-conspirator Capital One, which lists the 3-month and 1-month LIBOR rates in its

21 statements as possible components in disclosing variable interest rates to be charged to its

22 customers,” and “plaintiff Yvonne Jocelyn Gardner is a consumer of a variable interest rate

23 mortgage from defendant Bank of America.” Dkt. No. 1 ¶¶ 5-6. Questions left unanswered by

24 these allegations and the complaint as a whole include: whether (and which) plaintiffs even had

25 interest rates or other financial obligations that were tied to the LIBOR rate; whether plaintiffs

26 made any payments that were tied to the LIBOR rate; whether, and to what degree, the LIBOR

27 rate was higher than what a competitive rate would have been in the absence of the LIBOR

1 Capital One, which presumably set other important components of the interest rates and financial

2 obligations plaintiffs were subject to. Overall, plaintiffs have not done enough to establish

3 antitrust standing.

4 III. OTHER ARGUMENTS FOR DISMISSAL

5 The Court declines to reach defendants’ other arguments for dismissal at this time. As

6 plaintiffs contemplate amendment of the complaint, they are advised to take into account the

7 Court’s concerns about their theory of the case stated in the injunction order, Dkt. No. 351, and

8 during the hearings. “In a field in which catchwords have often been dominant there is a grave

9 risk of applying a tag with mechanical literalness.” Dick Geothermal, 890 F.2d at 151. That

10 observation has particular application to the way plaintiffs have framed and attempted to litigate

11 this case, with an unrelenting focus on defendants’ agreement “to fix” the LIBOR rate “by

12 formula.” See, e.g., Dkt. No. 328 at 1. This approach is all the more doubtful because the

13 complaint says nothing about how the LIBOR formula enabled its members to “maximize their

14 profits,” even though that is a major element of a Section 1 claim. See City of Oakland, 20 F.4th

15 at 458 (“In a horizontal price-fixing scheme . . . members of a cartel ‘collude on price and output

16 in an effort to maximize their profits.’”).

17 Plaintiffs acknowledge that the LIBOR rate is “used by an estimated US $350 trillion

18 ($350,000,000,000,000.00) of outstanding contracts in maturities ranging from overnight to more

19 than 30 years.” Dkt. No. 1 at 3. As the Supreme Court stated “over 20 years ago in Associated

20 Gen. Contractors of Cal., Inc. v. Carpenters, 459 U.S. 519, 528, n.17 (1983), ‘a district court must

21 retain the power to insist upon some specificity in pleading before allowing a potentially massive

22 factual controversy to proceed.’” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 558 (2007). The

23 current version of plaintiffs’ complaint is sorely lacking in that specificity.

24 CONCLUSION

25 Plaintiffs’ complaint, Dkt. No. 1, is dismissed in its entirety, with leave to amend. An

26 amended complaint must be filed by October 4, 2022. The amended complaint may re-allege

27 claims against the foreign defendants who were dismissed without prejudice for lack of personal

1 Pending further order, the case is stayed in all other respects. The discovery dispute and

2 request for a case schedule, Dkt. Nos. 317, 363, are terminated without prejudice and will be

3 addressed as developments warrant.

4 IT IS SO ORDERED.

5 Dated: September 13, 2022

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JAME NATO

8 United#$tates District Judge

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