The opinion
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------------X
In re:
MEMORANDUM & ORDER
LIBOR-Based Financial Instruments
Antitrust Litigation 11 MD 2262 (NRB)
This Document Applies to:
National Credit Union Administration
Board v. Credit Suisse Group AG, et al. 13 Civ. 7394
OTC Plaintiff Action 11 Civ. 5450
-----------------------------------------X
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE
INTRODUCTION
The Over-the-Counter (“OTC”) plaintiffs obtained final
judgments approving settlements with four defendants and
certification of a litigation class maintaining antitrust claims
against two defendants (“Litigation Class”) in this consolidated
multi-district litigation (“MDL”). From the earliest filing on
the electronic court filing (“ECF”) system referencing the first
settlement to the entry of the last of the final judgments, 960
days passed. During that span of 960 days, there were over 60
entries on the docket sheet directly related to the settlements
and the Litigation Class; multiple notices were filed in the
financial press, both online and in print; and direct mail was
sent to plaintiffs. This is the context in which we consider the
National Credit Union Administration Board’s (“NCUA”) pending
motion to be excused for its failure to timely seek exclusion from
the four settlements and the Litigation Class.
PROCEDURAL BACKGROUND
Before discussing NCUA’s motion, we set out in detail the
procedural history of the settlements and the Litigation Class.
On March 9, 2016, OTC plaintiffs moved for preliminary approval of
their settlement with Barclays Bank plc (“Barclays”), see ECF No.
1336, which was granted on December 21, 2016, see ECF No. 1678.1
OTC plaintiffs additionally moved for and obtained preliminary
approval of their settlements with Citibank, N.A. and Citigroup
Inc. (collectively, “Citi”) on August 31, 2017, and HSBC Bank plc
(“HSBC”) and Deutsche Bank Aktiengesellschaft (“Deutsche Bank”) on
April 5, 2018.2 See ECF Nos. 2195, 2247, 2448, 2472, 2480, 2481.
Every settlement class included “all persons or entities . . .
that purchased in the United States, directly from a Defendant (or
a Defendant’s subsidiaries or affiliates), a U.S. Dollar LIBOR-
Based Instrument and that owned the U.S. Dollar LIBOR-Based
Instrument any time during the period August 2007 through May
2010.”3 In re LIBOR-Based Fin. Instruments Antitrust Litig.
1 Docket entry numbers that are cited in this Memorandum and Order refer
to the master docket in In re LIBOR-Based Financial Instruments Antitrust
Litigation, No. 11 MD 2262 (NRB) (S.D.N.Y. filed Aug. 12, 2011).
2 Throughout this opinion, we refer to Barclays, Citi, HSBC, and Deutsche
Bank as “Settling Defendants.”
3 “U.S. Dollar LIBOR-Based Instrument” included various types of swaps
and similar instruments “that include[ ] any term, provision, obligation, or
right to be paid by or to receive interest from a Defendant (or its subsidiaries
or affiliates) based upon the U.S. Dollar LIBOR rate.” Final Approval of
Barclays and Citi Settlements, 327 F.R.D at 490 n.6.
(“Final Approval of Barclays and Citi Settlements”), 327 F.R.D.
483, 490 (S.D.N.Y. 2018); see also ECF No. 2746 at 5 (approving
settlements with HSBC and Deutsche Bank). This Court set the
following deadlines for requesting exclusion from the settlements:
October 9, 2017 (Barclays); January 2, 2018 (Citi); and September
28, 2018 (Deutsche Bank and HSBC). See ECF Nos. 1948, 2290, 2579.
On February 28, 2018, we also granted in part OTC plaintiffs’
motion for class certification and certified a Rule 23(b)(3) class,
which included plaintiffs asserting antitrust claims against Bank
of America, N.A. and JPMorgan Chase Bank, N.A. (“Non-Settling
Defendants”).4 See LIBOR VII, 299 F. Supp. 3d 430, 607-08 (S.D.N.Y.
2018). The notice program for the Deutsche Bank and HSBC
settlements included information regarding the Litigation Class.
In approving the proposed joint notice program, we used the same
deadline – September 28, 2018 – for requesting exclusion from the
Litigation Class. ECF No. 2579 at 3.
This Court entered final judgments approving the Barclays and
Citi settlements on August 1, 2018, and the Deutsche Bank and HSBC
settlements on October 25, 2018. See ECF Nos. 2655, 2746.5 In
4 The certified class included “all persons or entities residing in the
United States that purchased, directly from a Panel Bank (or a Panel Bank’s
subsidiaries or affiliates), a LIBOR-Based Instrument that paid interest indexed
to a U.S. dollar LIBOR rate set at any time during the period August 2007
through August 2009 (“Class Period”) regardless of when the LIBOR-Based
Instrument was purchased.” LIBOR VII, 299 F. Supp. 3d at 608.
5 This Court also held public fairness hearings concerning the settlements
on October 23, 2017 (Barclays), January 23, 2018 (Citi), and October 25, 2018
(HSBC and Deutsche Bank).
entering the final judgments, we found that the notice programs
for the four settlements satisfied due process and Rule 23 because
the programs incorporated “myriad methods” and constituted “the
best notice practicable under the circumstances.”6 Final Approval
of Barclays and Citi Settlements, 327 F.R.D at 491-92; see also
ECF No. 2746, ¶ 11 (making similar findings for the Deutsche Bank
and HSBC notice program). The notice programs clearly informed
class members of their right to opt out and the consequences of
failing to do so, explaining that “[u]nless you exclude yourself,
you give up the right to sue [Settling Defendants] for the claims
that you release through this Settlement.” ECF No. 1943-1 at 9
(Barclays settlement); see also ECF Nos. 2266-1 at 8 and 2576-1 at
10 (similar language for other settlements). In addition,
notifications of 61 separate ECF entries related to the four
settlements and the Litigation Class were sent to the counsel of
record for all parties. See Settling Defs.’ Br. Appx., ECF No.
2829 (list of the ECF entries).
6 The approved notice programs were comprehensive. In addition to sending
direct mail to potential class members, the notice programs included:
“publication notices appearing in widely read financial media such as Barron’s,
the Financial Times, Investor’s Business Daily, the Wall Street Journal,
Bloomberg Businessweek, and The Economist”; “extensive online outreach
including banner ads on various websites, sponsored keyword searches with
Google, Bing, and other search engines”; and “dissemination of a press release
through numerous online platforms” to key financial and business media
throughout the world. Settling Defs.’ Joint Mem. of Law in Opp. to NCUA’s Mot.
for Exclusion (“Settling Defs.’ Br.”), ECF No. 2829, at 2-3; see also ECF Nos.
2275-1, 2380, 2699 (declarations describing the notice programs for the four
settlements).
DISCUSSION
Despite these extensive, multi-faceted notice programs, NCUA
- who filed a complaint on September 23, 2013, asserting LIBOR-
related claims on behalf of five liquidated Credit Unions7 - claims
that it received none of the notices regarding the four settlements
or the Litigation Class. According to NCUA, it first learned about
its failure to opt out on October 30, 2018 – after this Court
entered the final judgments approving the four settlements and
their notice programs – when counsel for Barclays contacted NCUA’s
counsel regarding the Barclays settlement. See Mem. of Law in
Supp. of Mot. for Exclusion form Class Settlements (“NCUA’s Br.”),
ECF No. 2839, at 6.
In support of its motion for exclusion from the four
settlements and the Litigation Class, NCUA argues that its failure
to opt out formally was due to “excusable neglect” under Fed. R.
Civ. P. 6(b)(1)(B), see NCUA’s Br., at 10-11, and that formal opt-
out was not necessary because it “affirmatively expressed its
intent to opt out of the [s]ettlements and the Litigation Class”
by actively litigating its individual claims against the
defendants, id. at 2. We consider each argument in turn.
7 The five Credit Unions are: U.S. Central Federal Credit Union, Western
Corporate Federal Credit Union, Members United Corporate Federal Credit Union,
Southwest Corporate Federal Credit Union, and Constitution Corporate Federal
Credit Union. NCUA originally filed the complaint in the District of Kansas,
and the action was transferred to this District and was subsequently
consolidated into this MDL.
I. “Excusable Neglect”
In general, “[a] class member seeking permission to opt out
late must first demonstrate ‘excusable neglect’ for his or her
failure to comply with a fixed deadline” consistent with
6(b)(1)(B). In re Painewebber Ltd. P’ships Litig., 147 F.3d 132,
135 (2d Cir. 1998); see also In re Four Seasons Sec. Laws Litig.,
493 F.2d 1288, 1290 (10th Cir. 1974). A party seeking relief under
the “excusable neglect” standard “must show both good faith and a
reasonable basis for not acting within the specified period.” In
re Del-Val Financial Corp., 154 F.R.D. 95, 96 (S.D.N.Y. 1994)
(citing Four Seasons, 493 F.2d at 1290). The determination of
whether the movant’s conduct constitutes “excusable neglect” is an
equitable one that requires a court to consider “all relevant
circumstances.” Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd.
Partnership, 507 U.S. 380, 391 (1993). However, in applying the
Supreme Court’s ruling in Pioneer, the Second Circuit has noted
that “the equities will rarely if ever favor a party who fails to
follow the clear dictates of a court rule” and held that “where
the rule is entirely clear, we continue to expect that a party
claiming excusable neglect will, in the ordinary course, lose under
the Pioneer test.” Silivanch v. Celebrity Cruises, Inc., 333 F.3d
355, 366 (2d Cir. 2003) (internal citations omitted).
Settling Defendants contend that NCUA’s motion “should be
viewed as a motion for relief from judgment under Rule 60(b)” and
thus can only be granted if NCUA makes a showing of exceptional
circumstances. Settling Defs.’ Br. at 5. We agree that NCUA’s
motion should be viewed as a Rule 60(b) motion. NCUA is not
seeking a simple extension of time to submit opt-out requests.
Rather, NCUA is seeking to be relieved from this Court’s final
judgments approving the four settlements. However, we recognize
that Rules 6(b)(1)(B) and 60(b) embody the same “excusable neglect”
standard.8 See 3 William B. Rubenstein, Newberg on Class Actions
§ 9:45 (5th ed. Jun. 2019 update) (the “excusable neglect” standard
“arises from the court’s discretion to grant an extension of time
under Federal Rule of Civil Procedure 6(b), to grant relief from
its judgment or order under Rule 60(b)(1), and to enter orders
managing class actions under Rule 23(d),” and the standard is
“identical under all three”); see also Pioneer, 507 U.S. at 392-
93 (finding that the “excusable neglect” standard is the same for
Federal Rules of Civil Procedure 6(b) and 60(b)(1)).
In an effort to make a showing of “excusable neglect,” NCUA
argues that NCUA “acted in good faith by relying on an established
[internal] process,” in which NCUA’s Asset Management and
Assistance Center (“AMAC”) “reviews and processes mailed notices
of class-action settlements.” NCUA’s Br. at 12. NCUA asserts
that AMAC searched its email archive and mail logging system for
8 In addition, although the parties dispute whether the Second or Tenth
Circuit law applies to NCUA’s motion, we find that the “excusable neglect”
standard is applied in both the Second and Tenth Circuits.
any class-action notices relating to Settling and Non-Settling
defendants and did not find any. See Decl. of Conrad Wirries
(“Wirries Decl.”), ECF No. 2840, ¶ 7.
To the contrary, the mailing record provided by lead counsel
for OTC plaintiffs shows that three mailed notices were delivered
to Catalyst Corporate Credit Union (“Catalyst”), the successor to
one of the named plaintiffs in NCUA’s individual action, Southwest
Corporate Credit Union (“Southwest Corporate”).9 See NCUA’s Ex.
2, ECF No. 2839-1. NCUA argues that Catalyst is not one of the
five defunct credit unions on whose behalf it has brought claims.
However, NCUA admits that Catalyst is the successor to Southwest
Corporate, thus making applicable the case law holding that found
“[t]he failure of the internal procedures of the plaintiffs to see
that the notice reached the proper person [to be] no excuse.”
Supermarkets Gen. Corp. v. Grinnell, 59 F.R.D. 512, 514 (S.D.N.Y.
1973), aff’d sub nom. Manhattan-Ward, Inc. v. Grinnell Corp., 490
F.2d 1183 (2d Cir. 1974). Moreover, due process notice
requirements are not dependent on whether all potential class
members physically receive mailed notice. See State of West
Virginia v. Chas. Pfizer & Co., 440 F.2d 1079, 1090-91 (2d Cir.
1971) (holding that, although some potential class members did not
9 As Settling Defendants point out, a notice regarding another unrelated
class action settlement that was mailed to Catalyst Corporate Credit Union
“enabled NCUA’s settlement evaluation processes to function.” Settling Defs.’
Br., at 12 (citing Wirries Decl.’s Ex. A, ECF No. 2840-1).
receive notice regarding the settlement, the notice program still
satisfied due process because it was the best notice practicable
under the circumstances). The burden does not fall on Settling
Defendants to ensure that NCUA actually received the mailed
notices, and a failure in NCUA’s internal system to properly
process the notices is entirely NCUA’s fault and responsibility.10
Even if we assume arguendo, and contrary to the record, that
NCUA did not receive any mailed notice, NCUA received legally
sufficient notice of the settlements and the Litigation Class
through the publication notice programs approved by this Court.
The settlement administrator utilized “a rigorous publication
notice program spanning” major national newspapers and magazines
and “Internet advertising . . . across various targeted websites.”
See OTC Pls.’ Mem. of Law in Supp. of Mot. for Order Approving
Joint Notice Program for Deutsche Bank and HSBC Settlements, ECF
No. 2516, at 6-7. Furthermore, NCUA was on notice of the opt-out
deadlines through its counsel, who received no fewer than 61 ECF
notices regarding the four settlements and the Litigation Class.11
10 In fact, other government entities who had also filed separate actions
in this MDL opted out of the settlements and the Litigation Class without any
issue. See, e.g., ECF Nos. 2319, 2412 (lists of class members who properly
submitted opt-out requests). For example, the Federal Deposit Insurance
Corporation is a government entity that, just like NCUA, is asserting claims as
a receiver of multiple failed financial institutions.
11 See, e.g., ECF Nos. 1336-38, 2195-96, 2226, 2448-50, 2472-74
(preliminary approval motions); ECF Nos. 1926-30, 1939, 1943, 2155, 2229, 2251-
54, 2515-18, 2590-91 (filings concerning settlement notices and notice
programs); ECF Nos. 1948, 2290, 2579 (orders establishing the opt-out
deadlines). In addition, ECF notifications regarding the public fairness
hearings were sent to the counsel of record for all parties.
Incredibly, NCUA argues that the ECF system was not one of the
approved mechanisms for providing notice to potential class
members. NCUA’s Br., at 13. However, as Settling Defendants
underscore, NCUA is chargeable with the information that was
included in the ECF notifications its counsel received. See, e.g.,
Nemaizer v. Baker, 793 F.2d 58, 62-63 (2d Cir. 1986) (“[A]n
attorney’s actions, whether arising from neglect, carelessness or
inexperience, are attributable to the client, who has a duty to
protect his own interests by taking such legal steps as are
necessary. To rule otherwise would empty the finality of judgments
rule of meaning.” (emphasis added)); see also Shumsker v. Citigroup
Global Mkts. Inc., 569 Fed. App’x 16, 19 (2d Cir. 2014) (finding
no excusable neglect where counsel “had actual notice of the opt-
out requirement”). Thus, NCUA can be “held accountable for the
acts and omissions of [its] attorneys.” Pioneer, 507 U.S. at 396.
NCUA also argues that there is no prejudice to defendants in
allowing NCUA to opt out late, and that “[t]he only effect of
granting NCUA’s request would be to allow NCUA to continue to
litigate the claims that it is already litigating.” NCUA’s Br.,
at 13. However, Settling Defendants would indisputably suffer
prejudice from reviving claims that were previously and properly
released in exchange for consideration totaling $590 million. See
In re Am. Express Fin. Advisors Sec. Litig., 672 F.3d at 130
(“[Defendant] would suffer prejudice if [the movants] were
permitted to opt out of the Class Settlement three years late, as
it would be exposed to liability that it had every reason to think
had been foreclosed by the entry of the Settlement Agreement in
federal court.”). Therefore, we find that NCUA has not
demonstrated any sufficient showing of “excusable neglect.”
II. “Active Litigation”
NCUA’s argument that it affirmatively expressed its intent to
opt out of the four settlements and the Litigation Class by
actively litigating its individual action fares no better. As a
threshold matter, “most courts hold that pending parallel
litigation is not sufficient to communicate an opt-out request.”
3 William B. Rubenstein, Newberg on Class Actions § 9:46 (5th ed.
Jun. 2019 update); see also Berman v. L.A. Gear, Inc., No. 91-cv-
2653 (LBS), 1993 WL 437733, at *5 n.1 (S.D.N.Y. Oct. 26, 1993),
aff’d., 29 F.3d 621 (2d Cir. 1994) (“It is well recognized that
pendency of an individual action does not excuse a class member
from filing a valid request for exclusion.”).
NCUA asserts that this widely accepted case law is not
applicable to this case because it did not just merely rely on
“pendency of an individual action” but “has taken active steps to
pursue its individual claims during the opt-out period.” NCUA’s
Reply Mem. of Law in Further Supp. of Mot., ECF No. 2836, at 5.
NCUA selectively quotes generous language from Four Seasons – in
which the Tenth Circuit found that “[a] reasonable indication of
a desire to opt out ought to be sufficient” – and asserts that its
litigation activities of “notic[ing] an interlocutory appeal,
amend[ing] its protective complaint, and submit[ing] briefing in
support of its motion to amend its original complaint,” NCUA’s
Br., at 2, were reasonable indications of its desired exclusion.
However, Four Seasons is readily distinguishable on its
facts. In Four Seasons, Bank of America - the entity seeking to
opt out after the deadline - had actually contacted the settlement
trustee before the deadline to confirm “whether it could
participate in the class recovery as a member of a class and also
retain its cause of action which was already filed” and, after
further correspondence with class counsel, wrote to the trustee
one day after the deadline to request an opt-out form. 493 F.2d
at 1290. Therefore, when the Tenth Circuit assessed “a reasonable
indication of a desire to opt out,” id. at 1291, it is abundantly
clear that the Circuit was referring to Bank of America’s actual
engagement with the settlement administrator, not its active
litigation of its individual action.
Furthermore, as Settling Defendants point out, NCUA’s focus
on the “active” nature of its participation in this MDL “only
confirms the absence of any excuse for ignoring settlement class
opt-out deadlines of which they had actual notice.” Settling
Defs.’ Br., at 17. As discussed supra, NCUA received actual
notices through the notice programs that satisfied due process and
Rule 23, but NCUA did not take any step in the span of 960 days to
notify this Court, the settlement administrator, or any of the
defendants about its desire to opt out before the deadlines to do
so expired. Therefore, allowing NCUA to be excluded from the four
settlements and the Litigation Class – especially after we have
already entered the final judgments - “will erode finality of
complex adjudications, discourage class action settlements, permit
return of the former option of one-way intervention, and place a
burden on judicial resources.” McCubbrey v. Boise Cascade Home &
Land Corp., 71 F.R.D. 62, 69 (N.D. Cal. 1976).
NCUA cites several cases in which courts allowed plaintiffs
who did not satisfy specific opt-out requirements to be excluded
because they reasonably indicated their desired exclusion.
However, unlike NCUA, the plaintiffs in those cases did not utterly
fail to notify any relevant party about their desired exclusion
after receiving multiple settlement notices. We consider each
case in turn.
In Butler v. Fairbanks Capital, No. 04-cv-0367 (RMU), 2005 WL
5108537 (D.D.C. Jan. 3, 2005), a plaintiff seeking to be excluded
from a class action settlement filed an individual action against
the defendant during the opt-out period. See id. at *1-2. In the
instant case, NCUA had commenced its lawsuit more than two years
before OTC plaintiffs moved for preliminary approval of the first
settlement that was reached with Settling Defendants. Filing a
lawsuit during the opt-out period can be a clear statement of
desired exclusion, but litigation activities in a pending case do
not necessarily mean that a party does not wish to take advantage
of the settlement between the class and a defendant. NCUA cannot
expect this Court or Settling Defendants to be mind readers who
can decipher NCUA’s intent based on its litigation activities
unrelated to the proposed settlements, especially when NCUA is
still asserting claims against defendants that were not part of
the four settlements or the Litigation Class.
In McCubbrey, the court ruled that two specific groups of
plaintiffs who brought individual suits were not bound by the
settlement: (1) those who commenced individual suits against the
defendant prior to receipt of a settlement notice because they
“were afforded inadequate notice of the class settlement”12; and
(2) those who filed suit after receipt of the notice but prior to
termination of the opt-out period because they “effected
substantial compliance with the opt-out requirement.” 71 F.R.D.
at 67. None of those rulings helps NCUA, since NCUA: (1) does not
argue that the language of the notices was inadequate; and (2) did
not commence its individual action during the opt-out period.
12 The McCubbrey court found the notice inadequate because “[n]othing in
the detailed, 29-page Notice would alert even a careful reader that he must
satisfy the exclusion requirements or suffer the consequence of permitting his
ongoing litigation to evaporate.” 71 F.R.D. at 68.
In In re Brand Name Prescription Drugs Antitrust Litig., 171
F.R.D. 213 (N.D. Ill. 1997), a plaintiff’s individual action was
consolidated into the MDL action, and the plaintiff “followed the
procedures for opting out of the class” but sent the opt-out notice
to an incorrect address. See id. at 214. The plaintiff then filed
another action against the same defendants and four new defendants
after the opt-out deadline. See id. at 214-15. In the instant
case, NCUA did not even attempt to follow the court-approved
procedures for opting out before the deadlines.
In Morris v. Affinity Health Plan, Inc., 928 F. Supp. 2d 805
(S.D.N.Y. 2013), aff’d, 558 F. App’x 51 (2d Cir. 2014), a plaintiff
did not file a formal notice of exclusion but indisputably objected
to the settlement agreement by “timely fil[ing] her objections
with the Court.” Id. at 809. This ruling does not help NCUA since
it did not file any objection to the settlements or the Litigation
Class with this Court before the opt-out deadlines.
In Bonner v. Texas City Indep. Sch. Dist. of Tex., 305 F.
Supp. 600 (S.D. Tex. 1969), the court found that certain plaintiffs
in a racial discrimination lawsuit “expressed a firm desire not to
become associated with this [class] action” in their testimony at
trial. Id. at 617. This expression was “sufficient to constitute
a request to be excluded.” Id. NCUA has never expressed on the
record in open court “a firm desire not to become associated” with
the OTC class action.
In sum, NCUA’s reliance on those cases is nothing more than
a futile attempt to fit a square peg into a round hole. We thus
reject NCUA’s argument that it affirmatively expressed its desired
exclusion by actively litigating its individual action.
CONCLUSION
As we noted at the outset of this opinion, NCUA failed to
exclude itself from the four settlements and the Litigation Class
despite direct mail, multiple notices in the financial press, and
dozens of ECF notifications. To find on these facts that NCUA has
demonstrated a showing of “excusable neglect” or affirmatively
expressed its intent to opt out by “actively litigating” its
individual action would effectively write those legal standards
out of the law. We decline to do so.
For the foregoing reasons, NCUA’s motion for exclusion from
the OTC class settlements and the OTC Litigation Class is denied.
The Clerk of Court is respectfully directed to terminate the
pending motions listed at docket entries 2838 in 11 MD 2262 and
279 in 13 CV 7394.
SO ORDERED.
Dated: New York, New York
July /0, 2019
NAOMI RELCE BUCHWALD
UNITED STATES DISTRICT JUDGE
16