IN RE: EUROPEAN GOVERNMENT BONDS ANTITRUST LITIGATION

USDC SDNY

DOCUMENT

ELECTRONICALLY FILED

UNITED STATES DISTRICT COURT DOC #:

SOUTHERN DISTRICT OF NEW YORK DATE FILED: 6/27/2023

19 Civ. 2601 (VM)

IN RE HUROPEAN GOVERNMENT BONDS

ANTITRUST LITIGATION DECISION AND ORDER

VICTOR MARRERO, United States District Judge.

Plaintiffs Ohio Carpenters’ Pension Fund, San Bernardino

County Employees’ Retirement Association, and Electrical

Workers Pension Fund Local 103 I.B.E.W. (collectively,

“Plaintiffs”) brought this putative antitrust class action,

on behalf of themselves and all others similarly situated,

against Defendants, which include, among others, Natixis S.A.

(“Natixis”), UniCredit Bank AG, and UniCredit Capital Markets

LLC (together, with UniCredit Bank AG, “UniCredit”). 1

Plaintiffs entered into partial settlements (the “Proposed

Settlements” or “Settlements”) with UniCredit and Natixis

(together, the “Settling Defendants” or “Released Parties”)

in this action. (See “Settlement with UniCredit Bank AG,” or

1 In addition to including Natixis and UniCredit, “Defendants” is defined

to include Bank of America, N.A.; Merrill Lynch International; NatWest

Markets plc; NatWest Markets Securities Inc.; Nomura Securities

International Inc.; Nomura Securities International PLC; UBS AG; UBS

Europe SE; UBS Securities LLC; Citigroup Global Markets Limited; Citigroup

Global Markets Inc.; JP Morgan Chase Bank, N.A.; J.P. Morgan Securities

pic; J.P. Morgan Securities LLC; RBC Europe Limited; Royal Bank of Canada;

RBC Capital Markets, LLC; Jefferies International Limited; Jefferies LLC;

State Street Corporation; and State Street Bank and Trust Company. See In

re European Government Bonds Antitrust Litigation, No. 19 Civ. 2601 (VM)

(S.D.N.Y.) (the “In re EGB Action”).

“UniCredit Settlement,” Dkt. No. 349-1; “Settlement with

Natixis S.A.” or “Natixis Settlement,” Dkt. No. 349-2.) The

Court preliminarily approved the Proposed Settlements on May

16, 2023. (See Dkt. Nos. 353, 354.)

Coöperatieve Rabobank U.A. and Rabo Securities USA, Inc.

(together, “Rabobank”) and Deutsche Bank AG and Deutsche Bank

Securities Inc. (together, “Deutsche Bank,” and collectively,

with Rabobank, “Rabo and Deutsche”) are non-parties in the In

re EGB Action, but are named as defendants in a related matter

also before this Court, Ohio Carpenters’ Pension Fund, et al.

v. Deutsche Bank AG, et al., No. 22 Civ. 10462 (VM) (S.D.N.Y.)

(the “Ohio Carpenters Action”). Despite being non-parties

here, Rabo and Deutsche were named as “Defendants” in the

Proposed Settlements. (See UniCredit Settlement ¶ 1.l.)2

Now pending before the Court is Rabo and Deutsche’s joint

objection to the Proposed Settlements. (See “Objection,” or

“Obj.,” Dkt. No. 356.) Plaintiffs filed their opposition (see

“Opposition” or “Opp.,” Dkt. No. 358), and Rabo and Deutsche

filed their reply (see “Reply,” Dkt. No. 361). For the reasons

set forth below, Rabo and Deutsche’s Objection is SUSTAINED,

in part, and OVERRULED, in part.

2 The Court notes that the UniCredit Settlement and Natixis Settlement

include nearly identical provisions. Unless otherwise indicated, the

Court will cite to only the UniCredit Settlement with the understanding

that the Natixis Settlement includes an identical or similar provision.

I. DISCUSSION

Rabo and Deutsche, parties only to the Ohio Carpenters

Action, and not the instant matter, filed a joint Objection

to the Proposed Settlements pertaining to the In re EGB

Action. In their Objection, they argue that it is

inappropriate for the Proposed Settlements to include them as

“Defendants” because they are not parties to the instant

matter. They further argue that by naming them as Defendants,

the Proposed Settlements improperly extinguish their right to

seek contribution against the Released Parties. Lastly, they

argue that the Proposed Settlements improperly impose

discovery burdens on Rabo and Deutsche. The Court addresses

each objection in turn.

A. TREATMENT OF RABO AND DEUTSCHE AS “DEFENDANTS” AND

IMPACT ON CONTRIBUTION RIGHTS

First, the Court agrees with Rabo and Deutsche that

Plaintiffs should not have included them in the definition of

“Defendants” in the Proposed Settlements. The Proposed

Settlements approved by this Court would provide Plaintiffs

and the settlement class with a settlement fund of $27 million

and cooperation to aid Plaintiffs in pursuing certain claims.

(See Dkt. No. 348 at 1.) The Proposed Settlements specifically

define “Defendants” to include all Defendants named in the In

re EGB Action, plus Rabo and Deutsche -- the only entities

that are not named as parties to the In re EGB Action. (See

UniCredit Settlement ¶ 1.l.) Thus, where the Proposed

Settlements impose obligations or restrictions upon

“Defendants,” any of the entities included within the

definition of “Defendants,” including Rabobank and Deutsche,

would be obligated to comply. However, while Rabo and Deutsche

are parties to the related Ohio Carpenters Action, the Court

recognizes that they have not been involved in the In re EGB

Action as actual parties. And Plaintiffs have failed to cite

any authority allowing them to impose demands on non-parties

to the action (not merely non-parties to the settlement but

still parties to the action) or treat them as actual

defendants as part of the Proposed Settlements.

Rabo and Deutsche further contend that because they are

named as Defendants, the Proposed Settlements improperly

impose restrictions on their ability to pursue claims of

contribution and indemnification against the Released

Parties. Plaintiffs counter that Rabo and Deutsche do not

have standing to challenge the settlement. They rely on the

Second Circuit’s decision in Melito v.

Experian Marketing Solutions, Inc. for the proposition that

non-parties to a settlement generally lack standing to

challenge a partial class settlement. See 923 F.3d 85, 91

(2d Cir. 2019). In Melito, the Second Circuit remarked that

“a non-settling defendant,” which the court also extended to

third-party defendants, “generally lacks standing to object

to a court approving a partial settlement because a non-

settling defendant is ordinarily not affected by such a

settlement.” Id. at 91 (quoting Bhatia v. Piedrahita, 756

F.3d 211, 218 (2d Cir. 2014)). The Second Circuit noted an

exception, however, that an objection may be raised where a

non-settling defendant or a third-party defendant can

“demonstrate that it will sustain some formal legal prejudice

as a result of the settlement.” Id. Plaintiffs argue that

Rabo and Deutsche will not suffer legal prejudice because

they have not adequately demonstrated that their right to

contribution against UniCredit and Natixis has been

extinguished.

The Court, however, finds Melito not on point. Melito

discusses the propriety of third-party defendants3 that are

non-parties to a settlement to object to the settlement. In

Melito, the Second Circuit noted that as a third-party

defendant, Experian did not have standing to object to a

3 In Melito, third-party defendant Experian Marketing Solutions, Inc.

(“Experian”) was originally named as a defendant in the action and

subsequently dismissed. See 923 F.3d at 89. The remaining defendants,

American Eagle Outfitters and AEO Management Co., then filed a third-

party complaint against Experian, claiming contractual indemnity, breach

of contract, common-law indemnity, and negligence. See id. This third-

party complaint resulted in Experian appearing as a third-party defendant

in the action. See id. The Court notes that its reference to third-party

defendants is distinct from its reference to non-parties to an action.

standing unless it was stripped of some legal claim or

defense. See id. at 91-92. However, its reason for finding

that third-party defendants lack standing absent legal

prejudice is that as a third-party defendant, Experian “had

an opportunity to press its argument” of objecting to the

lower court’s approval of a settlement in the litigation and

would have other opportunities later in the litigation to

challenge the settlement, such as “on appeal from a final

judgment in the third-party proceeding.” Id. at 91 (emphasis

in original). Otherwise, third-party defendants would have

standing to challenge a settlement only where they can

demonstrate that they would suffer “some formal prejudice as

a result of the settlement,” such as where “the settlement

agreement formally strips a non-settling party of a legal

claim or cause of action.” Id. (quoting Bhatia, 756 F.3d at

218). The same logic applies to non-settling defendants,

which the Second Circuit discussed in Bhatia. See 756 F.3d at

218.

Here, Rabo and Deutsche are non-parties to the

settlement and to the action, as they are neither third-party

defendants as discussed in Melito nor non-settling defendants

as discussed in Bhatia. Neither Melito nor Bhatia addresses

what impact a settlement may have on non-parties to the

action, specifically where the settlement imposes certain

obligations upon them, and what proper avenues exist for non-

parties to press their arguments to challenge such a

settlement.

Courts have noted that generally, “a person cannot be

deprived of his legal rights in a proceeding to which he is

not a party.” Cobalt Multifamily Invs. I, LLC v. Shapiro, No.

06 Civ. 6468, 2013 WL 5418588, at *1-2 (S.D.N.Y. Sept. 27,

2013) (internal quotation marks omitted) (quoting Martin v.

Wilks, 490 U.S. 755, 759 (1989)); see also Parklane Hosiery

Co. v. Shore, 439 U.S. 322, 327 n.7 (1979) (“It is a violation

of due process for a judgment to be binding on a litigant who

was not a party or a privy and therefore has never had an

opportunity to be heard.”). Unlike the case in Melito, which

involved third-party defendants who were sued via a third-

party complaint, Plaintiffs here have not shown that as non-

parties to the action, Rabo and Deutsche would possess

analogous or similar procedural protections afforded to

third-party defendants (and non-settling defendants) to

otherwise challenge the settlements later in the litigation.

Accordingly, the Court finds that it would be improper for

Rabo and Deutsche to be considered and treated as “Defendants”

in the Proposed Settlements.

Related to the propriety of treating Rabo and Deutsche

as “Defendants” in the Settlements is whether it is proper

for the Proposed Settlements to impose restrictions on their

ability to pursue certain legal claims against the Released

Parties. Rabo and Deutsche argue that the Settlements would

improperly extinguish their rights to seek contribution and

indemnification against the Released Parties. (See Obj. at 1-

2.) The provision in the Proposed Settlements relating to

contribution and indemnification specifically states:

This Settlement Agreement is expressly intended to

absolve the Released Parties of any claims for

contribution, indemnification, or similar claims from

other Defendants in the Action, arising out of or related

to the Settled Claims, in the manner and to the fullest

extent permitted under the law of New York or any other

jurisdiction that might be construed or deemed to apply

for claims of contribution, indemnification, or similar

claims against any Released Parties.

(UniCredit Settlement ¶ 51.)

Plaintiffs counter that the provision is valid because

Rabo and Deutsche have not adequately demonstrated that they

would sustain legal prejudice, i.e., that their rights of

contribution against the Released Parties have actually been

extinguished. Plaintiffs contend that the “savings clause” in

paragraph 51 of the Proposed Settlements, which states that

the release of claims against the Released Parties extends

only “to the extent permitted by law” (id.), essentially

preserves Rabo and Deutsche’s ability to pursue their rights

under the law. (See Opp. at 2.)

Plaintiffs rely on In re PNC, a federal district court

case from the Western District of Pennsylvania, for the

proposition that the savings clause in the Proposed

Settlements “preclude[s] any improper and illegal use of the

partial settlements agreements to Deutsche Bank and

Rabobank’s disadvantage.” (Opp. at 2 (quoting In re PNC Fin.

Servs. Grp., Inc., 440 F. Supp. 2d 421, 453-54 (W.D. Pa.

2006)).) According to Plaintiffs, Rabo and Deutsche would not

be able to demonstrate any legal prejudice because of the

savings clause, thereby rendering any objections to the

Settlements on this ground baseless. The In re PNC case,

however, is inapposite because it speaks only to whether non-

settling defendants can object to bar orders, i.e., orders

that would bar certain claims of non-settling defendants

after entering into a partial settlement order, such as claims

of contribution or indemnification. See 440 F. Supp. 2d at

447-48.

In In re PNC, the district court determined that a bar

order that released and discharged certain parties from

claims of contribution, as applied to a non-settling

defendant, was proper because it was limited by the savings

clause “to the fullest extent allowed by law.” Id. at 453.

The court determined that the bar order did not extinguish

the rights of Ernst & Young, a non-settling defendant, to

pursue any viable claims against the released parties as a

matter of law, rendering the bar order proper. See id. at

453-54. However, In re PNC addresses the applicability of a

bar order on a non-settling defendant, which is still a party

to the action, but does not address whether it can apply to

non-parties to the action itself.4

Unlike Ernst & Young in In re PNC, Rabo and Deutsche are

not non-settling defendants in the In re EGB Action; they are

not parties to the litigation at all. Courts have routinely

determined that bar orders cannot apply to non-parties to an

action, as such application violates due process. See Cobalt

Multifamily Invs. I, LLC, 2013 WL 5418588, at *1-2; see also

Perkins v. Johnson, No. 06 Civ. 1503, 2007 WL 521170, at *1

(D. Colo. Feb. 15, 2007) (“[F]undamental principles of due

process preclude me from giving effect to that portion of the

parties’ agreement affecting the rights of any defendants who

may be added at a later time.” (internal quotation marks and

citation omitted)); Alvarado Partners, L.P. v. Mehta, 723 F.

Supp. 540, 554 (D. Colo. 1989) (declining to approve a

4 Plaintiffs also argue that Rabo and Deutsche would not suffer prejudice

because they “may be entitled to a set-off of the settlement amounts after

trial.” (Opp. at 1-2 (citing Hydrolevel Corp. v. Am. Soc. Of Mech.

Engineers, Inc., 635 F.2d 118, 130 (2d Cir. 1980)).) However, Hydrolevel

Corp., which Plaintiffs cite, pertained to a defendant’s entitlement to

a deduction in settlement amounts after trial. See 635 F.2d at 130. Again,

the case does not address the right of non-parties to the action to a

set-off of settlement amounts.

proffered partial settlement that sought to “bar potential

claims of non-parties to this action,” because “[f]undamental

due process principles prohibit claim extinguishment against

anyone not a party to this action”).

While these cases do not specifically address whether a

savings clause renders a bar order proper on a non-party to

the litigation, the Court is not persuaded that the absence

or presence of a savings clause creates a meaningful

distinction here. In In re PNC, the district court remarked

that the limitations imposed by a savings clause, such as “to

the fullest extent allowed by law,” “is implicit [in] any

contractual agreement.” 440 F. Supp. 2d at 453 (citing De

Slatopolsky v. Balmoral Condo. Ass’n, Inc., 427 So. 2d 781,

781–82 (Fla. Dist. Ct. App. 1983) for the proposition that

“implied in every contract is the fact that it is to be

interpreted and enforced in accordance with the law”). While

the In re PNC court considered that a savings clause “provides

an additional level of protection” to Ernst & Young, id. at

454, the Court finds that the premise underlying a savings

clause, such as the one in the instant matter, is necessarily

implied in bar orders and other such contractual agreements,

as a court should construe such bar orders within the

parameters of the law and consistent with due process.

Thus, the Court is not persuaded that a bar order, even

with a savings clause, may be imposed upon Rabo and Deutsche

as non-parties to the In re EGB Action, despite their being

parties to the related, but not consolidated, Ohio Carpenters

Action. The Court agrees that the Proposed Settlements

improperly burden Rabo and Deutsche’s rights to pursue claims

against the Released Parties, and as the Court determined

above, Plaintiffs’ treatment and inclusion of the non-party

Rabo and Deutsche as “Defendants” in the Proposed Settlements

is not appropriate. Accordingly, Rabo and Deutsche’s

Objection on this ground is SUSTAINED, and the Court directs

Plaintiffs to remove Rabo and Deutsche from the definition of

“Defendants” in the Proposed Settlements.

B. DISCOVERY BURDENS

Second, the Court finds that Plaintiffs did not impose

improper discovery obligations on Rabo and Deutsche. Rabo and

Deutsche object that the Proposed Settlements impose

discovery obligations on Rabo and Deutsche to search for and

produce to a claims administrator documents showing the

identities of any U.S.-based European Government Bond

transaction counterparties in order to aid Plaintiffs in

providing notice to potential class members.5 The discovery

5 Rabo and Deutsche further argue that the In re EGB and Ohio Carpenters

Actions, though related, are not consolidated, involve different sets of

defendants, allege distinct conspiracies over different time periods, and

obligation that Rabo and Deutsche object to is specifically

that in their Memorandum of Law in support of court approval

of the Proposed Settlements, Plaintiffs indicated that they

planned to “meet and confer with counsel for Deutsche Bank

and Rabobank to obtain Class Member information required for

notice.” (Dkt. No. 348 at 25.)

Plaintiffs argue that the Proposed Settlements do not

impose any discovery burdens on Rabo and Deutsche because

Plaintiffs are merely asking for their cooperation in

connection with the distribution of notice to potential class

members that were customers of Rabo and Deutsche, which

Plaintiffs contend are routine in class litigation.

The Court agrees with Plaintiffs that based on a plain

reading of Plaintiffs’ brief, Rabo and Deutsche are not

obliged to comply with Plaintiffs’ request, as Plaintiffs

simply seek Rabo and Deutsche’s cooperation in providing

notice. Should Rabo and Deutsche choose not to cooperate with

Plaintiffs’ requests, Plaintiffs have other avenues for

obtaining discovery from non-parties, including subpoenas,

for which Plaintiffs have already moved. (See Dkt. Nos. 364-

1, 364-2, 364-3, and 364-4.)

are in different procedural postures, rendering the discovery burdens on

non-parties like Rabo and Deutsche improper. (See Obj. at 1.)

Thus, the Court OVERRULES Rabo and Deutsche’s Objection

that the Proposed Settlements improperly impose discovery

burdens upon them. Further, in accordance with the Court’s

Order dated June 16, 2023 (see Dkt. No. 365), the Court

directs Rabo and Deutsche to respond to or move to quash

Plaintiffs’ subpoenas within fourteen (14) days of the date

of this Order.

II. ORDER

For the reasons discussed above, it is hereby

ORDERED that the objection (“Objection”) of Coöperatieve

Rabobank U.A., Rabo Securities USA, Inc., Deutsche Bank AG,

and Deutsche Bank Securities Inc.’s (collectively, “Rabo and

Deutsche”) (see Dkt. No. 356) to their inclusion as

“Defendants” in Plaintiffs’ Proposed Settlements with Natixis

S.A., UniCredit Bank AG, and UniCredit Capital Markets LLC

(see Dkt. Nos. 349-1, 349-2) is SUSTAINED. Plaintiffs are

directed to amend the Proposed Settlements to remove Rabo and

Deutsche from the definition of “Defendants” within fourteen

(14) days of the date of this Order; and it is further

ORDERED that the Objection of Rabo and Deutsche to

Plaintiffs’ discovery request is OVERRULED. As Plaintiffs

have filed motions to subpoena Rabo and Deutsche (see Dkt.

Nos. 364-1, 364-2, 364-3, and 364-4), Rabo and Deutsche shall

have fourteen (14) days from the date of this Order to respond

to or move to quash such motions.

SO ORDERED.

Dated: 27 June 2023

New York, New York Z, A. Z

Victor Marrero

U. Se Ded =

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