The opinion
December 18, 2023
The Honorable Jesse M. Furman
United States District Court for the
Southern District of New York
40 Foley Square, Room 1105
New York, New York 10007
Re: City of Philadelphia, et al. v. Bank of America, et al., No. 19-cv-1608 (JMF):
Letter Motion to Compel Defendants to Produce Additional Swaps Data
Dear Judge Furman:
In accordance with Your Honor’s Individual Practice Rule 3.E., Lead Counsel for the
certified class respectfully request a conference regarding Defendants’ refusal to produce data for
interest rate swaps entered into after the conspiracy. The meet and confer process occurred and
was unsuccessful.
Plaintiffs’ Data Request. As Your Honor is aware, Defendants made certain class
members’ use of interest rate swaps a focal point of their opposition to class certification, Dkt. 456
(Class Cert. Order) at 25-27, and have already indicated their intent to make swaps among their
central defenses at the merits stage. Indeed, since class certification, Defendants have already
issued 82 document subpoenas pertaining to swaps as part of “top-off” discovery, see Dkt. 485.
Despite acting on their own professed need for voluminous swaps discovery, Defendants have
flatly rejected Plaintiffs’ tailored data requests on the very same subject matter. Defendants cannot
have it both ways.
While Plaintiffs maintain that certain class members’ hedging transactions are irrelevant
as a matter of law, they also appreciate the Court’s guidance that further consideration of swaps
may be needed at the merits stage, Dkt. 456 at 25-27. As a result, as part of top-off discovery,
Plaintiffs made discrete swaps-related data requests to Defendants that Plaintiffs’ experts identified
would aid their analysis. See, e.g., Ex. 1 at 1 (10/17/2023 K. Peaslee e-mail to Citi); Ex. 2 at 5-6
(10/19/2023 S. Becker e-mail to Wells Fargo).
Specifically, we asked Defendants to supplement their prior productions of data for SIFMA
and cost-of-funds swaps active during the class period by adding data for any such swaps entered
into after the conspiracy through 2020.1 We followed up with Defendants repeatedly in pursuit of
the requested information, see, e.g., Ex. 2 (10/26/23, 11/01/23, and 11/06/23 S. Becker e-mails to
Wells Fargo); Ex. 1 at 2 (11/01/23 K. Peaslee e-mail to Citi), only to be rebuffed six weeks later
with a flat denial, Ex. 3 at 1 (12/01/23 M. Christian e-mail),
The relevance of this post-conspiracy data is without serious question. Defendants contend
that class members’ swaps lowered the damages class members suffered because the conspiracy
systematically inflated the variable payments class members received as a result of their swaps.
1 Plaintiffs also asked Defendants to produce LIBOR swaps (for both during and after the class
period), but Defendants have since stipulated they will not contend LIBOR swaps are relevant to
this action. See Ex. 3 at 4-5 (11/10/23 M. Christian e-mail).
But—even leaving aside whether this is a proper legal consideration—Defendants’ argument
ignores the full picture. Under basic economic theory, the fixed rate that class members paid should
equal the expected value of the allegedly inflated variable rate. Therefore, in order to pass on the
overcharge class members paid on their VRDOs, class members would need to outwit Defendants
and other financial institutions and pay a systematically lower fixed rate than they would be
expected to in a rational market.
Plaintiffs and their experts seek this post-conspiracy data precisely to test whether
Defendants’ pass-on theory holds any water (which it likely does not). In particular, Plaintiffs seek
post-conspiracy data to examine whether Plaintiffs were somehow able to receive systemically
better deals on their swaps during the conspiracy than after. Regressions, such as these, using a
benchmark and dirty period are “widely accepted as a generally reliable econometric technique”
in antitrust cases, Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 31 F. 4th 651,
677 (9th Cir. 2022),2 and, as such, data productions by antitrust defendants from outside the
conspiracy period is the norm. Indeed, it is commonplace for defendants to agree to these
productions, but, in the rare cases when they do not, courts regularly compel such discovery. See,
e.g., In re Peanut Farmers Antitrust Litig., 2020 WL 9216019, at *2 (E.D. Va. July 24, 2020)
(compelling the production of clean-period data to allow plaintiffs to “establish[] a benchmark
period” in their regression analysis).
Nor do Defendants seriously contend that Plaintiffs’ request would pose an undue burden.
Indeed, Defendants have already produced (or agreed to produce) the same categories of swaps
data for the much larger class period. And Barclays—the one Defendant who agreed to produce
swaps data after the class period—produced post-conspiracy data on one manageable spreadsheet
of 51 rows.
Defendants’ Unavailing Arguments. In order to avoid production—and to obstruct
Plaintiffs from subjecting Defendants’ swaps theory to empirical scrutiny—Defendants can be
expected to make the following arguments, each of which are off-base.
First, Defendants will claim swaps data is not organized in a way that allows Defendants
to reliably identify swaps that are part of so-called “synthetic rate transactions.” Ex. 3 at 1
(12/01/23 M. Christian e-mail). But this purported limitation did not prevent Defendants from
producing this very same data for swaps active during the class period, and Defendants have not
claimed the post-conspiracy time period presents any new complications. In fact, this supposed
hurdle contradicts Defendants’ prior representations that producing SIFMA and cost-of-fund
swaps was manageable because those swaps were “often issued to municipal issuer counterparties
in synthetic fixed rate transactions.” Ex. 3 at 4-5 (11/10/23 M. Christian e-mail).
In any event, Defendants’ argument is beside the point. Constructing a robust clean period
does not require isolating only the SIFMA or cost-of-fund swaps that were used to hedge
VRDOs—any post-conspiracy swaps falling into those two categories would be relevant.
Second, Defendants conclusorily assert that their post-conspiracy data will not allow
Plaintiffs to “reliably construct the clean period analysis.” Ex. 3 at 1 (12/01/23 M. Christian e-
2 See also Dkt. 363 (Pls’ Class Cert Br.) at 21-22 (collecting cases).
mail). But such arguments about the adequacy of Plaintiffs’ analyses are for the merits stage. It is
not Defendants’ place to make such a claim now, let alone force Plaintiffs or the Court to accept
it blindly. Indeed, it is difficult to see how Defendants are even in a position to make such a bold
assertion. Defendants have no insight into Plaintiffs’ analyses, nor should they. Nor are they aware
of what data sources Plaintiffs have procured to construct a robust clean period in conjunction with
Defendants’ data. Plaintiffs and their experts are well aware of the imperfections of Defendants’
data but nonetheless believe it will be a valuable input to their swaps analyses. That suffices for
discoverability.*
Finally, Defendant make the absurd claim that class members are the ones “with access to
the information Plaintiffs desire ... not Defendants.” Ex. 3 at 1 (12/01/23 M. Christian e-mail).
Defendants have served class members with well over one hundred subpoenas, and Lead Counsel
has been in contact with many of them to assist them. Not once has any Plaintiff or class member
ever produced or suggested that it possesses anything remotely resembling the breadth of
structured data maintained by Defendants, the largest financial institutions in the world.
Accordingly, Plaintiffs respectfully request that Defendants be ordered to promptly
produce documents containing their respective swaps data covering the post-conspiracy period of
November 30, 2015 to December 31, 2020.
Respectfully submitted,
/s/ Daniel L. Brockett /s/ David H. Wollmuth /s/ William C. Carmody
Daniel L. Brockett David H. Wollmuth William Christopher Carmody
Quinn Emanuel Urquhart Wollmuth Maher Susman Godfrey LLP
& Sullivan, LLP & Deutsch LLP
Given the broad definition of relevance for purposes of
Attachments (Exhibits 1-3) discovery, Plaintiffs' motion to compel is GRANTED. Most
ce: All counsel of record (via ECF) Defendants’ arguments to the contrary relate to the merits of
arguments that Plaintiffs may raise in the future and, thus, ar
premature. Defendants shall promptly produce the relevant
discovery to Plaintiffs. With that, "top off" discovery is deer
to be closed. The Clerk of Court is directed to terminate EC]
No. 491. SO ORDE
GO ecember 28, 2023
3 Defendants have also suggested Plaintiffs already have “clean” swaps data because Defendants
have produced some data for swaps entered into before the start of the class period (to the extent
they remained active during the class period). This data, however, is insufficient for Plaintiffs’
needs because, as the Court has recognized, “Defendants may well have been conspiring to inflate
VRDO rates before the Class Period.” Dkt. 456 (Class Cert. Order & Opinion) at 14-15. Plaintiffs’
experts, therefore, cannot use this data as a benchmark.