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Nypl v. JPMorgan Chase & Co.

United States District Court, S.D. New York

March 24, 2017

JOHN NYPL, et al., Plaintiffs,
v.
JPMORGAN CHASE & CO., et al., Defendants.

          OPINION AND ORDER

          LORNA G. SCHOFIELD, District Judge

         Plaintiffs, [1] a group of individuals and businesses that purchased foreign currency in the end-user market, bring this putative class action against eighteen banks and their affiliates[2]under the Sherman Antitrust Act, 15 U.S.C. § 1 et seq. Plaintiffs allege that they paid inflated foreign currency exchange rates caused by Defendants' alleged conspiracy to fix prices in the foreign exchange (“FX”) or foreign currency market. Defendants move to dismiss the Second Amended Complaint (the “Complaint”) pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the reasons stated below, Defendants' motion to dismiss is granted.

         I. BACKGROUND

         A. Factual Allegations

         The following facts are taken from the Second Amended Complaint, the operative complaint, and assumed to be true for the purposes of this motion. See Littlejohn v. City of New York, 795 F.3d 297, 307 (2d Cir. 2015).

         On May 20, 2015, the United States Department of Justice (“DOJ”) announced that Defendants Citicorp, JPMorgan Chase & Co., Barclays PLC, Royal Bank of Scotland plc and UBS AG were pleading guilty to conspiring to manipulate the price of U.S. dollars and euros exchanged in the foreign currency exchange spot market. According to the DOJ press release, traders at these banks used a chat room called “The Cartel” to manipulate benchmark exchange rates. Those exchange rates are set, among other ways, through two major daily “fixes” -- the 1:15 P.M. European Central Bank fix and the 4:00 P.M. World Markets/Reuters fix. Third parties collect trading data at these times to calculate and publish a daily “fix rate, ” which in turn is used to price orders for many large customers. Members of The Cartel allegedly coordinated their trading of U.S. dollars and euros to manipulate benchmark rates set at the 1:15 P.M. and 4:00 P.M. fixes in an effort to increase their profits.

         The DOJ press release stated that the traders also used The Cartel chat room to manipulate the euro-dollar exchange rate in other ways. For example, the traders agreed to withhold bids or offers for euros or dollars to avoid moving the exchange rate in a direction adverse to open positions held by co-conspirators. In this way, the traders protected each other's trading positions by withholding supply of or demand for currency and suppressing competition in the FX market.

         Based on this and other press releases and the plea agreements entered into by the defendants named in the May 20 press release, Plaintiffs allege that Defendants have entered into illegal price-fixing agreements to “fix and rig” the foreign currency exchange rates. The alleged purpose of the price-fixing agreements is to extract inflated currency exchange rates from Plaintiffs, who purchased foreign currency “for their own end use.” Plaintiffs claim that the price-fixing agreements are per se violations of § 1 of the Sherman Antitrust Act and caused them to pay more for the foreign currency they purchased than they otherwise would have paid.

         B. Procedural History

         Plaintiffs filed suit on May 21, 2015, in the Northern District of California. On November 25, 2015, the case was transferred to this district pursuant to 28 U.S.C. § 1404(a), in part because Defendants are litigating similar claims in In re Foreign Exchange Benchmark Rates Antitrust Litigation (“FOREX”), No. 13 Civ. 7789 (S.D.N.Y.).

         On January 29, 2016, Defendants moved to stay this action pending completion of the settlements reached in FOREX or in the alternative to consolidate this action with FOREX. On June 8, 2016, the Court denied Defendants' motion to stay and granted in part Defendants' motion to consolidate. The Court concluded that Plaintiffs are not included in the FOREX settlement classes because Plaintiffs engaged in “end-user purchases” of foreign currency, which Plaintiffs say are “completely different” from the electronic FX spot trading in which the FOREX plaintiffs participated. Nypl v. JPMorgan Chase & Co., No. 15 Civ. 9300, 2016 WL 3211440, at *3 (S.D.NY. June 8, 2016).

         II. STANDARD

         “A district court properly dismisses an action under Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction if the court lacks the statutory or constitutional power to adjudicate it, such as when . . . the plaintiff lacks constitutional standing to bring the action.” Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.A.R.L., 790 F.3d 411, 416-17 (2d Cir. 2015) (internal quotation marks and citation omitted). “The plaintiff bears the burden of alleging facts that affirmatively and plausibly suggest that it has standing to sue. In assessing the plaintiffs assertion of standing, we accept as true all material allegations of the complaint and construe the complaint in favor of the complaining party.” Id. at 417 (internal quotation marks, citations and alterations omitted).

         To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. On a Rule 12(b)(6) motion, “all factual allegations in the complaint are accepted as true and all inferences are drawn in the plaintiff's favor.” Littlejohn, 795 F.3d at 306. “In determining the adequacy of the complaint, the court may consider any written instrument attached to the complaint as an exhibit or incorporated in the complaint by reference, as well as documents upon which the complaint relies and which are integral to the complaint.” Subaru Distribs. Corp. v. Subaru of Am., Inc., 425 F.3d 119, 122 (2d Cir. 2015) (citation omitted); see also Beauvoir v. Israel, 794 F.3d 244, 248 n.4 (2d Cir. 2015).

         III. DISCUSSION

         The Court has subject matter jurisdiction, but Defendants' motion to dismiss pursuant to Rule 12(b)(6) is granted because the Complaint fails to plead sufficient facts to establish antitrust standing. The arguments concerning subject matter jurisdiction are addressed first. See, e.g., Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94 (1998) (assuming subject matter jurisdiction to reach the merits “carries the courts beyond the bounds of authorized judicial action and thus offends fundamental principles of separation of powers.”); Carver v. Nassau Cty. Interim Fin. Auth.,730 F.3d 150, ...


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