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Nypl v. JPMorgan Chase & Co.

United States District Court, S.D. New York

August 3, 2017

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



         Plaintiffs[1] commenced this putative class action under the Sherman Antitrust Act (“Sherman Act”), 15 U.S.C. § 1 et seq., alleging that they paid inflated foreign currency exchange rates caused by an alleged conspiracy among Defendants[2] to fix prices in the foreign exchange (“FX”) or foreign currency market. Plaintiffs' Second Amended Complaint was dismissed in its entirety because it did not sufficiently plead antitrust standing. Nypl v. JPMorgan Chase & Co., No. 15 Civ. 9300, 2017 WL 1133446, at *3 (S.D.N.Y. Mar. 24, 2017). Plaintiffs move for leave to file their Proposed Third Amended Complaint (the “PTAC”) pursuant to Federal Rule of Civil Procedure 15(a)(2). The PTAC asserts claims under the Sherman Act and California state law. For the following reasons, Plaintiffs' motion is granted in part.

         I. BACKGROUND

         Familiarity with the procedural history and the allegations contained in the Second Amended Complaint is assumed. See Nypl, 2017 WL 1133446, at *1-2. The following facts are taken from the PTAC and accepted as true for the purposes of this motion. See Doe v. Columbia Univ., 831 F.3d 46, 48 (2d Cir. 2016).

         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 FX benchmark rates. Those benchmark rates are derived daily from trading in the FX spot market. Two major benchmark rates that Defendants were accused of manipulating are the European Central Bank (“ECB”) rate and the World Markets/Reuters rate. According to an order about the manipulation from the Commodity Futures Trading Commission, the World Markets/Reuters rates “are the most widely referenced FX benchmark rates in the United States and globally” and “are used to establish the relative values of different currencies, and reflect the rates at which one currency is exchanged for another currency” Plaintiffs, a group of individuals and businesses, purchased foreign currency from Defendants in the consumer retail market. Plaintiffs allege that there is a “mechanical, direct correlation” between the FX benchmark rates that Defendants allegedly manipulated and the prices that Defendants charged Plaintiffs. Specifically, Plaintiffs allege that the prices Defendants charged for foreign currency in the consumer retail market were the benchmark rates on the day of the transaction plus a small handling fee or commission.

         Plaintiffs base this allegation primarily on a comparison of the prices Defendants JPMorgan Chase Bank, N.A., Citibank, N.A. and Bank of America, NA. charged for foreign currency in the consumer retail market and the benchmark rates published in the Wall Street Journal. On twelve occasions between March 28 and April 13, 2017, Plaintiffs' counsel purchased foreign currency from San Francisco branches of JPMorgan Chase, Citibank and Bank of America. Plaintiffs' counsel then compared the prices he paid to the “foreign-exchange rates in late New York trading” published in the Wall Street Journal for the same dates and currencies. Plaintiffs' counsel calculated that the prices he paid in the consumer retail market were between 5.56% and 7.69% (on average, 6.98%) higher than the exchange rates reported in the Wall Street Journal. Plaintiffs allege that this differential reflects a handling fee charged in the consumer retail market.

         To confirm the correlation observed in the data he gathered, Plaintiffs' counsel engaged Carl Saba, a Certified Valuation Analyst. Mr. Saba compared the prices charged to Plaintiffs' counsel at JPMorgan Chase[3] to the ECB spot market fix rate, as published on the ECB's website, for the same days. Mr. Saba applied a linear regression to the data and derived an equation that can predict with 99.8% accuracy the consumer retail price paid by Plaintiffs' counsel based on the ECB rate from the same day. Based on this analysis, Mr. Saba concluded that “the ECB Fix Rate on the foreign exchange spot market appears to be strongly correlated with and an accurate predictor of the End-user rates charged by JP Morgan Chase to Counsel.” However, Mr. Saba cautioned that his analysis was based on “the limited data” provided by Plaintiffs' counsel and that “in order to reach a conclusive determination of whether the ECB Fix Rate is a predictor of the End-user rate charged by Defendants, significantly more data must be analyzed over the time period in which Defendants engaged in price manipulation.”[4]

         Because they purchased foreign currency from Defendants at the allegedly rigged benchmark rates plus a small handling fee or commission, Plaintiffs allege that they participated in the price-fixed, manipulated benchmark rates market. The PTAC asserts claims under the Sherman Act and California's Cartwright Act and Unfair Competition Law (“UCL”).

         II. STANDARD

         “Leave to amend should be ‘freely give[n] . . . when justice so requires, ' Fed.R.Civ.P. 15(a)(2), but should generally be denied in instances of futility [or] undue delay . . . .” United States ex rel Ladas v. Exelis, Inc., 824 F.3d 16, 28 (2d Cir. 2016) (some internal quotation marks omitted). “A proposed amendment to a complaint is futile when it could not withstand a motion to dismiss.” F5 Capital v. Pappas, 856 F.3d 61, 89 (2d Cir. 2017). In reviewing such a motion, a court accepts as true all factual allegations and draws all reasonable inferences in the plaintiffs favor. See Trs. of Upstate N.Y. Eng'rs Pension Fund v. Ivy Asset Mgmt, 843 F.3d 561, 566 (2d Cir. 2016). To withstand dismissal, a pleading “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). Allegations of fraud or mistake must meet the heightened pleading standard imposed by Federal Rule of Civil Procedure 9(b). “In determining the adequacy of the complaint, the court [also] 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. 2005); accord Beauvoir v. Israel, 794 F.3d 244, 248 n.4 (2d Cir. 2015).


         Plaintiffs' motion for leave to file the PTAC is granted in substantial part as explained below because the PTAC adequately alleges antitrust standing such that neither the Sherman Act claim nor the California state law claims are futile.[5]

         A. Sherman Act

         Based on the facts alleged in the PTAC, Plaintiffs have antitrust standing to bring a Sherman Act claim. A plaintiff asserting an antitrust claim under federal law must establish antitrust standing in addition to Article III standing. Gelboim v. Bank of Am. Corp., 823 F.3d 759, 770 (2d Cir. 2016). The issue of antitrust standing is evaluated at the pleading stage based on the allegations in the complaint. In re Aluminum Warehousing Antitrust Litig. (“Aluminum III ”), 833 F.3d 151, 157 (2d Cir. 2016). To plead antitrust standing, a private antitrust plaintiff must plausibly allege that (1) it suffered an antitrust injury, and (2) it is a suitable plaintiff in that it satisfies the so-called “efficient enforcer” factors. Gelboim, 823 F.3d at 772; Aluminum III, 833 F.3d at 157. As explained below, the PTAC sufficiently pleads each of these requirements.

         1. ...

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