UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK INRE: SSA BONDS ANTITRUST LITIGATION 1 : 16-cv-0 3 711-ER This Document Relates To All Actions REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF FOREIGN DEALER DEFENDANTS' MOTION TO DISMISS THE SECOND CONSOLIDATED AMENDED CLASS ACTION COMPLAINT FOR LACK OF PERSONAL JURISDICTION AND IMPROPER VENUE Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 1 of 34 TABLE OF CONTENTS PRELIMINARY STATEMENT .................................................................................................... 1 ARGUMENT .................................................................................................................................. 3 I. FOREIGN DEALER DEFENDANTS ARE NOT SUBJECT TO SPECIFIC JURISDICTION ................................................................................................................. 3 A. Plaintiffs Fail to Allege that Foreign Dealer Defendants Purposely Availed Themselves of the Forum .......................................................................... 4 1. Plaintiffs Fail to Plausibly Allege that They Traded USD SSA Bonds with Foreign Dealer Defendants ....................................................... 5 2. Plaintiffs' In-Forum Trading and Marketing Allegations Are Neither Well-Pleaded Nor Suit-Related ....................................................... 9 B. Plaintiffs Fail to Allege that the Foreign Dealer Defendants Expressly Aimed Their Conduct at New York or the United States ..................................... 12 II. PLAINTIFFS' AFFILIATE AND CONSPIRACY ALLEGATIONS FAIL TO ESTABLISH JURISDICTION OVER FOREIGN DEALER DEFENDANTS ............... 15 A. Plaintiffs' Allegations of Affiliate Contacts Fail to Confer Jurisdiction .............. 15 B. Plaintiffs' Conspiracy Allegations Fail to Establish Jurisdiction ......................... 18 III. PLAINTIFFS' FAILURE TO ALLEGE PROPER VENUE UNDER THE CLAYTON ACT PRECLUDES PERSONAL JURISDICTION OVER VENUE DEFENDANTS .................................................................................................. 22 IV. CONSIDERATIONS OF FAIR PLAY, SUBSTANTIAL JUSTICE, AND INTERNATIONAL COMITY SUPPORT DISMISSAL. ................................................ 23 V. PLAINTIFFS ARE NOT ENTITLED TO JURISDICTIONAL DISCOVERY .............. 24 CONCLUSION ............................................................................................................................. 25 Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 2 of 34 TABLE OF AUTHORITIES Page(s) Cases 7 W 57th St. Realty Co. v. Citigroup, Inc., 2015 WL 1514539 (S.D.N.Y. Mar. 31, 2015) ......................................................................... 24 Alaska Elec. Pension Fund v. Bank of America Corp., 175 F. Supp. 3d 44 (S.D.N.Y. 2016) ........................................................................................ 6n In re Aluminum Ware housing Antitrust Litig., 2015 WL 6472656 (S.D.N.Y. Oct. 23, 2015) ........................................................................ 1 ln In re Aluminum Warehousing Antitrust Litig., 90 F. Supp. 3d 219 (S.D.N.Y. 2015) .................................................................................. 21, 24 AMTrustv. UBSAG, 78 F. Supp. 3d 977 (N.D. Cal. 2015) ......................................................................................... 8 Asahi Metal Indus. v. Superior Court, 480 U.S. 102 (1987) ................................................................................................................. 23 Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120 (2d Cir. 2002) ............................................................................................... 8n, 20 Bertha Bldg. Corp. v. Nat 'l Theatres Corp., 248 F.2d 833 (2d Cir. 1957) ..................................................................................................... 20 Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) ..................................................................................................... 7-8, 8n Charles Schwab Corp. v. Bank of America Corp., 883 F.3d 68 (2d Cir. 2018) ............................................................................................... passim In re Chinese-Manufactured Drywall Prods. Liab. Litig., 2017 WL 5971622 (E.D. La. Nov. 30, 2017) .......................................................................... 8n Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158 (2d Cir. 2010) ................................................... '. ................................................. 8n City of Almaty v. Ablyazov, 278 F. Supp. 3d 776 (S.D.N.Y. 2017) ...................................................................................... 19 Daimler AG v. Bauman, 571 U.S. 117 (2014) ................................................................................................................. 19 -11- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 3 of 34 Daniel v. American Bd. of Emergency Med., 428 F.3d 408 (2d Cir. 2005) ............................................................................................... 22-23 Daniel v. Tootsie Roll Indus., LLC, 2018 WL 3650015 (S.D.N.Y. Aug. 1, 2018) ............................................................................. 7 Dennis v. JPMorgan Chase & Co., 343 F. Supp. 3d 122 (S.D.N.Y. 2018) .............................................................................. passim In re Dental Supplies Antitrust Litig., 2017 WL 4217115 (E.D.N.Y. Sept. 20, 2017) ........................................................................ 8n Dixon v. Mack, 507 F. Supp. 345 (S.D.N.Y. 1980) .......................................................................................... 20 EM! Christian Music Group, Inc. v. MP ]tunes, LLC, 844 F.3d 79 (2d Cir. 2016) ..................................................................................................... 14n In re Foreign Exch. Benchmark Rates Antitrust Litig., 2016 WL 1268267 (S.D.N.Y. Mar. 31, 2016) ......................................................................... 6n FrontPoint Asian Event Driven Fund, L.P. v. Citibank, N.A., 2017 WL 3600425 (S.D.N.Y. Aug. 18, 2017) ............................................................ An, 6, 20n FrontPoint Asian Event Driven Fund, L.P. v. Citibank, N.A., 2018 WL 4830087 (S.D.N.Y. Oct. 4, 2018) .................................................................... 9n, 20n FrontPoint Asian Event Driven Fund L.P. v. Citibank, N.A., No. 16-cv-5263, Dkt. 335 (S.D.N.Y. Nov. 21, 2018) ............................................................ 20n Gonzalez v. Costco Wholesale Corp., 2018 WL 4783962 (E.D.N.Y. Sept. 29, 2018) ........................................................................ 8n Greene v. Mizuho Bank, Ltd., 2017 WL 7410565 (N.D. Ill. Dec. 11, 2017) ........................................................................... 8n !CO Services, Ltd. v. Coinme, Inc., 2018 WL 6605854 (S.D.N.Y. Dec. 17, 2018) ........................................................................... 7 Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181 (2d Cir. 1998) ................................................................................................. 7, 24 Junquist v. Sheikh Sultan Bin Khalifa Al Nahyan, 115 F.3d 1020 (D.C. Cir. 1997) ............................................................................................. 20n Keeton v. Hustler Magazine, Inc., 465 U.S. 770 (1984) ................................................................................................................. 15 -111- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 4 of 34 LaChapelle v. Torres, 1 F. Supp. 3d 163 (S.D.N.Y. 2014) ....................................................................................... 20n Langenberg v. So/air, 2006 WL 2628348 (S.D.N.Y. Sept. 11, 2006) ....................................................................... 25n Laydon v. Mizuho Bank, Ltd., 2015 WL 1515358 (S.D.N.Y. Mar. 31, 2015) ................................................................... 23-24 Leasco Data Processing Equipment Corp. v. Maxwell, 468 F.2d 1326 (2d Cir. 1972) ........................................................................................... 18, 19n In re LIBOR-Based Fin. Instruments Antitrust Litig., 2015 WL 6243526 (S.D.N.Y. Oct. 20, 2015) .......................................................................... 21 In re LIBOR-Based Fin. Instruments Antitrust Litig., 2016 WL 1733463 (S.D.N.Y. Apr. 29, 2016) .......................................................................... 24 In re Magnetic Audiotape Antitrust Litig., 334 F.3d 204 (2d Cir. 2003) ........................................................................................... 14n, 25n Ma/ea Ltd. v. Jawer SA, 511 F.3d 1060 (10th Cir. 2007) ............................................................................................. 20n In re North Sea Brent Crude Oil Futures Litig., 2017 WL 2535731 (S.D.N.Y. June 8, 2017) ........................................................................... 19 Papasan v. Allain, 478 U.S. 265 (1986) ................................................................................................................... 6 In re Parmalat Sec. Litig., 375 F. Supp. 2d 278 (S.D.N.Y. 2005) ................................................................................... .l 7n Pension Comm. of Univ. of Montreal Pension Plan v. Banc of America Sec., LLC, 2006 WL 708470 (S.D.N.Y. Mar. 20, 2006) ......................................................................... 25n Pincione v. D 'Alfonso, 506 F. App'x 22 (2d Cir. 2012) ............................................................................................... 22 In re Platinum & Palladium Antitrust Litig., 2017 WL 1169626 (S.D.N.Y. Mar. 28, 2017) ................................................................... 19, 24 Porina v. Marward Shipping Co., 521 F.3d 122 (2d Cir. 2008) ..................................................................................................... 21 Sea Trade Maritime Corp. v. Coutsodontis, 2012 WL 3594288 (S.D.N.Y. Aug. 16, 2012) ......................................................................... 19 -lV- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 5 of 34 SEC v. Straub, 921 F. Supp. 2d 244 (S.D.N.Y. 2013) ................................................................................... .14n Segal v. Bitar, 2012 WL 273609 (S.D.N.Y. Jan. 30, 2012) ............................................................................ 8n Siegel v. HSBC Holdings, PLC, 2018 WL 501610 (S.D.N.Y. Jan. 19, 2018) ........................................................................... .23 Simon v. Phillip Morris, Inc., 86 F. Supp. 2d 95 (E.D.N.Y. 2000) ......................................................................................... 19 Societe Generale v. Federal Ins. Co., 856 F.2d 461 (2d Cir. 1988) ..................................................................................................... 21 Sonterra Capital Master Fund Ltd. v. Credit Suisse Group AG, 277 F. Supp. 3d 521 (S.D.N.Y. 2017) ............................................................................ 14n, 20n In re SSA Bonds Antitrust Litig., No. 16 Civ. 3711 (ER), slip op. (S.D.N.Y. Aug. 28, 2018) ..................................................... 5n Sullivan v. Barclays PLC, 2017 WL 685570 (S.D.N.Y. Feb. 21, 2017) ........................................................................ 5, 24 Tadayon v. DATCO, Inc., 178 F. Supp. 3d 12 (D. Conn. 2016) ...................................................................................... 20n Tera Group v. Citigroup, Inc., 2018 WL 4732426 (S.D.N.Y. Sept. 28, 2018) ......................................................................... 16 In re Terrorist Attacks on Sept. 11, 2001, 349 F. Supp. 2d 765 (S.D.N.Y. 2005) ...................................................................................... 21 United States v. Hayes, 99 F. Supp. 3d 409 (S.D.N.Y. 2015) ...................................................................................... 14n Unspam Technologies, Inc. v. Chernuk, 716 F.3d 322 (4th Cir. 2013) ................................................................................................. 20n In re Vitamin C Antitrust Litig., 2012 WL 12355046 (E.D.N.Y. Aug. 8, 2012) ....................................................................... 1 ln Walden v. Fiore, 571U.S.277 (2014) ................................................................................................... 15, 19, 20n Waldman v. Palestine Liberation Org., 835 F.3d 317 (2d Cir. 2016) .................................................................................. .4, 12, 14, 14n -v- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 6 of 34 Weisblum v. Prophase Labs., Inc., 88 F. Supp. 3d 283 (S.D.N.Y. 2015) ........................................................................................ 25 Rules Fed. R. Civ. P. 4(k) .......................................................................................................... 21, 21n, 22 Statutes 15 u.s.c. § 22 ................................................................................................................................ 23 28 u.s.c. § 1391 ............................................................................................................................ 23 -VI- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 7 of 34 Foreign Dealer Defendants1 respectfully submit this memorandum of law in further support of their motion to dismiss the SAC for lack of personal jurisdiction and improper venue pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(3). PRELIMINARY STATEMENT Plaintiffs' opposition brief confirms that, despite having three bites at the apple, they remain unable to plausibly allege personal jurisdiction over any Foreign Dealer Defendant. After conceding that Foreign Dealer Defendants are not subject to general jurisdiction in New York, Plaintiffs resort to advancing the same flawed argument for specific jurisdiction. Plaintiffs based this assertion of jurisdiction on the theory that a handful of SSA bond traders located outside the United States manipulated the price of USD SSA bonds throughout the world, including those allegedly traded in the United States. Plaintiffs' untenable theory of specific jurisdiction has been repeatedly rejected by the Second Circuit and numerous Courts in this district. As in those cases, Plaintiffs here fail to plausibly allege the requisite "substantial connection" between the purported conspiracy and Foreign Dealer Defendants' alleged trading activities in the United States. Plaintiffs' opposition brief offers no meritorious arguments in response. First, Plaintiffs do not sufficiently allege that they traded with any Foreign Dealer Defendant, let alone with any of the handful of traders who supposedly carried out the purported conspiracy. Absent such allegations, Plaintiffs cannot plausibly claim any connection between their claims and Foreign Dealer Defendants' alleged suit-related conduct, much less the requisite "substantial connection." The only counter Plaintiffs can muster - regurgitating generalized allegations that U.S.-based affiliates acted as Foreign Dealer Defendants' agents or Foreign Dealer Defendants traded with absent class members - does not solve this fatal pleading defect. 1 Unless otherwise specified, defined terms have the same meaning as in Foreign Dealer Defendants' opening brief ("PJ Br."), and all internal citations and quotation marks are omitted. Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 8 of 34 Second, Plaintiffs do not plausibly allege that any Foreign Dealer Defendant engaged in suit-related conduct in or purposefully directed at New York, or elsewhere in the United States. Plaintiffs do not dispute that any alleged misconduct took place entirely outside the United States and that only foreign entities participated in the alleged agreements not to compete. Nor do they allege that any U.S.-based entities or employees were involved in any facet of the alleged conspiracy not to compete. Instead, Plaintiffs argue that the ordinary business activities of Foreign Dealer Defendants that allegedly occurred in the United States - primarily the supposed marketing and unspecified trading of USD SSA bonds - establish jurisdiction. But Plaintiffs fail to adequately allege that such activities occurred, let alone plausibly connect those activities to the alleged conspiracy, as it is well-settled law they must. Plaintiffs' attempt to distinguish their claims from the relevant body of case law and portray those cases as only of "academic interest" is unavailing. As in those cases, Plaintiffs are attempting to establish jurisdiction over foreign entities simply because the alleged conspiracy supposedly affected transactions across the globe, including, incidentally, in the United States. Third, Plaintiffs fail to allege that the purported conspiracy was expressly aimed at the forum. On the contrary, Plaintiffs simply seek to rely on conclusory allegations that the United States was the "primary" market for USD SSA bonds and that Foreign Dealer Defendants had a substantial presence in that market. But Plaintiffs do not plausibly allege that Foreign Dealer Defendants - allegedly acting through a handful of traders located primarily in London - engaged in any conduct with the express aim of causing injury in the forum. Plaintiffs' remaining arguments are similarly unpersuasive. Plaintiffs' claim that personal jurisdiction can be established over Foreign Dealer Defendants because the actions of U.S.-based affiliates can be imputed to them under agency principles is unavailing because -2- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 9 of 34 Plaintiffs' threadbare allegations are insufficient to plead the necessary degree of control. Similarly, Plaintiffs' "conspiracy jurisdiction" theory falls short because they do not allege a plausible conspiracy, any acts in furtherance of that conspiracy in or specifically directed at the United States, or a plausible agency relationship between any Foreign Dealer Defendant and its alleged co-conspirators. Moreover, they do not sufficiently plead that Venue Defendants are subject to venue under the Clayton Act, and, thus, cannot use that statute to establish jurisdiction. Plaintiffs' theories of jurisdiction also do not comport with fair play, substantial justice, or international comity. And their last-ditch effort to delay dismissal with a request for jurisdictional discovery is without merit. For these reasons, and those discussed below, Plaintiffs' claims against Foreign Dealer Defendants should be dismissed. ARGUMENT I. FOREIGN DEALER DEFENDANTS ARE NOT SUBJECT TO SPECIFIC JURISDICTION . Plaintiffs remain unable to tie the alleged foreign-based conspiracy to New York or the United States and thus cannot establish jurisdiction over any Foreign Dealer Defendant.2 Plaintiffs claim that the alleged conspiracy involved a small group of London-based traders, I -· Dkt. 579 ("PJ Opp.") at 10-13. In doing so, they concede that their claims are "transaction-specific" and, therefore, based solely on individual acts of alleged collusion pertaining to individual transactions with Dealer Defendants. Id. at 43. Plaintiffs further concede that Foreign Dealer Defendants did not manipulate any SSA bond trades from within New York or the United States. Id. at 4-5, 8-9. Instead, they attempt to connect the conspiracy 2 Plaintiffs' suggested "nationwide contacts" approach does not comport with due process. PJ Br. at Part Ill. -3- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 10 of 34 to the forum through Foreign Dealer Defendants' alleged marketing and trading activities.3 But despite reviewing thousands of documents produced by two settling Defendants and enjoying three opportunities to amend their pleadings, Plaintiffs have still failed to plead the requisite "substantial connection" between these alleged activities and the supposed conspiracy. As a result, Plaintiffs do not, and cannot, make out a prima facie case for jurisdiction under either a purposeful availment or "causal effects" theory. A. Plaintiffs Fail to Allege that Foreign Dealer Defendants Purposely Availed Themselves of the Forum Plaintiffs have failed to plausibly allege a "substantial connection" between the alleged London-based conspiracy and the forum and, therefore, cannot establish jurisdiction under a theory of purposeful availment. In Waldman v. Palestine Liberation Org., the Second Circuit confirmed that, before determining whether a plaintiff has alleged a "substantial connection" between its claim and a defendant's conduct, a court must make the threshold evaluation of identifying suit-related conduct by analyzing the defendant-specific elements of each cause of action. 835 F.3d 317, 331 (2d Cir. 2016). In Schwab, the Second Circuit applied this standard to a conspiracy similar to the one alleged here (i.e., a conspiracy carried out overseas that supposedly affected instruments traded across the globe, including in the United States) and confirmed that to establish jurisdiction in such circumstances, a plaintiff must allege that (i) it traded with the defendant in the forum and (ii) those alleged in-forum trading activities were related to the alleged overseas manipulation. Charles Schwab Corp. v. Bank of America Corp., 883 F .3d 68, 83-84 (2d Cir. 2018) (finding no jurisdiction even where defendants transacted 3 This Court must reject Plaintiffs' suggestions that, by not affirmatively disavowing in their declarations that Foreign Dealer Defendants traded USO SSA bonds in the United States, the declarations in fact lend some support to Plaintiffs' generalized allegations of marketing and trading activity in the United States. PJ Opp. at 14-21. Ultimately "it is [Plaintiffs'] burden to show jurisdiction, not [Defendant's] burden to disprove it." FrontPoint Asian Event Driven Fund, L.P. v. Citibank, N.A., 2017 WL 3600425, at *8 (S.D.N.Y. Aug. 18, 2017). -4- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 11 of 34 directly with plaintiffs in California because those transactions "did not cause Defendants' false LIBOR submissions to the BBA in London, nor did the transactions in some other way give rise to claims seeking to hold Defendants liable for those submissions"). Numerous district courts addressing substantially similar allegations have reached the same conclusion. See, e.g., Dennis v. JPMorgan Chase & Co., 343 F. Supp. 3d 122 (S.D.N.Y. 2018) ("BBSW') (finding no jurisdiction over foreign defendants because their U.S. transactions with plaintiffs did not cause the alleged overseas manipulation); Sullivan v. Barclays PLC, 2017 WL 685570, at *45 (S.D.N.Y. Feb. 21, 2017) (finding allegations of trades with U.S. counterparties, including plaintiffs, insufficient to show a "substantial connection" with the forum). Plaintiffs' opposition confirms that they come nowhere close to meeting this standard. 1. Plaintiffs Fail to Plausibly Allege that They Traded USD SSA Bonds with Foreign Dealer Defendants Plaintiffs have not sufficiently alleged that they traded with any Foreign Dealer Defendant (much less any of the small number of traders who allegedly carried out the purported conspiracy),4 which precludes the exercise of jurisdiction here. As an initial matter, Plaintiffs concede that they did not transact with Credit Agricole at all. P J Opp. at 29. As to most of the other Foreign Dealer Defendants,5 Plaintiffs rely only on allegations that they transacted with 50, 475. Such alle ations are insufficient to show a connection between . See MTD Decision, slip op. at 16 ("[T]he fact that Plaintiff may have traded in the same 24 hour period as traders ... discussed manipulation ... is simply too thin a basis for the Court to ~hie that the traders' employers caused the Plaintiff actual damages."). As to - - (SAC~~ 173-78, 332-34), Plaintiffs fail to plausibly tie any of them to any conspiracy, let alone an overarching, seven-year conspiracy to not compete involving all Defendants. See PJ Br. at 16-18. 5 Those Foreign Dealer Defendants are: Barclays Capital Securities Limited, Barclays Services Limited, BNP Paribas, Credit Suisse AG, Credit Suisse International, Credit Suisse Securities (Europe) Ltd., Nomura plc, Royal Bank of Canada, RBC Europe Limited, and The Toronto-Dominion Bank. -5- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 12 of 34 their U.S.-based affiliates, and that those trades were supposedly entered into at the direction of Foreign Dealer pefendants. Plaintiffs' conclusory agency allegations are insufficient to impute such trades to Foreign Dealer Defendants. See infra Part II.A. And while Plaintiffs assert that they traded with Barclays Bank plc and Citigroup Global Markets Limited (PJ Opp. at 24), the SAC does not actually contain any details or facts to support this at all - the issuers of the bonds, the volume, the dollar amount, or even the dates the transactions supposedly took place. Most importantly, the SAC never alleges that any such transaction was solicited or took place in New York, the forum for this case. Rather, the SAC simply repeats, in cut and paste fashion, the same boilerplate language: that those defendants "executed collusive USD SSA bonds trades with [named plaintiff] ... at artificial prices[.]" SAC ifif 52, 70. Without any facts in support, this is precisely the kind of "legal conclusion couched as a factual allegation" that courts need not accept as true. Papasan v. Allain, 478 U.S. 265, 286 (1986); see also FrontPoint, 2017 WL 3600425, at *6-9 (finding that because "Plaintiffs do not identify any specific trades or contracts that are alleged to be collusive," the plaintiffs' allegations of suit-related, in-forum trading with foreign defendants was insufficient to confer personal jurisdiction over such defendants) (emphasis added). None of the cases Plaintiffs cite are to the contrary. PJ Opp. at 24-26.6 The absence of any well-pled allegations concerning direct dealings with Foreign Dealer Defendants is fatal to Plaintiffs' claims. In Schwab, the Second Circuit held that a defendant 6 For example, unlike the conclusory assertions against Barclays Bank plc and Citigroup Global Markets Limited here (SAC~~ 52, 70), plaintiffs in Schwab made "individualized" allegations demonstrating that certain defendants "solicited" plaintiffs in California (the forum state where the action was originally initiated) and directly sold plaintiffs "more than $1.8 billion in floating rate instruments, and more than $174.8 billion in fixed rate instruments." Schwab, 883 F.3d at 79, 82-84; see also In re Foreign Exch. Benchmark Rates Antitrust Litig., 2016 WL 1268267, at *6 (S.D.N.Y. Mar. 31, 2016) (finding jurisdiction where plaintiffs plausibly pleaded "collusive conduct within the United States, giv[ing] examples of each [defendants'] participation in the alleged conspiracy, ... and provid[ing] undisputed averments concerning the [defendants'] extensive U.S.-based FX operations"). And the decision in ISDAFix that Plaintiffs cite does not even concern personal jurisdiction. Alaska Elec. Pension Fund v. Bank of America Corp., 175 F. Supp. 3d 44, 52 (S.D.N.Y. 2016). -6- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 13 of 34 cannot be subject to jurisdiction absent in-forum trading activities between that defendant and a plaintiff. 883 F.3d at 82-87. Without such transactions, Plaintiffs cannot show the requisite "affiliation between the forum and the underlying controversy, principally, [an] activity or occurrence that takes place in the forum state." Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773, 1781 (2017). Plaintiffs attempt to overcome this failing by positing that jurisdiction can be established based on their speculation that Foreign Dealer Defendants traded with absent class members. PJ Opp. at 34-39. But Plaintiffs have not alleged any specific facts about these purported trades, as they must. See Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 185 (2d Cir. 1998) (finding that "conclusory non-fact-specific allegations" are insufficient to establish personal jurisdiction over a foreign defendant); !CO Services, Ltd. v. Coinme, Inc., 2018 WL 6605854, at *5 (S.D.N.Y. Dec. 17, 2018) ("[T]he indeterminate and unspecified acts alleged so far fall far short of the non- conclusory, fact-specific allegations or evidence required for Plaintiff to make a prima facie showing of jurisdiction."). Plaintiffs' barebones allegations that Foreign Dealer Defendants "purposely transacted in USD SSA bonds in the United States with Class members at artificial prices" do not meet this standard. PJ Opp. at 35. Nor can Plaintiffs escape the deficiencies in their pleadings by trying to impermissibly shift the burden to Foreign Dealer Defendants to disprove Plaintiffs' supposition. Id. at 35 n.20; see also supra note 3. Even if Plaintiffs included specific factual allegations concerning trades with absent class members, which they have not, such allegations would not be sufficient to adequately plead jurisdiction as a matter of law. Courts have routinely rejected attempts to premise jurisdiction based solely on a defendant's contacts with absent class members. See PJ Br. at 14; see also Daniel v. Tootsie Roll Indus., LLC, 2018 WL 3650015, at *7 (S.D.N.Y. Aug. 1, 2018) ("When -7- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 14 of 34 the action is brought as a purported class action, personal jurisdiction over each defendant is assessed with respect to the named plaintiffs' causes of action."); AM Trust v. UBS AG, 78 F. Supp. 3d 977, 986 (N.D. Cal. 2015) ("[C]laims of unnamed class members are irrelevant to the question of specific jurisdiction."), aff'd, 681 F. App'x 587 (9th Cir. 2017). Plaintiffs do not cite any cases to the contrary7 and their attempts to distinguish well-established case law on this point are unavailing. For example, Plaintiffs argue that Bristol-Myers is "irrelevant," because it is a mass-tort case and only applies to the exercise of specific jurisdiction by state courts. P J Opp. at 36-37. But these distinctions have no bearing on the Supreme Court's ruling that suit-related contacts between the defendants and the named plaintiff must be present, as a matter of due process, for jurisdiction to exist. Bristol-Myers, 137 S. Ct. at 1781 ("The mere fact that other plaintiffs were prescribed, obtained, and ingested [the drug] in California- and allegedly sustained the same injuries as did the nonresidents - does not allow the State to assert specific jurisdiction over the nonresidents' claims."). 8 7 Neither Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158 (2d Cir. 2010) nor Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120 (2d Cir. 2002), were class actions, rendering these cases irrelevant to the issue of contacts with absent class members. In Segal v. Bitar, the named plaintiff pled in great factual detail the injury done to him by each corporate defendant, distinguishing it from the absence of similarly detailed allegations at issue here. 2012 WL 273609, at *5 (S.D.N.Y. Jan. 30, 2012). While the court in Segal noted that unnamed class members suffered injuries as a result of the corporate defendants' conduct, the analysis properly focused on the named plaintiffs injuries. The absent class members' alleged injuries were only relevant insofar as they aided in understanding the named plaintiffs injuries. Id. 8 The decisions Plaintiffs cite do not support any argument to the contrary. See, e.g., Gonzalez v. Costco Wholesale Corp., 2018 WL 4783962, at *8 (E.D.N.Y. Sept. 29, 2018) (recognizing that "courts have dismissed class-action claims based on the Supreme Court's holding in Bristol-Myers"); In re Chinese-Manufactured Drywall Prods. Liab. Litig., 2017 WL 5971622, at *12 (E.D. La. Nov. 30, 2017) (addressing whether a court has personal jurisdiction over claims of absent class members as a result of having jurisdiction over named plaintiffs' claims). Indeed, despite Plaintiffs' protestations, courts have repeatedly found that the holding in Bristol-Myers applies equally to federal class actions. See, e.g., Greene v. Mizuho Bank, Ltd., 2017 WL 7410565, at *3-4 (N.D. Ill. Dec. 11, 2017) (finding that "the case law interpreting Bristol-Myers confirms that a court can only exercise personal jurisdiction over a defendant based on the named plaintiffs' claims and not those of absent class members"); In re Dental Supplies Antitrust Litig., 2017 WL 4217115, at *9 (E.D.N.Y. Sept. 20, 2017). -8- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 15 of 34 2. Plaintiffs' In-Forum Trading and Marketing Allegations Are Neither Well- Pleaded Nor Suit-Related Plaintiffs also fail to establish jurisdiction based on Foreign Dealer Defendants' supposed in-forum trading and marketing activities because they fail to adequately allege that these activities occurred, let alone that they were connected to the alleged conspiracy.9 As a threshold matter, no Foreign Dealer Defendant is plausibly alleged to have traded USD SSA bonds anywhere in the United States or with U.S.-based counterparties. The SAC merely repeats similar generic and conclusory allegations of U.S. trading activity for each Foreign Dealer Defendant. 10 This critical omission alone is fatal to Plaintiffs' purposeful availment theory, and Plaintiffs cannot overcome these pleading deficiencies by arguing that Foreign Dealer Defendants did not affirmatively disavow in their declarations that they traded USD SSA bonds in the United States. In addition, Plaintiffs fail to establish jurisdiction because they do not connect Foreign Dealer Defendants' purported trading activities to the alleged conspiracy. While Plaintiffs claim that Foreign Dealer Defendants "artificially priced" every USD SSA bond trade that Plaintiffs 9 For many Foreign Dealer Defendants - such as Credit Suisse AG, Credit Suisse International (see Dkt. 524 at 7- 8), and Nomura Securities International Inc. (see Dkt. 529) - the SAC contains no specific allegations at all as to how they participated in the alleged conspiracy. Absent such allegations, any supposed in-forum trading activities by these Foreign Dealer Defendants have no connection, let alone a "substantial connection," to the supposed conspiracy. FrontPoint Asian Event Driven Fund, L.P. v. Citibank, N.A., 2018 WL 4830087, at *9 (S.D.N.Y. Oct. 4, 2018) (rejecting jurisdiction against defendants that were not alleged to have participated in a conspiracy based on allegations of those defendants' ordinary business activities in the forum). 10 See, e.g., SAC ifif 45, 46, 51, 56, 59, 69, 73, 75, 78, 79, 82, 89, 94, 97, 100, 103 (generally alleging that "[Defendant] (a) itself purposely transacted in USO SSA bonds in the United States with Class members at artificial prices, knowing such transactions were with U.S. counterparties; and (b) purposefully directed and controlled the trading of even more USO SSA bonds at artificial prices by [Defendant's affiliates], knowing and intending such transactions were with Class members in the United States, and booked the profit from such trades"). Plaintiffs insist that "[i]t is not improper for those allegations to look similar, given that the Forei~ structured their desks similarly" (PJ Opp. at 32-33), but do not allege a single fact as to_ (id. at 30). To the extent Plaintiffs allege facts about supposed transactions, as discussed above they only allege transactions with Foreign Dealer Defendants' affiliates or fail to allege the requisite specifics. Moreover, certain Foreign Dealer Defendants (Barclays Services Limited, BNP Paribas, and Toronto Dominion Bank) have confirmed that they do not transact in USO SSA bonds in the United States. -9- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 16 of 34 entered into with any Defendant (PJ Opp. at 25, 29-31), those claims are not supported by any well-pled allegations. Indeed, none of the chats identified by Plaintiffs demonstrates that any Foreign Dealer Defendant manipulated any USD SSA bond traded in New York or elsewhere in the United States. I I PJ Br. at 16-19. Unable to demonstrate that Foreign Dealer Defendants manipulated every USD SSA bond trade that they or their affiliates entered, let alone that any such trades occurred in the United States, Plaintiffs resort instead to arguing that the supposed conspiracy was "transaction-specific" (PJ Opp. at 32), but that argument only reinforces that Plaintiffs cannot establish jurisdiction here. I2 See Merits Reply Br. at Part l.A.2; see also PJ Opp. at 28-29 ("[T]he prices were made artificial when the specific deal was mispriced by the same people responsible for approving that deal in the first place .... [T]hey were made artificial because the specific transactions were deliberately mispriced."). Plaintiffs are thus left with no choice but to argue that Foreign Dealer Defendants' ordinary, in-forum trading activities in USD SSA bonds are sufficient to confer jurisdiction. But the Second Circuit in Schwab rejected that very argument. There, the court found that defendants' sales of billions of dollars of financial instruments in California to plaintiff were not 11 Plaintiffs ask the court to infer that "the pricing and approval for all of these transactions" between Plaintiffs and certain U.S. affiliates of certain Forei n Dealer Defendants "came from the Foreign Dealer Defendants" based on . PJ 0 . at 29-30. 12 Plaintiffs point to the December 20, 2018 announcement expressing the European Commission's "preliminary view" of its investigation into SSA bond trading as providing additional support for their allegations, but the press release Plaintiffs include in their opposition papers directly contradicts their conclusory allegations that all USO SSA bond transactions were manipulated: "The Commission's investigation relates to conduct by certain traders at the four banks and does not imply that the alleged anti-competitive conduct was a general practice among SSA bond traders." Brockett Deel. Ex. 1. Furthermore, Plaintiffs themselves also tout the fact that, according to the press release, the Europe Commission's Statement of Objections specifically related to '"secondary market trading in the [European Economic Area] of USO SSA bonds," and not in the United States. Merits Opp. Br. at 6 (alterations in original) (quoting Brockett Deel. Ex. 1 ); see also id. at 27. Furthermore, Plaintiffs' attempt to effectively amend their pleadings by attaching the news articles is impermissible. See Merits Reply Br. at Part 11.C.5. -10- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 17 of 34 "causally connected" to the alleged London-based conspiracy. Schwab, 883 F.3d at 84 (defendants' forum trading activities "did not cause Defendants' false LIBOR submissions to the BBA in London, nor did the transactions in some other way give rise to claims seeking to hold Defendants liable for those submissions."); see also BBSW, 343 F. Supp. 3d at 205 (applying Schwab and finding no jurisdiction where "the alleged manipulation of [a financial benchmark] ... was not caused by any transactions that any [ d]efendant entered into in the United States"). Here, as in Schwab, Plaintiffs do not allege that the supposedly collusive activity (i.e., the suit- related conduct) occurred in the United States, just mere trading. 13 And there is nothing in the SAC that suggests that any of the trading activities of Foreign Dealer Defendants in the United States caused any of the alleged manipulation outside the United States. Schwab, 883 F .3d at 84. Plaintiffs have therefore failed to set forth any plausible, non-conclusory allegations linking the alleged conspiracy to any alleged trading activities in the United States. Plaintiffs attempt to casually dismiss this precedent by claiming that these leading cases are merely of "academic interest," relying on meaningless distinctions to distinguish them. PJ Opp. at 2. But Plaintiffs themselves have cited these very decisions to support their jurisdictional arguments. See PJ Opp. at 22, 28, 45 n.31, 53 n.43, 60 n.51; 14 Pls.' Mar. 2, 2018 Ltr. at 2 (Dkt. 429) (submitting Schwab as supplemental authority "relevant to the various motions to dismiss for lack of personal jurisdiction"). In any event, Plaintiffs' attempt to 13 The cases Plaintiffs cite in support of their argument, PJ Opp. at 31, are all inapposite because they either do not involve conspiracy allegations or - unlike here - the transactions in the forum were plausibly alleged to be within the scope of the supposed conspiracy or the conspiracy was otherwise plausibly alleged to have been expressly aimed at the forum. See, e.g., In re Vitamin C Antitrust Litig., 2012 WL 12355046, at *8 (E.D.N.Y. Aug. 8, 2012). 14 None of the non-benchmark cases Plaintiffs cite compel a different outcome. Indeed, many of these cases are factually inapposite, as they either do not allege a conspiracy or provide facts to support allegations that transactions in the forum were within the scope of the purported conspiracy. See, e.g., In re Aluminum Warehousing Antitrust Litig., 2015 WL 6472656, at *12-13 (S.D.N.Y. Oct. 23, 2015) (findingjurisdiction where, among other things, plaintiffs "presented evidence that [defendant] engaged in several other communications related to aluminum deals ... in which the participants explicitly contemplate that actions, events or effects would take place within multiple regions of the United States"). -11- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 18 of 34 distinguish these decisions falls flat. Plaintiffs claim that here "there is no relevant or practical separation between the acts causing artificiality and the act of entering into a specific transaction." PJ Opp. at 33; see also id. at 28-29. But this misses the mark; the jurisdictional inquiry does not depend on how defendants supposedly manipulated the instruments at issue. Rather, the issue is how any supposed manipulation is connected to trading activities in the forum. Plaintiffs simply fail to set forth any plausible, non-conclusory allegations linking the two. B. Plaintiffs Fail to Allege that the Foreign Dealer Defendants Expressly Aimed Their Conduct at New York or the United States Plaintiffs' theory of jurisdiction under the so-called "causal effects" test fares no better than their purposeful availment analysis. Under this test, jurisdiction may be established over suit-related conduct that occurred outside the forum and caused effects in the forum if, and only if, it is plausibly alleged that "the defendant expressly aimed its conduct at the forum." Schwab, 883 F.3d at 87. Plaintiffs argue that because the United States was the primary market for USD SSA bonds and Foreign Dealer Defendants supposedly traded USD SSA bonds in the United States, they therefore would have profited in the United States from their supposed manipulation. PJ Opp. at 39-40. Plaintiffs' allegations, however, are insufficient to establish jurisdiction on this basis. As an initial matter, Plaintiffs fail to address the lack of factual support for their bare assertion that USD SSA bonds are "primarily" marketed to U.S. investors and thus that USD SSA bonds "inherently" target the United States. See PJ Opp. at 13-14, Part LC. Instead, Plaintiffs once again merely repeat their own conclusory allegations without providing any additional analysis or support. Plaintiffs cannot premise their entire theory of jurisdiction on the bare assertion that the bonds they allegedly traded in are U.S.-dollar denominated, see Waldman, -12- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 19 of 34 835 F.3d at 337 (finding it "insµfficient to rely on a defendant's random, fortuitous, or attenuated contacts or on the unilateral activity of a plaintiff with the forum to establish specific jurisdiction"), or by claiming that some unspecified share of the bonds are called "Yankee" bonds (P J Opp. at 13-14 ), as neither plausibly establishes that the mere act of trading in USD SSA bonds "targets" the United States. Indeed, Plaintiffs have once again failed to cite a single chat, out of the thousands that they have reviewed, that refers to these bonds as "Yankee" bonds. See PJ Br. at 24. To the contrary, the chats identified by Plaintiffs disprove their theory by and, as a result, demonstrating that the United States was the not the primary market for USD SSA bonds. See PJ Br. at 24-25; see, e.g., SAC~ 399 ( ). In addition, Plaintiffs are unable to satisfy their burden of establishing that Foreign Dealer Defendants "expressly aimed" their purported manipulative conduct at New York or the United States. The Second Circuit in Schwab rejected the argument that disconnected trading activities in the forum- even where defendants engaged in billions of dollars' worth of transactions there - could plausibly suggest that foreign defendants "expressly aimed" their conduct at the forum. 883 F.3d at 88 ("That the effects of LIBOR manipulation were likely to reach an economy as large as California's does not mean that Defendant's conduct in London was 'expressly aimed' at that state."). As Judge Kaplan explained when applying Schwab in a similar context, alleged sales of financial instruments in the United States are a type of conduct "more readily connected to [their] counterparties ... not the forum in which such transactions took place or where such counterparties are located" and, therefore, "[p]laintiffs' allegations that the United States was a substantial market for [these instruments] speak[s] only to the foreseeability of the effect of [defendants'] conduct in the United States." BBSW, 343 F. Supp. -13- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 20 of 34 3d at 207. 15 Plaintiffs protest that if the Court were to find that there is no jurisdiction here, Foreign Dealer Defendants would be insulated from liability simply because they entered a conspiracy that happened to cause harm across the globe, rather than just in the United States. PJ Opp. at 41-42. But Plaintiffs' "effects" theory fails not because the purported effects of the alleged conspiracy were global, but because Plaintiffs fail to allege any facts plausibly suggesting that Foreign Dealer Defendants expressly aimed their conduct at the United States. See Schwab, 883 F.3d at 87-88; Waldman, 835 F.3d at 337-40 (no jurisdiction because "the United States [was not] the focal point"). Plaintiffs cite no authority to the contrary. 16 At base, Plaintiffs allege that Foreign Dealer Defendants should have known that their supposed agreement not to compete - one that was allegedly entered into and carried out by 15 Plaintiffs' argue that, unlike in Schwab, the alleged harm in the United States here was not "indiscriminate[]," and that Foreign Dealer Defendants profited from their alleged U.S.-based trades. PJ Opp. at 43. But this overlooks that the relevant aspect of the inquiry is what forum (if any) was the target of the alleged misconduct. Waldman, 835 F.3d at 340. Here, Plaintiffs make no allegations suggesting that the U.S. in particular was in any way a target of the alleged manipulation, instead claiming in conclusory fashion that because some of the bonds that Defendants allegedly traded were denominated in U.S. dollars, any purported manipulation was expressly aimed at the United States. See BBSW, 343 F. Supp. 3d at 207; Schwab, 883 F.3d at 87-88. Their allegations that Foreign Dealer Defendants profited from the alleged conspiracy in the United States also fail because there is nothing in the SAC that plausibly suggests that Foreign Dealer Defendants undertook the alleged acts of manipulation overseas with the intention and anticipation ofreaping those profits. Id. at 87 (noting that "financial self-interest is not the same as furthering a conspiracy"). 16 For instance, in EM! Christian Music Group, Inc. v. MP 3tunes, LLC, the court determined it had personal jurisdiction over defendant not merely because its nationwide service had users in New York, but because (1) the defendants had engaged in previous litigation with similar plaintiffs (record companies) in New York based on the same file storage website, and (2) defendants had extensive control over the infringing website. 844 F.3d 79, 99 (2d Cir. 2016). Similarly, in In re Magnetic Audiotape Antitrust Litig., plaintiffs offered exactly what Plaintiffs here fail to provide: specific allegations that defendants expressly aimed their overseas conduct at the United States. 334 F.3d 204, 208 (2d Cir. 2003) (finding an allegation that defendant attended meeting where price-fixing activities took place, specifically with respect to products sold in the United States, sufficient to potentially "satisfy the 'effects' test"). And in SEC v. Straub, the court's finding of jurisdiction was limited to cases where a "foreign securities issuer ... participates in a fraud directed to deceiving United States shareholders in violations of federal regulations requiring disclosure of accurate information to holders of securities traded in the United States." 921 F. Supp. 2d 244, 255 (S.D.N.Y. 2013). Plaintiffs' other cases are no more convincing. See Sonterra Capital Master Fund Ltd. v. Credit Suisse Group AG, 277 F. Supp. 3d 521, 594 n.35 (S.D.N.Y. 2017) (expressly declining to decide whether foreign defendants were subject to personal jurisdiction under the effects test); United States v. Hayes, 99 F. Supp. 3d 409, 423 n.4 (S.D.N.Y. 2015) (a criminal case, in which the standards for establishingjurisdiction are different). -14- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 21 of 34 foreign traders outside the United States - would have affected prices around the world, including the United States. But these are the very same allegations of "mere foreseeability" that courts have repeatedly rejected as a basis for jurisdiction under the "effects" test. See PJ Br. at 23 n.25. They should be rejected again here, and for the same reasons. II. PLAINTIFFS' AFFILIATE AND CONSPIRACY ALLEGATIONS FAIL TO ESTABLISH JURISDICTION OVER FOREIGN DEALER DEFENDANTS Plaintiffs cannot sustain their altemati ve argument that jurisdiction over Foreign Dealer Defendants can be premised on the alleged trading activities of their U.S.-based corporate affiliates or purported co-conspirators. This theory should be rejected as to all Foreign Dealer Defendants because, as discussed above, the U.S.-based contacts of any entity named by Plaintiffs are not suit-related and cannot confer jurisdiction. See supra Part I.A. Plaintiffs' theory also fails because they do not adequately plead the requisite agency relationship between any Foreign Dealer Defendant and any affiliate or alleged co-conspirator. Due process demands that courts assess '"[e]ach defendant's contacts ... individually,"' Schwab, 883 F.3d at 84 (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781 n.13 (1984)), because personal jurisdiction must be based upon "contacts that the defendant himself creates with the forum State," Walden v. Fiore, 571 U.S. 277, 284-86 (2014). Plaintiffs cannot, as they attempt to do here, impute the alleged suit-related contacts of Defendants' affiliates or alleged co-conspirators absent plausible allegations of direction and control. A. Plaintiffs' Allegations of Affiliate Contacts Fail to Confer Jurisdiction As an initial matter, Plaintiffs concede that the SAC groups together Foreign Dealer Defendants and their U.S. affiliates under a single name in what they call a "short-hand reference for each family of Defendants[.]" PJ Opp. at 57. This type of group pleading is impermissible, particularly where, as here, Plaintiffs seek to establish an agency relationship in order to confer -15- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 22 of 34 personal jurisdiction. See, e.g., BBSW, 343 F. Supp. 3d at 206 n.461 (finding no specific jurisdiction where the complaint "attribut[ ed] ... transactions to corporate families and fail[ ed] to distinguish between parent and subsidiary entities" because "the allegations are insufficiently individualized to make out aprimafacie case of personal jurisdiction"); see also Tera Group v. Citigroup, Inc., 2018 WL 4732426, at *2 (S.D.N.Y. Sept. 28, 2018) (noting that "conflating" affiliate entities "fails to establish personal jurisdiction over each defendant"). Plaintiffs also concede, as they must, that allegations regarding an agency relationship "must not be 'sparse' or 'conclusory."' PJ Opp. at 55 (quoting Schwab, 883 F.3d at 86). Schwab demands specific, plausible allegations of direction or control, 883 F.3d at 84-85, which, despite their acknowledgement of the standard, Plaintiffs do not provide. To support their claim of a supposed agency relationship, Plaintiffs rely on repetitive variations of generic allegations purporting to establish an agency relationship between each Foreign Dealer Defendant and its U.S.-based affiliates. See PJ Opp. at 6-8, 56 (alleging that the thirteen Foreign Dealer Defendants "transacted in USD SSA bonds in the United States with Class members at artificial prices, knowing such transactions were with U.S. counterparties" and "directed and controlled the trading of ... USD SSA bonds at artificial prices by" their domestic affiliates, "knowing and intending such transactions were with Class members in the United States, and booked the profit from such trades") (citing SAC~~ 51, 53, 55-56, 59-60, 64-65, 67, 69, 73, 75-79, 93, 95, 97-98, 100, 103-04). This unsupported boilerplate is indistinguishable from the "sparse allegations" that the Second Circuit in Schwab rejected as too conclusory. See Schwab, 883 F.3d at 86 ("bare allegation[ s ]" purporting to establish the existence of an agency relationship - such as claims that foreign defendants "controlled or otherwise directed or materially participated in the operations" of their U.S.-based affiliates and "reaped proceeds or other financial benefits" from -16- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 23 of 34 the instruments they sold - cannot establish personal jurisdiction). 17 Nor do Plaintiffs cite a single specific allegation in the nearly 600-paragraph SAC to support their sweeping contentions that "the domestic affiliates were literally taking daily direction from the Foreign Dealer Defendants" and "all happened to arrange their desks in a similar fashion," despite contending that these allegations are See PJ Opp. at 57- 58. As in Schwab, Plaintiffs' allegations "shed[] no light on the relationship between" Foreign Dealer Defendants and their affiliates, and offer no details on the formation of any supposed agency relationship or the manner in which Foreign Dealer Defendants purportedly exercised 17 Unsurprisingly, Plaintiffs are unable to cite a single case concerning personal jurisdiction in support of their erroneous contention that "general allegations that subsidiaries and individuals acted as agents are sufficient." See PJ Opp. at 55. Plaintiffs' reliance on In re Parmalat Sec. Litig., 375 F. Supp. 2d 278, 294-95 (S.D.N.Y. 2005), which does not discuss personal jurisdiction, is unavailing. See PJ Opp. at 55 n.46. Parmalat only considers agency allegations for the purpose of establishing vicarious liability for securities fraud. -17- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 24 of 34 any direction and control over the conduct relevant to Plaintiffs' claims. See Schwab, 883 F.3d at 86. Plaintiffs thus fall far short of the detail required by the Second Circuit to impute a U.S.- based affiliate's contacts to a foreign corporation. B. Plaintiffs' Conspiracy Allegations Fail to Establish Jurisdiction Plaintiffs admit that their theory of conspiracy jurisdiction - that a defendant can be subject to jurisdiction based solely on the acts of a co-conspirator- must fail if they do not plausibly allege a conspiracy, each defendant's participation in the conspiracy, and an act within the scope of the conspiracy that occurred in or was expressly aimed at the forum. P J Opp. at 61. Schwab confirmed that the failure to plausibly allege any of these elements is fatal to a claim of conspiracy jurisdiction. See 883 F.3d at 87 ("To allow jurisdiction absent a showing that a co- conspirator' s minimum contacts were in furtherance of the conspiracy would be inconsistent with the 'purposeful availment' requirement."). Because Plaintiffs do not plausibly allege any of the three (see Merits Reply Br. at Part II; supra Part I; id. at note 10), they cannot rely on a theory of conspiracy jurisdiction. See BBSW, 343 F. Supp. 3d at 197 n.396, 205-06 (finding that "plaintiffs have failed to make a prima facie showing of jurisdiction under a conspiracy jurisdiction theory" because Schwab precludes finding personal jurisdiction solely on the basis of U.S.-based transactions). Moreover, Plaintiffs have still failed to satisfy the requisite due process and statutory standards because they fail to allege that each Defendant engaged in suit-related conduct in the forum. For more than forty years, this Circuit has required a plaintiff to make a plausible showing of agency in order to establish conspiracy jurisdiction consistent with due process. Leasco Data Processing Equipment Corp. v. Maxwell, 468 F.2d 1326, 1341 n.11, 1343 (2d Cir. 1972), abrogated on other grounds by Morrison v. Nat'! Australia Bank Ltd., 561 U.S. 247 -18- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 25 of 34 (2010).1 8 The Supreme Court's decisions in Daimler and Walden confirm the continuing effectiveness of this rule, holding that in order to establish jurisdiction, a plaintiff must show that each defendant engaged in suit-related conduct in the forum, either personally or through an agent. Daimler AG v. Bauman, 571 U.S. 117, 134-35 (2014); Walden, 571 U.S. at 285. Courts in this Circuit have repeatedly recognized that conspiracy jurisdiction requires a plaintiff to plausibly allege that the foreign defendant had knowledge, direction, and control over its co-conspirator's in-forum suit-related conduct and would benefit from such conduct. See, e.g., In re Platinum & Palladium Antitrust Litig., 2017 WL 1169626, at *48-49 (S.D.N.Y. Mar. 28, 2017) (noting that "[ c ]ourts have been increasingly reluctant to extend [conspiracy jurisdiction] beyond the context of New York's long-arm statute," which requires that in-forum co-conspirators "acted at the direction or under the control" of the out-of-state defendant); In re North Sea Brent Crude Oil Futures Litig., 2017 WL 2535731, at *9 (S.D.N.Y. June 8, 2017) ("[A]n agency relationship is required to uphold jurisdiction based on a conspiracy theory."); City of Almaty v. Ablyazov, 278 F. Supp. 3d 776, 808 (S.D.N.Y. 2017) (denying conspiracy jurisdiction where plaintiffs did "not sufficiently allege" that in-forum co-conspirator "acted at the behest of or on behalf of, or under the control of' the defendant). Many of the cases on which Plaintiffs rely expressly recognize this requirement. See P J Opp. at 60 n.51 (citing Sea Trade Maritime Corp. v. Coutsodontis, 2012 WL 3594288, at *8 (S.D.N.Y. Aug. 16, 2012), and Simon v. Phillip Morris, Inc., 86 F. Supp. 2d 95, 120 (E.D.N.Y. 2000) (each requiring a showing that the in-forum co-conspirator acted "at the direction or under the control" of the defendant for 18 Despite Plaintiffs' claims to the contrary, neither Schwab nor any other case overruled Leasco (PJ Br. at 31 n.30), which imposed an agency requirement. Leas co, 468 F .2d at 1343 (Plaintiff could not establish conspiracy jurisdiction where alleged co-conspirators were partners in the same firm because the relationship must be "the closer one between a senior partner, especially one who is a director of the client, and a younger partner to whom he has delegated the duty of carrying out an assignment over which the senior retains general supervision. The case for doing this would be materially strengthened by proof that the junior was in frequent communication with the senior."). -19- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 26 of 34 conspiracy jurisdiction)); PJ Opp. at 63 (citing Dixon v. Mack, 507 F. Supp. 345, 350 (S.D.N.Y. 1980) (same)). None of the few post-Walden decisions that Plaintiffs cite addresses, let alone endorses, their theory that conspiracy jurisdiction is constitutionally viable absent plausible agency allegations. 19 The SAC fails to allege any facts that show Foreign Dealer Defendants exercised knowledge, direction, benefit, or control over any suit-related activities of their supposed co-conspirators. Plaintiffs also argue that requiring a showing of agency among alleged co-conspirators creates an inconsistency between the substantive law of conspiracy (where the acts of a co- conspirator are imputed) and the law of jurisdiction (where the contacts of a co-conspirator are not imputed). See PJ Opp. at 63 n.55. That is irrelevant. The Second Circuit has long held that questions of liability and jurisdiction are distinct, and the answers need not be coextensive. See, e.g., Bank Brussels Lambert, 305 F.3d at 125 ("[T]he inquiry at this stage is the preliminary question of [personal] jurisdiction, distinct from an inquiry into ultimate liability on the merits[.]"); Bertha Bldg. Corp. v. Nat'! Theatres Corp., 248 F.2d 833, 836 (2d Cir. 1957) (rejecting jurisdiction based on presence of a co-conspirator as "unsound" and finding it is "not necessarily in conflict" to reject jurisdiction even where there is substantive liability); In re 19 In almost all the cases cited by Plaintiffs to support their theory of conspiracy jurisdiction, PJ Opp. at 60-62, the courts declined to actually decide the question after determining that plaintiffs in those cases failed to allege a conspiracy. See, e.g., Sonterra, 277 F. Supp. 3d at 598 ("The Court need not decide whether specific jurisdiction over [a foreign defendant] would be appropriate based solely on its contacts with a coconspirator in the forum."); FrontPoint, 2017 WL 3600425, at *8; Unspam Technologies, Inc. v. Chernuk, 716 F.3d 322 (4th Cir. 2013); Malea Ltd. v. Jawer SA, 511F.3d1060, 1070 (10th Cir. 2007); Junquist v. Sheikh Sultan Bin Khalifa Al Nahyan, 115 F.3d 1020, 1031 (D.C. Cir. 1997). Similarly, Tadayon v. DATCO, Inc., 178 F. Supp. 3d 12 (D. Conn. 2016), a decision involving a prose defendant, did not reach the constitutional question as the issue was not even raised in briefing. See, e.g., Defendant-Intervenor's Sur-Reply to Counterclaim-Defendant's Motion to Dismiss Its Counterclaims, Tadayon, 2015 WL 11718102 (D. Conn. Sept. 3, 2015). LaChapelle v. Torres, 1 F. Supp. 3d 163, 169-71 (S.D.N.Y. 2014), a factually dissimilar tort action decided three days after Walden, also did not reach the constitutional issue implicated by conspiracy jurisdiction. Finally, Plaintiffs' reliance on FrontPoint Asian Event Driven Fund L.P. v. Citibank, N.A., 2018 WL 4830087 (S.D.N.Y. Oct. 4, 2018) is misplaced, because that opinion did not address whether plaintiffs' conspiracy theory of jurisdiction comports with due process, see id. at *8-9, and that issue is the subject of further briefing, which Judge Hellerstein has acknowledged addresses "issues not previously decided." FrontPoint Asian Event Driven Fund L.P. v. Citibank, N.A., No. 16-cv-5263, Dkt. 335 (S.D.N.Y. Nov. 21, 2018). -20- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 27 of 34 LIBOR-Based Fin. Instruments Antitrust Litig., 2015 WL 6243526, at *20 (S.D.N.Y. Oct. 20, 2015) ("[l]t is elemental that the jurisdictional and merits questions are distinct. ... [I]t is ultimately unremarkable that we lack personal jurisdiction as to some claims that appear viable on the merits."). Indeed, this distinction exists for good reason - while a defendant may be liable for the acts of a co-conspirator, mere membership in "the [alleged] conspiracy does not, standing alone, cloak [co-conspirators] with the authority" to act on each other's behalf. Societe Generale v. Federal Ins. Co., 856 F .2d 461, 465 (2d Cir. 1988). Rather, the mere act of joining a conspiracy, even if plausibly alleged, would at most only make activities of co-conspirators foreseeable, and "mere foreseeability" is insufficient to establish specific jurisdiction over a foreign defendant. Schwab, 883 F.3d at 87. Plaintiffs also fail to meet the requirements of the New York long arm statute and Rules 4(k)(l )(A) and 4(k)(2)20 pursuant to which they must plausibly allege knowledge, benefit, direction, and control in order to establish jurisdiction through conspiracy. See, e.g., In re Terrorist Attacks on Sept. 11, 2001, 349 F. Supp. 2d 765, 805 (S.D.N.Y. 2005) (declining to exercise conspiracy jurisdiction when plaintiffs failed "to allege any specific facts from which the Court could infer that [the foreign co-conspirators] directed, controlled, or requested [a co- conspirator] to undertake its terrorist activities" and failed to make "specific allegations of their knowledge of, or consent to those activities" because"[ w]ithout supporting factual allegations, such a statement is insufficient to establish an agency relationship"); In re Aluminum Warehousing Antitrust Litig., 90 F. Supp. 3d 219, 227 (S.D.N.Y. 2015) (rejecting conspiracy theory of jurisdiction under Rule 4(k)). Plaintiffs' own cases acknowledge this requirement (see PJ Opp. at 64 (citing Porina v. Marward Shipping Co., 521 F.3d 122, 128 (2d Cir. 2008))), yet 20 In addition, Plaintiffs cannot rely on Rule 4(k)(2) because they have failed to certify that Foreign Dealer Defendants are not subject to jurisdiction in any particular state. See PJ Br. at 34 n.32. -21- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 28 of 34 Plaintiffs ignore it entirely. III. PLAINTIFFS' FAILURE TO ALLEGE PROPER VENUE UNDER THE CLAYTON ACT PRECLUDES PERSONAL JURISDICTION OVER VENUE DEFENDANTS Because Plaintiffs fail to plead venue as to the Venue Defendants under the Clayton Act, they cannot establish personal jurisdiction under Rule 4(k)(l ). See Daniel v. American Bd. of Emergency Med., 428 F.3d 408, 423-25 (2d Cir. 2005). Plaintiffs do not plausibly allege that Venue Defendants transacted business of "substantial character" in the district, and instead improperly rely on conclusory group pleading allegations of agency relationships with U.S. affiliates (P J Opp. at 46-48), which cannot establish venue under the Clayton Act. See Pincione v. D'Alfonso, 506 F. App'x 22, 24 (2d Cir. 2012); BBSW, 343 F. Supp. 3d at 199 ("Allegations that certain of these defendants are parent companies of subsidiaries that transact business in New York do not suffice to show that the parent companies transact business in New York."); see supra Part II.A.21 Plaintiffs' general allegations of (PJ Opp. at 47 (citing. -) ) do nothing to plausibly show that the Venue Defendants transacted business "of any substantial character" in the Southern District of New York. See BBSW, 343 F. Supp. 3d at 199- 200 (finding that allegations of recruiting efforts in New York did not "evidence the practical, everyday business or commercial concept of doing business or carrying on business of any substantial character"). 21 Additionally, this Court should not credit Plaintiffs' continued mischaracterizations of some Venue Defendants' declarations and financial statements as a basis for venue. PJ Opp. at 48; see also supra note 3. Plaintiffs' mischaracterization cannot establish venue because the actual statements cannot reasonably be construed as legitimate indications of business activities in the Southern District of New York (PJ Br. at 35-36), as opposed to the kind of generalized information typical of corporate annual reports. Further, Plaintiffs cite materials referring to alleged business activities occurring outside of the Class Period. See, e.g., PJ Opp. at 48. -22- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 29 of 34 Plaintiffs incorrectly contend that they can rely on a wholly separate statute, 28 U.S.C. § 1391, to assert that venue is proper under Section 12 of the Clayton Act. But Plaintiffs cannot avail themselves of Section 12's extraterritorial jurisdictional rule without first satisfying that provision's specific venue requirements, not the venue requirements of some other statute. See Daniel, 428 F.3d at 423 (holding that Section 12 "applies (and, therefore, establishes personal jurisdiction) only in cases in which its venue provision is satisfied"); BBSW, 343 F. Supp. 3d at 198 ("[J]urisdiction lies only in cases in which the venue provision of Section 12, not the general venue statute, is satisfied."). Because Plaintiffs fail to allege that the Venue Defendants are "found" or "transact[] business" in the Southern District of New York, they fail to establish personal jurisdiction over Venue Defendants. See BBSW, 343 F. Supp. 3d at 198-200. IV. CONSIDERATIONS OF FAIR PLAY, SUBSTANTIAL JUSTICE, AND INTERNATIONAL COMITY SUPPORT DISMISSAL Plaintiffs accuse Foreign Dealer Defendants of trying to "re-argue the personal jurisdiction merits" (P J Opp. at 80), but the unavoidable reality is that, even if Plaintiffs had adequately alleged sufficient minimum contacts over Foreign Dealer Defendants, Plaintiffs' assertions of jurisdiction are unreasonable on their face. To establish jurisdiction based on unsupported and conclusory allegations of conduct that occurred outside the United States that was not intentionally aimed at New York or elsewhere in the United States would offend the principles of fair play, substantial justice, and international comity. See, e.g., Laydon v. Mizuho Bank, Ltd., 2015 WL 1515358, at *6 (S.D.N.Y. Mar. 31, 2015) (declining to confer jurisdiction over multi-national banks where doing so "would not comport with notions of fair play and substantial justice"). Plaintiffs ignore that a court must exercise "great care and reserve" before "extending our notions of personal jurisdiction" over foreign corporate defendants. Siegel v. HSBC Holdings, PLC, 2018 WL 501610, at *3 (S.D.N.Y. Jan. 19, 2018) (quoting Asahi Metal -23- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 30 of 34 Indus. v. Superior Court, 480 U.S. 102, 115 (1987)). Plaintiffs' effort to evade comity concerns by pointing to their conclusory and wholly unsubstantiated allegation that "governmental investigations into [Defendants'] misconduct ... were spearheaded by the U.S. Department of Justice" does nothing to assuage concerns of judicial overreach into the affairs of a foreign country via private, civil litigation. PJ Opp. at 79 (citing SAC if 375). Plaintiffs' alternative theory of jurisdiction - imputing the contacts of alleged in-forum co-conspirators to Foreign Dealer Defendants -fares no better. See Jn re Aluminum Warehousing Antitrust Litig., 90 F. Supp. 3d at 232. V. PLAINTIFFS ARE NOT ENTITLED TO JURISDICTIONAL DISCOVERY After three attempts, including reviewing "thousands" of chat transcripts provided by two settling Defendants, Plaintiffs have failed to cure the jurisdictional deficiencies that have existed since their original consolidated complaint, which Foreign Dealer Defendants identified in two prior rounds of motion to dismiss briefing. Having failed to establish a prima facie case that this Court has jurisdiction over the Foreign Dealer Defendants, Plaintiffs should not now be entitled to a fourth bite at the apple through jurisdictional discovery. See Jazini, 148 F.3d at 186 ("Since [plaintiffs] did not establish a prima facie case that the district court had jurisdiction ... the district court did not err in denying discovery on that issue."); see also Dkt. 573. At least six judges in this district overseeing similar cases concerning alleged overseas manipulation have dismissed claims for lack of personal jurisdiction without permitting jurisdictional discovery. BBSW, 343 F. Supp. 3d at 212; Jn re Platinum, 2017 WL 1169626, at *50; Sullivan, 2017 WL 685570, at *49; Jn re LIBOR-Based Fin. Instruments Antitrust Litig., 2016 WL 1733463, at *3 (S.D.N.Y. Apr. 29, 2016); 7 W 57th St. Realty Co. v. Citigroup, Inc., 2015 WL 1514539, at *30 (S.D.N.Y. Mar. 31, 2015); Laydon, 2015 WL 1515358, at *7. Faced with this mass of unfavorable authority, Plaintiffs rely on a line of inapposite cases where, unlike here, plaintiffs -24- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 31 of 34 demonstrated a reasonable basis to believe that additional discovery would support a prima facie case for jurisdiction.22 Plaintiffs cannot even meet that threshold.23 Plaintiffs' request for jurisdictional discovery should also be denied because they "propose no actual plan for such discovery." See BBSW, 343 F. Supp. 3d at 212; see also Dkt. 573. Plaintiffs' request, supported by inadequate allegations of personal jurisdiction, is precisely the kind of impermissible "fishing expedition" that courts regularly reject. See Weisblum v. Prophase Labs., Inc., 88 F. Supp. 3d 283, 290 (S.D.N.Y. 2015) ("[P]laintiff may not make conclusory non-fact specific jurisdictional allegations against foreign defendants and thus obtain extensive discovery on that issue."). This Court should do the same. CONCLUSION As to the Foreign Dealer Defendants, the SAC should be dismissed with prejudice. 22 See, e.g., Jn re Magnetic Audiotape Antitrust Litig., 334 F.3d at 208 (limited jurisdictional discovery appropriate to probe allegation that executive attended in-person meeting during which the purported conspiracy was discussed); Pension Comm. of Univ. of Montreal Pension Plan v. Banc of America Sec., LLC, 2006 WL 708470, at *6 (S.D.N.Y. Mar. 20, 2006) (permitting limited jurisdictional discovery where agency or alter-ego allegations could plausibly provide a basis for jurisdiction). 23 Plaintiffs' suggestion that jurisdictional discovery should be granted because Defendants submitted declarations refuting their jurisdictional allegations is similarly unconvincing. Courts have routinely denied jurisdictional discovery after consideration of affidavits like those at issue here. See, e.g., Langenberg v. Sofair, 2006 WL 2628348, at *5 (S.D.N.Y. Sept. 11, 2006). -25- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 32 of 34 Dated: March 13, 2019 New York, New York Isl Barry Sher Barry Sher Anthony Antonelli PAUL HASTINGS LLP 200 Park A venue New York, NY 10166 Telephone: (212) 318-6085 Fax: (212) 230-5185 barrysher@paulhastings.com anthonyantonelli@paulhastings.com Attorneys for Defendants Barclays Bank PLC, Barclays Services Limited, and Barclays Capital Securities Limited Isl Jay B. Kasner Jay B. Kasner Karen M. Lent SKADDEN, ARPS, SLATE, MEAGHER & FLOMLLP Four Times Square New York, New York 10036 Telephone: (212) 735-3000 Fax: (212) 735-2000 jay.kasner@skadden.com karen.lent@skadden.com Attorneys for Defendant Citigroup Global Markets Limited Isl Carmine D. Boccuzzi Jr. Carmine D. Boccuzzi Jr. Martha E. Vega-Gonzalez Timothy Thomas Leech CLEARY GOTTLIEB STEEN & HAMILTON LLP One Liberty Plaza New York, New York 10006 Telephone: (212) 225-2508 Fax: (212) 225-3999 cboccuzzi@cgsh.com mvega-gonzalez@cgsh.com tleech@cgsh.com Attorneys for Defendant BNP Paribas Isl Lisa J. Fried Lisa J. Fried Benjamin A. Fleming HOGAN LOVELLS US LLP 875 Third Avenue New York, New York 10022 Telephone: (212) 918-3000 Fax: (212) 918-3100 lisa.fried@hoganlovells.com benjamin.fleming@hoganlovells.com Benjamin Holt HOGAN LOVELLS US LLP 555 Thirteenth Street, NW Washington, DC 20004 Telephone: (202) 637-8845 Fax: (202) 637-5910 benjamin.holt@hoganlovells.com Attorneys for Defendant Credit Agricole Corporate & Investment Bank -26- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 33 of 34 Isl David G. Januszewski Herbert S. Washer David G. Januszewski Elai Katz Sheila C. Ramesh Adam S. Mintz CAHILL GORDON & REINDEL LLP 80 Pine Street New York, New York 10005 Telephone: (212) 701-3000 Fax: (212) 269-5420 hwasher@cahill.com dj anuszewski@cahill.com ekatz@cahill.com sramesh@cahill.com amintz@cahill.com Attorneys for Defendants Credit Suisse AG, Credit Suisse Securities (Europe) Ltd, and Credit Suisse International Isl Alexander J. Willscher Alexander J. Willscher Matthew J. Porpora Stephen H. 0. Clarke SULLIVAN & CROMWELL LLP 125 Broad Street New York, New York 10004 Telephone: (212) 558-4000 Fax: (212) 558-3588 willschera@sullcrom.com porporam@sullcrom.com clarkest@sullcrom.com Attorneys for Defendants Royal Bank of Canada and RBC Europe Limited Isl John D. Buretta John D. Buretta CRA VA TH, SWAINE & MOORE LLP 825 Eighth A venue New York, New York 10019 Telephone: (212) 474-1000 Fax: (212) 474-3700 jburetta@cravath.com Attorneys for Defendant Nomura International pie Isl James R.R. Windels James R.R. Windels Gregory S. Morrison DA VIS POLK & WARDWELL LLP 450 Lexington A venue New York, New York 10017 Telephone: (212) 450-4000 Fax: (212) 701-5800 james.windels@davispolk.com gregory.morrison@davispolk.com Attorneys for Defendant The Toronto- Dominion Bank -27- Case 1:16-cv-03711-ER Document 589 Filed 03/13/19 Page 34 of 34