A few weeks ago, we published an overview of the third consolidated amended class action complaint and the subsequent motion for summary judgment filed by Credit Suisse, the sole remaining defendant in the litigation. That motion sequence was fully briefed in June 2021, and the Court has now issued an opinion and order dismissing both Credit Suisse’ motion and Plaintiffs’ cross-motion.
As set forth in our previous post, Credit Suisse argued that summary judgment must be granted because Plaintiffs had failed to prove the existence of a “single conspiracy” to widen spreads in the FX spot market. In their opinion denying that bid for dismissal, the Corut observed that “tellingly, [Credit Suisse] does not directly argue that no conspiracy existed.” It is also worth noting that, in summarizing the facts of the case, the Court took particular not of the fact that traders from the various Defendants communicated through chat rooms, with just “eight chat rooms connect[ing] employees of all sixteen Defendant Banks,” and that “some banks, including Credit Suisse, encouraged their employees to use interbank chat rooms and discuss bid-ask spreads in those chat rooms.
Discussing the quality of evidence required to defeat summary judgment, the Court observed that “[a] plaintiff need not “disprove all nonconspiratorial explanations for the defendants’ conduct; rather the evidence need be sufficient only to allow a reasonable fact finder to infer that the conspiratorial explanation is more likely than not.” (Internal citations omitted.) They further noted that, absent direct evidence, Plaintiffs could rely on circumstantial evidence, with parallel action being seeing as a “powerful form” of such evidence–though not sufficient without the showing of additional “plus factors.”
Turning to the “existence of a conspiracy” question, the court took a middle line finding evidence on both sides:
Construing the evidence in favor of Plaintiffs on CS Defendants’ motion, a reasonable jury could find that a single conspiracy existed to fix spreads in the FX market and that the supporting evidence tends to exclude the possibility that the alleged co-conspirators acted independently. Conversely, construing the evidence in favor of CS Defendants on Plaintiffs’ motion, a reasonable jury could conclude that no single overarching conspiracy existed, and that only multiple smaller conspiracies existed. While significant uncontroverted evidence shows at least some conspiratorial activity in the FX market in which Credit Suisse participated, questions remain about the scope of the shared illegal goal and extent of the conspirators’ mutual dependence and assistance.
The decision then considered the “economic plausibility” of the alleged conspiracy, finding that Plaintiffs’ allegations of a horizonal price fixing scheme was a theory that “makes economic sense,” because “Defendants had an incentive to fix spreads and keep them as wide as possible” because wider spreads would increase their profitability. The Court also notes that Credit Suisse “[did] not specifically contest the economic plausibility of Plaintiffs’ theory,” and that their arguments concerning the complexity of the alleged agreement does “not directly make Plaintiffs’ theory less economically plausible because Defendants’ rational economic motive is the same regardless of the number of currencies impacted or the amount of time in which trading occurs.”
The Court also looked at the direct evidence of a conspiracy, observing that “Plaintiffs’ point[ed] to at least fourteen instances in char transcripts of Credit Suisse traders encouraging others to use wider spreads, or acceding to wider spreads at the request of other traders.” (Side note – It must have been fun to depose the Credit Suisse trader who suggested that a subgroup of banks “sign a pact on spreads.” Same goes for the bright individual who decided to name their chat room the “Yen Cartel.”) With respect to Credit Suisse’s argument that the information exchanged was merely “market color,” the Court was dismissive: “Nothing in that [industry] guide suggests that real-time price spreads are considered market color to be shared.”
Turning next to circumstantial evidence of conspiracy—the “plus factors” required when relying on parallel action—the Court observed that “Plaintiffs point to significant evidence that permit an inference that Defendants entered into an agreement.” This included “evidence of a high level of interfirm communications”; “evidence of traders’ motives to widen spreads even though it [was] not always in their economic self-interest to do so”; and the fact that “three former Credit Suisse employees…asserted their Fifth Amendment privilege against self-incrimination.”
On the issue of single versus multiple conspiracies, the court swung more to neutral: “a reasonable jury could find for either Plaintiffs or Defendants on the issue of whether there existed a single conspiracy, as Plaintiffs allege, or multiple conspiracies, as Defendants’ argue[.]” Critical here was an examination of “what binds the alleged conspirators and their conduct together.” One relevant factors included the overlapping participants, which the court found to be present via the multiple overlapping chat rooms: the fact that Defendants shared information only in subgroups “does not negate the scale of the information shared or the number of connections between Defendants.” A second relevant factor was Plaintiffs’ “strong evidence” of cooperation in a collective venture. In support of this factor, the Court pointed to the language used by the traders when discussing their activity: referring to it as a “pact”, a “cartel,” and a “gentlemen’s agreement,” and discussions about getting on the “same page,” or making the “cartel gold.” (Again, people still put those things in writing?) The Court found Defendants’ opposing implausibility argument unavailing, noting that the testimony relied misconstrued Plaintiffs’ allegations. The Court also weighed the “interdependence” factor, finding the “strongest evidence” of that element was each Defendants’ reliance on the other Defendants to provide pricing information when asked, including “traders’ apologies for being slow to provide spread information when asked.” What the Court found to be a “more difficult question” was “whether, and to what extent there was interdependence between or among chatrooms to support the inference of one global conspiracy versus multiple conspiracies comprised of each chat room.” This was enough to raise a question of fact, and preclude Plaintiffs’ own cross-motion for summary judgment.
Finally, the Court addressed Credit Suisse’s argument that it could not have participated in a single global conspiracy because there was “no evidence suggesting that anyone was aware of some enormous worldwide scheme.” This was shut down quickly: there is no requirement that a plaintiff must prove that a conspirator understood the full scope of the conspiracy, only that they knew of the “general nature and extent.”
Since this decision was issued in February, is appears—based on a recent status letter—that there has been no movement on settlement in the interim. In response, the Court directed that the parties appear for a conference “to discuss whether it would be useful for the parties to explore settlement discussions.” Given that Credit Suisse is the last of sixteen defendants to settle, I’m sure the Court (not to mention the parties) are hoping the “exploration” is productive.
This post was written by Alexandra M.C. Douglas.