Mexican Government Bonds Antitrust Litigation: Reconsideration Motion Denied

In our most recent post about In re Mexican Government Bonds Antitrust Litigation, 18-cv-02830, we discussed the recent settlements with JP Morgan and Barclays, as well as Plaintiffs then-outstanding motion for reconsideration of the court’s November 2020 Order dismissing the Second Amended Class Action Complaint (“SACC”) against a subset of the Defendants.[1]  That motion has since been decided, and—unfortunately for Plaintiffs—denied.

As our previous posts cover in more detail, Plaintiffs in this action are U.S. pension funds which purchased or sold Mexican government bonds; the SACC set forth allegations against a multitude of banks, which Plaintiffs accuse of conspiring to sell Mexican government bonds at supra-competitive prices. The Moving Defendants against which claims were dismissed consisted entirely of Mexico-based banks, which traded with U.S.-based customers through non-party, New York-based affiliate sales desks, and through a nominal broker-dealer affiliate.

The Court’s original order dismissing the SACC against the Moving Defendants found that no personal jurisdiction existed over these Mexican banks. This holding was based on the precedent established by Charles Schwab Corp. v. Bank of America Corp., 883 F.3d 68 (2d Cir. 2018).  In this case, like Schwab, while the sales of the instruments in question occurred inside the United States, the rate fixing itself occurred in Mexico.  Therefore, the Court concluded, specific jurisdiction only existed over the misrepresentations made by Defendants during the sale, but not over Plaintiffs’ antitrust claims, as the latter focused on wrongful conduct (conspiracy to fix auctions, inflate prices, etc.) which took place in Mexico.  Plaintiffs’ reconsideration motion argued that a more recent case, Ford Motor Co. v. Montana Eighth Judicial District Court, 141 S. Ct. 1017 (2021), “reflect[ed] an intervening change in law that compel[ed] a different result.”

The Court’s dismissal of the reconsideration motion had two prongs. First was, very simply, timeliness: Plaintiffs failed to file their motion within the fourteen-day time period allowed by Local Rule 6.3.  Moreover, Plaintiffs were on notice that the pending Ford decision might “bear on the relevant law.” Despite that notice, Plaintiffs not only failed to ask for an extension of the fourteen-day time period, but “waited nearly two months” to file their motion after the Ford decision was issued.

The Court was also unimpressed by the merits of the motion.  While the Court may no longer be bound by the Schwab decision, it writes, “the facts there are indistinguishable,” as “there, as here, the sales [which occurred in the United States] were not part of the misconduct in the suit.”  Accordingly, sales in neither case can give rise to personal jurisdiction.  The Court further held that the Ford decision did not displace Schwab, as Ford did not concern the sale of financial instruments, rate-setting, or fraud or conspiracy. The ultimate holding in Ford—that “some relationships will support jurisdiction without a casual showing”—may “undermine” the rational on which Schwab is based, the Court notes, but as Ford did not identify the type of relationship in Schwab as being one sufficient for such treatment, it did not offer sufficient grounds for a district court to ignore binding precedent from the Second Circuit.   

Since the issuance of the order on reconsideration, the Plaintiffs have written to the Court requesting that a final judgment be entered against the sole non-settling Defendant that was not one of the dismissed Moving Defendants. The entry of a final judgment against that Defendant—UBS Mexico, which has since been dissolved and thus could not be served—is a necessary prerequisite before Plaintiffs can perfect an appeal.   Defendants subsequently filed a responding letter, indicating that they had no opposition to Plaintiffs request. The Court has not yet responded, but it seems likely that they will issue the order as requested. If that’s the case, we will be back with a summary of any appellate  briefing that is forthcoming.  

This post was written by Alexandra M.C. Douglas.

[1] This subset of Defendants (the “Moving Defendants”) included: The Moving Defendants are Banco Nacional de México, S.A., Institución de Banca Múltiple, Grupo Financiero Banamex; Banco Santander (México), S.A., Institución de Banca Múltiple, Grupo Financiero Santander México; Bank of America México, S.A., Institución de Banca Multiple, Grupo Financiero Bank of America; BBVA Bancomer S.A., Institución de Banca Múltiple, Grupo Financiero BBVA Bancomer; Deutsche Bank México, S.A., Institutión de Banca Múltiple; and HSBC México, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC.

Stay informed!
Sign up for email alerts and notifications here.