Citibank 2012 Annual Report Download - page 308

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Citigroup and Citibank, N.A., along with other defendants, have
moved to dismiss all of the above actions that were consolidated into the
MDL proceeding as of June 29, 2012. Briefing on the motion to dismiss
was completed on September 27, 2012. Judge Buchwald has stayed all
subsequently filed actions that fall within the scope of the MDL until the
motion to dismiss has been resolved. Citigroup and/or Citibank, N.A. are
named in the 17 such stayed actions that have been consolidated with or
marked as related to the MDL proceeding.
Eleven of these actions have been brought on behalf of various putative
plaintiff classes, including (i) banks, savings and loans institutions and credit
unions that allegedly suffered losses on loans they made at interest rates tied to
USD LIBOR, (ii) holders of adjustable-rate mortgages tied to USD LIBOR, and
(iii) individual and municipal purchasers of various financial instruments
tied to USD LIBOR. The remaining six actions have been brought by individual
plaintiffs, including an entity that allegedly purchased municipal bonds and
various California counties, municipalities, and related public entities that
invested in various derivatives tied to USD LIBOR. Plaintiffs in each of the 17
stayed actions allege that the panel bank defendants manipulated USD LIBOR
in violation of the Sherman Act, RICO, and/or state antitrust and racketeering
laws, and several plaintiffs also assert common law claims, including fraud,
unjust enrichment, negligent misrepresentation, interference with economic
advantage, and/or breach of the implied covenant of good faith and fair
dealing. Plaintiffs seek compensatory damages and, where authorized by
statute, treble damages and injunctive relief.
Additional information concerning the stayed actions is publicly
available in court filings under docket numbers 1:12-cv-4205 (S.D.N.Y.)
(Buchwald, J.), 1:12-cv-5723 (S.D.N.Y.) (Buchwald, J.), 1:12-cv-5822
(S.D.N.Y.) (Buchwald, J.), 1:12-cv-6056 (S.D.N.Y.) (Buchwald, J.),
1:12-cv-7461 (S.D.N.Y.) (Buchwald, J.), 2:12-cv-10903 (C.D. Calif.)
(Snyder, J.), 3:12-cv-6571 (N.D. Calif.) (Conti, J.), 3:13-cv-106 (N.D. Calif.)
(Beeler, J.), 4:13-cv-108 (N.D. Calif.) (Ryu, J.), 3:13-cv-109 (N.D. Calif.)
(Laporte, J.), 5:13-cv-62 (C.D. Calif.) (Phillips, J.), 3:13-cv-48 (S.D. Calif.)
(Huff, J.), 1:13-cv-346 (S.D.N.Y.) (Buchwald, J.), 1:13-cv-407 (S.D.N.Y.)
(Buchwald, J.), 5:13-cv-122 (C.D. Calif.) (Bernal, J.), 1:13-cv-981 (S.D.N.Y.)
(Buchwald, J.), and 1:13-cv-1016 (S.D.N.Y.) (Buchwald, J.).
In addition, on November 27, 2012, an action captioned MARAGOS V.
BANK OF AMERICA CORP. ET AL. was filed on behalf of the County of Nassau
against various USD LIBOR panel banks, including Citibank, N.A., and the
other defendants with whom the plaintiff had entered into interest rate swap
transactions. The action was commenced in state court and subsequently
removed to the United States District Court for the Eastern District of New York.
The plaintiff asserts claims for fraud and deceptive trade practices under New
York law against the panel bank defendants based on allegations that the
panel banks colluded to artificially suppress USD LIBOR, thereby lowering the
payments the plaintiff received in connection with various interest rate swap
transactions. The plaintiff seeks compensatory damages and treble damages.
The defendants have sought consolidation of this action with the MDL
proceeding. Additional information concerning this action is publicly available
in court filings under docket number 2:12-cv-6294 (E.D.N.Y.) (Spatt, J.).
Separately, on April 30, 2012, an action was filed in the United States
District Court for the Southern District of New York on behalf of a putative
class of persons and entities who transacted in exchange-traded Euroyen
futures and option contracts between June 2006 and September 2010. This
action is captioned LAYDON V. MIZUHO BANK LTD. ET AL. The plaintiff
filed an amended complaint on November 30, 2012, naming as defendants
banks that are or were members of the panels making submissions used in
the calculation of Japanese yen LIBOR and TIBOR, and certain affiliates of
some of those banks, including Citibank, N.A., Citigroup, CJL and CGMJ. The
complaint alleges that the plaintiffs were injured as a result of purported
manipulation of those reference interest rates, and asserts claims arising
under the Commodity Exchange Act and the Sherman Act and for unjust
enrichment. Plaintiffs seek compensatory damages, treble damages under
the Sherman Act, and injunctive relief. Additional information concerning
this action is publicly available in court filings under the docket number
12-cv-3419 (S.D.N.Y.) (Daniels, J.).
Interchange Fees Litigation
Beginning in 2005, several putative class actions were filed against Citigroup
and Related Parties, together with Visa, MasterCard and other banks and
their affiliates, in various federal district courts and consolidated with other
related cases in a multi-district litigation proceeding before Judge Gleeson
in the United States District Court for the Eastern District of New York. This
proceeding is captioned IN RE PAYMENT CARD INTERCHANGE FEE AND
MERCHANT DISCOUNT ANTITRUST LITIGATION.
The plaintiffs, merchants that accept Visa- and MasterCard-branded
payment cards as well as membership associations that claim to represent
certain groups of merchants, allege, among other things, that defendants
have engaged in conspiracies to set the price of interchange and merchant
discount fees on credit and debit card transactions and to restrain trade
through various Visa and MasterCard rules governing merchant conduct, all
in violation of Section 1 of the Sherman Act and certain California statutes.
Plaintiffs seek, on behalf of classes of U.S. merchants, treble damages,
including all interchange fees paid to all Visa and MasterCard members
with respect to Visa and MasterCard transactions in the U.S. since at least
January 1, 2004, as well as injunctive relief. Supplemental complaints have
also been filed against defendants in the putative class actions alleging that
Visa’s and MasterCard’s respective initial public offerings were anticompetitive
and violated Section 7 of the Clayton Act, and that MasterCard’s initial public
offering constituted a fraudulent conveyance.
On July 13, 2012, all parties to the putative class actions, including
Citigroup and Related Parties, entered into a Memorandum of Understanding
(MOU) setting forth the material terms of a class settlement. The class
settlement contemplated by the MOU provides for, among other things, a
total payment by all defendants to the class of $6.05 billion; a rebate to
merchants participating in the damages class settlement of 10 basis points on
interchange collected for a period of eight months by the Visa and MasterCard
networks; changes to certain network rules that would permit merchants
to surcharge some payment card transactions subject to certain limitations
and conditions, including disclosure to consumers at the point of sale; and
broad releases in favor of the defendants. Subsequently, all defendants and
certain of the plaintiffs who had entered into the MOU executed a settlement
agreement consistent with the terms of the MOU.