Citibank 2013 Annual Report Download - page 328

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Citigroup and Citibank, N.A., along with other USD LIBOR panel banks,
are also named as defendants in an individual action filed in the United
States District Court for the Southern District of New York on February 13,
2013, captioned 7 WEST 57th STREET REALTY CO. v. CITIGROUP, INC.,
ET AL. The plaintiff filed an amended complaint on June 11, 2013,
asserting federal and state antitrust claims and federal RICO claims and
seeking compensatory damages, treble damages where authorized by
statute, and declaratory relief. The plaintiff alleges that the defendant panel
banks manipulated USD LIBOR to keep it artificially high and that this
manipulation affected the value of plaintiffs’ OTC municipal bond portfolio.
The defendants have moved to dismiss the amended complaint, and briefing
on the motions to dismiss was completed on December 13, 2013. Additional
information concerning this action is publicly available in court filings
under the docket number 1:13-cv-981 (Gardephe, J.).
Separately, on April 30, 2012, an action was filed in the United
States District Court for the Southern District of New York 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 those banks,
including Citigroup, Citibank, N.A., CJL and CGMJ. On April 15, 2013,
the plaintiff filed a second amended complaint alleging that defendants,
including Citigroup, Citibank, N.A., CJL and CGMJ, manipulated Japanese
yen LIBOR and TIBOR in violation of the Commodity Exchange Act and
the Sherman Act. The second amended complaint asserts claims under
these acts and for unjust enrichment on behalf of a putative class of persons
and entities that engaged in U.S.-based transactions in Euroyen TIBOR
futures contracts between January 2006 and December 2010. Plaintiffs seek
compensatory damages, treble damages under the Sherman Act, restitution,
and declaratory and injunctive relief. The defendants have moved to dismiss
the second amended complaint, and briefing on the motions to dismiss
was completed on October 16, 2013. Additional information concerning
this action is publicly available in court filings under the docket number
1:12-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.
Visa and MasterCard have also entered into a settlement agreement
with merchants that filed individual, non-class actions. While Citigroup
and Related Parties are not parties to the individual merchant non-class
settlement agreement, they are contributing to that settlement, and
the agreement provides for a release of claims against Citigroup and
Related Parties.
On November 27, 2012, the court entered an order granting preliminary
approval of the proposed class settlements and provisionally certified two
classes for settlement purposes only. The United States District Court for
the Eastern District of New York held a hearing on September 12, 2013
to consider whether the class settlements should be finally approved. On
December 13, 2013, the court entered an order granting final approval to
the class settlement, and on January 14, 2014, the court entered a final
judgment. Additional information concerning these consolidated actions is
publicly available in court filings under the docket number MDL 05-1720
(E.D.N.Y.) (Gleeson, J.). A number of objectors have filed an appeal of the
final approval order with the Second Circuit Court of Appeals.
Numerous merchants, including large national merchants, have
requested exclusion (opted out) from the class settlements, and some of
those opting out have filed complaints against Visa, MasterCard, and in
some instances one or more issuing banks. Two of these suits, 7-ELEVEN,
INC., ET AL. v. VISA INC., ET AL., and SPEEDY STOP FOOD STORES, LLC,