Citibank 2015 Annual Report Download - page 308

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On June 30, 2014, the United States Supreme Court granted a petition
for a writ of certiorari in GELBOIM, ET AL. v. BANK OF AMERICA CORP.,
ET AL. with respect to the dismissal by the United States Court of Appeals
for the Second Circuit of an appeal by the plaintiff class of indirect OTC
purchasers of U.S. debt securities. On January 21, 2015, the Supreme Court
ruled that, contrary to the Second Circuit’s opinion, the plaintiffs had a right
to appeal, and remanded the case to the Second Circuit for consideration of
the plaintiffs’ appeal on the merits. The Second Circuit heard oral argument
on November 13, 2015. Additional information concerning this appeal is
publicly available in court filings under the docket numbers 13-3565 (2d
Cir.), 13-3636 (2d Cir.), and 13-1174 (U.S.).
Citigroup and Citibank, along with other USD LIBOR panel banks, also
are 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 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 in violation of federal and
state antitrust laws and federal RICO law. The plaintiff seeks compensatory
damages, treble damages where authorized by statute, and declaratory
relief. On March 31, 2015, the United States District Court for the Southern
District of New York dismissed this action. On June 1, 2015, the plaintiff
moved for leave to file a second amended complaint. Additional information
concerning this action is publicly available in court filings under the docket
number 13 Civ. 981 (Gardephe, J.).
On May 2, 2014, plaintiffs in the class action SULLIVAN v. BARCLAYS PLC,
ET AL. pending in the United States District Court for the Southern District of
New York filed a second amended complaint naming Citigroup and Citibank,
N.A. as defendants. Plaintiffs claim to have suffered losses as a result of
purported EURIBOR manipulation and assert claims under the Commodity
Exchange Act, the Sherman Act and the federal RICO law, and for unjust
enrichment. On September 11, 2014, the court granted the U.S. Department
of Justice’s motion to stay discovery for eight months, until May 12, 2015.
Plaintiffs filed a fourth amended complaint on August 13, 2015. Defendants
filed a motion to dismiss on October 14, 2015. Additional information
concerning this action is publicly available in court filings under the docket
number 13 Civ. 2811 (S.D.N.Y.) (Castel, 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 (Interchange
MDL). 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. Supplemental complaints also have 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 January 14, 2014, the court entered a final judgment approving
the terms of a class settlement providing for, among other things, a total
payment 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; and changes to
certain network rules.
On July 28, 2015, various objectors to the class settlement filed motions
in the U.S. District Court to vacate the court’s prior approval of the class
settlement, alleging improprieties by two of the lawyers involved in the
Interchange MDL. Various objectors appealed from the final class settlement
approval order with the United States Court of Appeals for the Second Circuit,
which heard oral argument regarding the appeals on September 28, 2015.
Additional information concerning these consolidated actions is publicly
available in court filings under the docket number MDL 05-1720 (E.D.N.Y.)
(Brodie, J.) and 12-4671 (2d Cir.).
Numerous merchants, including large national merchants, have
requested exclusion 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. One of these suits, 7-ELEVEN, INC., ET AL. v.
VISA INC., ET AL., brought on behalf of numerous individual merchants,
names Citigroup as a defendant. On December 5, 2014, the Interchange
MDL, including the opt-out cases, was transferred from Judge Gleeson
to Judge Brodie. Additional information concerning these actions is
publicly available in court filings under the docket numbers MDL 05-1720
(E.D.N.Y.) (Brodie, J.).