Supreme Court to Review Appeal Issue in LIBOR Litigation

Introduction

The Supreme Court has granted certiorari in Gelboim v. Bank of America Corp. and will soon decide whether a case that has been dismissed from a consolidated proceeding can be appealed immediately, notwithstanding other cases still pending in the same proceeding.1 A circuit split currently exists on this issue, with courts of appeals holding in one of three different ways.

Background & Procedural History

In August 2011, the Judicial Panel on Multidistrict Litigation (“JPML”) consolidated several cases involving an alleged conspiracy by large banks to manipulate the London Interbank Offering Rate (“LIBOR”), a bank-to-bank borrowing benchmark that underpins various financial instruments, in the Southern District of New York. 2

One category of plaintiffs, purchasers of bonds tied to the LIBOR rate (“the bondholder plaintiffs”), only brought antitrust claims, while the other plaintiffs pursued multiple theories of liability.3 In March 2013, Judge Naomi Reice Buchwald dismissed most of the plaintiffs’ claims, including all antitrust claims. This holding resulted in the bondholder plaintiffs being dismissed from the proceeding entirely, while other plaintiffs were allowed to proceed under non-antitrust causes of action.4

The bondholder plaintiffs appealed to the Second Circuit, which dismissed the appeal for lack of appellate jurisdiction.5 The Second Circuit held that it lacked jurisdiction because claims in the overall consolidated proceeding were still pending before Judge Buchwald, and therefore the bondholder plaintiffs had not appealed from a final order, a prerequisite for appellate jurisdiction under 28 U.S.C. § 1291.6

The bondholder plaintiffs filed a petition for writ of certiorari with the Supreme Court on this issue, which the Court granted on June 30, 2014.7

The Circuit Split

The issue of whether plaintiffs dismissed from consolidated proceedings can appeal immediately is subject to a circuit split that includes every circuit except the Fourth Circuit. The core question is whether consolidated cases merge for appellate jurisdiction purposes or whether they retain independent identities, and thus can be appealed as separate cases.8

On one end of the spectrum, the Second, Ninth, Tenth, and Federal Circuits have denied appeals until all cases in the consolidated proceedings have been adjudicated on the merits.9 These circuits have concluded, reasoning by analogy, that consolidated actions are similar to multiple claims or counterclaims presented in a single action.10 Therefore, consolidated cases merge into a single action for the purposes of appellate jurisdiction and appeals are appropriate only when the entire action has been resolved.11 The circuits that favor this approach point out that it reduces uncertainty for the parties, is more efficient, and prevents piecemeal review.12

On the opposite end, the First and Sixth Circuits permit appeals so long as claimants filed separate complaints before their actions were consolidated.13 These circuits have held that separate actions do not merge in the event of consolidation, and any individual action is appealable when all claims in that action have reached final adjudication.14 However, if claimants file an amended consolidated complaint, their separate actions are unified into a single action and the dismissal of some claims does not trigger appellate jurisdiction.15

Finally, the Third, Fifth, Seventh, Eighth, Eleventh and D.C. Circuits make up the middle ground and apply a case-by-case approach that assesses the extent to which cases have been merged for consolidation.16 These circuits have held that cases that have been consolidated for all purposes merge into a single case for appellate jurisdiction, and final resolution of all claims must occur before any individual claim can be appealed.17 Conversely, if cases are consolidated for limited purposes only, such as for pre-trial proceedings or discovery, final adjudication of one case readies it for appeal, even if the other is still pending.18

Conclusion & Impact on Antitrust Litigation

The Supreme Court’s decision will be significant for consolidated proceedings involving different classes of plaintiffs, each of whom may have different causes of action, standing, and other unique issues. The current prevalence of class action litigation with respect to cartel activity indicates that this decision will be meaningful for antitrust cases, particularly those involving direct purchaser, indirect purchaser, state attorneys general, and other types of plaintiffs. A holding that dismissed plaintiffs can appeal immediately may provide both parties with certainty. Dismissed plaintiffs will not have to wait until proceedings beyond their control reach final adjudication before commencing appeals, and defendants will know with which plaintiffs they must litigate or settle. On the other hand, immediate appeals may result in inefficiency and substantive issues being decided at different levels of litigation.

Endnotes    (↵ returns to text)
  1. This decision will likely affect proceedings consolidated through many possible avenues, including multidistrict litigation procedures and Rule 42 of the Federal Rules of Civil Procedure. Although Gelboim v. Bank of America Corp. is a multidistrict litigation, other relevant cases discussed infrawere consolidated through Rule 42.
  2. In re LIBOR-Based Fin. Instruments Antitrust Litig., 802 F. Supp. 2d 1380 (J.P.M.L. 2011).
  3. In re LIBOR-Based Fin. Instruments Antitrust Litig., 935 F. Supp. 2d 666 (S.D.N.Y. 2013).
  4. Id
  5. In re LIBOR-Based Fin. Instruments Antitrust Litig., Case No. 13-3565, 13-3636 (2d Cir. Oct. 30, 2013) (appeal dismissed).
  6. Id
  7. Gelboim v. Bank of America Corp., 82 U.S.L.W. 3587, 2014 WL 1234644 (U.S. June 30, 2014) (No. 13-1174) (granting certiorari).
  8. Spraytex, Inc. v. DJS&T, 96 F.3d 1377, 1379 (Fed. Cir. 1996) (“The fundamental question presented by this case is whether consolidation is to be viewed as merging the actions or whether the actions retain their separate identities for purposes of appellate review.”
  9. The Second Circuit is less adamant about this approach than the other circuits, holding that there is a “strong presumption” against allowing such appeals in consolidated actions. Houbigant, Inc. v. IMG Fragrance Brands, LLC, 627 F.3d 497, 498–499 (2d Cir. 2010).
  10. Spraytex,96 F.3d at 1379 (discussing agreement with Ninth and Tenth Circuits).
  11. at 1382.
  12. These circuits note that their approach does not prevent a party from requesting certification from the district court that there is no just reason for delay in appeal, as permitted by Rule 54(b) of the Federal Rules of Civil Procedure If the district court issues such certification, appeal is available even if the overarching consolidated proceeding is still pending.
  13. See,g.,Gateway KGMP Dev., Inc. v. Tecumseh Prods. (In re Refrigerant Compressors Antitrust Litig.) (hereinafter Refrigerant), 731 F.3d 586, 589–590 (6th Cir. 2013); Albert v. Maine Cent. R. Co., 898 F.2d 5, 6”“7 (1st Cir. 1990).
  14. Albert, 898 F.2d at 7.
  15. Refrigerant, 731 F.3d at 590–91.
  16. See Schippers v. United States, 715 F.3d 879, 884 (11th Cir. 2013).
  17. Id
  18. Id
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Wendy Fu

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