LIBORUnanimous Court orders review of key district court ruling 

The Second Circuit made a mistake when it refused to hear an appeal, the Supreme Court held 9-0 today in Gelboim v. Bank of Am. Corp., No. 13-1174 (U.S. Jan. 21, 2015); see Supreme Court Takes LIBOR Case, Blawgletter®, July 1, 2014.

The Court's ruling will hasten – by a year or more – review of a key decision by the district court that has the job of handling price-fixing and other claims in the massive In re Libor-Based Financial Instruments Antitrust Litigation, No. 1:11-md-02262-NRB (S.D.N.Y.).

Gelboim also will likely affect how district judges and parties deal with discrete legal issues that could dispose of some but not all claims in complex, multi-district cases like Libor.

Gelboim and Libor

The underlying case — in which Blawgletter's firm serves as co-lead counsel for a plaintiff class — arose from efforts by banks during 2007-10 to suppress the London Inter-bank Offer Rate, or LIBOR. Because trillions of (nominal) dollars in loans, swaps, and other financial instruments use LIBOR as a benchmark (according to one source, "Libor underpins approximately $350 trillion in derivatives"), the banks' machinations caused them to appear more financially sound and thus enabled them to pay less in interest to commercial paper and other lenders, counterparties to interest-rate swaps, and others.

The plaintiffs in Gelboim alleged one claim — that "a number of banks, acting in concert, had violated federal antitrust law" by fixing LIBOR, in violation of Sherman Act section 1. Gelboim, slip op. at 1. The Judicial Panel on Multidistrict Litigation assigned Gelboim and dozens of other cases from around the country to a single judge, in the Southern District of New York, "for pretrial proceedings" under 28 U.S.C. § 1407. Id.

Dismissal and appeal — and dismissal of appeal

Acting on the banks' motions to dismiss, the district court threw out the antitrust claims of all Libor plaintiffs, including those in Gelboim. The court held that the plaintiffs could not prove "antitrust injury" from the banks' conspiracy to suppress LIBOR.

The Gelboim plaintiffs filed a notice of appeal in the Second Circuit, which oversees district courts in New York, Connecticut, and Vermont. That court dismissed the appeal on its own motion. It explained that the "orde[r] appealed from did not dispose of all claims in the consolidated action." Gelboim, slip op. at 6.

High Court review — and reversal

The Gelboim plaintiffs filed a petition for review by the Supreme Court, which promptly granted it. The Court heard argument on December 9, 2014. Its unanimous ruling followed fewer than 60 days later.

The Court, per Justice Ginsburg, disposed of the issue before it in 10 pages. The putting of multi-district cases before one district judge for pretrial purposes does not, the Court ruled, effect a melding of them such that all dispositive orders must await a complete wrap-up of the MDL proceeding.

"Cases consolidated for MDL pretrial proceedings ordinarily retain their separate identities, so an order disposing of one of the discrete cases in its entirety should qualify under [28 U.S.C.] §1291 as an appealable final decision." Gelboim, slip op at 6-7.


The Court's ruling effectively permits all parties in Libor to obtain Second Circuit review of the district court's dismissal order. It also strengthens the hand of all Libor plaintiffs in any settlement talks with defendant banks, not least because the again-in-play antitrust claims allow joint and several liability regardless of contractual privity and permit recovery of treble damages and attorneys' fees. The state-law claims that remained after the dismissal of the price-fixing claims conferred neither advantage, the district court believed.

Gelboim may or may not speed up the handling of other MDL cases. MDL judges and parties now know that a dispositive ruling having "the hallmarks of a final decision" for even a single case among dozens, hundreds, or thousands can prompt appellate review as the other cases in the MDL lumber on.

Will that knowledge result in behavior that aims to postpone a "final decision" for strategic or tactical reasons? We will have to wait and see.