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When A Relationship Is Insufficient: Opting Out of the FX Antitrust Class Action Requires Clear Indication

On May 28, 2020, Judge Lorna G. Schofield of the United Stated District Court for the Southern District of New York issued her Opinion and Order in Allianz Global Inv’rs GMBH v. Bank of Am. Corp., No. 18 Civ. 10364 (LGS), 2020 U.S. Dist. LEXIS 93670 (S.D.N.Y. May 28, 2020) (“FX Opt-Outs Action”).  Defendants have recently requested certification of the Court’s May 28, 2020 order for interlocutory appeal with respect to whether foreign Plaintiffs are barred from bringing suit under the U.S. antitrust laws based on transactions with U.S. trading desks by the Foreign Trade Antitrust Improvements Act (the “FTAIA”).  As set forth in Defendants’ letter to the District Court last week, to the extent these foreign Plaintiffs’ antitrust claims are barred by the FTAIA, Defendants believe these Plaintiffs’ common law unjust enrichment claims will also fail as preempted by Congress.  But the FTAIA question is not the only interesting issue raised by the District Court’s decision, which includes a discussion of what is required to convey sufficient intent to opt out of a class action and how failure to adequately convey this intent may be cause for dismissal to the extent the time to opt out has expired.

 The Opt-Out Plaintiffs consist of nearly 1,300 funds and other investment accounts managed by trusts, investment firms, and government entities that opted out of the related In re Foreign Exchange Benchmark Rates Antitrust Litig., No. 13 Civ. 7789 (LGS) (S.D.N.Y. 2013) class action (the “Class Action”).  Similar to the Class Action, the Opt-Out Plaintiffs alleged antitrust claims under Section 1 of the Sherman Act claim, as well as a common law claim for unjust enrichment, against several of the world’s leading banks arising out of their alleged conspiracy to fix the benchmark rates and bid-ask spreads in the foreign exchange market.  The Opt-Out Plaintiffs filed their complaint in the Southern District of New York on November 7, 2018, approximately five years after the Class Action Complaint was first filed.

  In ruling on Defendants’ motion to dismiss in the FX Opt-Outs Action, Judge Schofield narrowed the antitrust claims, denied dismissal on the basis of forum non conveniens, and denied dismissal of the unjust enrichment claim.  Judge Schofield also addressed an argument made in a footnote of Defendants’ moving papers, in which Defendants asked the Court to find that certain of the Opt-Out Plaintiffs did not properly opt out of the Class Action, and thus should be dismissed with prejudice.  Ultimately, Judge Schofield held that, while certain fund entities had adequately demonstrated a desire to be excluded from the Class Action, the trusts that hold funds that formally opted out of the Class Action cannot use that relationship as sufficient indication of the trusts’ desire to opt out.  Judge Schofield thus dismissed the trusts from the action for failure to opt out.  Likewise, Judge Schofield found that the fund managers responsible for trading the relevant FX instruments of an entity that formally opted out of the Class Action must itself create an indication of a desire to opt out.  Although the Southern District of New York recognized that “[a]ny reasonable indication of desire to opt out should suffice,” FX Opt-Outs Action, 2020 U.S. Dist. LEXIS 93670, at *113 (quoting McReynolds v. Richards-Cantave, 588 F.3d 790, 800 (2d Cir. 2009)), Judge Schofield explained that “the burden [is] on the class member to establish that he or she made a sufficient effort to communicate an intent to opt out through the appropriate channels.  The class member must show that notice was effectively and timely communicated.” Id. (quoting In re Sunedison, Inc. Sec. Litig., No. 16-md-2742 (PKC), 2018 WL 2356663, at *3 (S.D.N.Y. May 1, 2018) (citations omitted)).  Judge Schofield continued that the above described relationships – that of a trust whose funds it holds had opted out and that of a fund manager of an entity that opted out – is “not sufficient to show that notice was ‘effectively and timely communicated’ that these Plaintiffs opted out.” Id. at *714.

 Although the topic of the procedural requirements for opting out are not routinely litigated, courts within the Second Circuit have made clear on prior occasions that they are unwilling to glean sufficient intent readily. See, e.g., Santiago v. Fischer, No. 09-CV-1383 (MKB) (ST), 2017 U.S. Dist. LEXIS 88397, at *11 (E.D.N.Y. June 7, 2017), aff’d, 2017 U.S. Dist. LEXIS 160371 (E.D.N.Y. Sept. 29, 2017) (noting “courts in this Circuit have expressly held that ‘pursuing an individual action or arbitration does not constitute notice of an election to opt out of a class action”) (citing In re Bank of Am. Corp. Sec., Derivative, & ERISA Litig., Nos. 09 MD 2058 (PKC) and 10 Civ. 2284 (PKC), 2013 U.S. Dist. LEXIS 81053, at *24-25 (S.D.N.Y. June 5, 2013); In re WorldCom Sec. Litig., 496 F.3d 245, 255 (2d Cir. 2007)).  This decision serves not only as an important reminder to funds and managers that wish to opt out of a class action to do so decisively and formally, but also as a reminder to the defense bar to consider raising an argument concerning insufficient intent to opt out to the extent one is available.

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Ellen Shapiro


Ellen Shapiro focuses her practice on complex commercial litigation and securities litigation, including shareholder class actions and opt-outs. She represents companies in the life sciences and in other industries and also maintains an active pro bono practice.