In the sprawling LIBOR-Based Financial Instruments Antitrust Litigation matters, Plaintiffs sought certification of three separate classes: (i) traders of Eurodollar futures and options on futures traded at the Chicago Mercantile Exchange (the Exchange-Based Plaintiff Action); (ii) financial institutions that made loans paying interest based on LIBOR (the Lender Plaintiff Action); and (iii) purchasers of over-the-counter (OTC) interest rate swaps and floating-rate bonds that paid LIBOR-linked interest (the OTC Plaintiff Action). Compass Lexecon Senior Affiliate Dr. Christopher L. Culp, and Senior Consultants Professor Janusz A. Ordover and Professor Robert D. Willig provided extensive testimony on behalf of the LIBOR panel banks. Judge Naomi Reice Buchwald of the U.S. District Court for the Southern District of New York found their testimony persuasive and cited them extensively in her opinion. Judge Buchwald denied class certification entirely for the Exchange-Based and Lender Plaintiff Actions and denied class certification in part for the OTC Plaintiff Action. Judge Buchwald denied Daubert motions filed by Plaintiffs challenging certain aspects of the testimony of Professor Willig and Dr. Culp, ruling that their testimony was reliable and admissible, while granting Defendants’ Daubert motions to exclude many of Plaintiffs’ experts’ opinions.
Dr. Culp offered testimony in the Exchange-Based Plaintiff Action that there was no causal relationship between alleged trader-based manipulation of LIBOR and Eurodollar futures and options on futures prices based on a reliable, formulaic method for all putative class-members. Judge Buchwald found “compelling” Dr. Culp’s testimony that Plaintiffs’ experts did not establish the existence of a causal relationship between alleged trader-based manipulation of LIBOR and Eurodollar futures and options on futures prices and that there is no reliable, formulaic method to determine any such causal relationship for all putative class-members. She also found that Plaintiffs’ motion to exclude Dr. Culp’s testimony was “premised on a mischaracterization of his reports” and that none of their critiques “call into question the reliability of Dr. Culp’s opinions.”
Professor Ordover offered testimony in the Exchange-Based, Lender and OTC Actions that the determination of injury and damages due to the alleged persistent suppression could be made on a class-wide basis, but would require individualized inquiries. In the Exchange-Based action, Judge Buchwald cited Professor Ordover’s opinions in denying class certification, ruling that Plaintiffs’ causation theory “is nonsensical; this finding is confirmed by Dr. Ordover’s analysis showing a lack of convergence between spot LIBOR and expected LIBOR at settlement implied by [Eurodollar futures] prices…despite increasing overlap between the time periods.” In the Lender Action, Professor Ordover testified that class-wide injury could not be presumed, since many terms of highly negotiated loans would be expected to be different in a world absent the alleged LIBOR suppression. Judge Buchwald cited this opinion while excluding Plaintiff’s expert’s opinions which did not “meaningfully rebut Dr. Ordover’s testimony.” In the OTC Plaintiff Action, Judge Buchwald found Professor Ordover’s testimony “more compelling” than Plaintiffs’ expert regarding the individualized nature of damage calculations.
In the Exchange-Based, Lender and OTC Actions Professor Willig addressed Plaintiffs’ claims that LIBOR was persistently suppressed. In each case, Professor Willig compared the banks’ LIBOR submissions with their actual borrowing costs (which Professor Willig opined were “the most informative data for evaluating the accuracy of [panel banks’] LIBOR submissions”), demonstrating that common evidence cannot be used to establish that submissions were suppressed class-wide compared with borrowing costs, and showing that the determination of any suppression would require numerous individualized inquiries. Judge Buchwald dismissed Plaintiffs’ challenges to Professor Willig’s testimony, finding that actual borrowing cost transactions are “properly considered” in any assessment of Plaintiffs’ claims and that the “argument to the contrary…is simply unavailing.” She ruled that Plaintiffs’ “attempted distinction between bid-initiated transactions and offer-initiated transactions is illusory and does not render Dr. Willig’s analysis unreliable; its attempt to paint Dr. Willig’s transaction analysis as a calculation of but-for LIBOR is a mischaracterization and fares even worse.”
Dr. Culp was supported by a Chicago-based Compass Lexecon team that included David Gross, Andria van der Merwe, Andrea Neves, Jonathan Williams, Laura Yergesheva and Bettina Staerkle.
Professor Ordover was supported by a Chicago-based Compass Lexecon team that included Thomas Stemwedel, David Ross, Dzmitry Asinski, Andria van der Merwe and Erika Morris.
Professor Willig was supported by a Compass Lexecon team that included David Gross, Joseph Goodman, Ron Laschever, Laura Yergesheva, Peter Marlantes and Binbin Deng from our Chicago office and Jith Jayaratne and Maya Meidan from our Oakland office.
Dr. Culp was retained by David R. Gelfand, Robert C. Hora, Mark Villaverde and Andrew Lichtenberg of Milbank, Tweed, Hadley & McCloy LLP. Professor Ordover and Professor Willig were retained by counsel for a joint defense group and worked closely with Elai Katz of Cahill Gordon & Reindel LLP; Andrew D. Lazerow and Thomas A. Isaacson of Covington & Burling LLP; Arthur J. Burke, Paul S. Mishkin, Adam Mehes and Peter J. Davis of Davis Polk & Wardwell LLP; Peter Sullivan, Eric J. Stock and Jefferson E. Bell of Gibson, Dunn & Crutcher LLP; Brian J. Poronsky of Katten Muchin Rosenman LLP; Moses Silverman and Hallie S. Goldblatt of Paul, Weiss, Rifkind, Wharton & Garrison LLP; and Paul C. Gluckow, Abram J. Ellis and Zander Li of Simpson Thacher & Bartlett LLP.