AAI Urges Second Circuit to Resist Raising Bar for Allegations of Antitrust Conspiracy (In re ICE LIBOR Antitrust Litigation)

AAI has filed an amicus brief in the Second Circuit asking the court to hold the line against an overbroad reading of Twombly and restore antitrust plaintiffs’ access to discovery.

In Putnam Bank v. Intercontinental Exchange (In re ICE LIBOR Antitrust Litigation), a collection of small banks and pension funds allege that a coalition of large financial institutions conspired to artificially suppress the ICE LIBOR rate. ICE LIBOR is an index, widely used as a benchmark in contracts, that is supposed to reflect the rates at which large financial institutions can borrow from one another.

Plaintiffs’ complaint included detailed allegations of the banks’ parallel submission of lending rates that defied financial logic as well as specific allegations of the structural characteristics of the industry and details of the banks’ motive, opportunity, and means to fix artificially low rates.

In March of this year, without any merits discovery, the district court dismissed the complaint, finding that it failed to allege a plausible conspiracy under Bell Atlantic v. Twombly.

AAI’s brief in support of the plaintiffs-appellants argues that the district court wrongly analyzed the plausibility of plaintiffs’ factual allegations, instead of following Twombly’s dictate to credit plaintiffs’ factual allegations and then determine if a conspiracy can be inferred from them.  The brief also explains the critical role of plus factors in providing the requisite context for making allegations of conspiracy based on parallel conduct plausible, and faults the district court for rejecting alleged plus factors that fall short of direct evidence.  The district court’s overbroad and confused reading of Twombly would make it nearly impossible to plead an antitrust conspiracy case absent a “smoking gun” of direct evidence of the conspiracy.

The brief was written by AAI Vice President of Policy Laura Alexander.