Ross v. Citigroup, Inc. , 630 F. App'x 79 ( 2015 )


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  •      14-1610(L)
    Ross v. Citigroup, Inc., et al.
    UNITED STATES COURT OF APPEALS
    FOR THE SECOND CIRCUIT
    SUMMARY ORDER
    RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
    ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
    PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
    DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
    ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
    SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
    1            At a stated term of the United States Court of Appeals
    2       for the Second Circuit, held at the Thurgood Marshall United
    3       States Courthouse, 40 Foley Square, in the City of New York,
    4       on the 19th day of November, two thousand fifteen.
    5
    6       PRESENT: DENNIS JACOBS,
    7                PIERRE N. LEVAL
    8                GERARD E. LYNCH,
    9                              Circuit Judges.
    10
    11       - - - - - - - - - - - - - - - - - - - -X
    12       ROBERT ROSS, on behalf of himself and
    13       all others similarly situated, ANDREA
    14       KUNE, WOODROW CLARK, S. BYRON
    15       BALBACH, JR., MATTHEW GRABELL, PAUL
    16       IMPELLEZZERI, on behalf of themselves
    17       and all others similarly situated,
    18       RICHARD MANDELL, RANDAL WACHSMUTH,
    19                Plaintiffs-Appellants,
    20
    21                    -v.-                                               14-1610(L)
    22                                                                       14-1616(con)
    23       CITIGROUP, INC., CITIBANK (SOUTH
    24       DAKOTA), N.A., CITICORP DINERS CLUB,
    25       CITIBANK USA, N.A., UNIVERSAL BANK,
    26       N.A., UNIVERSAL FINANCIAL CORPORATION,
    27       DISCOVER FINANCIAL SERVICES, INC.,
    28       DISCOVER BANK, AMERICAN EXPRESS CO.,
    1
    1   AMERICAN EXPRESS TRAVEL RELATED
    2   SERVICES CO., INC., DB SERVICING
    3   CORPORATION,
    4            Defendants-Appellees.
    5   - - - - - - - - - - - - - - - - - - - -X
    6
    7   FOR APPELLANTS:            MERRILL G. DAVIDOFF (with DAVID
    8                              A. LANGER on the brief), Berger
    9                              & Montague, P.C., Philadelphia,
    10                              Pennsylvania, for Plaintiffs-
    11                              Appellants.
    12
    13   FOR APPELLEES:             EAMON P. JOYCE (with DAVID F.
    14                              GRAHAM, T. ROBERT SCARBOROUGH,
    15                              PATRICK E. CROKE, and DAVID W.
    16                              DENTON, JR.,FIN on the brief),
    17                              Sidley Austin LLP, New York, New
    18                              York, for Defendants-Appellees
    19                              Citigroup Inc., Citibank, N.A.
    20                              (as successor-in-interest to
    21                              Citibank (South Dakota), N.A.,
    22                              for itself and as successor-in-
    23                              interest to Citibank U.S.A.,
    24                              N.A., Universal Bank, N.A., and
    25                              Universal Financial Corp.), and
    26                              Citicorp Diners Club Inc.
    27
    28                              ELIZABETH P. PAPEZ (with ROBERT
    29                              Y. STERLINE and CHRISTOPHER J.
    30                              LETKEWICZ, on the brief),
    31                              Winston & Strawn LLP,
    32                              Washington, D.C., for
    33                              Defendants-Appellees Discover
    34                              Financial Services, DB Servicing
    35                              Corporation, and Discover Bank.
    36
    37                              ROWAN D. WILSON (with EVAN R.
    38                              CHESLER and GARY A. BORNSTEIN on
    39                              the brief), Cravath, Swaine, &
    40                              Moore LLP, New York, New York,
    41                              for Defendants-Appellees
    42                              American Express Company,
    43                              American Express Travel Related
    44                              Services Company, Inc., and
    45                              American Express Centurion Bank.
    46
    2
    1        Appeal from a judgment of the United States District
    2   Court for the Southern District of New York (Pauley, J.).
    3
    4        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
    5   AND DECREED that the judgment of the district court be
    6   AFFIRMED.
    7
    8        Plaintiffs appeal from the judgment of the United
    9   States District Court for the Southern District of New York
    10   (Pauley, J.), which entered judgment in favor of defendants-
    11   appellees following a five-week bench trial. At issue are
    12   agreements between defendants (credit card issuing banks1)
    13   and plaintiffs (classes of individual cardholders). These
    14   agreements include provisions that specify arbitration as
    15   the sole method of resolving disputes relating to the credit
    16   accounts and disallow (among other things) class actions.
    17   We assume the parties’ familiarity with the underlying
    18   facts, the procedural history, and the issues presented for
    19   review.
    20
    21        1. Plaintiffs challenge the finding that defendants did
    22   not collusively adopt class-action-barring arbitration
    23   clauses in violation of the Sherman Act, 15 U.S.C. § 1. The
    24   standard of review for a district court’s findings of fact
    25   following a bench trial is clear error.2 Fed. R. Civ. P.
    1
    Several other credit card issuing banks that
    allegedly conspired and colluded with defendants have either
    settled those claims or are otherwise not a part of this
    appeal.
    2
    Plaintiffs argue that certain language in United
    States v. General Motors Corp., should be used to adopt a
    rule that the existence of a conspiracy is a legal
    conclusion subject to review de novo. See 
    384 U.S. 127
    , 141
    n.16 (1966) (“the ultimate conclusion by the trial judge,
    that the defendants' conduct did not constitute a
    combination or conspiracy in violation of the Sherman Act,
    is not to be shielded by the 'clearly erroneous' test”).
    However, in the very same paragraph, the Supreme Court
    continues: “the question here is not one of 'fact,' but
    consists rather of the legal standard required to be applied
    to the undisputed facts of the case." 
    Id. (emphasis added).
         Here, by contrast, the facts were hotly disputed, especially
    on the ultimate question whether certain conduct by
    defendants warranted an inference that a conspiracy existed.
    3
    1   52(a)(6); Ceraso v. Motiva Enters., LLC, 
    326 F.3d 303
    , 316
    2   (2d Cir. 2003); see also Anderson v. City of Bessemer City,
    3   N.C., 
    470 U.S. 564
    , 573-74 (1985) (“If the district court's
    4   account of the evidence is plausible in light of the record
    5   viewed in its entirety, the court of appeals may not reverse
    6   it even though convinced that had it been sitting as the
    7   trier of fact, it would have weighed the evidence
    8   differently.”). The district court’s conclusion that there
    9   was no conspiracy was not clearly erroneous.
    10
    11        An antitrust conspiracy in violation of Section 1 of
    12   the Sherman Act requires proof of joint or concerted action
    13   as opposed to unilateral action. Anderson News, L.L.C. v.
    14   Am. Media, Inc., 
    680 F.3d 162
    , 183 (2d Cir. 2012).
    15   Plaintiffs concede that they have no direct evidence of
    16   conspiracy; so the conspiracy here “must be proven though
    17   ‘inferences that may fairly be drawn from the behavior of
    18   the alleged conspirators.'" 
    Id. (quoting Michelman
    v.
    19   Clark-Schwebel Fiber Glass Corp., 
    534 F.2d 1036
    , 1043 (2d
    20   Cir. 1976)).
    21
    22        As the district court recognized, parallel conduct can
    23   be probative evidence of unlawful collusion. Apex Oil Co.
    24   v. DiMauro, 
    822 F.2d 246
    , 253 (2d Cir. 1987). An agreement
    25   among competitors "may be inferred on the basis of conscious
    26   parallelism, when such interdependent conduct is accompanied
    27   by circumstantial evidence and plus factors." Todd v. Exxon
    28   Corp., 
    275 F.3d 191
    , 198 (2d Cir. 2001). These "plus
    29   factors" may include (but are not limited to) "a common
    30   motive to conspire, evidence that shows that the parallel
    31   acts were against the apparent individual economic
    32   self-interest of the alleged conspirators, and evidence of a
    33   high level of inter-firm communications." Twombly v. Bell
    34   Atl. Corp., 
    425 F.3d 99
    , 114 (2d Cir. 2005) (internal
    35   citations omitted), rev'd on other grounds by Bell Atl.
    36   Corp. v. Twombly, 
    550 U.S. 544
    (2007); see also Mayor & City
    37   Council of Baltimore, Md. v. Citigroup, Inc., 
    709 F.3d 129
    ,
    38   136 (2d Cir. 2013).
    39
    Our Circuit has never applied General Motors as expansively
    as plaintiffs urge, and we see no reason to depart from
    well-settled principles of “clear error” review of factual
    determinations.
    4
    1        Having found that there was “conscious parallel action
    2   in the adoption and maintenance of arbitration clauses,”3
    3   the district court thoroughly analyzed various “plus
    4   factors,” including (1) whether defendants had a motive to
    5   collude, (2) the quantity and nature of inter-firm
    6   communications between defendants and other issuing banks,
    7   (3) whether the acts were contrary to the self interest of
    8   the defendants, (4) whether the arbitration clauses were
    9   “artificially standardized” as a result of an illegal
    10   agreement, (5) whether communications about a separate
    11   conspiracy to fix foreign currency exchange fees helped
    12   prove the instant conspiracy, (6) whether the lack of notes,
    13   internal work product, or recollection regarding meetings
    14   may suggest a conspiracy, (7) the documentation of the
    15   meetings, and (8) recollections of the meetings. After
    16   “weighing all the ‘plus factors’ evidence” and the
    17   “extensive record of inter-firm communications,” the
    18   district court found that the “final decision to adopt
    19   class-action-barring clauses was something the Issuing Banks
    20   hashed out individually and internally.” Ross v. Am. Exp.
    21   Co., 
    35 F. Supp. 3d 407
    , 452-53 (S.D.N.Y. 2014).4 That
    22   conclusion is plausible in light of the record viewed in its
    23   entirety, and we cannot say that the district court was
    24   “clearly erroneous” in reaching this conclusion. See
    25   
    Anderson, 470 U.S. at 574
    .5
    26
    3
    This conclusion was well supported by the record:
    the district court credited expert testimony that the credit
    card industry “is an oligopoly in which conscious
    parallelism is the norm” and noted that “the temporal
    connection between the meetings and the adoption of the
    clauses suggests parallel conduct.”
    4
    The district court then, “for the sake of
    assisting appellate review,” concluded that the alleged
    conduct would have been an unreasonable restraint on trade.
    Because we affirm the district court’s conclusion that the
    clauses were not adopted as the result of a conspiracy, we
    need not consider whether this conclusion was sound.
    5
    The district court also held that there was no
    antitrust standing because there was no antitrust injury.
    Because we affirm the finding that there was no antitrust
    conspiracy, we need not reach the issue of whether
    plaintiffs had antitrust standing.
    5
    1        2. Defendant American Express argues separately that
    2   the district court’s judgment should be affirmed for lack of
    3   Article III standing because plaintiffs are not American
    4   Express cardholders. To demonstrate standing, a plaintiff
    5   must show (1) injury-in-fact; (2) causation; and (3)
    6   redressibility. Lujan v. Defenders of Wildlife, 
    504 U.S. 7
      555, 560 (1992). As to injury, the mere existence of the
    8   clauses diminishes the cards’ value by foreclosing the
    9   opportunity for cardholders to go to court and address
    10   grievances through class action litigation. See Ross v.
    11   Bank of Am., 
    524 F.3d 217
    , 224 (2d Cir. 2008).
    12   Additionally, it is undisputed that consumer choice was
    13   reduced when banks who collectively held between 79 and 87%
    14   of the transaction volume and outstanding balances in the
    15   credit card market from 1999 to 2009 each adopted a class
    16   action barring clause, and it is of no moment that those
    17   banks may have since deleted the clauses from their
    18   cardholder agreements as part of settlements of these very
    19   same cases. As to causation, it is obvious that the
    20   adoption of the clauses is linked to the injury claimed by
    21   the cardholders. As to redressibility, an injunction
    22   invalidating the arbitration clauses would arguably redress
    23   the injuries to the market. Thus, we agree with the
    24   district court that plaintiffs satisfy Article III’s
    25   standing requirements.
    26
    27        For the foregoing reasons, and finding no merit in
    28   plaintiffs’ other arguments, we hereby AFFIRM the judgment
    29   of the district court.
    30
    31                              FOR THE COURT:
    32                              CATHERINE O’HAGAN WOLFE, CLERK
    33
    34
    6