A View from Constantine Cannon’s London Office

By Michael Petrides

Barclays announced on Monday that it has reached an out of court settlement of British LIBOR-related litigation with Graiseley Properties, owner of Guardian Care Homes (GCH).

The case concerned two interest rate swap contracts entered into by Graiseley and Barclays. Graiseley suffered substantial losses when base LIBOR rates fell.  Graiseley sought to escape its liability to Barclays by asserting claims that Barclays engaged in mis-selling, which involves misrepresenting the characteristics of a product or service.  Although Grassley originally alleged a case of innocent misrepresentation by Barclays, it succeeded in persuading the court to allow it to add fraudulent misrepresentation claims based on Barclay’s knowledge of LIBOR rigging once the LIBOR scandal became public knowledge.

The case received publicity as a result of its being treated as a test case for other LIBOR rigging claims and because of certain comments by judges hearing applications in the case that were critical of Barclay’s arguments.  It was expected that the trial this month would have led to the public disclosure of a large volume of documents relevant to LIBOR rigging (up to 200,000 documents according to pre-trial hearings) as well as embarrassing testimony by key former employees, including former Barclays CEO Bob Diamond, who resigned in 2012 following the LIBOR-related fines imposed by the U.K. Financial Services Authority.

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By Jean Kim

The antitrust claims of yet another putative class of Libor plaintiffs have been dismissed by the U.S. District Court for the Southern District of New York.

Finding that the plaintiff failed to adequately plead antitrust standing, Judge George Daniels dismissed the antitrust claims in Laydon v. Mizuho Bank, Ltd., a class action that alleges more than 20 banks manipulated the Euroyen Tokyo Interbank Offered Rate (Tibor) and the yen Libor.  Plaintiff alleged losses from shorting positions on Euroyen Tibor futures contracts, which allegedly were affected by defendants’ manipulation of rates.  Plaintiff’s case survives, however, because the court denied the defendants’ motion to dismiss the complaint’s Commodity Exchange Act claims.

The court found that plaintiff failed to plead facts sufficient to establish that defendants’ manipulation of TIBOR and yen Libor rates was anticompetitive.  The court concluded that “[a]t most, Plaintiff alleges that prices were distorted,” not “that this was a result of a reduction of competition.”  The court also found that plaintiff failed to allege facts that demonstrated an adequate connection between the alleged misconduct (manipulation of rates) and any effect (increases in the price of Euroyen TIBOR futures). The court reasoned that not only was the alleged injury indirect, bit plaintiff’s theory involved a complicated series of market interactions with multiple causal links that rendered any claim of damages “speculative.” click here for more »

Last week’s decision by the National Labor Relations Board granting Northwestern University scholarship football players the right to unionize is sparking a debate over the hypocrisy of college sports.

Constantine Cannon lawyers Gordon Schnell and David Scupp, who examined the NLRB decision in a post on this blog, express their views on the decision – and what it reveals about the big business of college sports – in an op-ed on cnn.com.  As Schnell and Scupp discuss in The hypocrisy of big-time college sports, amateurism in college sports is basically a myth that masks the reality that college athletes are employees who are responsible for the billions of dollars the NCAA and its members rake in each year.