Judge Lorna G. Schofield of the New York Southern District Court has denied a motion for class certification in a lawsuit accusing some of the US biggest banks of conspiracy among banks to fix prices in the FX market on consumers’ purchases of foreign currency with USD. On March 18, 2022, Judge Schofield signed an order denying the plaintiffs’ motion.

As FX News Group has reported, plaintiffs move to certify a class pursuant to Federal Rule of Civil Procedure 23(b)(3) and for appointment of class counsel pursuant to Rule 23(g). The lawsuit targets major banks, such as Bank of America, N.A., Bank of America Corporation, Barclays Capital, Inc., Barclays PLC, Citibank, N.A., Citicorp, Citigroup, Inc., HSBC Bank (USA), N.A., HSBC North American Holdings Inc., JP Morgan Chase & Co., JPMorgan Chase Bank, N.A., Royal Bank of Scotland, plc, and UBS AG.

In sum, Plaintiffs, a group of individuals and businesses, allege that they purchased foreign currency from defendant banks in the consumer retail market at manipulated rates. Plaintiffs allege that Defendants conspired to manipulate certain benchmark exchange rates that determined the retail prices they paid for foreign currency.

The Plaintiffs base this allegation on plea agreements and government orders involving certain Defendants. Those plea agreements and Plaintiffs’ allegations focus on two benchmarks: the WMR London closing fix (“the WMR fix”) and the European Central Bank fix (the “ECB fix”).

Defendants have presented uncontroverted evidence that they did not calculate retail exchange rates for consumers, such as Plaintiffs, based on the WMR and ECB fix benchmarks. Instead, each Defendant’s rate was calculated by, or using data from, a third-party.

Plaintiffs’ claims in this action are limited to transactions “involving foreign currency purchased with U.S. Dollars and physically received at Defendants’ retail branches within the United States.” Plaintiffs’ claims do not include “wire transfers” or “credit, debit and ATM card” transactions.

Plaintiffs seek to certify a nationwide class of “consumers and businesses in the United States who directly purchased supracompetitive foreign currency at Benchmark exchange rates from Defendants and their co-conspirators for their own end use” from January 1, 2007, to December 31, 2013.

On Friday, the Judge denied class certification finding that the plaintiffs have not shown that common questions will predominate over individual questions, and because the proposed class is a “fail-safe class.”

Plaintiffs have failed to establish predominance — that common issues will predominate over issues affecting only individual class members.

According to the order, the plaintiffs have not proposed a methodology to show through common proof the days and times that the defendants allegedly manipulated benchmark rates, which benchmark was manipulated or the direction in which spot market prices allegedly were moved. Plaintiffs cannot establish that class members were injured on any particular day without a day-by-day individualized analysis.

Further, the Court finds that the plaintiffs have not proposed a reliable methodology for calculating damages through common proof.

Class certification was denied for the additional reason that the proposed class is a “fail- safe” class. The proposed class is limited to those who “purchased supracompetitive foreign currency.” The inclusion of “supracompetitive” in the class definition makes the class a fail-safe class, which would require litigation of each class member’s claim on the merits to determine who is in the class.