UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW … · Case 1:13-cv-07789-LGS Document 774 Filed 05/15/17 Page 6 of 25. 3 the FX class action. Indeed, we invited them to provide

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK

IN RE FOREIGN EXCHANGE BENCHMARK RATES ANTITRUST LITIGATION

Case No. 13 Civ. 7789 (LGS)

ECF Case

ORAL ARGUMENT REQUESTED

OPPOSITION TO PLAINTIFFS’ MOTION TO COMPEL

Case 1:13-cv-07789-LGS Document 774 Filed 05/15/17 Page 1 of 25

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TABLE OF CONTENTS

PRELIMINARY STATEMENT .....................................................................................................1

STATEMENT OF FACTS ..............................................................................................................3

A. Quinn Emanuel Has Been Formally Engaged by Large Class Members to Seek a Global Solution.............................................................................................3

B. A Basic Memorandum is Sent to Twenty-One Institutional Investors ....................4

C. Class Counsel Attempts to Leverage Its Receipt of the Memorandum to Discourage Opt-outs and to Compete With Quinn Emanuel in Europe ..................5

D. Class Counsel Seeks Ex Parte Relief From the Court, While the Identity of Certain Quinn Emanuel’s Clients are Leaked to the Press..................................9

E. Class Counsel’s Competing Campaign to Establish a European Franchise ............9

ARGUMENT.................................................................................................................................11

I. NO ONE WAS MISLED INTO OPTING OUT BY THE CIRCULATION OF A MEMORANDUM REFERRING TO THE NOW VACATED OPT-OUT DATE ..........11

II. NO ONE WAS MISLED INTO OPTING OUT BY PASSING COMMENTS ABOUT THE STATUS OF DISCOVERY.......................................................................12

III. NO ONE WAS MISLED BY OUR ADVICE TO CONSIDER THE RISK OF CLAIM DILUTION AND THE POTENTIAL FOR A GLOBAL SOLUTION ..............13

IV. CLASS COUNSEL’S DEMAND FOR YEARS’ WORTH OF ATTORNEY-CLIENT COMMUNICATIONS IS WITHOUT PRECEDENT.......................................15

V. NO LEGITIMATE PURPOSE CAN BE SERVED BY REQUIRING ACTIONS BEYOND THOSE ALREADY VOLUNTARILY TAKEN, EVEN WITH RESPECT TO NON-CLIENT COMMUNICATIONS.....................................................17

CONCLUSION..............................................................................................................................20


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TABLE OF AUTHORITIES

Page

Cases

Auscape Int’l v. Nat’l Geographic Soc’y,2002 WL 31250727 (S.D.N.Y. Oct. 8, 2002) .......................................................................... 20

In re Cmty. Bank of N. Virginia,418 F.3d 277 (3d Cir. 2005)..................................................................................................... 17

In re Currency Conversion Fee Antitrust Litig.,361 F. Supp. 2d 237 (S.D.N.Y. 2005)...................................................................................... 17

E.E.O.C. v. CRST Van Expedited, Inc.,2009 WL 136025 (N.D. Iowa Jan. 20, 2009)........................................................................... 20

Fierro v. Gallucci,2007 WL 4287707 (E.D.N.Y. Dec. 4, 2007) ..................................................................... 19, 20

Georgine v. Amchem Prods.,160 F.R.D. 478 (E.D. Pa. 1995)............................................................................................... 17

Good v. W. Virginia-Am. Water Co.,2016 WL 6404006 (S.D. W.Va. Oct. 26, 2016) ...................................................................... 17

Gordon v. Hunt,117 F.R.D. 58 (S.D.N.Y. 1987) ............................................................................................... 13

Gregg v. Indep. Blue Cross,2004 WL 869063 (Pa. Com. Pl. Apr. 22, 2004) ...................................................................... 17

Gulf Oil Co. v. Bernard,452 U.S. 89 (1981)................................................................................................................... 17

In re Lupron Mktg. & Sales Practices Litig.,2004 WL 3049754 (D. Mass. Dec. 21, 2004).......................................................................... 17

In re Lutheran Bhd. Variable Ins.,2002 WL 1205695 (D. Minn. May 31, 2002).......................................................................... 17

In re McKesson HBOC, Inc. Sec. Litig.,126 F. Supp. 2d 1239 (N.D. Cal. 2000) ............................................................................. 12, 17

Minyard v. Double D Tong, Inc.,2017 WL 1193666 (W.D. Tex. Feb. 27, 2017)........................................................................ 13

Newmarkets Partners, LLC v. Sal. Oppenheim Jr. & Cie. S.C.A.,258 F.R.D. 95 (S.D.N.Y. 2009) ............................................................................................... 19

In re Payment Card Interchange Fee & Merchant Discount Antitrust Litig.,2014 WL 4966072 (E.D.N.Y. Oct. 3, 2014)............................................................................ 17

Phillips Petroleum Co. v. Shutts,472 U.S. 797 (1985)................................................................................................................. 13


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Retiree Support Grp. v. Contra Costa Cty.,2016 WL 4080294 (N.D. Cal. July 29, 2016).................................................................... 16, 17

Upjohn Co. v. U.S.,449 U.S. 383 (1981)................................................................................................................. 16

In re WorldCom, Inc. Sec. Litig.,2003 WL 22701241 (S.D.N.Y. Nov. 17, 2003)....................................................................... 17

Wultz v. Bank of China Ltd.,61 F. Supp. 3d 272 (S.D.N.Y. 2013)........................................................................................ 16

Additional Authorities

Fed. R. Civ. P. 23.......................................................................................................................... 13

Manual for Complex Litigation (Fourth) § 21.321....................................................................... 13


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PRELIMINARY STATEMENT

Class counsel’s motion to compel is a contrived effort to generate a dispute warranting

court intervention where none truly exists. Class counsel claim that their motion to compel is

necessary to protect the “due-process rights” of class members, but their motion fails to show

that the “due-process” rights of any class members are truly at risk.

Of course, the fundamental right each class member has in a class action is the right to

decide for themselves whether to opt out of the class. In this case, the decision whether or not to

opt out is a particularly significant one for a number of large and sophisticated class members

who suffered significant damages arising out of the FX cartel in the U.S. (where such claims

would be covered by the settlement here) and overseas (where such claims exceed this Court’s

jurisdiction). Those entities have the right to receive frank and confidential advice about how to

make that decision from independent counsel of their choosing, without having their

deliberations made public against their will or exposed to the scrutiny of class counsel, who have

an obvious self-interest in preventing such entities from opting out and also in persuading these

entities to engage them, rather than Quinn Emanuel or another law firm, in Europe.

Class counsel claim, however, that they should be entitled to learn the identities of these

entities and scrutinize the independent and privileged advice they received because of four

statements contained in an outdated background memorandum that was sent to a small group of

highly sophisticated entities, virtually all of whom have their own in-house legal departments.

The first statement they complain about is the memorandum’s passing reference to an

opt-out deadline of June 29, 2017. When the memorandum was drafted, the opt-out deadline

was June 29, 2017. However, that date later changed and the memorandum’s passing reference

was inadvertently not updated to reflect that fact. Of course, this hardly threatened anyone’s

due-process rights. Indeed, it did not matter at all. No entity took any steps based on that


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passing reference, and certainly no entity took any formal steps to opt out. In any event, to head

off this contrived dispute, we informed each recipient of the memorandum that the prior opt-out

date had been vacated after class counsel brought this issue to our attention. There is, therefore,

no real issue here at all.

The other three statements about which class counsel complain really reflect their

disagreement with how the memorandum characterizes certain matters that are open to different

interpretations. They complain, for example, about the memorandum’s statement that class

counsel had reached settlements with a number of banks before discovery began. That statement

is true and undisputed. But class counsel argue that the memorandum unfairly implied they were

settling early and not trying hard enough to obtain discovery. In fact, the primary point of these

few sentences was to highlight the willingness of many defendants to settle before meaningful

discovery even began, showing just how strong the liability case is.

Regardless, even if we had meant to question the strategy of class counsel, we would be

fully within our rights to do so. Sophisticated entities weighing the opt-out decision are entitled

to hear candid and confidential views from independent counsel about the strategic choices made

by class counsel. There is no need for class counsel to intervene to “protect” such entities from

hearing any such criticism. In any case, after class counsel complained, and again to head off

this contrived dispute, we sent a replacement memorandum that omitted those statements and

made clear that class counsel is pursuing discovery. Here again, there is nothing further to do.

Finally, class counsel disagree with our estimate of the size of the total notional amount

of FX transactions covered by the class action, and a related comparison of the size of the

settlements in this case to the settlements reached in the CDS antitrust case. But class counsel

themselves have not announced any determination of the size of the notional amount covered by


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the FX class action. Indeed, we invited them to provide one to us, and they declined. We even

told class counsel we would share their estimate with potential opt-outs, but again they declined.

Class size is difficult to estimate and we estimated it in good faith based on public

domain information and with the help of a well-regarded economic consulting firm. Everyone

well-understood it was a preliminary estimate that could change as new information came to

light. Class counsel are permitted to share with class members any different estimate they reach

(if and when they reach one) when they send out the class notice. But they are not entitled to

prevent us from providing our own preliminary estimate to sophisticated class members

weighing their legal options.

From the time they came across our background memorandum, class counsel have been

using it as an excuse to demand years’ worth of attorney-client communications. If we relented,

we would be betraying our clients’ trust, and be giving valuable information to law firms

competing with us for FX engagements in the U.S. and in Europe. If we refused, we were put at

risk of a public filing that would accomplish nothing to advance the interests of the class or any

class member, but would surely grab headlines. We did not relent. We have done nothing

wrong. We have bent over backwards to do anything reasonable that is asked of us to “correct”

anything even arguably worth correcting. But we cannot give other law firms access to our

privileged client and contact files. The Court should not indulge class counsel’s unprecedented

request for a privilege-destroying fishing expedition.

STATEMENT OF FACTS

A. Quinn Emanuel Has Been Formally Engaged by Large Class Members to Seek a Global Solution

Quinn Emanuel has closely followed the FX scandal, and actively pursued all potential

avenues of relief for injured investors ever since the initial news reports in 2013. We have been


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formally engaged by a variety of institutional clients for a variety of tasks since that time,

resulting in a great number of attorney-client communications.1 Our current focus in the U.S. is

on providing a small group of highly sophisticated institutions advice on a global strategy that

will allow them to maximize recoveries across their FX portfolios as a whole. That includes the

possibility of bringing claims in Europe or elsewhere on FX transactions that are not recoverable

in the U.S., of staying in the class or opting out in the U.S., and of seeking global peace with

defendants before such formal steps.2 These are difficult decisions and no one is making them

lightly.

B. A Basic Memorandum is Sent to Twenty-One Institutional Investors

In late December 2016 or early January 2017, Quinn Emanuel created a memorandum

giving an overview of the FX legal landscape.3 All told, Quinn Emanuel provided the

memorandum to just eight entities that are not clients as to FX issues, six of whom were firm

clients on other matters. These are each highly sophisticated entities with large in-house legal

departments, who are well-positioned to consider for themselves any legal advice they receive.

A search found only an additional two non-client institutions that received our preliminary class-

size estimate, but not the memorandum itself.4

In February 2017, Stanley Bernstein of Bernstein Liebhard informed Quinn Emanuel that

certain of his institutional clients might be interested in discussing the FX case. Mr. Bernstein

and his colleagues reached out to approximately fifteen institutions, all of whom were either

clients of Mr. Bernstein’s law firm or personal contacts.5 Those initial communications were

1 Declaration of Daniel L. Brockett dated May 15, 2017 (“Brockett Dec.”) ¶ 2.2 Brockett Dec.¶ 3; see also id. ¶¶ 4-6.3 We will submit a copy of that memorandum for the Court’s in camera review. We will also provide a

copy of the memorandum to class counsel, with the understanding that they will keep it confidential and not disclose it to the defendants or third parties.

4 Brockett Dec. ¶ 8.5 Declaration of Stanley D. Bernstein dated May 15, 2017 (“Bernstein Dec.”) ¶ 5.


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high-level, and did not include details about the opt-out date, the timing of the settlements, or the

size of the class.6

Thirteen of these investors responded with some interest, eight of which were clients of

the Bernstein firm on other matters.7 Mr. Bernstein asked if Quinn Emanuel had any pre-

prepared materials to be provided as background. Mr. Bernstein was given the memorandum

discussed above, and he in turn added his name and contact information to it. Of those that

responded following receipt of the memorandum, several were informed that their FX portfolios

were too small to be viable candidates for an opt-out claim.8 Not one of the institutions that

received the memorandum from Mr. Bernstein has retained us to pursue FX claims.

C. Class Counsel Attempts to Leverage Its Receipt of the Memorandum to Discourage Opt-outs and to Compete With Quinn Emanuel in Europe

It appears that one of Mr. Bernstein’s contacts provided the aforementioned background

memorandum to class counsel. On April 5, class counsel sent Quinn Emanuel and Bernstein

Liebhard a letter asserting that the memorandum contained inaccurate information about the four

categories of information at issue here. Also, as here, they demanded we “identify the class

members with whom [we had] communicated about the FX settlements” and “produce copies of

all written materials.”9

It was apparent to us the memorandum being complained of had not prejudiced anyone in

any way, including because no entity made a choice to opt out or not to opt out based on the

memorandum. But we nonetheless took class counsel’s concerns seriously, and promptly

responded with the utmost good faith and responsibility. On April 11, we confirmed that:

6 Bernstein Dec. ¶ 6.7 Bernstein Dec. ¶ 7.8 Bernstein Dec. ¶ 8.9 Dkt. No. 772-1.


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[A]ll recipients . . . will be informed by way of an updated memorandum . . . that there is currently no firm date for formal notice to occur. And . . . all recipients of the original memorandum will be provided an expanded and updated procedural history of the case, including making clear that class counsel has been pursuing non-public documents and information[.]10

With respect to size of the FX class and the related comparison to the recovery rates in

the CDS action, we explained that our figures had “been done in good faith based on publically

available information and expert analysis—efforts that included such adjustments as accounting

for the portion of FX transactions done outside the U.S.” Despite that belief, we confirmed that

an “updated memorandum will state that due to further consideration of this complex issue . . .

we do not currently have an estimate of the exact size of the relevant class. If you have figures

you would like us to consider, please pass them on.” In other words, we specifically invited

class counsel to give us their view as to the size of the settlement class, so that they could be

passed on to everyone to whom we had provided our own estimates. They never did so.

We also committed to provide a cover message “highlighting that corrections have been

made.” What we declined to provide, however, was our FX client list and attorney-client

communications, explaining that it would invade our privileges.

We promptly followed through on the commitments made in the April 11 letter, by

preparing an updated memorandum, which was sent to everyone that received the original

memorandum, as well as the additional two investors mentioned above that did not receive the

original memorandum but were given the estimate of the size of the class.11 Therein, we

informed everyone who had received the prior statements at issue that: (i) due to the delay in the

notice, “class members do not currently have an obligation to respond by any date certain”; (ii)

the class actions had now progressed into some discovery, including through class counsel’s

10 Dkt. No. 772-2.11 Brockett Dec. ¶¶ 9-10; Bernstein Dec. ¶¶ 10-11. We will also provide a copy of the updated

memorandum to the Court in camera, and to class counsel in confidence.


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receipt of non-public materials; and (iii) while the FX market is the largest in the world, “the

class settlement does not cover all such transactions,” and that “[a]ny prior estimate we may have

provided is currently being improved upon . . . [but] we do not have a revised figuring estimating

the size of the relevant class to provide at this time.” Finally, (iv) the revised memorandum

made no mention of the CDS matter.

The cover email stated in substance:

Please see attached an updated memorandum concerning the FX case. As you will see, it is largely the same as the one we previously sent, but we did update and correct a few items. Specifically, the status of the opt-out deadline has been changed (there is none), the discussion of class counsel’s efforts have been updated (they are receiving non-public information), and the memorandum notes that our prior estimation of the size of the U.S. class is being reviewed. Please send the updated memo to anyone who you may have sent the original memo or is considering these important issues.12

The last sentence was added in response to class counsel, who had speculated that a recipient

may have passed it on to someone else. We never believed such second-hand recipients exist,

and still are aware of none.13

On April 13, class counsel sent a three-sentence letter that ignored literally everything we

had said, and just demanded again that we produce all of our FX-related communications.14

On April 14, we confirmed that we had in fact re-contacted the “very limited number of

large institutional investors who received an outdated memo.”15 Having undertaken those

commitments, we explained our bewilderment over the continued request for copies of all

“written materials concerning the FX litigation,” particularly given Quinn Emanuel’s years of

client service in this area triggered a vast array of privilege and relevance concerns. We also

12 Brockett Dec. ¶ 10; Bernstein Dec. ¶ 11. 13 Brockett Dec. ¶ 8; Bernstein Dec. ¶ 12.14 Dkt. No. 772-3.15 Dkt. No. 772-4. This, notably, undermines class counsel’s claim we refused to divulge the “scope” of

the issue. Mot. at 1-2.


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repeated: “To assist us in understanding your views on [the size-of-class] issue, we ask you to

please let us know what your current estimate of the total qualifying notional for the class[.]”

We also asked “whether you have finalized but not yet made public what adjustments will be

made based on transaction type, currency pair, or any other factor.”

On April 19, class counsel purported to “narrow” the requests, focusing on the identities

of everyone who had received any “non-privileged solicitation or background memoranda,”

along with copies of such materials.16 But class counsel still refused to explain why such

materials were necessary for any legitimate purpose, especially given that every entity who

received the “old” information was receiving the promised “corrections.” And they again

ignored our invitation to provide their view of the “correct” size of the market covered by the

settlements.

On April 21, we explained we did not have “solicitation” materials in the sense class

counsel were seemingly presuming.17 We also reiterated that handing over the actual underlying

materials would both increase the “risk [to] our privileges” and would “effect a raid of a rival

firm’s relationships,” for no discernable benefit to the class in light of the “corrections” we

already made and our understanding that class counsel already had the materials in question.

However, we yet again invited class counsel to confer, including by asking them to “help us

understand what portion of the total FX market you see as being covered by the settlement” as to

“inform what advice we should be giving going forward,” and by asking them to help us

understand “what adjustments will be made based on transaction type, currency pair, or any other

factor.” We received no response from class counsel.18

16 Dkt. No. 772-5.17 Dkt. No. 772-6.18 Brockett Dec. ¶ 12.


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D. Class Counsel Seeks Ex Parte Relief From the Court, While the Identity of Certain Quinn Emanuel’s Clients are Leaked to the Press

Following our April 21 letter, class counsel filed an ex parte, under-seal letter with the

Court asserting that “misleading communications” had been sent.19 We only learned of the

letter’s existence, and the resulting conference, by way of the Court’s May 4 order.

Class counsel appear to complain of publicity surrounding our opt-out efforts. Mot. at 7.

But we assure the Court we have had nothing to do with it. Our clients value their privacy and

the confidentiality of their discussions with counsel while they consider how to proceed with

their FX claims. It appears that someone—not us—leaked our intention to give advice on opt-

outs, and even certain of our client names, to the press. On May 4 and 5, Quinn Emanuel was

contacted by a London-based reporter who had learned that we were representing FX investors,

and asked about certain class members by name. We did not reach out to that reporter, did not

share any information with him, and were not the “source” for the story. We have made no

statements to the press about our current pursuit of potential opt-out claims, or about the

identities of our current clients.20

E. Class Counsel’s Competing Campaign to Establish a European Franchise

Class counsel has multiple interests in the relief they seek, including an interest in

convincing class members to remain in the U.S. class action. Notably, they also have an interest

in signing up entities to file separate European claims, in competition with Quinn Emanuel in

Europe. Class counsel (particularly Scott+Scott) has engaged in a sweeping media campaign to

market themselves and solicit individual plaintiffs in Europe. For example, in an interview with

BBC, class counsel announced their intention to bring FX claims in Europe, and claimed to have

19 Dkt. No. 761.20 Brockett Dec. ¶ 13; Bernstein Dec. ¶ 13.


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generated interest from central banks, pension funds, and multinational entities.21 Class counsel

announced to Law360 that they would open a London office for the purpose of pursuing FX

claims in Europe.22 Class counsel added that “it’s a natural fit” for them to represent clients in

Europe, and that they had “real interest” from European investors. Class counsel gave a similar

interview to The Telegraph, boasting that “losses in the UK will exceed those in the US

market.”23

After opening their London outpost, class counsel gave yet another round of interviews,

reiterating that they were “in active conversations” with European investors and claimed to

“have some who have already signed up to bring this case.”24 In an interview with The

Independent, class counsel again proclaimed that they had received “a tremendous amount of

interest” and that investors “all want to have information” on FX claims.25 According to that

article, class counsel had been “touring companies relentlessly, trying to convince them to come

21 See Kamal Ahmed, Banks face new legal action over forex manipulation, BBC (July 14, 2015)

(available at http://www.bbc.com/news/business-33521235).22 See Jacob Batchelor, Scott & Scott Erects London Camp For Europe Forex Battle, Law360 (July 23,

2015) (available at https://www.law360.com/articles/682607/scott-scott-erects-london-camp-for-europe-forex-battle?article_related_content=1).

23 See Tim Wallace, British banks face foreign exchange time-bomb, The Telegraph (August 22, 2015) (available at http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11815145/British-firms-and-pension-funds-facing-a-foreign-exchange-time-bomb.html); see also Ben Chu, World’s big banks set to be sued in London over forex rigging, The Independent (August 15, 2015) (available at http://www.independent.co.uk/news/business/news/worlds-big-banks-set-to-be-sued-in-london-over-forex-rigging-10456919.html) (class counsel stating that “anyone who traded in the market at any time in this period . . . was at risk”).

24 See Kristin Ridley, Lawyers circle as Europeans eye new route to FX-rigging payouts, Reuters (October 1, 2015) (available at http://www.reuters.com/article/forex-litigation-britain-idUSL5N10T27Q20151001); see alsoChris Papadopoullos, Forex scandal: HSBC and RBS agree to 600m fine for foreign exchange rigging, City A.M. (October 22, 2015) (available at http://www.cityam.com/227150/barclays-hsbc-and-rbs-agree-to-600m-fine-for-foreign-exchange-rigging) (class counsel stating that “[g]iven our in-depth knowledge based on our success against the banks in the US, Scott+Scott is gearing up to bring the action to Europe”); Tabby Kinder, Barclays, HSBC and RBS face $900m forex rigging bill as firms gear up for raft of UK litigation, The Lawyer (October 23, 2015) (available at https://www.thelawyer.com/issues/online-october-2015/barclays-hsbc-and-rbs-face-900m-forex-rigging-bill-as-firms-gear-up-for-raft-of-uk-litigation/) (class counsel stating that “[w]e have clients signed up across the UK, Europe and Asia”); Scott Mcculloch, RBS agrees US settlement in foreign-exchange rigging case, Insider (October 23, 2015) (available at http://www.insider.co.uk/news/ rbs-agrees-settlement-foreign-exchange-9893510) (class counsel stating that “[w]e will soon be ready to bring an action against the banks in London”).

25 See Michael Bow, New year, new legal bills for the forex-rigging banks, The Independent (December 16, 2015) (available at http://www.independent.co.uk/news/business/analysis-and-features/new-year-new-legal-bills-for-the-forex-rigging-banks-a6776191.html).


11

on board.” Most recently, in March 2017, class counsel gave an interview to Legal Business in

which they claimed to have signed up more than forty European plaintiffs.26

Class counsel is aware of both Quinn Emanuel’s efforts, through its London and other

European offices, to offer a global solution to multinational investors (as discussed above), as

well as a European-only representation for appropriate European investors. The Court should

not discount the notion that class counsel’s demand for years’ worth of attorney-client

communications and work product has less to do about protecting of class members, and more to

do with their effort to compete with Quinn Emanuel for business.

ARGUMENT

I. NO ONE WAS MISLED INTO OPTING OUT BY THE CIRCULATION OF A MEMORANDUM REFERRING TO THE NOW VACATED OPT-OUT DATE

Class counsel claim that we pressured entities to make a decision by suggesting there as a

“looming” deadline to opt out. Mot. at 9. That is a hyperbolic way of describing the

memorandum’s brief and passing reference to the previously applicable opt-out deadline of June

29, 2017. When the memorandum was drafted, that statement was true. By the time the

memorandum was sent to at least some contacts, that statement was stale. That was a mistake,

but hardly a prejudicial one. Again, this memorandum was sent to highly sophisticated entities

who had their own lawyers reviewing any advice we gave them. Any discussions following the

provision of the introductory memo were guided by the then-current state of affairs, including

the fact that any notice deadline had been postponed. We have never pressured anyone to act on

26 See Tom Baker, Scott+Scott to take on Deutsche Bank in Europe after US success, Legal Business

(March 6, 2017) (available at http://www.legalbusiness.co.uk/index.php/lb-blog-view/9187-scott-scott-to-take-on-deutsche-bank-in-europe-after-us-success).


12

any timeline. Indeed, it would have been folly to do so; these sophisticated investors would have

quickly recognized that no opt-out could be done as they had not even received notice yet.27

Moreover, class counsel have long known that we have already re-contacted everyone

that received the memorandum to further ensure they understood that the pre-existing opt-out

deadline has been vacated.

II. NO ONE WAS MISLED INTO OPTING OUT BY PASSING COMMENTSABOUT THE STATUS OF DISCOVERY

Class counsel complains we belittled their efforts by a claim they have “have not pursued

discovery.” Mot. at 10. This is an imagined sleight. What the background memorandum did

was to correctly note that the class counsel discussed and concluded settlement with certain

banks before discovery began.28 The main point of those few sentences was, in fact, to highlight

the strength of the liability case, by pointing out that the banks were willing to pay substantial

sums before discovery even began. To the extent this sequence of events may suggest that class

counsel might have achieved higher settlements if they pursued a different strategy, it would

have been well within our rights to point that out. It is not the Court’s job to protect class

counsel from criticism under the guise of protecting class members.

Rather than argue about these points, after class counsel raised the issue, we went out of

our way to inform every recipient of the memorandum that class counsel had pursued

information to assist in assessing class members’ claims, despite the public-facing “stay”

27 The frivolity of class counsel’s motion is demonstrated by comparing these facts to those in In re

McKesson HBOC, Inc. Sec. Litig., 126 F. Supp. 2d 1239 (N.D. Cal. 2000), cited by class counsel. There, the other law firm engaged in a “massive mailing campaign” to individual shareholders that was misleading for a slew of reasons, including that the solicitations were themselves labeled as “notice,” and urged recipients to reply by a set date without any explanation of the importance of that date or the timetable of the case.

28 See Dkt. Nos. 242 (disposing of first motion to dismiss on January 28, 2015), 248 (noting mediation began with JP Morgan on November 1, 2014), 481 ¶ 17 (explaining discovery was stayed during pendency of motion to dismiss and that testamentary discovery was still stayed at the time of multi-bank settlement). Class counsel quibble that the mediation date (November 2014) was confused with the public announcement date (January 2015). Mot. at 10. But they do not and cannot possibly claim any prejudice from that scrivener’s error. Indeed, class counsel did not even point out this mistake to us prior to the current motion.


13

imposed by the Department of Justice.29 Again, then, there is nothing more to say to the

recipients of this memorandum to “correct” the record on this point. And even if there were,

class counsel can say whatever they want on this issue to all class members by way of the formal

notice (which they have yet to send out).

III. NO ONE WAS MISLED BY OUR ADVICE TO CONSIDER THE RISK OF CLAIM DILUTION AND THE POTENTIAL FOR A GLOBAL SOLUTION

While $2.1 billion in recoveries is a laudable achievement, this class action, like any

other, still involves a process in which absent class members will be asked by attorneys they did

not select to release their rights as the result of a litigation in which they had no say. To prevent

the interests of the group and the attorneys from compromising the rights of individuals, due

process provides the fundamental right to opt out of the class,30 and for class members to choose

counsel to provide independent guidance on their claims, including whether to opt out.31

One factor of importance for very large class members is the risk their claims in the class

action will be diluted. This risk is real. Class counsel’s own complaint alleges that the FX

market is “the world’s largest and most actively traded financial market,” and refers to a daily

average of $5.3 trillion.32 Another factor is that the largest class members are also more likely to

have a material amount of claims that fall outside the U.S., opening up the possibility of

demanding a premium for the banks to secure global peace with the largest actors in the FX

29 See Dkt. Nos. 274, 463, 583, 628. 30 See Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811-12, n.3 (1985) (“due process requires at a

minimum that an absent plaintiff be provided with an opportunity to remove himself from the class”); Fed. R. Civ. P. 23(c)(2)(B)(iv)-(v) (providing that absent class members may enter an appearance through counsel and may be excluded from the class upon request); Fed. R. Civ. P. 23(c)(2) comment (the “individual interest” in “pursuing [its] own litigation[]” must be “respected”).

31 See generally, e.g., Gordon v. Hunt, 117 F.R.D. 58, 61 (S.D.N.Y. 1987) (“Clearly, the requirements of due process and Rule 23 oblige the court to protect the interests of absent class members who may wish to . . . appear through separate counsel.”); Minyard v. Double D Tong, Inc., 2017 WL 1193666, at *4 (W.D. Tex. Feb. 27, 2017) (ordering counsel to fully advise putative class members of their right to retain separate counsel); Manual for Complex Litigation (Fourth) § 21.321 (“If the case involves a complex settlement or significant individual claims, a class member might need more time to consult with attorneys . . . before making an informed opt-out decision.”).

32 See Dkt. No. 619 at ¶ 2.


14

space. We thus stand by our core opinion here: very large institutional investors, particularly

with non-U.S. claims, should consider seeking independent legal advice with respect to a global

strategy.

Class counsel do not and cannot dispute the soundness of that advice. Instead, they

contend that our preliminary estimates of the size of the class is so “inflated” that it cannot

provide proper context to assess the risk of dilution. Mot. at 11. But that estimate was the result

of a good-faith attempt by a financial consulting firm hired by Quinn Emanuel to provide that

estimate based on public domain information.33 As class counsel’s motion makes clear, id. at 11-

12, that is a complex task, which requires a large set of assumptions and judgment calls, all being

applied to a complex and relatively opaque market. To better inform our own analysis, we have

repeatedly asked class counsel to share their class size estimates, and explain why they differ

from ours. Class counsel have not done so.

A difference of opinion between firms in competition with each other is not a basis to

interfere with our relationships or to direct the wholesale production of our privileged

communications with clients. This is particularly obvious where, as here, the recipients of the

conflicting opinions are among the most sophisticated and litigation-savvy class members

imaginable, and where the memorandum in question was provided merely by way of an

introduction to FX issues. These investors well-understood that the overall size of the class was

only a rough way of putting the $2.1 billion figure into context.

But even all this aside, this difference of opinion cannot justify the requested relief here,

which is unprecedented. As class counsel knows, every recipient of our initial estimate of the

33 Brockett Dec. ¶ 7.


15

size of the FX settlement class was informed that it was being re-assessed. Thus, no recipient of

the initial estimate is at any risk of relying on it for any purpose.34

Nor is there anything misleading about a high-level comparison to the CDS settlement.

In that case, the class recovered approximately $1.87 billion and that settlement amount was

spread across approximately $75 trillion in notional trading. In the FX case, by contrast, the $2.1

billion settlement amount will be spread across a market that is many times larger. Our highly

sophisticated clients and contacts well-understand that these are just general comparison points,

and that of course both cases, like all class actions, have many more variables that will

eventually go into determining a particular member’s recovery. Again, these entities do not need

to be protected from hearing our views about the comparisons between these two cases. They

are capable of evaluating the advice they receive and coming to their own conclusions.

In any event, again to heed class counsel’s concern, we dropped any reference to the CDS

case in the updated memorandum. There is nothing further to do or “correct” on this point.

IV. CLASS COUNSEL’S DEMAND FOR YEARS’ WORTH OF ATTORNEY-CLIENT COMMUNICATIONS IS WITHOUT PRECEDENT

Class counsel argue that “the party asserting a privilege has the burden of proving every

element of the claim.” Mot. at 12-13. That is quite easy here. We are attorneys. We have

clients. Some of those clients are potentially class members. We routinely communicated with

those clients, as compared to our sporadic communications with non-clients. The request for “all

34 That we committed to withdrawing the number despite class counsel’s lack of engagement as to what

we should be saying instead is a testament to our good faith and the pointlessness of class counsel’s motion, not an admission of guilt as class counsel suggests. Mot. at 11. Indeed, that class counsel pointedly ignored our requests to help us craft a revised figure further confirms that this is not about protecting class members, but rather only about finding an excuse to file some motion, any motion, against us.


16

communications with class members” thus indisputably calls not just for attorney-client

communications, but overwhelmingly privileged communications.35

Without waiving any privilege, we can state generally that all our clients are fully

apprised of all of the issues class counsel raise and have been given complete and accurate

information on each of them.36 There is absolutely no basis whatsoever for class counsel to

demand to see our attorney-client communications on the issues they raise.

With respect to our attorney-client communications on other issues, class counsel claim a

need to search for “additional erroneous communications.” Mot. at 2. This is a remarkable

admission that class counsel seek an open-ended fishing expedition in our communications with

our clients. Indeed, it is a baseless suggestion that we have acted for years in such reckless bad

faith that all of our attorney-client communications need to be policed by a rival law firm.37

To the contrary, our conduct vis-à-vis some of the most sophisticated investors

imaginable, often done through in-house counsel, has been responsible, prompt, and manifestly

reasonable. Our conduct bears no resemblance to the cases cited by class counsel, all of which

involve a combination of obvious bad faith, widespread dissemination to unsophisticated class

members, actual opt-outs that resulted, and unwillingness of the other counsel to assist in

remedial measures.38 And none even come close to involving the outlandish “remedy” of

handing over years of attorney-client communications to a rival law firm.

35 Attorney-client is “one of the oldest recognized privileges for confidential communications.” Wultz v.

Bank of China Ltd., 61 F. Supp. 3d 272, 283 (S.D.N.Y. 2013). Upholding the privilege is essential for “full and frank communication between attorneys and their clients,” and to “thereby promote broader public interests.” Upjohn Co. v. U.S., 449 U.S. 383, 389 (1981). Thus, the privilege over attorney-client communications is “absolute.” Wultz, 61 F. Supp. 3d at 284.

36 Brockett Dec. ¶ 11.37 The same lack of logic and support applies equally to the request that the Court be burdened with

scouring unrelated attorney-client communications on the off chance some heretofore undreamed-of additional “error” might be caught. Mot. at 1 n.1.

38 See Retiree Support Grp. v. Contra Costa Cty., 2016 WL 4080294 (N.D. Cal. July 29, 2016) (invalidating opt-outs resulting from letters to hundreds of elderly individuals stating they would receive


17

Finally, class counsel suggests a privilege log should be produced. Mot. at 1 n.1. As our

involvement in the FX space spans many years, and many clients, this would be an incredibly

burdensome task.39 Class counsel fails to explain what valid purpose such a log would serve

here, where the communications being discussed here, between a client and ourselves, attorneys,

are by definition attorney-client communications. It seems likely the real purpose is to first

harass us with a burdensome task, and then to use the resulting log as a back-door way to raid

our client relationships revealed therein.

V. NO LEGITIMATE PURPOSE CAN BE SERVED BY REQUIRING ACTIONS BEYOND THOSE ALREADY VOLUNTARILY TAKEN, EVEN WITH RESPECT TO NON-CLIENT COMMUNICATIONS

As discussed above, class counsel’s feigned ignorance as to the “necessary facts” is

unavailing. They were told immediately the full “scope” of the issue: one memorandum, and a

“very limited number of large institutional investors.”40 Their claim to need to know more to

“NOTHING” if they did not complete enclosed opt-out form); In re Payment Card Interchange Fee & Merchant Discount Antitrust Litig., 2014 WL 4966072, at *31 (E.D.N.Y. Oct. 3, 2014) (enjoining claims filing company that persisted in making false statements to “small and relatively unsophisticated merchants”); In re Currency Conversion Fee Antitrust Litig., 361 F. Supp. 2d 237, 253-54 (S.D.N.Y. 2005) (prohibiting defendant credit card companies from persuading individual card holders to sign away their rights); In re Lupron Mktg. & Sales Practices Litig., 2004 WL 3049754 (D. Mass. Dec. 21, 2004) (ordering removal of unauthorized websites presenting anillusory choice, but in fact effectuating an opt-out); In re WorldCom, Inc. Sec. Litig., 2003 WL 22701241, at *6-9 (S.D.N.Y. Nov. 17, 2003) (denying request for rival firm’s communications and contacts, and ordering curative notice only to the extent there was evidence of actual confusion that had not already been corrected); In re Lutheran Bhd. Variable Ins., 2002 WL 1205695, at *4-5 (D. Minn. May 31, 2002) (ordering corrective disclosure of false statements in postcards sent to thousands of individuals); In re McKesson, 126 F. Supp. 2d at 41-45 (ordering law firm to correct misleadingly labeled “notice” sent to individual shareholders as part of “massive mailing campaign”); Georgine v. Amchem Prods., 160 F.R.D. 478 (E.D. Pa. 1995) (ordering additional notice period after actual opt-outs were obtained by “mass mailings” stating that signing the enclosed opt-out form “immediately” was the only way to receive any compensation); Gregg v. Indep. Blue Cross, 2004 WL 869063, at *53-60 (Pa. Com. Pl. Apr. 22, 2004) (invalidating thousands of individual opt-outs obtained as a result of outside firm’s mass mailing containing a litany of uncorrected statements). See contra., e.g., Gulf Oil Co. v. Bernard, 452 U.S. 89, 102 (1981) (holding that any restrictions on counsel’s free speech rights require “a specific record showing by the moving party of the particular abuses by which it is threatened,” and must “limit[] speech as little as possible.”); In re Cmty. Bank of N. Virginia,418 F.3d 277, 312 (3d Cir. 2005) (holding that “class members [have] the right to contact their own attorneys to determine whether joining a proposed class-wide settlement is in their best interest,” and that communications restrictions on counsel for opt-outs “would essentially eviscerate this right”); Good v. W. Virginia-Am. Water Co., 2016 WL 6404006, at *1 (S.D. W.Va. Oct. 26, 2016) (class counsel’s unauthorized communications with opt-outs regarding damages amounts were “unquestionably improper”).

39 Brockett Dec. ¶ 3.40 See Dkt. Nos. 772-2, 772-4, 772-6.


18

determine if “curative relief” is required is further undermined by the fact we long ago informed

them that the only sensible such relief (“corrective disclosures”) was voluntarily taken weeks

ago. None of the other excuses for bringing this non-dispute public warrant Court involvement.

First, class counsel asked for copies of the memoranda. But their motion is plainly based

on the memoranda, and they have coyly never disputed our stated belief that they in fact already

obtained these materials elsewhere. We thus denied their request to give them what they

seemingly already had, so as to avoid future claims that we were waiving any privileges.

However, we will be submitting both memoranda to the Court and class counsel in confidence.

Second, class counsel seeks “all communications . . . concerning the FX settlements.”

Mot. at 2. Our client communications are discussed above. With respect to non-clients, a search

of our files has confirmed that the only background materials, memorandum, or similar written

product that touches upon the representations at issue is the single background memorandum

discussed above. As also discussed above, we identified only two non-client investors that

received the same estimate of the class size but did not receive the memorandum.41 Our search

has not found any other written communications that contain the same or similar statements at

issue in the motion. With respect to communications that “concern[] the FX settlements” but do

not contain the statements at issue in the motion, as discussed above, class counsel’s request for

an open-ended fishing expedition should be denied out of hand.

Third, class counsel demands the “identity of all class members” we ever communicated

about with the FX settlements. Mot. at 2. It is likely everyone we ever talked to about FX was at

some point at least made aware of the basic fact that some backs agreed to settle. This is thus in

effect a request for a roster of everyone that either (a) was interested enough in FX to contact us,

41 The emails are not being produced as to not violate the recipient’s privacy, or to reveal the privileged

and commercially sensitive information of who we have been contacting.


19

or (b) that we thought would potentially be interested enough for us to contact them. Class

counsel’s pre-textual excuse for needing this competitively sensitive information is that they

need to know “how many class members have been affected.” Mot. at 2. But no law or logic

explains why our assurances that this whole affair involved only a “very limited number of large

institutional investors” was insufficient. Nor did class counsel ever bother to call and ask the

specific number of investors who received the memorandum. In any event, we have fully

answered the “how many” question herein. And we have repeatedly expressed our willingness

to pass on whatever else class counsel reasonably wants to our clients and contacts to know

about their view of the case. They have not even bothered to respond.

Finally, class counsel feign shock that our cover email to the updated memorandum

asked recipients to pass on the update if they had ever shared the original memorandum. This is

labeled “deeply troubling” and an “admission.” Mot. at 4, 13. Such is highly disingenuous.

Class counsel well know that this sentence was included only because class counsel stated this

was a concern of theirs.42 We always found it implausible that the sophisticated institutional

investors who received the background memoranda would share legal advice with outsiders,

particularly when they had generally been non-responsive to the information. In any event, we

have already done what could possibly be done in the unlikely event our memorandum was

distributed without our knowledge, i.e., asking that the updated version be distributed as well.

In sum, even if class counsel is right that the mere lack of an eventual FX formal

engagement means some of our ‘non-client’ communications are not privileged,43 that does not

42 Brockett Dec. ¶ 9.43 The issue of whether materials sent to investors who may not have yet formally engaged us in this

specific matter can be privileged is not as straightforward as class counsel suggests. See, e.g., Newmarkets Partners, LLC v. Sal. Oppenheim Jr. & Cie. S.C.A., 258 F.R.D. 95, 101 (S.D.N.Y. 2009) (“An attorney-client relationship can arise prior to formal engagement. As a result, privilege may attach of a prospective client’s ‘initial statements’ to an attorney who is not ultimately hired.”); Fierro v. Gallucci, 2007 WL 4287707, at *6 (E.D.N.Y. Dec. 4, 2007) (“whether or not employment occurs, preliminary discussions between an attorney and a prospective client are


20

mean forcing us to produce our communications or a roster of our contacts is a remedy the Court

should consider. We are in competition with these firms, here, in Europe, and in other class

actions. Producing the requested communications would reveal competitively sensitive

information, including our strategies for bringing claims and even our strategy for offering our

competing legal services. Even just producing a roster of contacts (or anything else that would

reveal our contacts, such as the communications themselves or a privilege log) would not only

invade the privacy interests of the investors we have had discussions with, but would also be

competitively damaging, as it would reveal the specific institutions that we identified as

potentially being interested in the FX space, and even would reveal the contact information of

the specific people within each entity responsible for making FX-litigation decisions. Class

counsel would no doubt quickly use such information to “pitch” themselves, here and in Europe.

Simply put, this contrived dispute should be put to rest.

CONCLUSION

For these reasons, we respectfully request that class counsel’s motion be denied.

DATED: May 15, 2017 QUINN EMANUEL URQUHART &SULLIVAN, LLP

By: /s/ Daniel L. Brockett Richard I. Werder, Jr.Daniel L. Brockett51 Madison Avenue, 22nd FloorNew York, New York 10010Telephone: (212) 849-7000Fax: (212) [email protected]@quinnemanuel.com

subject to the attorney client privilege”). The cases cited by class counsel, Mot. at 13, merely stand for the uncontroversial point that unsolicited mass mailings—not at all what is at issue here—are typically not privileged. See Auscape Int’l v. Nat’l Geographic Soc’y, 2002 WL 31250727, at *2 (S.D.N.Y. Oct. 8, 2002) (“direct mail advertising” not privileged); E.E.O.C. v. CRST Van Expedited, Inc., 2009 WL 136025, at *3 (N.D. Iowa Jan. 20, 2009) (solicitation letters sent by “mass mailing” not privileged).


21

BERSTEIN LIEBHARD LLP

By: /s/ Stanley Bernstein Stanley Bernstein10 East 40th StreetNew York, NY 10016Telephone: (212) 779-1414Fax: (212) [email protected]


Documents

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW … · Case 1:13-cv-07789-LGS Document 774 Filed 05/15/17 Page 6 of 25. 3 the FX class action. Indeed, we invited them to provide