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Banks’ Appeal In US Collusion Case To Reach Supreme Court

By  |  April 19, 2022

An international banking case in which the city of Baltimore is seeking to recover millions of dollars in alleged overpayments is on appeal to the U.S. Supreme Court and could change Maryland law holding that civil defendants who have never set foot or operated in the state can nevertheless be sued in Maryland if an alleged conspirator has also been charged.

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    More than a dozen foreign banks accused of civil collusion are urging Supreme Court justices to review a lower court ruling that a New York federal court can hear the case because U.S.-based conspirators allegedly participated in the illegal conduct in question.

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    Baltimore is one of over a dozen U.S. cities and public and private investment funds accusing foreign and domestic banks of having illegally colluded to set a high price on the bonds they sell, an alleged act that exacerbated the 2008 financial crisis and cost municipalities and other investors millions.

    The U.S. District Court in New York had dismissed the case against many of the foreign banks for lack of jurisdiction because they had neither a personal presence nor operation in the United States. But the 2nd U.S. Circuit Court of Appeals reversed, saying the presence of an alleged conspirator in a state can be imputed to foreign defendants for jurisdictional purposes.

    The 2nd Circuit’s published decision is in line with the Maryland high court’s unanimous 2006 ruling that an alleged conspirator’s actions in Maryland can be imputed to an out-of-state defendant under the theory that conspirators are acting as the defendant’s agents.

    In their appeal to the justices, the banks noted the Maryland Court of Appeals decision in Mackey v. Compass Marketing Inc. and called it – as well as the 2nd Circuit’s ruling – a misinterpretation of Supreme Court decisions that the constitutional right to civil due process requires that defendants themselves have “minimum contacts” with a state in order for its courts to have jurisdiction over them.

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