A New York appeals court has rejected another attempt by several Wall Street banks to challenge an antitrust lawsuit by a former law firm partner. Linda Grant Williams, an attorney specialized in structure finance, and formerly a partner at the law firm Pillsbury Winthrop Shaw Pittman, LLP (“Pillsbury”), alleges that Citigroup Inc., Citigroup Global Markets, Inc. (together “Citigroup”), JP Morgan Securities, Inc., JP Morgan Chase & Co. and Goldman Sachs & Co., all major underwriters of Airline Special Facility bonds (“ASF bonds”), used to finance the construction and renovation of municipal airports, boycotted a structure that Williams developed and patented for such bonds. According to Williams, if utilized by defendants, her patented structure would permit ratings of these types of bonds, which would lower the risk and thereby significantly lower the interest rates on ASF bonds, resulting in savings to airlines and consumers. Williams also claims Citigroup forced her to leave Pillsbury, which had a strong preexisting business relationship with Citigroup. The plaintiff brought antitrust claims under New York’s Donnelly Act, a claim for tortious interference with her employment contracts at the law firms where she was practicing, and finally a claim for tortious interference with prospective economic relations.
After the trial court dismissed Williams’ complaint, including on the ground that the plaintiff had failed to allege antitrust injuries, she appealed. On appeal, the New York appellate division reinstated Williams’ Donnelly Act antitrust claim. Williams v. Citigroup Inc., 104 A.D.3d 521, 962 N.Y.S.2d 96, 2013 BL 71395 (1st Dep’t 2013). Thereafter, the appeals court denied defendants motion for reargument, or for leave to appeal to New York’s highest court. The case is now proceeding through discovery at the trial court.
Williams initial complaint was filed in New York federal district court and asserted eight causes of action. The first through fifth causes of actions (the “federal claims”) alleged that Citigroup violated Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, by engaging in various conspiracies to boycott her structure and by monopolizing, attempting to monopolize and conspiring to monopolize the ASF bond market. The sixth through eighth causes of actions (the “state law claims”) respectively allege that Citigroup violated New York’s Donnelly Act and Section 340 of New York’s General Business Law, that Citigroup tortiously interfered with Williams’ employment contracts with Pillsbury and then Greenberg Traurig, LLP (“Greenberg”), and that Citigroup tortiously interfered with Williams’ business relationships with those firms.
On November, 2, 2009, the federal district court granted Citigroup’s motion to dismiss the federal claims on the ground that the plaintiff failed to satisfy the pleading standard due to the absence of factual allegations plausibly suggesting that Citigroup violated the Sherman Act. Williams v. Citigroup, Inc., No. 08 CV 9208 (LAP), 2009 BL 291910, 2009 WL 3682536, at 2-8 (S.D.N.Y. Nov. 2, 2009). The court also dismissed the Donnelly Act claim based on the same deficiencies it detected in the federal claims, as well as the tortious interference claims for failure to allege certain elements required by New York law.
The district court’s dismissal of the federal claims was affirmed by the Second Circuit Court of Appeals. The Second Circuit reversed the district court’s retention of supplemental jurisdiction over Williams’ state law claims, and dismissed those claims. Williams v. Citigroup, Inc., 659 F.3d 208, 215 (2d Cir. 2011).
Thereafter, Williams filed a voluntary notice of dismissal of the federal action and refiled her case in New York state court asserting only state law claims.
The New State Claims
In May 2010, Williams refiled her state law claims in New York State court. Specifically, she asserted state law antitrust claims under the Donnelly Act, and claims for tortious interference with contract and tortious interference with prospective economic advantage. The claims were based on the assertion that the defendants were engaging in an ongoing conspiracy to boycott her and her cost-saving structures for ASF bonds.
On June 19, 2012, a New York trial court granted defendants’ motion to dismiss all of Williams’ claims due to failure to state a cause of action, lack of antitrust standing and lack of antitrust injury. The court dismissed plaintiff’s tortious interference causes of actions for being insufficiently pleaded. Williams v. Citigroup, Inc., No. 650481/2010, NY Slip Op 51145 (U) (N.Y. Co. 2012).
The Appellate Analysis
On appeal, a New York intermediate appellate court reinstated Williams’ antitrust claim reversing the trial court’s decision that she did not have standing and failed to allege antitrust injuries. The court held that the Donnelly Act claim was neither dismissed with prejudice nor barred by the prior federal action, and that the federal court’s dismissal with prejudice of plaintiff’s Sherman Act claim at the pleading stage had no preclusive effect as to her state law claims in light of the heightened pleading requirement for antitrust claims in federal court. Williams v. Citigroup Inc., 104 A.D.3d 521, 962 N.Y.S. 2d 96, 2013 BL 71395 (1st Dep’t 2013) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 554-57 (2007)). The court also ruled that Williams’ claim for interference with prospective business relations should not have been dismissed, but affirmed the dismissal of her claim for tortious interference with contract.
The New York appeals court ruled that where “plaintiff had attempted to facilitate competition with defendants, an attack on her through anticompetitive conduct is sufficient to confer standing.” Interestingly, the court noted that “although she is not a participant in the market for underwriting ASF bonds, defendants’ alleged group boycott of her patented structure for those bonds was a means to restrain trade in that market.”
The court further decided that, although plaintiff did not plead direct evidence of a conspiracy, the allegations, which include statements alleged to have been made by defendants and other market participants, that defendants boycotted the use of plaintiff’s structure to issue ASF bonds, were sufficient to raise an inference of conspiracy.
Contrary to the trial court’s finding that plaintiff had not sufficiently alleged that defendants “acted for a wrongful purpose or used dishonest, unfair, or improper means,” the appeals court ruled that “because plaintiff sufficiently alleged her Donnelly Act claim,” her claim for interference with prospective business relations should not have been dismissed.
However, the court confirmed that plaintiff’s claim for tortious interference with contract was properly dismissed because Williams “failed to identify any term of the agreements that was breached” from either law firm where she was practicing.
Finally, the court rejected plaintiff’s attempt to assert for the first time on appeal a claim for deceptive trade practices under Section 349 of the General Business Law and, in any event, found that such a claim would fail because that statute is limited to claims involving consumer-oriented conduct.