The Sniado case began with the suicide of Gerhard Praschak, the head of the (state owned) Austrian Kontrollbank in April 1997. In a suicide note, he confessed “that Austria’s banking system was rife with price-fixing of exchange rate fees for Euro-currencies.” Sniado v. Bank Austria AG, 352 F.3d 73, 75-76 (2d. Cir. 2003). According to the European Commission, the “Lombard Club,” as the cartel was called by the CEO’s of the participating banks who met every month at the Hotel Bristol in Vienna,

covered the entire Austrian territory ‘down to the smallest village’, … with a view to fixing deposit, lending and other rates to the detriment of businesses and consumers in Austria.

John Sniado, a New York resident and frequent traveler to Europe, brought a complaint on behalf of all U.S. persons who had paid inflated foreign exchange fees. The defendants were European banks headquartered in Austria, the Netherlands, Italy, and Germany. Specifically, Sniado alleged that (i) while in Europe, he paid inflated exchange fees to the defendants; and (ii) that others had been charged inflated exchanges fees both in Europe and in the U.S.

The case was a roller-coaster ride through the federal court system. First, Sniado lost in the Southern District of New York, where the court dismissed his case for lack of subject matter jurisdiction. Sniado v. Bank Austria AG, 174 F. Supp. 2d. 159 (S.D.N.Y. 2001). On appeal, the Second Circuit sided with Snaido, based on its recent decision in Kruman v. Christie’s (2002), where the court had endorsed a broad view of &#1676a(1) and (2) of the FTAIA. Kruman, however, following on the heels of the 5th Circuit’s decision in Den Norske v. HeereMac (2001), led to the circuit split that in June 2004 prompted the Supreme Court’s decision in Hoffman-La Roche v. Empagran. In Empagran, the Supreme Court refused to adopt the Second Circuit’s broad view. Thus, when Sniado petitioned for review by the Supreme Court, the Supreme Court, just seven days after its Empagran decision, sent the case back to the Second Circuit “for further consideration in light of [Empagran].” Bank Austria AG v. Sniado, 124 S.Ct. 2870. Less than two months later, in August 2004, the Second Circuit decided Sniado’s case on remand. Sniado lost, and the matter had come full-circle.

Based on the pleadings and the standard set out in Empagran, the Second Circuit’s decision is hardly surprising. Snidao suffered foreign harm, when he paid inflated exchange fees in Europe. Others suffered domestic harm, when they paid inflated exchange fees in the U.S. There are two ways in which a plaintiff can meet the requirement that domestic harm give rise to his or her claims: (i) the plaintiff, in addition to having suffered foreign harm, also suffered domestic harm; and (ii) the domestic harm (to others) caused the plaintiff’s foreign harm (i.e., foreign harm is dependent on domestic harm). Neither alternative was available to Sniado. He hadn’t exchanged money in the U.S. and thus did not suffer direct domestic injury. And he did not allege sufficient facts upon which the court could have found that higher rates in the U.S. had somehow caused (or “helped to bring about”) higher rates in Europe.

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