Alan Harry, Levante Capital, LLC v. Total Gas & Power N. Am., Inc.
889 F.3d 104
| 2d Cir. | 2018Background
- Plaintiffs (individual and institutional traders) sued Total Gas & Power North America and affiliates, alleging manipulation of physical natural gas markets at four western regional hubs (Permian, San Juan, SoCal, Waha) during 2009–2012 and seeking damages under the Commodities Exchange Act (CEA) and antitrust laws.
- CFTC and FERC investigations found that Total Gas’s West Desk engaged in a scheme to dominate thin regional hub trading during bidweek to “bang the index,” profiting on basis and index swaps; CFTC settled for $3.6 million; FERC enforcement ongoing.
- Plaintiffs did not trade at the manipulated regional hubs; they traded derivatives (futures/swaps) indexed to Henry Hub (Louisiana), whose price-setting methodology and trading volume differ materially from regional hubs.
- District court dismissed for lack of standing and for failure to plausibly plead injury (thus failing to state CEA and antitrust claims); plaintiffs appealed.
- Second Circuit held plaintiffs alleged a colorable (sufficient for Article III) injury theory but failed to plausibly allege that manipulation at the regional hubs meaningfully affected Henry Hub prices or harmed plaintiffs’ derivative positions, so CEA and antitrust claims were dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing | Regional and Henry Hub markets are integrated; manipulation anywhere can injure traders everywhere, so plaintiffs suffered concrete injury | Plaintiffs failed to plausibly tie manipulation at small regional hubs to injury in Henry Hub–based derivatives | Plaintiffs pleaded a colorable injury; Article III standing satisfied (standing dismissal vacated) |
| CEA private-right-of-action (actual damages) | CFTC/FERC findings plus cointegration studies show manipulation propagated to Henry Hub and harmed Henry-indexed derivatives | Manipulated trades at thin regional hubs were too few relative to Henry Hub volume and different pricing methodology to have plausibly affected Henry prices | Failed to plausibly allege actual injury causally tied to defendants’ manipulation; CEA claims dismissed |
| Pleading standard distinction | N/A (strategy relies on agency findings and studies) | N/A | Court reiterates lower threshold for constitutional standing (colorable injury) vs. higher plausibility requirement to state substantive claims under Twombly/Iqbal; plaintiffs met the former but not the latter |
| Antitrust standing / antitrust injury | Natural gas market is unified; plaintiffs suffered antitrust injury because artificial Henry/NYMEX prices flowed from defendants’ scheme | Plaintiffs are not participants in defendants’ manipulated markets; no plausible allegation they traded at artificial prices or that their injury was inextricably intertwined with defendants’ scheme | Plaintiffs lack antitrust injury and are not efficient enforcers; antitrust claims dismissed |
Key Cases Cited
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (U.S. 2016) (injury-in-fact must be concrete and particularized)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility pleading standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility requirement for pleadings)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (U.S. 1992) (standing elements)
- Warth v. Seldin, 422 U.S. 490 (U.S. 1975) (pleading injury for standing)
- W.R. Huff Asset Mgmt. Co. v. Deloitte & Touche LLP, 549 F.3d 100 (2d Cir. 2008) (standing framework)
- Gelboim v. Bank of America Corp., 823 F.3d 759 (2d Cir. 2016) (antitrust standing principles)
- In re LIBOR-Based Fin. Instruments Antitrust Litig., 962 F. Supp. 2d 606 (S.D.N.Y. 2013) (pleading actual injury where benchmark manipulation alleged)
- In re Commodity Exchange, Inc., 213 F. Supp. 3d 631 (S.D.N.Y. 2016) (standing and CEA injury analysis)
- In re Aluminum Warehousing Antitrust Litig., 833 F.3d 151 (2d Cir. 2016) (limitations on who suffers antitrust injury)