913 F. Supp. 2d 41
S.D.N.Y.2012Background
- Putative class action alleging Sherman Act §2 and CEA §25 manipulation of WTI prices in 2008; Complaint in consolidated form; claims framed against Parnon Energy and related entities; factuals treated as true for motion to dismiss; markets defined as WTI physical cash and NYMEX WTI futures; manipulation described as four-step scheme in Jan and Mar 2008 with concurrent calendar spreads; market moved from backwardation to contango after physical WTI sales; CFTC action previously addressed similar issues; plaintiffs seek damages and injunctive relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Monopolization via market power evidence | Galan alleges direct control of prices via manipulation. | Parnon argues market power not shown by existing market definitions or extrinsic data. | Plaintiffs sufficiently plead monopoly power and its willful use. |
| Proper relevant market definition | Market defined as physical WTI and related futures are plausibly linked. | Market should be properly defined; concerns about inclusion of derivatives. | Product/ geographic market definitions are plausible; discovery may clarify. |
| Willful acquisition and intent to monopolize | Detailed scheme shows willful intent to dominate physical WTI to manipulate spreads. | Arguments rely on conclusory assertions; intent not shown. | Plaintiffs plausibly allege willful intent to obtain monopoly power. |
| CEA standing and loss causation | Plaintiffs have standing under CEA §22(a) for manipulation in calendar spreads; loss causation not strictly required for manipulation claims in CEA. | Standing disputed; loss causation under Dura not clearly applicable to CEA; damages proof complex. | CEA standing denied only to extent of requiring full loss causation at pleading; otherwise claims survive; dismissal denied. |
Key Cases Cited
- PepsiCo, Inc. v. Coca-Cola Co., 315 F.3d 101 (2d Cir. 2002) (monopoly power shown by attempt to control prices; framework for proving market power)
- In re Platinum and Palladium Commodities Litigation, 828 F. Supp. 2d 588 (S.D.N.Y. 2011) (loss causation not necessarily required for manipulation claims)
- In re Initial Public Offering Sec. Litig., 297 F. Supp. 2d 668 (S.D.N.Y. 2003) (manipulation-style losses may dissociate from misrepresentation timing; loss causation context differs from securities fraud)
- Anderson News, L.L.C. v. American Media, Inc., 680 F.3d 162 (2d Cir. 2012) (plausibility standard; deny dismissal where facts plausibly support claims)
- Apex Oil Co. v. DiMauro, 713 F. Supp. 587 (S.D.N.Y. 1989) (duration/structural change as factors, not strict requirements for monopolization)
- Tops Mkts., Inc. v. Quality Mkts., Inc., 142 F.3d 90 (2d Cir. 1998) (direct evidence can show market power and anti-competitive effects)
- du Pont de Nemours & Co. v. United States, 351 U.S. 377 () (monopoly power can be shown by control of prices or exclusion of competition)
- Grinnell Corp. v. United States, 384 U.S. 563 () (monopoly power standard (Grinnell))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard; distinguish facts from legal conclusions)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard: plausibility, not mere possibility)