156 F. Supp. 3d 462
S.D.N.Y.2016Background
- Three consolidated actions by experienced silver futures spread traders (Shak, Wacker, Grumet) allege JP Morgan manipulated long-dated COMEX silver futures calendar spreads in late 2010–early 2011 by placing large, uneconomic spread orders at the close and pressuring the COMEX settlement committee.
- Plaintiffs claim these actions caused settlement-driven backwardation, diverged futures spreads from OTC benchmark (SIFO), forced plaintiffs to liquidate at losses, and transferred positions to JP Morgan or an affiliate.
- Complaints asserted CEA manipulation claims, Sherman Act § 2 monopolization/conspiracy claims, New York General Business Law §§ 340/349 claims, and unjust enrichment.
- JP Morgan moved to dismiss; key defenses: CEA and NYGBL § 349/time-barred, antitrust claims inadequately pleaded as to market definition, monopoly power, and exclusionary intent.
- Court dismissed all claims except granted leave to replead only Sherman Act § 2 (and corresponding state-law monopolization) claims; CEA and other claims dismissed as time‑barred or deficient.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of CEA claims | Injury discovered later; class-action tolling (American Pipe) extended limitations to March 2013 | Plaintiffs knew or should have known at liquidation in early 2011; class action did not encompass same post‑2010 conduct and tolling ended at dismissal in Dec. 2012 | CEA claims time‑barred; duty to inquire arose at liquidation; American Pipe tolling not available here; dismissal granted |
| NYGBL § 349 / Unjust enrichment statute of limitations | §349 accrual later; unjust enrichment distinct equitable claim | §349 accrues at injury (early 2011); unjust enrichment duplicates time‑barred claims and is remedial/money‑oriented | §349 and unjust enrichment dismissed as time‑barred (and substantively deficient) |
| Antitrust standing / statute of limitations | Antitrust claims timely for trades within 4 years of filing; seek damages for post‑limitation acts | Some alleged trades fall outside 4‑year window; separate overt acts not revitalize older injuries | Antitrust claims partially timely (limited to transactions within 4‑year window); court narrowed recoverable periods |
| Sherman Act § 2 pleading (monopoly power & willful acquisition) | Direct evidence of price control (uneconomic close orders, settlement pressure, divergence from SIFO) shows monopoly power and exclusionary conduct | Plaintiffs failed to define relevant market or allege market share; alleged conduct not shown uneconomic or aimed at acquiring/maintaining monopoly power | Plaintiffs adequately alleged monopoly power by direct evidence of price control, but failed to plead willful acquisition/exclusionary intent with sufficient particularity; §2 monopolization and conspiracy claims dismissed with leave to replead only those antitrust claims |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions vs. factual allegations)
- American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (class action tolling doctrine)
- In re Crude Oil Commodity Futures Litig., 913 F. Supp. 2d 41 (S.D.N.Y. 2012) (direct evidence of price control/market power in commodity markets)
- Tops Markets, Inc. v. Quality Markets, Inc., 142 F.3d 90 (2d Cir. 1998) (two routes to prove monopoly power: direct control or market share)
- Heerwagen v. Clear Channel Commc’ns, 435 F.3d 219 (2d Cir. 2006) (market‑share proof and discussion of direct‑evidence approach)
- PepsiCo, Inc. v. Coca‑Cola Co., 315 F.3d 101 (2d Cir. 2002) (monopoly power and market definition principles)
- Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (exclusionary conduct and intent relevance)
- Verizon Commc’ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (antitrust limits and need for exclusionary conduct)