In an opinion yesterday, Judge Forrest denied (for the most part) various motions to dismiss the collection of cases alleging an antitrust conspiracy among commodity trading firms and their affiliated warehouse operators relating to the price of aluminum. She had dismissed an earlier version of the case because it alleged only parallel (not conspiratorial) conduct (see here), but the updated pleadings, she ruled, are now sufficient:
Plaintiffs have spent thousands of pages assembling (or, trying out) various versions of claims that defendants have engaged in anticompetitive conduct. To put it in colloquial terms, they alleged they “smelled a rat” but could neither identify its whereabouts nor its destination. The cats prowled, seeking the hole from which the alleged rat emanated and into which it may have crept. The metaphorical cats have now pointed to a point of origin and destination. Whether there is in fact a rat at all, or whether any rodent has, could or would take up the position indicated remains a question for another day. Needless to say, it should never take thousands of pages to state a claim. Were it not for the legal standards governing when enough is deemed enough (which allow for more than what this Court might otherwise be inclined to tolerate), the trees felled in an effort to state a claim might be leafing even now.
Judge Forrest found that updated allegations did not fit the standard template for an antitrust case because the goal of the alleged scheme was allegedly to make trading profits – it was a “financial play – but the plaintiffs did not allege they were on the opposite side of that play (or competitors in the financial markets). Instead, the plaintiffs alleged they were necessary victims, because they bought and sold the aluminum that made the “financial play” possible:
Plaintiffs here are not competitors of any of these defendants: they do not operate warehouses, and they do not have commodities trading arms. Nor are they alleged to directly consume any of defendants’ trading products or aluminum warehouse-related products or services. Rather, the core of plaintiffs’ claims is that they have suffered necessary yet collateral damage from defendants’ scheme. Plaintiffs are the real world users whose demand for aluminum creates the market for aluminum sales; thus, were it not for their need to use aluminum as an input in their production processes, it would not be possible for the financial trading defendants to trade aluminum as a commodity. Put another way, plaintiffs are central—they are the fulcrum—to the creation of the market opportunity underlying both metal storage and warrant trading for aluminum. As the real world buyers who— they allege—must pay prices for aluminum that incorporate Midwest Premium, they are necessarily directly impacted by the alleged conduct. That is, their purchases are inextricably intertwined with the competitive landscape in which defendants’ alleged scheme ultimately played out.