United States Court of Appeals for the Second Circuit
Commodities Exchange Act
Extraterritorial – Best enforcers – Antitrust and standing
In re Platinum and Palladium Antitrust Litigation
Judges Pooler, Menashi, and Vyskocil
Background: The plaintiffs-appellants and cross-appellees are participants in physical and derivatives markets for platinum and palladium. They are seeking monetary and injunctive relief for violations of antitrust laws and the Commodities Exchange Act. They allege that the defendants, foreign companies engaged in trading these metals, manipulated the benchmark prices for the metals by collusively trading on the futures market to depress the price of the metals and by abusing the process for setting the benchmark prices. It is further alleged that the defendants benefited from this conduct via trading in the physical markets and holding short positions in the futures market. While the district court held it had personal jurisdiction over two of the foreign defendants, it dismissed the antitrust claims for lack of antitrust standing and the plaintiffs’ CEA claims for being impermissibly extraterritorial.
Ruling: The Second Circuit reversed in part, vacated in part, and affirmed in part. The court reversed the court’s holding regarding one set of plaintiffs’ lack of antitrust standing to sue for the manipulation of the New York Mercantile Exchange futures market. As traders in that market, the plaintiffs are the most efficient enforcers of the antitrust laws for that injury. The court also reversed the dismissal of the CEA claims. The plaintiffs alleged sufficient domestic activity so that the CEA claims are not impermissibly extraterritorial.
Matthew J. Perez, of Labaton Sucharow, for the plaintiffs-appellants-cross-appellees; Paul Mezzina, of King & Spaulding, Stephen Ehrenbergh and Mark A. Popovsky, of Sullivan & Cromwell, Matthew A. Katz, of Schindler Cohen & Hochman, Andrew C. Lawrence, of Kirkland & Ellis, and Robert G. Houck, of Clifford Chance US, for the defendants-appellees.