October 31, 2020

Not dead yet: banks still face aluminum price-fixing case


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Factory worker processing roll of steel sheet.By Scott Flaherty, From The Litigation Daily

To mangle a line from Mark Twain, our report on the death of a multibillion-dollar price-fixing class action was somewhat exaggerated.

Earlier this month, when U.S. District Judge Katherine B. Forrest dismissed several defendants from antitrust litigation over an alleged scheme to drive up aluminum prices, the Litigation Daily and other legal news outlets suggested the case was all-but finished. But as the judge’s latest ruling grudgingly makes clear, there’s life in the case yet.

Forrest on Thursday trimmed some of the lawsuit—including monopoly claims under Section 2 of the federal Sherman Act, and claims brought under certain state laws. But she also refused to dismiss antirust claims against several defendants, including Goldman Sachs & Co., JPMorgan Securities plc, mining company Glencore Ltd., and aluminum warehouse operators Henry Bath LLC and Pacorini Metals USA LLC (a Glencore subsidiary).

The ruling marks the latest twist in litigation that followed a 2013 New York Times report examining business practices in the aluminum warehousing industry. The Times reported that aluminum warehouses were colluding with the banks to hoard aluminum, generating rent from metal producers that served to drive up prices.

Picking up on those allegations, Grant & Eisenhofer, Lovell Stewart Halebian Jacobson, Robbins Geller Rudman & Dowd and other plaintiffs firms filed antitrust claims on behalf of aluminum purchasers and end-users. The suit targeted warehousing companies including Henry Bath (a former JPMorgan subsidiary) and Glencore’s Pacorini Metals USA, and also Goldman Sachs and JPMorgan, which profited from aluminum trades.

The case has been an uphill battle for the plaintiffs so far, as Thursday’s ruling attests.

“Plaintiffs have spent thousands of pages assembling (or, trying out) various versions of claims,” Forrest wrote. “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.”

Forrest granted an initial motion to dismiss in August, but at the time allowed plaintiffs lawyers to amend parts of their complaint and try again. Then, in a pair of rulings on March 3 and March 4, she dismissed the plaintiffs’ amended claims against parent companies The Goldman Sachs Group Inc., JPMorgan Chase & Co. and Pacorini Metals AG. Forrest found their only connection to the alleged price-fixing was through their corporate affiliates.

Those early March rulings, however, didn’t consider the plaintiffs’ amended claims against various affiliates of the parent companies. Thursday’s ruling does, and declines to let any of them fully off the hook.

Grant & Eisenhofer’s Linda Nussbaum told us Friday she’s delighted that Forrest’s ruling will allow the case to move forward. Representatives for Goldman Sachs and JPMorgan declined to comment.

The defense lineup in the case includes Sullivan & Cromwell (for Goldman and affiliates), Covington & Burling (for JPMorgan and its affiliates), Latham & Watkins (for Hong Kong Exchanges and Clearing Ltd. and London Metal Exchange); Skadden, Arps, Slate, Meagher & Flom (for Pacorini) and Curtis, Mallet-Prevost, Colt & Mosle (for Glencore).

For more on this story go to: http://www.litigationdaily.com/id=1202721924642/Not-Dead-Yet-Banks-Still-Face-Aluminum-PriceFixing-Case#ixzz3VtYSxgTR


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