In an opinion today, Judge Forrest dismissed (with a limited right to replead) claims that various banks and their affiliates conspired to monopolize and inflate prices in the market for zinc stored in warehouses licensed by the London Metal Exchange. The case is similar to the aluminum antitrust cases before Judge Forrest (covered here). She found (among other things) that the complaint alleged, at most, parallel conduct.
Judge Forrest noted:
While certain of this conduct, if true, is problematic and—to say the least— does not enhance the promotion of a fair market, as this Court held in Aluminum, these sort of allegations do not lead to a plausible inference of unlawful communication or coordination between defendants. The [complaint] itself alleges that a bank would have an edge when trading commodities by independently acquiring a warehouse operator, and plaintiffs fail to show why a rational economic actor would not independently take any of the subsequent alleged actions, including influencing LME policy, that leverage a combined trading firm/warehouse operator’s position for its own self interest. It hardly seems remarkable to have commodities traders decide—if they can afford it—to buy and hold the commodity to drive up the price. While this may violate LME rules, financial regulations, or even market expectations, that alone does not render such conduct a violation of the antitrust laws.
The opinion is also notable because Judge Forrest made a specific point of discouraging the practice of “group pleading”:
Rule 8 provides that a defendant is entitled to notice of the claims brought against him . . . .Mere generalizations as to any particular defendant—or even defendants as a group—are insufficient. The fact that two separate legal entities may have a corporate affiliation—perhaps owned by the same holding company— does not alter this pleading requirement. Nor is it sufficient for plaintiffs to simply state in conclusory terms that separate legal entities are “sometimes collectively referred to” by a shared generic name. In the absence of allegations that corporate formalities have been ignored, courts appropriately and routinely adhere to legal separateness.
Here, this means that grouping multiple defendants who are affiliated together with a single name (e.g. “Goldman”, “JPMorgan” or “Glencore”) to encompass affiliated trading and warehouse operations for pleading purposes does not resolve this larger issue. Plaintiffs must be able to separately state a claim against each and every defendant joined in this lawsuit.