On Wednesday May 22, 2013, Prime International Trading, Ltd. (“Prime”), a Chicago commodity trading company, filed a class action complaint against three major oil companies and “John Doe Defendant Nos. 1-50” in the U.S. District Court for the Southern District of New York. Prime Int’l. Trading, Ltd. v. BP PLC, et al., 13-cv-3473. Prime sued on behalf of itself and all persons or entities that purchased or sold a Brent Crude Oil futures contract on the New York Mercantile Exchange (“NYMEX”) or Intercontinental Exchange (“ICE”) from at least 2002 to the present. The first follow-on class complaint was filed on May 27, 2013 in the U.S. District Court for the Middle District of Louisiana, Harter v. BP PLC, et al., 3:13-cv-337. Harter seeks to represent a class of all landowners in North America of oil producing property, oil lease owners, royalty or working interests owners, persons, business or entities that purchased or sold Crude Oil during the period of at least 2002 through the Present (the "Class Period").
These cases follow the European Commission’s May 14, 2013 announcement that it carried out unannounced inspections (so called “dawn raids”) at a number of EU companies active in the crude oil, refined oil products and biofuels sectors. On May 17, 2013, Senator Ron Wyden, Chairman of the Senate Committee on Energy and Natural Resources, wrote to United States Attorney General Eric Holder encouraging him to coordinate with EU enforcement agencies to determine whether these or other companies engaged in improper reporting of oil pricing information in the United States.
Plaintiffs in both cases allege a conspiracy to fix, restrain trade in, and intentionally manipulate the price of North Sea Brent Crude Oil and oil futures traded on the NYMEX and ICE, with the New York action alleging violations of the Commodity Exchange Act, the Sherman Antitrust Act, and common law unjust enrichment, and the Louisiana action alleging violations of the Commodity Exchange Act, Sherman Antitrust Act and state antitrust laws. Plaintiffs allege that Defendants intentionally reported false and misleading information to Platts, a price reporting agency described in the New York Complaint as “the leading global provider of spot and contract pricing” for Brent Crude futures. According to the Complaints, this information is widely disseminated in the U.S., with the Platts prices used to price and settle derivative contracts traded on the NYMEX and ICE (in the case of the New York Complaint) and to settle physical crude oil transactions and pay royalty and other oil and gas interests (in the case of the Louisiana Complaint). The New York Complaint alleges that, as a result, the allegedly false information “undermines the entire pricing structure for the Brent Crude oil market” and that Defendants knew or should have known that misrepresenting price information to Platts would and did have substantial and reasonably foreseeable effects on the prices of U.S. Brent Crude oil futures contracts. Senator Wyden remarked in his letter to Attorney General Holder that “[e]fforts to manipulate the European oil indices, if proven, may have already impacted U.S. consumers and businesses, because of the interrelationships among world oil markers and hedging practices.”
Similar follow-on class complaints are expected to be filed in United States courts over the next weeks and months.