Commodity Manipulation

When the Firm began in 1980, there was substantial precedent indicating that claims for commodity futures contract manipulation and price fixing were not viable because there supposedly was no private right of action for manipulation in violation of the Commodity Exchange Act 7 U.S.C. §1 et seq., (“CEA”), and antitrust claims for commodity futures price manipulation were supposedly precluded by the CEA.

While prosecuting numerous cases since then, the Firm has worked successfully to overcome such adverse precedent, develop claims for commodity price fixing and manipulation into viable rights of action, make the claims susceptible of class treatment, prove such claims at trial, and sustain them on appeal.

Antitrust Claims For Commodity Price Fixing And Exchange Related Conduct

The Firm successfully argued in the Second Circuit Court of Appeals that antitrust claims involving exchange-related price fixing are viable and not preempted by the Commodity Exchange Act. Strobl v. New York Mercantile Exchange, 582 F. Supp. 770 (S.D.N.Y. 1984) (upholding jury verdict), aff’d, 768 F.2d 22 (2d Cir. 1985) (same), cert. denied sub nom., Simplot v. Strobl, 474 U.S. 1006 (1985).

Commodity Exchange Act Manipulation Claims

Lovell Stewart is the first and only plaintiffs’ law firm to do any of the following: (a) argue to the U.S. Supreme Court successfully to uphold the private right of action under the Commodity Exchange Act; (b) try a CEA manipulation claim successfully; (c) argue successfully for class certification of such claim in a Court of Appeals; and (d) argue for and successfully establish the viability of CEA manipulation allegations from the time that the claim itself arguably did not exist until its well-accepted status today.

The Firm successfully argued to the U.S. Supreme Court that the Court should imply a private right of action for manipulation in violation of the CEA. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S. 353, 102 S.Ct. 1825 (1982) (“Curran”). After the Curran decision, Congress considered creating an express private right of action under the CEA. A partner of the Firm then testified before the Congressional Committee regarding the appropriate parameters of the proposed express private right of action, which became Section 22(a) of the CEA. See Statement of Leonard Toboroff, Before The Sub-committee On Oversight And Investigations of The Committee On Energy And Commerce, 97th Cong., 2d Sess. 584-603 (Jun. 7, 1982).

Having successfully argued to establish a private right of action, the Firm then conducted the first trial of claims for manipulation in violation of the amended CEA and sustained the favorable verdict and judgment on appeal. Strobl v. New York Mercantile Exch., 582 F. Supp. 770 (S.D.N.Y 1984), aff’d, 768 F.2d 22 (2d Cir. 1985) (“Strobl”).  At the conclusion of the Strobl trial, then Chief Judge Lloyd F. MacMahon stated to the Firm’s senior partner, Christopher Lovell, and Defendants’ attorney, Peter Fleming Jr. Esq., “You both tried a very difficult case very well.” Trial Transcript, November 17, 1983, at 1253-5, Leist, et al. v. Simplot, et al., 76 Civ. 4350 (S.D.N.Y.); Strobl, 79 Civ. 1834 (S.D.N.Y.) (LFM).

Lovell Stewart then developed CEA claims for manipulation into viable class action claims by repeatedly and successfully arguing in Courts of Appeal to sustain decisions granting class certification. E.g., Kohen v. PIMCO, 244 F.R.D. 469, 481 (N.D. Ill. 2007) (“PIMCO”)(granting plaintiffs’ motion for class certification), appeal denied, 571 F.3d 672, 680 (7th Cir. 2009) (Posner, J.); In re Sumitomo Copper Litig., 182 F.R.D. 85, 97 (S.D.N.Y. 1998) (“Sumitomo”) (granting plaintiffs’ motion for class certification); Sumitomo, 194 F.R.D. 480, 483 (S.D.N.Y. 2000) (same), appeal denied, 262 F.3d 134, 143 (2d Cir. 2001); In re Natural Gas Commodities Litig., 231 F.R.D. 171, 177 (S.D.N.Y. 2005) (granting plaintiffs’ motion for class certification and finding “persuasive, indeed controlling” the reasoning in Sumitomo), petition for leave to appeal denied sub nom. Cornerstone Propane Partners, L.P., et al. v. Reliant Energy Services, Inc., et al., No. 05-5732-cv (2d Cir. Aug. 1, 2006) (citing Sumitomo, 262 F.3d 134, 139 (2d Cir. 2001)); In re Amaranth Natural Gas Commodities Litig., 269 F.R.D. 366, 386 (S.D.N.Y. 2010), petition for leave to appeal denied sub nom. Amaranth Advisors, LLC, et al. v. Roberto E. Calle Gracey, et al., No. 10-4110-mv (2d Cir. Dec. 30, 2010) (citing Sumitomo, 262 F.3d at 139-40).

The largest settlement of a class action manipulation claim in the history of the CEA was Sumitomo, 74 F.Supp.2d at 395. In Sumitomo, it was alleged that the artificial impact of collusively manipulated prices in London was transmitted to the prices of U.S. copper futures contracts.

In Sumitomo, Lovell Stewart was sole lead counsel for the class and the Honorable Milton Pollack praised what Judge Pollack found were the Firm’s “unprecedented efforts” and “skill and persistence” which overcame what Judge Pollack found was “virtually overwhelming resistance.” Sumitomo, 74 F.Supp.2d at 396 (emphasis supplied).

In PIMCO, Lovell Stewart was sole lead counsel for the class and the Honorable Ronald Guzman praised the Firm’s efforts in obtaining the second largest class action settlement in the history of the CEA by stating in December 2013 that the percentage recovery obtained by each class member was the highest in Judge Guzman’s experience.

Lovell Stewart also obtained, as Court appointed co-lead counsel, the third (Natural Gas, $101,000,000)and fourth (Amaranth, $77,100,000) largest class action recoveries in the history of CEA manipulation claims.

In Natural Gas, the Honorable Victor Marrero found that the claims were extremely complex and approved the settlements which provided claiming class members with 100% of their net artificiality paid.

In Amaranth, the Honorable Shira Scheindlin stated to the Firm’s senior partner, near the conclusion of the active litigation that preceded the settlement of the claim, as follows: “Mr. Lovell, and your lawyering is usually so excellent that I wouldn’t expect it [an unsuccessful argument] from you...” Amaranth, 07 Civ. 6377 (S.D.N.Y.), Hr’g Tr., at 5:2 (dated Jul. 6, 2011)

Lovell Stewart has been appointed sole class counsel in other CEA manipulation class actions in which proposed settlements have been made.

  • In re Platinum and Palladium Commodities Litig.,10 Civ. 3617 (S.D.N.Y.) (WHP), Dkt. No. 18 (appointing Lovell Stewart as sole lead counsel) and Dkt. No. 140 (requesting preliminary approval of a partial settlement consisting of a $48,400,000 cash payment and a $35,000,000 assignment and judgment);
  •  In re Dairy Farmers of America, Inc., Cheese Antitrust Litigation, 09 Civ. 3690 (N.D. Ill.) (RMD), Dkt. No. 413 (appointing Lovell Stewart as sole lead class counsel) and Dkt. No. 335 (requesting preliminary approval of a partial settlement consisting of a $46,000,000 cash payment).

Lovell Stewart has served as co-lead counsel in other successful manipulation class actions. E.g., In re Soybeans Futures Litig., 89 Civ. 7009 (CRN) (N.D. Ill.) ($21,500,000 settlement as co-lead counsel. This provided 100 cents on the dollar for each claiming class member).

The Firm is now prosecuting other commodity manipulation class action claims as Court appointed lead or co-lead counsel. E.g., In re LIBOR-Based Financial Instruments Antitrust Litig., No. 11-md-2262 (S.D.N.Y.) (NRB), Dkt. No. 90 (appointing Lovell Stewart as co-lead counsel); In re Crude Oil Commodity Futures Litig., 11-cv-03600 (S.D.N.Y.) (WHP), Dkt. 42 (Feb. 14, 2012); In Re: Rough Rice Commodity Litigation, 11-cv-0618 (N.D.Ill.) (JWD), Dkt. 24 (April 12, 2011) (same).