Antitrust Law Daily Personal jurisdiction found over foreign defendants in aluminum price manipulation case
News
Thursday, April 30, 2020

Personal jurisdiction found over foreign defendants in aluminum price manipulation case

By Nicole D. Prysby, J.D.

Foreign defendants were subject to personal jurisdiction in an aluminum price manipulation case, based on allegations that they directed actions of their U.S. subsidiaries and visited the U.S. to further the conspiracy.

The federal district court in New York City had personal jurisdiction over two foreign defendants in a case over an alleged conspiracy to inflate aluminum prices. The defendants in the case included companies that either traded primary aluminum on the London Metals Exchange (LME) or stored aluminum at warehouses certified by the LME. The defendants allegedly conspired to acquire large positions in primary aluminum at low prices during the economic downturn following the 2008 market collapse, and then inflated prices through manipulation of a regional benchmark for aluminum pricing. The court concluded that it had personal jurisdiction over the two foreign defendants because both engaged in sufficient relevant conduct within and directed at the U.S. For example, actions taken directing U.S. subsidiaries to lock up aluminum, transactions with U.S. counterparties involving massive quantities of U.S.-based aluminum, and a visit to the U.S. in furtherance of the conspiracy. Given that the defendants’ U.S. affiliates were already involved in the litigation in this forum, exercise of personal jurisdiction over the defendants was reasonable (In re Aluminum Warehousing Antitrust Litigation, April 28, 2020, Engelmayer, P.).

Plaintiff Fujifilm Manufacturing U.S.A., Inc. (Fujifilm), is one of several individual plaintiffs in multidistrict litigation (MDL) who alleged violations of Section 1 of the Sherman Act, in the form of a conspiracy to inflate aluminum prices. There were six sets of defendants, each of which either traded primary aluminum on the LME (Financial Defendants) or stored aluminum at warehouses certified by the LME (Warehouse Defendants). The gist of the allegations was that the Financial Defendants, having acquired large positions in primary aluminum at low prices during the economic downturn following the 2008 market collapse in anticipation of future price increases, conspired with each other and with the Warehousing Defendants to inflate artificially the prices they would realize in the sale of these positions by manipulating the Platts Midwest Premium, a regional benchmark based on the costs associated with delivery of aluminum.

Fujifilm amended its complaint and added certain foreign affiliates of the principal defendants in the MDL, including Glencore International AG (GIAG), an affiliate of one of the Financial Defendants, and Pacorini Metals Vlissingen B.V. (Pacorini Vlissingen), an affiliate of one of the Warehousing Defendants. Neither GIAG nor Pacorini Vlissingen has ever had offices or employees or been registered to do business in the U.S. Before the court were motions by GIAG and Pacorini Vlissingen to dismiss the claims against them for lack of personal jurisdiction.

The court held that it had specific personal jurisdiction over GIAG and Pacorini Vlissingen. Both companies engaged in sufficient relevant conduct within and directed at the U.S. to establish the requisite minimum contacts for the exercise of personal jurisdiction. Fujufilm alleged several different acts by GIAG to show that GIAG senior executives and traders purposefully availed themselves of the privilege of conducting activities in the U.S. First, an email and a deal suggested that U.S. subsidiaries took direction from GIAG to "lock up" aluminum in LME warehouses and store the aluminum. In addition, GIAG acquired the rights to 860,000 tons of aluminum (about one-sixth of all LME aluminum worldwide) in an LME warehouse in the U.S. Fujifilm’s allegations showed GIAG to be a driving force behind the U.S.-centered aluminum transactions. GIAG engaged in transactions with U.S. counterparties involving massive quantities of U.S.-based aluminum, stored in Detroit and New Orleans warehouses by U.S. entities, and allegedly directed at impacting the price of aluminum for U.S. buyers.

Pacorini Vlissingen also had sufficient conduct within and directed at the U.S., based on allegations that it participated in aluminum swaps and one of its executives visited the U.S. to improve Pacorini USA’s techniques for loading out the bare minimum of aluminum allowed by LME rules, in furtherance of the alleged conspiracy.

The court also held that exercising personal jurisdiction over GIAG and Pacorini Vlissingen was reasonable. Their affiliates were already involved in the litigation and the U.S. had a substantial interest in adjudicating the case given the significant effects on the aluminum market in the U.S. Fujifilm, a U.S. entity, was already litigating its claims against many of GIAG and Pacorini Vlissingen’s alleged co-conspirators in this forum, and the exercise of jurisdiction over GIAG and Pacorini Vlissingen would allow for the most efficient resolution of these claims.

This case is No. 13-md-2481 (PAE).

Attorneys: Allan Steyer (Steyer Lowenthal Boodrookas Alvarez & Smith LLP) and Derek Y. Brandt (McCune Wright Arevalo, LLP) for Fujifilm Manufacturing USA Inc. Richard C. Pepperman, II (Sullivan and Cromwell, LLP) for Goldman Sachs & Co.

Companies: Fujifilm Manufacturing USA Inc.; Goldman Sachs & Co.

MainStory: TopStory Antitrust GCNNews NewYorkNews

Back to Top

Interested in submitting an article?

Submit your information to us today!

Learn More

Antitrust Law Daily: Breaking legal news at your fingertips

Sign up today for your free trial to this daily reporting service created by attorneys, for attorneys. Stay up to date on antitrust legal matters with same-day coverage of breaking news, court decisions, legislation, and regulatory activity with easy access through email or mobile app.