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JORGE M.C.C. DE ATUCHA v. COMMODITY EXCH.

May 9, 1985

JORGE M.C.C. de ATUCHA, Plaintiff,
v.
COMMODITY EXCHANGE, INC., COMEX CLEARING ASSOCIATION, INC., THE BOARD OF TRADE OF THE CITY OF CHICAGO, THE BOARD OF TRADE OF THE CITY OF CHICAGO CLEARING CORPORATION, NELSON BUNKER HUNT, WILLIAM HERBERT HUNT, LAMAR HUNT, INTERNATIONAL METALS INVESTMENT CO., LTD., BACHE HALSEY STUART SHIELDS, INC., BACHE GROUP, INC., ALVIN BRODSKY, MERRILL LYNCH PIERCE, FENNER & SMITH INCORPORATED, CONTICOMMODITY SERVICES, INC., NORTON WALTUCH, MELVIN SCHNELL, GILLIAN FINANCIAL, CONTICAPITAL MANAGEMENT, INC., CONTICAPITAL MANAGEMENT, INC., CONTICAPITAL LTD., NAJI ROBERT NAHAS, SHEIK MOHAMMED ABOUD AL-AMOUDI, SHEIK ALI BIN MUSSALEM, and BANQUE POPULAIRE SUISSE, Defendants



The opinion of the court was delivered by: LASKER

LASKER, D.J.

Jorge M.C.C. de Atucha ("de Atucha") brings this suit, yet another case concerning the much publicized events in the silver market in 1979 and 1980, against The Commodity Exchange, Inc. ("Comex"), Comex Clearing Association, Inc., the Board of Trade of the City of Chicago ("CBOT"), the Board of Trade of the City of Chicago Clearing Corporation (the "exchange defendants"), as well as numerous other individuals and companies *fn1" (the "non-exchange defendants"). The motions are granted for lack of standing and the complaint is dismissed.

I.

 On January 18, 1980, at a time when the price of silver was approximately fifty dollars per ounce, de Atucha, "a citizen and resident of Argentina", Complaint P 5 (filed Oct. 1, 1982), purchased three silver contracts on the London Metals Exchange ("LME") *fn2" at a total cost of approximately $1,500,000. Id. at P 29. On April 16, 1980 de Atucha liquidated *fn3" his "long" position *fn4" at a loss in excess of $1,000,000. Id. at P 40. De Atucha alleges that the price at which he purchased the silver contracts was artificially high because of an alleged conspiracy among the non-exchange defendants. Id. at P 30. As for the exchange defendants, de Atucha alleges that although they took action in January 1980 to counteract the purported conspiracy and to stabilize the then volatile silver market, the corrective measures were taken too late. Id. at P 38. *fn5"

 The complaint presents five claims. Against the non-exchange defendants de Atucha asserts that the defendants (1) conspired to and manipulated silver and silver futures *fn6" contract prices in violation of the Commodities Exchange Act ("CEA") § 9(b); *fn7" (2) cheated and defrauded de Atucha and the silver markets and wilfully made false reports and statements to de Atucha in violation of CEA §§ 4b *fn8" and 4c; *fn9" (3) conspired to "unreasonably restrain interstate trade and commerce in silver and silver futures contracts in the United States and between the United States and ... England, with the intent and effect of raising and fixing the prices or[sic] silver and silver futures contracts," Complaint P 47, in violation of the Sherman Anti-Trust Act, § 1, 15 U.S.C. § 1 (1982); and (4) monopolized the silver and silver futures contracts trade and commerce in the United States and England in violation of the Sherman Anti-Trust Act, § 2, 15 U.S.C. § 2 (1982). Id. at § 51. Finally, de Atucha alleges that the "acts, practices and omissions" of the exchange defendants were wilfully in bad faith or negligent, and in either case, violated CEA §§ 5a(8) *fn10" and 5(d). *fn11" Id. at P 55.

 In support of de Atucha's claims the complaint also states, among other things:

 
The London Exchange, located in London, England, is also a market for silver futures contract trading. Because of the fungibility of silver and silver futures, the United States market represented by the Comex and CBOT and the London Exchange function from an economic standpoint as a single market. ...

 Id. at P 28.

 Two motions are pending. The non-exchange defendants move pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss (1) the antitrust claims against them on the ground that plaintiff lacks "antitrust standing" and (2) the claims against them arising under the CEA on the ground that de Atucha has not established standing under that Act. The exchange defendants also more to dismiss the complaint against them pursuant to Rule 12(b)(6), Fed. R. Civ. P., on the ground that plaintiff lacks standing to sue. For the reasons set forth below the complaint is dismissed.

 II.

 Antitrust Claims

 De Atucha seeks treble damages pursuant to the Clayton Act, § 4, 15 U.S.C. § 15 (1982), based upon the non-exchange defendants' alleged attempt to monopolize and restrain the silver and silver futures trade and commerce. The non-exchange defendants argue that de Atucha lacks standing to sue under Section 4 because de Atucha's injury occurred outside of United States commerce and his injury, if any, was too remote from the alleged violation to sustain a claim under United States antitrust law. The defendants *fn12" further argue that de Atucha cannot sue under Section 4 because plaintiff's alleged injury resulted from a restraint on foreign, rather than American commerce. Although the complaint alleges that the defendants attempted to monopolize (and restrain the trade of) the world silver market, see, e.g., Complaint P 30(b), de Atucha's theory of standing, as we understand it, is that he may sue under American antitrust laws because the defendants' manipulation of the American silver markets produced his injury on the LME. See Transcript (Jun. 3, 1983) (oral argument) at p. 15. De Atucha further argues that as a trader in silver commodities he has standing to maintain an action under the antitrust laws against those who attempted to monopolize the world silver market since, he asserts, he is "clearly in the target area" of the antitrust violation and because he sustained direct injury.

 De Atucha's reliance on the target area test, the approach to Section 4 standing previously followed in this Circuit, is misplaced. as the Court of Appeals recently explained:

 
This is not the proper method of analysis. With two recent elaborate Supreme Court opinions with respect to the scope of § 4 of the Clayton Act on the books, courts in this circuit should start their analysis of standing under § 4 with the Supreme Court opinions [in Associated General Contractors of California, Inc. v. California State Council, 459 U.S. 519, 74 L. Ed. 2d 723, 103 S. Ct. 897 (1983) and Blue Shield of Virginia v. McCready, 457 U.S. 465, 73 L. Ed. 2d 149, 102 S. Ct. 2540 (1982)] rather than engage in extensive parsing of Billy Baxter, [Inc. v. Coca-Cola Co., 431 F.2d 183, 193 (2d Cir. 1970), cert. denied, 401 U.S. 923, 91 S. Ct. 877, 27 L. Ed. 2d 826 (1971)] and Calderone [Enterprises Corp. v. United Artists Theatre Circuit, Inc., 454 F.2d 1292 (2d Cir. 1971), cert. denied, 406 U.S. 930, 32 L. Ed. 2d 132, 92 S. Ct. 1776 (1972)]. The "target area" test embodied in those decisions was adopted over powerful dissents, has proved difficult to apply, and is received tepidly in the leading treatise, 2 Areeda & Turner, Antitrust Law § 334d, at 165-68 (1978). (Additional citation omitted).

 Crimpers Promotions, Inc. v. Home Box Office, Inc., 724 F.2d 290, 293 (2d Cir. 1983), cert. denied, 467 U.S. 1252, 104 S. Ct. 3536, 82 L. Ed. 2d 841 (1984). Accordingly, despite plaintiff's reliance on a target area analysis *fn13" "[we] ... are compelled to follow the approaches adumbrated by the Supreme Court in McCready and Associated General [Contractors]..." in determining whether de Atucha has standing to bring his antitrust claims. Id.

 Section 4 of the Clayton Act provides that "[a]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefore ... and shall recover threefold the damages by his sustained ... ." 15 U.S.C. § 15. The broad language of the Act notwithstanding, in both McCready and Associated General Contractors the Supreme Court has reaffirmed that it was not Congress' intent "to allow every person tangentially affected by an antitrust violation to maintain an action to recover threefold damages ...." Blue Shield of Virginia v. McCready, 457 U.S. at 477; accord Associated General Contractors of California v. California State Council, 459 U.S. at 535. In McCready, Justice Brennan (for the majority) surveyed past Supreme Court opinions discussing restrictions on a plaintiff's standing to sue for treble damages and concluded that there are two considerations which may limit the availability of Section 4 remedy: the prevention of duplicative recoveries and the limitation on injuries which are too remote from the alleged violation. See 457 U.S. at 476. Subsequently, Justice Stevens, (also writing for the majority of the Court) in Associated General Contractors, enumerated five factors against which courts should analyze the standing issue. See 459 at 536 n.33. Not surprisingly, there is considerable overlap between the issues discussed in the two opinions. Indeed, despite minor differences in analytic approach, careful scrutiny reveals that with one exception, discussed below, the Associated General Contractors "factors" and the McCready "limitations" involve the same considerations. In any event, the Court's refusal to adopt a bright line rule requires that the standing determination be made on a case by case analysis. Upon evaluating the circumstances here presented in light of the relevant factors we conclude de Atucha does not have standing under American antitrust law to maintain this action.

 As was true in Associated General Contractors, not all of the factors in this case are unfavorable to the plaintiff. The plaintiff correctly asserts that the limitation embodying the policy against duplicative recoveries, which focuses primarily "on the risk ... engendered by allowing every person along a chain of distribution to claim damages arising from a single transaction that violated the antitrust laws", Blue Shield of Virginia v. McCready, 457 U.S. at 475, is not an issue here. *fn14" This is not a situation in which there are "innocent middleman"; the other parties to de Atucha's transactions, for instance Merrill Lynch, the brokerage house that placed de Atucha's silver trades, are named in the complaint as defendants. De Atucha's personal loss of anticipated profits on the LME is a discrete injury which does not involve different levels of harmed individuals. Cf. Crimpers Promotions Inc. v. Home Box Office, Inc., 724 F.2d at 293-94 (limitation designed to prevent double recovery inapplicable where plaintiff's injury was "distinct and different").

 The "conceptually more difficult question", Blue Shield of Virginia v. McCready, 457 U.S. at 476, and the critical inquiry here, is whether de Atucha's injury on the LME is too remote from the antitrust violation to serve as the gravamen of a Section 4 claim. *fn15" Initially, in evaluating whether plaintiff's injury is too fortuitous, one must "look ... to the physical and economic nexis between the alleged violation and the harm to the plaintiff", id. at 478, or, as Justice Stevens characterized it "the ...


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