United States District Court, S.D. New York
In re NORTH SEA BRENT CRUDE OIL FUTURES LITIGATION This document applies to: ALL CASES
OPINION AND ORDER ON PERSONAL JURISDICTION
L. CARTER, JR. United States District Judge.
putative class of futures and derivatives traders
("Trader Plaintiffs") and a putative class of the
owners of landholding and lease-holding interests in United
States oil-producing property ("Landowner Plaintiff,
" together with Trader Plaintiffs,
"Plaintiffs") have asserted claims against a number
of Brent crude oil producers, traders, and their selected
affiliates. Plaintiffs allege that Defendants conspired to
intentionally manipulate Brent crude oil prices and the
prices of Brent crude oil futures and derivatives contracts
traded on the New York Mercantile Exchange
("NYMEX") and the Intercontinental Exchange
("ICE Futures Europe") in violation of the
Commodity Exchange Act, the Sherman Act, and the laws of
International Trading and Shipping Company Limited
("STASCO") and Phibro Commodities Limited, both
Defendants in these actions, have moved to dismiss the
Complaints for lack of personal jurisdiction. For the reasons
set forth below, the Court finds that it has personal
jurisdiction over Phibro Commodities, but that it does not
have personal jurisdiction over STASCO. Plaintiffs'
claims against STASCO therefore are dismissed.
following facts are taken from the allegations contained in
the Complaints and the parties' submissions in connection
with the instant motions. Familiarity with the facts is
presumed and only those facts necessary to decide Phibro
Commodities' and STASCO's motions to dismiss are
short, however, Plaintiffs allege that Defendants, including
Phibro Commodities and STASCO, who are producers, refiners,
and traders of Brent crude oil, or their affiliates,
"monopolized the Brent Crude Oil market and entered into
unlawful combinations, agreements, and conspiracies to fix
and restrain trade in, and intentionally manipulate Brent
Crude Oil prices and the prices of Brent Crude Oil futures
and derivatives contracts." ECF No. 308 (Traders'
Second Amended Complaint ("Trader SAC")), at ¶
2; see also Landowner ECF No. 96 (Landowner's
Second Amended Complaint ("Landowner SAC")), at
¶ 3. The alleged manipulative conduct included
"selectively report[ing] bids, offers, 'spoof orders
and transactions with aberrant pricing" to Platts, a
price reporting agency, during the Market-on-Close
("MOC") window and engaging in "prohibited
wash sale transactions" with each other. Trader SAC
¶ 8; Landowner SAC ¶ 92. Plaintiffs do not allege
that any of the Defendants engaged in manipulative futures or
derivatives trading on NYMEX or ICE Futures Europe; rather,
they allege that the manipulation of Platts' Dated Brent
assessment, through manipulative physical trades and
reporting, "has effects that ripple throughout the Brent
Crude Oil and futures market." Trader SAC ¶ 126;
Landowner SAC ¶ 142.
is a limited company incorporated under the laws of England
with its headquarters in London. ECF No. 345 (Declaration of
Armand Lumens, dated Mar. 31, 2015 ("Lumens
Decl.")), at ¶ 3. It has no offices or employees in
the United States nor is it licensed or registered to conduct
business in the United States. Id. ¶¶ 6-9.
STASCO provides trading and shipping services for affiliates
and subsidiaries of its affiliate, Royal Dutch Shell, pic
("RDS"). Lumens Decl. ¶ 4. It trades energy
commodities, including crude oil, on its own behalf and on
behalf of two affiliates of RDS. Id.; ECF No. 399
(Declaration of David E. Kovel, dated Jul. 6, 2016
("Kovel Decl.")), Ex. 2 (Transcript of Deposition
of Armand Lumens, dated June 15, 2016 ("Lumens
Dep.")), at 31:5-24.
is part of Shell Trading & Supply, "an umbrella name
for a network of legal entities" within the RDS family,
including STASCO and Defendant Shell Trading (US) Company
("STUSCO"), involved in the trading and supply of
crude oil, gas, and power. Lumens Dep. 13:1-14:3, 16:5-7.
Shell Trading & Supply is managed by a Vice Presidential
Leadership Team ("VPLT") which meets quarterly.
Id. 56:24-57:11. Some of the members of the VPLT are
STASCO employees. Id. 58:5-20.
their Complaints, Plaintiffs allege that STASCO imports Brent
crude oil into the United States, see Trader SAC
¶ 35, Landowner SAC ¶ 11; however, STASCO does not
appear in the tables listing imports by "Defendants
STASCO and STUSCO (and affiliates)." Trader SAC ¶
491; see also Landowner SAC ¶ 226. Nor are any
of the entities listed in these tables subsidiaries of
STASCO. Lumens Dep. 114:14-15. In connection with the present
motion, Plaintiffs provide customs data showing STASCO listed
as either a shipper, consignee, or carrier on a number of
Brent crude oil cargoes. Kovel Decl., Ex. 12-2
("Panjiva" U.S. Customs Data for Jul. 2, 2007 to
Dec. 26, 2014). It is STASCO's position that it "did
not and does not import Brent, Forties, Oseberg or Ekofisk
cargoes into the United States." Lumens Decl. ¶ 5;
see also Lumens Dep. 110:3-114:13. Even though
STASCO may have been "part of a chain of transactions of
cargoes that ultimately were sent to the United States,
" the ownership of the cargoes was transferred from
STASCO to the buyer before that cargo reached the United
States. Lumens Decl. ¶ 5.
allege specific incidents of manipulation involving STASCO.
For instance, Plaintiffs allege that STASCO engaged in
suspiciously timed transactions aimed at manipulating the
Forties crude oil market in June 2010, including selling a
cargo of Forties (one of the four varieties of Brent crude
oil) to Statoil during the MOC window, as part of a planned
"staggered" transaction. Trader SAC ¶¶
254, 269-70; Landowner SAC ¶ 99. Plaintiffs also allege
that, in January 2011, STASCO engaged in a wash trade with
Mercuria for Brent crude oil, timed to the MOC window, to
manipulate the Brent crude oil market. Trader SAC
¶¶ 280-84. Plaintiffs identify additional anomalous
or suspicious behavior by STASCO in February 2011, when they
allege STASCO suppressed the market through "spoofing,
" wash trades, and other manipulative transactions
during the MOC window, Trader SAC ¶¶ 319-68;
Landowner SAC ¶¶ 116-28, and in September 2012,
when they allege STASCO engaged in sham trades and misleading
behavior, Trader SAC ¶¶ 369, 384-85, 389-91,
398-405; Landowner SAC ¶¶ 132-33.
addition to the suspicious trades reported to Platts,
Plaintiffs accuse STASCO of engaging in a variety of
manipulative conduct through its strategic use of very large
crude carriers ("VLCCs"), cargo ships that can hold
one to two million barrels of crude oil. Trader SAC
¶¶ 331-33, 342, 391-95, 411-12; Landowner SAC
¶¶ 117-19, 126. For instance, Plaintiffs allege
that STASCO chartered a VLCC, purportedly to transport Brent
crude oil to Korea, thereby decreasing supply in the nearby
market and increasing prices. Trader SAC ¶¶ 391-95.
STASCO, however, declined to comment its intentions.
Phibro Commodities and Phibro Trading
Commodities is a "United Kingdom private limited
company." Trader SAC ¶ 45; Landowner SAC ¶ 18.
It has no offices or employees in the United States. ECF No.
330 (Declaration of Roger Plaisted, dated Mar. 27, 2015
("Plaisted Decl.")), at ¶ 2. However, it
receives certain support services, including legal,
accounting, and risk management services, from non-party
Phibro Services LLC, based in Connecticut. Id.
¶ 8. Phibro Commodities is a wholly-owned subsidiary of
Defendant Phibro Trading LLC, a United States limited
liability company incorporated in Delaware with its
headquarters in Connecticut. Plaisted Decl. ¶ 3.
Commodities engages in trades connected to the physical
delivery of crude oil outside of the United States, but its
employees also execute so-called "financial" trades
in derivatives and futures products "for price
discovery, to hedge price exposure of physical commodities,
and to trade for profit." Plaisted Decl. ¶ 5. When
Phibro Commodities traders direct the execution of these
futures and derivatives trades on U.S. exchanges, including
NYMEX, they do so in the name of Phibro Trading and the
trades generally are maintained on Phibro Trading's
books. Id. ¶ 6. However, these financial trades
are directed by Phibro Commodities employees on behalf of
Phibro Commodities. ECF No. 361 (Declaration of Lauren W.
Pederson, dated May 8, 2015), Ex. A (Transcript of Deposition
of Roger Plaisted, dated Apr. 29, 2015 ("Plaisted
Dep.")), at 46:12-16. Additionally, when the financial
trading relates to a specific physical crude oil trade, the
benefits of that trade may be transferred from Phibro
Trading's books to Phibro Commodities. Plaisted Decl.
allege specific incidents of manipulation involving Phibro
Commodities. For instance, on February 24, 2011, STASCO and
Phibro Commodities engaged in a trade during the MOC window;
however Plaintiffs describe this trade as part of a scheme
orchestrated by STASCO, not Phibro Commodities, to set the
price levels in two types of Brent crude oil forward
contracts. Trader SAC ¶¶ 352-55. Plaintiffs also
allege that Phibro Commodities participated in a manipulative
scheme with STASCO and other Defendants taking place in
September 2012. Phibro Commodities allegedly conspired to
move the price of Dated Brent downward when it purchased a
cargo from BP on September 17 and then offered for sale that
same cargo the following day for a price $0.30 less than it
had paid BP. Trader SAC ¶¶ 369, 395-97; Landowner
SAC ¶¶ 129-30.
the various cases in this litigation were centralized and
transferred to this Court in October 2013, see ECF
No. 1, the Trader Plaintiffs filed an Amended Complaint on
July 3, 2014. ECF No. 166. The Landowner Plaintiff,
proceeding in a related case, also filed an Amended Complaint
on April 28, 2014. Landowner ECF No. 40. Thereafter, all
Defendants jointly filed three motions to dismiss: (1) a
motion to dismiss the Trader Complaint; (2) a motion to
dismiss the Landowner Complaint; and (3) a motion to dismiss
both the Trader Complaint and the Landowner Complaint as
exceeding the extraterritorial reach of United States law.
addition, the Phibro Defendants and the Shell Defendants,
like other Defendants, filed supplemental motions to dismiss,
advancing arguments specific to them. ECF Nos. 329-30 (Phibro
Trader Motion), 368-69 (Phibro Landowner Motion); 343-45
(Shell Trader Motion), 370-72 (Shell Landowner Motion). In
support of their supplemental motions regarding the
Court's lack of personal jurisdiction, both Phibro
Commodities and the Shell Defendants submitted declarations
of their executives. Phibro Commodities submitted the
declaration of Roger Plaisted, the General Manager of Phibro
Commodities Limited. ECF No. 330. The Shell Defendants
submitted the declaration of Armand Lumens, the Executive
Vice President Finance & Trading Supply of STASCO. ECF
Nos. 345, 372.
parties then engaged in limited jurisdictional
discovery-Phibro Commodities by stipulation and STASCO on
Plaintiffs' motion-consisting of depositions of Plaisted
and Lumens. ECF No, 347, 389. The parties completed their
briefing on the jurisdiction-challenging motions, and the
Court considers the motions fully submitted. ECF Nos. 360-61,
366, 377, 379, 398-400.
motion to dismiss for lack of personal jurisdiction under
Federal Rule of Civil Procedure 12(b)(2), a plaintiff has the
burden to establish personal jurisdiction and "must make
a prima facie showing that jurisdiction
exists." Eades v. Kennedy, PC Law Offices, 799
F.3d 161, 167-68 (2d Cir. 2015) (quoting Licci ex rel
Licci v. Lebanese Canadian Bank, SAL, 732 F.3d 161, 167
(2d Cir. 2013)) (internal quotation marks omitted). Where, as
here, there has been jurisdictional discovery but no
evidentiary hearing, "the plaintiff s prima
facie showing, necessary to defeat a jurisdiction
testing motion, must include an averment of facts that, if
credited by the trier, would suffice to establish
jurisdiction over the defendant." Dorchester Fin.
Sec, Inc. v. Banco BRJ, S.A., 722 F.3d 81, 85 (2d Cir.
2013) (citation omitted). In this posture, a plaintiff cannot
rely exclusively on the prima facie showing in the
complaint; that "showing must be factually
supported." Id. However, the court will credit
a plaintiffs presentation of facts "notwithstanding any
controverting presentation by the moving party."
Id. at 86 (quoting Marine Midland Bank, N.A. v.
Miller, 664 F.2d 899, 904 (2d Cir. 1981)).
allege claims under the Commodities Exchange Act and the
Sherman Act, both of which provide for nationwide service of
process. Accordingly, personal jurisdiction extends to the
"limit permitted by the Due Process Clause of the Fifth
Amendment." In re Amaranth Nat. Gas Commodities
Litig., 587 F.Supp.2d 513, 526 (S.D.N.Y. 2008) (citing
Leasco Data Processing Equip. Corp. v. Maxwell, 468
F.2d 1326, 1339 (2d Cir. 1972)). Further, "[w]hen the
jurisdictional issue flows from a federal statutory grant
that authorizes suit under federal-question jurisdiction and
nationwide service of process . . . the Second Circuit has
consistently held that the minimum-contacts test in such
circumstances looks to contacts with the entire United States
rather than with the forum state." In re Libor-Based
Fin. Instruments Antitrust Litig., No. ll-md-2262 (NRB),
2015 WL 4634541, at *18 (S.D.N.Y. Aug. 4, 2015) (quoting
SEC v. Straub, 921 F.Supp.2d 244, 253 (S.D.N.Y.
2013)) (alteration in original).
may assert personal jurisdiction over a defendant under two
theories: general or specific jurisdiction. Under either
theory, the court must "undertake an analysis consisting
of two components: the 'minimum contacts' test and
the 'reasonableness' inquiry.'" Bank
Brussels Lambert v. Fiddler Gonzalez & Rodriguez,305 F.3d 120, 127 (2d Cir. 2002). General jurisdiction allows
a court "to hear any and all claims" against
defendants "when their affiliations with the State are
so 'continuous and systematic' as to render them
essentially at home in the forum State." Goodyear
Dunlop Tires Ops., S.A. v. Brown,564 U.S. 915, 919
(2011). Thus, "[a]side from 'an exceptional
case' ... a corporation is at home .. . only in a state
that is the company's formal place of incorporation or