Green Plains Trade Grp. v. Archer Daniels Midland Co.

648 F.Supp.3d 1028

GREEN PLAINS TRADE GROUP, LLC, et al., Plaintiffs, v. ARCHER DANIELS MIDLAND CO., Defendant.

Case No. 22-CV-2067

United States District Court, C.D. Illinois, Urbana Division

Signed December 30, 2022

John Ernst Tangren, Adam J. Levitt, Mark Stanley Hamill, DiCello Levitt Gutzler LLC, Chicago, IL, David A. Domina, Domina Law Group PC LLO, Omaha, NE, Greg Garrel Gutzler, DiCello Levitt Gutzler LLC, New York, NY, Saul Cohen, DiCello Levitt Gutzler LLC, Washington, DC, for Plaintiffs.

Stephen V. D'Amore, Maureen L. Rurka, Reid Franklin Smith, Samantha M. Lerner, Scott P. Glauberman, Winston & Strawn LLP, Chicago, IL, John P. Passarelli, Maggie L. Ebert, Kutak Rock LLP, Omaha, NE, for Defendant.

ORDER

COLIN S. BRUCE, UNITED STATES DISTRICT JUDGE

Plaintiffs, Green Plains Trade Group, LLC, et al., individually and on behalf of all others similarly situated, filed their Complaint (#1) in this matter on October 26, 2021. Defendant, Archer Daniels Midland Co. ("ADM"), filed its Motion to Dismiss (#88) on May 20, 2022, to which Plaintiffs filed their Response (#90) on June 3, 2022. ADM filed its Reply (#91) on June 10, 2022.

BACKGROUND

In deciding a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court accepts as true the well-pleaded facts in the complaint and draws from those allegations all reasonable inferences in the plaintiff's favor. Park Pet Shop, Inc. v. City of Chicago, 872 F.3d 495, 499 (7th Cir. 2017).

Procedural Background

The path to this Order has been a long and winding one. Plaintiffs first sued ADM in the District of Nebraska in July 2020 (Case No. 20-CV-2332), in a class action suit, alleging that ADM manipulated the benchmark price of ethanol downward in violation of the Commodity Exchange Act ("CEA") (7 U.S.C. § 1 et seq.). Plaintiffs also alleged a claim of tortious interference with contract under Nebraska common law. On November 6, 2020, the Nebraska district court granted ADM's motion to transfer the case to this court. On August 16, 2021, this court entered an Order (#99 in 20-CV-2332) dismissing Plaintiffs' CEA claim with prejudice and relinquishing supplemental jurisdiction over Plaintiffs' Nebraska tortious interference claim.

Less than three months later, on October 26, 2021, Plaintiffs filed the instant suit (Case No. 22-CV-2067), again in the District of Nebraska, based on the exact same allegations as the prior suit, but this time claiming only Nebraska tortious interference with contract. The new Complaint (#1) was alleged under diversity jurisdiction, and has dropped the class action certification request. ADM moved to dismiss the case for failure to plead the elements of a plausible tortious interference claim. ADM also filed a motion to transfer the case to this court. The motion to dismiss was pending and fully briefed when the Nebraska court granted the transfer motion and transferred the case to this court on March 18, 2022. ADM has renewed its Motion to Dismiss (#88) in this court, and it is now fully briefed.

Factual Background

The factual allegations in this case are nearly identical to those in AOT, et al., v. ADM, 19-CV-2240, and other related cases, all of which concern ADM's alleged manipulation of ethanol prices at the Argo Terminal. The court will not repeat and recount all of the allegations from Plaintiffs' 50-page Complaint, nor the allegations from the related ADM ethanol cases. To do so would be a waste of time and judicial resources. Instead, the court will focus on those allegations specific to Plaintiffs and relevant to the tortious interference claim, as identified by the parties in their filings.

Plaintiffs and ADM are ethanol producers who sell ethanol at prices tied to pricing benchmarks determined or otherwise impacted by S & P Global Platts and OPIS. Plaintiffs allege that, during the relevant period of manipulation, ADM routinely acquired financial derivative contracts that went up in value if the price for physical ethanol at the Argo Terminal (which was the mechanism for setting the Chicago Benchmark Price, i.e., the pricing index or Pricing Benchmark) went down. Plaintiffs allege that ADM's uneconomic downward manipulation of the pricing index caused ethanol sales contracts tied to that index to price at artificially low values, causing damage to Plaintiffs and those who used the index as a pricing mechanism for their ethanol sales contracts.

Plaintiffs allege that most physical sales and deliveries of ethanol occur outside of the Argo Terminal, including sales contracts that are priced based on the Argo Terminal "Market-on-Close" ("MOC") window pricing mechanism. However, these physical ethanol sales are overwhelmingly tied to sales contracts that are priced based on Argo Terminal pricing. Thus, Plaintiffs allege, when ADM employed its manipulation strategy, it knew that its actions inevitably reduced the prices that ethanol producers received for sales under those contracts. Plaintiffs allege that ADM harmed producers such as themselves through tortious interference of lowering the Argo Terminal-based price index, which ADM knew producers used as the pricing mechanism for their sales contracts, depriving producers of the benefits of contracting/pricing free from tortious interference.

The Argo Terminal price for ethanol influences the prices of ethanol sold at other terminals, as well as the prices that private parties negotiate in non-terminal ethanol sales. Critically, to everyone from producers to consumers, the Argo Terminal serves as the key indicator for the underlying value of ethanol as a commodity. Plaintiffs routinely enter into contracts for the physical sale of ethanol in which the per-gallon price is set by reference to the Chicago Benchmark Price plus or minus a small additional amount determined by location basis. Plaintiffs allege that ADM's manipulation caused all physical sales of ethanol by Plaintiffs and other producers tied to the Chicago Benchmark Price to occur at a lower price than they would have in the absence of such manipulation.

Plaintiffs allege that they had valid contractual relationships that were tied to OPIS, Platts, the Chicago Benchmark, and other pricing benchmarks determined or impacted by Platts Chicago Terminal ethanol assessments (the Pricing Benchmarks) that were affected by ADM's unlawful manipulation. Plaintiffs allege that ADM was aware of these valid contractual relationships of Plaintiffs that were tied to the Pricing Benchmarks. Plaintiffs allege that ADM and Plaintiffs are parties to contracts with one another in which price paid and received is tied to the Pricing Benchmarks. Plaintiffs allege that ADM, through its unlawful manipulation, intentionally interfered with these valid contractual relationships of Plaintiffs that were tied to the Pricing Benchmarks. Plaintiffs do not allege that any of their contracts with third parties were breached or terminated, but rather that "ADM caused the contractual relations of Plaintiffs that were tied to the Pricing Benchmarks to be less profitable, which made their performance more expensive."

ANALYSIS

ADM argues that this case should be dismissed because: (1) Plaintiffs did not identify any contracts; (2) Plaintiffs did not allege that ADM knew about their specific contracts; and (3) Plaintiffs admitted that ADM did not cause a breach of contract.

Plaintiffs respond that they have plead a plausible tortious interference claim, in that: (1) the Complaint sufficiently identifies the existence of valid contracts that were detrimentally affected by ADM's illegal activity; (2) the Complaint sufficiently alleges ADM's knowledge of the contracts based on standard industry practice, and, further, ADM's knowledge of that standard industry practice is corroborated by its own contracts with Plaintiffs; and (3) in accordance with Nebraska law and Restatement of Torts (Second) § 766A, Plaintiffs sufficiently alleged tortious interference based on ADM's illegal manipulation impairing Plaintiffs' performance of their sales contracts.

Motion to Dismiss Standard

Under Federal Rule of Civil Procedure 8(a)(2), a pleading stating a claim for relief must contain "a short and plain statement of the claim showing that the pleader is entitled to relief[.]" Fed. R. Civ. P. 8(a)(2). Federal Rule of Civil Procedure 12(b)(6) allows for dismissal of a pleading if it fails "to state a claim upon which relief can be granted[.]" Fed. R. Civ. P. 12(b)(6). "Dismissal for failure to state a claim under Rule 12(b)(6) is proper 'when the allegations in a complaint, however true, could not raise a claim of entitlement to relief.' " Virnich v. Vorwald, 664 F.3d 206, 212 (7th Cir. 2011), quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 558, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "[T]he complaint must contain allegations that 'state a claim to relief that is plausible on its face' or it is subject to dismissal under Rule 12(b)(6)." Virnich, 664 F.3d at 212, quoting Ashcroft v. Iqbal, 556 U.S. 662, 663, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The complaint's factual allegations must be enough to raise a right to relief above the speculative level, meaning the complaint must contain allegations plausibly suggesting, not merely consistent with, an entitlement to relief. Virnich, 664 F.3d at 212. "A claim has facial plausibility when the plaintiff pleads 'factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.' " Virnich, 664 F.3d at 212, quoting Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.

While, in reviewing a plaintiff's claim, the court must accept the well-pleaded facts in the complaint as true and draw all reasonable inferences in the plaintiff's favor, the court is not bound to accept legal conclusions as true, and conclusory allegations merely reciting the elements of the claim are similarly not entitled to the presumption of truth. Burger v. County of Macon, 942 F.3d 372, 374 (7th Cir. 20...