Conspiring to raise aluminium prices: Cases against banks return

A federal appeals court on Tuesday revived lawsuits by aluminium purchasers that accused Goldman Sachs, JPMorgan Chase, mining company Glencore and other companies of conspiring to drive up prices for the metal by reducing supplies.

In a 3-0 decision, the United States Court of Appeals for the Second Circuit in New York City said a federal judge erred in dismissing antitrust claims made by “direct” purchasers of aluminium such as Novelis – as well as claims made by other purchasers, including Fujifilm, Eastman Kodak and Reynolds Consumer Products.

Purchasers accused banks – as well as commodity trading, mining and metals warehousing companies – of conspiring to hoard aluminium inventory earlier this decade after prices had declined because industrial activity fell during the global financial crisis.

The purchasers said the alleged conspiracy led to delays in processing orders and higher storage costs, ultimately inflating the cost to produce cabinets, flashlights, soft drink cans, strollers and other goods containing aluminium.

Lawyers for the defendants did not immediately respond to requests for comment.

Writing for the appeals court, federal judge Pierre Leval said the purchasers could sue because they claimed to suffer harm in a market that the defendants allegedly restrained – the market to buy and sell primary aluminium.

Leval distinguished them from commercial end users and consumer end users, whose own antitrust claims were rejected by the appeals court in an August 2016 decision because their claimed injuries were too far removed from the alleged misconduct.

Leval faulted US District Judge Katherine Forrest, who has since returned to private practice, for relying on that decision to conclude that any manipulation would have occurred in the warehousing market, not the primary aluminium market.

Unlike the injuries sustained by end users, “whose injury was an incidental byproduct of the defendants’ alleged violation, these plaintiffs’ injuries were a direct result of the defendants’ anticompetitive conduct,” Leval wrote.

The cases were returned to the federal court in Manhattan, where they are now overseen by US District Judge Denise Cote.

“We’re pretty excited,” Patrick Coughlin, a lawyer for the direct purchasers, said in an interview.

“Even if manipulation took place in another market, if it were directed toward our clients’ markets and inflated the price of aluminium there, we should be able to bring an antitrust case,” he said.

“We’re ready to go to trial,” Coughlin affirmed.

Lawyers for Kodak, Fujifilm and Reynolds did not immediately respond to requests for comment.