Shak et al v. JPMorgan Chase & Co. et al

Filing 43

OPINION & ORDER re: (19 in 1:15-cv-00995-PAE) MOTION to Dismiss the Complaints filed by J.P. Morgan Clearing Corp., J.P. Morgan Futures Inc., JPMorgan Chase & Co., J.P. Morgan Securities LLC, (21 in 1:15-cv-00992-PAE) MOTION to Dismiss the Complaints filed by J.P. Morgan Clearing Corp., J.P. Morgan Futures Inc., JPMorgan Chase & Co., J.P. Morgan Securities LLC, (20 in 1:15-cv-00994-PAE) MOTION to Dismiss the Complaints filed by J.P. Morgan Clearing Corp., J.P. Morgan Futures Inc., JPMorgan Chase & Co., J.P. Morgan Securities LLC. For the foregoing reasons, the Court grants JP Morgan's motions to dismiss in their entirety. The Clerk of Court is directed to close the motion pending at Dkt. 21 for 15 Civ. 992; Dkt. 20 for 15 Civ. 994; and Dkt. 19 for 15 Civ. 995. The Court grants plaintiffs leave to file amended complaints limited to their Sherman Act § 2 claims and the corresponding state-law cause of action, solely to permit plaintiffs, in the event that they are aware of facts that would rehabilitate these claims, to add such facts to their pleadings. Any Amended Complaints are due two weeks from today. If no such complaints are timely filed, the Court's dismissal will be with prejudice. (As further set forth in this Opinion & Order.) (Signed by Judge Paul A. Engelmayer on 1/12/2016) (mro)

the settlement prices in this market to benefit their positions, primarily by placing large,
uneconomic orders at the close of trading. JP Morgan has moved to dismiss. For the reasons
that follow, the Court grants the motion to dismiss, with leave to replead plaintiffs’ antitrust
claims but not any others.
I.

Background1
A.

Parties

The complaints in these three cases, brought by a common counsel, make parallel
allegations against common defendants. The complaints differ only in certain descriptive and
mostly irrelevant details, like the precise timing of each plaintiff’s trades and hence his (or its)
alleged injuries. The Court accordingly consolidated the briefing for the purpose of resolving the
instant motions to dismiss.
One action, 15 Civ. 992, originated with a complaint filed in state court on January 22,
2015 by plaintiffs Daniel Shak, SHK Asset Management, and SHK Diversified, LLC.2 Shak
Dkt. 1, ¶ 1. Shak is a metals trader focused on “spread trading in silver and gold futures spread
contracts,” and is the principal of the two corporate entities. Shak Compl. ¶¶ 14–15; Shak Dkt.
1. These parties are hereinafter referred to as “the Shak plaintiffs.”

1

The Court assumes the facts alleged in the complaints to be true for the purpose of resolving the
motions to dismiss. See Koch v. Christie’s Int’l PLC, 699 F.3d 141, 145 (2d Cir. 2012). When
necessary, the Court distinguishes between the three actions by placing the relevant plaintiff’s
name before referring to docket numbers or documents, e.g., “Shak Dkt. 1” or “Grumet Compl.”
Where the allegations are essentially common to all three sets of plaintiffs, the Court will refer
only to the Shak complaint.
2

After removal, a new complaint was filed in this Court naming only Shak and SHK Diversified,
LLC as plaintiffs. See Shak Dkt. 14 (“Shak Compl.”), ¶¶ 14–15.
2

A second action, 15 Civ. 994, originated with a state court complaint filed on February 4,
2015 by plaintiff Thomas Wacker. Wacker Dkt. 1, ¶ 1. Wacker, a silver and gold futures trader
who is self-financed, trades from home. Wacker Dkt. 14 (“Wacker Compl.”), ¶¶ 14–15.
A third action, 15 Civ. 995, began with a state court complaint filed on February 5, 2015
by plaintiff Mark Grumet. Grumet Dkt. 1, ¶ 1. Grumet has decades of experience in the
commodities market; for more than two decades, he has traded silver and other commodity
futures contracts for his own account. Grumet Dkt. 13 (“Grumet Compl.”), ¶ 15.
The defendants in each action are J.P. Morgan Chase & Co., J.P. Morgan Clearing Corp.,
J.P. Morgan Securities LLC, and J.P. Morgan Futures, Inc. (which has since merged into J.P.
Morgan Securities LLC). See, e.g., Shak Compl. ¶¶ 16–19. These defendants will be referred to
collectively as “JP Morgan.”
B.

Facts

In short, plaintiffs allege that JP Morgan manipulated and dominated what they term the
“silver futures spread market and in particular the ‘long-dated’ silver futures spread market” in
late 2010 and early 2011. See id. ¶ 52.
1.

The Silver Futures Calendar Spread Market

Silver futures contracts are agreements to buy or sell fixed amounts of silver on a certain
future date. Id. ¶ 23. They are traded on the Commodity Exchange, Inc. (“COMEX”), which
provides standardized contracts with delivery dates ranging from the next calendar month to 60
months later. Id. ¶ 22. The prices for “deferred” futures contracts—those with delivery dates
beyond the most nearby month—are determined by a variety of factors; in the absence of trading
activity on which to base the prices, the COMEX “settlement committee” uses “the spread
bids/asks actively represented” in the marketplace, i.e., the prices at which contracts are being
offered. Id. ¶ 25. Typically, the further off the delivery date, the greater the purchase price of
3

the futures contract for that date—a relationship called “contango.” Id. ¶ 35. A relationship of
“backwardation”—where nearer deliveries of the commodity cost more—is “extremely rare” in
the silver futures market. Id. ¶¶ 36–37.
A spread contract consists of alternating positions in two futures contracts. Id. ¶ 28. In a
“long” calendar spread, a party purchases a futures contract in a particular month and sells a
corresponding contract in a later month. Id. In a “short” calendar spread, a party sells a futures
contract in a particular month and purchases a corresponding contract in a later month. Id. The
spreads between silver futures contracts on a particular day are indicators of the “interest rate
term structures of silver prices on that day.” Id. ¶ 30. The pricing of calendar spreads also often
helps determine the pricing of deferred futures contracts. Id.
2.

JP Morgan’s Alleged Conduct

During the period at issue in this case—late 2010 and early 2011—JP Morgan was one of
only two or three remaining market makers in the silver futures markets. Id. ¶ 49. Thus, the
market for deferred silver futures calendar spreads “essentially consisted of JPMorgan on one
side and a small number of lower capitalized and very vulnerable locals and other independent
proprietary traders acting as market makers on the other.” Id. ¶ 51. The plaintiffs were such
traders. Id.; Wacker Compl. ¶ 51; Grumet Compl. ¶ 51. During this time, JP Morgan’s silver
trading desk was controlled by Robert Gottlieb, who used various COMEX floor brokers to
execute his orders. Shak Compl. ¶ 55.
Plaintiffs allege that JP Morgan manipulated the silver futures spread market by taking
large long positions in nearby silver futures months against short positions in the deferred futures
months, id. ¶ 57, and then placing “large, uneconomic spread bids and offers . . . just prior to the
close,” id. ¶ 67. These spread orders, plaintiffs allege, influenced the settlement prices in
deferred futures contracts, determined by the settlement committee. Id. This pushed the spreads
4

toward the rare condition of “backwardation,” benefitting JP Morgan’s position. Id. During the
same period, Gottlieb also allegedly caused certain brokers to “harangue” COMEX employees,
by pointing to JP Morgan’s own uneconomic bids and offers, so as to obtain JP Morgan’s desired
settlement spreads. Id. ¶ 73.
This allegedly artificial market movement put pressure on plaintiffs’ positions, which
they were ultimately forced to liquidate. Id. ¶¶ 76–77. JP Morgan itself took some of the Shak
plaintiffs’ silver spread positions, while a hedge fund with “significant links” to JP Morgan,
Wolverine Asset Management LLC, took most. Id. ¶¶ 78–79. These transfers took place on
January 24, 2011. Id. ¶ 80. Similarly, Wacker and Grumet allege that, when they were
ultimately forced to liquidate a few weeks later, JP Morgan was “clearly the counterparty.”
Wacker Compl. ¶ 80; Grumet Compl. ¶ 80. Wacker’s liquidation primarily took place on three
dates (January 25, February 3, and February 7, 2011, see Wacker Compl. ¶ 93)3, while Grumet’s
primarily occurred on February 17, 2011, see Grumet Compl. ¶ 76.4
Plaintiffs articulate several reasons to believe JP Morgan engaged in such conduct. First,
they allege that JP Morgan was motivated to manipulate the silver spreads market. They allege
that manipulating the spreads benefitted JP Morgan “in the context of physical transactions with
its silver counterparties, which were based on COMEX silver futures price settlements.” Shak
Compl. ¶ 98. They further allege that the manipulation improved JP Morgan’s traders’ “markedto-market” positions. Id. ¶ 99.

3

The trades spanned January 7, 2011 to February 25, 2011. Wacker Compl. ¶ 91.

4

Some trades occurred as early as January 5, 2011, and as late as February 22, 2011. Grumet
Compl. ¶ 88.
5

Second, plaintiffs allege that “open interest” (the total number of futures in a delivery
month that have not been offset or fulfilled by delivery) and “volume” (the number of contracts
in futures transacted during a specific period of time) evidence JP Morgan’s manipulation. See
id. ¶¶ 31–32. Plaintiffs allege that “JP Morgan’s market power is demonstrated by the high
percentage of open interest it comprised in the deferred spreads” and “by the percentage of total
volume JP Morgan’s [sic] commanded on particular trading days.” Id. ¶ 58. For instance, on
certain of the dates that Wacker and Grumet sold their positions to JP Morgan, those trades
accounted for 19%, 94%, 84%, and 70% of the daily volume, and the open interest in the
particular calendar spreads was reduced by roughly the amount of the trades, showing, plaintiffs
claim, that JP Morgan was the counterparty. Id. ¶¶ 60–61; see also ¶ 80 (as to Shak liquidation).
Third, plaintiffs allege that there was systematic, anomalous divergence between the
silver spreads market and the over-the-counter (OTC) silver market, which should roughly track
one another, absent manipulation. See id. ¶¶ 102–118. The silver OTC market “consists
generally of bi-lateral contracts between parties for various sorts of silvers swaps and other
derivatives.” Id. ¶ 38. Like the spreads market, plaintiffs allege, the silver OTC market “is
driven largely by interest rate mechanics.” Id. ¶ 40. Until late 2012, the Silver Indicative
Forward Mid Rates (“SIFO”) was a “reliable benchmark” representing conditions in the OTC
market. Id. ¶ 44. Prior to January 2011, plaintiffs allege based on an expert consultant’s
analysis, SIFO and the silver futures spreads “were close to each other.” Id. ¶ 110. A
“significant divergence” occurred between January and May 2011 (i.e., beginning around the
time of JP Morgan’s alleged conduct), which, plaintiffs claim, is “potentially a sign of silver
futures settlements being manipulated throughout the period.” Id. Specifically, during this time
period, silver futures spreads diverged from SIFO by an average of “10 to 15 cents.” Id. ¶ 131.

6

Because they converged again in May 2011, plaintiffs’ expert concluded, the divergence was not
“due to a fundamental structural change in the silver market.” Id. ¶ 129. And because the
divergence lasted several months, the expert concluded it was not due to the arrival of new
information, which would be quickly absorbed by the market.5 Id. ¶ 130. The expert also looked
at JP Morgan’s SIFO submissions and found that, while they were in line with the futures
spreads before January 2011, from January 2011 on, there was “a clear divergence between
silver futures spreads and JP Morgan’s SIFO submissions.” Id. ¶ 189. Plaintiffs allege that this
explains “why futures spreads entered backwardation to such an extent while SIFO did not.” Id.
¶ 196.
C.

Procedural History

As noted, plaintiffs initiated these actions by filing complaints in early 2015: Shak on
January 22, 2015; Wacker on February 4, 2015; and Grumet on February 5, 2015. See Shak Dkt.
1, ¶ 1; Wacker Dkt. 1, ¶ 1; Grumet Dkt. 1, ¶ 1. On February 11, 2015, JP Morgan removed each
case to federal court. On March 10, 2015, at the parties’ request, see Shak Dkt. 10, the latter two
actions were assigned to this Court as related to the first-filed Shak Action, with the consent of
the other judges and the District’s case assignment committee. See Shak Dkt. 11.

5

The Amended Complaints allege that other analyses performed by plaintiffs’ expert yielded the
same conclusions. The expert performed a regression analysis that concluded that the
relationship between silver futures spreads and SIFO decreased significantly in early 2011, but
bounced back gradually starting in May 2011. See id. ¶¶ 132–53. A separate analysis concluded
that the likelihood of “structural breaks” in the relationship between silver futures spreads and
SIFO was greatest in early 2011, which, the expert concluded, was not due to the arrival of new
information (as the break lasted many months, id. ¶ 165) or a fundamental change in the market
(as the relationship normalized after May 2011, id. ¶ 166). See id. ¶¶ 154–166. Yet another
analysis of “autoregressive models” concluded that the divergence was “highly anomalous” and
“potentially indicative of a consistent manipulation in the December silver futures settlements for
at least from Jan 2011 to May 2011.” Id. ¶ 167. Finally, an analysis comparing various silver
forward points to the silver futures spreads at issue showed that December silver futures behaved
differently from the rest of the market, potentially a sign of manipulation. See id. ¶ 174; 183.
7

On April 20, 2015, plaintiffs filed complaints in this Court. Shak Dkt. 14; Wacker Dkt.
14; Grumet Dkt. 13. Each brought seven claims: (1) three claims under the Commodities
Exchange Act (“CEA”), 7 U.S.C. §§ 1, et seq., to wit, a claim of price manipulation in violation
of 7 U.S.C. § 13(a)(2) and § 25(a), see Shak Compl. ¶¶ 201–02; a claim of manipulation by fraud
and deceit in violation of 7 U.S.C. § 9 and § 25, see id. ¶ 210; and a claim of principal-agent
liability under 7 U.S.C. § 2(a)(1)(B), see id. ¶ 217; (2) one claim under Section 2 of the Sherman
Act, 15 U.S.C. § 2, alleging monopolization, conspiracy to monopolize, and attempt to
monopolize, see id. ¶¶ 220–21; (3) one claim under New York General Business Law (NYGBL)
§ 340 (the Donnelly Act), alleging monopolization, see id. ¶ 232; (4) one claim under NYGBL §
349 alleging deceptive acts in the conduct of business, see id. ¶ 238; and (5) a state common-law
claim for unjust enrichment, see id. ¶ 243.
On June 19, 2015, JP Morgan moved to dismiss all three complaints. Shak Dkt. 21. JP
Morgan submitted a memorandum of law in support of these motions, Shak Dkt. 22 (“Def. Br.”),
as well as a declaration of Amanda F. Davidoff, Shak Dkt. 23 (“Davidoff Decl.”), with attached
exhibits. On August 18, 2015, plaintiffs filed a common memorandum of law in opposition.
Shak Dkt. 28 (“Pl. Br.”). On September 17, 2015, JP Morgan filed a reply brief. Shak Dkt. 34
(“Def. Reply Br.”). On November 10, 2015, the Court held argument. Shak Dkt. 41 (“Tr.”).
II.

Legal Standards on a Motion to Dismiss
To survive a motion to dismiss under Rule 12(b)(6), a complaint must plead “enough

facts to state a claim to relief that is plausible on its face.”6 Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). A claim has “facial plausibility when the plaintiff pleads factual content that

6

The parties dispute whether the CEA claims must be pled with particularity under Fed R. Civ.
P. 9(b), but because the Court dismisses these claims as time-barred, see infra, it need not reach
that issue.
8

allows the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint is properly dismissed where,
as a matter of law, “the allegations in a complaint, however true, could not raise a claim of
entitlement to relief.” Twombly, 550 U.S. at 558.
In considering a motion to dismiss, a district court must “accept[] all factual claims in the
complaint as true, and draw[] all reasonable inferences in the plaintiff’s favor.” Lotes Co. v. Hon
Hai Precision Indus. Co., 753 F.3d 395, 403 (2d Cir. 2014) (quoting Famous Horse Inc. v. 5th
Ave. Photo Inc., 624 F.3d 106, 108 (2d Cir. 2010)) (internal quotation marks omitted). However,
“the tenet that a court must accept as true all of the allegations contained in a complaint is
inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678. “Threadbare recitals of the elements
of a cause of action, supported by mere conclusory statements, do not suffice.” Id. “[R]ather,
the complaint’s factual allegations must be enough to raise a right to relief above the speculative
level, i.e., enough to make the claim plausible.” Arista Records, LLC v. Doe 3, 604 F.3d 110,
120 (2d Cir. 2010) (quoting Twombly, 550 U.S. at 555, 570) (internal quotation marks omitted)
(emphasis in Arista Records).
III.

Discussion
A.

Statutes of Limitations

The Court examines first whether plaintiffs’ claims are timely. For each plaintiff, nearly
four years passed between the day in early 2011 when the plaintiff’s position was liquidated (and
when the plaintiff claims to have suffered an injury caused by JP Morgan) and the day in early
2015 when the plaintiff filed his complaint. Because plaintiffs’ claims are subject to different
statutes of limitations, the Court examines each cause of action separately.

9

1.

CEA Claims

CEA claims are subject to a two-year statute of limitations. 7 U.S.C. § 25(c). Plaintiffs
make three arguments as to why their CEA claims are nonetheless timely—that: (1) the claims
did not arise in early 2011, but at an unspecified later date; (2) the pendency of a related class
action tolled the statute of limitations, and (3) the related class action ended, and the limitations
clock began to run as to plaintiffs, not in December 2012, when a motion to dismiss the class
action was granted, but in March 2013, when leave to replead was denied. For plaintiffs’ CEA
claims to be timely, plaintiffs would be required to prevail on at least the second and third
arguments, in which event the two-year statute of limitations would not have expired until March
2015, i.e., some two months after they filed their complaints. In fact, none of plaintiffs’
arguments has merit.
a.

When did plaintiffs’ CEA claims arise?

Plaintiffs argue that their CEA claims did not arise in early 2011—at the time they were
allegedly injured by the forced liquidation of their positions—but at an unspecified later date.
Under the CEA, the two-year statute of limitations begins to run upon “discovery of the
injury, not discovery of the other elements of a claim.” In re LIBOR-Based Fin. Instruments
Antitrust Litig., 935 F. Supp. 2d 666, 697 (S.D.N.Y. 2013) (quoting Koch, 699 F.3d at 148–49)
(internal quotation marks omitted). A plaintiff’s knowledge of the injury may be imputed in
situations where the plaintiff had a duty of inquiry; the date on which such knowledge is imputed
to the plaintiff turns on whether and how the plaintiff discharged that duty. See id. at 698.
The duty of inquiry arises when “circumstances would have suggested to a person of
ordinary intelligence the probability that he had been defrauded.” Id. If the plaintiff thereupon
proceeds to make no inquiry, knowledge of the injury is imputed at the time the duty arose, and
the limitations period begins at that point. See id. If, however, the plaintiff makes an inquiry,
10

the limitations period starts to run from the date that a reasonably diligent inquiry should have
revealed the fraud. See id.
Courts have characterized defendants as bearing a “heavy burden” on this point, because
inquiry notice “exists only when uncontroverted evidence irrefutably demonstrates when plaintiff
discovered or should have discovered” the fraudulent conduct. In re Crude Oil Commodity
Futures Litig. (“In re Crude Oil”), 913 F. Supp. 2d 41, 59 (S.D.N.Y. 2012) (quoting Newman v.
Warnaco Grp., Inc., 335 F.3d 187, 194–95 (2d Cir. 2003)). Dismissing claims on statute of
limitations grounds at the complaint stage “is appropriate only if a complaint clearly shows the
claim is out of time.” Harris v. City of New York, 186 F.3d 243, 250 (2d Cir. 1999).
Here, plaintiffs argue that “at the time Plaintiffs liquidated their positions, they were not
fully aware of the fact that JP Morgan was entirely on the opposite side of their contracts,” and
that the “smattering of publicly available information” was insufficient to trigger a duty of
inquiry. Pl. Br. 16 (citing Koch, 699 F.3d at 149, for proposition that the clock “does not run
until a plaintiff discovers ‘the injury and the injurer’” (emphasis in brief)). But that argument is
undermined by the allegations in plaintiffs’ complaints.7 These unavoidably suggest, if not
outright assert, that in early 2011, plaintiffs were well aware—and in any event easily could have
learned through publicly available data—that JP Morgan was their counterparty. See Shak
Compl. ¶ 80 (“That JP Morgan was on the other size [sic] of Plaintiffs [sic] short spread
positions is corroborated by what happened to open interest for many of the positions that JP
actually did take over.”8); id. ¶ 8 (the Shak plaintiffs’ Futures Commission Merchant called JP

7

It is also half-hearted: Plaintiffs’ statement that they were “not fully aware” of JP Morgan’s
role as their counterparty tacitly admits that plaintiffs had some awareness of this point.
8

The pleadings do not state when open interest for a trading day is known—on the date itself, or
later. At argument, JP Morgan’s counsel represented, without contradiction, that open interest is
available in “realtime.” Tr. 6. The Court’s holding that plaintiffs’ CEA claims arose at the time
11

Morgan’s head of global commodities to “sue[] for peace” and told her that Gottlieb was
“running Daniel Shak in”); see also Wacker Compl. ¶¶ 76, 80; Grumet Compl. ¶¶ 80–81. And
plaintiffs’ counsel, to his credit, conceded at argument that the complaints suggested that his
clients were aware in real time of JP Morgan’s role. See Tr. 32–33. Tracking allegations in the
complaints, plaintiffs’ counsel further acknowledged that “people on the floor” were
contemporaneously aware of JP Morgan’s alleged pre-closing bids—the injury-causing conduct
at the heart of plaintiffs’ claims. Tr. 34; see Shak Compl. ¶ 59 (“JP Morgan’s positions also can
be adduced in part through its conduct on the floor . . . .”); see also Wacker Compl. ¶ 56; Grumet
Compl. ¶ 56. These allegations bar any argument that, when plaintiffs were forced to close their
positions in early 2011, they were unaware that the party forcing their hand was JP Morgan.
The Court accordingly holds that plaintiffs’ duty of inquiry arose at the point when their
positions were liquidated and they suffered an injury caused by the conduct of counterparty JP
Morgan. Plaintiffs point to no inquiry that they subsequently undertook. The limitations period
as to each plaintiff’s CEA claims therefore arose and began to run when he liquidated his
positions: on January 24, 2011 for the Shak plaintiffs; between January 7, 2011 and February 25,
2011 for Wacker; and between January 5, 2011 and February 22, 2011 for Grumet. See Shak
Compl. ¶¶ 78–79; Wacker Compl. ¶ 91; Grumet Compl. ¶ 88.9 These dates predate the filing of
the respective complaints by about four years.

their positions were liquidated does not turn on this fact, because it is independently supported
by plaintiffs’ awareness of JP Morgan’s conduct on the trading floor.
9

Unlike the Shak plaintiffs, Wacker and Grumet allege that they liquidated their positions over
the course of many weeks in early 2011.
12

b.

Was the statute of limitations ever tolled?

Plaintiffs, relying on the tolling doctrine announced in American Pipe & Construction
Co. v. Utah, 414 U.S. 538 (1974), next argue that the CEA statute of limitations was tolled by the
pendency of a related class action. They point to a class action bringing CEA and antitrust
claims against the same four JP Morgan defendants involved here for alleged manipulation of
“COMEX silver futures and options contracts.” In re Commodity Exch., Inc., Silver Futures &
Options Trading Litig. (“Silver Class Action I”), No. 11 MD 2213 (RPP), 2012 WL 6700236, at
*4 (S.D.N.Y. Dec. 21, 2012). This argument, however, does not withstand close analysis.
The first complaint in what would become the Silver Class Action was filed on October
27, 2010. See Beatty v. JP Morgan Chase & Co., 10 Civ. 8146, Dkt. 1. A consolidated class
action complaint was filed on September 12, 2011. Silver Class Action I, 2012 WL 6700236, at
*1. Defendants’ motion to dismiss was granted on December 21, 2012, see id., whereupon the
district court gave plaintiffs 30 days “to show why leave to replead is necessary,” id. at *22.
Leave to replead was denied on March 18, 2013. In re Commodity Exch., Inc. Silver Futures &
Options Trading Litig. (“Silver Class Action II”), No. 11 MD 2213 (RPP), 2013 WL 1100770, at
*1 (S.D.N.Y. Mar. 18, 2013), aff’d, 560 F. App’x 84 (2d Cir. 2014) (summary order). Plaintiffs
argue that the statute of limitations was tolled between October 27, 2010 and March 18, 2013,
such that the clock did not even begin to run on their claims until less than two years before they
filed their complaints.
Under American Pipe, “the commencement of a class action suspends the applicable
statute of limitations as to all asserted members of the class who would have been parties had the
suit been permitted to continue as a class action.” 414 U.S. at 554. However, to qualify for such
tolling, a later individual action must challenge the same conduct as the class action, such that
the class action is “sufficient to alert the defendants sued there to preserve the evidence regarding
13

that conduct” and “the relevant evidence, memories, and witnesses . . . are the same for both
actions.” Cullen v. Margiotta, 811 F.2d 698, 720–21 (2d Cir. 1987), overruled on other grounds
by Agency Holding Corp. v. Malley-Duff & Assocs., Inc., 483 U.S. 143 (1987). In other words,
the statute of limitations is not tolled if the individual action “raises a new factual theory.” In re
Libor-Based Fin. Instruments Antitrust Litig., No. 11 MDL 2262 (NRB), 2015 WL 4634541, at
*135 (S.D.N.Y. Aug. 4, 2015) (emphasis in original).
It appears to be undisputed that plaintiffs were members of the class in the Silver Class
Action. Pl. Br. 14. However, JP Morgan argues, the complaints here are based on alleged
misconduct that is distinct from that alleged in the Silver Class Action. In particular, JP Morgan
notes that (1) the class period predated the conduct at issue here; (2) the two cases “involved
different trading positions,” i.e., short positions in nearby futures in the Silver Class Action,
versus long positions in nearby futures in this case; and (3) the Silver Class Action involved
alleged manipulation of silver futures and options, whereas plaintiffs here allege manipulation of
calendar spreads. Def. Reply Br. 2–3.
Plaintiffs agree that the conduct involved in this case occurred in “different months” than
the conduct underlying the Silver Class Action. Pl. Br. 14 n.8. However, plaintiffs argue that
the conduct at issue in the two cases occurred during the “same general time frame.” See id.
(quoting Sharpe v. Am. Exp. Co., 689 F. Supp. 294, 301 (S.D.N.Y. 1988)); see also Tr. 37
(plaintiffs’ counsel acknowledging that “there was no trade [in this case] that was done from start
to finish during the [class action] period”). Specifically, the Silver Class Action challenged
conduct alleged to have occurred on June 26, 2007 and also between March 17, 2008 and
October 27, 2010. Silver Class Action I, 2012 WL 6700236, at *1.

14

In arguing that alleged conduct in the “same general time frame” is close enough for
tolling purposes, plaintiffs rely on a case that involved discriminatory conduct that was ongoing
but that reached back in time enough to overlap with conduct covered by the prior class action.
See Sharpe, 689 F. Supp. at 301–02. Here, by contrast, none of the conduct alleged in these
individual lawsuits appears to have occurred within the class period of the Silver Class Action.
Moreover, notwithstanding the class end date of October 27, 2010, Judge Patterson’s decision
dismissing the Silver Class Action referred to dates no later than August 2010, and the bulk of
the conduct at issue was alleged to have occurred in 2007 and 2008. See Silver Class Action I,
2012 WL 6700236, at *5–7. Thus, the conduct alleged here, in late 2010 and early 2011, came
years after most of the conduct alleged in the class action occurred, and appears to have
postdated all of the conduct on which the class case was based. Plaintiffs allegedly injured by
conduct beginning so long after the conduct at issue in the class action could not have reasonably
relied on that class action to represent their interests as to the post-class conduct.
Moreover, the substantive differences between claimed illegalities in the Silver Class
Action and those alleged here are significant, so as to clearly not trigger the rationale behind
American Pipe. American Pipe tolling is based on the notion that, when a later individual suit
“concern[s] the same evidence, memories, and witnesses as the subject matter of the original
class suit,” defendants cannot claim unfair surprise when they are subjected to the subsequent
suit, even if the statute of limitations, absent tolling, would have otherwise barred it. American
Pipe, 414 U.S. at 562 (Blackmun, J., concurring). Here, in light of the different types and timing
of the acts of market manipulation alleged, there is no basis to suppose that the two actions
would turn on the “same evidence, memories, and witnesses.” While one JP Morgan trader,
Gottlieb, is mentioned in the complaints in both cases, tellingly absent from the Silver Class

15

Action complaint are any accusations of face-to-face manipulation of the COMEX settlement
committee, which the instant complaints prominently feature.10 See, e.g., Shak Compl. ¶¶ 73–74.
Plaintiffs’ counsel speculated at argument that had the Silver Class Action proceeded to
discovery and had Gottlieb been deposed, evidence of his manipulation of calendar spreads as
alleged in this case might have come to light. Tr. 39–40. But this is sheer speculation. And the
pertinent point is that, whether or not later and different machinations by Gottlieb might have
been revealed, these were not the basis of the class action.
To be sure, while some allegations in the present case (e.g., the claim that JP Morgan
caused brokers to “harangue” the settlement committee to achieve its desired settlement prices,
see Shak Compl. ¶ 73) appear to be unique, there are some echoes or similarities between the
theories of misconduct underlying this case and the prior class action. The class action involved
accusations that JP Morgan “placed . . . large volume (spoof) sell orders for silver futures just
above the price at which the market was trading,” which “deceptively encouraged other traders
to sell futures in the belief that the market was going to trade lower.” Silver Class Action Compl.
¶ 56. Here, too, plaintiffs allege a form of market manipulation: that JP Morgan placed
uneconomic bids and offers at the close of trading in order to squeeze other market players. But
this thematic similarity—the common claim of a form of price manipulation—is insufficient to
create the requisite overlap between the two cases. As plaintiffs acknowledge, the Silver Class
Action “did not allege that JP Morgan was banging the close [i.e., placing large orders at the

10

The class action complaint also mentions JP Morgan traders Marcus Elias and Chris Jordan,
see 11 Md. 2213, Dkt. 85 (“Silver Class Action Compl.”), ¶ 58. These persons are unmentioned
in the Shak, Wacker, and Grumet complaints.
16

close of trading] to benefit its own trading position,” Pl. Br. 28 n.20, which is the core allegation
here.
The American Pipe requirement that the individual and class actions have involved
essentially the same conduct is unsatisfied when defendants in the two cases are alleged to have
engaged in similarly malodorous, but clearly factually different, forms of manipulation. Because
the conduct alleged in the individual and class actions took place at different times and involved
different trading positions, different derivatives, and significantly non-overlapping conduct, the
fact that plaintiffs in both cases alleged forms of wrongful price manipulation by defendants is
insufficient to trigger American Pipe tolling.
c.

When did the prior class action end?

Even if the class action did toll the statute of limitations, plaintiffs’ theory that the toll
extended until March 2013 does not follow. The class action ended—and thus the statute of
limitations, assuming American Pipe tolling up to that point, began to run—on December 21,
2012, when Judge Patterson dismissed the Silver Class Action. Silver Class Action I, 2012 WL
6700236. That was more than two years before any complaints were filed in this case.
Plaintiffs’ argument that the opportunity that Judge Patterson extended to move for leave
to replead meant that tolling continued after the case was dismissed is unavailing. It is well
settled that “dismissal of all class claims in a suit terminates tolling and causes the limitations
period for each absent class member to resume running.” Scott v. D.C., 87 F. Supp. 3d 291, 296
(D.D.C. 2015). In Scott, tolling was held to continue through an initial dismissal of class claims
because the class action complaint was dismissed with specific leave to amend certain class
claims. See id. at 298. Here, in contrast, no such leave to amend was granted, and Judge
Patterson expressed substantial doubt about whether it would be. See Silver Class Action I, 2012

17

WL 6700236, at *22 (“[I]t is not clear that justice so requires leave to amend the Complaint at
issue.”).
Under these circumstances, after December 21, 2012, plaintiffs’ “reliance on the class
action to advance their claims” would have been unreasonable. In re Initial Pub. Offering Sec.
Litig., 617 F. Supp. 2d 195, 200 (S.D.N.Y. 2007). The class action had been dismissed and there
was no reason to expect it to rise from the dead. Plaintiffs here therefore had no business relying
on that dismissed case as a basis to stay their hand and hold off bringing suit. Plaintiffs’ CEA
claims are, therefore, time-barred, even if the Silver Class Action had tolled the statute of
limitations up to the point of its dismissal.
For these reasons, the Court holds that the statute of limitations was not tolled by the
pendency of the Silver Class Action, and that, even if it were tolled, plaintiffs’ CEA claims
would still be time-barred. These claims therefore are dismissed as untimely.
2.

NYGBL § 349 Claim

Plaintiffs’ NYGBL § 349 claim is subject to a three-year statute of limitations. N.Y.
C.P.L.R. § 214(2). A § 349 private right of action accrues “when plaintiff has been injured by a
deceptive act or practice violating section 349.” Gaidon v. Guardian Life Ins. Co. of Am., 96
N.Y.2d 201, 210 (2001). Thus, this cause of action accrued in early 2011 on the same dates that
the plaintiffs’ CEA claims accrued. For the same reasons discussed in connection with the CEA
claims, plaintiffs have no argument that the statute of limitations was tolled by the pendency of
the Silver Class Action. Plaintiffs’ § 349 claims thus are time-barred—they expired in early
2014, about a year before the complaints were filed.11

11

Plaintiffs’ § 349 claims, if not time-barred, would clearly not survive the motion to dismiss.
Plaintiffs cannot credibly maintain that the market in silver futures calendar spreads is
“consumer oriented,” as required to sustain such claims. Plaintiffs’ sole basis for claiming that
this element of a § 349 claim is met is that “the Complaints expressly allege broad impact on
18

3.

Antitrust Claims

Plaintiffs’ antitrust claims under both federal and state law are subject to a four-year
statute of limitations. 15 U.S.C. § 15b; N.Y. G.B.L. § 340(5). As with the other statutes of
limitations discussed above, “the statute begins to run when a defendant commits an act that
injures a plaintiff’s business.” Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338
(1971). Because the liquidations of each plaintiff’s positions were completed less than four
years before the filing of the respective complaints, plaintiffs’ antitrust claims are not, in their
entirety, time-barred.
JP Morgan, however, is correct that plaintiffs’ claims are significantly clipped here by
operation of the statute of limitations, in that injuries incurred more than four years before the
complaints were filed are not cognizable. In particular, JP Morgan notes that Wacker claims to
have executed substantial trades on, inter alia, January 25, 2011 and February 3, 2011, more than
four years before he filed his complaint (on February 4, 2015). The Court agrees that the
damages traceable to trades executed more than four years before the filing of the complaint are
not recoverable. See Stolow v. Greg Manning Auctions Inc., 80 F. App’x 722, 725 (2d Cir. 2003)
(summary order) (rejecting argument that “the continuing nature of the alleged illegal
[anticompetitive] conduct tolled the statute of limitations” because “the commission of a separate
new overt act generally does not permit the plaintiff to recover for the injury caused by old overt
acts outside the limitations period”) (quoting Klehr v. A.O. Smith Corp., 521 U.S. 179, 189
(1997)) (internal quotation marks omitted).

consumers, particularly with respect to numerous consumer goods that are made with silver.” Pl.
Br. 39 (citing, e.g., Shak Compl. ¶ 238). But conclusory allegations of some downstream effect
on consumers are insufficient where the product involved is “an instrument of high finance . . .
hardly a product that individuals purchase for ‘personal, family, or household use.’” In re Libor,
2015 WL 4634541, at *85.
19

Nevertheless, as the parties agree, each set of plaintiffs has non-time-barred antitrust
claims. Specifically, the Shak plaintiffs may seek damages arising from trades occurring on or
after January 22, 2011; Wacker may seek damages arising from trades occurring on or after
February 4, 2011; and Grumet may seek damages arising from trades occurring on or after
February 5, 2011. Unlike the CEA and § 349 claims, plaintiffs’ antitrust claims are, in part,
timely.
4.

Unjust Enrichment Claim

Under New York law, claims of unjust enrichment are subject to a six-year limitations
period where they seek equitable relief, but a three-year limitations period where they seek
monetary damages. Matana v. Merkin, 957 F. Supp. 2d 473, 494 (S.D.N.Y. 2013). Further,
when an unjust enrichment claim “is merely incidental to or duplicative of another claim with a
shorter limitations period,” the shorter period will apply. Malmsteen v. Berdon, LLP, 477 F.
Supp. 2d 655, 667 (S.D.N.Y. 2007). Here, JP Morgan argues that a three-year limitations period
applies, because plaintiffs’ unjust enrichment claim duplicates their CEA claims in that they are
“based on the same allegations.” Def. Reply Br. 6 (quoting Spinale v. Tenzer Greenblatt, LLP,
765 N.Y.S.2d 786, 786 (1st Dep’t 2003)) (internal quotation marks omitted). Plaintiffs counter
that the unjust enrichment claim has different pleading requirements (conveyance of a benefit
and a relationship between the parties) and enables different remedies (restitution and a
constructive trust). Pl. Br. 18.
On this point, the Court holds with JP Morgan. The distinctions that plaintiffs draw
between their unjust enrichment claim and their CEA claims are illusory. The unjust enrichment
claim is ultimately derivative and duplicative of the CEA claims—plaintiffs articulate no theory
of unjust conduct independent of the alleged acts of market manipulation underlying the CEA
claims.
20

Moreover, as to remedy, although restitution and formation of a constructive trust are
indeed classed as equitable remedies, in ascertaining the governing statute of limitations, courts
look beyond the form and to the substance of the sought-after remedy. See Access Point Med.,
LLC v. Mandell, 963 N.Y.S.2d 44, 47 (1st Dep’t 2013) (“The calculated use of the term
‘disgorgement’ instead of other equally applicable terms such as repayment, recoupment, refund,
or reimbursement, should not be permitted to distort the nature of the claim so as to expand the
applicable limitations period from three years to six.”). In this case, notwithstanding plaintiffs’
game attempt to distinguish damages from restitution—the former focusing on the plaintiff’s loss
and the latter on the defendant’s gain—the loss and the gain are two sides of the same coin, as
plaintiffs elsewhere acknowledge. See Shak Compl. ¶ 245 (“Commodity futures trading and
other derivatives trading is a zero sum game. To the extent that Defendants benefited from their
extensive unlawful acts, they necessarily did so by forcing Plaintiffs to lose.”). Plaintiffs may
not overcome the fundamentally monetary nature of the recovery they seek by recasting it as a
bid for restitution and a constructive trust. Allowing artful pleading to subvert the otherwise
applicable statute of limitations would elevate form over substance. See Matana, 957 F. Supp.
2d at 494.
Plaintiffs’ unjust enrichment claim is, therefore, time-barred.12

12

For related reasons, plaintiffs’ unjust enrichment claim, even if not time-barred, would not
state a claim. “Generally, if there is an adequate remedy at law, a court will not permit a claim in
equity.” Bongat v. Fairview Nursing Care Ctr., Inc., 341 F. Supp. 2d 181, 188 (E.D.N.Y. 2004)
(citing Strom v. Goldman, Sachs & Co., 202 F.3d 138, 144 n.6 (2d Cir. 1999)). Where, as here,
the unjust enrichment claim amounts to “little more than a recasting” of the CEA and antitrust
claims, plaintiffs fail to state a claim of unjust enrichment. Crigger v. Fahnestock & Co., No. 01
Civ. 7819 (JFK), 2003 WL 22170607, at *12 (S.D.N.Y. Sept. 18, 2003).
21

B.

Antitrust Claims

To state a claim for monopolization under § 2 of the Sherman Act and § 4 of the Clayton
Act,13 plaintiffs must allege two elements: “(1) the possession of monopoly power in the relevant
market and (2) the willful acquisition or maintenance of that power as distinguished from growth
or development as a consequence of a superior product, business acumen, or historic
accident.” PepsiCo, Inc. v. Coca–Cola Co., 315 F.3d 101, 105 (2d Cir. 2002) (per curiam)
(quoting United States v. Grinnell Corp., 384 U.S. 563, 570–71 (1966)).
To have standing to assert a § 2 claim, plaintiffs must also plead an antitrust injury.
Antitrust injury is an injury that is “of the type the antitrust laws were intended to prevent and
that flows from that which makes defendants’ acts unlawful.” Atl. Richfield Co. v. USA
Petroleum Co., 495 U.S. 328, 334 (1990) (quoting Brunswick Corp. v. Pueblo Bowl–O–Mat,
Inc., 429 U.S. 477, 489 (1977)); see also Port Dock & Stone Corp. v. Oldcastle Ne., Inc., 507
F.3d 117, 122 (2d Cir. 2007).
At the outset, the Court notes that plaintiffs’ claims far more naturally describe conduct
prohibited by the CEA. The pricing machinations in which plaintiffs allege JP Morgan engaged
to generate “backwardation” as to discrete silver futures contracts in early 2011 do not present a

13

Section 2 of the Sherman Act, 15 U.S.C. § 2, provides:
Every person who shall monopolize, or attempt to monopolize, or combine or
conspire with any other person or persons, to monopolize any part of the trade or
commerce among the several States, or with foreign nations, shall be deemed guilty
of a felony, and, on conviction thereof, shall be punished by fine not exceeding
$100,000,000 if a corporation, or, if any other person, $1,000,000, or by
imprisonment not exceeding 10 years, or by both said punishments, in the discretion
of the court.

Section 4 of the Clayton Act, 15 U.S.C. § 15, confers standing on any private plaintiff “who shall
be injured in his business or property by reason of anything forbidden in the antitrust laws” and
provides for treble damages.
22

paradigmatic Sherman Act § 2 claim. And, as reviewed below, plaintiffs have scarcely
attempted to plead the first § 2 element (the defendant’s possession of monopoly power in the
relevant market) by the ordinary means of alleging the defendants’ market share. There is,
therefore, good reason to surmise that the antitrust claims were included as a hedge against the
possibility (now realized) that the CEA claims would be held time-barred.
Nevertheless, it is possible for the same course of conduct to violate the CEA and the
Sherman Act. See Strobl v. N.Y. Mercantile Exch., 768 F.2d 22, 28 (2d Cir. 1985) (rejecting
argument that conduct specifically prohibited by the CEA falls outside the ambit of an antitrust
claim); In re Crude Oil, 913 F. Supp. 2d at 47 (denying motion to dismiss CEA and Sherman Act
§ 2 claims); In re Term Commodities Cotton Futures Litig. (“In re Cotton Futures”), No. 12 Civ.
5126 (ALC), 2013 WL 9815198, at *19, *27 (S.D.N.Y. Dec. 20, 2013) (same). The Court,
accordingly, examines the adequacy of plaintiffs’ pleadings of antitrust violations.
1.

Monopoly Power

As to the first element, plaintiffs allege that JP Morgan possessed monopoly power in the
“silver futures spread market and in particular the ‘long-dated’ silver futures spread market.”
Shak Compl. ¶ 52.
Ordinarily, monopoly power is established through proof that the defendant has a “large
percentage share of the relevant market.” Heerwagen v. Clear Channel Commc’ns, 435 F.3d
219, 227 (2d Cir. 2006). Although plaintiffs do not expressly abandon this means of proof, they
argue that such a showing is “unnecessary when a section 2 claim is based on ‘direct evidence of
anticompetitive effects,’” Pl. Br. 31 (quoting In re Crude Oil, 913 F. Supp. 2d at 51), and their
opposition to JP Morgan’s motion to dismiss largely relies on this alternative approach. JP
Morgan, for its part, disputes that direct evidence of anticompetitive effects—i.e., control of
prices or exclusion of competitors—can alone suffice to show monopoly power. In any event, JP
23

Morgan argues, “even if a plaintiff pleads direct evidence of market control—rather than indirect
evidence of control in the form of market share—it must still plead a relevant market,” and, JP
Morgan asserts, plaintiffs have not done so here. Def. Reply Br. 16 (citing Heerwagen, 435 F.3d
at 229).
It is, therefore, necessary to first review the governing law as to the means by which the
monopoly-power element can be established. In 1998, the Second Circuit held that monopoly
power can be established in either of two ways: It “may be proven directly by evidence of the
control of prices or the exclusion of competition, or it may be inferred from one firm’s large
percentage share of the relevant market.” Tops Markets, Inc. v. Quality Markets, Inc., 142 F.3d
90, 98 (2d Cir. 1998) (emphasis added). In 2002, the Circuit stated that “there is authority to
support [plaintiff’s] claim that a relevant market definition is not a necessary component of a
monopolization claim,” citing, inter alia, the passage from Tops Markets quoted above.
PepsiCo, Inc., 315 F.3d at 107. In 2004, the Circuit again cited the Tops Markets passage in the
course of analyzing whether plaintiffs had demonstrated monopoly power by either direct
evidence of price control or exclusion of competitors, or indirect evidence of a defendant’s
market share. See Geneva Pharm. Tech. Corp. v. Barr Labs. Inc., 386 F.3d 485, 500–501 (2d
Cir. 2004). Finally, in 2006, in Heerwagen, the Circuit again quoted, with seeming approval, the
same Tops Markets passage. See 435 F.3d at 227.
In the face of this body of authority, JP Morgan argues that the Circuit, in Heerwagen,
tacitly repudiated the direct-evidence option. JP Morgan overreads Heerwagen. In that case, the
Circuit did indeed state that a plaintiff offering direct evidence of price control or exclusion of
competitors must still prove its claim “with reference to a particular market.” Id. at 229. But
this statement does not close off this route to proving monopoly power. Rather, it teaches that a

24

plaintiff who elects to proceed by offering direct evidence of monopoly power must situate that
alleged power in the context of a particular market, such that the facts not only support
anticompetitive conduct, but also that such conduct is indicative of a defendant’s status as a
monopolist. See In re Aluminum Warehousing Antitrust Litig., No. 13 MD 2481 (KBF), 2014
WL 4277510, at *35 (S.D.N.Y. Aug. 29, 2014) (distinguishing “reference to a particular
market,” required by Heerwagen, from definition of a relevant market, required for showing
monopoly power via market share).
Reading Heerwagen to tacitly repudiate the direct-evidence mode of proof altogether,
however, is inconsistent with the Circuit’s repeated approval of the Tops Markets passage,
including in Heerwagen itself.14 And, since Heerwagen, district courts in this Circuit have
continued to acknowledge that direct evidence of price control or exclusion of competitors may
be used to prove monopoly power. See In re Aluminum Warehousing Antitrust Litig., 95 F.
Supp. 3d 419, 454 (S.D.N.Y. 2015); In re Cotton Futures, 2013 WL 9815198, at *24; In re
Crude Oil, 913 F. Supp. 2d at 51.
The Court, therefore, rejects JP Morgan’s invitation to hold that the direct-evidence route
to demonstrating monopoly power has been closed off. The Second Circuit, despite repeated
opportunities to close off this route, has not done so. Absent clearer guidance from the Circuit,
the Court therefore holds that monopoly power may be established, not only by proof of a
defendant’s market share in a relevant market, but alternatively by direct evidence of a
defendant’s price control or exclusion of competitors from a particular market in a manner
indicative of its possession of monopoly power.

14

Chapman v. N.Y. State Div. for Youth, 546 F.3d 230 (2d Cir. 2008), on which JP Morgan also
relies, likewise fails to show repudiation of the direct-evidence route.
25

The Court therefore turns to consider whether plaintiffs’ pleadings are adequate, by either
available means, to allege monopoly power.
a.

Evidence of JP Morgan’s market share

In § 2 cases, plaintiffs commonly rely on indirect evidence of a defendant’s monopoly
power, based on proof of its market share, “because direct measures are often difficult or
impossible to prove.” Heerwagen, 435 F.3d at 227. Such “proof that the defendant has a large
percentage share of the relevant market” functions as “a ‘surrogate’ for direct proof of market
power.” Id. To allege monopoly power by this means, a plaintiff must satisfactorily allege both
a plausible definition of a relevant market and excess market share in that market.
As to the market definition, “[t]he relevant market must be defined ‘as all products
reasonably interchangeable by consumers for the same purposes,’ because the ability of
consumers to switch to a substitute restrains a firm’s ability to raise prices above the competitive
level.” City of New York v. Grp. Health Inc., 649 F.3d 151, 155 (2d Cir. 2011) (quoting Geneva,
386 F.3d at 496) (internal quotation marks omitted). “Because market definition is a deeply factintensive inquiry, courts hesitate to grant motions to dismiss for failure to plead a relevant
product market.” Todd v. Exxon Corp., 275 F.3d 191, 199–200 (2d Cir. 2001).
Still, “an alleged product market must bear a rational relation to the methodology courts
prescribe to define a market for antitrust purposes—analysis of the interchangeability of use or
the cross-elasticity of demand.” Id. at 200 (quoting Gianna Enters. v. Miss World (Jersey) Ltd.,
551 F. Supp. 1348, 1354 (S.D.N.Y. 1982) (internal quotation marks omitted)). Thus, “[w]here
the plaintiff fails to define its proposed relevant market with reference to the rule of reasonable
interchangeability and cross-elasticity of demand, or alleges a proposed relevant market that
clearly does not encompass all interchangeable substitute products even when all factual
inferences are granted in plaintiff’s favor, the relevant market is legally insufficient and a motion
26

to dismiss may be granted.” Chapman v. New York State Div. for Youth, 546 F.3d 230, 238 (2d
Cir. 2008) (quoting Queen City Pizza, Inc. v. Domino’s Pizza, Inc., 124 F.3d 430, 436 (3d Cir.
1997)) (internal quotation marks omitted).
Plaintiffs’ complaints here define the relevant market as the “silver futures spread market
and in particular the ‘long-dated’ silver futures spread market.” Shak Compl. ¶ 52. They do not,
however, explain the basis for this definition. JP Morgan accordingly argues that these pleadings
fail to define a relevant market because they “are devoid of allegations that this limited group of
products—long-dated COMEX silver futures spreads—is not interchangeable with, for example,
physical silver, OTC silver, or other silver derivatives.” Def. Br. 29.
Plaintiffs counter by relying on Judge Pauley’s decision in In re Crude Oil as establishing
that the relevant market need not encompass both a physical commodity and related derivatives.
Pl. Br. 32 (citing In re Crude Oil, 913 F. Supp. 2d at 54). However, In re Crude Oil is readily
distinguishable. It involved allegations that defendants amassed a dominant position in physical
crude oil and then dumped the commodity onto the market on certain dates with the purpose and
effect of shifting futures prices, so as to benefit defendants’ positions in certain calendar spreads.
See In re Crude Oil, 913 F. Supp. 2d at 49–50. Here, in contrast, there are no allegations of any
connection between defendants’ positions or activities in the physical silver market, on the one
hand, and the derivatives market, on the other. In other words, there is no allegation, let alone a
concrete one supported by specific factual allegations, that “monopoly power in the relevant
market enables defendants to control prices in a different but closely related market.” Id. at 54.
Under these circumstances, JP Morgan’s critique of plaintiffs’ definition of the relevant
market as the “silver futures spread market and in particular the ‘long-dated’ silver futures spread
market” is apt. That definition is an ipse dixit. Plaintiffs fail entirely to allege why, for example,

27

physical silver or other silver derivatives products are not interchangeable. This glaring pleading
lapse makes plaintiffs’ market definition implausible. See Bayer Schering Pharma AG v.
Sandoz, Inc., 813 F. Supp. 2d 569, 577 (S.D.N.Y. 2011) (plaintiff “must allege sufficient facts
about other [potential substitutes] to make its proposed product market plausible”). Furthermore,
it is far from clear that the market as plaintiffs conveniently define it—excluding physical silver
and other silver derivative products—would withstand close review. Even In re Crude Oil, on
which plaintiffs rely, memorably noted that “it took two markets to contango”—that is, the
relevant market in commodity futures manipulation cases will often “consist[] of [futures
contracts] together with the supply of [the physical commodity] deliverable on those expiring
contracts.” 913 F. Supp. 2d at 54 (quoting Minpeco, S.A. v. Hunt, 718 F. Supp. 168, 171
(S.D.N.Y. 1989) (emphasis added).
Even if plaintiffs’ complaints had plausibly defined the relevant market as the silver
futures spread market, they fail to adequately plead JP Morgan’s share of that market. Plaintiffs
allege that JP Morgan’s market power “is demonstrated by the high percentage of open interest it
comprised in the deferred spreads” and by “the percentage of total volume JP Morgan’s [sic]
commanded on particular trading days.” Shak Compl. ¶ 58. And, they allege, JP Morgan was
one of only two or three market makers in the silver futures spread market. Id. ¶¶ 49–51. These
pleadings, however, are little more than vague generalities about the spread market as a whole
combined with evidence about trading in specific spread contracts on specific dates. Such
allegations are inadequate to allege JP Morgan’s share of market power in the “silver futures
spread market.”
Seeking to sustain their market definition, plaintiffs’ counsel, at argument, urged that the
Court could find market share limited to a several-day timespan. See Tr. 47 (arguing that In re

28

Crude Oil “teaches that [market share] doesn’t have to be long lived”). But that observation,
even if true, does not rectify the complaints’ failure to explain the parameters of the market as
defined, or to satisfactorily take into account potential interchangeable products identified by JP
Morgan. And in any event, In re Crude Oil and the cases on which it relies are factually quite
distinct. Judge Pauley sustained a market defined as the January, March and April 2008 markets
in physical WTI crude oil available in Cushing, Oklahoma, a market whose definition is far
narrower and more clearly delineated than that offered here. See In re Crude Oil, 913 F. Supp.
2d at 53; see also Thompson’s Gas & Elec. Serv., Inc. v. BP Am. Inc., 691 F. Supp. 2d 860, 867
(N.D. Ill. 2010) (relevant market is physical supply of propane deliverable in a specific month);
Minpeco, 718 F. Supp. at 171 (relevant market is specified futures contracts, along with physical
silver supply deliverable on them). And plaintiffs’ allegations in In re Crude Oil were far more
concrete as to defendants’ market share (between 84% and 92% during those months) and
included extensive allegations as to defendants’ price control within the market as defined. See
913 F. Supp. 2d at 53, 58. Under these circumstances, Judge Pauley held that plaintiffs’ product
and temporal market definitions, including its definition of the market to exclude alternate grades
of crude oil, as well as crude oil available on the global market, were plausible. See id. at 54.
Plaintiffs’ allegations about JP Morgan’s heavy trading on several dates in particular contracts is
no substitute for crystallized pleadings of this nature. JP Morgan’s trading on these dates reveals
little, if anything, about JP Morgan’s power in the overall silver futures spread market more
broadly, let alone why that represents a proper market definition.
Plaintiffs’ complaints, therefore, fail to plead monopoly power by conventional means—
by alleging sufficient market share in a properly pled market. To adequately plead monopoly
power in a relevant market through evidence of JP Morgan’s market share, plaintiffs’ pleadings

29

would need to be substantially more fulsome—both as to possible substitutes for silver spread
contracts (so as to plead a proper market) and as to JP Morgan’s share of this market.
b.

Direct evidence of anticompetitive effects

Plaintiffs primarily attempt to satisfy the monopoly-power element by means of direct
evidence of price control or exclusion of competitors. They allege that, on “a nearly daily basis”
in early 2011, JP Morgan placed large, uneconomic orders just before the close of trading. Shak
Compl. ¶ 6. They allege that it did so, with the intention of using these orders and its dominant
market position as to silver futures contracts, to influence settlement prices in a direction that
favored its calendar spread positions, for the settlement committee relied on such market
information in setting prices. See Shak Compl. ¶ 67. These uneconomic orders, plaintiffs allege,
drove the silver spreads market into the rare state of “backwardation,” causing an anomalous
divergence between silver spreads and OTC silver prices. This divergence, plaintiffs’ expert
concluded, cannot be accounted for by alternative causes (e.g., other market forces or structural
changes in the market). See id. ¶ 129.
As noted above, in two recent decisions, courts in this District recognized a plaintiff’s
ability to use direct evidence of price control to plead monopoly power, and relied on such
evidence, in part, in denying motions to dismiss. These decisions offer instructive guidance in
considering whether plaintiffs here have satisfactorily alleged monopoly power by this means.
In the first case, In re Crude Oil, Judge Pauley denied a motion to dismiss CEA and
Sherman Act § 2 claims stemming from an alleged scheme to manipulate futures prices for West
Texas Intermediate (WTI) crude oil. 913 F. Supp. 2d at 46–47. The complaint alleged that
defendants (collectively, “Parnon”), during January 2008, (1) acquired a substantial long position
in the February/March 2008 calendar spreads; (2) acquired a dominant position (roughly 92%) in
physical WTI crude oil—that is, bought up most of the crude oil available at Cushing, OK,
30

where WTI crude oil futures contracts are settled—thereby driving up the price of the
February/March calendar spreads before finally liquidating its position in those spreads; (3)
acquired a substantial short position in the March/April 2008 calendar spread; and (4) liquidated
its physical WTI position on a date in late January when the market would not have expected
such a dramatic increase in supply, such that February prices plummeted relative to March
prices, benefitting defendants’ calendar spread positions. See id. at 49–50.
In holding that the complaint adequately pled Parnon’s monopoly power, Judge Pauley
emphasized the following allegations: (1) “the market’s abrupt shift from backwardation to
contango when Parnon dumped its physical WTI position,” an anomalous shift that “happened
only twice between January 2006 and January 2011—both times on the precise days Parnon
dumped its WTI supply,” id. at 51; (2) defendants’ acquisition of “up to 92% of the next month’s
deliverable WTI supply,” id. at 52; and (3) defendants’ intentional acquisition of “substantial
positions in WTI calendar spreads that it knew would respond favorably to its activities in the
physical market,” id. In denying Parnon’s motion to dismiss, Judge Pauley emphasized that
“Defendants’ ability to change the market from backwardation to contango is . . . a ‘direct
measure’ of control.” Id. at 51 (quoting CFTC v. Parnon, 875 F. Supp. 2d 233, 246 (S.D.N.Y.
2012)).
In the second case, In re Cotton Futures, Judge Carter denied a motion to dismiss CEA
and Sherman Act claims arising from alleged power over and manipulation of the cotton futures
market. 2013 WL 9815198, at *1. The complaint alleged that defendants had uneconomically
insisted on delivery of certificated stocks of cotton under its futures contracts, at a time when
they could have purchased lower-priced cotton in the cash market, laying the groundwork for a
squeeze that allowed defendants to artificially manipulate futures prices upward, to the benefit of

31

their long positions. See id. at *3–7. Citing In re Crude Oil, Judge Carter held that the alleged
market anomalies—i.e., a “‘U-turn’ in backwardation resulting in ‘the highest percentage
backwardation and the highest absolute backwardation of any May-July Contract’” in the last 11
years—supplied direct evidence of defendants’ ability to control prices. Id. at *24. Judge Carter
also highlighted the allegation that defendants “controlled 99% of the relative market during the
relevant period.” Id. at *25.
Synthesizing these two cases, they illustrate that concrete allegations of a dominant
position in either a physical commodity or a related futures market, combined with significant
pricing anomalies that are closely correlated with defendants’ alleged conduct, may be sufficient
to plead monopoly power. Although not nearly as detailed as the allegations in In re Crude Oil
in particular, plaintiffs’ allegations here are of the same character. Plaintiffs allege—albeit
generally—that JP Morgan, as one of the few major players in the silver futures market, was able
to amass a dominant position in certain spread contracts. They further allege significant pricing
anomalies in certain silver futures spread contracts beginning in early 2011, just around the time
that, according to plaintiffs, JP Morgan was manipulating the settlement committee to obtain
favorable settlement prices. Although these allegations are not precise enough to plead market
share, particularly given the complete absence of adequate pleadings on the issue of defining the
market, they are sufficient at this stage to allege direct evidence of anticompetitive effects,
namely control over prices.
These allegations make plausible plaintiffs’ claim that, like the defendants in In re Crude
Oil and In re Cotton Futures, JP Morgan possessed monopoly power on the dates in question.
And these allegations have been made “with reference to a particular market,” as Heerwagen
requires: the silver futures spread market. Heerwagen does not require that a plaintiff who

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alleges monopoly power by means of direct evidence of price control define the market with the
same precision and punctiliousness (e.g., to exclude potential interchangeable products) that a
plaintiff who alleges monopoly power solely by means of alleging the defendant’s market share
must. And the Court is unaware of other authority erecting such a pleading requirement.
Therefore, plaintiffs have adequately alleged monopoly power.
2.

Willful Acquisition of Monopoly Power

To state a claim for monopolization under § 2, plaintiffs must also allege “the willful
acquisition or maintenance of that power as distinguished from growth or development as a
consequence of a superior product, business acumen, or historic accident.” PepsiCo, Inc., 315
F.3d at 105 (quoting Grinnell, 384 U.S. at 570–71). “To safeguard the incentive to innovate, the
possession of monopoly power will not be found unlawful unless it is accompanied by an
element of anticompetitive conduct.” Verizon Commc’ns v. Law Offices of Curtis V. Trinko,
LLP, 540 U.S. 398, 407 (2004) (emphasis in original). Moreover, the “willful” acquisition of
monopoly power “certainly requires proof of intent.” U.S. Football League v. Nat’l Football
League, 842 F.2d 1335, 1359 (2d Cir. 1988). Evidence of intent is relevant to “whether the
challenged conduct is fairly characterized as ‘exclusionary’ or ‘anticompetitive.’” Aspen Skiing
Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 602 (1985).
In other words, a defendant’s conduct must not only be anticompetitive in effect, but
anticompetitive in purpose as well. It must have been undertaken to obtain or cement monopoly
power. The plaintiff must demonstrate exclusionary conduct—as opposed to gloves-off, hardnosed market competition—aimed at obtaining or enshrining monopoly power, “harm[ing] the
competitive process and thereby harm[ing] consumers.” United States v. Microsoft Corp., 253
F.3d 34, 58 (D.C. Cir. 2001) (emphasis in original).

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Plaintiffs identify three categories of conduct by JP Morgan that, they claim, were of this
nature. First, they allege that JP Morgan placed large, uneconomic orders just before the close of
trading for the purpose of influencing settlement prices. See, e.g., Shak Compl. ¶¶ 65–67.
Second, they allege that JP Morgan (specifically Gottlieb) “caused” certain floor brokers and
clerks to “harangue” COMEX employees to set JP Morgan’s desired settlement prices, in part by
pointing to JP Morgan’s own “uneconomic, artificially tight bids and offers for calendar
spreads.” Id. ¶ 73. Third, they allege that JP Morgan “refus[ed] to provide spread quotes that
would allow Plaintiffs to exit” the market. Id. ¶ 59; see also Wacker Compl. ¶ 80; Grumet
Compl. ¶¶ 80–81.
JP Morgan makes two arguments in response. First, it argues, plaintiffs’ allegations as to
such practices “are entirely general,” and their complaints “identify no actual acts of abuse or
uneconomic orders.” Def. Reply Br. 17. Second, JP Morgan argues, even if this conduct were
pled with adequate specificity, it is not exclusionary. In other words, even if JP Morgan
exploited its monopoly power on a given date so as to achieve pricing benefits for itself, “none of
[that conduct] excludes competitors from the market.” Id.
For the reasons that follow, the Court agrees that plaintiffs have failed to adequately
plead willful acquisition of monopoly power. Plaintiffs’ claims as to the practices alleged are,
for the most part, pled in unacceptably vague terms. And plaintiffs’ complaints fail to
adequately plead conduct aimed at acquiring or maintaining monopoly power.
As In re Crude Oil and In re Cotton Futures reveal, “an intentionally manipulative
trading strategy to raise the prices of [futures] in order to profit from [defendants’] long
positions” may constitute exclusionary conduct. In re Cotton Futures, 2013 WL 9815198, at
*25. But, to support such an inference, the allegations must be of conduct that, were it not

34

intended to obtain or sustain monopoly power, would be uneconomic and irrational. In other
words, the alleged conduct must be such that a reasonable inference of intent to control prices
and exclude competitors may be drawn.
The detailed complaints in those two cases alleged such behavior. In In re Cotton
Futures, the 99-page operative complaint alleged an “interconnected series of uneconomic steps
[and] highly unusual steps . . . contrary to the customs and practices of cotton market
participants.” No. 12 Civ. 5126 (ALC), Dkt. 65 (“Cotton Compl.”), ¶ 44(b). Boiled down, the
facts alleged were these: Defendants amassed large long positions in the May 2011 and July
2011 ICE [Intercontinental Exchange] cotton futures contracts, meaning they had the right to
demand delivery at the expiration of those contracts. Id. ¶ 45. However, delivery is very rarely
demanded on such futures contracts; instead, futures traders will typically offset their purchases
with corresponding sales. Id. ¶¶ 18–19. Further, the complaint alleged that defendants’ need for
physical cotton “could have been satisfied much more cheaply in the cash markets.” Id. ¶ 109.
But instead of buying this lower-priced cotton on the cash markets and selling their higher-priced
futures contracts, defendants insisted on delivery. Id. ¶ 63. This caused anomalous increases in
the amount of open interest on these futures contracts as the settlement dates approached. Id. ¶
52. It also caused an anomalous divergence between the cash and futures markets: In the cash
markets, cotton prices continued to fall, but while this would normally dictate lower prices for
short-term futures contracts, those contract prices remained inflated because of defendants’
unprecedented demands for delivery. Id. ¶¶ 56, 65. At this time, however, it was too late to
increase the deliverable supply of cotton in the ICE warehouses, id. ¶ 52(l), and the existing
supply was too low to satisfy defendants’ positions through delivery, id. ¶¶ 21(a)–(b). Thus,
traders who had short positions on the futures contracts were forced to pay artificially high prices

35

in order to liquidate those positions. Id. ¶ 11. These facts, Judge Carter held, raised a
“reasonable inference of anticompetitive conduct.” 2013 WL 9815198, at *25.
In In re Crude Oil, the complaint alleged that defendant Parnon, aware of low supply in
physical crude oil, amassed a large long calendar spread position by which it would profit if the
price of February WTI crude oil futures was higher than the price of March futures. 11 Civ.
3600, Dkt. 66 (“Crude Oil Compl.”), ¶ 49(b). Parnon then purchased around 92% of the
deliverable supply of physical crude oil, leading the market to perceive scarcity of supply. Id. ¶
50(b). Parnon retained its physical position through the expiry date of the February/March
contracts—and then liquidated its calendar spread positions at the artificially inflated prices it
had created through its purchase of physical crude oil. Id. ¶ 50 (c)–(f). Next, Parnon amassed a
short position in March/April calendar spreads at the artificial prices they had caused. Id. ¶ 51.
Then Parnon dumped its physical supply on the market, so that the market abruptly moved from
backwardation to contango, and the value of Parnon’s short calendar spreads increased. Id. ¶ 52.
Parnon did all this, the complaint crucially alleged, despite having “no commercial need for WTI
crude oil,” and despite realizing that selling a large quantity of crude oil right after the expiration
of the next month’s futures contracts “would result in substantial losses (absent a manipulation).”
Id. ¶ 50(e). Thus, although Parnon lost more than $15 million by selling its physical positions, it
realized profits of more than $50 million as a result of its related calendar spread positions. Id. ¶
65. These allegations were sufficient to support an inference of anticompetitive conduct aimed
at undermining competitors’ market positions. In re Crude Oil, 913 F. Supp. 2d at 56 (citing,
inter alia, Concord Boat Corp. v. Brunswick Corp., 207 F.3d 1039, 1062 (8th Cir. 2000) (“[I]f
the conduct has no rational business purpose other than its adverse effects on competitors, an
inference that it is exclusionary is supported.” (internal quotation marks omitted)).

36

The facts pled here as to ostensibly exclusionary conduct are a far cry from those pled in
In re Crude Oil and In re Cotton Futures. No allegations raise a non-speculative inference that
JP Morgan’s orders were “uneconomic” or that its representations to the COMEX staff or other
market conduct were incompatible with the rational behavior of a legitimate competitor. See
Silver Class Action II, 2013 WL 1100770, at *6 (dismissing claims, and noting that “[p]laintiffs’
factual allegations [do not] make it clear that the apparently legitimate transactions which
JPMorgan is alleged to have made on the COMEX silver futures market were made for
illegitimate or anticompetitive reasons, i.e., an abuse of monopoly power”).
To be sure, plaintiffs’ claims that JP Morgan clustered its orders at the close of trading,
see Shak Compl. ¶ 66, and made allegedly contradictory SIFO submissions, see id. ¶¶ 186–96,
are not inconsistent with a scheme to acquire or maintain monopoly power. But they do not go
beyond that to affirmatively plead the existence of such a scheme or to differentiate it in
likelihood from conduct permissible under § 2. See Twombly, 550 U.S. at 554. In In re Crude
Oil and In re Cotton Futures, the uneconomic nature of defendants’ conduct was far more patent:
As alleged, defendants were taking short-term, separate losses (by selling physical crude oil and
by not buying cotton on the cash markets, respectively) in order to reap far larger gains by virtue
of their dominant positions in certain futures contracts. Here, in contrast, plaintiffs’ complaints
simply conclude—rather than show—that JP Morgan’s bids and offers were “uneconomic,” see
Shak Compl. ¶ 67, and declare, ipse dixit, there “was no legitimate justification” for reporting
significantly more tightness in the spreads market than in the over-the-counter markets, id. ¶ 69.
Plaintiffs’ complaints further contrast with In re Crude Oil in that there are no allegations
of statements by JP Morgan officials revealing the exclusionary purpose of the company’s
actions. The complaint in In re Crude Oil quoted numerous communications indicative, as Judge

37

Pauley found, of such anticompetitive knowledge and intent. See Crude Oil Complaint ¶¶ 47,
49, 52, 59. For instance, the complaint quoted communications from defendants to the effect
that (1) there was a “shitload of money to be made shorting” the calendar spreads, id. ¶ 47; (2)
the liquidation of defendants’ physical crude oil position represented an “inevitable puking” and
that it had “the desired effect” on spread prices, id. ¶ 52; and (3) the scheme had affected the
spreads “but not as much as hoped,” id. ¶ 59(d). No similar communications are alleged here.
In the end, plaintiffs’ claims pivot on the allegation that JP Morgan behaved in an
exploitative manner towards counterparties on several days in early 2011. In general terms, they
allege that, on these days, JP Morgan placed uneconomic orders at the close of trading and made
misrepresentations to the settlement committee. But these allegations not only lack specifics—
including, for particular orders, details such as dates, names, amounts, and prices. More
fundamentally, they fail to connect this conduct to a scheme to willfully acquire or maintain
monopoly power.
Plaintiffs also allege that JP Morgan, after exerting pressure on plaintiffs’ positions,
refused to provide spread quotes and attempted to hide its positions adverse to the Shak plaintiffs
by enlisting hedge fund Wolverine to take over some of these positions. See Pl. Br. 34–35; Tr.
52–53. But these factual allegations suffer from the same failings as plaintiffs’ other allegations.
First, they are imprecise: Plaintiffs are vague on when exactly spread quotes were refused them,
by whom, and for how long. Indeed, at least Wacker’s and Grumet’s complaints, closely read,
do not concretely reveal a refusal to provide spread quotes at all. See Wacker Compl. ¶¶ 9, 80
(Gottlieb said he “would help [Wacker] exit the spread”); Grumet Compl ¶¶ 9, 80–81 (Grumet

38

had to wait one day to obtain spread quote because Gottlieb was out of the office at a family
funeral).15
Second, plaintiffs’ complaints fail to allege that the refusal to provide spread quotes on
these days was a stratagem aimed at acquiring and/or maintaining monopoly power. As to the
acquisition of monopoly power, plaintiffs’ complaints allege, to the contrary, that JP Morgan
initially acquired monopoly power in the silver futures market by being the last man standing
after other market makers “disappeared.” Shak Compl. ¶ 49. This allegation does not violate §
2. Without more, it describes a mere “historic accident,” not deliberate conduct to secure a
monopoly position. PepsiCo, 315 F.3d at 105. Plaintiffs do not explain why JP Morgan’s failure
to provide spread quotes, or any other conduct in early 2011, helped it acquire monopoly power.
Nor do plaintiffs claim, let alone explain why, this conduct helped JP Morgan maintain such
power. Rather, plaintiffs allege merely that, after forcing out Shak, “JP Morgan’s market power
in the calendar spreads increased,” and its “ability to manipulate the market became unfettered.”
Shak Compl. ¶ 81; see also Wacker Compl. ¶ 75 (“By forcing Daniel Shak out of the market,
only smaller market participants, like [Grumet], were there to trade against JP Morgan.”);
Grumet Compl. ¶ 75 (same). This allegation is far too vague and conclusory to adequately plead
that, in so acting, JP Morgan sought to maintain its monopoly power.
In sum, unlike the plaintiffs in In re Crude Oil and In re Cotton Futures, plaintiffs here
have not made concrete allegations plausibly suggesting uneconomic behavior intended to

15

Plaintiffs separately fail to explain why JP Morgan was under any duty to deal with plaintiffs
at all. “[T]he sole exception to the broad right of a firm to refuse to deal with its competitors
comes into play only when a monopolist seeks to terminate a prior (voluntary) course of dealing
with a competitor.” In re Adderall XR Antitrust Litig., 754 F.3d 128, 134 (2d Cir. 2014), as
corrected (June 19, 2014) (quoting In re Elevator Antitrust Litig., 502 F.3d 47, 52, 53 (2d Cir.
2007)) (internal quotation marks omitted).
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acquire or maintain monopoly power, or satisfactorily distinguished JP Morgan’s conduct from
that of a rational, hard-nosed market actor. This pleading deficiency requires dismissal of the § 2
claim of monopolization.16
3.

Antitrust Injury

To have standing to pursue a § 2 monopolization claim, plaintiffs must plead antitrust
injury, that is, injury “of the type the antitrust laws were intended to prevent and that flows from
that which makes defendants’ acts unlawful.” Atl. Richfield Co., 495 U.S. at 334 (quoting
Pueblo Bowl–O–Mat, 429 U.S. at 489). The Second Circuit employs a three-step process to
determine whether a plaintiff has sufficiently alleged antitrust injury:
First, the party . . . must identify the practice complained of and the reasons such a
practice is or might be anticompetitive. Next, we identify the actual injury the
plaintiff alleges. . . . Finally, we compare the anticompetitive effect of the specific
practice at issue to the actual injury the plaintiff alleges.
Gatt Commc’ns, Inc. v. PMC Assocs., L.L.C., 711 F.3d 68, 76 (2d Cir. 2013) (citations, internal
quotation marks, and alterations omitted). In short, “[t]he necessary ‘antitrust injury’ is an injury
attributable to the anticompetitive aspect of the practice under scrutiny.” Port Dock & Stone
Corp., 507 F.3d at 122.
Here, JP Morgan argues, inter alia, that plaintiffs must allege not only a causal link
between their injury and the asserted violation, but also that JP Morgan’s conduct affected the
market generally. Def. Br. 34. Plaintiffs counter that JP Morgan’s conduct was anticompetitive
“insofar as it forced Plaintiffs out of the market.” Pl. Br. 37. The Court’s holding above—that

16

For similar reasons, plaintiffs also fail to state a claim of attempted monopolization, which
requires a showing of, inter alia, specific intent to monopolize. In re Crude Oil, 913 F. Supp. 2d
at 57 (citing Int’l Distrib. Ctrs. Inc. v. Walsh Trucking Co., 812 F.2d 786, 790 (2d Cir. 1987)).
They also fail to state a claim under New York’s Donnelly Act, which “require[s] identical basic
elements of proof for claims of monopolization or attempt to monopolize” as the Sherman Act.
Altman v. Bayer Corp., 125 F. Supp. 2d 666, 672 (S.D.N.Y. 2000).
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plaintiffs have not adequately pled exclusionary or anticompetitive conduct—would appear to
compel the conclusion that they have failed to allege antitrust injury as well, because the latter
inquiry turns, inter alia, on “the reasons [defendants’] practice is or might be anticompetitive.”
Gatt, 711 F.3d at 76. However, because plaintiffs’ antitrust claims independently fail to state a
claim as a result of their deficient pleading of the willful acquisition element, the Court has no
need to resolve this issue at this time.
4.

Conspiracy Claim

A Sherman Act § 2 claim for conspiracy to monopolize requires facts giving rise to a
plausible inference of “(1) concerted action, (2) overt acts in furtherance of the conspiracy, and
(3) specific intent to monopolize.” Elecs. Commc’ns Corp. v. Toshiba Am. Consumer Prods.,
Inc., 129 F.3d 240, 246 (2d Cir. 1997) (quoting Volvo N. Am. Corp. v. Men’s Int’l Prof’l Tennis
Council, 857 F.2d 55, 74 (2d Cir. 1988)) (internal quotation marks omitted). As to the
requirement of concerted action, plaintiffs must “allege facts that would provide ‘plausible
grounds to infer an agreement.’” In re Elevator Antitrust Litig., 502 F.3d at 50 (quoting
Twombly, 550 U.S. at 556).
Here, plaintiffs fail to allege an agreement. They argue that “the Complaints plead that
Defendants conspired with COMEX’s settlement committee to manipulate silver spread prices.”
Pl. Br. 35. In fact, the cited paragraph alleges merely that JP Morgan’s brokers sat on the
settlement committee. See Shak Compl. ¶ 67. Plaintiffs further argue that “JP Morgan also
joined with Wolverine to conceal its control of the silver spread market by having Wolverine
take over the Shak Plaintiffs’ silver spread positions.” Pl. Br. 35–36. But, in fact, the paragraphs
that plaintiffs cite for this proposition allege only that Wolverine “had significant links to JP
Morgan.” Shak Compl. ¶ 79. These allegations fall short of what is necessary to adequately
allege a conspiracy.
41