Court Denies Aluminum Buyers’ Appeal Request for Class Action Lawsuit

Judges for the U.S. Court of Appeals for the Second Circuit have denied several aluminum buyers’ request to appeal a district court’s order denying a motion to certify a class action lawsuit. This is the latest in a years-long suit against a group of large financial institutions and aluminum warehouses, which the buyers have accused of intentionally inflating primary aluminum prices.

The judges ordered to deny the petition because “an immediate appeal is not warranted.” The class action motion was denied by the U.S. District Court for the Southern District of New York in July because Judge Paul Engelmayer wrote that the “[first level purchasers (FLPs)] have failed to demonstrate that, at a trial on their claims, common issues would predominate over individualized ones. The opposite is so.”

Background

The aluminum buyers, or FLPs, brought claims in 2014 against six sets of defendants, three of which traded in primary aluminum and primary aluminum derivatives on the London Metals Exchange (LME) during the relevant period (the financial defendants), and three of which owned and operated LME-certified warehouses for the storage of metal (the warehousing defendants). The financial defendants are each affiliated with either Goldman Sachs & Co. LLC, J.P. Morgan Securities plc, or Glencore Ltd.

Each group of financial defendants directly or indirectly acquired one of the warehousing defendants in 2010, during a glut in the aluminum market following the 2008 financial crisis. The warehousing defendants are Metro International Trade Services LLC, Mitsi Holdings LLC, Henry Bath LLC and Pacorini Metals USA LLC.

In September, the banks and aluminum warehouses submitted a memorandum in support of their motion for summary judgment against all “umbrella” claims made by the plaintiffs. In the memorandum, the financial defendants have asked that all but one of the FLPs be eliminated from the case. The defendants allege that seven of the plaintiffs purchased all of their aluminum from non-defendant suppliers and that none acquired any aluminum from a defendant or an alleged co-conspirator. The eighth plaintiff, Ampal, acquired all of its aluminum from non-defendant third parties except for approximately 2,200 metric tons of aluminum it purchased from defendant Glencore and alleged co-conspirator Century Aluminum, according to the memorandum. The move has not yet been approved nor denied.

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