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AMERICAN AGRIC. MOVEMENT, INC. v. BOARD OF TRADE O

April 12, 1994

THE AMERICAN AGRICULTURE MOVEMENT, INC., et al., Plaintiffs,
v.
THE BOARD OF TRADE OF THE CITY OF CHICAGO, et al., Defendants.


MAROVICH


The opinion of the court was delivered by: GEORGE M. MAROVICH

Plaintiff American Agriculture Movement, Inc. ("AAM"), a national organization representing and advocating the interests of farmers, along with several of its soybean-farmer members, brought this suit against the Chicago Board of Trade and 26 of its officers and employees (collectively "CBOT") under the Commodity Exchange Act ("CEA"), the Sherman Antitrust Act, and state common law. The Seventh Circuit affirmed this Court's dismissal of the CEA count and the state common law claims, but reversed this Court's entry of summary judgment on the antitrust claim. American Agriculture Movement, Inc. v. Board of Trade, 977 F.2d 1147 (7th Cir. 1992). Now before the Court is Defendants' motion to dismiss the single remaining antitrust count pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6). Defendants contend that Plaintiffs lack both Article III standing and standing to raise an antitrust claim. In addition, Defendants argue that AAM lacks associational standing to raise the claims of its members. For the reasons set forth below, the Court will grant Defendants' motion to dismiss.

 BACKGROUND

 This Court has written two prior opinions in this case and the Seventh Circuit also has reviewed the factual allegations presented by the Plaintiffs. Under these circumstances, we will endeavor to contain this statement of facts to those necessary to provide context to the resolution of the pending motions. According to the Complaint, Plaintiffs claim to have suffered injuries due to a price decline in the cash market for soybeans allegedly linked to action taken by the CBOT on July 11, 1989, regarding the futures market in soybeans. The Emergency Resolution ("Resolution") adopted by the CBOT specified that:

 
Effective as of the opening of the market on July 12, 1989, any person or entity, either alone or in conjunction with any other person or entity, who owns or controls a gross long or gross short position *fn1" for any purpose whatsoever in excess of three million bushels in the July 1989 soybean futures contract traded on the Exchange must reduce said position and subsequent positions by at least 20% per trading day subject to the following absolute limits.
 
No person or entity, either alone or in conjunction with any other person or entity, shall own or control a gross long or gross short position for any purpose whatsoever in the July 1989 soybean futures contract traded on the Exchange in excess of three million bushels as of the close of trading on Tuesday, July 18, 1989.
 
No person or entity, either alone or in conjunction with any other person or entity, shall own or control a gross long or gross short position for any purpose whatsoever in the July 1989 soybean futures contract traded on the Exchange in excess of one million bushels as of the close of trading on Thursday, July 20, 1989.
 
This resolution is applicable to all positions, whether hedge or speculative.

 DISCUSSION

 As a preliminary matter, the Court must define the permissible scope of our inquiry in deciding a motion under Fed. R. Civ. P. 12(b)(1), as opposed to Fed. R. Civ. P. 12(b)(6). Plaintiffs argue that the Court is limited to the factual allegations of the complaint and cannot go beyond them. Plaintiffs, however, appear to ignore the fact that Defendants' motion is brought under both Rule 12(b)(1) for lack of Article III standing and Rule 12(b)(6) for failure to state an antitrust claim. *fn2" Defendants, not surprisingly, have a different view of what the Court may consider and argue that we are not limited to the allegations of the complaint on a motion to dismiss under Fed. R. Civ. P. 12(b)(1).

 It is true that one may find language indicating that on a motion to dismiss the Court must accept the well-pleaded factual allegations of the complaint as true and interpret all reasonable inferences in favor of the plaintiff. See, e.g., Capitol Leasing Co. v. F.D.I.C., 99 F.2d 188');">999 F.2d 188, 191 (7th Cir. 1993). Such statements, however, do not offer a complete understanding of Plaintiffs' burden when faced with a motion, such as the one here, that attacks the factual basis for jurisdiction under Fed. R. Civ. P. 12(b)(1). Under these circumstances, it is well-settled that once Defendants question jurisdiction, the Plaintiffs cannot rest on their pleadings. *fn3" As the Seventh Circuit noted in Capitol Leasing, "the district court may properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists." Id. (quoting Grafon Corp. v. Hausermann, 602 F.2d 781, 783 (7th Cir. 1979)); see also McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 80 L. Ed. 1135, 56 S. Ct. 780 (1936); Rennie v. Garrett, 896 F.2d 1057, 1057-58 (7th Cir. 1990). We also note, however, that "if a defendant's Rule 12(b)(1) motion is an indirect attack on the merits of the plaintiff's claim, the court may treat the motion as if it were a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted." Peckmann v. Thompson, 966 F.2d 295, 297 (7th Cir. 1992); see also Malak v. Associated Physicians, Inc., 784 F.2d 277, 279 (7th Cir. 1986). With these standards in mind, we will address the Defendant's multi-faceted attach on Plaintiffs' claim.

 Plaintiffs claim two forms of injury allegedly caused by Defendants' conduct in issuing the Resolution of July 11, 1989. First, Plaintiffs claim to represent persons who sold cash market soybeans after July 12, 1989, at a price that was artificially depressed. Second, Plaintiffs claim to represent persons who refrained from selling cash market soybeans after July 12, 1989, because they believed the price was too low. Plaintiffs never traded July 1989 soybean futures contracts. Defendants challenge the ability of both groups of Plaintiffs to meet the standing requirements of Article III.

 Article III standing requires that a party seeking to proceed in federal court meet three requirements. The Seventh Circuit has summarized these requirements as follows:

 
(1) the party must personally have suffered an actual or threatened injury caused by the defendant's allegedly illegal conduct, (2) the injury must be fairly traceable to the defendant's conduct, and (3) the injury must be one that is likely to be redressed through a favorable decision.

 Simmons v. ICC, 900 F.2d 1023, 1026 (7th Cir. 1990) (quoting City of Evanston v. Regional Transportation Authority, 825 F.2d 1121, 1123 (7th Cir. 1987), cert. denied, 484 U.S. 1005, 98 L. Ed. 2d 649, 108 S. Ct. 697 (1988)). Defendants' argument requires us to focus primarily on the second element.

 Defendants suggest that an order issued by the Commodities Futures Trading Commission ("CFTC") on the morning of July 11, 1989, prior to the CBOT action, would have caused any alleged decline in prices whether or not the CBOT action was taken later that day. As a result, Defendants contend this independent, supervening action prevents Plaintiffs from establishing the necessary link between Defendants' conduct and their resulting injury.

 Defendants assert that on July 11, 1989, the CFTC determined that "a threat to an orderly liquidation of the July . . . 1989 soybean futures" contract existed. Oversight Hearing With Regard to the Reauthorization of the Commodity Futures Trading Commission: Hearing Before the Senate Committee on Agriculture, Nutrition and Forestry, 101st Cong., 1st Sess. 216-17 (1989) (testimony of Kalo A. Hineman, Commissioner, CFTC) (hereinafter "Hearing"). That determination was made in a letter faxed on July 11 to Central Soya, a member of the Ferruzzi Finanziara, S.p.A ("Ferruzzi") group. Id. The CFTC, along with the CBOT, had monitored Ferruzzi's activities in the May and July 1989 soybean futures market. In the letter the Commission also revoked the hedge exemption of Central Soya for anticipatory processing requirements during the last three trading days *fn4" in July and August futures. Id. According to Defendants, the CFTC's action required Ferruzzi group to reduce its holdings from approximately 4,095 contracts, a position encompassing almost 60 percent of the outstanding long or buy futures contracts, to 600 contracts by July 18, 1989. See AAM, 977 F.2d at 1151. After being advised of the CFTC action, *fn5" the CBOT issued its Resolution which set more specific requirements for liquidation of gross long and short positions held by any trader.

 As a result of the CFTC action that purportedly preceded the issuance of the CBOT Resolution, Defendants maintain that Plaintiffs cannot show that their injury "fairly can be traced to the challenged action of the defendant, [rather than] injury that results from the independent action of some third party [i.e. the CFTC] not before the court." Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. 26, 41-42, 48 L. Ed. 2d 450, 96 S. Ct. 1917 (1976). Defendants contend that the CFTC letter to Central ...


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