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U.S. Futures Exchange LLC and U.S. Exchange Holdings, Inc v. Board of Trade of the City of Chicago and

August 3, 2012


The opinion of the court was delivered by: Judge James B. Zagel



The facts of this case have been laid out in detail in previous orders and are incorporated by reference herein.On February 14, 2007, in an effort to move the case forward in the face of a complex and costly discovery impasse, I granted Defendants leave to move for partial summary judgment. Defendants represented to the court that, based on the substantial discovery that had already been taken, they could knock out several of Plaintiffs' theories of liability, which would narrow the scope of the case and help resolve outstanding discovery issues. Specifically, Defendants proposed that we proceed under the assumption that they had in fact engaged in all alleged anti-competitive conduct so that the available evidence on causation and injury could be isolated and tested. Defendants believed they could conclusively prove that much of the alleged anticompetitive conduct they are accused of engaging in could not possibly have caused antitrust injury. I agreed to this course of action and granted Defendants leave to test three of Plaintiffs' theories of liability: 1) Defendants obstructed the regulatory approval process in order to hamstring USFE's launch; 2) Defendants erected barriers to USFE's entry by preventing it from securing competitive clearing services; and 3) Defendants interfered with Plaintiffs' customer relationships through a campaign of threats and misinformation.*fn1


Summary judgment is proper only if "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56 (a). A genuine issue of material fact exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In determining whether there is a genuine issue of fact, the Court "must construe the facts and draw all reasonable inferences in the light most favorable to the nonmoving party." Foley v. City of Lafayette, Ind., 359 F.3d 925, 928 (7th Cir. 2004). The party seeking summary judgment has the burden of establishing the lack of any genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). However, that burden does not necessarily require the moving party to put forth evidence negating the non-moving party's claims; summary judgment is proper against a non-moving party "who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322.


A. Antitrust Injury

Before examining the individual theories of liability, I begin by addressing Defendants' attempted knock-out-punch claim that Plaintiffs have not suffered antitrust injury. In order to have standing to bring an antitrust suit, a plaintiff must establish that its claimed injuries are "of the type the antitrust laws were intended to prevent and reflect the anticompetitive effect of either the violation or of anticompetitive acts made possible by the violation." Tri-Gen v. Int'l Union of Operating Eng'rs, Local 150, 433 F.3d 1024, 1031 (7th Cir.2006) (internal quotations omitted) (quoting Brunswick Corp. V. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977). In other words, Plaintiffs must establish that Defendants' actions caused market injury (i.e. injury to consumers) by reducing output or raising prices, not just injury to themselves. See U.S. Gypsum Co. v. Indiana Gas Co., Inc., 350 F.3d 623, 626-27 (7th Cir. 2003); Chicago Professional Sports Limited Partnership v. National Basketball Ass'n, 961 F.2d 667, 670 (7th Cir. 1992).

Defendants argue that Plaintiff cannot show antitrust injury because since USFE's opening, "trading is up and fees are down" in the U.S. Treasury futures market. It does not take a world renowned economist to spot the glaring logical error in this statement. The relevant consideration in determining whether Plaintiff has antitrust standing is not the current general state of the U.S. Treasury futures market. It is the much more complicated counterfactual comparison between the U.S. Treasury futures market as it exists today and the market that would have existed had Defendants' alleged anticompetitive conduct never taken place.

Even without Dr. Hausman's declaration Defendants cannot prevail on the antitrust injury question at this stage. Basic economic principles concerning the downward pressure on price created by competition are so well established that, in the context of this partial summary judgment exercise, this issue is effectively off the table. This case is distinguishable from Stamatakis Industries, Inc. V. King, 965 F.2d 469 (7th Cir. 1992). The alleged injury here is not decreased competitor market share but inability to enter the market, in any meaningful sense, due to Defendants' anticompetitive actions. Defendants' motion for summary judgment for inability to show antitrust injury is denied.

B. Obstruction of Regulatory Approval

Plaintiffs' first theory of antitrust liability is that Defendants engaged in a bad faith misinformation campaign in order to "prevent, hamper, and delay" USFE from obtaining CFTC approval to launch its exchange. According to Plaintiffs, Defendants made knowingly false statements to the CFTC and Congress*fn2 and engaged in other dilatory tactics in order to remove USFE's DCM application from the CFTC's 60-day "fast-track" application procedure and spread doubt in the market about its ultimate approval.

Defendants make three arguments in response. First, Plaintiffs cannot prove injury because, despite any alleged delays in CFTC approval, USFE opened on February 8, 2004, just one week after its earliest possible opening date under the terms of the Eurex-CBOT alliance. Second, Plaintiffs cannot prove causation because there is no evidence in the record attributing the CFTC's decision to remove USFE's application from the fast track to anything Defendants did. Third, even if Plaintiffs could establish causation and injury, Defendants' actions are shielded by the Noerr--Pennington doctrine.

I am unpersuaded by the first two arguments. Defendants' injury argument mischaracterizes Plaintiffs' claim--the alleged injury is not the one-week delay in opening, it is the uncertainty and loss of forward momentum created within the market once the CFTC announced that it needed to take a harder look at USFE's application. More discovery would be needed on this issue before I could grant summary judgment. Nor do I find the causation argument compelling. The CFTC press release announcing the cancellation of the December 17, 2003 hearing on USFE's application due to "scheduling conflicts" of certain "market ...

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