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Budicak, Inc. v. Lansing Trade Group, LLC

United States District Court, N.D. Illinois, Eastern Division

August 5, 2019

BUDICAK, INC., on behalf of itself and all other similarly situated, Plaintiff,



         In this proposed class action, Budicak, Inc. sued Lansing Trade Group, LLC and unknown individuals, alleging that Lansing unlawfully manipulated wheat futures and options contracts traded on the Chicago Board of Trade (CBOT) in violation of the Commodity Exchange Act, 7 U.S.C. § 1, et seq., the Sherman Antitrust Act, 15 U.S.C. § 1, and common law unjust enrichment and restitution. R. 1, Class Action Compl.[1] Lansing now moves to transfer the case to the District of Kansas, where the company is based. R. 26, Defs.' Mot. Transfer. Budicak, which is based in Oak Brook, Illinois, prefers to litigate the matter here in Chicago. See R. 32, Pl.'s Resp. Br. For the reasons explained below, Lansing's motion is granted.

         I. Background

         Lansing is a commodity merchandising company that buys, sells, handles, and stores physical commodities such as wheat in the cash market. Class Action Compl. ¶ 50, In early March 2015, Lansing allegedly caught wind of an insider tip: another market participant was planning to register and tender delivery of a large number of wheat shipping certificates.[2] Id. 55. This tip meant that there was a lack of demand for wheat and that the price of futures contracts would drop. Id. ¶ 55. Budicak alleges that Lansing used this insider information to come up with a plan to manipulate the prices of wheat futures and contracts. Id. ¶ 56. At least three Lansing traders, identified in the complaint as Lansing Traders 1, 2, and 3, were in on the plan and communicated internally among themselves and externally with John Doe Defendants to effectuate their scheme. Id. ¶ 11.

         On March 3, 2015, the insider tip came to fruition. A market participant registered and tendered 250 wheat certificates, and the price of wheat contracts and associated spreads[3] began declining. Class Action Compl. ¶¶ 58-59. So Lansing's traders began increasing its wheat spread and wheat call option positions at the new lower prices. Id. ¶ 59. And then, within the next few days, Lansing's traders bought all 250 wheat certificates with the plan to cancel them for load-out soon after. Id. ¶ 60. In other words. Lansing planned to order the physical grain to be “loaded-out” for transport. Id. ¶ 49. This would signal to other market participants that there was immediate demand for the market because someone supposedly wanted the wheat taken out of storage. Id. But the demand, according to Budicak, was in fact artificial. Id. ¶ 61. Nevertheless, even the perception of an increased demand meant that the value of Lansing's own wheat spread and wheat call option positions would go up. Id. ¶¶ 61-62. So to make sure that the market knew about the demand, Lansing Trader 1 allegedly asked the writer of a daily cash-wheat newsletter, as well as multiple market participants, to spread the word on Lansing's intent to cancel and load-out the wheat certificates. Id. ¶¶ 65-67. And they did. Id. ¶ 65. Meanwhile, Lansing's long wheat spread and wheat call option positions gradually increased in value according to plan. Id. ¶ 61. By March 10, 2015, Lansing had cancelled all of its wheat certificates. Id. ¶ 68.

         According to the complaint, Lansing's scheme caused harm to Budicak and others who transacted in CBOT wheat futures and options contracts at the artificial prices. Class Action Compl. ¶ 14. To obtain a remedy for the alleged scheme, Budicak brings this proposed class action, alleging that Lansing violated the CEA and Sherman Act.

         II. Legal Standard

         “For the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.” 28 U.S.C. § 1404(a). To justify a transfer of venue, several factors must be satisfied: (1) venue must be proper in the transferor district, (2) venue would be proper in the transferee district, (3) the transferee district would be more convenient for the parties and witnesses, and (4) transfer would serve the interests of justice. See Jaramillo v. DineEquity, Inc., 664 F.Supp.2d 908, 913 (N.D. Ill. 2009); see also Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219 n.3 (7th Cir. 1986). “Section 1404(a) is intended to place discretion in the district court to adjudicate motions for transfer according to an individualized, case-by-case consideration of convenience and fairness.” Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (cleaned up)[4]; see also Coffey, 796 F.2d at 219 (“The weighing of factors for and against transfer necessarily involves a large degree of subtlety and latitude, and, therefore, is committed to the sound discretion of the trial judge.”). The moving party has the burden of establishing “that the transferee forum is clearly more convenient.” Coffey, 796 F.2d at 219-20. Moreover, because § 1404(a) does not specify the weight to be accorded each factor, the decision is left to the discretion of the court. See Coffey, 796 F.2d at 219; see generally 15 C. *1128 Wright & A. Miller, Federal Practice § 3844- 47 (1986).

         III. Analysis

         To begin, for the purposes of this motion, neither party contests that venue is proper in this District and also would be proper in the proposed transferee district, the District of Kansas. The Court therefore turns to whether transfer would provide greater convenience and serve the interests of justice. As detailed below, both factors weigh in favor of transfer.

         A. Convenience

         In assessing convenience, “courts generally consider the availability of and access to witnesses, ... each party's access to and distance from resources in each forum[, ] ... the location of material events[, ] and the relative ease of access to sources of proof.” Research Automation, Inc. v. Schrader-Bridgeport Int'l., Inc., 626 F.3d 973, 978 (7th Cir. 2010) (citations omitted). On the whole, the elements favor litigating this case in Kansas.

         First, most of the relevant witnesses in this case are located in Kansas. Lansing is headquartered in Overland Park, Kansas, where most of the key witnesses and employees likely to have direct knowledge of the alleged unlawful scheme live and work. See R. 26-1, Declaration of Lansing Vice President Mike Lemke ¶¶ 5-8. In particular, Lansing Trader 3 and the Lansing Executive identified in Budicak's complaint as being directly involved with the alleged scheme continue to work in Lansing's Overland Park office and live in the Kansas City area. Id. ¶ 5. In addition to the individuals identified in Budicak's complaint, many current and former employees who are likely to have knowledge about Budicak's claims-including Lansing's Vice President of Grains, Chief Executive Officer, senior location managers, and trader's assistants and accounting staff-likewise work and live in the Kansas City area. Id. ¶ 7. These employees are likely to have knowledge of the development or approval of the alleged strategy, relevant trading in wheat futures and options, and the cash market sales of the futures Lansing loaded out. Id. And if this case continues to be litigated and goes to trial in Chicago, all of these witnesses would have to incur travel expenses, which are a “central measure of [in]convenience.” Craik v. Boeing Co., 37 F.Supp.3d 954, 962 (N.D. Ill. 2013).

         Against those witnesses, Budicak points out that two non-party witnesses do not live in Kansas: the market-newsletter writer and the market participant. Pl.'s Resp. Br. at 9. But only the market participant is located in Chicago; the newsletter writer is located in Oregon City, Oregon. Id.; Declaration of Lansing Vice President Mike Lemke ¶ 6. So either way, regardless of where this case is litigated, the market-newsletter writer would be inconvenienced. And the inconvenience of the market participant alone does not outweigh the inconvenience that the various witnesses discussed above would incur if they were to have to travel here. Thus, Lansing has met its burden of identifying potential non-party witnesses and explaining the subject matter of their testimony, supporting its contention that there is greater convenience in litigating in Kansas. See Heller Fin., Inc. v. Midwhey Powder ...

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