ADM Granted Venue Change in Lawsuit

Source: By Todd Neeley, DTN Staff Reporter • Posted: Tuesday, March 22, 2022

Green Plains Ethanol Market Lawsuit Filed in Nebraska Moves to Illinois

A federal judge in Nebraska granted Archer Daniels Midland's motion for a change of venue in a lawsuit filed by Green Plains Inc. alleging ethanol market manipulation. (DTN file photo)
A federal judge in Nebraska granted Archer Daniels Midland’s motion for a change of venue in a lawsuit filed by Green Plains Inc. alleging ethanol market manipulation. (DTN file photo)

LINCOLN, Neb. (DTN) — A federal court in Nebraska granted Archer Daniels Midland’s change of venue motion to move an ongoing ethanol markets lawsuit filed by Green Plains Inc. to Illinois where similar cases are pending, in an order handed down by the court March 18.

Green Plains filed a new lawsuit in the Nebraska court last October, alleging ADM conducted a scheme to illegally depress the ethanol cash spot market beginning in November 2017. Green Plains alleges ADM’s actions harmed its business.

The Nebraska lawsuit details how Green Plains believes ADM used the futures market to lower ethanol prices and hurt GP’s bottom line.

The district court in Nebraska said the transfer to Illinois makes sense because ADM’s witnesses, most of the relevant records and other evidence are in the Central District of Illinois.

“In sum, although Nebraska may be more convenient for Green Plains and even though this may weigh more heavily in the absence of the prior class action claims, Green Plains’ convenience remains outweighed by the convenience of the other witnesses and by judicial economy and consistency,” the district court in Nebraska said in its order.

“Further, the inconvenience to Green Plains in transferring venue to the Central District of Illinois is reduced here by the fact that Green Plains operates part of its business in Illinois and its counsel is partly in Illinois.”

The Nebraska court has not rendered a decision in ADM’s motion to dismiss the case.

In August 2021, the district court central Illinois dismissed a previous Green Plains lawsuit that argued the same claims. The court ruled the company did not have standing to sue under the Commodity Exchange Act.

Green Plains’ previous lawsuit was filed as a class action, whereas the new action focuses on the company’s losses from ADM’s alleged scheme.

In the new lawsuit filed in Nebraska, Green Plains said it had “valid contractual relationships” tied to various ethanol-pricing benchmarks.

Green Plains argues in its new lawsuit that ADM was “aware of these valid contractual relationships, pointing to the period from November 2017 through at least September 2019 as the time of the alleged manipulation.

“In fact, ADM and plaintiffs are parties to contracts with one another in which the price paid and received is tied to the pricing benchmarks,” the lawsuit said.

“ADM, through its unlawful manipulation, intentionally interfered with these valid contractual relationships of plaintiffs that were tied to the pricing benchmarks,” the lawsuit alleges.

Green Plains claims it suffered damages through lost profits, a diminishment in future earning capacity, “reputational harm,” impairment of business relationships and “consequential” losses.

Green Plains alleges ADM executed a three-step strategy that included lowering prices at the Argo terminal in Illinois by “flooding” the terminal with ethanol to lower the price.

The Argo terminal is the daily location for ethanol trading. The 30-minute trading window at the terminal is considered crucial because it is used to set the daily Chicago benchmark price to determine the value of Chicago ethanol derivatives.

That benchmark is used to price and settle ethanol derivatives on the New York Mercantile Exchange and the Chicago Board of Trade.

Second, Green Plains alleged ADM sold, on average, 1 million gallons of ethanol daily and adversely affected the pricing of more than 32 million gallons of physical ethanol produced industrywide each day.

Green Plains said ADM’s actions were contrary to what most ethanol producers would do based on market conditions.

Green Plains said that starting in November 2017, ADM was a buyer at the Argo Terminal on the market on close, or MOC, window just once at 210,000 gallons. The MOC window is when traders execute trades as close to the closing price as possible.

Green Plains said ADM, however, “was a seller at all other times for a total of approximately 821 million gallons — a sea change from their pre-November 2017 trading behavior in which ADM was consistently a buyer.”

Similar lawsuits filed by AOT Holding AG and six ethanol companies remain on track for a 2024 trial. In November 2020, Wisconsin producers United Wisconsin Grain Producers, Didion Ethanol, Ace Ethanol, Fox River Valley Ethanol, Badger State Ethanol and Iowa producer Pine Lake Corn filed their lawsuit.

Read more on DTN:

“ADM Wants Ethanol Case Transferred,” https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

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