Green Plains Ethanol Lawsuit Tossed

Source: By Todd Neeley, Progressive Farmer • Posted: Wednesday, January 4, 2023

Federal Court Rules Green Plains Unable to Re-File Ethanol Market Claims

A federal court dismissed an ethanol market lawsuit filed by Green Plains Inc. against Archer Daniels Midland. (DTN file photo)
A federal court dismissed an ethanol market lawsuit filed by Green Plains Inc. against Archer Daniels Midland. (DTN file photo)

LINCOLN, Neb. (DTN) — For the second time in three years a federal court dismissed a Green Plains Inc. ethanol market lawsuit against Archer Daniels Midland, this time ruling Green Plains would not be allowed to re-file the claims.

In October 2021, Omaha-based Green Plains filed a lawsuit in the U.S. District Court in the District of Nebraska, alleging ADM committed tortious interference with a Green Plains ethanol contract when ADM conducted an alleged scheme to illegally depress the ethanol cash market beginning in 2017.

That case was transferred to the U.S. District Court for the District of Central Illinois, where two other anti-trust cases are pending against ADM.

The Illinois court ruled late last week that Green Plains did not state a claim and failed to identify specific contracts with which ADM allegedly interfered.

Because the court dismissed the case with prejudice, it means Green Plains cannot re-file the claims with the court.

“In order to plead a claim for tortious interference with contract, a plaintiff must plead that a valid contract existed between the plaintiff and a third party,” the court said in its order to dismiss.

“This court has previously found that a plaintiff must allege specific contracts with which a defendant interfered for a tortious interference claim to move forward. Plaintiffs have alluded to various contracts with which ADM’s alleged manipulations interfered, but plaintiffs have not identified the specific contracts at issue. Plaintiffs have not identified the third parties with whom they had the contracts, any other terms of those contracts, or what specific losses they suffered.”

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

Antitrust lawsuits filed by AOT Holding AG and six ethanol companies against ADM 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.

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

“During the relevant time period, from November 2017 through at least September 2019, ADM routinely acquired financial derivative contracts that went up in value if the price for ethanol at the Argo terminal went down,” the lawsuit said.

Green Plains alleged 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 industry-wide each day.

Green Plains said 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.”

Read more on DTN:

“ADM Ordered to Turn Over Employee Info,” https://www.dtnpf.com/….

“ADM Ordered to Release Docs on Employee,” https://www.dtnpf.com/…

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

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