Sanner v. Board of Trade of City of Chicago

• Decision Date: 07 August 1995
• Docket Number: Nos. 94-2139,94-2152,s. 94-2139
• Citation: 62 F.3d 918
• Parties: , 1995-2 Trade Cases P 71,080, Comm. Fut. L. Rep. P. 26,471 Harvey J. SANNER, Warren D. Jones, also known as Corky, H. Dean Adkins, et al., Plaintiffs-Appellants, v. BOARD OF TRADE OF the CITY OF CHICAGO, Patrick H. Arbor, Donald G. Andrew, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 918

62 F.3d 918

64 USLW 2117, 1995-2 Trade Cases P 71,080,

Comm. Fut. L. Rep. P. 26,471

Harvey J. SANNER, Warren D. Jones, also known as Corky, H.

Dean Adkins, et al., Plaintiffs-Appellants, v. BOARD OF TRADE OF the CITY OF CHICAGO, Patrick H. Arbor, Donald G. Andrew, et al., Defendants-Appellees.

Nos. 94-2139, 94-2152.

United States Court of Appeals, Seventh Circuit.

Argued March 31, 1995.

Decided Aug. 7, 1995.

John F. Arens, Steve Alexander, Arens & Alexander, Fayetteville, AR, Patrick F. Daly, Palos Heights, IL, Terrance G. Reed (argued), Washington, DC, for Harvey J. Sanner, Warren D. Jones, H. Dean Adkins, Judy F. Adkins.

Mark D. Young, Kristen A. Denison, Kirkland & Ellis, Washington, DC, Garrett B. Johnson (argued), Robert S. Steigerwald, Kirkland & Ellis, Chicago, IL, for Chicago Bd. of Trade.

Garrett B. Johnson, Robert S. Steigerwald, Kirkland & Ellis, Chicago, IL, for Patrick H. Arbor, Donald G. Andrew, John F. Benjamin, Gary K. Blelfeldt, David P. Brennan, John J. Brogan, Thomas R. Donovan, Lawrence C. Dorf, Burton J. Gutterman, Hal T. Hansen, Glenn P. Hollander, Bruce H. Johnson, Dale E. Lorenzen, Karsten Mahlman, Silas Matthies, Sr., John W. Meriwether, Lester Mouscher, Jay C. Nolan, Thomas C. O'Halleran, Irwin N. Smith, Carl M. Zapffe, Charles P. Carey, J. Robert Collins, Philip G. Hubbard, David L. Seagren and Wallace G. Weisenborn.

John F. Arens, Steve Alexander, Arens & Alexander, Fayetteville, AR, Patrick F. Daly, Palos Heights, IL, Terrence G. Reed (argued), Reed & Hostage, Washington, DC, for American Agriculture Movement, Inc.

Mark D. Young, Kristen A. Denison, Kirkland & Ellis, Washington, DC, Garrett B. Johnson (argued), John E. Angle, Robert S. Steigerwald, Sara Rollins Slaughter, Kirkland & Ellis, Scott E. Early, Chicago, IL, for Board of Trade of City of Chicago.

Before CUDAHY and COFFEY, Circuit Judges, and WALTER, District Judge. ^*

CUDAHY, Circuit Judge.

This is the second appeal from an antitrust challenge asserted by the American Agricultural Movement and a number of named soybean farmers. The plaintiffs claim that a Resolution adopted by the Chicago Board of Trade, which generally required persons holding a certain number of soybean futures contracts to liquidate a percentage of their positions, violated the Sherman Antitrust Act. The district court dismissed their complaint for lack of standing. It first concluded that the American Agricultural Movement lacked associational standing to pursue the claims of its member farmers. Second, it determined that the individual farmers themselves lacked standing. The district court found that those farmers refraining from the sale of soybeans because of a depressed price allegedly caused by the Resolution lacked standing under Article III of the Constitution; those farmers actually selling soybeans at this depressed price lacked standing under the antitrust laws. Although we agree with the district court's conclusions concerning associational standing and Article III standing, we believe its dismissal of the complaint on the grounds of antitrust standing was premature. We therefore affirm in part and reverse and remand in part.

I.

The American Agricultural Movement (AAM) is a nonprofit organization representing the interests of farmers. This organization, along with several named soybean farmers who grow and sell soybeans, brought suit against the Chicago Board of Trade (CBOT) and various individuals associated with it. They generally complained of the CBOT's July 11, 1989 Emergency Resolution (Resolution), which required all holders of gross long positions in soybean futures contracts to liquidate their positions by at least 20 percent daily until July 20, 1989, the last trading day for the July 1989 contracts. They claim, essentially, that the Resolution was prompted by a conspiracy to cause a precipitous drop in soybean cash crop prices and to maintain those prices at artificially depressed levels. Because soybean farmers either sold at these depressed prices, or refrained from selling because of them, they allegedly suffered injury at the hands of the CBOT.

AAM and the farmers alleged various causes of action in their complaint against the CBOT, including violations of the Commodity Exchange Act (CEA), the Sherman Antitrust Act and state common law. The district court initially dismissed the complaint, holding, inter alia, that the CEA had repealed the plaintiffs' antitrust claims by implication. American Agriculture Movement, Inc. v. Board of Trade, 770 F.Supp. 407 (N.D.Ill.1991). On appeal, we affirmed the district court's dismissal of the CEA and common law claims, but held that the CEA did not repeal the antitrust claims by implication. American Agriculture Movement, Inc. v. Board of Trade, 977 F.2d 1147 (7th Cir.1992). We therefore remanded the antitrust claims to the district court for further proceedings. Id. at 1167.

On remand, the CBOT filed a motion to dismiss the remaining antitrust claims under Rules 12(b)(1) and 12(b)(6), and the district court again dismissed the plaintiffs' complaint. It held that the AAM lacked standing as an association to pursue the interests of its members. In addition, it believed that the claims of individual farmers should be dismissed. The farmers who refrained from selling soybeans because of the allegedly depressed price, in the district court's view, lacked Article III standing, although the farmers complaining because they sold soybeans at the lower prices satisfied Article III's standards. The district court believed, however, that this latter group of selling farmers lacked standing under the antitrust laws. Both AAM and the individual farmers contend that dismissal was erroneous.

The Emergency Resolution that lies at the root of this controversy was prompted by the CBOT's surveillance of the soybean futures market. The CBOT, along with the Commodity Futures Trading Commission (CFTC), was concerned about the activities of Ferruzzi Finanziaria S.p.A. and its affiliates (Ferruzzi), which had amassed an unusually large soybean futures position that the CBOT believed threatened orderly trading. See generally American Agriculture Movement, 977 F.2d at 1151 (detailing Ferruzzi's position). After Ferruzzi refused repeated requests to reduce its position, the CFTC and the CBOT acted.

On July 11, 1989, the CFTC sent a private letter to Central Soya, a member of Ferruzzi. This letter determined that Ferruzzi's position was a threat to orderly liquidation of soybean futures, and consequently revoked the regulatory exemption that had allowed Central Soya to amass its large position. The CBOT claims that this letter would have required Ferruzzi to liquidate over 3,400 long July soybean futures contracts in one week.

Later that day, after the close of trading, the CBOT issued the Emergency Resolution. The Resolution, in contrast to the CFTC's letter, was publicly issued and applied to all traders. It 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 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. Ferruzzi reduced its position in July 1989 soybean futures contracts to comply with these two orders. The plaintiffs claim that the Resolution eventually led to a price decline in the July 1989 soybean futures market, which resulted in a proportionate decline in the cash market for soybeans. They further suggest that the individual defendants, acting through CBOT, intended to cause a price decline in both markets in order to benefit clients in trading houses, who held short positions in soybeans and who had failed to hedge against actual soybean purchasing needs. The price decline in the soybean market ultimately harmed the farmers, who are cash market sellers of soybeans.

II.

The district court's holding requires us to examine a trio of standing doctrines. We agree with its conclusion that the AAM lacked standing as an association to pursue the interests of its member farmers. We also agree with the district court's conclusion that the farmers who allegedly refrained from selling soybeans because of the depressed price lacked standing under Article III. We find questionable, however, the district court's conclusion that the farmers who sold soybeans at depressed prices lacked antitrust standing. We will discuss each conclusion in turn.

Under Article III of the Constitution, a party must demonstrate standing in order to satisfy the "case or controversy" requirement necessary to the exercise of our judicial power. Simmons v. I.C.C., 900 F.2d 1023, 1026 (7th Cir.1990), cert. denied, 499 U.S. 919, 111 S.Ct. 1308, 113 L.Ed.2d 242 (1991). The standing inquiry demands a three-part showing: "(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 challenged conduct, and (3) the...