`
`20-1458 (L)
`In re Platinum and Palladium Antitrust Litigation
`In the
`United States Court of Appeals
`FOR THE SECOND CIRCUIT
`
`
`AUGUST TERM 2020
`Nos. 20-1458, 20-1575, 20-1611
`
`IN RE PLATINUM AND PALLADIUM ANTITRUST LITIGATION
`
`KPFF INVESTMENT, INC., WHITE OAK FUND LP, INDIVIDUALLY AND
`ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, LARRY HOLLIN,
`Plaintiffs-Appellants-Cross-Appellees,
`MODERN SETTINGS LLC, A NEW YORK LIMITED LIABILITY COMPANY,
`MODERN SETTINGS LLC, A FLORIDA LIMITED LIABILITY COMPANY,
`ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED,
`CRAIG R. COOKSLEY, INDIVIDUALLY AND ON BEHALF OF ALL THOSE
`SIMILARLY SITUATED, NORMAN BAILEY, THOMAS GALLIGHER,
`KEN PETERS,
`Plaintiffs,
`v.
`BASF METALS LIMITED, ICBC STANDARD BANK PLLC,
`Defendants-Appellees-Cross-Appellants,
`GOLDMAN SACHS INTERNATIONAL, HSBC BANK USA, N.A., THE
`LONDON PLATINUM AND PALLADIUM FIXING COMPANY LTD., BASF
`CORPORATION,
`Defendants-Appellees,
`UBS AG, UBS SECURITIES LLC,
`Defendants.*
`
`
`
`* The Clerk of Court is directed to amend the caption as set forth above.
`
`
`
`
`
`On Appeal from the United States District Court
`for the Southern District of New York
`
`
`ARGUED: JUNE 4, 2021
`DECIDED: FEBRUARY 27, 2023
`
`
`POOLER and MENASHI, Circuit Judges, and VYSKOCIL,
`District Judge.†
`
`Before:
`
`The plaintiffs-appellants and cross-appellees are participants in
`the physical and derivatives markets for platinum and palladium and
`seek monetary and injunctive relief for violations of the antitrust laws
`and the Commodities Exchange Act (“CEA”). According to the
`plaintiffs-appellants, the defendants—mostly foreign companies
`engaged in trading these metals—manipulated the benchmark prices
`for platinum and palladium by collusively trading on the futures
`market to depress the price of these metals and by abusing the process
`for setting the benchmark prices. The defendants allegedly benefited
`from this conduct via trading in the physical markets and holding
`short positions in the futures market. The district court held that it
`had personal jurisdiction over two of the foreign defendants, but it
`dismissed the plaintiffs’ antitrust claims for lack of antitrust standing
`and
`the plaintiffs’ CEA
`claims
`for being
`impermissibly
`extraterritorial. The plaintiffs appeal the dismissal of these claims. The
`
`
`† Judge Mary Kay Vyskocil of the U.S. District Court for the Southern
`District of New York, sitting by designation.
`
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`
`
`
`defendants cross-appeal the district court’s holdings on personal
`jurisdiction.
`
`We reverse in part, vacate in part, and affirm in part. We
`reverse the district court’s holding that Larry Hollin and White Oak
`Fund LP (the “Exchange Plaintiffs”) lacked antitrust standing to sue
`for the manipulation of the New York Mercantile Exchange futures
`market in platinum and palladium. As traders in that market, the
`Exchange Plaintiffs are the most efficient enforcers of the antitrust
`laws for that injury. But we affirm the district court’s conclusion that
`KPFF Investment, Inc. did not have antitrust standing. Additionally,
`we vacate the district court’s dismissal of the plaintiffs’ CEA claims.
`The plaintiffs have alleged sufficient domestic activity so that the CEA
`claims are not impermissibly extraterritorial. We affirm the district
`court’s holdings as to personal
`jurisdiction over the foreign
`defendants under a conspiracy theory of personal jurisdiction.
`
`
`
`
`
`
`
`MATTHEW J. PEREZ, Labaton Sucharow LLP, New York,
`NY (Jay L. Himes, Ethan H. Kaminsky, Labaton
`Sucharow LLP, New York, NY, and Merrill G. Davidoff,
`Martin I. Twersky, Zachary D. Caplan, Berger Montague
`PC, Philadelphia, PA, on the brief), for Plaintiffs-Appellants-
`Cross-Appellees.
`
`PAUL MEZZINA, King & Spalding LLP, Washington, DC
`(Damien J. Marshall, Leigh M. Nathanson, King &
`Spalding LLP, New York, NY, and Joshua N. Mitchell,
`
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`
`
`
`King & Spalding LLP, Washington, DC, on the brief), for
`HSBC Bank USA, N.A.
`
`Stephen Ehrenbergh, Mark A. Popovsky, Sullivan &
`Cromwell LLP, New York, NY, for Goldman Sachs
`International.
`
`MATTHEW A. KATZ (Lisa C. Cohen, on the brief), Schindler
`Cohen & Hochman LLP, New York, NY, for the London
`Platinum and Palladium Fixing Company Ltd.
`
`ANDREW C. LAWRENCE (Michael F. Williams, Peter A.
`Farrell, on the brief), Kirkland & Ellis LLP, Washington,
`DC, for BASF Metals Limited and BASF Corporation.
`
`ROBERT G. HOUCK (John D. Friel, Minji Reem, on the brief),
`Clifford Chance US LLP, New York NY, for ICBC
`Standard Bank Plc.
`
`
`
`
`
`MENASHI, Circuit Judge:
`
`The plaintiffs-appellants and cross-appellees in this case
`
`participate in the markets for physical platinum and palladium and
`for derivatives in those commodities. The plaintiffs-appellants
`brought lawsuits alleging that the defendants—companies engaged
`in precious metals trading—conspired to manipulate the global
`benchmarks for those metals. Most, but not all, of the defendants are
`foreign.
`
`The plaintiffs sued for violations of the antitrust laws and the
`Commodities Exchange Act (“CEA”) and for unjust enrichment.
`According to the plaintiffs, the defendants artificially depressed the
`
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`
`
`benchmark prices for platinum and palladium both by collusively
`trading in those metals’ derivatives—and thereby affecting the price
`of platinum and palladium generally—and by manipulating the
`process of setting the benchmark price. The defendants allegedly
`benefited from these actions by participating in the physical market
`for platinum and palladium and by holding short positions in the
`futures market. The plaintiffs, as sellers of platinum and palladium
`and participants in the derivatives market, allege corresponding
`injuries.
`
`The changing legal landscape since the initial filing resulted in
`multiple complaints from the plaintiffs and multiple dispositions
`from the district court. Ultimately, the district court concluded that it
`had personal jurisdiction over two of the foreign defendants under a
`conspiracy theory of personal jurisdiction, but it dismissed the
`antitrust and CEA claims. It determined that the plaintiffs were not
`efficient enforcers of the antitrust laws—and therefore lacked
`antitrust standing—and that the plaintiffs’ CEA claims were
`impermissibly extraterritorial. The plaintiffs timely appealed, and the
`foreign defendants over whom the district court held that it had
`personal jurisdiction cross-appealed that issue.
`
`We reverse in part, vacate in part, and affirm in part. KPFF
`Investment, Inc. lacked antitrust standing to sue for the impact that
`the defendants had on the physical platinum and palladium market.
`However, those plaintiffs who participated in the futures market—
`Larry Hollin and White Oak Fund LP—are the most efficient
`enforcers of the alleged antitrust injury in that market and have
`antitrust standing to pursue claims based on that injury. We also hold
`that the plaintiffs have alleged sufficient domestic activity to survive
`
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`
`
`
`a motion to dismiss on the CEA claims. And we affirm the district
`court’s exercise of personal jurisdiction over the foreign defendants.
`
`BACKGROUND
`
`In considering this appeal, we “accept[] as true all factual
`
`claims in the complaint and draw[] all reasonable inferences in the
`plaintiff’s favor.” Henry v. County of Nassau, 6 F.4th 324, 328 (2d Cir.
`2021) (quoting Fink v. Time Warner Cable, 714 F.3d 739, 740-41 (2d Cir.
`2013)).
`
`I
`
`Platinum and palladium, members of the same element family,
`
`are versatile metals. The metals are used in “catalytic converters,
`laboratory equipment, electrodes, and dentistry equipment.” App’x
`372 (footnote omitted). Besides these
`industrial applications,
`platinum and palladium are used in jewelry and are traded by
`investors. In 2013 alone, the gross demand for platinum and
`palladium was over 8 million and 9.6 million ounces, respectively.
`
`Aside from the traditional physical market, the metals are also
`traded in futures and options markets, especially on the New York
`Mercantile Exchange (“NYMEX”), “the leading centralized exchange
`for platinum and palladium futures and options worldwide.” Id. at
`381. On the NYMEX, “futures are standardized contracts that call for
`the delivery of physical platinum or palladium … on a specified
`date.” Id. In contrast to transactions involving physical metal, which
`“are done between private parties,” the NYMEX “is the counterparty
`to all transactions on the exchange” through “its clearinghouse, CME
`Clearing.” Id. at 381. By “simultaneously buying and selling the
`contract,” a clearinghouse “guarantees both sides of the trade and
`
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`
`
`ensures that neither buyer nor seller is exposed to any counterparty
`credit risk.” In re Amaranth Nat. Gas Commodities Litig., 730 F.3d 170,
`174 (2d Cir. 2013). Since 2011, the aggregate annual value of platinum
`and palladium futures has surpassed $100 billion and $40 billion,
`respectively.
`
`The defendants include BASF Metals Ltd. (“BASF Metals”),
`Goldman Sachs International (“Goldman Sachs”), HSBC Bank USA,
`N.A. (“HSBC”), and ICBC Standard Bank PLC (“ICBC”) (collectively,
`the “Fixing Members”). BASF Metals is a company organized under
`the laws of the United Kingdom with its principal place of business
`in London, England, that engages in “precious metals commodity
`dealing.” App’x 363. Goldman Sachs, HSBC, and ICBC are financial
`services companies and, according to the plaintiffs, each company
`“holds substantial market share in Physical and NYMEX Platinum
`and Palladium.” Id. at 366-68. The three financial services companies
`each conduct proprietary trading and also execute client trades.
`HSBC’s principal place of business is in McLean, Virginia; Goldman
`Sachs’s and ICBC’s principal places of business are in London,
`England.
`
`Between 2008 and 2014, there was a formal process for
`establishing the market spot price for platinum and palladium called
`the “Fixing.” Id. at 373. The Fixing was conducted twice daily—in an
`“AM Fixing” and a “PM Fixing”—with a private conference call that
`would set global benchmark prices for platinum and palladium. To
`conduct the Fixing, BASF Metals, Goldman Sachs, HSBC, and ICBC
`established the London Platinum and Palladium Fixing Company
`Ltd. (“LPPFC”). The LPPFC has its principal place of business in
`London, England, and “is 100% owned and controlled” by the four
`
`7
`
`
`
`entities that founded it. Id. at 371. Its “only function is to take on and
`continue the promotion, administration and conduct of [the Fixing].”
`Id. (internal quotation marks omitted).
`
`The Fixing was designed to be conducted as a Walrasian
`auction.1 One of the four founding entities would serve as the chair of
`the auction, and the chair would announce an opening price
`“ostensibly at or near the current spot price.” App’x 374. Each of the
`other three founding entities would then declare itself to be a net
`buyer or a net seller or to have no interest. The chair would adjust the
`price until there was no (or nearly no) net interest in buying or selling,
`and the resulting price would serve as the benchmark price—or the
`“Fix price.”
`
`Once the chair announced the benchmark price, the orders of
`the auction participants could not be retracted. But the effects of the
`benchmark extended beyond those orders. Market participants
`uninvolved in the Fixing frequently incorporated the benchmark
`prices in contracts. When buyers and sellers entered “spot”
`contracts—pursuant to which the contracting parties agreed to
`consummate the purchase and sale of physical platinum or
`palladium—the “spot price” was “often tied or keyed to the relevant
`metal’s Fixing on the day of the sale.” Id. at 380. Because the prices of
`NYMEX platinum and palladium closely tracked the spot prices of
`
`
`1 In a Walrasian auction, each trader “submit[s] his demand, or even his
`demand schedule,” to the auctioneer, who “aggregates traders’ demands
`and supplies to find a market-clearing price.” Maureen O’Hara, Market
`Microstructure Theory 4 (1995). In this way, the final price is the result of “an
`unseen trading game in which buyers and sellers costlessly exchange
`assets.” Id.
`
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`
`
`
`those metals, the result was that “[t]he spot, Fix, and NYMEX
`settlement prices exhibit[ed] an almost perfect correlation.” Id. at 387.
`
`II
`
`The Fixing would have been “a competitive process” if it were
`conducted properly. Id. at 352. The plaintiffs allege that it was not so
`conducted.
`
`The plaintiffs-appellants in this case are Larry Hollin, White
`Oak Fund LP (“White Oak”), and KPFF Investment, Inc. (“KPFF”).
`Hollin and White Oak sold NYMEX platinum or palladium futures
`contracts (collectively, the “Exchange Plaintiffs”). KPFF sold physical
`platinum and palladium. All of the plaintiffs-appellants reside in the
`United States.
`
`According to the plaintiffs, the defendants had the opportunity
`and the motive to use the Fixing to manipulate the benchmark prices
`of platinum and palladium toward lower prices. The plaintiffs alleged
`collusion among the defendants in several ways. Each Fixing call
`“involved the direct exchange of intended or future price information
`among horizontal competitors.” Id. at 448. The defendants also moved
`the market downward by coordinating large sell orders, which would
`lower the opening price for the Fixing. During the Fixing itself, the
`defendants affected the benchmark price by “submit[ting] aggregate
`‘auction’ ‘bids’ that understated demand.” Id. at 452. All the while, the
`defendants coordinated their behavior using “chat rooms, instant
`messages, phone calls, proprietary trading venues and platforms, and
`e-mails.” Id. at 449. The motive for such collusion, the plaintiffs
`contend, was that the defendants “are traders of Physical and
`NYMEX Platinum and Palladium and … had large short futures
`positions on NYMEX.” Id. at 474.
`
`9
`
`
`
`Five complaints based on this alleged conduct—each seeking
`to bring claims individually and on behalf of a class—were filed
`between November 2014 and March 2015. On March 20, 2015, the
`district court consolidated the five cases. Four months and two
`amendments later, the plaintiffs filed a second consolidated class
`action complaint. This second amended complaint named BASF
`Metals, Goldman Sachs, HSBC, ICBC, the LPPFC, BASF Corporation,
`UBS AG, and UBS Securities LLC as defendants. BASF Corporation,
`a “carrier, assayer, and refiner of platinum and palladium,” is a sister
`company of BASF Metals and is registered in Delaware. Id. at 85-86.
`UBS AG and UBS Securities—a wholly owned subsidiary of UBS
`AG—are financial services companies involved in trading physical
`and NYMEX platinum and palladium.
`
`The second amended complaint brought seven causes of action
`alleging (1) an agreement restraining trade in violation of the
`Sherman Act, 15 U.S.C. § 1, (2) five violations of the CEA, 7 U.S.C. § 1
`et seq., and (3) unjust enrichment. The plaintiffs alleged that the
`“manipulation of the Fixing by the Defendants impacted” the
`plaintiffs’ transactions and caused the plaintiffs “to incur greater
`losses and/or realize lower prices than they would have realized in a
`free and open competitive market.” Id. at 193. The plaintiffs also
`sought to certify a class of persons and entities similarly situated who
`engaged in certain transactions in platinum or palladium during the
`period from January 1, 2008, through November 30, 2014.
`
`The defendants moved to dismiss the complaint, and the
`district court granted the motion in part and denied it in part. In re
`Platinum & Palladium Antitrust Litig. (Platinum I), No. 14-CV-9391,
`2017 WL 1169626, at *2 (S.D.N.Y. Mar. 28, 2017). First, after noting that
`
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`
`
`the complaint “is silent with respect to whether … Plaintiffs had any
`direct sales to or purchases from Defendants,” the district court
`dismissed the plaintiffs’ claim under the Sherman Act for lack of
`antitrust standing. Id. at *20-25. Second, the district court denied the
`defendants’ motion to dismiss the CEA claims, granting the motion
`only with respect to the plaintiffs’ claims “based on false reports and
`transactions that precede the effective date of” Commodity Futures
`Trading Commission (“CFTC”) Rule 180.1. Id. at *36. Third, because
`the plaintiffs did not allege any direct transactions with the
`defendants, the district court held that “they have not adequately
`pleaded that Defendants were enriched at their expense” and
`dismissed the unjust enrichment claim. Id. at *38. Additionally, the
`district court dismissed all claims against BASF Corporation, UBS
`AG, and UBS Securities for failure to state how those entities were
`involved in the alleged misconduct. See id. at *51 (“UBS is not alleged
`to have been a member of the Fixing during the Class Period, or to
`have participated in the Fixing, either directly or indirectly.”); id. at
`*52
`(“[T]he
`[complaint] says nothing about BASF Corp.’s
`involvement—direct or indirect—in the alleged price manipulation,
`BASF Corp.’s role in executing the scheme, or BASF Corp.’s motive in
`artificially suppressing the Fix Price.”).
`
`BASF Metals, ICBC, and the LPPFC (collectively, the “Foreign
`Defendants”) also filed a motion to dismiss the complaint for lack of
`personal jurisdiction, which the district court granted. Id. at *2. The
`district court held that the plaintiffs “have not made a prima facie
`showing that the Foreign Defendants have sufficient contacts with the
`United States as a whole.” Id. at *44. Additionally, the district court
`rejected the plaintiffs’ argument that it could hear the suit under a
`theory of conspiracy jurisdiction. Id. at *49. The district court
`
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`
`
`concluded its order by granting the plaintiffs leave to amend the
`complaint a third time. Id. at *53.
`
`On May 15, 2017, the plaintiffs filed a third amended complaint
`that differed from the previous complaint in several respects. The
`complaint no longer named the LPPFC, BASF Corporation, UBS AG,
`and UBS Securities as defendants. It also no longer brought claims for
`unjust enrichment or CEA claims based on Rule 180.1 for conduct that
`preceded the rule’s enactment.
`
`Most important, the plaintiffs added allegations relating to
`antitrust standing and personal jurisdiction. As to antitrust standing,
`the complaint provided allegations to demonstrate “[t]he close
`relationship between the Fix[ing] and NYMEX futures prices,” “[t]he
`Defendants’ substantial market share in physical platinum and
`palladium as well as NYMEX platinum and palladium futures and
`options,” and “Plaintiffs’ ability to assess damages through
`discovery.” App’x 350-51. As to personal jurisdiction, the complaint
`provided allegations “pertaining to [BASF Metals’s and ICBC’s]
`continuous presence in the U.S. and their suit-related conduct in the
`U.S.” Id. at 350.
`
`While the third amended complaint was pending, this court
`decided Charles Schwab Corp. v. Bank of America Corp. (Schwab I), 883
`F.3d 68 (2d Cir. 2018), and Prime International Trading, Ltd. v. BP P.L.C.,
`937 F.3d 94 (2d Cir. 2019). Those cases addressed, respectively,
`whether a conspiracy theory of jurisdiction establishes personal
`jurisdiction over a co-conspirator and whether the CEA has
`extraterritorial application. See Schwab I, 883 F.3d at 86-87; Prime Int’l,
`937 F.3d at 102-04. In response to Prime International, the defendants
`sought reconsideration of the district court’s denial of the motion to
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`
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`dismiss with respect to the CEA claims. In re Platinum & Palladium
`Litig. (Platinum II), 449 F. Supp. 3d 290, 302 (S.D.N.Y. 2020).
`
`Taking the new allegations and the recent case law into
`account, the district court dismissed in part the third amended
`complaint. Id. at 298. The district court again concluded that the
`plaintiffs lacked antitrust standing, but this time the district court
`separately analyzed the antitrust standing of KPFF, which transacted
`solely in physical platinum and palladium, and the antitrust standing
`of the other plaintiffs, which transacted on the NYMEX. Id. at 303. The
`district court held that KPFF lacked antitrust standing because “the
`[complaint] does not allege that [KPFF] transacted directly with any
`defendant.” Id. at 304. With respect to the plaintiffs that transacted on
`the NYMEX, the district court was persuaded that the “line between
`those who transacted directly with defendants and those who did
`not” had little meaning in the exchange context. Id. at 311. Instead, the
`district court adopted a “market domination” test that other district
`courts in this circuit have applied. Id. at 312. Under that test, plaintiffs
`must “allege that defendants dominated the relevant exchange
`market” to establish antitrust standing. Id. (“Recognizing that
`counterparties to exchange plaintiffs are not reasonably ascertainable,
`judges in this district have adopted a test that depends primarily on
`the extent of defendants’ control of the market for the product traded
`on the exchange.”) (internal quotation marks omitted). Because it
`determined that the NYMEX plaintiffs “have not adequately pleaded
`that Defendants dominated the NYMEX market for platinum and
`palladium derivatives,” the district court held that those plaintiffs
`lacked antitrust standing as well. Id. at 317.
`
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`
`
`
`The district court reached a different conclusion with respect to
`personal jurisdiction. The district court understood Schwab I to allow
`the exercise of personal jurisdiction in this case if “United-States-
`based co-conspirators acted in furtherance of the conspiracy.” Id. at
`323-24 (internal quotation marks omitted). Because the third
`amended complaint “alleges United-States based traders for affiliates
`of BASF Metals and [ICBC] provided non-public client order
`information directly to Fixing participants” in furtherance of the
`conspiracy, the district court held that it had personal jurisdiction
`over BASF Metals and ICBC. Id. at 325-26. The district court denied
`the defendants’ motion to dismiss under Rule 12(b)(2).
`
`Success on the jurisdictional issue did not mean overall success
`for the plaintiffs, however, because the district court granted the
`defendants’ motion to reconsider its holding on the CEA claims. Id. at
`332. Based on Prime International, the district court concluded that the
`plaintiffs’ CEA claims “are predominantly foreign” and therefore
`“impermissibly extraterritorial.” Id. at 331. The district court
`dismissed the CEA claims without prejudice and granted the
`plaintiffs leave to amend the Sherman Act and CEA claims. Id. at 332-
`33.
`
`In sum, the district court denied BASF Metals’s and ICBC’s
`motion to dismiss for lack of personal jurisdiction, but it granted the
`defendants’ motion to dismiss for failure to state a claim as well as the
`defendants’ motion for reconsideration. Rather than file another
`amended complaint, the plaintiffs requested that the district court
`enter final judgment, which the district court did on April 15, 2020. Of
`the plaintiffs, only Hollin, White Oak, and KPFF appealed. BASF
`Metals and ICBC cross-appealed the district court’s denial of their
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`motion to dismiss for lack of personal jurisdiction.
`
`DISCUSSION
`
`“We review de novo the grant of a motion to dismiss, accept as
`
`true all factual claims in the complaint, and draw all reasonable
`inferences in the plaintiffs’ favor.” In re Aluminum Warehousing
`Antitrust Litig., 833 F.3d 151, 157 (2d Cir. 2016).
`
`According to the plaintiffs, the district court erred (1) in
`holding that the plaintiffs lack antitrust standing, (2) in holding that
`the CEA claims were impermissibly extraterritorial, (3) in dismissing
`the LPPFC for lack of personal jurisdiction, and (4) in dismissing the
`second amended complaint as to BASF Corporation for failure to state
`a claim. BASF Metals and ICBC—the only cross-appellants in this
`case—argue that the district court erred in holding that it had
`personal jurisdiction to hear claims against them. We address these
`arguments in turn.
`
`I
`
`We begin with the plaintiffs’ Sherman Act claims. Section 1 of
`
`the Sherman Act provides that “[e]very contract, combination in the
`form of trust or otherwise, or conspiracy, in restraint of trade or
`commerce among the several States … is declared to be illegal.”
`15 U.S.C. § 1. The Clayton Act provides a private cause of action for
`injuries “by reason of anything forbidden in the antitrust laws,” id.
`§ 15(a), as well as a private cause of action to seek “injunctive relief …
`against threatened loss or damage by a violation of the antitrust
`laws,” id. § 26. The plaintiffs claim that the defendants violated the
`Sherman Act when they “conspir[ed] to manipulate platinum and
`palladium market prices and the benchmark price” and seek treble
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`damages and injunctive relief because the conspiracy affected “the
`price of Physical and NYMEX Platinum and Palladium.” App’x 491-
`92.
`
`The district court dismissed these claims for lack of antitrust
`standing. The antitrust standing requirement “originates in the
`Supreme Court’s recognition that … ‘Congress did not intend the
`antitrust laws to provide a remedy in damages for all injuries that
`might conceivably be traced to an antitrust violation.’” Daniel v. Am.
`Bd. of Emergency Med., 428 F.3d 408, 436-37 (2d Cir. 2005) (quoting
`Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters
`(AGC), 459 U.S. 519, 534 (1983)). “To establish antitrust standing, a
`plaintiff must show (1) antitrust injury, which is injury of the type the
`antitrust laws were intended to prevent and that flows from that
`which makes defendants’ acts unlawful, and (2) that he is a proper
`plaintiff in light of four efficient enforcer factors.” Schwab Short-Term
`Bond Mkt. Fund v. Lloyds Banking Grp. PLC (Schwab II), 22 F.4th 103,
`115 (2d Cir. 2021) (internal quotation marks omitted). Whether a
`plaintiff is an efficient enforcer depends on:
`
`(1) the directness or indirectness of the asserted injury;
`(2) the existence of more direct victims or the existence of
`an identifiable class of persons whose self-interest would
`normally motivate them to vindicate the public interest
`in antitrust enforcement; (3) the extent to which the claim
`is highly speculative; and (4) the importance of avoiding
`either the risk of duplicate recoveries on the one hand, or
`the danger of complex apportionment of damages on the
`other.
`In re Am. Express Anti-Steering Rules Antitrust Litig., 19 F.4th 127, 138
`(2d Cir. 2021) (internal quotation marks omitted). “[T]he weight to be
`
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`
`
`given the various factors will necessarily vary with the circumstances
`of particular cases.” Daniel, 428 F.3d at 443.
`
`The district court separately analyzed the antitrust standing of
`KPFF, which traded in the physical market for platinum and
`palladium, and the antitrust standing of the Exchange Plaintiffs, who
`traded only on the exchange market for those metals. It determined
`that none of the plaintiffs were efficient enforcers and that no plaintiff
`had antitrust standing. We agree with the district court as to KPFF but
`disagree as to the other plaintiffs. We hold that the Exchange Plaintiffs
`have antitrust standing.
`
`A
`
`We first consider whether KPFF has antitrust standing. KPFF
`
`alleges that it “sold physical platinum and palladium … at artificial
`prices proximately caused by Defendants’ unlawful manipulation.”
`App’x 362. The district court determined that the complaint “does not
`allege that [KPFF] transacted directly with any defendant,” Platinum
`II, 449 F. Supp. 3d at 304, and KPFF on appeal concedes that it “did
`not transact with a Defendant,” Appellants’ Br. 45. Based on the
`efficient-enforcer factors, we agree with the district court that KPFF
`lacks antitrust standing in this case.
`
`1
`
`The first efficient-enforcer factor—“whether the violation was
`
`a direct or remote cause of the injury”—turns on “familiar principles
`of proximate causation.” Am. Express, 19 F.4th at 139. “In the context
`of antitrust standing, proximate cause generally follows the first-step
`rule.” Id. That rule “requires some direct relation between the injury
`asserted and the injurious conduct alleged.” Id. at 140 (internal
`
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`
`
`quotation marks omitted); see also Gatt Commc’ns, Inc. v. PMC Assocs.,
`L.L.C., 711 F.3d 68, 78 (2d Cir. 2013) (“Directness in the antitrust
`context means close in the chain of causation.”) (quoting IBM Corp. v.
`Platform Sols., Inc., 658 F. Supp. 2d 603, 611 (S.D.N.Y. 2009)).
`
`“Our court has repeatedly followed the first-step rule in the
`
`antitrust context.” Am. Express, 19 F.4th at 140. In American Express,
`we held that merchants who complained of anticompetitive conduct
`by American Express Company (“Amex”) but did not accept
`American Express cards lacked antitrust standing to sue. Id. at 134-35.
`We reasoned that, “[a]t the first step, Amex raised the price for Amex-
`accepting merchants,” and only at a later step did Amex’s competitors
`follow suit and raise the price for the plaintiff merchants. Id. at 140-
`41. Accordingly, the plaintiff merchants’
`injuries “were not
`proximately caused by Amex; the alleged antitrust violation was
`instead a ‘remote’ cause of the injuries.” Id. at 141.
`
`In Schwab II, we considered the London Interbank Offered Rate
`(“LIBOR”), a “benchmark interest rate” that “serves as an index for a
`variety of financial instruments, including bonds, interest rate swaps,
`commercial paper, and exchange-traded derivatives.” Schwab II,
`22 F.4th at 109-10. Bondholders who “held LIBOR-based bonds issued
`by third parties” alleged that the defendant banks had manipulated
`the LIBOR in violation of the antitrust laws. Id. at 111. We held that
`those bondholders were not efficient enforcers because “the decision
`of a third party to incorporate LIBOR as a term in a financial
`instrument could be made without any connection to the actions” of
`the defendant banks. Id. at 116. Additionally, that decision “in no way
`enriched the [defendant banks], who had no financial stake in the
`[third-party] transactions whatsoever.” Id. Accordingly, “[t]he first-
`
`18
`
`
`
`step rule and traditional proximate cause considerations require
`drawing a line between those whose injuries resulted from their direct
`transactions with the [defendant banks] and those whose injuries
`stemmed from their deals with third parties.” Id.
`
`We hold that KPFF has not alleged a direct injury in this case.
`As in Schwab II, the decision to incorporate or reference the
`benchmark price in the transactions into which KPFF entered—and
`by which KPFF was allegedly harmed—was an independent decision.
`The only transactions that were required to adopt the benchmark
`prices were those into which the defendants entered as part of the
`Fixing, and KPFF has concededly not transacted with the defendants.
`
`We said in Schwab II that the “disconnect” between the
`plaintiffs’ injury and the defendants’ alleged benefit “further
`demonstrates the attenuated nature of the causal chain.” Id. In other
`words, the allegedly harmful transactions in that case “in no way
`enriched” the defendants. Id. In this case, KPFF alleges that the
`conspiracy enabled the defendants, as “large participants in the
`market for physical platinum and palladium,” to “buy platinum and
`palladium cheaper than they would have been able to” otherwise,
`App’x 466, just as the defendant banks in Schwab II “may have
`increased their profits by selling LIBOR-indexed instruments,”
`22 F.4th at 116. But the defendants “derived no benefit from [KPFF’s]
`transactions with third parties,” which “were entirely separate from
`the purpose of the alleged conspiracy and took place merely because
`of [the benchmark’s] unlimited public availability as a reference point
`for innumerable transactions.” Id. at 117.
`
`KPFF argues that this case differs from Schwab II because, in
`this case, KPFF alleges a “lockstep” relationship between the
`
`19
`
`
`
`benchmark prices and the spot prices—and provided “the kind of
`statistical allegations” to prove that relationship—that was absent
`from the Schwab II plaintiffs’ case. Appellants’ Supp. Br. 14. In Sanner
`v. Board of Trade, the Seventh Circuit characterized the futures market
`and the cash market for the same commodity as exhibiting a
`“lockstep” relationship. 62 F.3d 918, 929 (7th Cir. 1995).2 To prove that
`such a relationship is present here, KPFF provides charts to show that
`“[t]he spot, Fix, and NYMEX settlement prices exhibit an almost
`perfect correlation.” App’x 387-88.
`
`We disagree that Schwab II can
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