ADM Ethanol Markets Lawsuit Dismissed

by Todd Neeley (DTN Progressive Farmer) Federal Judge Dismisses Ethanol Lawsuit Against Archer Daniels Midland -- A federal court in Illinois dismissed one of three ethanol market lawsuits against Archer Daniels Midland this week, outlining in an order that six ethanol companies in Iowa and Wisconsin were unable to prove antitrust injury.

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 a lawsuit in the U.S. District Court for the Central District of Illinois in Urbana.

The lawsuit alleged ADM intentionally manipulated and artificially depressed the price of ethanol in the United States by targeting ethanol sales activity at the Argo terminal in Illinois. 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.
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In dismissing the case this week, the court said the ethanol companies could not prove any of their ethanol was sold at the Argo terminal or that ADM's actions drove other ethanol producers out of business.

The lawsuit said from 2017 to 2019, ADM controlled 70% of the Argo terminal market and accounted for 90% of ethanol sold during the critical market window.
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"Plaintiffs insist that while the Argo terminal market was the actual site of ADM's conduct, the ultimate goal was the reduction of ethanol prices in the U.S. market generally, through the Argo terminal's unique role in the price-setting system," the court said in its ruling.

"Plaintiffs make no argument that those producers exited the Argo terminal market or that the amended complaint plausibly states such a fact."

Two similar lawsuits are pending in the same court, including a complaint filed by Omaha-based Green Plains Inc. and AOT Holdings, a Swiss company that owns an energy-trading subsidiary.

Excerpt from DTN Progressive Farmer: A federal appeals court gave Green Plains Renewable Energy new life in a lawsuit it filed against Archer Daniels Midland which alleged the company interfered with a Green Plains ethanol contract by conducting a scheme to illegally depress the ethanol cash market beginning in 2017.

Green Plains' originally sued ADM in October 2021 in the U.S. District Court for the District of Nebraska. The case was transferred to the U.S. District Court for the District of Central Illinois in 2022. That court dismissed the case in December 2022, ruling Green Plains did not state a claim and failed to identify specific contracts with which ADM allegedly interfered.

The U.S. Court of Appeals for the Seventh Circuit vacated the decision and sent the case back to the Illinois court, where according to the ruling, Green Plains will have the opportunity to file an amended complaint.

The Illinois court dismissed the case because it said Green Plains did not have a claim for tortured interference with a contract and because Nebraska courts may not recognize such claims.

"A federal court sitting in diversity has a basic constitutional responsibility to ascertain correctly the content of state law," the Seventh Circuit said in its ruling.

"When the highest court of the state has not spoken on the matter, this inquiry can be difficult, but it cannot be avoided. In such situations, our case law, and that of the Supreme Court, instructs us to search elsewhere for a persuasive indication of how the highest court of the state would rule if the present case were before that tribunal today."

The Seventh Circuit said the district court in Illinois misread the appeals court's case law on torturous interference in the "most restrictive" way when the content of state law "points to the less-restrictive" option.

"Here, the district court seemed to believe that the Nebraska Supreme Court might well be willing to apply section 766A (torturous interference law)," the Seventh Circuit said.

"Yet, it also believed that it could not take that course because it required applying section 766A for the first time in Nebraska without explicit direction from the Nebraska Supreme Court. But there is no such impediment to a district court applying the rule it believes the highest court of the state would apply."

In its legal challenge, 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.