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Court throws out traders' manipulation claims against global energy giant Total

A federal district judge dismissed a class action suit over alleged market manipulation filed by natural gas traders against the French oil and gas supermajor Total SA after the judge found that the traders failed to show direct economic harm.

Judge John Koeltl in the U.S. District Court for the Southern District of New York dismissed the putative class action for failure to state a claim in a March 27 opinion and order.

The class action was filed under the Commodity Exchange Act and the Sherman and Clayton Acts. Traders Alan Harry, Levante Capital LLC, Clark Public Utilities and C&C Trading LLC charged that Total, Total Gas & Power North America Inc. and Total Gas & Power Ltd. had manipulated the price of natural gas at four regional hubs in the U.S. Southwest between 2009 and 2012. They said the companies used excessive and uneconomic trades and maintained high market share during bid weeks at the hubs, then reported those trades to index publishers in order to tilt the monthly index prices. The activity caused economic harm to their physical and financial gas contracts at a separate hub, the Henry Hub in Louisiana, they said, and they sought to represent a class of individuals who had suffered similar harm.

The separation between the Henry Hub and the other hubs was crucial to the judge as he waded through a number of claims to grant the motions filed by Total and its subsidiaries to dismiss the complaint. The traders were not directly harmed by any purported market manipulation at the other hubs, the judge concluded. (U.S. District Court for the Southern District of New York docket 15-cv-9689)

"In sum, the [traders] were not participants in the 'very market that [was] directly restrained' by the misconduct alleged, and have therefore failed to allege plausibly that the injury they suffered is 'of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful," the judge wrote, citing earlier cases.

The district court decision was good news for the Total companies as they attempt to cast off market manipulation charges filed by FERC enforcement staff related to the trading activity at the Southwest hubs between 2009 and 2012. In April 2016, FERC asked the companies and two employees to prove why they should not be held liable for almost $217 million in civil penalties and forced to disgorge unjust profits of more than $9 million for the alleged manipulation of gas prices. (FERC docket IN12-17)