LME wants aluminum warehousing suits heard in New York

Reuters

By David Ingram

LAS VEGAS, Dec 5 (Reuters) - The London Metal Exchange askeda panel of U.S. judges on Thursday to assign a federal court inManhattan to handle a series of antitrust lawsuits that allegethe world's largest metal exchange, two of Wall Street's biggestbanks and big commodity merchants conspired to raise the priceof aluminum.

The venue of lawsuits is sometimes critically importantbecause of the varying levels of experience among judges indifferent cities, as well as other factors such as conveniencefor lawyers and witnesses.

LME, which is owned by Hong Kong Exchanges and Clearing Ltd, and other defendants including Goldman Sachs GroupInc, JPMorgan Chase & Co and merchants GlencoreXstrata are fighting allegations in about 30 lawsuitsthat they manipulated the warehousing of aluminum in order tolift the price of the metal. The U.S. Justice Department is alsoinvestigating the matter.

Goldman, JPMorgan and HKEx have rejected the claims and saidthey would contest them vigorously.

Many of the warehouses are in or near Detroit, Michigan, sosome aluminum buyers want their cases to be heard there.

But warehouse operators took their directions and rules frombosses in Manhattan and London, so the U.S. District Court forthe Southern District of New York would make more sense as avenue, said Margaret Zwisler, a lawyer at the firm Latham &Watkins which represents the LME.

"The real issue here is what were the rules and how were therules made," Zwisler said at a court hearing.

The rules were not made by warehouse workers, she added."The truck drivers are not the relevant people who are thewitnesses here," she said.

The venue decision will be made in the coming days by theU.S. Judicial Panel on Multidistrict Litigation, a panel ofseven judges who meet every two months to consider similarquestions in an array of matters. Its hearing on Thursday was inLas Vegas.

Chris Lovell, a lawyer who represents many of theplaintiffs, disputed that all key decisions were made in NewYork or London. He said many were likely made in Detroit byGoldman subsidiary Metro International Trade Services.

For that reason and because so many of the suits have beenfiled in Detroit, they should all be consolidated there, hesaid. "The manipulation allegedly occurred in Detroit," Lovellsaid.

The plaintiffs, though, are not unanimous. Some prefer NewYork, New Orleans or Los Angeles.

Goldman said in a recent court filing that it had nopreference between the Detroit and New York courts.

The judges on the panel gave little indication of how theywould decide. U.S. District Judge Charles Breyer said many ofthe relevant facts seemed to be specific to Detroit unless thedefendants decide not to contest the details of what went on inthe warehouses, while U.S. District Judge Lewis Kaplan doubtedthat the specific movements of aluminum among various warehouseswould be very relevant to the outcome.

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