PRIME INTERNATIONAL TRADING, LTD., WHITE OAKS FUND LP, KEVIN MCDONNELL, ANTHONY INSINGA, ROBERT MICHIELS, JOHN DEVIVO, NEIL TAYLOR, AARON SCHINDLER, PORT 22, LLC, ATLANTIC TRADING USA, LLC, AND XAVIER LAURENS, Plaintiffs-Appellants,
BP P.L.C., TRAFIGURA BEHEER B.V., TRAFIGURA AG, PHIBRO TRADING L.L.C., VITOL S.A., MERCURIA ENERGY TRADING S.A., HESS ENERGY TRADING COMPANY, LLC, STATOIL U.S. HOLDINGS INC., SHELL TRADING U.S. COMPANY, BP AMERICA, INC., VITOL, INC., BP CORPORATION NORTH AMERICA, INC., MERCURIA ENERGY TRADING, INC., MORGAN STANLEY CAPITAL GROUP INC., PHIBRO COMMODITIES LTD., SHELL INTERNATIONAL TRADING AND SHIPPING COMPANY LIMITED, STATOIL ASA, AND ROYAL DUTCH SHELL PLC, Defendants-Appellees. 
ARGUED: December 10, 2018
E. Kovel (Andrew M. McNeela on the brief), Kirby McInerney
LLP, New York, NY, for Plaintiffs-Appellants.
Richard C. Pepperman (Daryl Libow, Amanda Davidoff, Austin L.
Raynor on the brief, Sullivan & Cromwell LLP, New York,
NY for Defendants-Appellees BP PLC, BP America, Inc. and BP
Corporation North America, Inc.
B. Salmons (Steven A. Reed, R. Brenda Fee, Michael E.
Kenneally, on the brief) Morgan, Lewis & Bockius LLP,
Philadelphia, PA for Defendant-Appellee Shell International
Trading and Shipping Company Limited.
A. Lange (David S. Lesser on the brief) Wilmer Cutler
Pickering Hale and Dorr LLP, Washington, DC for
Defendant-Appellee Statoil ASA.
Before: Jacobs, Sullivan, Circuit Judges, and Korman,
District Judge [*]
RICHARD J. SULLIVAN, CIRCUIT JUDGE
from a judgment of the United States District Court for the
Southern District of New York (Carter, J., )
dismissing Plaintiffs-Appellants' claims for lack of
personal jurisdiction as to Defendant-Appellee Shell
International Trading and Shipping Company Limited, for lack
of jurisdiction under the Foreign Sovereign Immunities Act as
to Defendant-Appellee Statoil ASA, and for failure to state a
claim as to all claims. Plaintiffs-Appellants argue that the
district court erred in concluding that their claims under
the Commodity Exchange Act were impermissibly
extraterritorial. Plaintiffs-Appellants also contend that the
district court erred in dismissing their Sherman Act claims,
in concluding that the court lacked personal jurisdiction
over Defendant-Appellee Shell International Trading and
Shipping Company Limited, and in dismissing claims against
Defendant-Appellee Statoil ASA under the Foreign Sovereign
Immunities Act. We disagree. Accordingly, we
AFFIRM the district court's dismissal of
Plaintiffs-Appellants' Commodity Exchange Act claims in
this opinion, and AFFIRM the dismissal as to
all other Defendants-Appellees and all other claims in a
separately filed summary order.
appeal requires us to decide whether alleged misconduct tied
to the trading of crude oil extracted from Europe's North
Sea constitutes an impermissibly extraterritorial application
of the Commodity Exchange Act. For the reasons set forth
below, we find that it does, and therefore affirm the
dismissal of Plaintiffs-Appellants' claims.
("Plaintiffs") are individuals and entities who traded
futures and derivatives contracts pegged to North Sea oil -
also known as Brent crude - on the Intercontinental Exchange
Futures Europe ("ICE Futures Europe") and the New
York Mercantile Exchange ("NYMEX") between 2002 and
2015 (the "Class Period").
("Defendants") are a diverse group of entities
involved in various aspects of the production of Brent crude.
In addition to producing, refining, and distributing Brent
crude, Defendants also purchase and sell Brent crude on the
physical market and trade Brent-crude-based futures contracts
on global derivatives markets.
Brent Crude Physical Market
crude is extracted from the North Sea of Europe, and refers
to oil pulled from four fields in the region: Brent, Forties,
Oseberg, and Ekofisk (collectively, "BFOE"). The
price of Brent crude serves as the benchmark for two- thirds
of the world's internationally-traded crude.
extraction, Brent crude is delivered via pipeline to ports in
Europe where it is loaded onto ships for delivery. These
physical cargoes are bought and sold through private,
over-the-counter ("OTC") transactions between
producers, refiners, and traders. Because these physical
transactions are private and do not occur on an open
exchange, the price of Brent crude is not immediately
available to the public. Instead, price-reporting agencies
collect information about transactions from market
participants and report it to the consuming public.
Platts and the Dated Brent Assessment
is a prominent London-based price-reporting agency that
collects information from market participants regarding their
physical Brent crude transactions, analyzes that data to
compute benchmark prices, and publishes those prices in
real-time price reports as well as various end-of-day price
assessments. The price reports track several different
submarkets in the Brent crude market, but the "primary
pricing benchmark"-widely regarded as the
"spot" price for Brent crude - is the "Dated
Dated Brent Assessment tracks physical cargoes of North Sea
crude oil that have been assigned specific delivery dates.
Rather than averaging the prices of the four grades of Brent
crude, the Dated Brent Assessment is based on the lowest
price among the four grades, and is calculated each day
during the assessment period. Platts uses a Market-on-Close
("MOC") methodology, under which Platts tracks all
Brent crude trading activity during the day, but weighs most
heavily the bids, offers, and transactions that occur at the
end of each trading day, from 4:00 to 4:30 P.M. GMT.
Platts relies on market participants to voluntarily
self-report their private transactions in order to create and
publish the Dated Brent Assessment, they do not just
mechanically recite the reported trade activity. Instead,
Platts exercises its own discretion to accept or reject
transactional data, and makes this assessment based on the
reliability, accuracy, and consistency of such data. At the
end of the day, Platts' goal in publishing the Dated
Brent Assessment is to accurately reflect market prices and
to avoid distortion or artificiality.
Brent Futures Market
focus their claims on Brent-related futures and derivatives
contracts ("Brent Futures"), which are primarily
traded on two exchanges: NYMEX and ICE Futures Europe. NYMEX
is a U.S.-based commodity futures exchange, while ICE Futures
Europe is a London-based exchange. Plaintiffs and other
market participants trade on both exchanges. The most heavily
traded Brent Futures contract is the "ICE Brent Futures
Contract," which has a corollary contract on the NYMEX.
These contracts stop trading, or "expire,"
approximately two weeks before the delivery month. If a
futures contract is not offset before it expires, the
contract is cash-settled. In other words, the in-the-money
counterparty receives the cash value of the contract rather
than the underlying asset itself.
Futures traded on ICE Futures Europe ("ICE Brent
Futures") are cash- settled based on an established
benchmark known as the ICE Brent Index. Brent Futures traded
on the NYMEX, in turn, settle at expiration to the price of
ICE Brent Futures. Unlike the Dated Brent Assessment - which
Platts calculates based on prices for the least expensive
BFOE grade of Brent cargoes - the ICE Brent Index is
calculated based on the entire BFOE market of
physical Brent cargoes. In addition, the ICE Brent Index
incorporates an average of certain designated price-
reporting assessments, one of which, Plaintiffs allege, is
the Dated Brent Assessment.
this incorporation, Plaintiffs provide several other points
of support for their claim of a "direct link"
between Brent Futures settlement prices and the Dated Brent
Assessment. Specifically, they contend that the "ICE
Brent Futures Contracts prices rarely deviate from the Dated
Brent Assessment by more than 1% at expiration," and