Prime International Trading v. BP P.L.C.

Prime International Trading (Prime) (plaintiff) traded futures based on the price of crude oil extracted from Europe’s North Sea, known as Brent crude. Prime traded Brent crude futures on the Intercontinental Exchange Futures Europe (ICE Futures Europe) and the New York Mercantile Exchange (NYMEX). Physical cargoes of Brent crude were traded in private, over-the-counter transactions. Because the transactions were private, market prices were not known to the public in real time. Instead, price-reporting agencies collected sales information from market participants and used the information to develop an index price. One price-reporting agency, Platts, was based out of London. Platts tracked and calculated the spot price, known as the Dated Brent Assessment, based on the lowest price among four various grades of Brent crude, using a market-on-close methodology that placed a heavier weight on transactions that took place near the end of each trading day. Platts relied on market participants to self-report their sales activity. In contrast, the Brent crude futures traded on ICE Futures Europe were priced based on all the physical Brent cargoes, not just the cheapest grades. NYMEX used the ICE Futures Europe price. BP P.L.C. and other oil companies (collectively, the oil companies) (defendants) purchased and sold Brent crude in the physical markets and traded Brent-crude-based futures on global derivatives markets. Prime filed an action in federal district court against the oil companies, arguing that the oil companies engaged in artificial trading of Brent crude in foreign markets and reported the artificial trading to Platts, resulting in a manipulated Dated Brent Assessment, which in turn ultimately affected the price of Brent crude futures traded on NYMEX. Prime claimed that these actions violated the Commodity Exchange Act (CEA). The oil companies moved to dismiss, arguing that the relevant provisions of the CEA did not apply extraterritorially. The district court granted the motion to dismiss, and Prime appealed.