ADM Asks Court to Dismiss Ethanol Case

Archer Daniels Midland Wants Green Plains' Ethanol Lawsuit Dismissed

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
Connect with Todd:
Archer Daniels Midland filed a motion in court to dismiss a lawsuit filed by Green Plains Inc. (DTN file photo)

LINCOLN, Neb. (DTN) -- Archer Daniels Midland asked a federal court to dismiss an ethanol markets lawsuit filed by Omaha, Nebraska-based Green Plains Inc., alleging in a motion filed on Friday that Green Plains had not stated a claim.

Green Plains filed a new lawsuit in the Nebraska court last October, alleging ADM conducted a scheme to illegally depress the ethanol cash spot market beginning in November 2017. Green Plains alleges ADM's actions harmed its business. The court transferred the case to the U.S. District Court for the District of Central Illinois in March.

In August 2021, the Illinois court dismissed a previous Green Plains lawsuit that argued the same claims but as a class action. The court ruled the company did not have standing to sue under the Commodity Exchange Act.

In a memorandum filed with the court as part of its motion for the court to dismiss the case, ADM said Green Plains has fallen short in proving the necessary elements of a tortious interference case.

"The first element is the existence of a valid contract," ADM said in the memo. "But the complaint fails to identify a single contract. Not one. That is the very same deficiency that led this Court to dismiss the tortious interference claim in the United Wisconsin ethanol case."

ADM said the second element is whether the defendant had knowledge of the specific contracts at issue. "Given that plaintiffs did not identify a single contract, neither did they allege facts to show that ADM was aware of any unidentified contracts," the memo said.

The third element is conduct causing a breach of contract or termination of a relationship.

"This is the second time that plaintiffs have tried to plead tortious interference, and for this attempt they had the benefit of this court's prior decisions and extensive discovery from ADM," ADM said. "It is now clear they cannot state a claim."

In the new lawsuit Green Plains said it had "valid contractual relationships" tied to various ethanol-pricing benchmarks.

Green Plains argues ADM was "aware of these valid contractual relationships, pointing to the period from November 2017 through at least September 2019 as the time of the alleged manipulation."

Green Plains claims it suffered damages through lost profits, a diminishment in future earning capacity, "reputational harm," impairment of business relationships and "consequential" losses.

Green Plains alleges 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.

That benchmark is used to price and settle ethanol derivatives on the New York Mercantile Exchange and the Chicago Board of Trade.

Second, Green Plains alleged ADM sold, on average, 1 million gallons of ethanol daily and adversely affected the pricing of more than 32 million gallons of physical ethanol produced industrywide each day.

Green Plains said ADM's actions were contrary to what most ethanol producers would do based on market conditions.

Green Plains said starting in November 2017, ADM was a buyer at the Argo Terminal on the market on close, or MOC, window just once at 210,000 gallons. The MOC window is when traders execute trades as close to the closing price as possible.

Green Plains said ADM, however, "was a seller at all other times for a total of approximately 821 million gallons -- a sea change from their pre-November 2017 trading behavior in which ADM was consistently a buyer."

Similar lawsuits filed by AOT Holding AG and six ethanol companies remain on track for a 2024 trial. 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 their lawsuit.

Read more on DTN:

"ADM Granted Venue Change in Lawsuit," https://www.dtnpf.com/…

"Court Dismisses Ethanol Market Lawsuits," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @DTNeeley

Todd Neeley