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LME wants aluminum warehousing suits heard in New York

David Ingram
Thursday, 5 Dec 2013 | 7:29 PM ET

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

The venue of lawsuits is sometimes critically important because of the varying levels of experience among judges in different cities, as well as other factors such as convenience for lawyers and witnesses.

LME, which is owned by Hong Kong Exchanges and Clearing Ltd , and other defendants including Goldman Sachs Group Inc, JPMorgan Chase & Co and merchants Glencore Xstrata are fighting allegations in about 30 lawsuits that they manipulated the warehousing of aluminum in order to lift the price of the metal. The U.S. Justice Department is also investigating the matter.

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

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

But warehouse operators took their directions and rules from bosses in Manhattan and London, so the U.S. District Court for the Southern District of New York would make more sense as a venue, 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 the rules 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 the witnesses here," she said.

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

Chris Lovell, a lawyer who represents many of the plaintiffs, disputed that all key decisions were made in New York or London. He said many were likely made in Detroit by Goldman subsidiary Metro International Trade Services.

For that reason and because so many of the suits have been filed in Detroit, they should all be consolidated there, he said. "The manipulation allegedly occurred in Detroit," Lovell said.

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

Goldman said in a recent court filing that it had no preference between the Detroit and New York courts.

The judges on the panel gave little indication of how they would decide. U.S. District Judge Charles Breyer said many of the relevant facts seemed to be specific to Detroit unless the defendants decide not to contest the details of what went on in the warehouses, while U.S. District Judge Lewis Kaplan doubted that the specific movements of aluminum among various warehouses would be very relevant to the outcome.

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