Judge dismisses soybean farmers' lawsuit
CHICAGO - District Court Judge Wayne Anderson issued a direct verdict in favor
of the Chicago Board of Trade, dismissing a 13-year-old lawsuit by soybean
farmers who accused the exchange of bilking them out of millions of dollars.
Thursday's ruling came in a lawsuit in which the plaintiffs had argued that a
1989 emergency order by the CBOT caused November soybean futures to plummet at a
time when market forces seemed to be pushing prices higher.
"At the CBOT, we take great pride in the integrity of our markets and members.
That is why I am pleased that the completion of the plaintiff's case in this
matter caused Judge Andersen to render a verdict in favor of our exchange," said
Nickolas Neubauer, CBOT Chairman, in a statement issued following the verdict.
Despite CBOT officials' happiness with Andersen's ruling, even the judge expects
his decision to be appealed. Plaintiff attorneys immediately promised to do that
in the 7th Circuit Court of Appeals. They have 30 days to file.
In 1988, the United States experienced a severe drought. A poor crop reduced
soybean stocks to a 12-year low. The following year, market prices in east
Arkansas were in the range of $7.50 per bushel. Many farmers were still holding
1988 soybeans expecting the prices to go even higher. All indications were
prices were heading up due to short supplies up and down the pipeline.
Then, on July 11, 1989, CBOT issued an emergency order. The board claimed the
market was artificial and they had to take steps to correct it. CBOT mandated
that anyone holding large contracts for soybeans had to liquidate them. When
that order was given soybean prices dropped 40 cents almost immediately.
Yesterday, in an odd admission, Andersen wrote that his opinion might be wrong
and that farmers really were hurt by CBOT actions in 1989 “First, it is possible
that farmers who sold soybeans based on July futures prices in the immediate
aftermath of the drastic actions of July 11th, 1989, did get paid less for their
soybeans. It does appear that the market was jolted for at least a day or two,"
Anderson said.
"And I want to say, also, I could be wrong. I have a duty to do, and I don't
think there could be any reasonable outcome that's different than this. So, if
it turns out that the Court of Appeals disagrees, so be it," wrote Andersen.
On Thursday morning, Harvey Joe Sanner - one of the plaintiffs and a farmer from
Des Arc, Ark. - had yet to hear Andersen's ruling. But Andersen had dropped
hints earlier in the week.
"We were sweating blood Monday because the judge indicated he would rule on
CBOT's request for a directed verdict after we'd presented our case. (A directed
verdict is often requested after the plaintiff presents its case. The defense
attorneys, in essence, tell the judge the charges against their client weren't
proven and ask him to dismiss the case.) Andersen said he'd rule on the request
Tuesday morning and was inclined to rule in favor of CBOT.
"Well, I was physically sick when I heard that. But court started Tuesday and
nothing happened. The judge never mentioned his earlier statements, never
mentioned why he didn't rule and court just went on like normal. Here it is
Thursday and the trial is still ongoing," said Sanner.
Plaintiff attorneys rested Monday a week ago. Sanner said he thought the
attorneys did a "good job" presenting the case against CBOT. "But CBOT attorneys
are doing a hell of a job with their defense. They keep hollering on and on
about the communications they had with the CFTC and how they had no choice but
to take the actions they did. They claim there doesn't have to be an actual
threat, that they can act simply because they think there's a threat to the
market," said Sanner.
After Andersen's decision, Neubauer said plaintiff charges of CBOT conflicts of
interest and artificially depressed cash markets were wrong. "Both the Commodity
Futures Trading Commission, the federal regulatory agency that oversees our
markets, and the U.S. General Accounting Office agreed with our taking such
action," he said.