BP, Shell, Morgan Stanley Seek End of Oil Price-Fixing Lawsuit

BP Plc , Royal Dutch Shell Plc (RYDAF), Morgan Stanley (MS) and other companies urged a U.S. judge to dismiss nationwide litigation claiming they conspired for 12 years to fix prices of Brent crude oil, a benchmark for the cost of gasoline and heating oil.

In papers filed on Monday night in U.S. District Court in Manhattan, the defendants said there was no evidence they colluded to manipulate spot prices or intended to do so, in violation of U.S. commodity and antitrust laws.

They also said that because the alleged manipulation took place outside the United States and was governed by foreign law, U.S. courts had no authority to handle the case to begin with.

"Threadbare" and "conclusory" allegations made by the plaintiffs are "wholly untethered to any defendant's conduct," the defendants said. "The complaint thus fails to adequately allege price artificiality in any market."

The plaintiffs include futures and derivatives traders and firms who allege the manipulation resulted in unfavorable prices on the oil they traded.

They sued after European Commission investigators in May 2013 raided offices of BP, Shell, the London bureau of pricing service Platts and others over suspected oil and biofuel price manipulation.

The plaintiffs seek class-action status, compensatory damages and triple damages.

David Kovel, a Kirby McInerney partner representing the plaintiffs, on Tuesday said his clients are reviewing and will respond to the defendants' filings.

Brent crude is a North Sea oil benchmark used to price roughly two-thirds of the world's crude oil supplies.

According to the complaint, the defendants deliberately submitted false prices, "spoof" orders and transactions with "aberrant" pricing to Platts, which is owned by McGraw Hill Financial Inc and used by traders around the world.

The defendants were also accused of conducting "wash sales" that moved prices without exposing participants to market risk.

Among the other defendants are Norway's Statoil ASA (STOHF) ; Switzerland-based energy trading firm Vitol SA; a trading unit of Switzerland's Mercuria Energy Group Ltd; and Hess Energy Trading Co, a joint venture between Hess Corp and two former Goldman Sachs partners.

Part of their argument for dismissal is based on a 2010 U.S. Supreme Court decision that emphasized a presumption against using U.S. law to police foreign conduct.

"Brent crude oil is sourced from the North Sea and traded overseas, and Platts makes its reports from London," the defendants said. "Plaintiffs' winding causal theory - starting in a foreign oil market, going through a foreign price reporting agency, and then ending in diverse futures and physical oil markets - does nothing to change that."

The plaintiffs said they conducted their trades on U.S. exchanges including the New York Mercantile Exchange and Intercontinental Exchange, and incurred liability domestically.

Platts is not a defendant.

The case is In re: North Sea Brent Crude Oil Futures Litigation, U.S. District Court, Southern District of New York, No. 13-md-02475.

(By Jonathan Stempel; Editing by Tom Brown)