Peggy Zwisler of Latham & Watkins
Peggy Zwisler of Latham & Watkins (Photo by Diego M. Radzinschi)

When a New York Times investigation found that lax aluminum warehousing standards implemented by the London Metal Exchange had raised the price of the metal, LME hired Margaret “Peggy” Zwisler to fend off the inevitable class action lawsuits that followed. The Latham & Watkins partner delivered a rapid victory for her new client, persuading a skeptical judge that privately-owned LME is actually an instrument of a foreign state.

In an Aug. 25 ruling, U.S. District Judge Katherine Forrest in Manhattan dismissed claims that LME conspired with owners of aluminum warehouses—including Goldman Sachs & Co. and JPMorgan Chase & Co.—to fix aluminum prices. Forrest ruled that LME is an organ of the U.K. government and therefore shielded from U.S. antitrust claims under the Foreign Sovereign Immunities Act. The ruling doesn’t affect claims against Goldman and the other codefendants, which have their own motions to dismiss pending.

Forrest acknowledged that her holding would seem “surprising and counterintuitive” because LME—the leading marketplace for metals futures and an overseer of more than 700 metals warehouses around the world—is a privately held for-profit company. The judge even confessed in her ruling that she was initially skeptical of Zwisler’s argument, writing that she finally changed her mind after a careful study of the case law.

While LME won absolution at the earliest possible stage, it was still a hard-fought victory for Zwisler, a 38-year veteran of the antitrust bar. The market for aluminum is particularly complex, so the judge convened a hearing where the lawyers brought experts to walk her through it. The judge also had to resolve contested facts in order to decide the sovereign immunity issue. “It was more like a summary judgment argument than a motion to dismiss,” Zwisler told us in an interview.

Back in 2010, Goldman acquired a company called Metro International Trade Services that owns aluminum warehouses around the United States. JPMorgan acquired a similar company, Henry Bath & Son Ltd., a year later. Both financial institutions have since signaled that they’re putting the units up for sale amid pressure from regulators to get out of the warehousing industry.

Metro and Henry Bath generate revenue by charging rent to aluminum producers. That means the longer they stockpile aluminum, the more money they make. The Times reported in a July 13 article that after Goldman acquired Metro, Metro warehouses took much longer to fill orders from businesses like the Coca-Cola Company that rely on aluminum. Increased storage costs associated with the stockpiling allegedly inflated the price of aluminum across the world.

Coca Cola and other critics of the current system place the blame partly on LME. The company, which lays down rules governing the warehousing industry, allowed warehouses to hold far more aluminum than they sell on any given day. (LME has in recent months implemented new rules intended to reduce wait times.)

In the wake of the Times’ story, plaintiffs lawyers filed 26 price-fixing suits on behalf of direct aluminum purchasers and end-users. The suits were consolidated before Forrest, who appointed Lovell Stewart Halebian & Jacobson, Grant & Eisenhofer and other plaintiffs firms to lead the litigation.

After beating out several other firms for the LME assignment, Zwisler spearheaded the company’s sovereign immunity defense and finally presented it during a hearing before Judge Forrest in June. There are many factors to consider in determining whether LME is a government instrumentality, Zwisler told the judge, and LME’s private ownership shouldn’t be dispositive. Her client is closely monitored by U.K. government officials, Zwisler said, to the point where they’ve held meetings to discuss industry standards more than 50 times over the last few years. She also explained that LME has successfully invoked sovereign immunity in U.K. courts.

By winning Forrest over, Zwisler has added another victory to a long and impressive career. According to Law360, Zwisler has tried at least 14 antitrust cases—a high number, given how rarely such cases ever go before a jury—and won 10 of them outright.

Women only made up 13 percent of Zwisler’s law school class, and she said she joined now-defunct Howrey—then a litigation boutique—because she saw it as her most likely ticket into the male-dominated corporate litigation bar. “At the time, there were very women doing corporate litigation, and very few firms could give me assurances that I’d do corporate litigation.” Zwisler said.

After almost three decades at Howrey, Zwisler joined Latham in 2005, where she long served as cochair of the firm’s top-flight antitrust group. “I only do litigation,” Zwisler said. “I’ve been doing that for 38 years, and it’s been a great career.”

This week’s victory for LME came much sooner than might have been expected when the case began a year ago. But Zwisler isn’t complaining, and neither is LME. “It’s a lot more fun for clients to win a case at this stage,” Zwisler said.