Zimmerman, Raymond v. Chicago Bd Trade

In the
United States Court of Appeals
For the Seventh Circuit
____________

Nos. 02-3844 & 02-3997
RAYMOND ZIMMERMAN, INDIVIDUALLY
AND ON BEHALF OF A CLASS OF SIMILARLY
SITUATED SOYBEAN FARMERS, ET AL.,

Plaintiffs-Appellants, Cross-Appellees,

v.

CHICAGO BOARD OF TRADE, PATRICK H. ARBOR,
THOMAS R. DONOVAN, ET AL.,

Defendants-Appellees, Cross-Appellants.

____________
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 89 C 8467—Wayne R. Andersen, Judge.
____________
ARGUED SEPTEMBER 25, 2003—DECIDED FEBRUARY 9, 2004
____________

Before CUDAHY, RIPPLE and KANNE, Circuit Judges.
CUDAHY, Circuit Judge. This appeal represents what may
be the last chapter in a story that began more than ten
years ago, when the Chicago Board of Trade (CBOT) issued
2 Nos. 02-3844 & No. 02-3997

an Emergency Resolution (the Resolution), which, according
to the plaintiffs, depressed the price of soybeans sold in the
July 1989 cash market. Only four months later world
history took a turn as the Berlin Wall fell. The cold war was
over but the “soy war” had just begun.
The plaintiffs in this action are a class of soybean farmers
who sold their soybeans during the period of allegedly
depressed prices in July 1989. The plaintiffs argue that the
CBOT violated antitrust laws by adopting the Resolution,
not for proper regulatory purposes but instead out of self-
interest and to protect a politically powerful member of the
CBOT. After twelve days of jury trial, the district court
granted the CBOT’s Rule 50(a) motion for judgment as a
matter of law, finding that the plaintiffs failed to present a
legally sufficient evidentiary basis for a reasonable jury to
find that the CBOT’s dominant motive for issuing the
Resolution was held in bad faith. This appeal followed.
After reviewing the record, we find ourselves in agreement
with the district court, and we therefore affirm.

I. BACKGROUND
Because our task is to determine whether there is suf-
ficient evidence in the record for a jury to find for the
plaintiffs, we must review the evidence in the record which
might support such a finding. Therefore, although not ex-
haustive, our recitation of the facts is necessarily lengthy.

1. Introduction
On July 11, 1989, the CBOT publicly issued an
Emergency Resolution requiring all holders of positions in
the July 1989 soybeans futures contract to reduce their
positions to three million bushels as of the close of trading
on July 18, 1989, and to further reduce their positions to
one million bushels as of the expiration of trading in the
Nos. 02-3844 & No. 02-3997 3

July contract on July 20. App. at 897.1 According to the
plaintiffs’ expert, this public liquidation of the July 1989
soybeans contracts disrupted the market, contributing to a
39.5-cent drop in the price of the July 1989 soybean futures
contract on July 12, and correspondingly causing a 25-cent
drop in the cash price of a bushel of soybeans through the
rest of July 1989. App. at 372, 385-88, 507-08.
This lawsuit has been before us on two previous occa-
sions. In 1992, we found that the defendants did not have
antitrust immunity because the Commodities Futures
Trading Commission (CFTC or the Commission) never
formally approved the Resolution. See American Agric.
Movement v. Board of Trade, 977 F.2d 1147, 1167 (7th Cir.
1992) (AAM). In 1995, we found that the plaintiffs’ com-
plaint should not have been dismissed for lack of antitrust
standing. See Sanner v. Board of Trade, 62 F.3d 918, 930
(7th Cir. 1995). Since that time, the case was certified as a
class action, the district court denied the defendants’
summary judgment motion and a jury trial commenced
on September 18, 2002, before the Honorable Wayne R.
Andersen. After the plaintiffs rested their case on
September 30, the defendants moved for judgment as a
matter of law pursuant to Fed. R. Civ. P. 50(a). The district
court did not then rule on the motion and allowed the
defendants to proceed with their case.
On October 10, the trial court granted the defendants’
Rule 50(a) motion from the bench, holding that there was
insufficient evidence for a reasonable jury to return a ver-
dict that the defendants’ dominant motive was held in bad
faith. App. at 793-815. At that time, the seven defendants
were: the CBOT; five members of the CBOT’s Board of

1
The joint appendix in this case will be designated as “App.”
while the transcript will be designated as “Tr.”
4 Nos. 02-3844 & No. 02-3997

Directors (Chairman Karsten Mahlmann, Vice Chair
Patrick Arbor, President Thomas Donovan and Directors
Hal Hansen, and Glen Hollander); and the Chairman of the
CBOT’s Business Conduct Committee (Wallace
Weisenborn).

2. The Market For Soybeans
The following facts were elicited at trial. Every year,
American farmers plant soybeans in the spring and harvest
them in the fall. Soybeans are often stored and sold during
the period between crop harvests. The plaintiff farmers are
those who harvested their soybeans in the fall of 1988 and
held onto the beans for sale in the summer of 1989, when
prices were predicted to be higher.2 App. at 336. Almost the
entire annual American soybean crop is ultimately pur-
chased by a handful of commercial firms, including Cargill
and Archer Daniels Midland, generally known as “commer-
cials.” App. at 312-14. Commercial firms acquire soybeans
to process them into oils or meal, or for purposes of export.
App. at 307, 312-13.
In addition to commerce in soybeans themselves, which is
known as the cash market, there is also commerce in
contracts for the future purchase and sale of soybeans (the
futures market). Under the terms of CBOT soybean futures
contracts, one party, commonly known as a “short,” agrees
to make delivery of soybeans during a specified delivery
month, while the other party, commonly known as a “long,”
agrees to pay for the beans and take delivery of them
during the delivery month. If the futures price declines, the
short benefits financially while the long suffers a commen-
2
Because of a drought, the 1988 soybean crop was small, ap-
proximately 1.8 billion bushels—about ten percent below normal.
Soybean futures prices trading in the summer of 1988 for delivery
the following summer approached $10 a bushel. App. at 313, 504-
05.
Nos. 02-3844 & No. 02-3997 5

surate loss. App. at 191-92. Every day, CBOT member firms
known as “clearing firms” mark contract holders’ positions
to market, such that fluctuations in futures prices are
credited to or debited from customers’ accounts daily. App.
at 192, 309-10. Clearing firms also serve as guarantors of
contract performance because they must perform if their
customers cannot. App. at 310-11.
In 1989, more than 90% of all soybean futures contracts
were traded on the CBOT. App. at 308-09. The CBOT
is a futures exchange, authorized as a “contract market”
and regulated by the CFTC pursuant to the Commodities
Exchange Act (CEA). App. at 617. The CEA imposes on
CBOT regulatory responsibility for the markets conducted
under its auspices, subject to CFTC oversight. App. at 615-
16. The CBOT is governed by its Board of Directors and also
has a Business Conduct Committee (BCC), which is respon-
sible for monitoring exchange members’ financial compli-
ance, for maintaining liquid markets and for ensuring
orderly liquidation of expiring contracts. App. at 225-27,
556.
CBOT soybean futures contracts are traded with respect
to seven separate delivery months during the year, includ-
ing the last months of the old crop in May, July, August and
September, followed by November contracts representing
the new crop. App. at 320. The futures contracts expire
during the delivery month. Prior to a contract’s expiration,
it can be canceled by purchases of offsetting contracts, but
futures contracts held at a contract’s expiration require
delivery for performance.3

3
A short has the contractual right to make delivery at any time
during the delivery month. App. at 321. Trading in an expiring
contract ceases approximately seven business days before the end
of the month. This period after the end of trading was adopted in
the 1930s to give shorts sufficient days after the end of trading in
a contract to arrange for transportation and delivery. App. at 322.
6 Nos. 02-3844 & No. 02-3997

A CFTC requirement limits a firm’s soybean futures po-
sition to three million bushels, but the CFTC is authorized
to exempt individual commercial firms from this require-
ment as to any one month’s contract because commercial
firms have large needs for physical soybeans for processing
and export. App. at 317-18. These exemptions or “anticipa-
tory hedges” are issued by the CFTC and require holders of
such positions to substantially liquidate their positions five
days prior to the contract’s expiration. App. at 319, 523. The
purpose of this federal regulatory requirement is to promote
orderly liquidation by making sure that holders of anticipa-
tory hedges do not hold all their contracts until the expira-
tion date. App. at 670- 72.
The rule is also aimed at preventing a corner on the mar-
ket. A corner occurs when a trader secretly acquires a long
futures position, very large relative to the physical supply
that is available to be delivered, and simultaneously ac-
quires the means, by ownership or otherwise, to prevent
delivery at reasonable prices of the physical commodity,
thereby “squeezing” the shorts that must make delivery.4
App. at 519-20.

3. Cargill and Ferruzzi
Cargill, a large privately held corporation and member of
the CBOT, began acquiring a short position in the expiring
May 1989 soybean contract during the first week of May
1989. App. at 357. Cargill lost money on this position and
may have blamed its losses upon an Italian competitor,
Ferruzzi Finanziaria, S.p.A. (Ferruzzi). In 1988, Ferruzzi
had bought the American soybean processor Central Soya,

4
For more information about futures trading and the CBOT, see
Roberta Romano, A Thumbnail Sketch of Derivative Securities and
Their Regulation, 55 Md. L. Rev. 1 (1996).
Nos. 02-3844 & No. 02-3997 7

and thus had begun competing directly with Cargill for
American soybeans. App. at 314-15, 783. Ferruzzi was a
large holder of May 1989 long soybean contracts, holding in
mid-May more than 80% of the May long contracts still
open (the “open interest”) through expiration of the May
contract on May 19, 1989. App. at 347-48.
In 1988, the CFTC became interested in Ferruzzi because
it had not submitted the reports required to allow it to hold
futures positions in excess of the CFTC-set limits and
because it had not answered all of the CFTC’s questions.
App. at 619-23, 733, 1011-12, 1012-14. The CFTC became
concerned with Ferruzzi’s pattern of maintaining large long
soybean futures positions late in the delivery month and
taking delivery of large quantities of soybeans under the
futures contracts. App. at 623. Both the CFTC and CBOT
monitored Ferruzzi’s futures and cash positions in late 1988
and into the spring of 1989. Id.; App. at 694-96, 736-41. The
CFTC and CBOT also gathered information from other
market participants and received complaints that mirrored
their own concerns. App. at 234-37, 702-05, 866-69, 1027-30,
1033, 1035, 1151-52.
Between May 12 and May 19, Cargill sent four letters
to the BCC complaining that it was losing money, that the
“futures price appears . . . to be artificial” and that it was
“amazed that the regulatory authorities have permitted
a single firm to amass such control of the soybean [sic] vis-
ible as well as a dominant position in the expiring futures
contract . . . .”5 App. at 864-65, 866-67, 870, 873. On May 18,
5
The plaintiffs introduced evidence that, when testifying un-
der oath on July 13, 1989 in an injunction action brought by
Ferruzzi, Chairman Mahlmann denied that he had received
complaints from any of the commercials about Ferruzzi’s position
as the dominant long prior to July 11. App. at 218-19, 903. In fact,
Mahlmann had received a number of letters which did not
(continued...)
8 Nos. 02-3844 & No. 02-3997

1989, Cargill Director James Howard sent an internal
memorandum to his subordinates, informing them of
Cargill’s dual objectives as follows:
1. Establish for once and all the economic parameters
of futures market pricing as it relates to the underlying
cash market.
2. A distant second is to recover the losses we have
experienced because of uneconomic disruption caused
by the actions of the principal long in the market.
Punishing that long has value only in the reinforcement
of the first objective that might occur.
App. at 872 (emphasis in original). The memo also indicates
that:
If it appears, once the dust settles, that it’s back
to business as usual, consider selling our member-
ship in the CBOT and withdrawing our elevators from
deliverable status. This is a viable option, because fail-
ure to act on the part of those responsible for regulating
these markets would simply confirm the reality of
recent years in which the delivery process has not been
allowed to work its economic role of reflecting the cost
of carrying grain in the underlying marketplace.
Id. Throughout the spring of 1989, the CFTC and CBOT
staffs separately communicated frequently with Ferruzzi to
explore Ferruzzi’s reasons for simultaneously holding a
substantial long futures position and a large supply of de-
liverable soybean warehouse receipts. App. at 625, 629, 699,
1015-16; Tr. at 1600-03. The CFTC and CBOT repeatedly
urged Ferruzzi to liquidate its futures positions and to buy

(...continued)
explicitly mention Ferruzzi but contained numerous indirect
references. App. at 234-37, 864-70.
Nos. 02-3844 & No. 02-3997 9

the soybeans it claimed it needed at lower prices in cash
markets. App. at 634, 706-10, 1040-41. The CFTC and
CBOT exchanged information gathered from Ferruzzi
during these conversations. App. at 706-09, 1031.
As the May 19 expiration of trading in the May soybean
futures contract approached, Ferruzzi held a large position
in both May futures and the deliverable supply of physical
soybeans and was not significantly reducing its position.
App. at 736-37; Tr. at 1610-14, 1663-65. Thus, on May 18,
the day before the May contract expired, the CFTC sent a
private letter to Ferruzzi directing it to liquidate its soy-
bean futures position down to three million bushels or less
by the end of trading on May 19. Ferruzzi complied but in
fact it moved its large May long position to the July futures
contract. App. at 634, 676-77, 743. Hence, the CFTC and
CBOT intensified their monitoring of the July soybean
futures contract after the May contract expired. App. at
636-38, 743. At its June 5 meeting, the BCC called several
market participants, including Ferruzzi, to discuss the
CBOT’s concerns. App. at 744-46, 1042-49. The CFTC
staff also contacted Ferruzzi on at least seven occasions
throughout June (June 1, 6, 12, 13, 14, 19, and 28), urging
Ferruzzi to liquidate its July futures position and to buy
soybeans more cheaply in the cash market. App. at 398-402,
405, 639-40, 710-11, 1093-95. The CFTC’s concern over
Ferruzzi’s situation remained very high at June’s end. App.
at 641.
At one point in May 1989, Cargill still had a large short
futures position, including approximately 30 million bushels
short in the July 1989 soybean contract alone. App. at 362-
63. During May and throughout June, Cargill began
incurring losses in its July soybean position, in amounts
ultimately exceeding $20 million. Id.; App. at 527-29. A
Cargill senior manager, Dan Huber, met with Chairman
Mahlmann in the Chairman’s office of the CBOT on the
10 Nos. 02-3844 & No. 02-3997

morning of June 23, 1989. App. at 207. This was not out of
the ordinary; Mahlmann testified that he “met with the
members of the exchange or member firm representatives
on a frequent basis.” Id. Also present in the meeting were
CBOT President Donovan and, at times, Hal Hansen,
another Cargill senior manager. According to Mahlmann,
they discussed the discrepancy between futures and cash in
the previous May contract, the exacerbated discrepancy in
July and the need to take action with regard to the general
performance of grain contracts. App. at 213.
On June 26, 1989, Dan Huber of Cargill sent a letter to
Chairman Mahlmann, following up on the meeting, which
stated that “we” must move forward with a “basic action
plan.” App. at 879. The letter emphasized that “[f]oremost
in our plan is an understanding by the staff and committee
members of the problems/concerns some of us have ex-
pressed . . . .” Id. Mahlmann testified that the “basic action
plan” was not addressing an emergency resolution but
“contracts in general” and that the group agreed to form a
committee of long and short commercial users. App. at 214.
Huber also distributed an internal memorandum at Cargill
summarizing the meeting at CBOT and concluding that he
was confident that Cargill’s concerns were finally going to
get attention. App. at 874-78.
On June 27, BCC Chairman Weisenborn wrote to
Ferruzzi expressing concerns, warning of possible actions by
CBOT and urging Ferruzzi to liquidate. App. at 946. In a
letter to CBOT’s BCC dated June 28, 1989, TENCO Limited
Partnership (a non-commercial CBOT member) complained
that Ferruzzi’s actions might cause “(A) the destruction of
the integrity of the contract as deliveries would have no
effect on the price determining function[;] (B) the demoral-
ization of the soybean contract . . . [;] (C) price manipulation
(by means of a corner) . . . [and;] (D) the undermining of the
entire futures contract marketplace . . . .” App. at 1151.
Tom Neal of TENCO met with the BCC to discuss the
Nos. 02-3844 & No. 02-3997 11

letter. App. at 608. Continental Grain Company also sent a
letter to the BCC. App. at 236-37. Further, Glenn Hollander
and Dave Brennan, members of CBOT’s soybean committee,
also raised concerns to the BCC “that there must be
something wrong.” App. at 609.
Chairman Mahlmann called Cargill on June 29, 1989, to
follow up on their meeting. App. at 214, 280. By the time of
this telephone conversation, Cargill had eliminated its July
1989 soybean futures position. On the day after this
conversation, however, Cargill began re-acquiring a short
position in the July 1989 soybeans futures contract. App. at
364-65.
During late June or early July of 1989, BCC Chair
Weisenborn made some handwritten notes summarizing the
situation confronting the Board in early July 1989. App. at
571-72, 883-87. These notes began with a list of “recent
problems,” including a “drought,” an “old crop” and a “short
supply.” App. at 883, 885. The notes stated: “(3) Basic
problem is rich nonmember long in narrow supply market”
and “(4) Shorts expect to be rescued.” App. at 885. The next
page of the notes described the “recent problems” as
including: “Member Commercial Using hedger exemption
(BOT—CFTC)” and “Non member speculator—On the long
side in a market (a guy with $) tight enough for he (and
maybe others) to cause a problem.” App. at 886. The
plaintiffs argue that these notes are a clear reference to
Cargill and Ferruzzi. Pet. Br. at 15. The notes also indi-
cated that “we have ultimate weapon—emergency action—
nuclear bomb.” App. at 883. Further, they stated that there
is “pressure on BCC to get the other guy” and that the
“Winners go to [the] Bank” and the “Losers [go] to [the]
newspaper.” App. at 883-84. The notes concluded by stating:
“shorts are in greatest danger and expect to get rescued.
Politically they are harder to deal with.” App. at 884.
12 Nos. 02-3844 & No. 02-3997

4. Actions by CFTC and CBOT
Ferruzzi’s July futures position was particularly large in
relation to the soybeans in a deliverable position that
Ferruzzi did not already own, and the position was being
reduced only modestly. App. at 641. The CFTC experts
believed that Ferruzzi was not bidding for soybeans at its
processing plants at prices comparable to prices demanded
in taking delivery of soybeans on July futures and shipping
them to its plants. App. at 642.
On July 5, the BCC met to gather market information
from Ferruzzi and others and to consider what action to
take in light of Ferruzzi’s market position and failure to
cooperate. App. at 755-70, 1155-56. Before this BCC meet-
ing, CBOT Market Surveillance informed the BCC that:
registered warehouse receipts were dramatically lower than
in the prior years (App. at 964), Ferruzzi owned approxi-
mately 85% of those warehouse receipts (Id.), Ferruzzi had
been slow to liquidate and held an increasingly large
percentage of all open July futures (App. at 967), and the
July contract was not converging with cash values and was
at an unusual level relative to subsequent contract months
(App. at 964).
The BCC’s discussions with Ferruzzi lasted more than
two hours. App. at 595. The BCC had noted that Ferruzzi
could buy cash beans more cheaply near its domestic
processing plants than by standing for delivery on July
futures and so it strongly urged Ferruzzi to buy cash beans
and to promptly liquidate its July hedges. App. at 769-71.
CBOT staff and BCC members also questioned Ferruzzi’s
candor, since Ferruzzi now claimed that its hedges, which
it had previously said were for export, were for domestic
processing. App. at 768-69.
On July 6, Ferruzzi met with CFTC staff. App. at 712; Tr.
at 1630-35. At that meeting, Ferruzzi representatives
admitted that it had not been bidding delivery equivalent
values for soybeans in cash markets. App. at 1160-61. The
Nos. 02-3844 & No. 02-3997 13

CFTC instructed Ferruzzi to bid aggressively for cash soy-
beans, to promptly raise cash bids to delivery equivalent
values and to begin immediate, substantial liquidations of
its July soybean futures. App. at 1157-61.
As of July 7, 1989, Ferruzzi had not begun to liquidate.
App. at 771-72. Thus, in a letter drafted that day, the BCC
expressed its dismay and reiterated that Ferruzzi should
reduce positions immediately. App. at 772-73, 976-77. The
same day, the CFTC’s Director of Market Surveillance rec-
ommended to the CFTC Commissioners that they revoke
Ferruzzi’s July hedge exemption. App. at 651-52. The
Commissioners authorized CFTC staff to do so. App. at 650.
The plaintiffs note that on that day, a Cargill representa-
tive called CBOT President Donovan and spoke with him
for almost 18 minutes. App. at 552.
On July 10, 1989, Ferruzzi continued to ignore liquidation
requests and, instead of liquidating, Ferruzzi responded by
letter to the BCC. App. at 774, 978-80. The CBOT’s BCC
Chairman and the CFTC’s Director of Market Surveillance
read the letter as an admission that Ferruzzi had not been
bidding delivery values in domestic cash markets; an
indication that Ferruzzi might stand for delivery despite
the CFTC’s and CBOT’s urging that it liquidate; and as a
threat to sue CBOT if forced to liquidate. App. at 567-68,
598-99, 647-49. After the close of trading, the BCC met and
concluded that Ferruzzi’s concentrated futures and deliver-
able supply positions threatened an orderly liquidation of
the July soybean futures contract. App. at 600-02, 604-07,
1241-44. The BCC recommended that the CBOT Board of
Directors take emergency action to address the threat. App.
at 601-05, 776, 981-82, 1241-44. This same day the CFTC
verbally notified the CBOT that it was going to revoke
Ferruzzi’s anticipatory hedge position effective three days
prior to the expiration of the July 1989 contract, which was
July 18. App. at 653. But when the Chairman of the BCC
recommended to the Board that it take action, he was not
14 Nos. 02-3844 & No. 02-3997

aware that the CFTC was also acting on the matter. App. at
605. The BCC Chairman conveyed to CBOT Chairman
Mahlmann orally and by letter the recommendation that
the CBOT take action. App. at 600-02, 981-84.
After hearing from the BCC, Mahlmann telephoned the
CFTC Chair, Wendy Gramm, to inform her of the situation.
Chairman Gramm said that her staff would look into
emergency alternatives for the CBOT to consider. App. at
241-42. Chairman Mahlmann met that afternoon in his
office with the CBOT’s president, the CBOT’s counsel and
the CBOT’s vice president in charge of Investigations and
Audits. App. at 246-47. At that meeting, they discussed the
possibility of a resolution but made no decision at that time
as to what type of emergency resolution to pursue.
On the morning of July 11, 1989, Chairman Mahlmann
again spoke with the CFTC Chair, who told him that her
staff had looked into potential alternatives for the CBOT to
consider and that she would fax these alternatives to
Mahlmann shortly. App. at 248. Within minutes, the CFTC
faxed the CBOT a copy of its private letter to Ferruzzi no-
tifying Ferruzzi that: (1) the CFTC was approving an
increase in Ferruzzi’s annual anticipatory hedge position for
the new crop; and (2) it was revoking Ferruzzi’s anticipatory
hedge position during the last three trading days for the
July and August soybean contracts. App. at 1006-07. In the
same fax, the CFTC also included a list of five alternatives
which the CBOT might follow to avoid the threat to orderly
liquidation. App. at 248-49, 651-54, 1005.
The CFTC Market Surveillance Director and the CBOT
Chairman both testified that the CFTC’s revocation of
Ferruzzi’s hedge exemption did not fully remove the threat
to the July contract. App. at 288-89, 658-59. The revocation
did not specify when Ferruzzi had to start liquidating its
position, nor did it prevent other market participants from
increasing their positions to a level that could threaten
Nos. 02-3844 & No. 02-3997 15

orderly liquidation. App. at 658-59. Further, the CFTC’s
letter revoked only Ferruzzi’s anticipatory hedge exemption
and did not prevent Ferruzzi from claiming that its hedges
were for other purposes, like exports. Id.
The morning of July 11, Chairman Mahlmann and
President Donovan met again to discuss emergency action.
App. at 286-87, 548-51. In these meetings, the Chairman
drafted what would become the Resolution, and he then
recommended it to the CBOT’s Board of Directors that
afternoon. Id. Before the Board of Directors meeting,
Mahlmann again called the CFTC Chairman to inform her
of the proposed Resolution. App. at 257-58. Mahlmann de-
scribed the Resolution and noted that it combined alterna-
tives one and two from the fax the CFTC had sent over that
morning. Id. The CFTC Chairman stated that the proposal
sounded “reasonable” and that it had the advantage of
providing an advance indication whether Ferruzzi intended
to cooperate with the two regulatory authorities. App. at
258-59, 1162.
Later that morning, Mahlmann polled the board to de-
termine whether any director personally owned or con-
trolled July soybean futures. App. at 260-61; 1008-10.
One director responded affirmatively and recused himself.
App. at 1008. According to a handwritten list, however,
six directors, including Chairman Mahlmann and Vice
Chairman Arbor, were affiliated with clearing firms that
had customer or proprietary (i.e., house) positions which
were net short.6 App. at 881-82. The plaintiffs argue that
this “conflict” list was compiled in a manner consistent with

6
At the time, Mahlmann was the Chairman of a company known
as Stotler and owned 13% of the company. The conflict list in-
dicated that Stotler had a net customer short position of over two
million bushels. App. at 189, 881. Stotler was experiencing fi-
nancial difficulties at the time and would declare bankruptcy
within a year. App. at 188.
16 Nos. 02-3844 & No. 02-3997

the Board’s conflict standards as reflected in CBOT Reg.
540.05(c) (“No member of the Board shall hear an appeal if
. . . he or any person or firm with which he is affiliated has
a financial, personal, or other direct interest in the mat-
ter.”). App. at 888. The plaintiffs argue that this informa-
tion was enough to deprive the Board of a quorum. How-
ever, the CBOT staff determined upon request that there
were enough non-conflicted members to make a quorum,
and these members continued to consider the Resolution.
App. at 194-95.
Mahlmann distributed a packet of material to the re-
maining directors, which included the July 7 BCC letter to
Ferruzzi, the July 10 Ferruzzi letter to the BCC, the July 11
CFTC letter revoking Ferruzzi’s hedge exemption and
information regarding Ferruzzi’s cash soybean transactions.
App. at 262-63, 985-1002. Mahlmann summarized the
relevant information for the Board, and then the Board
debated the market situation and considered a variety of
potential emergency actions. App. at 264-66. After a thor-
ough discussion, CBOT’s directors voted 16 to 1 to approve
the proposed Resolution. App. at 266. Among the directors
voting to approve were two public directors: an Oregon
wheat farmer and the Dean of the Graduate School of
Business of the University of Chicago. App. at 268-69. No
director who participated in the meeting personally owned
or controlled July soybeans futures contracts. App. at 261-
62.
According to the plaintiffs’ expert, Dr. Jeffrey Williams,
a professor in the Department of Agriculture & Resource
Economics at the University of California—Davis, based
upon known available soybeans for delivery, there was no
possibility of Ferruzzi’s implementing a corner or otherwise
causing a market manipulation in the July 1989 soybean
contract. App. at 339-44, 515-16. Critical to his opinion was
his conclusion that the CFTC’s order of July 11, requiring
Ferruzzi to liquidate its July futures position down to three
Nos. 02-3844 & No. 02-3997 17

million bushels, effectively prevented a corner without
further CBOT action. App. at 515-16. When asked whether
liquidation of the July contract, assuming that Ferruzzi
complied with the July 11 order, would have been orderly,
the plaintiffs’ expert said, “I think so. It was in Ferruzzi’s
interest to minimize price impacts that would have been
costing it money.” App. at 516.
The plaintiffs’ expert also opined that it would have been
impossible for Ferruzzi to exercise a squeeze or a corner
because it lacked control over the deliverable supply of soy-
beans and did not have the element of secrecy required to
execute such a market manipulation. App. at 518-23. The
plaintiffs’ expert further testified that there was no arti-
ficiality in the pricing of the July 1989 soybean futures
contract as of the time of adoption of the Resolution. App.
at 335-43. Prior to the Resolution, the price of the futures
contract resulted from normal market forces, was conver-
gent with the July cash prices and was consistent with
historical pricing trends and data. Id.
On October 10, 2002, the trial court granted the defen-
dants’ Rule 50(a) motion from the bench, holding that there
was no legally sufficient evidentiary basis for a reasonable
jury to return a verdict that the defendants’ dominant
motive was held in bad faith. App. at 793-815. This appeal
followed. The plaintiffs (appellants) argue that the district
court improperly granted judgment as a matter of law
because there was enough evidence to go to the jury
on the question of bad faith. The defendants (appellees), of
course, disagree. Moreover, the defendants contend that (a)
the plaintiffs failed to present evidence that the Resolution
restrained trade in any relevant market for cash soybeans;
(b) any restraint in the soybeans futures market was
18 Nos. 02-3844 & No. 02-3997

reasonable; (c) the plaintiffs lacked standing7; (d) the class
was not properly certified; and (e) the district court erred in
allowing the plaintiffs’ expert to testify. Because we affirm
the district court’s grant of judgment as a matter of law on
the basis of a lack of evidence of bad faith, we do not reach
these other issues.

II. DISCUSSION
1. Motion To Strike Portions of the Appellees’ Brief and
Record on Appeal
As a preliminary matter, the appellants have moved to
strike sixteen exhibits from the appellees’ brief and from
the record on appeal, arguing that Defense Exhibit (DX) 1
was ruled inadmissible by the district court, and the other
exhibits were never “formally” moved into evidence. Given
that no particular magic words are required to admit an
exhibit into evidence, it would be impossible for us to de-
termine which of these exhibits the district court intended
to treat as formally admitted. See Hastings v. Reynolds
Metals Co., 165 F.2d 484, 486 (7th Cir. 1947) (“It is not
indispensable that an exhibit be offered and admitted in
evidence by any precise words.”). Perhaps this is why a
motion to strike matter from the record on the ground that
it is not properly a part of it must first be presented to the
district court. See Circuit Rule 10(b); see also Fed. R. App.
P. 10(e); Practitioner’s Handbook for Appeals to the United
States Court of Appeals for the Seventh Circuit at 95 (2002)
(“[I]f there is a dispute as to what is part of the record, the
parties should resolve that in the district court.”). The ap-
pellants have brought their motion in the wrong court.

7
In addition to our opinion in Sanner, the issue of antitrust
standing with respect to the present action is discussed in Loeb
Indus., Inc. v. Sumitomo Corp., 306 F.3d 469, 498 (7th Cir. 2002)
(Cudahy, J., concurring).
Nos. 02-3844 & No. 02-3997 19

Whether or not these exhibits were technically admitted
into evidence, however, is not important to this court’s
analysis, since the relevant content of each exhibit was read
into the record and discussed extensively at trial.8 There-
fore, to avoid any confusion, our analysis relies on the
record testimony regarding each exhibit in question and not
upon the exhibit itself. The appellant’s motion to strike is
denied.

2. Judgment as a Matter of Law
We review de novo the district court’s decision to grant
judgment as a matter of law. See Mathur v. Board of
Trustees of Southern Ill. Univ., 207 F.3d 938, 941 (7th Cir.
2000); Lane v. Hardee’s Food Sys., Inc., 184 F.3d 705, 707
(7th Cir. 1999). Judgment as a matter of law is proper only
where there is no legally sufficient basis for a reasonable
jury to find for the nonmoving party. See Fed. R. Civ. P.
50(a). In considering a Rule 50(a) motion, the court is
required to view the evidence in the light most favorable to
the nonmoving party, and must draw all reasonable in-
ferences in that party’s favor. See Reeves v. Sanderson
Plumbing Prods., Inc., 530 U.S. 133, 150-51 (2000); Sheehan
v. Donlen Corp., 173 F.3d 1039, 1043-44 (7th Cir. 1999). We
may not weigh the evidence or pass on the credibility of
witnesses, nor may we substitute our view of the contested
evidence for the jury’s. See Reeves, 530 U.S. at 150; Place v.
Abbott Labs., 215 F.3d 803, 809 (7th Cir. 2000). However, in
order to reverse a district court’s grant of judgment for the
defendants as a matter of law, there must be more than a

8
See, e.g., Tr. at 1342-43 (DX3); Tr. at 1343-44, 1614-15 (DX4);
Tr. at 350 (formally moving DX12 into evidence); Tr. at 1720-21
(DX38); App. at 702-705 (DX40); Tr. at 1721-22 (DX43); Tr. at
1600-03 (DX44); Tr. at 1663-65 (DX55); Tr. at 1610-14, 1742-1744
(DX70); Tr. at 1755-63 (DX85); Tr. at 325-27 (DX107); Tr. at 1630-
35 (DX123).
20 Nos. 02-3844 & No. 02-3997

mere scintilla of evidence to support the plaintiffs’ case. See
Mutual Serv. Cas. Ins. Co. v. Elizabeth State Bank, 265 F.3d
601, 612 (7th Cir. 2001); 3M v. Pribyl, 259 F.3d 589, 605
(7th Cir. 2001).
It is undisputed that the CBOT had the power to adopt
the Resolution in order to address market “emergencies.”
See, e.g., Cargill, Inc. v. Board of Trade, 164 F.2d 815, 823
(7th Cir. 1947) (“Almost every act of an agency such as the
Board and Clearing affects or restrains commerce in some
respect, but such restraints as may be within the rule of
reason are not unlawful.”). In 1989, § 5 of the CEA assigned
the CBOT the duty to “provide[ ] for the prevention of
manipulation of prices and the cornering of any commodity”
traded on the CBOT. 7 U.S.C. § 7(d) (1989). The CBOT was
authorized by law to deal with any market “emergency,”
which was defined by the CFTC as:
Any . . . occurrence or circumstance which, in the opin-
ion of the governing board of the contract market,
requires immediate action and threatens or may threat-
en such things as the fair and orderly trading in, or the
liquidation of or delivery pursuant to, any contract for
the future delivery of a commodity or any commodity
option on such contract market.
17 C.F.R. § 1.41(a)(4)(ii) (1989). By way of describing
an actual or attempted manipulation, “emergencies” were
defined to include “any actual, attempted, or threatened
corner, squeeze, congestion, or undue concentration of posi-
tions . . . .” Id. § 1.41(a)(4)(ii)(B). The plaintiffs, however,
argue that the Resolution was an improper response by
the CBOT because it was not taken for any of these proper
regulatory purposes but instead was adopted in bad faith.
See Cargill, 164 F.2d at 823 (“Only the bad faith of the
defendants in the discharge of their duties under the
emergency in which they purported to act can vitiate the
defendants’ action.”).
Nos. 02-3844 & No. 02-3997 21

In order to understand the context of the district court’s
decision here, we note that the CBOT is a self-regulated
entity. Its board is made up of members who are not only
knowledgeable in the market operations that the CBOT is
charged with regulating, but who may have a personal
interest in the market. “The concept of exchange self-reg-
ulation necessarily implies that the boards of exchanges
shall contain a substantial number of persons with first-
hand knowledge of the market and that these persons shall
be free to share in important deliberations.” Sam Wong &
Son, Inc. v. New York Mercantile Exch., 735 F.2d 653, 672
(2d Cir. 1984). The members of exchange boards may to a
degree have potentially mixed motives in taking action.
These motives, of course, include genuine regulatory
concerns, but the impact of the regulatory actions may
advance private interests and harm the interests of compet-
itors. Id. at 677 (“[I]f the governors sincerely and rationally
believe their action is in the public interest, there should
not be liability simply because the action has the incidental
effect of advancing their private interests or damaging
someone whom they do not like.”). In order to constitute bad
faith, the plaintiffs must show that “self-interest or other
ulterior motive unrelated to proper regulatory concerns is
alleged to constitute the sole or the dominant reason for the
exchange action.” Id. (emphasis added). In other words, it
is not enough for the plaintiffs to show that the CBOT, or
some subset of its membership, was incidentally motivated
in part by a desire to “rescue the shorts,” to “punish the
long” or to advance their own interests—the plaintiffs must
present evidence that the CBOT’s sole or dominant motive
for acting was to serve personal interests.
We believe that the plaintiffs have presented no evidence
from which a jury could reasonably find that the CBOT’s
dominant motive was held in bad faith, and that there is
scant evidence of any improper motive. The plaintiffs have
argued that there were two possible bad faith and improper
motives that may have been important to the CBOT. First,
22 Nos. 02-3844 & No. 02-3997

CBOT may have acted to “rescue the shorts,” to “punish the
long” and specifically to benefit Cargill, one of the politically
powerful members of the CBOT. Second, the CBOT may
have adopted the Resolution to benefit its board members
who were affiliated with brokerage companies that had
house or customer accounts that were net short. Before
addressing these two alleged bad faith motives, we will
discuss the substantial evidence in the record of a good
faith regulatory motive.

A. Good faith motive
There is no need to repeat our discussion of the factual
history here. The record shows that starting in 1988, both
the CFTC and the CBOT had been concerned with
Ferruzzi’s pattern of maintaining large long soybean fu-
tures positions late in the delivery month and of taking
delivery of large quantities of soybeans under the futures
contracts. Decision makers from both the CFTC and the
CBOT testified that they were concerned that Ferruzzi’s
actions threatened the creation of a corner and were a
threat to the orderly liquidation of the market. The plain-
tiffs do not deny that the threat of a corner or of an obstacle
to orderly liquidation would represent a legitimate occasion
for regulatory concern, and that a response to this concern
would not constitute an act of bad faith.
The CFTC and CBOT repeatedly communicated their
concerns to Ferruzzi, through letters and in personal meet-
ings. Various market participants, including TENCO
Limited Partnership and Continental Grain Company, ex-
pressed these same concerns to the CBOT and to the CFTC.
On several occasions, the CFTC gave specific directives to
Ferruzzi, such as an order to liquidate its May soybeans
futures position and, later, to liquidate its July soybeans
contracts. With respect to this latter directive, Ferruzzi’s
Nos. 02-3844 & No. 02-3997 23

response suggested that it might ignore the CBOT’s and the
CFTC’s requests and might instead sue the CBOT.
Ultimately, the CFTC had serious concerns that
Ferruzzi’s heavy futures and deliverable supply positions
threatened orderly liquidation of the July futures contract.
Hence, the CFTC revoked Ferruzzi’s July anticipatory
hedge exemption. Even the plaintiffs’ expert, Dr. Williams,
agreed that Ferruzzi represented a threat to orderly liquid-
ation, at least before the CFTC revoked its anticipatory
hedge exemption. App. at 397.
A director of the CFTC testified that after the Ferruzzi
hedge exemption was revoked, there was still a threat to
the markets because the CFTC had not specified when
Ferruzzi had to start liquidating its position.9 Additionally,
the revocation of the anticipatory hedge exemption did not
prevent other market participants from increasing their
positions to a level that could threaten orderly liquidation.
Finally, the CFTC revoked only Ferruzzi’s anticipatory
hedge exemption and did not prevent Ferruzzi from claim-
ing that its hedges were for the purpose of other operations,
like exports. Ferruzzi’s July 10 letter suggested that
Ferruzzi might play hardball, and that it might not intend
to cooperate.
The Chairman of the CFTC, upon request of the CBOT,
provided the CBOT with a list of five additional emergency
measures to consider taking. None of these five alternatives
suggested that the CBOT do nothing. The CBOT based the
Resolution on a combination of the first two of the CFTC’s
five suggestions. After the Chairman of the CBOT discussed
the Resolution with the CFTC Chairman, she agreed that
it sounded reasonable and spoke positively about its
advantages. Although in American Agriculture Movement,
we held that the CFTC did not formally “approve” the

9
It is important to note that there is no allegation that the CFTC
had any improper purpose or was in any way biased.
24 Nos. 02-3844 & No. 02-3997

Resolution so as to give the CBOT antitrust immunity, the
close involvement and informal approval of the CFTC in all
matters involving Ferruzzi, and particularly in the adoption
of the Resolution, make it particularly difficult to find that
the CBOT acted in bad faith and is a significant factor in
our decision today. See Lagorio v. Board of Trade, 529 F.2d
1290, 1292 (7th Cir. 1976) (CFTC’s “concurrence” gives
“[a]dded weight” to the conclusion that the exchange board’s
emergency action was within its discretion). Moreover, the
Board passed the Resolution by a 16-1 margin. Ten of those
voting directors are not alleged to have any conflict of
interest. Based on all of this evidence, we find that the
record strongly suggests that the CBOT was motivated by
a legitimate regulatory concern. With that in mind, we
discuss the evidence which the plaintiffs have presented to
show that the CBOT’s dominant purpose was in fact in bad
faith.

B. Rescuing the shorts and punishing the long
The plaintiffs attempt to establish that the CBOT’s dom-
inant motives were “improper.” First, the plaintiffs present
evidence of communications between Cargill and the CBOT
which they argue suggest an improper motive. Second, the
plaintiffs present expert testimony that at the time the
CBOT acted, there was no legitimate regulatory purpose for
such an action.
The plaintiffs rely heavily on an internal memorandum
dated May 18, 1989, by Cargill Director James Howard,
which indicates Cargill’s desire to “punish the long,” i.e.,
Ferruzzi. See App. at 872. First, we note that the plaintiffs
do not argue that this internal memorandum was ever seen
by the defendants. The plaintiffs refer to it largely to show
that Cargill had a selfish motive, and they argue that there
is an inference that CBOT adopted this motive. We believe,
however, that even if the memorandum undisputably
Nos. 02-3844 & No. 02-3997 25

indicated that Cargill’s dominant motive was to feather its
own nest, it would be improper to infer from this fact alone
that CBOT’s motive was improper and held in bad faith. As
every judge well knows, one can listen to a proponent’s self-
interested argument for following a particular course and
ultimately follow that course for noble reasons of one’s own
without buying into the motives of the proponent.
And, even so, the only fair reading of the internal memo-
randum is that Cargill’s main concern was simply that the
“delivery process has not been allowed to work its economic
role of reflecting the cost of carrying grain in the underlying
marketplace.” This seems to be the case because the
memorandum specifically states that “[p]unishing that long
has value only in the reinforcement of the first objective. .
. .” Id. The first objective is to “[e]stablish . . . the economic
parameters of futures market pricing as it relates to the
underlying cash market.” Id. Therefore, this memorandum
does not really reflect a predatory motive on the part of
Cargill. It certainly does not suggest that Cargill’s domi-
nant motive was predatory, and it does not properly support
an inference that the CBOT was stained with a bad faith
motive.
The four letters Cargill sent to the BCC reflected the
same legitimate concern for regulatory action about which
others, including the CFTC, had inquired. App. at 864, 866,
870, 873. In these letters, Cargill complained that it was
losing money, that the “futures price appears . . . to be
artificial” and that it was “amazed that the regulatory
authorities have permitted a single firm to amass such
control of the soybean [sic] visible as well as a dominant
position in the expiring futures contract. . . .” App. at 866-
67, 870. Cargill expressed these same concerns in its five-
page internal “action plan.” App. at 874-78. Just because
Cargill might have stood to profit from the regulatory action
that it was urging does not render its concern illegitimate,
and nothing here suggests bad faith on the part of the
CBOT.
26 Nos. 02-3844 & No. 02-3997

The plaintiffs also make much of the so-called Weisenborn
notes. App. at 883-87. These notes, however, do not suggest
that either Cargill or the CBOT was acting illegitimately.
The notes state, inter alia, that there is “pressure on BCC
to get the other guy” and that “shorts are in greatest danger
and expect to get rescued. Politically they are harder to deal
with.” App. at 883-84. As the district court noted, however,
there is nothing wrong with rescuing the shorts if they need
to be rescued from an alleged squeeze or other improper
market manipulation. Weisenborn confirmed that this was
what he meant by his notes when he testified that the
shorts were “expecting us to protect them by creating an
orderly liquidation . . . .” Tr. at 1189. While the memoran-
dum is admittedly colorful, it does not suggest that the
CBOT should take emergency action because the shorts are
harder to deal with politically. In fact, there is really
nothing in these notes to suggest that the CBOT was
considering intervening for a reason other than to prevent
further market manipulation. These same notes specifically
state: “BCC, we have to prevent manipulation of prices and
cornering of any commodity.” Tr. at 1179. Although superfi-
cially suggestive, these notes do not establish the CBOT’s
bad faith.
The plaintiffs have presented extensive evidence that
Cargill communicated regularly with the CBOT during the
relevant time period. However, officials of the CBOT “met
with the members of the exchange or member firm repre-
sentatives on a frequent basis.” App. at 207. Since the
CBOT is a self-regulated entity, market participants are
expected and encouraged to alert the exchange if they per-
ceive manipulation or other problems involving its con-
tracts. App. at 704-05; Tr. at 695-96; cf. Apex Oil Co. v.
DiMauro, 822 F.2d 246, 260 (2d Cir. 1987) (finding that
communications between exchange and “long” defendants
in the face of an impending default did not support an
Nos. 02-3844 & No. 02-3997 27

inference of conspiracy involving the exchange). Other
commercials and non-commercials communicated with the
CBOT about the same problem. App. at 236-37, 608, 1151-
52. The mere fact that the CBOT met and communicated
with Cargill on a regular basis does not suggest that its
motive in adopting the Resolution was primarily to benefit
Cargill or was otherwise held in bad faith.10
The plaintiffs argue that the CBOT’s reason for adopting
the Resolution was not regulatory concern but instead
Cargill’s indirect threat to stop using the CBOT’s futures

10
The plaintiffs also argue that under Rajewski, a jury could have
considered the fact that Chairman Mahlmann lied under oath in
another proceeding when he denied having received complaints
from any of the commercials about Ferruzzi. See United States
v. Rajewski, 526 F.2d 149, 158 (7th Cir. 1975) (“It is well settled
that untrue exculpatory statements may be considered as cir-
cumstantial evidence of the defendant’s consciousness of guilt.”).
Rajewski and its predecessors, however, were all criminal cases in
which one element that the government had to prove was whether
the defendant committed a crime knowingly. See Rajewski, 526
F.2d 149 (knowingly and willfully making and using false
documents); United States v. Riso, 405 F.2d 134 (7th Cir. 1968)
(receiving and concealing property transported interstate,
knowing it to have been stolen); United States v. Scoleri, 374 F.2d
859 (7th Cir. 1967) (same). This court allowed consideration of
untrue exculpatory statements because they suggested that
defendants knew that they were committing crimes. In the
present civil case, it may not be so simply and fairly inferred from
the alleged untrue exculpatory statements that Chairman
Mahlmann’s dominant motive was held in bad faith. We therefore
decline to extend this doctrine to apply to the case at bar.
Moreover, in the present case, Mahlmann has presented an
explanation for the seeming inconsistencies and has never been
adjudicated to have testified falsely. Finally, Rajewski’s holding
does not imply that one Board member’s untrue exculpatory
statement can be considered as evidence of the motive of the
entire Board. Therefore, the district court did not err in giving
little, if any, weight to this piece of evidence.
28 Nos. 02-3844 & No. 02-3997

market. Pet. Br. at 40. In one of Cargill’s letters to the
CBOT, it did state that “we are seriously reconsidering our
operating philosophy because of the difficulty we face in
using futures as a hedge against inventories.” App. at 867.
The plaintiffs have presented no direct evidence, however,
that anyone at the CBOT was actually concerned about or
motivated by this threat.
Even if the CBOT had been motivated by Cargill’s threat
to pull out of the market, this would not constitute “bad
faith” if the CBOT believed that Cargill would be withdraw-
ing for a legitimate reason, i.e., the CBOT’s failure to
respond effectively to attempts at market manipulation. It
is not bad faith to respond to legitimate complaints in order
to maintain investor confidence in the exchange. See Apex
Oil Co. v. Dimauro, 641 F. Supp. 1246, 1279-80 (S.D.N.Y.
1986), aff’d in part and rev’d in part, 822 F.2d 246, 261 (2d
Cir. 1987) (finding an exchange’s decision to keep the
market open in order to avoid a loss of investor confidence
did not constitute an improper or ulterior motive);
Grossman v. Citrus Assoc. of N.Y. Cotton Exch., Inc., 742 F.
Supp. 843, 853 n.10 (S.D.N.Y. 1990) (finding that an ex-
change’s decision to keep the market open in order to
increase the number of exchange members and increase the
trading volume was akin to avoiding a loss of investor
confidence and did not constitute an improper ulterior
motive). The evidence in the record suggests that Cargill’s
reasons for considering withdrawal stem from this legiti-
mate concern. See, e.g., App. at 872.
Finally, the plaintiffs presented evidence that the CBOT’s
alleged “good faith” motive could not have been the CBOT’s
true motive, because according to the plaintiffs’ expert,
there was no legitimate threat to orderly liquidation after
the CFTC revoked Ferruzzi’s anticipatory hedge position.
However, what matters is not whether there was in fact a
legitimate threat, but whether the CBOT believed in good
Nos. 02-3844 & No. 02-3997 29

faith that there was such a threat. See Sam Wong & Son,
735 F.2d at 677 (board must “sincerely and rationally
believe their action is in the public interest”).11
All the evidence at trial demonstrated that the CFTC, an
entity not alleged to have had an improper motive, thought
that there remained a legitimate threat. If the CFTC be-
lieved that the threat continued and that further action was
warranted, it was reasonable for the CBOT to hold this
belief as well. Indeed, the evidence at trial demonstrated
that the CBOT and the CFTC shared the same concerns.
The CFTC Market Surveillance Director testified at trial
that he believed there was still a legitimate threat to
orderly liquidation, even after the CFTC’s revocation of the
anticipatory hedge exemption, and he gave reasons sup-
porting his belief. App. at 288-89, 658-59. Moreover, after
the CFTC revoked Ferruzzi’s anticipatory hedge position,
the Chairman of the CFTC faxed the CBOT a list of emerg-
ency alternatives that the CBOT might consider taking.
App. at 248-51, 652-54, 1004-05. This fax would have been
not only unnecessary but reckless on the part of the CFTC
if it believed there was no longer a threat to orderly li-
quidation.12 The Chairman of the CBOT discussed the
11
Under Sam Wong, a party can demonstrate bad faith on the
part of an exchange simply by showing that an emergency action
lacked any “basis in reason.” See Sam Wong & Son, 735 F.2d at
678 n.32. In this case, however, there is insufficient evidence in
the record to support a finding that the CBOT’s actions consti-
tuted “the kind of reckless and virtually irrational exchange action
that might independently support an inference of bad faith.”
Minpeco, S.A. v. Hunt, 693 F. Supp. 58, 63 (S.D.N.Y. 1988)
(citation omitted).
12
The plaintiffs assert that this fax was not a list of alternative
actions for the CBOT. They base this assertion on the fact that the
fax contained one or more alternatives which they argue the
CBOT lacked the power to adopt. We do not find this argument
persuasive given that the CFTC director who drafted and sent the
(continued...)
30 Nos. 02-3844 & No. 02-3997

proposed Resolution with the Chairman of the CFTC before
adopting it, and Chairman Gramm thought that it was
“reasonable.” App. at 258-59, 1162. While viewing the
market from a distance and with the benefit of hindsight, it
might appear that there was in fact a minimal threat to
orderly liquidation, the evidence in the record clearly shows
that this was not the belief of the CBOT or the CFTC at the
time.
Thus, we have found no evidence in the record actually
suggesting that the CBOT was motivated by an improper
desire simply to rescue the shorts and help Cargill. At best,
the plaintiffs have presented a scintilla of evidence that one
of the CBOT’s motives may have been held in bad faith.
This is not enough evidence to go to the jury. See Mutual
Serv. Cas. Ins., 265 F.3d at 612; 3M, 259 F.3d at 605. Even
if we assume that there was sufficient evidence for the jury
to find that one of the CBOT’s motives was improper, this
alone would not be enough for the plaintiffs to recover. As
discussed supra, there must be evidence in the record that
the CBOT’s bad faith motive was its dominant motive. See
Sam Wong & Son, 735 F.2d 653, 677. The plaintiffs have
presented no evidence suggesting that the CBOT’s alleged
bad faith motive could have been more powerful than
CBOT’s legitimate regulatory purpose. To the contrary, all
the evidence in the record suggests that the CBOT’s
dominant motive was its legitimate regulatory purpose.

(...continued)
fax testified that it was indeed a list of alternative actions for the
CBOT to consider, prepared at the request of the Chairman of the
CFTC. Tr. at 1424. Further, he suggested that, in his view, the
CBOT could have taken the alternatives listed in the fax. Id. The
plaintiffs do not argue that the CFTC was a part of the alleged
conspiracy. Moreover, if this was not a list of alternative actions
for the CBOT to consider, the plaintiffs do not adequately explain
what it was or why it was faxed to the CBOT.
Nos. 02-3844 & No. 02-3997 31

C. Private interests
The plaintiffs argue that the CBOT’s other bad faith
motive for adopting the Resolution was to advance the
Board’s private interests. However, there is no basis in the
record to support such a finding. In order to avoid judgment
as a matter of law through a showing of conflict of interest,
“[p]laintiffs must make a showing first, that these potential
conflicts actually influenced the votes of the board mem-
bers, and if so, that any instances of bad faith on the part
of individual members could ‘be deemed to taint the entire
Board’s actions,’ ” Minpeco, 693 F. Supp. at 66 (citation
omitted).
In Minpeco, the plaintiffs brought an action against a
commodities exchange arguing that the exchange breached
its duty to prevent manipulation of prices in connection
with silver trading. The court found it undisputed that a
number of the exchange’s board members “were associated
with businesses which either held net long silver positions,
had net long customer accounts, or did business with the
Hunt defendants . . . .” Id. at 69. Nonetheless, it granted the
defendant’s motion for summary judgment because there
was insufficient evidence in the record that any of these
business affiliations actually influenced any board mem-
ber’s action. “Bad faith cannot be inferred from these
theoretical conflicts.” Id. Moreover, the court found that
even if an alleged conflict were proven, there was no evi-
dence in the record that the conflict tainted the actions of
the Board as a whole. Id.
We find ourselves in virtually the same situation to-
day. The record shows that no director who voted on the
Resolution actually owned or controlled any July soybean
futures. App. at 260-62; 1008-10. The Resolution passed
16 to 1. App. at 266. Of the sixteen who voted for the
Resolution, it appears that six directors were affiliated with
clearing firms that had customer or house positions which
were net short. App. at 881-82. However, there is
no evidence in the record that these affiliations actually
32 Nos. 02-3844 & No. 02-3997

influenced the vote of any of these six directors. See
Minpeco, 693 F. Supp. at 69; see also Sam Wong & Son,
Inc., 735 F.2d at 661 n.12 (finding insufficient evidence
of bad faith where some of the eleven board members
present at the meeting were affiliated with firms having
house and customer positions in the relevant contract).
There is no evidence that any of these affiliated firms or
their customers actually ended up benefiting from the
Resolution. Finally, as in Minpeco, there is no evidence that
the alleged conflict of the six directors tainted the actions of
the other ten members of the board who voted in favor of
the Resolution.13 Minpeco, 693 F. Supp. at 69. The plaintiffs
have shown “no more than the existence of the theoretical
conflicts which ‘inevitably taints the decisions of self-
regulating exchange boards.’ ” Id. at 67 (citation omitted).

III. CONCLUSION
Eleanor Roosevelt once said, “[d]o what you feel in your
heart to be right—for you’ll be criticized anyway. You’ll
be damned if you do, and damned if you don’t.” In this case,
the Chicago Board of Trade “did,” and as a result it has
been “damned” with over ten years of litigation and the
prospect of significant liability. However, we believe that
had the Board not acted, it might have been “damned”
13
The plaintiffs argue that if those board members affiliated with
firms whose house or customer accounts were net short had re-
cused themselves, the board would have been deprived of a
quorum and therefore could not have adopted the Resolution.
Such a strict recusal requirement, however, would be inconsistent
with the self-regulatory nature of the CBOT and would make it
virtually impossible for the Board ever to take action. See Sam
Wong & Son, 735 F.2d at 672. In this case, no voting board
member personally owned or controlled July soybean futures, and
we can find no other basis on which any of the Board members
should have been conflicted out of this vote. App. at 260-62, 1008-
10.
Nos. 02-3844 & No. 02-3997 33

anyway, as its inaction would have subjected it to claims
from Cargill and others who might have been hurt by
Ferruzzi. See Ryder Energy Distribution Corp. v. Merrill
Lynch Commodities, Inc., 748 F.2d 774, 780 (2d Cir. 1984)
(“[W]e have recently made it clear that the bad faith
requirement governs claims of both exchange action and
inaction.”) (citation omitted) (emphasis added). Although
the price of soybeans in the cash market may have been
temporarily depressed, we find no evidence that the CBOT’s
dominant motive in adopting the Resolution was held in
bad faith. To the contrary, we believe that “[t]he acts of the
defendants rather than being in restraint of commerce,
were in aid of commerce in facilitating future trading on the
market.” Cargill, 164 F.2d at 823. For the foregoing rea-
sons, we bring an era to an end and AFFIRM the district
court’s order of judgment as a matter of law.

A true Copy:
Teste:

________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit

USCA-02-C-0072—2-9-04