Choi v. Tower Rsch. Cap. LLC

20-1648-cv
Choi v. Tower Rsch. Cap. LLC

In the
United States Court of Appeals
For the Second Circuit
________

AUGUST TERM, 2020

ARGUED: MAY 18, 2021
DECIDED: JUNE 22, 2021

No. 20-1648-cv

MYUN-UK CHOI, JIN-HO JUNG, SUNG-HUN JUNG, SUNG-HEE LEE, and
KYUNG-SUB LEE, individually and on behalf of all others similarly
situated,
Plaintiffs-Appellants,

v.

TOWER RESEARCH CAPITAL LLC, MARK GORTON,
Defendants-Appellees. *
________

Appeal from the United States District Court
for the Southern District of New York.
________

Before: WALKER, PARK, and NARDINI, Circuit Judges.

________

* The Clerk of Court is respectfully requested to amend the official
caption as set forth above.
2 No. 20-1648-cv

Plaintiffs, five South Korean citizens, traded a derivative
financial product called KOSPI 200 futures on an overnight market of
the Korea Exchange (KRX). They brought this action against
defendants Tower Research Capital LLC (Tower) and its CEO, Mark
Gorton, alleging that, in 2012, Tower’s trading of KOSPI 200 futures
violated the anti-manipulation provisions of the Commodity
Exchange Act (CEA). Following an initial appeal in which we rejected
Tower’s extraterritoriality defense, the district court (Kimba Wood, J.)
entered summary judgment on plaintiffs’ CEA claims, finding that
Tower’s overnight trading of KOSPI 200 futures was not “subject to
the rules of [a] registered entity” as required by Section 9 of the CEA.

Plaintiffs appeal the judgment of the district court, arguing
that: (1) there is a genuine factual dispute as to whether Tower’s
trading was subject to the rules of the Chicago Mercantile Exchange
(CME), a “registered entity” under the CEA; (2) the district court
abused its discretion by excluding the report of their expert; (3) the
judgment contradicts our prior opinion denying Tower’s
extraterritoriality defense, and therefore violates the law of the case;
and (4) the judgment will undermine public policy by placing trading
of foreign futures in the United States beyond the reach of the CEA.
For the reasons that follow, we find plaintiffs’ contentions without
merit and therefore AFFIRM the judgment of the district court.

________

MICHAEL B. EISENKRAFT (Richard A. Speirs, Jessica
(Ji Eun) Kim, on the brief), Cohen Milstein Sellers &
Toll PLLC, New York, New York; Dan S.
Sommers, on the brief, Cohen Milstein Sellers & Toll
PLLC, Washington, District of Columbia; for
Plaintiffs-Appellants Myun-Uk Choi, et al.
3 No. 20-1648-cv

NOAH A. LEVINE, Wilmer Cutler Pickering Hale
and Dorr LLP, New York, New York; Matthew T.
Martens, Matthew Beville, Albinas J. Prizgintas, on
the brief, Wilmer Cutler Pickering Hale and Dorr
LLP, Washington, District of Columbia; Adam
Cambier, on the brief, Wilmer Cutler Pickering Hale
and Dorr LLP, Boston, Massachusetts; for
Defendants-Appellees Tower Research Capital LLC and
Mark Gorton.

________

JOHN M. WALKER, JR., Circuit Judge:

Plaintiffs, five South Korean citizens, traded a derivative
financial product called KOSPI 200 futures on an overnight market of
the Korea Exchange (KRX). They brought this action against
defendants Tower Research Capital LLC (Tower) and its CEO, Mark
Gorton, alleging that, in 2012, Tower’s trading of KOSPI 200 futures
violated the anti-manipulation provisions of the Commodity
Exchange Act (CEA). Following an initial appeal in which we rejected
Tower’s extraterritoriality defense, the district court (Kimba Wood, J.)
entered summary judgment on plaintiffs’ CEA claims, finding that
Tower’s overnight trading of KOSPI 200 futures was not “subject to
the rules of [a] registered entity” as required by Section 9 of the CEA.

Plaintiffs appeal the judgment of the district court, arguing
that: (1) there is a genuine factual dispute as to whether Tower’s
trading was subject to the rules of the Chicago Mercantile Exchange
(CME), a “registered entity” under the CEA; (2) the district court
abused its discretion by excluding the report of their expert; (3) the
judgment contradicts our prior opinion denying Tower’s
extraterritoriality defense, and therefore violates the law of the case;
and (4) the judgment will undermine public policy by placing trading
of foreign futures in the United States beyond the reach of the CEA.
4 No. 20-1648-cv

For the reasons that follow, we find plaintiffs’ contentions without
merit and therefore AFFIRM the judgment of the district court.

BACKGROUND

We draw our discussion of the facts from plaintiffs’ second
amended complaint 1 as well as exhibits and other evidence submitted
in connection with defendants’ motion for summary judgment.
Unless otherwise noted, the facts are undisputed and construed in the
light most favorable to plaintiffs.

The KOSPI 200 is an index of two hundred Korean stocks
traded on the KRX, a securities and derivatives exchange
headquartered in Busan, South Korea. To allow investors to take
positions on future values of the KOSPI 200 index, the KRX created a
derivative financial product called KOSPI 200 futures contracts. 2
During daytime hours, orders for KOSPI 200 futures are placed and
matched on the KRX in South Korea. During overnight hours, orders
for KOSPI 200 futures are placed on the KRX in South Korea but
matched with a counterparty through an electronic platform called
CME Globex in Aurora, Illinois. 3 Following matching, all trades—
including those placed overnight—are settled on the KRX.

Unlike the KRX, CME Globex is not an exchange. Rather, it is
an electronic platform that provides a trade-matching engine used by
a number of exchanges—both foreign and domestic. Notably, CME
Globex is owned by CME Group Inc. (CME Group), a holding

1 See J. App. at 92–124 (second amended complaint, hereinafter referred
to as “SAC”).
2 A futures contract is an agreement to purchase or sell a particular asset

on a later date at a predetermined price. See Set Capital LLC v. Credit Suisse
Grp. AG, 996 F.3d 64, 69 n.3 (2d Cir. 2021).
3 The KRX’s overnight hours are 5:00 p.m. to 6:00 a.m. Seoul time, or 2:00

a.m. to 3:00 p.m. Chicago time.
5 No. 20-1648-cv

company that also owns several domestic exchanges, including the
CME, the Chicago Board of Trade (CBOT), the New York Mercantile
Exchange (NYMEX), and the Commodity Exchange (COMEX). Like
the KRX, all four of these exchanges use CME Globex to match trades
of their own exchange’s futures contracts.

In 2012, defendant Tower, a high-frequency trading firm in
New York, executed nearly 4,000,000 trades for KOSPI 200 futures
during the KRX’s overnight hours—representing approximately
53.8% of all overnight KOSPI 200 futures trades for the entire calendar
year. Plaintiffs, who also traded KOSPI 200 futures, allege that many
of these trades were manipulative. Specifically, plaintiffs allege that
Tower’s traders placed large volume buy or sell orders on the KRX
overnight market and then used Tower’s algorithmic and high-speed
trading technology to immediately cancel their orders or to fill their
own orders before they could be matched by other traders. Tower
employed these tactics because its intent was not to execute the trades
with a counterparty, but rather to create a false impression of supply
and demand and, in turn, artificially drive the market price up or
down. 4 Plaintiffs allege that, once the market price moved in the
desired direction, Tower sold futures contracts at the artificially
inflated price or bought futures contracts at the artificially deflated
price, earning more than $14,000,000 in illicit profits.

In May 2014, South Korean regulators announced that they had
uncovered potentially unlawful trading in the overnight market for

4Plaintiffs describe aspects of Tower’s scheme as a type of “spoofing.”
SAC ¶ 63. While the term “spoofing” has acquired various meanings over
the years, see United States v. Wedd, 993 F.3d 104, 110 n.2 (2d Cir. 2021), in
the context of commodities trading fraud it generally refers to the
manipulative practice of “bidding or offering with the intent to cancel the
bid or offer before execution,” 7 U.S.C. § 6c(a)(5)(C) (defining “spoofing”
under the Commodity Exchange Act).
6 No. 20-1648-cv

KOSPI 200 futures and that they had referred Tower to South Korean
prosecutors. Several months later, plaintiffs initiated the instant
litigation, filing a class-action complaint on behalf of themselves and
others who were allegedly harmed by Tower’s manipulative scheme.
The complaint asserted causes of action for violations of the CEA and
New York common law.

In March 2015, defendants moved to dismiss the complaint on
the basis that Tower’s alleged conduct occurred in South Korea and
so was not within the territorial reach of the CEA. The district court
granted the motion in February 2016, holding that applying the CEA
to Tower’s conduct would be impermissibly extraterritorial under
Morrison v. National Australia Bank Ltd.5 The district court granted
plaintiffs leave to amend their complaint, but later dismissed their
amended complaint on the same basis in February 2017. 6 According
to the district court, the amended complaint still failed to allege either
that CME Globex was a domestic exchange or that Tower’s trades
were domestic transactions, at least one of which was required to
establish domestic application under Morrison. 7

In March 2018, we vacated the dismissal and remanded for

5See Myun-Uk Choi v. Tower Rsch. Cap. LLC (Choi I), 165 F. Supp. 3d 42,
48–50 (S.D.N.Y. 2016) (citing Morrison, 561 U.S. 247, 269–70 (2010)).
6 See Myun-Uk Choi v. Tower Rsch. Cap. LLC (Choi II), 232 F. Supp. 3d 337,

340–43 (S.D.N.Y. 2017).
7 Id. In Morrison, the Supreme Court concluded that Section 10(b) of the

Securities Exchange Act, 15 U.S.C. § 78j(b), reaches “only transactions in
securities listed on domestic exchanges” and “domestic transactions in
other securities.” 561 U.S. at 267. We held in Loginovskaya v. Batratchenko
that Morrison’s “domestic transaction” test applies to the CEA, 764 F.3d 266,
272–75 (2d Cir. 2014), but we have not had occasion to decide whether
Morrison’s “domestic exchange” test applies to the CEA as well.
7 No. 20-1648-cv

further proceedings. 8 Applying Morrison and more recent circuit
precedent, we held that plaintiffs’ allegations made it plausible that
parties who trade KOSPI 200 futures on the KRX overnight market
incur irrevocable liability in the United States, where their orders are
matched through CME Globex. 9 At the pleadings stage, those
allegations were sufficient to show that Tower’s trades were plausibly
“domestic transactions” under Morrison such that applying the CEA
to Tower’s conduct would not constitute an extraterritorial
application of the Act. 10 Because our irrevocable liability analysis was
a sufficient basis to resolve the extraterritoriality question, we
declined to address whether the CEA could reach Tower’s conduct on
the basis that CME Globex is a “domestic exchange.” 11

In July 2018, following remand to the district court, defendants
again moved to dismiss plaintiffs’ CEA claims, this time raising a
factual defense: Even if the CEA could apply to Tower’s trading
without running afoul of Morrison, its trading of KOSPI 200 futures
was not “subject to the rules of any registered entity” as required by
the CEA itself. 12 The district court referred the motion to a magistrate
judge, who granted plaintiffs leave to amend their complaint in
response to the motion. In May 2019, plaintiffs filed a second
amended complaint alleging that Tower’s trading of KOSPI 200
futures was subject to the rules of the CME, one of four registered
entities owned by CME Group.

After the close of fact discovery, defendants moved for
judgment on the pleadings or, in the alternative, for summary
judgment, maintaining that Tower’s trading of KOSPI 200 futures was

8See Myun-Uk Choi v. Tower Rsch. Cap. LLC (Choi III), 890 F.3d 60, 63 (2d
Cir. 2018).
9 Id. at 66–68.

10 Id.

11 Id. at 66–67.

12 See 7 U.S.C. § 9(1), (3).
8 No. 20-1648-cv

not “subject to the rules of any registered entity.” In December 2019,
the magistrate judge issued a report and recommendation concluding
that the motion for summary judgment should be granted. 13 On
March 30, 2020, the district court adopted the recommendation in full
and dismissed plaintiffs’ CEA claims. 14 On May 11, the district court
entered final judgment on plaintiffs’ CEA claims pursuant to Rule
54(b) 15 so that plaintiffs could file this appeal. 16

DISCUSSION

We review a decision granting summary judgment de novo, 17
mindful that summary judgment is appropriate only “if the movant
shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” 18 “An issue of fact
is genuine if the evidence is such that a reasonable jury could return
a verdict for the nonmoving party. A fact is material if it might affect
the outcome of the suit under the governing law.” 19 In evaluating a
motion for summary judgment, we resolve all ambiguities and draw
all permissible factual inferences in favor of the party against whom
summary judgment is sought. 20

13Myun-Uk Choi v. Tower Rsch. Cap. LLC (Choi IV), No. 14 Civ. 9912, 2019
WL 6871295, at *4–9 (S.D.N.Y. Dec. 17, 2019), report and recommendation
adopted, No. 14 Civ. 9912, 2020 WL 1503446 (S.D.N.Y. Mar. 30, 2020).
14 Myun-Uk Choi v. Tower Rsch. Cap. LLC (Choi V), No. 14 Civ. 9912, 2020

WL 1503446, at *3–7 (S.D.N.Y. Mar. 30, 2020).
15 See Fed. R. Civ. P. 54(b).

16 Myun-Uk Choi v. Tower Rsch. Cap. LLC (Choi VI), No. 14 Civ. 9912, 2020

WL 2317363, at *1–2 (S.D.N.Y. May 11, 2020). The district court did not enter
judgment on plaintiffs’ state-law claim for unjust enrichment. Id. Only the
CEA claims are at issue in this appeal.
17 Fischer v. Forrest, 968 F.3d 216, 219 (2d Cir. 2020).

18 Fed. R. Civ. P. 56(a).

19 Frost v. N.Y.C. Police Dep't, 980 F.3d 231, 242 (2d Cir. 2020) (quoting

SCR Joint Venture L.P. v. Warshawsky, 559 F.3d 133, 137 (2d Cir. 2009)).
20 See Sloley v. VanBramer, 945 F.3d 30, 36 (2d Cir. 2019).
9 No. 20-1648-cv

Plaintiffs argue that the district court erred in granting
summary judgment for four reasons. First, they contend that there is
a genuine factual dispute as to whether Tower’s trading of KOPSI 200
futures was subject to the rules of the CME, a registered entity under
the CEA. Second, they contend that the district court abused its
discretion by excluding the report of their expert, Professor Michael
Greenberger. Third, they contend that the district court’s judgment
contradicts our prior opinion denying Tower’s extraterritoriality
defense, and therefore violates the law of the case. Fourth, they
contend that the district court’s ruling will undermine public policy
by placing trading of foreign futures in the United States beyond the
reach of the CEA. We disagree with each of plaintiffs’ arguments, and
therefore affirm.

I. The trading of KOSPI 200 futures on the KRX is not subject
to the rules of the CME

The CEA makes it unlawful to manipulate or attempt to
manipulate the price of any futures contract “on or subject to the rules
of any registered entity.” 21 Neither the KRX nor CME Globex is a
registered entity under the CEA, 22 so plaintiffs concede that KOSPI
200 futures are not traded “on” a registered entity—even when
overnight orders are matched through CME Globex. The sole issue,
therefore, is whether overnight trading of KOSPI 200 futures is
nonetheless “subject to” a registered entity’s rules.

Plaintiffs claim that overnight trading of KOSPI 200 futures is
subject to the rules of the CME, a domestic exchange registered under
the CEA. They contend that they identified sufficient evidence to
survive summary judgment, and they argue that the district court
erred by failing to draw all reasonable inferences in their favor.

21 See 7 U.S.C. § 9(1), (3).
22 The list of registered entities is defined by statute. See 7 U.S.C. § 1a(40).
10 No. 20-1648-cv

Reviewing the record de novo, we disagree. As both the magistrate
judge and district court explained, at least two sources of evidence
conclusively demonstrate that trading of KOSPI 200 futures is not
subject to the rules of the CME.

First, the CME Rulebook 23—the source of the CME’s rules—
specifies that it applies only to futures contracts that are created by
and listed on the CME itself. It states that its rules apply to the trading
and clearing of “Exchange futures,” 24 and it defines “Exchange”
exclusively as the “Chicago Mercantile Exchange Inc.,” or the CME.25
It is undisputed that KOSPI 200 futures are not CME futures; they are
KRX futures created by and listed on the KRX. If there were any
doubt, the CME Rulebook explicitly lists hundreds of CME futures
contracts that are subject to its rules. 26 Nothing on that list mentions
KOSPI 200 futures—let alone the KRX. Thus, the Rulebook itself is
virtually conclusive evidence that the trading of KOSPI 200 futures is
not “subject to” the rules of the CME.

Second, both the CME and its parent, CME Group, have
confirmed that the CME does not regulate the trading of KOSPI 200
futures, even when trades are matched using CME Globex. In
response to a subpoena early in this case, the CME and CME Group
stated that the “CME does not regulate, review, or monitor the trading
activity that occurs in the KOSPI Futures contract[s],” as “such

23 The parties principally cite Chapter 5 of the Rulebook and its
governing definitions. See J. App. at 1095–149 (Chapter 5); id. at 495–506
(governing definitions). The full CME Rulebook is available online. See
CME Rulebook, http://www.cmegroup.com/rulebook/CME.
24 J. App. at 505 (emphasis added).

25 Id. at 499.

26 As reflected in the Table of Contents, the CME Rulebook devotes

separate chapters to each futures contract. See id. at 245–51. Chapter 52, for
example, lists “Class III Milk Futures” and specifies that such futures “shall
be subject to the general rules and regulations of the Exchange.” Id. at 253.
11 No. 20-1648-cv

activity is done by the Korea Exchange.” 27 CME Group later verified
this in an unrebutted declaration. 28 The declaration explains that,
while the CME and the KRX have a trade-matching services
agreement under which KOSPI 200 futures are hosted on CME
Globex for overnight trading, KOSPI 200 futures are “not listed on
[the CME] and the trading itself remains governed by the KRX
rulebook.” 29 The declaration explicitly states that the “KRX bears all
responsibility and must perform all regulatory obligations with
respect to any [KRX] contracts traded on CME Globex,” and it affirms
that the “CME does not now, and has not ever, provided any of these
regulatory functions” for such trading. 30 Thus, the CME itself has
confirmed what its Rulebook already says: any trading of KOSPI 200
futures is regulated by the KRX, not the CME.

While plaintiffs acknowledge that KOSPI 200 futures are
subject to the rules of the KRX, they dispute that KRX regulation is
exclusive. They argue that Chapter 5 of the CME Rulebook, which
concerns orders matched through CME Globex, speaks in broad
terms and says nothing that would specifically exclude KOSPI 200
futures from its scope. Setting aside the declaration and the CME
Rulebook’s own restrictive statement on the scope of its rules,
plaintiffs contend that the CME’s silence with respect to KOSPI 200
futures creates “negative space” that, when combined with a
smattering of other evidence, permits an inference that the CME in
fact regulates overnight trading of KOSPI 200 futures alongside the
KRX. This argument is without merit.

Id. at 553.
27

28 See id. at 558–60 (declaration of Robert Sniegowski, CME Group

Executive Director, Rules and Regulatory Outreach).
29 Id. at 559 (emphasis added).

30 Id. at 560 (emphasis added).
12 No. 20-1648-cv

As a threshold matter, the CEA requires exchanges to
“establish, monitor, and enforce” their rules affirmatively, including by
setting forth “the terms and conditions of any contracts to be traded”
on the exchange. 31 Pursuant to this requirement, the CME explicitly
lists each futures contract that it regulates, and its sister exchanges
have done the same: the CBOT rulebook lists CBOT futures; the
NYMEX rulebook lists NYMEX futures; and the COMEX rulebook
lists COMEX futures. None of the products listed in the rulebooks of
these four exchanges overlaps, even though all four exchanges rely on
the services of CME Globex for overnight order-matching. This
evidence strongly supports Tower’s argument that, absent an
affirmative statement to the contrary, trading in a futures contract is
confined to, and regulated by, the exchange that creates it. 32

Moreover, linking KOSPI 200 futures to Chapter 5 of the CME
Rulebook—which plaintiffs claim governs all trading through CME
Globex—would yield absurd results. As plaintiffs concede, all of the
CME’s sister exchanges have established analogous rules governing
trading of their own futures contracts through CME Globex. Even the
KRX has its own rules that apply when KRX futures are matched
through the platform. 33 Plaintiffs’ theory would require us to
conclude that any futures contract matched on CME Globex is
regulated by every exchange with rules governing the use of the

317 U.S.C. § 7(d)(2)(A)(ii).
32See Psimenos v. E.F. Hutton & Co., 722 F.2d 1041, 1047 (2d Cir. 1983)
(explaining that a futures contract “has no lawful existence or being
independent of the designated contract market upon which it is traded”
(citation omitted)).
33 The KRX has confirmed that its own rulebook applies to overnight

trading of KOSPI 200 futures, and an entire chapter in Part 3 of the KRX
Rulebook specifically governs the trading of KRX futures contracts through
CME Globex. See J. App. at 322–25 (“Chapter III: Special Case of Trade on
CME Globex”).
13 No. 20-1648-cv

platform. A CBOT trade would not only be subject to the rules of the
CBOT, but also to the rules of the CME, the NYMEX, the COMEX, and
perhaps even the KRX. 34 Unsurprisingly, CME Group itself says that
is not how it works. As it explains in its declaration, each of the four
exchanges offers “a different (and not overlapping) suite of products”
and “[d]ifferent rulebooks govern trading depending on which
[exchange] a product is listed on.” 35

Even if plaintiffs could present a coherent theory, the fragments
of evidence they cite would not support a reasonable inference that
overnight trades of KOSPI 200 futures are subject to the rules of the
CME. Although plaintiffs place great stock in a handful of rules in
Chapter 5 of the CME Rulebook, none of those rules contains any
affirmative indication that the CME intended them to apply to the
trading of KOSPI 200 futures on the KRX. 36 To the contrary, the rules
cross-reference the same definitions that restrict their scope to CME
futures traded on CME Group markets. Plaintiffs’ reliance on
comments in the CME Globex Reference Guide 37 fares no better. The
CME Globex is not a registered entity, so the Guide does not reflect a
registered entity’s rules. Indeed, the Guide specifically instructs
readers to “refer to the CME, CBOT or NYMEX Rulebooks” for “the
text of actual rules or interpretations.” 38

Plaintiffs also attempt to peg KOSPI 200 futures to the CME’s
rules through several other documents, none of which supports their

As plaintiffs concede in their reply brief, they could just as well argue
34

that KOSPI 200 futures are subject to the rules of the CBOT, the NYMEX, or
the COMEX. See Appellants’ Reply Br. at 8 n.6.
35 J. App. at 559.

36 See id. at 1136 (Rule 574); id. at 1137–39 (Rule 578); id. at 1139 (Rule

579); id. at 1140 (Rule 580); id. (Rule 583.A); id. at 1143 (Rule 588.H).
37 See id. at 1833–61.

38 Id. at 1854.
14 No. 20-1648-cv

case. They first point to two documents—a 1989 memorandum 39 and
a 2008 “no action” letter 40—published by the Commodity Futures
Trading Commission (CFTC). But, as the district court explained,
neither of those documents purports to address a foreign exchange’s
use of CME Globex for overnight order-matching—particularly
where, as here, the futures are offered and sold exclusively on a
foreign exchange. 41 Plaintiffs next point to a 2012 email 42 from CME
Group warning that Tower was “consuming KRX market data
without the appropriate licensing” and that CME Group would
“continue to monitor for non-compliance.” 43 But CME Group is not a
registered entity under Section 9 and, even if it were, the district court
correctly observed that the email concerns CME Group’s capacity as
a vendor for KRX market data—not as a regulator of KRX futures
trading. 44

Unable to identify any affirmative evidence that the CME’s
rules apply, plaintiffs turn the tables and argue that Tower has failed
to prove the negative. They cite a handful of cases in which courts
have applied the CEA to trades that were matched through CME
Globex. But when confronted with the fact that all of those cases

39See id. at 922–1079.
40See id. at 488–94.
41 Choi V, 2020 WL 1503446, at *5. The 1989 memorandum considered

rules that “relate solely to CME contracts” and expressly noted that
“[i]ssues relating to foreign exchanges are not currently before the
Commission.” J. App. at 929, 1075. The 2008 “no action” letter says nothing
about the trading of KOSPI 200 futures on the KRX. Rather, it confirms that
U.S. brokers—who are not at issue in this case—may “offer [or] s[ell]” KOSPI
200 futures to their U.S. customers provided that the brokers remain
governed by certain CFTC regulations. Id. at 494.
42 See J. App. at 2034–35.

43 Id. at 2034–35.

44 See Choi V, 2020 WL 1503446, at *6.
15 No. 20-1648-cv

involved products traded on the CME or another registered entity, 45
plaintiffs pivot, arguing that “no court has ever held” that a futures
contract matched through CME Globex “is not covered by the CEA.” 46
Plaintiffs take the same tack with the CME Group declaration.
Although they acknowledge that the declaration “says that the KRX
Rulebook applies exclusively to KOSPI 200 futures trading,” they
assert that “it conspicuously fails to say that the CME Rulebook does
not apply to KOSPI 200 futures trading on the CME Globex.” 47 In both
cases, the negative inferences that plaintiffs ask us to draw are nearly
fantastical. They fail to create a genuine issue for trial.

II. The district court did not abuse its discretion by excluding
Professor Greenberger’s expert report

In addition to relying on the evidence discussed above,
plaintiffs argue that the district court erred by declining to consider
as evidence the written report of their expert witness, Professor
Greenberger, who opined that Tower’s trading of KOSPI 200 futures
was “subject to” the rules of the CME. 48 The district court made no
such error.

See CFTC v. Oystacher, No. 15 Civ. 9196, 2016 WL 3693429, at *3-4, *8
45

(N.D. Ill. July 12, 2016) (COMEX, NYMEX, CME, and Chicago Board Option
Exchange Futures Exchange futures contracts); Laydon v. Mizuho Bank, Ltd.,
No. 12 Civ. 3419, 2014 WL 1280464, at *2 (S.D.N.Y. Mar. 28, 2014) (CME
futures contracts); CFTC v. Taylor, No. 12 Civ. 8170, 2013 WL 5437362, at *2
(S.D.N.Y. Aug. 29, 2013) (CME futures contracts); In re Rough Rice
Commodity Litig., No. 11 Civ. 618, 2012 WL 473091, at *1 (N.D. Ill. Feb. 9,
2012) (CBOT futures contracts); CFTC v. Garofalo, No. 10 Civ. 2417, 2010 WL
11245430, at *1 (N.D. Ill. Dec. 21, 2010) (CME futures contracts).
46 Appellants’ Br. at 44 (emphasis added).

47 Id. at 33.

48 J. App. at 666; see generally id. at 660–72.
16 No. 20-1648-cv

It is well established that expert testimony admitted under Rule
702 must be relevant, 49 meaning it must “help the trier of fact to
understand the evidence or to determine a fact in issue.” 50 Expert
testimony that usurps the role of the factfinder or that serves
principally to advance legal arguments should be excluded. 51 The
proponent of expert testimony carries the burden of establishing its
admissibility by a preponderance of the evidence, 52 and we review a
trial judge’s exclusion of expert testimony for abuse of discretion. 53

Here, Professor Greenberger’s report functions as little more
than a legal brief that parrots plaintiffs’ arguments. The report
identifies a handful of rules in Chapter 5 of the CME Rulebook (the
same rules that plaintiffs marshal in their briefing), and it cites several
cases and CFTC documents that Professor Greenberger claims
supports his interpretation of those rules (the same cases and CFTC
documents that plaintiffs cite). Much of Professor Greenberger’s
report advances policy arguments. As the district court explained,
the report “offers scant input” on the issues appealed and, in any
event, would not alter the outcome on summary judgment. 54 The
district court did not abuse its discretion by excluding it.

III. The district court’s judgment does not contradict our prior
ruling in this case

Despite their failure to show that KOSPI 200 futures are subject
to the rules of the CME, plaintiffs argue that we should reverse the
district court because its judgment contradicts our prior decision,

49See Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 597 (1993).
50Fed. R. Evid. 702.
51 See United States v. Lumpkin, 192 F.3d 280, 289 (2d Cir. 1999); Hygh v.

Jacobs, 961 F.2d 359, 364 (2d Cir. 1992).
52 United States v. Williams, 506 F.3d 151, 160 (2d Cir. 2007).

53 Gen. Elec. Co. v. Joiner, 522 U.S. 136, 142–43 (1997).

54 Choi V, 2020 WL 1503446, at *7.
17 No. 20-1648-cv

which is now law of the case. As explained above, our prior opinion
found it plausible that parties trading KOSPI 200 futures on the
overnight market of the KRX incurred irrevocable liability in the
United States, where the orders were matched through CME Globex.
Although the opinion focused exclusively on Tower’s
extraterritoriality defense under Morrison, plaintiffs contend that the
district court’s entry of summary judgment “effectively overrules”
that decision by holding that the CEA does not, in fact, cover the
trading at issue. 55

The law of the case doctrine “forecloses reconsideration of
issues that were decided—or that could have been decided—during
prior proceedings.” 56 It applies “both to that which is expressly
decided as well as to everything decided by necessary implication.” 57
While the doctrine “does not rigidly bind [us] to [our] former
decisions,” 58 we generally adhere to prior decisions in subsequent
stages of the same case “unless ‘cogent and compelling reasons
militate otherwise.’” 59 Cogent and compelling reasons justifying a
departure from the law of the case may include “an intervening
change in law, availability of new evidence, or ‘the need to correct a
clear error or prevent manifest injustice.’” 60

The district court’s judgment does not violate the law of the
case. As we noted above, our prior opinion addressed only whether

55Appellants’ Br. at 19.
56Doe v. E. Lyme Bd. of Educ., 962 F.3d 649, 662 (2d Cir. 2020) (quoting
United States v. Williams, 475 F.3d 468, 471 (2d Cir. 2007)).
57 United States v. Yonkers Bd. of Educ., 856 F.2d 7, 11 (2d Cir. 1988)

(internal quotation marks, citation, and alteration omitted).
58 Johnson v. Holder, 564 F.3d 95, 99 (2d Cir. 2009) (quoting Higgins v. Cal.

Prune & Apricot Grower, Inc., 3 F.2d 896, 898 (2d Cir. 1924)).
59 Id. (quoting United States v. Quintieri, 306 F.3d 1217, 1225 (2d Cir.

2002)).
60 Id. at 99–100 (quoting Quintieri, 306 F.3d at 1230).
18 No. 20-1648-cv

application of the CEA to Tower’s alleged conduct would constitute
an extraterritorial application of the Act in violation of Morrison. 61 In
concluding that it would not, our analysis focused exclusively on
Morrison’s “domestic transactions” test and declined to address
whether the CEA might plausibly have territorial reach over
plaintiffs’ allegations on the basis that CME Globex is a “domestic
exchange.” 62 In any event, our conclusion that Morrison does not
prevent the CEA from regulating these transactions says nothing
about whether a registered entity affirmatively subjected Tower’s
trading to its rules. Our prior opinion did not address the
requirement in Section 9 that trading be “subject to the rules of [a]
registered entity,” and it did not resolve whether the trading of KOSPI
200 futures through CME Globex was in fact governed by the CME
Rulebook.

IV. The district court properly rejected plaintiffs’ public policy
arguments

Ultimately, plaintiffs fall back on public policy. They remind
us that the CEA was designed as a remedial statute, and that it serves
an important role in protecting retail investors and promoting the
integrity of futures markets. 63 They argue that, if the district court’s
decision stands, it will create a “gigantic loophole” in which plausibly
domestic transactions evade enforcement under the CEA simply

61Choi III, 890 F.3d at 66.
62Id. at 66–67.
63 See Loginovskaya, 764 F.3d at 270 (explaining that “[t]he CEA . . . serves

the crucial purpose of protecting the innocent individual investor—who
may know little about the intricacies and complexities of the commodities
market—from being misled or deceived” (internal quotation marks and
citation omitted)).
19 No. 20-1648-cv

because they are not “subject to the rules of [a] registered entity.” 64
Plaintiffs’ arguments are unpersuasive.

First, as the district court recognized, it is the CEA itself that
restricts its scope to futures contracts “on or subject to the rules of [a]
registered entity.” 65 Our task is to “give the statute the effect its
language suggests, . . . not to extend it to admirable purposes it might
be used to achieve.” 66 Thus, while it might further certain of
plaintiffs’ policy interests for Congress to have legislated more
expansively, it did not do so, and it is not our place to effectively strike
Section 9’s requirement from the text of the law. 67

Second, plaintiffs’ policy arguments are overstated in any
event. As plaintiffs concede, the trading of KOSPI 200 futures on the
KRX will remain subject to the rules of the KRX, including when they
are matched using CME Globex. The KRX prohibits manipulative
trading, and it enforces its rules through a Market Oversight
Commission that “conducts market surveillance . . . to prevent unfair
trading practices such as manipulation.” 68 Indeed, plaintiffs initiated
this case only after South Korean regulatory authorities identified
irregularities in Tower’s trading and referred Tower to South Korean
prosecutors. Plaintiffs do not suggest that the absence of concurrent
U.S. regulation leaves them unprotected from the wrongdoing of
would-be manipulators.

64See Appellants’ Br. at 51–54; see also 7 U.S.C. § 9(1), (3).
65See 7 U.S.C. § 9(1), (3).
66 Morrison, 561 U.S. at 270.

67 See Prime Int’l Trading, Ltd. v. BP P.L.C., 937 F.3d 94, 108 (2d Cir. 2019)

(“‘[T]he sole function of the courts is to enforce [the CEA] according to its
terms,’ not to reinvent it.” (second alteration in original) (quoting Arlington
Cent. Sch. Dist. Bd. of Educ. v. Murphy, 548 U.S. 291, 296 (2006))).
68 See J. App at 488.
20 No. 20-1648-cv

Finally, while it appears that the trading of foreign futures on a
foreign exchange will rarely be subject to the rules of a registered
entity, our decision today is a principally a factual one. Nothing in
our opinion is intended to interfere with existing authorities under
the CEA or other federal statutes that may allow domestic exchanges
to regulate foreign futures, in particular when such futures are offered
and sold in the United States.

CONCLUSION

For the foregoing reasons, we AFFIRM the judgment of the
district court.