Mobarak Prado v. JPMorgan Chase & Co.

Background

Martin Mobarak Prado and Comprosuoro S.A. de C.V. sued JPMorgan Chase & Co. under the Racketeer Influenced and Corrupt Organizations Act (RICO) and the Sherman Act. The plaintiffs alleged that JPMorgan manipulated the silver market through “spoofing,” which involved placing genuine orders together with deceptive orders that were quickly canceled. They alleged that this conduct artificially suppressed silver prices and caused Comprosuoro to shut down production at the Dorosa silver mine in late 2014.

The plaintiffs alleged that they did not learn that the decline in silver prices resulted from JPMorgan’s conduct until 2020, when JPMorgan was charged with wire fraud and entered into a deferred prosecution agreement. They filed this action in 2022. JPMorgan moved to dismiss the plaintiffs’ amended complaint under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim.

Court’s Analysis

The court explained that both the RICO and Sherman Act claims had four-year statutes of limitations. For both claims, the limitations period began when the plaintiffs discovered their injury, rather than when they discovered the alleged pattern of misconduct causing that injury. The court concluded that the alleged injury occurred when Comprosuoro shut down the mine in late 2014. Because the plaintiffs filed suit in 2022, more than four years later, the court found both claims time barred.

The plaintiffs argued that fraudulent concealment should toll, or pause, the limitations period until 2020. To invoke that doctrine at the pleading stage, they had to allege that JPMorgan concealed the existence of their claims, that they remained unaware of the violation during the limitations period, and that their lack of knowledge was not caused by insufficient diligence. The court held that the plaintiffs failed to plead the first requirement.

The court distinguished spoofing from price-fixing schemes that may be inherently self-concealing. It reasoned that the plaintiffs knew they had been harmed when the mine shut down in 2014, even though they did not know the alleged cause of the harm. The plaintiffs therefore had not alleged that the fraud concealed the fact of their injury, nor had they alleged affirmative concealment sufficient to satisfy the doctrine’s first requirement.

Disposition

The court held that both claims were time barred and dismissed both claims. It granted JPMorgan’s motion to dismiss the amended complaint, directed the clerk to enter judgment dismissing the amended complaint, and ordered the case closed. Because the statute-of-limitations issue was dispositive, the court did not address JPMorgan’s other arguments. Judge Laura Taylor Swain signed the memorandum order.