## Facts

- Blanchard & Company, Inc., a retail dealer in rare coins and precious metals, and others involved in gold investing or mining (collectively, Blanchard) sued Barrick Gold Corporation (Barrick) and J.P. Morgan Chase & Company (Chase), alleging manipulation of the world price of gold and attempted monopolization of the gold market in violation of federal and Louisiana antitrust law.
- Blanchard challenged Barrick’s gold-sales and hedging program, which allegedly depended on Chase (or another bullion bank) borrowing gold from foreign central banks on terms not available to other market participants.
- According to the complaint, Barrick and Chase obtained gold through central-bank leasing arrangements at favorable rates and sold or otherwise placed that gold into the market through forward and related transactions, which Blanchard claimed increased supply and suppressed the spot price of gold.
- Blanchard alleged that the lower gold price harmed:
  - a gold investor (loss in investment value),
  - Blanchard’s retail business (reduced demand and lost profits tied to a suppressed gold price), and
  - a participant in gold mining (reduced revenues tied to a depressed market price).
- Blanchard sought damages and broad injunctive relief, including an order terminating contracts alleged to be used to manipulate gold prices (including “Master Trading Agreements,” deferred/spot-deferred sales contracts, and related arrangements).
- Defendants moved to dismiss, arguing that the suit could not proceed because the alleged conduct involved foreign central banks’ gold-leasing decisions and because the requested injunction could affect those banks.
- Defendants also argued that the foreign central banks were required parties under Federal Rule of Civil Procedure 19 but could not be joined due to sovereign immunity, requiring dismissal.

## Issues

1. Whether the act-of-state doctrine barred the action at the pleading stage because the alleged scheme involved gold leased by foreign central banks and the requested relief could affect those banks.
2. Whether foreign central banks involved in gold-leasing transactions were required parties under Federal Rule of Civil Procedure 19 such that the case had to be dismissed because they could not be joined.
3. Whether the complaint’s antitrust and related allegations were sufficient to proceed past a motion to dismiss.

## Decision

- The court denied defendants’ motions to dismiss.
- The court declined to treat the act-of-state doctrine as a threshold bar to adjudicating claims directed at alleged private anticompetitive conduct, even though foreign central banks were connected to the challenged transactions.
- The court rejected dismissal based on Rule 19, refusing to require joinder of foreign central banks as indispensable parties at this stage.
- The case proceeded beyond the pleadings on the challenged dismissal grounds.

## Legal Principles

- The act-of-state doctrine generally applies when a court must rule on the validity of an official act of a foreign sovereign performed within its own territory; it does not automatically bar claims aimed at alleged unlawful conduct by private parties simply because sovereign entities appear in the factual background.
- A party is “required” under Rule 19 only if the court cannot accord complete relief among existing parties, or if the absent party claims an interest such that proceeding may impair that interest or expose existing parties to inconsistent obligations; the presence of sovereign immunity does not, by itself, require dismissal.
- On a motion to dismiss, the court assesses whether the pleaded facts, taken as true, state claims that can proceed; disputes about the merits and the full role of third parties are generally not resolved at the pleading stage.

## Conclusion

Blanchard alleged that Barrick and Chase manipulated and suppressed gold prices through a gold-sales and hedging program tied to central-bank gold leasing, and sought damages plus contract-terminating injunctive relief. The court denied the motions to dismiss, holding that neither the act-of-state doctrine nor Rule 19 required dismissal at the pleading stage, and allowed the case to move forward.


Blanchard & Co., Inc. v. Barrick Gold Corp., 2003 WL 22071173 (2003)