LINCOLN, Neb. (DTN) -- An expert witness will be allowed to testify in an ongoing ethanol markets class-action lawsuit against Archer Daniels Midland, after a federal court denied ADM's fourth motion to exclude the witness.

In December 2024, ADM and plaintiff AOT Holding AG debated whether AOT's witness Shaun Ledgerwood should be allowed to present his findings using a so-called regression analysis model he created on behalf of AOT Holding and Maize Capital Group LLC, a second plaintiff in a related case.

That model, AOT alleges, shows ADM manipulated the ethanol market at the Argo terminal in Illinois.

The U.S. District Court for the District of Central Illinois ruled that Ledgerwood did enough to justify his choice of variables in the model. Ledgerwood argued that because there wasn't much "elasticity" in the price, supply and demand curves for ethanol, ADM's alleged manipulation of the market would not have materially affected ethanol stocks.

"Ledgerwood has done that here," the court said in its order.

"He provided an explanation to support his inclusion of the variable -- which also lessened Wooldridge's objections (to an extent). Thus, it is up to the jury to determine whether Ledgerwood's choice of data inputs render his model either more or less persuasive than what is offered by ADM's expert." The court had appointed its own neutral expert in Professor Jeffrey Wooldridge, whose opinion carried weight with the court because of its presumed neutrality.

Ledgerwood is an economist from The Brattle Group who has focused on energy market regulation and competition.

AOT and other companies have alleged ADM manipulated ethanol prices, violating the Commodity Exchange Act.

Specifically, AOT alleged ADM suppressed the daily benchmark price of ethanol to benefit its short positions. AOT has alleged ADM's actions benefited the company by increasing the value of ADM's "short" or "hedged" ethanol positions.

AOT filed a class-action lawsuit in May 2020, alleging ADM manipulated the daily ethanol market at the Argo terminal by flooding the fuel terminal with lower-priced ethanol starting in November 2017 through March 2019. The specific trading in question occurred during the 30-minute "market-on-close," or MOC, window.

Wooldridge had concerns about the ethanol stocks variable in Ledgerwood's model, however the court found Wooldridge's testimony didn't offer a clear condemnation of Ledgerwood's model. According to the court's order, Wooldridge testified that "unfortunately, we can't really tell which one is likely to be true."

When the court asked him whether combining two questionable variables might still produce a valid result in the Ledgerwood model, Wooldridge testified: "Two wrongs could make a right." Then the judge pressed him -- "Wait. You just said two wrongs could make, actually, the right conclusion? Possibly?" Wooldridge replied: "It's the business we're in, yes, unfortunately."

ADM was given 14 days to file a renewed, narrowed motion on the remaining arguments, including whether the model was robust and engineered to find damages.

Ledgerwood is a former economist at the Office of Enforcement of the Federal Energy Regulatory Commission. Wooldridge, the university distinguished professor of economics at Michigan State University, reportedly concluded AOT did not suffer economic damage from ADM's alleged actions.

Wooldridge has been involved in critiquing Ledgerwood's conclusions as part of vetting him as a witness.

The model Ledgerwood developed, according to court documents, includes:

-- Futures price of corn

-- Wages paid to manufacturing workers

-- Electricity and natural gas prices

-- Prices of byproducts of ethanol production

-- Railroad transportation costs

-- Storms or other severe weather in Illinois

-- Gasoline price in New York Harbor

-- Price of renewable identification numbers, or RINs

-- Amount of ethanol and gasoline stocks in the U.S.

-- U.S. imports and exports of ethanol and the Chinese tariffs placed on them.

ADM has argued Ledgerwood and his report are not admissible because the model almost always finds ethanol-price suppression on ADM's part, and that he used the wrong model and data for pricing, among other issues.

Read more on DTN:

"Expert Witness Who Alleges ADM Manipulated Ethanol Market Sees Credibility Examined in Court," https://www.dtnpf.com/….

Todd Neeley can be reached at todd.neeley@dtn.com

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