Posted: July 15, 2020

Court Denies Motion to Dismiss on Jurisdictional Grounds in In re Aluminum Warehousing Antitrust Litigation

In FujiFilm Manufacturing, U.S.A., Inc. v. Goldman Sachs & Co., 15 CV 8307, decided under In re Aluminum Warehousing Antitrust Litigation, 13 MD 2481, United States District Judge Paul A. Engelmayer of the Southern District of New York issued a decision denying a motion to dismiss brought under Fed. R. Civ. P. 12(b)(2) by two foreign affiliates of other defendants, based on his finding that the foreign affiliates were alleged to have sufficient contacts with the United States relating to plaintiff’s claim.

Background

FujiFilm, like various other MDL plaintiffs, alleged that certain defendants from the financial industry (the “Financial Defendants”) had engaged in an anti-trust conspiracy that included the acquisition of other defendants involved in the warehousing and delivery of aluminum (the “Warehousing Defendants”). Delays at the Warehousing Defendants’ facilities inflate the spot price of aluminum, and plaintiffs alleged that Financial and Warehousing Defendants conspired to create such delays, causing plaintiffs injury.

The two moving defendants were Glencore International AG (“GIAG”) and Pacorini Metals Vlissingen B.V. (“Pacorini Vlissingen”) (together, “Movants). GIAG is a Swiss corporation and an affiliate of defendant Glencore, Ltd, which is in turn affiliated with the Financial Defendants. Pacorini Vlissingen is a Dutch Corporation, and an affiliate of Warehousing Defendant Pacorini Metals USA, LLC (“Pacorini USA”). The Pacorini entities were owned by one or more of the Glencore entities.

GIAG and Pacorini Vlissingen sought dismissal on the grounds that they had insufficient contacts with the United States to support personal jurisdiction. Neither Movant had offices or employees, maintained bank accounts, mailing addresses, or telephone numbers, paid income or property taxes, registered to conduct business, conducted officer or board meetings, or had a registered agent for service of process anywhere in the United States. Op. at 6.

The Court’s Decision

But FujiFilm did not argue for general jurisdiction, and Judge Engelmayer found specific jurisdiction based on FujiFilm’s allegations, and showing by affidavits, concerning Movants’ contacts with the United States.

FujiFilm asserted jurisdiction under Fed. R. Civ. P. 4(k)(2), which provides:

(2) Federal Claim Outside State-Court Jurisdiction. For a claim that arises under federal law, serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if:
(A) the defendant is not subject to jurisdiction in any state’s courts of general jurisdiction; and
(B) exercising jurisdiction is consistent with the United States Constitution and laws.

FujiFilm’s claim arose under federal antitrust law, and Judge Engelmayer found it undisputed that neither Movant was subject to the courts of general jurisdiction of any one state. Therefore, the relevant question was “whether this Court’s exercise of jurisdiction pursuant to Rule 4(k)(2) comports with due process.” Op. at 20.

This required assessment of two questions. First, whether plaintiff has adequately shown the required minimum contacts between the defendant and the United States and, second, whether the exercise of jurisdiction comports with traditional notions of fair play and substantial justice. Judge Engelmayer found both elements to be satisfied.

Minimum Contacts
The sufficiency of “minimum contacts” turns on “’the quality and nature’” of the defendant’s contacts. Op. at 21, quoting Best Van Lines, Inc. v. Walker, 490 F.3d 239, 242 (2nd Cir. 2007), quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985). “In the Rule 4(k)(2) context, a foreign corporation may satisfy the minimum contacts test by: (1) transacting business in the United States, (2) doing an act in the United States, or (3) having an effect in the United States by an act done elsewhere.” Op. at 21, n.19 (citations omitted). Where the relevant conduct took place entirely outside the forum, defendant must have “expressly aimed its conduct at the forum”; the mere fact that harm in the forum is foreseeable will not suffice. Op. at 22 (citations omitted).

GIAG has sufficient contacts because its “executives and traders actively coordinated and participated in the alleged U.S. conduct from which FujiFilm’s Sherman Act claim arises.” Op. at 23-24. The Court noted three instances to illustrate this. Op at 24-27. First, an email recounting a meeting between top executives from GIAG and Pacorini Metals AG (the parent of both Pacorini USA and Pacorini Vlissingen) “demonstrates GIAG’s keen interest in the U.S. aluminum market and suggests that other Glencore-Pacorini entities, including U.S. subsidiaries, took direction from GIAG in organizing their U.S. activities.” Second, a GAIG representative took a lead role in working out the details of an agreement whereby Glencore Ltd. would continue to store 27,000 metric tons of aluminum in a Detroit warehouse as part of the conspiracy alleged. Third, GAIG accepted warrants for 860,000 tons of aluminum stored in a Detroit warehouse as part of an aluminum swap with Financial Defendant J.P. Morgan. The Court found that each of these incidents reflected senior GIAG executives and traders purposely availing themselves of the privilege of conducting activities in the United States.

Pacorini Vlissingen participated in much of the same the conduct the Court relied on with respect to GAIG, and actively involved itself in efforts to take an interest in other aluminum batches stored in the United States. Op. at 27-29. Moreover, while traveling to the United States in 2013 on behalf of Pacorini Vlissingen, Duncan Holterman worked on storage issues relating to Pacorini USA’s warehouses. When “viewed in the light most favorable to FujiFilm, Holterman’s trip constitutes substantial activity on U.S. soil furthering defendants’ alleged antitrust conspiracy.” Op. at 29.

Traditional Notions of Fair Play and Substantial Justice
Judge Engelmayer cited Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 173 (2d Cir. 2010) for the five-part test regarding traditional notions of fair play and substantial justice, and found the exercise of personal jurisdiction over GAIG and Pacorini Vlissingen to satisfy it. Op. at 30-31.

The first factor, the burden imposed on defendant, did not weigh heavily in light of the conveniences of modern transportation and communication, and the involvement of Movants’ affiliates in the litigation. The second factor, the interest of the forum in adjudicating the case, favored plaintiff, given the alleged effect of the conspiracy on aluminum prices in the United States. The third and fourth factors – plaintiff’s interest in obtaining convenient and effective relief, and the interstate judicial system’s interest in efficient resolution – both favored plaintiff, as the exercise of jurisdiction over GAIG and Pacorini Vlissingen in the existing litigation “would allow for the most efficient resolution of these claims”. Judge Engelmayer found the fifth factor, the shared interests of the states in furthering substantives social policies, to be “at most, neutral”, and noted that Chloe had found the fair play/substantial justice test satisfied “where the first factor favored defendants, and second and third factors favored plaintiff, and the last two factors were neutral.”

This post was written by Schlam Stone & Dolan partner Thomas A. Kissane.

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