In re Magnetic Audiotape Antitrust Litigation

• Citation: 334 F.3d 204
• Decision Date: 20 June 2003
• Docket Number: Docket No. 02-7687.
• Parties: In re: MAGNETIC AUDIOTAPE ANTITRUST LITIGATION Texas International Magnetics, Inc., f/k/a Hix Recording, on behalf of itself and all others similarly situated, and Crown Magnetics, Inc., Plaintiffs-Appellants, and Premier Multimedia, Inc., Plaintiff-Counter-Defendant-Appellant, v. Auriga-Aurex, Inc., Defendant-Counter-Claimant-Appellee, and Sunkyong Industries Co., f/k/a Sunkyong Ltd, Sunkyong America, Inc. (New York), Sunkyong America, Inc. (Los Angeles), BASF Magnetics GMBH, EMTEC Magnetics Promedia, Inc., f/k/a Jr Pro Sales, EMTEC Magnetics GMBH, Kohap Group of Korea, Kohap Inc., EMTEC Holding GMBH, Aurex S.A. De C.V. (Auriga), TDK Corporation, TDK Electronics Corporation, and SKM Ltd., formerly SK Magnetic Co. Ltd., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

334 F.3d 204

In re: MAGNETIC AUDIOTAPE ANTITRUST LITIGATION

Texas International Magnetics, Inc., f/k/a Hix Recording, on behalf of itself and all others similarly situated, and Crown Magnetics, Inc., Plaintiffs-Appellants, and Premier Multimedia, Inc., Plaintiff-Counter-Defendant-Appellant, v. Auriga-Aurex, Inc., Defendant-Counter-Claimant-Appellee, and Sunkyong Industries Co., f/k/a Sunkyong Ltd, Sunkyong America, Inc. (New York), Sunkyong America, Inc. (Los Angeles), BASF Magnetics GMBH, EMTEC Magnetics Promedia, Inc., f/k/a Jr Pro Sales, EMTEC Magnetics GMBH, Kohap Group of Korea, Kohap Inc., EMTEC Holding GMBH, Aurex S.A. De C.V. (Auriga), TDK Corporation, TDK Electronics Corporation, and SKM Ltd., formerly SK Magnetic Co. Ltd., Defendants-Appellees.

Docket No. 02-7687.

United States Court of Appeals, Second Circuit.

Argued/Submitted March 13, 2003.

Decided: June 20, 2003.

Howard J. Sedran, Philadelphia, PA (Levin, Fishbein, Sedran & Berman, Eric L. Olson, Karla Gluek, Heins, Mills & Olson, P.L.C., Minneapolis, MN; Richard J. Kilsheimer, Kaplan Fox & Kilsheimer, LLP, New York, NY; and Michael J. Brickman, Richardson, Patrick, Westbrook & Brickman, LLC, Charleston, SC, of counsel), for Plaintiffs-Appellants and Plaintiff-Counter-Defendant-Appellant.

Bud G. Holman, New York, N.Y. (Kelley, Drye & Warren, LLP, of counsel), for Defendant-Appellee SKM Ltd.

Before: OAKES, CABRANES and SOTOMAYOR, Circuit Judges.

PER CURIAM.

Named plaintiffs Texas International Magnetics, Inc., Crown Magnetics, Inc., and Premier Multimedia, Inc., appeal from the dismissal of defendant SKM, Ltd., from this class action antitrust suit based on lack of personal jurisdiction. Plaintiffs argue that the district court erroneously determined that it lacked personal jurisdiction over SKM and, alternately, that the court improperly denied them the opportunity to conduct jurisdictional discovery on questions of both specific and general personal jurisdiction prior to making its decision. Similar to our conclusion in the companion case to this matter, see Tex. Int'l Magnetics, Inc. v. BASF Aktiengesellschaft, 31 Fed.Appx. 738, 2002 WL 385569 (2d Cir.2002), we agree that the plaintiffs should have been afforded an opportunity to engage in jurisdictional discovery with regard to SKM prior to the court ordering dismissal. Furthermore, we deny SKM's motion to dismiss the appeal based on events in SKM's pending bankruptcy proceeding in Korea. Accordingly, we vacate the judgment and remand to the district court.

In their complaint, plaintiffs allege that SKM, a Korean corporation, along with a number of other manufacturers and distributors of magnetic audiotape, conspired to fix the price of such tape in the United States for a period of roughly eight years, in violation of the Sherman Act, 15 U.S.C. § 1 (2002). Specifically with regard to SKM, plaintiffs alleged that it participated directly in the conspiracy, as well as indirectly, by directing the activities of employees of its United States subsidiary, SKMA, Inc.

SKM brought a motion to dismiss under Fed.R.Civ.P. 12(b)(2), arguing that the court lacked personal jurisdiction. The court granted the motion, concluding in relevant part (1) that plaintiffs had failed either to allege facts or point to facts in the record establishing that SKM was a direct participant in the price fixing activities directed at the United States such that specific personal jurisdiction extended over it; and (2) that plaintiffs had failed either to allege facts or point to facts in the record such that the continuous and systematic contacts of SKM's subsidiary, SKMA, Inc., should be imputed to it for purposes of establishing general personal jurisdiction. In dismissing SKM, however, the court failed to rule explicitly on plaintiffs' request for further discovery on the question of personal jurisdiction.

After plaintiffs filed their notice of appeal, SKM filed a motion to dismiss in this court, which we have considered along with the merits of this appeal.

A.

We review a district court's dismissal for want of personal jurisdiction de novo. See Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 124 (2d Cir.2002). On a Fed.R.Civ.P. 12(b)(2) motion to dismiss for lack of personal jurisdiction, plaintiff bears the burden of showing that the court has jurisdiction over the defendant. See Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir.1996). Prior to discovery, a plaintiff may defeat a motion to dismiss based on legally sufficient allegations of jurisdiction. Id.

We credit a plaintiff's averments of jurisdictional facts as true. Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.1990). Where plaintiff has engaged in jurisdictional discovery, but no evidentiary hearing was conducted, "the plaintiff's prima facie showing, necessary to defeat a jurisdiction testing motion, must include an averment of facts that, if credited ... would suffice to establish jurisdiction over the defendant." Id.

We note, here, that the district court analyzed the question of personal jurisdiction under § 12 of the Clayton Act, 15 U.S.C. § 22 (2002), adopting the Ninth Circuit's interpretation of the provision found in Go-Video, Inc. v. Akai Elec. Co., 885 F.2d 1406 (9th Cir.1989).¹ Neither party contests on appeal the propriety of this decision.

Under the Ninth Circuit's interpretation of § 12, plaintiffs may avail themselves of § 12's worldwide service-of-process provision, which enables courts to extend personal jurisdiction over corporations to the limits permitted under the Fifth Amendment's due process clause, even if § 12's venue provision is not satisfied.² Id. at 1408-13; accord Dee-K Enters. v. Heveafil Sdn. Bhd., 982 F.Supp. 1138, 1144 n. 12 (E.D.Va.1997); Gen. Elec. Co. v. Bucyrus-Erie Co., 550 F.Supp. 1037, 1041-42 (S.D.N.Y.1982). The ensuing minimum contacts analysis looks to a corporation's contacts with the United States as a whole to determine if the federal court's exercise of personal jurisdiction comports with due process. Go-Video, 885 F.2d at 1414-15; Bucyrus-Erie, 550 F.Supp. at 1043; Dee-K, 982 F.Supp. at 1145 n. 15; see also Dardana Ltd. v. A.O. Yuganskneftegaz, 317 F.3d 202, 207 (2d Cir.2003) (when personal jurisdiction over foreign corporation is based on Fed.R.Civ.P. 4(k)(2) — in essence the federal long-arm statute — due process analysis involves contacts with United States as a whole); United States v. Swiss Am. Bank, Ltd., 191 F.3d 30, 36 (1st Cir.1999)(same); Mariash v. Morrill, 496 F.2d 1138, 1143 (2d Cir.1974) (when undertaking due process analysis with respect to analogous service-of-process provision of federal Securities Exchange Act — § 27 — courts look to contacts with United States as a whole).

We will assume, without deciding, that the district court's approach to § 12 is correct, given that the parties do not question it on appeal. We note, however, that there is some disagreement over whether a party first must demonstrate that § 12's venue requirement — that an antitrust suit against a corporation be brought in a district of which it is an inhabitant, in which it may be "found," or in which it transacts business — is satisfied before § 12's expansive jurisdictional provision may be invoked. Compare Go-Video, 885 F.2d at 1408-13 (holding that venue and service-of-process provisions of § 12 operate independently); Daniel v. Am. Bd. of Emergency Med., 988 F.Supp. 127, 198-201 (W.D.N.Y.1997) (same); Bucyrus-Erie, 550 F.Supp. at 1041-42 (same); Dee-K, 982 F.Supp. at 1144 n. 12 (opining same), with GTE New Media Servs. Inc. v. BellSouth Corp., 199 F.3d 1343, 1350 (D.C.Cir. 2000) (holding venue portion of § 12 must be satisfied before extraterritorial service provision can confer personal jurisdiction over a corporation); Michelson v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 709 F.Supp. 1279, 1286-87 (S.D.N.Y.1989) (same); Reynolds Metals Co. v. Columbia Gas Sys., Inc., 694 F.Supp. 1248, 1251 (E.D.Va.1988) (opining same). See also In re Vitamins Antitrust Litigation, 94 F.Supp.2d 26, 27 n. 3, 30 (D.D.C.2000) (questioning wisdom of D.C. Circuit's interpretation of § 12 to require that a defendant be an inhabitant of, be found in, or transact business in a forum before being subject to worldwide service of process in a multidistrict, antitrust suit, but noting it was bound by this precedent).

With regard to the specific question in this case — whether SKM has sufficient minimum contacts with the United States to satisfy due process — we believe the district court improperly denied plaintiffs the opportunity to engage in limited discovery on the question prior to dismissing SKM. First, in both plaintiffs' complaint and materials submitted in opposition to dismissal, they point to minutes from a meeting showing that an executive of SKM was present at a meeting in Seoul in which price-fixing activities took place. For purposes of a motion to dismiss, this arguably would satisfy the "effects" test frequently used in the analysis of specific personal jurisdiction. See Calder v. Jones, 465 U.S. 783, 789-90, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984) (court may exercise personal jurisdiction over defendant consistent with due process when defendant is a primary participant in intentional wrongdoing — albeit extraterritorially — expressly directed at forum). Indeed, SKM concedes that one of its executives was present at the meeting in question, but argues that the meeting was a "short culturally required courtesy meeting," in which no price-fixing discussion took place. This factual argument, however, is not proper for resolution in the context of a motion to dismiss.

Furthermore, it is not clear...