551 F.Supp. 626 (S.D.N.Y. 1982), 76 Civ. 1388, El Cid, Ltd. v. New Jersey Zinc Co.

Docket Nº76 Civ. 1388 (WK).
Citation551 F.Supp. 626
Party NameEL CID, LTD., Plaintiff, v. The NEW JERSEY ZINC COMPANY, Gulf & Western Industries, Inc., Gulf & Western International Holding Company, Gulf & Western (Canada) Limited, Watts, Griffis & McQuat, Limited, Camino Gold Mines Limited, Confor Mining, Inc., Richard W. Hogeland and David M. Koogler, Defendants.
Case DateNovember 30, 1982
CourtUnited States District Courts, 2nd Circuit, Southern District of New York

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551 F.Supp. 626 (S.D.N.Y. 1982)

EL CID, LTD., Plaintiff,

v.

The NEW JERSEY ZINC COMPANY, Gulf & Western Industries, Inc., Gulf & Western International Holding Company, Gulf & Western (Canada) Limited, Watts, Griffis & McQuat, Limited, Camino Gold Mines Limited, Confor Mining, Inc., Richard W. Hogeland and David M. Koogler, Defendants.

No. 76 Civ. 1388 (WK).

United States District Court, S.D. New York.

Nov. 30, 1982

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Malcolm H. Bell, Norwalk, Conn., for plaintiff.

Joseph Einstein, Kassel, Hoffman, Neuwirth & Geiger, Arthur Sobel, Kimmelman, Sexter & Sobel, New York City, for defendants.

MEMORANDUM & ORDER

WHITMAN KNAPP, District Judge.

After extensive discovery, the so-called Gulf & Western defendants 1 have brought a motion for summary judgment against the antitrust claim of the second amended complaint. For reasons set forth below, it is conditionally granted. 2

THE ANTITRUST CLAIM

This case involves eight gold mining concessions [the Bolgol Concessions] located in Bolivia's Tipuani Valley. These concessions are owned by defendant Camino Gold Mines Ltd. [Camino], which does not mine them for gold. It is plaintiff's contention that, had the defendants not prevented it by unfair means from obtaining the necessary funds from its American backers, it--and not Camino--would now be the owner of the Bolgol Concessions. Plaintiff, moreover, asserts that it--unlike Camino--would have mined the concessions for gold.

The antitrust claim at issue is based on section 1 of the Sherman Act, 15 U.S.C. § 1, and section 73 of the Wilson Tariff Act which extends the antitrust laws to the importation of goods. 15 U.S.C. § 8. It alleges that defendants conspired wrongfully to deprive plaintiff of the Bolgol Concessions. This conspiracy is claimed to have affected, among others, the security markets and commerce in mining equipment and machinery. Complaint ¶ 22. In this connection the complaint states at ¶ 25:

The acts of the defendants have had and will have a substantial impact on trade and commerce among the several States and with foreign nations, in particular but without limitation, trade and commerce in mining equipment and machinery, in gold, and in the securities of such defendants as are publicly held and traded. The combination, conspiracy and concert of action alleged herein are between and among persons and corporations who, as agents or principals, are engaged or to become engaged in importing gold and other commodities into the United States; and such combination, conspiracy and concert of action are intended to operate in restraint of lawful trade and commerce. (Emphasis supplied.)

THE INSTANT MOTION

It is axiomatic that a motion for summary judgment may not be granted unless, after resolving all ambiguities and drawing all reasonable inferences in favor of the party against whom summary judgment is sought, there remains no material fact genuinely in dispute. FLLI Moretti Cereali v. Continental Grain Co. (2d Cir.1977) 563 F.2d 563, 565; 6 Moore's Federal

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Practice ¶ 56.23. 3 Accordingly, for the purposes of this motion, we will accept as established that defendants did indeed use unfair means to deprive plaintiff of the Bolgol Concessions and that the alleged conspiracy among defendants was planned and set in motion in the United States. We will focus at the outset on the pivotal question whether--on the assumption that unfair means were used--their "intended effects" had a sufficient impact upon United States commerce to warrant application of the antitrust laws to this extraterritorial dispute. We answer this first question in the negative. Furthermore, we then go on to observe that, after several years of discovery, plaintiff has failed to submit such evidence as would allow a reasonable jury to find defendants' conduct in depriving plaintiff of the Bolgol Concessions to have had an anticompetitive effect.

THE UNITED STATES CONNECTION

Facts

As noted above, the subject of this lawsuit is a gold mining concession located in Bolivia's Tipuani Valley and now owned by defendant Camino--a Canadian corporation.

Plaintiff is a corporation organized in the Cayman Islands, British West Indies, with offices in San Jose, Costa Rica. It is not authorized to do business in any jurisdiction within the United States, and has no office or place of business here. It has, however, provided investment advice to investors in this country, and has had American citizens as stockholders. Plaintiff's Rule 3(g) Statement ¶ 2. 4 Moreover, plaintiff, its predecessors, and stockholders have generally conducted business in U.S. dollars, plaintiff's only checking account (presumably with a foreign bank) is and always has been denominated in U.S. dollars, and plaintiff's two main backers on the Bolgol venture--S.J. Groves & Sons Co. and William J. Kilpatrick--are both American. Plaintiff's Rule 3(g) Statement ¶ 57.

The cast of defendants includes three that are Canadian: Camino (the vehicle for defendants' Bolivian mining ventures), Watts, Griffis & McQuat, Ltd., and Gulf & Western (Canada). The other defendants, however, are American. As stated above, for present purposes, it must be taken as established that the alleged conspiracy to deprive plaintiff of the Bolgol was planned and set in motion within the United States. Thus, plaintiff avers that defendant Gulf & Western expended some $2,275,000 in interstate and foreign commerce in this connection; that defendants sought financing of approximately $7,000,000 for the project from New York City banks and financiers, obtaining a conditional commitment in 1975; and that defendants purchased and prepared to ship from California to Bolivia a large walking dragline valued at several hundred thousand dollars. Plaintiff's Rule 3(g) Statement ¶ ¶ 45, 47, 48.

All parties, moreover, used airlines, telexes, telephones, and other instrumentalities of United States interstate and foreign commerce and communication in their respective efforts to secure the Bolgol. Plaintiff's Rule 3(g) Statement ¶ 51.

As to the effect on United States commerce, plaintiff avers that, had defendants not wrongfully deprived it of the Bolgol, it and its partners would have purchased the bulk of their mining equipment--some several million dollars worth--in the United States. Defendants having failed to go forward with the venture, these purchases

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were wholly lost to domestic commerce. Moreover, plaintiff offers documents which suggest that even if defendants had gone forward with the project, they would have purchased most of the necessary mining equipment in Canada, not in the United States. Plaintiff's Rule 3(g) Statement ¶ ¶ 49-50.

Plaintiff further avers that it would have brought into the United States a large portion either of the gold mined from the Bolgol or of the money received for it. Plaintiff's Rule 3(g) Statement ¶ 57. It concedes, however, that defendants would have, likewise, brought into the United States the fruits of the Bolgol had they not "failed to go forward with the project through their own missteps and fallings-out..." Plaintiff's Rule 3(g) Statement ¶ 56.

Finally, plaintiff states that its ability to conduct business in the United States and elsewhere has been hindered by defendants' actions, which wrongfully deprived it of "cash flow for implementing such operations." Plaintiff's Answer to Interrogatories, No. 15(c).

Discussion

Plaintiff's claim must fail because its impact on United States commerce is insufficient to warrant the application of the antitrust laws. As to this phase of the defendants' motion, Judge Learned Hand established the focus of inquiry with the oft-quoted statement that:

We should not impute to Congress an intent to punish all whom its courts can catch, for conduct which has no consequences within the United States. United States v. Aluminum Co. of America (2d Cir.1945) 148 F.2d 416, 443.

There has been no want of litigation over the question of what must be shown to establish at least some "consequences" within the United States. Timberlane Lumber Co. v. Bank of America (9th Cir.1976) 549 F.2d 597, 608 n. 12. See, generally, 6 Toulmin's Antitrust Laws § 31.7. A recent review of the law led Judge Carter to rule that any demonstrable effect would suffice, so long as it was not de minimus. Thus, in Dominicus Americana Bohio v. Gulf & Western Industries (S.D.N.Y.1979) 473 F.Supp. 680 he observed at 687:

According to the Alcoa rule, even wholly foreign conduct may come within the sweep of the antitrust laws if it has a sufficient effect on the interstate or foreign commerce of the United States. Indeed, it is probably not necessary for the effect on foreign commerce to be both substantial and direct as long as it is not de minimis. (Citations omitted.)

Accepting Judge Carter's formulation of the doctrine, we conclude that any effect in the United States of the alleged conspiracy would be, at most, de minimis. 5

Examination of the cases cited by plaintiff on this issue shows that in each of them the defendants were claimed to have

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conspired to control or to destroy some specific business activity--either in existence or realistically planned--within the United States, or had cut off the importation into the United States of specifically designated goods. 6 It can readily be seen that these

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cases lend no support to a claim by a foreign plaintiff who has never imported anything into the United States and only alleges the vaguest and undocumented hope of ever doing so.

The startling thing about the facts and arguments submitted by plaintiff is that, despite the assertion that plaintiff and its predecessors had previously conducted "mining operations in Latin America" and that its president had "engaged in mining for many years", see Memorandum in Opposition at 10, 16, there is no suggestion that plaintiff, its president, or its predecessors...

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