Pension Benefit Guar. Corp. v. Asahi Tec Corp.

• Decision Date: 14 March 2012
• Docket Number: Civil Action No. 10–1936 (ABJ).
• Citation: 839 F.Supp.2d 118,53 Employee Benefits Cas. 2346
• Parties: PENSION BENEFIT GUARANTY CORPORATION, Plaintiff, v. ASAHI TEC CORPORATION, Defendant.
• Court: U.S. District Court — District of Columbia

839 F.Supp.2d 118

53 Employee Benefits Cas. 2346

PENSION BENEFIT GUARANTY CORPORATION, Plaintiff,

v.ASAHI TEC CORPORATION, Defendant.

Civil Action No. 10–1936 (ABJ).

United States District Court, District of Columbia.

March 14, 2012.

Israel Goldowitz, Karen L. Morris, James L. Eggeman, Ralph L. Landy, Pension Benefit Guaranty Corporation, Washington, DC, Daniel S. Lubell, Derek J.T. Adler, Hughes, Hubbard & Reed LLP, New York, NY, for Plaintiff.

Robert N. Eccles, Theresa S. Gee, Joanna L. Nairn, O'Melveny & Myers, LLP, Washington, DC, Scott T. Nonaka, O'Melveny & Myers LLP, Tokyo, Japan, for Defendant.

MEMORANDUM OPINION

AMY BERMAN JACKSON, District Judge.

Plaintiff Pension Benefit Guaranty Corporation (“PBGC”) brings this action against defendant Asahi Tec Corporation (“Asahi Tec”) under Title IV of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended29 U.S.C. §§ 1301–1461 (2006 and Supp. II 2008). In 2007, defendant, a Japanese corporation, acquired a U.S.-based company, Metaldyne Corporation (“Metaldyne”). The complaint alleges that as a result of the acquisition, defendant became a “controlled group” member of Metaldyne and is therefore liable for the termination of Metaldyne's Pension Plan (“the Pension Plan”) and for termination premiums. Defendant moved to dismiss under Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction [Dkt. # 11], arguing that the Court cannot exercise general or specific jurisdiction over the foreign corporation for the acts of its U.S. subsidiary. The Court finds that plaintiff has made a prima facie showing that defendant purposefully directed activity towards the United States in connection with the acquisition of Metaldyne and the attendant assumption of controlled group pension liability, and that the claims in the complaint arise directly out of that specific conduct. Therefore, the Court can exercise specific jurisdiction over the defendant, it will deny defendant's motion to dismiss, and it need not reach the question of general jurisdiction.

I. BACKGROUNDA. Factual Background

1. The Metaldyne Acquisition

Defendant Asahi Tec is a corporation organized under the laws of Japan that maintains its headquarters in Shizuoka, Japan. Compl. ¶ 5. Asahi Tec manufactures high quality cast iron and aluminum parts for trucks and cars. Def.'s Mem. in Support of Mot. to Dismiss (“Def.'s Mem.”) at 3. In September 2006, defendant announced its plans to acquire Metaldyne, an automotive parts manufacturer based in Michigan that produced chassis and powertrain components and subassemblies for passenger cars and light trucks. Compl. ¶ 10; Amato Decl. ¶ 11. For purposes of the transaction, defendant established a wholly owned subsidiary in the United States and agreed to pay Metaldyne shareholders over $200 million for their interest in Metaldyne stock. Compl. ¶ 10. Asahi Tec approximated that the total consideration for the acquisition, including the refinancing of Metaldyne's debt, was $1.2 billion. Id.

The complaint alleges that prior to the acquisition, “Asahi Tec performed due diligence in connection with this $1.2 billion transaction to assess the financial impact of the Metaldyne acquisition” and that “one aspect of that due diligence involved Asahi Tech's obligation for pension liabilities of Metaldyne.” Id. ¶ 11. In particular, the complaint alleges that “Asahi Tec learned about the Pension Plan, that the Pension Plan had unfunded benefit and other pension-related liabilities and that, as a member of Metaldyne's controlled group, it would be jointly and severally liable with Metaldyne and other affiliates, for the Pension Liability under the Pension Plan.” Id.

The acquisition of Metaldyne was completed in January 2007. Id. ¶ 13. The complaint alleges, and defendant disputes, that following the merger, Asahi Tec “controlled and directed Metaldyne's operations and made Metaldyne its agent and alter ego to do business in the U.S.” Id. Plaintiff further alleges the acquisition allowed Asahi Tec to “pursue[ ] its goals of gaining access to Metaldyne's engineering, design and manufacturing capabilities and expanding its global reach with Metaldyne's significant operations, presence, and customer base in the U.S. and elsewhere.” Id. Plaintiff avers that Asahi Tec solicited customers and otherwise conducted “continuous and systematic business activities in the U.S. using Metaldyne as its agent and alter ego.” Id.

2. Termination of Metaldyne's Pension Plan

On May 27, 2009, Metaldyne filed a voluntary petition for relief as debtors-in-possession under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. Id. ¶ 15. On July 13, 2009, plaintiff PBGC ¹ filed a complaint under 29 U.S.C. § 1342 against Metaldyne in the U.S. District Court for the Eastern District of Michigan, seeking a decree terminating the Pension Plan and requesting that plaintiff be appointed as statutory trustee of the plan. Id. ¶ 16. Plaintiff alleges that prior to filing that action, it discussed defendant's controlled group liability with defendant's counsel in the United States and requested that Asahi Tec “assume sponsorship of the Pension Plan, given the fact that no buyer of Metaldyne's assets was expected to assume the Pension Plan in the Bankruptcy Cases.” Id. Plaintiff avers that because Asahi Tec refused to assume sponsorship, the Pension Plan was terminated effective July 31, 2009, and plaintiff became the statutory trustee pursuant to section 4042(c) of ERISA. Id. ¶ 17. On September 18, 2009, plaintiff sent a demand letter to Asahi Tec informing the company that it was liable for the terminated pension because it was a controlled group member of Metaldyne. Id. ¶ 18.

B. Procedural Background

Plaintiff filed this action on November 12, 2010. [Dkt. # 1]. The complaint alleges three claims under ERISA. Count I seeks entry of judgment against Asahi Tec for the full principal amount of the pension liability plus accrued interest from July 31, 2009, to date of payment under 29 U.S.C. §§ 1303(e)(1), 1362(b), and 29 C.F.R. § 4062.7. Compl. at 6–7. Count II alleges that Asahi Tec is jointly and severally liable for termination premiums under 29 U.S.C. §§ 1306(a)(7) and 1307(e)(2). Id. at 7–8. Count III seeks litigation costs from this action under 29 U.S.C. § 1303(e)(5). Id. at 8.

On April 8, 2011, defendant filed a motion to dismiss for lack of personal jurisdiction [Dkt. # 11] under Fed.R.Civ.P. 12(b)(2). Plaintiff opposed the motion, and in the alternative, requested that it be permitted to take jurisdictional discovery. [Dkt. # 15]. On July 5, 2011, the Court permitted both parties to submit supplemental briefs addressing the Supreme Court's holdings in Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. ––––, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011), and J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. ––––, 131 S.Ct. 2780, 180 L.Ed.2d 765 (2011). Minute Order, July 5, 2011.

A status conference was held on July 21, 2011, during which the Court ruled that no merits discovery could be conducted until after the Court ruled on the motion to dismiss, but it heard argument on the need for, and the potential scope of, jurisdictional discovery. [Dkt. # 29]. The Court directed plaintiff to submit a proposal outlining the narrowly tailored documentary discovery it was seeking and accorded defendant an opportunity to respond to the proposal. After consideration of the parties' submissions, the Court permitted plaintiff to take some limited discovery but narrowed the proposed order because it was broader than necessary to accomplish its asserted purpose. Id. After the completion of this discovery, the Court also allowed the parties to submit a supplemental brief addressing any evidence that was uncovered during the jurisdictional discovery process. Minute Order, Nov. 18, 2011. A hearing on the motion to dismiss was held on January 18, 2012.

II. STANDARD OF REVIEW

It is the plaintiff who bears the burden of establishing personal jurisdiction over each defendant. Crane v. N.Y. Zoological Soc'y, 894 F.2d 454, 456 (D.C.Cir.1990). In order to survive a motion to dismiss for lack of personal jurisdiction, the “plaintiff must make a prima facie showing of the pertinent jurisdictional facts.” First Chi. Int'l v. United Exch. Co., 836 F.2d 1375, 1378 (D.C.Cir.1988). To establish that personal jurisdiction exists, the plaintiff must allege specific acts connecting the defendant with the forum. In re Papst Licensing GMBH & Co. KG Litig., 590 F.Supp.2d 94, 97–98 (D.D.C.2008), citing Second Amendment Found. v. U.S. Conference of Mayors, 274 F.3d 521, 524 (D.C.Cir.2001). Plaintiff “cannot rely on conclusory allegations” to establish personal jurisdiction. Atlantigas Corp. v. Nisource, Inc., 290 F.Supp.2d 34, 42 (D.D.C.2003).

“A court may consider material outside of the pleadings in ruling on a motion to dismiss for lack of ... personal jurisdiction[.]” Artis v. Greenspan, 223 F.Supp.2d 149, 152 (D.D.C.2002). However, “the plaintiff is not required to adduce evidence that meets the standards of admissibility reserved for summary judgment and trial; rather, [plaintiff] may rest [its] arguments on the pleadings, ‘bolstered by such affidavits and other written materials as [it] can otherwise obtain.’ ” Urban Inst. v. FINCON Servs., 681 F.Supp.2d 41, 44 (D.D.C.2010), quoting Mwani v. bin Laden, 417 F.3d 1, 7 (D.C.Cir.2005) (alteration in original). Any factual discrepancies should be resolved in favor of the plaintiff. Crane, 894 F.2d at 455–56. But, the Court need not treat all of the plaintiff's jurisdictional allegations as true. United States v. Philip Morris Inc., 116 F.Supp.2d 116, 120 n. 4 (D.D.C.2000). “Instead, the court may receive and weigh affidavits and any other relevant matter to assist it in determining the jurisdictional facts.” In re Papst Licensing, 590 F.Supp.2d at 98 (internal quotation marks and citation omitted).

III. ANALYS...