Dee-K Enterprises, Inc. v. Heveafil Sdn. Bhd., Civ.A. 97-556-A.

• Citation: 985 F.Supp. 640
• Decision Date: 23 December 1997
• Docket Number: No. Civ.A. 97-556-A.,Civ.A. 97-556-A.
• Parties: DEE-K ENTERPRISES, INC., et al., Plaintiffs, v. HEVEAFIL SDN. BHD., et al., Defendants.
• Court: U.S. District Court — Eastern District of Virginia

985 F.Supp. 640

DEE-K ENTERPRISES, INC., et al., Plaintiffs, v. HEVEAFIL SDN. BHD., et al., Defendants.

No. Civ.A. 97-556-A.

United States District Court, E.D. Virginia, Alexandria Division.

December 23, 1997.

Joel Davidow, Sturgis M. Sobin, Ablondi, Foster, Sobin & Davidow, P.C., Michael D. Hausfeld, Daniel A. Small, Paul T. Gallagher, Cohen, Milstein, Hausfeld & Toll, PLLC, Washington, DC, for Plaintiffs.

Walter J. Spak, Anne D. Smith, Carolyn B. Lamm, Denise L. Diáz, George L. Paul, Francis A. Vasquez Jr., White & Case, Washington, DC, for Heveafil Sdn. Bhd., Filmax Sdn. Bhd., Rubfill Sdn. Bhd., Rubberflex Sdn. Bhd., Filati Lastex Sdn. Bhd., Filati Lastes Elastofibre USA, Inc., Filati Corp. of RI, Filati Corp. of NC, Rubfil USA, Inc., and P.T. Bakrie Rubber Industry.

David M. Foster, Joseph T. Small, Christine P. Hsu, Fulbright & Jaworski, LLP, Washington, DC, for JPS Elastomerics Corp.

James A. West, James A. West, PC, Houston, TX, for Consortium International Corp.

MEMORANDUM OPINION

ELLIS, District Judge.

In this international antitrust action, plaintiffs allege a conspiracy between and among various foreign manufacturers of extruded rubber thread and their distributors to fix prices of the thread in the United States. The underlying facts are set out in full in an earlier Memorandum Opinion in this matter. See Dee-K Enterps., Inc. v. Heveafil Sdn. Bhd., 982 F.Supp. 1138 (E.D.Va.1997).

The matter now before the Court is a motion by several defendants to dismiss for improper venue pursuant to Rule 12(b)(3), Fed.R.Civ.P. The facts pertinent to this motion may be succinctly stated. The named defendants fall into two groups: (i) Malaysian, Indonesian, and Thai manufacturers of extruded rubber thread, and (ii) the American distributors of the thread. None of these defendants is located in the Eastern District of Virginia. Moreover, no defendant transacts business in this District; defendant Consortium International Corp. ("Consortium") has supplied thread to plaintiff Dee-K Enterprises, Inc. ("Dee-K") in Virginia, but all of those transactions took place in the Western District of Virginia. Thus, certain defendants contend that venue is improper in this District. Several defendants also moved to dismiss this action for lack of personal jurisdiction and for failure to state a claim; these motions were denied by the earlier Memorandum Opinion. Left undecided by that Memorandum Opinion, however, was defendants' motion to dismiss for improper venue. See Dee-K, 982 F.Supp. at 1148-49. Accordingly, by Order dated October 23, 1997, plaintiffs were directed to file a memorandum concerning the propriety of venue in the Eastern District of Virginia. Plaintiffs have filed such a memorandum, and defendants have filed their responses. Thus, the matter is now ripe for disposition.

I

The threshold question is whether the venue objection has been waived. Plaintiffs contend that each defendant either failed to raise an objection to venue in its first responsive pleading or Rule 12 motion, as required by Rule 12(h)(1), Fed.R.Civ.P., or waived its objection to venue by later asserting a counterclaim. Plaintiffs' contention is correct as to all defendants but one.

Plaintiffs filed their complaint on April 17, 1997. Nine defendants (the "Malaysian defendants") filed their first Rule 12 motion on June 9, 1997, and did not challenge venue in that pleading. Three of those defendants, namely Rubfil USA, Inc., Flexil Corp., and Filati Lastex Elastofibre USA, Inc., contend that they were not required to raise an improper-venue defense at that time because the defense was not "then available." See Rules 12(g), (h), Fed.R.Civ.P. (providing that defense is waived only for objections "then available," i.e., available at the time the first pleading was filed). These domestic defendants base their contention on the erroneous proposition that simply because the original complaint was sufficiently vague to warrant dismissal for lack of specificity,¹ it must also have been so vague as to obscure whatever basis for venue might have existed at that time. Thus, the domestic defendants argue they were not able to discern whether venue was proper in this District until plaintiffs filed their more specific, amended complaint and indicated precisely which of defendants' acts constituted the alleged conspiracy. This argument amounts to the assertion that the domestic defendants could not, on their own, have known whether or not they conducted any business in this District such that venue here would be proper until plaintiffs identified specific alleged conduct in this District that they believed violated the antitrust laws.

This argument is unpersuasive. First, these domestic defendants certainly knew the scope and details of their business activities, and thus they knew whether they resided, transacted business, or could be found in this District. See 28 U.S.C. § 1391 (setting forth criteria for proper venue). Therefore, they cannot now claim that they were unaware of a potential objection to venue at the time the original complaint was filed. Had a venue objection then been available, they could and should have raised it at that time.² Second, and more important, because improper venue is an affirmative defense, allegations showing that venue is proper need not be included in the complaint.³ It follows that the Malaysian defendants have waived any objection to venue they might have had.

Yet another defendant, PT Bakrie Rubber Industry, filed its first Rule 12 motion on June 17, 1997, and did not raise a venue objection therein. Thus, it too has waived any venue objection. Three more defendants, PT Perkebunan III ("Perkebunan"), Natural Rubber Thread Co., and Longtex Rubber Industries, are in default, and thus they have waived all venue objections. See Hoffman v. Blaski, 363 U.S. 335, 343, 80 S.Ct. 1084, 1089, 4 L.Ed.2d 1254 (1960). In any event, venue is proper in this District as to all of these foreign defendants pursuant to 28 U.S.C. § 1391(d).⁴

Consortium, the last remaining defendant, by contrast did preserve its objection to venue, which it raised in response to both the first amended complaint and the second amended complaint.⁵ Plaintiffs now assert, however, that because Consortium has filed a counterclaim in this action, it has waived its improper-venue defense. Plaintiffs' argument has two flaws. First, though courts in the past have split on the issue, "the trend in more recent cases is to hold that no Rule 12(b) defense is waived by the assertion of a counterclaim, whether permissive or compulsory."⁶ Charles A. Wright & Arthur R. Miller, supra, § 1397, at 790; see, e.g., Chase v. Pan-Pacific Broadcasting, Inc., 750 F.2d 131, 132 (D.C.Cir.1984) (R.B. Ginsburg, J.);⁷ Neifeld v. Steinberg, 438 F.2d 423, 428 n. 10 (3rd Cir.1971) ("If [defendant] had raised his jurisdictional defenses by motion prior to filing his answer,⁸ there would clearly have been no waiver."). The rationale supporting these cases is persuasive: To hold otherwise would controvert the dual goals of Rule 12 of (i) preventing the delay inherent in filing successive motions and (ii) abolishing the common law practice of raising jurisdictional defenses by "special appearances." See Gates, 743 F.2d at 1330 n. 1.

Second, plaintiffs' argument overlooks the undeniable fact that Consortium did indeed object to venue at its first opportunity. Were plaintiffs correct that the filing of a counterclaim in effect nullifies a defendant's threshold venue objection, defendants such as Consortium would be caught in a Hobson's choice: they might either file an answer and counterclaim as required by Rules 12 and 13, Fed.R.Civ.P., and forego the venue defense; or preserve the venue defense, but then find themselves either in default for not answering or forever foreclosed from asserting a compulsory counterclaim. Clearly the Federal Rules do not compel or contemplate such a result.⁹ In short, Consortium's timely venue objection is not erased by the subsequent filing of a counterclaim.

II

The next task, then, is to evaluate Consortium's venue objection to determine if venue is properly laid in this District.

As to the American defendants, venue is proper in

(1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred ... or (3) a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought.

28 U.S.C. § 1391(b) (stating the venue rules for federal-question cases). In the case at bar, neither (1) nor (2) applies; thus, venue is proper as to all the American defendants in any district where one of them may be found.¹⁰

Dee-K, 982 F.Supp. at 1148-49.

Notwithstanding the earlier Memorandum Opinion's holding that venue, if proper at all, would be proper under § 1391(b)(3), plaintiffs now argue that venue is proper under § 1391(b)(1). That section requires that all defendants reside in-state, and that at least one defendant reside in the forum district. To prove that the foreign defendants reside in Virginia, plaintiffs rely on § 1391(d), which allows foreign defendants to be sued in any district. Plaintiffs suggest that because the foreign producer-defendants are subject to suit in this District by virtue of § 1391(d), those defendants also reside in this District. This they do in the face of the Court's earlier holding, reprinted here at footnote 10, that the fact that an alien can be sued in this District does not mean that it resides or can be found here. See 982 F.Supp. at 1148-49 n. 24. Plaintiffs' argument is no more persuasive the second time around.

As to four of the American distributor-defendants, plaintiffs do not attempt to show that they reside in Virginia. Instead, plaintiffs argue that these defendants are mere alter egos of their foreign...