Plaintiffs seek to represent a putative class of U.S. purchasers of magnesite. They allege that sixteen Chinese corporations have conspired to fix prices and control the supply of magnesite and magnesite products exported to the United States. As a result, they say, magnesite prices have remained above market levels since at least April 2000. Defendants' cartel is alleged to constitute a per se violation of § 1 of the Sherman Act. Plaintiff Resco Products, Inc., contends that it and similarly situated direct purchasers suffered damages amounting to $58.9 million, trebled pursuant to § 4 of the Clayton Act. Plaintiff Animal Science Products, Inc., on behalf of indirect purchasers, seeks injunctive relief pursuant to § 16 of the Clayton Act.
This matter had a protracted history in this Court, interrupted by a reversal and remand by the Court of Appeals, before it was reassigned to me in August 2012. Currently before me are (1) two motions to dismiss the amended complaint for failure to state a claim, and (2) a motion to compel arbitration. I here find that Plaintiff Resco has not plausibly pleaded facts sufficient to establish its antitrust standing as a direct purchaser. Consequently, I will grant the motions to dismiss the Amended Complaint, without prejudice.
In light of that dismissal, I will not now determine whether the U.S. antitrust laws apply to Defendants' alleged foreign anti-competitive activity under the Foreign Trade Antitrust Improvements Act. I do briefly discuss that issue to provide guidance in the event that Plaintiffs file a Second Amended Complaint. Likewise, on the current state of the record, I cannot find that Plaintiffs must arbitrate their claims against Defendants, but again I discuss the issue briefly, in anticipation of a possible amended pleading.
Many of the defects in the Amended Complaint trace back to the antitrust standing requirement that the plaintiff (or the entity from which plaintiff obtained its claims by assignment) be a direct purchaser. The Complaint alleges direct purchases by an assignor, Possehl (US), but it does so in self-contradictory terms, and without supporting facts (such as, for example, the identification of even a single concrete purchase). It should be possible in a subsequent amended pleading to identify such purchase/sale transactions, and the agreements under which they were made. If that is done, the Court may determine whether Possehl (US) was a direct purchaser. The Court may also then ascertain whether such agreements contained arbitration clauses. (Defendants have made a suggestive demonstration that certain related agreements did contain such clauses.) Any subsequent pleading should also furnish a specific factual basis to assess the applicability of the “import exception” or the “effects exception” of the FTAIA. The relevant facts are, or should be, available to Plaintiffs, and they must be pleaded before I will permit this complex and expensive litigation to proceed.
The original complaint, filed on September 7, 2005, see ECF No. 1, named as Defendants sixteen Chinese entities. It also named one U.S. subsidiary, Minmetals, Inc. (“Minmetals USA”), alleged to be a New Jersey corporation with its principal place of business in Bergen County. Id. ¶ 10. After Defendants failed to answer the complaint or move to dismiss, in May 2007 the Clerk of Court began making entries of default for failure to appear against the Chinese Defendants. On December 14, 2007, Plaintiffs moved for Default Judgment. See Motion for Default Judgment as to Defaulting Defendants, Dec. 14, 2007, ECF No. 28 (MDJ, 28). Also on December 14, 2007, Defendant Minmetals USA moved to dismiss the Complaint. See ECF No. 27. Several of the defaulting Chinese Defendants responded to Plaintiffs' Motion for Default Judgment. Relying on facts presented in Plaintiffs' moving papers, seven of the Chinese Defendants (collectively, the “Seven Defendants”) filed a Motion to Compel Arbitration. See Motion of Seven Defendants to Compel Arbitration, Feb. 5, 2008, ECF No. 37 (“MTCA, 37”). Those Seven Defendants comprise the following: China Minmetals Corp., China Natl. Minerals Co., (together the “Minmetals Defendants”),1 Sinosteel Corp., China Metallurgical Import & Export Corp. (subsequently renamed Sinosteel Trading Company), Liaoning Jiayi Metals & Minerals Co., Ltd., (together, the “Sinosteel Defendants”), Haicheng Houying Corp., Ltd., and Haicheng Huayu Group Import & Export Co. Ltd. (Huaziyu), (together, the “Haicheng Defendants”).
In September 2008, the case was reassigned to Chief Judge Garrett E. Brown, Jr. In October 2008, Judge Brown heard oral argument on the three pending motions (Minmetals' Motion to Dismiss, Plaintiffs' Motion for Default Judgment and the Seven Defendants' Motion to Compel Arbitration). See ECF No. 72; docket entry dated October 6, 2008. In December 2008, Judge Brown terminated without prejudice the three pending motions and dismissed the original complaint. ECF No. 74. The grounds for dismissal, raised sua sponte by the Court, were that the Court lacked subject matter jurisdiction to adjudicate the dispute pursuant to the Foreign Trade Antitrust Improvements Act. See Animal Science Prods., Inc. v. China Nat'l Metals & Minerals Imp. & Exp. Corp., 596 F.Supp.2d 842 (D.N.J.2008).
On March 30, 2009, ...
