Animal Sci. Products Inc. v. China Minmetals Corp.., No. 10–2288.

CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)
Writing for the CourtOPINION
Citation654 F.3d 462,2011 Trade Cases P 77566
Docket NumberNo. 10–2288.
Decision Date17 August 2011
PartiesANIMAL SCIENCE PRODUCTS, INC., Appellantv.CHINA MINMETALS CORPORATION; China National Co., Ltd.; Xiyang Group; Xiyang (Pacific) Import & Export Ltd. Company; Xiyang Refractory Materials Ltd. Company; Xiyang Fireproof Materials Ltd. Company; Sinosteel Corporation; Sinosteel Trading Company; Liaoning Jiayi Metals & Minerals Co., Ltd.; Liaoning Foreign Trade General Corporation; Liaoning Jinding Magnesite Group; Dalian Golden Sun Import & Export Corp.; Haicheng Houying Corp. Ltd.; Haicheng Huayu Group Import & Export Co. Ltd. (Huaziyu); Haicheng Pailou Magnesite Ore Co. Ltd.; Yingkou Huachen (Group) Co. Ltd.

654 F.3d 462
2011-2 Trade Cases P 77,566

ANIMAL SCIENCE PRODUCTS, INC., Appellant
v.
CHINA MINMETALS CORPORATION; China National Co., Ltd.; Xiyang Group; Xiyang (Pacific) Import & Export Ltd.
Company; Xiyang Refractory Materials Ltd. Company; Xiyang Fireproof Materials Ltd. Company; Sinosteel Corporation; Sinosteel Trading Company; Liaoning Jiayi Metals & Minerals Co., Ltd.; Liaoning Foreign Trade General Corporation; Liaoning Jinding Magnesite Group; Dalian Golden Sun Import & Export Corp.; Haicheng Houying Corp. Ltd.; Haicheng Huayu Group Import & Export Co. Ltd. (Huaziyu); Haicheng Pailou Magnesite Ore Co. Ltd.; Yingkou Huachen (Group) Co. Ltd.

No. 10–2288.

United States Court of Appeals, Third Circuit.

Argued Jan. 24, 2011.Filed: Aug. 17, 2011.


[654 F.3d 463]

William A. Isaacson (Argued), Jennifer Milici, Boies, Schiller & Flexner LLP, Washington, D.C., David S. Stone, Robert A. Magnanini, Amy Walker Wagner, Stone & Magnanini LLP, Short Hills, NJ, Richard E. Donovan, Kelley Drye & Warren

[654 F.3d 464]

LLP, Parsippany, NJ, for Plaintiffs–Appellants, Animal Science Products, Inc. and Resco Products, Inc.Jonathan S. Caplan (Argued), Timothy J. Helwick, Mark A. Baghdassarian, Kramer Levin Naftalis & Frankel, New York, NY, for Defendants–Appellees, Sinosteel Corporation, Sinosteel Trading Company, Liaoning Jiayi Metals & Minerals Co., Ltd.Michael L. Weiner (Argued), Shepard Goldfein, Thomas Pak, Sean M. Tepe, Skadden, Arps, Slate, Meagher & Flom LLP, New York, NY, for Defendants–Appellees, China Minmetals Corporation and China National Minerals Co., Ltd.Before: FUENTES, CHAGARES, Circuit Judges, and POLLAK,* District Judge.
OPINION
CHAGARES, Circuit Judge.

Plaintiffs Animal Science Products, Inc. and Resco Products, Inc. appeal the District Court's dismissal of their First Amended Complaint, in part without prejudice, on the basis that it lacked subject matter jurisdiction under the Foreign Trade Antitrust Improvements Act of 1982 (the “FTAIA”), 15 U.S.C. § 6a. For the reasons that follow, we will vacate and remand.

I.

The plaintiffs are domestic purchasers of “magnesite.” 1 The plaintiffs allege, on behalf of a putative class, that the defendants—Chinese producers and exporters of magnesite—engaged in a conspiracy since at least April 2000 to fix the price of magnesite that is exported to and sold in the United States. The plaintiffs allege that this conspiracy has impacted hundreds of millions of dollars of United States commerce. Based on these allegations, the plaintiffs assert federal claims pursuant to 15 U.S.C. §§ 4, 16, predicated on the defendants' alleged violation of Section 1 of the Sherman Act, 15 U.S.C. § 1.

The plaintiffs first initiated this action by filing a complaint on September 7, 2005. That complaint named seventeen Chinese business entities as defendants. Only five of those defendants are parties to this appeal, however, and these defendants are divided into two groups: (1) the China Minmetals defendants and (2) the Sinosteel defendants.2 After two years of litigation surrounding service of process issues, the plaintiffs moved for a default judgment on December 14, 2007. The China Minmetals defendants and the Sinosteel defendants responded, and moved to compel arbitration of the dispute in China pursuant to arbitration clauses contained in several of the magnesite sales contracts.

In an opinion dated December 30, 2008, the District Court dismissed all pending motions and dismissed the plaintiffs' complaint on the ground that it lacked subject matter jurisdiction to adjudicate the dispute pursuant to the FTAIA, a basis raised sua sponte by the District Court. See

[654 F.3d 465]

Animal Science Prods., Inc. v. China Nat'l Metals & Minerals Imp. & Exp. Corp., 596 F.Supp.2d 842 (D.N.J.2008).3 The dismissal was without prejudice, and the District Court granted the plaintiffs leave to amend their complaint. The District Court instructed that

in the event Plaintiffs file an amended complaint, Plaintiffs must incorporate in their submission evidentiary proof allowing the [District] Court to conduct a factual determination (in contrast with the facial analysis conducted herein) and to conclusively satisfy itself as to presence or lack of subject matter jurisdiction over this action.Id. at 881 (emphasis in original).

On March 30, 2009, the plaintiffs filed their First Amended Complaint and, as instructed, included evidentiary proof with their allegations. The China Minmetals defendants and the Sinosteel defendants subsequently moved to dismiss on the basis that the District Court lacked subject matter jurisdiction or should otherwise abstain from resolving this dispute. In a remarkably comprehensive opinion dated April 1, 2010, the District Court engaged in extensive fact-finding and held that the FTAIA deprived it of subject matter jurisdiction. See Animal Science Prods., Inc. v. China Nat'l Metals & Minerals Imp. & Exp. Corp., 702 F.Supp.2d 320 (D.N.J.2010). The District Court thoroughly discussed the FTAIA's two exceptions but ultimately determined that the plaintiffs failed to demonstrate that either exception was applicable to this case. The District Court thus granted the defendants' motion and dismissed the plaintiffs' First Amended Complaint.4 Although the dismissal was partly without prejudice, the plaintiffs declined the District Court's invitation to amend their complaint for a second time and filed a timely notice of appeal.5

II.

This appeal involves interpreting the FTAIA, a statute that this Court has described as being “inelegantly phrased” and using “rather convoluted language.” Turicentro, S.A. v. Am. Airlines Inc., 303 F.3d 293, 300 (3d Cir.2002) (quotation marks omitted). To wit, the FTAIA provides, in relevant part, that:

[The Sherman Act] shall not apply to conduct involving trade or commerce (other than import trade or import commerce) with foreign nations unless—

(1) such conduct has a direct, substantial, and reasonably foreseeable effect—

(A) on trade or commerce which is not trade or commerce with foreign nations, or on import trade or import commerce with foreign nations; or

(B) on export trade or export commerce with foreign nations, of a person engaged in such trade or commerce in the United States; and

(2) such effect gives rise to a claim under the provisions of [the Sherman Act], other than this section.

[654 F.3d 466]

If [the Sherman Act] appl[ies] to such conduct only because of the operation of paragraph (1)(B), then [the Sherman Act] shall apply to such conduct only for injury to export business in the United States.

15 U.S.C. § 6a.

Parsing this text reveals that the FTAIA first limits the reach of the U.S. antitrust laws by articulating a general rule that the Sherman Act “shall not apply to conduct involving trade or commerce ... with foreign nations.” The FTAIA then creates two distinct exceptions that restore the authority of the Sherman Act. First, the FTAIA provides that it does not apply (and thus that the Sherman Act does apply) if the defendants were involved in “import trade or import commerce” (the “import trade or commerce” exception). Second, the FTAIA's bar is inapplicable if the defendants' “conduct has a direct, substantial, and reasonably foreseeable effect” on domestic commerce, import commerce, or certain export commerce and that conduct “gives rise” to a Sherman Act claim (the “effects” exception). See generally Turicentro, 303 F.3d at 298–306 (discussing the FTAIA, the import trade or commerce exception, and the effects exceptions); Carpet Group Int'l v. Oriental Rug Importers Ass'n., 227 F.3d 62, 71–73 (3d Cir.2000) (discussing the FTAIA and the import trade or commerce exception).

As noted above, the District Court construed the FTAIA as imposing a jurisdictional restriction, and, after engaging in fact-finding, determined that neither of the FTAIA's two exceptions applied. For the reasons stated below, we hold that the FTAIA imposes a substantive merits limitation rather than a jurisdictional bar. We will therefore vacate the District Court's opinion and remand for proceedings consistent with this holding.

A.

“Jurisdiction, it has been observed, is a word of many, too many, meanings.” Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 90, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (quoting United States v. Vanness, 85 F.3d 661, 663 n. 2 (D.C.Cir.1996)) (quotation marks omitted). In recent years, the Supreme Court has been especially critical of courts' “profligate” and “less than meticulous” use of the term. Arbaugh v. Y & H Corp., 546 U.S. 500, 510, 511, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006). Thus, for example, in Kontrick v. Ryan, 540 U.S. 443, 447, 124 S.Ct. 906, 157 L.Ed.2d 867 (2004), and Eberhart v. United States, 546 U.S. 12, 13, 126 S.Ct. 403, 163 L.Ed.2d 14 (2005) (per curiam), the Supreme Court clarified that time limitations set forth in the Federal Rules of Bankruptcy Procedure and the Federal Rules of Criminal Procedure, respectively, were not jurisdictional in nature. And more recently, in Morrison v. National Australia Bank Ltd., ––– U.S. ––––, 130 S.Ct. 2869, 2877, 177 L.Ed.2d 535 (2010), the Supreme Court overturned lower court precedent and held that the extraterritorial reach of § 10(b) of the Securities Exchange Act of 1934 presents a merits issue, rather than a question of subject matter jurisdiction.

Courts have been particularly “less than meticulous” in distinguishing between substantive merits and jurisdiction—that is, in differentiating between statutory elements that serve as a predicate to establishing a successful federal claim for relief on the merits, and statutory elements that define a federal court's adjudicative authority. As a result, judicial opinions “ ‘often obscure the issue by stating that the court is dismissing “for lack of jurisdiction” when some threshold fact has not been established, without explicitly considering whether the dismissal should be for lack of

[654 F.3d 467]

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316 practice notes
  • N. Sound Capital LLC v. Merck & Co., 3:13–cv–7240 (FLW) (DEA)
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • May 15, 2018
    ...with the plaintiff, who must establish that there is subject matter jurisdiction." Animal Sci. Prod., Inc. v. China Minmetals Corp. , 654 F.3d 462, 470 (3d Cir. 2011).314 F.Supp.3d 598 In evaluating a Rule 12(b)(1) motion to dismiss, the court must first determine whether the motion "presen......
  • Nekrilov v. City of Jersey City, Civ. No. 19-22182 (KM) (JBC)
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • March 24, 2021
    ...as the moving party, bears the burden of showing that no claim has been stated. Animal Science Products, Inc. v. China Minmetals Corp. , 654 F.3d 462, 469 n.9 (3d Cir. 2011). For the purposes of a motion to dismiss, the facts alleged in the complaint are accepted as true and all reasonable ......
  • Williams v. Verizon N.J., Inc., Civ. No. 2:19-09350 (KM-SCM)
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • March 12, 2020
    ...as the moving party, bears the burden of showing that no claim has been stated. Animal Science Products, Inc. v. China Minmetals Corp., 654 F.3d 462, 469 n.9 (3d Cir. 2011). For the purposes of a motion to dismiss, the facts alleged in the complaint are accepted as true and all reasonable i......
  • Aliperio v. Bank of Am., N.A., Civ. No. 2:16-CV-01008-KM-MAH
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • December 13, 2016
    ...as the moving party, bears the burden of showing that no claim has been stated. Animal Science Products, Inc. v. China Minmetals Corp., 654 F.3d 462, 469 n. 9 (3d Cir. 2011). For the purposes of a motion to dismiss, the facts alleged in the complaint are accepted as true and all reasonable ......
  • Request a trial to view additional results
313 cases
  • N. Sound Capital LLC v. Merck & Co., 3:13–cv–7240 (FLW) (DEA)
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • May 15, 2018
    ...with the plaintiff, who must establish that there is subject matter jurisdiction." Animal Sci. Prod., Inc. v. China Minmetals Corp. , 654 F.3d 462, 470 (3d Cir. 2011).314 F.Supp.3d 598 In evaluating a Rule 12(b)(1) motion to dismiss, the court must first determine whether the motion "presen......
  • Nekrilov v. City of Jersey City, Civ. No. 19-22182 (KM) (JBC)
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • March 24, 2021
    ...as the moving party, bears the burden of showing that no claim has been stated. Animal Science Products, Inc. v. China Minmetals Corp. , 654 F.3d 462, 469 n.9 (3d Cir. 2011). For the purposes of a motion to dismiss, the facts alleged in the complaint are accepted as true and all reasonable ......
  • Williams v. Verizon N.J., Inc., Civ. No. 2:19-09350 (KM-SCM)
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • March 12, 2020
    ...as the moving party, bears the burden of showing that no claim has been stated. Animal Science Products, Inc. v. China Minmetals Corp., 654 F.3d 462, 469 n.9 (3d Cir. 2011). For the purposes of a motion to dismiss, the facts alleged in the complaint are accepted as true and all reasonable i......
  • Aliperio v. Bank of Am., N.A., Civ. No. 2:16-CV-01008-KM-MAH
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • December 13, 2016
    ...as the moving party, bears the burden of showing that no claim has been stated. Animal Science Products, Inc. v. China Minmetals Corp., 654 F.3d 462, 469 n. 9 (3d Cir. 2011). For the purposes of a motion to dismiss, the facts alleged in the complaint are accepted as true and all reasonable ......
  • Request a trial to view additional results
1 books & journal articles
  • ANTITRUST VIOLATIONS
    • United States
    • American Criminal Law Review Nbr. 58-3, July 2021
    • July 1, 2021
    ...reach of the Sherman Act do not constitute a jurisdictional limit on the courts), and Animal Sci. Prods. v. China Minmetals Corp., 654 F.3d 462, 466 (3d Cir. 2011) (holding that “the FTAIA imposes a substantive merits limitation rather than a jurisdictional bar”). 239. Minn-Chem, 683 F.3d a......

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