China Tire Holdings v. Goodyear Tire and Rubber

• Citation: 91 F.Supp.2d 1106
• Decision Date: 03 March 2000
• Docket Number: No. 5:99-CV-3163.,5:99-CV-3163.
• Parties: CHINA TIRE HOLDINGS LIMITED, Plaintiff, v. GOODYEAR TIRE AND RUBBER COMPANY, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

91 F.Supp.2d 1106

CHINA TIRE HOLDINGS LIMITED, Plaintiff, v. GOODYEAR TIRE AND RUBBER COMPANY, et al., Defendants.

No. 5:99-CV-3163.

United States District Court, N.D. Ohio, Eastern Division.

March 3, 2000.

Joshua B Nathanson, Mark B Cohn, McCarthy, Lebit, Crystal & Haiman, Cleveland, OH, Peter J McNulty, Los Angeles, CA, for China Tire Holdings Limited, Plaintiffs.

Charles A Gilman, Cahill, Gordon & Reindel, New York, NY, Karen K Grasso, Mark J. Skakun, Walter A Lucas, Buckingham, Doolittle & Burroughs, Akron, OH, for Goodyear Tire and Rubber Company, Goodyear International Corporation, Defendants.

OPINION

GWIN, District Judge.

On January 14, 2000, Defendants Goodyear Tire and Rubber Company and Goodyear International Corporation collectively filed a motion to dismiss the claims asserted against them by Plaintiff China Tire Holdings Limited [Doc. 4]. In their motion, the defendants say the plaintiff's claims are barred by the doctrine of res judicata or claim preclusion. Alternatively, the defendants contend that the plaintiff has failed to state any claim upon which relief can be granted, and that, even if adequately pled, the plaintiff's claims are barred by the applicable statute of limitations.

For the reasons set forth below, the Court grants the defendants' motion.

I. Background

The present dispute arises from the parties' attempts to exploit the potential market for tires in the Peoples Republic of China ("China"). Both parties sought to enter a joint venture with a leading Chinese tire manufacturer located in Dailan, China. The defendants eventually established a joint venture with the tire manufacturer, Dalian General Rubber Factory ("Dalian Rubber"), to the exclusion of the plaintiff. The plaintiff now says various illegalities attended the defendants' success in securing the joint venture.

Specifically, the plaintiff says the defendants unlawfully interfered with the plaintiff's pre-existing business relationship with Dalian Rubber. According to the plaintiff, the defendants convinced Dalian Rubber to terminate its joint venture with the plaintiff by making false and unjustifiably derogatory statements regarding the plaintiff's business operations. The defendants also allegedly gave improper gifts to Chinese government officials and their families in order to influence the business decisions of Dalian Rubber, which is a government-controlled business entity.

Seeking redress for these alleged acts, the plaintiff asserts civil claims under the Racketeer Influenced and Corrupt Organization Act ("RICO"), 18 U.S.C. § 1961, et seq., a claim for trade libel, and a claim under the Ohio Deceptive Trade Practices Act, Ohio Rev.Code § 4165.01, et seq. The plaintiff requests damages in excess of $3,000,000,000, as well as reasonable attorneys' fees and costs.

The defendants ask this Court to dismiss the plaintiff's action. They insist that each of the plaintiff's claims is barred by the doctrine of res judicata or claim preclusion. In this regard, the defendants note that the plaintiff previously filed suit against them in the United States District Court for the Central District of California, alleging the same and similar claims as asserted in this action. That court dismissed the plaintiff's claims on various grounds. See Orion Tire Corp. v. Goodyear Tire and Rubber Co., SA CV 95-221 (U.S Dist. Ct. M.D. Cal. March 22, 1996 Order and August 5, 1996 Order). The plaintiff's appeal of that ruling is currently pending with the United States Court of Appeals for the Ninth Circuit.

The judgment of the district court in the prior action, the defendants say, precludes the plaintiff from bringing essentially the same claims in this action. The defendants therefore ask the Court to dismiss the plaintiff's action and, in light of the duplicative nature of the action, enjoin the plaintiff from bringing any related actions in the future and award costs and attorneys' fees under 28 U.S.C. § 1927.¹

Further, even if claim preclusion does not apply, the defendants insist that alternative grounds exist for dismissing the plaintiff's claims. First, the defendants say the plaintiff has failed to state any claim upon which relief can be granted. Second, the defendants argue that the claims the plaintiff attempts to assert are barred by the applicable statutes of limitations.

The Court analyzes the defendants' motion below.

II. Analysis

A. Standard for Dismissal

The defendants seek dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure. In ruling on a motion under Rule 12(b)(6), the Court construes the complaint in the light most favorable to the plaintiff and accepts as true all of the plaintiff's well-pled factual allegations. The Court will grant the motion only if it appears that the plaintiff can prove no set of facts that would entitle it to relief. See Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984).

B. Claim Preclusion

The doctrine of claim preclusion provides that "`[a] final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action.'"² Rivet v. Regions Bank, 522 U.S. 470, 476, 118 S.Ct. 921, 139 L.Ed.2d 912 (1998) (quoting Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 398, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981)). The purposes of the doctrine are manifest. By preserving the finality of judgments and requiring parties to bring all claims in one action, the doctrine avoids the potential for inconsistent decisions and conserves judicial and litigant resources.

A party asserting claim preclusion must establish three elements: (1) a prior judgment on the merits; (2) an identity of the parties or their privies; and (3) an identity of the causes of action. See Re/ MAX Int'l, Inc. v. Zames, 995 F.Supp. 781, 785 (N.D.Ohio 1998); see also Kane v Magna Mixer Co., 71 F.3d 555, 560 (6th Cir.1995).

Here, the defendants insist that they have established the elements of claim preclusion for each of the plaintiff's claims. First, the defendants say the district court's dismissal with prejudice of the plaintiff's civil RICO claim in the prior action bars the assertion of the plaintiff's RICO claims in this action. Second, the defendants say that the district court's dismissal of the plaintiff's trade libel claim based on forum non conveniens precludes the plaintiff from bringing the remaining claims in this action.

1. Civil RICO

In the prior action between these parties, the district court dismissed the plaintiff's civil RICO claim for failure to state a claim upon which relief can be granted. The court noted that RICO requires a plaintiff to assert specific facts establishing the existence of an enterprise. The court dismissed the claim after finding that the plaintiff had pleaded only conclusory allegations rather than the required specific facts. See Orion, SA CV 95-221, at 31 (March 22, 1996 Order).

The plaintiff now asserts two RICO claims in this action. The parties do not dispute that the first and third elements of claim preclusion are met with regard to these claims. The only question, then, is whether the RICO claim asserted in the prior action and the RICO claims before the Court constitute identical causes of action.

Determining whether claims constitute identical causes of action is not necessarily an easy task. As one court has observed, "the phrase `identity of cause of action' is more easily stated than defined." See Kale v. Combined Ins. Co. of America, 924 F.2d 1161 (1st Cir.1991) (citation omitted); Sherman v. Ludington, 968 F.2d 1216, 1992 WL 158878, *5 (6th Cir.1992).

The United States Court of Appeals for the Sixth Circuit has held that identical causes of action share a common factual basis. Specifically, in Westwood Chemical Co. v. Kulick, the court explained that an identity of causes of action means an "identity of the facts creating the right of action and of the evidence necessary to sustain each action." 656 F.2d 1224, 1227 (6th Cir.1981).

The plaintiff interprets this definition narrowly in arguing that the RICO claims are not identical causes of action. The plaintiff insists that it has discovered new facts pertaining to the defendants' unlawful conduct since the prior action. Therefore, the plaintiff contends that the RICO claims are not supported by the same facts and evidence, and are thus not identical causes of action.

With this argument, the plaintiff apparently contends that claims constitute identical causes of action only when the party asserting the claims seeks to support both with the same specific facts. However, the application of claim preclusion is not dependent on the specific facts or evidence a party seeks to cite in support of a claim. If such was the case, parties could easily avoid the application of claim preclusion by simply changing, ever so slightly, the facts upon which they base their claim.

Instead, claims constitute the same cause of action for purposes of claim preclusion when they arise out of the same transaction and occurrence, or the same core of operative facts. See In re Micro-Time Management Systems, Inc., 983 F.2d 1067, 1993 WL 7524, *5 (6th Cir. 1993); Sherman, 1992 WL 158878 at *6. If two claims arise from the same event and seek to redress the same basic wrong, they are identical causes of actions notwithstanding which specific facts the plaintiff relies on in stating a claim for relief. See Kale, 924 F.2d at 1166.

Here, there is little question that the plaintiff's RICO claims constitute identical causes of actions. The claims all arise from the defendants' alleged effort to interfere with the plaintiff's business relationship with Dalian Rubber between 1993 and 1994. Though the plaintiff insists it only recently discovered some elements of this effort, the claims are nevertheless based on the same purported criminal enterprise.

Rather than include its new factual allegations in a...