General Cigar Holdings, Inc. v. Altadis, S.A., No. 00-4187CIV.

• Court: U.S. District Court — Southern District of Florida
• Writing for the Court: Moreno
• Citation: 205 F.Supp.2d 1335
• Parties: GENERAL CIGAR HOLDINGS, INC., Plaintiff, v. ALTADIS, S.A.; Altadis U.S.A., Inc.; and Consolidated Cigar Holdings Inc., Defendants.
• Decision Date: 12 June 2002
• Docket Number: No. 00-4187CIV.

205 F.Supp.2d 1335 GENERAL CIGAR HOLDINGS, INC., Plaintiff,
v.
ALTADIS, S.A.; Altadis U.S.A., Inc.; and Consolidated Cigar Holdings Inc., Defendants. No. 00-4187CIV. United States District Court, S.D. Florida. June 12, 2002.

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Robert T. Wright, Jr., Ignacio Sanchez, Verner, Liipfert, Bernhard, McPherson and Hand, Miami, FL.

E. Marcellus Williamson, D. Benjamin Barros, Latham & Watkins, Washington DC.

Larry Kellogg, Peter F. Valori, Tew Cardenas Rebak Kellogg, Lehman Demaria & Tague, L.L.P., Miami, Florida.

Daniel R. Murdock, Brian L. Sullivan, Steven J. Young, Winston & Strawn, New York City.

ORDER GRANTING ALTADIS S.A.'S MOTION TO DISMISS AND ORDER GRANTING ALTADIS U.S.A., INC.'S AND CONSOLIDATED CIGAR HOLDINGS INC.'S MOTION TO DISMISS

MORENO, District Judge.

Plaintiff, a cigar manufacturer, brought this action against a foreign competitor and two of its domestic subsidiaries, alleging violations of the Sherman Act, 15 U.S.C. §§ 1 & 2, the Clayton Act, 15 U.S.C. § 14, the Lanham Act, 15 U.S.C. § 1125(a), and state law relating to antitrust and unfair competition. Plaintiff contends that Defendants have attempted to monopolize the United States cigar market and have illegally exploited their exclusive right to sell Cuban cigars.

Before the Court are two motions to dismiss. Defendant Altadis, S.A. filed a motion to dismiss for lack of personal jurisdiction or, in the alternative, for failure to state a claim for which relief may be granted. Because the Court finds that Altadis, S.A. has insufficient ties to the State of Florida to satisfy the due process clause of the Fourteenth Amendment, this motion is GRANTED. Defendants Altadis U.S.A., Inc. and Consolidated Cigar Holdings, Inc. filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim for which relief can be granted. The Court finds that Plaintiff's federal claims are insufficient as a matter of law. As to the remaining state claims, the Court declines to exercise supplemental jurisdiction. Accordingly, Altadis U.S.A., Inc. and Consolidated Cigar Holdings, Inc.'s motion is also GRANTED.

BACKGROUND

Plaintiff General Cigar Holdings, Inc. is a New York based cigar manufacturer. Defendant Altadis, S.A., a Spanish corporation, is the world's largest producer and distributor of cigars. Altadis, S.A. allegedly does business in the United States through its subsidiaries, Defendants Altadis U.S.A, Inc. ("Altadis U.S.A.") and Consolidated Cigar Holdings, Inc. ("Consolidated Cigar"). Compl. ¶¶ 5,6,7.

In 1999, Altadis, S.A. was formed through the merger of Societé Nationale d'Exploitation Industrielle des Tabacs et Allumettes ("SEITA"), the French tobacco monopoly, and Tabacalera de España, S.A. ("Tabacalera"). At the time of the merger, two American subsidiaries of SEITA and Tabacalera, Consolidated Cigar and Havatampa, Inc., also merged. The result of this merger was Altadis U.S.A., a wholly owned subsidiary of Altadis, S.A. that is incorporated under Delaware law. Consolidated Cigar, also incorporated under Delaware law, survived the merger as a direct subsidiary of Altadis U.S.A. and an

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indirect subsidiary of Altadis, S.A. Compl. ¶¶ 6, 7, 8.

According to the complaint, the mergers that created Altadis, S.A., Altadis U.S.A., and Consolidated Cigar also put them in a position to obtain monopoly power in certain cigar markets. Combining SEITA and Tabacalera allegedly gave Altadis, S.A. production and distribution of 78% of all premium cigars outside of the United States. Compl. ¶ 6; Plaint.Mem.Opp. to Altadis, S.A.'s Motion at 2. Within the United States, the combination of Consolidated Cigar and Havatampa allegedly resulted in a 39% share of the cigar market divided between Altadis U.S.A. and Consolidated Cigar. Compl. ¶ 14.

The position of Altadis, S.A. and Altadis U.S.A. became even stronger in September of 2000, when Altadis S.A. obtained a 50% interest in Corporación Habanos S.A., ("Habanos") a monopolist in Cuban cigars, trademarks, and trade names organized under Cuban law. Compl. ¶ 15. The remaining 50% of Habanos is owned by Empresa Cubana del Tabaco, an instrumentality of the Cuban government. Habanos is allegedly the only company authorized by the Cuban government to sell Cuban cigars for distribution outside of Cuba. While sale of Cuban cigars is currently illegal in the United States under the Cuban embargo, Altadis, S.A. contends that its arrangement with Habanos will put it in a "unique position in the U.S. once the embargo is lifted." Compl. ¶ 18.

Plaintiff portrays itself as the sole remaining significant competition to Altadis. In this light, Plaintiff claims that through predatory leverage and tying activities, Altadis is attempting to obtain a monopolistic and unfair dominance of the cigar market. Plaintiff alleges that Defendants have coerced customers to buy Defendants' cigars instead of competitor cigars. Specifically, Plaintiff alleges that Defendants have: (1) conditioned the future sale of Cuban cigars upon the current purchase of non-Cuban cigars, requiring retailers to maintain or increase their current purchases or else be left out of the Cuban cigar market; (2) made false and misleading representations that, after the Cuban embargo is lifted, Defendants will lawfully succeed to the brand names of "Partagas" and "Punch," which are registered trademarks of the Plaintiffs; and (3) illegally marketed and solicited the sale of Cuban cigars and by utilizing property and trademarks confiscated by the Cuban government in violation of Helms-Burton Act and the Cuban Asset Control Regulations. Compl. ¶¶ 19, 34, 29.

As a result of these alleged activities, Plaintiff filed this complaint, seeking damages and injunctive relief for violations of federal and state law. The claims include (1) attempted monopolization under Sherman Act § 2; (2) monopoly leveraging under Sherman Act § 2; (3) unreasonable restraint of trade under Sherman Act § 1; (4) tying and full-line forcing under Clayton Act § 3; (5) trademark infringement violations under Lanham Act, 15 U.S.C. § 1125(a); (6) violations of the Florida Antitrust Act of 1980, Fla.Stat. § 542.15, et. seq. (1999); (7) violations of the Florida Deceptive and Unfair Trade Practices Act, Fla.Stat. § 501.204 (1999); (8) violations of common law unfair competition law; and (9) violations of common law interference with prospective business relations.

Defendants filed their motions to dismiss these claims on December 7, 2000. Thereafter, the Court stayed discovery on all issues except whether the Court has personal jurisdiction over Altadis, S.A. After completion of such discovery, the parties submitted supplemental briefs and the Court held a hearing on the motions to dismiss.

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ANALYSIS I. Altadis, S.A.'s Motion to Dismiss for Lack of Personal Jurisdiction

The doctrine of personal jurisdiction limits upon whom a court may impose a binding and enforceable judgment. McGee v. Int'l Life Insurance Company, 355 U.S. 220, 222, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957). To invoke a court's in personam jurisdiction, a plaintiff must make a prima facie case by presenting enough evidence that jurisdiction exists to withstand a directed verdict. Meier v. Sun Int'l Hotels, Ltd., 288 F.3d 1264, 1269 (11th Cir.2002) (citing Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir.1990)). To contradict prima facie evidence of jurisdiction, a defendant may submit affidavits or other evidence showing that jurisdiction would be improper. The burden then shifts back to the plaintiff to produce evidence supporting jurisdiction unless such evidence contains only conclusory assertions. Id. In considering the affidavits and supporting evidence, the court must construe all reasonable inferences in favor of the plaintiff. Id.

A. The Forum and the Contacts

To determine whether personal jurisdiction exists, the Court examines the defendant's contacts with the applicable forum. That begs a question: which forum? Generally, a federal court with federal question jurisdiction looks to the state in which it sits. See Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623, 626-27 (11th Cir.1996). Where the court's jurisdiction is invoked based on a statute that authorizes nationwide or worldwide service of process, however, the applicable forum can be expanded to include the entire United States. See United States Sec. & Exch. Comm. v. Carrillo, 115 F.3d 1540, 1544 (11th Cir.1997).

In this case, Plaintiff argues that the applicable forum is the United States, as opposed to the State of Florida, because "the federal statute at issue provides for nationwide service of process." Plaint. Mem. at 9. The Court assumes that Plaintiff refers to Section 12 of the Clayton Act, 15 U.S.C. § 22, which provides that personal jurisdiction is proper in any district, so long as sufficient national contacts have been established. See Go-Video, Inc. v. Akai Elec. Co., 885 F.2d 1406, 1413-15 (9th Cir.1989).

While Section 12 of the Clayton Act does authorize worldwide service of process, Plaintiff actually served Altadis, S.A. under the Hague Convention,¹ not the Clayton Act. In Carillo, the court explained that the relevant forum is the United States "where service of process has been effected pursuant to a federal statute authorizing nationwide or worldwide service." Carrillo, 115 F.3d at 1543. This rule is "predicated on the well settled principle that service of process constitutes the vehicle by which the court obtains jurisdiction." Id. (internal quotation marks omitted). Thus, to activate the worldwide service provision of Section 12 of the Clayton Act, a plaintiff must actually serve the defendant pursuant to that provision. In Doe v. Unocal Corp., 27 F.Supp.2d 1174, 1183 (C.D.Cal.1998), the court considered this issue where the Plaintiff brought RICO claims but did not serve the defendant under RICO's...