Melhuish v. Crompton Corporation, CUM CV-02-567

• Decision Date: 26 December 2004
• Docket Number: CUM CV-02-567
• Citation: Melhuish v. Crompton Corporation, CUM CV-02-567 (Me. Super. Dec 26, 2004)
• Parties: GEOFFREY MELHUISH Plaintiff v. CROMPTON CORPORATION, UNIROYAL CHEMICAL COMPANY, INC., UNIROYAL CHEMICAL COMPANY LIMITED, FLEXSYS NV, FLEXSYS AMERICA LP, BAYER AG, BAYER CORPORATION, RHEIN CHEMIE RHEINAU GMBH, AND RHEIN CHEMIE CORPORATION Defendants.
• Court: Maine Superior Court

GEOFFREY MELHUISH Plaintiff v. CROMPTON CORPORATION, UNIROYAL CHEMICAL COMPANY, INC., UNIROYAL CHEMICAL COMPANY LIMITED, FLEXSYS NV, FLEXSYS AMERICA LP, BAYER AG, BAYER CORPORATION, RHEIN CHEMIE RHEINAU GMBH, AND RHEIN CHEMIE CORPORATION Defendants.

No. CUM CV-02-567

Superior Court of Maine, Cumberland.

February 26, 2004.

SUPERIOR COURT CIVIL ACTION

ORDER ON DEFENDANTS' MOTIONS TO DISMISS

Before the court are Motions to Dismiss Plaintiff's Class Action Complaint for Lack of Personal Jurisdiction made by (1) Defendants Crompton Corporation, Uniroyal Chemical Company Inc., and Uniroyal Chemical Company limited (collectively "Crompton"), (2) Defendants Flexsys NV & Flexsys America L.P. (collectively "Flexsys"), and (3) Defendant Bayer Corporation ("Bayer").

FACTUAL BACKGROUND

This action stems from an alleged illegal price fixing agreement between the three primary producers of rubber-processing chemicals, Crompton, Flexsys, and Bayer. Plaintiff is a Cumberland County resident who purchased tires in July of 2001 from Sears, Roebuck and Co. in South Portland, Maine and in April of 2000 from VIP in Westbrook, Maine. Plaintiff represents all persons within the State of Maine who purchased automobile tires that were manufactured using rubber-processing chemicals sold by Defendants since 1994.

Plaintiff's complaint alleges that Defendants have violated the Maine Antitrust Act, 10 M.R.S.A. § 1101 et seq. He alleges that Defendants were parties to an illegal cartel agreement, contract, combination and/or conspiracy designed to fix, raise, stabilize and maintain the price for rubber-processing products. Plaintiff prays that the court: (a) certify a Class consisting of all persons within the State of Maine who purchased tires that were manufactured using rubber processing chemicals sold by Defendants since 1994 (excluding all Defendants and their respective officers, directors, employees, subsidiaries, and affiliates, as well as all governmental entities and all judges or justices assigned to hear any aspect of this case) (b) appoint Plaintiff as representative of the Class; (c) appoint Plaintiff's counsel as counsel for the Class; (d) enter judgment in favor of Plaintiff and the Class; (e) award Plaintiff and the Class their damages, trebled; (f) award Plaintiff and the Class reasonable attorneys' fees; (g) award Plaintiff and the Class costs reasonably incurred in the prosecution of this litigation; and (h) award such other relief as the court deems just and proper under the circumstances.

DISCUSSION

Standard of Review

There are two types of personal jurisdiction that courts recognize general and specific. General jurisdiction is achieved when the defendant has engaged in substantial or systematic and continuous activity, unrelated to the subject matter of the action in the forum state. Daynard v. Ness, Motley Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 51 (1st Cir. 2002); Scott v. Jones, 984 F.Supp. 37, 43 (D Me. 1997). Specific jurisdiction is conferred "where the cause of action arises directly out of, or relates to, the defendant's forum-based contacts." United Elec Radio & Mach. Workers of Am. v. 163 Pleasant St. Corp. 960 F.2d 1080, 1088-89 (1st Cir. 1992).

Maine's long-arm statute provides only for the exercise of specific personal jurisdiction. Danton v. Innovative Gaming Corp. of Am., 246 F.Supp. 2d 64, 68 (D. Me.

2003). Under 14 M.R.S.A. § 704-A, the exercise of personal jurisdiction is permissible as long as it is consistent with the Due Process Clause of the Federal Constitution. 14 M.R.S.A. § 704-A (2003); Suttie v. Sloan Sales, 1998 ME 121, ¶ 4, 711 A.2d 1285, 1286. (citing Mahon v. East Moline Metal Prods., 579 A.2d 255, 256 (Me. 1990)). For Maine to exercise specific personal jurisdiction over a nonresident defendant, "due process requires that (1) Maine have a legitimate interest in the subject matter of [the] litigation; (2) the defendant, by his conduct, reasonably could have anticipated litigation In Maine; and (3) the exercise of jurisdiction by Maine's courts comports with traditional notions of fair play and substantial justice." Suttie, 1998 ME 121, ¶ 4, 711 A.2d at 1286 (citing Murphy v. Keenan, 667 A.2d 591, 593 (Me. 1995)).

The plaintiff bears the burden of establishing the first two prongs of the specific personal jurisdiction test. Suttie, 1998 ME 121, ¶ 4, 711 A.2d at 1286 (citing Murphy, 667 A.2d at 594). The plaintiff's showing must be based on specific facts set forth in the record, and the record should be construed in a light most favorable to the plaintiff. Frazier v. Bankamerica Int'l, 593 A.2d 661, 662 (Me. 1991). Once Plaintiff makes this requisite showing, the burden shifts to the defendant to establish that asserting jurisdiction does not comport with traditional notions of fair play and substantial justice. Id.

In the present case, the heart of both parties' pleadings and oral arguments focuses on the second prong of this three-part test, viz: whether Defendants, by their conduct, could have reasonably anticipated litigation in Maine. Although Plaintiff offers four arguments in support of his position, for the reasons set forth below, the court finds none of the arguments convincing and grants Defendants' motions to dismiss for lack of personal jurisdiction.

Jurisdiction Under 14 M.R.S.A. § 704-A(2)(B)

Plaintiff argues that Defendants should reasonably have anticipated litigation in Maine when they violated the Maine Anitrust Act and committed tortious acts within the state under 14 M.R.S.A. § 704-A(2)(B).^[1] While there is no Maine case law that directly addresses the question of whether price fixing is a tortious act in Maine, guidance can be found from other jurisdictions. Several federal courts have recently held that the act of price fixing does not constitute a tort. See e.g. Free v. Abbott Labs., Inc., 164 F.3d 270, 273-74 (5th Cir. 1999) (holding that price fixing did not amount to a tort where neither the Legislature or State Supreme Court recognized its existence as a tort); Four B Corp. v. Ueno Fine Chems. Indus., Ltd., 241 F.Supp. 2d 1258, 1262-63 (D. Kan. 2003) (prohibiting the plaintiffs from invoking the state's long-arm statute where the plaintiffs failed to provide legal support for the contention that a violation of the state's antitrust laws constituted tortious behavior); Indiana Grocery Co. v. Super Valu Stores, Inc., 684 F.Supp. 561, 584 (S.D. Ind. 1988) (holding that price fixing is not a tort; rejecting plaintiffs' invitation to expand state law not recognized by controlling precedent).

The authority set forth by Plaintiff for the purpose of establishing that other jurisdictions have found liability in tort for violation of state antitrust laws is unpersuasive. See GTE New Media Servs., Inc. v. Ameritech Corp., 21 F.Supp. 2d 27, 37 (D.D.C. 1998); Origins Natural Res., Inc. v. Kotler, 133 F.Supp. 2d 1232, 1234 (D.N.M. 2001). Such cases are distinguishable from the case at bar. GTE and Origins involve wrongful interference with a competitor's business and trademark infringement respectively. The acts of wrongful interference with a competitor's business and trademark infringement were considered tortious at common law, whereas price fixing was not. See Apex Hosiery Co. v. Leader, 310 U.S. 469, 497 (1940) (under common law, agreements to fix prices gave no rise to an actionable wrong); see also Mosley v. V. Secret Catalogue, Inc., 123 S. Ct 1115, 1122 (2003) (trademark infringement was tortious at common law); see also Note, Contribution in Private Antitrust Suits, 63 Cornell L. Rev. 682, 692-97 (1978) (arguing that whether a private antitrust suit sounds in tort should depend on the particular nature of the violation; stating that an antitrust violation that takes the form of wrongful interference with a competitor's business closely resembles the common-law tort of wrongful interference with a trade or calling).

This court refrains from deeming price fixing tortious behavior where neither the Law Court nor the Legislature has done so. See Free 164 F.3d at 273-74; Four B Corp. v. Ueno Fine Chems. Indus., Ltd., 241 F.Supp. 2d at 1262-63; Indiana Grocery Co. v. Super Valu Stores, Inc., 684 F.Supp. at 584. Accordingly, Plaintiff's argument that jurisdiction is proper in Maine under section 704-A(2)(B) is rejected.

Jurisdiction Under 14 M.R.S.A. § 704-A(2)(I)

Plaintiff also asserts that personal jurisdiction is warranted under 14 M.R.S.A. § 704-A(2)(I), based on Defendants' maintenance of relationships with the state.^[2] To evaluate Plaintiff's assertion, it is necessary to examine Defendants' relationships with the state. Defendant Bayer benefits from substantial revenues from the sale of its products here in Maine. See Pl.'s Ex. E (Bayer's annual sales revenues in Maine between 1998 and 2001 ranged from $34 million to $54 million). In addition, during the relevant time period, Defendant Bayer has employed between five and eleven employees, whose salaries were subject to Maine personal income tax, as well as reported property located in Maine with a total average yearly value of over $1 million. See Pls.' Ex. E. However, during the relevant period, Defendant Bayer did not sell tires or rubber-processing chemicals in Maine (Niemeck Decl. ¶¶ 4-5). Likewise, Crompton Defendants have fourteen customers in Maine to whom they supply products and from whom they have generated $6.5 million in sales revenue for the years 1999 through 2002. See Pls.' Ex. C. However, Crompton Defendants have not sold any rubber processing chemicals in Maine that were used to manufacture tires. (Shainman Decl. ¶ 13.) Finally, Flexsys Defendants do not sell any product directly to Maine, nor do they hold property, maintain bank accounts, or employ people in Maine. See Pls.' ...