UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
IN RE:
AIR CARGO SHIPPING SERVICES
ANTITRUST LITIGATION
MDL No. 1775
THIS DOCUMENT RELATES TO:
ALL CASES
) 06-MD-1775 (JG) (VVP)
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PLAINTIFFS’ RESPONSE TO DEFENDANTS’ MOTIONS TO DISMISS PLAINTIFFS’
EUROPEAN UNION LAW CLAIMS
TABLE OF CONTENTS
Page
INTRODUCTION ......................................................................................................................... 1
ARGUMENT................................................................................................................................. 7
I.
Plaintiffs Have Stated A Claim For Relief Under Article 81(1) Of The EC Treaty
And Article 53(1) Of The EEA Treaty .............................................................................. 7
II.
The Court Has Original Diversity Jurisdiction Over Plaintiffs’ Foreign Law
Claims Pursuant To 28 U.S.C. 1332(d)(2)....................................................................... 10
A.
Under the Plain Language Of 28 U.S.C. 1332(d)(2),
This Court Has Diversity Jurisdiction Over Plaintiffs’ Foreign Law Claims.................. 11
III.
B.
Defendants Misstate The Congressional Intent Behind CAFA ........................... 12
C.
Complete Diversity Is Not Required Under 28 U.S.C. 1332(d)(2) ..................... 13
D.
Sitting in Diversity, This Court Can Apply Class Action Procedures................. 14
1.
A Federal Court Sitting In Diversity May Apply U.S. Federal
Procedural Law ........................................................................................ 14
2.
Rule 23 Is A Procedural Rule, And Therefore Can Apply In
Adjudicating Plaintiffs’ Substantive EU Law Claims ............................. 16
The Court Has Supplemental Jurisdiction Over Plaintiffs’ Foreign Law Claims
Pursuant To 28 U.S.C. §1367 .......................................................................................... 21
A.
The Court Has Jurisdiction Over Plaintiffs’ Foreign Law Claims Because
All Claims Alleged In The Complaint Arise From A Common Nucleus Of
Operative Facts .................................................................................................... 21
B.
The Court Should Exercise Supplemental Jurisdiction Over Plaintiffs’
Foreign Law Claims............................................................................................. 22
1.
This Case Does Not Require The Court To Resolve Novel or
Complex Issues of Law............................................................................ 24
2.
There Are No Exceptional Circumstances In This Case That
Warrant Declining To Exercise Supplemental Jurisdiction..................... 24
3.
Defendants’ Cases are Inapposite ............................................................ 26
4.
Exercise of Supplemental Jurisdiction Will Achieve Important
Judicial Objectives ................................................................................... 27
IV.
Application Of Foreign Law By A U.S. Federal Court Is Appropriate And
Common........................................................................................................................... 29
V.
Principles Of International Comity Do Not Permit Dismissal Of Plaintiffs’ Article
81 And Article 53 Claims ................................................................................................ 32
A.
Defendants Have Not Demonstrated A True Conflict of U.S. and EU Law ....... 33
-i-
TABLE OF CONTENTS
(continued)
Page
VI.
B.
Because Defendants Have Not Shown A True Conflict, This Court May
Not Dismiss Plaintiffs’ EU Law Claims On Comity Grounds ............................ 34
C.
Neither The Supreme Court’s Holding In Empagran Nor The Amicus
Brief Submitted Therein, Even If They Were Relevant, Support The
Extension Of Comity Here................................................................................... 36
D.
European Courts Do Not Have Exclusive Jurisdiction Over Claims
Arising Under Article 81 ..................................................................................... 38
E.
There Is No Bar On U.S. Courts Adjudicating Private Claims For
Damages Under Article 81................................................................................... 39
F.
This Court’s Adjudication Of Plaintiffs’ Foreign Law Claims Advances
Comity Principles................................................................................................. 40
The Doctrine Of Forum Non Conveniens Does Not Warrant Dismissal Of
Plaintiffs’ Article 81 And Article 53 Claims ................................................................... 43
A.
Plaintiffs’ Decision To Bring Their Claims In the United States Is Entitled
To Deference........................................................................................................ 44
B.
The European Union Does Not Yet Provide An Adequate Alternative
Forum In Which Plaintiffs Can Litigate Their Claims ........................................ 47
C.
Both Public and Private Interest Factors Weigh In Favor Of This Court
Exercising Jurisdiction Over Plaintiffs’ Claims .................................................. 51
1.
2.
Public Interest Factors Favor Plaintiffs’ Choice of Forum...................... 51
a.
This Court Has A Strong Interest In Adjudicating All
Plaintiffs’ Claims ......................................................................... 51
b.
Comity and Forum Non Conveniens Are Distinct Doctrines
Requiring Separate Treatment ..................................................... 52
c.
This Court’s Application of Foreign Law Is In The Public
Interest.......................................................................................... 52
d.
Difficult Determinations Of Complex Or Novel Law Are
Not Required In Adjudicating Plaintiffs’ EU Law Claims.......... 53
Private Interest Factors Favor Plaintiffs’ Choice of Forum..................... 55
a.
Evidence and Witnesses To Prove Plaintiffs’ EU Law
Claims Will Be Easily Accessible In This Forum ....................... 55
b.
Determination of U.S. and EU Law Claims In A Single
Proceeding Will Result in Efficiencies ........................................ 58
c.
A Judgment By This Court Would Likely Have Force In
Other Jurisdictions ....................................................................... 60
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TABLE OF CONTENTS
(continued)
Page
D.
Litigation In A European Forum Would Be Appropriate At This Time
Only Upon Agreement By The Parties To Certain Conditions. .......................... 61
CONCLUSION............................................................................................................................ 63
-iii-
TABLE OF AUTHORITIES
Page(s)
CASES
Abogados v. AT&T, Inc.,
223 F.3d 932 (9th Cir. 2000) ...................................................................................................30
Allstate Life Ins. v. Linter Group Ltd.,
994 F.2d 996 (2d Cir. 1993).....................................................................................................32
Ansoumana v. Gristede’s Operating Corp.,
201 F.R.D. 81 (S.D.N.Y. 2001) .........................................................................................22, 26
Armstrong v. Virgin Records, Ltd.,
91 F. Supp. 2d 628 (S.D.N.Y. 2000)........................................................................................31
Auburn Hous. Auth. v. Martinez,
277 F.3d 138 (2d Cir. 2002).....................................................................................................11
Barnhart v. Sigmon Coal Co.,
534 U.S. 438 (2002).................................................................................................................11
Bigio v. Coca-Cola Co.,
239 F.3d 440 (2d Cir. 2000)...............................................................................................34, 44
Bigio v. Coca-Cola Export Corp.,
448 F.3d 176 (2d Cir. 2006).........................................................................................38, 46, 51
Blockbuster, Inc. v. Galeno,
472 F.3d 53 (2d Cir. 2006).......................................................................................................13
Bon Jour Group Ltd. v. Elan-Polo, Inc.,
1997 U.S. Dist. LEXIS 10283 (S.D.N.Y. July 16, 1997) ........................................................47
Bonime v. Avaya, Inc.,
No. 06-CV-1630, 2006 WL 375129 (E.D.N.Y. Dec. 20, 2006), appeal pending, 071136 (2d Cir.).....................................................................................................................19, 20
Brazinski v. Amoco Petroleum Additives Co.,
6 F.3d 1176 (7th Cir. 1993) .....................................................................................................22
Briskin v. Glickman,
267 F. Supp. 600 (S.D.N.Y. 1967)...........................................................................................18
-iv-
Bus. Guides, Inc. v. Chromatic Commc’ns Enters., Inc.,
498 U.S. 533 (1991) (Kennedy, J., dissenting)........................................................................15
Califano v. Yamasaki,
442 U.S. 682 (1979).................................................................................................................15
Cambridge Literary Properties, Ltd. v. W. Goebel Porzellanfabrik G.m.b.H. & Co.,
295 F.3d 59 (1st Cir. 2002)......................................................................................................30
Can. Life Assurance Co. v. Converium Ruckversicherung (Deutschland) AG,
335 F.3d 52 (2d Cir. 2003).......................................................................................................11
Colorado River Water Conservation Dist. v. United States,
424 U.S. 800 (1976).................................................................................................................34
Correspondent Services Corp. v. J.V.W. Investments Ltd.,
205 F. Supp. 2d 191 (S.D.N.Y. 2002)......................................................................................26
Cromer Fin. Ltd. v. Berger,
205 F.R.D. 113 (S.D.N.Y. 2001) .............................................................................................12
Curley v. AMR Corp.,
153 F.3d 5 (2d Cir. 1998) ..............................................................................................6, 30, 53
Deposit Guar. Nat’l Bank v. Roper,
445 U.S. 326 (1980)...........................................................................................................16, 29
DiRienzo v. Philip Servs. Corp.,
294 F.3d 21 (2d Cir. 2002).................................................................................................55, 57
Distillers Co. v. Standard Oil Co.,
150 U.S.P.Q. (BNA) 42 (N.D. Ohio 1964)........................................................................59, 60
Doe v. Dist. of Columbia,
701 F.2d 948, 960-63 (D.C. Cir. 1983)....................................................................................16
Doe I v. Karadzic,
176 F.R.D. 458 (S.D.N.Y. 1997) .............................................................................................12
Does I v. The Gap, Inc.,
No. CV-01-0031, 2002 WL 1000073 (D.N. Mar. I. May 10, 2002) .......................................12
Dorman v. Emerson Elec. Co.,
23 F.3d 1354 (8th Cir. 1994) ...................................................................................................30
Drexel Burnham Lambert Group Inc. v. Galadari,
777 F.2d 877 (2d Cir. 1985).....................................................................................................32
-v-
Eco Swiss China Time Ltd. v. Benetton Int’l,
NV 1999 ECR I-3055 ...............................................................................................................60
Eisen v. Carlisle & Jacquelin,
417 U.S. 156 (1974).................................................................................................................60
Empagran, S.A. v. F. Hoffman-La Roche Ltd.,
453 F. Supp. 2d 1 (D.D.C. 2006) .............................................................................................35
Empagran S.A. v. F. Hoffman-La Roche Ltd.,
No. 00-CV-1686, 2001 WL 761360 (D.D.C. June 7, 2001) (“Empagran I”), rev’d on
other grounds, 315 F.3d 336 (D.C. Cir. 2003), vacated ........................................27, 35, 36, 37
Erie R. Co. v Tompkins,
304 U.S. 64 (1938).......................................................................................................14, 15, 20
Evolution Online Sys., Inc. v. Koninklijke PTT Nederland N.V.,
145 F.3d 505 (2d Cir. 1998).....................................................................................................47
Executive Software N. Am. Inc. v. U.S. Dist. Court for Central Dist. Cal.,
24 F.3d 1545, 1548 (9th Cir. 1994) ...................................................................................24, 25
Exxon Mobil Corp. v. Allapattah Servs., Inc.,
125 S. Ct. 2611 (2005).......................................................................................................21, 22
F. Hoffman-La Roche Ltd v. Empagran, S.A.,
542 U.S. 155 (2004).....................................................................................................27, 36, 37
Filetech S.A. v. France Telecom, Inc.,
157 F.3d 922 (2d Cir. 1998).........................................................................................32, 33, 34
Finova Capital Corp. v. Ryan Helicopters U.S.A., Inc.,
180 F.3d 896 (7th Cir. 1999) ...................................................................................................34
Forest Labs., Inc. v. Pillsbury Co.,
452 F.2d 621 (7th Cir. 1971) ...................................................................................................22
Gasperini v. Ctr. for Humanities, Inc.,
518 U.S. 415 (1996).................................................................................................................15
Gottlieb v. Carnival Corp.,
436 F.3d 335 (2d Cir. 2006).....................................................................................................19
Greenery Rehab. Group v. Hammon,
150 F.3d 226 (2d Cir. 1998).....................................................................................................11
Gross v. British Broad. Corp.,
386 F.3d 224 (2d Cir. 2004).......................................................................................................5
-vi-
Gulf Oil Corp, v. Gilbert,
330 U.S. 501 (1947)...............................................................................................43, 44, 51, 55
Hachamovitch v. DeBuono,
159 F.3d 687 (2d Cir. 1998).....................................................................................................34
Hanna v. Plumer,
380 U.S. 460 (1965).....................................................................................................14, 15, 16
Hartford Fire Ins. Co. v. Cal.,
509 U.S. 764 (1993).........................................................................................32, 33, 34, 35, 36
Henderson v. United States,
517 U.S. 654 (1996) (Thomas, J., dissenting) .........................................................................15
Hilao v. Estate of Marcos,
393 F.3d 987 (9th Cir. 2004) ...................................................................................................13
In re Bridgestone/Firestone, Inc. Tires Prods. Liab. Litig.,
205 F.R.D. 503 (S.D. Ind. 2001), rev’d on other grounds, 288 F.3d 1012 .............................18
In re CINAR Corp. Sec. Litig.,
186 F. Supp. 2d 279 (E.D.N.Y. 2002) ...................................................................32, 33, 34, 41
In re French,
440 F.3d 145 (4th Cir. 2006) cert denied, 127 S. Ct. 72 (2006)..............................................38
In re Gaming Lottery Sec. Litig.,
58 F. Supp. 2d 62 (S.D.N.Y. 1999)..........................................................................................12
In re Grandote Country Club Co.,
252 F.3d 1146 (10th Cir. 2001) ...............................................................................................38
In re Grosso,
9 B.R. 815 (Bankr. N.D.N.Y. 1981) ........................................................................................20
In re Houbigant, Inc.,
914 F. Supp. 964 (S.D.N.Y. 1995)...........................................................................................31
In re Lebner,
197 B.R. 180 (Bankr. D. Mass. 1996) .....................................................................................20
In re Linerboard Antitrust Litig.,
333 F. Supp. 2d 333 (E.D. Pa. 2004) .........................................................................................2
In re Maxwell Commc’n Corp.,
93 F.3d 1036 (2d Cir. 1996)...............................................................................................32, 33
-vii-
In re New York Trap Rock Corp.,
160 B.R. 876 (S.D.N.Y. 1993).................................................................................................26
In re Nortel Networks Corp. Sec. Litig.,
No. 01 Civ. 1855 (RMB), 2003 WL 22077464 (S.D.N.Y. Sept. 8, 2003) ..............................12
In re Oot,
112 B.R. 497 (Bankr. N.D.N.Y. 1989) ....................................................................................20
In re Peters,
90 B.R. 588 (Bankr. N.D.N.Y. 1988) ......................................................................................20
In re Vitamins Antitrust Litig.,
No. 99-0197 (TFH), 2001 U.S. Dist. LEXIS 25068 (D.D.C. Mar. 19, 2001) ...........................2
Indasu Int’l, C.A., v. Citibank, N.A.,
861 F.2d 375 (2d Cir. 1988).....................................................................................................30
Information Resources, Inc. v. Dun & Broadstreet Corp.,
127 F. Supp. 2d 411 (S.D.N.Y. 2001)................................................................................26, 35
Ingersoll Milling Mach. Co. v. Granger,
833 F.2d 680 (7th Cir.1987) ....................................................................................................34
Iragorri v. United Techs. Corp.,
274 F.3d 65 (2d Cir. 2001)...........................................................................................43, 44, 45
Itar-Tass Russian News Agency v. Russian Kurier, Inc.,
140 F.3d 442 (2d Cir. 1998).....................................................................................5, 23, 24, 25
Iwanowa v. Ford Motor Co.,
67 F. Supp. 2d 424 (D.N.J. 1999) ............................................................................................35
Jones v. Ford Motor Credit Co.,
358 F.3d 205 (2d Cir. 2004).....................................................................................................24
Jota v. Texaco,
157 F.3d 153 (2d. Cir 1998).....................................................................................................62
Koster v. (Am.) Lumbermens Mut. Cas. Co.,
330 U.S. 518 (1947).................................................................................................................43
Kristiansen v. John Mullins & Sons, Inc.,
59 F.R.D. 99 (E.D.N.Y. 1973) .................................................................................................18
Lamie v. United States Tr.,
540 U.S. 526 (2004).................................................................................................................11
-viii-
Lowery v. Alabama Power Co.,
483 F.3d 1184 (11th Cir. 2007) ...............................................................................................12
Mace v. Van Ru Credit Corp.,
109 F.3d 338 (7th Cir. 1997) ...................................................................................................16
Manfredi v. Lloyd Adriatico Assicurazioni SpA,
Combined proceedings C-295/04, C-296/04, C-297/04 and C-298/04, (Jan. 26, 2006) .........49
Manu Int’l, S.A. v. Avon Prods., Inc.,
641 F.2d 62 (2d Cir. 1981)............................................................................................... passim
Marek v. Chesny,
473 U.S. 1 (1985) (Brennan, J., dissenting).............................................................................15
Mars Inc. v. Kabushiki-Kaisha Nippon Conlux,
24 F.3d 1368 (Fed. Cir. 1994)..................................................................................................22
Mathews v. ABC Television, Inc.,
776 F. Supp. 821 (S.D.N.Y. 1991)...........................................................................................31
Mattera v. Clear Channel Commc’ns, Inc.,
239 F.R.D. 70 (S.D.N.Y. 2006) ...............................................................................................13
McMorris v. The TJX Cos., Inc.,
493 F. Supp. 2d 158 (D. Mass. 2007) ......................................................................................13
Metabolife Int’l, Inc. v. Wornick,
264 F.3d 832 (9th Cir. 2001) ...................................................................................................15
Metito (Overseas) Ltd. v. Gen. Elec., Co.,
05 Civ. 9478 (GEL) 2006 U.S. Dist. LEXIS 81683 (S.D.N.Y. Nov. 7, 2006) .......................56
Miller v. Mackey Int’l,
452 F.2d 424 (5th Cir. 1971) ...................................................................................................60
Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. BP Amoco, PLC,
No. 03 Civ. 0200 (GEL), 2003 WL 21180421 (S.D.N.Y. May 20, 2003) ........................31, 53
New Moon Shipping Co. v. MAN B&W Diesel AG,
121 F.3d 24 (2d Cir. 1997).......................................................................................................47
Norex Petroleum Ltd. v. Acces Indus., Inc.,
416 F.3d 146 (2d Cir. 2005)............................................................................................. passim
O’Keefe v. Mercedes-Benz USA, LLC,
214 F.R.D. 266 (E.D. Pa. 2003)...............................................................................................18
-ix-
Olympic Corp. v. Societe Generale,
462 F.2d 376, 379 (2d Cir. 1972).............................................................................................52
Ortman v. Stanray Corp.,
371 F.2d 154 (7th Cir. 1967) ...................................................................................................22
Overseas Programming Cos. v. Cinematiographische Commerz-Anstalt,
684 F.2d 232 (2d Cir. 1982).....................................................................................................56
Packard Instrument Co. v. Beckman Instruments, Inc.,
346 F. Supp. 408 (N.D. Ill. 1972) ............................................................................................22
Paraschos v. YBM Magnex Int’l, Inc.,
130 F. Supp. 2d 642 (E.D. Pa. 2000) .......................................................................................35
Piper Aircraft Co. v. Reyno,
454 U.S. 235 (1981)...........................................................................................4, 43, 45, 50, 51
Pravin Banker Assocs., Ltd. v. Banco Popular Del Peru,
109 F.3d 850 (2d Cir. 1997).....................................................................................................34
Printz v. United States,
521 U.S. 898 (1997).............................................................................................................5, 29
R. Maganlal & Co. v. M.G. Chemical Co., Inc.,
942 F.2d 164 (2d Cir. 1991).....................................................................................................43
Rationis Enters. Inc. of Panama v. Hyundai Mipo Dockyard Co.,
426 F.3d 580 (2d Cir. 2005).........................................................................................30, 39, 52
Research Frontiers Inc. v. Marks Polarized Corp.,
290 F. Supp. 725 (E.D.N.Y. 1968) ..........................................................................................22
Royal & Sun Alliance Ins. Co. of Can. v. Century Int’l Arms, Inc.,
466 F.3d 88 (2d Cir. 2006).................................................................................................34, 52
Sequihua v. Texaco, Inc.,
847 F. Supp. 61 (S.D. Tex. 1994) ............................................................................................35
Serrano v. 180 Connect, Inc.,
478 F.3d 1018 (9th Cir. 2007) .................................................................................................13
Servicios Comerciales Andinos, S.A. v. Gen. Elec. Del Caribe, Inc.,
145 F.3d 463 (1st Cir. 1998)....................................................................................................16
Shanahan v. Vallat,
No. 03 Civ. 3496 (MBM), 2004 WL 2937805 (S.D.N.Y. Dec. 19, 2004) ..............................34
-x-
Societe Internationale Pour Participations Industrielles et Commercials, S.A. v. Rogers,
357 U.S. 197 (1958)...........................................................................................................18, 58
Société Nationale Industrielle Aérospatiale v. United States Dist. Court for the S. Dist. of
Iowa,
482 U.S. 522 (1987).....................................................................................................18, 32, 34
Spatola v. United States,
925 F.2d 615 (2d Cir. 1991).....................................................................................................35
Syro Steel Co. v. Mellon Bank (East) P.S.F.S. Nt’l Ass’n,
No. 90-Civ-1321, 1993 WL 173439 (N.D.N.Y. May 17, 1993) .............................................20
Takeda v. Turbodyne Tech., Inc.,
67 F. Supp. 2d 1129 (C.D. Cal. 1999) .....................................................................................12
Torres v. Southern Peru Copper Corp.,
965 F. Supp. 899 (S.D. Tex. 1996) ..........................................................................................35
Treglia v. Town of Manlius,
313 F.3d 713 (2d Cir. 2002).....................................................................................................23
Tschira v. Willingham,
135 F.3d 1077 (6th Cir. 1998) .................................................................................................30
Turner Entm’t Co. v. Degeto Film GmbH,
25 F.3d 1512 (11th Cir. 1994) .................................................................................................35
United States Parole Comm’n v. Geraghty,
445 U.S. 388 (1980).................................................................................................................16
United Int’l Holdings, Inc. v. Wharf Ltd.,
210 F.3d 1207 (10th Cir. 2000) ...............................................................................................32
United Mine Workers of America v. Gibbs,
383 U.S. 715 (1966).....................................................................................................21, 25, 27
United States v. Ron Pair Enters. Inc.,
489 U.S. 235 (1989).................................................................................................................11
Universal Church v. Geltzer,
463 F.3d 218 (2d Cir. 2006).....................................................................................................11
Universal Maintenance, Inc. v. Amherst Painting, Inc.,
304 U.S. 64 (1938)...................................................................................................................20
Voda v. Cordis Corp.,
476 F.3d 887 (Fed. Cir. 2007)..................................................................................................27
-xi-
Zahn v. Int’l Paper Co.,
414 U.S. 291 (1973).................................................................................................................16
STATUTES
28 U.S.C. § 1332(d)(2) ..................................................................................................5, 10, 11, 13
28 U.S.C. § 1332............................................................................................................................12
28 U.S.C. § 1332(a) .................................................................................................................13, 14
28 U.S.C. § 1332(a)(3)...................................................................................................................10
28 U.S.C. § 1332(d)(2) ..................................................................................................5, 10, 12, 13
28 U.S.C. § 1350............................................................................................................................12
28 U.S.C. §1367.................................................................................................................21, 22, 25
28 U.S.C. § 1367(a) .................................................................................................................21, 23
28 U.S.C. § 1367(c) ...........................................................................................................23, 25, 27
28 U.S.C. § 1367(c)(4).......................................................................................................23, 24, 25
28 U.S.C. § 1711............................................................................................................................13
Class Action Fairness Act of 2005, Pub. L. 1001-2 § 9, 119 Stat. 4 (2005) (“CAFA”)........ passim
CPLR § 901....................................................................................................................................20
Foreign Trade Antitrust Improvements Act of 1982 (“FTAIA”), 15 U.S.C. § 6a.........................38
New York Civil Procedure Law § 901(b)................................................................................19, 20
Telephone Consumer Protection Act of 1991, 47 U.S.C. § 227 (“TCPA”) ............................19, 20
OTHER AUTHORITIES
Alba Conte & Herbert Newberg, Newberg on Class Actions § 7:30 (4th ed.) .......................17, 28
Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Fed. Prac. & Proc. Civ. 3d §
1758 (3d ed. 2005) ......................................................................................................17, 20, 31
-xii-
Donncadh Woods, Private Enforcement of Antitrust Rules—Modernisation of the EU
Rules and the Road Ahead .......................................................................................................49
Doug Keller, Interpreting Foreign Law Through an Erie Lens: A Critical Look at United
States v. McNab, 40 Tex. Int’l L.J. 157 (2004)........................................................................14
Fed. R. Civ. P. 1.............................................................................................................................15
Fed. R. Civ. P. 44.1................................................................................................................5, 6, 14
Federal Courts Study Committee 22, Conn. L. Rev. 733, 787 (1990)...........................................28
Federal Rule of Criminal Procedure 26.1 ......................................................................................14
George A. Bermann, Public Law in the Conflicts of Law, 34 Am. J. Comp. L., 157 (1986) ........40
Ilana T. Buschkin, Note, The Viability of Class Action Lawsuits in a Globalized
Economy—Permitting Foreign Claimants to be Members of Class Action Lawsuits in
the U.S. Federal Courts, 90 Cornell L. Rev. 1564 (2005).......................................................29
Lesley Farrell and Sara Ince, United Kingdom: Private Enforcement in the United
Kingdom...................................................................................................................................49
Manual for Complex Litigation, Third § 33.14 (1995)..................................................................28
Note: The Rules Enabling Act and the Limits of Rule 23, 111 Harv. L. Rev. 2294 (1998) ...........15
Robert G. Bone, Revisiting the Policy Case for Supplemental Jurisdiction, 74 Ind. L.J.
139, 140....................................................................................................................................27
Fed. R. Civ. P. Rule 4 ....................................................................................................................15
Fed. R. Civ. P. Rule 11 ..................................................................................................................15
Fed. R. Civ. P. Rule 12 ............................................................................................................18, 60
Fed. R. Civ. P. Rule 12(b)(6) .....................................................................................................7, 10
Fed. R. Civ. P. 23................................................................................................................... passim
Fed. R. Civ. P. Rule 68 ..................................................................................................................15
Fed. R. Civ. P. Rule 81 ..................................................................................................................15
-xiii-
INTRODUCTION
Every claim alleged in Plaintiffs’ First Consolidated Amended Complaint (the
“Complaint”) arises from a single global conspiracy by Defendants to artificially fix the prices of
airfreight shipping services around the world. Thus, Plaintiffs’ claims asserted under European
Union (EU) law arise from the identical conspiracy as the claims asserted under United States
law, and therefore properly fall within the jurisdiction of this Court. Indeed, many of the
Plaintiffs asserting claims under EU law are U.S. Plaintiffs who also have Sherman Act claims,
many of which arise from identical transactions. Accordingly, Defendants’ characterization of
Plaintiffs’ EU law claims as “having no U.S. connection” contradicts reality, and their motions to
dismiss the EU law claims asserted in Counts VI and VII1 of the Complaint should be rejected.
Because all claims asserted in the Complaint arise from the same conspiratorial conduct
by Defendants, litigation of Plaintiffs’ claims in multiple fora would prove redundant and
inefficient. This is particularly true because the substantive laws of the United States and the EU
barring price-fixing are virtually identical.2 Given that a violation of the Sherman Act requires
nearly identical proof as a violation of Article 81(1) of the Treaty Establishing the European
Community, Nov. 10, 1997, 1997 O.J. (C 340) 3 (hereinafter “Article 81”) (attached hereto as
1
Two separate motions are pending to dismiss Plaintiffs’ foreign law claims. One was filed by the
non-settling Defendants in which they moved to dismiss both Plaintiffs EU law claims asserted in Counts VI and
VII of the Complaint and Plaintiffs’ Sherman Act claims asserted in Counts I-V of the Complaint Plaintiffs are
responding herein only to the portion of the non-settling Defendants’ motion moving against the foreign law claims
and are filing a separate response dealing with portion the non-settling Defendants’ motion moving against
Plaintiff’s Sherman Act claims. In addition, Defendants Deutsche Lufthansa AG, Lufthansa Cargo AG, and Swiss
International Air Lines Ltd. (collectively, “Lufthansa”) filed a separate motion to dismiss the foreign law claims
asserted in Counts VI and VII of the Complaint. Plaintiffs also respond to that motion herein. Lufthansa did not
join in the non-settling Defendants’ motion to dismiss Plaintiffs’ Sherman Act claims asserted in Counts I-V of the
Complaint, as Lufthansa has already settled those claims.
2
Indeed, Defendants’ unlawful conduct violated the laws of every nation in which they operated:
“Nearly 100 jurisdictions now have comprehensive antitrust laws,” and “[n]early all” of these “now ban cartels
either civilly or criminally.” R. Hewitt Pate, The DOJ International Antitrust Program — Maintaining the
Momentum, Speech Before the ABA Section of Antitrust Law, at 6, 8 (Feb. 6, 2003), available at
http://www.usdoj.gov/atr/public/speeches/200736.pdf (emphasis added) (last visited Oct. 24, 2007).
1
Ex. 1), the same factual evidence regarding the existence and scope of the conspiracy will be at
issue in the determination of claims under both laws.3
For the same evidence regarding claims arising from the same nucleus of operative facts
to be presented repeatedly by the parties and heard by multiple courts would not only require
redundant production of documents and witnesses and duplicated expenditure of judicial and
party resources, but would also present the possibility of the inconsistent adjudication of
identical issues, and conflicting outcomes for parties in identical litigation postures. Indeed,
because some Plaintiffs have claims arising under both U.S. and EU law as a result of precisely
the same transactions with Defendants, adjudication of Plaintiffs’ claims in multiple fora could
result in inconsistent judicial determinations on identical issues as to the same parties or on the
ultimate outcome of the exact same claims.4 Accordingly, it is not only appropriate for this
Court to entertain all claims alleged in the Complaint, but it is in the best interests of judicial
efficiency as it will conserve the resources of courts internationally and of the parties, and will
3
See Declaration of Spencer Weber Waller (“Waller Decl.”) ¶ 70 (footnote omitted) (attached
hereto as Ex. 2) (“The principal differences between Article 81 and Section 1 of the Sherman Act relate to the
possibility of exemption of anticompetitive agreements under Article 81(3), for which there is no viable possibility
of exemption under the facts of this case. The remaining textual differences between Article 81(1) and Section 1 of
the Sherman Act relate to either issues not implicated in the litigation or proof of the effect (or potential effect) of
the agreement on trade between the member states, a matter that should involve no more than access to information
in the public record.”)
4
Other Courts faced with the similar possibility of duplicative litigation have found these problems
of inefficiency and inconsistency of judgments sufficient grounds for requiring Defendants to submit to coordinated
procedures in another jurisdiction. For example, in the case of Canadian plaintiffs’ efforts to gain access to
discovery in U.S. proceedings in similar antitrust cases, courts have recognized that foreign plaintiffs’ access to U.S.
discovery “is not oppressive or unfair to the defendants in the Canadian proceedings” and “[s]uch access is
consistent with important policy objectives … [such as] – facilitating access to justice, judicial efficiency and
behaviour modification.” See Ford v. F. Hoffman-LaRoche Ltd., Sup. Ct. Justice File No. 771/99 (Ontario, Canada),
Justice Cumming’s Reasons for Decision ¶ 49 at 13 (Jan. 26, 2001) (“Cumming Decision”) (emphasis added)
(attached hereto as Ex. 3); see also In re Vitamins Antitrust Litig., No. 99-0197 (TFH), MDL No. 1285, 2001 U.S.
Dist. LEXIS 25068, at *36-37 (D.D.C. Mar. 19, 2001); In re Linerboard Antitrust Litig., 333 F. Supp. 2d 333, 342
(E.D. Pa. 2004). Canada’s Divisional Court further adopted the “laudable principle of judicial cooperation” set out
by Justice Cumming: “If both societies are to maximize the benefits of expanding free trade and open markets, the
legal systems of both countries must recognize and facilitate an expeditious, fair and efficient regime for the
resolution of litigation that arises from disputes in either one or both countries.” Ford v. F. Hoffman-LaRoche Ltd.,
Sup. Ct. Justice File No. 771/99 (Ontario, Canada), Divisional Court Endorsement, ¶ 11 at 4 (Apr. 10, 2002) (citing
Cumming Decision, ¶ 27 at 13) (attached hereto as Ex. 4).
-2-
prevent inconsistent determinations of fact based on identical evidence.
Achieving these
important objectives is simplified by the fact that the substantive law in the U.S. and the EU are
identical and, therefore, application of EU law to the facts that will be presented to the Court in
resolving Plaintiffs’ U.S. law claims requires no complex or novel application of EU law.
Just as importantly, considerations of fundamental fairness to injured parties also support
adjudication of Plaintiffs’ EU law claims together with their Sherman Act claims before this
Court. Because every Plaintiff whose claim is asserted in the Complaint is equally entitled under
the laws of the U.S. and the EU to compensation for injury resulting from Defendants’
conspiracy, they should all be provided equal access to justice to seek redress of their injuries.
However, despite the fact that Defendants’ conduct is condemned equally in both the U.S. and
the EU, and the availability of a private right to compensation is contemplated equally by both
jurisdictions, that remedy is, as a practical matter, available only in the U.S. As the European
Commission (“EC”) has itself recognized, the availability of adequate procedures by which
claimants in the EU can seek redress of competition law injuries is lacking—indeed, the EC has
characterized the state of private enforcement as one of “total underdevelopment.”
See
Commission of the European Communities, Green Paper: Damages Actions for Breach of the
EC Antitrust Rules, COM (2005) 672 Final (Dec. 19, 2005) (“Green Paper”) (attached hereto as
Ex. 5). The Office of Fair Trading in the U.K. has similarly recognized about its own system
that so far, consumers appear to have obtained virtually no redress in private competition law
actions.” Office of Fair Trading, Private Actions in Competition Law: Effective Redress for
Consumers and Business (Apr. 2007) at 2.12 (“OFT Paper”) (attached hereto as Ex. 6). This
lack of effective private enforcement is, in large part, due to the fact that, “consumers and small
and medium-sized business (in particular) face a number of practical barriers which have to date
-3-
made them reluctant to take action to enforce their rights.” Id. at 1.2 (recognizing the need for a
“more effective system” of private enforcement).5
Because of the widely recognized inaccessibility of effective procedural mechanisms to
bring their claims in the EU, Plaintiffs, including both domestic and foreign purchasers of
airfreight shipping services, have chosen the United States as the forum in which to adjudicate
their claims under both U.S. and EU law. This choice was made by sophisticated foreign
entities, including Volvo, H&M and IKEA, among others, who do business in multiple
jurisdictions and determined that all of their claims were best pursued in a single forum in the
U.S. The choice of these representative plaintiffs is entitled to deference by the Court. Piper
Aircraft Co. v. Reyno, 454 U.S. 235, 256 (1981).
Dismissal of Plaintiffs’ EU law claims would leave many class members —primarily
individual claimants and smaller business — without a realistic means of redressing their injuries
despite an identical prohibition on Defendants’ misconduct in both the United States and Europe.
While Defendants are correct that Europe is “in the process of developing legislative proposals
intended to further harmonize and develop the framework for bringing private actions for
damages” (Memorandum of Law in Support of Defendants’ Motion to Dismiss (“Linklaters’
Memo.”) at 35), a working framework that can provide such access to justice does not yet exist.
Until it does, this Court is in a unique position to provide an effective forum in which Plaintiffs’
claims arising from Defendants’ global conspiracy can be heard.
This Court’s adjudication of Plaintiffs’ foreign law claims in the interim is entirely within
the bounds of this Court’s jurisdictional powers. The new diversity jurisdiction provision set
5
In its discussion paper released only months ago, the OFT specifically states as one of its goals to
“set[] out the principles that we believe should inform improvements to the existing system to ensure that it allows
for effective redress and enhanced compliance with competition law … [victims] should be better placed to recover
their losses and address the competitive disadvantage they may have suffered from infringements.” OFT Paper at
1.3.
-4-
forth in 28 U.S.C. § 1332(d)(2), added by the Class Action Fairness Act of 2005, Pub. L. 1001-2
§ 9, 119 Stat. 4 (2005) (“CAFA”), specifically contemplates that federal courts are permitted to
hear claims involving foreign plaintiffs and/or foreign defendants and, impliedly, foreign law
claims. Additionally, the ability of federal courts to take supplemental jurisdiction over the
foreign law claims of Plaintiffs where those claims arise from a common nucleus of operative
facts as U.S. law claims—as is precisely the situation here—is well established. See, e.g., ItarTass Russian News Agency v. Russian Kurier, Inc., 140 F.3d 442, 444 (2d Cir. 1998), (once it is
determined that a supplemental claim is related to the claim within the court’s original
jurisdiction … “supplemental jurisdiction over the related claim is mandatory.”) The Federal
Rules of Civil Procedure also specifically contemplate a procedure by which U.S. federal courts
can make determinations of foreign law. See Fed. R. Civ. P. 44.1.6
Consistent with their obligation to decide claims properly before them, United States
Courts routinely apply foreign law. The U.S. Supreme Court has remarked that courts “applied
the law of other sovereigns all the time.” Printz v. United States, 521 U.S. 898, 907 (1997)
(emphasis added). United States courts have determined and applied foreign commercial law,
property law, inheritance law, citizenship law, copyright law, trademark law, liability and
negligence law, and other foreign law as appropriate. Here, Plaintiffs’ foreign law claims arise
under both the law of the EU and that of the U.K., about which the Second Circuit has noted:
“there are few if any countries in the world whose body of law is more amenable to application
in the United States than Great Britain’s … we do not believe application of such law creates a
burden on the court.” Gross v. British Broad. Corp., 386 F.3d 224, 234 (2d Cir. 2004).
6
Indeed, pursuant to that rule, both parties have already retained experts in European law to assist
them and the court in applying appropriate EU and U.K. law.
-5-
In fact, in very similar circumstances both courts and defendants have recognized the
appropriateness of a U.S. court’s resolving both U.S. and EU law claims arising from a single
global conspiracy. In the In re International Air Passenger Surcharge Litigation, currently
pending in the Northern District of California, defendant Virgin Atlantic Airways has stipulated
to a violation of both U.S. and U.K. law as a result of its participation in a conspiracy to fix the
prices of passenger flights into and out of London, including between London and the United
States.
See Stipulation as to Violation by Defendant Virgin Atlantic Airways Ltd., In re
International Air Transportation Surcharge Antitrust Litigation, MDL No. 1793 (N.D. Cal. Sept.
21, 2007) (attached hereto as Ex. 7). Such adjudication of foreign law claims together with U.S.
law claims in circumstances where a single illegal global conspiracy results in injury on a
transnational scale is consistent with the Second Circuit’s urging of district courts to “invoke the
flexible provisions of Rule 44.1 to determine issues relating to the law of the foreign nations”
because “[s]uch issues can be expected to come to the federal courts with increasing frequency
as the global economy expands and cross-border transactions increase.” Curley v. AMR Corp.,
153 F.3d 5, 13 (2d Cir. 1998).
As would be expected given the numerous other instances in which courts have exercised
jurisdiction over claims under European law, EU law does not prevent the Court here from
exercising jurisdiction over the claims that Plaintiffs have alleged. See Declaration of Alexander
Layton and Vincent Smith (“Layton and Smith Decl.”) (attached hereto as Ex. 8) ¶ 8.1, 12.e
Moreover, neither the principles of international comity nor the doctrine of forum non
conveniens, both of which Defendants’ assert as affirmative defenses, provide this Court with
reason to deny the jurisdiction that it properly has over Plaintiffs’ foreign law claims.
Defendants cannot meet their burden of showing that a true conflict exists between U.S. and EU
-6-
law such that principles of international comity warrant dismissal of Plaintiffs claims or that an
adequate alternative forum exists in which the foreign law claims should be adjudicated such that
dismissal is appropriate under the doctrine of forum non conveniens. Absent proper application
of either comity principles or the doctrine of forum non conveniens, this Court must hear
Plaintiffs’ EU law claims.
The vague political concerns Defendants rely upon in arguing
otherwise are insufficient grounds for this Court to dismiss Plaintiffs’ claims. Accordingly,
because it provides a convenient forum in which to litigate Plaintiffs’ claims and because it must
exercise the jurisdiction conferred upon it absent a “true conflict” of law, this Court should deny
Defendants’ motion and adjudicate all of the claims asserted by Plaintiffs arising from
Defendants’ global conspiracy.
ARGUMENT
I.
Plaintiffs Have Stated A Claim For Relief Under Article 81(1) of the EC Treaty and
Article 53(1) of the EEA Treaty.
The non-settling Defendants argue that Plaintiffs’ EU law claims should be dismissed
pursuant to Rule 12(b)(6) for failure to state a claim for relief. This argument, which Lufthansa
did not even bother to raise in its 59-page effort to dismiss Plaintiffs’ EU law claims, is
meritless. As Plaintiffs’ experts state in their declaration,
[t]he Complaint contains a plea of a breach by the Defendants of
EU competition law and of English law by reference to section 2 of
the European Communities Act 1972 (which gives statutory effect
in English law to directly effective EU rules). If the matters
pleaded in the Complaint were proved to the satisfaction of an
English court on the balance of probabilities they would be
sufficient to entitle at least the named Plaintiffs to judgment
against the Defendants.
Layton and Smith Decl. ¶ 11.
Layton and Smith explain that, “EU law and the national laws of the Member States
together form the framework for enforcing the competition rules in the EU.” Id., ¶ 16(1).
-7-
Specifically, the substantive provisions of EU competition law are set forth in European
Commission legislation, including Article 81(1) of the EC Treaty and Agreement on the
European Economic Area, art. 53, Jan. 1, 1994, 1801 U.N.T.S. 3 (hereinafter “Article 53”)
(attached hereto as Ex. 9),7 and the case law of the European courts. Layton and Smith Decl.
¶ 16(2). The substantive law of the EU works together with the procedural and damages rules of
the member states in order to provide a private right of action for claimants to seek monetary
compensation for injuries sustained as a result of a violation of EU competition law under Article
81 and Article 53. Id. ¶ 16.
In keeping with this framework, Plaintiffs have pled violations of both Article 81(1) and
Article 53(1) and have asked for the appropriate compensatory damages allowable under the
laws of the United Kingdom. See Complaint ¶¶ 272, 278, 303, 320, 353, 388; see also Devenish
Nutrition, Ltd. V. Sanofi-Aventis SA (France), 2007 E.W.H.C. 2394 (Ch.), ¶ 19 (“Devenish
Nutrition”) (attached hereto as Ex. 10) (“It is common ground…that the claimants are entitled to
compensatory damages.”). Plaintiffs do not, as the non-settling Defendants contend, “state
claims for damages directly under Article 81 of the EC Treaty [or] Article 53 of the EEA
Treaty.”
Linklaters’ Memo. at 25.
Rather, as Lufthansa’s brief recognizes, Plaintiffs are
“seeking to apply the cause of action for breach of Article 81 that is furnished by the law of a
single jurisdiction—England ….” Memorandum of Law in Support of Lufthansa’s Motion to
Dismiss Counts VI and VII of Plaintiffs’ First Consolidated Amended Complaint (“Lufthansa
Memo.”) at 44.
Plaintiffs have pled a violation of the substantive provisions of Articles 81(1) of the EC
Treaty and 53(1) of the EEA Treaty:
7
Article 53(1) of the EEA Treaty mirrors Article 81(1) of the EC Treaty, except that it applies only
to Iceland, the Kingdom of Norway and the Principality of Liechtenstein.
-8-
Defendants’ agreements and concerted practices, as complained of
herein, had the following effects, among others:
a.
The selling prices of Airfreight Shipping Services were
directly or indirectly fixed by Defendants at supracompetitive levels; and
b.
Competition within the common market has been
prevented, restricted, or distorted.
Complaint ¶¶ 392-93. Plaintiffs also allege:
By reason of their implementation of and/or giving effect to the
Airfreight Shipping Services cartel, Defendants acted in breach of:
a.
a statutory duty imposed under Section 2(1) of the
European Communities Act 1972 not to infringe Article
81(1) of the EC Treaty or Article 53(1) of the EEA
Agreement; and/or
b.
a statutory duty imposed under Article 81(1) of the EC
Treaty and Article 53(1) of the EEA Agreement
Defendants conduct described herein does not meet the exceptions
set forth in Article 81(3) of the EC Treaty.
Id.8 Plaintiffs’ experts confirm that such allegations, together with the rest of the complaint,
sufficiently plead a breach of EU and U.K. law. See Waller Decl. ¶ 67 (confirming that “the
allegations in the complaint, if true, constitute a violation of Article 81(1) of the EU.”); Layton
and Smith Decl. ¶ 11. In addition to these allegations of violations of substantive EU law,
Plaintiffs have sought damages as appropriate under the tort law of the United Kingdom. See,
e.g., Complaint ¶ O (seeking damages for foreign Plaintiffs “for the present value of actual
damages determined to have been sustained by them by virtue of Defendants’ infringements of
8
Specifically, Articles 81(1) and 53(1) provide that:
The following shall be prohibited as incompatible with the common market: all agreements between
undertakings, decisions by associations of undertakings and concerted practices which may affect trade between
Member States and which have as their object or effect the prevention, restriction or distortion of competition within
the common market, and in particular those which:
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;
(b) limit or control production, markets, technical development, or investment;
(c) share markets or sources of supply . . . .
See Article 81.
-9-
E.U. Law….”). See also, Devenish Nutrition, ¶ 19 (finding it “common ground” that “claimants
are entitled to compensatory damages.”)
Thus, Plaintiffs have pled the basic elements of a claim under Articles 81(1) of the EC
Treaty and 53(1) of the EEA Agreement and allowable damages provided for in the tort law of
the U.K. In doing so, Plaintiffs not only state a claim that cannot be dismissed under Rule
12(b)(6) but have also allowed this Court to “apply[] (substantive) EU competition law, taking
account of appropriate damages available under English rules to private claimants in the EU” so
that the Court “does not violate public policy in the EU.” Layton and Smith Decl. ¶ 8.3.
II.
The Court Has Original Diversity Jurisdiction Over Plaintiffs’ Foreign Law Claims
Pursuant to 28 U.S.C. 1332(d)(2).
As Plaintiffs have alleged, this Court properly has diversity jurisdiction over the EU law
claims asserted by Plaintiffs pursuant to the new 28 U.S.C. 1332(d)(2), added to the diversity
statute by CAFA. 28 U.S.C. § 1332(d)(2) (as added by CAFA) reads:
The district courts shall have original jurisdiction of any civil
action in which the matter in controversy exceeds the sum or value
of $5,000,000, exclusive of interest and costs, and is a class action
in which -...
(B) any member of a class of plaintiffs is…a citizen of a foreign
state and any defendant is a citizen of a State; or
(C) any member of a class of plaintiffs is a citizen of a State and
any defendant is . . . a citizen or subject of a foreign state.9
(emphasis added). This provision gives the Court diversity jurisdiction over this civil action
because, since Defendants include citizens of both the United States and foreign States, each
9
28 U.S.C. § 1332(a)(3) provides diversity jurisdiction over civil actions where the matter in
controversy exceeds $75,000 and is between “citizens of different States and in which citizens or subjects of a
foreign state are additional parties . . . .”.
-10-
class, whether a class of U.S. citizens, foreign citizens or both, contains at least one class
member who is diverse from at least one Defendant.
Despite this clear and unambiguous language providing the Court with diversity
jurisdiction over this action, Defendants contend that Plaintiffs “improperly use [CAFA] to
establish diversity jurisdiction over [their] claims.” Linklaters’ Memo. at 27. Ignoring the plain
language of the statute, Defendants devolve straight into an “intent” analysis arguing that
“Congress undoubtedly would be shocked” to discover that it created diversity jurisdiction in this
case. Id. at 28. While, in fact, it was clear that Congress sought to greatly expand federal
jurisdiction under CAFA and explicitly included claims involving foreign parties, whether
Congress would be “shocked” is irrelevant to the statutory examination here, where the plain
language of the statute provides this Court jurisdiction.
A.
Under the Plain Language Of 28 U.S.C. 1332(d)(2), This Court Has Diversity
Jurisdiction Over Plaintiffs’ Foreign Law Claims.
Statutory interpretation begins and ends with the plain language of the statute. See
Barnhart v. Sigmon Coal Co., 534 U.S. 438, 450 (2002); Universal Church v. Geltzer, 463 F.3d
218, 223 (2d Cir. 2006); Auburn Hous. Auth. v. Martinez, 277 F.3d 138, 143 (2d Cir. 2002). As
the Second Circuit has noted, “[i]f the statutory terms are unambiguous, our review generally
ends and the statute is construed according to the plain meaning of its words.” Greenery Rehab.
Group v. Hammon, 150 F.3d 226, 231 (2d Cir. 1998). Only where the plain statutory language is
ambiguous or would lead to an absurd result should courts consider legislative history to
determine the legislative intent. See Lamie v. United States Tr., 540 U.S. 526, 534 (2004);
United States v. Ron Pair Enters. Inc., 489 U.S. 235, 242 (1989); Can. Life Assurance Co. v.
Converium Ruckversicherung (Deutschland) AG, 335 F.3d 52, 57 (2d Cir. 2003). Thus, because
-11-
no ambiguity exists here, no further analysis is necessary and the Court has diversity jurisdiction
over this action.
B.
Defendants Misstate The Congressional Intent Behind CAFA
An examination of the intent behind the new diversity jurisdiction provision, which the
Court need not even consider given the plain language of the statute conferring jurisdiction,
reveals that Defendants’ argument that Congress did not intend to broaden the diversity statute to
include the claims alleged here is unavailing. That the plain language of 28 U.S.C. § 1332(d)(2)
now authorizes diversity jurisdiction over a broad array of claims has been recognized by
numerous courts. See, e.g., Lowery v. Alabama Power Co., 483 F.3d 1184, 1193 (11th Cir.
2007) (emphasis added) (“CAFA amends the federal diversity jurisdiction statute, 28 U.S.C §
1332, by inserting a new subsection, § 1332(d). This new subsection works a sea change in
diversity jurisdiction for certain class actions. It broadens diversity jurisdiction by establishing
lower threshold requirements for jurisdiction and abrogating long-established precedent.”).
Clearly, Congress considered and approved of the federalization of class actions involving
foreign defendants and, at least implicitly, claims implicating foreign law. Further, the fact that a
foreign purchaser may be a putative class representative or a member of the class is irrelevant, as
numerous courts have certified class actions with foreign class representatives.10
10
For example, class actions involving foreign investors as class representatives have been certified.
See, e.g., Takeda v. Turbodyne Tech., Inc., 67 F. Supp. 2d 1129, 1139 (C.D. Cal. 1999) (citations omitted)
(appointing lead plaintiff group consisting of German and U.S. investors, and concluding “[i]t is evident there is no
per se rule against the certification of a class whose members are both foreign and American investors. Nor is there
a prohibition against having a mix of foreign and American investors serve as class representatives.”); In re Gaming
Lottery Sec. Litig., 58 F. Supp. 2d 62, 73-75 (S.D.N.Y. 1999) (certifying a class of four Canadian class
representatives and two U.S. representatives to represent a class of U.S. and Canadian investors); In re Nortel
Networks Corp. Sec. Litig., No. 01 Civ. 1855 (RMB), 2003 WL 22077464 (S.D.N.Y. Sept. 8, 2003) (granting class
certification motion brought by Canadian pension fund on behalf of class of U.S. and foreign investors); Cromer
Fin. Ltd. v. Berger, 205 F.R.D. 113, 125-26 (S.D.N.Y. 2001) (certifying class and rejecting the argument that
foreign named plaintiffs lacked standing to assert class claims).
Similarly, courts have also certified foreign plaintiff class actions under the Alien Tort Statute, 28 U.S.C §
1350 involving violations of international law. See, e.g., Does I v. The Gap, Inc., No. CV-01-0031, 2002 WL
1000073 (D.N. Mar. I. May 10, 2002) (certifying class of 30,000 garment workers in Saipan); Doe I v. Karadzic,
-12-
Congress made clear in enacting CAFA that it was not intended to limit class actions as
Defendants imply:
Class action lawsuits are an important and valuable part of the
legal system when they permit the fair and efficient resolution of
legitimate claims of numerous parties by allowing the claims to be
aggregated into a single action against a defendant that has
allegedly caused harm.
28 U.S.C. § 1711 (historical and statutory notes), PL-109-2, § 2(a)(1).
C.
Complete Diversity Is Not Required Under 28 U.S.C. 1332(d)(2)
The law in the Second Circuit is clear that complete diversity is not required under 28 §
1332(d)(2): “As we have noted above, §1332(d)(2) requires only minimal diversity of the parties
….” Blockbuster, Inc. v. Galeno, 472 F.3d 53 (2d Cir. 2006). This has been confirmed by
multiple other courts as well. See, e.g., Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1021 (9th
Cir. 2007) (“[U]nder CAFA, complete diversity is not required; ‘minimal diversity’ suffices.”)
(collecting cases); Mattera v. Clear Channel Commc’ns, Inc., 239 F.R.D. 70, 77 (S.D.N.Y. 2006)
(“Among other things, CAFA amended the federal diversity jurisdiction statute by relaxing the
complete diversity rule for covered class actions.”); McMorris v. The TJX Cos., Inc., 493 F.
Supp. 2d 158, 162 (D. Mass. 2007) (footnote omitted) (“For class actions covered by CAFA,
Congress abandoned the ‘complete’ diversity requirement of 28 U.S.C. § 1332(a).”)
Accordingly, Defendants are wrong that Plaintiffs’ claims “must be dismissed under a standard
diversity analysis unless there is complete diversity among all plaintiffs and all defendants.”
Linklaters’ Memo. at 33.11
176 F.R.D. 458 (S.D.N.Y. 1997) (certifying class of plaintiffs alleging they were victims of genocide, war crimes,
and crimes against humanity in Bosnia-Herzegovina during civil war); Hilao v. Estate of Marcos, 393 F.3d 987, 989
(9th Cir. 2004) (approving lower court’s class certification decision involving alien claims against former
Philippines president after three-phase trial on liability, punitive damages and compensatory damages).
11
The single case that Defendants cite in support of their argument is inapposite, as it predates
CAFA and does not deal with diversity under 28 U.S.C. § 1332(d)(2).
-13-
D.
Sitting in Diversity, This Court Can Apply Class Action Procedures
Defendants mistakenly argue that this Court may not exercise original diversity
jurisdiction under CAFA because such jurisdiction does not obtain where a class action could not
be instituted or class-wide recovery obtained under European law. Defendants’ entire argument
on this point is based on a faulty analogy they make between the Court’s exercise of diversity
jurisdiction over claims alleged under EU law here and a federal court’s exercise of diversity
jurisdiction over state law claims pursuant to 28 U.S.C. § 1332(a). As explained below, their
analogy does not hold, and, as a result, their argument fails.
1.
A Federal Court Sitting In Diversity May Apply U.S. Federal
Procedural Law.
When sitting in diversity over state law claims, federal courts are required to apply state
substantive law and federal procedural law. See Erie R. Co. v Tompkins, 304 U.S. 64, 78
(1938).12 In Hanna v. Plumer, 380 U.S. 460 (1965), the Court developed a two-part test for
deciding when state law should apply in federal diversity cases. Under the Hanna test, a court
must determine whether the state law in question directly conflicts with a Federal Rule of Civil
Procedure. If it does, “the court [is] instructed to apply the Federal Rule, and can refuse to do so
only if the Advisory Committee, [the Supreme] Court, and Congress erred in their prima facie
judgment that the Rule in question transgresses neither the terms of the [Rules] Enabling Act nor
12
Commentators have noted that courts should apply foreign law under the Erie framework:
While the words of Federal Rule of Civil Procedure 44.1 and Federal Rule of Criminal Procedure 26.1—
along with their accompanying Advisory Committee notes — nowhere discuss Erie, the intent, or purpose of the
rule changes was to make determining foreign law as similar to domestic law as possible. Domestically for federal
courts, the closest analogous situation to applying the law of a foreign country is when they must apply the law of
another domestic jurisdiction, which they do following the Erie line of cases. Applying the Erie framework is the
intent of the federal procedural rules insofar as it is the natural consequence of determining foreign law in the same
manner as the closest analogous situation available domestically.
Doug Keller, Interpreting Foreign Law Through an Erie Lens: A Critical Look at United States v. McNab,
40 Tex. Int’l L.J. 157, 179 (2004) (footnote omitted).
-14-
constitutional restrictions.” Id. at 471.13 The second prong of the Hanna test comes into play
only if the state law does not conflict with a Federal Rule; if that is the case, then the court must
determine whether failure to apply the state law would lead to different outcomes in state and
federal court and result in inequitable administration of the laws or forum shopping. See Hanna,
380 U.S. at 468. But those determinations are not reached when the first prong of Hanna
applies, i.e., where the state provision conflicts with a federal rule of procedure. E.g., Gasperini
v. Ctr. for Humanities, Inc., 518 U.S. 415, 427 n.7 (1996) (“It is settled that if the Rule in point is
consonant with the Rules Enabling Act, 28 U.S.C. § 2072, and the Constitution, the Federal Rule
applies regardless of contrary state law.”); see also Metabolife Int’l, Inc. v. Wornick, 264 F.3d
832, 845 (9th Cir. 2001) (“Procedural state laws are not used in federal court if to do so would
result in a ‘direct collision’ with a Federal Rule of Civil Procedure.”).14 In other words, Erie
cannot be “invoked to void a Federal Rule.” As such, if the Federal Rules of Civil Procedure
apply to a question, no “outcome —determination” test nor any “forum-shopping” analysis is
ever used — outcome determination “was never intended to serve as a talisman.” Hanna, 380
U.S. at 466, 467, 470.
The same analysis applies, as Defendants effectively concede, where a federal court is
asked to take diversity jurisdiction over foreign law claims rather than state law claims, to the
extent that foreign procedural rules conflict with U.S. federal procedural rules, the U.S. federal
13
The Supreme “Court has never applied the REA to invalidate a Federal Rule.” Note: The Rules
Enabling Act and the Limits of Rule 23, 111 Harv. L. Rev. 2294 (1998). See Henderson v. United States, 517 U.S.
654, 676 (1996) (Thomas, J., dissenting) (arguing that an interpretation of Rule 4 violates the Rules Enabling Act);
Bus. Guides, Inc. v. Chromatic Commc’ns Enters., Inc., 498 U.S. 533, 568, 569 (1991) (Kennedy, J., dissenting)
(suggesting that an interpretation of Rule 11 might violate the Rules Enabling Act); Marek v. Chesny, 473 U.S. 1,
35-38 (1985) (Brennan, J., dissenting) (arguing that an interpretation of Rule 68 violates the Rules Enabling Act).
14
The first sentence of the Federal Rules of Civil Procedure states “[t]hese rules govern the
procedure in the United States district courts in all suits of a civil nature whether cognizable as cases at law or in
equity or in admiralty, with the exceptions stated in Rule 81.” Fed. R. Civ. P. 1. Rule 23 regarding class actions is
one of the rules applicable to controversies in federal courts. See Califano v. Yamasaki, 442 U.S. 682, 700 (1979)
(“In the absence of a direct expression by Congress of its intent to depart from the usual course of trying ‘all suits of
a civil nature’ under the Rules established for that purpose, class relief is appropriate in civil actions brought in
federal court.”)
-15-
rules will apply. Servicios Comerciales Andinos, S.A. v. Gen. Elec. Del Caribe, Inc., 145 F.3d
463, 479 (1st Cir. 1998).
2.
Rule 23 Is A Procedural Rule, And Therefore Can Apply In
Adjudicating Plaintiffs’ Substantive EU Law Claims.
Rule 23 is a procedural rule, not a substantive one: “[T]he right of a litigant to employ
Rule 23 is a procedural right only, ancillary to the litigation of substantive claims.” Deposit
Guar. Nat’l Bank v. Roper, 445 U.S. 326, 332 (1980) (emphasis added); see also U.S. Parole
Comm’n v. Geraghty, 445 U.S. 388, 402 (1980) (referring to “right to represent class” as a
“procedural claim”); Zahn v. Int’l Paper Co., 414 U.S. 291, 298 (1973) (emphasis added)
(“[T]he class actions as constituted under original Rule 23 were but procedural devices to permit
some to prosecute or defend an action without the necessity of all appearing as plaintiffs or
defendants.”). Accordingly, as the D.C. Circuit Court of Appeals articulated in Doe v. District of
Columbia, Rule 23 can be applied regardless of the substantive state cause of action:
[I]t is settled that Rule 23 is sufficiently confined to questions of
‘procedure’ to be applicable in diversity actions without
transgressing the constitutional requirement that federal courts
defer to state ‘substantive’ law in such situations. In short, ‘Rule
23 is considered a procedural rule, rather than one that affects the
substance or the merits of litigation.’
701 F.2d 948, 960-63 (D.C. Cir. 1983) (citations omitted). Likewise, in Mace v. Van Ru Credit
Corp., a state rule purported to require an ante litem notice before a class action could be used.
The Seventh Circuit concluded that this state provision conflicted with Rule 23 and that Rule 23
controlled because the state rule did not grant or deny a substantive right. 109 F.3d 338, 346 (7th
Cir. 1997).
Thus, while prior to Hanna, it was not clear whether Rule 23 was applicable when a state
lacked or limited the class action device, as Wright and Miller note,
-16-
The Hanna decision resolves any doubt as to the availability of a
class action in a federal court under Rule 23 in a diversity action,
even in a state that does not recognize the procedure. Federal and
not local standards also will determine the various procedural
elements of the class action, such as the adequacy of representation
and the manner in which the court administers the action.
7A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Fed. Prac. & Proc. Civ. 3d § 1758
(3d ed. 2005) (“Fed. Prac. & Proc.”) (internal footnotes omitted) (emphasis added); see also 3
Alba Conte & Herbert Newberg, Newberg on Class Actions § 7:30 (4th ed.) (“Newberg on Class
Actions”) (footnotes omitted) (“Rule 23 is considered a procedural rule, rather than one that
affects the substance or the merits of litigation. Accordingly, it is now settled that Rule 23
governs the certification of class actions in federal courts, even in diversity actions, in which the
forum state may have a more restrictive class action rule.”).
Nonetheless, Defendants contend that this Court cannot apply Rule 23 in a diversity
action involving EU law claims because no corresponding procedural rule exists in the EU.
Linklaters’ Memo. at 31-32. While Plaintiffs dispute this assertion that no such procedural
equivalent exists in the EU,15 assuming it were true, it is of no relevance to the Court’s analysis.
15
While, as noted in Section VIP, infra, the EU has not yet explicitly adopted a class action
mechanism to address antitrust claims such as this one, Defendants' suggestion that this reflects a fundamental
hostility to the class action procedure is inaccurate. On the contrary, the EC has indicated that class actions may
be appropriate in cases such as this one, and several member states have begun permitting class actions in certain
circumstances, indicating a growing acceptance of their utility. For example, in Sweden, Lag om Grupprättegång
(the Act of Class Actions) SFS 2002:599 (Swed.), provides for different types of class actions including: (1)
association class actions on behalf of consumers or employees in disputes with businesses; and (2) public class
actions brought under governmental authority. Under this system, class actions may be brought when, due to the
size of the claimant groups, class actions are the best procedural alternative to individual actions. As in the United
States, settlements require judicial authorization and will not be approved if they are found to be unreasonable or
discriminatory. Similarly, English procedural law provides for mechanisms, beyond representative actions and
joinders, where Group Litigation Orders provide case management for claims which have common issues of law or
fact render judgments that are binding on all the members of the claimant group. Civ. P. R. 19.10 (Eng.). In France,
certified consumer associations can bring claims to protect consumers’ collective interests. Code De La
Consommation [C. Consommation] art. L. U21.1 (Fr.). In the Netherlands, foundations or associations whose
purpose is to safeguard the interest of third parties may bring claims for the protection of those interests. In
Portugal, natural persons or associations (but not companies) may apply for injunctive relief from infringements on
public health, the environment, and consumer rights. CONST. art. 52 and Law No 83/95 of August 31, 1995 (Port.).
In Spain, the Consumers and Users Association can bring a claim on behalf of an identified group. Ley de
Enjuicimiento Civil [L.E. CIV.] art. 11 (Spain).
-17-
First, federal courts routinely apply the Federal Rules to foreign claimants in other procedural
areas, even where Federal Rules are markedly different from foreign rules. This routinely occurs
with respect to discovery procedures. See, e.g., Société Nationale Industrielle Aérospatiale v.
United States Dist. Court for the S. Dist. of Iowa, 482 U.S. 522, 536 (1987) (examining Hague
Convention on discovery and acknowledging that the Federal Rules are “the normal methods” of
discovery for litigation involving foreign parties); Societe Internationale Pour Participations
Industrielles et Commercials, S.A. v. Rogers, 357 U.S. 197, 204-06 (1958). Defendants have
pointed to no reason why federal discovery rules (or Rule 12) would be applicable here, but Rule
23 would not.
Further, as noted above, a similar situation often arises when a state prohibits or lacks a
class action device. Courts repeatedly have held, however, that state law restrictions on class
adjudication are procedural limits that create a “direct collision” with Rule 23 and are therefore
preempted. See O’Keefe v. Mercedes-Benz USA, LLC, 214 F.R.D. 266, 285-86 (E.D. Pa. 2003)
(holding that limits on class actions in Alabama’s consumer protection act were “procedural” and
conflicted with the class adjudication provided by Rule 23); In re Bridgestone/Firestone, Inc.
Tires Prods. Liab. Litig., 205 F.R.D. 503, 514-15, (S.D. Ind. 2001), rev’d on other grounds, 288
F.3d 1012 (concluding that similar limits under the Michigan Consumer Protection Act created a
direct conflict by attempting to place limits on “how these Plaintiffs can proceed in pursuing
relief,” an issue governed by Rule 23); Kristiansen v. John Mullins & Sons, Inc., 59 F.R.D. 99,
109-10, n.13 (E.D.N.Y. 1973) (holding that a class action bar created a direct conflict, because
Rule 23 governed the “method of enforcing rights” in court); Briskin v. Glickman, 267 F. Supp.
600, 603-05 (S.D.N.Y. 1967).16
16
Briskin involved pendent, not diversity jurisdiction, but the court held that the same principles
apply in the two contexts. 267 F. Supp. at 603.
-18-
Defendants base their contrary argument primarily on one entirely distinguishable case
involving a unique federal law. See Bonime v. Avaya, Inc., No. 06-CV-1630, 2006 WL 375129,
at *4 (E.D.N.Y. Dec. 20, 2006), appeal pending, 07-1136 (2d Cir.) (cited at Linklaters’ Memo. at
29-30). In Bonime, the plaintiff brought a class action under the Telephone Consumer Protection
Act of 1991, 47 U.S.C. § 227 (“TCPA”)17 after receiving unsolicited faxes. Under TCPA, a
private party may “if otherwise permitted by the laws or rules of a court of a State, bring in an
appropriate court of that State … an action to recover for actual monetary loss from such a
violation, or to receive $500 in damages for each such violation, whichever is greater ….” Id. at
§ 227(b)(3) (emphasis added). Even though TCPA is a federal statute, the Second Circuit has
ruled that there is no federal question jurisdiction under the statute, see, e.g., Gottlieb v. Carnival
Corp., 436 F.3d 335, 337 (2d Cir. 2006), and thus the Plaintiff attempted to invoke diversity
jurisdiction. Bonime, 2006 WL 375129, at *1. Under New York Civil Practice Law and Rules
(“NYCPLR”) § 901(b) (which the Court looks to under TCPA), a class action may not be
maintained in state court where a claim is alleged under a statute creating or imposing a penalty,
or a minimum measure of recovery unless that statute specifically authorizes recovery in a class
action. Numerous New York courts have held, and the parties did not dispute, that class actions
may not be maintained in New York state court for alleged violations of TCPA since TCPA
contains a penalty or minimum measure of recovery but does not specifically authorize class
actions. Bonime, 2006 WL 3715129, at *2 (citing cases). As such, given the specific language
of TCPA referring to “state law or rules” for invoking proper jurisdiction, the court found that in
this unique instance, NYCPLR § 901(b) was a “substantive rule” and would apply to prohibit the
plaintiff’s class allegations. Id. at *3-5.
17
Defendants incorrectly refer to TCPA as the “New York Telephone Consumer Protection Act”
Linklaters’ Memo. at 29 (emphasis added). TCPA is a federal statute, not a New York state law. See 47 U.S.C §
227.
-19-
Defendants have not pointed to any prohibitions on class actions in the EU like those in
NYCPLR § 901(b), nor have they cited language in EU law directing the court to examine the
laws or rules of the foreign country like that in TCPA. At best, Defendants contend that a class
procedure “does not exist in the EC or its Members States.” Linklaters’ Memo. at 32. A lack of
a parallel procedure, however, does not prevent this Court from applying the Federal Rules here:
[T]he federal courts are free to follow the practices and procedures
authorized under the Federal Rules or an Act of Congress, despite
the fact that a particular practice or procedure might not be
available in a state court and might be viewed as “remedial.” Thus
the absence of a corresponding procedure or remedy in the forum
state’s court system does not affect the ability of a federal court in
a diversity case to do any of the following: to certify and
adjudicate a class action under Rule 23 . . . .
19 Fed. Prac. & Proc. § 4513 (footnotes omitted) (emphasis added). Indeed, it would undermine
the Federal Court system if a court applying foreign substantive law were unable to proceed
under the Federal Rules of Civil Procedure merely because the foreign jurisdiction whose
substantive law was being applied did not mirror federal procedural rules.18 Thus, because this
Court can apply Rule 23 to Plaintiffs’ claims, the diversity jurisdiction this Court has under the
plain language of 1332(d)(2) is undisturbed.
18
Moreover, previous decisions examining CPLR 901 in situations outside of the unique language of
thee TCPA have reached the opposite conclusion. Therefore, Bonime is not established law. In Universal
Maintenance, Inc. v. Amherst Painting, Inc., for example, the court found that “[i]n light of Erie R. Co. v. Tompkins,
304 U.S. 64 (1938), this Court applies [Rule] 23 in the stead of the similar state requirements of Lien Law § 77 and
CPLR Art. 9.” No. 94-CV-0875E(H), 1995 WL 737927, at *3 n.4 (W.D.N.Y. Dec. 7, 1995); In re Oot, 112 B.R.
497, 502 (Bankr. N.D.N.Y. 1989) (“Also, since New York Civil Procedure Law and Rules (“NYCPLR”) § 901 and
Federal Rules Civil Procedure (“FRCP”) 23 are procedural in nature, this Court adheres to FRCP 23 under Erie . . .
.”); In re Peters, 90 B.R. 588, 594-95 (Bankr. N.D.N.Y. 1988) (“Since CPLR § 901 and Fed.R.Civ.P. 23 are
procedural statutes, this federal forum is bound to follow, under the policies underlying the rule of Erie . . . , federal
procedural law.”); Syro Steel Co. v. Mellon Bank (East) P.S.F.S. Nt’l Ass’n, No. 90-Civ-1321, 1993 WL 173439, at
*2 (N.D.N.Y. May 17, 1993); In re Grosso, 9 B.R. 815, 823 (Bankr. N.D.N.Y. 1981); In re Lebner, 197 B.R. 180,
188 (Bankr. D. Mass. 1996).
-20-
III.
The Court Has Supplemental Jurisdiction Over Plaintiffs’ Foreign Law Claims
Pursuant to 28 U.S.C. §1367
Because the Court has original diversity jurisdiction over Plaintiffs’ EU law claims, it
need not consider whether it has supplemental jurisdiction over those claims pursuant to 28
U.S.C. §1367. However, should the Court finds that it does not have original jurisdiction over
the EU law claims, it also has — and should exercise — supplemental jurisdiction over them.
A.
The Court Has Jurisdiction Over Plaintiffs’ Foreign Law Claims Because All
Claims Alleged In The Complaint Arise From A Common Nucleus Of
Operative Facts.
Plaintiffs have alleged that Defendants’ conduct involved a “single, overarching
conspiracy to artificially inflate the prices of Airfreight Shipping Services.” Complaint ¶ 20.
This conspiracy violated both U.S. and EU law.
Thus, this Court can properly exercise
supplemental jurisdiction over Defendants’ foreign law claims because those claims derive from
a “common nucleus of operative fact.” United Mine Workers of America v. Gibbs, 383 U.S. 715,
725 (1966). Defendants do not—and could not—argue to the contrary. 28 U.S.C. §1367
provides:
[I]n any civil action of which the district courts have original
jurisdiction, the district courts shall have supplemental jurisdiction
over all other claims that are so related to claims in the action
within such original jurisdiction that they form part of the same
case or controversy under Article III of the United States
Constitution.
Id.
The Supreme Court has made it clear that Ҥ1367(a) is a broad jurisdictional grant, with
no distinction drawn between pendent-claim and pendent-party cases.” Exxon Mobil Corp. v.
Allapattah Servs., Inc., 125 S. Ct. 2611, 2621 (2005). That is, the Court can properly take
subject matter jurisdiction over either: (1) the additional supplemental claims of a party who has
claims already properly before the Court; or (2) the claims of a party not otherwise before the
-21-
Court, but whose claims are supplemental to those of a party who is before the Court with claims
over which the court has original jurisdiction. See generally, id.19 Thus, the Court may properly
exercise supplemental jurisdiction over both the pendant EU law claims20 of Plaintiffs also
asserting Sherman Act claims in this action (alleged in Count VI) and the claims of a pendant
class of Plaintiffs asserting EU law claims (alleged in Count VII), as all such claims arise from a
common nucleus of operative facts as do the Sherman Act claims over which this Court has
original subject matter jurisdiction.21
B.
The Court Should Exercise Supplemental Jurisdiction Over Plaintiffs’
Foreign Law Claims
As set forth above, the Court need not reach the question of whether it has supplemental
jurisdiction over Plaintiffs’ EU law claims because it has original diversity jurisdiction over all
claims alleged in the complaint. Such jurisdiction (which, of course, is non-discretionary),
renders Defendants’ lengthy supplemental jurisdiction analysis academic.
Nevertheless,
Defendants’ argument that this Court should not exercise supplemental jurisdiction is
unpersuasive.
19
See, e.g., Brazinski v. Amoco Petroleum Additives Co., 6 F.3d 1176, 1181-82 (7th Cir. 1993)
(holding that under 28 U.S.C. § 1367, a district court could take supplemental jurisdiction over a plaintiff’s state law
claims against a defendant where the court properly had original federal question jurisdiction over other plaintiffs’
federal law claims, which were sufficiently factually related to the state-law claims so as to involve the same case or
controversy.)
20
In accordance with the long-standing jurisdictional principles now codified in 28 U.S.C. § 1367 a
court’s authority to exercise jurisdiction over supplemental claims includes an ability to take jurisdiction over
foreign claims that are ancillary to domestic claims. See Ortman v. Stanray Corp., 371 F.2d 154, 158 (7th Cir. 1967)
(permitting exercise of supplemental jurisdiction over foreign claims where “[a]ll of the actions of defendant of
which complaint is made are the result of defendant doing similar acts both in and out of the United States.”); see
also, Mars Inc. v. Kabushiki-Kaisha Nippon Conlux, 24 F.3d 1368, 1373 (Fed. Cir. 1994); Forest Labs., Inc. v.
Pillsbury Co., 452 F.2d 621 (7th Cir. 1971); Packard Instrument Co. v. Beckman Instruments, Inc., 346 F. Supp. 408
(N.D. Ill. 1972); Research Frontiers Inc. v. Marks Polarized Corp., 290 F. Supp. 725 (E.D.N.Y. 1968).
21
The ability of a court to exercise supplemental jurisdiction over pendant parties remains the same
where the pendant party is a class of plaintiffs. See Ansoumana v. Gristede’s Operating Corp., 201 F.R.D. 81
(S.D.N.Y. 2001) (holding that 28 U.S.C. § 1367 allowed a court to properly take supplemental jurisdiction over a
pendent class of plaintiffs asserting state law claims arising from the same operative facts as the claims of a class of
federal plaintiffs over which the court had original federal question jurisdiction.)
-22-
Defendants concede, as they must, that this Court has the power to exercise supplemental
jurisdiction under 28 U.S.C. § 1367(a). Therefore, the only issue before this Court is whether it
should decline to do so under one of the enumerated factors of § 1367(c), which states:
(c) The district courts may decline to exercise supplemental
jurisdiction over a claim under subsection (a) if—
(1)
(2)
(3)
(4)
the claim raises a novel or complex issue of State law,
the claim substantially predominates over the claim or claims over which
the district court has original jurisdiction,
the district court has dismissed all claims over which it has original
jurisdiction, or
in exceptional circumstances, there are other compelling reasons for
declining jurisdiction.
Id.
The Second Circuit has held that that “the discretion to decline supplemental jurisdiction
is available only if founded upon an enumerated category of [28 U.S.C. § 1367(c)].” Treglia v.
Town of Manlius, 313 F.3d 713, 723 (2d Cir. 2002) (internal quotations omitted) (quoting ItarTass Russian News Agency v. Russian Kurier, Inc., 140 F.3d 442, 448 (2d Cir. 1998) (emphasis
added). Because it is clear that there are claims over which the Court has original jurisdiction
and that the EU law claims do not predominate over the Sherman Act claims here, the Court may
not decline to exercise supplemental jurisdiction under either categories (c)(2) or (c)(3). Thus,
Defendants contend that this Court should decline to exercise supplemental jurisdiction because
(1) “the foreign claims raise novel and complex issues of law” under § 1367(c)(1), and (2)
“comity considerations provide additional ‘exceptional circumstances’ that weigh against
exercising supplemental jurisdiction” under § 1367(c)(4). Linklaters’ Memo. at 39-43. Both
arguments fail.
-23-
1.
This Case Does Not Require The Court To Resolve Novel or Complex
Issues of Law.
First, Defendants’ argument that the Court should decline to exercise supplemental
jurisdiction because Plaintiffs’ EU law claims raise novel legal issues is unavailing. Given that
United States courts routinely apply foreign law, as set forth in detail in Section VI below, and
that the foreign law here is virtually identical to the U.S. law that the Court must apply (Layton
and Smith Decl. ¶ 74), there is no reason why this Court should be confronted with novel or
complex issues arising under Articles 81(1) and 53(1) that it would be unable to adjudicate.
2.
There Are No Exceptional Circumstances In This Case That Warrant
Declining To Exercise Supplemental Jurisdiction.
The Second Circuit has held that a district court may decline jurisdiction under the
“catch-all” of § 1367(c)(4) only if it finds both that (1) the case presents “exceptional
circumstances,” and (2) the balance of the Gibbs values provide “compelling reasons” for
declining jurisdiction. See Itar-Tass, 140 F.3d at 446. The Second Circuit has cautioned that
declining jurisdiction under § 1367(c)(4) should be “the exception rather than the rule” in accord
with Congress’ intent to restrict the discretion of courts to decline jurisdiction. Itar-Tass, 140
F.3d at 448 (“The use of ‘exceptional circumstances’ indicates that ‘Congress has sounded a note
of caution that the bases for declining jurisdiction should be extended beyond the circumstances
identified in subsections (c)(1)-(3) only if the circumstances are quite unusual.’”) (quoting
Executive Software N. Am. Inc. v. U.S. Dist. Court for Central Dist. Cal., 24 F.3d 1545, 1548
(9th Cir. 1994)); Jones v. Ford Motor Credit Co., 358 F.3d 205, 215 (2d Cir. 2004) (“In order to
decline jurisdiction on [the basis of 28 U.S.C. § 1367(c)(4)], the District Court should identify
truly compelling circumstances that militate against exercising jurisdiction.”)
This case does not present any “exceptional” or “unusual” circumstances that could
justify declining jurisdiction under 28 U.S.C. § 1367(c)(4). The only purportedly “exceptional”
-24-
circumstance Defendants offer is application of the principles of comity. But, as set forth in
Section V below, Defendants cannot meet their burden of proving comity as an affirmative
defense because they have not and cannot show a true conflict between U.S. and EU competition
law such that compliance with both laws would be impossible. This Court may not use the
“catch all” of § 1367 to end run the requirements of the comity doctrine. Since Defendants offer
no other “exceptional circumstances,” this disposes of the 28 U.S.C. § 1367(c)(4) analysis.
Absent a showing of “exceptional circumstances,” (and Defendants have made none), the
Court need not consider the Gibbs factors. The Second Circuit has directed that the Gibbs
factors (judicial economy, convenience, fairness, and comity) are to be analyzed under the
“catch-all” category of 28 U.S.C. § 1367(c)(4) and that this category is only applicable when the
circumstances are “exceptional” or “quite unusual.” Itar-Tass, 140 F.3d at 446, 448 (quoting
Executive Software, 24 F.3d at 1558).22 To decline jurisdiction under 28 U.S.C. § 1367(c)(4), a
district court must “articulate why the circumstances of the case are exceptional in addition to
inquiring whether the balance of the Gibbs values provide compelling reasons for declining
jurisdiction in such circumstances.” Itar-Tass, 140 F.3d at 446 (quoting Executive Software, 24
F.3d at 1558).
Even if the Court did examine the Gibbs factors, however, the balance of those factors—
efficiency, convenience, and fairness—weighs heavily in favor of exercising supplemental
jurisdiction over the E.U. law claims, which involve the same factual issues as the Sherman Act
claims over which the Court has original jurisdiction.
22
Failure to exercise supplemental
The Second Circuit has followed the Ninth Circuit on the proper approach to the relationship
between § 1367(c) and the factors articulated by the Supreme Court in United Mine Workers of America v. Gibbs,
383 U.S. 715, 726 (1966). Whereas several other circuits have held that § 1367(c) merely incorporated the Gibbs
factors, the Second Circuit has joined the Ninth Circuit in holding that § 1367(c) modifies and restricts the
application of the Gibbs factors. See Itar-Tass, 140 F.3d at 445–46 (rejecting the approach of the First, Third,
Seventh, and D.C. Circuits in favor of the approach taken by the Ninth Circuit and subsequently adopted by the
Eighth and Eleventh Circuits).
-25-
jurisdiction would effectively require thousands of plaintiffs to litigate identical issues each in
separate proceedings, which would cause “great potential for confusion of issues; considerable
unnecessary costs; inefficiency and inconsistency of proceedings and results” Ansoumana, 201
F.R.D. at at 96. This would, “significantly prejudice the Plaintiffs who have properly turned to
this Court to seek redress of what are alleged to be significant violations of their rights.” Id.
3.
Defendants’ Cases are Inapposite.
While Defendants cite several cases in which courts have declined to hear supplemental
foreign law claims, these cases are inapposite. In Information Resources, Inc. v. Dun &
Broadstreet Corp., 127 F. Supp. 2d 411 (S.D.N.Y. 2001), the district court declined to exercise
jurisdiction over claims for antitrust violations brought under Article 82 of the EC Treaty.
However, the basis of the Court’s decision was a concern that it would not have available to it a
process for seeking an opinion from the European Court of Justice if a question of law arose. As
explained in Section V1(c)(1)(d), infra, there is now nothing to prevent this Court from seeking
such an advisory opinion if necessary. See also Layton and Smith Decl. ¶¶ 81-82.
Defendants also cite Correspondent Services Corp. v. J.V.W. Investments Ltd., 205 F.
Supp. 2d 191, 200 (S.D.N.Y. 2002) and In re New York Trap Rock Corp., 160 B.R. 876, 881-82
(S.D.N.Y. 1993) as examples of courts that refused to exercise jurisdiction because of complex
or novel issues of law. However, unlike in this case, the decisive factor in both of those cases
was that the federal claims over which the court had original jurisdiction had already been
dismissed. See Correspondent Servs., 205 F. Supp. 2d at 200; Trap Rock, 160 B.R. at 881.
Indeed, that was also the decisive factor in Empagran II. Here, to the contrary, Plaintiffs are
asking the Court to exercise supplemental jurisdiction over EU law claims arising from identical
conduct as that giving rise to Sherman Act claims and to do so in the exact same proceeding.
-26-
Moreover, the cases Defendants cite in an effort to show that “comity” considerations
constitute “exceptional circumstances” that weigh against the exercise of supplemental
jurisdiction are cases decided in circuits that take an approach to application of the Gibbs factors
that the Second Circuit has expressly rejected. For example, Defendants cite Empagran S.A. v.
F. Hoffman-La Roche Ltd., No. 00-CV-1686, 2001 WL 761360, at *8 (D.D.C. June 7, 2001)
(“Empagran I”), rev’d on other grounds, 315 F.3d 336 (D.C. Cir. 2003), vacated and remanded
on other grounds, 542 U.S. 155 (2004); Empagran S.A. v. F. Hoffman-La Roche Ltd., 417 F.3d
1267 (D.C. Cir. 2004) (“Empagran II”) (upholding initial determination upon reconsideration),
and Voda v. Cordis Corp., 476 F.3d 887 (Fed. Cir. 2007). But both the D.C. Circuit and the
Federal Circuit treat § 1367(c) as merely incorporating the Gibbs factors, so that the Gibbs
factors provide an independent basis for declining jurisdiction in addition to the four enumerated
categories of 28 U.S.C. § 1367(c). This renders the cases Defendants cite from other circuits that
have adopted a contrary view of no persuasive value. See Empagran I, 2001 WL 761360, at *8.
4.
Exercise of Supplemental Jurisdiction Will Achieve Important
Judicial Objectives.
A central purpose of supplemental jurisdiction is to protect parties from the unfairness
arising out of the costs, delays, and other burdens of duplicative litigation of factually
interdependent claims. See, e.g., Robert G. Bone, Revisiting the Policy Case for Supplemental
Jurisdiction, 74 Ind. L.J. 139, 140 (“The standard account of supplemental jurisdiction justifies
the doctrine as a way to facilitate the efficient packaging of litigation in federal court and to
prevent the unfairness to parties who would otherwise be forced to litigate claims in separate
suits.”). The foreign claims at issue here fall squarely within the standard for supplemental
jurisdiction in that they “derive from a common nucleus of operative fact” with the claims over
which this Court has original jurisdiction. Gibbs, 383 U.S. at 725.
-27-
Given the commonality of factual issues and the nearly identical substantive law,
considerations of judicial economy and convenience to the parties weigh heavily in favor of
adjudicating all of the claims before a single tribunal to conserve private and judicial resources,
avoid duplicative litigation, and safeguard the parties’ interests in finality. The exercise of
supplemental jurisdiction also fosters fundamental fairness by ensuring that both the foreign and
domestic purchasers affected by the global price-fixing conspiracy will have equally available to
them the procedural means by which to seek effective relief for their identical injuries.
In complex antitrust litigation such as this, both the litigants and the judicial system have
a heightened interest in efficient adjudication that avoids what may constitute claim splitting and
multiple litigation.23 Such litigation is often complex, expensive, and resource-intensive. See
Manual for Complex Litigation, Third § 33.14 (1995). As a consequence, antitrust jurisprudence
has long reflected heightened concerns about subjecting both litigants and the judicial system
alike to the burdens of duplicative litigation. See 6 Newberg on Class Actions § 18:1.24 These
concerns weigh strongly in favor of exercising supplemental jurisdiction over Plaintiffs’ foreign
law claims.
Fairness to the parties also weighs strongly in favor of this Court exercising supplemental
jurisdiction over the foreign claims. Since all of the claims in this case arise out of the same
global price-fixing conspiracy, there is no distinguishing characteristic between the Plaintiffs
bringing U.S. claims and those bringing, in whole or in part, foreign law claims in terms of the
injury that they suffered as a result of Defendants’ conduct. The only distinction is their reliance
23
See Federal Courts Study Committee, Report of Federal Courts Study Committee 22, Conn. L.
Rev. 733, 787 (1990)
24
In fact, these concerns have made the class action device a favored means of redressing antitrust
violations, even where the plaintiffs are relatively large claimants. See 6 Newberg on Class Actions § 18:1 (noting
that Rule 23 “allows larger claimants and their adversaries to litigate more economically and efficiently and thereby
avoid needless duplication of judicial effort”).
-28-
on the substantive law of the EU rather than the U.S. If this Court declines supplemental
jurisdiction, the Plaintiffs bringing foreign claims will be forced to bear the undue delay and
expense of asserting their claims (premised on nearly identical facts) separately in multiple
different foreign jurisdictions, if they are able to bring those claims at all.
Given the
unavailability of a group action device and other procedural mechanisms that would permit
Plaintiffs to effectively prosecute those claims in foreign jurisdictions, this Court’s exercise of
supplemental jurisdiction over the foreign law claims is the only means by which this inequitable
result can be avoided.25
IV.
Application of Foreign Law By A U.S. Federal Court Is Appropriate and Common.
Many of Defendants’ arguments—some of which are dressed as comity arguments and
some of which are dressed as forum non conveniens arguments—are intended to make it appear
that Plaintiffs are asking this Court to act outside the norm by adjudicating Plaintiffs’ foreign law
claims. To the contrary, Plaintiffs ask nothing unusual of this Court in seeking adjudication of
their EU law claims arising from the same conduct as the Sherman Act claims. Application of
foreign law by U.S. courts is routine. See Printz v. United States, 521 U.S. 898, 907 (1997)
25
By exercising supplemental jurisdiction, this Court will ensure that all Plaintiffs have access to
what is likely the only available procedural means for effective relief—the class-action device. The Supreme Court
has recognized that a central policy purpose served by the class-action device is to provide access to judicial relief
that otherwise would be economically unavailable by means of individual litigation. In Deposit Guaranty National
Bank v. Roper, for instance, the Court stressed that:
The aggregation of individual claims in the context of a classwide suit is an evolutionary response to the
existence of injuries unremedied by the regulatory action of government. Where it is not economically feasible to
obtain relief within the traditional framework of a multiplicity of small individual suits for damages, aggrieved
persons may be without any effective redress unless they employ the class-action device.
445 U.S. 326, 339 (1980). The EC has agreed that the filing of individual suits in the EU cannot, at
present, provide effective redress for violations of competition law. Moreover, no other remedies exist in Europe in
place of the class-action device to provide effective judicial relief. See Ilana T. Buschkin, Note, The Viability of
Class Action Lawsuits in a Globalized Economy—Permitting Foreign Claimants to be Members of Class Action
Lawsuits in the U.S. Federal Courts, 90 Cornell L. Rev. 1564, 1596-99 (2005) (discussing the absence of alternative
mechanisms for group and representative litigation outside the U.S.). However, the U.K. Office of Fair Trading has
recommended that, “to ensure that there is an adequate level of protection throughout the EU, it may be appropriate
for a community instrument to require all Member States to ensure that there is an effective collective means
(especially for consumers) to bring claims for breaches of competition law in the relevant Member State.” OFT
Paper, ¶ 4.5.
-29-
(courts “applied the law of other sovereigns all the time.”) Indeed, the Second Circuit has
indicated its confidence that, “[A] New York court is fully capable of applying foreign law.”
Rationis Enters. Inc. of Panama v. Hyundai Mipo Dockyard Co., 426 F.3d 580, 587 (2d Cir.
2005) (applying Korean law). See also Curley v. AMR Corp., 153 F.3d 5, 12 (2nd Cir. 1998)
(expressing “agreement with the concept that appellate courts, as well as trial courts, may find
and apply foreign law” and holding that foreign law should be applied unless “violative of
fundamental notions of justice and prevailing concepts of good morals.”); Indasu Int’l, C.A., v.
Citibank, N.A., 861 F.2d 375, 379 (2d Cir. 1988) (determining the applicable Ecuadorian law of
contracts and guaranty and applying that law to the obligation between the United States
guarantor and a Panamanian corporation as to a contract to be performed in Ecuadorian waters).
Numerous other circuits have confirmed that federal courts in the United States have
authority to resolve disputes involving interpretation and application of foreign law.
For
example, in Cambridge Literary Properties, Ltd. v. W. Goebel Porzellanfabrik G.m.b.H. & Co.,
295 F.3d 59 (1st Cir. 2002) the court observed that the district court could apply United States
copyright law, German contract law, and Austrian inheritance law in order to resolve all of the
issues in the case. Similarly, in Abogados v. AT&T, Inc., 223 F.3d 932 (9th Cir. 2000), the court
applied California choice of law analysis to hold that the law of Jalisco, Mexico should be
applied by the district court to an issue of tortious interference with a contract made in Mexico
between the Mexican plaintiffs and the Mexican subsidiary of AT&T. In Tschira v. Willingham,
135 F.3d 1077 (6th Cir. 1998), the court applied German law to determine the issue of whether a
letter created a fiduciary duty, and then applied Tennessee law to a fraudulent misrepresentation
concerning property in Tennessee. See also Dorman v. Emerson Elec. Co., 23 F.3d 1354 (8th
Cir. 1994) (determining that Canadian law applied to a personal injury claim against a product
-30-
that was designed in Missouri, manufactured in Taiwan, and sold and used in Canada).26 See
generally 9 Fed. Prac. & Proc. §§ 2444-46 (discussing application of foreign law in federal
courts).
Application of foreign law in this case is even more appropriate than in most because
Plaintiffs have limited their foreign law claims only to those arising under EU law. Plaintiffs
have done so despite the fact that Defendants’ conduct pursuant to their global conspiracy was in
violation of the law in virtually all countries worldwide27 precisely because application of
European law is entirely permissible and manageable given that the violation is identical to that
in the United States and that it is pled, as it must be, in connection with a violation of U.K. law.
See Layton and Smith Decl. ¶ 8.2 (“this US court will be able to apply the substantive rules of
EU competition (anti-trust) law together with the other applicable legal rules of one European
Member State to all of these claims. The Plaintiffs have pleaded that English law should apply
and there is no reason in English or EU law why that choice is in error.”)
Accordingly, application of EU law here to parties already litigating U.S. law claims
arising from the identical nucleus of operative facts is not only appropriate, but consistent with
the Second Circuit’s admonition against “an excessive reluctance to undertake the task of
deciding foreign law, a chore federal courts must often perform.” Manu Int’l, S.A. v. Avon
Prods., Inc., 641 F.2d 62, 67-68 (2d Cir. 1981). See also Nat’l Union Fire Ins. Co. of Pittsburgh,
26
See also Mathews v. ABC Television, Inc., 776 F. Supp. 821 (S.D.N.Y. 1991) (applying
comparative negligence law and case law of the East African Court of Appeals to a claim by a Kenyan film-maker
against ABC Television brought in New York for injuries by a sustained in Kenya, alleging that an ABC employee’s
reckless conduct caused the injury.); In re Houbigant, Inc., 914 F. Supp. 964 (S.D.N.Y. 1995) (applying various
provisions of the Canadian Trade-Marks Act and the laws of the Province of Quebec and the State of New York to
the interpretation of a licensing arrangement); Armstrong v. Virgin Records, Ltd., 91 F. Supp. 2d 628, 637 (S.D.N.Y.
2000) (exercising jurisdiction over United States and foreign copyright claims, stating that “there is no principled
reason to bar, in absolute fashion, copyright claims brought under foreign law for lack of subject matter
jurisdiction,” and that “subject matter jurisdiction over any claims properly arising under United States copyright
law, potentially allowing the Court to exercise pendant [sic] jurisdiction over claims arising under foreign law.”).
27
See fn. 2, supra.
-31-
PA v. BP Amoco, PLC, No. 03 Civ. 0200 (GEL), 2003 WL 21180421, at *10 (S.D.N.Y. May 20,
2003) (“Because federal courts must often apply foreign law, and the means of pleading and
proving foreign law are provided in the Federal Rules of Civil Procedure, interpreting the
contracts according to English law, and instructing a jury on that law if this case should go to
trial, are not burdens heavy enough to weight the balance of convenience strongly in favor of
dismissing the action.”).
V.
Principles of International Comity Do Not Permit Dismissal Of Plaintiffs’ Article 81
and Article 53 Claims.
Under binding Second Circuit authority, “[i]nternational comity comes into play only
when there is a true conflict between American law and that of a foreign jurisdiction” and a true
conflict exists only if it is alleged that compliance with the laws of both countries would be
impossible. See In re Maxwell Commc’n Corp., 93 F.3d 1036 , 1049-50 (2d Cir. 1996) (citing
Hartford Fire Ins. Co. v. Cal., 509 U.S. 764, 798 (1993))(emphases added).28 Comity is an
affirmative defense and defendants bear the burden of establishing its application. Allstate Life
Ins. v. Linter Group Ltd., 994 F.2d 996, 999 (2d Cir. 1993); Filetech S.A. v. France Telecom,
Inc., 157 F.3d 922 (2d Cir. 1998); Drexel Burnham Lambert Group Inc. v. Galadari, 777 F.2d
877, 881 (2d Cir. 1985). A substantial claim of a true conflict is insufficient; a true conflict must
be clearly demonstrated. Filetech, 157 F.3d at 932. Defendants have not met this burden and
thus dismissal of Plaintiffs’ foreign law claims on comity grounds is not permitted. Id. (vacating
the district court’s dismissal on comity ground because it did not provide sufficient findings to
28
See also Société Nationale Industrielle Aérospatiale v. U.S. Dist. Court S. Dist. Ia., 482 U.S. 522,
555 (1987); United Int’l Holdings, Inc. v. Wharf Ltd., 210 F.3d 1207, 1223 (10th Cir. 2000) (“A true conflict would
exist here only if Hong Kong law compelled securities fraud rather than just permitted it.”); Filetech S.A. v. France
Telecom, Inc., 157 F.3d 922, 932 (2d Cir. 1998) (dismissal inappropriate where record did not indicate that
compliance with laws of both countries was impossible); In re CINARr Corp. Sec. Litig., 186 F. Supp. 2d 279, 291
(E.D.N.Y. 2002) (Defendants unable to meet “true conflict” threshold because they do not maintain it would be
impossible to comply with both American securities law and Canadian tax law.)
-32-
show a “true conflict” or “justify the legal conclusion that compliance with the regulatory laws
of both France and the United States would be impossible”).
A.
Defendants Have Not Demonstrated A True Conflict of U.S. and EU Law.
A true conflict of laws is not simply a divergence between the laws or policies of the two
countries, but rather exists only if compliance with the regulatory laws of both countries would
be impossible. Hartford Fire, 509 U.S. at 799; In re Maxwell Commc’n. Corp., 93 F.3d at 1050;
In re CINAR Corp., 186 F. Supp. 2d at 291 (no “true conflict” where plaintiffs did not maintain it
would be impossible to comply with both American and Canadian law). Defendants have not
demonstrated (or even alleged) a true conflict between U.S. and EU antitrust laws. Nor could
they given that the conduct proscribed by the laws of both jurisdictions is identical. Indeed, in
the nearly thirty pages of argument presented by Defendants purportedly on the issue of comity,
they never address this threshold question of whether a true conflict of law exists. 29 Instead,
Defendants set forth a number of policy reasons that they claim bar U.S. courts from hearing
such claims. Not only are Defendants wrong as to the substance of their arguments, but, more
importantly they are wrong that any such policy considerations permit the Court to dismiss
Plaintiffs’ claims under the comity doctrine. At bottom, Defendants argue simply that it would
be more appropriate for European courts to hear claims arising under European law. Such
arguments are insufficient to invoke comity. See, e.g., Filetech, 157 F.3d at 932 (vacating the
district court’s dismissal on comity grounds because the district court’s finding that it would be
“more appropriate” for French law to be declared by French courts was insufficient to
demonstrate a true conflict).
29
In fact, the only place Defendants even mention a “conflict” is in a footnote, where they assert that
procedural features of the U.S. litigation system may conflict with principles embodied in EC law. See Lufthansa
Memo. at 29 n.37. A potential conflict, however, is insufficient to invoke comity. Filetech, 157 F.3d at 932 (a true
conflict must be clearly demonstrated).
-33-
The showing of a true conflict is a threshold issue; unless a true conflict exists, no further
consideration of comity principles is permitted and dismissal is inappropriate. Hartford Fire,
509 U.S. at 799; Filetech, 157 F.3d at 932 (dismissal inappropriate where record did not indicate
that compliance with laws of both countries was impossible); Shanahan v. Vallat, No. 03 Civ.
3496 (MBM), 2004 WL 2937805, at * 9 (S.D.N.Y. Dec. 19, 2004) (same); CINAR, 186 F. Supp.
2d at 291 (same).30 Since it is possible for Defendants to comply with both U.S. law and EU
law, under binding Second Circuit precedent, the threshold for consideration of the comity
doctrine is not met. Thus, Defendants’ failure to allege a true conflict between the laws of the
United States and the laws of the EU is fatal to their request for comity.
B.
Because Defendants Have Not Shown A True Conflict, This Court May Not
Dismiss Plaintiffs’ EU Law Claims On Comity Grounds.
Federal courts have a “virtually unflagging obligation” to exercise the jurisdiction
conferred upon them. Colorado River Water Conservation Dist. v. United States, 424 U.S. 800,
817 (1976). Abstention from hearing claims for comity reasons is to be a narrow exception to
“the court’s normal duty to adjudicate a controversy properly before it” Bigio v. Coca-Cola Co.,
239 F.3d 440, 455 (2d Cir. 2000) (citing Hachamovitch v. DeBuono, 159 F.3d 687, 693 (2d Cir.
1998). “In weighing the considerations for and against abstention, a court’s ‘heavy obligation to
exercise jurisdiction’ exists regardless of what factors are present on the other side of the
balance.” Royal & Sun, 466 F.3d 88 (citing Colorado River, 424 U.S. at 820); see also Finova
Capital Corp. v. Ryan Helicopters U.S.A., Inc., 180 F.3d 896, 898 (7th Cir. 1999) (applying “the
same general principles” of Colorado River to international abstention); Ingersoll Milling Mach.
Co. v. Granger, 833 F.2d 680, 685 (7th Cir.1987) (stating that Colorado River serves as a
30
Even where there is a true conflict between domestic and foreign law, U.S. courts are not required
by principles of international comity to defer to the foreign jurisdiction. Hartford Fire, 509 US at 799. Société
Nationale, 482 U.S. at 543-44; Royal & Sun Alliance Ins. Co. of Can. v. Century Int’l Arms, Inc., 466 F.3d 88, 92
(2d Cir. 2006); Pravin Banker Assocs., Ltd. v. Banco Popular Del Peru, 109 F.3d 850, 854 (2d Cir. 1997).
-34-
“helpful guide” when applied to cases of international abstention). Thus, unless a defendant can
meet its burden of showing that a true conflict of law exists, a court may not refuse to exercise
the jurisdiction it properly has over plaintiffs’ claims on comity grounds.
The cases Defendants cite involving dismissals on comity grounds do not support
dismissal here.31 Most of the cases they cite extended comity in deference to foreign judgments
or ongoing foreign proceedings, neither of which is present here.32 See, e.g., Spatola v. United
States, 925 F.2d 615, 618 (2d Cir. 1991) (extending comity to Italian conviction); Turner Entm’t
Co. v. Degeto Film GmbH, 25 F.3d 1512, 1521 (11th Cir. 1994) (extending comity to German
court’s ruling breach of contract claim); Paraschos v. YBM Magnex Int’l, Inc., 130 F. Supp. 2d
642, 645 (E.D. Pa. 2000) (extending comity because of ongoing Canadian proceedings);
Iwanowa v. Ford Motor Co., 67 F. Supp. 2d 424 (D.N.J. 1999) (extending comity to German
courts’ rulings that Nazi-era forced labors could not bring claims against German companies).33
Because, as in Hartford Fire, foreign law does not “require them to act in some fashion
prohibited by United States law,” defendants have not met the threshold for extending comity.
Id. As a result, the court need not “address other considerations that might inform a decision to
31
Defendants cite to Information Resources, Inc. v. The Dun & Bradstreet Corp., 127 F. Supp. 2d
411, 417 (S.D.N.Y. 2000) and Empagran, S.A. v. F. Hoffman-La Roche Ltd., 453 F. Supp. 2d 1, 13 (D.D.C. 2006)
for the proposition that both U.S. courts to have addressed the issue have denied jurisdiction over claims arising
under the EC Treaty. Neither of these cases, however, was dismissed on comity grounds. In Information Resources,
the court declined to grant the plaintiffs leave to amend their complaint to assert claims under Article 82, concluding
that it would not exercise supplemental jurisdiction over “the novel and complex issues” that may be presented by
such claims. 127 F. Supp. 2d at 417-18. The court, however, makes no mention of comity concerns. Id. In
Empagran, the court decline to exercise supplemental jurisdiction over claims under Article 81 where there were no
remaining claims to which the Article 81 claims could be supplements. 453 F. Supp. 2d at 12. While the court, in
dicta, expressed comity concerns, such concerns were based upon then-pending parallel cases in the European
Union. Id. at 13.
32
Plaintiffs do not dispute that, to the extent European courts have interpreted Article 81, this Court
is bound by those interpretations. Because, as discussed in more detail below, no European court has concluded that
U.S. courts may not adjudicate Article 81 claims, dismissal on comity grounds is not warranted. See Section (V(E),
Infra.
33
The remaining two cases cited by Defendants, Torres v. Southern Peru Copper Corp., 965 F.
Supp. 899, 908-09 (S.D. Tex. 1996) and Sequihua v. Texaco, Inc., 847 F. Supp. 61, 63 (S.D. Tex. 1994) did not
apply the binding rule of the Second Circuit that requires a threshold showing of a true conflict before comity can be
extended.
-35-
refrain from the exercise of jurisdiction on the grounds of international comity.” Hartford Fire,
509 U.S. at 798-799. Dismissal on comity grounds is not available to Defendants absent a true
conflict, and the Court’s analysis may proceed no further. Nonetheless, because Defendants
have presented a number of policy arguments in which they incorrectly address a host of issues,
Plaintiffs address those arguments below for the sake of clarification.
C.
Neither The Supreme Court’s Holding In Empagran Nor The Amicus Brief
Submitted Therein, Even If They Were Relevant, Support The Extension Of
Comity Here.
Defendants’ argument that all branches of government have expressed views that support
an abstention by this Court in exercising its jurisdiction on comity grounds here fails for two
reasons. First, absent a showing of the requisite true conflict necessary to trigger application of
comity, expressions by the government as to the propriety of a court’s exercise of jurisdiction are
not entitled to the deference Defendants claim. In Hartford Fire, defendants and the British
Government acting as amicus curiae asserted that Britain had established a comprehensive
regulatory scheme and that the alleged anticompetitive conduct was consistent with British law
and policy. Defendants and the British government argued that principles of international comity
compelled American judges to defer to the British regulations. Nonetheless, the Supreme Court
held that the doctrine of comity did not apply where compliance with the laws of both countries
was possible. Hartford Fire, 509 U.S. at 799.
Second, Defendants misapply the views expressed by U.S. and European governmental
bodies’ regarding extraterritorial application of U.S. law to the claims at issue here. Neither the
Supreme Court’s holding in F. Hoffman-La Roche Ltd v. Empagran, S.A., 542 U.S. 155 (2004)
nor the amicus briefs submitted therein by European governments support the extension of
comity in this case. In Empagran, the Supreme Court was considering whether U.S. courts could
adjudicate claims for antitrust injuries incurred abroad under the Sherman Act. See generally, id.
-36-
at 159. The Supreme Court invoked comity principles in declining to adjudicate such claims
under the Sherman Act, reasoning that the provision of treble damages provided under the
Sherman Act, which conflict with more limited damages available under foreign laws, would
permit foreign plaintiffs to bypass their own less generous remedial schemes and would diminish
foreign firms’ incentive to cooperation with antitrust authorities. Id. at 166-69. The lynchpin of
the Court’s analysis in Empagran, however, was the fact that plaintiffs sought application of U.S.
law to wholly foreign injuries. That reasoning is inapplicable here, where Plaintiffs bring their
claims under EU law and thus are limited to (and have only sought) the remedies available
thereunder. In addition, the concerns of the Supreme Court in Empagran and of the D.C. Circuit
on remand about the “legal imperialism” that may occur if the U.S. were to overextend the
extraterritorial application of the Sherman Act are not implicated here because Plaintiffs seek
application of EU, not U.S. law.
Defendants also rely heavily on amicus briefs submitted by the Department of Justice and
European governments in Empagran in support of their argument that those governments object
to the adjudication of claims under EU law in U.S. courts. For the same reason, though,
Defendants’ reliance on those briefs is unfounded. While the amicus briefs submitted by the
European governments objected to the application of U.S. law to injuries incurred abroad, they
expressed no opinion on the adjudication of claims under EU law in U.S. Courts.34 Defendants
point to absolutely no objection that has been made by any EU authority or by the United States
government to this Court’s application of EU law in appropriate circumstances.35
34
See generally, Amici Curiae Brief for the Federal Republic of Germany and Belgium, F.
Hoffmann-La Roche Ltd. v. Empagran, S.A., 542 U.S. 155 (2004) No. 03-724, 2004 WL 226388 (Feb. 3, 2004);
Amici Curiae Brief for the United Kingdom of Great Britain and Northern Ireland, Ireland and the Kingdom of the
Netherlands, F. Hoffmann-La Roche Ltd. v. Empagran, S.A., 542 U.S. 155 (2004) No. 03-724, 2004 WL 226597
(Feb. 3, 2004); Amicus Curiae Brief for the United States, F. Hoffmann-La Roche Ltd. v. Empagran, S.A., 542 U.S.
155 (2004), No. 03-724 (Feb. 3, 2004), 2004 WL 234125.
35
Moreover, no authority has filed such an amicus in this case.
-37-
Defendants’ claim that Congress has expressed opposition to application of foreign law in
antitrust matters is similarly incorrect. Lufthansa Memo. at 12. Defendants base that argument
on the terms and legislative history of the Foreign Trade Antitrust Improvements Act of 1982
(“FTAIA”), 15 U.S.C. § 6a. However, that statute defines the extraterritorial reach of the
Sherman Act and does not deal in any way with the application of foreign antitrust law by U.S.
courts.
D.
European Courts Do Not Have Exclusive Jurisdiction Over Claims Arising
Under Article 81.
Contrary to Defendants’ assertion, European courts do not have exclusive jurisdiction
over claims arising under Article 81. Layton and Smith Decl. ¶ 41 (“No EU rule precludes this
Court from applying EC competition law and, even if EU law did purport to do so, it would
have, at best, persuasive effect.”). Unlike in the United States, where Supreme Court precedent
vests federal courts with exclusive jurisdiction over Sherman Act claims, there is not a single
decision by the European Court of Justice or a Member State finding that Article 81 claims are
within the exclusive jurisdiction of European courts. Id. ¶ 38-40, 62-65. Thus, this is not
sufficient grounds for the extension of comity.
In fact, comity principles here favour application of Articles 81 and 53 to certain
Plaintiffs’ claims. See, e.g., In re French, 440 F.3d 145, 153 (4th Cir. 2006) cert denied, 127 S.
Ct. 72 (2006) (“at base comity involves the recognition that there are circumstances in which the
application of foreign law may be more appropriate than the application of our own law”); In re
Grandote Country Club Co., 252 F.3d 1146, 1150 (10th Cir. 2001) (noting that principles of
comity would favor application of Japanese law). Given this recognition that foreign law may be
the most appropriate law to apply, the courts of this Circuit are regularly called upon to interpret
foreign law, and do not thereby offend principles of international comity. See Bigio v. Coca-
-38-
Cola Export Corp., 448 F.3d 176, 179 (2d Cir. 2006) (citing cases). Indeed, as stated above, the
Second Circuit has cautioned “against an excessive reluctance to undertake the task of deciding
foreign law, a chore federal courts must often perform,” Manu International, S.A. v. Avon
Products, Inc., 641 F.2d 62, 67-68 (2d Cir. 1981), and has held that “a New York court is fully
capable of applying foreign law.” Rationis, 426 F.3d at 587.
E.
There Is No Bar On U.S. Courts Adjudicating Private Claims For Damages
Under Article 81.
Defendants and Professor Bermann, whose declaration they submit in support of the
motion to dismiss, would have this Court believe a U.S. court may not adjudicate Plaintiffs’ EU
law claims for damages because doing so would require enforcement of “the public laws of
foreign states.” Lufthansa Memo. at 20. Adjudication of Plaintiffs’ private damages claims
would do no such thing.
The Restatement Conflicts of Law 2d (1971) in Section 89 (Actions for Penalty) states
the traditional rule of American case law as: “No action will be entertained on a foreign penal
cause of action.” In an attempt to convince this Court that Plaintiffs’ claims under EU law are
barred in U.S. courts, Professor Bermann argues alternatively that Plaintiffs’ claims arise under
“penal law” and that they implicate “public law” of Europe that is not justiciable in the United
States.
First, Professor Bermann’s use of the terms “penal law,” “public law” and “public
policy” interchangeably is incorrect—these are in fact separate and distinct concepts (Waller
Decl. ¶ n.2), and only the adjudication of issues of “foreign penal law” is barred in U.S. courts.
Second, neither the traditional bar on adjudication of foreign penal law nor the policy behind the
abstention of jurisdictions from determining one another’s public law has application in this case,
which involves private claims for damages under Article 81 and English tort law. Such private
-39-
damages claims involve neither foreign penal law nor foreign public law. Waller Decl. ¶ 12.
Professor Bermann admits as much in prior publications, directly contradicting the position he
has taken in his declaration: “An American court may refuse to impose the penalty statutorily
prescribed for a foreign criminal violation, but still entertain a tort action based upon the
corresponding breach of duty.” George A. Bermann, Public Law in the Conflicts of Law, 34 Am
J. Comp. L. Supp. 157, 179 (1986) (emphasis added).
There is nothing about a private claim for damages by victims of price fixing under EU
law that is inherently public or penal in nature. Waller Decl. ¶ 12. Plaintiffs assert a private
cause of action authorized by European and English law seeking compensation for their
individual injuries. Id. ¶ 21-22. They are neither asserting the rights of the EC nor utilizing the
enforcement procedures or remedies of the EC. As Professor Waller explains, “[s]uch private
plaintiffs do not have the ability to conduct dawn raids, seize documents, compel explanations
from officials of the enterprise in question, impose periodic payments for failure to cooperate,
grant amnesty, or impose fines up to 10% of annual turnover of the undertakings found in
violation. Nor are the foreign plaintiffs here asking this court to afford them any such relief.”
Id. ¶ 20. Rather, Plaintiffs “assert a private law right to damages as compensation for a tort
based on a breach of a statutory and treaty duty under EU law.” Id. ¶ 21. As such, there is no
reason why concerns about enforcement of public or penal law bear on this Court’s ability to
adjudicate Plaintiffs’ EU law claims.
F.
This Court’s Adjudication Of Plaintiffs’ Foreign Law Claims Advances
Comity Principles.
As set forth in detail in Section VI, infra, this forum in which Plaintiffs have brought
their EU law claims is the only forum in which Plaintiffs have meaningful access to adequate
procedural mechanisms to seek redress of their injuries. Thus, Plaintiffs’ bringing of such claims
-40-
in this circumstance vindicates the interests of the European Union in effective adjudication of
the substantive private enforcement rights it intends for its citizens. Respect for the competition
law of the EU and its Member-States supports this Court’s adjudication of EU law claims
asserted by U.S. and foreign Plaintiffs at this time while the EU is still attempting to bring about
a change to its procedural regime so that the substantive law of the EU can be given its full
effect.
In deference to principles of international comity, Plaintiffs bring their claims for
shipments to, from, and within Europe under EU law. Plaintiffs recognize that by bringing their
claims under EU law, they are bound by the same substantive laws that would govern in a
European court and that they will be limited to the maximum damages permitted under the laws
of the European Union Member States, as opposed to the treble damages permitted under U.S.
law. Accordingly, they have sought only those damages. Moreover, as they would be with
respect to precedent of the Second Circuit and Supreme Court interpreting the Sherman Act,
Plaintiffs and this Court would similarly be bound by prior decisions of European Courts
interpreting Article 81.36 CINAR, 186 F. Supp. 2d at 292. As the court in CINAR explained in
refusing to dismiss claims requiring the interpretation of complex Canadian tax law on comity
grounds:
While it is undoubtedly true that Canadian courts have more
experience interpreting these laws, there is no indication that this
Court’s application of those laws will conflict with previous
Canadian precedent. Certainly this Court will not be called upon
to apply laws that are in direct opposition to Canadian law.
Id.
36
Defendants make much ado of the fact that a U.S. court would have no mechanism for obtaining a
preliminary ruling from a European court. However, as explained below, the European Commission recently
published a Notice setting out its policy of assisting courts as amicus curiae in applying EC competition law if
request for such assistance is made.
-41-
Further, adjudication of all Plaintiffs’ claims in a single proceeding is compatible with
EU policy. European courts have indicated acceptance of the idea that it is appropriate for a
single court to hear claims of all purchasers affected by a single cartel, whether or not they are all
domiciliaries of the jurisdiction entertaining the claims, in order to prevent “irreconcilable
judgments.” See, e.g. Provimi Ltd. v. Aventis Animal Nutrition S.A., 2003 E.W.H.C. 961 (May 2,
2003), ¶¶ 46-47 (attached hereto as Ex. 11). In Provimi, the court specifically confronted the
question whether to allow a non-English domiciled claimant to bring an action in the English
courts to recover damages for antitrust injury suffered outside of the United Kingdom because
the defendant had an English subsidiary also involved in the infringement, despite the fact that
the claimant had not made purchases from that English subsidiary. Id. The court found that the
claim could be brought in the English court, stating:
[The claims] all arise out of the same alleged infringements of
Art.81. They are all private law claims for damages for those
infringements. The nature of the claims against all the defendants
is identical…. [T]herefore, I think that it is expedient to hear and
determine all of these claims together to avoid the risk of
irreconcilable judgments. Ultimately, the question of when and
how an infringement of Art.81 takes place and the circumstances
in which a private law claim for damages can be maintained may
need to be considered by the European Court. But it does not seem
sensible to me that, in the meantime, there should be different
views from different national courts which are given in relation to
the same factual background and the same cartels, simply because
the different defendants are of different domiciles.
Id. (emphasis added). The reasoning of the Provimi court precisely illustrates why comity
principles favor this Court hearing EU Plaintiffs’ claims under EU law—to prevent the rendering
of “irreconcilable judgments” in cases where claimants have all suffered a similar injury from
identical cartel conduct.
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VI.
The Doctrine of Forum Non Conveniens Does Not Warrant Dismissal Of Plaintiffs’
Article 81 and Article 53 Claims
“Any review of a forum non conveniens motion starts with ‘a strong presumption in favor
of the plaintiff’s choice of forum.’” Norex Petroleum Ltd. v. Acces Indus., Inc., 416 F.3d 146
(2d Cir. 2005) (citing Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255 (1981)), cert. denied, 126
S. Ct. 2320 (2006). (“To prevail on a motion to dismiss based on forum non conveniens, a
defendant must demonstrate that an adequate alternative forum exists and that, considering the
relevant private and public interest factors set forth in Gulf Oil Corp, v. Gilbert, 330 U.S. 501,
508-09 (1947), the balance of convenience tilts strongly in favor of trial in the foreign forum.”)
R. Maganlal & Co. v. M.G. Chemical Co., Inc., 942 F.2d 164, 167 (2d Cir. 1991). The moving
party must show that proceeding in this forum would be “unjust, oppressive, or vexatious” and
not merely inconvenient for the party seeking dismissal. Koster v. (Am.) Lumbermens Mut. Cas.
Co., 330 U.S. 518, 524 (1947). Defendants cannot meet their burden and, therefore, their motion
should be denied.
Given these principles, a forum non conveniens analysis must proceed as follows: First, a
determination is made as to the degree of deference owed a plaintiff’s choice of forum; second,
the court must determine whether an adequate alternative forum exists; finally, if an adequate
alternative forum does exist, the court must balance factors of private and public interest to
decide, based on weighing the relative hardships, whether the case should be adjudicated in the
forum chosen by plaintiffs or in the alternative forum proposed by the defendant. See Iragorri v.
United Techs. Corp., 274 F.3d 65, 73 (2d Cir. 2001) (citing Gilbert, 330 U.S. at 507-09).
Notably, if Defendants fail to show that an adequate alternative forum exists, there is no need for
the Court to proceed to a weighing of the Gilbert private and public interest factors. Id.
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A.
Plaintiffs’ Decision To Bring Their Claims In the United States Is Entitled To
Deference.
“[I]t is generally understood that, ‘unless the balance is strongly in favor of the defendant,
the plaintiff’s choice of forum should rarely be disturbed.’” Norex, 416 F.3d at 154 (citing Gulf
Oil Corp., 330 U.S. at 508). Given the legitimacy of Plaintiffs’ reasons for pursuing all of their
claims arising from a common nucleus of operative facts in a single litigation—efficiency,
consistency, and unavailability of another adequate forum to pursue their claims—even greater
deference to their choice of forum is appropriate. See Bigio, 239 F.3d 440, citing Iragorri, 274
F.3d at 73 (“[T]he more that a plaintiff, even a foreign plaintiff, chooses to sue in a United States
court for ‘legitimate reasons,’ the more deference must be given to that choice.”)37
In an attempt to detract from the well-accepted principle that great deference is usually
afforded a plaintiff’s choice of forum, Defendants make much of the distinction in the degree of
deference afforded to a plaintiff suing in its home forum and that which may be afforded a
foreign plaintiff suing in the U.S. In doing so, Defendants attempt to gloss over in a footnote the
salient fact that the Plaintiff class in Count VII includes the claims of domestic U.S. Plaintiffs
who have claims under EU law. The choice of forum by those domestic U.S. Plaintiffs is
entitled to the highest degree of deference by this Court.
The deference that should be afforded the choice of forum by the foreign Plaintiffs in
Count VI who have both Sherman Act and EU law claims is no less. While it is true that courts
sometimes afford less deference to a foreign plaintiffs’ choice of forum, the Second Circuit has
37
Defendants’ citations to Iragorri and Empagran II for the proposition that “forum shopping” in
search of a potentially more favorable damages award undermines the deference to be afforded Plaintiffs’ choice of
forum are entirely inapposite. Defendants’ implication that Plaintiffs here have engaged in any such forum shopping
to seek favorable damages under U.S. law is directly contradicted by the fact that those Plaintiffs alleging EU law
claims have pled entitlement to appropriate relief under U.K. law, not to damages under U.S. law. Plaintiffs’
compliance with the EU “blocking statutes” that prevent recovery of treble damages by EU citizens obviates any
argument that EU law claimants are simply using this Court to access damages unavailable in their home forum.
See Layton and Smith Decl. ¶ 75 (“if the request for enforcement were confined to compensatory damages (which
can include pre-trial interest), it would not contravene the English blocking statute.”)
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made clear that a “sliding scale” taking account of the totality of the circumstances is
appropriate. See Norex, 416 F.3d 146 (2005). Given that all of the Plaintiffs asserting EU law
claims in Count VI also have Sherman Act claims, the fact that they are already litigants in this
forum strongly favors a presumption that their choice of forum “was made for convenience.”
Piper Aircraft Co. v. Reyno, 454 U.S. 235, 256 (1981). Therefore, the forum selection of these
Plaintiffs, too, is entitled to deference.
See, e.g., Iragorri, 274 F.3d at 71-72 (where the
plaintiff’s choice of forum is motivated by a genuine convenience, that choice should be
respected by the Court). In fact, a case such as this in which the facts to be proved and legal
issues to be resolved in adjudicating the claims challenged on forum non conveniens grounds
arise from the same common nucleus of operative facts (and often the very same transactions)
that are the subject of claims that will certainly be heard by the chosen court provides a paradigm
example of one in which genuine convenience motivates Plaintiffs’ choice of forum.
Of course, it is not truly in the legitimate interests of any party to this litigation to
produce the evidence necessary to demonstrate and litigate identical facts and issues in multiple
fora—to do so would be a duplicative waste of time and monetary resources. Defendants’
arguments to the contrary (which, if accepted, would necessitate multiple litigations of the same
facts and issues in different fora) demonstrate the actual reason that they seek dismissal of the
EU law claims:
the unavailability of an alternative forum in which most Plaintiffs can
effectively seek redress of their injuries diminishes the likelihood that Defendants will actually
face any threat of private litigation based on their violation of EU law.
Defendants are
undoubtedly keenly aware that, as has occurred in many global cartel cases that have preceded
this one, many class members whose claims are dismissed by a U.S. will, as a practical matter,
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be unable to pursue their claims elsewhere.
38
That attractive possibility surely is not lost on
Defendants here.
Indeed, Defendants have made no representation that they would submit to jurisdiction in
any other single forum, indicating that they really do not seek transfer of the litigation, but rather
expect dismissal here to induce many Plaintiffs to abandon their claims for lack of an adequate
alternative forum.
This provides substantial additional support for according deference to
Plaintiffs’ chosen forum. See Norex, 416 F.3d 146 at 156 (finding that plaintiffs’ choice of
forum was supported by the fact that “nothing in the record indicates that defendants are willing
to submit themselves to jurisdiction in [the plaintiff]’s home forum.”) Indeed, while Defendants
have argued extensively against proceeding in the United States, they have not pointed the Court
to a single “selected forum [that is] significantly preferable” to overcome the deference typically
afforded to Plaintiffs’ choice. Bigio v. Coca-Cola Co., 448 F.3d 176, 179 (2d Cir. 2006).
Defendants’ forum arguments are simply a thinly-veiled effort to escape liability for much of the
harm caused by their conspiracy and, as such, should be rejected.
In this vein, Lufthansa has also argued that, because some of its airfreight shipping
contracts contain forum selection clauses, the Court should afford Plaintiffs’ choice of forum less
deference. Lufthansa Memo. at 38. Its argument is premature. Even if Lufthansa’s contracts
with some customers do contain forum selection clauses, it is impossible to determine their scope
38
The outcome of the litigations arising from the price-fixing conspiracy in the Vitamins litigation
confirms this reality. There, where the conspiracy of one of the largest cartels to operate in history was uncovered,
the number of victims outside of the United States who were able to recover their losses was paltry. While
thousands of U.S. victims of the vitamins cartel recovered approximately $2.4 billion through civil proceedings,
less than ten victims in the EU have recovered under €7.6 million. This disparity existed despite record fines in
both the United States and the EU, largely because of the recognized underdevelopment of an effective
procedural mechanism for private enforcement in the EU. Thus, the U.S. court’s declination of its authority to
exercise jurisdiction in that case resulted not in the bringing of the rejected claims in a “more convenient” forum,
but rather total loss of those claims by injured consumers. As a result, despite the record fines and billions paid
to U.S. purchasers as a result of their misconduct, the Vitamins cartelists retained approximately $13 billion in illgotten worldwide profits, than they returned to the market they victimized. For the vitamins cartel, crime paid
handsomely.
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or applicability here because no documents, including those contracts, have yet been produced.
As the Second Circuit has said regarding the applicability of forum selection clauses, the issue is
not whether or not they provide for a different forum other than this Court, but whether the
“application of the clause[s] to [Plaintiffs’ antitrust law claims] is proper.” Evolution Online
Sys., Inc. v. Koninklijke PTT Nederland N.V., 145 F.3d 505, 509 (2d Cir. 1998); see Bon Jour
Group Ltd. v. Elan-Polo, Inc., 1997 U.S. Dist. LEXIS 10283, at *5-6 (S.D.N.Y. July 16, 1997)
(stating “once a forum selection clause is found to be valid, the court must determine if its scope
encompasses the particular action at bar.”) Here, the Court cannot make a determination as to
whether “the scope of the forum selection clause[s] extends” to Plaintiffs’ antitrust law claims at
this stage of this litigation without examining the language of the contracts in question. New
Moon Shipping Co. v. MAN B&W Diesel AG, 121 F.3d 24, 33 (2d Cir. 1997).
Of course, even if certain forum selection clauses eventually are determined to require
adjudication of some class members' EU law claims in another jurisdiction, that does not make
the adjudication of the claims of the EU subclasses improper. Rather, the Court can simply
exclude the few class members with such agreements from the class and proceed to adjudicate
the case with regard to the representative plaintiffs, who have selected this forum, and the vast
majority of class members, who are not bound by forum selection clauses.
B.
The European Union Does Not Yet Provide An Adequate Alternative Forum
In Which Plaintiffs Can Litigate Their Claims.
Despite the substantive ban on price-fixing that is provided for under EU law, the ability
of private claimants in the EU to recover for injuries sustained as a result of competition law
violations is nearly non-existent. The injustice this creates for victims of cartel conduct and the
need to address such injustice has been recognized by European Commissioner Neelie Kroes:
“Businesses and consumers in Europe have a right to damages if they have lost out as a result of
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the anti-competitive behaviour of others. We are presenting options to help ensure that this right
is a reality and not just a theory.” (http://europa.eu.int/comm/competition/antitrust/
others/actions_for_damages/index_en.html, last visited Oct. 22, 2007). At the present time, the
private right to recovery in Europe is “just a theory.”39 Id.
The need for new “options” to help ensure claimants’ access to justice in the EU arises
because of the widely recognized unavailability of sufficient procedural mechanisms in the EU
by which private claimants can effectively seek redress. In fact, in 2004, the EC initiated a highlevel analysis of modifications in EU and national law that might provide a much needed spur to
private enforcement of competition law in the EU. The result of that analysis was a “Green
Paper” released by the EC in an effort to “improve the enforcement of competition law” by
“address[ing] the conditions for bringing damages claims for infringement of EC antitrust law.”
See Green Paper at 3. In the Green Paper, the EC recognized that, despite the critical importance
of ensuring that a strong private enforcement mechanism be made available to those injured by
antitrust violations in the European Community, an adequate system for such enforcement does
not presently exist in the European Community:
While Community law therefore demands an effective system for
damages claims for infringements of antitrust rules, this area of the
law in the 25 Member States presents a picture of “total
underdevelopment.”
Id. at 4 (emphases added). As recently as this month, and notwithstanding some changes that the
EU is beginning to implement given the acknowledged ineffectiveness of private enforcement of
39
While it is entirely possible and realistically expected that, given the efforts by the EU to remedy
the lack of a meaningful system of private recovery for competition law violations, an adequate forum will one day
be available for litigation of claims like Plaintiffs in Europe, the potential for that eventuality is insufficient to help
Defendants meet their burden here of demonstrating an adequate alternative forum that, upon a balancing of the
hardships, is more appropriate than that chosen by Plaintiffs. See Norex, 416 F.3d 146 at 160 (“to base an adequate
alternative forum determination on … remote future [claims] misperceives the defendant’s burden at the second step
of forum non conveniens analyis: to demonstrate a presently available alternative forum in which plaintiff can
litigate its claim.”) (second emphasis added).
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competition law by cartel victims, “concern has been expressed by both the Commission and the
OFT that more could be done to facilitate private damages actions.” Lesley Farrell and Sara
Ince, United Kingdom: Private Enforcement in the United Kingdom, Oct. 14, 2007, available at
http://www.mondaq.com/article.asp?article_id=53018 (last visited Oct. 22, 2007).
As the
Deputy Head of Unit, Antitrust Policy and Strategic Support, European Commission, Brussels
has said of this underdevelopment of the EU’s procedural regime, “it is clear to any observer that
whereas private enforcement of competition rules is a beaten track in the United States, it is still
a barely discovered mountain path in the European Union.”
Donncadh Woods, Private
Enforcement of Antitrust Rules—Modernisation of the EU Rules and the Road Ahead, May 24,
2004, at 5, available at http://www.luc.edu/law/academic/special/center/antitrust/pdfs/
woods.pdf (last visited Oct. 22, 2007).
Even the European Courts that Defendants would have adjudicate Plaintiffs’ claims have
made clear their belief that the present system in the EU for private adjudication of competition
law claims is insufficient and that, as recognized by the EC, development in this area is needed if
a real remedy is to be made available for victims of cartel conduct:
[A] new system…could offer greater space and more opportunities
for individuals to file proceedings, alongside the action of the
public bodies. This is what is strongly favored by the Commission.
The advantages and/or the desirability of such a development have
been illustrated in numerous accompanying notes, communiqués
and speeches.
Manfredi v. Lloyd Adriatico Assicurazioni SpA, Combined proceedings C-295/04, C-296/04, C297/04 and C-298/04, Conclusions of the Appeal Court Lawyer (Jan. 26, 2006), ¶¶ 28-30
(internal citations omitted) (emphasis added).
The admission that the EU is not an adequate alternative forum by the very authorities
and courts charged with overseeing competition law enforcement, as well as by those who have
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studied it, cannot be overcome by Defendants’ cursory argument that because Plaintiffs have
pled a violation of EU and U.K. law, such claims could “certainly be brought in English courts.”
Lufthansa Memo. at 40. Given the totally underdeveloped state of the EU as a forum for private
claimants’ EU competition law claims, a dismissal by this Court of Plaintiffs’ EU law claims
under the forum non conveniens doctrine is tantamount to telling them that their claims cannot be
brought at all. Such an outcome clearly contravenes the intended application of the forum non
conveniens doctrine, as the Second Circuit has recognized: “It is almost a perversion of the
forum non conveniens doctrine to remit a plaintiff, in the name of expediency, to a forum in
which, realistically, it will be unable to bring suit when the defendant would not be genuinely
prejudiced by having to defend at home in the plaintiff’s chosen forum.” Manu Int’l, 641 F.2d at
67.
History has shown that such a perversion of the doctrine is likely. For example, in Piper
v. Reyno, upon which Defendants rely heavily, the Supreme Court affirmed dismissal on forum
non conveniens grounds of claims of foreign plaintiffs being heard in U.S. federal court
stemming from an airline crash in Scotland. 459 U.S. at 235. While the Court found that
Scotland was an adequate alternative forum, Plaintiffs never were able to bring their claims
there—rather, their application for legal aid in Scotland was denied, and their claims were never
heard. Waller Decl. ¶ 54. Similarly, in Westminster Currency, the one antitrust case ever
dismissed under the doctrine of forum non conveniens and upon which Defendants also heavily
rely, there is no indication that a private damages claim was ever pursued in the United
Kingdom, the supposedly adequate alternative forum. Id. ¶ 55.
The forum non conveniens doctrine should not be permitted to operate toward the same
ends here—as nothing more than a de facto limitation on Defendants’ liability.
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This is
particularly true given that the Court is already going to be determining the facts that establish
that liability. To allow Defendants to escape their obligation under the law to restitute those
whom they have injured by their unlawful conduct by sending Plaintiffs off to litigate in a forum
that provides most Plaintiffs no realistic possibility of relief would constitute a dismissal that is
“not [] in the interests of justice.” Piper, 454 U.S. at 254; see also Waller Decl. ¶ 56.
C.
Both Public and Private Interest Factors Weigh In Favor Of This Court
Exercising Jurisdiction Over Plaintiffs’ Claims.
Even if the Court accepts that Defendants have proposed an adequate alternative forum
(which it should not), dismissal is still inappropriate absent a showing by Defendants that a
weighing of the public and private interests identified in Gilbert tilts so substantially in favor of
the proposed alternative forum that the usual deference afforded a plaintiff’s choice of forum is
outweighed. Bigio, 448 F.3d 176. They can make no such showing.
1.
Public Interest Factors Favor Plaintiffs’ Choice of Forum.
The relevant public interest factors set forth in Gilbert all favor this Court hearing
Plaintiffs’ EU law claims.
a.
This Court Has A Strong Interest In Adjudicating All
Plaintiffs’ Claims.
Defendants’ argument that the very jurisdiction already hearing claims arising out of the
same nucleus of operative facts that gives rise to the foreign claims at issue bears only a “tenuous
connection” to the litigation is meritless. Lufthansa Memo. at 36. This jurisdiction was chosen
by the Judicial Panel on Multidistrict Litigation (JPML) as the most appropriate jurisdiction to
hear all of the claims arising out of Defendants’ conspiracy that were asserted in the multiple
complaints filed in this case. Given the transfer order of the JPML, this Court must hear all
claims at issue in the action and over which it properly has jurisdiction. Accordingly, it is going
to oversee discovery, hear the facts and evidentiary basis for the claims alleged, and make legal
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determinations regarding claims arising from the very conspiracy that is the subject of the
foreign claims. It is difficult to imagine how any Court might have a stronger connection to the
litigation.
b.
Comity and Forum Non Conveniens Are Distinct Doctrines
Requiring Separate Treatment.
Defendants’ reassertion of their comity argument as weighing in favor of dismissal on
forum non conveniens grounds is an inappropriate attempt to shoehorn their comity argument
into the doctrine of forum non conveniens. However, the doctrines of forum non conveniens and
comity are of “a distinct historical pedigree, and the traditional considerations behind dismissal
for forum non conveniens differ markedly from those informing the decision to abstain.” Royal
& Sun Alliance Ins. Co. of Can. v. Century Int’l Arms, Inc., 466 F.3d 88, 95 (2d Cir. 2006)
(citation and internal quotation marks omitted). As set forth above, comity permits dismissal
only upon the narrowest grounds—where a true conflict of laws exists. See Section V, supra.
Defendants ignore this black letter law and nonetheless characterize their amorphous concerns
about protecting Europe’s “sovereign interests” (Lufthansa Memo. at 25) as a comity
consideration warranting dismissal under the forum non conveniens doctrine.
This both
incorrectly states the proper application of comity principles and inappropriately conflates the
two doctrines.
c.
This Court’s Application of Foreign Law Is In The Public
Interest.
Plaintiffs’ assertion of foreign law claims “is not in itself a reason to apply the doctrine of
forum non conveniens.”
Manu Int’l, 641 F.2d at 67-68, citing Olympic Corp. v. Societe
Generale, 462 F.2d 376, 379 (2d Cir. 1972). U.S. courts routinely apply foreign law, and as the
Second Circuit has made clear, federal courts are “fully capable of applying foreign law.”
Rationis Enters. Inc. of Panama v. Hyundai Mipo Dockyard Co., 426 F.3d 580, 587 (2d Cir.
-52-
2005); see also Curley v. AMR Corp., 153 F.3d 5, 12 (2d Cir. 1998) (expressing “agreement with
the concept that appellate courts, as well as trial courts, may find and apply foreign law.”)
Accordingly, this Court’s adjudication of the EU law claims using “the means of pleading and
proving foreign law [] provided in the Federal Rules of Civil Procedure” is appropriate and is
“not [a] burden [that is] heavy enough to weight the balance of convenience strongly in favor of”
dismissal. Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. BP Amoco, PLC, No. 03-civ-200, 2003
WL 21180421, at *10 (S.D.N.Y. May 20, 2003). Indeed it is the policy of the Second Circuit
that courts should not display “an excessive reluctance to undertake the task of deciding foreign
law, a chore federal courts must often perform.” Manu Int’l, 641 F.2d at 67-68.
d.
Difficult Determinations Of Complex Or Novel Law Are Not
Required In Adjudicating Plaintiffs’ EU Law Claims.
Finally, adjudication of Plaintiffs’ foreign law claims would not require determination by
this Court of complex or novel issues of foreign law. See Waller Decl. ¶ 67 (“This case raises no
complicated legal issues of any substance under the law of either Article 81(1) of the EU Treaty.
There is no dispute that the allegations in the complaint, if true, constitute a violation of Article
81(1) of the EU.”). In fact, Defendants’ alarm that a routine application of foreign law will
“embroil the Court in complex and unsettled questions of foreign antitrust law” (Lufthansa
Memo. at 47) is unwarranted. As Plaintiffs’ experts explain, there is nothing so inherently
complex about EU competition law that prevents its application by non-EU courts, even if a
novel issue were to arise:
EU law is regularly applied in competition cases by bodies other
than courts in the EU Member States. In particular, arbitral bodies
are regularly called on to apply EU competition law to disputes
before them regardless of where they are sitting. Despite the fact
that many of the issues they have had to deal with in EU law were
novel, for example in the field of intellectual property, we are not
aware that in general they have either failed to apply EU
competition law correctly, or failed to discharge their duty to
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adjudicate on the dispute before them due because they needed to
apply EU law.
Layton and Smith Decl. ¶ 78 (citing the European Court’s decision in Eco Swiss, and its citation
of Nordsee v Reederei Mond [1982] ECR 1095). Moreover, the particular issues that Defendants
claim this Court should shrink from deciding are not issues regarding which the Court would
find no guidance in European law. As Plaintiffs’ experts explain, this Court should not “be
deterred from hearing these claims by the alleged uncertainty as to, or complexity of, the issues
involved.” Layton and Smith Decl. ¶ 79. They state:
The areas of uncertainty to which the Defendants’ witnesses
mainly allude include the existence or otherwise of the ‘pass-on’
defence and the standing of indirect purchasers to make a claim, as
well as issues relating to disclosure of evidence. Many of these
issues are properly within the scope of English law as distinct from
being the English law manifestation of an overriding EC law rule.
In this regard, they are no different from the issues which this
Court would be called on to address in any claim (eg for breach of
contract) where English law applied.
Id. Moreover, if the unlikely circumstance were to occur in which this Court was faced with a
novel or complex issue of law that it found utterly inarbitrable without guidance from the EC, it
could seek such guidance by requesting an amicus curiae opinion from the EC.
Since the ECJ’s judgment in Eco Swiss, the European Commission
has published a Notice setting out its policy of assisting the courts
of EU member States as amicus curiae if they request it, in
applying EC competition law. This acts as a complementary
method for national courts to obtain guidance on difficult issues of
competition law where necessary in cases pending before
them…[S]uch assistance does not bind the national courts, but will
nevertheless be an authoritative statement of the law having highly
persuasive effect. We believe the Commission may also extend
this policy of acting as amicus curiae to non-EU courts where they
are properly deciding issues relating to EU competition law or
policy ….
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Id. ¶ 81 ((citing Commission Notice on the co-operation between the Commission and the courts
of the EU Member States […] of April 27, 2004, 2004 O.J. C101/04, 54), available at
http://europa.eu/scadplus/leg/en/lvb/126110.htm).
2.
Private Interest Factors Favor Plaintiffs’ Choice of Forum.
The private interest factors identified in Gilbert also weigh in favor of according
deference to Plaintiffs’ choice of forum. The private interest factors to be considered, assuming
Defendants could propose an adequate alternative forum, include: “(1) ease of access to
evidence; (2) the availability of compulsory process for attendance of unwilling witnesses; (3)
the cost of willing witness’ attendance; (4) if relevant, the possibility of a view of premises; and
(5) all other factors that might make the trial quicker or less expensive.” DiRienzo v. Philip
Servs. Corp., 294 F.3d 21, 29-30 (2d Cir. 2002). These considerations have been summarized by
the Supreme Court as those factors that “make trial of a case easy, expeditious and inexpensive.”
Gilbert, 330 U.S. at 508. Plaintiffs’ have sought to achieve precisely such interests here, and
those factors, therefore, weigh against dismissal.
a.
Evidence and Witnesses To Prove Plaintiffs’ EU Law Claims
Will Be Easily Accessible In This Forum.
Because the EU law claims and Sherman Act claims at issue arise from the exact same
conspiratorial conduct by Defendants, much of the same evidence will need to be produced and
many of the same witnesses will need to be called to prove both claims.40 Since that evidence
and those witnesses must already be made available in this forum in order for Plaintiffs, both
40
Throughout their analysis of the private interest factors, Defendants conflate the question of
whether complex issues with the question of whether the evidence necessary to prove those issues will be
burdensome to produce in this forum. For example, Defendants attempt to make it appear as though, because there
are different shipping routes involved, the determination of the overcharge paid by Plaintiffs will require different
evidence about each route. See Lufthansa Memo. at 51. While Plaintiffs have no evidence to suggest this is
accurate, even if it were, it would have no bearing on the burden to Defendants of producing that data in a particular
forum. If anything, such differences simply may require more finely parsed economic analysis, but that is hardly an
issue that has any bearing on the convenience of this forum in which the claims have been brought.
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domestic and foreign, to litigate their Sherman Act claims, it creates no additional burden or
expense for Defendants to litigate Plaintiffs’ EU law claims here as well. In fact, hearing both
Plaintiffs’ foreign law and Sherman Act claims will save both parties substantial time and
expense, particularly considering that an entire class of those Plaintiffs with EU law claims—
those asserting claims in Count VI of the Complaint—by definition also have Sherman Act
claims in this case.
Defendants attempt to obfuscate the efficiencies of litigating all claims arising from the
same conspiracy and involving the same evidence by arguing that many of the documents and
witnesses are located in another forum. Their argument is undermined not only by the fact that
these documents and witnesses will need to be produced in the U.S. to litigate the Sherman Act
claims, but also by the fact that, as many courts have recognized, the “burden” of producing
documents and witnesses in a forum other than that in which they are located is generally very
small given the modern realities of electronic discovery and globalized business practices. See,
e.g., Metito (Overseas) Ltd. v. Gen. Elec., Co., 05 Civ. 9478 (GEL) 2006 U.S. Dist. LEXIS
81683 (S.D.N.Y. Nov. 7, 2006) (“For many years, courts in this Circuit have recognized that
modern technologies can make the location of witnesses and evidence less important to the
forum non conveniens analysis, particularly where the parties are major corporations.”) (citing
DiRienzo, 294 F.3d at 30, “To the extent documents exist in England, advances in transportation
and communicator accord this issue less weight.”); Overseas Programming Cos. v.
Cinematiographische Commerz-Anstalt, 684 F.2d 232, 232 n.1 (2d Cir. 1982) (“advances in
modern telecommunications and jet travel may further circumscribe a district court’s discretion
in dismissing a suit on the ground of forum non conveniens.”) Indeed, given the very nature of
the business in which Defendants’ engage, which requires regular operation of transatlantic
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flights, their argument that transport of documents or witnesses to the United States is
burdensome is incongruous.41
Moreover, the Second Circuit has made clear that such a small burden on Defendants is
insufficient to overcome the deference usually accorded a plaintiff’s choice of forum:
We reiterate, however, that plaintiffs should not have been
deprived of their choice of forum except upon defendants’ clear
showing that a trial in the United States would be so oppressive
and vexatious to them as to be out of all proportion to plaintiffs’
convenience.
The defendants have failed to explain how
transporting the documents or copies of them would be
“oppressive” or “vexatious”…
DiRienzo, 294 F.3d at 30 (citation omitted). Certainly here, where Defendants regularly do
business in the United States and will already be producing much of the evidence and many of
the witnesses necessary to prove Plaintiffs’ EU law claims in this forum, there is nothing
“oppressive or vexatious” about the Court simultaneously determining Plaintiffs’ EU law claims
based upon that same evidence.
The issues Defendants raise with respect to compulsion of appearance by unwilling
witnesses are equally unavailing.
Numerous courts have found that such issues are not
sufficiently problematic to overcome the deference due Plaintiffs’ choice of forum. See e.g.,
DiRenzo, 294 F.3d at 30 (“Despite the preference for live testimony, we have recognized the
availability of letter rogatory as relevant in deciding whether plaintiffs’ chosen forum is
inconvenient … videotaped depositions, obtained through letter rogatory, could afford the jury
an opportunity to assess the credibility of [foreign] witnesses.”) (citing collecting cases).
Moreover, Defendants are incorrect that the discovery will necessarily be governed by
the Hague Convention for the Taking of Evidence Abroad: “The Aerospatialle decision of the
41
Indeed, given that, at this point, nearly all documents are retained by electronic means, the notion
of burdensome transportation of documents is essentially obsolete.
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United States Supreme Court rejected an exclusive, or even presumptive, use of the Hague
Convention. That decision instead requires US courts to consider a host of case specific factors
before deciding whether to require discovery under the Federal Rules of Civil Procedure or under
the Hague convention.” Waller Decl. ¶ 73.
Similarly, Defendants have overstated the concern posed by the possible invocation of
blocking statutes to hinder the taking of discovery. As Professor Waller explains, “Foreign
blocking statutes are not asserted with any frequency in the modern era and have fallen into
disuse, and in some cases are preempted, as a result of the growth of foreign competition law and
various cooperative agreements with the US in the competition law area.” Id. ¶ 76. Even if there
were an attempt to make use of blocking statutes here, “US discovery rules and sanctions are
sufficiently flexible to take into account the presence or absence of good faith in the conduct of
the defendants and the invocation of foreign blocking statutes.” Waller Decl. ¶ 74 (citing Societe
Internationale Pour Participations Industrielles Et Commerciales, S. A. v. Rogers, 357 U.S. 197
(1958)).
b.
Determination of U.S. and EU Law Claims In A Single
Proceeding Will Result in Efficiencies.
Defendants request that this Court dismiss Plaintiffs’ claims on forum non conveniens
grounds asks this Court to sacrifice the overwhelming efficiency of consolidated adjudication at
great expense to both the parties and the developing international antitrust enforcement system.
It urges this Court to decline to exercise jurisdiction that it otherwise must over the nearly
identical foreign law claims, leaving these claims to be separately litigated in up to thirty-one
scattered jurisdictions. Such a result would not only waste judicial resources through costly,
needlessly duplicative litigation, but would also prevent similarly-situated Plaintiffs from
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availing themselves of the necessary procedural mechanisms for ensuring effective relief for all
Plaintiffs in this case.
Even if Defendants were correct (which they are not) that Europe does provide an
adequate forum for Plaintiffs’ claims and that the potentially thousands of European purchasers
could simply bring their claims in European national courts rather than in a single U.S. court
(which they could not), a dismissal by this Court of Plaintiffs’ foreign claims on forum non
conveniens grounds would result in nothing more than fragmented national antitrust trials
throughout Europe, which would impose heavy demands on judicial resources. It would require
an archipelago of different courts to each separately develop extensive factual knowledge of both
the conspiracy and the complex industry at issue here. This would sacrifice the efficiency to be
gained by this Court hearing claims identical to those over which it has original jurisdiction.
This Court will develop incomparable institutional knowledge of the industry and conspiracy at
issue here. This factual knowledge will include the underlying facts and time lines concerning
the case, the details of the worldwide cargo-shipping industry and conspiracy, and the expert
literature and testimony generated by this litigation. Such extensive institutional knowledge will
not easily or quickly be acquired by other courts. Because this Court will have gained such an
extensive knowledge of both the litigation itself and the industry it concerns, judicial economy
and efficiency weigh in favor of this Court rejecting Defendants’ motion to dismiss on forum non
conveniens grounds even if it were to find that an adequate alternative forum exists in Europe.
Any sacrifice in efficiency due to this Court’s application of foreign law will be minor
when compared to the substantial gains from a consolidated adjudication of the complex factual
issues of this case. As explained by the court in Distillers Co. v. Standard Oil Co., 150 U.S.P.Q.
(BNA) 42 (N.D. Ohio 1964):
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Even if the application of foreign tort law might be
necessary . . . this does not pose as serious a problem as that which
would confront the parties if the claims . . . were left for separate
trials in separate tribunals. The law is in the books, and may be
found conveniently if not easily. The facts are the elusive elements
of lawsuits. If the parties must collect and interpret facts for one
action, we might properly make every effort to adjudicate all
claims arising out of the facts in one forum at one time.
Id. at 48. Similarly, the most time-consuming tasks in complex antitrust litigation such as this
are achieving an understanding of the workings of the industry, the underlying facts of the
conspiracy, and the intricacies of the expert testimony. Given that all of Plaintiffs’ claims arise
out of a common set of facts and course of conduct, the efficiency yielded by consolidating the
domestic and foreign claims far outweigh any concerns about applying foreign law that is nearly
identical to U.S. law.42
c.
A Judgment By This Court Would Likely Have Force In Other
Jurisdictions.
Defendants argue that this Court should not accept jurisdiction over Plaintiffs’ EU law
claims because a final judgment may not be enforceable. But the failure by a European Court to
enforce a judgment by a U.S. Court of a claim decided under Article 81 is remote and does not
counsel in favor of dismissal. Indeed, Plaintiffs’ experts confirm that “a U.S. court’s judgment
properly applying EU competition law will be enforceable in the EU, at least as to substance.”
Layton and Smith Decl. ¶ 8.4. This is confirmed by the decision of the European Court in Eco
Swiss China Time Ltd. v. Benetton International NV 1999 ECR I-3055, in which that court held
42
Defendants’ argument that these efficiencies “cannot materialize” because “class certification for
Counts VI and VII is unlikely” (Lufthansa Memo. at 57) is premature and inappropriate. Defendants seek to have
this Court preemptively hold that Plaintiffs’ foreign claims cannot be certified without proper consideration under
the applicable Rule 23. The Court should decline to consider the propriety of Plaintiffs’ class allegations, however,
until Plaintiffs file an appropriate motion under Rule 23. As the Supreme Court made clear in Eisen, class
allegations should be judged under Rule 23 standards -- not Rule 12: “‘[i]n determining the propriety of a class
action, the question is not whether the plaintiff or plaintiffs have stated a cause of action or will prevail on the
merits, but rather whether the requirements of Rule 23 are met.’” Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178
(1974) (emphasis added) (quoting Miller v. Mackey Int’l, 452 F.2d 424 (5th Cir. 1971)).
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that Articles 81 and 82 must be regarded as a matter of public policy within the meaning of the
New York Convention on the recognition and enforcement of foreign arbitral awards. See
Layton and Smith Decl. ¶ 67. While it would likely be up to the national courts of the Member
States whether to enforce a judgment of a U.S. Court on Article 81, “the Eco Swiss case strongly
suggests that they could not refuse recognition solely on the ground that the non-EU court had
applied EU law.” Id. ¶ 68. Upon proper application of EU law, then, so long as the public
policy of the EU was not violated by this Court’s decision (which, given the identical substantive
prohibition of price-fixing in the two jurisdictions would be highly unlikely), a judgment as to
Defendants’ liability under Article 81 by a U.S. Court would be enforceable. See id. ¶ 74
(“Since cartel behaviour of the kind in respect of which the Plaintiffs claim damages is
prohibited both in EU law (by Article 81(1) of the EC Treaty) and by section 1 of the Sherman
Act in similar terms, we find it difficult to believe that any judgment of this court would be held
to be unenforceable by the English courts on these grounds.”).
D.
Litigation In A European Forum Would Be Appropriate At This Time Only
Upon Agreement By The Parties To Certain Conditions.
While Plaintiffs do not believe that, at present, the European Union provides an adequate
alternative forum for litigation of their claims, agreement to or imposition of certain conditions
upon Defendants that would govern litigation of Plaintiffs’ EU law claims in the EU may be able
to overcome a number of the procedural obstacles that render the EU a presently inadequate
forum. Accordingly, if Defendants will consent to determination of Plaintiffs’ EU law claims in
a single proceeding in a single forum in Europe—the United Kingdom—under the following
conditions, Plaintiffs will also agree to litigation of all EU law claims arising from Defendants’
conspiracy there rather than before this Court: (1) Defendants must consent to jurisdiction,
waiving all jurisdictional objections; (2) the proceeding must encompass claims of all potential
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businesses who were affected by Defendants’ conspiracy and who assert a claim under EU law;
(3) the determination of whether to permit a class action or other group action proceeding and the
form of that class or other group action will be made by the U.K. court; and (4) Defendants’
waiver of objections to use in both jurisdictions of discovery taken in either jurisdiction.
Such an agreement would be congruent with the jurisdictional powers of the U.K. courts
over a claim properly seised to hear claims against multiple defendants in a single jurisdiction:
If he is one of a number of defendants, a person domiciled in one
EU Member State may be sued in the courts of another Member
State in the place where any of the defendants is domiciled (even if
that is in a Member State where he is not himself domiciled) under
Article 6(1). This exception applies where “the claims are so
closely connected that it is expedient to hear and determine them
together to avoid the risk of irreconcilable judgments resulting
from separate proceedings”. Article 6(1) is a powerful tool for the
concentration of claims against several defendants in a single
court. A good illustration of this occurring is a claim brought
against defendants which had been found (or were in the same
groups as companies which had been found) to have participated in
the well-known vitamins cartel. Proceedings were brought in
England and defendants domiciled in other EU Member States
were held to be subject to the jurisdiction of the English courts on
the basis of Article 6(1).
Layton and Smith Decl., ¶ 25 (citing Provimi Ltd. v. Aventis Animal Nutrition SA, 2003
E.W.H.C. 961 (May 2, 2003)).
Should Defendants decline this proposal, Plaintiffs ask that the Court, if it grants
Defendants’ motion for a dismissal on forum non conveniens grounds, impose such conditions.
Imposition of similar conditions has been required by the Second Circuit in instances where
Defendants have required dismissal in favor of an alternative forum. See, e.g., Jota v. Texaco,
157 F.3d 153 (2d. Cir 1998) (“dismissal on the ground of forum non conveniens [and] … on the
ground of comity was erroneous in the absence of a condition requiring [the defendant] to submit
to jurisdiction in [the alternative form]).
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CONCLUSION
For the reasons set forth herein, this Court should deny Defendants’ motions to dismiss
Plaintiffs’ claims under Article 81(1) of the EC Treaty and Article 53(1) of the EEA Treaty.
Dated: October 24, 2007
By: /s/ Charles E. Tompkins
Michael D. Hausfeld
Charles E. Tompkins
Andrew B. Bullion
Hilary K. Ratway
Andrea L. Hertzfeld
COHEN, MILSTEIN, HAUSFELD &
TOLL, PLLC
1100 New York Avenue NW
West Tower, Suite 500
Washington, DC 20005
(202) 408-4600
Respectfully submitted,
By: /s/ Barbara J. Hart
Barbara J. Hart (BH-3231)
Hollis L. Salzman (HS-5994)
Gregory S. Asciolla (GA-2222)
LABATON SUCHAROW LLP
140 Broadway
New York NY 10005
(212) 907-0700
Co-Lead Counsel
Co-Lead Counsel and Co-Lead Counsel
Principally Responsible for the Claims of the
Foreign Purchasers
By: /s/ Howard J. Sedran
Howard J. Sedran
Austin B. Cohen
LEVIN, FISHBEIN, SEDRAN &
BERMAN
510 Walnut Street
Philadelphia, PA 19106
(215) 592-1500
By: /s/ Robert N. Kaplan
Robert N. Kaplan (RK-3100)
Gregory K. Arenson (GA-2426)
Jason A. Zweig (JZ-8107)
KAPLAN FOX & KILSHEIMER, LLP
850 Third Avenue, 14th floor
New York, NY 10022
(212) 687-1980
Co-Lead Counsel
Co-Lead Counsel
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By: /s/ Steven N. Williams
Joseph W. Cotchett
Steven N. Williams
COTCHETT, PITRE & MCCARTHY
840 Malcolm Road, Suite 200
Burlingame, CA 94010
(650) 697-6000
By: /s/ Henry A. Cirillo
Henry A. Cirillo
THE FURTH FIRM, LLP
225 Bush Street, 15th Floor
San Francisco, CA 94104-4249
(415) 433-2070
U.S. Indirect Purchaser Class and Subclass Counsel
U.S. Indirect Purchaser Class and Subclass
Counsel
By: /s/ W. Joseph Bruckner
W. Joseph Bruckner
Richard A. Lockridge (RL 0714)
Heidi M. Silton
R. Reid LeBeau
LOCKRIDGE GRINDAL
NAUEN, PLLP
100 Washington Avenue South, Suite 2200
Minneapolis, MN 55401
(612) 339-6900
By: /s/ Christopher Lovell
Christopher Lovell
Gary Jacobson
Craig Essenmacher
Imtiaz A. Siddiqui
LOVELL STEWART HALEBIAN LLP
500 Fifth Avenue, Suite 58
New York, NY 10110
(212) 608-1900
U.S. Indirect Purchaser Class and Subclass Counsel
U.S. Indirect Purchaser Class and Subclass
Counsel
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