The opinion of the court was delivered by: Ackerman, Senior District Judge
SECOND AMENDED OPINION AND ORDER*fn1
This matter comes before the Court on the motions for partial summary judgment filed by Defendants ACE Insurance Ltd., ACE Insurance Company SA-NV, Insurance Company of North America, Insurance Company of North America (UK) Ltd., and Certain of the Australian, European, and London Market Insurer Defendants (collectively "Defendants" or "Insurers"), and the motion and cross-motions for partial summary judgment filed by Plaintiffs CSR Limited and Rinker Materials Corporation (collectively "CSR" or "Plaintiffs").
The parties have filed a total of sixteen motions and cross-motions for partial summary judgment in this matter. This Opinion and Order will only address the motions styled as Defendants' Motion for Summary Judgment Dismissing Counts III and IV for Lack of Subject Matter Jurisdiction and Plaintiffs' Cross Motion that this Court Does Have Subject Matter Jurisdiction over Plaintiffs' Federal and New Jersey Antitrust Claims. The Court will resolve the other pending summary judgment motions in this matter in subsequent opinions.
For the following reasons, Defendants' motion for summary judgment dismissing Counts III and IV for lack of subject matter jurisdiction is GRANTED in part and DENIED in part. The Court will dismiss Counts III and IV of Plaintiffs' Second Amended Complaint with regard to CSR Limited for lack of subject matter jurisdiction, and will exercise subject matter jurisdiction over Counts III and IV with regard to Rinker Materials Corporation (f/k/a CSR America, Inc.). Plaintiffs' related cross-motion is DENIED.
Plaintiff CSR Limited ("CSR") is an Australian public company headquartered in Sydney, Australia. From 1949 to 1966, CSR sold raw asbestos fiber mined by one of its subsidiaries, Midalco Pty Limited ("Midalco"). Midalco mined this asbestos fiber from a mine owned by Midalco in Wittenoom, Western Australia ("Wittenoom" or "Wittenoom mine"). CSR sold raw asbestos fiber from its Wittenoom mine to, among others, Johns-Manville Corporation ("Manville"), which operated its main plant in Manville, New Jersey. CSR first delivered Wittenoom asbestos to Manville in 1949, and its last sale of asbestos to Manville occurred in or about 1966. In 1966, the Wittenoom mine closed and asbestos-mining activities at the mine ceased. CSR's sales of raw asbestos fiber to Manville have resulted in the initiation of more than 129,000 asbestos-related personal injury claims in the United States against CSR Limited and/or its American subsidiary CSR America, Inc., presently known as Rinker Materials Corporation (hereinafter "CSR America"). These claims have been brought by persons suffering exposure to raw asbestos fiber at or in the vicinity of Manville plants in New Jersey and elsewhere, and to finished Manville products containing asbestos mined and sold to Manville by CSR.
Defendants comprise various insurance companies who issued or subscribed to primary or umbrella excess general liability insurance policies in favor of CSR during the period of November 2, 1978 to March 31, 1989 ("post-1978 policies"). These Defendants include: Insurance Company of North America and its subsidiaries, including its Australian subsidiary, Insurance Company of North America (Australia) Limited, later known as CIGNA Insurance Company (Australia) Ltd. ("INA" or "CIGNA");*fn2 and various other insurance companies known in this litigation as Certain of the Australian, European, and London Market Insurer Defendants (Coughlin Duffy or "CD Defendants"). INA was the lead primary insurer on the post-1978 policies and also served as the lead insurer on some of the umbrella and excess insurance layers. As lead insurer on a significant portion of the policies, INA/CIGNA conducted the majority of the administration of, negotiations over, and renewal of the post-1978 policies.
In 1981, CSR first notified its pre-1978 insurers of its asbestos claims in the United States and that CSR might seek indemnity from those insurers. CSR first presented formal notice of demand for indemnification for asbestos-related claims to the Defendant post-1978 Insurers in a letter dated November 29, 1991. (Certif. of Todd G. Cosenza ("Cosenza Certif."), Ex. 7.) Defendants denied CSR's claim for coverage of CSR's United States asbestos-related liabilities in a February 20, 1992 letter from Anthony Scotford, an attorney retained by Defendants in relation to CSR's claim. On March 17, 1992, CSR sent a letter to the Insurers which purported to withdraw its asbestos-coverage claims and acknowledge that the policies did not cover asbestos-related claims stemming from the operation of the Wittenoom mine or the sale of asbestos mined at Wittenoom. (Cosenza Certif., Ex. 56.)
This action results from Defendants' handling of the November 1991 claims and ultimate denial of coverage for those claims under the post-1978 policies. CSR also alleges a group boycott by the Defendant Insurers in which Defendants threatened denial of new or renewal insurance for CSR unless CSR withdrew its November 1991 request for coverage. CSR's Second Amended Complaint ("SAC") alleges federal antitrust claims under Section 1 of the Sherman Act (Count III) and New Jersey state antitrust claims under N.J.S.A. § 56:9-3 (Count IV).
The instant motions do not broadly implicate the substantive merits of CSR's group boycott claim and therefore do not require this Court to revisit its prior discussion of the per se and Rule of Reason approaches, or to determine which analysis will ultimately apply in this matter. Rather, Defendants in their instant motion challenge this Court's subject matter jurisdiction over CSR's federal and state antitrust claims under the Foreign Trade Antitrust Improvements Act of 1982 ("FTAIA"), 15 U.S.C. § 6a. As discussed in great detail later in this opinion, the FTAIA sets forth conditions on jurisdiction under the Sherman Act over claims involving trade or commerce with foreign nations and focuses primarily on the general nature of the alleged conduct and especially the geographic focus of that conduct's alleged anticompetitive effects. Because the parties do not seek summary judgment on the merits of CSR's antitrust claims, this Court need not delve into the extensive, disputed factual background produced during discovery concerning the minute details and alleged proofs of the claimed group boycott here.
However, as will be seen, the jurisdictional requirements outlined in the FTAIA may not be easily distinguished from certain substantive antitrust elements, such as antitrust injury. Therefore, the Court will briefly discuss, for background and jurisdictional purposes only, general factual allegations regarding the workings of the alleged boycott itself and the evidence relevant to proof of concerted action. The Court stresses that it does not purport to make conclusive factual findings on the merits in this opinion, and only discusses background facts to the extent necessary for clarity and to provide the basis for the Court's jurisdictional analysis.
CSR alleges that Defendants jointly decided to "link renewal of CSR's 1992-93 worldwide insurance coverage to withdrawal" of CSR's asbestos-related claims (Pls.' Br. 12), and that Defendants initially represented to CSR and its insurance broker that treatment of the asbestos-related claims had nothing to do with the renewal issue (id. 12-13). CSR also alleges that in addition to a group boycott, Defendants made misrepresentations concerning CSR to others in the insurance market in an effort to prevent CSR from obtaining alternative coverage. (Pls.' Br. 19.)
The instant motions require particular focus on the geographic location of the alleged actions and their effects. Defendants stress that CSR directed its insurance and risk management activities out of its Sydney headquarters, used Australian and British insurance brokers, and dealt primarily with INA/CIGNA's Australian affiliate, CIGNA Insurance Company (Australia) Limited, now known as ACE Insurance Ltd. They claim that the parent American corporations INA and CIGNA never issued any insurance policy to CSR.
CSR emphasizes that the renewal coverage at issue was global and included coverage for risks incurred in the United States. Plaintiffs note that several of the defendants are United States corporations or subsidiaries of American corporations, including INA, the parent company of the Australian INA affiliate with which CSR primarily dealt. Plaintiffs further argue that officials and entities in the United States played significant roles in managing and negotiating CSR's insurance coverage and in facilitating the alleged group boycott, and that insurance officials in the United States at the very least monitored and offered advice to the Australian officials. (Pls.' Br. 20-21 & n.10.)
Plaintiffs also observe that Plaintiff CSR America is a United States corporation. Defendants emphasize their view that CSR America was not included in the renewal proposals at issue here and that CSR America obtained renewal for the implicated policy year on its own from United States insurers. While renewal of coverage for the parent company CSR forms the primary basis for Plaintiffs' antitrust claims, the parties dispute the extent to which the boycott also impacted CSR's ability to secure alternative coverage in the United States through its subsidiary CSR America. Finally, CSR emphasizes that the claimed group boycott's underlying purpose was to avoid Defendants' alleged obligations to provide coverage for CSR's United States asbestos-related liabilities.
CSR filed its Complaint in the instant action on June 23, 1995. After extensive, international discovery under the supervision of two court-appointed special masters, the parties filed sixteen motions for partial summary judgment, including the instant motions.
Defendants filed their motion as one for partial summary judgment, and Plaintiffs similarly deemed their cross-motion a partial summary judgment motion. However, this Court may not simply accept the parties' labels and mechanically apply generic summary judgment standards. While the parties agree that their motions seek "summary judgment," they advance differing positions regarding whether Defendants' motion presents a facial or factual challenge to this Court's subject matter jurisdiction and relatedly whether this Court should consider only Plaintiffs' allegations or should instead weigh the evidence in making its jurisdictional analysis. Therefore, before assessing the impact of the FTAIA on this matter, this Court must consider the nature of Defendants' argument and its implications for the Court's standard of review.
A. Rule 12(b)(1) Standards, Rather Than Rule 56 Standards, Apply to the Instant Motions
Several courts have addressed whether the FTAIA establishes jurisdictional prerequisites or instead provides additional substantive elements of an antitrust claim. Our Circuit has considered challenges under the FTAIA as questioning the court's subject matter jurisdiction. Turicentro, S.A. v. American Airlines Inc., 303 F.3d 293, 300 (3d Cir. 2002). After extended analysis, the Seventh Circuit agreed that the FTAIA limits a federal court's subject matter jurisdiction and does not merely impose additional substantive elements to an antitrust claim involving foreign conduct. United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946-52 (7th Cir. 2003) (en banc); see also United States v. LSL Biotechnologies, 379 F.3d 672, 679-80 & n.5 (9th Cir. 2004) (holding that FTAIA provides the "binding test for determining jurisdiction over foreign restraints of trade" and citing cases from the Third, Fifth, Seventh, and District of Columbia Circuits).
The Seventh Circuit in United Phosphorus observed that if the FTAIA merely created additional substantive elements, then arguments to dismiss antitrust claims under the FTAIA would be properly analyzed under summary judgment standards pursuant to Federal Rule of Civil Procedure 56. 322 F.3d at 946. However, challenges to subject matter jurisdiction properly arise under Federal Rule of Civil Procedure 12(b)(1) and must be assessed by the different review standards Rule 12 dictates. Id. The Seventh Circuit therefore applied Rule 12(b)(1) to the FTAIA challenge before it. Id. at 952-53. Our own Circuit has similarly applied Rule 12(b)(1) standards to FTAIA challenges. Turicentro, 303 F.3d at 300 & n.4. Therefore, although the parties deem their motions as ones seeking partial summary judgment, Defendants' motion may only be properly construed as a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1).
The Court surmises that Defendants might have filed their instant jurisdictional motion under Rule 56 rather than under Rule 12 to avoid filing what would be Defendants' third motion to dismiss CSR's antitrust claims.*fn3 This Court first denied Defendants' Rule 12(b)(6) motion to dismiss these claims, and later denied Defendants' Rule 12(b)(2) motion to dismiss this entire action for lack of personal jurisdiction or on the ground of forum non conveniens. However, as discussed further below, in its Rule 12(b)(6) motion, Defendants only argued that CSR had failed to allege conduct which could be deemed per se unreasonable and that Plaintiffs failed to plead antitrust injury. These contentions questioned whether Plaintiffs stated a claim upon which relief could be granted. Defendants did not advance any challenge to this Court's subject matter jurisdiction over Plaintiffs' antitrust claims, and this Court therefore did not consider any such theory. Similarly, Defendants' Rule 12(b)(2) motion had nothing to do with subject matter jurisdiction.
Defendants might have wanted to avoid filing a third Rule 12 motion, but any hesitation on that ground is unfounded.*fn4 Objections to subject matter jurisdiction may not be waived, and indeed the Court may determine whether it has subject matter jurisdiction on its own motion, sua sponte. See, e.g., Brown v. Phila. Hous. Auth., 350 F.3d 338, 346-47 (3d Cir. 2003); Fed. R. Civ. P. 12(h)(3). As discussed later in this opinion, this Court's holdings and reasoning in denying Defendants' prior Rule 12 motions do not restrict the jurisdictional analysis here nor do they somehow insulate Plaintiffs' claims from a jurisdictional attack with regard to subject matter jurisdiction.
For these reasons, the Court will consider the instant motions under the review standards of Rule 12(b)(1).*fn5
B. Defendants Present a Factual Challenge to This Court's Jurisdiction
As the Third Circuit noted in considering an FTAIA jurisdictional challenge in Turicentro, "[c]hallenges to subject matter jurisdiction under Rule 12(b)(1) may be 'facial' or 'factual.'" 303 F.3d at 300 n.4. Facial attacks "contest the sufficiency of the pleadings, and the trial court must accept the complaint's allegations as true." Id. "In contrast, a trial court considering a factual attack accords plaintiff's allegations no presumption of truth. In a factual attack, the court must weigh the evidence relating to jurisdiction, with discretion to allow affidavits, documents, and even limited evidentiary hearings." Id. A defendant challenging subject matter jurisdiction "in fact" "dispute[s] the existence of certain jurisdictional facts alleged by the plaintiffs." Carpet Group Int'l v. Oriental Rug Importers Ass'n, Inc., 227 F.3d 62, 69 (3d Cir. 2000).
Defendants "strongly contest but concede arguendo for the purposes of this motion" that a group boycott occurred (Defs.' Reply Br. 1-2), and argue that jurisdiction depends on where any alleged resulting injury occurred, not whether a boycott occurred. Plaintiffs argue that because Defendants assume the existence of an antitrust boycott and thereby do not "dispute the existence of certain jurisdictional facts alleged by the plaintiffs," Carpet Group, 227 F.3d at 69, Defendants' challenge is a facial attack, and the Court therefore need only consider "'whether the allegations on the face of the complaint, taken as true, allege facts sufficient to invoke the jurisdiction of the district court.'" Turicentro, 303 F.3d at 300 (quoting Licata v. United States Postal Serv., 33 F.3d 259, 260 (3d Cir. 1994)). However, whether a boycott occurred is not a jurisdictional fact. The FTAIA, which establishes jurisdictional limits on foreign antitrust claims, focuses on the particular kind of trade or commerce involved in the alleged antitrust conduct and the geographic impact of the alleged effects of such conduct. Defendants may concede, for purposes of this motion, the existence of a group boycott while still heatedly contesting, based on the record, the impact of that boycott. Although they argue for facial standards to apply, Plaintiffs nonetheless also argue extensively from the evidentiary record as well as the allegations of their SAC, suggesting that the instant motion presents a factual challenge.
This Court concludes that Defendants' challenge to this Court's subject matter jurisdiction constitutes a "factual" attack, because Defendants dispute jurisdictional facts regarding the effects of their alleged antitrust conduct and go well beyond merely accepting Plaintiffs' allegations in the SAC. This Court will therefore "weigh the evidence relating to jurisdiction" and not accord CSR's allegations any "presumption of truth." Turicentro, 303 F.3d at 300 n.4.*fn6 "In addition, the burden of proving the existence of subject matter jurisdiction lies with the plaintiff[s]." Carpet Group, 227 F.3d at 69 (citing Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)).
II. This Court's Prior Decisions Regarding Dismissal of Antitrust Claims Do Not Dictate the Result of the Instant Motions
Plaintiffs strenuously argue that this Court's prior decisions denying Defendants' motions to dismiss, particularly its decision denying Defendants' Rule 12(b)(6) motion to dismiss the antitrust claims for failure to state a claim, dictate that Defendants' current effort to dismiss the antitrust claims must fail. Plaintiffs contend that in the instant motion, Defendants merely reiterate previously rejected arguments or "recast" them as pertaining to subject matter jurisdiction, and even suggest that Defendants have shown "[o]bstinate persistence" and "disregard for this Court's prior rulings." (Pls.' Br. 1.)
However, as suggested earlier in this Opinion, this Court's prior decisions have no controlling effect on the issues raised by the instant motion. This Court previously denied Defendants' motion to dismiss Plaintiffs' antitrust claims, as alleged in the First Amended Complaint, under Federal Rule of Civil Procedure 12(b)(6). CSR Ltd. v. Fed. Ins. Co., 40 F. Supp. 2d 559 (D.N.J. 1998). In its motion to dismiss, Defendants argued that CSR failed to allege conduct which could be deemed per se unreasonable and that Plaintiffs failed to plead antitrust injury. This Court held that it could not determine at that stage whether it would apply a per se analysis or the Rule of Reason in evaluating Defendants' conduct, id. at 564-65, and similarly concluded that Plaintiffs did not need to plead antitrust injury separately to survive a motion to dismiss, id. at 566. This Court stated that analysis with regard to both issues would be more properly conducted after discovery. Id. at 565, 566. Contrary to Plaintiffs' assertions, this Court did not decide whether Plaintiffs had sufficiently alleged or proven requisite antitrust injury; rather, the Court merely ruled that "an analysis of antitrust injury would be more properly conducted after discovery." Id. at 566.
Therefore, while Defendants' first motion to dismiss might have been premature, the Court's denial of that motion did not preclude determination of any of the issues raised by the instant motion. A party may raise the issue of subject matter jurisdiction at any time, and, as previously discussed, courts in this Circuit and elsewhere have clearly established that the FTAIA establishes jurisdictional prerequisites for foreign antitrust claims, and does not merely impose additional substantive elements which would properly form the subject of a Rule 12(b)(6) motion.
This Court indeed found that the conduct alleged by Plaintiffs "appears to have eliminated competition within the market for general and products liability insurance with respect to plaintiffs." CSR, 40 F. Supp. 2d at 565. Plaintiffs read this statement to mean that "if plaintiffs prove their allegations, plaintiffs will have established that defendants' challenged conduct had a substantial effect on competition in the general and products liability insurance market in the United States." (Pls.' Br. 31 (emphasis added).) However, the Court made no geographical finding whatsoever, and therefore Plaintiffs' gloss on the Court's reasoning lacks support. Defendants' instant motion arises under the FTAIA and requires an analysis, in part, of the geographic nature of Plaintiffs' antitrust injury. Not only did this Court expressly decline to undertake any analysis of antitrust injury prior to discovery, CSR, 40 F. Supp. 2d at 566, the Court simply has not previously considered the geographic arguments under the FTAIA raised by the instant motion.
Furthermore, Plaintiffs complain that this Court again rejected Defendants' efforts to dismiss the antitrust claims in its opinion denying Defendants' motion to dismiss for lack of personal jurisdiction or based on the doctrine of forum non conveniens. CSR Ltd. v. Fed. Ins. Co., 146 F. Supp. 2d 556 (D.N.J. 2001). Yet, again, the Court did not consider any FTAIA subject matter jurisdiction arguments on this prior motion. Indeed, that motion dealt exclusively with matters of personal jurisdiction and the appropriateness of Plaintiffs' chosen forum. The Court's opinion did not address the substance of Plaintiffs' antitrust claims, and ...