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Emerson Electric Co. v. Lorraine

August 9, 2007

EMERSON ELECTRIC CO., ET AL., PLAINTIFFS,
v.
LE CARBONE LORRAINE, S.A., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Simandle, District Judge

[relates to Docket Items 9 and 43]

OPINION

I. BACKGROUND

This matter is before the Court on Motions to Dismiss the Amended Complaint by Defendants Le Carbone Lorraine, Carbone Lorraine North America Corp., and Carbone of America Industries Corp. [Docket Item 9] and by Emilio Di Bernardo [Docket Item 43]. The Court heard oral argument on April 24, 2007 and reserved decision.

Plaintiffs in this action are companies that opted-out of the larger electrical carbon products anti-trust class action, which settled. See In re: Elec. Carbon Prods. Antitrust Litig., 447 F. Supp. 2d 389 (D.N.J. 2006). Specifically, Plaintiffs are:

1. Emerson Electric Co., a Missouri corporation with its principal place of business in Missouri;

2. Valeo, S.A., a French corporation with its principal place of business in Paris, France;

3. Valeo, Inc., a New York corporation with its principal place of business in Michigan;

4. Electrolux Home Care Products, Ltd., a Texas limited partnership*fn1 with its principal place of business in Illinois;

5. Delphi Corp., a Delaware corporation with its principal place of business in Michigan;

6. Robert Bosch GmbH, a German corporation with its principal place of business in Stuttgart, Germany;

7. Robert Bosch Corp., an Illinois corporation with its principal place of business in Illinois;

8. A.O. Smith Corp., a Delaware corporation with its principal place of business in Wisconsin;

9. Visteon Corp., a Delaware corporation with its principal place of business in Michigan;

10. Rockwell Automation, Inc., a Delaware corporation with its principal place of business in Wisconsin;

11. Baldor Electric Co., a Missouri corporation with its principal place of business in Arkansas;

12. Fasco Industries Inc., a Michigan corporation with its principal place of business in Michigan;

13. Siemens Transportation Systems Inc., a Delaware corporation with its principal place of business in California; and

14. CBS Corp., a Delaware corporation with its principal place of business in New York.*fn2

(Am. Compl. ¶¶ 11-24.)

The original Complaint in this action was filed September 23, 2005, in the Eastern District of Michigan. In December 2005, the case was transferred to this Court by the Judicial Panel on Multidistrict Litigation. In June 2006, Plaintiffs filed an Amended Complaint in this Court and these motions to dismiss eventually followed.

The defendants moving to dismiss the Amended Complaint are the only remaining defendants who have appeared in this action. Defendant Le Carbone Lorraine ("LCL") is a French company that owns 100% of the shares of Defendant Carbone Lorraine North America. Carbone Lorraine North America is a New Jersey corporation with its principal place of business in New Jersey. Defendant Carbone of America Industries Corp. is a Michigan corporation with its principal place of business in New Jersey. It is a subsidiary of Carbone Lorraine North America. The Court shall collectively refer to these companies as "the Carbone Defendants" or "the Carbone group." According to Plaintiffs, Defendant Emilio Di Bernardo was employed by and acted as an agent for the Carbone group and participated in their worldwide conspiracy to fix the prices of electrical carbon products sold in the United States, Europe and elsewhere. (Am. Compl. ¶ 34.)

II. ALLEGATIONS OF THE AMENDED COMPLAINT

Plaintiffs allege that between October 1988 and September 2001 Defendants engaged in a conspiracy to fix the prices of electrical carbon products, which Plaintiffs purchased at inflated, non-competitive prices in the United States, Europe and elsewhere. (Am. Compl. ¶ 2). The Amended Complaint defines "electrical carbon products" as: carbon brushes, commutators, brush holders, and current collectors used in the manufacture of direct current electric motors, automotive applications and other transit applications as well as consumer, commercial and industrial products; mechanical carbon products used in pump and compressor industries; also the blocks of carbon from which these products are made.

(Id. at ¶ 10(a)). The Amended Complaint also describes some of those products:

Carbon brushes are used to transfer electrical current in direct current motors by acting as the rubbing contacts for electrical connectors in motors. Direct current motors are used in a variety of products including computers, consumer products, automobiles, battery-operated electric vehicles and public transit vehicles. Carbon collectors are used to transfer electrical current from wires or rails for use in transit vehicles that are not independently powered. Mechanical carbon products are sold primarily to pump seal manufacturers and are used in fluid handling products for containing liquids in wear situations. In this Amended Complaint, the types of electrical and mechanical carbon products at issue include, but are not limited to, carbon current collectors, carbon brushes sold to original equipment manufacturers for automotive applications, traction-transit carbon brushes, industrial carbon brushes for use in battery-operated vehicles, carbon brushes sold to original equipment manufacturers for use in consumer products, commercial products and industrial applications, and mechanical carbon products for use in pump and compressor industries.

(Id.)

Plaintiffs bring this action pursuant to the Sherman Act, 15 U.S.C. § 1; the Clayton Act, 15 U.S.C. §§ 15 and 26; and the Michigan Antitrust Reform Act, Mich. Comp. Laws §§ 445.772, et seq. (Id. at ¶ 4.) Plaintiffs seek treble damages, injunctive relief and attorneys' fees.

Among other things, Plaintiffs allege that:

Defendants and their Co-conspirators conspired in a global price-fixing scheme that had the direct and substantial effect of keeping prices paid by purchasers in the United States artificially high. Price movements in each sales region were inextricably linked to all other regions so that the prices charged by Defendants and their Co-conspirators in other countries directly impacted United States prices. Defendants and their Co-conspirators fixed prices and allocated or controlled customers in the United States not merely to capture cartel profits in the United States, but also to allow the cartel to be effective anywhere in the world. Defendants and their Co-conspirators knew that their conspiracy would not succeed unless they coordinated their prices and market shares throughout the world.

(Am. Compl. ¶ 72). Plaintiffs include foreign and domestic companies that bought electrical carbon products in the United States as well as those who purchased abroad.

Plaintiffs also allege more specific domestic conduct that they claim caused foreign injury. For example, Plaintiffs claim defendants manipulated the prices of raw materials in the United States. (Id. at ¶ 79). Those raw materials were converted into products that were sold in Europe with inflated prices. (Id.) In addition, Plaintiffs allege that the defendants participated in a conspiracy for Morgan Crucible to purchase an American competitor, raise that competitor's prices to the cartel prices, and frustrate international competition and cause domestic as well as foreign antitrust injury by preventing both domestic and foreign Plaintiffs from purchasing at fair prices. (Id. at ¶ 80).

Plaintiffs also claim that defendants fraudulently concealed their conduct and that the statute of limitations on their claims was tolled until November 4, 2002, when the Department of Justice announced that Morganite (no longer a defendant in this action) had pled guilty to charges of price fixing and obstruction of justice in connection with the electrical carbon products industry. (Id. at ¶¶ 107-11).

III. MOTION TO DISMISS BY CARBONE DEFENDANTS

A. Subject Matter Jurisdiction Over Injuries Arising From Foreign Purchases

Plaintiffs' first cause of action is a claim that Defendants violated Section 1 of the Sherman Act, 15 U.S.C. § 1. (Am. Compl. ¶¶ 113-17). By incorporating the allegations of the rest of the Complaint (id. at ¶ 113), Plaintiffs are seeking damages under that Act for purchases they made in the United States and in other countries. The Carbone Defendants argue that this Court does not have subject matter jurisdiction under the Sherman Act to hear Plaintiffs' claims of injury from purchases that occurred outside the United States.*fn3 Plaintiffs oppose, arguing that this Court has subject matter jurisdiction over all of their antitrust damages, including those damages arising from foreign purchases. (Pl.'s Br. Opp. Carbone*fn4 at 6-21.)

Because it is a challenge to the Court's subject matter jurisdiction, this motion is appropriately considered a Rule 12(b)(1) motion. CSR Ltd. v. Cigna Corp., 405 F. Supp. 2d 526 (D.N.J. 2005). Further, because this attack on subject matter jurisdiction is a "facial" attack, the Court must take all the facts alleged in the Amended Complaint as true and decide whether the Court has jurisdiction. See Turicentro, S.A. v. American Airlines, 303 F.3d 293, 300 n.4 (3d Cir. 2004) (explaining difference between facial and factual attacks on subject matter jurisdiction).

Although the parties have submitted additional exhibits, Defendants conceded at oral argument that this is a facial attack and that the Court must accept as true the facts alleged in the Amended Complaint. Therefore, the Court will look only to the allegations in the Amended Complaint and will not consider these additional exhibits. Nor will the Court convert these motions to dismiss into motions for summary judgment, as Rule 12(b) permits, because these motions were filed in lieu of Answers, shortly after the Amended Complaint was served and likely before any substantial discovery occurred. See Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 893 n.18 (3d Cir. 1977) ("In Doctors, Inc. v. Blue Cross, 490 F.2d 48 (3d Cir. 1973), [a Sherman Act case,] the defendant had filed a 12(b)(1) motion prior to filing an answer, so plaintiffs' jurisdictional allegations were entitled to a presumption of truthfulness."

The Supreme Court has noted that this Court's jurisdiction is limited:

Federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute, see Willy v. Coastal Corp., 503 U.S. 131, 136-137(1992); Bender v. Williamsport Area School Dist., 475 U.S. 534, 541 (1986), which is not to be expanded by judicial decree, American Fire & Casualty Co. v. Finn, 341 U.S. 6 (1951). It is to be presumed that a cause lies outside this limited jurisdiction, Turner v. Bank of North-America, 4 U.S. 8 (1799), and the burden of establishing the contrary rests upon the party asserting jurisdiction, McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 182-183 (1936).

Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).

Whether this Court has jurisdiction over the foreign injuries of Plaintiffs turns on the application of the Foreign Trade Antitrust Improvements Act ("FTAIA")*fn5 , which says the Sherman Act: shall not apply to conduct involving trade or commerce (other ...


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