Opinion
MDL Docket No. C-04-1648 MMC.
August 20, 2008
Before the Court is defendants Flexsys America LP and Flexsys N.V.'s (collectively, "Flexsys") "Motion to Dismiss with Prejudice Plaintiff's Third Amended Complaint," filed May 16, 2008. Plaintiff Korea Kumho Petrochemical Co., Ltd. ("KKPC"), has filed opposition, to which defendants have replied.
Having read and considered the papers filed in support of and in opposition to the motion, and having reviewed the claims set forth in the Third Amended Complaint ("TAC"), the Court will direct the parties to show cause why the Court should not issue, pursuant to Rule 7.6 of the Rules for Multidistrict Litigation, a suggestion of remand.
By order filed December 21, 2004, the Judicial Panel on Multidistrict Litigation ("the Panel"), transferred two actions to this district for coordination or consolidation with two actions originally filed herein, thereby creating MDL 1648. Observing that each of the actions comprising MDL 1648 was "brought under the Sherman Act to recover for violations arising in the context of an alleged conspiracy to fix the price of rubber chemicals," the Panel found that "[c]entralization under [28 U.S.C.] Section 1407 is necessary in order to eliminate duplicative discovery, prevent inconsistent pretrial rulings (especially with respect to class certification matters), and conserve the resources of the parties, their counsel, and the judiciary." See In re Rubber Chemicals Antitrust Litig., 350 F. Supp. 2d 1366, 1367 (JPML 2004).
At the time MDL 1648 was formed, each plaintiff in the four matters then comprising the multidistrict litigation was a purchaser of the subject rubber chemicals. Thereafter, the Panel transferred to this district for coordination or consolidation three additional actions, each of which was filed by a plaintiff or plaintiffs who had purchased rubber chemicals, with the exception of Korea Kumho Petrochemical Co., Ltd. v. Flexsys America LP, et al. ("the KKPC Action"), in which the plaintiff is a seller of the subject rubber chemicals, i.e., a competitor of the entities that allegedly conspired to fix the price of rubber chemicals. Also included in MDL 1648 were additional actions filed in this district by a plaintiff or plaintiffs who had purchased rubber chemicals. In total, the instant proceeding involved ten actions originally filed in this district and five actions transferred to this district.
The fifteen component cases can be categorized as follows: (1) eight separate actions brought by purchaser plaintiffs, which actions were consolidated, a class was certified, and the claims of each purchaser were fully resolved; (2) four separate actions brought by purchaser plaintiffs who elected to opt out of the consolidated class proceeding, and whose claims were resolved, or, in one instance, remain to be resolved, on an individual basis; (3) two separate actions brought by purchaser plaintiffs, which actions were voluntarily dismissed; and (4) the KKPC Action, which, as noted, is brought by a competitor of the alleged conspirators, and which is proceeding on an individual basis. At the present time, each component case has been fully resolved, with two exceptions: (1) Bridgestone Americas Holding, Inc. v. Chemtura Corp. ("the Bridgestone Action"), a case brought by plaintiffs who opted out of the consolidated class proceeding, and (2) the KKPC Action.
In light of KKPC's most recent amendment to its pleading, it appears to the Court, for the reasons discussed below, that retention in this district of the KKPC Action is no longer proper, for the reason that it appears no coordinated pretrial proceedings remain to be conducted therein. See Lexecon Inc. v. Milberg Weiss Bershad Hynes Lerach, 523 U.S. 26, 34 (1998) (holding Panel required "to remand any pending case to its originating court when, at the latest, [coordinated or consolidated] pretrial proceedings have run their course"); In re Patenaude, 210 F. 3d 135, 142 (3rd Cir.) (holding transferee court only has authority to conduct "coordinated or consolidated" pretrial proceedings in actions comprising an MDL), cert. denied, 531 U.S. 1011 (2000).
In seeking transfer pursuant to 28 U.S.C. § 1407, KKPC, in a "Notice of Potential `Tag-Along Action'," dated August 16, 2006, described its claims as follows:
The KKPC Action alleges antitrust violations involving a conspiracy between defendants and their co-conspirators . . . to restrain trade and fix the price of rubber chemicals in the United States market. The claims in the KKPC Action are substantially similar to the claims asserted in the cases already transferred by the Panel pursuant to 28 U.S.C. § 1407 to the Northern District of California. . . .
(See Docket # 583, Case No. MDL 04-1648, Ex. D.) Consistent with such description, KKPC's First Amended Complaint ("FAC"), the operative pleading at the time of transfer, included, inter alia, claims brought under the Sherman Act to recover for violations arising from the alleged conspiracy to fix the price of rubber chemicals. (See Docket #1, Case No. C-07-1057, Part 5, ¶¶ 26-27, 42, 48, 57.)
In its Transfer Order, filed February 6, 2007, the Panel found transfer of the KKPC Action hereto "for inclusion in the coordinated or consolidated pretrial proceeding occurring there will serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation" because the instant district was "a proper Section 1407 forum for actions brought under the Sherman Act to recover for violations arising in the context of an alleged conspiracy to fix the prices of rubber chemicals." (See Transfer Order, filed February 6, 2007.)
After the KKPC Action was transferred to this district, Flexsys moved to dismiss the FAC. The Court, by order filed August 13, 2007, dismissed the antitrust claims in the FAC, with leave to amend. On September 12, 2007, KKPC filed its Second Amended Complaint ("SAC"), in which KKPC continued to allege, inter alia, Sherman Act claims based on alleged violations arising from the conspiracy to fix the price of rubber chemicals. (See SAC ¶¶ 27-29, 59, 65, 74.) By order filed March 11, 2008, the Court, on motion by Flexsys, dismissed the antitrust claims in the SAC, again affording KKPC an opportunity to amend.
On April 18, 2008, KKPC filed its TAC, on which pleading the KKPC Action currently proceeds. As Flexsys observes in its pending motion to dismiss the TAC, KKPC has deleted from the TAC each claim based on the alleged conspiracy to fix the price of rubber chemicals, and now bases its Sherman Act claims solely on a "group boycott" theory, (see TAC ¶ 37), specifically, that Flexsys, beginning in September 2005 and continuing to the present, has issued "threats" to third parties who purchase or intend to purchase products sold by KKPC and that such third parties have, in response to the threats, refused to purchase rubber chemicals from KKPC, (see TAC ¶¶ 30-34, 41).
In sum, the KKPC Action no longer includes a claim "under the Sherman Act to recover for violations arising in the context of an alleged conspiracy to fix the price of rubber chemicals." See In re Rubber Chemicals Antitrust Litig., 350 F. Supp. 2d at 1367. The remaining Sherman Act claims on which KKPC now proceeds do not appear to present a significant issue of fact that also is presented by the price-fixing claims alleged in the 13 closed actions and in the one other open action (the Bridgestone Action) in MDL 1648. Cf. id. (finding transfer appropriate where, inter alia, actions filed in other districts and actions filed in transferee district "involve[d] common questions of fact"). Further, the interest of judicial economy and convenience to the parties and witnesses would not appear to be advanced by retention of the KKPC Action in this district, as the KKPC Action now presents claims that are based on facts not litigated or presented in the closed cases and that will not be litigated or presented in the Bridgestone Action, and appear to be based on conduct occurring after the alleged price-fixing conspiracy had ended. Cf. id. (finding transfer appropriate where, inter alia, "centralization [of actions in one district] will serve the convenience of the parties and the witnesses and . . . conserve the resources of the parties, their counsel and the judiciary"). Stated otherwise, the coordinated pretrial proceedings on the claims in the KKPC Action within the scope of MDL 1648 would appear to have been concluded as of the time KKPC chose not to plead in the TAC any claim based on the alleged price-fixing of rubber chemicals. See, e.g., In re Nazi Era Cases Against German Defs. Litig., 2002 WL 31396607 (D. N.J. 2002) (holding, in MDL proceeding "encompass[ing] those cases which directly impact or are impacted by the implementation and operation of the German Foundation `Remembrance, Responsibility, and the Future'," one component case should be "transferred back to its court of origin" in light of plaintiffs' having dismissed all claims therein against German corporations, leaving only claims "beyond the contemplated scope of the MDL proceeding").
Under the circumstances, the parties are hereby ORDERED TO SHOW CAUSE, in writing and no later than September 9, 2008, why the Court should not issue a suggestion of remand pursuant to Rule 7.6 of the Rules for Multidistrict Litigation.
The Court will defer ruling on Flexsys' motion to dismiss the TAC until this Court determines whether issuance of a suggestion of remand is appropriate, and, if so, until the Panel acts thereon.