Opinion
No. 02 Civ. 5068 (JFK).
July 15, 2004
WINDELS MARX LANE MITTENDORF, LLP, New York, New York, Of Counsel: Leonard Violi, Esq., Alan R. Wentzel, Esq., for Plaintiffs.
ELIOT SPITZER, Attorney General of the State of New York, New York, New York, Of Counsel: Avi Schick, Deputy Counsel to the Attorney General, for Defendants (as Liaison Counsel).
OPINION ORDER
Procedural Background
Originally commenced in July of 2002, this action was brought by several cigarette manufacturers, importers and wholesalers with the intent of enjoining the defendants, 31 current or former state's attorneys general, from enforcing Escrow Statutes and Contraband Laws enacted by the defendants' states. In response to the Complaint, defendants made two motions to dismiss. The 30 non-New York defendants moved for dismissal due to lack of personal jurisdiction (Fed.R.Civ.P. 12(b)(2)). The other motion, brought by all 31 defendants sought dismissal of each of plaintiffs' claims for failure to state a claim on which relief could be granted (Fed.R.Civ.P. 12(b)(6)) and lack of subject matter jurisdiction (Fed.R.Civ.P. 12(b)(1)). By Opinion and Order dated September 29, 2003, the Court granted the motions of the non-New York defendants to dismiss for lack of personal jurisdiction and all 31 defendants to dismiss for failure to state a claim on which relief could be granted.
Familiarity with the facts is assumed and acronyms and abbreviations used in the Court's September 29, 2003 Opinion and Order are used without further explanation here.
On December 19, 2003, the parties submitted briefs on the instant Motion to Alter Judgment, For Relief from Judgment or For Leave to Amend the Complaint, timely noticed in October of 2003. Shortly after the motion was fully briefed, the Second Circuit rendered its decision in Freedom Holdings, Inc. v. Spitzer, 2004 WL 26498 (2d Cir. Jan. 6, 2004). In light of the fact thatFreedom Holdings was relied on as persuasive authority by this Court in reaching its decision regarding a Sherman Act claim included in the plaintiffs' Complaint, the Court asked the parties to submit supplemental briefs setting forth their respective opinions as to how the Second Circuit's opinion affected the case at bar. Defendants requested that the Court refrain from considering the motion until the Second Circuit passed judgment on a Petition for Rehearing filed by the defendants in the Freedom Holdings case. In light of the importance of the that decision to this case, the Court found defendants' request reasonable and adjourned the briefing schedule. On March 25, 2004, the Circuit denied the Petition for Rehearing. Pursuant to this Court's order, the parties filed their supplemental briefs on May 21, 2004.
Motion for Reconsideration
Plaintiffs' motion for reconsideration is made pursuant to the Court for the Southern District of New York's Local Civil Rule 6.3 and Federal Rule of Civil Procedure 59(e). Rule 6.3 essentially elaborates on Rule 59(e). The two rules provide a vehicle for a party to call the court's attention to facts or controlling decisions it believes the court overlooked in reaching its prior decision. The rules are not meant to serve as a substitute for a direct appeal or as an opportunity to reargue the original motion. See Cohen v. Koenig, 932 F. Supp. 505, 506 (S.D.N.Y. 1996). For that reason, motions to reconsider are not granted where the moving party is simply looking to relitigate an issue already decided. Shrader v. CSX Transp., Inc., 70 F.3d 225, 257 (2d Cir. 1995).
The decision to grant or deny a motion for reconsideration falls squarely within the discretion of the district court. See Devlin v. Transp. Communications Int'l Union, 175 F.3d 121, 132 (2d Cir. 1999). Although granting reconsideration is within its discretion, "reconsideration of a previous order is an extraordinary remedy to be employed sparingly in the interests of finality and conservation of scarce judicial resources." In re Health Mgmt. Sys. Inc. Sec. Litig., 113 F. Supp. 2d 613, 614 (S.D.N.Y. 2000). "The standard for granting such a motion is strict, and reconsideration will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked . . . that might reasonably be expected to alter the conclusion reached by the court." Shrader, 70 F.3d at 257. This standard is to be narrowly construed and strictly applied in order to avoid retracing ground already covered. Cohen, 932 F. Supp. at 506-07.
Plaintiffs also seek relief pursuant to Rule 60(b) of the Federal Rules of Civil Procedure. Rule 60(b) allows a Court to provide a party relief from a final judgment, order or proceeding where a party discovers new evidence that could not have been discovered in time to request a new trial under Rule 59(b). A court may also grant relief for any other reason it deems appropriate. See Fed.R.Civ.P. 60(b). As with Rules 6.3 and 59(e), the grant of relief pursuant to Rule 60(b) is solely within the discretion of the Court.
Reconsideration of the 12(b)(6) Motion
Plaintiffs' motion for reconsideration asserts that the Court was mistaken in its decision to dismiss its Commerce Clause, Fourteenth Amendment, Sherman Act, First Amendment and Federal Cigarette Labeling and Advertising Act claims. Setting aside the Sherman Act claim, which will be discussed separately, the Court finds plaintiffs' have failed to demonstrate that it was in error to have dismissed its claims. Plaintiffs' motion is, in essence, little more than an attempt to relitigate the 12(b)(6) motion. The arguments raised by plaintiffs in their briefs are the same arguments they raised in opposition to the 12(b)(6) motion. Plaintiffs seem to make the mistake of confusing the Court's rejection of certain arguments with "overlooking" those arguments. Contrary to plaintiffs' belief, the Court did consider the case law and facts they believe were overlooked. The Court simply was not persuaded by those cases and facts to accept the arguments plaintiffs' contend they support.
Plaintiffs' Sherman Act claim, however, warrants consideration for a different reason. As stated, shortly after the Court dismissed plaintiffs' claim, the Second Circuit handed down its decision in Freedom Holdings. The Court relied on the district court ruling in Freedom Holdings in reaching its decision relative to the Sherman Act claim. Just as Judge Hellerstein did in Freedom Holdings, this Court found the plaintiffs to be preempted from asserting a Sherman Act claim on the grounds that defendants were immune from such an attack under the doctrine set forth in Parker v. Brown, 317 U.S. 341, 350 (1943). In Freedom Holdings, the Second Circuit rejected Parker immunity as a basis for dismissing antitrust claims against the Contraband and Escrow Statutes. The Circuit held that the defendants in that case had failed to provide evidence of active state supervision of the pricing decisions of the OPMs and SPMs as required byCalifornia Retail Liquor Dealer Association v. Midical Aluminum, Inc., 445 U.S. 97, 104 (1980), in order to qualify for Parker immunity. See Freedom Holdings, 2004 WL 26498, at *18-*19. In light of this decision, the Court must vacate its decision to dismiss the plaintiffs' Sherman Act claims.
The defendants may well be able to present evidence of active supervision, but to this point they have not offered anything beyond what the Second Circuit found to be insufficient in Freedom Holdings. Although plaintiffs have yet to prove that defendants have created the output cartel they allege, they are not required to do so in order to survive a motion to dismiss prior to discovery. For these reasons, dismissal pursuant to Rule 12(b)(6) is inappropriate. Plaintiffs' Sherman Act claim is reinstated.
Jurisdiction
Plaintiffs also seek to have the Court reconsider its decision to dismiss their claims against the non-New York defendants for lack of personal jurisdiction. As with its arguments in support of its attempt to have the Court reconsider its decision with respect to the motion to dismiss, plaintiffs arguments relative to the availability of jurisdiction are essentially a rehashing of the same arguments they made in response to the original motion. The facts the plaintiffs contend were overlooked by the Court were considered and expressly rejected. Contrary to the contention of the plaintiffs', the Court explicitly considered arguments that the five months spent negotiating the MSA in New York, the selection of a New York bank as the Escrow Agent and a New York choice of law provision conferred jurisdiction over the defendants. See Opinion, at pp. 13-14. The Court simply found that these contacts were not sufficient, when measured against the totality of the circumstances, to confer personal jurisdiction over the non-New York defendants.
Nor is the Court persuaded that submitting briefs as amicus curiae in a lawsuit filed in New York is satisfactory to create jurisdiction. The suit was not filed by the defendants. Appearing as amicus curiae does not reflect an attempt by the defendants to purposely avail themselves of the benefits of doing business in New York. To the extent that the filing of that action in New York is an outgrowth of the choice of law provision in the MSA, that argument was addressed in the Court's Order and Opinion.
Finally, plaintiffs submit that if the defendants violated the Sherman Act they committed a tortious act within the state. Were it the case that the defendants committed a tortious act within the state, NYCPLR § 302(a)(2) would grant this Court jurisdiction. Plaintiffs make clear in their Complaint, see Compl. ¶ 3, and their papers in opposition to the Motion to Dismiss for Lack of Personal Jurisdiction, see Pl. Brief in Opp., at p. 2, that their claims are aimed at the Escrow and Contraband Statutes, not the MSA itself. These Statutes were enacted by the individual states through their individual legislatures. The Statutes were not enacted in New York. Furthermore, the defendants are named in their official capacities on the notion that they are the ones attempting to enforce the Statutes in their respective states. Any tortious conduct was, therefore, committed in the various states. Only New York and defendant Eliot Spitzer can be claimed to have committed a potentially tortious act within the jurisdiction of this Court. Thus, the Court refuses to reconsider its decision to dismiss the claims against the non-New York defendants for lack of personal jurisdiction.
Request for Leave to Amend
Plaintiffs request, in the alternative, that they be granted leave to amend their complaint. Leave to amend should be freely given unless there is evidence of undue delay, bad faith, undue prejudice to the non-moving party or futility. See Foman v. Davis, 371 U.S. 178, 182 (1962). In this instance allowing the plaintiffs to amend would result in undue prejudice and be an exercise in futility. The prejudice would stem from the fact that this action is two-years old and was the subject of motions to dismiss that took more than six months to brief and submit.
Even if the Court were to ignore the prejudice that this would cause to defendants, the Court could not possibly ignore the futility of allowing the amendment. Nothing in plaintiffs' proposed Amended Complaint, see Williams Aff. Ex. A, would change the Court's opinion with respect to the motion to dismiss for failure to state a claim on which relief can be granted. Courts of this circuit are instructed that if the proposed new claim cannot withstand a 12(b)(6) motion, leave to amend should be denied as futile. See Ricciuti v. N.Y.C. Transit Auth., 941 F.2d 119, 123 (2d Cir. 1991). In this instance, plaintiffs do not add a new claim but rather seek to add alleged facts in further support of their existing claims. None of these facts are new to the case and none would change the Court's decision to dismiss all but the Sherman Act claim. Grand River, itself, concedes this very point in its request for leave to amend. Grand River states that "it does not believe it necessary" to amend the Complaint to include the additional information it seeks to add. See Pl. Brief in Supp., at p. 7. Allowing plaintiffs to amend would, therefore, be an exercise in futility.
Conclusion
Plaintiffs' request for reconsideration of the Court's decision with respect to its Sherman Act claim as to the New York defendant is granted. That portion of the Court's September 29, 2003 Opinion and Order regarding the Sherman Act claim is hereby vacated. The parties are to begin conducting the necessary discovery with respect to this claim immediately, and conclude the discovery process by no later than December 15, 2004. Discovery is to be overseen by Magistrate Judge Eaton. Any disputes or issues that should arise are to be submitted to him.
The remainder of plaintiffs' request for reconsideration is denied. This includes plaintiffs' motion for reconsideration of dismissal of the claims against the non-New York defendants. As such, the only defendant against whom the Sherman Act claim is to be reinstated is the New York defendant, Eliot Spitzer in his official capacity as Attorney General. Plaintiffs' request for leave of the Court to amend the Complaint is also denied. A status conference is set for December 20, 2004 at 9:45 a.m.
SO ORDERED.