Companhia Brasileira Carbureto De Calcio-CBBCC v. Applied Industrial Materials Corp.

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
COMPANHIA BRASILEIRA )
CARBURETO DE CALCIO - CBCC, )
et al., )
)
Plaintiffs, )
)
v. ) Civil Action No. 01-646 (RMC)
)
) (Consolidated with
APPLIED INDUSTRIAL ) Civil Action No. 01-2678 (RMC))
MATERIALS CORP., et al., )
)
Defendants. )
____________________________________)
MEMORANDUM OPINION
In 1992, certain participants in the U.S. ferrosilicon1 industry filed an anti-
dumping petition with the International Trade Commission (“ITC”), causing the ITC to impose
import duties on foreign producers of ferrosilicon and in turn causing Plaintiffs, who are foreign
producers, to withdraw from the U.S. market. Subsequently, the Department of Justice
investigated, charged, and convicted U.S. ferrosilicon producers of price fixing. Based on the
price fixing convictions, the ITC reviewed its decision to impose duties on foreign producers,
and in 1999, the ITC reversed itself. In 2001, Plaintiffs brought these consolidated cases against
the following U.S. ferrosilicon producers: CC Metals & Alloys, Inc. (“CC Metals”); Elkem
1
Ferrosilicon is a material used in making steel.
Metals, Inc. (“Elkem”); and Applied Industrial Materials Corporation (“AIMCOR”).2 Plaintiffs
allege that CC Metals, Elkem, and AIMCOR (collectively “Defendants”) conspired to file
fraudulent antidumping petitions with the ITC in violation of the Sherman Antitrust Act, 15
U.S.C. § 1, and the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C.
§ 1962(c) & (d).
Defendants filed a joint memorandum in support of their separate motions to
dismiss. They argue lack of personal jurisdiction, the statute of limitations, lack of standing, and
failure to state a claim. As explained below, the motions will be denied.
I. FACTS
A. Factual Background
In May 1992, AIMCOR, American Alloys Inc., Globe Metallurgical Inc.
(“Globe”), and unions representing Elkem and CC Metals employees petitioned the ITC to
impose import tariffs on foreign ferrosilicon for alleged unfair “dumping” of those products at
low prices in the United States. Compl. [Dkt. 1] ¶ 20;3 Opp’n [Dkt. 114], Ex. A (“1999 ITC
Decision”) at 13. The ITC was persuaded, and the Department of Commerce imposed duties on
ferrosilicon from various foreign countries in 1993 and on ferrosilicon from Brazil in 1994. This
allegedly caused Plaintiffs, Brazilian ferrosilicon producers,4 to withdraw from the U.S. market.
2
Elkem is the successor of Elkem Metals Company, Inc., and CC Metals is the successor
in interest to SKW Metals & Alloys, Inc. (“SKW”). All other defendants named in the
Complaint have been dismissed.
3
Citations to the Complaint are to the Complaint in Civil Action No. 01-646. The
Complaint filed in Civil Action 01-2678 is identical in all material respects.
4
Plaintiffs are: Companhia Brasileira Carbureto de Calcio – CBCC (“CBCC”);
Companhia Perroligas Minas Gerais – Minasligas; and Cia. De Ferroligas Da Bahia – Ferbasa.
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Beginning in 1993, the Department of Justice investigated the domestic silicon
products industry for illegal price fixing. That investigation resulted in a guilty plea and two
convictions. On September 22, 1995, Elkem pleaded guilty to conspiracy to engage in price
fixing; on April 18, 1996, American Alloys pleaded guilty to the same charge; and on March 17,
1997 CC Metals’ predecessor (SKW) and its senior vice president (Charles Zak) were convicted
of the same charge.5
As a result of the criminal case, in 1998, Plaintiffs requested that the ITC review
its ruling on the antidumping petition. The ITC did so and in August of 1999 reversed its prior
decision. See 1999 ITC Decision. In 2001, Plaintiffs brought these consolidated cases alleging
that the Defendants conspired to file fraudulent antidumping petitions with the ITC, causing the
imposition of antidumping duties that harmed Plaintiffs. The Complaint alleges that Defendants
violated section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1 (Count 1) as well as RICO, 18
U.S.C. § 1962(c) & (d) (Counts II and III).6
B. Procedural Background
These consolidated cases were stayed while the 1999 ITC Decision lifting the
import tariffs was appealed. After almost ten years of litigation, the Court of International Trade
and the Federal Circuit both affirmed. See Elkem Metals Co. v. United States, No. 99-00627,
2008 WL 4097463 (C.I.T. Sept. 5, 2008) (affirming the ITC’s fourth remand determination),
5
Globe was named as an unindicted co-conspirator. SKW and Mr. Zak’s convictions
were upheld on appeal. See United States v. SKW Metals & Alloys, Inc., 195 F.3d 83 (2d Cir.
1999). American Alloys filed a petition for bankruptcy protection in January 2000, and it was
not named as a defendant in this action.
6
See Compl., Count I ¶¶ 43-47, Count II ¶¶ 48-59, Count III ¶¶ 60-64.
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aff’d without op., No. 2009-1007, 2009 WL 1285837 (Fed. Cir. May 11, 2009).
The cases here then resumed. In 2010, this Court dismissed the case for lack of
personal jurisdiction over the Defendants, holding that the government contacts doctrine barred
Plaintiffs from relying on Defendants’ participation in the ITC proceedings as a basis for
personal jurisdiction.7 Plaintiffs appealed to the D.C. Circuit. The Circuit certified to the D.C.
Court of Appeals the question of whether, under District of Columbia law, a petition sent to a
federal government agency in the District provides a basis for establishing personal jurisdiction
over the petitioner when the plaintiff has alleged that the petitioner fraudulently induced
unwarranted government action against the plaintiff. Companhia Brasileira Carbureto de Calcio
v. Applied Indus. Materials Corp., 640 F.3d 369, 373 (D.C. Cir. 2011). When the D.C. Court of
Appeals answered in the affirmative, see Companhia Brasileira Carbureto de Calcio v. Applied
Indus. Materials Corp., 35 A.3d 1127 (D.C. 2012), the D.C. Circuit vacated the judgment of this
Court with regard to personal jurisdiction and remanded for further proceedings. Companhia
Brasileira Carbureto de Calcio v. Applied Indus. Materials Corp., 464 Fed. Appx. 1, 2012 WL
555650 (D.C. Cir. Feb. 10, 2012).8
Hence, jurisdiction returned to this Court. Elkem and CC Metals immediately
moved to dismiss for lack of personal jurisdiction. The Court denied the motion. See Order
7
Mem. Op. [Dkt. 97] at 11 (citing Naartex Consulting Corp. v. Watt, 722 F.2d 779, 787
(D.C. Cir. 1983) (such contacts may not be considered to establish personal jurisdiction, as to do
so would impair the right to petition the government for redress of grievances).
8
The Circuit affirmed, in part, this Court’s rejection of the coconspirator theory of
jurisdiction based on an alleged conspiracy with The Ferroalloys Association (“TFA”), due to
Plaintiffs’ failure to plead with particularity the conspiracy and the underlying overt acts by TFA
within the forum. 640 F.3d at 372.
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[Dkt. 109]; Op. [Dkt. 110]. Now, all remaining Defendants (Elkem, CC Metals and AIMCOR)
have moved to dismiss, arguing lack of personal jurisdiction, the statute of limitations, lack of
standing, and failure to state a claim. Dismissal is not warranted.
II. LEGAL STANDARD
A. Rule 12(b)(1)
Pursuant to Federal Rule of Civil Procedure 12(b)(1), a defendant may move to
dismiss a complaint, or any portion thereof, for lack of subject-matter jurisdiction. Fed. R. Civ.
P. 12(b)(1). When reviewing a motion to dismiss for lack of jurisdiction, a court must review the
complaint liberally, granting the plaintiff the benefit of all inferences that can be derived from the
facts alleged. Barr v. Clinton, 370 F. 3d 1196, 1199 (D.C. Cir. 2004). Nevertheless, “the court
need not accept factual inferences drawn by plaintiffs if those inferences are not supported by
facts alleged in the complaint, nor must the [c]ourt accept plaintiff’s legal conclusions.”
Speelman v. United States, 461 F. Supp. 2d 71, 73 (D.D.C. 2006).
To determine whether it has jurisdiction over the claim, a court may consider
materials outside the pleadings. Settles v. U.S. Parole Comm’n, 429 F.3d 1098, 1107 (D.C. Cir.
2005). No action of the parties can confer subject matter jurisdiction on a federal court because
subject matter jurisdiction is both an Article III and a statutory requirement. Akinseye v. Dist. of
Columbia, 339 F.3d 970, 971 (D.C. Cir. 2003). The party claiming subject matter jurisdiction
bears the burden of demonstrating that such jurisdiction exists. Kokkonen v. Guardian Life Ins.
Co. of America, 511 U.S. 375, 377 (1994); Khadr v. United States, 529 F.3d 1112, 1115 (D.C.
Cir. 2008).
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B. Rule 12(b)(6)
A motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil
Procedure 12(b)(6) challenges the adequacy of a complaint on its face. Fed. R. Civ. P. 12(b)(6).
A complaint must be sufficient “to give a defendant fair notice of what the . . . claim is and the
grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal
citations omitted). Although a complaint does not need detailed factual allegations, a plaintiff’s
obligation to provide the grounds of his entitlement to relief “requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. To
survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true,
to state a claim for relief that is “plausible on its face.” Twombly, 550 U.S. at 570.
A court must treat the complaint’s factual allegations as true, “even if doubtful in
fact.” Twombly, 550 U.S. at 555. But a court need not accept as true legal conclusions set forth
in a complaint. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). In deciding a motion under
Rule 12(b)(6), a court may consider the facts alleged in the complaint, documents attached to the
complaint as exhibits or incorporated by reference, and matters about which the court may take
judicial notice. Abhe & Svoboda, Inc. v. Chao, 508 F.3d 1052, 1059 (D.C. Cir. 2007).
III. ANALYSIS
A. Personal Jurisdiction
Defendants contend that they are not subject to the personal jurisdiction of this
Court. To establish personal jurisdiction, a plaintiff must allege facts evidencing purposeful
activity in the district, by which the defendant invoked the benefits and protections of the
district’s laws. See Novak-Canzeri v. HRH Prince Turki Bin Abdul Aziz Al Saud, 864 F. Supp.
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203, 205 (D.D.C. 1994). The Complaint alleges that AIMCOR, Globe, and the unions conducted
such purposeful activity in the district by filing a fraudulent ITC petition.9 Compl. ¶¶ 19-20.
In their prior motion to dismiss, Elkem and CC Metals argued that they had no
contacts with this forum and they were not petitioners before the ITC. They contended that the
fraudulent ITC petition filed by others could not be used as a basis for exercising jurisdiction
over them. This Court rejected that argument, holding:
[T]he Court can exercise personal jurisdiction over Elkem and CC
Metals. The Complaint alleges that they conspired with the
petitioners before the ITC to violate the antitrust and RICO laws
and that the ITC petitioners had the requisite personal contact with
the District of Columbia, i.e., the filing of the ITC petition. Thus,
coconspirator jurisdiction applies.
Op. [Dkt. 109 at 8]. While Elkem and CC Metals have preserved the issue for appeal, they do
not seek reconsideration here.
This time around, Elkem and CC Metals are joined by AIMCOR, who (together
with American Alloys, Globe, and the unions) was a petitioner before the ITC. In this iteration,
Defendants argue that the Complaint fails to meet the heightened pleading standard for a
pleading a fraud claim.10 Defendants argue that Plaintiffs must allege with particularity that the
ITC petition fraudulently induced unwarranted government action against Plaintiffs. In order to
sufficiently allege fraud, a plaintiff must allege both fraudulent intent and reasonable reliance.
Companhia Brasileira, 35 A.3d at 1134. Unsupported allegations are usually deemed
9
If the petition were not fraudulent, the filing of the petition would fall under the
government contact exception to personal jurisdiction.
10
A party alleging fraud must “state with particularity the circumstances constituting [the]
fraud . . . .” Fed. R. Civ. P. 9(b).
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insufficient. Id. at 1135. Noting that limited jurisdictional discovery was taken in this case,
Defendants assert that Plaintiffs should proffer affidavits or other factual support for their
allegations of fraud against AIMCOR and the other ITC petitioners.
Under the unique circumstances of this case where the ITC has determined that it
had been defrauded, this Court can rely on the ITC’s findings as a basis for exercising personal
jurisdiction. The ITC explained that its original determination that imports were causing
material injury to the domestic producers was based on the false belief that the U.S. ferrosilicon
market was “competitive and price sensitive.” 1999 ITC Decision at 3. In fact, the three U.S.
ferrosilicon producers who represented a majority of U.S. production (Elkem, SKW, and
American Alloys) were convicted of conspiracy to fix prices from 1989 to 1991. Because the
period of the price fixing conspiracy encompassed a substantial portion of the time period on
which the ITC based its original determination and because the ITC had the authority to
reconsider a decision obtained by fraud, the ITC undertook the task of reconsideration. Id. at 3 &
6-7.
When the ITC decided to impose antidumping tariffs, the focal point of the
analysis was price. But the ITC had based its original finding on misrepresentations and
omissions by domestic ferrosilicon producers. “Domestic producers were criminally convicted
of an offense concerning an issue — the establishment of prices for ferrosilicon — that was a
focal point of the original ITC investigations. In addition, domestic producers made material
misrepresentations and omission throughout the investigations relating to that key issue.” Id. at
8. The record in the original investigation was “replete with material misrepresentations and
omissions stemming from the criminal price fixing conspiracy.” Id. at 12. Accordingly, the ITC
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refused to rely on such misrepresentations and omissions:
In light of the material misrepresentations and omissions made by
American Alloys, Elkem, SKW, Globe, and AIMCOR, we have
determined not to rely on information these firms have submitted.
Their misrepresentations and omissions concerning competition in
the marketplace and the establishment of prices were pervasive,
and were not limited to discrete transactions or periods of time.
Id. at 23. The ITC described the effect of the fraud: “These actions by the domestic producers
seriously undermined the integrity of the ITC’s proceedings and compromised the deliberative
process, and in a broader sense, constituted an abuse of the unfair trade laws we administer.” Id.
at 3. The ITC reversed the imposition of import duties. “[W]e have determined on
reconsideration that the domestic ferrosilicon industry is not materially injured or threatened with
material injury by reason of imports from Brazil . . . .” Id. at 41.
AIMCOR sought reversal of the August 1999 ITC Decision, and in 2002 the ITC
backed off of its prior finding that AIMCOR knew about the price fixing conspiracy. Because
the record contained some evidence that would support a finding that AIMCOR knew about the
price fixing conspiracy and some evidence that would support a finding it did not, the ITC
decided that it did not have sufficient evidence to find that AIMCOR was culpable of fraud.
AIMCOR’s Reply [Dkt. 91], Ex. A (2002 ITC Decision) at 7-8. The ITC made a similar finding
regarding Globe. Id. at 8-10. Even so, the ITC did not reverse its 1999 Decision. Noting that
AIMCOR was a relatively small producer while Elkem, SKW, and American Alloys together
represented a majority of the U.S. production, the ITC refused to reverse its conclusion its
original antidumping decision had been based on fraud. Id. at 10-11.
Consequently, our finding on remand that AIMCOR and Globe did
not make material misrepresentations or omissions during the
original Commission investigations does not undercut the findings
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the Commission made in its 1999 opinion concerning either the
pervasiveness or the significance of the misrepresentations and
omissions that domestic ferrosilicon producers made during the
original investigations.
...
The remand record thus supports the same central conclusion that
the Commission made in 1999: that the vast majority of the
domestic industry significantly impeded the Commission’s
investigations by making misstatements and omissions that
affected central issues in the original investigations pertaining to
the relevant conditions of competition in the domestic industry,
pricing of the like product, and factors that affected pricing of the
like product.
Id. at 11. The ITC reaffirmed its 1999 Decision.11
The Complaint here alleges that Defendants conspired with one another and the
ITC petitioners (AIMCOR, American Alloys, Globe, and the unions). In addition, the ITC found
that petitioner American Alloys was culpable of fraud before the ITC in Washington D.C. That
contact with the District of Columbia serves as a basis for personal jurisdiction over American
Alloys. When a court has personal jurisdiction over a coconspirator (American Alloys) of a
nonresident defendant (Defendants), the coconspirator is deemed the nonresident’s agent for
11
The ITC reaffirmed, holding:
In light of the fact that domestic prices were a function of the conspiracy, demand
trends, and the ferrosilicon production process, we cannot conclude that there is a
significant nexus between the subject imports and any price suppression or
depression experienced by the domestic industry. In the 1999 opinion, we
concluded that, absent volume or price effects, we could not find that the subject
imports had a significant impact on the domestic industry. We reaffirm that
conclusion now.
2002 ITC Decision at 27.
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purposes of the long arm statute. See United States v. Philip Morris, Inc., 116 F. Supp. 2d 116,
122 (D.D.C. 2000). Thus, the ITC petitioners (including American Alloys) are deemed to be the
agents of AIMCOR, Elkem, and CC Metals for the purpose of the long arm statute.
To establish personal jurisdiction over coconspirators, a plaintiff must allege with
particularity the existence of the conspiracy, the defendant’s participation in the conspiracy, and
an overt act by a coconspirator within the forum. FC Inv. Grp. v. IFX Markets, Ltd., 529 F.3d
1087, 1096 (D.C. Cir. 2008). The Complaint alleges Defendants conspired to file a fraudulent
antidumping petition with the ITC. Compl. ¶¶ 16-18. It alleges an overt act by a coconspirator
in the forum — the filing of the allegedly fraudulent antidumping petition with the ITC. Id.
¶¶ 19-20. It also alleges that AIMCOR, Elkem and CC Metals participated in the conspiracy by
asserting that: they agreed to it and coordinated with the ITC petitioners, id. ¶¶ 16, 18, 22; they
provided false information to the ITC via questionnaires, id. ¶ 17, 22-23, 55i, 55m; they induced
unions to join the ITC petition, id. ¶ 20; and they paid the unions’ attorney fees. Id.12 The
motion to dismiss for lack of personal jurisdiction will be denied.
B. Statute of Limitations
Defendants also contend that this suit should be dismissed as barred by the
applicable four year statute of limitations applicable to antitrust and RICO actions. Damages are
12
While the allegation of “inducement” of the unions to file the ITC petition and
payment of the unions’ attorney fees did not demonstrate contact with the District of Columbia
that on its own could be the basis of personal jurisdiction, these allegations suffice to assert that
Elkem and CC Metals took certain actions in furtherance of the alleged conspiracy. Similarly,
while the allegation that Elkem and CC Metals provided false responses to ITC questionnaires
does not constitute contact with the District that establishes personal jurisdiction over Elkem and
CC Metals, these allegations also support a claim that they took action in furtherance of the
alleged conspiracy.
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recoverable under federal antitrust acts only if suit is commenced within four years after the
cause of action accrued. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338
(1971) (citing 15 U.S.C. § 15b); see Klehr v. A.O. Smith Corp., 521 U.S. 179, 183 (1997) (citing
Agency Holding Corp. v. Malley-Duff & Assocs., Inc., 483 U.S. 143 (1987) (the four year statute
of limitations that applies to antitrust actions also applies to civil RICO claims).
Generally, an antitrust claim accrues and the statute of limitations begins to run
when a defendant commits an overt act that injures a plaintiff’s business. Zenith Radio, 401 U.S.
at 338. Even so, an antitrust suit can be brought more than four years after the events which
initially created the cause of action if the damages attributable to the defendant’s actions outside
the limitation period were speculative or unprovable at that time. Zenith, 401 U.S. at 339 (cited
with approval in Klehr, 521 U.S. at 190-91).13 The rule focuses on when the injury accrued.
[I]f a plaintiff feels the adverse impact of an antitrust conspiracy on
a particular date, a cause of action immediately accrues to him to
recover all damages incurred by that date and all provable damages
that will flow in the future from the acts of the conspirators on that
date. To recover those damages, he must sue within the requisite
number of years from the accrual of the action. On the other hand,
it is hornbook law, in antitrust actions as in others, that even if
injury and a cause of action have accrued as of a certain date,
future damages that might arise from the conduct sued on are
unrecoverable if the fact of their accrual is speculative or their
amount and nature unprovable.
In antitrust and treble-damage actions, refusal to award
future profits as too speculative is equivalent to holding that no
cause of action has yet accrued for any but those damages already
suffered. In these instances, the cause of action for future damages,
13
A claim can also be brought outside the limitations period under the “continuing
violations” theory. Under this theory, if a defendant committed further overt acts that harmed the
plaintiff within the limitations period, the plaintiff can recover for the injuries caused by the
additional overt acts. Zenith, 401 U.S. at 338-39.
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if they ever occur, will accrue only on the date they are suffered;
thereafter the plaintiff may sue to recover them at any time within
four years from the date they were inflicted. Otherwise future
damages that could not be proved within four years of the conduct
from which they flowed would be forever incapable of recovery,
contrary to the congressional purpose that private actions serve as
an important bulwark of antitrust enforcement, and that the
antitrust laws fully protect the victims of the forbidden practices as
well as the public.
Zenith, 401 U.S. at 339-40 (internal quotation marks and citations omitted) (emphasis added). In
other words, a plaintiff may recover for acts that violate the antitrust laws which were committed
prior to the statute of limitations date, but he may only recover damages for such acts which
accrued and became ascertainable within the period of the statute. In re Multidistrict Vehicle Air
Pollution, 591 F.2d 68, 73 (9th Cir. 1979). Damages “accrue” when they can be reasonably
established. Poster Exchange, Inc. v. Nat’l Screen Serv. Corp., 456 F.2d 662, 667 (5th Cir.
1972) (following Zenith). “The moment the victim can prove such subsequent damages, the
statute begins to run leaving four more years in which to assert them.” Id.Like the antitrust statute, the objective of civil RICO is to encourage civil
litigation to supplement Government efforts to deter and penalize prohibited practices. Rotella v.
Wood, 528 U.S. 549, 557 (2000). Also, like the antitrust statute of limitations, the statute of
limitations for a RICO claim is based on an injury-focused accrual rule. Id. at 555. To put it
another way, a RICO cause of action accrues when the plaintiff knew, or should have known, of
the existence of the RICO injury. Lares Group, II v. Tobin, 221 F.3d 41, 44 (1st Cir. 2000)
(citing Rotella, 528 U.S. 549).
Defendants contend that Plaintiffs’ causes of action accrued in February 1994
when Plaintiffs were allegedly injured, i.e., when duties were first imposed on Plaintiffs due to
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the ITC’s antidumping decision. Defendants further assert that the statute of limitations expired
four years later, in February of 1998, and thus this case (filed in 2001) was out of time.
But under the principles enunciated above, Plaintiffs’ antitrust and RICO claims
are not barred by the statute of limitations. Plaintiffs’ antitrust and RICO claims did not accrue
until 1999 because their damages were not actually discoverable and were not provable until the
1999 ITC Decision. Before 1999 it was not known whether Defendants’ actions caused the ITC
to impose the antidumping tariffs (thereby injuring Plaintiffs) or whether the 1999 ITC Decision
had an independent basis. The filing of this suit in 2001 was well within the four year statute of
limitations period.
In fact, this case was stayed until 2008 in order to permit Defendants to appeal the
1999 ITC Decision to the Court of International Trade and then to the Federal Circuit, with the
understanding by the parties and the Court that Plaintiffs’ case hinged on the affirmance of the
1999 ITC Decision. If the 1999 ITC Decision did not become final, but instead it was
determined that the duties were rightly imposed despite the actions of the ITC petitioners and
Defendants, Plaintiffs would not have been injured by reason of Defendants’ actions.
The finding that damages did not accrue until the 1999 ITC Decision is
underscored by a district court decision in a pre-1999 suit similar to this one — Midland Export,
Ltd. v. Elkem Holding, Inc., 947 F. Supp. 163 (E.D. Pa. 1996). In that case, Midland was a
ferroalloy importer who sued Elkem and others alleging that they had “deliberately engaged in
price fixing with the purpose of causing antidumping duties to be imposed on plaintiff” and
alleging that the defendants had violated the Sherman Act. 947 F. Supp. at 164-65. Defendants
argued that Midland lacked standing to sue because Midland could not prove a causal connection
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between the alleged price fixing and its injury. Defendants argued that their actions did not harm
the plaintiff; it was the ITC’s imposition of tariffs that did. The court agreed and dismissed the
case, noting “Defendants can be said to have ‘caused’ the ITC’s [duties] determination only to
the extent that their alleged price fixing and the information they supplied actually influenced the
ITC’s decision.” Id. at 167-68. The Midland court explained, “[W]e cannot say that market
distortion resulting from price fixing would likely result in the wrongful imposition of
antidumping duties by the ITC given the ITC’s expertise and independent decision process.” Id.
at 167. The ITC considers numerous factors in deciding whether to impose antidumping duties,
some of which are not related to price fixing or market distortion. Id. at 168. “Thus, determining
the degree to which the ITC actually relied on information unrelated to the alleged conspiracy
would inevitably be a highly speculative inquiry, impossible to resolve with any degree of
certainty.” Id.In this case, Plaintiffs do not ask the Court to undertake such a “highly
speculative” inquiry. The ITC itself determined that its imposition of duties on foreign
ferrosilicon was based on misrepresentations and omissions by the ITC petitioners and
Defendants. Until the ITC review was complete, it was unknown and unknowable whether that
agency would conclude that Defendants’ fraud caused the imposition of import duties or whether
the ITC would conclude that the duties were appropriate despite the fraud. Plaintiffs’ claims
accrued when their injury became discoverable, provable, and no longer speculative — i.e., at the
time of the August 1999 ITC Decision when Plaintiffs’ cause of action accrued. To hold
otherwise would allow the defrauding party the benefit of his fraud.
Defendants complain that to allow this litigation to proceed twenty years after the
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price fixing conspiracy ended would undermine the purpose of the statute of limitations. But it is
not Plaintiffs’ fault that this case has lingered so long. While convictions related to the price
fixing conspiracy were obtained in 1995 through 1997, it was not until 1999 that the ITC
reversed its decision to impose the antidumping tariffs. That decision was appealed and was
affirmed almost ten years later in May 2009. See Elkem Metals, 2008 WL 4097463, aff’d
without op., 2009 WL 1285837. In the meantime, Plaintiffs filed suit here, and the case was
stayed awaiting the result of the appeals. When the Federal Circuit ruled in 2009, this Court
lifted the stay, Defendants moved to dismiss, and, in 2010, the Court granted the motion based on
personal jurisdiction. Plaintiffs appealed, and the Circuit did not resolve the appeal for another
two years. While a final resolution to this case would benefit all parties, the simple desire to end
a long-standing case does not serve as an adequate reason to find it barred by the statute of
limitations.
C. Standing
Defendants also contend that Plaintiffs lack antitrust standing to bring this suit.
Antitrust standing requires a plaintiff to show an actual or threatened injury “of the type that the
antitrust laws were intended to prevent” that was caused by the defendant’s alleged wrongdoing.
Andrx Pharm. Inc. v. Biovail Corp. Int’l, 256 F.3d 799, 806 (D.C. Cir. 2001). To satisfy the
antitrust standing requirement, a plaintiff must show that its alleged injury has a sufficiently
direct causal relationship to the alleged wrongdoing. Associated Gen. Contractors v. California
State Council of Carpenters, 459 U.S. 519, 533-35 (1983). “[W]hen competitors violate the
antitrust laws and another competitor is forced from the market, the latter suffers an injury-in-
fact.” Andrx, 256 F.3d at 806.
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Defendants make the same argument that the defendants in Midland did — that
the ITC caused Plaintiffs’ injury, not Defendants. As explained above, Midland was different in
one key respect — the ITC had not yet reversed its decision to impose antidumping duties. In
Midland, it was impossible to tell if the ITC would have imposed antidumping duties,
independent of the alleged antitrust wrongdoing. See Midland, 947 F. Supp. at 167-68. This
case arises after the ITC has determined unequivocally that it would not have imposed
antidumping duties if it had not been for the misrepresentations and omissions of the petitioners
and Defendants. See August 1999 Decision; ITC 2002 Decision. Midland is inapposite due to
this critical distinction.
Defendants also argue, without supporting evidence, that Plaintiffs caused their
own injury – that “[i]f Plaintiffs had not charged less than fair value for their ferrosilicon, they
would have been able to compete in the United States market regardless of whether Defendant’s
had filed antidumping petitions or not.” This argument ignores the ITC’s reversal of the
imposition of tariffs and its finding that its original decision was based on the false understanding
that the market was competitive and price sensitive. See 1999 ITC Decision at 3.
In addition, Defendants contend that Plaintiffs are not the proper parties to bring
suit, that the tariffs were imposed on importer agents and when the duties were reversed the
tariffs were returned to the agents. Plaintiffs do not alleged that they paid the tariffs themselves
nor do they seek recoupment of the tariffs. Instead, they assert their own injury separate from the
harm caused to importer agents. They allege that they suffered an antitrust injury when they were
excluded from the market, and they seek to recover lost profits. Consequently, Plaintiffs are the
proper party to seek to recover for the alleged antitrust injury. They have shown a sufficiently
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direct relationship between Defendants’ alleged wrongdoing and the imposition of duties that
allegedly caused Plaintiffs to be excluded from the market.14
Defendants also contest Plaintiffs’ standing to bring the RICO claims. Again,
Defendants assert that they did not cause any injury to Plaintiffs — the ITC did. As explained
above, this assertion is meritless. Plaintiffs allege that Defendants conspired to impose
antidumping duties on Plaintiffs and used the ITC as their tool to do so. The ITC determined that
it imposed duties based on the wrongdoing of the ITC petitioners and Defendants. Plaintiffs
have standing to bring the RICO claims. The motion to dismiss for lack of standing will be
denied.
D. Failure to State a RICO Claim
Defendants contend that Plaintiffs have failed to allege a “pattern” of RICO
activity. A claim under RICO consists of four elements: (1) conducting (2) an enterprise
(3) through a pattern (4) of racketeering activity. W. Assocs. Ltd. P’shp. v. Market Square
Assocs., 235 F.3d 629, 633 (D.C. Cir. 2001); see 18 U.S.C. § 1962(c).15 “Racketeering activity”
requires the commission of specified predicate criminal acts that are defined by statute. W.
Assocs., 235 F.3d at 633. RICO requires at least two overt acts of racketeering activity in order
to establish a pattern. 18 U.S.C. § 1961(5). Further, these acts must be related and must
“amount to or pose a threat of continued criminal activity.” H.J. Inc. v. Nw. Bell Tele. Co., 492
14
Defendants also assert a bogus claim that Plaintiffs’ suit will result in duplicative
recovery because Defendants have already settled certain claims by direct purchasers of
ferrosilicon. Plaintiffs are producers/sellers of ferrosilicon; they seek to recover lost profits; their
damage claims are not the same as those of direct purchasers who allegedly over-paid.
15
It is also a violation of the RICO statute to conspire to violate any subsection of 18
U.S.C. § 1962. See 18 U.S.C. § 1962(d).
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U.S. 229, 239 (1989).
In determining whether there is an alleged “pattern” of RICO activity, courts use a
commonsense, fact-specific approach. Id. at 241-42. The RICO pattern requirement “helps to
prevent ordinary business disputes from becoming viable RICO claims.” W. Assocs., 235 F.3d at
637. Courts have dismissed cases where the complaint alleges a combination of only a single
scheme, a single injury, and a few victims. See id. at 635 (dismissing RICO claim where plaintiff
alleged a single scheme of fraudulent bookkeeping entries, resulting in the diminished value of a
single partnership).
Common sense dictates that the claim alleged here is far from an ordinary
business dispute. Plaintiffs assert a large price fixing and antidumping scheme involving 57
predicate offenses in furtherance of a ten-year conspiracy to eliminate foreign competition so that
conspirators could maintain prices above what market conditions would ordinarily allow.
Compl. ¶ 16-23. Defendants were allegedly engaged in a “massive scheme to manipulate the
entire North American market for ferrosilicon and exclude from the market every ferrosilicon
producer from numerous countries around the world including China, Russia, Kazakhstan,
Ukraine, Venezuela, and Brazil.” Pl.’s Opp. [Dkt. 114] at 28. Defendants allegedly injured
every ferrosilicon producer in these six countries and affected every purchase of ferrosilicon in
the United States during the time of the price fixing conspiracy and the antidumping conspiracy.
The motion to dismiss the RICO claims for failure to state a claim will be denied.
IV. CONCLUSION
For the reasons stated above, the motions to dismiss filed by Elkem Metals, Inc.
[Dkt. 111], by CC Metals & Alloys, Inc. [Dkt. 112], and by Applied Industrial Materials
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Corporation [Dkt. 113] will be denied.16 A memorializing Order accompanies this Memorandum
Opinion.
Date: August 20, 2012 /s/
ROSEMARY M. COLLYER
United States District Judge
16
The Court makes no findings here regarding whether Plaintiffs can garner sufficient
evidence to survive a summary judgment motion or to succeed at trial.
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