MEAD JOHNSON & COMPANY LLC et al v. LEXINGTON INSURANCE COMPANY
Filing
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ORDER granting Lexington's 42 Motion to Dismiss Plaintiffs' Amended Complaint. Signed by Judge Richard L. Young on 1/18/2012. (TMD)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
EVANSVILLE DIVISION
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vs.
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LEXINGTON INSURANCE COMPANY, )
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Defendant.
MEAD JOHNSON & COMPANY, LLC,
and MEAD JOHNSON NUTRITION
COMPANY,
Plaintiffs,
3:11-cv-00043-RLY-WGH
ENTRY ON LEXINGTON INSURANCE COMPANY’S MOTION TO DISMISS
PLAINTIFFS’ AMENDED COMPLAINT
Defendant, Lexington Insurance Company (“Lexington”), moves to dismiss
Plaintiffs’ Amended Complaint for lack of subject matter jurisdiction pursuant to Rule
12(b)(1) of the Federal Rules of Civil Procedure. For the reasons set forth below, the
court GRANTS Lexington’s Motion.
This case arises out of prior litigation between PBM Products, LLC (“PBM”), and
Mead Johnson & Company, LLC and Mead Johnson Nutrition Company (“Mead
Johnson”), competitors in the sale of infant formula. PBM asserted that Mead Johnson
engaged in a false advertising campaign against PBM’s competing store brand infant
formulas, in violation of the Lanham Act. PBM ultimately prevailed by winning a
$13,500,000.00 jury verdict against Mead Johnson in November 2009. The verdict was
affirmed by the Fourth Circuit Court of Appeals in April 2011.
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During this time frame, Mead Johnson had in place Commercial General Liability
Policy No. 090-72-27 issued by National Union Fire Insurance Company (“National
Union”), and Commercial Umbrella Liability Policy No. 065302639 issued by Lexington,
both of which provided advertising liability coverage for the policy period February 10,
2009 to February 10, 2010. (Amended Complaint ¶ 7). Following the jury verdict, Mead
Johnson sought insurance coverage from National Union and Lexington for the
Underlying PBM Claim. This prompted National Union to file a declaratory judgment
action in this court, seeking a determination of its rights and obligations under its
Commercial General Liability Policy, and a declaration that it is not obligated to defend
or indemnify Mead Johnson with respect to the Underlying PBM Claim. See National
Union Fire Ins. Co. of Pittsburgh, Pa. v. Mead Johnson & Company, Mead Johnson
Nutritional Company, and PBM Products, LLC, 3:11-cv-15-RLY-WGH. Jurisdiction in
that case is predicated upon diversity of citizenship.
In the present case, Mead Johnson alleges that Lexington breached the Umbrella
Liability Policy by failing to provide coverage for the Underlying PBM Claim, and seeks
a declaratory judgment that Lexington owes Mead Johnson complete and comprehensive
coverage under the Umbrella Liability Policy. Jurisdiction is not predicated on diversity
of citizenship, as the principal place of business for both Mead Johnson and Lexington is
Delaware. Instead, jurisdiction is predicated on the Federal Arbitration Act (“FAA”) and
the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June
10, 1958, 21 U.S.T. 2517 (1970) (the “New York Convention”). (Amended Complaint ¶
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4). The arbitration relied upon by Mead Johnson in the Amended Complaint to support
subject matter jurisdiction relates to an arbitration between AIU Insurance Company
(“AIU”) and Bristol-Myers Squibb Company (“BMSCo”), in which BMSCo sought
coverage determinations with respect to both indemnity and defense costs for advertising
liability to PBM. Ultimately, on June 11, 2003, the arbitration panel issued a final award
in favor of BMSCo., and required AIU to pay $24,611,357.99 to BMSCo for its liability
under the policy, $1,617,514.38 for pre-judgment interest, and $634,397.36 for defense
and compliance-related costs. (Declaration of David A. Stryker ¶ 11). AIU, like National
Union and Lexington, is an affiliate of American International Group, Inc. (Id. ¶ 3).
The FAA cannot, by itself, confer subject matter jurisdiction. See Kittle v.
Prudential Ins. Co. of Am., 102 F.Supp.2d 1029, 1037 (S.D. Ind. 2000) (noting that a
plaintiff must plead subject matter jurisdiction independent from the Federal Arbitration
Act). Mead Johnson concedes that point. Mead Johnson contends, however, that the
New York Convention provides an independent basis upon which to predicate subject
matter jurisdiction.
As noted by Lexington, the arbitration alleged by Mead Johnson in its Amended
Complaint is factually inapposite and irrelevant to this dispute. The arbitration alleged by
Mead Johnson involves a different insurer (AIU), a different insurance contract (the AIU
Commercial Umbrella Policy No. CLM 932-07067), and a different underlying claim.
(See Declaration of Tara Leigh Lucas (“Lucas Dec.”), Ex. B). Accordingly, the
arbitration upon which Mead Johnson relies cannot confer jurisdiction because it has
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nothing to do with the actual parties and actual dispute in this matter.
Moreover, the New York Convention is limited to the recognition and enforcement
of foreign arbitrations:
An arbitration agreement or arbitral award arising out of a legal
relationship, whether contractual or not, which is considered as commercial,
including a transaction, contract, or agreement described in section 2 of this
title, falls under the Convention. An agreement or award arising out of
such a relationship which is entirely between citizens of the United States
shall be deemed not to fall under the Convention, unless that relationship
involves property located abroad, envisages performance or enforcement
abroad, or has some other reasonable relation with one or more foreign
states. For purposes of this section a corporation is a citizen of the United
States if it is incorporated or has its principal place of business in the United
States.
9 U.S.C. § 202 (emphasis added). The arbitration agreement, attached to the Declaration
of Tara Leigh Lucas, reflects that the arbitration alleged in the Amended Complaint
involved citizens of the United States, was conducted in New York, and required that the
arbitration panel give due consideration to New York law. (Lucas Dec. ¶¶ 8-9; Lucas
Dec., Ex. B ¶¶ 2, 4). In addition, the arbitration agreement provided that all disputes
arising out of the arbitration take place in a state or federal court located in the Southern
District of New York. (Lucas Dec. ¶ 10; Lucas Dec., Ex. B ¶ 10). The arbitration did not
involve property located abroad, did not envisage performance abroad, and had no
reasonable relation to a foreign state. In sum, the New York Convention has no
application to the present case. Accordingly, the court must find that it lacks subject
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matter jurisdiction. Lexington’s Motion to Dismiss Plaintiffs’ Amended Complaint
(Docket # 42) is therefore GRANTED.
SO ORDERED this 18th day of January 2012.
__________________________________
s/ Richard L. Young
RICHARD L. YOUNG, CHIEF JUDGE
RICHARD L. YOUNG, CHIEF JUDGE
United States District Court
United States District Court
Southern District of Indiana
Southern District of Indiana
Electronic Copies to:
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Mark D. Gerth
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Daniel I. Graham Jr.
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Laura A. McArdle
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Mark E. Miller
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Richard H. Nicolaides Jr.
BATES CAREY NICOLAIDES LLP
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John E. Rodewald
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Hal S. Shaftel
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Louis M. Solomon
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KIGHTLINGER & GRAY
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