Haley Paint Company v. E.I. Dupont De Nemours and Company et al

Filing 268

MEMORANDUM ORDER denying 222 Motion by plaintiff to Vacate prior order and requesting permission to take Jurisdictional Discovery. Signed by Judge Richard D Bennett on 4/3/2012. (aos, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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HALEY PAINT COMPANY, ET AL.

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PLAINTIFFS,
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CIVIL ACTION NO.: RDB-10-0318

V.

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E.I. DUPONT DE NEMOURS & CO., ET AL.
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DEFENDANTS.
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MEMORANDUM ORDER
Pending before this Court is Plaintiffs‟ Haley Paint Company and Isaac Industries,
Inc. (“Plaintiffs) Motion to Vacate Prior Order and Requesting Permission to Take
Jurisdictional Discovery (ECF No. 222). Previously, this Court granted the Defendant The
National Titanium Dioxide Company Ltd. d/b/a Cristal‟s (“Cristal”) motion to dismiss on
the ground that it could not exercise personal jurisdiction over the Saudi Arabian company.
Plaintiffs essentially seek, pursuant to Rule 60(b) of the Federal Rules of Civil Procedure, to
have this Court reconsider its prior ruling in light of “documents recently produced” that
were not available to the Plaintiffs when this Court first considered Cristal‟s motion to
dismiss. This Court has reviewed the record, as well as the pleadings and exhibits, and the
parties have agreed that no hearing is necessary.1 See Local Rule 105.6 (D. Md. 2011). For
the following reasons, the Plaintiffs‟ motion (ECF No. 222) is DENIED.

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This Court has adopted a practice of holding monthly teleconferences in this case to discuss
outstanding issues and discovery related matters. See, e.g., Letter Orders, ECF Nos. 204, 220, 236,
and 258. The parties agreed that no hearing is necessary on one of these calls.
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PROCEDURAL HISTORY
This class action lawsuit alleges price fixing and cartel practices in the multi-billion
dollar titanium dioxide industry in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1.
Plaintiffs have filed this class action on behalf of themselves and on behalf of a class
consisting of all persons and entities that purchased Titanium Dioxide in the United States
directly from one or more named Defendants between March 1, 2002, and the present.
Putative defendant Cristal is a foreign corporation domiciled in the Kingdom of
Saudi Arabia. During the class period, Cristal manufactured and sold titanium dioxide to
purchasers in the U.S. and elsewhere, directly or through affiliates and subsidiaries, including
Defendant Millennium Inorganic Chemicals, Inc. (“Millennium”). Millennium is a Delaware
corporation with its principal place of business in Maryland. Millennium manufactures
titanium dioxide, and markets and sells titanium dioxide products to its customers. The
Plaintiffs‟ Consolidated Amended Complaint, ECF No. 51, alleges that “Millennium has
acted as the U.S. agent and alter ego for Cristal. Cristal has exerted considerable control
over the activities and operations of Millennium such that the two entities are essentially
one.” Id. ¶ 14. On this basis, Plaintiffs sought to establish this Court‟s personal jurisdiction
over Cristal.
However, almost one year ago, this Court granted putative Defendant Cristal‟s
motion to dismiss after concluding that personal jurisdiction was lacking. Specifically, this
Court held that Cristal did not have the requisite “minimum contacts” with the State of
Maryland, and that because Cristal did not exert “considerable control” over its subsidiary
Millennium, the jurisdictional contacts of Millennium could not therefore be imputed to

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Cristal. Haley Paint Co. v. E.I. DuPont De Nemours and Co., 775 F. Supp. 2d 790, 799-800 (D.
Md. 2011). Moreover, this Court determined that jurisdictional discovery was not warranted
because “jurisdictional discovery „cannot simply be a fishing expedition, and absent
allegations . . . that would provide a basis for piercing the corporate veil, plaintiffs are not
entitled to such discovery.” Id. at 801 (quoting Glass v. Volkswagen of Am., Inc., 172 F. Supp.
2d 743, 744 (D. Md. 2001)).
The Plaintiffs did not move this Court to reconsider its prior ruling, and did not
pursue an interlocutory appeal—instead the Plaintiffs and the remaining Defendants2
proceeded to discovery. Discovery has largely been completed, and the Plaintiffs now argue
that in light of recently discovered evidence supporting their initial contention that
Millennium is the alter ego of Cristal, this Court should vacate its prior order and allow
jurisdictional discovery.
STANDARD OF REVIEW
Plaintiffs have filed their motion to vacate expressly pursuant to Rule 60(b) of the
Federal Rules of Civil Procedure. To support a motion under Rule 60(b), the moving party
must show “timeliness, a meritorious defense, a lack of unfair prejudice to the opposing
party, and exceptional circumstances.” Hale v. Belton Assoc., Inc., 305 F. App‟x 987, 988 (4th
Cir. 2009) (quoting Dowell v. State Farm Fire & Cas. Auto. Ins. Co., 993 F.2d 46, 48 (4th Cir.
1993)).

“Rule 60(b) provides extraordinary relief and may only be invoked under

„exceptional circumstances.‟” Mines v. United States, No. WMN-10-520, 2010 WL 1741375, at
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Two days prior to dismissing Cristal on jurisdictional grounds, this Court denied the other
Defendants‟ motion to dismiss, holding that the Plaintiffs had adequately stated a claim on which
relief may be granted. See Haley Paint Co. v. E.I. DuPont De Nemours and Co., 804 F. Supp. 2d 419 (D.
Md. 2011).
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*2 (D. Md. April 28, 2010) (Nickerson, J.) (quoting Compton v. Alton Steamship Co., Inc., 608
F.2d 96, 102 (4th Cir. 1982)).
Rule 60(b), however, applies only to final judgments. Fed. R. Civ. P. 60(b) (“On
motion . . . the court may relieve a party . . . from a final judgment, order, or proceeding”);
see also Fayetteville Investors v. Commercial Builders, Inc., 936 F.2d 1462, 1472 (4th Cir. 1991) (rules
59 and 60 apply only to final judgments). Federal Rule of Civil Procedure 54(b), after
mentioning that “[w]hen an action presents more than one claim for relief . . . the court may
direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if
the court expressly determines that there is no just reason for delay,”3 states:
Otherwise, any order or other decision however designated, that adjudicates
fewer than all the claims or the rights and liabilities of fewer than all than all
the parties does not end the action as to any of the claims or parties and may be
revised at any time before the entry of a judgment adjudicating all the claims and all the
parties rights and liabilities.
Fed. R. Civ. P. 54(b) (emphasis added).
Accordingly, because the Plaintiffs did not move for certification of this Court‟s
Order dismissing Defendant Cristal as final under Rule 54(b), the Order is interlocutory in
nature, and is more properly viewed through the lens of Rule 54. See generally 15A CHARLES
ALAN WRIGHT, ARTHUR R. MILLER, & EDWARD H. COOPER, Federal Practice and Procedure §
3914.7 (2d ed. 1992). In this regard, the Fourth Circuit has stated that “a district court
retains the power to reconsider and modify its interlocutory judgments,” and that power “is
committed to the discretion of the district court.” American Canoe Assoc. v. Murphy Farms, Inc.,

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For a discussion of the two-step process that a court must undertake in certifying a judgment as
final under Rule 54(b), see MCI Constructors, LLC v. City of Greensboro, 610 F.3d 849, 855 (4th Cir.
2010).
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326 F.3d 505, 514-15 (4th Cir. 2003) (citing, inter alia, Moses H. Cone Mem. Hosp. v. Mercury
Const. Corp., 460 U.S. 1, 12 (1983)).

Moreover, “[m]otions for reconsideration of

interlocutory orders are not subject to the strict standards applicable to motions for
reconsideration of a final judgment.” Id. at 514; see also Fayetteville Investors, 936 F.2d at 1472
(“a review of an interlocutory order under Rule 54 is not subject to the restrictive standards
of motions for reconsideration of final judgments under Rule 60”).
Accordingly, by requesting review under Rule 60(b), Plaintiffs have inadvertently
sought review under a heightened standard—a standard that is not necessary or proper in
this case. See id. at 1472-74 (district court improperly reconsidered interlocutory order under
the strictures of Rule 60). Therefore, this Court will not apply the heightened standard of
Rule 60(b) insofar as interlocutory orders “are left subject to the complete power of the
court rendering them to afford such relief from them as justice requires.” Fed. R. Civ. P.
60(b) Advisory Committee Note (1946).
ANALYSIS
Although the Plaintiffs need not show the “exceptional circumstances” required for
relief under Rule 60(b), they nevertheless fail to convince this Court that justice requires
vacating its prior order dismissing Defendant Cristal for lack of personal jurisdiction.
Before exercising personal jurisdiction over a non-resident defendant, a court must
determine that (1) the exercise of jurisdiction is authorized under the state‟s long-arm statute,
and (2) the exercise of jurisdiction conforms to the Fourteenth Amendment‟s due process
requirements. See Carefirst of Maryland, Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396
(4th Cir. 2003). For a non-resident defendant, due process requires that a defendant have

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certain minimum contacts with the forum state. See Int’l Shoe Co. v. Washington, 326 U.S. 310,
316 (1945). The Fourth Circuit has clarified that “due process requires that a defendant‟s
contacts with the forum state be tantamount to physical presence there.” Ritz Camera Ctrs.,
Inc. v. Wentling Camera Shops, Inc., 982 F. Supp. 350, 353 (D. Md. 1997) (citation omitted).
When, as here, the defendant has no direct contacts with the forum state and the
plaintiffs seeks to impute the jurisdictional contacts of a subsidiary to the parent defendant,
under Maryland law the agency test is used in analyzing whether or not to pierce the
corporate veil for jurisdictional purposes. See Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 61
(4th Cir. 1993). The Maryland agency test allows a court to attribute the actions or contacts
of a subsidiary corporation to the foreign parent “only if the parent exerts considerable
control over the activities of the subsidiary.” Id. Moreover, “[t]he fiction of the wholly
separate corporate form is jealously guarded by courts in Maryland, where, as a matter of
public policy, the [p]ower to pierce the corporate veil is to be exercised „reluctantly‟ and
„cautiously.‟” Baltimore Line Handling Co. v. Brophy, 771 F. Supp. 2d 531, 552 (D. Md. 2011)
(adopting Report and Recommendation of Magistrate Judge Gauvey of this Court) (quoting
DeWitt Truck Brokers, Inc. v. W. Ray Flemming Co., 540 F.2d 681, 683 (4th Cir. 1976)). At base,
“Maryland generally is more restrictive than other jurisdictions in allowing a plaintiff to
pierce the corporate veil, and courts do so only where necessary to prevent fraud or to
enforce a paramount equity.” Rheumatology Nurses Soc’y, Inc. v. Phoenix Grp. Holdings, LLC, No.
CCB-08-1675, 2009 WL 249233, at *3 (D. Md. Jan. 8, 2009) (citation omitted, emphasis
added); see also Dixon v. The Process Corp., 382 A.2d 893, 900 (Md. Ct. Spec. App. 1978) (“We
make it clear that the rule of law in this State is that no matter how flimsily woven is the

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corporate curtain, it may not be flung aside except to prevent fraud or [enforce] a paramount
equity.”). “[I]t is generally the case that the contacts of a corporate subsidiary cannot impute
jurisdiction to its parent entity.” Saudi v. Northrop Grumman Corp., 427 F.3d 271, 276 (4th Cir.
2005).
Here, the Plaintiffs do not argue that the corporate cloak has been used to perpetrate
some sort of fraud, and instead only argue that the jurisdictional contacts of Millennium
should be imputed to Cristal under the “alter ego” doctrine—a doctrine that this Court has
concluded “is not a separate basis for piercing the [corporate] veil, but is rather subsumed „in
the notion of paramount equity.‟”

Baltimore Line Handling, 771 F. Supp. 2d at 552-53

(quoting Hildreth v. Tidewater Equip. Co., Inc., 838 A.2d 1204, 1212-13 (Md. 2003)). A court
may attribute the subsidiary‟s actions to the parent corporation “only if the parent exerts
considerable control over the activities of the subsidiary.” Mylan, 2 F.3d at 61.
The most forceful new evidence propounded by the Plaintiffs supporting their
position that Cristal exerts the requisite control over Millennium is a document titled
“Authorized Approval Matrix.” See Pls.‟ Reply, Ex. A., ECF No. 242-2. This document
purports to show that Cristal executives must approve the most significant contracts entered
into by Millennium. Specifically, the document shows that titanium dioxide sales contracts
between $100 million and $199 million must be approved by Cristal‟s President or CEO, and
that contracts over $200 million must be approved by the “Cristal Global Steering Body.”4

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As they did in their original opposition to Cristal‟s motion to dismiss, the Plaintiffs spend much
time arguing that, contrary to this Court‟s previous conclusion, “Cristal Global” is not merely an
umbrella marketing moniker. See March 31, 2011 Mem. Op., 775 F. Supp. 2d at 794. Essentially,
the Plaintiffs argue that because all the Cristal entities (including Millennium) are somehow
enmeshed within “Cristal Global,” that fact evidences the requisite control of a parent over a
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Id.

However, as noted by the Defendants, this document also reflects the fact that

Millennium has significant autonomy in its day-to-day operations, and does not need
Cristal‟s approval for the majority of sales contracts it enters into or capital projects it
undertakes. While this evidence does suggest that Cristal exerts significant control over its
subsidiary Millennium, in light of Maryland‟s restrictive piercing standard, it does not rise to
the level required to disregard the corporate veil between the two companies. See Newman v.
Motorola, Inc., 125 F. Supp. 2d 717, 723 (D. Md. 2000) (“the fact that [the parent corporation]
will control certain decisions and even must approve changes does not mean the two
companies operate as one”); see also In re Chocolate Confectionary Antitrust Litig., 674 F. Supp. 2d
580, 599-600 (M.D. Pa. 2009) (approval of budgets “typify standard parent-subsidiary
interactions and do not reflect daily, operational control that is the sine qua non of an alter ego
relationship”).
In sum, Plaintiffs have simply not met the high burden required of them to pierce the
corporate veil and impute the jurisdictional contacts of Millennium to Cristal. Millennium‟s
Senior Vice President—Strategy & Development, John E. Hall, has now submitted three
affidavits detailing Millennium‟s independence from Cristal, and these affidavits are more
than sufficient to outweigh the evidence put forth by the Plaintiffs in support of their
motion. See Hall Affs., ECF Nos. 86-3, 94-1, & 232-1. Accordingly, this Court concludes

subsidiary sufficient to warrant piercing the corporate veil. This argument was unavailing when this
Court first considered the matter, and it remains unavailing today. Additionally, Plaintiffs make an
additional argument, based on Section 12 of the Clayton Act, which was previously rejected by this
Court. For the reasons discussed in this Court‟s previous Memorandum Opinion, that argument
also remains unavailing. See id. at 800.
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that no paramount equity compels piercing the corporate veil in this case, and Plaintiffs‟
motion is therefore DENIED.
CONCLUSION
For the reasons stated above, it is this 3rd day of April, 2012, ORDERED that:
1. Plaintiffs‟ Motion to Vacate Prior Order and Requesting Permission to Take
Jurisdictional Discovery (ECF No. 222) is DENIED; and
2. The Clerk of the Court transmit this Memorandum Order to counsel.

/s/________________________
Richard D. Bennett
United States District Judge

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