Valve Timing Control Devices - Dealership Actions

Filing 96

OPINION AND ORDER granting 61 Motion to Dismiss. Signed by District Judge Marianne O. Battani. (KDoa)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
_________________________________
IN RE: AUTOMOTIVE PARTS
ANTITRUST LITIGATION

MASTER FILE NO. 12-md-02311

_________________________________
In Re: Valve Timing Control Devices

HON. MARIANNE O. BATTANI

_________________________________
THIS DOCUMENT RELATES TO:

Automobile Dealer Plaintiffs
End-Payor Plaintiffs
_________________________________/

2:13-cv-02502
2:13-cv-02503

OPINION AND ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
Before the Court is Defendant Delphi Powertrain Systems Korea Ltd.’s Motion to
Dismiss Plaintiffs’ Consolidated Amended Class Action Complaints for Lack of Personal
Jurisdiction and Failure to State a Claim (Doc. No. 61 in 13-2502, Doc. No. 58 in 132503). The Court heard oral argument on May 6, 2015, and at the conclusion of the
argument, took this matter under advisement. For the reasons stated below,
Defendant’s motion is GRANTED, and Delphi Powertrain Systems Korea Ltd. is
DISMISSED.
I. RELEVANT FACTS
Automobile Dealership Plaintiffs (“ADPs”) and End-Payor Plaintiffs (“EPPs”)
(collectively referred to as “Indirect Purchaser Plaintiffs” or “IPPs”) filed separate
consolidated amended class action complaints alleging several federal and state law

antitrust claims against Defendants. In their respective complaints, the EPPs and ADPs
allege that Delphi Powertrain Systems Korea Ltd. (“DPSK”) engaged “in a long running
conspiracy to unlawfully fix, raise, maintain and/or stabilize prices, rig bids for, and
allocate the market and customers in the United States for Valve Timing Control
Devices” (“VTCD”). (See Doc. No. 33 in 13-2502 at ¶ 1, hereinafter “ADPs’ Complaint;”
Doc. No. 27 in 13-2503 at ¶ 1, hereinafter “EPPs’ Complaint”). It is undisputed that
DPSK is a limited liability company under the laws of the Republic of Korea, with its
principal place of business in Korea. (See Doc. No. 58 in 13-2502, Decl. of James J.
Rim, Member of Board of Directors of DPSK at ¶ 3).
According to IPPs, DPSK “directly or indirectly sold or marketed substantial
quantities of Valve Timing Control Devices throughout the United States. . .had
substantial aggregate contacts with the United States. . .targeted customers in the
United States” and “engaged in an illegal price-fixing conspiracy that was directed at,
and had a direct, substantial, reasonably foreseeable and intended effect of causing
injury to the business or property of persons and entities residing, located in, or doing
business throughout the United States.” (ADPs’ Complaint at ¶ 23; EPPs’ Complaint at
¶ 23 ) Indirect Purchaser Plaintiffs allege that DPSK knew and took advantage that a
substantial portion of its products are sold, used or otherwise, end up in the United
States. (ADPs’ Complaint at ¶¶ 23-25; EPPs’ Complaint at ¶¶ 23-25).
II. STANDARD OF REVIEW
Before its answer is filed, a defendant may move to dismiss for lack of personal
jurisdiction over the defendant. Fed. R. Civ. P. 12(b)(2). “Where personal jurisdiction is
challenged in a 12(b)(2) motion, the plaintiff has the burden of establishing that
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jurisdiction exists.” Am. Greetings Corp. v. Cohn, 839 F. 2d 1164, 1168 (6th Cir. 1988);
see also McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936) (plaintiff
“must allege in his pleading the facts essential to show jurisdiction”).
If a district court rules on such a motion before trial, the court, in its discretion,
“may determine the motion on the basis of affidavits alone; or it may permit discovery in
aid of the motion; or it may conduct an evidentiary hearing on the merits of the motion.”
Serras v. First Tenn. Bank Nat’l Ass’n, 875 F.2d 1212, 1214 (6th Cir. 1989) (quoting
Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981)). The district
court is granted considerable discretion in this decision and will be reversed only for
abuse of discretion. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991);
Mich. Nat’l Bank v. Quality Dinette, Inc., 888 F.2d 462, 466 (6th Cir. 1989). The method
the court selects will affect the magnitude of the burden on the plaintiff to avoid
dismissal. Serras, 875 F.2d at 1214. Where, as is the case here, the court relies solely
on the parties’ affidavits to reach its decision on the motion, the burden rests on the
plaintiff to establish a prima facia showing of jurisdiction in order to avoid dismissal,
Intera Corp. v. Henderson, 428 F.3d 605, 615 (6th Cir. 2005), and the court must
consider the pleadings and affidavits in the light most favorable to the plaintiff.
CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1261-62 (6th Cir. 1996).
In considering 12(b)(2) motions, the court does not weigh the controverting
assertions of the moving party due to its interest in “prevent[ing] non-resident
defendants from regularly avoiding personal jurisdiction simply by filing an affidavit
denying all jurisdictional facts.” CompuServe, Inc., 89 F.3d at 1262 (quoting
Theunissen, 935 F.2d at 1459).
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III.

ANALYSIS
A. Personal Jurisdiction
The Supreme Court has held that to subject a nonresident defendant to personal

jurisdiction, due process requires that he must “have certain minimum contacts with [the
forum] such that the maintenance of the suit does not offend ‘traditional notions of fair
play and substantial justice.’” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)
(quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). The defendant’s “conduct and
connection with the forum State” must be “such that he should reasonably anticipate
being haled into court there.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S.
286, 297 (1980). The party seeking to assert personal jurisdiction bears the burden of
demonstrating that such jurisdiction in fact exits. Neogen Corp. v. Neo Gen Screening,
Inc., 282 F.3d 883, 887 (6th Cir. 2002).
A party is subject to the personal jurisdiction of the Court through either specific
or general jurisdiction. See J Mcintyre Machinery, Ltd. v. Nicastro,

U.S.

, 131 S.

Ct. 2780, 2789 (2011). Whether general or specific jurisdiction exists turns on the
nature of the defendant’s contacts with the forum. Bird v. Parsons, 289 F.3d 865, 873
(6th Cir. 2002).
When “a federal court exercises jurisdiction pursuant to a national service of
process provision, it is exercising jurisdiction for the territory of the United States, and
the individual liberty concern is whether the individual over which the court is exercising
jurisdiction has sufficient minimum contacts with the United States.” Med. Mut. v.
deSoto, 245 F.3d 561, 567-568 (6th Cir. 2001). For federal antitrust claims, 15 U.S.C. §
22 authorizes service of process over an antitrust defendant “wherever it may be found.”
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Here, personal jurisdiction exists, provided DPSK has “sufficient minimum contacts with
the United States” to satisfy the due process requirements of the Fifth Amendment.
Med. Mut. of Ohio, 245 F.3d at 566–67. “This inquiry parallels the more traditional
personal-jurisdiction analysis under which a defendant must have ‘minimum contacts' ”
with the forum state pursuant to the state's long-arm statute. Carrier Corp. v.
Outokumpu Oyj, 673 F.3d 430, 449-50 (6th Cir. 2012) (citing Med. Mut. of Ohio, 245
F.3d at 566–67).
1. General Jurisdiction
The parties dispute whether the Court may exercise general jurisdiction over
DPSK inasmuch as it is not “at home” in the United States. See Daimler AG v.
Bauman,

U.S.

, 134 S.Ct. 746, 761 (2014) (holding that to exercise general

jurisdiction over a foreign corporation, the corporation had to be “at home” in the forum).
The Supreme Court explained that although the phrase “at home” applies not only to the
forum in which the corporation is incorporated, it also includes “instances in which the
continuous corporate operations within a state [are] so substantial and of such a nature
as to justify a suit. . .on causes of action arising from dealings entirely distinct from
those activities.” Id., (quotation omitted).
Because DPSK is a Korean corporation with its principal place of business in
Korea, it is not “at home” in the traditional sense. Instead, IPPs assert that the Court
may exercise general jurisdiction over DPSK because it is an alter-ego of Defendant
Delphi Automotive LLP. According to IPPs, Delphi Automotive LLP controlled DPSK.
The Court rejects this basis for jurisdiction. The “alter-ego theory permits parent
corporations to be subjected to personal jurisdiction based on the actions of their
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subsidiaries, not vice versa.” Alexander Associates, Inc. v. FCMP, Inc., No. 10-12355,
2012 WL 1033464, at *18 (E.D. Mich. Mar. 27, 2012). Even if that were not the case,
the allegations here do not satisfy Michigan law.
To pierce the corporate veil and hold the parent company liable for acts of a
subsidiary, the evidence must show there is “such a complete identity between the
defendant and the corporation as to suggest that one was simply the alter-ego of the
other.” Pettaway v. McConaghy, 116 N.W.2d 789, 790 (Mich. 1962). In the alternative,
“[t]here must be evidence that the use of the corporation was improper.” Mattner v.
Jennaro & Assocs., Inc., No. 89-2366, 1991 WL 159452 at *3 (6th Cir. Aug. 20, 1991)
(internal citation omitted) (applying Michigan law); accord Precision, Inc. v.
Kenco/Williams, Inc., 66 Fed. Appx. 1, 4 (6th Cir. 2003). In this case, the only specific
allegation is that the chief operating officer of a Delphi entity has ultimate responsibility
for the Powertrain Division, including DPSK. This allegation merely reflects a typical
corporate relationship and does not satisfy IPPs’ burden. Because IPPs have not met
their burden to show the existence of general jurisdiction, the Court considers whether it
may exercise specific jurisdiction over DPSK.
2. Specific Jurisdiction
Specific jurisdiction subjects the defendant to actions in the forum arising out of
or relating to the defendant’s contacts with that forum. Helicopteros Nacionales de
Colombia v. Hall, 466 U.S. 408, 414 (1984). In determining whether the exercise of
specific personal jurisdiction is proper, the Sixth Circuit follows a three-prong test
originally laid out in S’ern Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6th
Cir. 1968):
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First, the defendant must purposefully avail himself of the privilege of
acting in the forum state or causing a consequence in the forum state.
Second, the cause of action must arise from the defendant’s activities
there. Finally, the acts of the defendant or consequences caused by the
defendant must have a substantial enough connection with the forum state
to make the exercise of jurisdiction over the defendant reasonable.

Calphalon Corp. v. Rowlette, 228 F.3d 718, 721 (6th Cir. 2000) (citing Mohasco, 401
F.2d at 381).
a. Purposeful Availment
The first issue to be addressed relative to specific jurisdiction is whether DPSK
“purposefully avail[ed] [itself] of the privilege of acting in the forum or causing a
consequence in the forum.” Mohasco, 401 F.2d at 381. Indirect Purchaser Plaintiffs
advance three grounds to establish purposeful availment. First, IPPs argue that the
factor is met because DPSK was involved in a conspiracy designed to have an effect in
the United States. Next, IPPs assert the Court may exercise personal jurisdiction
because DPSK placed its products in the stream of commerce with intent to harm
consumers in the United States. Finally, IPPs argue that personal jurisdiction is proper
here because the harmful effects resulting from DPSK’s conduct were felt here. The
Court discusses the arguments below.
i. Conspiracy Theory
In support of their assertion that DPSK created a substantial connection with the
United States, IPPs rely on the conspiracy theory. According to Indirect Purchaser
Plaintiffs, DPSK participated in a conspiracy with other defendants, over whom the Court
may exercise jurisdiction. The Court has no basis for imputing the actions of one
defendant to another in analyzing jurisdiction in the absence of an explicit directive by
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the Sixth Circuit to do so. Despite the passage of more than thirty years since the theory
was acknowledged in Chrysler Corp. v. Federes Corp., 643 F.2d 1229, 1236 (6th Cir.
1981), it has never been adopted.
ii. Stream of Commerce
Next, Indirect Purchaser Plaintiffs assert that DPSK availed itself of the laws of the
United States by placing its products in the stream of commerce with the intent to reach
the United States. The stream of commerce theory, articulated in Ashai Metal Indus. Co.
v. Superior Court, 480 U.S. 102, 112 (1987), does not support IPPs’ assertion that the
exercise of jurisdiction would satisfy due process given the facts of this case. In J.
McIntyre Mach., 131 S. Ct. at 2788, the Supreme Court discussed the stream of
commerce basis for personal jurisdiction.
This Court has stated that a defendant's placing goods into the stream of
commerce “with the expectation that they will be purchased by consumers
within the forum State” may indicate purposeful availment. World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 298, 100 S.Ct. 559, 62
L.Ed.2d 490 (1980) (finding that expectation lacking). But that statement
does not amend the general rule of personal jurisdiction. It merely
observes that a defendant may in an appropriate case be subject to
jurisdiction without entering the forum--itself an unexceptional proposition--as where manufacturers or distributors “seek to serve” a given
State's market. Id., at 295, 100 S.Ct. 559. The principal inquiry in cases
of this sort is whether the defendant's activities manifest an intention to
submit to the power of a sovereign. In other words, the defendant must
“purposefully avai[l] itself of the privilege of conducting activities within the
forum State, thus invoking the benefits and protections of its laws.”
Hanson[ v. Denckla], supra, [357 U.S. 235] at 253, 78 S.Ct. 1228 [(1958)];
Insurance Corp.[of Ireland, ltd. v. Compagnie des Bauxites de Guinee],
supra, [456 U.S. 694] at 704-705, 102 S.Ct. 2099 [(1987)](“[A]ctions of the
defendant may amount to a legal submission to the jurisdiction of the
court”). Sometimes a defendant does so by sending its goods rather than
its agents. The defendant's transmission of goods permits the exercise of
jurisdiction only where the defendant can be said to have targeted the
forum; as a general rule, it is not enough that the defendant might have
predicted that its goods will reach the forum State.
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Id. (Kennedy, J., plurality opinion). Although the four justice plurality opinion is not
binding law, this Court finds the allegations regarding targeting consumers in the United
States guide the analysis.
Specifically, Indirect Purchaser Plaintiffs allege that DPSK sold price-fixed
products to Korean manufacturers and that Original Equipment Manufacturers
sometimes include the ultimate destination in Requests for Quotations. At most, this
allegation creates an inference that DPSK could have predicted that its goods would
reach the United States. The Sixth Circuit, however, has adopted a heightened version
of this theory, noting that merely placing products into the stream of commerce, without
more, is not a purposeful act directed at the forum. Bridgeport Music, Inc. v. Still N The
Water Pub, 327 F.3d 472, 479-80 (6th Cir. 2003) (adopting the stream of commerce
“plus” approach articulated by J. O’Connor in Asahi).
Here, DPSK has no contacts with the United States and has not pleaded guilty to
criminal conduct in the United States. Moreover, DPSK submitted the declaration of
James Rim, who attests that DPSK never designed products specifically for the United
States. (Doc. No. 61 in 13-2502, Rim Decl. at ¶ 17). Nor does DPSK market or
advertise its products in the United States. IPPs have failed to establish the “plus”
required under Sixth Circuit law. Merely placing products into the stream commerce with
the potential that they may end up in a specific forum is insufficient.
The Court previously rejected this theory of purposeful availment based on similar
facts in the Wire Harness case. See In re Automotive Parts Antitrust Litig., 2013 WL
2456611, at *4-5 (E.D. Mich. June 6, 2013) (rejecting stream of commerce argument
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because although the defendant sold wire harnesses to auto manufacturers whose
goods reached the United States, there was no evidence that the defendant controlled
the distribution decisions of its customers). The Court also rejected this theory in the
Bearings case. See In re Automotive Parts Antitrust Litig., 2014 WL 2999271, at *4 (E.D.
Mich. July 3, 2014) (rejecting stream of commerce theory based on substantially similar
facts in the Wire Harness case).
The Court is not persuaded that a different outcome is required by the decision in
Fortis Corporate Ins. v. Viken Ship Mgmt., 450 F.3d 214, 219-20 (6th Cir. 2006)
(rejecting the district court’s holding that it lacked personal jurisdiction over the
defendants where they had “rigged their vessels to sail into the Great Lakes and call at
Toledo's port” merely because the “third-party charterer was Canadian”). In Fortis, the
Sixth Circuit considered whether a federal court had jurisdiction over the defendant
Norwegian companies, which owned and managed a fleet of cargo vessels, some of
which had been chartered to a Canadian company. The Canadian company had
subchartered one of the vessels to an American company for the purpose of transporting
steel coils to Toledo, Ohio. After the steel coils rusted during transit, an insurance
underwriter filed suit. The Sixth Circuit found the Norwegian defendants had purposely
availed themselves of the privilege of acting in the forum state. They rigged their
vessels to ship to Great Lakes ports; they entered into a long-term charter agreement
with the Canadian company that shipped on the Great Lakes; they made frequent calls
to American ports. Fortis, 450 F.3d at 221-222. The charter agreement was the
culmination of the Norwegian defendants’ organized efforts over a significant period of

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time to take advantage and turn a profit from the American market and the agreement
confirmed that “the vessel was suitable for Toledo.” Id. at 221.
The circumstances here differ. DPSK never attempted to sell its products directly
in the United States, never attempted to affiliate with an American corporation, never
availed itself of any privilege of acting there. Despite IPPs’ characterization, the
allegations do not rise to the level of targeting. Here, there is no suggestion that DPSK
controlled the distribution of its VTCD, nor is there any suggestion that DPSK cared
where its products were sold. Therefore, no inference arises that DPSK targeted the
United States or that DPSK sought the protection of the forum’s laws or benefitted from
them.
iii. Effects Test
In Calder v. Jones, a professional entertainer domiciled in California sued two
National Enquirer reporters in California Superior Court for libel resulting from conduct
that took place entirely in Florida. Calder v. Jones, 465 U.S. 783 (1984). After
considering the facts of the case, the Supreme found that California courts could
properly exercise personal jurisdiction over the defendants because the “the brunt of the
harm. . . was suffered in California.” Id. at 789. California was “the focal point both of
the story and of the harm suffered,” and jurisdiction in California was proper “based on
the ‘effects’ of their Florida conduct in California.” Id. at 789.
To support the application of the Calder test, IPPs again argue that the brunt of
the harm from the conspiracy was felt in the United States, and their allegations are
sufficient to meet the Calder effects test. The Court disagrees. The allegations specific
to DPSK involves sales in Korea to third parties in Korea.
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The Sixth Circuit has not given Calder wide berth. The appeals court limits the
application “by evaluating whether a defendant's contacts with the forum may be
enhanced if the defendant expressly aimed its tortious conduct at the forum and
plaintiff's forum state was the focus of the activities of the defendant out of which the suit
arises.” Scotts Co. v. Aventis S.A., 145 F. App'x. 109, 113 n. 1 (6th Cir. 2005) (citations
omitted). DPSK had no contacts with the United States, and the United States cannot be
deemed the focal point of DPSK’s conduct.
b. Connection and Reasonableness
Because IPPs cannot satisfy the first prong of the Mohasco test, there is no need
to analyze the other factors: whether DPSK’s activities gave rise to Plaintiffs’ causes of
action, and whether it is reasonable to exercise personal jurisdiction over DPSK. Each
element of the test “represents an independent requirement, and failure to meet any one
of the three means that personal jurisdiction may not be invoked.” Lak, Inc. v. Deer
Creek Enter., 885 F.2d 1293, 1303 (6th Cir. 1989).
B. Jurisdictional Discovery
Indirect Purchaser Plaintiffs ask the Court for jurisdictional discovery in the event
the Court finds that the exercise of personal jurisdiction over DPSK is unwarranted.
Here, the Court finds there is no reasonable basis for expecting that further discovery
would reveal contacts sufficient to support personal jurisdiction. Chrysler Corp., 643
F.2d at 1240. It is undisputed that DPSK operated exclusively in Korea. Even if IPPs
found that certain RFQs included information that VTCD would be sold abroard, the fact
would not constitute purposeful availment.

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IV. CONCLUSION
For the reasons stated above, the motion is GRANTED. DPSK is DISMISSED.

IT IS SO ORDERED.
Date: July 23, 2015

s/Marianne O. Battani
MARIANNE O. BATTANI
United States District Judge

CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing Order was served upon counsel of record via the Court's ECF System to
their respective email addresses or First Class U.S. mail to the non-ECF participants on July 23, 2015.
s/ Kay Doaks
Case Manager

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