The opinion of the court was delivered by: PETER K. LEISURE
This is an action brought by Eskofot A/S ("Eskofot") against E.I. Du Pont De Nemours & Company ("Du Pont") and Du Pont (U.K.) Limited ("Du Pont U.K."). Eskofot alleges that defendants have monopolized the domestic and international market for certain printing equipment and materials. Memorandum of Plaintiff Eskofot A/S in Opposition to Defendants' Motion to Dismiss the Complaint, Stay This Action, Transfer This Action, and Strike Portions of the Complaint ("Plaintiff Mem.") at 2. It further alleges that defendants have engaged and continue to engage in systematic, intentional conduct which restrains trade. Defendants now move this Court (a) to dismiss the action for lack of subject matter jurisdiction, pursuant to Fed. R. of Civ. P. 12(b)(1); (b) to dismiss the claims against Du Pont U.K. for lack of personal jurisdiction, pursuant to Fed. R. Civ. P. 12(b)(2), and to dismiss the action due to plaintiff's consequent inability to join an indispensable party, pursuant to Fed. R. Civ. P. 12(b)(7) and 19; (c) to dismiss or stay the action on grounds of international comity; (d) to dismiss plaintiff's claims under Section One of the Sherman Act, 15 U.S.C. § 1, for failure to state a claim upon which relief can be granted, pursuant to Fed. R. Civ. P. 12(b)(6); (e) to strike certain paragraphs of the complaint, pursuant to Fed. R. Civ. P. 12(f) and Rule 408 of the Federal Rules of Evidence ("Fed. R. Evid."); and to transfer the action to the United States District Court for the District of Delaware, pursuant to 28 U.S.C. § 1404(a). For the reasons stated below, defendants' motions are denied.
Eskofot is a large producer of equipment for the graphic arts and printing industry, and is based in Denmark. Plaintiff Mem. at 8. It has average annual sales of approximately $ 75 million, $ 12 million of which is derived from sales in the United States. Id. Du Pont U.K. is an English corporation, and has a printing and graphic arts division in Leeds, England. Memorandum of Law in Support of Defendants' Motion to Dismiss the Complaint ("Defendant Mem.") at 2; Plaintiff Mem. at 9. Its total sales in 1992 were in excess of 700,000,000 British Pounds, and of that amount, 50,000,000 resulted from sales outside of Britain. Plaintiff Mem. at 9. Howson-Algraphy Division of Vickers PLC ("Howson"), is the indirect predecessor of Du Pont U.K. Finally, Du Pont is one of the largest companies in the world, with hundreds of subsidiaries and annual sales of approximately $ 40 billion. Plaintiff Mem. at 8. Du Pont's corporate headquarters is in Wilmington, Delaware. Id.
Eskofot and Howson began work on a new printing system in 1987, and formalized their relationship with the execution of a written agreement on November 3, 1987. Plaintiff Mem. at 9. Defendants allege that the genesis of this dispute was a further contract executed in England in 1989, between Howson and Eskofot. Defendant Mem. at 7. Defendants state that, in that contract, Eskofot agreed to supply Howson with automatic cameras for use in the development of a direct-to-plate silver halide metal platemaking system (the "System").
Id. In May 1989, Vickers PLC sold Howson to Du Pont, and its name was changed to Du-Pont-Howson Limited ("DPH"). DPH accepted the assignment of Eskofot's contract, and DPH executed two additional agreements with Eskofot relating to materials for the development of platemaking systems. Id. The first agreement was for the purchase of manual cameras, and the second (the "consumable agreement"), for the supply of certain components of the relevant platemaking systems.
In 1992, Du Pont U.K. acquired DPH, and in June 1992, Du Pont U.K. notified Eskofot that it wanted to cancel the agreements. Id. at 8. Eskofot alleges that Du Pont retained full control of Silverlith plates, processors and chemicals,
and that defendants intensified their worldwide sales and marketing efforts for Silverlith. Plaintiff Mem. at 12. In April 1993, plaintiff instituted an action against Du Pont U.K. in England (the "English action") for breach of the consumables agreement and for damages stemming from Du Pont's alleged abuse of its dominant market position, pursuant to Article 86 of the Treaty of Rome. Id. Four months after bringing the English action, plaintiff instituted the instant action.
A. Subject Matter Jurisdiction
It is well established that, in considering defendants' motion to dismiss for want of subject matter jurisdiction, the Court must accept as true all material factual allegations in the complaint. See, e.g., Atlantic Mut. Ins. Co. v. Balfour Machine Int'l Ltd., 968 F.2d 196, 198 (2d Cir. 1992). It is also well established, however, that the Court should not draw argumentative inferences favorable to the party asserting jurisdiction. Id. The first question before this Court, therefore, is whether Eskofot has pleaded facts sufficient to establish subject matter jurisdiction.
Defendants maintain that the Court's jurisdiction to hear antitrust claims brought by foreign competitors derives from the Foreign Trade Antitrust Improvements Act, 15 U.S.C. § 6a (the "FTAIA").
Plaintiff Mem. at 13. Defendants note that the FTAIA was intended to exempt from U.S. antitrust law conduct that lacks the necessary level of domestic effect. See Eurim-Pharm GmbH v. Pfizer, Inc., 593 F. Supp. 1102, 1105-06 (S.D.N.Y. 1984). The FTAIA provides, in relevant part, that sections 1 through 7 of the Sherman Act:
shall not apply to conduct involving trade or commerce (other than import trade or import commerce) with foreign nations unless (1) such conduct has a direct, substantial and reasonably foreseeable effect (A) on trade or commerce which is not trade or commerce with foreign nations, or on import trade or import commerce with foreign nations; or (B) on export trade or export commerce with foreign nations, of a person engaged in such trade or commerce in the United States
15 U.S.C. § 6a (emphasis added).
Defendants dispute plaintiff's conclusion, and urge that plaintiff may not escape application of the FTAIA by asserting in conclusory terms that domestic commerce has been affected. Defendants also claim that the FTAIA governs the extraterritorial application of the American antitrust laws and is not confined to export transactions.
This Court notes that the FTAIA, by its own terms, clearly states that the provisions of the Sherman Act do not apply to conduct involving trade or commerce, "other than import trade or import commerce," with foreign nations. The implication that the Sherman Act provisions continue to apply to import trade and import commerce is unmistakable. Plaintiff contends that defendants' actions have precluded it from exporting goods into the United States. Consequently, plaintiff's pleading alleges an impact on import trade and import commerce into the United States.
Rather than the FTAIA's "direct, substantial and reasonably foreseeable" standard, the Court must determine whether the challenged conduct has, or is intended to have, any anti-competitive effect upon United States commerce. See National Bank of Canada v. Interbank Card Ass'n, 666 F.2d 6, 8 (2d Cir. 1981). Eskofot alleges that defendants' actions have had a significant anti-competitive effect upon United States commerce. Moreover, Eskofot alleges facts which, if true, amply support its contention. As a result, this Court has subject matter jurisdiction.
Eskofot alleges that both it and Du Pont always planned to market and sell, respectively, the Proff Print and Silverlith systems and their component parts in the United States. Eskofot further asserts that it would have sold its Proff Print system in the United States if it were not for defendants' conduct, and that defendants still intend to market their Silverlith system in the United States. Defendants dispute these assertions and contend that they are merely conclusory allegations that should be accorded little weight in determining whether to apply American antitrust laws.
The Court notes that, in the present posture of this action, factual questions must be resolved in favor of plaintiff. The instant allegations, for example, require a careful investigation of the records of the various parties before they can be resolved. Whether Eskofot or either of the defendants initiated research to develop the System with the expectation of selling significant quantities in the American market is very much a question of fact. Certainly Eskofot and defendants have the capacity to sell their systems in the United States, and both Du Pont and Eskofot currently sell a certain percentage of their products in the United States. Whether Du Pont or Du Pont U.K. has sold, developed plans to sell, or harbors ambitions of selling the Silverlith system in the United States are questions of fact. Resolving these questions and other factual questions in favor of the plaintiff, this Court finds that plaintiff has sufficiently demonstrated that defendants' conduct impacted the import trade of the United States.
In sum, plaintiff has alleged that: its sale of the Proff Print system in the United States was precluded by defendants' actions, defendants intend to sell Silverlith in the United States, defendants have already initiated marketing activities in the United States to facilitate future sales, and that consumers in the United States will be negatively affected by the higher prices and reduced output that flow from the emergence of a monopoly. Defendants do not convincingly dispel these concerns or transform plaintiff's factual allegations into mere speculative inferences simply by revealing that plaintiff's assertions are not quantitatively definite or that plaintiff has failed, at this stage of the action, conclusively to demonstrate its assertions. Plaintiff does not have to meet such standards, in the present posture of the instant action, and it is not apparent, as defendants urge, that any potential restraint on U.S. commerce would be de minimis.
This Court cannot conclude that no set of facts would support plaintiff's claim that defendants' conduct has had an anti-competitive effect on trade or commerce in the United States. Moreover, this Court cannot even conclude that the conduct alleged by plaintiff has not had a direct, actual, and foreseeable effect in the United States. Accordingly, this Court cannot dismiss this action for lack of subject matter jurisdiction.
Defendants accurately note that plaintiff bears the burden of establishing the existence of personal jurisdiction and assert that plaintiff has failed to do so as regards defendant Du Pont U.K. The Court observes that on a motion to dismiss, plaintiff is only obligated to allege facts sufficient to establish a prima facie showing of jurisdiction. See, e.g., Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.), cert. denied, 498 U.S. 854, 112 L. Ed. 2d 116, 111 S. Ct. 150 (1990).
Defendants contend that (1) Du Pont U.K. is not subject to personal jurisdiction under New York law, (2) Du Pont U.K. is not subject to personal jurisdiction by virtue of section 12 of the Clayton Act ("Section 12"), (3) Fed. R. Civ. P. 4(k)(2) ("Rule 4(k)(2)") does not authorize the assertion of jurisdiction over Du Pont U.K., and (4) the requisite constitutional nexus between Du Pont U.K. and the forum does not exist. Plaintiff, in turn, forwards a number of bases for personal jurisdiction. This Court finds that personal jurisdiction exists, pursuant to Rule 4(k)(2), and therefore finds it unnecessary to analyze the other possible bases for personal jurisdiction.
Rule 4(k)(2) provides that:
if the exercise of jurisdiction is consistent with the Constitution and laws of the United States, serving a summons or filing a waiver of service is also effective, with respect to claims arising under federal law, to establish personal jurisdiction over the person of any defendant who is not subject to the jurisdiction of the courts of general jurisdiction of any state.
a. Applicability of Rule ...