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Grand River Enterprises Six Nations, Ltd v. Troy King et al

January 30, 2012


The opinion of the court was delivered by: John F. Keenan, United States District Judge:

Opinion and Order

Before the Court is Plaintiff Grand River Enterprises Six Nations, Ltd.'s ("Grand River" or "Plaintiff") motion to amend the March 22, 2011 judgment dismissing its Sherman Act and Commerce Clause claims against the Attorneys General of Alabama, Alaska, Arizona, California, Colorado, Delaware, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, Nebraska, New York, North Carolina, Ohio, Oregon, South Carolina, South Dakota, Tennessee, Washington, Wisconsin, and Wyoming (collectively, the "States" or "Defendants").*fn1 For the reasons that follow, the motion is denied.


Briefly, in 1998, the nation's four largest tobacco companies negotiated an agreement known as the tobacco Master Settlement Agreement ("MSA") with forty-six states and certain other jurisdictions settling pending and future claims in exchange for annual payments by the cigarette companies to compensate the states for health care costs associated with the treatment of tobacco-related illnesses. The first four tobacco company signatories are known as the original participating manufacturers ("OPMs"). Other tobacco manufacturers may elect to participate in the MSA at any time and be released from liability; these are known as subsequent participating manufacturers ("SPMs"). Some manufacturers continue to sell cigarettes in the United States without joining the MSA; these are referred to as non-participating manufacturers ("NPMs"). Unlike OPMs and SPMs, NPMs do not make MSA settlement payments to the States; therefore, the States enacted Escrow and Contraband Statutes requiring NPMs that sell cigarettes in-state either to: (1) join the MSA and make settlement payments; or

(2) pay a specified amount per cigarette sold in-state into an escrow fund used to satisfy any judgment the state should win against the NPM.

Grand River filed its initial complaint in 2002, alleging that the MSA and its implementing legislation violated the dormant Commerce Clause, the Foreign Commerce Clause, the Indian Commerce Clause, the Sherman Act, the Equal Protection Clause, the Due Process Clause, the First Amendment, 42 U.S.C. § 1983, and that the MSA was preempted by the Federal Cigarette Labeling and Advertising Act. After several years of litigation, Grand River's claims were winnowed down to the alleged dormant Commerce Clause and Sherman Act violations. See, e.g., Grand River Enters. Six Nations, Ltd. v. Pryor, 425 F.3d 158 (2d Cir. 2005) (affirming dismissal of Indian Commerce Clause, due process, and equal protection claims and remanding for further proceedings on dormant Commerce Clause claim); Grand River Enters. Six Nations, Ltd. v. Pryor, No. 02 Civ. 5068, 2006 WL 1517603 (S.D.N.Y. May 31, 2006) (denying Grand River's application for a preliminary injunction barring the States from enforcing the amended allocable share provisions of their Escrow Statutes), aff'd, 481 F.3d 60 (2d Cir. 2007) (per curiam). In an opinion and order dated March 17, 2011, the Court granted summary judgment in favor of the States on both the Sherman Act and Commerce Clause claims, finding, in relevant part, that:

(1) Grand River does not have standing to challenge the MSA, as it has suffered no antitrust injury flowing from the agreement itself; (2) the MSA, as implemented by the States' Escrow and Contraband Statutes, is not a per se violation of § 1 of the Sherman Act; (3) the Escrow and Contraband Statutes do not mandate or authorize a per se violation of the Sherman Act such that they are preempted by the federal law; and (4) Parker state action immunity independently protects the States from any potential Sherman Act liability. See Grand River Enters. Six Nations, Ltd. v. King, 783 F. Supp. 2d 516, 529-39 (S.D.N.Y. 2011).

Grand River now moves pursuant to Rules 52(b) and 59(e) of the Federal Rules of Civil Procedure to vacate those portions of the March 17, 2011 opinion and order and the accompanying judgment that granted the States summary judgment on the Sherman Act so the claim can proceed to trial. Grand River contends that documents it acquired long after discovery in this case had closed would have materially influenced the Court's findings had they been part of the summary judgment record. First, Grand River submits a series of January and February 2011 emails in which officials in the Nebraska Attorney General's Office circulated draft amendments to Nebraska's Escrow Statute to attorneys representing certain OPMs. (Declaration of Gregory J. Kerr ("Kerr Decl."), Ex. D). In response, the tobacco lawyers offered proposed edits to the draft amendments. (Id.) Additionally, Grand River cites to an arbitration brief New York State submitted in proceedings relating to the NPM Adjustment for 2003 as evidence that the MSA is a contract between the OPMs and the States requiring the States to enact Escrow Statutes that impose costs on NPMs. (Kerr Decl., Ex. E).


Rule 52(b) of the Federal Rules of Civil Procedure provides that the district court "may amend its findings -- or make additional findings -- and may amend the judgment accordingly." Initially, there is some question about whether Rule 52, which contemplates amendment of findings made by the court in a non-jury trial, is an appropriate vehicle for reconsideration of a summary judgment decision. See, e.g., St. Paul Mercury Ins. Co. v. Fair Grounds Corp., 123 F.3d 336, 339 (5th Cir. 1997); Buck v. Libous, No. 02 Civ. 1142, 2005 WL 2033491, at *1 n.2 (N.D.N.Y. Aug. 17, 2005) ("Since a court engages in no fact-finding when it decides a summary judgment motion, a party may not use a Rule 52(b) motion to seek reconsideration of such a decision."); see also U.S. v. Local 1804-1, Int'l Longshoremen's Ass'n, 831 F. Supp. 167, 169 (S.D.N.Y. 1993), aff'd sub nom.

U.S. v. Carson, 52 F.3d 1173 (2d Cir. 1995) ("The purpose of post-judgment motions under Rule 52(b) is to give the district court an opportunity to correct manifest errors of law or fact at trial, or in some limited situations, to present newly discovered evidence." (emphasis added)). Therefore, the Court considers Plaintiff's motion pursuant to its alternate ground for relief -- Rule 59(e).

"While there are no formal guidelines, courts have recognized four basic grounds on which a judgment may be altered or amended pursuant to Rule 59(e): the need to prevent manifest injustice, the need to correct errors of law or fact, the availability of new evidence, or an intervening change in controlling law." D'Amico Dry Ltd. v. Primera Maritime (Hellas) Ltd., No. 09 Civ. 7840, 2011 WL 3273208, at *2 (S.D.N.Y. Aug. 1, 2011) (citing Virgin Atlantic Airways, Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992)). As construed, Rule 59(e) substantially overlaps with Rule 60(b), which allows the court to relieve a party from a final judgment on grounds such as mistake, fraud, and "newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b)." Fed. R. Civ. P. 60(b)(2). "Whether relief is sought under Rule 59(e) or Rule 60(b)(2), courts apply the same strict standard for determining what qualifies as 'newly discovered evidence.'" Becnel v. Deutsche Bank AG, No. 11 Civ. 1615, 2011 WL 6599229, at *2 (S.D.N.Y. Dec. 21, 2011). Accordingly, reconsideration is warranted only if the moving party demonstrates that: "(1) the newly discovered evidence was of facts that existed at the time of trial or other dispositive proceeding, (2) the movant must have been justifiably ignorant of them despite due diligence, (3) the evidence must be admissible and of such importance that it probably would have changed the outcome, and (4) the evidence must not be merely cumulative or impeaching." U.S. v. Int'l Bhd. of Teamsters, 247 F.3d 370, 392 (2d Cir. 2001) (internal quotation omitted).

A.The Nebraska Emails and New York State Brief

On February 24, 2011, the law firm of Fredericks Peebles & Morgan LLP, which does not represent Plaintiff in this action, submitted a public records request to the Office of the Attorney General of Nebraska seeking correspondence between the state and three tobacco companies regarding proposed amendments to Nebraska's Escrow Statute. (Kerr Decl., Ex. C at 2). On April 5, 2011, after entry of final judgment in this case, the Nebraska Attorney General's Office responded to the request; the Fredericks firm shared the documents provided with Plaintiff's counsel on April 8, 2011. (Kerr Decl. ΒΆ 4). The documents include: (1) a January 20, 2011 email in which the Chief Deputy Attorney General of Nebraska sent draft legislation to various tobacco attorneys, noting that "[w]e would be interested in your thoughts" (Kerr Decl., Ex. D at 1); and (2) a follow-up email regarding "Nebraska's efforts to implement the model legislation contemplated during settlement negotiations" in which the Attorney General's Office stated that it would "welcome your comments and suggestions as to the sufficiency of these legislative revisions." (Kerr Decl., Ex. D at 5). In a response dated February 16, 2011, one OPM attorney ...

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