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Animal Science Products, Inc v. China Minmetals Corporation; China National Co

August 17, 2011

ANIMAL SCIENCE PRODUCTS, INC., APPELLANT
v.
CHINA MINMETALS CORPORATION; CHINA NATIONAL CO, LTD.; XIYANG GROUP; XIYANG (PACIFIC) IMPORT & EXPORT LTD. COMPANY; XIYANG REFRACTORY MATERIALS LTD COMPANY; XIYANG FIREPROOF MATERIALS LTD COMPANY; SINOSTEEL CORPORATION; SINOSTEEL TRADING COMPANY; LIAONING JIAYI METALS & MINERALS CO., LTD; LIAONING FOREIGN TRADE GENERAL CORPORATION; LIAONING JINDING MAGNESITE GROUP; DALIAN GOLDEN SUN IMPORT & EXPORT CORP.; HAICHENG HOUYING CORP. LTD; HAICHENG HUAYU GROUP IMPORT & EXPORT CO. LTD. (HUAZIYU); HAICHENG PAILOU MAGNESITE ORE CO. LTD.; YINGKOU HUACHEN (GROUP) CO LTD.



On Appeal from the United States District Court for the District of New Jersey (Civ. No. 05-cv-04376) District Judge: Hon. Garrett E. Brown, Jr.

The opinion of the court was delivered by: Chagares, Circuit Judge.

PRECEDENTIAL

Argued January 24, 2011

Before: FUENTES, CHAGARES, Circuit Judges, and POLLAK, District Judge.

OPINION

Plaintiffs Animal Science Products, Inc. and Resco Products, Inc. appeal the District Court‟s dismissal of their First Amended Complaint, in part without prejudice, on the basis that it lacked subject matter jurisdiction under the Foreign Trade Antitrust Improvements Act of 1982 (the "FTAIA"), 15 U.S.C. § 6a. For the reasons that follow, we will vacate and remand.

I. The plaintiffs are domestic purchasers of "magnesite."*fn1

The plaintiffs allege, on behalf of a putative class, that the defendants -- Chinese producers and exporters of magnesite -- engaged in a conspiracy since at least April 2000 to fix the price of magnesite that is exported to and sold in the United States. The plaintiffs allege that this conspiracy has impacted hundreds of millions of dollars of United States commerce. Based on these allegations, the plaintiffs assert federal claims pursuant to the Clayton Act, 15 U.S.C. §§ 4, 16, predicated on the defendants‟ alleged violation of Section 1 of the Sherman Act, 15 U.S.C. § 1.

The plaintiffs first initiated this action by filing a complaint on September 7, 2005. That complaint named seventeen Chinese business entities as defendants. Only five of those defendants are parties to this appeal, however, and these defendants are divided into two groups: (1) the China Minmetals defendants and (2) the Sinosteel defendants.*fn2

After two years of litigation surrounding service of process issues, the plaintiffs moved for a default judgment on December 14, 2007. The China Minmetals defendants and the Sinosteel defendants responded, and moved to compel arbitration of the dispute in China pursuant to arbitration clauses contained in several of the magnesite sales contracts.

In an opinion dated December 30, 2008, the District Court dismissed all pending motions and dismissed the plaintiffs‟ complaint on the ground that it lacked subject matter jurisdiction to adjudicate the dispute pursuant to the FTAIA, a basis raised sua sponte by the District Court. See Animal Science Prods., Inc. v. China Nat‟l Metals & Minerals Imp. & Exp. Corp., 596 F. Supp. 2d 842 (D.N.J. 2008).*fn3 The dismissal was without prejudice, and the District Court granted the plaintiffs leave to amend their complaint. The District Court instructed that in the event Plaintiffs file an amended complaint, Plaintiffs must incorporate in their submission evidentiary proof allowing the [District] Court to conduct a factual determination (in contrast with the facial analysis conducted herein) and to conclusively satisfy itself as to presence or lack of subject matter jurisdiction over this action.

Id. at 881 (emphasis in original).

On March 30, 2009, the plaintiffs filed their First Amended Complaint and, as instructed, included evidentiary proof with their allegations. The China Minmetals defendants and the Sinosteel defendants subsequently moved to dismiss on the basis that the District Court lacked subject matter jurisdiction or should otherwise abstain from resolving this dispute. In a remarkably comprehensive opinion dated April 1, 2010, the District Court engaged in extensive fact-finding and held that the FTAIA deprived it of subject matter jurisdiction. See Animal Science Prods., Inc. v. China Nat‟l Metals & Minerals Imp. & Exp. Corp., 702 F. Supp. 2d 320 (D.N.J. 2010). The District Court thoroughly discussed the FTAIA‟s two exceptions but ultimately determined that the plaintiffs failed to demonstrate that either exception was applicable to this case. The District Court thus granted the defendants‟ motion and dismissed the plaintiffs‟ First Amended Complaint.*fn4 Although the dismissal was partly without prejudice, the plaintiffs declined the District Court‟s invitation to amend their complaint for a second time and filed a timely notice of appeal.*fn5

II. This appeal involves interpreting the FTAIA, a statute that this Court has described as being "inelegantly phrased" and using "rather convoluted language." Turicentro, S.A. v. Am. Airlines Inc., 303 F.3d 293, 300 (3d Cir. 2002) (quotation ...


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