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Dee-K Enterprises, Inc. v. Heveafil Sdn. Bhd.

United States District Court for the Eastern District of Virginia · 1997 · Civil Procedure

venuetransferconvenience of parties28 USC 1404personal jurisdictionantitrust pleadingIllinois Brickantitrust injury

Facts

Plaintiffs Dee-K and Asheboro are American end users who bought extruded rubber thread for manufacturing products, and they alleged that foreign producers and certain distributors conspired to fix prices and restrain competition in the United States. Indonesian producer Bakrie sold to Globe in Indonesia, but Globe was Bakrie's exclusive U.S. distributor, Globe owned 25% of Bakrie, shared some directors and officers, and Bakrie executives came to the United States annually to meet with Globe. The complaint also alleged that distributor-defendants coordinated price increases, reported price cutting to producer-parents, refused discounts, and acted with knowledge of the cartel. Defendants also argued that antidumping findings by the Department of Commerce showed plaintiffs could not have suffered antitrust injury.

Issue

Whether the court could exercise personal jurisdiction over Bakrie, whether venue was proper in the Eastern District of Virginia, and whether the second amended complaint adequately stated antitrust claims against the distributor-defendants despite Illinois Brick and the Department of Commerce antidumping order. More specifically, the court had to determine whether an exclusive U.S. distributor relationship created purposeful availment, whether alien-defendant venue and federal-question venue were satisfied, and whether plaintiffs sufficiently alleged distributor participation in the conspiracy.

Rule

When Congress authorizes nationwide or worldwide service of process, personal jurisdiction turns on whether the defendant has minimum contacts with the United States as a whole and whether exercising jurisdiction comports with fair play and substantial justice. Under Asahi as applied by the court, mere placement of a product into the stream of commerce is insufficient, but purposeful availment exists when a defendant markets a product through a distributor that has agreed to serve as its sales agent in the forum. Under Estate Construction, an antitrust plaintiff must plead more than a bare allegation of conspiracy and must provide supporting allegations of communications, meetings, or other facts permitting an inference of conspiracy whenever possible. Under Illinois Brick, indirect purchasers generally cannot recover, but plaintiffs may proceed if they allege that distributors were part of the conspiracy or were owned or controlled by the producers.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

A South Korean chemical manufacturer is sued in federal court in Illinois under the Sherman Act. It has no office, employees, or property in any state, but it appointed Harbor Crest Sales, LLC as its exclusive distributor for the United States, and Harbor Crest markets the manufacturer’s resin nationwide; the manufacturer’s executives travel to Chicago each year to meet with Harbor Crest.

Assuming service was properly made abroad and no state court has general jurisdiction over the manufacturer, is personal jurisdiction in federal court most likely proper?

Explanation. When federal law authorizes nationwide or worldwide service, due process looks to contacts with the United States as a whole. Stream of commerce alone is insufficient, but purposeful availment exists where the defendant markets through a distributor that agreed to serve as its sales agent in the forum. The annual meetings reinforce, but are not necessary to, that conclusion. The fact that title passed abroad does not by itself defeat jurisdiction. Fairness also favors jurisdiction where the alleged antitrust conduct targeted the U.S. market. (Derived from Dee-K Enterprises, Inc. v. Heveafil Sdn. Bhd. (1997).)