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Pension Benefit Guaranty Corporation v. Asahi Tec Corporation

March 14, 2012

PENSION BENEFIT GUARANTY CORPORATION, PLAINTIFF,
v.
ASAHI TEC CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Amy Berman JACKSONUnited States District Judge

MEMORANDUM OPINION

Plaintiff Pension Benefit Guaranty Corporation ("PBGC") brings this action against defendant Asahi Tec Corporation ("Asahi Tec") under Title IV of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended 29 U.S.C. §§ 1301--1461 (2006 and Supp. II 2008). In 2007, defendant, a Japanese corporation, acquired a U.S.-based company, Metaldyne Corporation ("Metaldyne"). The complaint alleges that as a result of the acquisition, defendant became a "controlled group" member of Metaldyne and is therefore liable for the termination of Metaldyne's Pension Plan ("the Pension Plan") and for termination premiums. Defendant moved to dismiss under Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction [Dkt. # 11], arguing that the Court cannot exercise general or specific jurisdiction over the foreign corporation for the acts of its U.S. subsidiary. The Court finds that plaintiff has made a prima facie showing that defendant purposefully directed activity towards the United States in connection with the acquisition of Metaldyne and the attendant assumption of controlled group pension liability, and that the claims in the complaint arise directly out of that specific conduct.

Therefore, the Court can exercise specific jurisdiction over the defendant, it will deny defendant's motion to dismiss, and it need not reach the question of general jurisdiction.

I. BACKGROUND

A. Factual Background

1. The Metaldyne Acquisition Defendant Asahi Tec is a corporation organized under the laws of Japan that maintains its headquarters in Shizuoka, Japan. Compl. ¶ 5. Asahi Tec manufactures high quality cast iron and aluminum parts for trucks and cars. Def.'s Mem. in Support of Mot. to Dismiss ("Def.'s Mem.") at 3. In September 2006, defendant announced its plans to acquire Metaldyne, an automotive parts manufacturer based in Michigan that produced chassis and powertrain components and sub-assemblies for passenger cars and light trucks. Compl. ¶ 10; Amato Decl. ¶ 11. For purposes of the transaction, defendant established a wholly owned subsidiary in the United States and agreed to pay Metaldyne shareholders over $200 million for their interest in Metaldyne stock. Compl. ¶ 10. Asahi Tec approximated that the total consideration for the acquisition, including the refinancing of Metaldyne's debt, was $1.2 billion. Id.

The complaint alleges that prior to the acquisition, "Asahi Tec performed due diligence in connection with this $1.2 billion transaction to assess the financial impact of the Metaldyne acquisition" and that "one aspect of that due diligence involved Asahi Tech's obligation for pension liabilities of Metaldyne." Id. ¶ 11. In particular, the complaint alleges that "Asahi Tec learned about the Pension Plan, that the Pension Plan had unfunded benefit and other pension-related liabilities and that, as a member of Metaldyne's controlled group, it would be jointly and severally liable with Metaldyne and other affiliates, for the Pension Liability under the Pension Plan." Id.

The acquisition of Metaldyne was completed in January 2007. Id. ¶ 13. The complaint alleges, and defendant disputes, that following the merger, Asahi Tec "controlled and directed Metaldyne's operations and made Metaldyne its agent and alter ego to do business in the U.S." Id. Plaintiff further alleges the acquisition allowed Asahi Tec to "pursue[] its goals of gaining access to Metaldyne's engineering, design and manufacturing capabilities and expanding its global reach with Metaldyne's significant operations, presence, and customer base in the U.S. and elsewhere." Id. Plaintiff avers that Asahi Tec solicited customers and otherwise conducted "continuous and systematic business activities in the U.S. using Metaldyne as its agent and alter ego." Id.

2. Termination of Metaldyne's Pension Plan On May 27, 2009, Metaldyne filed a voluntary petition for relief as debtors-in-possession under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. Id. ¶ 15. On July 13, 2009, plaintiff PGBC*fn1 filed a complaint under 29 U.S.C. § 1342 against Metaldyne in the U.S. District Court for the Eastern District of Michigan, seeking a decree terminating the Pension Plan and requesting that plaintiff be appointed as statutory trustee of the plan. Id. ¶ 16. Plaintiff alleges that prior to filing that action, it discussed defendant's controlled group liability with defendant's counsel in the United States and requested that Asahi Tec "assume sponsorship of the Pension Plan, given the fact that no buyer of Metaldyne's assets was expected to assume the Pension Plan in the Bankruptcy Cases." Id. Plaintiff avers that because Asahi Tec refused to assume sponsorship, the Pension Plan was terminated effective July 31, 2009, and plaintiff became the statutory trustee pursuant to section 4042(c) of ERISA. Id. ¶ 17. On September 18, 2009, plaintiff sent a demand letter to Asahi Tec informing the company that it was liable for the terminated pension because it was a controlled group member of Metaldyne. Id. ¶ 18.

B. Procedural Background

Plaintiff filed this action on November 12, 2010. [Dkt. # 1]. The complaint alleges three claims under ERISA. Count I seeks entry of judgment against Asahi Tec for the full principal amount of the pension liability plus accrued interest from July 31, 2009, to date of payment under 29 U.S.C. §§ 1303(e)(1), 1362(b), and 29 C.F.R. § 4062.7. Compl. at 6--7. Count II alleges that Asahi Tec is jointly and severally liable for termination premiums under 29 U.S.C. §§ 1306(a)(7) and 1307(e)(2). Id. at 7--8. Count III seeks litigation costs from this action under 29 U.S.C.§ 1303(e)(5). Id. at 8.

On April 8, 2011, defendant filed a motion to dismiss for lack of personal jurisdiction [Dkt. # 11] under Fed. R. Civ. P. 12(b)(2). Plaintiff opposed the motion, and in the alternative, requested that it be permitted to take jurisdictional discovery. [Dkt. # 15]. On July 5, 2011, the Court permitted both parties to submit supplemental briefs addressing the Supreme Court's holdings in Goodyear Dunlop Tires Operation, S.A., v. Brown, 564 U.S. ---, 131 S. Ct. 2846 (2011), and J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. ---, 131 S. Ct. 2780 (2011). Minute Order, July 5, 2011.

A status conference was held on July 21, 2011, during which the Court ruled that no merits discovery could be conducted until after the Court ruled on the motion to dismiss, but it heard argument on the need for, and the potential scope of, jurisdictional discovery. [Dkt. # 29]. The Court directed plaintiff to submit a proposal outlining the narrowly tailored documentary discovery it was seeking and accorded defendant an opportunity to respond to the proposal. After consideration of the parties' submissions, the Court permitted plaintiff to take some limited discovery but narrowed the proposed order because it was broader than necessary to accomplish its asserted purpose. Id. After the completion of this discovery, the Court also allowed the parties to submit a ...


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