Nanko Shipping, USA v. Alcoa, Inc. , 107 F. Supp. 3d 174 ( 2015 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
__________________________________
)
NANKO SHIPPING, USA, et al., )
)
Plaintiffs, )
)
v. ) Civil Action No. 14-1301 (RMC)
)
ALCOA, INC., et al., )
)
Defendants. )
_________________________________ )
OPINION
Plaintiffs Nanko Shipping USA, Nanko Shipping Guinea, and their President and
sole shareholder, Mori Diane, brought this suit to enforce shipping rights as alleged third party
beneficiaries who are entitled to contractual rights held by the Republic of Guinea. Alcoa, Inc.
and Alcoa World Alumina LLC move to dismiss for failure to join an indispensable party,
among other reasons. Plaintiffs failed to name the Republic of Guinea as a party, likely because
it is entitled to sovereign immunity. Because the Republic of Guinea is indispensable, the case
will be dismissed. Plaintiffs move to file a Second Amended Complaint, but the proposed filing
would not survive a motion to dismiss and therefore the motion to amend will be denied as futile.
I. FACTS
Because Plaintiffs contend that their proposed Second Amended Complaint
overcomes the objections raised in Defendants’ motion to dismiss, the Court analyzes the motion
to dismiss in light of Plaintiffs’ best attempt to state a claim, i.e. their proposed Second Amended
Complaint (SAC). See Second Am. Compl. [Dkt. 14-1].
1
In 1963, the Republic of Guinea (Guinea) and Harvey Aluminum Company of
Delaware (Halco) 1 executed the Compagnie des Bauxites de Guinee (CBG) Convention to
develop bauxite mining and processing in Guinea. SAC at 1-2; see Mot. to Dismiss [Dkt. 7], Ex.
A (Convention) [Dkt. 7-2]. CBG is a corporation owned 49% by Guinea and 51% by Halco.
SAC at 2 (introduction). Article 9 of the Convention gave Guinea a qualified right to ship 50%
of the bauxite produced:
The Government [of Guinea] reserves the right, inasmuch as it does
not adversely affect the sale of bauxite, to have the exported tonnage
load[illegible] a proportion [of] which shall not exceed fifty percent
on ships operating under the Guinean flag or an assimilated flag, or
on ships chartered by the Government on the international shipping
market, the above being, however, under the express condition that
the freight tariffs practiced are lower or equal to those which are
quoted at that particular time on the international shipping market
for identical conditions for the freight and the shipping routes
considered.
Convention, Art. 9; see also SAC ¶ 14. 2 Over the past 50 years, CBG has produced and exported
over 600 million tons of bauxite from Guinea; the bauxite has been used to produce
approximately 150 million tons of aluminum valued at over $400 billion. SAC ¶ 9.
1
Harvey Aluminum Company of Delaware is now known as Halco Mining, Inc., a corporation
organized under the laws of Delaware. SAC ¶ 5.
2
The proposed Second Amended Complaint alleges that Article 9 reads as follows:
The government [of Guinea] reserves the right, to the extent that it
doesn’t have a negative impact on the sale of bauxite, to charge for
the exported tonnage, to a maximum proportion of 50%, unto
vessels flying the Guinean flag or similar or its chartered vessels on
the international freight market, everything under the first condition
[sic] that the freight rates be lower or equal to the current rates on
the international freight market under equal conditions for the time
period concerned for the freight and maritime relations in question.
SAC ¶ 14.
2
On August 17, 2011, Guinea entered into a Technical Assistance Agreement
(TAA) with one of the Plaintiffs, Nanko Shipping Guinea (sometimes, NSG). 3 Id. ¶ 20. Under
the terms of the TAA, Guinea allegedly authorized Nanko Shipping Guinea to exercise Guinea’s
shipping rights under Article 9 of the Convention thereby making Nanko Shipping Guinea a third
party beneficiary to the Convention. Id. ¶¶ 3, 4, 20, 72. Nanko Shipping Guinea asserts a right
to control CBG bauxite shipments for the benefit of the Guinean government and people. Id. ¶ 4.
Nanko Shipping USA owns 90% of the shares of Nanko Shipping Guinea and
Mori Diane owns the remaining 10% of the shares. Id. ¶ 3. Nanko Shipping Guinea, Nanko
Shipping USA, and Mr. Diane brought this suit against Alcoa, Inc. and its affiliate, Alcoa World
Alumina LLC (collectively Alcoa Defendants), alleging that the Alcoa Defendants refused “to
implement NSG’s rights via the TAA, including the effectuation of shipping contracts . . .” SAC
¶ 63; see also Am. Compl. [Dkt. 10-1] ¶ 63. Plaintiffs’ Amended Complaint asserts two counts:
Count I, breach of third party beneficiary contract; and Count II, race discrimination in
contracting in violation of 42 U.S.C. § 1981. Am. Compl. ¶¶ 57-76. The Alcoa Defendants
move to dismiss, arguing that they cannot be liable for breaching a contract––i.e. the Convention
(which is the alleged source of Plaintiffs’ third party rights)––when the Alcoa Defendants are not
parties to the Convention. In response, Plaintiffs move to file a Second Amended Complaint,
realleging Counts I and II and seeking to add Halco as a defendant (because Halco is a party to
the Convention) and to add claims for conspiracy under 42 U.S.C. § 1985, tortious interference
with contract and/or prospective business advantage, and civil conspiracy. SAC ¶¶ 69-104.
Plaintiffs essentially allege that the Alcoa Defendants are liable for breach of the
Convention, although not signatories to the Convention, because the Alcoa Defendants are alter
3
Neither party has filed a copy of the TAA.
3
egos to Halco. Plaintiffs contend that Halco is “essentially a conduit via which major corporate
aluminum entities, such as Alcoa Defendants, by way of unknown legal instruments, own,
control and manage Halco.” Id. at 2 (introduction). Plaintiffs describe the business relationship
between Alcoa Inc. and Halco as follows: “[a]t some point after or when the bauxite is shipped,
upon purchase of bauxite from CBG, Halco simultaneously transfers ownership of the bauxite to
its Consortium Members.” Id. Plaintiffs define the “Consortium” as a group of three companies:
Alcoa Inc. (a U.S. corporation), Rio Tinto (an Anglo-Australian company), and DADCO (a
Swiss company). Id. ¶ 5. Together, Alcoa Inc. and Rio Tinto own a majority of the shares of
Halco, and the three Consortium Members “comprise the Halco Board of Directors.” 4 Id. ¶¶ 5-6.
Plaintiffs allege that “Halco and Alcoa should be treated as a single entity, and alter ego liability
should attach since the two businesses actually function as a single entity in many respects, and
the notion that Halco is a parent is a fiction.” Id. ¶ 6.
The Alcoa Defendants move to dismiss on numerous grounds, including lack of
standing, failure to join an indispensable party, and failure to state a claim; Plaintiffs oppose.
See Mot. to Dismiss [Dkt. 7]; Opp’n [Dkt. 11]; Reply [Dkt. 13]. Plaintiffs attempt to rescue their
case through the filing of a Second Amended Complaint, and the Alcoa Defendants oppose on
grounds of futility. See Mot. for Leave to File [Dkt. 14]; Opp’n [Dkt. 15]; Reply [Dkt. 17]. As
described below, the case will be dismissed and the motion to amend will be denied.
4
Some of Plaintiffs’ allegations are vague and inconsistent. Plaintiffs fail to explain how three
corporations can comprise the Halco board of directors, when boards of directors are composed
of individuals. Plaintiffs also fail to explain how Alcoa and Halco can be alter ego corporations
when Alcoa, Inc. is a minority shareholder in Halco. Because Plaintiffs have failed to join an
indispensable party and have otherwise failed to state a claim, see infra, the fact that Plaintiffs’
allegations are vague and inconsistent is immaterial to this Opinion.
4
II. LEGAL STANDARDS
A. Motion to Dismiss For Lack of Jurisdiction
A motion to dismiss based on lack of standing to sue as a legal entity is governed
by Federal Rule of Civil Procedure 12(b)(1). When reviewing a motion to dismiss for lack of
jurisdiction under Rule 12(b)(1), a court must review the complaint liberally, granting the
plaintiff the benefit of all inferences that can be derived from the facts alleged. Barr v. Clinton,
370 F. 3d 1196, 1199 (D.C. Cir. 2004). Nevertheless, “the court need not accept factual
inferences drawn by plaintiffs if those inferences are not supported by facts alleged in the
complaint, nor must the Court accept plaintiff=s legal conclusions.” Speelman v. United States,
461 F. Supp. 2d 71, 73 (D.D.C. 2006). To determine whether it has jurisdiction over the claim, a
court may consider materials outside the pleadings. Settles v. U.S. Parole Comm’n, 429 F.3d
1098, 1107 (D.C. Cir. 2005). The party claiming subject matter jurisdiction bears the burden of
demonstrating that such jurisdiction exists. Khadr v. United States, 529 F.3d 1112, 1115 (D.C.
Cir. 2008).
B. Motion to Dismiss for Failure to Join Indispensable Party
Federal Rule of Civil Procedure 12(b)(7) permits dismissal of a complaint for
failure to join a party under Rule 19. In evaluating the need for an absent party, a court must
accept as true the allegations set forth in the complaint and may consider extrinsic evidence
submitted by the parties without converting a motion to dismiss to one for summary judgment.
16th & K Hotel, LP v. Commonwealth Land Title Ins. Co., 276 F.R.D. 8, 12 (D.D.C. 2011). The
burden is on the moving party to demonstrate “the nature of the interest possessed by an absent
party and that the protection of that interest will be impaired by the absence.” Citadel Inv. Grp.,
LLC v. Citadel Capital Co., 699 F. Supp. 2d 303, 317 (D.D.C. 2010).
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C. Motion to Dismiss for Failure to State a Claim
A motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil
Procedure 12(b)(6) challenges the adequacy of a complaint on its face. Fed. R. Civ. P. 12(b)(6).
A complaint must be sufficient “to give a defendant fair notice of what the . . . claim is and the
grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal
citations omitted). Although a complaint does not need detailed factual allegations, a plaintiff=s
obligation to provide the grounds of his entitlement to relief “requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. To
survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true,
to state a claim for relief that is “plausible on its face.” Id. at 570. A court must treat the
complaint’s factual allegations as true, “even if doubtful in fact.” Id. at 555. But a court need
not accept as true legal conclusions set forth in a complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). In deciding a motion under Rule 12(b)(6), a court may consider the facts alleged in the
complaint, documents attached to the complaint as exhibits or incorporated by reference, and
matters about which the court may take judicial notice. Abhe & Svoboda, Inc. v. Chao, 508 F.3d
1052, 1059 (D.C. Cir. 2007).
III. ANALYSIS
A. Standing
To have Article III standing, a plaintiff must establish: “(1) [he] has suffered an
‘injury in fact’ that is (a) concrete and particularized and (b) actual or imminent, not conjectural
or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and
(3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable
decision.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167, 180-81 (2000)
(citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). To assert standing for
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breach of contract, an individual shareholder must identify his own legal interest that has been
directly or independently harmed, not an interest derived from an injury to the corporation.
Cheeks v. Fort Myer Constr. Co., 722 F. Supp. 2d 93, 109 (D.D.C. 2010).
Plaintiffs Nanko Shipping Guinea, Nanko Shipping USA, and Mr. Diane claim
that the TAA made them third party beneficiaries to the Convention and they claim to have
suffered from a breach of contract as such third party beneficiaries. Only Nanko Shipping
Guinea is a party to the TAA and thus only Nanko Shipping Guinea can assert a viable claim that
it is a third party beneficiary to the Convention. Its shareholders, Mr. Diane and Nanko Shipping
USA, have not asserted any personal rights under the TAA or the Convention, and they have not
asserted any direct or independent harm to themselves. See Cheeks, 722 F. Supp. 2d at 109.
They have no standing to bring the third party breach of contract claim. See Friends of the
Earth, 528 U.S. at 180-81.
Mr. Diane and Nanko Shipping USA also lack standing to bring the claim for race
discrimination in violation of 42 U.S.C. § 1981. These two plaintiffs allege that Nanko Shipping
Guinea is a Black-owned company, that Mr. Diane is a Black American, and that the Alcoa
Defendants and Halco intentionally impaired Nanko Shipping Guinea’s contractual rights under
the TAA due to race discrimination. Am. Compl. ¶¶ 64-76 (allegations against Alcoa
Defendants); SAC ¶¶ 77-91 (allegations against Alcoa Defendants and Halco). Section 1981
protects the equal right of all persons to make and enforce contracts without respect to race.
Domino’s Pizza, Inc. v. McDonald, 546 U.S. 470, 474 (2006). Any claim brought under § 1981
must identify an impaired contractual relationship under which the plaintiff has rights. Id. at
476. That is, to assert a claim that a defendant discriminatorily failed to enforce a contract in
violation of § 1981, a plaintiff must allege that he has rights under an existing contract that he
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wishes to enforce. 5 Id. at 479-80. “Section 1981 plaintiffs must identify injuries flowing from a
racially motivated breach of their own contractual relationship, not of someone else’s.” Id. at
480. Mr. Diane and Nanko Shipping USA have not alleged injuries flowing from a breach of
their own contractual relationships, they have only alleged injuries to Nanko Shipping Guinea
due to breach of Nanko Shipping Guinea’s third party rights under the Convention. Because
they have not identified an injury in fact to their own contractual interests, Nanko Shipping USA
and Mr. Diane will be dismissed as parties here for lack of standing.
B. Failure to Join an Indispensable Party
Federal Rule of Civil Procedure 19(a) describes required persons who must be
joined as a party in a lawsuit:
(a) Persons Required to Be Joined if Feasible
(1) Required Party. A person who is subject to service of process
and whose joinder will not deprive the court of subject matter
jurisdiction must be joined as a party if:
(A) in that person’s absence, the court cannot accord
complete relief among existing parties; or
(B) that person claims an interest relating to the subject of
the action and is so situated that disposing of the action in
the person’s absence may:
(i) as a practical matter impair or impede the person’s
ability to protect the interest; or
(ii) leave an existing party subject to a substantial
risk of incurring double, multiple, or otherwise
inconsistent obligations because of the interest.
5
In addition to protecting the right to enforce contracts, § 1981 also protects the right to “make”
contracts. See 42 U.S.C. § 1981. To assert a claim for discrimination in making a contract under
§ 1981, a plaintiff must identify a proposed contract under which he would have had rights if the
discrimination had not occurred. Domino’s Pizza, 546 U.S. at 479-80.
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(2) Joinder by Court Order. If a person has not been joined as
required, the court must order that the person be made a party. A
person who refuses to join as a plaintiff may be made either a
defendant or, in a proper case, an involuntary plaintiff.
Nanko Shipping Guinea asserts breach of its rights as a third party beneficiary––
claiming that, under the terms of the TAA, it is entitled to exercise Guinea’s rights under the
CBG Convention. If this Court were to resolve the issue of breach, the Court would have to
interpret the meaning of Article 9 and the parameters of Guinea’s rights and duties under the
Convention. The Court’s interpretation of the Convention may impair or impede Guinea’s right
to protect its interests under the Convention. Under Rule 19, Guinea is a necessary party to this
suit.
Guinea, however, cannot be joined because it is entitled to sovereign immunity.
The Foreign Sovereign Immunities Act provides:
Subject to existing international agreements to which the United
States is a party at the time of enactment of this Act a foreign state
shall be immune from the jurisdiction of the courts of the United
States and of the States except as provided in sections 1605 and
1607.
28 U.S.C. § 1604. The exceptions do not apply here. 6
Under Rule 19(b) “[i]f a person who is required to be joined if feasible cannot be
joined, the court must determine whether, in equity and good conscience, the action should
proceed among the existing parties or should be dismissed.” Fed. R. Civ. P. 19(b). The factors
for a court’s consideration include:
(1) the extent to which a judgment rendered in the person’s absence
might prejudice that person or the existing parties;
6
Plaintiffs do not contest the assertion that Guinea is protected from suit by sovereign
immunity. Opp’n [Dkt. 11] at 25 (“Defendants may be correct . . . that this Court lacks
jurisdiction over Guinea . . . .”).
9
(2) the extent to which any prejudice could be lessened or avoided
by:
(A) protective provisions in the judgment;
(B) shaping the relief; or
(C) other measures;
(3) whether a judgment rendered in the person's absence
would be adequate; and
(4) whether the plaintiff would have an adequate remedy if
the action were dismissed for nonjoinder.
Fed. R. Civ. P. 19(b).
The Republic of Guinea could be prejudiced if this case were to move forward.
Guinea’s important and highly valuable contract rights could be impaired or impeded by the
Court’s ruling on the third party breach of contract claim as well as the § 1981 claim for
enforcement of the contract. Further, Nanko Shipping Guinea has an adequate remedy without
proceeding in this Court, as it can assert its rights in arbitration. If Nanko Shipping Guinea in
fact is entitled to exercise Guinea’s rights under the Convention, it is also bound by the other
terms of the Convention, including the arbitration clause. The Convention requires that all
disputes that are connected to the Convention shall be arbitrated. 7 See Convention, Art. 13
(“Conciliation and arbitration shall apply . . . to all disputes which in any way are connected with
this Agreement and with any legal instruments and legal relationships which might be a
consequence thereof . . .”). The Court cannot in equity and good conscience proceed among the
existing parties, and thus this case will be dismissed for failure to join an indispensable party.
7
Even if Guinea were joined as a party here, the case would have to be dismissed so that the
parties could proceed to mandatory arbitration.
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C. Motion for Leave to Amend
As explained above, Nanko Shipping Guinea seeks to file the Second Amended
Complaint, to add Halco as a defendant and to add claims for conspiracy under 42 U.S.C.
§ 1985, tortious interference with contract and/or prospective business advantage, and civil
conspiracy. SAC ¶¶ 69-104. Federal Rule of Civil Procedure 15(a) provides that leave should
be freely granted when justice so requires. However, a motion to amend should be denied if
amendment is futile because the proposed claim would not survive a motion to dismiss. James
Madison Ltd. v. Ludwig, 82 F.3d 1085, 1099 (D.C. Cir. 1996).
The joinder of Halco and the allegations that Alcoa Inc. and Halco are alter egos
does not save the third party breach of contract claim or the related § 1981 claim because Guinea
is a necessary party here and cannot be joined because it enjoys sovereign immunity. See Fed. R.
Civ. P. 19; 28 U.S.C. § 1604.
Further, the additional proposed claims––violation of 42 U.S.C. § 1985, tortious
interference with contract and/or prospective business advantage, and civil conspiracy––would
not survive a motion to dismiss. Section 1985 of Title 42 does not create any substantive rights,
but only permits a private cause of action to sue for conspiracy to violate a federal right. Weaver
v. Gross, 605 F. Supp. 210, 213 n.5 (D.D.C. 1985) (citing United Bhd. of Carpenters & Joiners,
463 U.S. 825, 833 (1983)). Here, Plaintiffs assert a claim under § 1985, as part of Count II
which alleges violation of § 1981. Because the § 1981 claim will be dismissed, the § 1985 claim
also fails. See, e.g., Wesley v. Howard Univ., 3 F. Supp. 2d 1, 3 (D.D.C. 1998) (dismissing
§ 1985 claims because plaintiff failed to state a § 1981 claim).
Plaintiffs also seek to add a claim for tortious interference with contract and/or
prospective business advantage/expectancy. The elements of a claim for tortious interference
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with contract or business expectancy are: (1) the existence of a valid contract/business
expectancy; (2) knowledge of the contract/expectancy on the part of the interferor; (3) intentional
interference causing termination of the contract or relationship or causing a failure of
performance by one of the parties; and (4) resultant damage. Onyeoziri v. Spivok, 44 A.3d 279,
286 (D.C. 2012) (describing a claim for tortious interference with contract under D.C. law);
McNamara v. Picken, 866 F. Supp. 2d 10, 15 (D.D.C. 2012) (describing a claim for interference
with business expectancy under D.C. law).
The third element of the claim––intentional interference causing termination of
the contract or relationship or causing a failure of performance by one of the parties––requires
that a plaintiff plead and make a “strong showing of intent to disrupt ongoing business
relationship,” see Bell v. Ivory, 966 F. Supp. 23, 31 (D.D.C. 1997), and “affirmative, intentional
acts of interference,” see Benedict v. Allen, No. 00-1023(CKK), 2001 U.S. Dist. LEXIS 26293,
at * 21-23 (D.D.C. June 13, 2001). Mere refusal to deal is insufficient. Restatement (Second) of
Torts § 766 cmt. b; Bill Call Ford, Inc. v. Ford Motor Co., 830 F. Supp. 1053, 1064 (N.D. Ohio
1993). Plaintiffs’ tortious interference claim rests on alleged inaction. Plaintiffs allege that the
Alcoa Defendants “interfered with CBG [Convention] related shipping transactions (Nanko’s
related Article 9 rights) per the TAA. Defendants refused to recognize [Nanko Shipping
Guinea’s] rights as stated in the TAA, and further refused to execute any shipping contracts
related thereto.” SAC ¶ 95; see also id. ¶ 28 (Defendants interfered with the TAA and Plaintiffs’
business expectancy by their “refusal to provide Nanko shipping contract controls and awards as
per the CBG [Convention]”); id. ¶ 61 (Defendants “refused . . . to respect, implement, support, or
ensure the effectuation of the TAA). Allegations of inaction do not satisfy the requirement that a
plaintiff plead affirmative, intentional acts of interference. See Benedict, 2001 U.S. Dist. LEXIS
1226293, at * 21-23. It would be futile to permit the addition of the claim for tortious interference;
the allegations fail to state a claim and would not survive a motion to dismiss.
Finally, Plaintiffs seek to add a civil conspiracy claim. A civil conspiracy is not
an independent claim, but instead is a means for establishing vicarious liability for an underlying
tort. Halberstam v. Welch, 705 F.2d 472, 479 (D.C. Cir. 1983). If the underlying tort claim
fails, a conspiracy claim based on such tort also fails. See id. Because Plaintiffs’ tortious
interference claim would not survive a motion to dismiss, their civil conspiracy claim based on
the tortious interference claim would not survive. Accordingly, it would be futile to permit the
addition of the civil conspiracy claim.
In sum, Plaintiffs’ motion to file a Second Amended Complaint will be denied
because to permit its filing would be futile since it would not survive a motion to dismiss.
IV. CONCLUSION
For the reasons stated above, the Alcoa Defendants’ motion to dismiss [Dkt. 7]
will be granted, Plaintiffs’ motion to file a second amended complaint [Dkt. 14] will be denied,
and this case will be dismissed. A memorializing Order accompanies this Opinion.
Date: June 5, 2015 /s/
ROSEMARY M. COLLYER
United States District Judge
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