On March 22, 2021, United States District Judge Bernard A. Friedman of the Eastern District of Michigan dismissed antitrust and business tort claims against Volkswagen AG and Volkswagen Group of America on forum non conveniens grounds.1 The claims were brought by plaintiffs Prevent USA Corporation and Eastern Horizon Group. The two plaintiffs alleged that they were two members of a group of related companies known collectively as the Horizon Group. They alleged that Volkswagen had acted in violation of Sections 1 and 2 of the Sherman Act, and similar Michigan state laws, to block efforts by Prevent Group to acquire auto parts suppliers that sold auto parts to Volkswagen.
The Prevent Group allegations were based in substantial part on what Prevent described as "internal Volkswagen documents" provided by a senior Volkswagen executive. The documents purportedly described a Volkswagen corporate strategy to stop Prevent Group and other suppliers from acquiring distressed auto parts suppliers. The strategy allegedly allowed Volkswagen to continue a strategy of using its market power to force its parts suppliers to accept sub-competitive prices from Volkswagen, and that Volkswagen created the strategy in response to a 2016 acquisition by Prevent Group of a Volkswagen supplier that transformed the acquired company from a "compliant" target of Volkswagen's market power to "a company with enough bargaining power to resist" Volkswagen. The plaintiffs also identified a number of target supplier acquisitions that Volkswagen allegedly blocked, including several operations being sold by Michigan-based companies, and identified their failed attempts to acquire German and Polish suppliers that were allegedly foiled by Volkswagen. In support of these allegations, the complaint detailed communications that the Prevent Group had with Tower, a Michigan-based supplier of metal auto body structures, that announced it was selling its Brazil and China operations. Tower's executives allegedly described their communications with Volkswagen regarding the potential sale, including an apparent agreement not to sell the operations to a Prevent Group company.
Despite the plaintiffs' allegations of connections to Michigan, the Court dismissed the claim for forum non conveniens. The primary basis for the decision was that Prevent Group had filed multiple similar lawsuits against Volkswagen in Germany, at least one of which was still ongoing. The court relied heavily on that fact for its forum non conveniens analysis. First, the court found that Germany was available as an adequate alternate forum. It cited to a number of cases from other districts finding Germany an adequate forum for pursuing those claims, then specifically noted that Prevent Group companies had already filed several lawsuits against Volkswagen alleging unfair competition and antitrust violations arising from similar conduct. Notably, those cases include one filed the same year as the Eastern District of Michigan case that the court found included "allegations that are nearly identical to those made in the present case."
The court also found that both public interest and private interest factors weighed in favor of litigating the case in Germany. Despite the allegations related to Michigan-based companies, the court determined that the actual connections to Michigan were scant—rather, the primary allegations included a German company's conduct relating to acquisitions of parts suppliers in Germany, Poland, and Brazil. The court determined that the allegations that Volkswagen blocked Prevent Group from acquiring other Michigan-based companies were "speculative" and not entitled to significant weight. Conversely, because the conduct was centered in Germany, the court found that public interest factors weighed towards litigating the dispute in Germany.
The court similarly found that the private interest factors weighed towards litigating the dispute in Germany. The court found that "the vast bulk of the evidence in this case is in Germany," and that a U.S. court would have difficultly compelling discovery that would be more readily available in Germany. It also concluded that documents and testimony would likely need to be translated, complicating the litigation process.
Finally, the court gave little weight to the plaintiffs' choice of forum due to the multiple related cases that Prevent Group had initiated in Germany and the plaintiffs' minimal connections to Michigan. It concluded that "Plaintiffs' litigation history shows that their decision to sue in the United States has nothing to do with convenience and everything to do with forum shopping," and cataloged the history of disputes between the parties in German courts.
Footnote
1 Prevent USA Corp., et al. v. Volkswagen AG, et al., no. 19-cv-13400 (E.D. Mich.)
Originally published by ATLP, April 9, 2021
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
