MEAD JOHNSON & COMPANY LLC et al v. LEXINGTON INSURANCE COMPANY, No. 3:2011cv00043 - Document 72 (S.D. Ind. 2012)
Court Description: ORDER granting Lexington's 42 Motion to Dismiss Plaintiffs' Amended Complaint. Signed by Judge Richard L. Young on 1/18/2012. (TMD)
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MEAD JOHNSON & COMPANY LLC et al v. LEXINGTON INSURANCE COMPANY Doc. 72 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF INDIANA EVANSVILLE DIVISION ) ) ) ) ) ) vs. ) LEXINGTON INSURANCE COMPANY, ) ) Defendant. MEAD JOHNSON & COMPANY, LLC, and MEAD JOHNSON NUTRITION COMPANY, Plaintiffs, 3:11-cv-00043-RLY-WGH ENTRY ON LEXINGTON INSURANCE COMPANY’S MOTION TO DISMISS PLAINTIFFS’ AMENDED COMPLAINT Defendant, Lexington Insurance Company (“Lexington”), moves to dismiss Plaintiffs’ Amended Complaint for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. For the reasons set forth below, the court GRANTS Lexington’s Motion. This case arises out of prior litigation between PBM Products, LLC (“PBM”), and Mead Johnson & Company, LLC and Mead Johnson Nutrition Company (“Mead Johnson”), competitors in the sale of infant formula. PBM asserted that Mead Johnson engaged in a false advertising campaign against PBM’s competing store brand infant formulas, in violation of the Lanham Act. PBM ultimately prevailed by winning a $13,500,000.00 jury verdict against Mead Johnson in November 2009. The verdict was affirmed by the Fourth Circuit Court of Appeals in April 2011. 1 Dockets.Justia.com During this time frame, Mead Johnson had in place Commercial General Liability Policy No. 090-72-27 issued by National Union Fire Insurance Company (“National Union”), and Commercial Umbrella Liability Policy No. 065302639 issued by Lexington, both of which provided advertising liability coverage for the policy period February 10, 2009 to February 10, 2010. (Amended Complaint ¶ 7). Following the jury verdict, Mead Johnson sought insurance coverage from National Union and Lexington for the Underlying PBM Claim. This prompted National Union to file a declaratory judgment action in this court, seeking a determination of its rights and obligations under its Commercial General Liability Policy, and a declaration that it is not obligated to defend or indemnify Mead Johnson with respect to the Underlying PBM Claim. See National Union Fire Ins. Co. of Pittsburgh, Pa. v. Mead Johnson & Company, Mead Johnson Nutritional Company, and PBM Products, LLC, 3:11-cv-15-RLY-WGH. Jurisdiction in that case is predicated upon diversity of citizenship. In the present case, Mead Johnson alleges that Lexington breached the Umbrella Liability Policy by failing to provide coverage for the Underlying PBM Claim, and seeks a declaratory judgment that Lexington owes Mead Johnson complete and comprehensive coverage under the Umbrella Liability Policy. Jurisdiction is not predicated on diversity of citizenship, as the principal place of business for both Mead Johnson and Lexington is Delaware. Instead, jurisdiction is predicated on the Federal Arbitration Act (“FAA”) and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958, 21 U.S.T. 2517 (1970) (the “New York Convention”). (Amended Complaint ¶ 2 4). The arbitration relied upon by Mead Johnson in the Amended Complaint to support subject matter jurisdiction relates to an arbitration between AIU Insurance Company (“AIU”) and Bristol-Myers Squibb Company (“BMSCo”), in which BMSCo sought coverage determinations with respect to both indemnity and defense costs for advertising liability to PBM. Ultimately, on June 11, 2003, the arbitration panel issued a final award in favor of BMSCo., and required AIU to pay $24,611,357.99 to BMSCo for its liability under the policy, $1,617,514.38 for pre-judgment interest, and $634,397.36 for defense and compliance-related costs. (Declaration of David A. Stryker ¶ 11). AIU, like National Union and Lexington, is an affiliate of American International Group, Inc. (Id. ¶ 3). The FAA cannot, by itself, confer subject matter jurisdiction. See Kittle v. Prudential Ins. Co. of Am., 102 F.Supp.2d 1029, 1037 (S.D. Ind. 2000) (noting that a plaintiff must plead subject matter jurisdiction independent from the Federal Arbitration Act). Mead Johnson concedes that point. Mead Johnson contends, however, that the New York Convention provides an independent basis upon which to predicate subject matter jurisdiction. As noted by Lexington, the arbitration alleged by Mead Johnson in its Amended Complaint is factually inapposite and irrelevant to this dispute. The arbitration alleged by Mead Johnson involves a different insurer (AIU), a different insurance contract (the AIU Commercial Umbrella Policy No. CLM 932-07067), and a different underlying claim. (See Declaration of Tara Leigh Lucas (“Lucas Dec.”), Ex. B). Accordingly, the arbitration upon which Mead Johnson relies cannot confer jurisdiction because it has 3 nothing to do with the actual parties and actual dispute in this matter. Moreover, the New York Convention is limited to the recognition and enforcement of foreign arbitrations: An arbitration agreement or arbitral award arising out of a legal relationship, whether contractual or not, which is considered as commercial, including a transaction, contract, or agreement described in section 2 of this title, falls under the Convention. An agreement or award arising out of such a relationship which is entirely between citizens of the United States shall be deemed not to fall under the Convention, unless that relationship involves property located abroad, envisages performance or enforcement abroad, or has some other reasonable relation with one or more foreign states. For purposes of this section a corporation is a citizen of the United States if it is incorporated or has its principal place of business in the United States. 9 U.S.C. § 202 (emphasis added). The arbitration agreement, attached to the Declaration of Tara Leigh Lucas, reflects that the arbitration alleged in the Amended Complaint involved citizens of the United States, was conducted in New York, and required that the arbitration panel give due consideration to New York law. (Lucas Dec. ¶¶ 8-9; Lucas Dec., Ex. B ¶¶ 2, 4). In addition, the arbitration agreement provided that all disputes arising out of the arbitration take place in a state or federal court located in the Southern District of New York. (Lucas Dec. ¶ 10; Lucas Dec., Ex. B ¶ 10). The arbitration did not involve property located abroad, did not envisage performance abroad, and had no reasonable relation to a foreign state. In sum, the New York Convention has no application to the present case. Accordingly, the court must find that it lacks subject 4 matter jurisdiction. Lexington’s Motion to Dismiss Plaintiffs’ Amended Complaint (Docket # 42) is therefore GRANTED. SO ORDERED this 18th day of January 2012. __________________________________ s/ Richard L. Young RICHARD L. YOUNG, CHIEF JUDGE RICHARD L. YOUNG, CHIEF JUDGE United States District Court United States District Court Southern District of Indiana Southern District of Indiana Electronic Copies to: Brian J. Capitummino CADWALADER WICKERSHAM & TAFT LLP brian.capitummino@cwt.com James E. Gentry Jr. BOWERS HARRISON LLP jeg@bowersharrison.com Mark D. Gerth KIGHTLINGER & GRAY mgerth@k-glaw.com Daniel I. Graham Jr. BATES CAREY NICOLAIDES, LLP dgraham@bcnlaw.com Mary F. Licari BATES CAREY NICOLAIDES, LLP mlicari@bcnlaw.com Laura A. McArdle BATES CAREY NICOLAIDES LLP lmcardle@bcnlaw.com Mark E. Miller Bowers Harrison, LLP mem@bowersharrison.com 5 Richard H. Nicolaides Jr. BATES CAREY NICOLAIDES LLP rnicolaides@bcnlaw.com John E. Rodewald BATES CAREY NICOLAIDES, LLP jrodewald@bcnlaw.com Hal S. Shaftel CADWALADER WICKERSHAM & TAFT LLP hal.shaftel@cwt.com Louis M. Solomon CADWALADER, WICKERSHAM & TAFT LLP louis.solomon@cwt.com Kase L. Stiefvater KIGHTLINGER & GRAY kstiefvater@k-glaw.com Brent R. Weil KIGHTLINGER & GRAY bweil@k-glaw.com 6
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