THE SUPREME COURT OF THE
FEDERATED STATES OF MICRONESIA
TRIAL DIVISION
Cite as AHPW, Inc. v. FSM,
9 FSM Intrm. 301 (Ponape 2001)

[9 FSM Intrm. 301]

AHPW, INC.
Plaintiff,

vs.

GOVERNMENT OF THE
FEDERATED STATES OF MICRONESIA
and GOVERNMENT OF THE STATE OF POHNPEI,
Defendants.

CIVIL ACTION NO. 1998-053

ORDER AND MEMORANDUM

Martin Yinug
Associate Justice

Decided:  January 12, 2000

APPEARANCES:
For the Plaintiff:          Douglas F. Cushnie, Esq.
                                     P.O. Box 949
                                     Saipan, Northern Marianas MP 96950

For the Defendant:     Amy J. Fitzpatrick, Esq.
           (FSM)               Assistant Attorney General
                                     FSM Department of Justice
                                     P.O. Box PS-105
                                     Palikir, Pohnpei FM 96941

For the Defendant:     James Woodruff, Esq.
           (Pohnpei)         Attorney General
                                     Pohnpei Department of Justice
                                     P.O. Box 1555
                                     Kolonia, Pohnpei FM 96941

*    *    *    *

[9 FSM Intrm. 302]

HEADNOTES
Civil Procedure ) Motions
     Although the Civil Procedure Rules do not specifically provide for the filing of replies to oppositions to motions, the Rules do not prohibit the practice, and the usual practice has been to accept them.  AHPW, Inc. v. FSM, 9 FSM Intrm. 301, 303 (Pon. 2000).

Civil Procedure ) Dismissal
     In ruling on a motion to dismiss, the court must assume the truth of the allegations in the complaint, with the benefit of all reasonable inferences to be given to the plaintiff.  AHPW, Inc. v. FSM, 9 FSM Intrm. 301, 303 (Pon. 2000).

Commerce; Statutes of Limitation
     A statute of limitations begins to run when the cause of action accrues.  When a complaint alleges that a defendant's anticompetitive actions forced the plaintiff out of business the cause of actions accrues when the plaintiff went out of business.  AHPW, Inc. v. FSM, 9 FSM Intrm. 301, 304 (Pon. 2000).

Civil Procedure ) Dismissal; Commerce
     Whether Pohnpei's power to regulate trochus means that any action which has an arguably regulatory effect on trochus cannot constitute an anticompetitive practice is an issue for trial, and a motion to dismiss in this respect must be denied.  AHPW, Inc. v. FSM, 9 FSM Intrm. 301, 304 (Pon. 2000).

Commerce; Transition of Authority
     Title 32, sections 301 et seq. date from the Trust Territory period but continue in effect pursuant to the FSM Constitution's Transition Clause.  AHPW, Inc. v. FSM, 9 FSM Intrm. 301, 305 (Pon. 2000).

Commerce
     The State of Pohnpei is deemed a person within the meaning of section 306 of the Anticompetitive Practices statute and may be a defendant as well as a plaintiff in suits brought under the statute.  AHPW, Inc. v. FSM, 9 FSM Intrm. 301, 305 (Pon. 2000).

Statutes ) Construction; Transition of Authority
     Via the analogy implicated by the Transition Clause, under a statute carried over from the Trust Territory which speaks in terms of the Trust Territory and any of its political subdivisions as being persons, Pohnpei is also a person to the same extent that a Trust Territory political subdivision was a person under the statute's prior incarnation.  AHPW, Inc. v. FSM, 9 FSM Intrm. 301, 305 (Pon. 2000).

Civil Procedure ) Dismissal
     When a defendant draws its own legal conclusions from the complaint's alleged facts, its comments are not a sufficient basis on which to dismiss a complaint, and the facts as alleged present issues for trial because the court must take the complaint's allegations as true.  AHPW, Inc. v. FSM, 9 FSM Intrm. 301, 305-06 (Pon. 2000).

*    *    *    *
[9 FSM Intrm. 303]

COURT'S OPINION
MARTIN YINUG, Associate Justice:
     On October 13, 1999, this matter was reassigned to me after Chief Justice Andon L. Amaraich recused himself.

     As a preliminary matter, on September 28, 1999, plaintiff AHPW, Inc. ("AHPW"), which is a corporation existing under FSM law and holding a foreign investment permit, moved for a continuance to file its response to Pohnpei's motion to dismiss on or before October 11, 1999.  The affidavit attached to the motion recites that defendant Government of the State of Pohnpei ("Pohnpei") does not object to the continuance.  Good cause appearing, the motion is granted nunc pro tunc to October 11, 1999.

     Also as a preliminary matter, on October 11, 1999, AHPW filed it Motion to Allow Filing of Copies Pending Arrival of Originals.  The court disposes of this motion along the following lines.  AHPW may fax copies of its submissions to this court's Yap office, fax number 691 350-2336, with the originals to be mailed to the trial division in Pohnpei, since this is a Pohnpei case.  The clerk in Yap will note the date of receipt of the fax on the faxed copy, and the fax will be placed in the file maintained at the Yap office.  The faxed copy will not be file stamped. When the originals arrive in Pohnpei, they will then be file stamped.  So long as the court receives any faxed copies by the time provided in any applicable rule of the FSM Rules of Civil Procedure, the filing time requirements will be deemed to have been met.

     The foregoing does not apply ) and counsel is to take note ) to any filing that is jurisdictional in nature.  This must be filed in Pohnpei by the date specified in the FSM Rules of Civil Procedure.

     The court has received and reviewed Pohnpei's Motion to Dismiss filed on September 15, 1999; AHPW's Memorandum in Response to State's Motion to Dismiss filed on October 11, 1999; and Pohnpei's Reply to Memorandum in Response to State's Motion to Dismiss, filed on October 20, 1999.  Although the FSM Rules of Civil Procedure do not specifically provide for the filing of replies, the Rules do not prohibit the practice, and the usual practice in the trial divisions of the FSM Supreme Court in the four states has been to accept them. Damarlane v. FSM, 7 FSM Intrm. 383, 385 (Pon. 1996).  The court considers Pohnpei's reply to the extent that it addresses the points raised in the response, and to the extent that it raises no new matters.

     For the reasons that follow, Pohnpei's motion to dismiss is denied.

     In ruling on a motion to dismiss, the court must assume the truth of the allegations in the complaint, with the benefit of all reasonable inferences to be given to the plaintiff.  Jano v. King, 5 FSM Intrm. 388, 390 (Pon. 1992).

     AHPW has alleged two causes of action, the first involving AHPW's pepper production business, and the second its trochus button making business.  The first cause of action generally alleges that Pohnpei's manipulation of the pepper market in Pohnpei resulted in the failure of AHPW's pepper business, which did business under the trade name Island Traders.  Specifically, the complaint alleges that Pohnpei engaged in price fixing, and did so "in a deliberate effort . . . to force Island Traders to raise its price for the pepper it purchased from local growers." Complaint, First Cause of Action para. 10 (Aug. 26, 1999).  The second cause of action alleges that AHPW's trochus button business, which did business under the trade name AHPW, failed because Pohnpei refused to permit trochus harvesting, thus depriving the business of its trochus shell source. Each cause of action is divided into three

[9 FSM Intrm. 304]

parallel counts, for a total of six distinct bases for relief.  The second count of each cause of action seeks relief only against the FSM, and is therefore not at issue here. That leaves the first and third counts of each cause of action for purposes of the motion to dismiss.  Count I under both causes of action alleges due process and equal protection violations, while count III under both causes of action alleges that Pohnpei engaged in anticompetitive practices in violation of 32 F.S.M.C. 301 et seq.

     In its motion, Pohnpei first addresses the trochus cause of action, and contends that the trochus claims are barred by the applicable statute of limitations; that Pohnpei's statutory authority to regulate trochus harvesting essentially forecloses any discussion of anticompetitive practices; and that the FSM anticompetitive practices statute does not apply to it because Pohnpei is not a person within the meaning of the statute.  The court addresses these contentions in turn.  Pohnpei also offers brief comments directed to the pepper business allegations, but the court does not address these legal conclusions.

      a.  Statute of limitations
     Pohnpei first contends that the trochus business claims are barred by the two years statute of limitations provision of 1-426 of the Pohnpei Government Liability Act, S.L. No. 2L-192-91.  AHPW alleges at paragraph 8 of count I of the second cause of action that the "investors in Plaintiff's button operation could no longer continue to fund the operation since there was a total lack of income and the business was closed in June, 1998."  A statute of limitations begins to run when the cause of action accrues.  Creditors of Mid-Pac Constr. Co. v. Senda, 4 FSM Intrm. 157, 159 (Pon. 1989).  AHPW's cause of action accrued when the business closed in June of 1998.  It filed its complaint on August 26, 1999, which is less than two years later.  AHPW's trochus claims are not time barred. Pohnpei's motion to dismiss on this basis is denied.

      b.  Pohnpei's power to regulate trochus harvesting
     Pohnpei next urges that the trochus claims may not proceed because Pohnpei is empowered to regulate trochus harvesting under the applicable Pohnpei state statute.  Pohnpei cites 2-3 of the Marine Resources Conservation Act of 1981, S.L. No. 2L-106-81, as amended by S.L. No. 2L-132-89, which provides in pertinent part that the "Department of Conservation and Resource Surveillance shall have the power and duty to:  . . . (2) Prohibit the harvesting of trochus during any given calendar year or years."  However, subsection (14) of 2-3 further provides that the Department of Conservation and Resource Management "shall have the power and duty to:  . . . (14) Establish and implement such other policies, procedures and requirements to achieve a desirable balance between the exploitation of trochus as an economic resource and the preservation of trochus as a renewable resource." The complaint under paragraph 7 of count I of the second cause of action alleges that Pohnpei refused to permit trochus "without any valid basis."  Whether or not Pohnpei acted in accordance with the statutorily mandated policies and procedures in so doing remains a question for trial.  Pohnpei's motion to dismiss on this ground is denied.

     Pohnpei also asserts that 32 F.S.M.C. 301 et seq. cannot apply to Pohnpei because it is empowered to regulate trochus under article IX, section 2(m), and article VIII, section 2 of the FSM Constitution which provide respectively that Congress has the power to regulate marine resources beyond twelve miles from island base lines, and that a power not expressly delegated to the national government remains a state power.  The thrust of Pohnpei's point in this regard seems to be that any action which has an arguably regulatory effect on trochus cannot constitute an anticompetitive practice.  This is an issue for trial.  The motion to dismiss in this respect is denied.

[9 FSM Intrm. 305]

      c.  The anticompetition allegations
     Pohnpei contends that 32 F.S.M.C. 301 et seq., Anticompetitive Practices, does not apply to Pohnpei because Pohnpei is not a "person" within the meaning of 302, which provides that it is illegal for any "person" to engage in restrictive trade practices, including restricting production, preventing competition, or fixing prices. This statute dates from the Trust Territory period, but pursuant to the Transition Clause of the FSM Constitution, FSM Const. art. XV, 1, "continues in effect except to the extent it is inconsistent with this Constitution, or is amended or repealed." Pohnpei does not suggest that the statute does not apply because it has its origins in the Trust Territory.  The court makes the express determination that 32 F.S.M.C. 301 et seq. applies here, where Pohnpei is alleged to have engaged in anticompetitive conduct in violation of the statute.

     Pohnpei's argument is based on the definitions section found at 32 F.S.M.C. 301, which provides that "'person or persons' includes an individual or individuals, corporations, firm, partnerships, or any other association existing under or authorized by the laws of the Trust Territory."  Pohnpei urges that because the statute only applies to private persons, it does not apply to the state of Pohnpei.

     Section 301 says that "`person or persons' includes" the individuals and entities that follow in the listing, versus saying that "`person or persons' is limited to" those enumerated in the list.  Section 306(2) further provides in pertinent part that

the Trust Territory and any of its political subdivisions and public agencies shall be deemed a person within the meaning of this section, and may, through the Attorney General or the District Attorney, bring an action on behalf of the Trust Territory, its political subdivisions, or public agencies to recover the damages provided by this section, including a reasonable attorney's fee together with the costs of suit.

While the phrase, "and may . . . bring an action on behalf of the Trust Territory, its political subdivisions, or public agencies" may suggest that Pohnpei is only a "person" when cast as a plaintiff seeking to enforce the statute, the preceding clause nevertheless uses the mandatory "shall":  "the Trust Territory and any of its political subdivisions and public agencies shall be deemed a person within the meaning of this section" (emphasis added).  Any doubt as to whether Pohnpei may be a defendant is resolved by subsection (1) of 306, which provides that "[a]ny person who violates section 302 or 303 or this chapter is guilty of a misdemeanor" (emphasis added).  As just noted, subsection (2) of 306 provides that "the Trust Territory and any of its political subdivisions and public agencies shall be deemed a person within the meaning of this section" (emphasis added), meaning 306, and subsection (1) obviously is part of 306.  Hence, Pohnpei is a person within the meaning of the statute.

     As previously noted, 32 F.S.M.C. 301 et seq. applies via the Transition Clause of the FSM Constitution.  A specific point with respect to 306(2), which speaks in terms of "the Trust Territory and any of its political subdivisions" as being "person[s]," is that Pohnpei is a political subdivision of the FSM.  Via the analogy implicated by the Transition Clause, Pohnpei is also a "person" to the same extent that a political subdivision of the Trust Territory was a "person" under the statute's prior incarnation.

     Accordingly, Pohnpei's motion to dismiss on the basis that Pohnpei is not a "person" within the meaning of 32 F.S.M.C. 301 et seq. is denied.

     Pohnpei draws its own legal conclusions from the alleged facts of the complaint in the three, six, and nine lines respectively of parts III. C., D., and E of its motion to dismiss, which are directed to the

[9 FSM Intrm. 306]

pepper business allegations.  The facts as alleged present issues for trial. Pohnpei's comments are not a sufficient basis on which to dismiss a complaint where, as here, the court must take the allegations of the complaint as true.  Jano v. King, 5 FSM Intrm. at 390.

     Accordingly, Pohnpei's motion to dismiss is denied.  Pohnpei shall file its answer within ten days as provided by Rule 12(a) of the FSM Rules of Civil Procedure.
                                                                                                                                                                                                                                                                                                           
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