Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-05-04307/USCOURTS-ca8-05-04307-0/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 

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United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 05-4303

 No. 05-4307

___________

In re: Monosodium Glutamate *

Antitrust Litigation *

_____________________ *

*

Inquivosa SA; Petbowe Chemtrade *

Corporation; Plus Sun Company, Ltd.; *

MCC Menssing Chemiehandel & *

Consultants GMBH; Newco Trading *

Company, on behalf of themselves and *

all others similarly situated, *

*

Plaintiffs/Appellants, * Appeals from the United States 

* District Court for the

v. * District of Minnesota.

*

Ajinomoto Company, Inc.; Ajinomoto *

USA, Inc.; Orsan S.A.; Cheil Jedang *

Corporation; C.J. America, Inc., *

*

Defendants/Appellees, *

*

Miwon Company, Ltd.; Daesang *

America, Inc., *

*

Defendants, *

*

Takeda Chemical Industries, Ltd.; *

Kyowa Hakko Kogyo Company, Ltd.; *

Vedan Enterprises Group, formerly *

known as Tung Hai Fermentation *

Industrial Corporation, *

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The Honorable Paul A. Magnuson, United States District Judge for the District

of Minnesota. 

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*

Defendants/Appellees, *

*

Ajinomoto Europe, *

*

Defendant. *

_____________________ *

*

Government of Japan, *

*

Amicus on Behalf of *

Appellee. *

___________

Submitted: December 11, 2006

Filed: February 8, 2007

___________

Before WOLLMAN, BEAM, and RILEY, Circuit Judges.

___________

WOLLMAN, Circuit Judge.

Appellants appeal from the district court’s1

 dismissal of their complaint for lack

of subject matter jurisdiction. We affirm. 

I.

The appellants are foreign corporations that purchased monosodium glutamate

(MSG) and nucleotides from the appellees in transactions that occurred outside the

United States. They contend that the appellees participated in a global price-fixing

and market allocation scheme to increase the worldwide price of MSG and

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nucleotides. This scheme allegedly involved fixing the price and controlling the

market share of MSG and nucleotides both inside and outside the United States. The

appellants assert that the United States market was included within the scheme

because the fungible nature and worldwide flow of these products made the domestic

and foreign markets interconnected, such that super-competitive prices abroad could

be sustained only by maintaining super-competitive prices in the United States. 

The appellants’ action asserted that the appellees’ involvement in the global

conspiracy constituted a violation of the Sherman Act, 15 U.S.C. § 1. The appellants

do not assert that they purchased or attempted to purchase MSG or nucleotides in the

United States market. Rather, they allege that they purchased overpriced MSG and

nucleotides abroad because the appellees’ inclusion of the United States market in the

conspiracy prevented them from buying competitively priced MSG and nucleotides

either directly from the United States or from arbitrageurs selling MSG or nucleotides

imported from the United States. 

Shortly after the commencement of this action, the parties agreed to stay the

proceedings pending a decision by the United States Supreme Court in F. HoffmannLa Roche Ltd. v. Empagran S.A., 542 U.S. 155 (2004) (Empagran I), a factually

similar antitrust case brought by foreign and domestic purchasers of vitamins.

Following the Empagran I decision, which addressed the applicability of the Sherman

Act under the Foreign Trade Antitrust Improvements Act of 1982 (FTAIA), the

appellees moved to dismiss the complaint for lack of subject matter jurisdiction and

for failure to state a claim, alleging that the FTAIA precluded the claim from being

brought under the Sherman Act. The district court denied the appellees’ motion. D.

Ct. Order of May 2, 2005, at 14. Following the D.C. Circuit’s decision in Empagran

S.A. v. F. Hoffmann-Laroche, Ltd., 417 F.3d 1267 (D.C. Cir. 2005), cert. denied, 126

S. Ct. 1043 (2006) (Empagran II), the appellees filed a motion for reconsideration of

the district court’s order denying their motion to dismiss. The district court, relying

on Empagran II, granted the motion and dismissed the complaint with prejudice,

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The FTAIA provides in full:

Sections 1 to 7 of this title shall not apply to conduct involving

trade or commerce (other than import trade or import commerce) with

foreign nations unless-

(1) such conduct has a direct, substantial, and reasonably

forseeable effect-

(A) on trade or commerce which is not trade or commerce

with foreign nations, or on import trade or import

commerce with foreign nations; or

(B) on export trade or export commerce with foreign

nations, of a person engaged in such trade or commerce in

the United States; and

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holding that the appellants had not stated a claim under the Sherman Act because they

had not shown that the domestic effect of the global price-fixing cartel proximately

caused their injuries. D. Ct. Order of Oct. 26, 2005, at 6-7. 

II.

We review a district court’s dismissal for lack of subject matter jurisdiction de

novo. V S Ltd. P’ship v. Dep’t of Housing and Urban Dev., 235 F.3d 1109, 1112 (8th

Cir. 2000). 

“The Foreign Trade Antitrust Improvements Act of 1982 (FTAIA) excludes

from the Sherman Act’s reach much anticompetitive conduct that causes only foreign

injury. It does so by setting forth a general rule stating that the Sherman Act ‘shall not

apply to conduct involving trade or commerce . . . with foreign nations.’” Empagran

I, 542 U.S. at 158 (ellipsis in original) (quoting 15 U.S.C. § 6a). The FTAIA then

creates a limited exception to this rule, making the Sherman Act applicable if the

foreign conduct “(1) has a ‘direct, substantial, and reasonably foreseeable effect’ on

domestic commerce, and (2) ‘such effect gives rise to a [Sherman Act] claim.’” Id.

at 159 (quoting 15 U.S.C. § 6a).2

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(2) such effect gives rise to a claim under the provisions of

sections 1 to 7 of this title, other than this section.

If sections 1 to 7 of this title apply to such conduct only because of the

operation of paragraph (1)(B), then sections 1 to 7 of this title shall apply

to such conduct only for injury to export business in the United States.

15 U.S.C. § 6a (1997).

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In dismissing the appellants’ action, the district court concluded that 1) the

FTAIA’s statutory language “gives rise to” requires that the appellants show that the

domestic effects of the anticompetitive conduct were the direct or proximate cause of

their claim, 2) the appellants’ claim failed to satisfy this causation standard, and 3) the

appellants therefore failed to state a claim under the Sherman Act. D. Ct. Order of

Oct. 26, 2005, at 4-7. On appeal, the appellants contend that under the FTAIA’s

exception a showing of causation less than that of proximate cause is sufficient and

that their claim meets this lesser standard. The appellants alternatively contend that

their claim satisfies even the proximate cause standard. 

In Empagran I, the United States Supreme Court concluded that the causal link

between the domestic effect of the anticompetitive conduct and the foreign injury is

not satisfied when the foreign injury is independent of the domestic effect. Empagran

I, 542 U.S. at 164. The Court thereafter remanded the case to the D.C. Circuit to

determine whether the causal link is satisfied when the foreign injury is linked to, and

not independent of, domestic effects. Id. at 175. On remand, the D.C. Circuit

concluded that the statutory “gives rise to” language requires a direct or proximate

causal relationship, rather than a lesser “but for” relationship. Empagran II, 417 F.3d

at 1271. The court then determined that under the plaintiffs’ theory, namely, that the

domestic effects of the anticompetitive conduct gave rise to their foreign injury

because the defendants could not have maintained their global price-fixing

arrangement without fixing the prices in the United States, the domestic effects of the

conspiracy were only a “but for” cause of the plaintiffs’ injuries and the FTAIA

exception and Sherman Act were therefore inapplicable. Id. at 1270-71. 

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The appellants contend that we should part ways with the D.C. Circuit and

apply a less direct causation standard under the FTAIA’s exception. We disagree.

The principles of prescriptive comity require us to respect the sovereign authority of

foreign nations and to construe ambiguous statutory language in a way that avoids

unreasonable interference with such authority. Empagran I, 542 U.S. at 164;

Empagran II, 417 F.3d at 1271. “America’s antitrust laws, when applied to foreign

conduct, can interfere with a foreign nation’s ability independently to regulate its own

commercial affairs.” Empagran I, 542 U.S. at 165. Although it may be reasonable to

apply our antitrust laws to foreign conduct in certain situations, id., permitting a

standard that is less direct than proximate cause here would unreasonably “interfere[]

with other nations’ prerogative to safeguard their own citizens from anti-competitive

activity within their own borders” and violate these comity considerations. Empagran

II, 417 F.3d at 1271. We therefore conclude, as did the court in Empagran II, that the

statutory “gives rise to” language requires a direct or proximate causal relationship

and that this standard is in accord with the principles of prescriptive comity. We

believe that this standard is also consistent with general antitrust principles, which

typically require a more direct causation standard. See Associated Gen. Contractors

of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 533-35 (1983)

(“‘Congress did not intend to allow every person tangentially affected by an antitrust

violation to maintain an action to recover . . . .’” (quoting Blue Shield of Va. v.

McCready, 457 U.S. 465, 477 (1982))); Holmes v. Sec. Investor Prot. Corp., 503 U.S.

258, 267-69 (1992) (“[A] plaintiff’s right to sue under § 4 [of the Clayton Act]

required a showing that the defendant’s violation not only was a ‘but for’ cause of his

injury, but was the proximate cause as well.”); Latino Quimica-Amtex S.A. v. Akzo

Nobel Chemicals B.V., No. 03 Civ. 10312(HBDF), 2005 WL 2207017, at *8

(S.D.N.Y. Sept. 8, 2005) (“[T]he proximate causation standard . . . is consistent with

antitrust principles requiring that an antitrust injury-in-fact be caused directly by a

defendant’s conduct.”).

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The appellants contend that two pre-FTAIA cases support applying a less

direct causation standard: Pfizer, Inc. v. Gov’t of India, 434 U.S. 308 (1978) and

Industria Siciliana Asfalti v. Exxon Research and Eng’g Co., No. 75 Civ. 5828-CSH,

1977 WL 1353 (S.D.N.Y. Jan. 18, 1977). We disagree. In Pfizer, the court addressed

only the narrow issue of whether a foreign nation could be considered a “person”

under the antitrust laws. Pfizer, 434 U.S. at 320. The court did not address the causal

relationship between the domestic effect and the foreign injury. Empagran II, 417

F.3d at 1270. In Industria, a foreign plaintiff purchased engineering services from a

domestic firm that had engaged in anticompetitive behavior in violation of the

Sherman Act. Industria, 1977 WL 1353 at **1-3. The domestic effect in Industria

(diminished domestic competition) was therefore a more direct cause of the plaintiff’s

injury (higher prices paid for the domestic services). 

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Further, the Supreme Court has held that “the FTAIA’s language and history

suggest that Congress designed the FTAIA to clarify, perhaps to limit, but not to

expand in any significant way, the Sherman Act’s scope as applied to foreign

commerce.” Empagran I, 542 U.S. at 169. Despite the appellants’ contention to the

contrary, there appear to be no cases prior to the FTAIA’s enactment that would have

supported the application of the Sherman Act based on the indirect causation alleged

in the case at hand.3

 Accordingly, to adopt a causation standard less than that of

proximate cause would effectively expand the Sherman Act’s scope beyond that

contemplated by the FTAIA. 

We turn, then, to whether the claim proffered by the appellants meets the

proximate cause standard. The appellants’ causation theory is identical to that

presented in Empagran II. Empagran II, 417 F.3d at 1270. They allege that because

MSG and nucleotides are fungible and marketed worldwide, the appellees were

required to maintain super-competitive prices in the United States in order to sustain

super-competitive prices abroad. In the absence of super-competitive domestic

pricing, the appellants assert that they would have been able to purchase MSG or

nucleotides at lower prices either directly from the United States or from arbitrageurs

selling MSG or nucleotides imported from the United States. The appellants therefore

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contend that the super-competitive pricing in the United States gave rise to the foreign

super-competitive prices paid by the appellants. 

As did the court in Empagran II, we conclude that the theory advanced by the

appellants does not satisfy the proximate cause standard. The domestic effects of the

price fixing scheme (increased U.S. prices) were not the direct cause of the appellants’

injuries. Rather, it was the foreign effects of the price fixing scheme (increased prices

abroad). Although United States prices may have been a necessary part of the

appellees’ plan, they were not significant enough to constitute the direct cause of the

appellants’ injuries, as they constituted merely one link in the causal chain. The theory

proffered by the appellants therefore establishes at best only an indirect connection

between the domestic prices and the prices paid by the appellants. While such an

indirect connection may be enough to satisfy a “but for” causation standard, it is too

remote to satisfy the proximate cause standard.

The appellants’ argument regarding the importance of enforcing the Sherman

Act’s deterrence goal, although not without force, is unavailing in light of the dictates

of the FTAIA and the considerations of comity as discussed above. See Empagran I,

542 U.S. at 174-75.

The judgment is affirmed. 

______________________________

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