Ci rc ui tJ udge Ter en c e T. E vans d i ed on August10, 20 11 , an d  di d notpar t i c i pat e i n the d ecision ofthi s c as e, whi c h i s be i ng re so lv ed b y a q u o ru m o f th e p a n el u n d er 28 U .S.C . § 4 6 (d ).



## In the 

# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 10

- 1712 M I NN -C HEM, I NCO RPORATE D , etal., P la intif fs-A pp ellees, v.
A GRI U M I NCO RPORATE D , et a l., D efend a nts-A pp ella nts.

A pp eal from the United S t ates Di strictC our t fo r the N o rthernDi stricto f Illino is, Eas tern Div isi on. No . 08 C6910

—RubenC astil lo, Judge .
A RGUED J UNE 3, 2010

— D ECI DE D S EP TE MBE R 23, 2011

Befo re M A NI ON, E VANS , an d S YKES, C ircu it Judges .  S YKES, Cir cu i tJudg e . Thi s m ult i
- dist ri ct a nt itr u st cl ass acti on a l l ege s a gl obalco nspir acy to ra i se the pr i ce o f p otash , a m ineral used prim aril y i n agricu ltural fertil izer.2 N o. 10

- 1712 M osto fthe w or l d’s potash re ser ves ar e co ncentr ate d i n thre e c ou ntri es

— Can ada, Rus si a, a nd Be l arus

— an d th e d e fe n d a n t s a r e l e a d i n gp r o d u c e r s wh o s e mi n i ng op erations are located i n th ose c ou nt ries. Th e plaintiff s ar e di r e c ta nd i nd i r e c tp o t a s h pu r c ha s e r s i n the U ni ted S ta te s. The y a l l eg e th atthe Ca na di an, Rus si an, a nd Bel ar usi an pro du c er s o perat ed a c ar telthr ough which th eyfi xe d po ta shpr i ce s i n Br az i l, C hin a, a nd Indi a, a nd th e infl ated p rices in th ese overseas m arkets in tu rn i nfluen c ed the pri ce o fpota sh so l d i n the U ni ted S tat es. The defe nd ants m ov ed to di sm i ss und erRule s 1 2( b) ( 1) and 12( b) ( 6) of the F edera lRule s o fCi vi lPro cedure, ar guing fi rs t that the di str i ct c ou rt l acke d subj ectm att erj uri sdic ti on under the Fo re i gn Tra de A nti tr ust I m p rovem en ts A ct (“FT A I A ”), 15 U
. S. C
. § 6a, and a lterna ti ve l y, tha t th e co m pl aintdi d no t sa tisfythe pl ea di ng requ irem en ts of B el l Atlanti c C orp. v. Tw om bly, 550 U
. S. 5 4 4 ( 2 0 0 7 ) , a nd Ash crof tv. Iq b al , 129 S. C t. 1 9 3 7 (2 0 09). The dis tr i ct c ourtdeni ed the m oti on but cer ti fi ed i ts or d er for im m ed iat e re vie w . See28 U .S .C . § 1292(b). W e a ccepted r evi ew and now reve rs e. A s relevant here, the FT A IA l im its the ex traterri to ria l reac h ofthe Sher m an A nti tr ust Act to f or ei gn an ticom p etitive cond uc t tha t eithe r i nv olves U
. S. i m p ort c om m er c e o r h as a “d ire c t, su b st an tia l, an d r ea so n ab ly f o r e s e e ab l e e ffe c t ” o n U
. S
. i mp o r to rd o me s t i c c o mm er ce . 1 5 U. S
. C. § 6 a. In U ni t e d Phos phor us, Lt d. v. Angu s C h e m i c a l C o ., 32 2 F
. 3d 94 2 ( 7th Ci r . 2 00 3) , we sa t enb an c to add re ss w hetherthe FTA I A ’ s l i m i tation s a re j uri sd ict ion al or ins te ad are ele m en ts of a Sh er m an A c t c laim t ha ti mp l i c a t e s o ff s h o r e a n t i c o mp e t i t i v e c o n d u c t . WeN o. 10

- 1712 3 h eld th at th e F T A IA ’s re q u i r em en ts are j u ris d ict ion al. Id. at 950 -5 2 . A sub stan tial m inority ofthe cou rt d isa gr ee d , s e ei d. at 95 3- 54 ( W o o d, J
. , di ss en ting ) , a nd th e di ss en t’ s appr o ac h h as s i nc e p revail ed i n the Suprem e Cour t, al though in deci si ons i nvol vi ng o ther st at u te s. See M o r r i s o n v . Na t’l A ustl. B a nk, 130 S. Ct. 28 69, 28 76 -77(20 10 ); A rba ug h v. Y& HC o rp., 546 U
. S. 50 0, 51 5- 16 ( 2006 )
. These inte rv eni ng devel opm ents sugge st that U nited P ho sph o rus m ay be r i pe f o rr ec o ns i der at i o n, b u t we need not und er tak e that tas k here
. W hetherit blocks j urisd iction or establi s h e s an elem en t of a Sh er m an A c t c laim , th e F T A IA ap p lies h er e t o b ar th is anti tr ust s uit
. The defen d an ts ar e e nti tl ed to di sm i ssa l und erei ther R ule 12(b)(1) o r 12(b)(6).

I . B a c kg r o und Tw o separ ate gr oups of pla i nti ff s fi l ed near l y i denti cal anti tr ust cl ass act i ons aga i ns t th e w or l d’s l eadi ng pota sh pr o duce r s. The fi r stg r o up

— M inn -Ch em , Inc . ; Ga ge’s Fer ti l i zerand Grai n, Inc. ; Kraft Che m i calCom pany; S ha nno n D. F l i nn; W es ts i de F o r es try Ser vi ce s; a nd Thom asvi l l e F eed & S eed, Inc.

— s ue d o n b e h a l fo fth e ms e l ve s a n d all ot h er s w h o p u rc h as ed p ot as h p ro d u c ts in th e Uni te d S ta te s di r ec tly fr o m the de fen dan ts. The se co nd g r o up

— K evin Gil l espi e, Gordon Til l m an, Fe yh Fa rm s C om p an y, W illiam H . C oa ke r, Jr., an d D av id Baie r

— su ed on beh alfof t h em selves an d allothers w ho purchase d potash pr od ucts in the U ni ted S tat es i nd i re ctl y fro m the defe nd ants.4 N o. 10

- 1712 The defe nd ants ar e s eve n com panie s whose princi pal m i ni ng o per at i o ns ar e l o ca te d i n Can ada, Rus si a, a nd B elarus, w he re m ost of the w orld’s pot ash reserves are f ound: A gr i um Inc. , Pot ash Cor porati on o fS ask atchewan I nc . ( “P C S”), Th e M osaic C om p an y , J SC U ralkali, J SC S i l vini t, J S C Be l arus i anPo ta shCo m pan y ( “BPC”) , a nd J S C In t e r n a t i o n a lP o t a s h C o mp a n y ( “ I P C ” )
. A g r i u m, PC S, and M osa i c oper ate potash m i nes i n th e C an adia n p r o v i n c e o fS a s k a t c h e wa n . T h e s e th r e e co mpa n i e s o wn Ca np o t e x Lt d. , a Ca na di a n c o r po r a t i o n tha t i s na med as a co conspi ra torbut not as a defendant. C an p ote x i s a j o i nte xpo r t m arketinga nd di st r ibut i o n c o m pan y tas ked with coo rdi nati ng the o ff shor e s al es ofthe p ot ash su p p ly of e ac h of its th re e s ta ke h old er s. C an p ot ex is speci fi cal l y s tr uctured t o excl ud e the U
. S. and Canadian m ar ke ts . E x p or t m ar ke tin g th ro u gh C an p ot ex is ex p licit ly author i zed and encour age d by Canadia n l aw . In oth er w or ds, Canpotex’ s co or d in atio n ofCanadian potash export s i s l aw ful und erthe dom est i c l aw o fthatco untry. The re m ai ni ng defendants co n du ct thei r m i ni ng o perati ons i n R u ssi a a nd Bel ar us. S i l vi ni t i s a Russi an com pany, and I PC i s the excl usi ve i nter nati onaldi str ibutoro fS i l vi ni t’ s pot ash pro du ct. BPC i s the excl usi ve i nter nati onal d ist rib u to r for U ra lka li (a R u ss i an co m pan y he adqua r te r ed i n Mos co w) an d R UE PA Be l a r uska l i
. Ur a l k a l ia nd Be l a r us k a l ij o i nt l y o wn BP C. Bel arus k al iw as in i ti al l y na m ed as a de fen dan t, b ut because i t i s o w ned by the Republi c o fBel ar us, it w as dism i sse d fr om t h e su i t under the F or ei gn S ove re i gn Im m u n itie s A c t. See28 U
. S. C. §§ 1604 et seq
.N o. 10

- 1712 5

A s w e have not ed, the direct and indire ct pu rchas ers as se rt ed 1 sub sta ntia lly id en tical claim s un d er th e Sh erm an A ntitru st A ct, 15 U .S. C
. § 1. T he ind irect p u rch asers also asserted a ho st ofs tat e- law clai m s a g a in stthe def endan ts ; the se cl aim s are no t be fore u s on this interlo cu tor y ap p eal. W e tak e the f acts fro m the am ended consol i dated cl ass a c t i o n c o mp l a i n t . T h e c l a s s p e r i o d c o v e r e d b y th e c o mpl ainti s J uly 1, 200 3, t o the pr es en t. As o f2 00 8 th e na m ed defen dan ts a cc o unt ed f o r r o ug hl y 7 1% o fthe w or ld ’ s pot ash s up ply
. The co m pla i nt ge nera l l y a l l ege s a c on sp ira cy to re str i ct o utput and fi x pri ces ofpota sh at ar ti fi ci al l y hi g h l ev el s i n v i o l at i o n o fS ec ti o n 1 o fthe Sher m an A c t, 15 U
. S. C. § 1
. Fr om 20 03 to 2008 , pota sh 1 pr i ce s i n the Uni te d S ta te s i nc r ea se d b y a s ta g geri ng amount

— r o u g h l y 6 0 0 %. T h i s d r a ma t i c i n c r e a s e c a me after years of relativel y stable p rici ng . Th e plaintiff s conte nd thatthe sp ike i n pri ces cannot be e xplained by r i s i ngp r o duc t i o n c o s t s o ri nc r e a s e d d e man d; i nd e e d, th ey cla im th at d em a n d w a s fallin g for m u c h of th is p er iod . T h e y a l so co n te n d th at th e s h ar p inc re as e in pri ces cannot be a ttr ibuted to prod u cti on s hor tag es; the defe nd ants ar e a l l ege d to have ple nty o fexce ss capaci ty. The pl ai nti ff s a lleg e th at the s urge i n pri ces w as i nstea d the re sul t o fan a gr eem ent b y the defendants t o j o i nt l y r e s t r i c to u t p u ta n d i n c r e a s e p r i c e s a s e x e mpli fi ed bypara l l elbusi ness conduct i n thr ee f or ei gn m ar ket s

— Brazi l, China, and I nd i a. The f ac tu als ec ti on ofthe c o m pl aintb eg i ns wi tha gener aldescr i pti on o fthe c hara cter i sti cs o fthe potash m ar ket, wh i ch the pla i nti ff s a l l ege ar e co nd uci ve to6 N o. 10

- 1712 f or m i ng a stabl e ca rt el
. Pot ash i s a n el em ent m i ned fr om natura l l y o ccurr i ng o re deposi ts and used pri m ar il y a s an i ngre die nt i n agr i cul tura lfer ti l i zer . I t i s (fo r th e m ost part) a hom oge ne ou s p ro du ct, but onl y a handfulo f c ou n tr ies p os se ss sign ifica n t q u an tit ies of th is v alu ab le re sour ce. A ccor d in gly, the potash i nd ustr y i s a n o li gopoly c ha r ac te r i ze d b y hi g h mar k etc o nc en tr at i o n. The Can adi an pr o vinc e o f S as k at ch ewa n i s th e l ea di ng producer, acc ounti ng f orr oughl y o ne- thi rd o fgl obal producti on. R ussi a a nd Bel ar us ar e the next bi gge st ex port er s. S i nce pot ash a ccounts f ora re l ati vel y s m all per ce nt ag e o ft o ta lc r o p- pr o duct i o n c o st s an d ha s no ob vio u s s u b st itu te s, d em an d for th e p ro d u c t is rela tiv ely in ela stic, al though no t e nti re l y s o because f ar m er s ca n o pt to r educe the a m o unto ffer ti l i ze rthe y us e i n a gi ven s eas on. A l so, the m aj or i ty of p roductio n cos ts f orpota sh ar e v ar i abl e r atherthan fi xed ; ther efor e, p ro d u c e r s f a c e le ss p re ss u re in a giv en ye ar to h it an y p ar tic u lar ou tp u t t ar ge t in ord er to rec ou p th eir expenses. Final l y, there are hi gh ba rr i er s t o entr y into the p otash business. In additi on t o fi rs t fi nd i ng a prom i si ng so urce ofpota sh deposi ts, an y pot enti al en tr an t woul d i nc ura ppr o xi m at ely $ 2. 5 bi l l i o n in s ta r t- up cos ts ove r a fi ve- to- seve n-y eardevel opm ent period bef or e pr oducti on co uld co m m ence. Wi th th e s e b a c k g r o u n d al l e g a t i o n s i n p l a c e , th e c o mp lain t p ro c ee d s t o e x p l a i n th at “t h e p ot as h ind u st ry is m ar k ed bya hi g h de g r ee o fc o o per at i o n” pr o vi di ng “o p p or tu n itie s t o c on sp ire a n d s h ar e in for m at ion .” In th i s r eg ar d, the c o m pl aintno te s th atPCS, Agr i um , a nd M osa i c have acc ess to o ne ano ther ’ s s ensi ti ve i nfo rm a-N o. 10

- 1712 7 tion abou t p rod uc tion cap acity th roug h th eir j oint ow ne rshi p ofCanpotex. Canpotex al so offer s these th re e def enda nt s a c o nv e ni e ntf o r um t o di s c us s ma t t e r s o f pri ci ng and output. M or eov er, Canpotex pre vi ousl y had a j o i nt ma r k e t i n g a g r e e me n t wi th Ura l k al i
. The co m p lai nt al so a l l eg es tha t th e i nt er es ts o fUra l k al ia nd S il vini t ar e al i g ne d b ec au se the y s ha r e a co m m o n, i nfl uenti alshar ehol der, Dm i tr y Ryb ol ovl ev, w ho i s a l l ege d to o wn 66 % o fUra l k al ia nd 2 0% o fS i l vini t’ s vo ting stoc k
. The pl aint i ff s al so al l eg e th at th e defen dan ts pa rti ci pate in an “e xc h an ge prog ra m o fm utual vi si ts” and “these vi si ts have p ro vi ded o pp or tuni ti es to conspi re and exchange hi ghly sensi ti ve com peti ti ve i nfo rm ati on. ” F i nal l y, the d efe nd ants m eetto gether at the a nnual confer ence ofthe I nter nati onalFe rt i l i zer I ndus try Ass o ci at i o n. The c o m pl ainta l l eg es tha t th e “m ajor potash m anufa cture rs ” a nnounced p ri ce i ncre ase s duri ng the A ssocia ti on’ s 2 007 confer ence. A lso , a P C S ex ec u tiv e is alleg ed to h av e p u b licly co m p lim ented BPC ( the Bel ar usi an expor ter ) f orsho w in g “tr em en d ou s d isc ip lin e . . . in te rm s o f m an ag in g s u p p ly in th e m ar ke tp lac e.” Fr om th ese al l ega ti ons about gener al“o pp or tuni ti es to co n sp ire ” t h e c o m p lain t m ov es on to alleg e s p ec ific p ar alle l bu sin es s c on d u c t c on sis tin g of re d u c tio n s in o ut putde si g ne d t o k eep pr i ce s ar ti fi ci al l y hi g h a nd par al l eli nc r ea se s i n pri ce s. S o m e o fthe se a l l eg at i o ns are gen eral and others sp ecifi c to certain f o reign m arket s. Fo r ex am ple , the com pla i nt al l ege s that a s gl obaldem and fo r potash decl i ned i n the seco nd hal fo f 2005 , the defe nd ants “j oi ntl y r est ri cted” th e output of8 N o. 10

- 1712 p ot as h for th e p u rp os e o fm ain ta in in g a n art ificia lly hi g h pr i ce . I n th e l as t two m o nths o f 20 05 , PCS, the w or l d’s l eadi ng pota sh pro du cer, announced the shutdo wn o fthr e e o fi t s mi ne s . T he s e s hu t do wns r esul ted in the r emov alo f1
. 34 mil l i o n t o ns o fpo ta shfr o m the mar k e t . Atthe s a me t i me, Mo s a i c a l s o a nn o unce d a te m po r ary, 20 0, 00 0- to n r edu ct i o n i n po ta shpr o duct i o n. U ra l kal i, B el ar uskal i, and Si l vi ni t fol l owed sui t with re d u c tio ns o fthei r own i n the fi rs t hal fo f20 06. These producti on cuts co nti nued thr ou gh 20 08 despit e the f a c ttha tthe de fe nd a nt s ma i nt a i ne d s i z e ab l e e xc e ss capaci ty. The com pla i nt al so poi nts t o an ev ent in Octobe r of 2007, wh en S i l vi ni t a nnounced that a sinkhol e a t o ne o f its m in es m igh t c au se a lon g- t e rm d isr u p tio n in producti on at that l oca ti on. W i thi n a day ofthe announcem en t, P C S, U ra lka li, A gr iu m , an d B P C (bu t a p p ar en tly not M osa i c) announced tha t they w oul d suspend new s a l e s i n th e wa k e o fS i l v i n i t ’ s d i s cl o su r e . R o u g h l y t wo w eek s l ate r, S i l vi ni t a nnounced t h at the s i nkhol e was n otas se ve re as init ially fea re d an d th at th e m in e in q u es tio n w ou ld ret u rn to bu sin e s s a s u su al. A t t h is poi nt the o thercom panie s e nd ed thei r sel f

- i m posed m or ato rium o n new sa l es. The co m pla i nt al l ege s that [t]h e join t s u sp en sio n of sa les by P C S, U ra lka l i, A g r iu m an d B P C d u rin g t h e s h u td ow n by Silvin it, a supp ose d com peti tor, m ake s no eco nom i c se nse ab s e n t a c ar te l. H ad th e m ar ke t t ru ly b ee n co m p et iti ve, defendants wo u ld have the i ncenti ve to inc rease, n otsu sp en d , pr od u c tio n to ta ke ad va n ta g e o f th eirN o. 10

- 1712 9
com peti tor ’ s r educed output and thus gain m ar ket shar e. The com pla i nt ’s otherf actualal l ega ti ons ofpara l l el c on d u c t fo c u s e x c lu siv ely o n thr ee for ei gn m ar ket s

— Brazi l, C h in a, an d Ind ia

— g i vinge xa m pl es of s uppl y a nd pri ci ng ac ti vi ty by the defen d an ts beg i nning i n 200 3. Forexam ple , the com pla i nt all ege s that in “ea rl y 2 003, I PC ann ou n ced thati t would incre ase i ts potash pri ces bye i g htdo l l ar s pert o n. W i th i n a month Ca npo te x a nnounced that it w oul d seeka near l y i denti calpri ce in c re as e fo r its sa les in B ra zil.” T h en , “[b ]y m i d -20 03 all supp l i er s t o Brazi lwere announci n g that they ha d ac h iev ed aninc re as e o f eigh t d olla rs p er to n .” L a t er , in 20 04, “ I PC a nno unc ed a p ri ce i nc r ea se t o b uy er s i n Indi a , ” a nd “ [ s ] ho r t l y a ft e r the s e a nn o un c e men ts, PCS anno unc ed two fi ve do l l arpe rt on in cr ea se s wi th i n a fi ve w eekper i od.” O th eral l ega ti ons f ocus on cl ai m ed coo rdi n at ion o fsupply re str i cti ons i n thes e co untri es. Fo r ex ample, the c o m pl ainta l l eg es tha t po ta shde m an d dr o pped by2 0. 9% i n Br az i ldur i ng2 005 and th e Ru s s i a n a n d B e l a r u s i a n d e fe n d a n t s r e d u c e d th e i rc o mbi ned exports to thatco un tr y b y the sa m e per centag e; Canpo t e x f o l l o we d s ui ta nd c uti t s Br a z i l i a n e xp o r ts “by al m ostexact l y the sa m e p er centag e. ” Pl ai nti ff s a l so al l ege thatCanpotex and BPC j oi ntl y r est ri cted e xports to C h in a in a n e f for t t o b oo st th e p ric e o f p ot as h in that countr y. N otabl y, al l of the anti com peti ti ve conduct i denti fi ed i n the c o mpl a i nt i s a l l e g e d t o ha v e o c c ur r ed outs i de the Unite d Sta tes . T h e on l y l i nk be tw een the act i vi ti es10 N o. 10

- 1712 ofthi s wholly for ei gn c on sp ira cy and the U.S
. pota sh m ar ke t a re ge n er al a lleg at ion s t h at p ot as h p ric e s in th e U n ite d Sta te s w er e a d ve rs ely affe c te d by th e c oo rd ina te d pr i ce hi k es i n Br az i l, Chi na , a nd Indi a. Tha t i s, the com pla i nt al l ege s that the cart el i zed p ri ces i n thes e for ei gn m ar ke ts s e r v ed as a “b en c h m ar k” for p ot as h sa les in t h is countr y. The defe nd ants m oved t o dism i ss the S herm an A ct cl ai m p u r s u a n t t o R u l e 1 2 ( b ) ( 1 ) a n d R u l e 1 2 ( b ) ( 6 ) o ft he Feder alRule s of C ivil Pro cedure f orl ack ofsubj ectm at te r j u ris d ict ion u n d er th e FT A IA an d a lte rn at ive ly f orf ai lu re t o state a cl ai m upon w hi ch r el i efcan be gr anted. In a thor ough o pini on, the dist ri ct c ou rtdeni ed the mo t i o n b utc e r t i fi e d i t s o r de rf o ri mm edi ate ap p eal un d er 28 U
. S. C
. § 1292(b).

I I . Discussi on A s they di d i n the dist ri ct c ourt, the defe n d an ts m ake tw o a r g ume nt s o n a pp e a l, o ne n a r r o we ra nd the o ther m or e br oadl y b ase d. Fi rs t, becau se the pl ai nti ff s hav e al l ege d an off shor e pr i ce- fi xi ng co nspir acy, the defe nd ants argu e tha t the FTA I A , 15 U
. S. C
. § 6a, d ep rives the cou rt o fs ubj ec t- m at te rj ur i sdi ct i o n o ve rthi s su i t, r eq uir i ng dism i ssa lunder Rul e 1 2( b) ( 1)
. A l ternati vel y, they ar gue that the co m pla i nt does notpl ausibl y stat e a n anti tr ust cl ai m under the pl eadi ng st andards ann ou nced in Tw om blya nd Iq bal a nd mus tb e di s mi s s e d u nd er Rul e 12 ( b) ( 6)
. The pl aint i ff s’ c o m pl aint, the y mai nt ain, al l ege s a t m osto nl y innocent paral l elbu sin ess co nd uct: “Even ‘ consci ous par al l el i sm , ’ a com m on r eact i on o fN o. 10

- 1712 11

Indeed, the Eighth Circ uit, s it ti ng e n b a n c, rej ect ed a very 2 s i m i l ar Sh er m an A ct clai m br oughtag ai ns tthe m em ber s of C an p ote x, the n co m p rised of a sligh tly d ifferen t m ix of pr incipals, al le ging a cons piracy t o fix potash pri ces betw ee n 1987 a n d 19 9 4
. Se e Bl o mk e s t Fe r t i l iz e r, Inc . v . Po t a sh C orp. , 203 F. 3d 10 28 , 10 33

- 38 ( 8th Ci r. 20 00 )
. Al thou gh B lom ke st was be f or e the Eig h th C ir cuiti n a differentprocedu ral posture ( the dist ri ct c our th a d e n t e r e d s u mm a r y j u dg me n ti n f a v o r o fth e d e fe nd an ts) , the c o u r t’ s ana lysis of the ad equ acy of the p lain tiffs’ ev id en ce of p ara lle l c o nd u ct an d interfirm com m u nica tion s in the potash i nd ustr y supp orts the def endan ts ’ argum ents here
. ‘firm s in a c on c en tr at ed m ar ke t [t h a t ] rec og n iz[e ] th eir sh ar ed eco nom i c i nter est s a nd thei r i nter depend ence w ith res p ec t t o p ric e a n d ou tp u t d ec isio n s,’ is ‘n otin i tse l funl aw ful. ’ ” Tw o m bly, 55 0 U
. S
. a t 55 3- 54 ( quo ting B roo k e G r o up Ltd . v. B row n & Willia m son To ba cco C o rp., 50 9 U. S
. 2 09 , 2 27( 19 93 ) ( al te r at i o ns i n Tw om bly ))
. T he re m ay w ellbe reason to dou bt th e com p lai nt ’s s u ff ici en cy u nd er Tw om bly
. The “ cr uci alque st i o n” i n a 2 Sher m an A ct § 1 cl ai m “i s whe th erthe chal l enged an tic om p et itiv e c on d u c t s te m [s] fro m ind ep en d en t d ec isio n or fro m an ag re em en t, ta c it or ex p re ss s.” Id. at 553 ( quotati on m ar ks om i tte d). “W i thout m or e, para l l el con d uc t d oes not su ggest consp iracy, an d a c o n clusory al l egati on o fag re em ent a t s om e uni denti fi ed poi nt does not supp l y fa cts adequate t o show il l ega l i ty. ” Id. at 556- 57. The pl aint i ff s’ c o m pl aintf o cus es mos tly o n a ll egat i o ns o fpa r al l elo ut puta nd pr i cingc ond uc t inthe Br az i l i an, Ch i n e s e , a n d In d i a n p o t a s h ma r k e t s ; “ wh e n a l l e g a t i o ns ofpara l l elco nd uct ar e s et out in o rd er to m ake a § 112 N o. 10

- 1712 cl ai m , theym ust be pl ac ed i n a c onte xt thatr ai ses a su gg es tio n of a p re c ed in g agr ee m en t, n otm e r ely par al l elc o nd uc t t ha t co ul d j us t as wel lb e i nde pen den t acti on. ” Id. at 55 7; see a lso In re Text M essag i n g A ntitru st Lit ig. , 6 3 0 F
. 3 d 6 2 2 , 6 2 8
- 2 9 ( 7 th C i r . 2 0 1 0 ) ( d e s c r ib i n gthe “kind of ‘parallelplus ’ behav ior” an antitru st p lai nt iff m ust a l l ege to sur vi ve dism i ssa lpost
- Tw om bly ). Bu t the thr es h old i ssue i n thi s ca se concerns appli cati o n o fthe F TAI A’s l i m i ts o n the Sh erm anAct ’ s r ea ch
. On thi s po i ntwe agree w ith the de fen dan ts tha t th e F TAI A r e qu i r e s di s mi s s a l ; the r e f o r e , we n e e d n o tde c i de th e qu e s t i o n o fth e b r o a d e rs u ffi c i e n c y o fth e c o mpl a i nt un d er Tw om b l y a nd Iq b al
.
A . T h e F T A IA an d th e E ffec t of Arbaugh a nd M orri son o n Uni ted Phosph orus I ti s we l l

- un de r s t o o d tha t“ Am e r i c a n a nt i t r us tl a ws do not re gul ate the com peti ti ve condi ti ons ofo thernati ons’ eco nom i es. ” M atsus hita Elec
. In d u s. C o. v. Z eni th Rad io Corp
. , 475 U.S
. 574, 58 2 ( 1986 )
. “The S herm an A ct doe s r ea chcond uc t o ut si de o urb o r der s, b uto nl y whenthe conduct has an effect on Am er i can co m m er ce. ” Id. at 583 n .6. B ef or e the FTA I A was enact ed, thi s dom est i ce ffe c t s l i mi t i n gp r i n c i p l e e x i s t e d a s a ma t te r o fc a s e l a w. Se eU ni t e d Phos phor us , 3 2 2 F
. 3 d a t9 4 6

- 4 7
. T h e F T AI A, ad op te d in 1 98 2, in c or p or at es th e p rin c ip le. M or e s p ec ifical l y, the FTA I A pro vi des thatthe Sher m an A ct: s h a l ln o ta p p l y t o c o n d u c ti nv o l v i n gt r a d e o rc o mm er ce ( othe r than i m porttr ade ori m portco m m er ce) w i th f or ei gn nat i ons unle ss

—N o. 10

- 1712 13 ( 1) such co nd uct has a d irect, subst anti al, and re asonab l y for ese eabl e e ffect

— ( A ) on t ra d e o r com m er ce which i s no t t ra de or c o mm e r c e wi th f o r e i g n na t i o ns , o ro n i m po r tt r a de ori m portco m m er ce with f or ei gn nat i ons; o r ( B) o n e xp o r tt r a de o re xp o r tc o mm e r c e wi th f or ei gn nat i ons, o fa perso n enga ged i n such tr ade or co m m er ce i n the Uni te d S ta te s; a nd ( 2) s uche ffec t g i ve s r i se to a cl ai m unde r[ th e She rm an A ct]. 15 U
. S. C. § 6 a. Though aw kwardlyphrase d, “[ t]h e FT A I A se eks to m ake c l ea rt o Am er i ca n e xpo r te r s ( an d t o fi r m s do i ng busi ness abr oad ) t h at the S herm an A ct doe s no t preve nt the m from ente ring i nto busi ness ar ra ngem ents ( say, j o int
- s e l l inga r r a ng e men ts) , howeveranti com peti ti ve, as lon g a s t h os e a rra n ge m en ts ad ve rs ely affe c t o n ly for ei gn m ar ket s. ” F
. Ho f f man n - L a R o c h eL t d
. v . Emp ag r an S.A ., 542 U
. S. 1 55 , 1 61 ( 2004 )
. The A ct fi rs t s tat es a br oad gener alr ule thatthe Sher m an A ct “ shal lnotapply ” t o conduct i nvol vi ng f or ei gn tr ade orco m m er ce. I t then ca r ve s o uts ev er ale xcep tions
. As r el ev an t he r e, the F T AI A r e s t o r e s th e S h e r ma n Ac t ’ s a p p l i c abi l i t y t o t wo cate gor i es off or ei gn ant icom peti ti ve conduct: ( 1) f or ei gn an ticom p etitive cond uc t “in volving .
. . [ U
. S. ] im p ort tr ad e or im p or t com m er c e” ; an d (2) fore ign a n tic om p et iti ve c o nduc t th at “h as a di r ec t, s ubs ta nt i al, a nd reason ably foresee a b le effect” on U
. S. dom estic or i m p ort trad e or com m erce. 15 U
. S. C
. §§ 6a & 6a(1)( A ).14 N o. 10

- 1712 I n U ni t e d Phos phor us , thi s co urt sate n b an c to co nsi der w hetherthe FTA I A i s pro perl y unders too d to cre ate a j ur i sdi ct i o na lrequ ir emento r, r athe r, a n e xt r a el ement ofa Sh er m an A ct c l ai m wh en the pl ai nti ffal l ege s a forei gn an titrust consp iracy. 322 F. 3d at 944. T h e c o u rt w as clo se ly d ivid ed on t h e q u es tio n . Re lyin g p rim ar ily on e ar l i ero pini ons tr eat i ng the stat u te’ s r equi re m ents as j ur i sdi ct i o na l, the e n banc maj o r i tyhe l d tha t th e FTA I A has the s tatus ofa j uri sdic ti onalpro vis ion
. Id. at 94 6-4 8. Ju d ge W oo d d iss en te d , j oin ed by th re e c oll eagues; herdi sse nt f ocuse d on the text of the s tatute, w hi ch co ntai ned no “hint t h at the Congr ess was att em pti ng to st ri p federa lco urts o fthei r com p et ence to hear and dec id e anti tr ust ca ses with a f or ei gn el em ent. ” Id. at 954 ( W oo d, J
. , di sse nti ng)
. The di sse nt ar gued that th e p lain st at u to ry lan gu ag e, w h ich d oe s n otsp ea k in j u ri s d ict ion al t er m s, “s u p p or ts th e p os itio n th at th is is an el em ent of the [ Sher m an A ct] cl ai m , es peci al l y when i t i s co ntra ste d to tr ue j uri sdic ti on- str i pp i ng st atute s. ” Id. S ubs eque ntSupr eme Co ur t dec i si o ns

— notab l y Arb augh a nd M or r i s on

—have tak enthe di ss en t’ s appr o ac h t o the questi on, al though in differ ent s tatutor y c ontexts . Arb augh addres sed wh etherthe “num er i calqual i fi cati on cont a i ne d in Ti t l e V I I ’ s de fi ni t i o n o f‘ e mpl o y e r ’ a ffe cts f e de r a l

- c o ur ts ubj e c t
- mat t e rj ur i s di c t i o n o r, i ns t e a d, d elin ea te s a su b st an ti v e i n gr ed ien t o f a T itle V II c laim f o rr el i ef
. ” 546 U
. S
. a t 50 3. The S upr eme Co ur t co ncl ud ed that thi s num er i calthr esho l d w as not a r equi re m ent forsubj ect-m at terj uri sdic ti on but, r ather, was an ele m en t o f a T itle V II c laim
. Id
. a t 51 6. Th e C o ur t ex pla i ned that a s t a t ut o r y pr o v i s i o n pr e s c r ib i ng aN o. 10

- 1712 15 “thr esho l d l i m i tat i on o n a s tatute’ s s cope” es tabli shes a j u ris d ict ion al lim ita tio n on ly if th e s ta tu to ry te x t c lea rly say s s o: I fthe Legi sl atur e cl ear l y stat es that a thres hol d l i m i tatio n on a sta tu te ’s sc op e sh all c ou n t as ju ris d ict ion al, th enc o ur ts a nd l i ti g an ts wi l lb e dul y in struct ed an d w i l lnotbe l eft t o w re stl e w ith the i ssue. But w hen Congre ss does not r ank ast atuto ryl i m i tat i on o n cove r ag e as j ur i sdi ct i o na l, c o ur ts s ho ul d t r ea t th e restriction as non ju r is d ic t io n a l in cha racter. A pp l yi ng tha t r eadi l y a dm i ni str abl e bright l i ne to th i s c a s e , w e h o l d th a tth e thr e s ho l d n u mb e ro fe mp loyees forap p li cation of T itl e VI I i s an elem en t of a pla i nti ff’ s cl ai m f orr el i ef, nota j uri sdic ti onali ssue. Id
. at 515-16 (citation om itted ). I n M or r i s on th e Cou r t co ns i der ed th e q ue st i o n o fthe ex tr at er r i to r i alr ea cho f§ 1 0(b) o fthe S ec ur iti es an d Exch an g e Act o f1 93 4. 1 30 S
. Ct
. a t 2 875. The S ec o nd Cir cui t had trea ted thi s a s a di spute o versubj ect- m att er j ur i sdi ct i o n t o b e dec i ded unde rRul e 12 ( b) ( 1) , bu t th e C ou rt m a d e i t c lea r it w as a m er its qu es tio n . Id. at 2877
. N ot in g t h at th e Se c on d C irc u i t w as “h ar d ly a lon e” in m i schar acte ri zi n g the i ssue, the Court re sta ted the questi on: “[ T]o as k what co nd uct § 10(b) r eaches i s t o askwh at co nduc t § 10 ( b) pr o hibi ts , whi chi s a m er i ts que st i o n. S ubj ec t- m at te rj ur i sdi ct i o n, b y c o nt r as t, r efer s to a t r ibunal ’ s pow er to hear a c ase. ” Id. ( quotati on m ar ks om i tte d )
. E v e n s o , b e c a u s e “ n o th i n g i n th e a n a l y s i s o ft he c o ur t s b e l o w turne d o n the mi s t a k e , ” the Co ur ts a i d that re m and w as unnecessary; “a r em and w oul d onl y r e-16 N o. 10

- 1712 quir e a new Ru l e 1 2( b) ( 6) l abelf orthe sam e Rul e 1 2(b)(1) concl usi on, ” s o th e Court proce eded to the m er i ts questi on o fw h ether the pl ai nti ff s’ al l ega ti ons sta ted a c laim
. Id. We h a v e r e c e n t l y a p p l i e d Arb augh ’ s “ cl earst ate m ent” ru l e o u t s id e t h e T itle V II c on te x t, s e eM i l l e rv. He r m an , 600 F.3d 726, 732 (7th Cir. 2010), an d the p lai nt iffs c o n t e n d th a tth e F T AI A s h o u l d b e s u bj e c tt o th e s a me anal ysi s. Thi s ca l l s U nited P ho sph o rus i nt o que st ion. The de fendants’ r esponse i s tw of ol d. They fi rs t a rgue that U n ited P ho sph o rus c a n b e d i s t i n g u i s h e d fr o m Ar b a ugh base d o n the FTA I A ’ s concern f or i nter nati onal c om i ty; thi s ar gum ent i s i n tensi on w i th the Cour t’s ap proa ch i n M or r i s on , wh i ch al so concerned a questi on of the e xtra
ter ri tor i alr each o fa federa lst atute . I n the al ternati ve, they ar gu e th at because the re sul t i s the sa m e e i ther w ay, we need n ot att em pt to r eco nci l e U ni t e d Phos phor us wi th Arb augh a nd M or r i s on ; d i sm i ssa lis re quir ed w hether the F TA I A st ate s a ju ris dict i onalr equi re m ent, as U nited P ho sph o rus h eld , ora n e l e me n to fth e S h e r ma n A c tc l a i m. We a g r e e wi th th e s e c o n d o fth es e a r g u me n t s . As we ha ve no te d, i n M or r i s on th e Cou r t f o und i t unne ce ssary to or der a r em and to apply “a new Rule 12(b) ( 6) l abel[ to] the s am e Rul e 1 2( b) ( 1) co ncl usi on. ” 1 30 S. Ct. at28 77. H er e, the defe nd ants m ove d to dism i ss f orl ack ofj uri sdi ct i o n and f ai l ure to sta te a cl aim ; o ur s ubstanti ve re vi ew o f t h e FTA I A i s no di ffer ent whether vi ew ed thro ugh t h e l ens o fRule 12 ( b) ( 1) o r Rule 12(b) ( 6)
. Fo r re as on s w e w ill ex p lain , w e c on c lu d e t h a t t h e F T A IA bar s thi s s ui ta nd the r e f o r e di s mi s s a li s r e qui re dN o. 10

- 1712 17

W e not ed thatthe Thi rd Ci rc ui thas re c en t l y a ppl i ed the 3 Ar b a ug h clear

- s t at em en tr ul e, ove rr ul ed c i rc ui tpr ec ede nt, an d he ld th at t he FTAIA doe s no ti m pos e a j ur i s di c t i ona l l i m i tbut i ns t ea d es t abl i s he s ane l em en tofa Sh erm an Actc l ai m , c i t i ng w ith a p p ro val the U n i te d P hosp horu s d iss en t. A n im a l S c i. P ro d s., Inc
. v . C h ina M inm etals C orp ., N o . 1 0
- 2 2 8 8 , 2 0 1 1 WL 3 6 0 6 9 9 5 (3d C ir . A u g . 17, 20 1 1 ). w hether the sta tute i s pro perl y c onst rued to st ate a j uri sdict i onalr equi re m ent oran e l em ent o fthe pla i n tiffs’ S he r manAc tc l a i m. Ac c o r di ng l y, we n e e d not de c i de w he th er U nited P ho sph o rus survi ves Arb a ugh a nd M or r i s on . 3 W e no te the i ssue and res er ve i t forano therday.
B. A pp l yi ng t he FT A I A’ s Re qui r e me nt s t o the Plai nti f f s’ Co mpl a i nt A s we have expla i ned, the FTA I A l i m i ts the S herm an Act ’ s e xt r a t e r r i t o r i a lr e a c h b y ma k i ngi tg e ne ra l l y i na ppli cabl e t o f or ei gn ant i com peti ti ve conduct, subj ect to cer tain e n u m erate d excepti ons. 15 U
. S. C. § 6 a. That i s, th e F TAI A “i ni ti al l y l ay s do w n a gen er alr ul e pl ac i ng all ( noni m port ) act i vity i nvol vi ng f or ei gn co m m er ce ou ts id e t h e S h er m an A c t’s rea c h .” Em pagran , 542 U
. S. at1 62
. “ I t th enb r i ng s su chc o nduc t b ack wi th i n the Sher m an A ct’ s r each, ” id., if the f or ei gn ant icom peti ti ve conduct i s “ conduct i nvol vi ng . . . i m portco m m er ce” or h as “a d ire c t, su b st an t i a l , an d rea so n ab ly for es ee ab le effe c t” on dom est i c o r i m portco m m er ce, 15 U
. S. C. § 6 a. To deter m i ne wh ether th e pl ainti ff s hav e done enough a t the ple ad in gs sta ge to bring the i r cl ai m withi n ei thero f18 N o. 10

- 1712 th e s e e x c e p t i o n s , w e a r e r e q u i r e d t o ev a l u a t e th e i rc o mp lai nt i n li gh t of th e “p lausibili ty” p lead ing s t a n d a rd an n ou n c ed inTw om blya nd fur th ere xpl aine d i n Iq b al : To s u rv i ve a m oti on t o dism i ss, a com pla i nt m ust c o nt a i n s uffi c i e nt f a c t ua l mat t e r, a c c e pt e d a s t r ue, to st at e a cla im to relie f th at is p lau sib le on its fac e. A c l a i m ha s f a c i a lp l a us ib i l i t y wh en th e p l a i nt i ffp l e a ds f ac tu alc o nt en t th ata l l o ws the c our t to dr aw the re as on abl e infe re nce that the defendant i s l i abl e for t h e m isc on d u c t a lleg ed . Th e p lau sib ility st an d ar d is not akin to a probabi l ity r eq u i re m ent, but i t a sks f or m or e than a s heerp oss ibi l i ty that a defendant has acte d unlawful l y. W here a com pla i nt p lead s f acts th ata r e m er ely c o ns i st en t wi tha de fen dan t’s l i abi l i ty, i t s tops shor t o fthe l i ne be tw een pos sibi l i ty an d plau sibil ity ofentitlem en t to rel ief
. Iq b al , 1 29 S
. Ct
. at 1 94 9 ( quo ta ti o n mar k s an d c i ta ti o ns om itted ). Twom blyexp l ai ned that “a pla i nti ff’ s obl i gat i on t o provi de the ‘ gr ounds’ of hi s ‘ enti tl em ent to re l i ef’ r equi re s m or e than l abel s a nd co ncl usi ons, and a form u laic r eci tati on o fthe el em ents ofa cause ofact ion w i l lnotdo. ” 5 50 U .S
. at55 5. Iqbal r ei te r at ed th i s po i nt : “ Thr ea dbare re ci tal s o fthe el em ents ofa cause ofact i on, supporte d by m er e co ncl usor y s tat em ents, do notsuffi ce. ” 1 29 S. Ct. a t 19 4 9
. R a the r, “ [ w] hi l e l e g a lc o nc l us i o ns c a n pr o v i de the fr a mewo r ko fa c o mpl a i nt, the y mus tb e s up po r t ed by f actual all ega ti ons. ” Id
. at19 50. A ccor dingl y, to av o i d di smi ss al, the c o m pl aintmusti nc l ude s uffi ci en t f ac tu alc o nt entt o s uppo r t a pl au sibl e i nfer en ce tha t th eN o. 10

- 1712 19 defe nd ants’ al l ege d anti c om peti ti ve acti vi ty

— al lo f w hi ch oc curr ed ove rs eas

— eit h er “in vo lv[e d ] . . . [U .S.] i m porttr ade ori m portco m m er ce” orh ad a “dir ect, su bsta nt ial, and reason ably fore seeab le effect” on U
. S. dom est i c o r i m portco m m er ce. The dis trict c ou rthel d that the pl ainti ff s had al l ege d e n o ug h t o p r o c e e d o n th e b a s i s o fth e “ i mp o r tc o mm er ce” excepti on a nd ther ef or e did not add re ss the “ dir ect effec ts ” excep tio n. The c o ur t r ea so ne d tha t be ca us e th e defen dan ts i m po r t po ta shi nt o the Uni te d S ta te s an d w er e g ener al l y a ccused ofco nsp i ring to fi x the pri ce o f po ta shg l o ba l l y, the r e was a s uffi ci en tly“ ti g htne xus between the al l ege d i l l ega lco n d u c t and [ d]efendants’ i m po r t ac ti vi ti es . . . t o c o nc l ude tha t th e f o r m er‘ i nvo lve d ’ th e la tt er .” T h is w as err or . “T h e F T A IA d iffer en tia t e s be t we e n c o n d u c tth a t‘ i n v o l v e s ’
. . . [ i mp o r t ] c o mm er ce, and cond uc t t ha t ‘ di r e c t l y , s ub s t a nti al l y, an d f o r es ee ab l y ’ a ffec ts su ch c o m m er ce . To g i ve the l at te rpr o vi si o n mea ni ng, the f o r m ermustb e g i ve n a re l ati vel y s tr i ct c onst ructi on. ” Carp e t Grou p Int ’ l v. O r i e nt al Ru g Imps . As s’ n , 227 F. 3d 62, 72 ( 3d Cir
. 20 00) ove r r ul e d on o ther g rou nd s i n A nim al S ci . P rods. , Inc. v. Ch ina M inm et als Corp., N o. 10

- 2288 , 20 11 W L 36069 95 ( 3d Cir
. A ug. 17, 2011 ). The fl aw i n th e di st r i ct co ur t’ s r ea so ni ngi s th ati t es se nti al l y co nfl at es the “ i m po r t co m m er ce ” ex ce pti o n a nd the “dir ect effects ” e xcepti on. I ffor ei gn ant i com peti ti ve c on d u c t c an “in vo lve ” U .S. im p or t c om m er c e e v e n if it is dir ecte d en ti re l y a t m ar ket s o ver sea s, then the “ dir ect effects ” e xcepti on i s e ffecti vel y r endered m eani ngl ess . U nd erthe dist ri ct c ourt ’ s r eadi ng o f t h e st atute , a f or ei gn20 N o. 10

- 1712
com pany thatdoes anyi m port busi ness i n the U ni ted St at es w ou ld vio lat e t h e Sh er m a n A c t w h en ev er it en te re d in to a join t- sel l i ng ar ra ngem ent o ver sea s rega rdless of its im p ac t o n th e A m er ica n m a r k e t . Th is w oul d produce t h e ver y inter fer ence w i th f or ei gn ec on om ic a c tiv it y t h at th e F T A IA se ek s t o p re ve n t. See Em pagran , 54 2 U.S
. at16 1. A s the Th ird C ircu it h as no ted , the FT A I A ’s “i m p ort com m er ce” and “dir ect effects ” e xcepti ons ar e di stinct an d c ap ture di ffer ent k i nd s o ffor ei gn ant i com peti ti ve conduct. Se eTur i ce nt r o, S. A. v. Am
. Ai r l i ne s Inc., 30 3 F. 3d 293, 3 01-02 (3d Cir. 2002) o verru led o n o ther g rou nd s in A nim al Sci ence, 20 11 W L 36069 95. The i m port
- com m er ce excepti on ca ptures for ei gn ant i com peti ti ve conduct ( thus b ringi ngi t ba ckwi th i n the S he r m anAct ’ s r ea ch ) if th e o versea s an ti co m pet i ti ve c o nduc t ac tu al l y “ i nv o l v e s ” the U. S
. i mpo r tma r k e t . T he di r e c t
- e ffe c t s e xc e pti on ca ptures f or ei gn ant i com peti ti ve conduct thathas a “dir ect, substanti al, and reas onabl y for ese eabl e e ffect” o n U
. S. d om es ti c o r i m portco m m er ce rega rdless o fwh ether th e o ve r se as a nt i co m pet i ti ve co nduc t ac tu al l y “ i nvo lve s” th e U .S. im p or t m ar ke t. Id. Thu s, the re l evant inquiry under the i m port
- com m er ce e x c e p t i o n i s “ wh e th e rth e d e fe n d a n t s ’ a l l e g e d a n t i c o mp e t i tiv e b eh av ior ‘w as d ire c te d atan im p or t m ar ke t.’ ” A nim al Sci ence, 2011 W L 3606 995, at * 5 ( quoti ng Turic entro , 3 0 3 F .3d at 303). Con trary to w ha t the district cou rt s e e m ed to think, i t is not enou gh that the d efend an ts are e ng a g e d i n the U. S
. i mpo r t mar k e t, tho ugh tha tm ay be re lev an t t o th e a n aly sis
. Id. Rat h er , “ the i m porttr ade or com m er ce excepti on requi re s that the defendants’ [ f or ei gnN o. 10

- 1712 21

I n M etal lges el l sc haf

t A G v. Sum i t omo C orp. of A m er i ca , 325 F. 3d 4 836, 842 ( 7th Cir
. 2003) , w e c oncluded that t h e p lainti ff s had (co n tin u ed ...) a nt i c o mpe t i t i v e ] c o nd uc tta r g e t[ U. S
. ] i mpo r tg o o ds orse rv i ces. ” Id. H er e, the c om p l ai nt co ntai ns no f actualal l ega ti ons to su ppo r t appl i ca ti o n o fthe i m po r t- co m m er ce e xc ept i o n, proper l y und er sto od. I t doe s no t, f orexam ple , al l ege an y s pec i fi c f ac ts to suppo r t a pl au sibl e i nfer en ce tha t th e off sh ore defendants ag re ed to an Am er i can pri ce o r producti on quota f orpota sh. N ordoes i t allege, f or tha tma t t e r, tha tthe de fe nd a nt s a g r e e d t o wo r l dwi de pr o du c t i o n qu o t a s f o r a l l memb e r s o f the c o ns pi r a cy or th at a global cartel price w as ev e r s e t . Th e com p lai nt ’s speci fi c fac tualal l ega ti ons describe a nti com peti ti ve conduct ai m ed at the pot ash m ar kets in Brazi l, China, an d Ind ia

— n o tth e U
. S
. i mp o r tma r k e t . Tr u e , th e c o mpla i nt ge nera l l y al l ege s that the “defendants co nspir ed to coord in at e potash pri ces and pri ce incre ase s s o as to fi x, r ai se, m ai ntai n, and stabi l i ze the pr i ce a t which p ot as h w as so ld in t h e U n ite d St a t es atart ificia lly in flat ed an d a n t ico m p et itiv e le ve ls.” B u t t h is w h olly concl usor y s tat em en t is ak i n to a re ci tat i on o fthe el em en ts o fthe S he r m anActc l ai m , whi chi s i ns uffi ci en t un d er Tw om b l y a nd Iq b al
. We c o n c l u d e th a tt he c o mpl ai n t c a n n o t s u r v i v e d i s mi s s a l b a s e d o n t he FTA I A ’ s i m port
- com m er ce e xcepti on a nd m ust s tand or f al lbas ed on the di re ct- effects exce pti on a l one. W e ha ve no t y etha d o cc asio n t o c o ns i derthe mean i ng ofthe ter m “di re ct” i n the FTA IA , but the Ninth Ci rcui t, 422 N o. 10

- 1712

(
. . . c on t i nu e d) 4 s uffi c i e nt l y a l l e ge d tha tth e de fe nd a nt s ’ a nt i c ompe t i t i ve con d u ct ha d a “d irect, sub stan t i a l , an d reaso na b ly fore seeab le effec t ” o n dom es t i c c om m er c e, butdi d note l abor ate on the m eaning ofthe w ord “d ir ect . ” M etallges e ll sc h aft involved al l eg at i ons thatthe defen dant s ha d i l l eg al l y m ani p u l at ed the price ofcopper contrac ts tr aded on the Lo nd on M etals Exch an g e. Th is con d u ct im m e d iately an d un av oid ab ly i nc r e a s e d th e p r i c e a twh i c h c o p p e r wa s e x c h a n g e d i n t he Uni t ed S t at es . I ndee d, we poi nt edl y obs er ved that“[ t ] he plaint iff s befor e us have all eged m ore than a global c onspirac y thathas si gnific ant e ffect s in the United Stat es . ” Id
. relyi ng on th e Sup rem e C ou rt’s int erp retation of a n e a r l y i de n t i c a lt e r m in th e F o r e i g n S o v e r e i g n I mm unit i es A ct, 28 U .S
. C. § 1 605( a) ( 2) , has hel d that a n effec t i s “di r ec t” i f“ i t f o l l o ws a s ani m m edi at e co nsequence ofthe defe nd ant’ s a cti vi ty. ” U ni t e d S t at e s v. LS L B io tech s. , 379 F. 3d 672, 68 0 ( 9th Ci r. 2004) ( ci ti ng Rep ub l i c of A rge ntina v. Wel tover, Inc. , 504 U
. S. 6 07, 618 ( 1992 ))
. “A n effe c t c an n otbe ‘d ire c t’ w h er e itd ep en d s o n . . . uncert ai n in ter veni ng devel opm ents. ” Id. at6 81
. W e fi nd thi s defi ni ti on co m pel l i ng. Despit e i ts l ength a n d m any s peci fi c f actualal l ega ti o ns , the c o m pl ainto ffer s ve r y l i tt le ofs ubs ta nc e co ncer ni ng the r el atio n shi p between the defe nd ants’ al l ege d ove rs ea s anti com peti ti ve conduct and the Am er i can do m es ti c m ar k etf o rpo ta sh
. Re cal l th atthe c o m pl aint bui l ds i ts case f or conspi ra cy ar ound the char acte ri sti cs of th e p ot as h ind u st ry th at m ak e itp ar tic u lar ly su scep tible to coll us ion. T he com p lai nt all eges, m oreover,N o. 10

- 1712 23 th atthe c o ns pi r ac y was f ac i l i ta te d b y the c l o se wor k i ng re lat ion sh ip am on g t h e C an ad ian d efe n d an t s (via Can po te x) a nd a m o nga l lthe de fen dan ts th r o ug h the I nter nati onalFe rt i l i zerInd ustr y Associ ati on a nd an “e xc ha ng e pr o g r am o fmutua lv i si ts . ” Altho ug h the com pla in t desc ribes i n so m e deta i lcer tain paral l el o ut putand pri cingco nduc t i n the Br az i l i an, Chi ne se , a nd In d ian m ar ke ts , i t d oe s litt le t o e lab or at e o n h ow t h is conduct actual l y i m pacts the Am er i can pota sh m ar ket
. A s we have note d, the c om pla i nt does n ot al l ege that the defenda n ts agr eed to worl dw i de producti on quota s ora gl obalcar telpri ce, norar e there al l ega tion s that the defe nd ants eve r i m posed a pri ce o r supp l y quot a o n the Amer i c a n po t a s h mar k e ts pe c i fi c a l l y . In the s e cti on o fthe c o m pl ainte nt i tl ed “ I m pac t o fDe fen dan ts ’ Co ndu ct o n U ni ted S tat es Pri ces, ” th e p lainti ff s a l l ege that “[ t] he vast m aj or i ty of potash sal es i n the U ni te d Sta tes ar e m ade byPCS, M osa i c, A gr i um and BPC atpri ces th at are setacc or ding to benchm ar ks est abl i shed by d efe n d an ts ba se d on sa les in In d ia, C h in a an d els ew h er e.” T h is is e x p lain ed in s ligh tly m or e d et ail els ew h er e in thi s s ecti on o fthe com pla i nt: Defe nd ants nego ti ate te rm co ntra c ts forpurchase s ofpota sh thr oughout the worl d. A gr eem ents w i th b uy e r s in B ra z i l, Ind i a a nd Ch i na ty pi c a l l ya r e ma de fi rs t, and the pri ces est abl i shed i n thos e m ar ket s dir ectly influence pri ces i n other m aj orm ar ket s. Once de fendants es tabl i sh the se pri ces, theyuse them to deter m i ne pota sh pri ces i n other m aj orm ar ket s, i ncl ud i ng the U ni ted S tat es. The pri ces fo r car tel i zed24 N o. 10

- 1712 ter m co ntra cts becom e benchm ar ks f orspotm ar ket sal es [ i ncl ud i ng tho se i n the U ni ted S tat es] , wh i ch ty p ica lly ar e h igh er th an th os e o f te rm co n tr ac ts . The pr o bl em wi ththe se g en er al i ze d all eg at i o ns i s th e ab se nc e o f spe ci fi c f ac tu al co nt en t to su ppo rt the as se r te d pr o po si ti o n tha t pr ice s i n China , Indi a, a nd Brazi lse rv e a s a “be nchm ar k” f orpri ces in t he U ni ted S ta te s an d tha t th i s ben ch m ar k, i fi t ex i st s, ha s a st r o ng enough r el ati onshi p w i th the d om est i c pota sh m ar ketto ra i se a pl ausible i nfe re nce that the defendants’ f or ei gn an ti co m pet i ti ve c o nduc t ha s a “di r ec t, s ubs ta nt i al, a nd reason ably foreseeable effect” on d o m estic or i m p ort com m er ce. That i s, the com pla i nt o nl y g ener al l y a l l ud es to a l i nk be tw een the ca rt el i zed pri ces i n thes e three forei gn m arkets an d A m er ic a n p otash prices. Elsew he re i n the com pla i nt the pl ai nti ff s do cl ai m that : Thr o ugh muc h o f2 0 0 6 , p r i c e i nc r e a s e s we r e mut ed as pur ch as er s awai te d the o ut co m e o fne g o ti at i o ns ov er a propos ed i ncre ase to custo m er s in China. A fterpota sh prod u c ers r eached an agr eem ent o n a pri ce in c re ase to custo m er s in China in l ate Ju ly 2 00 6, a n d B ra zil lat er in 2 00 6, p ot as h p ric es in the Unite d Sta tes inc re ased as wel l, as defendants k ne w a nd i nt e nd e d. Bu t thi s g ener alal l ega ti on does n ot add m uch. Pri ces of po tash w er e i nc r ea singa r o und the wor l d thr o ug ho ut m osto fthe c lass per i od. Thi s a l l ega ti on o nl y hi nts a t a re lat ion sh ip be t w ee n C h in es e a n d A m er ica n p ric es ; i t does not suffi ce t o ra i se a pl ausibl e infe re n c e that pr i ce i ncre ase s in China orB ra zi l“d i re ctl y” and “substa nti al l y”N o. 10

- 1712 25 affected prices in th e U nited States. Som eth ing m ore s pe c i fi c i s r e qu i r e d in o r de rt o s uc c e s s ful l y p l e a d a “dir ect effects ” ca se. To s ati sfy the r equi re m ents of Tw om b l y and the F TA IA , the pla i nti ff s nee ded to pr o vi de en o ug h f ac tu alc o nt en t

— th at i s, theyneeded to provi de so m e fa ctualdescr i pti on o fthe w ay i n w hi ch pri ces i n China, Brazi l, and I nd i a s er ve as a “ benchm ar k” f or A m er i can pri ces

— to perm i t a pl ausibl e infe re nce tha tthe de fe nd a nt s ’ a nt i c o mpe t i t i v e c o nd uc ti n these for eig n m a r ke ts h as a d ire c t, su b st an tia l, an d rea so n ab ly f or ese eabl e e ffect on pot ash pri ces i n the U ni ted S tat es. T h e “ s o me th i n gmo r e ” i s n o ts u p p l i e d b y th e c o mpla i n t’s c itat i on t o a r em ar k b y o ne unnam ed “anal yst ” wh o i s a l l e g e d t o h a v e s t a t ed t ha t“ th e b a r r i e r s th a twe have see n i n the past b etween dom est i c and i nter n atio n al p ric es h av e jus t fa llen d ow n . W e’r e n ow p ar tic ip ating in a global ferti liz er m arket.” Th e all egation of a “global fertil izer m arke t ” i s of cou rse con clusory an d unh el pful, a nd the c o m pl aintpr o vi des no c o nt ex t w h a t s o ev er for th is s ta te m en t t h at m igh t m ak e it m or e m eani n gful
. In the end, the m ostspeci fi c al l ega ti on in the sect i on o fthe com p lain t describi ng the i m pact ofthe d efe n dants’ o ver sea s co nd uct o n the A m er i can potash m ar keti s thi s o ne: Defe nd a nt s kne w a nd int e nd e d tha tthe i rg l obal con spi ra cy w oul d dir ectly i m pact pri ces ofpota sh on worl d m ar ket s a nd withi n the U ni ted S tat es. Representa ti ves ofU ra l kal i, i n a pr ese ntati on t o anal yst s inD ec em b er 2 00 7, se t fo rt h ea c h st ep in t h e c h ain o f ev en ts r es ul ting i n i nc r ea se d pr i ce s th r o ug ho ut26 N o. 10

- 1712 the world and i n the U ni ted S tat es: “[ 1] co ntra ct se tt l ementi n the k eymar k et s i m m edi atel y t i ed up vo l um es o fpo ta shpr o duce r s . . . [ 2] c au singde m an d com peti ti on o n SPOT m ar ket s fol l owed byi ncre ase i n pr i ce s . . . [ 3] c o nc l us i o n o fIndi anc o nt r act on th e backo fthe SPOT m ar ket s’ gr owth

— eve n l ess vol um e i s a v a i l ab l e . . . [ 4 ] b o o m o n S PO T mar ket co nt i nue s st i m ul at i ngi nc r ea se d Chi ne se di sc o unt an d a st ro n ge r re as on to br in g it d ow n in 2 00 8.” This chai n-o f

- eve nts al l ega ti on is crypti c and r el i es on t oo m any inter veni ng va ri abl es to suffi ce a s s up portf or appli cati on o fthe FTA I A ’ s di re ct- effects exce pti on. Even ta k i ngi nt o a cc o unt“ th e na tu r e o fa g l o ba lmar k et, ” th e al l egatio ns her e a m ount t o “nothing m or e than w hat cour ts have ter m ed a ‘ ri pp l e e ffect’ o n the U ni ted S tat es dom est i c m ar ket, and th e FT A I A pre vents the Sher m an A ct fro m r eachi ng such ‘ ri pp l e e ffec ts . ’ ” In reInt e l Corp. M i croproc essor Anti t r us tLi t ig. , 45 2 F
. S up p. 2d 55 5, 56 1 (D . D el. 20 06 ). U ltim at el y , th e c on n ec tio n as se rt ed in the c om pla i nt be tw een the al l ege d cart el i zed p ri ces of potash ove rs eas and the dom est i c pri ce o fpota sh i s t oo sp ec u lat ive an d ind ire c t t o s t a te an ac tio n ab le c laim unde rthe F TAI A’s di r ec t- effec ts e xc ept i o n. F o ra l lthe f o r eg o i ngr ea so ns , we concl ude tha t th e com pla i nt does notco ntai n suffi ci ent f actua l c onte nt to p lea d a p lau sib le “ d ire c t, su b st an tia l, an d rea so n ab ly f or ese eabl e” conn ecti on be tw een the al l ege d fo re i gn an tico m p etitive activity an d the d om estic p otash m arket
. Because th e c om p lain t fails to al l ege f acts su ffi ci en t to s at i sfy the di r ec t- effec ts e xc ept i o n o ftheN o. 10

- 1712 27 FTA I A , di sm i ssa li s r equi re d. A ccor dingl y, we vacat e th e d istr i ct c ourt ’ s o rderdenyi ng the defendants’ m oti on to dism i ss and rem and w i th i nstr ucti on s t o dism i ss th e p l a i n t i ff s ’ S h e r ma n A c tc l a i m. V ACA T ED AN D R EMAND ED WI T H I NS T RUCT I ONS .

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