Opinion ID: 375952
Heading Depth: 1
Heading Rank: 1

Heading: jurisdiction

Text: The governments of Australia, Canada, South Africa and the United Kingdom of Great Britain and Northern Ireland 11 have filed briefs as amici curiae. The principal thrust of the amici's briefs is to call into question the jurisdiction of the United States District Court over this controversy. We view the jurisdictional issue as two-pronged: (1) does subject matter jurisdiction exist; and (2) if so, should it be exercised? The jurisdictional reach of the Sherman Act to conduct outside the United States was not favorably received at the outset. See American Banana Co. v. United Fruit Co., 213 U.S. 347, 29 S.Ct. 511, 53 L.Ed. 826 (1909). However, that view was later eroded, and the Act was applied to conduct outside the United States so long as some of the acts occurred within the United States and the parties were American. United States v. Sisal Sales Corp., 274 U.S. 268, 47 S.Ct. 592, 71 L.Ed. 1042 (1927). Timkin Roller Bearing Co. v. United States, 341 U.S. 593, 71 S.Ct. 971, 95 L.Ed. 1199 (1951). In United States v. Aluminum Co. of America (Alcoa), 148 F.2d 416 (2nd Cir. 1945), Judge Learned Hand articulated what is known as the intended effects test. In Alcoa Judge Hand reasoned that agreements made outside of the United States which restrain trade or commerce within the United States have the same effect as similar agreements entered into within our borders. Since any state may impose liabilities, even upon persons not within its allegiance, for conduct outside its borders that has consequences within its borders which the state reprehends, 12 he concluded that Congress did intend to apply the Act to conduct abroad so long as the intended effect of that conduct is prohibited by the Act. Since Alcoa, United States Courts have exercised jurisdiction over antitrust activity outside the United States so long as there is an intended effect on American commerce. Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 705, 82 S.Ct. 1404, 1413, 8 L.Ed.2d 777 (1962); Mannington Mills v. Congoleum Corporation, 595 F.2d 1287, 1299 (3rd Cir. 1979); 13 U. S. v. The Watchmakers of Switzerland Information Center, Inc., 1963 Trade Cases P 70,600, at p. 77, 456-57 (S.D.N.Y.1962); Fleischman Distilling Corp. v. Distillers Co. Ltd., 395 F.Supp. 221, 226-227 (S.D.N.Y.1975). In its complaint Westinghouse alleges that twenty domestic and nine foreign corporations conspired to fix the price of uranium in the world market. The alleged meetings at which Westinghouse claims prices were agreed upon took place in France, 14 Australia, 15 South Africa, 16 Illinois, 17 the Canary Islands 18 and England. 19 At the present state of this litigation, there has been no opportunity for fact-finding. 20 We must therefore accept all properly pleaded allegations as true for purposes of determining jurisdiction. Accordingly, the picture which emerges is one of concerted conduct both abroad and within the United States intended to affect the uranium market in this country. While the governments of the foreign participants in this alleged conspiracy are actively and admittedly sympathetic to the economic determinism of the defaulters, there is no claim that the alleged conduct of the defaulters is mandated by those governments. 21 We therefore conclude that Westinghouse's allegations against the defaulters do fall within the jurisdictional ambit of the Sherman Act, as defined in Alcoa. The amici, in particular the United Kingdom contend that Alcoa is no longer to be accepted by United States Courts as 'settled law' , in light of the recent opinions of the United States Courts of Appeals in Timberlane Lumber Co. v. Bank of America, N.T. & S.A., 549 F.2d 597 (9th Cir. 1976) and Mannington Mills, Inc. v. Congoleum Corporation, 595 F.2d 1287 (3rd Cir. 1979). In those cases the Courts were faced with a dismissal of an antitrust claim brought by an American company against an American corporation for conduct in a foreign country; and against a foreign subsidiary of an American corporation for illicit conduct abroad. Each Court began its analysis with the questions of whether the complaint stated a claim and whether subject matter jurisdiction existed. Both Courts answered those questions in the affirmative. 22 In each case the Court reversed the District Court and remanded the case for a determination as to whether jurisdiction should be exercised. The Third Circuit set forth factors for the District Court to consider in resolving that question. 23 Those factors were employed by the Court in Mannington Mills. 24 The United Kingdom relies primarily on the comment in Timberlane that The effects test by itself is incomplete because it fails to consider other nations' interests. 25 This amicus curiae contends the critical discussion of the Alcoa effects test has undermined its continuing viability as the standard of extraterritorial jurisdiction of the Sherman Act. We do not read Timberlane so broadly. The jurisdictional rule of reason 26 espoused in Timberlane is that while an effect on American commerce is the necessary ingredient for extraterritorial jurisdiction, considerations of comity and fairness require a further determination as to whether American authority should be asserted in a given case. 27 The clear thrust of the Timberlane Court is that once a district judge has determined that he has jurisdiction, 28 he should consider additional factors to determine whether the exercise of that jurisdiction is appropriate. We conclude that nothing in Timberlane is inconsistent with our determination that Westinghouse's allegations of concerted conduct by foreign and domestic corporations are sufficient to confer jurisdiction on the District Court, under Alcoa. We turn now to the question of whether jurisdiction should be exercised in the present case. In this case, unlike the situation in Timberlane and Mannington Mills, there has been a determination by the District Court as to whether jurisdiction should be exercised. In the order of January 3, 1979, and the order of September 17, 1979, the District Judge considered the unique circumstance presented in this case, and determined, in the exercise of his discretion, to proceed. Our task is to decide whether he abused his discretion in reaching that conclusion. We find that he did not. In granting the requested default judgment, the District Court considered three factors: 29 the complexity of the present multi-national and multi-party action; the seriousness of the charges asserted; and the recalcitrant attitude of the defaulters. 30 The District Judge concluded that those factors all weighed heavily in favor of proceeding to judgment and damages. The amici suggest that the District Court abused its discretion by not considering the factors set out in Mannington Mills in reaching this determination. While the considerations recommended in that case certainly provide an adequate framework for such a determination, we can hardly call the failure to employ those precise factors an abuse of discretion. First, the Mannington Mills factors are not the law of this Circuit. Second, even assuming their adoption by this Court, the circumstances here are distinct from those found in Timberlane and Mannington Mills. In those cases the defendants appeared and contested the jurisdiction of the District Court. In the present case, the defaulters have contumaciously refused to come into court and present evidence as to why the District Court should not exercise its jurisdiction. They have chosen instead to present their entire case through surrogates. Wholly owned subsidiaries of several defaulters have challenged the appropriateness of the injunctions, 31 and shockingly to us, the governments of the defaulters have subserviently presented for them their case against the exercise of jurisdiction. If this Court were to remand the matter for further consideration of the jurisdictional question, the District Court would be placed in the impossible position of having to make specific findings with the defaulters refusing to appear and participate in discovery. We find little value in such an exercise. We conclude that given the posture of this case, and the circumstances before the District Court, the Judge did not abuse his discretion in proceeding to exercise his jurisdiction. We therefore decline to remand the case to the District Court as requested by the amici curiae.