Opinion ID: 2775174
Heading Depth: 4
Heading Rank: 2

Heading: import trade and the ftaia

Text: The appropriate characterization of the import trade provision of the FTAIA is essential to our analysis. The statute provides that the Sherman Act “shall not apply to conduct involving trade or commerce (other than import trade or import commerce),” and then goes on to provide limitations vis-a-vis nonimport commerce. 15 U.S.C. § 6a. We agree with the defendants that this section should not be labeled an FTAIA exception. Rather, more accurately, import trade, as referenced in the parenthetical statement, does not fall within the FTAIA at all. It falls within the Sherman Act without further clarification or pleading. Consequently, we disagree with the defendants’ view that the indictment was insufficient because it did not allege import trade under the FTAIA. The indictment charged a violation of § 1 of the Sherman Act and alleged that the defendants “entered into and engaged in a combination and conspiracy to suppress and eliminate competition by fixing the prices of thin-film transistor liquid crystal display panels (“TFT-LCD”) in the United States and elsewhere.” See United States v. Morrison, 536 F.2d 286, 288 (9th Cir. 1976) (“It is generally sufficient that an indictment set forth the offense in the words of the statute itself, as long as those words of themselves fully, directly, and expressly, without any uncertainty or ambiguity, set forth all the elements necessary to constitute the offence intended to be punished.” (internal quotation marks omitted)). Apart from tracking the language of the Sherman Act in the 32 UNITED STATES V. HSIUNG indictment, the government did, in fact, plead and prove that the defendants engaged in import trade. In Empagran, the Supreme Court explained the somewhat convoluted scope of the FTAIA: [The FTAIA] initially lays down a general rule placing all (nonimport) activity involving foreign commerce outside the Sherman Act’s reach. It then brings such conduct back within the Sherman Act’s reach provided that the conduct both (1) sufficiently affects American commerce, i.e., it has a direct, substantial, and reasonably foreseeable effect on American domestic, import, or (certain) export commerce, and (2) has an effect of a kind that antitrust law considers harmful, i.e., the effect must giv[e] rise to a [Sherman Act] claim. 542 U.S. at 162 (internal quotation marks omitted). Under its plain terms, the FTAIA does not affect import trade. See id.; Dee-K Enters., 299 F.3d at 287 (“Because this case involves importation of foreign-made goods, however—conduct Congress expressly exempted from FTAIA coverage as involving . . . import trade or import commerce . . . with foreign nations—the FTAIA standard obviously does not directly govern this case.” (internal quotations marks and citation omitted)). The legislative history supports this statutory interpretation. House Reports are clear that the FTAIA does not implicate import trade. “A transaction between two foreign firms, even if American-owned, should not, merely UNITED STATES V. HSIUNG 33 by virtue of the American ownership, come within the reach of our antitrust laws. Such foreign transactions should, for the purposes of this legislation, be treated in the same manner as export transactions—that is, there should be no American antitrust jurisdiction absent a direct, substantial and reasonably foreseeable effect on domestic commerce or a domestic competitor. . . . It is thus clear that wholly foreign transactions as well as export transactions are covered by the Amendment, but that import transactions are not.” H.R. Rep. 97-686, at 9–10. Although our circuit has not defined “import trade” for purposes of the FTAIA, not much imagination is required to say that this phrase means precisely what it says. As the Seventh Circuit held in a case involving foreign cartel members,“transactions that are directly between the [U.S.] plaintiff purchasers and the defendant cartel members are the import commerce of the United States . . . .” Minn-Chem, 683 F.3d at 855. Similarly, the Sixth Circuit labeled goods manufactured abroad and sold in the United States “import commerce.” Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430, 438 n.3, 440 (6th Cir. 2012). So too are transactions between the foreign defendant producers of TFT-LCDs and purchasers located in the United States.8 See id. 8 The Third Circuit also addressed the import trade exclusion, holding that it applies to importers and to defendants whose “conduct is directed at a U.S. import market,” even if the defendants did not engage in importation of products into the United States. Animal Sci. Prods., 654 F.3d at 471 & n.11. We need not determine the outer bounds of import trade by considering whether commerce directed at, but not consummated within, an import market is also outside the scope of the FTAIA’s import provisions because at least a portion of the transactions here involves the heartland situation of the direct importation of foreign goods into the United States. See id. 34 UNITED STATES V. HSIUNG The defendants’ conduct, as alleged and proven, constitutes “import trade,” and falls outside the scope of the FTAIA. The allegations in the indictment, which we review de novo, United States v. O’Donnell, 608 F.3d 546, 555 (9th Cir. 2010), must “ensure that [the defendants were] prosecuted only on the basis of the facts presented to the grand jury,” see United States v. Du Bo, 186 F.3d 1177, 1179 (9th Cir. 1999) (internal quotation marks omitted). Thus, “[a]n indictment must be specific in its charges and necessary allegations cannot be left to inference. . . . [A]n indictment should be read in its entirety, construed according to common sense, and interpreted to include facts which are necessarily implied.” O’Donnell, 608 F.3d at 555 (citations and internal quotation marks omitted). The indictment is replete with allegations that support the government’s position that the defendants engaged in import trade. The indictment alleged that, within the conspiracy period, AUO and AUOA “engaged in the business of producing and selling TFT-LCDs to customers in the United States.” During the conspiracy period, AUO employees “had one-on-one discussions in person or by phone with representatives of coconspirator TFT-LCD manufacturers during which they reached agreements on pricing of TFT-LCD sold to certain customers, including customers located in the United States.” The indictment went on to allege that AUO attempted to attain the price goals set with coconspirators by, during the conspiracy period, “regularly instruct[ing] employees of [AUOA] located in the United States to contact employees of other TFT-LCD manufacturers in the United States to discuss pricing to major United States TFT-LCD customers,” and that “[i]n response to these instructions, employees of [AUOA] located in the United States had regular contact through in-person meetings and UNITED STATES V. HSIUNG 35 phone calls with employees of other TFT-LCD manufacturers in the United States to discuss and confirm pricing, and at times agree on pricing, to certain TFT-LCD customers in the United States.” These allegations directly describe that the defendants and their coconspirators engaged in import commerce with the United States—indeed, the conspiracy’s intent, as alleged, was to “suppress and eliminate competition” by fixing the prices for panels that AUO and AUOA sold to manufacturers “in the United States and elsewhere” for incorporation into retail technology sold to consumers in the United States and elsewhere. Going into trial, there was no surprise regarding the import trade allegations; likewise, the evidence at trial was ample on this aspect of the conspiracy. We review the defendants’ sufficiency of the evidence challenge under the well established standard of Jackson v. Virginia, 443 U.S. 307 (1979): “viewing the evidence in the light most favorable to the prosecution,” we determine whether “any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” Id. at 319. Trial testimony established that AUO imported over one million price-fixed panels per month into the United States. The Crystal Meeting participants earned over $600 million from the importation of TFT-LCDs into the United States. Although it was undisputed at trial that AUO and AUOA did not manufacture any consumer products for importation into the United States, the evidence revealed that AUO and AUOA executives and employees negotiated with United States companies in the United States to sell TFT-LCD panels at the prices set at the Crystal Meetings. Importation of this 36 UNITED STATES V. HSIUNG critical component of various electronic devices is surely “import trade or import commerce.” To suggest, as the defendants do, that AUO was not an “importer” misses the point. The panels were sold into the United States, falling squarely within the scope of the Sherman Act. The defendants also claim that the transactions did not “target” the United States. Targeting is not a legal element for import trade under the Sherman Act, though it was included in the jury instructions at the defendants’ request. In any event, the negotiations in the United States and the significant direct sales to the United States certainly qualify as targeting. The challenge to the sufficiency of the evidence fails. In sum, the FTAIA does not apply to the defendants’ import trade conduct. The government sufficiently pleaded and proved that the conspirators engaged in import commerce with the United States and that the price-fixing conspiracy violated § 1 of the Sherman Act.