Court Opinion

ID: 9476772
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:05:06.307473+00
Date Added: 2024-06-11T17:45:30.136809
License: Public Domain

CARDAMONE, Circuit Judge;
dissenting:
The question raised on this appeal is whether a federal court should exercise anti-trust jurisdiction over conduct that, aided by foreign protectionist legislation, brings about unlawful consequences in the United States. The majority says “no”. Respectfully, I disagree.
Applying the balancing tests of Timberlane Lumber Co. v. Bank of America, N.T. & S.A., 549 F.2d 597 (9th Cir.1976) and Mannington Mills, Inc. v. Congoleum Corp., 595 F.2d 1287 (3d Cir.1979), the district court concluded that because of Colombia’s strong interest in its protectionist legislation and because of the Colombian government’s ownership interest in Flota through the National Federation of Coffee Growers, there would be probable adverse effects upon our foreign relations were it to assert jurisdiction. Given its dismissal on comity grounds, the district judge did not decide whether O.N.E.’s complaint should be dismissed under the Foreign Trade Antitrust Improvements Act of 1982, Pub.L. No. 97-290, 96 Stat. 1246, 15 U.S.C. § 6a (1982) (Act), though it added, without discussion, that the Act did not appear to deprive it of jurisdiction. Relying on well-settled act of state doctrine principles, the majority affirmed the district court’s dismissal on comity grounds. Because I do not believe that this case should be dismissed under the Act or on comity grounds, I dissent.
A. The Foreign Antitrust Improvements Act
To understand Congress’ purpose in this area, it is necessary to examine the 1982 Act. Section 402 of the statute provides that United States antitrust laws:
*455shall 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 foreseeable effect—
(A) on trade or commerce which is nor 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; ...
15 U.S.C. § 6a (1982).
Under this statute Congress excluded from the coverage of U.S. antitrust laws conduct involving export commerce and purely foreign transactions unless such conduct has a “direct, substantial, and reasonably foreseeable effect” on domestic commerce, import commerce or the export trade or commerce of a person “engaged in such trade or commerce in the United States.” Congress aimed to clarify existing American law, and when defining the Act’s scope used the phrase “commerce ... with foreign nations”, which is precisely the same terminology as that used in § 1 of the Sherman Act. 15 U.S.C. § 1 (1982). In that context, the phrase has consistently been construed to cover international transportation cases. See, e.g., Thomsen v. Cayser, 243 U.S. 66, 88, 37 S.Ct. 353, 360, 61 L.Ed. 597 (1917); United States v. Pacific & Arctic Ry. & Navig. Co., 228 U.S. 87, 105-06, 33 S.Ct. 443, 448, 57 L.Ed. 742 (1913); Joseph Muller Corp., 451 F.2d at 729. Thus, the Act extends to international shipping of the sort involved here.
To say that the Act applies to foreign shipping cases is not to say that it is easily applied. For though shipping goods from the United States is clearly foreign commerce, it does not fall neatly into those categories set out in the Foreign Antitrust Improvements Act. O.N.E. argues that the Act does not deprive the courts of jurisdiction over this case because the conduct alleged falls under the exception for conduct having the required effect on “export trade or export commerce ... of a person engaged in such trade or commerce in the United States.” 15 U.S.C. § 6a(l)(B). O.N.E. assumes that the service of transporting goods from the U.S. is itself “export commerce” and offers its various ties with the U.S. — for example, its U.S. parent and its U.S. derived income — as proof that it is a “person engaged in ... [export] commerce in the United States.” Appellees counter that the transactions do not fall under (1)(B) because as a non-U.S. corporation O.N.E. lacks the indicia of a “person engaged in ... [export] commerce in the United States.” Thus, appellees continue, the Act deprives the courts of jurisdiction over this case.
Both of these contentions are incorrect in several respects. First, the commerce involved here is import rather than export commerce; U.S. corporations import from foreign flag lines the service of shipping their goods from the United States to Colombia. See Pacific Seafarers, Inc. v. Pacific Far East Lines, 404 F.2d 804, 813 (D.C.Cir.1968), cert. denied, 393 U.S. 1093, 89 S.Ct. 872, 21 L.Ed.2d 784 (1969) (“Maritime nations ... providing transportation services ... are engaged ... in the ‘export’ of shipping services.”). The conclusion that the transportation at issue here is “import” rather than “export” commerce is consistent with the Act’s legislative history. The drafters of the Act had as their primary concern “preserving] antitrust protections in the domestic marketplace.” H.R.Rep. No. 686, 97th Cong., 2d Sess. 10, reprinted in 1982 U.S. Code Cong. & Admin. News 2431, 2487, 2495 (House Report). The record amply demonstrates that a market exists among United States corporations for the service of shipping LBC to Latin America. Viewed as an import, the service of transporting goods from the U.S. is not excluded by the Act from the coverage of American antitrust laws. The Act explicitly states that it does not apply to “import trade or import commerce.” 15 U.S.C. § 6a.
Second, even if the shipment of LBC from the United States is “export commerce”, appellees’ alleged conduct is still subject to U.S. antitrust laws because it falls under the Act’s exception 1(B) for *456conduct having a “direct, substantial, and reasonably foreseeable effect ... on export tráde ... of a person engaged in such ... commerce in the United States.” The legislative history defines “a person engaged in [export] trade or commerce in the United States” as a person “doing business in the United States.” House Report, supra, at 10, 12, U.S.Code Cong. & Admin.News 1982, pp. 2495, 2497. Because Congress strongly emphasized that the Act was intended to preserve antitrust protection for the domestic market, see House Report, supra, at.9, 10, 11, U.S.Code Cong. & Admin.News 1982, pp. 2494-2496, and because O. N.E. participates in the domestic market for shipping services, it satisfies this “doing business” requirement.
Finally, federal courts have long taken jurisdiction over shipping services between the United States and abroad. See, e.g., Thomsen, 243 U.S. at 88, 37 S.Ct. at 360; Pacific & Arctic Ry. & Navig. Co., 228 U.S. at 101, 33 S.Ct. at 446. Thus, the language of the Act and its legislative history makes it obvious that Congress did not aim to deprive federal courts of jurisdiction over suits like the instant one.
B. International Comity Considerations and Extraterritorial Antitrust Jurisdiction
Yet, despite Congress’ aim that there be jurisdiction, the majority holds that the case should be dismissed on international comity grounds because of Colombia’s significant interest in implementing its cargo reservation law. The majority suggests that U.S. and Colombian interests should be weighed in order to determine whether jurisdiction exists over O.N.E.’s complaint. The Ninth Circuit in Timberlane, 549 F.2d 597, and the Third Circuit in Mannington Mills, 595 F.2d 1287, have each set forth a list of factors1 to be considered in determining “whether the interests of, and links to, the United States ... are sufficiently strong, vis-a-vis those of other nations, to justify an assertion of extraterritorial authority.” Timberlane, 549 F.2d at 613.
1. The Scope of Extraterritorial Antitrust Jurisdiction
Courts have often grappled with the precise standard to be employed in determining whether American antitrust law should apply to a particular extraterritorial transaction. As Judge Learned Hand wrote over 40 years ago in United States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir.1945) (on certification from the Supreme Court), “[w]e should not impute to Congress an intent to punish all whom its courts can catch, for conduct which has no consequences within the United States.” Id. at 443. Alcoa established that in determining when Congress has chosen “to attach liability to the conduct outside the United States of persons not in allegiance *457to it,” one must look to the effects upon U.S. commerce. Id. Since Alcoa, different formulations of the “effects” text have been advanced.
In an effort to provide a single standard to determine whether American antitrust laws apply to a given extraterritorial transaction, the Act of 1982 was passed. Congress deliberately refrained from adopting Timberlane’s judicial balancing of the interests of the nations involved. The House Committee report, citing Timberlane, disclaimed any intent “to prevent [or] encourage additional judicial recognition of the special international characteristics of transactions.” House Report at 13, U.S. Code Cong. & Admin.News 1982, p. 2498.
It was left to the courts to decide how to employ notions of international comity in extraterritorial antitrust cases. Using this grant of power, the majority concludes that jurisdiction should not be exercised on account of comity considerations and the probable adverse effect upon United States relations with the Republic of Colombia. The primary factor relied upon — Colombia’s significant interest in its cargo reservation laws — seems to be insufficient to preclude jurisdiction under controlling Supreme Court precedents. Our highest Court has twice addressed the effect of United States antitrust laws on anticompetitive conduct allegedly aided by foreign protectionist legislation. In both cases it held that such assistance did not oust federal courts from jurisdiction on comity grounds.
2. Controlling Supreme Court Precedents
In United States v. Sisal Sales Corp., 274 U.S. 268, 47 S.Ct. 592, 71 L.Ed. 1042 (1927), the defendants, Comisión Exportadora de Yucatan, a public agency that purchased sisal from Mexican producers, and Sisal Sales Corp., its exclusive sales agent, had utilized the discriminatory legislation of the Yucatan to monopolize the importation and sale of sisal into the United States. The legislation imposed special taxes designed to drive other purchasers out of the sisal market, leaving Comisión Exportadora as the sole sisal purchaser in the Yucatan. The Supreme Court, in finding jurisdiction over this conspiracy, observed: “True, the conspirators were aided by discriminating legislation, but by their own deliberate acts, here and elsewhere, they brought about forbidden results within the United States. They are within the jurisdiction of our courts and may be punished for offenses against our laws.” Id. at 276, 47 S.Ct. at 594.
More recently, in Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962), the Supreme Court again found jurisdiction despite the role of another nation’s discriminatory legislation in an alleged restraint of trade. In that case, one of the defendants, Electro Metallurgical Company of Canada (Electro Met), had been appointed by the Canadian government as the exclusive wartime purchasing agent for all of the vanadium required by Canadian industry. Plaintiff Continental Ore alleged that Electro Met, at the behest of its American parent, Union Carbide, used its position to exclude Continental Ore from the Canadian vanadium market. In finding jurisdiction, the Court relied on Sisal Sales stating that jurisdiction may be found "even though the defendants’ control of ... production was aided by discriminatory legislation of the foreign country which established an official agency as the sole buyer of the product. ...” Id. at 705, 82 S.Ct. at 1414.
The Supreme Court went on to note that “[tjhere is nothing to indicate that [Canadian] law in any way compelled discriminatory purchasing, and it is well settled that acts which are in themselves legal lose that character when they become constituent elements of an unlawful scheme.” Id. at 707, 82 S.Ct. at 1414. It also stated that “there is no indication that ... any ... official within the structure of the Canadian Government approved or would have approved of joint efforts to monopolize the production and sale of vanadium or directed that purchases from Continental be stopped.” Id. at 706, 82 S.Ct. at 1414.
*4583. Application of Supreme Court Precedents
The facts before us parallel those of Sisal Sales and Continental. In both cases, the alleged restraint of trade was possible only because of the discriminatory laws of a foreign sovereign. Also, in all three cases, one of the defendants — here Flota— was found to be an agent of that sovereign. In one respect, the instant case is even more conducive to an assertion of jurisdiction than either Sisal Sales or Continent tal. In those cases the governments ceded a greater degree of control over the commerce in question to the defendants, while in the instant case, in contrast, Flota and its associates were not singled out for special treatment, but received preferences along with all other Colombian flag lines. Further, only 50 percent of the trade involved was set aside in the case at bar while the entire vanadium trade was restricted in Continental. For these reasons, this case falls squarely within the holdings of Continental and Sisal Sales and should not be dismissed on comity grounds.
In one respect this case might arguably be distinguishable from Continental. In that case, as noted, the Supreme Court observed that there was no evidence that Canada had approved the effort to monopolize the vanadium trade. Here, the Colombian government has expressed approval in two ways which must be considered. Colombia initially approved the agreements creating the association among the appellees, and it sent telexes to the United States State Department urging it to intervene on the appellees’ behalf before the FMC.
Neither action should cause a dismissal on account of comity. The approval of the agreements are not of the type contemplated by Continental. In Continental, the Canadian government clearly “approved” of the power defendants had in the vanadium market because it had granted them that power. But the government did not express its consent to their attempt to monopolize the market. Similarly, here the initial assent by the Colombian government may have given appellees a degree of power over LBC commerce, but there is no indication that in approving the agreements Colombia considered their antitrust implications.
Nor do the telexes compel a different conclusion. Although these telexes may demonstrate some sort of official blessing of the anticompetitive effects of appellees’ conduct — since they were sent after U.S. corporations had filed objections with the FMC — they should not be considered when determining jurisdiction. As Kingman Brewster, the commentator who devised the doctrine of judicial comity balancing, observed: “reliance on case-specific foreign policy concerns would create problems of fairness and consistency____ Disparities in rulings would ... reward foreign governments that bellow at every threat of antitrust enforcement____” 1 J. Atwood & K. Brewster, Antitrust and American Business Abroad § 6.18, at 175-76 (2d ed. 1981). Cf. United States v. The Watchmakers of Switzerland Information Center, Inc., 1963 Trade Cas. (CCH) ¶ 70,600, at 77,456-57 (S.D.N.Y.1962) (government approval of private activity does not deprive court of jurisdiction). Further, a consideration of these telexes in determining jurisdiction would unduly involve courts in foreign policy concerns. It is especially significant here that the United States State Department — despite a request to do so from the Colombian government — chose not to intervene on appellees’ behalf before the FMC. Hence, the majority’s notions of comity towards Colombia should not effectively reverse the settled holdings of the United States Supreme Court.
C. Conclusion
In sum, despite the aid of foreign protectionist legislation, Flota and its associates’ actions brought about unlawful consequences in the United States for which they should be answerable in federal court. Since the facts of the instant case fall plainly within controlling Supreme Court precedents, I must dissent from the majority’s affirmance of the district court’s dismissal of the complaint for want of jurisdiction on the grounds of comity and vote *459instead to reverse and remand the case to the district court for further proceedings on the merits.

. The factors enumerated in Timberlane are:
1. the degree of conflict with foreign law or policy,
2. the nationality or allegiance of the parties and the locations or principal places of business of corporations,
3. the extent to which enforcement by either state can be expected to achieve compliance,
4. the relative significance of effects on the United States as compared with those elsewhere,
5. the extent to which there is explicit purpose to harm or affect American commerce,
6. the foreseeability of such effect, and
7. the relative importance to the violations charged of conduct within the United States as compared with conduct abroad.
549 F.2d at 614.
The ten factors listed in Mannington Mills are:
1. Degree of conflict with foreign law or policy:
2. Nationality of the parties;
3. Relative importance of the alleged violation of conduct here compared to that abroad;
4. Availability of a remedy abroad and the pendency of litigation there;
5. Existence of intent to harm or affect American commerce and its foreseeability;
6. Possible effect upon foreign relations if the court exercises jurisdiction and grants relief;
7. If relief is granted, whether a party will be placed in the position of being forced to perform an act illegal in either country or be under conflicting requirements by both countries;
8. Whether the court can make its order effective;
9. Whether an order for relief would be acceptable in this country if made by the foreign nation under similar circumstances;
10. Whether a treaty with the affected nations has addressed the issue.
595 F.2d at 1297-98.