Court Opinion

ID: 9490118
Source: CourtListenerOpinion
Date Created: 2023-08-05 13:33:13.482252+00
Date Added: 2024-06-11T17:53:54.275774
License: Public Domain

LYNCH, Circuit Judge
(concurring).
The question presented in this case is whether Section One of the Sherman Act authorizes criminal prosecutions of defendants for their actions committed entirely outside the United States. Judicial precedents, culminating with the Supreme Court’s decision in Hartford Fire Insurance Co. v. California, 509 U.S. 764, 113 S.Ct. 2891, 125 L.Ed.2d 612 (1993), conclusively establish that Section One’s jurisdictional reach extends, in civil actions, to foreign conduct that is meant to produce, and does in fact produce, substantial effects in the United States. The next question to be asked is whether there is any persuasive reason to believe that, with regard to wholly foreign conduct, Section One in the criminal context is not coextensive with Section One in the civil context.
In answering this second question, courts must be careful to determine whether this construction of Section One’s criminal reach conforms with principles of international law. “It has been a maxim of statutory construction since the decision in Murray v. The Charming Betsy, 2 Cranch 64, 118, 2 L.Ed. 208 (1804), that ‘an act of congress ought never to be construed to violate the law of nations, if any other possible construction remains.’” Weinberger v. Rossi, 456 U.S. 25, 32, 102 S.Ct. 1510, 1516, 71 L.Ed.2d 715 (1982). In the Alcoa case, Judge Learned Hand found this canon of construction relevant to determining the substantive reach of the Sherman Act, observing that “we are not to read general words [i.e., Section One] ... without regard to the limitations customarily observed by nations upon the exercise of their powers.” United States v. Aluminum Co. of Am., 148 F.2d 416, 443 (2d Cir.1945); see also Hartford Fire, 509 U.S. at 814-15, 113 S.Ct. at 2918-19 (Scalia, J., dissenting).
The task of construing Section One in this context is not the usual one of determining congressional intent by parsing the language or legislative history of the statute. The broad, general language of the federal antitrust laws and their unilluminating legislative history place a special interpretive responsibility upon the judiciary. The Supreme Court has called the Sherman Act a “charter of freedom” for the courts, with “a generality and adaptability comparable to that found ... in constitutional provisions.” Appalachian Coals, Inc. v. United States, 288 U.S. 344, 359-60, 53 S.Ct. 471, 474, 77 L.Ed. 825 (1933). As Professors Areeda and Turner have said, the federal courts have been invested “with a jurisdiction to create and develop an ‘antitrust law5 in the manner of the common law courts.” I Areeda & Turner, Antitrust Law ¶ 106, at 15 (1978).7 The courts are aided in this task by canons of statutory construction, such as the presumption against violating international law, which serve as both guides and limits in the absence of more explicit indicia of congressional intent.
Here, we are asked to determine the substantive content of Section One’s inexact jurisdictional provision, “commerce ... with foreign nations.” 15 U.S.C. § 1. Because of the “compunctions against the creation of crimes by judges rather than by legislators,” II Areeda & Hovenkamp, Antitrust Law ¶ 311b, at 33 (1995 rev. ed.), the constitution-like aspects of the antitrust laws must be handled particularly carefully in criminal prosecutions.
As the antitrust laws give the federal enforcement agencies a relatively blank cheek, the development of antitrust law has been *10largely shaped by the cases that the executive branch chooses — or does not choose — to bring. Accordingly it has been said that:
novel interpretations or great departures have seldom, if ever, occurred in criminal cases, which prosecutors have usually reserved for defendants whose knowing behavior would be generally recognized as appropriate for criminal sanctions.
Id. at 34. This case does present a new interpretation. We are told this is the first instance in which the executive branch has chosen to interpret the criminal provisions of the Sherman Act as reaching conduct wholly committed outside of this country’s borders.
Changing economic conditions, as well as different political agendas, mean that antitrust policies may change from administration to administration. The present administration has promulgated new Antitrust Enforcement Guidelines for International Operations which “focus primarily on situations in which the Sherman Act will grant jurisdiction and when the United States will exercise that jurisdiction” internationally. Brockbank, The 1995 International Antitrust Guidelines: The Reach of U.S. Antitrust Law Continues to Expand, 2 J. Int’l Legal Stud. 1, *22 (1996). The new Guidelines reflect a stronger enforcement stance than earlier versions of the Guidelines, and have been described as a “warning to foreign governments and enterprises that the [antitrust enforcement] Agencies intend to actively pursue restraints on trade occurring abroad that adversely affect American markets or damage American exporting opportunities.” Id. at *21. The instant case is likely a result of this policy.
It is with this context in mind that we must determine if the exercise of jurisdiction occasioned by the decision of the executive branch of the United States is proper in this case. While courts, including this one, speak of determining congressional intent when interpreting statutes, the meaning of the antitrust laws has emerged through the relationship among all three branches of government. In this criminal case, it is our responsibility to ensure that the executive’s interpretation of the Sherman Act does not conflict with other legal principles, including principles of international law.
That question requires examination beyond the language of Section One of the Sherman Act. It is, of course, generally true that, as a principle of statutory interpretation, the same language should be read the same way in all contexts to which the language applies. But this is not invariably true. New content is sometimes ascribed to statutory terms depending upon context. Cf. Robinson v. Shell Oil Co., — U.S. -, -, 117 S.Ct. 843, 847, 136 L.Ed.2d 808 (1997) (depending on context, statutory term may have different meanings in different sections of single statute); 3 Sutherland, Statutory Construction § 60.04 (5th ed. 1995) (statutes with both remedial and penal provisions may be construed liberally in remedial context and strictly in penal context). As NPI and the Government of Japan point out, the Supreme Court has held that Section One of the Sherman Act, which defines both criminal and civil violations with one general phrase,8 “should be construed as including intent as an element” of a criminal violation. United States v. United States Gypsum Co., 438 U.S. 422, 443, 98 S.Ct. 2864, 2876, 57 L.Ed.2d 854 (1978). Where Congress intends that our laws conform with international law, and where international law suggests that criminal enforcement and civil enforcement be viewed differently, it is at least conceivable that different content could be ascribed to the same language depending on whether the context is civil or criminal. It is then worth asking about the effect of the international law which Congress presumably also meant to respect.
The content of international law is determined “by reference ‘to the customs and usages of civilized nations, and, as evidence of these, to the works of jurists and commentators.’ ” Hilao v. Estate of Marcos, 103 F.3d 789, 794 (9th Cir.1996) (quoting The Paquete Habana, 175 U.S. 677, 700, 20 S.Ct. 290, 299, 44 L.Ed. 320 (1900)); see also Kadic v. Karadzic, 70 F.3d 232 (2d Cir.1995). The Restatement (Third) of the Foreign Rela*11tions Law of the United States restates international law, as derived from customary international law and from international agreements to which the United States is a party, as it applies to the United States. See Restatement (Third) of the Foreign Relations Law of the United States §§ 1, 101 (1987) [hereinafter Restatement ]. The United States courts have treated the Restatement as an illuminating outline of central principles of international law. See Hartford Fire, 509 U.S. at 799, 113 S.Ct. at 2910-11 (citing Restatement); Hartford Fire, 509 U.S. at 818, 113 S.Ct. at 2920 (Scalia, J., dissenting) (“I shall rely on the Restatement (Third) of Foreign Relations Law for the relevant principles of international law. Its standards appear fairly supported in the decisions of this Court construing international choice-of-law principles ... and in the decisions of other federal courts____”); In re Maxwell Communication Corp., 93 F.3d 1036, 1047-48 (2d Cir.1996).
The Restatement articulates principles, derived from international law, for determining when the United States may properly exercise regulatory (or prescriptive) jurisdiction over activities or persons connected with another state. It serves as a useful guide to evaluating the international interests at stake. Sections 402 and 403 articulate general principles. See Restatement §§ 402, 403. Section 415 applies these principles to “Jurisdiction to Regulate Anti-Competitive Activities.” Id. § 415.
Restatement Section 402(l)(c) states that “Subject to § 403,” a state has jurisdiction to prescribe law to “conduct outside its territory that has or is intended to have substantial effect within its territory.” Id. § 402(l)(c). Section 403(1) states that, even when Section 402 has been satisfied, jurisdiction may not be exercised if it is “unreasonable.” Id. § 403(1). Section 403(2) lists factors to be evaluated in determining if jurisdiction is reasonable:
(a)the link of the activity to the territory of the regulating state, ie., the extent to which the activity takes place within the territory, or has substantial, direct, and foreseeable effect upon or in the territory;
(b) the connections, such as nationality, residence, or economic activity, between the regulating state and the person principally responsible for the activity to be regulated, or between that state and those whom the regulation is designed to protect;
(c) the character of the activity to be regulated, the importance of regulation to the regulating state, the extent to which other states regulate such activities, and the degree to which the desirability of such regulation is generally accepted;
(d) the existence of justified expectations that might be protected or hurt by the regulation;
(e) the importance of the regulation to the international political, legal, or economic system;
(f) the extent to which the regulation is consistent with the traditions of the international system;
(g) the extent to which another state may have an interest in regulating the activity; and
(h) the likelihood of conflict with regulation by another state.
Id. § 403(2).9
Comment f to Section 403 states that the principles of Sections 402 and 403 “apply to criminal as well as to civil regulation.” Id. § 403 emt. f. But, specifically naming the United States antitrust laws, the comment also says that for statutes that give rise to both types of liability, “the presence of substantial foreign elements will ordinarily weigh against application of criminal law.” Id. The comment argues that legislative intent to apply these laws criminally should only be found on the basis of “express statement or clear implication.” Id.
While the majority opinion accurately states that this comment is an expression of the clear statement rule, the comment also implies that there are special concerns associated with the imposition of criminal sanctions on foreign conduct. See also id. § 403 *12n. 8 (“In applying the principle of reasonableness, the exercise of criminal (as distinguished from civil) jurisdiction in relation to acts committed in another state may be perceived as particularly intrusive.”). Indeed, most people recognize a distinction between civil and criminal liability; that the law of nations should do so as well is not surprising.10 And while Hartford Fire and earlier judicial decisions have found that the antitrust laws do apply, in the civil context, to foreign conduct, this antitrust common law is not the express statement of legislative intent that the Restatement suggests may be appropriate in the criminal context.
Also relevant to the present inquiry is section 415(2), which states that:
Any agreement in restraint of United States trade that is made outside of the United States, and any conduct or agreement in restraint of such trade that is carried out predominantly outside of the United States, are subject to the jurisdiction to prescribe of the United States, if a principal purpose of the conduct or agreement is to interfere with the commerce of the United States and the agreement or conduct has some effect on that commerce.
Restatement § 415(2). Comment a to Section 415 states that the reasonableness principles articulated in Section 403 must still be satisfied. See id cmt. a.
Application of these principles to the indictment at issue here leads to the conclusion that the exercise of jurisdiction is reasonable in this case. Here, raising prices in the United States and Canada was not only a purpose of the alleged conspiracy, it was the purpose, thus satisfying Section 415’s “principal purpose” requirement. Moreover, Section 415’s requirement of “some effect” on United States markets is amply met here. The indictment alleges that NPI sold $ 6.1 million of fax paper into the United States during 1990, approximately the period covered by the charged conspiracy. In 1990, total sales of fax paper in North America were approximately $100 million. NPI’s price increases thus affected a not insignificant share of the United States market.
These same factors weigh heavily in the Section 403 reasonableness analysis. Because only North American markets were targeted, the United States’ interest in com-batting this activity appears to be greater than the Japanese interest, which may only be the general interest of a state in having its industries comport with foreign legal norms. Japan has no interest in protecting Japanese consumers in this case as they were unaffected by the alleged conspiracy. The United States, in contrast, has a strong interest in protecting United States consumers, who were affected by the increase in prices. In this situation, it may be that only the United States has sufficient incentive to pursue the alleged wrongdoers, thereby providing the necessary deterrent to similar anticompetitive behavior. In another case, where the consumers of the situs nation were injured as well, that state’s interest in regulating anticompetitive conduct might be stronger than it is here.
Other Section 403 factors also counsel in favor of the exercise of jurisdiction here. The effects on United States markets were foreseeable and direct. The Government of Japan acknowledges that antitrust regulation is part of the international legal system, and NPI does not really assert that it has justified expectations that were hurt by the regulation.11 The only factor counseling against finding that the United States’ antitrust laws apply to this conduct is the fact that the situs of the conduct was Japan and that the principals were Japanese corporations. This consideration is inherent in the nature of jurisdiction based on effects of conduct, where the situs of the conduct is, by definition, always a *13foreign country. This alone does not tip the balance against jurisdiction.
For these reasons, I agree with the majority that the district court erred in dismissing the indictment.

. Professors Areeda and Turner also note that "judges sometimes talk as if Congress has already decided the question before them. This is usually a misconception." Id.

. "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce ... is declared to be illegal....” 15U.S.C. § 1.

. Section 403(3) is not applicable here. See id. § 403(3) cmt. e.

. Enforcement of criminal laws against foreign nationals for conduct on foreign soil may affect this country's relationship with the foreign country in somewhat different ways than would a civil action. Congress could choose to provide more explicit guidance to the executive and the courts in this area if it is concerned about such impacts on foreign relations.

. While criminal prosecution may come as a surprise, NPI should have known that civil antitrust liability could include treble damages. A corporation found guilty of a criminal violation of Section One is subject to a fine not exceeding $ 10 million. See 15 U.S.C. § 2. Treble damages obviously do not include a similar cap.