Den Norske Stats Oljeselskap as v. HeereMac Vof

Revised February 26, 2001
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 99-20763
_____________________
DEN NORSKE STATS OLJESELSKAP AS,
Plaintiff-Appellant,
versus
HEEREMAC VOF; HEERMA MARINE CONTRACTORS;
HEEREMA OFFSHORE SERVICES US, INC.;
HEEREMA OFFSHORE CONSTRUCTION GROUP, INC.;
JAN MEEK; PIETER HEEREMA; McDERMOTT
INTERNATIONAL, INC.; McDERMOTT, INC.;
J. RAY McDERMOTT, SA; J. RAY McDERMOTT,
INC.; J. RAY McDERMOTT GULF CONTRACTORS,
INC.; McDERMOTT ENGINEERS & CONSTRUCTORS
(USA), INC.; McDERMOTT ENGINEERING HOUSTON
LLC; McDERMOTT-ETPM, INC.; SAIPEM SPA;
SAIPEM INTERNATIONAL BV; SAIPEM UK LIMITED;
SAIPEM (PORTUGAL) - COMERCIO MARITIMO,
SOCIEDADE UNIPESSOAL, SA,
Defendants-Appellees.
_________________________________________________________________
Appeal from the United States District Court for the
Southern District of Texas
_________________________________________________________________
February 5, 2001
Before JOLLY, HIGGINBOTHAM, and EMILIO M. GARZA, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
This appeal requires us to interpret the scope of the United
States antitrust laws and their application to foreign conduct.
The plaintiff is a Norwegian oil corporation that conducts business
solely in the North Sea. It seeks redress under the United States
antitrust laws against the defendants for an alleged
anticompetitive conspiracy that supposedly inflated the plaintiff’s
operating costs in the North Sea. Supreme Court precedent makes
clear as a general proposition that United States antitrust laws
“do not regulate the competitive conditions of other nations’
economies,” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 582, 106 S. Ct. 1348 (1986). More specifically, today we
are bound by the plain language of the Foreign Trade Antitrust
Improvements Act (FTAIA). Thus, even though the plaintiff alleges
that the antitrust conspiracy raised prices in the United States,
it fails to assert jurisdiction under the antitrust laws because
the plaintiff’s injury did not arise from that domestic
anticompetitive effect. Accordingly, we find that the district
court properly dismissed the plaintiff’s antitrust claims for lack
of subject matter jurisdiction. It follows that we affirm the
court’s determination that the plaintiff lacked antitrust standing
to bring these claims in United States federal court.
I
2
We begin with the basics. Sections 1 and 2 of the Sherman Act
prohibit restraints of trade and monopolization. Section 1 reads:
Every contract, combination in the form of trust or
otherwise, or conspiracy, in restraint of trade or
commerce among the several States, or with foreign
nations, is hereby declared to be illegal.
15 U.S.C. § 1. Section 2 of the Sherman Act states:
Every person who shall monopolize, or attempt to
monopolize, or combine or conspire with any other person
or persons, to monopolize any part of the trade or
commerce among the several States, or with foreign
nations, shall be deemed guilty of a felony. . . .
15 U.S.C. § 2. The FTAIA, enacted by Congress in 1982 to clarify
the application of United States antitrust laws to foreign conduct,
limits the application of such laws when non-import foreign
commerce is involved. The FTAIA states that the antitrust laws
will not apply to non-import commerce with foreign nations unless
the conduct at issue has a “direct, substantial, and reasonably
foreseeable effect” on domestic commerce and “such effect gives
rise to a claim under” the antitrust laws.1
1
15 U.S.C. § 6a. In full, the FTAIA reads:
Sections 1 to 7 of this title shall 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 not 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
3
II
The plaintiff, Den Norske Stats Oljeselskap As (“Statoil”), is
a Norwegian oil company that owns and operates oil and gas drilling
platforms exclusively in the North Sea. The defendants are
providers of heavy-lift barge services in the Gulf of Mexico, the
North Sea, and the Far East. Only six or seven heavy-lift barges
exist in the world. These immense vessels have cranes capable of
hoisting and transporting offshore oil platforms and decks weighing
in excess of 4,000 tons. During the 1993-1997 time frame, which is
at issue in this suit, the three defendants controlled these
barges.2 Between 1993 and 1997, Statoil purchased heavy lift barge
services from the HeereMac and Saipem defendants in the North Sea.
Statoil alleges that the defendants conspired to fix bids and
allocate customers, territories, and projects between 1993 and
the United States; and
(2) such effect gives rise to a claim under the
provisions of sections 1 to 7 of this title, other than
this section.
[Proviso] If sections 1 to 7 of this title apply to such
conduct only because of the operation of paragraph
(1)(B), then sections 1 to 7 of this title shall apply to
such conduct only for injury to export business in the
United States.
2
The first group of defendants, HeereMac v.o.f. and its
subsidiaries, a foreign corporation with its principal place of
business in The Netherlands, controlled four or five of the barges.
Saipem S.p.A., a British company, controlled one heavy-lift barge.
McDermott, Inc., an American corporation, apparently controlled the
last barge.
4
1997. Under the alleged arrangement, the defendants agreed that
HeereMac and McDermott would have exclusive access to heavy-lift
projects in the Gulf of Mexico, while Saipem would receive a higher
allocation of North Sea projects in exchange for staying out of the
Gulf. The defendants also allegedly agreed to submit embellished
bids on heavy-lift projects. As a result of this conspiracy,
Statoil contends that it paid inflated prices for heavy-lift barge
services in the North Sea.3 Statoil further argues that the
conspiracy compelled it to charge higher prices for the crude oil
it exported to the United States.4 Finally, Statoil asserts that
purchasers of heavy-lift services in the Gulf of Mexico were forced
to pay inflated prices for those services because of the
conspiracy.5
III
By way of background, it should be noted that in December
1997, the United States Department of Justice filed a criminal
3
Statoil does not allege that it purchased any heavy-lift
services in the United States or that the contracts it entered into
included agreements to apply United States law.
4
Statoil asserts that it has exported an average of 400,000
barrels of oil a day into the United States over the past three
years. Statoil does not, however, allege any injury to itself
derived from its export of oil to the United States.
5
Statoil does not allege that it owns, operates, or
commissions any oil exploration platforms within United States
waters, or that it conducted business with any of the defendants
incorporated in the United States.
5
complaint against defendants HeereMac and Jan Meek, one of
HeereMac’s managing directors. The complaint alleged that the
defendants conspired “to suppress and eliminate competition by
rigging bids for the sale of heavy-lift derrick barge and related
marine construction services in the United States and elsewhere.”6
HeereMac and Meek submitted to United States jurisdiction and pled
guilty to the charges. They agreed to pay fines of $49 million and
$100,000, respectively.
Following the guilty pleas, numerous companies across the
globe filed suit in United States federal court seeking redress for
injuries stemming from defendants’ conduct. The first of these
suits was filed in the Southern District of Texas in June 1998 by
Phillips Petroleum Company and three of its foreign-based
subsidiaries.7
On January 22, 1999, the court dismissed Phillips’s claims for
injuries sustained by its foreign subsidiaries relating to projects
in foreign waters but allowed those claims asserting injury from
projects in United States waters to proceed. While the court
acknowledged the worldwide nature of the alleged conspiracy in its
6
The plea agreement separately addressed issues related to
commerce affected by defendants’ conduct in the Gulf of Mexico and
commerce affected by defendants’ activity in the North Sea and Far
East.
7
A group of about forty plaintiffs brought a second suit
against defendants in the Northern District of Texas.
6
order, it nonetheless held that subject matter jurisdiction did not
exist for those claims pled by foreign-based subsidiaries for
injuries allegedly sustained on foreign platforms.8 Specifically,
the court determined that those claims did not fall within the
ambit of the United States antitrust laws because the claims did
not arise from a direct and substantial effect on United States
commerce.9
Statoil filed this suit in the same court in December 1998.
The court dismissed Statoil’s complaint against the defendants on
July 12, 1999.10 In its order, the court relied heavily upon its
decision in the Phillips case and found no subject matter
jurisdiction over the claims because “Statoil’s damages arise from
its projects in the Norwegian sector of the North Sea”; thus, the
FTAIA’s requirement that the effect on domestic commerce “gives
rise” to the antitrust claim was not satisfied. See 15 U.S.C.
8
The court determined it did have subject matter jurisdiction
over the alleged conspiracy and injury “relating to the Mahogany
project in the territorial waters of the United States in the Gulf
of Mexico.”
9
The court stated that “the claims of the foreign-based
[subsidiaries] regarding injuries sustained in relation to the
foreign platforms” were not justiciable in United States courts
because “the primary injury to that party must be caused in the
United States and substantially affect United States commerce.”
10
The defendants filed motions to dismiss based on lack of
subject matter jurisdiction (Rule 12(b)(1)) and failure to state a
claim under the Sherman Act (Rule 12(b)(6)).
7
§ 6a(2). The court also held that the defendants’ conspiracy “did
not have a direct, substantial, and reasonably foreseeable
anticompetitive effect on United States trade or commerce” under
the FTAIA. See 15 U.S.C. § 6a(1). Finally, the court determined
that “Statoil lacks standing to bring a claim under United States
antitrust laws because its alleged injuries are not of the type
that the antitrust statute was intended to redress.”11 Statoil
timely appealed the judgment.
IV
The issue presented to us is primarily one of statutory
interpretation. Specifically, this appeal requires us to interpret
the relevant provisions of the FTAIA to determine whether the
defendants’ conduct and Statoil’s injury in the North Sea presents
a justiciable claim in the federal courts of the United States.
It is not helpful that the federal courts have generally
disagreed as to the extraterritorial reach of the antitrust laws
and have employed assorted tests to determine the scope of the
Sherman Act. The history of this body of case law is confusing and
unsettled.12 However, as far as this appeal is concerned, our work
11
The court then declined to exercise supplemental jurisdiction
over the remaining common law claims pursuant to 28 U.S.C.
§ 1367(c)(3).
12
The first case to consider the extraterritorial application
of United States antitrust law was American Banana Co. v. United
Fruit Co., 213 U.S. 347, 29 S. Ct. 511 (1909). In that case,
8
is simplified by Congress’ passage in 1982 of the FTAIA, which
specifically exempts certain foreign conduct from the antitrust
laws. This circuit has never interpreted the relevant portions of
the FTAIA as they apply to global conspiracies and resulting
Justice Holmes announced that the Sherman Act could have no
application to conduct that occurred outside of the United States.
Id. at 357. However, as the United States became increasingly
involved in foreign commerce in the years following American
Banana, the Supreme Court relaxed its previous stance and held that
the Sherman Act authorized jurisdiction over foreign defendants so
long as domestic commerce was affected and some conduct occurred
within the United States See United States v. Sisal Sales Corp.,
274 U.S. 268, 276, 47 S. Ct. 592 (1927).
In 1945, the Second Circuit laid the groundwork for what
became known as the “effects test” to determine antitrust
jurisdiction over foreign conduct. In United States v. Alumnium
Company of America (“Alcoa”), 148 F.2d 416 (2d Cir. 1945), Judge
Learned Hand determined that a United States court would have
jurisdiction over the conduct of foreign corporations where that
conduct was intended to, and actually did, affect United States
commerce. Id. at 443-44. The Alcoa effects test has been
gradually adopted by most federal courts, albeit in various forms.
The already confused effects test was even more imprecise
following the Ninth Circuit’s decision in Timberland Lumber Co. v.
Bank of America, 549 F.2d 597, 613 (9th Cir. 1976). In that case,
the court introduced a balancing test that considered principles of
comity in addition to domestic effects when determining the scope
of antitrust jurisdiction over foreign defendants. The Fifth
Circuit adopted a similar comity-informed approach. See American
Rice, Inc. v. Arkansas Rice Growers Co-op Ass’n, 701 F.2d 408, 413
(5th Cir. 1983). Most recently, in 1993, the Supreme Court
confirmed that “the Sherman Act applies to foreign conduct that was
meant to produce and did in fact produce some substantial effect in
the United States.” Hartford Fire Ins. Co. v. California, 509 U.S.
769, 796, 113 S. Ct. 2891 (1993).
9
foreign injury.13 Today, we take on this task, and make no claim
that it is an easy one.
V
A
We review de novo a district court’s ruling on a 12(b)(1)
motion to dismiss for lack of subject matter jurisdiction. 14 See
Hebert v. United States, 53 F.3d 720, 722 (5th Cir. 1995). In
ruling on a motion to dismiss for lack of subject matter
jurisdiction, a court may evaluate (1) the complaint alone, (2) the
complaint supplemented by undisputed facts evidenced in the record,
or (3) the complaint supplemented by undisputed facts plus the
court’s resolution of disputed facts. See Barrera-Montenegro v.
United States, 74 F.3d 657, 659 (5th Cir. 1996). Nevertheless, we
must accept all factual allegations in the plaintiff’s complaint as
true. See Williamson v. Tucker, 645 F.2d 404, 412 (5th Cir. 1981).
13
In fact, no circuit appears to have interpreted the critical
portion of the FTAIA at issue in this case--the requirement that
the domestic effect on commerce “gives rise” to the antitrust
claim. 15 U.S.C. § 6a(2).
14
It is true that the defendants filed 12(b)(6) motions along
with their 12(b)(1) motions. However, the district court’s order
establishes that the court dismissed the claims for lack of subject
matter jurisdiction rather than failure to state a claim under the
antitrust laws:
[T]he court orders that Defendants’ motions to dismiss
for lack of subject matter jurisdiction are granted and
that this case is dismissed without prejudice. All
remaining pending motions are moot.
10
We first outline Statoil’s argument that United States
antitrust jurisdiction encompasses the conduct and injury in its
complaint.
B
Statoil argues that the FTAIA does not preclude the district
court’s jurisdiction over its antitrust claims. Specifically,
Statoil argues that the FTAIA was enacted exclusively to ensure
that the conduct providing the basis of the plaintiff’s claim have
the requisite domestic effects, and was not intended to preclude
recovery to foreign plaintiffs based on the situs of the injury.15
Moreover, Statoil contends that Section 2 of the FTAIA was inserted
only to ensure that the effect on United States commerce that
provides jurisdiction is itself a violation of the antitrust laws;
that is, the statute simply requires that there be some
15
Statoil refers to the legislative history of the FTAIA to
support its interpretation:
The Committee did not believe that the bill reported by
the subcommittee was intended to confer jurisdiction on
injured foreign persons when that injury arose from
conduct with no anticompetitive effects in the domestic
marketplace. Consistent with this conclusion, the full
committee added language to the Sherman and FTC Act
amendments to require that the ‘effect’ providing the
jurisdictional nexus must also be the basis for the
injury alleged under the antitrust laws. This does not,
however, mean that the impact of the illegal conduct must
be experienced by the injured party within the United
States.
H.R. Rep. No. 97-686, at 12.
11
anticompetitive, harmful effect in this country--not just a
positive or neutral domestic effect.16
Addressing specifically the FTAIA’s requirement that the
domestic effect “gives rise” to its antitrust claim, Statoil
primarily argues that, because the defendants operating in the Gulf
of Mexico were able to maintain their monopolistic pricing only
because of their overall market allocation scheme (which included
agreements regarding operations in the North Sea), Statoil’s injury
in the North Sea was a “necessary prerequisite to” and was “the
quid pro quo for” the injury suffered in the United States domestic
market. Statoil alleges that the market for heavy-lift services in
the world is a single, unified, global market; therefore, because
the United States is a part of this worldwide market, the effect of
16
Statoil cites additional legislative history in support of
this interpretation of the FTAIA:
. . . [T]he domestic ‘effect’ that may serve as the
predicate for antitrust jurisdiction under the bill must
be of the type that the antitrust laws prohibit. For
example, a plaintiff would not be able to establish
United States antitrust jurisdiction merely by proving a
beneficial effect within the United States, such as
increased profitability of some other company or
increased domestic employment, when the plaintiff’s
damage claim is based on an extraterritorial effect on
him of a different kind.
H.R. Rep. No. 97-686, at 12 (1982) (citation omitted).
12
the conspiracy, whether in the United States or in the North Sea,
“gives rise” to any claim that is based upon this conspiracy.17
C
We must disagree with Statoil’s arguments based on our reading
of the antitrust statutes. Although we are controlled by the plain
language of the statutes, we also find that the legislative history
of the FTAIA and applicable case law supports our determination
that the district court lacked jurisdiction over Statoil’s claims.
We begin with an analysis of the relevant statutes and the
plain language contained therein.
1
The Supreme Court has explained that “[a]bsent a clearly
expressed legislative intention to the contrary, [statutory]
language must ordinarily be regarded as conclusive.” Escondido
Mut. Water Co. v. La Jolla Indians, 466 U.S. 765, 772, 104 S. Ct.
2105 (1984). We are thus bound by the plain, ordinary meaning of
17
In addition to its statutory interpretation arguments,
Statoil cites a number of cases in an attempt to support its
proposition that subject matter jurisdiction exists under the
Sherman Act so long as the conspiratorial conduct had an affect on
United States commerce. See Caribbean Broad. Sys., Ltd. v. Cable
and Wireless PLC, 148 F.3d 1080 (D.C. Cir. 1998); United States v.
Nippon Paper Indus. Co., 109 F.3d 1 (1st Cir. 1997); Hartford Fire,
509 U.S. 764; Pfizer, Inc. v. Gov’t of India, 434 U.S. 308, 98
S. Ct. 584 (1978). However, none of these cases interpret the
relevant provision of the FTAIA (15 U.S.C. § 6a(2)) and, therefore,
none of these cases inform our inquiry into the proper
interpretation of the “gives rise to” requirement.
13
the language used in the antitrust statutes and, in particular, the
FTAIA.
We begin by first noting that the Sherman Act itself applies
only to conduct in “trade or commerce with foreign nations.” 15
U.S.C. §§ 1,2 (emphasis added). The commerce that gives rise to
the action here–-the contracting for heavy lift barge services in
the North Sea--was not United States commerce with foreign nations,
but commerce between or among foreign nations–-that is, between or
among Statoil (a Norwegian corporation), Saipem (England), and
HeereMac (The Netherlands). Therefore, we doubt that foreign
commercial transactions between foreign entities in foreign waters
is conduct cognizable by federal courts under the Sherman Act.18
As we have noted, the FTAIA states that the antitrust laws
will not apply to non-import foreign conduct unless (1) such
conduct has a direct, substantial, and reasonably foreseeable
effect on United States domestic commerce, and (2) such effect
18
This interpretation is further strengthened by the limits
placed on Congressional power in the Constitution. Article I, § 8
of the Constitution gives Congress the authority only to regulate
interstate commerce and “commerce with foreign nations” (emphasis
added). Thus, even if Congress indeed intended to regulate purely
foreign commerce in the Sherman Act, it was not empowered to do so
under the Commerce Clause.
14
gives rise to the antitrust claim.19 The conduct of these
defendants is foreign conduct that falls within the general
parameters of the FTAIA and, thus, Statoil must show that the two
19
The dissent, like Statoil, argues that Section 2 should be
read to require only that the domestic effect give rise to any
antitrust claim, not necessarily the plaintiff’s claim. This
interpretation contradicts the explicit intent of Congress to
require that the effect must give rise to the particular injury
claimed by the plaintiff in the suit:
. . . [T]he full committee added language to the Sherman
and FTC Act amendments to require that the ‘effect’
providing the jurisdictional nexus must also be the basis
for the injury alleged under the antitrust laws.
H.R. Rep. No. 97-686, at 12 (emphasis added).
The dissent asserts that reading Section 2 as requiring that
the domestic effect give rise to the plaintiff’s claim renders the
FTAIA’s proviso redundant. Although giving the statute a clear
understanding is difficult, we disagree with the dissent’s reading.
We read Section 1(B) to provide that the export commerce covered
under the exception must be conducted by a person who is engaged in
that export business in the United States. Section 2 provides that
the defendant’s antitrust effect on this export commerce described
in Section 1(B) must give rise to the plaintiff’s cause of action.
The proviso, in turn, states that the recovery for injuries
resulting from the conduct described in Section 1(B), which gives
rise to the plaintiff’s antitrust claim in Section 2, is limited to
injuries occurring in the United States. Therefore, we fail to see
the redundancy to which the dissent refers. See In re Copper
Antitrust Litigation v. Sumitomo Corp., No. 00-C-0040-C, 2000 WL
1521587, at *10 (W.D. Wis. Oct. 2, 2000) (holding that “[t]he
logical interpretation of the language of § 6a is that Congress
extends domestic jurisdiction to extraterritorial conduct only when
the plaintiffs have been injured by the effects on the domestic
market.”).
15
specific requirements of the statute are met to establish subject
matter jurisdiction over its claims.20
We accept the contention that Statoil has sufficiently alleged
that the defendants’ conduct–-that is, the agreement among heavy-
lift service providers to divide territory, rig bids, and fix
prices–-had a direct, substantial, and reasonably foreseeable
effect on the United States market. Statoil alleges that the
conspiracy not only forced purchasers of heavy-lift services in the
Gulf of Mexico to pay inflated prices, but also that the agreement
compelled Americans to pay supra-competitive prices for oil.21
These allegations are sufficient to satisfy the first requirement
of the FTAIA.
However, Statoil fails to show that this effect on United
States commerce in any way “gives rise” to its antitrust claim.22
20
Specifically, Statoil’s claim falls under Section 6(a)(1)(A)
and not Section 6(a)(1)(B), because defendants’ conduct had no
substantial effect on export trade with foreign nations.
21
Statoil’s complaint alleges that the defendants’ conspiracy
adversely affected at least $165 million in United States commerce
during the 1993-97 period.
22
Statoil repeatedly frames the inquiry as whether a plaintiff
can suffer injury abroad, or whether the injury itself must be
suffered in the United States. This approach is an incorrect
formulation of the threshold question and reflects a misreading of
the FTAIA. We recognize that many federal courts, including the
district court in these proceedings, might have chosen to frame the
analysis in this manner. However, the proper inquiry to make here
is, regardless of the situs of the plaintiff’s injury, did that
injury arise from the anticompetitive effects on United States
commerce? See, e.g., Caribbean, 148 F.3d 1080 (identifying that,
16
Based on the language of Section 2 of the FTAIA, the effect on
United States commerce–-in this case, the higher prices paid by
United States companies for heavy-lift services in the Gulf of
Mexico--must give rise to the claim that Statoil asserts against
the defendants. That is, Statoil’s injury must stem from the
effect of higher prices for heavy-lift services in the Gulf. We
find no evidence that this requirement is met here. The higher
prices American companies allegedly paid for services provided by
the McDermott defendants in the Gulf of Mexico does not give rise
to Statoil’s claim that it paid inflated prices for HeereMac and
Saipem’s services in the North Sea. This is not to say that any
antitrust injury suffered by customers or competitors of McDermott
that arose from the anticompetitive effect in the Gulf of Mexico
cannot be addressed.23 This means only that, while we recognize
that there may be a connection and an interrelatedness between the
high prices paid for services in the Gulf of Mexico and the high
prices paid in the North Sea, the FTAIA requires more than a “close
while the situs of the injury was overseas, the claim arose from
the conspiracy’s effects on the United States advertising market).
23
The dissent notes with disapproval that our interpretation
of the FTAIA means that “a foreign cartel that fixes prices
worldwide will be subject to suit under the Clayton Act only from
plaintiffs injured in American commerce.” However, our reading
produces the precise result intended by Congress--that “[f]oreign
purchasers should enjoy the protection of our antitrust laws in the
domestic marketplace, just as our citizens do.” H.R. Rep. No. 97-
686, at 10-11.
17
relationship” between the domestic injury and the plaintiff’s
claim; it demands that the domestic effect “gives rise” to the
claim.24
Statoil asks that we interpret the requirement of Section 2
that the domestic “effect” give rise to a claim under the antitrust
laws as merely requiring that the defendants’ domestic “conduct”
(here, for example, agreements relating to the Gulf of Mexico) give
rise to a claim. This interpretation is not true to the plain
language of the FTAIA. Moreover, under such an expansive
interpretation, any entities, anywhere, that were injured by any
conduct that also had sufficient effect on United States commerce
could flock to United States federal court for redress, even if
24
Statoil argues that, had the district court accepted its
allegation of a worldwide conspiracy as true, the requirements of
the FTAIA would be satisfied and subject matter jurisdiction would
exist. We cannot agree. Regardless of the nature of the
conspiracy, Statoil must allege an injury that falls within the
scope of the antitrust statutes. The assumed existence of a
single, unified, global conspiracy does not relieve Statoil of its
burden of alleging that its injury arose from the conspiracy’s
proscribed effects on United States commerce. This principle was
stressed by the Supreme Court in Matsushita:
Respondents also argue that the check prices, the five
company rule, and the price fixing in Japan are all part
of one large conspiracy that includes monopolization of
the American market through predatory pricing. The
argument is mistaken. However one decides to describe
the contours of the asserted conspiracy--whether there is
one conspiracy or several--respondents must show that the
conspiracy caused them an injury for which the antitrust
laws provide relief.
475 U.S. at 584 n.7 (emphasis added).
18
those plaintiffs had no commercial relationship with any United
States market and their injuries were unrelated to the injuries
suffered in the United States.25 Such an expansive reading of the
extraterritorial application of the antitrust laws was never
intended nor contemplated by Congress. See EEOC v. Arabian Am. Oil
Co., 499 U.S. 244, 248, 111 S. Ct. 1227 (1991) (noting that “[w]e
assume that Congress legislates against the backdrop of the
presumption against extraterritoriality. Therefore, unless there
is the affirmative intention of the Congress clearly expressed, we
must presume it is primarily concerned with domestic conditions.”)
(citation omitted).
In sum, we find that the plain language of the FTAIA precludes
subject matter jurisdiction over claims by foreign plaintiffs
against defendants where the situs of the injury is overseas and
that injury arises from effects in a non-domestic market.26
25
The dissent repeatedly emphasizes that the antitrust laws
have always contemplated foreign plaintiffs recovering for their
injuries. We do not disagree. We simply read the FTAIA to provide
that, if individuals conspire to restrain trade such that an
American market is harmed, the United States antitrust laws can
provide redress to any person injured by the domestic effects of
the conspiracy, even if the injured party is located overseas. See
Sumitomo, 2000 WL 1521587, at *11 (“On the other hand, the
antitrust laws do not apply to an action by a person injured
overseas because of price-fixing in a foreign market even if the
same defendants engage in price-fixing affecting an American
market.”).
26
Statoil alleges that it paid inflated prices for heavy-lift
services in the North Sea. This injury, however, does not arise
from the alleged effect on United States commerce–-that is, the
19
Although the plain language of the relevant statutes is clear and
controlling, we nonetheless turn now to address briefly the
legislative history of the FTAIA to illustrate how that history
reinforces our interpretation of the extraterritorial reach of the
antitrust laws.
2
Before analyzing the legislative history of the FTAIA, we
reemphasize that “[l]egislative history is relegated to a secondary
source behind the language of the statute in determining
congressional intent; even in its secondary role legislative
history must be used cautiously.” Boureslan v. Aramco, 857 F.2d
1014, 1018 (5th Cir. 1988) (citation omitted). We are thus “not
free to substitute legislative history for the language of the
Act.” Id.
The FTAIA House Report states that the purpose of the law is
“to more clearly establish when antitrust liability attaches to
international business activities” and to ascertain “the precise
legal standard to be employed in determining whether American
higher prices paid by United States consumers for heavy-lift
services in the Gulf of Mexico. While Statoil also asserts that
the conspiracy had the effect of raising crude oil prices in the
United States, Statoil alleges no injuries to itself occurring in
the market for crude oil or arising from this domestic effect.
20
antitrust law is to be applied to a particular transaction.” H.R.
Rep. No. 97-686, at 5, 8.27 Moreover, the relevant House Report
shows that Congress intended to exclude purely foreign
transactions, like the contract for services in the North Sea
between Statoil and the foreign defendants, from the reach of
United States antitrust laws:
A transaction between two foreign firms, even if
American-owned, should not, merely by virtue of the
American ownership, come within the reach of our
antitrust laws. . . . It is thus clear that wholly
foreign transactions as well as export transactions are
covered by the [FTAIA], but that import transactions are
not.
Id. at 10.
Thus, the legislative history of the FTAIA, while not
controlling, reinforces our conclusion that a foreign plaintiff
injured in a foreign marketplace must show that a substantial
domestic effect on United States commerce “gives rise” to its
antitrust claim.28
27
The dissent seems to imply that the sole purpose of the FTAIA
is to “exempt exporting from antitrust scrutiny.” Although this is
clearly a primary goal of the legislation, the dissent ignores the
second purpose behind the FTAIA--to resolve “possible ambiguity” in
the extraterritorial reach of antitrust jurisdiction. Id. at 4-5.
28
The dissent argues that our decision in this case is contrary
to the statement in the legislative history that “[a] course of
conduct in the United States . . . would affect all purchasers of
the target domestic products or services, whether the purchaser is
21
We now turn to address briefly applicable case law and its
effect on our interpretation of the FTAIA.
3
Because few courts have directly addressed the specific
meaning of the FTAIA’s Section 2 requirement that a domestic effect
“gives rise” to the plaintiff’s antitrust claim, very little case
law exists to aid our inquiry. Our interpretation of the FTAIA’s
requirements, however, is entirely consistent with prior case law
defining the jurisdictional reach of the antitrust laws.
Furthermore, those decisions illustrate that our interpretation of
Section 2 is not a novel reading of the statute.
foreign or domestic.” Again, we do not assert that foreign
purchasers of domestic products can never sue in United States
federal court. We only hold that the FTAIA requires that a foreign
plaintiff show that its injuries arise from a United States market.
This is not a novel reading of the FTAIA:
[T]he legislative history [of the FTAIA] reflects that
Congress was proceeding from the premise that, wherever
title is taken or economic injury is suffered, at least
some aspect of the sales transaction took place in the
United States. Any doubt on that score is resolved by .
. . the sentence which states that ‘foreign purchasers
should enjoy the protection of our antitrust laws in the
domestic marketplace, just as our citizens do.’ Nothing
is said about protecting foreign purchasers in foreign
markets.
In re Microsoft Corp. Antitrust Litigation, 2001 U.S. Dist. LEXIS
305, at *37 (M.D. Md. Jan. 12, 2001).
22
To begin, we note that the only three federal courts that have
addressed the narrow question before us interpreted Section 2
exactly as we have. See Kruman, et al. v. Christie’s Int’l PLC, et
al., 00 Civ. 6322 (S.D.N.Y. Jan. 29, 2001) (holding that the FTAIA
permits jurisdiction “only where the conduct complained of had
‘direct, substantial and reasonably foreseeable’ effects in the
United States and the effects giving rise to jurisdiction are the
basis for the alleged injury.”); In re Microsoft Corp., 2001 U.S.
Dist. LEXIS 305, at *37 (holding that, under the FTAIA, “foreign
consumers who have not participated in any way in the U.S. market
have no right to institute a Sherman Act claim.”); Sumitomo, 2000
WL 1521587, at *1 (holding that “it is plain from the language of
this act and bolstered by the legislative history that a private
plaintiff cannot sue under the antitrust laws of the United States
for injuries incurred as a result of international transactions
that have an anticompetitive effect on a United States market if
the domestic anticompetitive effect is not the same one that gives
rise to the plaintiff’s injury.”).
We further note that we have found no case in which
jurisdiction was found in a case like this--where a foreign
plaintiff is injured in a foreign market with no injuries arising
23
from the anticompetitive effect on a United States market.29 In
those cases where the domestic effect on commerce did not give rise
to the plaintiff’s claim, courts have found subject matter
jurisdiction lacking. See, e.g., S. Megga Telecomm. Ltd. v. Lucent
Technologies, Inc., 1997 WL 86413 (D.Del. Feb. 14, 1997)
(anticompetitive domestic effect of higher prices for United States
consumers did not “give rise” to plaintiff’s claim for lost sales
to defendant); The ‘In’ Porters, S.A. v. Hanes Printables, Inc.,
663 F. Supp. 494 (M.D.N.C. 1987) (anticompetitive domestic effect
(lost exports of United States exporters) did not “give rise” to
plaintiff’s claim for lost sales in France due to marketing sales
agreement with defendant); de Atucha v. Commodity Exch., Inc., 608
F. Supp. 510 (S.D.N.Y. 1985) (conspiracy’s effect on silver prices
on United States exchange did not “give rise” to plaintiff’s injury
on London exchange).
On the other hand, in every case where jurisdiction has been
found, the substantial effect on United States commerce has
“give[n] rise” to the plaintiff’s injury and claim under the
29
See Sumitomo, 2000 WL 1521587, at *9 (“So far as can be
determined, the issue [of interpreting the language of Section 2]
never came up. In the reported cases, the courts had no occasion
to address the same effects requirement because in each case, the
plaintiffs’ injuries arose out of the same effects experienced by
the markets.”).
24
antitrust laws. See, e.g., Carpet Group Int’l v. Oriental Rug
Importers Ass’n, 2000 WL 1273592 (3rd Cir. Sept. 8, 2000)
(anticompetitive effect on domestic rug market ‘gives rise’ to
plaintiff’s injury); Caribbean, 148 F.3d 1080 (monopolization of
United States market for advertising in the Caribbean “gives rise”
to plaintiff’s claim of being blocked from that market); Nippon
Paper, 109 F.3d 1 (collusion amongst fax paper producers resulted
in higher prices for fax paper in the United States, which “gives
rise” to the United States’ claim); Hartford Fire, 509 U.S. 764
(conspiracy’s effect on the United States insurance market “gives
rise” to the plaintiffs’ injury, the inability to obtain certain
types of coverage in that market).
Finally, we note that none of the cases cited by Statoil in
support of its interpretation of the FTAIA cast doubt upon our
plain language interpretation of Section 2. Statoil cites Pfizer
v. India, 434 U.S. 308, for the proposition that antitrust
jurisdiction exists over foreign conduct like the commerce between
Statoil and defendants in this case. Pfizer, however, was decided
four years before enactment of the FTAIA, and the court’s holding
was limited to the question of whether a foreign government
25
qualified as a “person” under the Sherman Act. Id. at 320.30
Statoil further maintains that Caribbean Broadcasting, 148 F.3d
1080, requires that jurisdiction be found over its claims.
Initially, that case looks similar to today’s case in that both the
plaintiff and the defendant were foreign, and the defendant’s
international conspiracy had anticompetitive effects both inside
and outside the United States. The critical difference, however,
is that the effect on United States commerce in that case (that is,
limiting to one radio station potential advertisers in the United
States who wished to advertise in the Eastern Caribbean radio
market) gave rise to the injury suffered by the plaintiff, a
competing radio station–-that is, exclusion of the plaintiff from
the market for United States advertising dollars. Id. at 1082,
1086. As previously explained, that is simply not true with
Statoil’s claims.31 Similarly, Statoil’s reliance on Nippon Paper,
30
The dissent relies heavily upon Pfizer in asserting that
Statoil’s claim should be cognizable in United States federal
court. The Pfizer court, however, did not analyze the requisite
elements that must be present before a foreign entity can sue under
the United States antitrust laws. Indeed, Pfizer’s narrow holding
was “only that a foreign nation otherwise entitled to sue in our
courts is entitled to sue for treble damages under the antitrust
laws to the same extent as any other plaintiff.” Id. (emphasis
added).
31
The dissent asserts that we “struggle” to reconcile Caribbean
Broadcasting with our holding in the case before us. However, the
26
109 F.3d 1, is misplaced because the global conspiracy in that case
had the domestic effect of raising fax paper prices in the United
States, which gave rise to the government’s claim under the
antitrust laws. Id. at 2.
Simply put, Statoil has cited no case law to support an
interpretation of Section 2 of the FTAIA different from the one we
now adopt. This absence of such precedent, when considered with
the plain language of the statute and evidence of congressional
intent in enacting the FTAIA, reinforces our conclusion in this
case.
court in Caribbean Broadcasting, for whatever reason, completely
ignored Section 2 of the FTAIA in its analysis. Given that a
decision in the case before us requires an interpretation of that
provision, we find Caribbean Broadcasting unhelpful to any
resolution of Statoil’s claim. Indeed, we fail to understand how
Caribbean Broadcasting provides any meaningful support for the
dissent’s interpretation of Section 2, given that the plaintiff’s
claim in that case arose from the anticompetitive effects on the
domestic market for radio advertising in the Caribbean. See 148
F.3d at 1086.
27
VI
In sum, we find that the district court did not err when it
dismissed Statoil’s antitrust claims for lack of subject matter
jurisdiction. Any reading of the FTAIA authorizing jurisdiction
over Statoil’s claims would open United States courts to global
claims on a scale never intended by Congress. Without subject
matter jurisdiction, United States federal courts are without power
to entertain Statoil’s claims.32 The judgment of the district court
is therefore
A F F I R M E D.
32
As Statoil has no claim under the United States antitrust
laws, we affirm the district court’s finding that Statoil lacked
standing to bring its claims. Based on Associated Gen’l
Contractors Inc. v. California State Council of Carpenters, 459
U.S. 519, 535-45, 103 S. Ct. 897 (1983), the determination of
Statoil’s standing to bring its claims is dependent upon our
finding of subject matter jurisdiction. Thus, in concluding that
the FTAIA bars Statoil’s claims against defendants under the
Sherman Act, we have perforce found that Statoil’s injury is not of
the type that the antitrust statute was intended to forestall.
28
PATRICK E. HIGGINBOTHAM, Circuit Judge, dissenting:
I agree that this is not an easy case, but I have no
hesitation in concluding that the Foreign Trade and Antitrust
Improvements Act does not here divest the federal courts of
jurisdiction and that the plaintiff has standing. With deference
to my colleagues, I am persuaded by the plain text of section 6a,
as well as its statutory context, legislative history, and purpose.
The claim is that defendants allocated the market for hundreds
of millions of dollars of commerce – an allocation that placed
United States markets at the mercy of monopoly charges in an
industry vital to national security. The charged conspiracy was no
foreign cabal whose secondary effects only lapped at United States
shores. The impact of the conspiracy was direct and substantial.
Indeed, the participation of American business in the market
allocation scheme was critical to its success. The plaintiff here
is a foreign company, true enough, but it was injured by the same
acts of defendants that injured American plaintiffs whose right to
seek recovery of their losses the district court recognized in this
litigation.
29
With the Foreign Trade and Antitrust Improvements Act,
Congress set out to insulate United States business from its
antitrust laws for certain business conducted outside the country.
Its central purpose was to assist American business in competing
abroad. This pass from antitrust restrictions did not extend to
all conduct outside the United States. It stopped short of
insulating conduct having direct and substantial effects upon
American commerce and causing antitrust injury to that commerce
sufficient to support a claim for treble damages.
I am not persuaded that when illegal conduct produces these
domestic effects, that Congress intended to close the door to a
foreign company injured by the same illegal conduct. That was not
the law before this effort to assist American business abroad, and
Congress did not intend to change it or do so unwittingly. I would
reverse and remand for further proceedings.
I
A
Interpretation of a statute must begin with the text of the
statute itself. Section 6a states in its entirety:
Sections 1 to 7 of this title [the Sherman Act] shall not
apply to conduct involving trade or commerce (other than
30
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 not 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; and
(2) such effect gives rise to a claim under the
provisions of sections 1 to 7 of this title, other
than this section.
[Proviso:] If sections 1 to 7 of this title apply
to such conduct only because of the operation of
paragraph (1)(B), then sections 1 to 7 of this
31
title shall apply to such conduct only for injury
to export business in the United States.33
Section 6a(1) requires an effect on (A) domestic or import
commerce of the United States or (B) the export commerce of a
person in the United States.34 Section 6a(2) requires that this
effect “give[ ] rise to a claim under the provisions of sections 1
to 7 of this title, the Sherman Act, other than this section.” The
majority reads section 6a(2) to require that the effect “give[ ]
rise to” the plaintiff’s claim. It does not say that. It does
say that the effect must “give[ ] rise to a claim.”35 In other
words, the effect on United States commerce must be sufficient to
support a claim, an injury of some person in a way cognizable under
the Sherman Act.36
The literal text of the statute supports this conclusion. It
reads, “gives rise to a claim.” The word “a” has a simple and
33
15 U.S.C.A. § 6a (1997).
34
For brevity, I herein refer to the effects required by
section 6a(1) as effects on “United States commerce.”
35
15 U.S.C. § 6a(2) (emphasis added).
36
The effect must cause “antitrust injury.” The “effect”
described by section 6a(1) can be beneficial, neutral, or
injurious. Section 6a(2) requires that this effect be injurious
and, further, that the injury be caused by reduced, not increased,
competition.
32
universally understood meaning. It is the indefinite article.
There are many terms of art about which one can debate whether
Congress uses the term as courts do, but this word is not one of
them. If the drafters of the FTAIA had wished to say “the claim”
instead of “a claim,” they certainly would have.37
The reference to “a” claim makes clear that the “effect”
described by section 6a(1) must violate the Sherman Act — that is,
harm competition. Section 6a(1) requires that the conspiracy have
an effect on United States commerce; section 6a(2) requires that
this effect either monopolize commerce or restrain trade in the
United States, thereby giving rise to a Sherman Act claim. Section
6a(2) removes jurisdiction over conspiracies whose effects on
United States commerce are beneficial or benign, even if they
37
Courts will not presume that statutory language is redundant
or surplusage. The majority’s interpretation, however, makes the
proviso at the end of section 6a redundant. Section 6a(1)(B)
states that the Sherman Act applies to conduct with effects on
“export trade or export commerce with foreign nations, of a person
engaged in such trade or commerce in the United States.” The
proviso limits the applicability of the Sherman Act under section
6a(1)(B) “to such conduct only for injury to export business in the
United States.” Thus, while (1)(B) requires only that the conduct
affect a person engaged in export trade in the United States, the
proviso limits recovery under the Sherman Act to such persons. The
majority’s reading of 6a(2) renders this proviso redundant, since
it requires that the effect on the exporter in the United States
“give[ ] rise to” the plaintiff’s claim — in other words, that the
person engaged in export trade be the plaintiff.
33
restrain competition in other parts of the world. That an injury
that “gives rise to” an antitrust claim must be an injury caused by
harm to competition is no light notion. It is a well established
and fundamental tenet of antitrust law.38 Termed “antitrust
injury,” it is frequently encountered in enforcement action under
the Clayton Act, by which Congress enlisted private enforcement in
supplementation of governmental enforcement of the Sherman Act.39
Thus, the literal text does not require that the effect on
United States commerce give rise to the plaintiff’s claim. At
worst, the text is sufficiently ambiguous to allow for both the
38
Courts have long held that private plaintiffs “must prove
the existence of ‘antitrust injury’” to recover under section 4 of
the Clayton Act. Atlantic Richfield Co. v. USA Petroleum Co., 495
U.S. 328, 334 (1990). In Matsushita Electric Industrial Co., Ltd.
v. Zenith Radio Corp., 475 U.S. 574 (1986), the Supreme Court noted
that the plaintiffs “must show that the conspiracy caused them an
injury for which the antitrust laws provide relief.” Id. at 584
n.7. The Court explained that a “cognizable injury” is an
“antitrust injury.” Id. at 586.
39
The Clayton Act requires that the plaintiff suffer antitrust
injury. The FTAIA, by contrast, requires that the United States
suffer antitrust injury. Compare Clayton Act, 15 U.S.C.A. § 15(a)
(providing cause of action to anyone “injured in his business or
property by reason of anything forbidden in the antitrust laws”)
(emphasis added), with FTAIA, 15 U.S.C.A. § 6a(2) (“gives rise to
a claim under the [Sherman Act]”) (emphasis added). When a private
plaintiff wishes to sue under the Clayton Act, the Clayton Act and
FTAIA erect complementary requirements: the plaintiff must suffer
antitrust injury, and persons in United States commerce must suffer
antitrust injury. The majority opinion, on the other hand, appears
to conflate these two concepts.
34
construction the majority offers and the construction I believe is
correct. At the least, the majority cannot find support in a plain
text argument.
Accepting that the text of the FTAIA compels neither the
majority’s reading or mine, we must enlist other aids in
determining the meaning of the statute. In doing so, I conclude
that the textual conclusion that “a” means “a” is supported by the
statutory context of the FTAIA, which describes the function of the
FTAIA and its animating purpose, and by the purposes of the
antitrust laws in general; by the legislative history of the FTAIA;
and by the sparse case law that interprets the FTAIA.
B
The FTAIA was enacted as Title IV of Public Law 97-290,
entitled “Export Trading Company Act of 1982.”40 Title I contains
the congressional findings. Every single congressional finding
relates to the importance of export business and the need to
encourage export activity by American business.41 The statute then
states: “It is the purpose of this Act to increase United States
40
Export Trading Company Act of 1982, Pub. L. No. 97-290, 96
Stat. 1233 (codified in scattered sections of 15 U.S.C.).
41
Export Trading Company Act of 1982 § 102, 96 Stat. at 1233-
34.
35
exports of products and services by encouraging more efficient
provision of export trade services to United States producers and
suppliers, in particular by . . . modifying the application of the
antitrust laws to certain export trade.”42 It could not be clearer
that the FTAIA serves to exempt exporting from antitrust scrutiny,
not to limit the liability of participants in transnational
conspiracies that affect United States commerce.43
42
§ 102(b), 96 Stat. at 1234. The Third Circuit has recently
cited this language in concluding that “Congress enacted the FTAIA
for the purpose of facilitating the export of domestic goods by
exempting export transactions that did not injure the United States
economy from the Sherman Act and thereby relieving exporters from
a competitive disadvantage in foreign trade.” Carpet Group Int’l
v. Oriental Rug Importers Ass’n, Inc., 227 F.3d 62, 71 (3d Cir.
2000).
43
Because the language of the statute is clear, we need not
resort to its legislative history to discern its purpose. In any
case, the legislative history only reiterates this single,
motivating purpose. See H.R. Rep. No. 97-686, 97th Cong., 2d
Sess., reprinted in 1982 U.S.C.C.A.N. 2487, 2487 (describing the
legislation as “the bill . . . to exclude from the application of
[the antitrust laws] certain conduct involving exports” and “one of
several bills . . . that seek to promote American exports”). The
excerpt of legislative history upon which the majority relies, that
the purpose of the law is “to more clearly establish when antitrust
liability attaches to international business activities,” is
certainly a true statement, but it expresses the purpose of the law
at a level of generality that offers us no guidance on the narrow
question we face. What the majority has overlooked is that
Congress has spoken with much more particularity as to the purpose
of this law: the purpose of the FTAIA is to promote exports by
exempting American exporting activity from the antitrust laws.
36
The text of the FTAIA implements this purpose perfectly. The
Sherman Act, prior to the enactment of the FTAIA, applied to
conduct that affected domestic, import, and export commerce.
Recall that section 6a(1) limiting the reach of the Sherman Act
applies to conduct that affects (1) domestic commerce; (2) import
commerce; or (3) export commerce, but only to the extent that
American exporters are affected. One class of conduct is excluded:
conduct that affects only foreign purchasers of American exports.
This is the function of the FTAIA: to protect American exporters
who monopolize or conspire to restrain export trade that does not
harm United States commerce.
The purpose of the FTAIA offers no support for the majority’s
reading of the statute. It is undisputed that if proved, the
conspiracy in this case would have direct, substantial, and
reasonably foreseeable effects upon United States commerce. No
American exporters are implicated by this suit. American exporting
business can only be harmed by the alleged conspiracy in this case.
Indeed, interpreting the FTAIA as the majority wishes will
impair the competitiveness of American exporters. Under the
majority’s view, an American cartel that fixes prices worldwide
will be subject to Clayton Act suits by plaintiffs from around the
37
world,44 but a foreign cartel that fixes prices worldwide will be
subject to suit under the Clayton Act only from plaintiffs injured
in American commerce. This interpretation of the FTAIA transforms
a safe harbor for American exporters into a boon for foreign
cartels that restrain commerce in the United States.
With respect to my colleagues, I fear that their reading of
the FTAIA will hinder its purposes and reduce the effectiveness of
the antitrust laws. Nothing in the text of the FTAIA, or the
Export Trading Company Act of 1982 as a whole, or its legislative
history, casts doubt on the importance of deterring restraints of
trade that affect United States commerce. The Supreme Court has
repeatedly recognized that the accent of the Sherman and the
Clayton Acts is deterrence, requiring violators to pay full, treble
damages, even if some plaintiffs gain a windfall or are foreigners.
For example, in Illinois Brick Co. v. Illinois,45 the Supreme Court
noted the importance of “vigorous private enforcement of the
antitrust laws” and “deterring violators” and recognized that “from
44
This cannot seriously be disputed. The FTAIA does not alter
the holding of Pfizer, Inc. v. Government of India, 434 U.S. 308
(1978), which allowed foreign governments to sue an American cartel
that charged supra-competitive prices for pharmaceuticals
worldwide. The legislative history approves of Pfizer. See H.R.
Rep. No. 97-686, reprinted in 1982 U.S.C.C.A.N. 2487, 2495.
45
431 U.S. 720 (1977).
38
the deterrence standpoint, it is irrelevant to whom damages are
paid, so long as some one redresses the violation.”46
The Supreme Court in Pfizer, Inc. v. Government of India47
addressed a situation somewhat analogous to this case. The
government of India sued several American pharmaceutical
manufacturers under the Clayton Act for damages caused by a price-
fixing conspiracy. Like Statoil, the government of India alleged
a worldwide conspiracy that raised prices in the United States and
abroad. Unlike in this case, in Pfizer the sales were made in the
United States.48 In holding that foreign governments could recover
under the Clayton Act, Justice Stewart observed: “Treble-damage
46
Id. at 745-46, quoting id. at 760 (Brennan, J., dissenting).
47
434 U.S. 308 (1978).
48
Because of this, Pfizer is distinguishable from this case,
since one can argue, as the majority does, that the injury to the
foreign plaintiff occurred in the United States. But there is
nothing in the reasoning of Pfizer that suggests that the facts of
Pfizer define the outer limit of the antitrust laws. Further, even
if we assume that the plaintiffs in Pfizer were injured in the
United States, they were injured as buyers in an export transaction
from the United States. Under section 6a(1)(B) and the majority’s
reading of the section 6a(2), injuries to buyers of American
exports do not create jurisdiction under the antitrust laws. Yet
the legislative history of the FTAIA cites Pfizer with approval.
Pfizer maintains its force after the FTAIA because the conspiracy
in Pfizer also affected Americans in domestic commerce. This is
why section 6a(2) states “gives rise to a claim” and not “gives
rise to the plaintiff’s claim.”
39
suits by foreigners who have been victimized by antitrust
violations clearly may contribute to the protection of American
consumers. . . . [A]n exclusion of all foreign plaintiffs would
lessen the deterrent effect of treble damages.”49
The logic underlying this conclusion is straightforward.
Conspirators facing antitrust liability only to plaintiffs injured
by their conspiracy’s effects on the United States may not be
deterred from restraining trade in the United States. A worldwide
price-fixing scheme could sustain monopoly prices in the United
States even in the face of such liability if it could cross-
subsidize its American operations with profits from abroad. Unless
persons injured by the conspiracy’s effects on foreign commerce
could also bring antitrust suits against the conspiracy, the
conspiracy could remain profitable and undeterred.
It is no rejoinder that conspirators would simply choose to
exclude the United States from any price-fixing conspiracy as long
as American plaintiffs could sue. In at least some cases,
including the United States in a price-fixing conspiracy is
necessary to generate monopoly profits. Otherwise, arbitrage would
rapidly equalize unequal prices around the globe as speculators re-
49
Id. at 314-15.
40
sold goods purchased in the United States to buyers in high-price
regions.50 Thus, a cartel may find it impossible to fix prices
anywhere without a worldwide conspiracy. The Sherman Act can only
deter these violations if it protects all parties injured by such
a conspiracy.
Justice Stewart succinctly made this argument in Pfizer:
The conspiracy . . . operated domestically as well as
internationally. If foreign plaintiffs were not permitted to
seek a remedy for their antitrust injuries, persons doing
business both in this country and abroad might be tempted to
enter into anticompetitive conspiracies affecting American
consumers in the expectation that the illegal profits they
could safely extort abroad would offset any liability to
plaintiffs at home. If, on the other hand, potential
antitrust violators must take into account the full costs of
their conduct, American consumers are benefited by the maximum
50
For a real-life example of an arbitrage attempt, see Eurim-
Pharm GmbH v. Pfizer, Inc., 593 F. Supp. 1102, 1104 (S.D. N.Y.
1984) (describing how antitrust plaintiff attempted to arbitrage
pharmaceuticals by repackaging drugs purchased in England for sale
in Germany).
41
deterrent effect of treble damages upon all potential
violators.51
C
The legislative history also supports this reading of the
statute and undermines the majority’s interpretation of section
6a(2). The Committee Report on the House bill that became the
FTAIA states that the FTAIA
does not exclude all persons injured abroad from
recovering under the antitrust laws of the United States.
A course of conduct in the United States — e.g., price
fixing not limited to the export market — would affect
all purchasers of the target domestic products or
services, whether the purchaser is foreign or domestic.
The conduct has the requisite effects in the United
States, even if some purchasers take title abroad or
suffer economic injury abroad.52
51
434 U.S. at 315 (footnote omitted).
52
H.R. Rep. No. 97-686, 97th Cong., 2d Sess., reprinted in
1982 U.S.C.C.A.N. 2487, 2495 (emphasis in original), citing
Pfizer, Inc. v. Government of India, 434 U.S. 308 (1978).
42
This statement explicitly refers to plaintiffs who “suffer
economic injury abroad.” The majority’s interpretation of the
statute is contrary to this statement in the legislative history.
The “effect” on United States commerce is the injury suffered by
purchasers in the United States; this effect does not give rise to
the injury suffered by the foreign plaintiffs. Yet the legislative
history contemplates such plaintiffs recovering under the Sherman
Act. The scenario described in this statement is virtually
identical to the instant case: a conspiracy sells to buyers in the
United States and abroad, and each of the buyers is injured. All
are injured by the same conspiracy, and it is a conspiracy that has
been injurious to competition in the United States.
The majority, however, chooses to rely on the following
statement in the same House Report:
A transaction between two foreign firms, even if
American-owned, should not, merely by virtue of the
American ownership, come within the reach of our
antitrust laws. . . . It is thus clear that wholly
foreign transactions as well as export transactions are
43
covered by the [FTAIA], but that import transactions are
not.53
That American ownership alone should not create jurisdiction over
a wholly foreign conspiracy is not controverted, controversial, or
relevant to this case. What is relevant is that the language
omitted from the quotation above states that if a conspiracy
between two foreign firms, regardless of American ownership, does
have an effect on domestic commerce, there is jurisdiction.54
D
I recognize that there is little precedent to guide our
analysis of this question. Of the case law that does exist, there
are no appellate court cases supporting the majority’s holding. To
the contrary, the majority must reconcile or distinguish the only
other circuit court decisions interpreting the FTAIA, because all
of them find jurisdiction present.
53
Id. at 2494-95.
54
Id. (“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.”).
44
The majority opinion struggles, and I believe fails, to
reconcile Caribbean Broadcasting System, Ltd. v. Cable & Wireless
PLC,55 which involved a foreign plaintiff alleging monopolization
in radio advertising in the Caribbean by a competing radio station.
The defendant was also a foreign entity. Consistent with the
reasoning of this dissent, the D.C. Circuit held that the FTAIA did
not preclude jurisdiction, because the plaintiff showed that the
foreign defendants’ conduct had the effect of harming United States
purchasers of advertising. It stated: “the alleged injury is to
advertisers in the United States.”56 Thus, based on the injury to
advertisers in the United States, the court found jurisdiction over
a suit by a radio broadcaster in the Caribbean. The D.C. Circuit
did not require that the injury to American advertisers “give[ ]
rise to” the plaintiff’s cause of action; its determination that
the injury gave rise to “a” claim was sufficient.
E
Finally, the majority’s attempt to enlist the aid of the
Commerce Clause and the canon of construction that creates a
presumption against extraterritoriality is mistaken.
55
148 F.3d 1080 (D.C. Cir. 1998).
56
Id. at 1086.
45
The majority suggests that the interpretation of the FTAIA
that I espouse is beyond the power of Congress to regulate
commerce.57 The Supreme Court itself has recognized — in the
context of the Sherman Act — that Congress has intended to
regulate, and constitutionally has regulated, foreign conduct that
affects United States commerce.58 And it has been decades since any
court has taken so cramped a view of the Commerce Clause in any
context.59
The majority is correct to note that the courts’ historical
willingness to apply the Sherman Act extraterritorially is not
dispositive of this appeal, since the FTAIA, and not the courts’
earlier interpretations of the Sherman Act, is controlling here.60
But precisely because the FTAIA applies here, the majority’s
reliance on the canon against extraterritorial application of
statutes is misplaced. This canon operates when Congress has not
57
See Majority Op. at 1938 n.18.
58
Hartford Fire Ins. Co. v. California, 509 U.S. 764, 796
(1993) (“[I]t is well established by now that the Sherman Act
applies to foreign conduct that was meant to produce and did in
fact produce some substantial effect in the United States.”).
59
See, e.g., United States v. Lopez, 514 U.S. 549, 552-59
(1995) (recounting the development of Commerce Clause jurisprudence
in the domestic context).
60
See Majority Op. at 1935-36.
46
clearly spoken on the issue of extraterritoriality.61 The FTAIA,
however, explicitly addresses nothing other than
extraterritoriality. We must be careful not to use such a canon
when Congress is speaking directly to the relevant issue. Make no
mistake: such canons reflect substantive presumptions about the
content of laws. If courts apply substantive canons of
construction against statutes that do speak to an issue, then it is
the courts, not Congress, who are making the policy choices that
form the content of legislation.62
II
61
See E.E.O.C. v. Arabian American Oil Co., 499 U.S. 244, 248
(1991) (“This ‘canon of construction . . . is a valid approach
whereby unexpressed congressional intent may be ascertained.’ . .
. In applying this rule of construction, we look to see whether
‘language in the [relevant Act] gives any indication of a
congressional purpose to extend its coverage
[extraterritorially].’”).
62
In any case, when Congress enacted the FTAIA, is was
legislating against a backdrop of extraterritorial application of
the Sherman Act; thus we cannot presume that Congress treated non-
extraterritoriality as the default condition. See Hartford Fire
Ins., 509 U.S. at 796 (“[I]t is well established by now that the
Sherman Act applies to foreign conduct that was meant to produce
and did in fact produce some substantial effect in the United
States.”); id. at 814 (Scalia, J., dissenting) (“[I]t is now well
established that the Sherman Act applies extraterritorially.”);
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
582 n.6 (1986); Continental Ore Co. v. Union Carbide & Carbon
Corp., 370 U.S. 690, 704 (1962).
47
Because I disagree with the majority’s interpretation of the
FTAIA, I would reach the standing inquiry. It is straightforward;
this court has restated the test for standing under the Clayton Act
as “1) injury-in-fact, an injury to the plaintiff proximately
caused by the defendants’ conduct; 2) antitrust injury; and 3)
proper plaintiff status, which assures that other parties are not
better situated to bring suit.”63
Statoil has standing. First, it has suffered injury-in-fact.
It paid inflated prices directly to the defendants.
Second, Statoil has suffered antitrust injury. Antitrust
injury requires that the injury to the plaintiff not merely show
“injury causally linked to an illegal presence in the market” but
injury “attributable to an anti-competitive aspect of the practice
under scrutiny.”64 This element of standing excludes plaintiffs,
primarily competitors, harmed by increased, rather than decreased,
63
Doctor’s Hospital of Jefferson, Inc. v. Southeast Medical
Alliance, Inc., 123 F.3d 301, 305 (5th Cir. 1997). For further
discussion, see McCormack v. NCAA, 845 F.2d 1338, 1341 (5th Cir.
1988); see also Associated General Contractors of California v.
California State Council of Carpenters, 459 U.S. 519 (1983);
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489
(1977).
64
Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328,
334 (1990), quoting Brunswick, 429 U.S. at 489.
48
competition.65 Statoil’s injury was the direct result of the
alleged price-fixing conspiracy and consequent restraint of trade.66
Third and finally, Statoil is a proper plaintiff. In
determining whether a party is a proper plaintiff, it should
examine “such factors as (1) whether the plaintiff’s injuries or
their causal link to the defendant are speculative, (2) whether
other parties have been more directly harmed, and (3) whether
allowing this plaintiff to sue would risk multiple lawsuits,
duplicative recoveries, or complex damage apportionment.”67
First, neither Statoil’s injuries, nor their connection to the
defendants, is speculative. The injuries arise from the defendants
charging Statoil monopoly prices. Second, other parties have not
been harmed more directly than Statoil. Statoil was a purchaser in
the market for heavy-lift barge services, the market in which the
defendants fixed prices. Third, allowing Statoil to sue would not
65
See Atlantic Richfield, 495 U.S. at 334, 337-38; Brunswick,
429 U.S. at 488-89.
66
Appellees rely heavily on the antitrust injury requirement
in arguing that Statoil lacks standing. Their argument that
Statoil’s injury was not caused by high prices charged to U.S.
consumers misconstrues the antitrust injury requirement. Antitrust
injury does not limit standing to U.S. consumers but to anti-
competitive injuries. See Doctor’s Hospital, 123 F.3d at 305-06;
see also Blue Shield of Virginia v. McReady, 457 U.S. 465 (1982).
67
McCormack, 845 F.2d at 1341.
49
risk duplicative recoveries or the like. There is no suggestion
that any unnamed party can seek to recover for the same damages
Statoil suffered.
III
The antitrust laws have always given federal courts
jurisdiction over conspiracies that adversely affect competition in
the United States. The FTAIA limits that jurisdiction; but it does
so by exempting American export conspiracies, not foreign
conspiracies that injure American competition.
The majority opinion expresses concern that foreign litigants
will flock to the United States for redress of their injuries in
distant lands. The majority opinion, and the district court
opinions it cites, seem to fear that the interpretation of the
FTAIA that Statoil advocates makes the Sherman Act an antitrust
regulation of foreign economies throughout the entire world, a
paternalistic lawmaking enterprise that ignores the adequacy of
foreign tribunals. But Congress has enacted no such thing.
Congress enacted the FTAIA to serve the United States’ narrow
interest in vigorous domestic competition.
The text of the FTAIA may be inelegant, but it serves the
selfish national interests of the United States: the FTAIA excludes
from antitrust liability all conduct that has caused no antitrust
50
injury to the United States economy;68 but it enlists all injured
parties — foreign or domestic — to assist the Department of Justice
in deterring conduct that does harm the forces of competition in
the United States. When a conspiracy causes a direct and
substantial injury to competition in the United States, the Clayton
Act recruits private parties to supplement the efforts of the
Department of Justice in ending the conspiracy. The FTAIA ensures
that parties injured by foreign aspects of the same conspiracy that
harms American commerce are part of the phalanx of enforcers
brought to bear by the Clayton Act. Thus, treble damages suits by
parties who suffer antitrust injury from a conspiracy that has a
direct and substantial harmful impact on United States commerce
serve a single function: the protection of United States commerce.
The FTAIA threatens no parade of horribles — it does nothing more
than zealously protect competition in the United States while
sparing from the docket of American courts suits involving
conspiracies that affect only foreign economies.
In sum, I believe the FTAIA does not divest the federal courts
of jurisdiction over suits by plaintiffs who suffer antitrust
68
Indeed, the fact that the FTAIA protects American exporters
from antitrust liability for conduct that restrains export trade
indicates that the FTAIA is not concerned with regulating foreign
economies.
51
injuries from a conspiracy that also harms competition in United
States commerce. Whether the harm felt in the United States is the
source of the injury to the plaintiff is irrelevant; it is the
effects on the United States that creates jurisdiction. Under the
facts of this case, I would conclude that the district court had
jurisdiction over the suit and that Statoil had standing to sue the
defendants under the Clayton Act. I respectfully dissent.
52