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United States: Seventh Circuit En Banc Affirms Denial Of Motion To Dismiss Direct Purchase Antitrust Claims Against Potash Cartel Members: Foreign Trade Antitrust Improvements Act Clarified
Minn-Chem, Inc., et al. v. Agrium Inc., et
al., No. 10-1712 (7th Cir. 2012) (en banc), is a decision of
all the active sitting Judges of the United States Court of Appeals
for the Seventh Circuit. The Court addresses two issues of
central importance to international litigation, especially in the
antitrust context — from a court that has enormous
experience in and understanding of antitrust.
The case alleges global price-fixing by manufacturers of potash,
a naturally occurring mineral used in agricultural fertilizers and
other products. Classes of direct and indirect purchasers of
potash brought suit in federal court against members of the
cartel. The principal issue on appeal was whether the Foreign
Trade Antitrust Improvements Act of 1982 (FTAIA) applied to the
conduct alleged. The Court of Appeals ruled that:
"Whether this case can be entertained by a court in the United
States turns on the global reach of the antitrust laws, and to a
significant degree on the" FTAIA.
The first issue the Court of Appeals discussed was whether the
statute's criteria "related to the merits of a claim"
or whether they relate to subject matter jurisdiction. Here
we will recall that it was the Supreme Court in Morrison
that
emphasized the need to draw a careful
line between true jurisdictional limitations and other types of
rules. Thus, in Morrison v. National Australia Bank Ltd., 130 S.
Ct. 2869 (2010), which dealt with the securities laws, the Court
squarely rejected the notion that the extraterritorial reach of
§ 10(b) of the Securities Exchange Act, 15 U.S.C. §
78j(b), raises a question of subject-matter jurisdiction. Id. at
2877. "[T]o ask what conduct § 10(b) reaches is to ask
what conduct § 10(b) prohibits, which is a merits question.
Subject-matter jurisdiction, by contrast, refers to a
tribunal's power to hear a case."
The Seventh Circuit decided that the FTAIA "sets forth an
element of an antitrust claim, not a jurisdictional limit on the
power of the federal courts". In one of the clearest
articulations of the distinction (and so we quote it at length
–though it is not clear that the distinction would have
affected the outcome here), the Court of Appeals went on to
say that
a party who wishes to contest the
propriety of an antitrust claim implicating foreign activities
must, at the outset, use Federal Rule of Civil Procedure 12(b)(6),
not Rule 12(b)(1). This is not a picky point that is of interest
only to procedure buffs. Rather, this distinction affects how
disputed facts are handled, and it determines when a party may
raise the point. While "it is the burden of the party who
seeks the exercise of jurisdiction in his favor clearly to allege
facts demonstrating that he is a proper party to invoke judicial
resolution," [citations omitted], we "accept as true all
of the allegations contained in a complaint," Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v.
Twombly, 550 U.S. 544 (2007)) subject, of course, to the
limitations articulated in those cases. Likewise, subject matter
jurisdiction must be secure at all times, regardless of whether the
parties raise the issue, and no matter how much has been invested
in a case. [citations omitted] By contrast, a motion to dismiss for
failure to state a claim may only be brought as late as trial. FED.
R. CIV. P. 12(h)(2).
The second issue related to the interpretation of the federal
statute itself. The statute reflects Congress's effort to
indicate "that the Sherman Act does not apply to every
arrangement that literally can be said to involve trade or commerce
with foreign nations", and the limitation "was inspired
largely by international comity". If non-U.S. activities
"adversely affect . . . imports to the United
States" then they are not excluded from the reach of the U.S.
antitrust laws. The Court of Appeals' exhaustive and
painstaking analysis led to the conclusion, simply stated,
non-U.S. sellers but U.S. buyers are not excluded from the reach of
the U.S. antitrust laws. On that basis the Court of Appeals
affirmed the District Court's rejection of the defendants'
motion to dismiss.
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