Within the Scope Cannot Be Beyond the Reach: The FTAIA and Personal Jurisdiction

By Barbara Hart, President and CEO of Lowey Dannenberg Cohen & Hart, P.C. [This article was originally published in the New York Law Journal as part of the Journal’s NYSBA Annual Meeting Special Report on January 26, 2015.]

Since the Federal Trade Antitrust Improvements Act’s (the “FTAIA”) passage, the federal courts have discussed, at length, whether the FTAIA speaks to the court’s power to hear the case (subject matter jurisdiction) or to the substantive elements of a Sherman Act claim.[1]  The FTAIA was enacted to “clarify the legal standard determining when American antitrust law governs foreign conduct.”  Lotes Co., Ltd. V. Hon Hai Precision Industry Co., Ltd., 753 F.3d 395, 404 (2nd Cir. 2014).  The FTAIA does this by “placing all nonimport activity involving foreign commerce outside the Sherman Act’s reach.  It then brings back such conduct within the Sherman Act’s reach provided the conduct both” has a “‘direct, substantial and reasonably foreseeable effect’ on American domestic, import or (certain) export commerce” and “gives rise to a Sherman Act claim.”  F. Hoffman-La Roche Ltd. V. Empagran S.A., 542 U.S. 155, 162 (2004) (emphasis removed).  

Among the issues still percolating is the interplay between the FTAIA and personal jurisdiction over a foreign defendant.[2]  Although the FTAIA does not and was not intended to address personal jurisdiction specifically, when one examines the Sherman Act and the FTAIA, as well as the burden of proof the FTAIA places on plaintiffs, a convincing argument can be made that personal jurisdiction is established if the two “Acts” elements are met.

With the exception of import commerce,[3] the FTAIA extends Sherman Act protection to domestic commerce that is injured by antitrust violations perpetrated by foreign entities.  By carving out an exception for domestic commerce impacted by foreign antitrust activity, the Act recognizes an American citizen’s right to a private cause of action in United States courts, for harms caused by a foreign defendant.  In demonstrating that a defendant’s conduct was “direct, substantial and reasonably foreseeable,” the plaintiff arguably satisfies the “Calder effects test”- the causal link necessary to show a connection between the defendant’s acts and the plaintiff’s injury.  United States ex rel. Piacentile v. Novartis AG, 2010 U.S. Dist. LEXIS 146050 at *14 (E.D.N.Y. 2011).  In order to establish specific personal jurisdiction over a foreign defendant, the plaintiff must show that “defendants expressly aimed their allegedly tortious conduct at the United States.”  In re Terrorist Attack on September 11, 2001, 714 F.3d 659, 665 (2nd Cir. 2013).  This language is consistent with the “direct, substantial and reasonably foreseeable” language of the FTAIA.

There are allegations of market wide, worldwide conspiracies currently being litigated; each with tremendous economic ramifications for international commerce.  It would be illogical that an actor whose conduct falls within the scope of the Sherman Act’s prohibitions might escape accountability due to a technical and constrained personal jurisdiction analysis.  To allow such a defendant to escape liability on these grounds would appear to defeat the purpose of the Sherman Act.

[1] In a series of recent decisions, the Second, Third, Seventh, and Ninth Circuit have all held that the FTAIA applies to the substantive elements of a Sherman Act claim.  See Animal Sci. Prods., Inc. v. China Minmetals Corp., 654 F.3d 462 (3d Cir. 2011), Minn-Chem, Inc. v. Agrium Inc., 683 F.3d 845 (7th Cir. 2012), Lotes Co., Ltd. V. Hon Hai Precision Industry Co., Ltd., 753 F.3d 395 (2nd Cir. 2014), United States v. Hui Hsiung, No. 12-10492, 2014 U.S. App. LEXIS 13051 (9th Cir. 2014).


[2] This article only addresses situations involving a foreign entity engaging in anticompetitive conduct abroad, with the intent to affect U.S. domestic commerce.  This article does not address foreign parties who wish to sue foreign entities for engaging in anticompetitive conduct abroad in U.S. courts.


[3] Import commerce and “conduct involving import commerce” are within the scope of the Sherman Act and that truth was not impacted by the FTAIA despite the sometimes considerable energy trying to make case law to the contrary.  Precision Assocs. V. Panalpina World Transp. (Holding) Ltd., 2011 U.S. Dist. LEXIS 51330 at *115 (E.D.N.Y. 2011).

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