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ISSUES PRESENTED
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ARGUMENT
States v. LSL Biotechnologies, 379 F.3d 672, 68083 (9th Cir. 2004). More
recently, in 2012, the Seventh Circuit adopted the reasonably proximate
causal nexus test. Minn Chem, Inc. v. Agrium, Inc., 683 F.3d 845, 857 (7th
Cir. 2012). Before the FTAIA and these two opinions, the test utilized by most
courts was the Second Circuits effects test that the Sherman Act was
meant to reach foreign conduct only if it was intended to and did affect
United States commerce. LSL Biotechnologies, 379 F.3d at 677.
The Ninth Circuit adopted the immediate consequence test in
response to the patchwork of FTAIA interpretations of lower courts, many of
which could not even agree on whether the FTAIA set a new jurisdictional
standard or merely codified the [effects test] Id. at 678. To create this test,
the court used a dictionary from the time of the FTAIAs passage, which
stated that direct meant proceeding from one point to another in space or
time without deviation or interruption. Id. at 680. They then analogized a
Supreme Court interpretation of direct in the context of the Foreign Service
Immunities Act, where the Court stated that an effect is direct if it follows
as an immediate consequence of the defendants activity. Id. (quoting
Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 618 (1992). When
determining whether an action is direct for purposes of the FTAIA, the
effect must follow as an immediate consequence of the defendants activity.
Id.
The Seventh Circuit adopted the reasonably proximate causal nexus
test and rejected the Ninth Circuits immediate consequence test in Minn
Chem, Inc. 683 F.3d 845, 856 (7th Cir. 2012); Lotes Co. v. Hon Hai Precision
Industry, Co., 753 F.3d 395, 410 (2d Cir. 2014). This test reads substantial
whereas the latter test imposes less predictable standards on foreign entities
and discourages foreign participation in U.S. commerce.
A primary goal by Congress when passing the FTAIA was to provide
clarity for the application of the Sherman Act to foreign conduct because
predictability fosters foreign investment in U.S. commerce; the immediate
consequence test furthers Congresss intent and the reasonably
foreseeable nexus test does not. The House Report associated with this bill
states that the ultimate purpose of this legislation is to create certainty in
assessing the applicability of American antitrust law to international business
transactions and proposed transactions . . . . H.R. REP. NO. 97-686, at 9
(1982) (emphasis added). By clarifying the standard for American antitrust
law application to foreign conduct, Congress intended to allow American
firms greater freedom when dealing with foreign companies in order to
encourage a competitive domestic marketplace. Id. at 7. It is not
coincidence that the FTAIA was passed in the early 1980s during the Reagan
administration, well known for being pro-business and opposed to
commercial regulation. Bryan J. Soukup, From Coolidge to Christie:
Historical Antecedents of Current Government Officials Dealing with Public
Sector Labor Unions, LABOR L. J., Dec. 2013, WL 6685867.
In direct opposition to the purpose of the FTAIA, to provide clarity,
stands the reasonably foreseeable causal nexus test. The reasonably
foreseeable causal nexus test is a less stringent approach to the FTAIA
that 1) requires a case-by-case fact-intensive analysis, and 2) covers far
more activity than the immediate consequence test. Lotes, Co. v. Hon Hai
Precision Indus. Co., 753 F.3d 395, 410 (2d Cir. 2014); Record p. 36.
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nexus test works directly against the purpose of this legislation, while the
rigid, predictable immediate consequence test supports it.
C. On difficult questions, deference should be given to
the interests in a foreign nations sovereignty.
Even if, after considering the plain language of the statute along with
Congress clearly stated intent, the Court still considers the statute to be
ambiguous, the statute should be interpreted to be less restrictive on foreign
nations under the principles of prescriptive comity. Prescriptive comity is the
rule of statutory construction that [the Supreme] Court construes
ambiguous statutes to avoid unreasonable interference with the sovereign
authority of other nations. F. Hoffman-La Roche, Ltd. v. Empagran S.A., 542
U.S. 155, 164 (2004). This is a rule of statutory construction derived from
customary international law, which the Court assumes Congress ordinarily
seeks to follow. Id. Americas antitrust laws, when applied to foreign
conduct, can interfere with a foreign nations ability independently to
regulate its own commercial affairs. Id.
Ultimately, the court presumes that Congress means to minimize their
interference with a foreign nations sovereignty. If a statute is ambiguous
with two interpretations, one that interferes more with foreign sovereignty
and one that interferes less, the court should construe the statute to
interfere less absent some sort of express congressional statement of intent.
In this case, foreign nations have an interest in criminalizing antitrust
activities that occur in their own country. Interpreting the FTAIA to cover
significantly more activity than a reasonable interpretation of its plain
language suggests would violate the principle of prescriptive comity.
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In this case, the district court properly denied Plaintiffs Motion for
Judgment as a Matter of Law. There remains a reasonable question as to
whether Bolton Chemists and Walder Medicals alleged conduct in fixing the
price for their product, Viseriol, has an immediate consequence on the
United States. Viseriol is manufactured by two facilities, one in South Korea
and the other in Germany. Bolton Chemists and Walder Medical then send
their product to a facility in Sweden, Tyrell Manufacturing. At this point, both
Bolton Chemists and Walder Medical are no longer involved in the
manufacturing or production process of Sansa. Tyrell Manufacturing then
manufactures Sansa, which only consists of 40%50% Viseriol. The jury
properly determined that the miniscule effect in the United States was not an
immediate consequence of the alleged conduct, especially when Bolton
Chemists and Walder Medical end their involvement in the manufacturing
process after their product reaches a manufacturing facility in Sweden.
The term direct should be interpreted to require the effect in the
United States to arise as an immediate consequence of the foreign action.
First, the definition immediate consequence is supported by multiple
dictionary definitions from the period that the FTAIA was passed, and the
Supreme Court specifically interpreted direct to mean an immediate
consequence under a similar antitrust statute. Second, the reasonably
foreseeable causal nexus test requires a fact-intensive, case-by-case
analysis, which is inconsistent with the explicit legislative intent to increase
the predictability regarding what conduct fits within the statute. Finally, even
if the Court believes the statute is ambiguous, the statutory principle of
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