The FTAIA and Claims by Foreign Plaintiffs Under State Law

Edward D. Cavanagh

St. John's University - School of Law


Antitrust Law Journal, Vol. 26, No. 1, p. 43, Fall 2011
St. John's Legal Studies Research Paper No. 12-0015

In F. Hoffman LaRoche Ltd. v. Empagran S.A., 542 US 155 (2004), the Supreme Court limited access to American courts by foreign plaintiffs suing under the Sherman Act based on foreign transactions. Jurisdiction over foreign antitrust claims is governed by the Foreign Trade Antitrust Improvements Act (“FTAIA”). However, rather than parsing this opaque and poorly drafted statute, the Court drew on the doctrine of prescriptive comity and held that where a statute is vague, it should be construed narrowly so as not to interfere with the prerogatives of co-sovereigns. Alternatively, the Court concluded that if the conduct in question would have been beyond the reach of the Sherman Act prior to the enactment of FTAIA, it would not be cognizable under the FTAA because that statute was designed to limit — not expand — jurisdiction over foreign claims. The Court found that there were no pre-FTAIA cases to support jurisdiction.

On remand, the D.C. Circuit ruled that even if foreign plaintiffs could show that “but for” participation of U.S. firms in the conspiracy, they would not have been injured, their claims would still be barred. The FTAIA contemplates that (1) the illegal foreign have a “direct, substantial and reasonably foreseeable effect” on U.S. commerce; and (2) such adverse effect on foreign commerce gives rise to claims by foreign plaintiffs. Incidental or “but for” linkage does not suffice; proximate cause is the standard.

Moreover, foreign claims based on foreign transactions are also barred under the doctrines of standing and antitrust injury. Antitrust courts have traditionally denied standing to firms that were neither competitors nor consumers in the U.S. market. Similarly, the doctrine of antitrust injury limits the universe of antitrust plaintiffs to those who have suffered injury of the kind that the antitrust laws are met to protect against and that flows from that which makes the conduct unlawful. The U.S. antitrust laws were not meant to protect plaintiffs who were not participants in the U.S. market. Empagran may not eliminate antitrust actions by foreign purchasers, but the decision is a major hurdle to their successful prosecution.

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Date posted: September 21, 2012  

Suggested Citation

Cavanagh, Edward D., The FTAIA and Claims by Foreign Plaintiffs Under State Law (2011). Antitrust Law Journal, Vol. 26, No. 1, p. 43, Fall 2011; St. John's Legal Studies Research Paper No. 12-0015. Available at SSRN: http://ssrn.com/abstract=2149729

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Edward D. Cavanagh (Contact Author)
St. John's University - School of Law ( email )
8000 Utopia Parkway
Jamaica, NY 11439
United States
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