Resources—Potash, the FTAIA, and Pleading Requirements
Nov 16, 2011
Resources For NOV-11(1), The "Potash" Case Issue:
For our reader's convenience, when appropriate in the Antitrust Chronicle, we'll be presenting copies and/or links of the cases and other source materials referred to in our issues. We hope you find this resource both helpful and time-saving.
Foreign Trade Antitrust Improvements Act ("FTAIA")
The relevant part of 15 U.S.C. 6a reads as follows:
§ 6A. CONDUCT INVOLVING TRADE OR COMMERCE WITH FOREIGN NATIONS
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-
i. on trade or commerce which is not trade or commerce with foreign nations, or on import trade or import commerce with foreign nations; or
ii. 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.
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.
Minn-Chem Inc. v. Agrium Inc. 657 F.3d 650 (7th Cir. 2011) ("Potash")
This multi-district antitrust class action alleges a global conspiracy to raise the price of potash, a mineral used primarily in agricultural fertilizer. Most of the world's potash reserves are concentrated in three countries-Canada, Russia, and Belarus-and the defendants are leading producers whose mining operations are located in those countries. The plaintiffs are direct and indirect potash purchasers in the United States. They allege that the Canadian, Russian, and Belarusian producers operated a cartel through which they fixed potash prices in Brazil, China, and India, and the inflated prices in these overseas markets in turn influenced the price of potash sold in the United States. The defendants moved to dismiss under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, arguing first that the district court lacked subject matter jurisdiction under the Foreign Trade Antitrust Improvements Act ("FTAIA"), 15 U.S.C. § 6a, and alternatively, that the complaint did not satisfy the pleading requirements of Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009). The district court denied the motion but certified its order for immediate review. See 28 U.S.C. § 1292(b). We accepted review and now reverse.
As relevant here, the FTAIA limits the extraterritorial reach of the Sherman Antitrust Act to foreign anticompetitive conduct that either involves U.S. import commerce or has a "direct, substantial, and reasonably foreseeable effect" on U.S. import or domestic commerce. 15 U.S.C. § 6a. In United Phosphorus, Ltd. v. Angus Chemical Co., 322 F.3d 942 (7th Cir. 2003), we sat en banc to address whether the FTAIA's limitations are jurisdictional or instead are elements of a Sherman Act claim that implicates offshore anticompetitive conduct. We held that the FTAIA's requirements are jurisdictional. Id. at 950-52. A substantial minority of the court disagreed, see id. at 953-54 (Wood, J., dissenting), and the dissent's approach has since prevailed in the Supreme Court, although in decisions involving other statutes. See Morrison v. Nat'l Austl. Bank, 130 S. Ct. 2869, 2876-77 (2010); Arbaugh v. Y & H Corp., 546 U.S. 500, 515-16 (2006). These intervening developments suggest that United Phosphorus may be ripe for reconsideration, but we need not undertake that task here. Whether it blocks jurisdiction or establishes an element of a Sherman Act claim, the FTAIA applies here to bar this antitrust suit. The defendants are entitled to dismissal under either Rule 12(b)(1) or 12(b)(6).
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