As we’ve been noting for the past two years, federal courts have been quick to apply the U.S. Supreme Court’s June 2010 decision in Morrison v. National Australia Bank to all sorts of areas beyond securities law. The decision’s core prescription–”when a statute gives no clear indication of an extraterritorial application, it has none”–has been used to support dismissal motions by foreign defendants in cases involving trade secrets, alien tort, bankruptcy, and racketeering.
But on Wednesday, the U.S. Court of Appeals for the Seventh Circuit cited Morrison to support its conclusion that U.S. antitrust law extends to overseas conduct by foreign potash producers in a multibillion-dollar price-fixing class action. The court, ruling en banc, reversed its own September 2011 decision siding with the defendants, who had cited Morrison to support their own motion to dismiss. The appellate judges affirmed a ruling by U.S. District Judge Ruben Castillo in Chicago, who refused to dismiss the case in November 2009.
The decision, which you can read here, came in Minn-Chem et al. v. Agrium et al., a huge proposed antitrust class action filed in 2008. The plaintiffs, U.S. direct purchasers of potash, allege that the dominant potash producers, all located outside the United States, colluded in coordinating production cutbacks and subsequent price hikes on the substance, a key ingredient in fertilizers.
The 32-page ruling sends the case back to the district court, and it counts a big win for the direct purchasers, who were jointly represented at oral arguments by Bruce Simon of San Francisco-based Pearson, Simon, Warshaw & Penny. The U.S. purchased 6.2 million tons of potash in 2008, 5.3 million of which were imported. The price hikes alleged were considerable: a six-fold increase in prices in the six years ended in 2008. The ruling may also embolden future claims by U.S. purchasers against foreign companies where non-U.S. conduct was a proximate, but not an immediate, trigger of domestic price hikes.
The defendants, led at oral arguments in both appeals by Mayer Brown appellate partner Charles Rothfeld, asserted that the plaintiffs’ claims were barred jurisdictionally by a 1982 law covering foreign anticompetitive conduct, the Foreign Trade Antitrust Improvement Act. The companies also argued that the claims were barred under the FTAIA’s requirement that the foreign conduct being challenged must have a direct effect on U.S. import prices. The original Seventh Circuit panel concluded that the allegations were insufficient to establish the direct link that the FTAIA requires, and that the allegations weren’t specific enough under Twombley.
