Chinese DRAMs. Xie xie.
Today the Ninth Circuit dealt a death blow to a price-fixing case against foreign and domestic makers of those silicon-and-metal dealies that enable your computer to remember megabytes and even gigabytes of stuff and to recall it on command. The reason? The putative class of buyers all bought their dynamic random access memory chips outside the U.S. of A. Centerprise Int’l, Ltd v. Micron Tech., Inc., No. 06-15636 (9th Cir. Aug. 14, 2008).
The overseas locus of the DRAM purchases matters because Congress cut the potential reach of U.S. antitrust law in the Foreign Trade Antitrust Improvement Act of 1982, 15 U.S.C. §§ 1-7. The Supreme Court put meat on the FTAIA bone in F. Hoffman-La Roche Ltd. v. Empagran S.A., 542 U.S. 155 (2004). The Empagran Court held that non-domestic purchases generally don’t satisfy the FTAIA’s "domestic injury" requirement for violations involving international or foreign commerce. The Court didn’t set a standard for assessing whether antitrust claims involve the "direct, substantial, and reasonably foreseeable [domestic] effect" that the FTAIA demands. 15 U.S.C. § 6a. But two courts of appeals later did, and both adopted a "proximate cause" or "direct cause" test. The in-U.S. "effect" of an antitrust violation thus must proximately cause the outside-U.S. injury. See Empagran S.A. v. F. Hoffmann-La Roche, Ltd., 417 F.3d 1267, 1271 (D.C. Cir. 2005); In re Monosodium Glutumate Antitrust Litig., 477 F.3d 535, 539 (8th Cir. 2007).
The Ninth Circuit agreed with its sister circuits and likewise chose proximate cause as the determinant of a sufficient causal connection. It also, like its sisters, held the complaint deficient for alleging little more than that the foreign price-fixing wouldn’t and couldn’t have succeeded unless the domestic price-fixing did, too. Mere "but for" causation just doesn’t cut it.
Which brings us to our Quote of the Day: John T. Noonan, Jr. Senior Circuit Judge Noonan wrote an enlightening and snappy concurrence. Blawgletter reproduces it here in its pithy entirety:
There is such a thing as "cause in fact," that is, an event that, not necessarily alone, brings about a given result. A "but for" cause is a cause in fact. A "legal cause" is a cause in fact that is recognized in law as creating liability. A "proximate cause" is a legal cause. What turns cause in fact into a legal cause is a value judgment that the cause in fact creates an unreasonable risk of injury to a protected interest. What is an unacceptable risk and what is to be protected depend on the values of the society.
As Cardozo’s famous opinion in Palsgraf make clear, that is how causation is often considered in the law of negligence. Antitrust law, apparently, still offers "proximate" as if it provided something more than a label for a judgment that the conduct in question is foreseeably harmful to a social interest worthy of protection.
In the instant case, it would seem that reasonably prudent persons in the position of the defendants would see that their actions setting prices in the United States would negatively affect customers in the United States and elsewhere. But it has been the judgment of Congress and the Supreme Court that the economic interests of consumers outside the United States are normally not something that American law is intended to protect. Hence it is difficult to persuade a court that injury to foreign consumers has been "caused" by price-fixing in the United States. It’s so difficult that amendment of the complaint becomes futile and jurisdiction itself is found not to exist. We reach this vanishing point not from guidance in words like "proximate" or "direct" but from a strong sense that the protection of consumers in another country is normally the business of that country. Location, not logic, keeps Centerprise’s claim out of court.
Centerprise, slip op. at 10661-62.
