Resolving Conflicts of Jurisdiction: The Balancing Test Case:
Timberlane Lumber Co. v. Bank of America (1976, 9th)
549 F.2d 597 Facts: Pl, Timberlane, is a U.S. corporation who extended their lumber business in Honduras (Honduran subsidiaries were Danli & Maya). Dfs conspired to paralyze Pl's business, since they were a direct and strong competitor to them. Dfs actions caused a lot for damage to Pl's business, including being forced to be shut down for a while. Pl brings the claim based on this conspiracy, alleging that there has been a direct and substantial effect on U.S. foreign commerce, and that defendants intended the results of the conspiracy, including the impact on the U.S. economy. Based on the Sherman Antitrust Act. Issue: Does the U.S. has jurisdiction over an antitrust claim, when Pls are US citizens, but Dfs are foreign citizens? Holding: Court says that yes, U.S. has a legitimate claim to jurisdiction, but there are some situations where they shouldn’t exercise that jurisdiction. Court uses a 3-part test to decide if this is an antitrust issue that the U.S. needs to get involved with: o There must be some effect - actual or intended - on American foreign commerce before the federal courts may legitimately exercise subject matter jurisdiction under those statutes o A greater showing of burden or restraint may be necessary to demonstrate that the effect is sufficiently large to present a cognizable injury to the Pl, and therefore, a civil violation of the antitrust laws o (unique to the int'l setting) Whether the interests of, and links to, the U.S. -including the magnitude of the effect on American foreign commerce - are sufficiently strong, vis-a-vis those other nations, to justify an assertion of extraterritorial authority (balancing - you can only have this if 1st 2 tests are satisfied). balancing test - Elements to be weighed: Looking at the ○ The totality of the circumstances o Degree of conflict with foreign law or policy o The nationality or allegiance of the parties the locations or principal places of business of corporation o The extent to which enforcement by either state can be expected to achieve compliance o The relative significance of effects on the U.S. as compared with those elsewhere o The extent to which there is explicit purpose to harm or affect American commerce, the foreseeability of such effect, - ando The relative importance to the violations charged of conduct with the U.S. as compared with conduct abroad. ○ A court balancing these factors should identify the potential degree of conflict if American authority is asserted o Potential degrees of conflict □ Difference in law or policy □ Nationality (own nationals more important than foreign nationals) ○ Conclusion: o The allegation was that Dfs intended to, and did, affect U.S. foreign commerce, so they are within U.S.'s jurisdiction of the fed courts under the Sherman Antitrust Act. o Comity Issue (comity is the principle that jurisdictions will respect ○
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other nations, particularly by recognizing their laws) □ Df's are foreign nationals. Most of the activity took place in Honduras (but may have been directed from San Francisco), and the most direct economic effect was in Honduras. □ However, there is no indication of conflict of law or policy of Honduras, nor a comprehensive analysis of the relative connections and interests of Honduras and the U.S. o U.S. kept the jurisdiction. Therefore, dismissal vacated, action remanded. ○ The test is good law. Controversy on the application of it in this case. Notes: American Banana (territoriality jurisdiction) - Restricted U.S. jurisdiction "to the water's edge" o Here - Court said that a conspiracy in the United States to do acts in another jurisdiction did not draw to itself those acts and make them unlawful, if they were permitted by the local law o Judge Choy here makes distinction - it's not that U.S. law is not meant to apply, but that U.S. law ought not be employed even if it might apply □ Judge Choy - "It is evident that at some point the interests of the U.S. are too weak and the foreign harmony incentive too strong to justify an extraterritorial assertion of jurisdiction.." ○ Balancing Factors o 5 considerations U.S. courts taken into account when deciding whether to apply U.S. law extraterritorially □ The legislative intent of the Congress □ The presumptive "reach" of the statute □ The limits imposed by international law □ Judicial doctrines of discretion (like comity) □ U.S. Constitution ○
