As global economic activity increases, the U.S. courts see more and more antitrust claims brought by customers and competitors allegedly injured in transactions occurring outside the United States. International cartel and monopolization cases routinely feature complaints filed by foreign plaintiffs or that allege foreign conduct. U.S. antitrust law applies to some—but far from all—foreign conduct. The Foreign Trade Antitrust Improvements Act (FTAIA)1 delineates the U.S. antitrust law’s extraterritorial reach and thus provides standards for evaluating which foreign injury antitrust claims may be properly brought pursuant to U.S. law. A recent Third Circuit decision regarding the scope of the FTAIA should make it more difficult for defendants to defeat antitrust claims involving foreign conduct.
Until recently, courts, including the Third Circuit Court of Appeals, have overwhelmingly treated the FTAIA as a jurisdictional statute, holding that it defined the parameters of federal court subject matter jurisdiction in international antitrust cases. In challenges to subject matter jurisdiction—which any party may raise until the last appeal is exhausted—the plaintiff bears the burden of proving the court has jurisdiction by a preponderance of the evidence. In contrast, in substantive challenges—which defendants may raise only at the pleading or summary judgment stages—defendants bear the burden of proof that the plaintiff’s allegations do not have merit.
Construing the FTAIA as a jurisdictional rather than substantive rule confers several procedural advantages on defendants, particularly with respect to the timing and costs associated with litigation. Because courts, until recently, considered the FTAIA to define the jurisdictional limits with respect to foreign conduct, FTAIA challenges were generally raised and resolved early in case proceedings. Early resolution of such claims is possible because (1) the plaintiff always bears the burden of proof, when faced with a motion brought under Federal Rule of Civil Procedure (Fed. R. Civ. P.) 12(b)(1) challenging subject matter jurisdiction; and (2) courts are allowed to make factual findings, often relying on extrinsic evidence, before all discovery is complete (and in some cases, at the pleading stage) when defendants assert a factual challenge to jurisdiction under Fed. R. Civ. P. 12(b)(1). Finally, U.S. courts are required, when possible, to resolve jurisdictional questions prior to the merits—and to do so as early as reasonably practicable.
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