MINN-CHEM, INC. v. AGRIUM INC. (September 23, 2011)

The plaintiff and other direct and indirect United States potash purchasers brought a class action against potash producers. The defendants' mining operations are located in Canada, Russia, and Belarus. The defendants responded that: a) the court lacked jurisdiction under the Foreign Trade Antitrust Improvements Act, or, alternatively, b) that the complaint failed to state a claim. Judge Castillo (N.D. Ill.) denied defendants' motion but certified the order for immediate review.

In their opinion, Seventh Circuit Judges Manion, Evans (who, as a result of his death, took no part in the decision), and Sykes vacated and remanded with instructions to dismiss the complaint. The Court addressed only one of the defendants' arguments – that the FTAIA requires dismissal of the complaint. Under the FTAIA, the Sherman Act does not apply to foreign trade or commerce unless the alleged anticompetitive conduct involves U.S. imports or has a "direct, substantial, and reasonably foreseeable effect" on U.S. commerce. The Court noted the tension between its earlier United Phosphorus decision, which held that the FTAIA's requirements were jurisdictional, and the Supreme Court’s decisions in Arbaugh and Morrison, which held that similar requirements in other statutes were not jurisdictional. The Court concluded that it need not address that tension, since dismissal was required in either case. The Court cautioned that the two FTAIA exceptions -- involved U.S. import commerce or had a direct effect on U.S. commerce -- must be treated separately and distinctly. The district court erred when it concluded that the complaint was sufficient because it alleged both that the defendants were potash importers and that they conspired to fix potash prices outside the U.S. The relevant inquiry under the import exception is whether the defendants' alleged illegal behavior was directed at the import market. The complaint contains no such allegations. It contains only allegations of anticompetitive conduct directed at non-U.S. markets. With respect to the direct effect exception, the effect must be an immediate consequence of defendants’ behavior. The Court concluded that the complaint said very little about the relationship between defendants' conduct and the U.S. potash market. The allegations it does contain are too indirect to support a direct effects exception.