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 lum ber business in Honduras (Honduran subsidiaries were Danli & Maya). Dfs conspire d to paralyze Pl's business, since they were a direct and strong competitor to t hem. Dfs actions caused a lot for damage to Pl's business, including being force d to be shut down for a while. Pl brings the claim based on this conspiracy, all eging that there has been a direct and substantial effect on U.S. foreign commer ce, and that defendants intended the results of the conspiracy, including the im pact 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 a re foreign citizens? Holding: Court says that yes, U.S. has a legitimate claim t o jurisdiction, but there are some situations where they shouldn't exercise that j urisdiction. Court uses a 3-part test to decide if this is an antitrust issue th at 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 legitimate ly exercise subject matter jurisdiction under those statutes o A greater showing of burden or restraint may be necessary to demonstrate that the effect is suffi ciently large to present a cognizable injury to the Pl, and therefore, a civil v iolation of the antitrust laws o (unique to the int'l setting) Whether the inter ests of, and links to, the U.S. -including the magnitude of the effect on Americ an foreign commerce - are sufficiently strong, vis-a-vis those other nations, to justify an assertion of extraterritorial authority (balancing - you can only ha ve this if 1st 2 tests are satisfied). The balancing test - Elements to be weigh ed: Looking at the totality of the circumstances o Degree of conflict with forei gn 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 b y 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 t here is explicit purpose to harm or affect American commerce, the foreseeability of such effect, - ando The relative importance to the violations charged of con duct with the U.S. as compared with conduct abroad. A court balancing these fact ors should identify the potential degree of conflict if American authority is as serted o Potential degrees of conflict Difference in law or policy Nationality ( own nationals more important than foreign nationals) Conclusion: o The allegatio n was that Dfs intended to, and did, affect U.S. foreign commerce, so they are w ithin U.S.'s jurisdiction of the fed courts under the Sherman Antitrust Act. o C omity Issue (comity is the principle that jurisdictions will respect

other nations, particularly by recognizing their laws) Df's are foreign national s. 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, th ere is no indication of conflict of law or policy of Honduras, nor a comprehensi ve 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: Amer ican 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 unl awful, if they were permitted by the local law o Judge Choy here makes distincti on - it's not that U.S. law is not meant to apply, but that U.S. law ought not b e 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 st rong to justify an extraterritorial assertion of jurisdiction.." Balancing Facto rs o 5 considerations U.S. courts taken into account when deciding whether to ap ply U.S. law extraterritorially The legislative intent of the Congress The presu mptive "reach" of the statute The limits imposed by international law Judicial d octrines of discretion (like comity) U.S. Constitution