# Opposition Brief — Timberlane Lumber Co. v. Bank of America National Trust & Savings Ass'n

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1985
- **Citation:** 472 U.S. 1032

## Text

oo | MAY 31 1985

ALEXANDER L. STEVAS,

No. 84-1761 coping

In the Supreme Court

OF THE

United States
Ocroser TERM, 1984

we ae

Tae TrmperLane Lumser Company, Dani InpustrRiL, S.A.,
Maya Lumser Company, S. de R.L., Jorce Lima,
Micve. Arpon, and Gorpon Sioan Smita,
Petitioners,

vs.

Bank or America Nationat Trust anp SavinGs ASSOCIATION,
BanxaMenica Corporation, Pepro Casanova e Hisos, S.A.,
InmportaporE Mayorista, S. de R.L., Micnen Casanova,
Nasser Bonnevur, Manvex Ruts, Luis Pasmrino,
Henry Matartesta, Jose Gonzaues, and Patrick Byrne,

Respondents.

On Petition for a Writ of Certiorari to the United States
Court of Appeals for the Ninth Circuit

RESPONDENTS’ BRIEF IN OPPOSITION
TO PETITION FOR A WRIT OF CERTIORARI

MicHak. H. Sauinsky
Counsel of Record

Wuuio I. Ep_tunp

Cuarues R. Ragan

Pitispury, Mapison Kevin M. Fone
& Sutro Counsel for Respondents
225 Bush Street 225 Bush Street
Mailing Address Mailing Address
P.O. Box 7880 P.O. Box 7880
San Francisco, CA 94120 San Francisco, CA 94120
Of Counsel Telephone: (415) 983-1462

SOWNE OF GAN FRANCISCO, INC. * 190 NINTH ST. © S.F., CA

BEST AVAILABLE copy |

QUESTION PRESENTED

1. Should this Court review the decision below, which,
consistent with the reasoning of this Court and with deci-
sions of the Courts of Appeals, correctly determined that,
where there is great potential for conflict with the economic
policy and commercial law of a friendly sovereign State
and the effect on U.S. foreign commerce is minimal, the
Federal court should not exercise jurisdiction over a puta-
tive antitrust claim ?*

*Bank of America National Trust and Savings Association is a
wholly owned subsidiary of BankAmerica Corporation.

BankAmerica Corporation owns, directly or indirectly, more than
50 percent but less than 100 percent of the voting stock of the
following:

Banca d’America e Italia
BancAmerica Options, Inc.
BA Australia Limited
Bamerical Investments ( Australia) Limited
Bamerical Nominees (Australia) Proprietary Ltd.
BA Oil and Gas Management Ltd.
BA (Australia) Holding Proprietary, Ltd.
BA Investors Mgt. Ltd.
BA Australia Leasing Ltd.
Bamerical Proprietary Ltd.
BA (Australia) Hong Kong Ltd.
Bank of America Cameroon

TABLE OF CONTENTS

Page
Preliminary Statement 1
Statement of the Case ...... 2
Argument .. 6

I. The Result in this Case Is Consistent with the Rea-
soning of this Court’s Precedents and with Deci-
sions from the Courts of Appeals 7

II. The Executive Branch Has Endorsed the Timber-
lane Approach, and Legislative History of the 1982
Amendments to the Sherman Act Establishes Leg-
islative Intent To Permit Courts To Employ
Comity 13

Conclusion ........... iat yas 15

li

TABLE OF AUTHORITIES
Cases
Page
American Banana Co. v. United Fruit Co., 213 U.S. 347 7

Bulk Oil (Zug) A.G. v. Sun Company, Ince. ......

F.Supp. ...... 10
Continental Co. v. Union Carbide, 370 U.S. 690 .............. 7, 8
Dominieus Americana Bohio v. Gulf & Western, 473

SOO. eceiiniicintinnivinninianintiniapnbennings 10

Industrial Inv. Development Corp. v. Mitsui & Co., 671
F.2d 876, vacated on other grounds 460 U.S. 1007,
holding reinstated 704 F.2d 785, certiorari denied
iid US. ......, 104 S.Ct. 394 9, 10, 11

In re Uranium Antitrust Litigation, 617 F.2d 1248 ........ 10

Laker Airways v. Sabena, Belgian World Airlines, 731
- F.2d 909 ‘ 12, 15

Mannington Mills, Inc. v. Congoleum Corp., 595 F.2d
1287 ; Niger) wed 10, 11

Montreal Trading Ltd. v. Amax Inc., 661 F.2d 864 ........ 10

National Bank of Canada v. Interbank Card Ass’n, 507
WP, Bema, AEB acai cicesccessnersnssernsseennireninnistioaienienssonion 10

National Bank of Canada v. Interbank Card Ass’n, 666
F.2d 6 ai San: a

Power East Ltd. v. Transamerica Delaval, Inc., 558
PR, GF arsescnsenceiemnisinscseninsnnnienntninnnimcananieaninchaneiogiainais 10

Timberlane Lumber v. Bank of America (Timberlane
I), 549 F.2d $97 ..................- 2, passim

Timberlane Lumber v. Bank of America (Timberlane
II), 574 F.Supp. 1453 ....2, passim

iii

TABLE oF AUTHORITIES
CaskEs
Page

Timberlane Lumber v. Bank of America (Timberlane
IIT), 749 F.2d 1378 2, passim

United States v. Aluminum Co. of America, 148 F.2d
416 8

Uranium Antitrust Litigation, In re, 617 F.2d 1248 ...... 10

Statutes

Sherman Act
Section 7 14

Other Authorities

Antitrust Division, United States Dept. of Justice,
Antitrust Guide for International Operations (1977) 13

J. Atwood & K. Brewster, Antitrust and American

Business Abroad (2d Ed. 1981) 10
W. F. Baxter, Responses to Questions Submitted by the
Committee on the Judiciary (March 23, 1981) ............ 14

Grippando, Declining To Exercise Extraterritorial
Antitrust Jurisdiction on Grounds of International
Comity: An [legitimate Extension of the Judicial

Abstention Doctrine, 23 Va.J.Int’l L. (1983) 395 ...... 9
House of Representatives Report 97-686, 97th Cong.,
2d Sess. (1982) 2, 15

Letter of J. Brian Atwood, Assistant Secretary of
State, to Senator Edward M. Kennedy, Chairman of
the Senate Committee of the Judiciary (Sept. 27,
1979), reprinted in Senate Report No. 444, 96th
Cong., Ist Sess. (1979) ............ 14

iv

TABLE oF AUTHORITIES
CasEs

Letter of Roberts B. Owen, Legal Adviser of the De-
partment of State, to John H. Shenefield, Associate
Attorney General (March 17, 1980), reprinted (1980)
74 Am.J.Int’l.L. 665

Remarks of Commissioner Robert Pitofsky, The Bar
Association of Greater Cleveland, Antitrust Com-
pliance Seminar (April 28, 1981)

Remarks by John H. Shenefield, International Law
Institute and the International Law Section of the
American Bar Association (Dec. 10, 1980) reprinted
in CCH Trade Reg.Rptr., Current Comment Trans-
fer Binder, { 50,4264 ....

Remarks of John H. Shenefield, “Extraterritorial Im-
pact of U.S. Antitrust Laws,” before the ABA Sec-
tion of International Law (Aug. 9, 1978), reprinted
in CCH Trade Reg.Rptr., Current Comment Trans-
DR RO: TF Te epesisisin ip lpvaniclininchatesidiintsigaidinibdlatiiias

Remarks by Alexander W. Sierck, Director of Trade
Policy, Antitrust Division, World Trade Institute,
BOOT OUR CHONG, Bed sivsicictnaieiapintinctidisnsstntiddiion

Shenefield, The Perspective of the U.S. Department of
Justice, in Perspectives on the Extraterritorial Ap-
plication of U.S. Antitrust and Other Laws (J. Grif-
is Bees NATED LOR nsinsescsnciniciinisenenncoepisbiipaciamaiaibiditimbidastiiigenbniisit

Statement of William F. Baxter Before House Sub-

committee on Monopolies and Commercial Law, Com-

mittee on the Judiciary, November 19, 1981 ................

14

14

14

14

14

13

No. 84-1761

In the Supreme Court

OF THE

United States

THe TimMBERLANE LuMBER Company, Dani InpusTRIAL, S.A.,
Maya Lumser Company, S. de R.L., Jonge Lima,
Micvue.t Agpon, and Gorvon Sioan SmirtH,
Petitioners,

Vs.

Bank or America Nationa Trust anp Savines ASSOCIATION,
BanxkaMeErica Corporation, Pepro Casanova e HiJos, S.A.,
ImportTaDoRE Mayorista, S. de R.L., Micnen Casanova,
Nasser BonHeEvr, Manveu Ruts, Luis Pasmino,
Henry Mauatesta, Jose Gonzaues, and Patrick Bygye,

Respondents.

On Petition for a Writ of Certiorari to the United States
Court of Appeals for the Ninti Circuit

RESPONDENTS’ BRIEF IN OPPOSITION
TO PETITION FOR A WRIT OF CERTIORARI

PRELIMINARY STATEMENT

Petitioners have not set forth a single ground for the
granting of certiorari which merits serious consideration.
The balancing test for exercising jurisdiction applied by
the court below is consistent with the reasoning of this
Court and the Courts of Appeals, and has been approved
by each Court of Appeals that has considered the question.
Thus, no conflict exists.

Further, the balancing approach employed below has
received approval by the Legislative and Executive
branches of Government. Not only have the Department of

2

Justice, the Federal Trade Commission and the Depart-
ment of State endorsed the approach, but also Congress,
in amending the Sherman Act in 1982, expressly approved
what the court below did here: “employ notions of comity
or otherwise .. . take account of the international char-
acter of the transaction” (H.R.Rep. 97-686, 97th Cong.,
2d Sess. (1982), p. 13). In short, no reason for review
exists.

STATEMENT OF THE CASE

Petitioners’ statement of the case ignores the evidence
and merely repeats the unsupported allegations made by
petitioners for more than 12 years. The relevant facts,
however, are largely undisputed, and are summarized in
the 1983 opinion of the district court (Petn.Appx. C-1-87)
and the 1984 opinion of the Court of Appeals (Petn.Appx.
B-1-35).* They are as follows.

In 1971, petitioner Timberlane Lumber Company (“Tim-
berlane”) formed two Honduran companies (petitioners
Maya Lumber Company, S. de R.L. (“Maya”) and Danli
Industrial, S.A.) as investment vehicles with respect to
the Honduran lumber business (Petn.Appx. C-6-7). Maya
was organized to purchase assets of another Honduran
lumber company, Lima e Hijos, S.A. (the “Lima com-
pany”), which was net operating because of liquidity and
management problems (Petn.Appx. C-5).

‘In 1977, the Court of Appeals remanded the action for discovery
and further findings (Timberlane Lumber v. Bank of America
(9 Cir. 1977) 549 F.2d 597 (“Timberlane I”), Petn.Appx. D-10-14).
Thereafter, the courts below applied a “rigorous standard” of proof
to respondents’ jurisdictional challenge (see Timberiane Lumber v.
Bank of America (N.D.Cal. 1983) 574 F.Supp. 1453 (“Timber-
lane IT”), Petn.Appx. C-25 n. 24; Timberlane Lumber v. Bank of
America (9 Cir. 1984) ___.. F.2d ...... (“Timberlane IIT”), Petn.Appx.
B-17 n.2) Many of the facts in the record are admissions of
petitioners on tape recordings they made of their own conversations.

7

3

The Honduran branch of respondent Bank of America
National Trust and Savings Association (the “Bank’’)
had been one of the Lima company’s secured lenders.
When the Lima company ceased operations, it owed the
branch a substantial debt which was secured by a hipoteca
de empresa, an all-inclusive Honduran mortgage (Petn.
Appx. C-10). As the result of Honduran foreclosure
proceedings filed by creditors of the Lima company (in-
cluding other banks), a judicial decree was issued that
the Lima company assets be sold at public auciion to
satisfy the creditors’ claims (Petn.Appx. C-14). No such
auction was held, however; the assets were surreptitiously
conveyed to Maya (ibid.).?

Honduran counsel advised the Bank’s Honduras branch
that Maya’s title to the Lima company assets was defective
and that the Bank’s hipoteca de empresa still encumbered
the Lima company assets in Maya’s custody. A collection
effort was undertaken, and the Bank caused its security
interest to be assigned to a local collection agent (Petn.
Appx. C-17-18). The ensuing judicial proceedings in
Honduras were protracted. Ultimately, the assets were sold
at a judicial auction. A final and complete settlement of
the Honduran litigation was reached in 1977 (Petn.Appx.
C-24).

Unsuccessful in their efforts to defeat the creditors’
rights actions against Maya in Honduras, petitioners filed
an action in U.S. District Court, alleging that the conduct
of the Bank’s Honduran branch and others in Honduras
aborted petitioners’ plans to mill lumber in Honduras and
export it to the United States, in violation of the U.S.

*Maya’s manager was heard on tape to urge that petitioners
“snake” the Lima company assets out from under the legitimate
Honduran creditors. The objective was to defraud those creditors,
and contemporaneous documents spoke of petitioners’ plan to
obtain the $2 million worth of Lima company assets “for a song.”

+

antitrust laws. In 1974, the district court granted a motion
to dismiss and entered judgment on the ground, inter alia,
that there was “no direct and substantial effect on United
States foreign commerce” (Appendix A hereto).* On
appeal, the Ninth Circuit ruled in Timberlane I that a
simple “effects” test was inadequate in international cases
because it failed to take into account possible adverse
consequences for American foreign policy, and vacated the
first judgment (Petn.Appx. D-42-77).

On remand, the district court found that, even assuming
the truth of petitioners’ allegations about the quantity of
commerce affected, there was no more than a de minimis
effect on foreign commerce (Petn.Appx. C-78-79; also see
id. at pp. C-62-63 (“infinitesimally small quantity”)). Its
holding, however, was based on additional factors. In
particular, the government of Honduras had issue a Diplo-
matic Note, expressing

“the concern which has been caused to the Government
of Honduras in that there is being litigated in a court
of the United States, on the basis of a North American
law which not only is inapplicable in Honduras but is
contrary to the principles of local legislation, a case
which has already been decided in legal form by the
courts of the Republic with reference to activities

’While that judgment was on appeal, related (but not consoli-
dated) tort actions were filed by Maya and Danli managers, peti-
tioners Ardon, Lima and Smith, but dismissed on grounds of forum
non conveniens. Those dismissals were vacated in Timberlane I,
reinstated by the district court on remand and affirmed in the Court
of Appeals 1984 opinion. Petitioners do not seek certiorari as
to the related Federal tort actions (see generally Petn. ).

In 1975, petitioners filed an action in the California state courts
based on the same conduct. After some discovery, that action was
dismissed on grounds of forum non conveniens and affirmed on
appeal in an unreported opinion. The California Supreme Court
denied a hearing and petitioners did not seek certiorari of that
decision.

5

carried on under its jurisdiction and which affects a
Honduran natural resource, that is timber, which is
by law under the control and oversight of the govern-
ment of the nation itself” (CR: 343, Exh. 5).

The court found potential for “needless tensions” with
Honduras (Petn.Appx. C-83), and ruled:
“Regard for the codification of [Honduras’] cultural,
business and ethical mores, as well as the integrity of
its system of justice leads us inextricably to conclude
that we need DISMISS these actions” (Petn.Appx.
C-87).

The Court of Appeals affirmed (Petn.Appx. B). It too
found that the “actual effect of Timberlane’s potential
operations on United States foreign commerce” was “in-
substantial, even in the narrow pine lumber market” (Petn.
Appx. B-30; also see id., p. B-29 (“miniscule effect”) ).
Moreover, the record failed to reveal either intent to affect
foreign commerce or foreseeability of such effect:

“. .. Bank of America’s acts were directed primarily
toward securing a greater return on its investment. Its
actions were consistent with Honduran customs and
practices. ...

“. .. Bank of America simply enforced its mort-
gage in an attempt to recoup its investment. ... We
do not believe that a reasonable investor would have
foreseen the minimal effect that has occurred here”
(Fetn.Appx. B-31-32).

The Court of Appeals was also concerned about a “signifi-
cant conflict with Honduran law and policy” (Petn.Appx.
B-26; also see id., p. B-33), and, for all these reasons,
affirmed. On February 1, 1985, the Court of Appeals denied
a petition for rehearing (Petn.Appx. A).

6

ARGUMENT

The ruling below is wholly consistent with the reasoning
of the decisions of this Court and the Courts of Appeals.
The Court of Appeals in Timberlane I correctly set forth

criteria which, in international antitrust cases, allow the -

district court to evaluate serious concerns expressed by
foreign governments:

“A tripartite analysis seems to be indicated... .
[T]he antitrust laws require in the first instance that
there be some effect—actual or intended—on American
foreign commerce before the federal courts may legiti-
mately exercise subject matter jurisdiction under those
statutes. Second, a greater showing of burden or re-
straint may be necessary to demonstrate that the effect
is sufficiently large to present a cognizable injury to
the plaintiffs and, therefore, a civil violation of the
antitrust laws. . . . Third, there is the additional
question which is unique to the international setting
of whether the interests of, and links to, the United
States—including the magnitude of the effect on
American foreign commerce—are sufficiently strong,
vis-a-vis those of other nations, to justify an assertion
of extraterritorial authority” (Petn Appx. D-62-63;
citations omitted).

As the Court of Appeals explained, this kind of balancing
“ig especially required in private suits [because] .. .
there is no opportunity for the executive branch to weigh
the foreign relations impact, nor any statement implicit in
the filing of the suit that that consideration has been out-
weighed” (Petn.Appx. D-66-67). This procedure provides a
safety valve for the rare case, like this one, which has the
potential for creating a serious, and needless, diplomatic
rift with a friendly sovereign. No Court of Appeals that has
considered the desirability of applying such balancing in
similar circumstances has opposed it. To the contrary,

.

at least four other circuits (and district courts in a fifth)
have concluded that such balancing provides a useful and
appropriate framework.

I
THE RESULT IN THIS CASE IS CONSISTENT WITH
THE REASONING OF THIS COURT’S PRECEDENTS
AND WITH DECISIONS FROM THE COURTS OF
APPEALS.

Petitioners’ action was dismissed on jurisdictional
grounds because, on balance, there was insufficient nexus
to the United States (as compared to Honduras) and a
serious potential for conflict with the government of
Honduras. After several years of full discovery, peti-
tioners were unable to show any intended effect, any
reasonably foreseeable effect, or anything more than a
de minimis actual effect on U.S. foreign commerce. More-
over, the conduct giving rise to the alleged claims and all
the substantial effects occurred in Honduras. Petitioners
are unable to cite one case in which jurisdiction has been
exercised in such circumstances, and there is none.

The decisions of this Court establish that concerns
about foreign policy implications require there be some
limits on the exercise of Sherman Act jurisdiction in
foreign commerce cases. This Court first noted in American
Banana Co. v. United Fruit Co. (1909) 213 U.S. 347, that
it was “surprising to hear it argued” that the Sherman
Act governed acts outside the United States (id. at 355).
Subsequent cases have held that, with limitations, extra-
territorial conduct could be subject to Sherman Act
scrutiny, i.e., where the alleged conspiracy is hatched in
the United States and there are effects on U.S. commerce
(see Continental Co. v. Union Carbide (1962) 370 U.S.
690, 704-706).*

‘Here, the district court found “no evidence linking the home
office of the Bank to any anticompetitive scheme” (Petn.Appx.
C-64).

8

For many years, Judge Learned Hand’s opinion in
United States v. Aluminum Co. of America (2 Cir. 1945)
148 F.2d 416 has also been recognized as a leading state-
ment of applicable principles. That decision held that
Sherman Act jurisdiction was appropriate where defend-
ants’ foreign conduct both was intended to and did cause
substantial effects in the United States (148 F.2d 443-445).
(Petitioners have failed in 12 years of litigation to make
such a showing.) In so holding, however, the Alcoa court
recognized that foreign policy considerations impose limi-
tations on cases alleging Sherman Act jurisdiction for
conduct abroad. In particular, the Alcoa court hypothe-
sized an agreement abroad which (as the courts found in
this case) was not intended to affect U.S. imports, but
which might have some repercussions in the United States
and concluded:

“TW ]hen one considers the international complications
likeiy to arise from an effort in this country to treat
such agreements as unlawful, it is safe to assume that
Congress certainly did not intend the Act to cover
them” (148 F.2d 443).

Potential international complications have been acknowl-
edged by this Court and led the Court of Appeals to con-
clude in Timberlane I that jurisdictional rulings in foreign
commerce cases require delicate handling.®

Contrary to petitioners’ suggestion in their third question
for review, Timberlane I does not give the district courts

\

‘Compare the citations of secondary authorities Fugate and
Brewster cited in Continental Co. v. Union Carbide, 370 U.S. 690,
705, with those cited in Timberlane I, Petn.Appx. D-42, n. 12, et
seq. The Timberlane I court expressly relied upon Continental Co.
v. Union Carbide (Petn.Appx. D-67-68).

9

“unbridled discretion” to abstain.* Rather, the district
court balances the relevant criteria and national interests,
and its decision is subject to plenary review by the Court

of Appeals.’

Each circuit that has considered balancing national in-

*Cf. Timberlane III, Petn.Appx. B-18-19 & n. 3; Industrial Inv.
Development Corp. v. Mitsui & Co. (5 Cir. 1982) 671 F.2d 876,
884-885, n. 7, vacated on other grounds (1983) 460 U.S. 1007,
holding reinstated (5 Cir. 1983) 704 F.2d 785, certiorari denied
(1983) .... US. ......, 104 S.Ct. 394).

"Petitioners argue that the Timberlane test is “completely inap-
propriate,” citing a law review article by James M. Grippando
(Petn., p. 45), which was written before Timberlane II or Timber-
lane III. Mr. Grippando’s primary concern is that foreign remedies
may not include treble damages. This is precisely the source
of much international conflict over the jurisdictional reach of
the Sherman Act. More important, however Mr. Grippando
argues for “interest balancing embodied in the judicial abstention
tests” because it “better accommodates sensitive foreign relations
concerns than does the traditicnal [simple] effects doctrine” (De-
clining to Exercise Extraterritorial Antitrust Jurisdiction on Grounds
of International Comity: An Illegitimate Extension of the Judicial
Abstention Doctrine, 23 Va.J.Int’l L. (1983) 395, 428). But he
urges interest balancing under a “choice of law” approach. Mr.
Grippando’s distinction is therefore one of form, not substance (cf.
id., p. 423 (“functionally similar”) ), and would have made no
difference in application in this case (see Petn.Appx. C-80-83
(district court findings on availability and adequacy of alternative
forum) ). Finally, Mr. Grippando notes that where “the balance of
relative national interests tip against the United States,” as the
Court of Appeals here held (Petn.Appx. B-33-34), “federal regu-
latory statutes should not receive extraterritorial application”
(23 Va.J.Int’l L. 428 n. 167). In short, Mr. Grippando’s analysis
supports respondents, not petitioners.

eT

10

terests in determining Sherman Act jurisdiction over
foreign commerce cases has endorsed the concept :*

© In Montreal Trading Ltd. v. Amax Inc. (1981) 661
F.2d 864, 869, the Tenth Circuit held that Timberlane I
“eontains the proper elements for consideration”;

¢ In Mannington Mills, Inc. v. Congoleum Corp. (1979)
095 F.2d 1287, 1297-1298, the Third Cireuit adopted
a similar balancing test;

¢ In In re Uranium Antitrust Litigation (1980) 617
F.2d 1248, 1255, the Seventh Circuit said the balanc-
ing test “certainly provide[s] an adequate frame-
work for such a [jurisdictional] determinaticn”;°
and

© In Industrial Inv. Development Corp. v. Mitsui & Co.
(1982) 671 F.2d 876, 884 n. 7, vacated on other
grounds (1983) 460 U.S. 1007, holding reinstated

SIn addition, several district courts in the Second Circuit have
invoked Timberlane I principles (Dominicus Americana Bohio v.
Gulf & Western (S.D.N.Y. 1979) 473 F.Supp. 680, 687 (“proper
standard is a balancing test”); National Bank of Canada v. Inter-
bank Card Ass'n (S.D.N.Y. 1980) 507 F.Supp. 1113, 1119 (“parties
are in agreement that the applicable criteria are provided by
[Timberlane I]”); Power East Ltd. v. Transamerica Delaval, Inc.
(S.D.N.Y. 1983) 558 F.Supp. 47, 49 (“see” cite) ). On appeal from
the dismissal in the National Bank case, the Second Circuit affirmed
on the basis that there was no anticompetitive effect on U.S. foreign
commerce (Nat. Bank of Canada v. Interbank Card Ass’n (2 Cir.
1981) 666 F.2d 6, 8 (“[w]ithout questioning the pertinence of the
third [balancing] test identified in Timberlane”)). See also Bulk
Oil (Zug) A.G. v. Sun Company, Inc. (S.D.N.Y. 1983) ......
F.Supp. ...... , nh. 4 (available on LEXIS, Genfed).

*The Uranium decision did not involve a specific challenge to
jurisdiction. Rather, the defendants did not appear and defaulted,
making sensible balancing difficult if not impossible (see J. Atwood
& K. Brewster, Antitrust and American Business Abroad (2d Ed.
1981) p. 173) ). In those circumstances, the Seventh Circuit declined
to find that the trial court had abused its discretion by net
balancing national interests (617 F.2d 1256).

11

(5 Cir. 1983) 704 F.2d 785, certiorari denied (1983)
eqmnee US. ........, 104 S.Ct. 394, the Fifth Circuit “com-
mend[ed]” the analysis in Timberlane and Manning-
ton Mills. But, the court concluded, the Mitsui de-
fendants had set forth “a series of mere assertions,
unsupported by the pleadings or by summary judg-
ment evidence” (671 F.2d 885), which failed to
satisfy the Timberlane test.

Petitioners’ argument that the different results in Mitsur
and Timberlane justify review by this Court (Petn., pp.
44-47) is erroneous. The different records compelled the
different appellate treatments under the same legal stand-
ard.*° In contrast to Mitsui, the record here contains abun-
dant evidence of the potential conflict with foreign (Hon-
duran) law. This was one of the matters of concern ex-
pressed by the Honduran government in its Diplomatic
Note (see p. 5, supra), and recognized by the district court
(see Petn.Appx. C-53-54 n. 31, C-75-85). That conflict was
also forcefully stated in the opinion of a leading compara-
tivist, Eduardo White (which was paraphrased in the Court
of Appeals decision, see Petn.Appx. B-24-25) :

“(C]ertain practices restricting competition and ob-
viously condemned by the United States antitrust laws,

°This difference is underscored by petitioners’ own synopsis of
the cases (Petn., pp. 46-47):

“In Timberlane the court found that the ‘enforcement of United
States antitrust laws in this case would lead to a significant
conflict with Honduran law and policy’ [Timberlane III, 749
F.2d 1384] while in Mitsui the court said that neither the
Indonesian court’s nullification of [plaintiffs’] joint venture
agreement with Telaga Mas nor the Indonesian government's
action in cancelling its approval of [plaintiffs’] joint venture . ..
has been shown to have been [an] approval of defendants’
efforts to destroy the joint venture agreement . . .” 671 F.2d
at 885.”

Fe ne ne eR Rr ee a a ee eR ee ee

12

are accepted and even encouraged by the economic
environment and legal organization of Honduras... .

“(M]y opinion is that the enforcement of the United
States antitrust laws to business activities in Honduras
clearly would be contrary to the principles and rules
of Honduras and would be considered under the legis-
lation of that country to be an unjustified intrusion
into those activities” (CR :292, paragraphs 11, 17).

Contrary to petitioners’ contention (see Petn., pp. 33-41),
this case, as the district court noted, is “easily distinguish-
able” from the district court order which was affirmed in
Laker Airways v. Sabena, Belgian World Airlines (D.C.
Cir. 1984) 731 F.2d 909 (Petn.Appx. C-45 n. 28). In Laker,
jurisdiction over the Sherman Act claims was “beyond
dispute” (731 F.2d 925) given the conduct which occurred
in the United States and the magnitude of the adverse
effects the alleged conspiracy had on U.S. consumers and
U.S.-based creditors (731 F.2d 923-925). The sole issue was
whether a foreign court could enjoin prosecution of on-

, going United States litigation and thereby supersede the
conceded subject matter jurisdiction of the Federal court
(731 F.2d 920-921). In that context, the Laker majority
rejected defendants’ argument that principles of comity
required the Federal court to defer to the foreign court’s
injunction, and to dissolve a U.S. antisuit injunction,
because the “foreign act [to which deference was re-
quested] is inherently incons‘stent with the policies under-
lying comity” (731 F.2d 937).

Thus, Laker and Timberlane are consistent, and do
not, as petitioners now argue (Petn., pp. 33-41), create a
conflict warranting review by this Court." This is borne

“Petitioners did not even refer to the decision of the District of
Columbia Court of Appeals when they petitioned for rehearing
from Timberlane III, although Laker had been decided some ten

13

out by the Laker court’s explanation that:

“CI}f the anticompetitive aspect of the alleged injury
is not appreciable; the contacts with the United States
are attenuated; and the actions of foreign govern-
ments denote the existence of strong foreign interests
[—the very circumstances of Timberlane—], then
comity may suggest a lack of Congressional intent to
regulate the alleged conduct. In this context, comity
may have a strong bearing on whether application of
the United States antitrust laws should go forward”
(731 F.2d 938).

II

THE EXECUTIVE BRANCH HAS ENDORSED THE
TIMBERLANE APPROACH AND LEGISLATIVE
HISTORY OF THE 1982 AMENDMENTS TO THE
SHERMAN ACT ESTABLISHES LEGISLATIVE IN-
TENT TO PERMIT COURTS TO EMPLOY COMITY.

The Timberlane approach to foreign commerce Sherman
Act cases has received strong endorsements from the U.S.
‘Department of Justice, the Federal Trade Commission
and the U.S. Department of State.”

months earlier. Petitioners’ argument (Petn., p. 40) is borrowed
from a newspaper article by two lawyers who confuse the Laker
defendants’ comity argument (which was rejected) with the
court's holding on subject matter jurisdiction. Moreover, their
attack on the application of Timberlane’s jurisdictional rule of
reason is based on two erroneous statements: (1) that the Timber-
lane conclusions about the effect on commerce rested on a resolu-
tion of conflicting evidence when in fact they were based on the
assumed truth of petitioners’ assertions, and (2) that discovery on
remand was limited to the jurisdictional issue. Their conclusions
are therefore entitled to no weight.

“FE g., Antitrust Division, United States Dept. of Justice, Antitrust
Guide tor International Operations (1977), pp. 6-7; Statement of
William F. Baxter Before House Subcommittee on Monopolies and
Commercial Law, Committee on the Judiciary, November 19, 1981;
Shenefield, The Perspective of the U.S. Department of Justice, in

14

Likewise, Congress has manifested its approval of
Timberlane. In 1982, Congress enacted section 7 of the
Sherman Act (15 U.S.C. 46a), limiting jurisdiction to
export claims having “direct, substantial and reasonably
foreseeable effect” on U.S. foreign commerce.” How the
amendment will affect future cases is not entirely clear.
But the legislative history of the amendment demonstrates
that Congress recognized the importance of the courts’
applying the rules of comity:

“If a court determines that the requirements for
subject matter jurisdiction are met, this bill would have

Perspectives on the Extraterritorial Application of U.S. Antitrust
and Other Laws,” (J. Griffin, Ed. 1979) 12, 22-24; Remarks of John
H. Shenefield, “Extraterritorial Impact of U.S. Antitrust Laws,”
before the ABA Section of International Law (Aug. 9, 1978),
reprinted in CCH Trade Reg.Rptr., Current Comment Transfer
Binder, { 50,386, at p. 55,857; Remarks by John H. Shenefield,
International Law Institute and the International Law Section
of the American Bar Association (Dec. 10, 1980) reprinted in
CCH Trade Reg.Rptr., Current Comment Transfer Binder, { 50,424,
at p. 55,959; Remarks by Alexander W. Sierck, Director of Trade
Policy, Antitrust Division, World Trade Institute, New York
(Sept. 6, 1979), p. 9; W. F. Baxter, Responses to Questions
Submitted by the Committee on the Judiciary (March 23, 1981),
pp. 15-16 (“I agree with the trend of recent case law which
acknowledges the need for United States courts to consider and
weigh foreign interests before asserting jurisdiction in antitrust
cases involving conduct beyond our borders” ); Remarks of Commis-
sioner Robert Pitofsky, The Bar Association of Greater Cleveland,
Antitrust Compliance Seminar (April 28, 1981), pp. 7-8 (“I think
the Timberlane approach is right.” ).

As for the Department of State, see, e.g., Letter of J. Brian
Atwood, Assistant Secretary of State, to Senator Edward M.
Kennedy, Chairman of the Senate Committee on the Judiciary
(Sept. 27, 1979), reprinted in S.Rep. No. 444, 96th Cong., Ist Sess.
(1979), 118; see Letter of Roberts B. Owen, Legal Adviser of the
Department of State, to John H. Shenefield, Associate Attorney
General ( March 17, 1980), reprinted in 74 Am.J.Int'l.L. (1980) 665.

“The text of the statute is set forth in the statutory appendix
( Appendix B hereto).

15

no effect on the courts’ ability to employ notions of
comity or otherwise to take account of the inter-
national character of the transaction. Similarly, the bill
is not intended to restrict the application of American
laws to extraterritorial condnect where the requisite
effects exist .. .” (H.R.Rep. 97-686, 97th Cong., 2d Sess.
(1982), p. 13).

See also Laker Airways v. Sabena, Belgian World Air-
lines, supra, 731 F.2d 946 n. 137. Thus, Congress has said
that it is appropriate for the courts to apply the Timberlane
approach in cases like this one.

CONCLUSION

For the foregoing reasons, the petition for a writ of
certiorari should be denied.

Respectfully submitted,
Micuas. H. Saurysxy

Counsel of Record
Wuuus I. Eptvuyp
Cuartes R. Ragan
Keviw M. Fone

Counsel for Respondents

Pruuitssury, Mapison & Sutro
Of Counsel

(Appendices follow)

———eee —

A-l

APPENDIX A
United States District Court for the
Northern District of California
No. C-73-0792 L.H.B.
Civil
The Timberlane Lumber Company, an Oregon
Partnership; Danli Industrial, S.A.,
a Honduras corporation;
Maya Lumber Company, S. de R.L.,
a Honduras corporation,
Plaintiffs,
vs.

Bank of America National Trust and Savings
Association, a National banking association;
Bankamerica Corporation, a California corporation;
Pedro Casanova E Hijos, S.A.,

a Honduras corporation;
Importadore Mayorista, 8. de R.L.,

a Honduras corporation;

Michel Casanova; Nasser Bonheur, Manuel Ruis;
Louis Pasmino; Henry Malitesta; Jose Gonzales;
Patrick Byrne; and Does I to X Inclusive,
Defendants.

[Filed Mar. 29, 1974]

JUDGMENT

Defendants’ motion to dismiss came on for hearing
before this Court, the Honorable Lloyd H. Burke presiding,
and the matter having been submitted by the parties for
decision, and a decision having been duly rendered and
announced by the Court at the hearing,

The Court having concluded that it is prohibited under
the act of state doctrine from examining the acts of a
foreign sovereign state; and in any event, that there is
no direct and substantial effect on United States foreign
commerce,

A-2

It is hereby ORDERED, and ADJUDGED that plaintiffs
take nothing and that the action be dismissed on the merits.
Each party will bear its own costs.

Dated: March 20, 1974

Luoyp H. Burke
United States District Judge

A-3

APPENDIX B
SHERMAN ACT, $7 (15 U.S.C. § 6a)
Conduct involving trade or commerce with foreign nations

Sections 1 to 7 of this title shall not apply to conduct
involving trade or commerce (other than import trade or
import commerce) with foreign nations unless—

(1) such conduct has a direct, substantial, and reasonably
foreseeable effect—

(A) on trade or commerce which is not trade or
commerce with foreign nations, or on import trade or
import commerce with foreign nations; or

(B) on export trade or export commerce with
foreign nations, of a person engaged in such trade or
commerce in the United States; and

(2) such effect gives rise to a claim under the provisions
of sections 1 to 7 of this title, other than this section.

If sections 1 to 7 of this title apply to such conduct only
because of the operation of paragraph (1) (B), then sections
1 to 7 of this title shall apply to such conduct only for injury
to export business in the United States.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_0195%3A2. Public record. Not legal advice.