Academic journal article Texas International Law Journal

Shifting Viewpoints: The Foreign Trade Antitrust Improvement Act, A Substantive or Jurisdictional Approach

Academic journal article Texas International Law Journal

Shifting Viewpoints: The Foreign Trade Antitrust Improvement Act, A Substantive or Jurisdictional Approach

Article excerpt

Since being passed in 1982, the Foreign Trade Antitrust Improvement Act (FTAIA) has been viewed predominantly as a jurisdictional limitation to the Sherman Act. All of the Circuits currently agree with this interpretation and although the Supreme Court has not ruled on this issue specifically, in its Empagran decision the Court refers to the FTAIA in jurisdictional terms. There are, however, those that see the FTAIA as a restriction on the substantive applicability of the Sherman Act rather than a jurisdictional limitation. This view is supported by Justice Scalia in his Hartford Fire dissent and by Judge Wood, of the 7th Circuit, in her dissent in United Phosphorus.

In 2006 the Supreme Court held in Arbaugh, a Title VII (Civil Rights Act of 1964) case, that, "when Congress does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as nonjurisdictional in character."1 Since there is nothing in the language of the FTAIA indicating that its limitations are jurisdictional, the Arbaugh decision may require the Circuits to review their treatment of this issue.

This article will analyze these two very different treatments of the FTAIA and discuss the effects that the Arbaugh decision may have on its future. After an introductory overview of the issues in Part I, Part II will give a brief history and explanation of the FTAIA; Part III will analyze the differences between jurisdictional and substantive statutory interpretation; Part IV will discuss how these different interpretations are applied to the FTAIA in United Phosphorus and Hartford Fire. Part V will analyze the Arbaugh case and its possible effects on the statutory interpretation of the FTAIA; and finally, Part VI will discuss the future of the FTAIA.

I. INTRODUCTION: ARBAUGH, AN END TO JURISDICTIONAL DRIVEBY'S ON THE FTAIA

From its nascent days to the present, the Foreign Trade Antitrust Improvement Act (FTAIA) has been viewed predominantly as a jurisdictional limitation to the Sherman Act rather than a limit on its substantive applicability.2 All of the Circuits currently interpret the FTAIA as jurisdictional, and although the Supreme Court has not ruled on this issue specifically, in its Empagran decision the Court refers to the FTAIA in jurisdictional terms.3 There are however, those who see the FTAIA as a limit on the substantive applicability of the Sherman Act rather than a jurisdictional limitation, and the prevailing winds may be changing, eventually displacing the majority's view with that of the minority. This approach is supported, most notably and most vocally, by Justice Scalia in his dissent in Hartford Fire,4 and by Judge Wood of the Seventh Circuit in her dissent in United Phosphorus.5

The Second Circuit has long been a progenitor of important decisions in the commercial sphere, and has been especially notable in the field of antitrust where Judge Learned Hand's 1945 Alcoa decision announced the "effects test" and the rule of extraterritoriality.6 It is no wonder then that careful attention is paid to the decisions handed down from the Second Circuit and that these decisions are carefully scrutinized; changes in the treatment of issues there can have rippling effects throughout the judicial system. Judge Lynch of the Southern District of New York knows this well, and it comes as no surprise that he does not take lightly the possible shift coming in the Second Circuit's treatment of the Foreign Trade Antitrust Improvement Act (FTAIA). In his 2008 opinion, Boyd v. AWB Limited, Judge Lynch wrote a nearly 350-word footnote on the debate over the treatment of the FTAIA as either a jurisdictional limitation or as a limitation on the substantive applicability of the statute, even though neither party challenged the characterization of the statute as jurisdictional.7 He quoted the Supreme Court, calling "the tendency of courts to term the non-existence of a critical fact a 'jurisdictional defect' rather than merely the failure to prove an element of the claim . …

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