AAI Asks Ninth Circuit to Reject FTAIA Interpretation that Would Exempt Certain International Cartels from Liability to U.S. Consumers (Seagate v. NHK)

AAI has submitted an amicus brief to the Ninth Circuit in support of plaintiffs in Seagate Technology LLC, et al. v. NHK Spring Co., LTD., et al. In its brief, AAI urges the appeals court to reverse a district court’s dismissal of a direct purchaser action based on a misreading of the Foreign Trade Antitrust Improvement Act (FTAIA) that would unnecessarily limit private antitrust enforcement.

The suit was brought by a U.S. manufacturer and its foreign affiliates who purchased price-fixed suspensions for incorporation into hard drives, some of which were inputs into laptops and other electronic products ultimately sold to U.S. consumers. The district court ordered summary judgment for defendants on the grounds that plaintiffs’ claims were barred by the FTAIA. The court held that, regardless of the ultimate consumer harmed, it was dispositive that defendants sold the price fixed products to plaintiffs’ subsidiaries outside of the U.S.

The AAI brief explains that the district court’s broad application of the FTAIA would exempt a whole category of international cartels from private civil liability even though they harm U.S. consumers and can be prosecuted by the federal government. The result of the district court rule is a two-tier enforcement framework for international cartels that is inconsistent with the FTAIA’s intent and the relevant precedent.

The brief explains the importance of federal private damages actions to U.S. antitrust enforcement and why government actions and private state law indirect-purchaser cases are not sufficient on their own. It highlights the significant under-deterrence of cartels and points to evidence of the particular harms that international cartels impose on U.S. consumers. AAI argues that the FTAIA, which was intended to preserve protections for U.S. commerce, should not be read to make U.S. consumers more vulnerable to anticompetitive harms. It asks the Ninth Circuit to reverse the district court and instruct it to apply the FTAIA to allow, at a minimum, direct purchaser suits based on sales into the U.S. of products incorporating price-fixed components.

The brief was written by AAI Vice President and Director of Legal Advocacy Kathleen Bradish, with assistance from AAI President Randy Stutz.

Read the full brief here: AAI Amicus Brief in Seagate v. NHK