Industrial Inv. Development Corp. v. Mitsui & Co., Ltd.

• Decision Date: 31 March 1982
• Docket Number: No. 81-2175,81-2175
• Citation: 671 F.2d 876
• Parties: 1982-1 Trade Cases 64,660 INDUSTRIAL INVESTMENT DEVELOPMENT CORPORATION, et al., Plaintiffs-Appellants, v. MITSUI & CO., LTD., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 876

671 F.2d 876

1982-1 Trade Cases 64,660

INDUSTRIAL INVESTMENT DEVELOPMENT CORPORATION, et al Plaintiffs-Appellants, v. MITSUI & CO., LTD., et al., Defendants-Appellees.

No. 81-2175.

United States Court of Appeals Fifth Circuit.

March 31, 1982.

Louis Paine, Robert Hayden Burns, Fitzhugh H. Pannill, Jr., Houston, Tex., for plaintiffs-appellants.

B. J. Bradshaw, Rufus Wallingford, Jerry E. Smith, Daniel M. McClure, Houston, Tex., for defendants-appellees.

Appeal from the United States District Court for the Southern District of Texas.

Before COLEMAN, REAVLEY and SAM D. JOHNSON, Circuit Judges.

REAVLEY, Circuit Judge:

This is an antitrust suit. The district court initially granted the defendants' motion for summary judgment on the single ground that the action was barred by the act of state doctrine. We reversed. 594 F.2d 48 (5th Cir. 1979), cert. denied, 445 U.S. 903, 100 S.Ct. 1078, 63 L.Ed.2d 318 (1980). On remand, the district court turned back to the same motion of the defendants and granted summary judgment on the three remaining grounds: (1) that defendants' conduct is beyond the extra-territorial scope of the antitrust laws; (2) that plaintiffs have no standing to sue under the antitrust laws; and (3) forum non conveniens. ¹ The court declined to exercise pendent jurisdiction over plaintiffs' nonfederal claims, and dismissed the suit. ² Defendants were not entitled to summary judgment on any of the grounds they invoked. We again reverse and remand.

I. Background

The plaintiffs are an American corporation, Industrial Investment Development Corporation ("Industrial Investment"), and its two Hong Kong subsidiaries, Indonesia Industrial Investment Corporation, Ltd. ("Indonesia Industrial") and Forest Products Corporation, Ltd. ("FPC"). The defendants-appellees are a Japanese corporation, Mitsui & Co., Ltd. ("Mitsui-Japan") and its American subsidiary, Mitsui & Co. (U.S.A.), Inc. ("Mitsui-U.S.A."). A third defendant is an Indonesian corporation, P. T. Telaga Mas Kalimantan Company, Ltd. ("Telaga Mas"), which was served but has never appeared in this action.

Plaintiffs claim that the three defendants conspired to keep plaintiffs out of the business of harvesting trees in East Kalimantan (Borneo), Indonesia and exporting logs and lumber from Indonesia to the United States and other countries. Plaintiffs allege that defendants' conspiracy was intended to and did unreasonably restrain and monopolize the foreign commerce of the United States, in violation of §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. ³ Plaintiffs also claim that the two Mitsui defendants are liable for tortious interference with contractual relations. In our prior opinion, we detailed the plaintiffs' allegations concerning the defendants' efforts to deprive plaintiffs of their alleged contractual rights to a timber concession in East Kalimantan. See 594 F.2d at 50. We will not repeat those allegations here. We think it useful for the purposes of this appeal, however, to outline the procedural history of this case.

On June 19, 1975, plaintiffs filed their complaint in this action, along with a set of interrogatories and a document request addressed to Mitsui-U.S.A. Response to the interrogatories and document request was made on October 1, 1975. On July 6, 1976, plaintiffs served a set of interrogatories and a document request on Mitsui-Japan, which did not respond until April 27, 1977. One month later, defendants served their motion for dismissal and summary judgment on grounds of standing, subject matter jurisdiction, and forum non conveniens. After replying to defendants' voluminous motion papers on October 11, 1977, plaintiffs attempted to continue discovery. On November 4, 1977, plaintiffs served notice that they would take the deposition of Mitsui-Japan on December 15 in Houston, Texas. After securing a postponement, Mitsui-Japan moved for a protective order on January 6, 1978, asking the court to stay all discovery on the ground that it had filed a dispositive motion and that "the questions raised in said motion are questions of law rather than questions of fact and involve, primarily, the insufficiency of plaintiffs' legal theories under the facts as alleged by them." ⁴ Responding to this motion, plaintiffs argued that it was "especially inappropriate" to stay the deposition of Mitsui-Japan while a summary judgment motion was pending, since plaintiffs were entitled to discover evidence establishing the existence of genuine issues of material fact.

The district court did not rule on the stay of Mitsui-Japan's deposition; it granted summary judgment on the act of state ground on February 28, 1978. This court's mandate reversing that judgment was not issued until September 4, 1979. When plaintiffs attempted to resume discovery by serving a notice of deposition of Mitsui-U.S.A. on September 7, 1979, defendants filed another motion to stay all discovery pending the court's resolution of the remaining grounds in its motion, again averring that "the issues raised are questions of law rather than questions of fact and involve, primarily, the insufficiency of plaintiffs' legal theories under the facts as alleged by them." After this motion and two others were denied in November and December of 1979, ⁵ Mitsui-U.S.A. produced employees for deposition in December. Then, on March 7, 1980, plaintiffs filed a motion to compel discovery, asking the court to resolve the issues concerning the deposition of Mitsui-Japan and also contending that Mitsui-U.S.A. had failed to present for deposition representatives with knowledge of the matters involved in this litigation.

Thirteen months later, without resolving any of the outstanding discovery issues, the court again granted summary judgment against plaintiffs. The court explained only that it found "(t)he arguments in Defendants' briefs" to be "meritorious" and "dispositive." ⁶ Although the action had been pending for almost six years, plaintiffs had not been allowed to depose one of the defendants, and claimed that the deposition of the other was insufficient. Almost four years had been consumed by defendants' motion for dismissal and summary judgment and their attendant efforts to resist discovery on the ground that resolution of the motion could render further discovery unnecessary.

II. The Extraterritorial Scope of the Sherman Act

A. Effect on United States Commerce

A restraint that directly or substantially affects the flow of commerce into or out of the United States is within the scope of the Sherman Act. See Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 704, 82 S.Ct. 1404, 1413, 8 L.Ed.2d 777 (1962); United States v. Aluminum Co. of America, 148 F.2d 416, 443-44 (2d Cir. 1945) ("Alcoa "); 1 J. von Kalinowski, Antitrust Laws and Trade Regulation § 5.02(2)(c) (1980); L. Sullivan, Antitrust 714-16 (1977). A review of the summary judgment submissions and evidence convinces us that defendants have not demonstrated that there is no genuine issue concerning the existence of a direct or substantial effect on United States foreign commerce. See Fed.R.Civ.P. 56(c); Adickes v. S. H. Kress & Co., 398 U.S. 144, 157-61, 90 S.Ct. 1598, 1608-10, 26 L.Ed.2d 142 (1970) (burden on movant).

In their briefs prior to the first appeal, defendants' attack on the existence of an effect on United States commerce was only an attack on plaintiffs' pleadings. Defendants placed their own characterization on the complaint and declared that the case involved only the tree-cutting business in Indonesia; thus, they concluded, their conduct had no effect on United States commerce. Plaintiffs had alleged, however, that Mitsui-U.S.A., an American corporation which imports a sizeable amount of lumber or lumber products into the United States, had conspired to keep them out of the business of harvesting trees and exporting logs and lumber from Indonesia to the United States. There was ample evidence in the record to show that Mitsui-U.S.A. had appropriated much of the business that plaintiffs claim they would have derived from the forestry concession: Mitsui-U.S.A. was purchasing the bulk of the logs from the concession and selling them for export to Mitsui-Japan at a substantial profit.

The competition between two American importers to obtain a source of supply on foreign territory affects the foreign commerce of the United States. Timberlane Lumber Co. v. Bank of America, 549 F.2d 597, 604-05, 615 (9th Cir. 1976); see Pacific Seafarers, Inc. v. Pacific Far East Line, Inc., 404 F.2d 804, 811-17 (D.C.Cir.1968), cert. denied, 393 U.S. 1093, 89 S.Ct. 872, 21 L.Ed.2d 784 (1969); cf. Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 113 n.8, 89 S.Ct. 1562, 1571 n.8, 23 L.Ed.2d 129 (1969) (American corporation's participation in foreign patent pools); Timken Roller Bearing Co. v. United States, 341 U.S. 593, 71 S.Ct. 971, 95 L.Ed. 1199 (1951) (division of foreign markets by American corporation and its foreign affiliates). Mitsui-Japan was allegedly a co-conspirator in this attempt to restrain competition between two American competitors. Thus, defendants' attack on the pleadings did not make it "appear( ) beyond doubt that the plaintiff (could) prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957) (motion to dismiss for failure to state a claim), quoted in McLain v. Real Estate Board, 444 U.S. 232, 245, 100 S.Ct. 502, 511, 62 L.Ed.2d 441 (1980) (challenge to "jurisdictional element" of a Sherman Act claim).

After we reversed the district court's first grant of summary judgment, the defendants shifted to a factual attack by arguing that the single, undisputed fact that Mitsui-Japan exported all of the lumber, purchased from Mitsui-U.S.A. in Indonesia, to Japan demonstrated that there was no genuine issue concerning an effect on United States commerce. Mitsui-Japan...