(INTRODUCTION TO SUMMARY JUDGMENT MOTIONS; SUBJECT MATTER JURISDICTION)
This is the first of a series of opinions which will address, piecemeal, the plethora of issues presented by the voluminous summary judgment motions before us in this massive litigation. This opinion will discuss the contention raised in the motion of Mitsubishi Electric Corporation (MELCO) that an American court lacks subject matter jurisdiction over an antitrust claim against a foreign defendant such as MELCO whose actions took place in a foreign land (Japan). The motion will require us to examine the extraterritorial reach of the United States antitrust laws and to define both a methodology and appropriate standards for determining when exercise of that extraterritorial jurisdiction is appropriate. Because this opinion is the first in a series, we will also use it to set forth background material which we can incorporate by reference in subsequent opinions addressing the summary judgment motions.
The plaintiffs in this action are Zenith Radio Corporation ("Zenith") and National Union Electric Corporation ("NUE"). NUE, the corporate successor to Emerson Radio Co. and one of the pioneers in the radio and TV industry, ceased all production of television receivers in February of 1970.
That December, it filed the first of these suits,
alleging that the Japanese defendants and others had conspired to take over the American consumer electronic products industry and thereby to drive NUE out of business. In 1974, Zenith filed an action making similar allegations.
The NUE action was then transferred to this district for coordinated or consolidated pretrial proceedings with the Zenith action;
the transfer was later made unconditional and the actions were consolidated for trial.
The ten principal defendants are Japanese manufacturers of consumer electronic products (Matsushita Electric Industrial Co., Ltd.; Toshiba Corporation; Hitachi, Ltd.; Sharp Corporation; Sanyo Electric Co., Ltd.; Sony Corporation; and Mitsubishi Electric Corporation ("MELCO")); a Japanese trading company (Mitsubishi Corporation); and two American companies (Sears, Roebuck & Co. and Motorola, Inc.). Fourteen other defendants are subsidiaries of the principal Japanese defendants. Of the twenty-four defendants, fifteen are defendants in both suits, seven in the Zenith action only, and two in the NUE action only.
In addition to the twenty-four named defendants, the plaintiffs have identified scores of alleged coconspirators whose business operations traverse the globe, ranging from small Japanese companies to such world industrial giants as N.V. Phillips Gloeilampenfabrieken and General Electric.
In capsule form, plaintiffs' complaints allege that the Japanese defendants and their coconspirators are and have been participants in a conspiracy which, by artificially lowering export prices, has for more than twenty years sought the methodical destruction of the United States domestic consumer electronic products industry.
The defendants are accused of carrying out the aims of this conspiracy by flooding the United States market with imported goods at prices so attractive to consumers that domestic producers suffered serious losses, and were either unable to compete or able to do so only by moving some or all of their own production facilities to Mexico and the Far East.
The particular offenses charged in the complaints span the entire range of the antitrust laws. The overall conspiracy is alleged to violate §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, and § 73 of the Wilson Tariff Act, 15 U.S.C. § 8. Plaintiffs also allege actual and attempted monopolization under § 2 of the Sherman Act. Additionally, they allege that the Japanese defendants have violated § 801 of the Revenue Act of 1916, better known as the 1916 Antidumping Act, 15 U.S.C. § 72, by "commonly and systematically," with predatory intent, selling their products in this country for substantially less than their actual market value or wholesale price in Japan. The defendants are also charged with violating the Robinson-Patman Act, 15 U.S.C. § 13(a), by discriminating in price among American purchasers.
Finally, Zenith charges that Sears, Motorola, and the Matsushita and Sanyo defendants violated § 7 of the Clayton Act, 15 U.S.C. § 18, in connection with the Japanese companies' acquisitions of interests in domestic consumer electronic products manufacturers.
The plaintiffs' papers seek to portray a unitary worldwide conspiracy said to have lasted over a period of some thirty years and to have involved approximately one hundred manufacturers, exporters, and importers of consumer electronic products of various national origins.
The defendants maintain that, notwithstanding their voluminous submissions, plaintiffs have failed to elucidate their claims with any degree of precision. They also deny both the legal and factual validity of the plaintiffs' claims. Additionally, certain of the defendants have asserted counterclaims against Zenith, attacking Zenith on two fronts. First, they allege that Zenith, acting alone and in combination and conspiracy with others, engaged in territorial allocations, price discrimination, and horizontal and vertical price fixing arrangements, and effected certain "key dealer preferences" in violation of the Robinson-Patman Act and §§ 1 and 2 of the Sherman Act. Second, they accuse Zenith and its coconspirators of seeking to interfere with its competitors, including the counterclaimants, "by every means available, including the submission of complaints, petitions, testimony and other information to various federal governmental agencies and officials, federal courts, and the United States Congress which were based upon sham, false and misleading allegations and information, without regard to the truth or merits of the claims made." The counterclaiming defendants thus invoke the "sham litigation" theory of antitrust liability recognized in Otter Tail Power Co. v. United States, 410 U.S. 366, 93 S. Ct. 1022, 35 L. Ed. 2d 359 (1973).
Pending before us currently are motions by all defendants seeking summary judgment against both Zenith and NUE. Some are joint motions; others are motions by individual defendants, some of which are joined by other defendants; some motions are addressed to discrete legal issues; others are omnibus motions addressed to several issues. These motions, which number several dozen, raise a wide variety of issues, both factual and legal, and may be catalogued as follows: (1) an attack upon subject matter jurisdiction (the motion addressed herein); (2) a motion asserting that NUE lacks standing to sue under the doctrine of Bangor Punta Operations, Inc. v. Bangor & Aroostook R.R., 417 U.S. 703, 94 S. Ct. 2578, 41 L. Ed. 2d 418 (1974), because of its 100% acquisition by the Swedish manufacturer Aktiebolaget Electrolux after the allegedly offending events occurred; (3) a motion contending that Zenith was not directly injured and that it therefore cannot recover under the doctrine of Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S. Ct. 2061, 52 L. Ed. 2d 707 (1977); (4) a motion (decided this day) asserting that plaintiffs' claim under the Antidumping Act of 1916, 15 U.S.C. § 72, fails because of the lack of required comparability between products sold in Japan and those sold in the United States; (5) a motion asserting insufficiency of evidence of the monopolization and attempted monopolization claims under § 2 of the Sherman Act; (6) a motion asserting insufficiency of the evidence of price discrimination under the Robinson-Patman Act; (7) motions addressed to the claims under § 7 of the Clayton Act, some of which argue that the particular defendants were not involved in any acquisitions, and others of which contest the sufficiency of the evidence; (8) a separate motion by Sony Corporation advancing its allegedly unique position as a manufacturer of higher priced goods, with the resulting implication that it could not have been a member of a conspiracy to sell at artificially low prices; (9) a motion by Sears asserting a statute of limitation defense; (10) a motion by Motorola advancing its allegedly unique status as a victim, rather than a perpetrator, of the acts complained of; and (11) a series of motions addressed to plaintiffs' conspiracy claims alleging, inter alia, (a) lack of evidence of conspiracy; (b) insufficiency of the evidence of consciously interdependent parallel behavior, required to prove conspiracy; and (c) that the "check-price agreements" which plaintiffs contend are central to defendants' conspiracy were mandated by the Japanese Ministry of International Trade and Industry (MITI) and hence cannot be condemned by the United States antitrust laws under the act of state and sovereign compulsion doctrines, and principles of international comity. Finally, and relevant to the monopolization, dumping, and Robinson-Patman claims, all of which require predatory intent, defendants claim that plaintiffs have shown no evidence of pricing below marginal cost, or its surrogate average variable cost, as required to prove predation under the standard advanced by Professors Areeda and Turner,
which defendants maintain applies.
As the foregoing description suggests, this is a case of considerable complexity. It is also a case of monumental proportions. The document production has run to twenty million documents; deposition transcripts run to over 100,000 pages; interrogatories have come in wave after wave the plaintiffs' answer to one interrogatory ran to 750 pages. Plaintiffs' final pretrial statement, filed with preclusive effect,
consumes over 17,000 pages. And yet not even the foregoing description can adequately portray the character of this litigation. It is only when the matrices of complexity and magnitude are superimposed upon the ambience of this case, which has been conducted throughout in the highest of dudgeon and rhetoric and attended by constant acrimony, that its incredible and burdensome nature can be truly assayed. We will have more to say on this point later.
Rather than waiting to file a comprehensive opinion addressing each motion, we have chosen to write separately on each discrete legal issue, whether raised by one motion or by several. Such an approach will be valuable in terms of case management, for it will permit us to narrow the issues in advance of trial, saving further preparation time for the parties. Furthermore, it will allow us to address in a single opinion those legal issues which are common to several motions. We turn now to the matter of subject matter jurisdiction.
Notwithstanding that the subject matter jurisdiction issue is raised only by MELCO,
and notwithstanding that this issue gives us little difficulty, we write at some length herein for three reasons. First, as we have already noted, because this is the first of our opinions to address the summary judgment motions, it is an appropriate vehicle through which to set forth the background of the litigation; we will incorporate that background by reference in subsequent summary judgment motion opinions. Second, although the result on the subject matter jurisdiction motion is clear, the extensive case law gives us nothing precisely on point; moreover, there are a number of conceptual problems in determining the appropriate analytical framework for resolution of MELCO's motion which require discussion. Third, because of the importance and magnitude of the case and the vigor with which MELCO asserts the subject matter jurisdiction issue, we feel that MELCO is entitled to complete explication of our reasoning.
One final matter of a preliminary nature must be resolved. MELCO urges that in determining this and other summary judgment motions, we consider only those papers filed as of April of 1979, when argument on the summary judgment motions was heard, and that we not refer to plaintiffs' massive final pretrial statement as we act on the summary judgment motions filed theretofore. We believe, however, that we would be remiss were we to neglect to consider all materials available to us. Indeed, we submit that the grant of summary judgment would not pass muster if factual material such as that in the FPS were ignored. Because of the recurring nature of MELCO's request, we add the following explanation of our reasons for this aspect of our decision.
MELCO's motion was filed on March 31, 1978. MELCO contends that the summary judgment record was closed with the filing of the last affidavits and briefs in connection with its motion, which occurred in April, 1979. MELCO, citing caselaw, contends that it is entitled to disposition of the summary judgment motion on the basis of the record as it then stood, and that it is improper for us to consider the FPS, which was not filed until the fall of 1979. We disagree.
The cases cited by MELCO in support of its view that we should not consider plaintiffs' FPS do not persuade us. Mid-West Paper Products Co. v. Continental Group, Inc., 596 F.2d 573 (3d Cir. 1979), permits early decision of summary judgment motions as a remedy for abusive use of discovery, but certainly does not require such consideration. Denckla v. Maes, 313 F. Supp. 515 (E.D.Pa.1970), is distinguishable on the ground that plaintiff had filed no counter-affidavits to meet defendant's denials, resting instead on the allegations of the complaint and the affidavit filed therewith. Engelhard Industries, Inc. v. Research Instrumental Corp., 324 F.2d 347 (9th Cir. 1963), cert. denied, 377 U.S. 923, 84 S. Ct. 1220, 12 L. Ed. 2d 215 (1964), held only that a district judge did not err in refusing to consider affidavits filed with an application for rehearing, after decision of the summary judgment motion. Accord, Southern Rambler Sales, Inc. v. American Motors Corp., 375 F.2d 932 (5th Cir.) cert. denied, 389 U.S. 832, 88 S. Ct. 105, 19 L. Ed. 2d 92 (1967). The cases are clear that the choice of materials to be considered in conjunction with a summary judgment motion is within the discretion of the trial judge. It is our view that the case management powers accorded to federal trial judges under Federal Rule of Civil Procedure 16 are controlling in this regard.
We cannot say how we would exercise our discretion respecting MELCO's argument that we decide the case on the April 1979 record if this were an ordinary or even a moderately involved case. However, what we have here is a case whose colossal dimensions and unique chemistry render it qualitatively different from the cases which MELCO has cited, and indeed from all but a few cases in the annals of litigation. We have discussed the complexity and magnitude of the case supra. In terms of chemistry, suffice it to say that the case has been attended, through much of its course, by constant acrimony, recriminatory rhetoric, and a significant failure of the parties to cooperate or stipulate to anything, even routine matters such as extension of deadlines.
The chemistry of the case has tainted the discovery proceedings and compounded already serious problems with the adequacy of discovery. More importantly, the FPS was in not insignificant measure required as a surrogate for incomplete discovery. As will be seen, all of these matters have impacted upon the exercise of our challenged discretion.
When this case was assigned to our docket in November of 1977, discovery was essentially in midstream. As note 17 supra suggests, accomplishing the completion of discovery, through direct or surrogate means, was a major undertaking. Regrettably, at the time that MELCO submits that the record on its summary judgment motion should have been closed, there still was much discovery outstanding, either in its conventional sense17A or in its surrogate sense, i. e., completion of the FPS. Given the magnitude of the case, the chemistry of the case, and the problems with completion of discovery, it is our considered judgment that to treat the summary judgment record as closed as of April 1979 would be foolhardy.
Let us consider the following examples. Assume that we were to grant summary judgment for one of the defendants on the basis of the April 1979 record. Would not plaintiffs assail that grant mightily in the Court of Appeals, if but a modest amount of material surfaced after the proffered date and found its way into the FPS? Consider, on the other hand, the "dumping" issue on which summary judgment has been granted this day. Are not the opinion and accompanying order granting summary judgment to the defendants, including MELCO, on plaintiffs' dumping claims bottomed on a much more solid foundation than they otherwise would be by virtue of our having considered the model match-ups, expert opinion reports, and the FPS, all of which were filed after April 1979, with respect thereto? Indeed, it was not until the FPS was filed with preclusionary effect that the plaintiffs' case, subject to the good cause exception of Pretrial Order No. 154, was "cast in concrete," as it were.
In sum, we believe that we would tarnish our stewardship in this litigation were we to have failed to consider the FPS in connection with the MELCO summary judgment motion. We thus decline to exercise our discretion to treat the summary judgment record as closed as of April 1979.
II. THE CONTENTIONS OF THE PARTIES
MELCO has submitted an omnibus motion, much of which resembles a traditional summary judgment motion, arguing that there is no evidence to support plaintiffs' contentions. However, throughout its arguments, MELCO has interwoven the threshold issue of subject matter jurisdiction.
As to that issue, MELCO's arguments are both legal and factual. It maintains, first, that the United States antitrust laws, principally the Sherman Act, cannot be stretched to cover acts occurring outside the territorial boundaries of the United States by foreign nationals, and that the actions of MELCO were all of that character. Secondly, it argues that, even if the Sherman Act were intended to reach such activities, the actions of MELCO do not rise to a level which would meet the jurisdictional test.
More specifically, MELCO argues that it is a Japanese company which sold its products solely in Japan, maintaining no American presence, and that therefore any operative acts in furtherance of the alleged conspiracy by which plaintiff seeks to bring MELCO into the action could have occurred only in Japan.
It then strongly presses an absolute territorial doctrine of jurisdiction, maintaining that reports of the demise of American Banana Co. v. United Fruit Co., 213 U.S. 347, 29 S. Ct. 511, 53 L. Ed. 826 (1909), which is said to posit that doctrine, are highly exaggerated, and that American Banana, rather than United States v. Aluminum Co. of America (Alcoa), 148 F.2d 416 (2d Cir. 1945) (L. Hand, J.), is the law. Therefore, according to MELCO, the United States antitrust laws cannot be applied to it.
MELCO further argues that, even if Alcoa is the law in some respects, the "intent plus effect" test announced there by Judge Learned Hand, see infra at 1182-1184, dubbed the "qualified" test by MELCO, applies only when (1) the actor is a U.S. national, (2) all or part of the activities occurred in or were controlled from the United States, or (3) a combination of those factors. Conspicuously absent from the case law, it contends, are situations in which the Alcoa test has been applied to reach actions by foreign nationals which occurred on foreign soil. Thus, finding no specific overruling of American Banana's broad language implying an absolute territorial principle of subject matter jurisdiction, MELCO argues that that case controls, despite frequent commentary to the contrary. See, e.g., 1 P. Areeda & D. Turner, Antitrust Law 261 (1978).
Turning to constitutional arguments, MELCO maintains that the doctrine of separation of powers demands that the courts not assume jurisdiction over foreign commerce, an area plainly allocated to the legislative and executive branches of government, unless there is some compelling reason; plaintiffs have adequate remedies, MELCO urges, in the procedures, both administrative and diplomatic, established by those non-judicial branches. Furthermore, it argues that the Sherman Act and the 1916 Antidumping Act do not delegate control over foreign commerce to private citizens, and that a private damage action in this context may not be maintained.
As will be seen infra, the state of the law renders MELCO's positions untenable; hence the cornerstone of MELCO's thesis is that it is simply bad policy to extend United States antitrust jurisdiction to foreigners acting abroad. The United States must recognize, MELCO urges, that under the "law of nations" concept which it espouses, by which we assume it means those standards of conduct that have come to be accepted as customary in international relations, there is no analogue of the Sherman Act making economic matters punitively actionable, i. e., there is no universal recognition that the actions which the United States antitrust laws interdict are or should be serious offenses. Therefore, the argument runs, it is unfair to hold an alien corporation liable for actions undertaken in its home country which were perfectly legal there.
MELCO cites numerous commentators for support, but, significantly, little law. This viewpoint is epitomized in MELCO's final brief, its "Supplemental Brief of Defendants Mitsubishi Electric Corporation and Melco Sales, Inc. with Respect to Subject Matter Jurisdiction," filed April 23, 1979, in which we are asked to ignore the welter of precedent and write on "tabula rasa " concerning this issue, which is "so fraught with such overriding considerations as national sovereignty, the conduct of foreign relations, and world trade," Supplemental Brief at 2, and to dismiss as to defendant MELCO for reasons of comity.
Finally, MELCO maintains that even if the Alcoa test were to prevail, its activities, all of them allegedly in Japan, must be tested by some obscure higher threshold of jurisdictional proof, again because the "law of nations" so requires. As to factual issues, MELCO maintains that it has committed no acts which would bring it within the subject matter jurisdiction of the United States antitrust laws under any standard which may be applied.
The plaintiffs rejoin that the law supports their position that American Banana has been entirely undermined, though concededly never explicitly overruled, that the Alcoa test plainly reigns, and that it is easily met with respect to MELCO, at least insofar as the low threshold required for subject matter jurisdiction is concerned. They urge in addition that comity considerations do not require that the court refrain from finding jurisdiction in this case. Finally, plaintiffs maintain that they have brought forth evidence more than sufficient to implicate MELCO in the massive conspiracy which they have alleged, hence to subject it to the jurisdiction of this court.
In the following sections, we will discuss those of the parties' contentions which raise strictly legal issues. For purposes of this opinion, we will assume that MELCO does not maintain an agent in this country, and that, as argued so strenuously by MELCO, the only acts with which it could possibly be charged occurred in Japan.
Nonetheless we will reject MELCO's "absolute territorial" doctrine of jurisdiction and find that the American antitrust laws may be applied to these actions.
III. PROCEDURAL CONSIDERATIONS
As a threshold matter, we must determine the appropriate procedural mechanism for disposing of MELCO's motion. As we have pointed out, MELCO disputes that any of its activities had any effect on United States interstate or foreign commerce. Because, in Sherman Act cases, the existence of a nexus with interstate or foreign commerce is both a jurisdictional prerequisite and an element of the substantive claim,
the jurisdictional and substantive challenges raised in the motion are necessarily intertwined. This partial identity of issues, when linked with the fact that subject matter jurisdiction can never be waived and can be raised at any time, even after trial, raises questions as to the appropriate procedural hatrack upon which to hang a decision, the identity judge or jury of the ultimate jurisdictional decisionmaker, and the level of proof required for a final jurisdictional determination. While we believe it is clear that the court decides the jurisdictional question and that the level of proof is a modest one, we nonetheless extend our opinion by a few pages to draw attention to the confused and anomalous state of the law in this area, in the hope that future commentary and judicial decision may ultimately provide clarification.
Two fundamental philosophies are placed at odds by this potential procedural snarl: (1) the basic principle that jurisdiction is a threshold question requiring resolution by the court at the outset of any litigation, because in its absence the court has neither statutory nor constitutional authority to proceed to adjudicate the merits of a dispute; and (2) the right to trial by jury, or at least a decision by a factfinder, unless it is clear as a matter of law that there is no provable set of facts on which relief could be granted. Moreover, where the jurisdictional and substantive questions are intertwined in some degree and a finding of fact at trial results in a deprivation of jurisdiction, the entire purpose of pretrial disposition of jurisdictional matters is defeated. We have looked in vain for a definitive discussion of this problem, which surfaces in a number of contexts.
While this may not be a subject for codification or synthesis, we deem it worthy of discussion.
The Supreme Court has stated that it is irrelevant whether the question is deemed one of jurisdiction or one of substance since in either case the critical inquiry would be the same, Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738, 742 n. 1, 96 S. Ct. 1848, 1851 n. 1, 48 L. Ed. 2d 338 (1976). That pronouncement, however, is of little succor for the trial judge. In Hospital Building, the Court reversed a dismissal on the pleadings, holding that there were sufficient allegations to support jurisdiction at that stage. See note 24 infra. It was thus unnecessary for the Supreme Court to consider, as the trial ...