The opinion of the court was delivered by: J. Curtis Joyner, J.
This action arises out of the decision of the International Air
Transport Association ("IATA")*fn1 at the July 19-23, 1999 meeting of
its Passenger Tariff Coordinating Conference in Montreal, Canada to lower
the commission paid to IATA-accredited travel agents in Central America
and Panama to a flat rate of 7%. Prior to this time, the commission rates
paid to travel agents in Latin America and the Carribean varied, depending
upon the country. In the case of Peru, Panama, Bolivia and Nicaragua, the
commission rate was as high as 10-11%.
Plaintiffs aver that, despite the reflection in the meeting's minutes
that the "U.S.-based TC [Tariff Commission] Members were prohibited by
their authorities from participating in such discussions [concerning the
proposal to lower the commission rates in Latin America and the Caribbean]
and . . . were therefore not present for this part of the Agenda," the
four defendant airlines were, in fact, ". . . aware of and endorsed and
encouraged IATA to adopt and implement this change in commission
structure" and "assisted in planning this agenda, were aware this vote
would be taken, and endorsed the Tariff Conference's lowering the
commission rates." (Complaint, ¶¶ 37, 38, 40). Plaintiffs allege that
the defendants thus acted in concert to lower the commission rates, in
violation of United States antitrust laws with devastating effects upon
plaintiffs' businesses and the businesses of the members of the proposed
class*fn2 whom they seek to represent. (Complaint, ¶ s47-49).
Defendants now move to dismiss the plaintiffs' complaint in its
entirety on the grounds that Plaintiffs lack antitrust standing and this
court lacks subject matter jurisdiction as the American antitrust laws do
not regulate competitive conditions in foreign countries. In addition to
these arguments, Defendant IATA further seeks dismissal of the complaint
against it because (1) all of the alleged conduct of IATA and the
conference members was expressly approved and granted antitrust immunity
under Sections 413 and 414 of the Federal Aviation Act,
49 U.S.C. § 41308-41309; and (2) it lacks the requisite "minimum
contacts" with this forum such as would justify this Court's exercise of
personal jurisdiction over it. Because we find that we do not have subject
matter jurisdiction to hear this matter, we do not address the
defendants' alternative arguments.
Standards Governing Rule 12(b)(1) and 12(b)(6) Motions
When defendants move to dismiss a complaint under Rule 12(b)(1) for
allege subject matter jurisdiction, the allegations of the
complaint must be treated as true and the plaintiff afforded the
favorable inferences to be drawn from the complaint. N.E. Hub Partners,
L.P. v. CNG Transmission Corp., 239 F.3d 333, 341 (3rd Cir. 2001), citing
Mortensen v. First Federal Savings & Loan Ass'n., 549 F.2d 884, 891 (3rd
Cir. 1977); Fed.R.Civ.P. 8(f). A challenge to a complaint for failure to
allege subject matter jurisdiction is known as a "facial" challenge, and
must not be confused with a "factual" challenge contending that the court
in fact lacks subject matter jurisdiction, no matter what the complaint
alleges, as factual challenges are subject to different standards. Id.,
at n. 7. See Also: 5A Wright & Miller, Federal Practice & Procedure Civil
2d § 1350, at 212-18 (1990). Thus, a Rule 12(b)(1) motion may be
treated as either a facial or factual challenge to the court's subject
matter jurisdiction. Gould Electronics, Inc. v. United States,
220 F.3d 169, 176 (3rd Cir. 2000). In reviewing a facial attack, the
court must only consider the allegations of the complaint and documents
referenced therein and attached thereto, in the light most favorable to
the plaintiff. Id, citing PBGC v. White, 998 F.2d 1192, 1196 (3rd Cir.
1993). In reviewing a factual attack, the court may consider evidence
outside the pleadings. Id., citing Gotha v. United States, 115 F.3d 176,
178-79 (3rd Cir. 1997). In any event, on a motion to dismiss for lack of
subject matter jurisdiction it is the plaintiff who has the burden of
persuading the court that it has jurisdiction. Gould, 220 F.3d at 178.
In contrast, a motion to dismiss pursuant to Rule 12(b)(6) may be
granted only if, accepting all well pleaded allegations in the complaint
as true, and viewing them in the light most favorable to plaintiff,
plaintiff is not entitled to relief. In re Burlington Coat Factory
Securities Litigation, 114 F.3d 1410, 1420 (3d Cir. 1996); Bartholomew
v. Fischl, 782 F.2d 1148, 1152 (3d Cir. 1986). "The issue is not whether
a plaintiff will ultimately prevail but whether the claimant is entitled
to offer evidence to support the claims." Id. quoting Scheuer v. Rhodes,
416 U.S. 232, 236, 40 L.Ed.2d 90, 94 S.Ct. 1683 (1974).
As noted, Defendants first seek to have the plaintiffs' complaint
dismissed because it fails to allege any anticompetitive effect on United
States domestic commerce thus depriving this Court of subject matter
jurisdiction. In light of the current state of the record, Defendants
thus appear to be raising a facial challenge to subject matter
jurisdiction as well as to the plaintiffs' statement of a claim upon
which relief can be granted.
Plaintiffs' complaint seeks monetary damages and an adjudication that
by conspiring and enacting the agreement to lower their commission
rates, the defendants' conduct violated the Sherman Act, 15 U.S.C. § 1.
Under that Act,
Every contract, combination in the form of trust or
otherwise, or conspiracy or restraint of trade or
commerce among the several States, or with foreign
nations, is hereby declared to be illegal. Every
person who shall make any contract or engage in any
combination or conspiracy hereby declared to be
illegal shall be deemed guilty of a felony, and on
conviction thereof, shall be punished by fine not
exceeding $10,000,000 if a corporation, or if any
other person, $350,000, or by imprisonment not
exceeding three years, or by both said punishments, in
the discretion of the court.
Generally speaking, American antitrust laws do not regulate the
competitive conditions of other nations' economies.
Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 582, 106 S.Ct.
1348, 89 L.Ed.2d 538 (1986); United States v. Aluminum Co. of America,
148 F.2d 416, 443 (2nd Cir. 1945). The Sherman Act does reach conduct
outside our borders, but only when the conduct has an effect on American
commerce. Matsushita, ...