The Supreme Court ruled 5 to 3 yesterday that a foreign nation claiming to be injured by antitrust violations is a "person" entitled to seek triple damages in American courts.
The court held that neither the fact that the nations "are foreign nor the fact that they are sovereign is reason to deny them the remedy of treble damages Congress affored to 'any person' victimized by violations of the antitrust laws."
The majority's resolution of what Justice Potter Stewart termed "an important and novel question" puts 162 sovereign governments into the same antitrust status as flesh-and-blood human beings, the 50 states, and domestic and foreign corporations. Under a 1955 law, the U.S. government is permitted to sue only for single damages, on the theory that supplemental remedies are available to it.
In a dissenting opinion, Chief Justice Warren E. Burger accused the majority of achieving its "extraordinary result" with an "undisguised exercise of legislative power."
Justice Harry A. Blackman participated neither in considering nor deciding the case and, as is customary, didn't say why. His former law firm in Minneapolis represents American Cyanamid Co. (Lederle Laboratories), one of six pharmaceutical manufacturers in the case.
The decision frees Federal Judge Charles R. Weiner to proceed with the trial in Minneapolis of treble-damage claims brought by the Governments of Columbia, India, Iran, the Philippines and West Germany.
In addition to Cyanamid, the defendants are five other suppliers of antibiotics in the tetracycline family that are used to treat a broad spectrium of infections.The firms are Pfizer, Inc., Bristol-Myers Co., The Upjohn Co Squibb Corp. and Olin Corp.
The governments accused the firms of having conspired to restrain and monopolize interstate and foreign trade in the manufacture distribution and sale of the antibiotics from 1954 into the 1970s.
Millions of dollars are at stake in the litigation, which has been languishing in pre-trial stages, although the complaints do not specify the damages sought. The companies already have paid out nearly $200 million to states, counties, cities and other domestic litigants.
In an indictment returned in 1961, a federal grand jury in New York City charged Pfizer, Cyanamid and Bristol with having engaged in a seven-year criminal anti-trust conspiracy involving fraud on the Patent Office, price-fixing and other anticompetitive activities.
Upjohn and Squibb (then owned by Olin) were named as unindicted co-conspirators. In 1967, a jury convicted the three defendants, but eventually the Second U.S. Circuit Court of Appeals [WORD ILLEGIBLE] the entire proceeding.
In addition to drug companies, all American firms now are on notice that foreign governments to which they sell now can sue them in the United States for antitrust violations.
In the opinion for the court, Justice Stewart wrote that the fundamental purposes of the antitrust laws - to deter violators and deprive them of "the fruits of their illegality" - would be "defeated" by denying foreign nations the right to sue for treble damages.
He said that "persons doing business both in this country and abroad might be tempted to enter into anti-competitve conspiracies affecting American consumers in the expectation that the illegal profits they could safely extort abroad would offset any liability to plaintiffs at home."
In 1976, State Department legal adviser Monroe Leigh said in a letter, to the Eighth U.S. Circuit Court of Appeals that the department "would not anticipate any problems" from a holding that foreign governments are "persons" for antitrust purposes. The appeals court ruled later that the governments are persons.
The majority acknowledged that nothing in the Sherman Act of 1890 or the Clayton Act of 1914, or in their legislative histories, says clearly whether Congress intended to define "any person" entitled to sue include foreign governments. The question was "never considered at the time" the laws were enacted, Stewart wrote.
But, he said, the legislative history of the Sherman Act does show a congressional intent to give a "naturally broad" meaning to "any person." He noted that the law's sponsor said the treble-damage remedy was available to "any party," and that a principal draftsman of the final bill said it established a right to sue for "anybody" who chooses to do so.