Minn-Chem, Inc. v. Agrium, Inc. (7th Cir., en banc, June 27, 2012)

On June 27, 2012, the  U.S. Court of Appeals for the Seventh Circuit Court provided fresh guidance on the Foreign Trade Antitrust Improvements Act (FTAIA) in its much-anticipated en banc opinion in Minn-Chem, Inc. v. Agrium, Inc.  A panel of the Seventh Circuit had held in September 2011, that a class-action complaint alleging a global price-fixing cartel among Canadian, Russian and Belarusian producers of potash, a mineral used primarily in agricultural fertilizer, failed to plead enough facts to satisfy either of the two import-related exceptions to the FTAIA, and on that ground reversed a decision of the district court which had denied a motion to dismiss the complaint for failure to state a claim.  The Seventh Circuit in October 2011, vacated the original panel’s opinion and granted the en banc review that led to its June 27, 2012 opinion.        

Before reaching the FTAIA exceptions, the Court in Part II of its opinion overruled its previous en banc decision in United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942 (7th Cir. 2003) — and held that the FTAIA does not limit the subject matter jurisdiction of the federal courts, but merely spells out an element of an antitrust claim.  

In Part III of its opinion, the Court interpreted the two “import” related exceptions to the FTAIA.  The Court concluded that the exception for “pure import commerce — that is the kind of commerce that is not subject to the special rules created by the FTAIA” — applies to “trade involving only foreign sellers and domestic buyers,” in this case, direct purchases of potash by U.S. entities from members of the alleged cartel located outside the United States.  It was clear, the Court stated, that some, but not all, of the transactions alleged in the Complaint were pure import transactions outside the scope of the FTAIA.

Regarding the second FTAIA import-related exception — foreign trade or commerce that has “direct, substantial, and reasonably foreseeable” effects on U.S.domestic or import commerce — the Court held that, “for FTAIA purposes, the term ‘direct’ means only a ‘reasonably proximate causal nexus.'”  In so holding, the Court explicitly adopted the position of the U.S. Department of Justice’s Antitrust Division and rejected a more restricted definition in United States v. LSL Biotechs., 379 F.3d 672 (9th Cir. 2004). 

Applying these standards, the Court concluded that the allegations of the Complaint state a claim for violation of the Sherman Act and affirmed the order of the district court denying the defendants’ motion to dismiss for failure to state a claim.


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