Professional Documents
Culture Documents
Facts: The Pls (U.S. states including California) allege that both domestic and
foreign Dfs violated the Sherman Act by engaging in various conspiracies to affect
the American insurance market.
○ Dfs argue:
o the McCarran-Ferguson Act (15 USC 1011) precludes application of the
Sherman Act to the conduct alleged
o The principle of int'l comity requires the district court to refrain
from exercising jurisdiction over certain claims against it.
○ The United States district court in which the case was brought accepted
Dfs arguments and dismissed the case. Pl appeals.
Issue: Whether certain claims against foreign insurers should have been
dismissed as improper applications of the Sherman Act to foreign conduct. - No.
The U.S. has jurisdiction here, but should they exercise it?
Holding: The Court of Appeals reversed the dismissal. Held that the alleged
conduct is not immunized from antitrust liability by the McCarran-Ferguson Act,
and even assuming it applies, the principle of int'l comity does not preclude
District court jurisdiction over the foreign conduct alleged.
Reasoning: (Justice Souter has very diff understanding of comity than Justice
Scalia)
○ (regarding comity) Court recognizes that the application of the U.S.
antitrust act would lead to significant conflict with English law and policy, and
that, unless outweighed by other factors, should be a reason to decline
jurisdiction.
o Here, the reinsurer's express purpose to affect U.S. commerce and the
substantial nature of the effect produced, outweighed the supposed conflict and
required the exercise of jurisdiction here.
o Is there a conflict between domestic and foreign law?
□ Df argues that the conduct alleged here was consistent with
British law and policy
® However, the court says this is not a conflict. "The fact
that conduct is lawful in the state in which it took place will not, of itself,
bar application of the U.S. antitrust laws" even where the foreign state has a
strong policy to permit or encourage such conduct.
® Therefore, no conflict exists where a person subject to
regulation by two states can comply with the laws of both.
◊ Since British law does not require Dfs to act in a
way prohibited by the law of the U.S., or claim that compliance with the laws of
both countries is otherwise impossible, there is no conflict with British law.
Notes:
· More on comity
○ Comity is a complex & elusive concept - Since comity varies according the
factual circumstances, the absolute boundaries of the duties it imposes are
inherently uncertain.
○ Central precept of comity - when possible, the decisions of foreign
tribunals should be given effect in domestic courts, since recognition fosters
int'l cooperation and encourages reciprocity, thereby promoting predictability and
stability through satisfaction of mutual expectations.
o The interests of both forums are advanced
□ The foreign court b/c its law and policies have been vindicated
□ The domestic country b/c int'l cooperation ties have been
strengthened
○ Comity is a necessary outgrowth of globalization. With the movement among
nations, national interests cross borders. So every nation must often rely on
other countries to achieve its regulatory expectations.
○ Limitations to the application of comity
o When the foreign act is inherently inconsistent with the policies
underlying comity, domestic recognition of those policies defeats the goals of
comity. Therefore, no nation is obligated to enforce foreign interests which are
prejudicial to those of the domestic forum. Comity expires when the strong
public policies of the forum are impaired by the foreign act.
· Criticism of Souter's test as used in this case - basically, that means that US
forums would give more deference to the laws of nations that have substantially
different laws than our own (like favoring monopolistic practices) instead of
giving deferential treatment to laws of nations who have the same goals we do, but
just not as strict laws. This doesn’t make sense though.
○ Also doesn’t really get along with globalization. We need a more outward-
looking and cooperative economic policy so we should more often defer to foreign
states, and not make an assumption that our laws are the best.