Hartford Fire Insurance Co. v. California
Encyclopedia
Hartford Fire Insurance Co. v. California, 113 S.Ct. 2891
(1993), was a controversial United States Supreme Court
case which held that foreign companies acting in foreign countries could nevertheless be held liable for violations of the Sherman Antitrust Act
if they conspired to restrain trade within the United States
, and succeeded in doing so.
had conspired to coerce U.S. insurers into abandoning certain policy practices that were beneficial to consumers, but costly to the reinsurers. When U.S. state
s (including the named plaintiff
, California
) filed a lawsuit
alleging antitrust
violations, the defendant
companies raised a number of defenses, asserting that the United States lacked jurisdiction over their acts, that various statutes exempted them from liability, and that principles of comity
dictated that they should not be brought before a U.S. court. The United States district court
in which the case was brought accepted these arguments and dismissed the case. The Court of Appeals
reversed the dismissal.
The defendants raise, and the Court rejects the applicability of § 402 of the Foreign Trade Antitrust Improvements Act of 1982 (FTAIA) 96 Stat. 1246, 15 U.S.C. § 6a, which states that the Sherman Act does not apply to conduct involving foreign trade or commerce (other than import trade or import commerce), unless "such conduct has a direct and reasonably foreseeable effect" on domestic or import commerce. The Court found that the conduct at issue here clearly had such an effect.
The Court also found that, in enacting the FTAIA, the U.S. Congress
did not intend to write principles of comity into the Sherman Act - but even if they had, this would not affect the outcome. Both the defendant and Hartford argued that the conduct in which the reinsurers had engaged was lawful in the United Kingdom. Nevertheless, the Court looked to the Restatement (Third) Foreign Relations Law, § 415, Comment j for the principle that:
Furthermore, the Court cited Restatement (Third) Foreign Relations Law, § 403, Comment e for the proposition that no conflict exists "where a person subject to regulation by two states can comply with both."
, Kennedy, and Thomas
. Scalia acknowledged that the federal courts had jurisdiction
over this case, and that the Sherman Act could be applied extraterritorially, so long as the foreign acts complained of were directed into the United States. Nevertheless, Scalia contended that the actions of the U.S. courts showed a lack of judicial respect for the comprehensive regulatory scheme enacted by the UK. Although Congress may have intended the Sherman Act to apply to acts originating abroad, it was unreasonable to assume that Congress intended to apply the antitrust laws where they would be disruptive of another country's legislative scheme.
Case citation
Case citation is the system used in many countries to identify the decisions in past court cases, either in special series of books called reporters or law reports, or in a 'neutral' form which will identify a decision wherever it was reported...
(1993), was a controversial United States Supreme Court
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
case which held that foreign companies acting in foreign countries could nevertheless be held liable for violations of the Sherman Antitrust Act
Sherman Antitrust Act
The Sherman Antitrust Act requires the United States federal government to investigate and pursue trusts, companies, and organizations suspected of violating the Act. It was the first Federal statute to limit cartels and monopolies, and today still forms the basis for most antitrust litigation by...
if they conspired to restrain trade within the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, and succeeded in doing so.
Facts
Various reinsurance companies in the United KingdomUnited Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
had conspired to coerce U.S. insurers into abandoning certain policy practices that were beneficial to consumers, but costly to the reinsurers. When U.S. state
U.S. state
A U.S. state is any one of the 50 federated states of the United States of America that share sovereignty with the federal government. Because of this shared sovereignty, an American is a citizen both of the federal entity and of his or her state of domicile. Four states use the official title of...
s (including the named plaintiff
Plaintiff
A plaintiff , also known as a claimant or complainant, is the term used in some jurisdictions for the party who initiates a lawsuit before a court...
, California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
) filed a lawsuit
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
alleging antitrust
Antitrust
The United States antitrust law is a body of laws that prohibits anti-competitive behavior and unfair business practices. Antitrust laws are intended to encourage competition in the marketplace. These competition laws make illegal certain practices deemed to hurt businesses or consumers or both,...
violations, the defendant
Defendant
A defendant or defender is any party who is required to answer the complaint of a plaintiff or pursuer in a civil lawsuit before a court, or any party who has been formally charged or accused of violating a criminal statute...
companies raised a number of defenses, asserting that the United States lacked jurisdiction over their acts, that various statutes exempted them from liability, and that principles of comity
Comity
In law, comity specifically refers to legal reciprocity—the principle that one jurisdiction will extend certain courtesies to other nations , particularly by recognizing the validity and effect of their executive, legislative, and judicial acts...
dictated that they should not be brought before a U.S. court. The United States district court
United States district court
The United States district courts are the general trial courts of the United States federal court system. Both civil and criminal cases are filed in the district court, which is a court of law, equity, and admiralty. There is a United States bankruptcy court associated with each United States...
in which the case was brought accepted these arguments and dismissed the case. The Court of Appeals
United States court of appeals
The United States courts of appeals are the intermediate appellate courts of the United States federal court system...
reversed the dismissal.
Result
The Supreme Court, in an opinion by Justice Souter, stated that "it is well established by now that the Sherman Act applies to foreign conduct that was meant to produce and did in fact produce some substantial effect in the United States."The defendants raise, and the Court rejects the applicability of § 402 of the Foreign Trade Antitrust Improvements Act of 1982 (FTAIA) 96 Stat. 1246, 15 U.S.C. § 6a, which states that the Sherman Act does not apply to conduct involving foreign trade or commerce (other than import trade or import commerce), unless "such conduct has a direct and reasonably foreseeable effect" on domestic or import commerce. The Court found that the conduct at issue here clearly had such an effect.
The Court also found that, in enacting the FTAIA, the U.S. Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
did not intend to write principles of comity into the Sherman Act - but even if they had, this would not affect the outcome. Both the defendant and Hartford argued that the conduct in which the reinsurers had engaged was lawful in the United Kingdom. Nevertheless, the Court looked to the Restatement (Third) Foreign Relations Law, § 415, Comment j for the principle that:
- The fact that conduct is lawful in the state in which it took place will not, of itself, bar application of the United States antitrust laws, even where the foreign state has a strong policy to permit or encourage such conduct.
Furthermore, the Court cited Restatement (Third) Foreign Relations Law, § 403, Comment e for the proposition that no conflict exists "where a person subject to regulation by two states can comply with both."
Dissent
Justice Scalia dissented, joined in part by Justices O'ConnorSandra Day O'Connor
Sandra Day O'Connor is an American jurist who was the first female member of the Supreme Court of the United States. She served as an Associate Justice from 1981 until her retirement from the Court in 2006. O'Connor was appointed by President Ronald Reagan in 1981...
, Kennedy, and Thomas
Clarence Thomas
Clarence Thomas is an Associate Justice of the Supreme Court of the United States. Succeeding Thurgood Marshall, Thomas is the second African American to serve on the Court....
. Scalia acknowledged that the federal courts had jurisdiction
Jurisdiction
Jurisdiction is the practical authority granted to a formally constituted legal body or to a political leader to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility...
over this case, and that the Sherman Act could be applied extraterritorially, so long as the foreign acts complained of were directed into the United States. Nevertheless, Scalia contended that the actions of the U.S. courts showed a lack of judicial respect for the comprehensive regulatory scheme enacted by the UK. Although Congress may have intended the Sherman Act to apply to acts originating abroad, it was unreasonable to assume that Congress intended to apply the antitrust laws where they would be disruptive of another country's legislative scheme.
See also
- List of United States Supreme Court cases, volume 509
- List of United States Supreme Court cases
- Lists of United States Supreme Court cases by volume
- List of United States Supreme Court cases by the Rehnquist Court