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The more U.S. District Judge Alfred V. Covello looks at the case of three chemical distributors in India suing one of America’s chemical giants for an alleged price-fixing conspiracy, the more he’s convinced his Hartford, Conn., courthouse is where it should be litigated. And that’s despite a landmark ruling by the U.S. Supreme Court this summer that shut the door on many foreign antitrust litigants who’d like to sue in U.S. federal courts, under the Sherman Antitrust Act. For the third and perhaps final time, Covello rejected arguments this month from Danbury-based Union Carbide and its parent, Dow Chemical Co. of Midland, Mich., that the high-stakes dispute should be dismissed for lack of jurisdiction. The defendants, represented by Craig A. Raabe of Robinson & Cole’s Hartford office and the Chicago-based national firm of Meyer, Brown, Rowe & Maw, have argued that the Foreign Trade Antitrust Improvements Act (FTAIA) of 1982 prohibits Sherman Act claims against them, because their alleged conduct did not have a direct, substantial and foreseeable effect on U.S. commerce. Covello, in an Aug. 11 ruling, concluded that jurisdiction was proper, despite the U.S. Supreme Court’s June ruling in F. Hoffman-LaRoche Ltd. v. Empagran, S.A. That case turned on the statutory construction of the FTAIA, which requires a foreign plaintiff to plead the existence of conduct creating a Sherman Act claim within the U.S. At issue was whether the claim had to be the plaintiff’s claim, or if the existence of a third party’s claim was sufficient. The Empagran case posed such a potential threat to global trade that Germany, Belgium, Canada, the United Kingdom, Ireland and the Netherlands, in amicus briefs, all joined the U.S. to oppose extending the reach of U.S. antitrust jurisdiction. International corporations fear foreign litigation would be drawn to U.S. courts by the Sherman Act’s treble damages, and liberal U.S. discovery practices. The Supreme Court narrowed the scope with Empagran, holding the plaintiff personally needed a domestic claim. While all three plaintiffs in MM Global Services Inc., v. Dow Chemical, et al. operate in India, the first-named plaintiff is incorporated in the U.S. The companies claim they were set up by Union Carbide, in the wake of Union Carbide’s Bhopal gas leak disaster in 1984, to create a public relations buffer allowing the company’s products to be traded in and around India. When Union Carbide was acquired by Dow in 1999, it suddenly had a non-controversial name in India, and less use for MM Global and the other plaintiff subsidiaries. They contend that the defendant suppliers used e-mails and other communications from the U.S. in forcing them to maintain price levels in India to assure higher price levels of chemicals and polymers both in the U.S. and worldwide. In his most recent ruling, Covello noted that Empagran overruled the 2nd U.S. Circuit Court of Appeals’ latest decision on the FTAIA, Kruman v. Christie’s Int’l PLC, which Covello had cited in finding jurisdiction. “Specifically,” he wrote, “the defendants argue that the plaintiffs have not and cannot now assert that domestic effects on commerce led to their injuries, as required by Empagran, because the plaintiffs have built their case around the proposition that Indian resale price maintenance led to higher prices in the United States, not the other way around.” Dow asserted it was logically impossible for the plaintiffs to claim “that their injuries gave rise to domestic effects on commerce and that domestic effects also gave rise to their injuries.” But the plaintiffs — represented by Richard S. Taffet of Bingham McCutchen’s New York office and Wiggin & Dana antitrust lawyer Robert M. Langer in Hartford — countered that Empagran denied jurisdiction in a situation where the foreign injuries from price fixing were entirely independent from the domestic effects of the conspiracy. They argued there’s nothing in Empagran that precludes jurisdiction over a case, like this one, where the foreign and domestic effects of a pricing scheme are intertwined. Convinced, Covello concluded the plaintiffs properly alleged that Dow and Union Carbide’s conduct “had an effect on competition in and from the United States and the plaintiffs were injured as a result of that effect.” Taffet said, in an interview this month, “To our knowledge, this is the first ruling to a apply Empagran to specific facts.”

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