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Antitrust

Lotes Co. v. Hon Hai Precision Industry Co.

Second Circuit Adopts Minn-Chem test for Domestic Effects.

The Foreign Trade Antitrust Improvements Act of 19821×1. 15 U.S.C. § 6a (2012). (FTAIA) establishes as a default rule that the Sherman Act2×2. Id. §§ 1–7. The Act prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce,” id. § 1, and monopolistic behavior, id. § 2. does not apply to nonimport foreign commerce.3×3. Id. § 6a (“Sections 1 to 7 of this title shall not apply to conduct involving trade or commerce (other than import trade or import commerce) with foreign nations . . . .”). However, the so-called “domestic effects” exception of the FTAIA permits Sherman Act claims based on foreign conduct when (1) that conduct “has a direct, substantial, and reasonably foreseeable effect” on U.S.-related commerce4×4. Id. § 6a(1). and (2) the plaintiff’s claim arises from that effect.5×5. Id. § 6a(2). The language, sometimes called the “domestic-injury exception,” provides that the Sherman Act does apply when “such conduct has a direct, substantial, and reasonably foreseeable effect . . . on trade or commerce which is not trade or commerce with foreign nations, or on import trade or import commerce with foreign nations . . . [and] such effect gives rise to a claim” under the Sherman Act. Id. § 6a. The Supreme Court clarified that “a claim” refers to the plaintiff’s claim. F. Hoffman-La Roche Ltd v. Empagran S.A., 542 U.S. 155, 174–75 (2004). Although the FTAIA purports to clarify the international scope of the Sherman Act, courts have struggled to interpret its “inelegantly phrased”6×6. United States v. Nippon Paper Indus. Co., 109 F.3d 1, 4 (1st Cir. 1997). language and ascertain the full reach of the Sherman Act.7×7. See, e.g., Empagran, 542 U.S. at 174–75 (interpreting “a claim” in “gives rise to a claim”); Empagran S.A. v. F. Hoffman-LaRoche, Ltd., 417 F.3d 1267, 1271 (D.C. Cir. 2005) (interpreting “gives rise to” in “gives rise to a claim”); United States v. LSL Biotechnologies, 379 F.3d 672, 680 (9th Cir. 2004) (interpreting “direct” in “direct, substantial, and reasonably foreseeable effect”).

Recently, in Lotes Co. v. Hon Hai Precision Industry Co.,8×8. 753 F.3d 395 (2d Cir. 2014). the Second Circuit interpreted “direct . . . effect” to require a “reasonably proximate causal nexus” between conduct and effect.9×9. Id. at 398 (citing Minn-Chem, Inc. v. Agrium Inc., 683 F.3d 845, 857 (7th Cir. 2012) (en banc)). This interpretation, though, risks unreasonable interference with the sovereignty of foreign countries and provides inadequate guidance to actors in foreign markets. Instead, courts should adopt an alternative rule that limits the “direct . . . effect” language to effects in the market at which the conduct is directed, which will mitigate friction between different nations’ antitrust regimes and provide more clarity to foreign actors. Such a reading is not only consistent with the statute but also consistent with the international comity canon of statutory interpretation that the Supreme Court has applied in interpreting the FTAIA.10×10. See Empagran, 542 U.S. at 169.

Lotes Co. is a Taiwanese corporation that designs and manufactures Universal Serial Bus (USB) connectors that are incorporated into electronics manufactured abroad and then sold in the United States.11×11. Lotes, 753 F.3d at 399. The defendants, Hon Hai Precision Industry Co. and various Foxconn companies,12×12. As the Lotes opinion notes, the plaintiff often treats the various Foxconn companies (Foxconn International Holdings, Ltd.; Foxconn International, Inc.; Foxconn Electronics, Inc.; and Foxconn (Kunshan) Computer Connector Co.) as a single entity. Id. For the purposes of this analysis, the Foxconn corporate structure is largely irrelevant. perform functions similar to those of Lotes,13×13. Id. but also own patents related to the latest USB technology, USB 3.0.14×14. Id. at 401. Lotes alleged that under the terms of the USB 3.0 standard-setting agreement, “contributors” to the standard — including patent owners, such as Hon Hai — are required to license USB 3.0 patents to all “adopters” of the standard, such as Lotes, under prescribed terms.15×15. See id. at 400–01. The standard-setting organization responsible for USB 3.0 technology, the USB Implementers Forum (USB-IF), requires, by contract, that contributors grant adopters a “non-exclusive world-wide license . . . on a royalty-free basis and under otherwise reasonable and nondiscriminatory (‘RAND–Zero’) terms.” Id. at 401 (quoting Joint Appendix at 79, Lotes, 753 F.3d 395 (No. 13-2280) (emphasis omitted)) (internal quotation marks omitted). In exchange, contributors are assured that their technology will be widely adopted. Id. at 400. Instead, Hon Hai and Foxconn delayed licensing and, when Lotes began manufacturing USB 3.0 products, pursued patent infringement lawsuits in China in order to establish and maintain dominant market share.16×16. Id. at 401–02. This business strategy is sometimes referred to as a “patent hold-up.” See Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 310 (3d Cir. 2007). These lawsuits would have the effect, Lotes claimed, of increasing the cost not only of the USB 3.0 connectors sold in China, but also of all products, including those sold in the United States, that incorporate USB 3.0 technology.17×17. See Lotes, 753 F.3d at 402. Lotes brought suit in the District Court for the Southern District of New York, alleging violations of the Sherman Act and making various state law claims.18×18. Id. at 403.

The district court granted the defendants’ motion to dismiss.19×19. Lotes Co. v. Hon Hai Precision Indus. Co., No. 12 Civ. 7465, 2013 WL 2099227, at *1 (S.D.N.Y. May 14, 2013). Following Second Circuit precedent, the district court held that the FTAIA’s requirements were jurisdictional.20×20. Id. at *7 (citing Filetech S.A. v. Fr. Telecom S.A., 157 F.3d 922, 931 (2d Cir. 1998), overruled in part by Lotes, 753 F.3d 395). Accordingly, the court proceeded to examine whether the domestic effects of defendants’ foreign conduct fell within the FTAIA’s exception. In analyzing whether the domestic effects of the defendants’ conduct were sufficiently “direct,” the court adopted the Ninth Circuit’s test from United States v. LSL Biotechnologies,21×21. 379 F.3d 672 (9th Cir. 2004). which asks whether the effects flowed as “an immediate consequence” of the conduct.22×22. Lotes, 2013 WL 2099227, at *7 (quoting LSL, 379 F.3d at 680). Applying that test, the district court concluded that the domestic “effects are simply too attenuated to establish the proximate causation required by the FTAIA.”23×23. Id. at *8. The court declined to exercise jurisdiction over the remaining state claims and also denied Lotes leave to amend, noting that Lotes’s request to add plaintiffs was “a transparent attempt to create diversity jurisdiction.” Id. at *11.

Writing for a unanimous panel of the Second Circuit, Chief Judge Katzmann24×24. Chief Judge Katzmann was joined by Judge Livingston and by Judge Carter of the District Court for the Southern District of New York, sitting by designation. affirmed on alternate grounds. The court first overruled its prior holding that the FTAIA’s requirements were jurisdictional, citing the Supreme Court’s intervening decision in Arbaugh v. Y & H Corp.,25×25. 546 U.S. 500 (2006). which instructed lower courts to interpret statutory limitations as jurisdictional only if explicitly required by the text.26×26. Lotes, 753 F.3d at 408 (overruling in part Filetech S.A. v. Fr. Telecom S.A., 157 F.3d 922 (2d Cir. 1998)). Chief Judge Katzmann rejected the defendants’ arguments that principles of international comity required interpreting the FTAIA as jurisdictional. Id. at 407. Because the statute’s requirements were substantive, not jurisdictional, the court then evaluated — and rejected — Lotes’s argument that the defendants had waived the protections of the FTAIA by contract.27×27. Id. at 408. The court pointed out that the plaintiff had waived the argument by not raising it below, id., and that, further, the claim was meritless since the defendants had agreed only to “abide by the Sherman Act to the extent it properly applies,” id. at 409 (emphasis added).

Having determined that the statute applied to the case, the court then turned to the question of whether the alleged conduct had the requisite “direct, substantial, and reasonably foreseeable effect” on U.S. domestic or import commerce. The court criticized the LSL “immediate consequence” rule as unsupported by the text of the FTAIA.28×28. Id. at 411. Because any domestic effect that is both “immediate” and “substantial” would also be “reasonably foreseeable,” an interpretation of “direct” as “immediately consequential” would render “foreseeable” superfluous, thus violating the cardinal rule of statutory interpretation against surplusage.29×29. Id. The court noted that the LSL court’s reliance on the Supreme Court’s interpretation of the term “direct effects” in the Foreign Sovereign Immunity Act (FSIA) was misplaced. Id. at 410–11 (citing Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 618 (1992)). Further, the “immediate consequence” test, Chief Judge Katzmann argued, “focuses narrowly on a single factor” of “spatial and temporal separation” between conduct and effect.30×30. Id. at 412. In the world of modern commerce, where many end products sold domestically consist of components manufactured overseas, such an “immediate consequence” test was too restrictive.31×31. Id.

Chief Judge Katzmann instead adopted the Seventh Circuit’s alternative direct effects test, which considers whether there is “a reasonably proximate causal nexus” between the foreign conduct and the domestic effect.32×32. Id. at 410 (quoting Minn-Chem, Inc. v. Agrium Inc., 683 F.3d 845, 857 (7th Cir. 2012) (en banc)) (internal quotation marks omitted). This “less stringent” test was a “better reading of the statute”33×33. Id. that avoided the problems of the LSL test while “still addressing antitrust law’s classic aversion to remote injuries.”34×34. Id. at 411. Such an interpretation was also more consistent with traditional analysis of domestic antitrust claims, which focuses on “directness or indirectness,” often using the language of proximate cause.35×35. Id. at 412 (quoting Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 540 (1983)) (internal quotation mark omitted). Despite the difficulty of defining proximate cause, courts can rely on judicial experience to analyze the many relevant factors.36×36. Id. at 412–13. The court mentioned as two possible factors “the structure of the market and the nature of the commercial relationships at each link in the causal chain.” Id. at 413.

Although the court found that the trial court had applied the wrong standard, it did not perform a direct effects analysis of the defendants’ conduct because any domestic effects, direct or not, did not “give rise to a claim” as required by the FTAIA.37×37. Id. at 413 (internal quotation marks omitted). The Supreme Court, in F. Hoffman-La Roche Ltd v. Empagran S.A.,38×38. 542 U.S. 155 (2004). had interpreted this second prong to require that the domestic effects “give rise to” the plaintiff’s claim, as opposed to just anyone’s claim.39×39. Id. at 174 (internal quotation mark omitted); see id. at 174–75. In Empagran, the Court began with the presumption that ambiguous statutes should be construed to avoid unreasonable interference with other nations — a canon derived from principles of comity.40×40. Id.; see also Hartford Fire Ins. Co. v. California, 509 U.S. 764, 817 (1993) (Scalia, J., dissenting). “International comity” is the principle that a sovereign’s laws extend extraterritorially only “so far as they do not prejudice the powers or rights of another state.” Animal Sci. Prods., Inc. v. China Nat’l Metals & Minerals Imp. & Exp. Corp., 596 F. Supp. 2d 842, 863 n.17 (D.N.J. 2008). While recognizing that comity concerns do not categorically prohibit the enforcement of U.S. antitrust laws against foreign conduct, the Court in Empagran emphasized that extraterritoriality was appropriate — reasonable — only when targeted against domestic harm.41×41. Empagran, 542 U.S. at 165 (citing United States v. Aluminum Co. of Am., 148 F.2d 416, 443–44 (2d Cir. 1945)). Chief Judge Katzmann, referencing comity concerns, framed the question as “whether any domestic effect . . . proximately caused Lotes’s injury.”42×42. Lotes, 753 F.3d at 414 (adopting reasoning from Empagran S.A. v. F. Hoffman-LaRoche, Ltd., 417 F.3d 1267, 1271 (D.C. Cir. 2005)). The Supreme Court in Empagran did not settle the appropriate standard of causation for this second prong, leaving it to the lower courts. The court found that the plaintiff’s injuries in fact preceded the domestic effects, and, noting that “[a]n effect never precedes its cause,”43×43. Id. (alteration in original) (quoting Am. Home Prods. Corp. v Liberty Mut. Ins. Co., 748 F.2d 760, 765 (2d Cir. 1984)) (internal quotation marks omitted). affirmed the dismissal of the complaint on these alternate grounds.44×44. Id. at 415. The court also affirmed the denial of leave to amend. Id. at 416.

The interpretation of “direct . . . effect” adopted by the Second Circuit in Lotes has two negative implications: First, the interpretation allows extraterritorial application of U.S. laws that might unreasonably interfere with foreign sovereigns’ regulation of their own territories. Second, the proximate cause standard creates unpredictability in global markets. The “immediate consequence” test, though stricter, has not in practice mitigated these concerns. Instead, courts should adopt a clearer and more limited test, one that considers only the effects on the market toward which the conduct was directed. Such an interpretation is consistent with the text of the FTAIA when viewed — as by the Court in Empagran — through the lens of international comity.

As Chief Judge Katzmann recognized, proximate cause is “notoriously slippery” and difficult to apply.45×45. Id. at 412. It may or may not also be too broad in its international scope — because it is so nebulous, there is certainly a risk of extraterritorial overreach as courts apply it “case by case.”46×46. See Empagran, 542 U.S. at 168. The risk that extraterritorial application will interfere with other sovereigns is particularly high in the realm of antitrust law,47×47. See id. at 165 (noting “serious risk of interference with a foreign nation’s ability independently to regulate its own commercial affairs”). where different countries have adopted dramatically different laws that comport with their prevailing business cultures.48×48. See, e.g., Jiro Tamura, U.S. Extraterritorial Application of Antitrust Law to Japanese Keiretsu, 25 N.Y.U. J. Int’l L. & Pol. 385, 399 (1993). Remedies also vary: for example, many countries do not allow treble damages, see, e.g., Empagran, 542 U.S. at 167–68, and others limit criminal sanctions, see, e.g., Maurice E. Stucke, Morality and Antitrust, 2006 Colum. Bus. L. Rev. 443, 541–43; cf. Eleanor M. Fox, International Antitrust and the Doha Dome, 43 Va. J. Int’l L. 911, 928 (2003) (advocating for global antitrust enforcement that allows individual nations to implement their own standards within general guidelines). Additionally, ambiguity concerning the scope of U.S. antitrust law can deter foreign actors from taking advantage of their own countries’ amnesty programs, thus reducing the effectiveness of those policies.49×49. Amnesty programs reduce criminal liability for the first member of a cartel to come clean to authorities. See Wolfgang Wurmnest, Foreign Private Plaintiffs, Global Conspiracies, and the Extraterritorial Application of U.S. Antitrust Law, 28 Hastings Int’l & Comp. L. Rev. 205, 214–15 (2005). A cartel member contemplating coming clean to its own antitrust enforcement agency is likely to weigh the costs and benefits of amnesty quite differently if accepting amnesty exposes it to treble civil damages in the United States. Id. at 215.

Similarly, a proximate cause standard does not provide useful guidance to individual and corporate actors in foreign markets.50×50. Compare Lotes, 753 F.3d at 413 (components commerce potentially direct), with Motorola Mobility LLC v. AU Optronics Corp., 746 F.3d 842, 844 (7th Cir.) (components commerce inherently remote), vacated and reh’g granted, No. 14-8003 (7th Cir. July 1, 2014). This ambiguity is evident in an explication offered by the United States: “[U]nder the Minn-Chem proximate cause standard[,] anticompetitive conduct . . . has a direct effect when it proximately causes a price increase on a product sold in U.S. import or domestic commerce.” Brief for the United States & Federal Trade Commission as Amici Curiae in Support of Defendants-Appellees at 36, Lotes, 753 F.3d 395 (No. 13-2280). The brief did not define when conduct might “proximately cause” such effect. One impetus for passing the FTAIA was to provide clarity to U.S. exporters whose actions abroad were consistent with those of their foreign competitors.51×51. See Empagran, 542 U.S. at 161. As markets have globalized, foreign actors increasingly cannot be certain whether they might be subject to U.S. laws52×52. The Court has previously noted “the need of the international commercial system for predictability.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 629 (1985); cf. Empagran, 542 U.S. at 164–65 (noting that harmony between “potentially conflicting laws of different nations,” id. at 164, is especially important “in today’s highly interdependent commercial world,” id. at 165). : under the proximate cause standard, they must constantly evaluate whether their actions have “proximate effects” on U.S. markets — if this impact can be determined ex ante at all. If a foreign actor reasonably does not expect to be subject to U.S. law — as when his foreign conduct is directed at local markets — it is unreasonable to impose U.S. law on him.53×53. See Joel R. Paul, The Transformation of International Comity, 71 Law & Contemp. Probs., Summer 2008, at 19, 29.

The LSL “immediate consequence” test rejected in Lotes is potentially more rigid, and it is at least more “stringent” in that it applies to less conduct.54×54. Lotes, 753 F.3d at 410. In practice, however, application of the “immediate consequence” test has been inconsistent.55×55. Compare In re TFT-LCD (Flat Panel) Antitrust Litig., 822 F. Supp. 2d 953, 964 (N.D. Cal. 2011) (finding components commerce falls within domestic-injury exception), with Lotes Co. v. Hon Hai Precision Indus. Co., No. 12 Civ. 7465, 2013 WL 2099227, at *8 (S.D.N.Y. May 14, 2013) (finding components commerce falls outside domestic-injury exception). Some courts have considered anticompetitive conduct in one market to have immediate consequences only in that particular market — effects in other markets would not be sufficiently immediate or, to use the statute’s term, direct.56×56. See, e.g., In re Intel Corp. Microprocessor Antitrust Litig., 452 F. Supp. 2d 555, 561 (D. Del. 2006) (noting that plaintiff’s allegations “refer to the computer market and not the microprocessor market, and therefore, the effects . . . are not effects linked to the relevant market”). But other courts have discussed the “immediate consequence” test in terms synonymous with proximate cause.57×57. See Lotes, 2013 WL 2099227, at *8 (finding the domestic effects “simply too attenuated to establish the proximate causation required by the FTAIA”).

Whatever terminology courts use, “direct” effects should be limited to effects in the market at which the conduct is directed. If overseas conduct by actors in a global market raises prices for that market in the United States, such conduct should be regulated by the Sherman Act.58×58. See, e.g., Minn-Chem, Inc. v. Agrium Inc., 683 F.3d 845, 859 (7th Cir. 2012) (en banc) (finding effects of foreign conduct direct in a global market for potash). But see Boyd v. AWB Ltd., 544 F. Supp. 2d 236, 244–45 (S.D.N.Y. 2008) (rejecting global market theory in context of domestic wheat prices). Such a rule simultaneously reduces unreasonable interference with other sovereigns’ interests and gives foreign actors more concrete guidance for what conduct is regulated by U.S. laws.59×59. Of course, market definitions will still be litigated, but in general a foreign actor will better know which market he is participating in than which markets he might “proximately” affect. The Seventh Circuit recently took a similar approach in Motorola Mobility LLC v. AU Optronics Corp.60×60. 746 F.3d 842, vacated and reh’g granted, No. 14-8003 (7th Cir. July 1, 2014). by interpreting Minn-Chem, Inc. v. Agrium Inc.61×61. 683 F.3d 845. narrowly to hold that entirely overseas commerce of goods later incorporated into products sold in the United States was outside the domestic-injury exception.62×62. Motorola Mobility, 746 F.3d at 844. Even though, as Chief Judge Katzmann noted in Lotes, complex commerce is “increasingly common in our modern global economy,”63×63. Lotes, 753 F.3d at 412; see also Motorola Mobility, 746 F.3d at 846. it does not necessarily follow that the Sherman Act should apply to it. Instead, as Judge Posner argued in Motorola Mobility, such components commerce creates just “a few ripples in the United States.”64×64. Motorola Mobility, 746 F.3d at 844 (quoting Minn-Chem, 683 F.3d at 860) (internal quotation mark omitted).

That kind of clear and narrow rulemaking makes sense in the context of extraterritorial jurisdiction, where there are foreign relations concerns. Of course, such concerns are irrelevant if the Minn-Chem reading is compelled by the statutory language. But the FTAIA is far from unambiguous — as the Supreme Court once noted: “[I]t is unclear . . . . whether the Act[] . . . amends existing law or merely codifies it.”65×65. Hartford Fire Ins. Co. v. California, 509 U.S. 764, 797 n.23 (1993). Thus, courts should appropriately consider other means of statutory interpretation. Principles of comity — avoiding unreasonable interference with other sovereigns — ought to be at the forefront when analyzing statutes with extraterritorial application.66×66. Judge Posner, for example, based his analysis in part on international comity concerns. See Motorola Mobility, 746 F.3d at 846. In Empagran, the Court rejected the plaintiffs’ argument that comity concerns could be addressed case-by-case in the FTAIA context,67×67. F. Hoffman-La Roche Ltd v. Empagran S.A., 542 U.S. 155, 168–69 (2004). and instead considered comity in the interpretation of the statute.68×68. See id. at 169. Such an analysis is consistent with the Roberts Court’s treatment of foreign relations concerns in other instances of statutory interpretation, at least when the statute itself is ambiguous and ripe for judicial interpretation. See The Supreme Court, 2013 Term — Leading Cases, 128 Harv. L. Rev. 381, 387–89 (2014) (contrasting the Court’s text-focused interpretation of the detailed eight-page Foreign Sovereign Immunities Act in Republic of Argentina v. NML Capital, Ltd., 134 S. Ct. 2250 (2014), with its comity analysis in the context of the less detailed Due Process Clause in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), and Alien Tort Statute in Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659 (2013)). The 153-word FTAIA, like the rest of the Sherman Act, relies on judicial interpretation to give it meaning. Cf. Andrew S. Oldham, Sherman’s March (in)to the Sea, 74 Tenn. L. Rev. 319, 321–23 (2007) (noting the importance of judicial interpretation to development of the Sherman Act). Accordingly, courts interpreting the FTAIA’s “direct, substantial, and reasonably foreseeable” language — which tracks closely with one of the traditional factors for comity analysis69×69. See The Supreme Court, 2003 Term — Leading Cases, 118 Harv. L. Rev. 476, 482 (2004). The Restatement in print when the FTAIA was enacted suggests extraterritorial prescriptive jurisdiction — regulation of overseas conduct — is reasonable if the effect “is substantial . . . [and] occurs as a direct and foreseeable result of the conduct outside the territory.” Restatement (Second) of Foreign Relations Law of the United States § 18 (1965). — should similarly be guided by principles of international comity. But although courts following Empagran have applied comity to interpret the FTAIA’s “gives rise to” language,70×70. See, e.g., Lotes, 753 F.3d at 414; In re Dynamic Random Access Memory (DRAM) Antitrust Litig., 546 F.3d 981, 987 (9th Cir. 2008); Empagran S.A. v. F. Hoffmann-LaRoche, Ltd., 417 F.3d 1267, 1271 (D.C. Cir. 2005). neither the court in Lotes, nor either the Seventh Circuit in Minn-Chem or the Ninth Circuit in LSL, addressed these concerns in interpreting “direct . . . effect.”71×71. In Minn-Chem the court paid lip service to comity by quoting Empagran’s language acknowledging the extraterritorial reach of U.S. antitrust law. See Minn-Chem, Inc. v. Agrium Inc., 683 F.3d 845, 858 (7th Cir. 2012) (en banc). The court then implied that comity concerns are adequately protected by the “gives rise to” language: “[W]e note that § 6a(2) will protect many a foreign defendant.” Id. The LSL court explicitly avoided comity issues by noting that the jurisdictional question — LSL preceded Arbaugh — was separate from and antecedent to analysis of comity issues. See United States v. LSL Biotechnologies, 379 F.3d 672, 682 (9th Cir. 2004); see also id. at 685 n.3 (Aldisert, J., dissenting) (“The contested issue is subject matter jurisdiction, not comity.”). They should have.

Prudential political and economic considerations, as well as legal principles of comity, counsel against the “unreasonable” application of U.S. laws extraterritorially.72×72. See Restatement (Third) of Foreign Relations Law of the United States § 403 cmt. a (1987). In the antitrust context, where the presumption against extraterritoriality has already been breached, more than the vagaries of proximate cause are required to prevent slipping into “unreasonable” interference with other sovereigns’ interests. As the Supreme Court noted in Empagran, litigation uncertainty itself could “threaten interference with a foreign nation’s ability to maintain the integrity of its own antitrust enforcement system.”73×73. F. Hoffman-La Roche Ltd v. Empagran S.A., 542 U.S. 155, 169 (2004). The court in Lotes missed an opportunity to establish a bright-line rule that not only appropriately limits the extraterritorial reach of the Sherman Act, but also alerts foreign actors, ex ante, to that scope.