In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 14‐8003
MOTOROLA MOBILITY LLC,
Plaintiff‐Appellant,
v.
AU OPTRONICS CORP., et al.,
Defendants‐Appellees.
____________________
Petition for Leave to Take an Interlocutory Appeal from the
United States District Court for the Northern District of Illinois,
Eastern Division.
No. 09 C 6610 — Joan B. Gottschall, Judge.
____________________
SUBMITTED MARCH 13, 2014 — DECIDED MARCH 27, 2014
____________________
Before POSNER, KANNE, and ROVNER, Circuit Judges.
POSNER, Circuit Judge. This case is before us on the plain‐
tiff’s unopposed petition for leave to take an interlocutory
appeal, pursuant to 28 U.S.C. § 1292(b), from an order that
the district judge has certified for an immediate appeal. We
grant the petition for reasons explained below; and because
the petition and the defendants’ response, together with the
district judge’s opinion explaining her order and the record
in the district court, provide an ample basis for deciding the
2 No. 14‐8003
appeal, we dispense with further briefing and with oral ar‐
gument.
Motorola and its foreign subsidiaries buy liquid‐crystal
display (LCD) panels and incorporate them into cellphones
manufactured by either the parent or the subsidiaries. The
suit accuses several foreign manufacturers of the panels of
having violated section 1 of the Sherman Act, 15 U.S.C. § 1,
by agreeing on the prices to charge for them. Only about 1
percent of the panels were bought by, and delivered to, Mo‐
torola in the United States; the other 99 percent were bought
by, paid for, and delivered to its foreign subsidiaries (mainly
Chinese and Singaporean). Forty‐two percent of all the pan‐
els were bought by the subsidiaries and incorporated by
them into products that were then shipped to Motorola in
the United States for resale by Motorola (which did none of
the manufacturing). Another 57 percent of the panels were
also bought by the subsidiaries, but were incorporated into
products that were sold abroad as well (42 percent plus 57
percent plus 1 percent equals 100 percent of the allegedly
price‐fixed panels). The 57 percent never entered the United
States, so never became domestic commerce. See 15 U.S.C. §§
6a, 6a(1)(A). And so, as we’re about to see, they can’t possi‐
bly support the Sherman Act claim.
Motorola says that it “purchased over $5 billion worth of
LCD panels from cartel members [i.e., the defendants] for
use in its mobile devices.” That is incorrect. All but 1 percent
of the purchases were made by Motorola’s foreign subsidiar‐
ies, which are not plaintiffs in this litigation.
In response to a motion for partial summary judgment by
the defendants, the district judge ruled that Motorola’s claim
regarding the 42 percent (plus the 57 percent, but we’ll ig‐
No. 14‐8003 3
nore that, as a frivolous element of Motorola’s claim) is
barred by 15 U.S.C. § 6a(1)(A), a provision of the Foreign
Trade Antitrust Improvements Act that says that the
Sherman Act (only section 1 of that Act, but to simplify our
opinion we’ll now drop that qualification) “shall not apply
to conduct involving trade or commerce (other than import
trade or import commerce) with foreign nations unless 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 also, in either case, unless the “ef‐
fect gives rise to a claim” under federal antitrust law. See,
e.g., F. Hoffman‐La Roche Ltd. v. Empagran S.A., 542 U.S. 155,
161–62 (2004); Minn‐Chem, Inc. v. Agrium, Inc., 683 F.3d 845,
853–54 (7th Cir. 2012) (en banc).
We agree with the district judge and the parties that in
the language of section 1292(b) the judge’s order presents “a
controlling question of law as to which there is substantial
ground for difference of opinion and that an immediate
appeal from the order may materially advance the ultimate
termination of the litigation.” Motorola’s antitrust suit
against the defendants, now in its fifth year, is a complicated
affair. If 99 percent of the transactions on which the suit is
based can be eliminated from the litigation at a stroke (the 42
percent at issue in this appeal plus the 57 percent clearly
barred by the Foreign Trade Antitrust Improvements Act
from challenge under the Sherman Act) before the litigation
moves into high gear, there will be a considerable economy.
Although as we’re about to explain we think the district
judge’s ruling correct, there is room for a difference of
opinion, as evidenced by the fact that the judge presiding at
the multidistrict‐litigation phase of the proceeding had ruled
4 No. 14‐8003
for Motorola on the issue of the Sherman Act’s applicability
to the 42 percent. So, as in Minn‐Chem, Inc. v. Agrium, Inc.,
supra, 683 F.3d at 848, which also involved an interlocutory
appeal presenting issues under the Foreign Trade Antitrust
Improvements Act, Motorola’s appeal is properly before us
and we proceed to the merits.
If the defendants conspired to sell LCD panels to
Motorola in the United States at inflated prices, they would
be subject to the Sherman Act because of the foreign trade
act’s exception for importing. That is the 1 percent, which is
not involved in the appeal. Regarding the 42 percent,
Motorola must show that the defendants’ price fixing of the
panels that they sold abroad and that became components of
cellphones imported by Motorola had “a direct, substantial,
and reasonably foreseeable effect” on commerce within the
United States. There was (assuming price fixing is proved)
doubtless some effect; and it was foreseen by the defendants
if they knew that Motorola’s foreign subsidiaries intended to
incorporate some of the panels into products that they
would sell to Motorola in the United States. And who knows
what “substantial” means in this context? But what is
missing from Motorola’s case is a “direct” effect. The effect is
indirect—or “remote,” the term used in Minn‐Chem, Inc. v.
Agrium, Inc., supra, 683 F.3d at 856–57, to denote the kind of
effect that the statutory requirement of directness excludes.
The alleged price fixers are not selling the panels in the
United States. They are selling them abroad to foreign
companies (the Motorola subsidiaries) that incorporate them
into products that are then exported to the United States for
resale by the parent. The effect of component price fixing on
the price of the product of which it is a component is
No. 14‐8003 5
indirect, compared to the situation in Minn‐Chem, where
“foreign sellers allegedly created a cartel, took steps outside
the United States to drive the price up of a product that is
wanted in the United States, and then (after succeeding in
doing so) sold that product to U.S. customers.” Id. at 860
(emphasis added). It is closer to the situation in which we
said the foreign trade act would block liability under the
Sherman Act: the “situation in which action in a foreign
country filters through many layers and finally causes a few
ripples in the United States.” Id.
Motorola contends, and at this stage in the litigation we
must assume the truth of the contention, that it determined
what the subsidiaries paid for the LCD panels. It must have
thought the price okay, or it wouldn’t have let the
subsidiaries pay it. It may or may not have known that it
was a cartel price. But we cannot see what difference any of
this makes. Suppose Motorola had bought the panels from
the defendants outright, then resold the panels to its foreign
subsidiaries, which used them in manufacturing cellphones
that they then exported to the United States. The effect on
prices in the United States would be the same as if the
foreign subsidiaries had negotiated the price charged by the
alleged cartel to Motorola, because the price would be the
same—it would be the cartel price. And so the (indirect)
effect on U.S. domestic commerce (the sale of the cellphones
in the United States) would be the same.
Motorola’s claim is upended by another—and
independent—requirement that must be satisfied for the
statutory exemption in 15 U.S.C. § 6a(1)(A) to apply: the
“effect” of the defendants’ practice on domestic U.S.
commerce must “give[] rise to” an antitrust claim. The effect
6 No. 14‐8003
of the alleged price fixing on that commerce in this case is
mediated by Motorola’s decision on what price to charge
U.S. consumers for the cellphones manufactured abroad that
are alleged to have contained a price‐fixed component. No
one supposes that Motorola could be sued by its U.S.
customers for an antitrust offense merely because the prices
it charges for devices that include such components may be
higher than they would be were it not for the price fixing.
(We say may be, not would be, because Motorola’s ability to
pass on the higher price to consumers would depend on
competition from other cellphones and on consumer
demand for cellphones.) So the effect in the United States of
the price fixing could not give rise to an antitrust claim.
Motorola’s claim against the defendants is based not on any
illegality in the prices Motorola charges (in which event
Motorola would be suing itself, as in William Gaddis’s novel
satirizing law, A Frolic of His Own (1994)), but rather on the
effect of the alleged price fixing on Motorola’s foreign
subsidiaries. See F. Hoffmann‐La Roche Ltd. v. Empagran S.A.,
supra, 542 U.S. at 173–74. And as we said in the Minn‐Chem
case, “U.S. antitrust laws are not to be used for injury to
foreign customers.” 683 F.3d at 858. The subsidiaries are
“foreign customers,” being fully subject to the laws of the
countries in which they are incorporated and operate—and
“a corporation is not entitled to establish and use its
affiliates’ separate legal existence for some purposes, yet
have their separate corporate existence disregarded for its
own benefit against third parties.” Disenos Artisticos E
Industriales, S.A. v. Costco Wholesale Corp., 97 F.3d 377, 380
(9th Cir. 1996).
Furthermore, derivative injury rarely gives rise to a claim
under antitrust law, especially a claim by the owner of or an
No. 14‐8003 7
investor in the company that sustained the direct injury.
Mid‐State Fertilizer Co. v. Exchange National Bank of Chicago,
877 F.2d 1333, 1335–36 (7th Cir. 1989). Such a claim would be
redundant, because if the direct victim received full
compensation there would be no injury to the owner or
investor—he or it would be as well off as if the antitrust
violation had never occurred. If Motorola’s foreign
subsidiaries have been injured by violations of the antitrust
laws in the countries in which they do business, they have
remedies; if the remedies are inadequate, or if the countries
don’t have or don’t enforce antitrust laws, these were risks
that the subsidiaries (and hence Motorola) assumed by
deciding to do business in those countries. What they didn’t
have if they overpaid was a claim under the Sherman Act;
no more does their parent.
But we don’t want to rest our decision entirely on the
statutory language (the requirement of a “direct effect” on
domestic commerce and the separate requirement that that
“effect” give rise to a Sherman Act claim), without
considering the practical stakes in the expansive
interpretation urged by Motorola. The stakes are large and
cut strongly against its position. Nothing is more common
nowadays than for products imported to the United States to
include components that the producers had bought from
foreign manufacturers. See Gregory Tassey, “Competing in
Advanced Manufacturing: The Need for Improved Growth
Models and Policies,” Journal of Economic Perspectives, vol. 28,
no. 1, p. 27, 31–35 (Winter 2014); Dick K. Nanto, “Globalized
Supply Chains and U.S. Policy” 4–10 (Congressional Re‐
search Service, CRS Report for Congress, Jan. 27, 2010),
http://assets.opencrs.com/rpts/R40167_20100127.pdf (visited
March 26, 2014). Motorola itself acknowledges “that a sub‐
8 No. 14‐8003
stantial percentage of U.S. manufacturers utilize global sup‐
ply chains and foreign subsidiaries to effectively compete in
the global economy.” Many foreign manufacturers are
located in countries that do not have or, more commonly, do
not enforce antitrust laws, or whose antitrust laws are far
more lenient than ours, especially when it comes to
remedies. As a result, the prices of many products exported
to the United States are elevated to some extent by price
fixing or other anticompetitive acts that would be forbidden
by the Sherman Act if committed in the United States.
Motorola argues that “the district court’s ruling would allow
foreign cartelists to come to the United States” and “unfairly
overcharge U.S. manufacturers.” Not true; the defendants
did not sell in the United States and, if they were overcharg‐
ing, they were overcharging other foreign manufacturers—
the Motorola subsidiaries.
The Supreme Court has warned that rampant extraterri‐
torial application of U.S. law “creates a serious risk of inter‐
ference with a foreign nation’s ability independently to regu‐
late its own commercial affairs.” F. Hoffmann‐La Roche Ltd. v.
Empagran S.A., supra, 542 U.S. at 165. The Foreign Trade An‐
titrust Improvements Act was intended to prevent such “un‐
reasonable interference with the sovereign authority of other
nations.” Id. at 164. The position for which Motorola
contends would if adopted enormously increase the global
reach of the Sherman Act, creating friction with many
foreign countries and “resent[ment at] the apparent effort of
the United States to act as the world’s competition police
officer,” a primary concern motivating the foreign trade act.
United Phosphorus, Ltd. v. Angus Chemical Co., 322 F.3d 942,
960–62 (7th Cir. 2003) (en banc) (dissenting opinion), over‐
No. 14‐8003 9
ruled on other grounds by Minn‐Chem, Inc. v. Agrium, Inc.,
supra. It is a concern to which Motorola is oblivious.
AFFIRMED.