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POWER EAST LTD. v. TRANSAMERICA DELAVAL INC.

January 21, 1983

POWER EAST LIMITED, Plaintiff,
v.
TRANSAMERICA DELAVAL INC. and SHEIK YAQOOB YUSUF AL-RASHEED, Defendants



The opinion of the court was delivered by: DUFFY

MEMORANDUM & ORDER

 KEVIN THOMAS DUFFY, D.J.:

 The defendant Transamerica Delaval, Inc. ("Delaval") moves pursuant to Rule 12(b)(6) to dismiss the complaint herein for failure to state a claim on which relief may be granted. In the complaint, the plaintiff, Power East Limited ("Power East"), has alleged in Count One a violation of section 1 of the Sherman Antitrust Act and in Count Two a breach of an oral contract involving a finder's fee. I have taken as true the allegations of the complaint and the expansion of them in the plaintiff's papers opposing this motion, as well as all inferences that reasonably can be drawn from these allegations. Nonetheless, I have concluded that the defendant's motion to dismiss must be granted. *fn1"

 The complaint alleges that Power East is a corporation organized under the laws of Cyprus and having its principal place of business in Cyprus. "The company was founded in 1976 and it became active in the design, construction and servicing of electrical power stations and substations in the Middle East area." (Complaint, para. 2). The complaint described defendant Delaval as a corporation formed "under the laws of one of the States of the United States" and engaged in the production and sale of steam turbine generators and other equipment used in power plants. (Complaint, para. 3).

 The complaint further alleges that the defendant Sheik Yaqoob Yusuf Al-Rasheed ("Al-Rasheed") "was at all relevant times and still is an importer and industrial agent located at Riyadh, Saudi Arabia."

 Plaintiff alleges that in 1977 it introduced the two defendants to each other for discussions of possible joint ventures in Saudi Arabia. Paragraph 8 of the complaint sets forth the nub of the dispute between the parties:

 
One of the mutually contemplated projects which came to fruition was a power station installation at Madjma, Saudi Arabia, utilizing Delaval equipment. Upon information and belief, it was Power East Limited's contract tender documents which enabled this project to be implemented; yet Power East Limited was deceitfully and wrongfully deprived by both defendants herein from receiving the deserved and anticipated compensation for its instrumental role in the transaction.

 The alleged nonpayment of this "finder's fee" is claimed in Count Two of the complaint. The Sherman Act claim alleges that after the dispute arose the defendants interfered with plaintiff's business relationships in Saudi Arabia and forced plaintiff out of business in Saudi Arabia.

 The defendant's motion to dismiss the Sherman Act claim is based on the failure of the complaint to allege for jurisdictional purposes any effect upon "commerce among the several states, or with foreign nations." All of the improper activity alleged occurred in Saudi Arabia. In opposition to this motion, plaintiff argues that its principal shareholder and president was at all relevant times and still is a citizen of the United States and that much of the business of the defendant Delaval is done in the United States. It is suggested by plaintiff that this is sufficient impact on interstate commerce to bring the matter within the ambit of the antitrust laws. Plaintiff further suggests that the extent of this impact will be developed by discovery.

 II.

 DISCUSSION

 A. Plaintiff's Sherman Act Claim

 The activities complained of all occurred outside the United States. The market from which the plaintiff is supposedly excluded is outside the United States. Neither the fact that the principal shareholder of plaintiff is a United States citizen, nor that defendant Delaval is a corporation organized within the United States provides the requisite nexus with American trade that would bring the alleged illegal activity within the purview of the Sherman Act. See Timberlane Lumber Company v. Bank of America, N.T. & S.A., 549 F.2d 597 (9th Cir. 1976). Plaintiff makes no suggestion of a "relevant market" within the United States, nor mentions any American competitors whatsoever.

 McLain v. Real Estate Bd. of New Orleans, 444 U.S. 232, 242-43, 62 L. Ed. 2d 441, 100 S. Ct. 502 (1980), requires that more than just the particular anticompetitive conduct alleged be examined to determine whether plaintiff's claim is within the reach of the antitrust laws. But see Nat'l Bank of Canada v. Interbank Card Assoc., 666 F.2d 6, 8-9 (20 Cir. 1981) (different test applied in international commerce context). Plaintiff asserts that this requires "proof of a nexus merely between interstate commerce and the defendant's general business activity . . . ." Plaintiff's Memorandum of Law at 5. Plaintiff is not completely accurate, however. McLain does not require an examination of activities wholly unrelated to the instant litigation to determine whether there is an effect on commerce. Rather, McLain necessitates an examination of the general business activities which form the basis of the complaint. Here, ...


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