That is the factor the Supreme Court considered in Hartford Fire Insurance.
The case at bar differs from Hartford Fire Insurance because, unlike the London reinsurers in that case, France Telecom argues throughout that French law prohibits it from revealing the Orange List to Filetech, even if its refusal to do so violates the Sherman Act. See, e.g., Reply Brief at 33 ("The unambiguous language of article R.10-1 and the policy determination underpinning the Saffron List resolution preclude France Telecom from disclosing the Orange List to Filetech.").
This American trial judge, encumbered by the difficulties inherent in interpreting the decrees of foreign courts and governmental bodies, cannot discern in the profusion of French court decisions and regulatory pronouncements described in Part I of this opinion an explicit declaration that France Telecom would violate French law by revealing the Orange List to Filetech in the manner requested by Filetech. Nor am I able to discern an explicit declaration that, as Filetech contends, the disclosure of the Orange List by France Telecom to Filetech not only would not violate French law, but is mandated by French domestic law as supplemented by the antitrust rules of the Treaty of Rome.
The parties argue strenuously for these diametrically opposing interpretations of French law. In the best tradition of advocates the world over, counsel at bar give different readings to the several court decisions, which do not appear to be (to the extent I am able to judge the matter) wholly consistent with each other. When a particular decision appears to favor one of the parties at bar, that party proclaims the decision as determinative of every issue in the case at bar, while the other party says it has nothing to do with them. The parties' discussion of the decision of the Court of Appeals of Paris in CMS v. France Telecom, affirmed by the Supreme Court of France, is typical. Filetech says that decision, explicitly or by necessary implication, rejects all of France Telecom's arguments on the effect of French law. France Telecom says that the case related only to the rights of competing publishers of telephone directories and has nothing to do with a direct marketing service company like Filetech. I lack the competence to say with any confidence who is right, although the French Government's modification of Article R. 10-1 of the PTT Code in response to the Paris Court of Appeals' decision in CMS would seem to argue for a narrow reading of the case's effect. There was no joy for France Telecom (or the public prosecutor) in the decision of the trial court at Nanterre, but that decision has now been reversed in a manner unfavorable to Filetech. It also appears that French courts and a regulatory agency have rejected Filetech's applications for the injunctive relief in respect of the Orange List that Filetech seeks to obtain from this Court in this action. And the most recent development in the French courts is a criminal indictment of France Telecom by a French magistrate on what sound like antitrust charges, to which France Telecom will presumably make defenses consistent with the theories it has asserted in France and now in this Court.
What is one to make of all this? Having considered these French authorities and proceedings to the best of my non-Gallic ability, I am unable to conclude whether or not the release of the Orange List by France Telecom to Filetech would violate French law. Were I to conclude that it would, I read Hartford Fire Insurance as requiring dismissal on the ground of international comity. But the most I can conclude from this record is that France Telecom has asserted in the French courts a substantial claim that controlling French law and public policy preclude releasing the Orange List to Filetech in aid of direct marketing. I am not able to conclude, from this assortment of French trial and appellate decisions and regulatory declarations, that France Telecom's claim has been rejected at the highest level of French jurisprudence or regulation.
I hold that France Telecom's substantial claim, consistently asserted in France and not yet finally adjudicated there, is sufficient to implicate the first Timberlane factor. If France Telecom is correct in its position under French law and policy, the Sherman Act's "degree of conflict with foreign law or policy" is total. I think that comity requires that the courts and Government of France make the final decision as to whether France Telecom's conduct violates the laws and policies of France. There are two reasons. First, the French courts are obviously better able to decide what French law and policy require or condemn.
Second, it is inappropriate to ask an American court to enjoin the conduct of a French governmental entity in France in a case where the risk arises -- to put it no higher than that -- of a conflict between the American court's injunction and French law or policy.
So I conclude that the first Timberlane factor requires dismissal of the case at bar on the ground of comity. But if that factor alone does not require that conclusion, it surely does when viewed in conjunction with other Timberlane factors.
The other Timberlane factors include the nationality or allegiance of the parties and the locations of the parties and the locations or principal places of business of corporations, the extent to which enforcement by either state can be expected to achieve compliance, the relative significance of effects on the United States as compared with those elsewhere, the extent to which there is explicit purpose to harm or affect American commerce, the foreseeability of such effect, and the relative importance to the violations charged of conduct within the United States as compared with conduct abroad. Timberlane I, 549 F.2d at 614.
It does not require extended discussion to demonstrate that most of these factors militate in favor of dismissing the complaint on the ground of international comity. The two primary parties are Filetech and France Telecom. One is a French corporation; the other is an entity of the French Government; their principal places of business are in France.
If, as Filetech has consistently maintained, France Telecom's conduct with respect to the Orange List violates the antitrust laws of both France and the European Union, enforcement by the French courts may be better expected to achieve compliance with the principles for which Filetech contends.
Indeed, if litigation of comparable antitrust claims is permitted to go forward in both France and the United States, the resulting potential for international conflict furnishes a particular basis for dismissal in the interest of comity. Cf. Ensign-Bickford Co., 817 F. Supp. at 1032 ("This action presents the prospect of a conflict between a decision by this court and a decision by a Canadian court. The potential for conflict arises because the plaintiff has initiated an action in a Canadian court alleging a breach of the same contractual provisions that provide the basis for the breach-of-contract claim in this matter."). In the case at bar, the claims and defenses asserted in the French proceedings appear to mirror the issues arising out of Filetech's Sherman Act claim in this Court.
The parties dispute the effects of France Telecom's conduct upon the United States. Filetech says that effect is substantial; France Telecom says it is minimal, bordering upon the non-existent. Comparable disputes with respect to another Timberlane factor, the extent to which there is explicit purpose to harm or affect American commerce, and the foreseeability of such effect. But it is crystal clear that other, related factors militate in favor of dismissal: the relative significance of the effects of France Telecom's conduct on the United States as compared with France; and the relative importance of conduct within the United States as compared with conduct abroad.
In those regards, it bears recalling that France Telecom's electronic telephone directory is limited to individuals and entities resident in France. The direct marketing mailings contemplated by Filetech will all be to addressees in France. If, in consequence of Filetech's business operations and those of its clients, unsolicited and unwelcome brochures and fliers cause mailboxes to overflow, all those mailboxes will be in France.
If such a consequence offends public policy, it is the public policy of France.
Filetech's 38-page, 80-paragraph complaint describes at length its aspirations and France Telecom's conduct, but the allegations concerning the effect of that conduct upon American commerce are scant. They deal exclusively with the thwarting of Filetech's desire to achieve "one of Mr. Birenbaum's primary business objectives," namely, making "the French consumer market more accessible to foreign countries and notably Americans who sell their products and services on a worldwide basis." Complaint, P 19. To that desired end, Birenbaum "has facilities available for his business use located in New Jersey" (this is apparently a reference to Filetech USA), id, P 20, and, were it not for France Telecom's anticompetitive conduct directed at Filetech, "the organization of plaintiff Filetech USA would have been long before it was actually organized in 1994, in order to carry out the business activities envisioned by Mr. Birenbaum," id., P 21. This theme is stated early in the complaint; P 6 alleges that by its conduct relevant to the Orange List, "France Telecom has prevented Plaintiff Filetech SARL from realizing one of its main objectives, that is, to compete over [sic ] the US market, either directly or indirectly using a New York subsidiary as its marketing and sales arm in the US . . . " The complaint also alleges that France Telecom "either directly or indirectly through France Telecom Inc., engages in substantial commercial activity in the United States, including the one on which this action is based," id., P 41, the latter assertion apparently being based upon the allegation that France Telecom "competes in the Relevant Market by providing two retail services [Marketis and Teladresses] to its customers seeking to obtain particular categories and types of client address lists," id, P 47.
Assuming for the present that these allegations are both true in fact and sufficient in law to state a claim under the Sherman Act, a question considered under Point IV, it is readily apparent for the purpose of comity analysis that the effects of France Telecom's conduct on the United States (limited to the thwarting of one of Filetech's several business objectives) are far less significant than its effects in France; and that the fundamental commercial importance of France Telecom's activities arises out of its conduct in France, as opposed to any conduct in the United States.
Accordingly I conclude that all the Timberlane factors, which constitute the law in the Second Circuit as well as in the Ninth, militate in favor of dismissing the complaint at bar on the ground of international comity.
The Court will dismiss that complaint on that ground.
France Telecom's second and third grounds for dismissing the complaint are that the FSIA precludes subject matter jurisdiction over France Telecom, which defendants assert is the only defendant "whose conduct is at issue" in the case,
and that the conduct alleged does not fall within the Sherman Act.
Both grounds turn upon the degree of commercial activity carried on by France Telecom in the United States, an issue that the parties dispute. As for the FSIA, 28 U.S.C. § 1605(a)(2) provides that a foreign state
is not immune from the jurisdiction of United States courts if the action is based on commercial conduct or acts carried on or performed in the United States, or elsewhere if the act causes a direct effect in the United States. The Second Circuit has said that the statute requires that "a significant nexus exist between the commercial activity in this country upon which the exception is based and a plaintiff's cause of action." NYSA-ILA Pension Trust Fund v. Garuda Indonesia, 7 F.3d 35, 38 (2d Cir. 1993), cert. denied, 510 U.S. 1116, 127 L. Ed. 2d 384, 114 S. Ct. 1065 (1994).
As for the Sherman Act, subject matter jurisdiction of the district courts depends upon whether the foreign conduct at issue "was meant to produce and did in fact produce some substantial effect in the United States." Hartford Fire Insurance, 509 U.S. at 796 (citations omitted).
On this motion to dismiss on these particular grounds, I look only to the complaint, to determine whether Filetech "has made the minimal allegations about the impact on competition in the United States necessary to state a claim for a Sherman Act violation," Metro Industries, 82 F.3d at 847, an analysis that also applies to the FSIA issue. While Filetech's allegations are sparse and largely conclusory, I think that they meet that undemanding standard.
Accordingly, in the present posture of the case, I deny defendants' motion to dismiss the complaint on either of these grounds.
However, for the reasons stated, the Clerk of the Court is directed to dismiss the complaint on the ground of international comity.
It is SO ORDERED.
Dated: New York, New York
September 15, 1997
CHARLES S. HAIGHT, JR.