USCA1 Opinion

UNITED STATES COURT OF APPEALS

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT

_________________________

No. 96-2001

UNITED STATES OF AMERICA,

Appellant,

v.

NIPPON PAPER INDUSTRIES CO., LTD., ET AL.,

Defendants, Appellees.

_________________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Joseph L. Tauro, U.S. District Judge]

___________________

_________________________

Before

Selya, Circuit Judge,

_____________

Coffin, Senior Circuit Judge,

____________________

and Lynch, Circuit Judge.

_____________

_________________________

Mark S. Popofsky, Attorney,

_________________
of

Justice,

with

whom

Antitrust Division, U.S. Dep't

Anne K. Bingaman,
_________________

General, Joel I. Klein, Deputy Assistant

______________

Assistant

Attorney

Attorney General, John

____

J. Powers, III, Robert B. Nicholson, David A. Blotner, Lisa M.

_______________ ____________________ _________________ _______

Phelan, and Reginald K. Tom, Attorneys, Antitrust Division, were

______
________________
on brief, for the United States.
Richard G.

Parker, with whom

Geoffrey D.

Oliver, Alan

M.

__________________
Cohen,
_____

___________________

________

O'Melveny & Myers LLP, William H. Kettlewell, and Dwyer &

_____________________ _____________________
_______

Collora were on brief, for Nippon Paper Industries Co., Ltd.

_______
John G. Roberts, Jr.,
_______________________

David G. Leitch,
________________

Bartolomucci, and Hogan & Hartson L.L.P. on

____________
______________________
of Japan, amicus curiae.

_________________________

March 17, 1997

_________________________

H. Christopher
_______________

brief for Government

SELYA, Circuit Judge.

SELYA, Circuit Judge.
______________

hitherto unanswered question.

In

This case

raises an important,

it, the United States attempts

to convict a foreign corporation under the Sherman Act, a federal

antitrust

statute, alleging

took place entirely in Japan

intended

this

to have, and did

country.

antitrust

The

that price-fixing

are prosecutable because they

in fact have,

district court,

prosecution

extraterritorial conduct,

could

not

1996).

We reverse.

JUST THE FAX

JUST THE FAX

be

based

dismissed the indictment.

v. Nippon Paper Indus. Co., 944

_________________________

were

substantial effects in

declaring that

States
______

I.
I.

activities which

F. Supp. 55

a criminal

on

wholly

See United
___ ______

(D. Mass.

Since the district court granted the defendant's motion

to dismiss for failure

our account of the

in

to state a prosecutable offense,

pertinent events from the well-pleaded

the indictment itself.

See United States

___ _____________

we draw

facts

v. National Dairy
______________

Prods. Corp., 372 U.S. 29, 33 n.2 (1963).

____________

In 1995, a

naming

federal grand jury handed

up an indictment

as a defendant Nippon Paper Industries Co., Ltd. (NPI), a

Japanese

manufacturer

of

facsimile

paper.1

alleges that in 1990 NPI and certain unnamed

The

indictment

coconspirators held

a number of meetings in Japan which culminated in an agreement to

____________________

1The
Jujo

grand jury

Paper

earlier,

Co.,

however,

also named another

Ltd. (Jujo),
NPI

had

as

been

Japanese manufacturer,

codefendant.

formed

and,

the

Two

years

government

alleges, had assumed Jujo's assets and

liabilities.

Because the

issue of successor liability is not before us, we treat NPI as if

it were the sole defendant

and as if it, rather than

Jujo, were

alleged to have committed the acts described in the indictment.

fix the price of thermal fax paper throughout North America.

and other manufacturers who were

accomplished their

unaffiliated trading

NPI

privy to the scheme purportedly

objective by selling

the paper

houses on condition that

in Japan

to

the latter charge

specified

North

(inflated) prices for the paper when they resold it in

America.

The trading

houses then

shipped and

sold the

paper to their subsidiaries in the United States who in turn sold

it to

American

consumers at

further relates that, in

worth

approximately

United States; and

venture, NPI

prices.

The

indictment

1990 alone, NPI sold thermal

$6,100,000

for

fax paper

eventual import

into

the

that in order

to ensure

the success of

the

monitored the paper

trail and

confirmed that

the

prices

charged to

These

activities,

adverse effect

swollen

end users

the

were those

indictment

that it

posits,

had

had arranged.

substantial

on commerce in the United States and unreasonably

restrained

trade in violation of Section One of the Sherman Act,

15 U.S.C.

1 (1994).

NPI

moved

to

dismiss

because, inter
_____

alia,
____

if

the

conduct attributed to NPI occurred at all, it took place entirely

in Japan, and,

thus, the

under Section One

of the

this initiative on two

indictment failed to

limn an

offense

The government

opposed

First, it claimed that

the law

Sherman Act.

grounds.

deserved a less grudging reading and that, properly read, Section

One

of the

Sherman

Act applied

criminally

to wholly

foreign

conduct as long as that conduct produced substantial and intended

effects

within the United States.

Second, it

claimed that the

indictment,

too,

deserved a

properly

read,

the

restraint

of

trade

bill

less

grudging

alleged

that

involved

vertical

overt

coconspirators within the United States.

reading of

both

the statute

court dismissed the case.

at 64-66.

II.
II.

and the

reading and

that,

conspiracy

acts

by

in

certain

Accepting a restrictive

indictment, the

district

See United States v. NPI, 944 F. Supp.

___ _____________
___

This appeal followed.

ANALYSIS
ANALYSIS

We

question.2

begin

Because

and

end

this

construction, we review de

with

question

the

is

overriding

one

of

legal

statutory

novo the holding that Section

One of

the Sherman Act does not cover wholly extraterritorial conduct in

the criminal context.

See United States v. Gifford, 17 F.3d 462,

___ _____________
_______

471-72 (1st Cir. 1994).

Our analysis

the historical

proceeds in

context in which this

moieties.

We

first present

important question arises.

We move next to the specifics of the case.

A.
A.

Our

law

Congress, unless

only within

EEOC
____

An Historical Perspective.
An Historical Perspective.
_________________________

has

long

a contrary

presumed

that

intent appears,

the territorial jurisdiction of

v. Arabian American Oil Co.,

__________________________

____________________

499

"legislation

is meant

of

to apply

the United States."

U.S. 244,

248

(1991)

2Inasmuch as we hold
have a substantial and
may form the basis
of

the

Sherman

alternative
that

some

that activities committed abroad which

intended effect within the United

for a criminal prosecution under

Act,

we

argument that
overt acts

in

need

not

address

the indictment
furtherance

States

Section One

the

government's

in this

case alleges

of

the conspiracy

were

perpetrated in the United States.

(citation

omitted).

charged inquiring

In

this

courts with

clearly expressed an affirmative

context, the

Supreme

determining whether

Court has

Congress has

desire to apply particular laws

to conduct that occurs

beyond the borders of the

United States.

See id.
___ ___

The earliest

Supreme

comparable

task in

determined

that the presumption

not been

213

overcome.

case

Section One

which

of the

undertook

Sherman Act

against extraterritoriality had

In American Banana Co. v. United Fruit Co.,

____________________
________________

U.S. 347 (1909), the Court considered the application of the

Sherman Act in

entirely

on

respect to

Court

in Central America and which

imports to

Holmes

a civil action concerning

the United

termed "the

"that the

general and

character of

determined wholly

States.

by the

an act

law of

conduct which occurred

had no discernible effect

Starting with

almost universal

as

lawful or

the country

what Justice

rule" holding

unlawful must

where the

be

act is

done," id. at 356,

___

of

doubt, a

effect to

general

and the ancillary proposition that,

statute should

the territorial

be "confined

limits

and legitimate power," id.

___

in its

over which

at 357, the

in cases

operation and

the lawmaker

has

Court held that

the defendant's actions abroad were not proscribed by the Sherman

Act.

Our

static.

jurisprudence is

precedent-based, but

it is

not

By 1945, a different court saw a very similar problem in

somewhat softer light.

Am., 148 F.2d

___

416 (2d

In United States v.
______________

Cir. 1945) (Alcoa),

_____

Aluminum Co. of
_______________

the Second

Circuit,

sitting

as

court

of

last

resort,

see
___

15

U.S.C.

29

(authorizing designation of a court of appeals as a court of last

resort

for

certain

antitrust

cases), mulled

civil

action

brought under Section One against a Canadian corporation for acts

committed

produced

States.

entirely abroad

which,

the government

substantial anticompetitive

The Alcoa
_____

court read

averred,

effects within

American Banana
_______________

had

the United

narrowly; that

case, Judge Learned Hand wrote, stood only for the principle that

"[w]e should not impute to Congress an intent to punish

its

courts

within

can catch,

the

United

ordinarily can

that

of

for

States."

at

443.

impose liability for conduct

comity argue against

applying Section

effect within the

American Banana scenario

________________

proscribe

affect imports

at

Id.
___

has

no consequences

But a

sovereign

outside its borders

produces consequences within them, and while considerations

which no

does

conduct which

all whom

444.

against

On

One to

United States has

the

been shown

statute, properly

extraterritorial acts

which

situations in

were

interpreted,

"intended to

[to the United States] and did affect them."

the facts

of

Alcoa, therefore,
_____

extraterritoriality had

the

Id.
___

the

presumption

been overcome, and

the Sherman

Act had been violated.

See id. at 444-45.

___ ___

Any perceived tension between American Banana and Alcoa

_______________
_____

was eased by the

Sherman Act's

Supreme Court's most recent exploration

extraterritorial reach.

of the

In Hartford Fire Ins. Co.

______________________

v. California, 509 U.S. 764 (1993), the Justices endorsed Alcoa's

__________
_____

core holding, permitting civil antitrust claims under Section One

to go forward despite

violated Section

noting

the fact that the actions

One occurred entirely

American Banana's
________________

initial

proposition, the Hartford Fire

_____________

by now that

meant

in

which allegedly

on British soil.

disagreement

with

While

this

Court deemed it "well established

the Sherman Act applies to foreign

conduct that was

to produce and did in fact produce some substantial effect

the United

States."

London-based conspiracy

met that benchmark.3

To sum

Id. at
___

796.

The conduct

to alter the American

alleged, a

insurance market,

See id.
___ ___

up, the

case law now

conclusively establishes

that civil antitrust actions predicated on wholly foreign conduct

which has an intended and substantial effect in the United States

come

within Section One's jurisdictional

reach.

In arriving at

this conclusion, we take no view of the government's asseveration

that

the

Foreign

Trade

Antitrust

Improvements

Act

of

1982

____________________

3As

NPI reminds

Fire.
____

This

expressed

is

us,

cold

complete

extraterritoriality.

four Justices

comfort,

agreement

dissented in

however,

with

the

for

the

Hartford
________

dissenters

majority's

view

on

See Hartford Fire, 509 U.S. at 814 (Scalia,

___ _____________

J., dissenting).

By the same token, NPI's attempt to distinguish

Hartford Fire on
_____________

the ground that

the United

the defendants there

conceded

States' jurisdiction over their conduct fails for two

reasons.

In the first place, the assertion is no more than a play on

words.

The

majority opinion

district court
claims, "as the
795.
on

stated that

had jurisdiction

over

London reinsurers apparently

the

concede."

the

civil
Id.
___

at

It is obvious, therefore, that jurisdiction did not depend

the

concession;

"undoubtedly"
one

"undoubtedly"

in Hartford Fire
_____________

of the

to

the

contrary,

have existed in any

London

defendants did

jurisdiction

event.

In

not

join in

would

the second place,

this

apparent

concession,

but the

Court

nonetheless

held

that

defendant's

foreign conduct to be within the Sherman Act's proscriptive ambit

because it was part of a scheme which "was intended to and did in

fact

produce

market."

a substantial

effect

on

the American

insurance

Id. at 795 n.21.

___

(FTAIA), 15

to

apply

U.S.C.

6a (1994), makes

the Sherman

inelegantly phrased

Act

manifest Congress' intent

extraterritorially.

and the court

The

in Hartford Fire
_____________

FTAIA

is

declined to

place any weight on it.

See Hartford Fire, 509 U.S. at 796 n.23.

___ _____________

We emulate this example

and do not rest our

ultimate conclusion

about Section One's scope upon the FTAIA.

B.
B.

Were

But

here the

The Merits.
The Merits.
__________

this a civil case, our journey would be complete.

United States

essays a

criminal prosecution

solely extraterritorial conduct rather than a civil action.

is

largely

uncharted terrain;

we

are

aware of

no

for

This

authority

directly on point, and the parties have cited none.

Be that as

thumb:

it may,

one datum sticks

in both criminal and civil cases,

One applies extraterritorially is

the

same

section

of

the

same

out like a

sore

the claim that Section

based on the same language

statute:

"Every

in

contract,

combination

restraint

in the form of trust or otherwise, or conspiracy, in

of trade or commerce among the several States, or with

foreign nations,

is declared

to be

illegal."

15 U.S.C.

1.

Words may sometimes be chameleons, possessing different shades of

meaning in

different contexts, see,

___

e.g., Hanover Ins. Co.

____ _________________

v.

United States, 880 F.2d 1503, 1504 (1st Cir. 1989), cert. denied,
_____________
_____ ______

493 U.S.

1023

(1990), but

should interpret the

same

common

same language

statute uniformly,

sense suggests

in the same

regardless of

interpretation is criminal or civil.

that

courts

section of

whether the

the

impetus for

Common sense

meaning.

Here, however,

accepted

canons

direction.

is usually a good

we need not rely on common sense alone;

of statutory

It is

barometer of statutory

construction

fundamental

point

in the

same

interpretive principle

that

identical words or terms used in

different parts of the same act

are

meaning.

intended

to have

the same

See
___

Commissioner of
_______________

Internal Revenue v. Lundy, 116 S. Ct. 647, 655 (1996); Gustafson

_________________
_____
_________

v. Alloyd Co., 115 S. Ct.

___________

1061, 1067 (1995).

This principle

which the

Court recently

called "the

basic canon

of statutory

construction," Estate of Cowart v. Nicklos Drilling Co., 505 U.S.

________________
____________________

469,

479 (1992)

operates not

only

when particular

phrases

appear in different sections of the same act, but also when

appear in different

See Russo
___ _____

is a

they

paragraphs or sentences of a single section.

v. Texaco, Inc., 808 F.2d 221, 227 (2d Cir. 1986) ("It
____________

settled principle of statutory construction that [w]hen the

same word

or phrase is used in

the same section of

an act more

than once, and the meaning is clear as used in one place, it will

be

construed to

(citations and

v.

Gertz,
_____

follows,

have

the same

meaning

internal quotation marks

249 F.2d

therefore,

662,

that

665 (9th

if

the

Cir.

in the

next

place.")

omitted); United States

_____________

1957) (similar).

language

upon

which

It

the

indictment rests were the

liability

rests

but

same as the language upon

appeared

in a

different

which civil

section

of the

Sherman Act, or in a different part of the same section, we would

be under great pressure to

Court

and

construe

the

follow the lead of the Hartford Fire

______________

two

iterations

of

the

language

identically.

is,

the

appearing

Where,

as here, the tie binds

text under

consideration

somewhere else

phrase in the original

in

setting

language

from

irresistible.

rejecting

statute

but is

that

duplicate

the original

and the

a manner consonant with a prior

Thompson/Center Arms Co., 504

__________________________

op.) (flatly

the pressure escalates

Supreme Court interpretation is

(plurality

not merely

the statute,

case for reading the language in

v.

is

more tightly

with

U.S.

the

both

See United States

___ _____________

505,

518 n.10

idea, while

civil

and

(1992)

construing

criminal

implications, that a court should "refrain in criminal cases from

applying statutory language that would have been held to apply if

challenged in civil litigation").

The

Supreme Court confronted an analogous situation in

Ratzlaf v. United States, 510 U.S. 135 (1994).

_______
_____________

There, the court

dealt with

a single

contained in

31

U.S.C.

5322(a)

punishment

for

criminal penalty

(1994),

which

clause,

authorized

individuals "willfully violating" a number

of separate statutory

provisions.

The

under

provisions.

After noting

multiple

places

defendant

within

was charged

that

identical

single statute

consistent meaning, the Court said:

to

construe a single formulation,

______

each time it

is called into

Court proceeded to interpret

play."

one

of

these

terms appearing

customarily

have

at

"We have even stronger cause

here

5322(a),

Id. at 143.
___

the same way

The

Ratzlaf
_______

the phrase "willfully violating" to

incorporate the same mens rea requirement that had been read into

the

phrase when section

5322(a) was applied

in other contexts.

10

See id.
___ ___

approval

at 136-37,

141.

In

iteration . . .

code section

courts

the

Court quoted

with

our statement in United States v. Aversa, 984 F.2d 493,

_____________
______

498 (1st Cir. 1993) (en banc):

single

so doing

"Ascribing

reading the

to which it applies

can render

meaning

various meanings to a

word differently for each

would open Pandora's jar.

so malleable,

the

usefulness of

If

single penalty provision

for a

group of

related code

sections

will be eviscerated."

Ratzlaf
_______

recently

is not

confronted

our

only teaching

situation

that,

aid.

putting

This

court

together

successive stages, throws light upon the problem at hand.

found

an

ambiguity

employment income," 7

reasonable

Strickland v.
__________

12, 21 (1st

subsequent

in

the

U.S.C.

administrative

phrase

"cost

self-

2014(d)(9) (1994), we deferred to

regulation interpreting

Cir.), cert. denied,

_____ ______

involving the

Having

of producing

it.

Commissioner, Me. Dep't of Human Servs.,

________________________________________

suit

its

116 S. Ct.

same

parties,

plaintiffs' contention, advanced in a somewhat

See
___

48 F.3d

145 (1995).

we debunked

In

the

different context

and in connection with

in

question

had a

a neoteric legal theory, that

plain meaning.

ambiguity does not flash on and

We explained:

the phrase

"Statutory

off like a bank of strobe lights

at a discotheque, shining brightly at the time of one lawsuit and

then vanishing mysteriously in the interlude before the next suit

appears."

96

Strickland v. Commissioner, Me. Dep't of Human Servs.,

__________
_______________________________________

F.3d 542,

Strickland
__________

547 (1st Cir.

opinions

1996).

stand for

the

11

Read in

the ensemble, the

proposition

that the

same

phrase, appearing in the same portion of the same statute, cannot

bear divergent interpretations in different litigation contexts.

The

shared

cases reinforces

the basic

confidence that

Section

canon of

we should follow the

the

Ratzlaf
_______

and Strickland
__________

construction and gives

canon here.

The

us

words of

One have not changed since the Hartford Fire Court found
_____________

that they clearly

Act

rationale of

evince Congress' intent

extraterritorially

disingenuous

clarity simply

for us

in

to pretend

because this

unless some special

civil

is

to apply the

actions,

that the

a criminal

and

it

words had

Sherman

would

lost their

proceeding.

circumstance obtains in this

be

Thus,

case, there is

no principled way in which we can uphold the order of dismissal.

NPI and its

special

reasons

differently

in

amicus, the Government of Japan, urge that

exist

measuring

criminal context.

exhortations and found

promising theses below.

1.
1.

for

them hollow.

Section

We

have

We discuss

One's

reach

reviewed their

the five

most

The rest do not require comment.

Lack of Precedent.
Lack of Precedent.
_________________

NPI and its amicus make much of

the fact that this appears to be the first criminal case in which

the

United States

foreign conduct.

for everything, and

probably more

of

endeavors

to extend

We are not

impressed.

the absence of

a demonstration of the

our economy than proof

Section

There is

One to

wholly

a first time

earlier criminal actions

is

increasingly global nature

that Section One

cannot cover wholly

foreign conduct in the criminal milieu.

Moreover,

this

argument

overstates

the

lack

of

12

precedent.

There is, for example, solid authority for applying a

state's criminal

statute to

the state's borders.

conduct occurring

See Strassheim v. Daily,

___ __________
_____

entirely outside

221 U.S. 280, 285

(1911)

(Holmes,

J.) ("Acts

intended to produce and

present at

the

this

same

shrinking world.

a jurisdiction,

the cause of the harm as if

effect, if

getting him within its power.").

apply

outside

but

producing detrimental effects within it,

justify a State in punishing

been

done

principle

the

State should

It is not

he had

succeed

in

much of a stretch to

internationally,

especially

in

See, e.g., Chua Han Mow v. United States,

___ ____ _____________
_____________

730

F.2d 1308, 1311-12 (9th Cir. 1984) (applying Strassheim principle

__________

to conduct in Malaysia

involving drugs intended for distribution

in the United States), cert. denied, 470 U.S. 1031 (1985); United
_____ ______
______

States
______

John

v. Hayes, 653
_____

F.2d 8, 11 (1st

Cir. 1981) (similar); cf.

___

Donne, Devotions Upon Emergent Occasions,

___________________________________

(warning that "no

man is an island, entire of

no. 17

(1624)

itself; every man

is a piece of the continent, a part of the main").

2.
2.

court and

(1922),

Difference in Strength of Presumption.

Difference in Strength of Presumption.
______________________________________

NPI both

for

the

cite United States v.

______________

proposition

that

the

extraterritoriality operates with greater

Bowman, 260
______

U.S. 94

presumption

against

force in the

arena than in civil

litigation.

be sure, the Bowman

______

Court, dealing with a charged

defraud, warned that if

include

those

[crimes]

The lower

criminal

This misreads the opinion.

the criminal law "is

committed

outside

conspiracy to

to be extended

of

To

the

to

strict

territorial jurisdiction, it is natural for Congress to say so in

13

the statute, and failure

to do so

Congress in this

regard."

merely

the

restated

previously established

U.S.

at

357.

The

will negative the purpose

Id. at 98.
___

presumption

But this

against

in civil cases like

Bowman
______

Court

nowhere

of

pronouncement

extraterritoriality

American Banana, 213

_______________

suggested

that

different, more resilient presumption arises in criminal cases.4

Nor does United States v. United States Gypsum Co., 438

_____________
________________________

U.S. 422 (1978),

offer aid and succor to NPI.

"the behavior proscribed by the

to distinguish

economically

Gypsum
______

from the

gray

[Sherman] Act is often difficult

zone of

socially acceptable

justifiable business conduct,"

Court held that criminal intent

convict

under

the

distinguishes some

Act.

Recognizing that

See
___

id.
___

civil antitrust

id. at
___

and

440-41, the

generally is required to

at

443.

Although

cases (in which

this

intent need

not be proven) from their criminal counterparts, the Gypsum Court

______

made

it plain

that

criminally "conduct

unquestionably

means,

of

intent

need

regarded as

anticompetitive

course,

that

not

be

shown

per se illegal
___ __

effects."

defendants

Id.
___

can

be

to

prosecute

because of

at

440.

convicted

its

This

of

participation

demonstration

antitrust

in

of

laws.

price-fixing

specific

See, e.g.,
___ ____

conspiracies

criminal intent

United States
_____________

without

to

violate

v. Brown,
_____

any

the

936 F.2d

____________________

4Indeed, the
Banana as
______

Bowman Court stated that

______

an appropriate

analogy because the

"is criminal

as well as civil."

support

notion that

the

to

craft

260 U.S.

the presumption

instances and leaves little

was attempting

it regarded American
________

antitrust statute

at 98.
is

the same

room to argue that the

a

special,

criminal proceedings.

14

more

This seems to

in both

Bowman Court
______

rigorous

rule

for

1042,

1046 (9th Cir. 1991);

United States v.
_____________

Society of Indep.
_________________

Gas. Marketers, 624 F.2d 461, 465 (4th Cir. 1980), cert. denied,
_______________
_____ ______

449 U.S. 1078 (1981); United States v. Gillen, 599 F.2d 541, 544_____________
______

45

(3d Cir.), cert. denied,

_____ ______

444 U.S. 1078

(1979).

Because the

instant case falls within that rubric, Gypsum does not help NPI.
______

We add

that even if Gypsum

______

had differentiated between

civil and criminal price-fixing cases, NPI's reliance on it would

still be problematic.

Reduced to bare essence, Gypsum focuses on

______

mens rea, noting that centuries of Anglo-American legal tradition

instruct that criminal liability ordinarily should be premised on

malevolent intent, see id. at 436-37, whereas civil liability, to

___ ___

which less stigma and

requires

a lesser

showing

comparable tradition

distinction with

milder consequences commonly attach, often

of

intent.

or rationale

There

for drawing a

is

simply

no

criminal/civil

regard to extraterritoriality, and

neither NPI

nor its amicus have alluded to any case which does so.

3.
3.

F. Supp.

The Restatement.
The Restatement.
_______________

court, 944

at 65, both sing the praises of the Restatement (Third)

of Foreign

distinction

Relations Law

between civil

extraterritoriality.

states:

NPI and the district

(1987),

claiming that

and criminal

cases on

The passage to which

it supports

the issue

of

they pin their hopes

[I]n the case of regulatory statutes that may

give

rise

liability,

to

both

such

as

antitrust and securities

of

substantial

ordinarily
criminal law.

weigh

civil

and

the

United

laws, the

criminal
States
presence

foreign

elements

against

application

In such

cases,

will
of

legislative

intent to subject conduct outside the state's

15

territory to its criminal law should be found

only

on the

basis

clear implication.

of express

statement or

Id.
___

at

403 cmt.

f.

We believe

that this

statement merely

reaffirms the classic

presumption against extraterritoriality

no

After

more,

no less.

all, nothing

in

the

text of

the

Restatement proper contradicts the government's interpretation of

Section One.

subject

See, e.g.,
___ ____

id. at
___

402(1)(c) (explaining

that,

only to a general requirement of reasonableness, a state

has jurisdiction to proscribe "conduct outside its territory that

has

or

is

intended

territory");5 id.
___

to

at

have

substantial

415(2) ("Any

effect

agreement in

within

its

restraint of

United States trade that is made outside of the United States . .

. [is] subject

to the

jurisdiction to prescribe

States, if a principal purpose of the conduct

interfere

with the

commerce

of

the

United

of the

United

or agreement is to

States,

and

the

agreement or conduct has

some effect on that commerce.").

is more,

indicate that a

other comments

prosecute wholly

id. at
___

country's decision

is discretionary.

to

See, e.g.,
___ ____

403 rep. n.8.

4.
4.

from

foreign conduct

What

The Rule of Lenity.

The Rule of Lenity.
__________________

its quiver

venerable;

statutes

it

is the

provides

in criminal

rule

that,

cases,

The next arrow which NPI yanks

of lenity.

in the

The

course

a reviewing

rule itself

of

is

interpreting

court should

resolve

____________________

5We note in passing that, by their use of the disjunctive in

this section, the drafters

of the Restatement seem to

suggest a

more permissive standard then we, and other American courts, see,
___
e.g., Alcoa, 148 F.2d at 444, would deem meet.
____ _____

16

ambiguities affecting a statute's scope in the defendant's favor.

See, e.g., Hughey

___ ____ ______

v. United States, 495 U.S.

______________

411, 422

(1990);

Crandon v. United States, 494 U.S. 152, 158 (1990); United States
_______
_____________
_____________

v.

Gibbens, 25
_______

Ferryman,
________

830

F.3d 28,

35 (1st Cir.

897 F.2d 584, 591

(1990).

But

the rule

1994); United States v.

______________

(1st Cir.), cert.

_____

of

lenity is

denied, 498 U.S.

______

inapposite unless

statutory ambiguity looms,

this

purpose simply

and a

because

statute is

some courts

questioned its proper interpretation.6

not ambiguous

or commentators

for

have

See Reno v. Koray, 115 S.

___ ____
_____

Ct. 2021, 2029 (1995); Moskal v. United States, 498 U.S. 103, 108
______
_____________

(1990).

Rather,

"[t]he rule

of lenity applies

only if,

seizing everything from which

aid can be derived, [a

make

to what Congress intended."

no more than a guess as

115 S.

certain

Ct.

at 2029

(citations, internal

brackets omitted);

court] can

quotation marks,

accord United States v.

______ ______________

after

Reno,
____

and

O'Neil, 11
______

F.3d 292, 301 n.10 (1st Cir. 1993) (describing the rule of lenity

as "a background principle that properly comes into play when, at

the end

of a thorough inquiry, the meaning of a criminal statute

remains obscure").

Put bluntly,

used to create ambiguity when

the rule of

lenity cannot

the meaning of a law, even

be

if not

readily apparent, is, upon inquiry, reasonably clear.

____________________

6Leaving aside the lower court's

reported opinion

has questioned

Fire's
____

in

exercise

patrolled

by the

rendition of the
See,
___

statutory

the

to

Nevertheless,

statute has drawn

W.

applicability of

construction

criminal law.

e.g., Kenneth
____

decision in this case,

the

no

Hartford
________

precincts

Hartford Fire's
_____________

criticism from the

academy.

Dam, Extraterritoriality in an Age of

___________________________________

Globalization: The Hartford Fire Case, 1993 Sup. Ct.

_______________________________________
307-13 (1993).

17

Rev. 289,

That ends the matter

that the Supreme

One

of

the

Court deems it "well

Sherman

Hartford Fire,
_____________

of lenity.

Act

509 U.S.

applies

at 796,

from trying to tease an ambiguity

its extraterritorial

In view of the

fact

established" that Section

to

wholly foreign

we effectively are

conduct,

foreclosed

out of Section One relative to

application.

Accordingly,

the

rule

of

lenity plays no part in the instant case.

5.
5.

counsels

legitimate

Comity.
Comity.
______

voluntary

claim

International comity is

forbearance when

to

jurisdiction

a doctrine that

sovereign

concludes

that

which has

second

sovereign

also

principles

of

has a

legitimate

international

claim

law.

to jurisdiction

See
___

Harold

G.

under

Maier,

Extraterritorial Jurisdiction at a Crossroads:

An Intersection
_________________________________________________________________

Between Public and Private International Law, 76 A. J.

_____________________________________________

280, 281 n.1

(1982).

Comity is more an

Int'l L.

aspiration than a fixed

rule, more a matter of grace than a matter of obligation.

events,

its growth in the

antitrust sphere has

Hartford Fire, in which the

_____________

would operate

those

few

to defeat

cases

required a defendant

Sherman

Act

or in

to act

which

been stunted by

Court suggested that comity concerns

the

in which

In all

exercise of

the

law

of

in a manner

full compliance

jurisdiction only

the foreign

sovereign

incompatible with

with

in

the

both statutory

schemes was impossible.

see
___

also Kenneth
____

W.

See Hartford Fire, 509 U.S.

___ _____________

Dam,

Extraterritoriality in an Age of
____________________________________

Globalization: The Hartford Fire Case, 1993 Sup. Ct.

_______________________________________

306-07 (1993).

at 798-99;

Accordingly, the Hartford Fire Court

_____________

Rev. 289,

gave short

18

shrift to the

defendants' entreaty that

the conduct leading

to

antitrust liability

was perfectly

legal in the

United Kingdom.

See Hartford Fire, 509 U.S. at 798-99.

___ _____________

In

this case the

even more attenuated.

illegal

under

both

defendant's comity-based argument is

The conduct with which NPI

Japanese

and

American

is charged is

laws,

thereby

alleviating any founded concern about NPI being whipsawed between

separate sovereigns.

And, moreover, to the extent that comity is

informed by general principles of reasonableness, see Restatement

___

(Third)

of Foreign

against

NPI

charges

that the

Relations Law

is well

within the

403, the

pale.

defendant orchestrated

In it,

the government

a conspiracy

object of rigging prices in the United States.

can

indictment lodged

with the

If the government

prove these charges, we see no tenable reason why principles

of comity should shield NPI from

prosecution.

of international commerce, where

decisions reached in one corner

of

the world can reverberate around

it takes

create

to tell the tale.

perverse incentives

means to influence

for erecting

Thus,

for

the globe in less time than

a ruling in NPI's favor would

those who

markets in the United

as many

We live in an age

would use

nefarious

States, rewarding them

territorial firewalls as

possible between

cause and effect.

We

need go

no

further.

Hartford Fire
_____________

definitively

establishes that Section One of the Sherman Act applies to wholly

foreign conduct which has

the United States.

We

an intended and substantial

effect in

are bound to accept that holding.

19

Under

settled principles

to

apply

it

criminal case.

that we

of statutory construction, we

by interpreting

Section

One

The combined force of these

accept the

also are bound

the same

way

in a

commitments requires

government's cardinal argument,

reverse the

order of the district court, reinstate the indictment, and remand

for further proceedings.

Reversed and remanded.

Reversed and remanded.
_____________________

Concurring Opinion follows

Concurring Opinion follows

20

LYNCH,
LYNCH,

presented

Circuit Judge
Circuit Judge
______________

(concurring). The
(concurring).

question

in this case is whether Section One of the Sherman

Act authorizes criminal prosecutions of defendants for

actions

committed

entirely

Judicial precedents,

outside

culminating

with the

decision

in Hartford Fire Insurance Co.

___________________________

U.S. 764

(1993), conclusively

jurisdictional reach extends,

conduct that is meant

the

be asked

States.

Supreme

Court's

v. California, 509
__________

is whether

believe that, with regard

there is

Section One's

actions, to

to produce, and does in

substantial effects in the United States.

to

United

establish that

in civil

their

foreign

fact produce,

The next question

any persuasive

reason to

to wholly foreign conduct, Section

One in the criminal context is not co-extensive with

Section

One in the civil context.

In answering this

careful to

One's

determine

criminal

international

construction

whether this

reach

law.

second question, courts must

"It

since the

construction of

conforms

with

has

been

decision in

Section

principles

maxim

of

Murray v.
______

be

of

statutory

The Charming
____________

Betsy, 2 Cranch 64, 118, 2 L. Ed. 208 (1804), that 'an act of
_____

congress

nations,

ought never to be

if

Weinberger v.
__________

case,

any

other

construed to violate

possible

Rossi, 456 U.S.

_____

Judge Learned

Hand found

relevant to determining the

construction

25, 32 (1982).

this canon

the law of

remains.'"

In the Alcoa
_____

of construction

substantive reach of the Sherman

21

Act,

observing that "we are not to read general words [i.e.,

____

Section

One]

customarily observed

powers."

without

by nations

regard

to

the

limitations

upon the exercise

of their

United States v. Aluminum Co. of Am., 148 F.2d 416,

_____________
___________________

443 (2d Cir. 1945);

see also Hartford Fire, 509 U.S. at 814-

________ _____________

15 (Scalia, J., dissenting).

The task of construing

is not the usual one

parsing the

Section One in this context

of determining congressional intent

language or legislative history

by

of the statute.

The broad, general language of the federal antitrust laws and

their

unilluminating

legislative

interpretive responsibility

Court has called the

history

place

upon the judiciary.

Sherman Act a "charter of

a special

The Supreme

freedom" for

the courts, with "a generality and adaptability comparable to

that found . . . in constitutional provisions."

Coals, Inc. v.
___________

United States, 288

_____________

Appalachian
___________

U.S. 344, 359-60

(1933).

As Professors Areeda and Turner have said, the federal courts

have been invested "with a jurisdiction to create and develop

an 'antitrust law' in

the manner of the common

law courts."

I Areeda & Turner, Antitrust Law

______________

106, at 15 (1978).7

courts

by

are

aided

construction,

in

such

as

this

the

task

canons

presumption

The

of

statutory

against

violating

____________________

7.

Professors

sometimes

talk

Areeda
as

question before them.

if

and

Turner also

Congress

already

that

"judges

decided

the

This is usually a misconception."

Id.
___

22

has

note

international law, which serve

as both guides and

limits in

theabsence of more explicit indicia of congressional intent.

Here,

content

we are

of Section

"commerce

Because of

. .

asked

to determine

One's inexact

with foreign

the substantive

jurisdictional provision,

nations."

the "compunctions against the

15

U.S.C.

1.

creation of crimes

by judges rather than by legislators," II Areeda & Hovenkamp,

Antitrust
Law
_______________

constitution-like

311b,

at

33

(1995

rev.

aspects

of

the

antitrust

ed.),

laws must

handled particularly carefully in criminal prosecutions.

the

be

agencies

As

the antitrust laws give the federal enforcement

relatively

antitrust law has been

blank

check,

the

development

largely shaped by the cases

executive branch chooses

- or

does not choose

of

that the

- to

bring.

Accordingly it has been said that:

novel

interpretations

or

seldom, if ever, occurred

prosecutors
whose

have

knowing

great

departures

have

in criminal cases, which

usually reserved
behavior

would

for defendants
be

generally

recognized as appropriate for criminal sanctions.

Id. at 34.
___

are

This case does present a new

told this is the

first instance in

interpretation.

We

which the executive

branch has chosen to interpret the criminal provisions of the

Sherman Act

as reaching conduct wholly

this country's borders.

committed outside of

Changing economic conditions,

political

agendas, mean

as well as different

that antitrust policies

may change

23

from

administration

administration

Guidelines

for

has

to

administration.

promulgated

International

new

The

Antitrust

Operations

present

Enforcement

which

"focus

primarily on

situations in which the Sherman

jurisdiction and

jurisdiction"

when the

Act will grant

United States will

internationally.

exercise that

Brockbank,

The
1995
__________

International Antitrust Guidelines:

The Reach of
U.S.
_____________________________________________________________

Antitrust Law Continues to Expand, 2 J. Int'l Legal Stud. 1,

__________________________________

*22

(1996).

The

enforcement stance

new

Guidelines

reflect

than earlier versions

stronger

of the Guidelines,

and

have been described as a "warning to foreign governments

and

enterprises that

intend

to

abroad

that

actively

the

[antitrust enforcement]

pursue restraints

adversely

affect American

American exporting opportunities."

on

trade

markets

Id. at *21.
___

case is likely a result of this policy.

Agencies

occurring

or

damage

The instant

It

is

with

this

context in

mind

determine if

the exercise of jurisdiction

decision

the executive

of

proper in this case.

of

determining

statutes,

through

the

the

government.

branch of

we must

occasioned by the

the United

States is

While courts, including this one, speak

congressional

meaning of

relationship

the

intent

antitrust

among

all

In this criminal case, it is

to ensure that the

that

when

interpreting

laws has

three

emerged

branches

of

our responsibility

executive's interpretation of the Sherman

24

Act does not conflict

with other legal principles, including

principles of international law.

That

language

course,

of

question

requires

Section One

generally true

of

examination

the Sherman

that,

as a

Act.

principle of

beyond

It

the

is, of

statutory

interpretation, the same language should be read the same way

in all contexts

not

to which the language applies.

invariably true.

statutory

New content is

terms depending

upon

But this is

sometimes ascribed to

context.

Cf. Robinson
___ ________

v.

Shell Oil Co., 117

_______________

context,

statutory

different

S. Ct.

term

sections

of

Statutory Construction
______________________

843,

may

have

single

60.04

847 (1997)

(depending on

different

statute);

meanings

in

Sutherland,

(5th ed. 1995) (statutes with

both remedial and penal provisions may be construed liberally

in remedial context and

strictly in penal context).

As NPI

and

the Government of Japan point out, the Supreme Court has

held

that Section One of the Sherman Act, which defines both

criminal and

"should

civil

violations

with

one

general

phrase,8

be construed as including intent as an element" of a

criminal violation.

Co., 438 U.S. 422,

___

United States v. United States Gypsum

______________
_____________________

443 (1978).

Where Congress

intends that

our

laws

international

conform

with

law

suggests

international

that

criminal

law,

and

where

enforcement and

____________________

8.

"Every

contract, combination

in

the form

of trust

or

otherwise, or conspiracy, in restraint of trade or commerce .

. . is declared to be illegal . . . ."

15 U.S.C.

1.

25

civil

enforcement

be viewed

differently,

it

is at

least

conceivable that

different content could be

same language

depending on whether

criminal.

is then worth

It

international

law which

ascribed to the

the context is

civil or

asking about the effect

Congress presumably

also

of the

meant to

respect.

The content of international

reference 'to

and,

the customs

as evidence

commentators.'"

of

law is determined "by

and usages of

these, to

the

civilized nations,

works of

jurists

and

Hilao v. Marcos, 103 F.3d 789, 794 (9th Cir.

_____
______

1996) (quoting The Paquete Habana, 175 U.S. 677, 700 (1900));
__________________

see
___

also Kadic v. Karadzic, 70

____ _____
________

Restatement

United

(Third)

of the

States restates

F.3d 232 (2d Cir. 1995). The

Foreign

Relations

international law,

Law of

as derived

the

from

customary international law and from international agreements

to

which the United States is a

United

States.

See
___

party, as it applies to the

Restatement (Third) of the Foreign

_____________________________________

Relations Law
of the United States
________________________________________

[hereinafter

Restatement].
___________

1,

The United States

101

(1987)

courts have

treated the Restatement as an illuminating outline of central

principles of international law.

at 799

See Hartford Fire, 509 U.S.

___ _____________

(citing Restatement); Hartford Fire, 509

_____________

(Scalia, J.,

dissenting) ("I

(Third) of Foreign Relations

of international law.

shall rely on

U.S. at 818

the Restatement

Law for the relevant principles

Its standards appear fairly supported

26

in

the

decisions

of

this Court

choice-of-law principles

construing

international

. . . and in the decisions of other

federal courts . . . ."); In re Maxwell Communications Corp.,

__________________________________

93 F.3d 1036, 1047-48 (2d Cir. 1996).

The

from

Restatement

international

law,

articulates

principles,

for determining

when

the

derived

United

States

may

properly exercise

jurisdiction

over

another state.

international

activities

regulatory

or

415

persons

connected

interests

at stake.

applies

Sections

these principles

to

state has

Id.
___

"conduct outside

have

substantial

402(1)(c).

jurisdiction

its territory

effect

within

its

402, 403.

415.

that "Subject

to prescribe

that has

403

"Jurisdiction to

Restatement Section 402(1)(c) states

403," a

402 and

See Restatement
___ ___________

Regulate Anti-Competitive Activities."

to

with

It serves as a useful guide to evaluating the

articulate general principles.

Section

(or prescriptive)

law to

or is intended

territory."

to

Id.
___

Section 403(1) states that, even when Section 402

has been satisfied, jurisdiction

may not be exercised

if it

is

"unreasonable."

factors

to be

Id.
___

403(1).

evaluated in

Section

determining if

403(2)

lists

jurisdiction is

reasonable:

(a)

the link
the
which

of the activity to

regulating state,
the

territory,

activity
or

has

i.e.,
_____

the territory of
the

takes place

extent

to

within

the

substantial, direct,

and

foreseeable effect upon or in the territory;

27

(b)

the

connections,

such

residence, or economic
regulating

state

as

nationality,

activity, between

and the

the

person principally

responsible

for the activity to be regulated,

or

that

between

state

and

those

whom the

regulation is designed to protect;

(c)

the character of the activity to be regulated,

the importance of regulation to the regulating
state,

the

regulate
which

extent

to

such activities,

the desirability of

which

other

and the

states

degree to

such regulation is

generally accepted;

(d)

the existence of

justified expectations

that

might be protected or hurt by the regulation;

(e)

the

importance

international

of

the

political,

regulation
legal, or

to

the

economic

system;

(f)

the

extent

consistent

to

which

with

the

the

regulation

traditions

of

is
the

international system;

(g)

the extent to which

another state may have an

interest in regulating the activity; and

(h)

the likelihood of

conflict with regulation by

another state.

Id.
___

403(2).9

Comment f to Section 403 states that the principles

of Sections

402 and

civil

regulation."

naming

the United

says

that for

403 "apply

Id.
___

to criminal

403 cmt.

States antitrust

statutes

that give

f.

to

But, specifically

laws, the

rise

as well as

comment also

to both

types

of

liability, "the presence of substantial foreign elements will

____________________

9.

Section

403(3) is not applicable here.

See id.
___ ___

403(3)

cmt. e.

28

ordinarily weigh against

The

comment argues

application of

that legislative

criminal law."

intent to

Id.
___

apply these

laws criminally should only be found on the basis of "express

statement or clear implication."

Id.
___

While

this comment

the

the majority opinion

is an expression

comment also

associated

foreign

principle

with

implies

the

conduct.

See
___

distinguished

committed in

intrusive.").

of the clear

that there

imposition

also id.
____ ___

of reasonableness,

from civil)

the

statement rule,

are special

of criminal

403

concerns

sanctions

on

n.8 ("In applying the

exercise of

criminal (as

jurisdiction in relation

another state may be

Indeed, most

accurately states that

to acts

perceived as particularly

people recognize

a distinction

between civil and criminal liability; that the law of nations

should do so as well is not surprising.10

Fire
____

and

earlier judicial

decisions

And while Hartford

________

have

found that

the

antitrust

conduct,

laws do apply,

this

antitrust

in the

civil context,

common

law

is

not

to foreign

the

express

statement of legislative intent that the Restatement suggests

may be appropriate in the criminal context.

____________________

10.

Enforcement of criminal

for

conduct

on

foreign

soil

relationship with the foreign

ways than would
provide
courts

more

a civil

laws against foreign

may

this

country's

country in somewhat

different

action.

explicit guidance

affect

nationals

Congress
to

the

could choose
executive and

to
the

in this area if it is concerned about such impacts on

foreign relations.

29

Also relevant to the present inquiry is section 415

(2), which states that:

Any

agreement

in

restraint

States trade that is

United

States,

of

United

made outside of the

and

any

conduct

or

agreement in restraint of such trade that

is carried out
the

United

predominantly outside

States, are

jurisdiction to prescribe
States, if

of

subject

to the

of the

United

principal purpose

of

the

conduct or agreement is to interfere with

the commerce of the United States and the
agreement

or conduct has

some effect on

that commerce.

Restatement
___________

415(2).

Comment a to Section 415

states that

the reasonableness principles articulated in Section 403 must

still be satisfied.

See id cmt. a.
___ __

Application

at

of these principles

issue here leads to

jurisdiction

is

to the indictment

the conclusion that

reasonable in

this

the exercise of

case.

Here,

raising

prices in the United States and Canada was not only a purpose
_

of

the

alleged

satisfying

Moreover,

United

conspiracy,

Section

Section

415's

415's

States markets

alleges that NPI

was

the purpose,
___

"principal purpose"

requirement

is

sold $ 6.1

United States during

it

amply met

requirement.

of "some

here.

million of fax

thus

effect"

on

The indictment

paper into

the

1990, approximately the period covered

by the charged conspiracy.

In 1990, total sales of fax paper

in

North America

price increases

were

approximately $100

thus affected

million.

a not insignificant

NPI's

share of

the United States market.

30

These same factors weigh heavily in the Section 403

reasonableness analysis.

Because only North American markets

were

targeted,

this

activity

the United

appears

to

interest, which may only

in having

Japan

be

greater

interest in

States, in

the

United States

a state

protecting Japanese

consumers in

contrast, has

the alleged conspiracy.

strong interest

in

who were affected by the

In this situation, it may

has

Japanese

legal norms.

protecting United States consumers,

increase in prices.

the

comport with foreign

this case as they were unaffected by

The United

than

in combatting

be the general interest of

its industries

has no

States' interest

sufficient incentive

be that only

to pursue

the

alleged wrongdoers, thereby providing the necessary deterrent

to similar anticompetitive behavior.

the

In another case, where

consumers of the situs nation were injured as well, that

state's

interest in regulating anticompetitive conduct might

be stronger than it is here.

Other Section 403 factors

the exercise of

States markets

of Japan

the

jurisdiction here.

The

effects on

were foreseeable and direct.

acknowledges that

international

assert that it

also counsel in favor of

The Government

antitrust regulation is

legal system,

and

NPI

does not

has justified expectations that

31

United

part of

really

were hurt by

the regulation.11 The only factor

that

the United States' antitrust laws apply to this conduct

is the fact that the situs

the

counseling against finding

principals

were

of the conduct was Japan and that

Japanese

corporations.

This

consideration is inherent in the nature of jurisdiction based

on effects of conduct, where the situs

definition, always a

foreign country.

of the conduct is, by

This alone does

not

tip the balance against jurisdiction.

For these

reasons, I agree with

the majority that

the district court erred in dismissing the indictment.

____________________

11.

While

should
include
criminal

have

criminal prosecution may come as a surprise, NPI

known

treble

that

damages.

civil

A corporation

violation of Section One

exceeding $ 10 million.

antitrust

could

found guilty

of a

is subject to

See 15 U.S.C.
___

obviously do not include a similar cap.

32

liability

2.

a fine not

Treble damages