Indiana Law Review


Foreign Application of the Noerr-Pennington Doctrine

After Coastal States Marketing v. Hunt

I. Introduction

United States businesses operating abroad have long recognized that

they can profit from lobbying foreign governments just as they can gain

a competitive advantage from successfully petitioning Congress, the ex-

ecutive branch, numerous administrative agencies, and the courts. Domestic

lobbying by American and foreign businesses and their trade associations

can, when successful, have an adverse effect on competition. In some cases,
this governmental petitioning is undertaken solely to achieve an an-

ticompetitive effect. Although a demonstrable restraint of trade may result,
such petitioning activity is immune from domestic antitrust liability under
the Sherman Act 1 because of the judicially created exception to antitrust

laws known as the Noerr-Pennington doctrine. 2

When American businesses operating abroad jointly petition foreign
governments for the purpose of gaining a competitive advantage, and a

substantial anticompetitive effect on trade within the United States results,

their antitrust liability is uncertain. If petitioning activities by United States

corporations directed at foreign governments are treated the same as peti-

tioning directed at a branch of the United States government, then the

Noerr-Pennington doctrine would render foreign petitioning immune from
antitrust liability. The Supreme Court has never addressed the issue, but
two circuit courts have done so and have arrived at conflicting decisions. 3

'15 U.S.C. §§ 1-7 (1982).
2The doctrine takes its name from Eastern R.R. Presidents Conference v. Noerr Motor

Freight, Inc., 365 U.S. 127 (1961) and United Mine Workers v. Pennington, 381 U.S. 657

(1965). See generally 1 P. Areeda & D. Turner, Antitrust Law ft 201-204 (1978)
[hereinafter cited as Areeda & Turner]; J. Atwood & K. Brewster, Antitrust and
American Business Abroad § 8.12 (1981) [hereinafter cited as Atwood & Brewster]; 1
W. Fugate, Foreign Commerce and the Antitrust Laws § 2.28 (3d ed. 1982) [hereinafter
cited as Fugate]; Costilo, Antitrust *s Newest Quagmire: The Noerr-Pennington Defense,

66 Mich. L. Rev. 333 (1968); Oppenheim, Antitrust Immunity for Joint Efforts to Influence

Adjudication Before Administrative Agencies and Courts—From Nperr-Pennington to Truck-
ing Unlimited, 29 Wash. & Lee L. Rev. 209 (1972); Comment, Antitrust Immunity: Recent
Exceptions to the Noerr-Pennington Defense, 12 B.C. Ind. & Com. L. Rev. 1133 (1971);
Note, Corporate Lobbyists Abroad: The Extraterritorial Application of Noerr-Pennington

Antitrust Immunity, 61 Calif. L. Rev. 1254 (1973) [hereinafter cited as Note, Corporate

Lobbyists Abroad]; Note, Antitrust: The Brakes Fail on the Noerr Doctrine, 57 Calif . L.

Rev. 518 (1969); Note, Limiting The Antitrust Immunity For Concerted Attempts to In-

fluence Courts and Adjudicatory Agencies: Analogies to Malicious Prosecution and Abuse

of Process, 86 Harv. L. Rev. 715 (1973); Note, Application of the Sherman Act to At-

tempts to Influence Government Action, 81 Harv. L. Rev. 847 (1968).
'Compare Coastal States Mktg. v. Hunt, 694 F.2d 1358 (5th Cir. 1983) (Noerr-

Pennington does apply to foreign petitioning) with Occidental Petroleum Corp. v. Buttes

613



614 INDIANA LAW REVIEW [Vol. 17:613

Their contradictory positions are the subject of this Note, which examines

the rationales of the circuits in light of the development of the Noerr-

Pennington doctrine.
4 A brief discussion of the Sherman Act precedes

an examination of this exception to the antitrust laws. 5 This Note will

demonstrate why the more recent view, that the Noerr-Pennington doc-
trine applies beyond the territorial confines of the United States, is the

better view,
6 and why the Justice Department's Antitrust Guide for Inter-

national Operations should be expanded to explain how the Noerr-
Pennington doctrine operates when applied abroad. 7

II. The Sherman Act and Extraterritorial Jurisdiction

Individuals and businesses are prohibited from restraining or

monopolizing trade in the United States by the Sherman Act, 8 the first

of the United States' antitrust laws. 9 The Sherman Act was passed in 1890

and was aimed at eliminating the various monopolies and combinations

in restraint of trade that threatened economic competition in the nine-

teenth century.
10

Section 1 of the Act prohibits "[e]very contract, combination in the

form of trust or otherwise, or conspiracy, in restraint of trade or com-

merce among the several States, or with foreign nations." 11 Terms of
crucial importance, such as "restraint" and "commerce," were undefined
in the Act and were left to the courts to construe. 12 What was clear in
Section 1 was that individual conduct was not prohibited; a violation re-

quired two or more persons in order to find the contract, combination,
or conspiracy that was prohibited. 13

Unlike the first section, Section 2 of the Sherman Act reaches the
conduct of individuals and is directed towards "[e]very person who shall
monopolize, or attempt to monopolize, or combine or conspire with any

other person or persons, to monopolize any part of the trade or com-
merce among the several States, or with foreign nations . . . ," 14 Section
1 and Section 2 are complementary in that the former is directed at the

means of anticompetitive conduct—combinations in restraint of trade

—

Gas & Oil Co., 331 F. Supp. 92 (CD. Cal. 1971), aff 'd per curiam, 461 F.2d 1261 (9th
Cir. 1972) {Noerr-Pennington does not apply to foreign petitioning).

4
See infra notes 181-266 and accompanying text.

5 See infra notes 8-34 and accompanying text.
6 See infra notes 267-89 and accompanying text.

"See infra note 290 and accompanying text.
8
15 U.S.C. §§ 1,2 (1982).

'J. Townsend, Extraterritorial Antitrust: The Sherman Antitrust Act and
U.S. Business Abroad 26-27 (1980) [hereinafter cited as Townsend].

10
Id. at 29.

"15 U.S.C. § 1 (1982).
i2Townsend, supra note 9, at 34.
n
Id.

"15 U.S.C. § 2 (1982).



1984] ANTITRUST ABROAD 615

while the latter prohibits the goal of such conduct—monopolization. 15
Violations of Section 2 take three forms: monopolizations, attempts to

monopolize, and conspiracy to monopolize. As a general rule, Section
2 is violated when one person or a combination of persons possesses
monopoly power, or attempts to gain monopoly power, and has the in-
tent and purpose to exercise that power. 16

The broad statutory language of the Sherman Act has acquired more

precise definition in the courts over the last ninety years. Certain types

''Standard Oil Co. v. United States, 221 U.S. 1, 61-62, (1911); see J. Van Cise,
Understanding the Antitrust Laws 26 (1963).

16Townsend, supra note 9, at 35. More specifically, it is important to note that Sec-

tion 2, by its terms, does not prohibit monopolies "in the concrete." Standard Oil Co.

v. United States, 221 U.S. 1, 62 (1911). Rather, Section 2 prohibits the act of "monopoliza-

tion," which requires that the defendant (1) have monopoly power (2) in the relevant market

(3) with the intent or purpose of exercising such power.

Monopoly power exists when the defendant has obtained "control of price or competi-

tion." United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 393 (1956). Such control
would be present if the defendant were able to charge a higher price than would be set

by competition or to exclude competitors from the market. The defendant need not have

obtained monopoly power by means which would violate Section 1 of the Sherman Act

in order to be held in violation of Section 2. Standard Oil, 221 U.S. at 61.

The relevant market in which the defendant possesses monopoly power has two com-

ponents. The first is the product market. In defining the relevant product market in the

du Pont case, the Supreme Court stated that one must make

an appraisal of the "cross-elasticity" of demand in the trade. ... In considering
what is the relevant [product] market for determining the control of price and

competition, no more definite rule can be declared than that commodities reasonably

interchangeable by consumers for the same purposes make up that "part of the
trade or commerce," monopolization of which may be illegal.

351 U.S. at 394-95 (footnote omitted).

The second component of the relevant market is the geographic market. The relevant

geographic market may be broad or narrow: "[I]n addition to the principal national market,
there may well be local markets of limited territorial area, or city markets, which in other
litigation might be found in themselves to constitute, for purposes of the antitrust laws,

definable, separate markets, wherein . . . prohibited monopolization . . . might be enjoined

or punished." United States v. Grinnell Corp., 236 F. Supp. 244, 253 (D.R.I. 1964), aff'd

except as to decree, 384 U.S. 563 (1966).

The final element of monopolization is the intent or purpose to exercise the monopo-

ly power. Specific intent to monopolize is not required, "for no monopolist monopolizes

unconscious of what he is doing." United States v. Aluminum Co. of America, 148 F.2d

416, 432 (2d Cir. 1945) (Hand, J.), quoted in American Tobacco Co. v. United States,

328 U.S. 781, 814 (1946). Rather, the intent to exercise monopoly power may be inferred
from the conduct of the defendant in obtaining or maintaining monopoly power by prac-

tices that are an unreasonable restraint of trade, see Standard Oil, 221 U.S. at 70-77, or

by other exclusionary practices that do not themselves rise to the level of a Section 1 viola-

tion, see Aluminum Co. of America, 148 F. Supp. at 431-32.
The standard formulation for attempts to monopolize is "the employment of methods,

means and practices which would, if successful, accomplish monopolization, and which, though

falling short, nevertheless approach so close as to create a dangerous probability of it."

American Tobacco, 328 U.S. at 785 (quoting and approving jury instructions given in the

district court).



616 INDIANA LAW REVIEW [Vol. 17:613

of agreements have come to be regarded as illegal per se under Section

1 of the Act.
17 These include agreements to allocate territories,

18 agreements

among competitors to fix the prices at which their products are sold, 19

collective refusals to deal and group boycotts, 20 tying arrangements, 21 and

agreements to exclude competitors.
22 The reason for the per se rule is

that

[although [Section 1 of the Sherman Act] is literally all-

encompassing, the courts have construed it as precluding only

those contracts or combinations which "unreasonably" restrain

competition.

However, there are certain agreements or practices which

because of their pernicious effect on competition and lack of any

redeeming virtue are conclusively presumed to be unreasonable

and therefore illegal without elaborate inquiry as to the precise

harm they have caused or the business excuse for their use. This
principle of per se unreasonableness not only makes the type of

restraints which are proscribed by the Sherman Act more certain

to the benefit of everyone concerned, but it also avoids the

necessity for an incredibly complicated and prolonged economic

investigation into the entire history of the industry involved, as

well as related industries, in an effort to determine at large whether

a particular restraint has been unreasonable—an inquiry so often
wholly fruitless when undertaken. 23

Restraints that fall outside the per se rule are subject to a full factual

inquiry to determine "whether they will have any significantly adverse

effect on competition, what the justification for them is, and whether

that justification could be achieved in a less anticompetitive way." 24 This

inquiry is the "rule of reason" which has been a part of antitrust ad-

judication since 191 1.
25

Actions to enforce the Sherman Act may be either criminal or civil.
Violations of Sections 1 and 2 are, when prosecuted by the government,

i7Townsend, supra note 9, at 38.
18 United States v. Addyston Pipe & Steel Co., 85 F. 271 (6th Cir. 1898), aff'd, 175

U.S. 211 (1899).
l9United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940).

"Fashion Originators' Guild of America v. Federal Trade Comm'n, 312 U.S. 457 (1941).
2, Northern Pac. Ry. Co. v. United States, 356 U.S. 1 (1958).

"International Salt Co. v. United States, 332 U.S. 392 (1947).

"Northern Pac. Ry. Co., 356 U.S. at 5 (citations omitted).

'"Department of Justice, Antitrust Division, Antitrust Guide for International Opera-

tions, (Jan. 26, 1977), reprinted in Antitrust & Trade Reg. Rep. (BNA) No. 799, at E-l
(Feb. 1, 1977) [hereinafter cited as Antitrust Guide for International Operations].

25The rule of reason test was first applied in Standard Oil Co. v. United States, 221

U.S. 1.



1984] ANTITRUST ABROAD 617

felonies.
26 Upon conviction, a corporate violator may be fined up to one

million dollars; the maximum punishment for other persons is a fine of
up to one hundred thousand dollars, or three years imprisonment, or

both.
27

Section 4 of the Clayton Act28 authorizes suit in the United States

district courts by any person harmed in his business or property by an

act in violation of the antitrust laws.
29

Section 4 also mandates the recovery

of treble damages and the cost of litigation, including reasonable attorneys'

fees.
30

Sections 1 and 2 of the Sherman Act prohibit joint restraints or the

monopolizing of "trade or commerce . . . with foreign nations." 31 The

statutory language indicates that the antitrust law was drafted to reach

international trade activities. Yet, the regulation of international business

activity that occurred outside United States territory raised serious ques-

tions of jurisdiction. Originally, courts applied a territorial limitation to

the application of United States antitrust laws, denying jurisdiction when

the acts complained of occurred outside the borders of the United States. 32

Eventually, courts turned from a strictly territorial view of jurisdiction

to one that focused less on the place where the allegedly anticompetitive

conduct occurred and more on the effects that conduct, outside United

States territory, had on competition within the country. Professor Town-
send has stated the modern general rule of the antitrust laws' foreign
jurisdiction: "The law pertains extraterritorially only to activities, no matter

where performed, that directly and substantially affect the foreign trade

of the United States." 33 In the view of the Justice Department, "the U.S.

antitrust laws should be applied to an overseas transaction when there
is a substantial and foreseeable effect on the United States commerce;

and, consistent with these ends, it should avoid unnecessary interference

with the sovereign interests of foreign nations." 34

III. Foreign Sovereign Involvement and Antitrust Defenses

The foreign sovereigns of nations in which United States corporations

do business have become integrally involved in matters of international

26
15 U.S.C. §§ 1, 2 (1982).

21
Id.

28
15 U.S.C. § 15(a) (1982).

29
Id.

i0
Id.

3,
15 U.S.C. §§ 1, 2 (1982).

32Townsend, supra note 9, at 42-43 (citing American Banana Co. v. Unified Fruit

Co., 213 U.S. 347, 356-57 (1909).
33Townsend, supra note 9, at 85.
34
Antitrust Guide for International Business Operations, supra note 24, at E-2 to E-3

(footnote omitted).



618 INDIANA LAW REVIEW [Vol. 17:613

trade.
35 Some do so by interfering directly in competitive markets to pro-

mote their domestic employment, to increase income, or to elevate the

public welfare.
36 Occasionally, the official activities of foreign sovereigns

have an adverse effect on commerce within the United States. 37 When
a foreign sovereign's activities occur with the cooperation of, or in con-

junction with, United States businesses operating abroad, the businesses

involved may face antitrust consequences in United States courts. American
courts have the power to determine liability for Sherman Act violations

which have occurred abroad, provided that the activity complained of has

a substantial effect on commerce in the United States. 38

The involvement of foreign sovereigns in international business com-
plicates antitrust enforcement and litigation. 39 When American businesses
have acted in conjuction with foreign governments to violate United States

antitrust laws, it is likely that, as defendants, those businesses will challenge

a United States court's exercise of jurisdiction through affirmative defenses,

such as the doctrines of sovereign compulsion40 and act-of-state. 41 Both

of these doctrines were originally developed in areas of the law other than

antitrust; but today, both are used in antitrust litigation to defeat liability

in some extraterritorial antitrust cases. 42 In addition, defendants may call
on consideration of comity to foreign governments to avoid inquiry into

antitrust liability.
43

It is in this manner that the Noerr-Pennington doc-
trine is interjected into some extraterritorial antitrust litigation.

A. Sovereign Compulsion

Sovereign compulsion operates when the defendant's activities were
performed pursuant to an official command of a foreign government. 44

For example, if the government of one nation prohibits businesses

35See Townsend, supra note 9, at 82-83.
36D. Baker, Sovereign Compulsion, The Noerr Doctrine and Government Cartelizing,

in Seventeenth Annual Advanced Antitrust Law Seminar: International Trade and
the Antitrust Laws, 95 (1977) [hereinafter cited as Baker].

11
Id. at 97.

™See generally Areeda & Turner, supra note 2, f 236. One example arises when
foreign governments directly cartelize a world market as a political act, as in the case of

OPEC, where the impact on the United States market is great. See Baker, supra note 36,
at 107.

19See generally Areeda & Turner, supra note 2, % 235.
*°See Baker, supra note 36, at 98.
41 See Graziano, Foreign Governmental Compulsion as a Defense in United States An-

titrust Law, 7 Va. J. Int'l L. 100 (1967); Note, The Development of the Defense of Foreign

Compulsion, 69 Mich. L. Rev. 888 (1971).
i2
See, e.g., American Banana Co. v. United Fruit Co., 213 U.S. 347; Interamerican

Refining Corp. v. Texaco Maracaibo, Inc., 307 F. Supp. 1291 (D. Del. 1970).

^Antitrust Guide for International Operations, supra note 24, at E-3.
44The doctrine, also known as "force majeure," generally exempts a private party

from performing dutes that it would normally be required to perform. The doctrine will

not apply unless the government-compelled acts or omissions took place in the government's



1984] ANTITRUST ABROAD 619

operating in that country from exporting a scarce commodity to the United

States, and the defendant complies with the order, he would not be liable

for any resultant trade restraint within the United States. 45 The doctrine

of sovereign compulsion would provide the defendant with protection even

if he complied with the sovereign's mandate with an intent to restrain

trade or eliminate competition in the United States. 46 The doctrine is

premised on the respect for the sovereignty of foreign nations and the

belief that businesses should not be held liable for conduct that was com-

pelled by the sovereign of another country. 47 For the doctrine to apply,

the foreign government's mandate must be compulsory, not merely

permissive.
48

B. Act-of-State

The traditional statement of the act-of-state doctrine was made by
Chief Justice Fuller of the Supreme Court in Underhill v. Hernandez: 49

"Every sovereign State is bound to respect the independence of every other

sovereign State, and the courts of one country will not sit in judgment

on the acts of the government of another done within its own territory." 50

The act-of-state doctrine, like that of sovereign compulsion, is based

on the concept of sovereign immunity. 51 The doctrine holds that United

States courts will not examine the validity of the acts of a foreign

sovereign, especially when those acts occur in the foreign territory. The
act-of-state doctrine was premised on a belief in mutual respect between

equal nations. 52 This respect meant that one state would not interfere with

the internal exercises of another's sovereign power. Whether foreign exer-

cises of the governing power are invalid, or are the result of bad motiva-

tion, are questions to be determined within that other country. 53

Although United States courts have adhered to the act-of-state doc-

trine since the Underhill decision, the reasons for this adherence have

own territory. Baker, supra note 36, at 98; see also, Fugate, supra note 2, § 2.27; Atwood
& Brewster, supra note 2, § 8.14.

45The example assumes that the defendant's compliance occurs in the foreign country.
46Graziano, supra note 41, at 132. The author explains that irrespective of a private

illegal intent, the anticompetitive actions would be directly attributable to the sovereign since

commanded by him. Id.
41
Id.

**Id. at 133-38. "Today it is clear that a businessman may do no more than what
is required by foreign legislative mandate if he is to claim antitrust immunity." Id.

49
168 U.S. 250 (1897).

50
Id. at 252.

5 'Norton, Reflections on the Act of State Doctrine, A Fifth Wheel in Conflict of
Laws, 10 Hous. L. Rev. 1, 2 (1972).

"See, Underhill v. Hernandez, 168 U.S. 250 (1897), in which the Court explained

that redress of grievances by reason of acts of a sovereign state must be achieved "through

the means open to be availed of by sovereign powers as between themselves." Id. at 252.

"See American Banana, 213 U.S. at 358.



620 INDIANA LAW REVIEW [Vol. 17:613

changed. Originally based on sovereignty and comity, the doctrine was

primarily used in expropriation cases.
54

Occasionally, it was applied in

antitrust actions. One of the most significant of those early antitrust cases
was American Banana Co. v. United Fruit Co. 55 There, the Supreme Court

held that the complaint did not state a cause of action under the Sher-

man Act because the acts complained of occurred outside the United States
and were legal under the laws of the country where they were committed. 56

Justice Holmes, writing for the majority, relied, in part, on the act-of-

state doctrine: "[A] seizure by a state is not a thing that can be com-

plained of elsewhere in the courts." 57 The Court stated that

it is a contradiction in terms to say that within its jurisdction

it is unlawful to persuade a sovereign power to bring about a

result that it declares by its conduct to be desirable and proper.

It does not, and foreign courts cannot, admit that the influences

were improper or the results bad. It makes the persuasion lawful
by its own act. The very meaning of sovereignty is that the decree
of the sovereign makes law. 58

In effect, the Court held that successful petitioning of a foreign sovereign

was protected from antitrust liability because it resulted in official govern-

mental action that the American courts would not judge.

The act-of-state doctrine was applied somewhat mechanically in

American Banana. Its application was modified and became more flexi-

ble after the Supreme Court decided Banco National de Cuba v.
Sabbatino59 in 1964. In that case, Justice Harlan explained that neither

international law, nor sovereignty, nor the United States Constitution man-

dated the act-of-state doctrine. 60 Instead, it was the constitutionally based

concept of the separation of powers that required courts to decline from

examining the validity of a foreign sovereign's acts. 61 Such an inquiry

could cause embarrassment if, for example, an American court held in-

valid an expropriation by a foreign state while the Executive was trying

to soothe a volatile diplomatic situtation with the same nation. Since the

Constitution assigns foreign affairs to the political branches, the Court

"See, e.g., Oetjen v. Central Leather Co., 246 U.S. 297 (1918); Ricaud v. American

Metal Co., 246 U.S. 304 (1918).

"213 U.S. 347 (1909). For a review of the facts of this case, see infra, text accompa-

nying notes 147-55.
i6
Id. at 354-55.

"Id. at 357-58 (citing Underhill v. Hernandez, 168 U.S. 250).

"Id. at 358 (citation omitted).

"376 U.S. 398 (1964).

™Id. at 421, 423.
6x
Id. at 423.



1984] ANTITRUST ABROAD 621

in Sabbatino announced that it would not look into the validity of a seizure

of American property in Cuba. 62

The important result of Sabbatino's shift in emphasis was the

emergence of a much less rigid doctrine. A "balance of relevant con-
siderations' ' was to be made before courts would hear cases involving
the domestic effect of a foreign government's passage of legislation of

rule.
63

If those considerations did not indicate^ serious need to stay a

court's exercise of jurisdiction, it would be possible to decide a case which

in some way involved the act of another sovereign. In Sabbatino, the
Supreme Court made it clear that the act-of-state doctrine was not
jurisdictional.

64

In antitrust cases, the act-of-state defense is invoked in two ways:

The first occurs when the plaintiff charges that one exercising the delegated

power of a foreign sovereign participated in some anticompetitive activity

that significantly affected United States commerce; the second occurs when

the plaintiff alleges that the defendant induced a foreign sovereign to take

official action that results in a restraint of trade in the United States. 65

The act-of-state doctrine has been a successful defense in several antitrust

cases, but some exceptions have also developed. 66 For example, induce-
ment that is illegal is not protected by the doctrine, 67 nor is inducement

to take purely commercial action on the part of the foreign sovereign. 68

American courts have the power to hear cases which involve considera-
tion of the official acts of foreign sovereigns and cases which involve

attempts by private firms to persuade a foreign sovereign to enact legisla-

tion with an anticompetitive effect. Usually, American courts will allow

"Id. at 433.
63
Id. at 428. The Court stated:

It should be apparent that the greater the degree of codification or consensus

concerning a particular area of international law, the more appropriate it is for

the judiciary to render decisions regarding it, since the courts can then focus on

the application of an agreed principle to circumstances of fact rather than on

the sensitive task of establishing a principle not inconsistent with the national

interest or with international justice. It is also evident that some aspects of inter-

national law touch more sharply on national nerves than do others; the less im-

portant the implications of an issue are for our foreign relations, the weaker the

justification for exclusivity in the political branches.

Id.

"Id.
65Hawk, Act of State Doctrine, Noerr-Pennington Abroad, and Foreign Government

Compulsion Defense, 47 Antitrust L.J. 987, 992 (1978).
66
See, e.g., Bernstein v. N.V. Nederlandsche-Amerikaansche Stomvart-Maatschaapij,

173 F.2d 71 (2d Cir. 1949); Bernstein v. Van Heyghen Freres Societe Anonyme, 163 F.2d

246 (2d Cir. 1947).
67
See, e.g., Dominicus Americana Bohio v. Gulf & W. Indus., 473 F. Supp. 680,

690 (S.D.N.Y. 1979).

"See, e.g., Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682 (1976).



622 INDIANA LAW REVIEW [Vol. 17:613

the defense whenever the successful foreign petitioning which brought about

the official act of a foreign government is at issue.

C. The Noerr-Pennington Doctrine

There are circumstances, however, where the antitrust defendant's con-

duct was not compelled by a foreign sovereign and was not taken in com-

pliance with an official act of the foreign country. 69 One example is when
the antitrust defendant has induced a foreign sovereign to take steps that

adversely affect a business rival. For example, when Combination A per-
suades a foreign ruler to seize the property of Business B, nothing in

Combination A's conduct could be said to have been compelled or per-

mitted by foreign actions. Assuming the effect of the seizure is that

Business B is forced out of the export market, should Combination A
be held liable for the restraint of trade in the United States caused in

part at its instigation? The answer cannot be determined by resort to either

the act-of-state doctrine or sovereign compulsion. It would appear that

Combination A would be liable under the Sherman Act70 unless the Noerr-
Pennington doctrine is applied extraterritorially.

Since the development of the Noerr-Pennington doctrine in the

1960's,
71

antitrust laws have given special treatment to those defendants

who conspired to restrain or brought about restraints on commerce through
attempts to influence state and federal legislative, 72 administrative, 73 and

judicial determinations. 74 Provided that their petitioning activity is not

a sham, 75 antitrust defendants are immune from liability even if such ac-
tivity has as its sole purpose a restraint of trade76 or is part of a broader

scheme77 that violates the antitrust laws. Few commentators have examined
the question whether the same immunity should extend to efforts to in-

fluence foreign governments. 78 An examination of the rationales underly-

69Such conduct occurred in United States v. Sisal Sales Co., 274 U.S. 268 (1927),

discussed infra, notes 170-79 and accompanying text. A complete discussion of the case
is located in Note, Corporate Lobbyists Abroad, supra note 2, at 1266-67.

70
15 U.S.C. §§ 1, 2 (1982).

7
'The doctrine was not entirely formulated during that decade, because it was not

until 1972 that the Supreme Court ruled that the Noerr-Pennington doctrine also protected

petitioning directed toward courts and adjudicatory agencies in California Motor Transport

Co. v. Trucking Unlimited, 404 U.S. 508 (1972).
72
Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (Penn-

sylvania legislature petitioned).
73United Mine Workers v. Pennington, 381 U.S. 657 (Secretary of Labor petitioned).
11
California Motor Transport, 404 U.S. 508 (State licensing boards and courts

petitioned).

"Id. at 511.

"See Alexander v. National Farmers Organization, 1982-2 Trade Cas. (CCH) 164,914
(8th Cir. 1982).

77
381 U.S. at 670.

"See, e.g., Davis, Solicitation of Anticompetitive Action From Foreign Governments:



1984] ANTITRUST ABROAD 623

ing the creation of the Noerr-Pennington doctrine is useful when con-

sidering whether foreign application of the doctrine is warranted.

IV. The Noerr-Pennington Doctrine

A. Eastern Railroad Presidents Conference v.

Noerr Motor Freight, Inc.

The Noerr-Pennington doctrine was first defined in the Supreme

Court's unanimous opinion in Eastern Railroad Presidents Conference v.

Noerr Motor Freight, Inc. 19 The Noerr controversy developed out of the
intensely competitive long-distance freight hauling business in the eastern

United States after World War II. 80 When long-distance truckers began
to compete directly with railroads in the profitable long-haul trade, twenty-

four eastern railroads and their trade association hired a New York public
relations firm to develop a publicity campaign designed to promote legisla-

tion and public opinion advantageous to the railroads. 81 Forty-one Penn-

sylvania truckers and their trade association82 filed an antitrust suit in

the United States District Court for the Eastern District of Pennsylvania,

charging that the railroads and their public relations firm had conspired

to restrain trade and monopolize the long-distance freight business in viola-

tion of Sections 1 and 2 of the Sherman Act. 83 The complaint alleged

that the railroads hired Carl Byoir and Associates to conduct a publicity

campaign "designed to foster the adoption and retention of laws and law

enforcement practices destructive of the trucking business, to create an

atmosphere of distaste for the truckers among the general public, and
to impair the relationships existing between the truckers and their

customers." 84 The truckers charged that the sole motivation behind the

campaign was "to injure the truckers and eventually to destroy them as

competitors in the long-distance freight business." 85

The public relations method by which this objective was to be achieved

was known as the "third-party technique," in which seemingly indepen-
dent groups and individuals espoused the views of the railroads without

disclosing that these apparently spontaneous comments were largely

prepared by the railroads' public relations firm and paid for by the

railroads.
86 The substantial efforts of Carl Byoir and Associates were

Should the Noerr-Pennington Doctrine Apply to Communications with Foreign Sovereigns?,

11 Ga. J. Int'l Comp. L. 395 (1981) ; Note, Corporate Lobbyists Abroad, supra note 2.
79
365 U.S. 127 (1961).

>°Id. at 128.

"Id. at 129.
82The trade association involved was the Pennsylvania Motor Truck Association. Id.
83
Id.

"Id.
Si
Id.

* 6
Id. at 130. The third-party technique and activities were described in comprehensive



624 INDIANA LAW REVIEW [Vol. 17:613

proven successful when the Governor of Pennsylvania vetoed the Fair

Truck Bill which would have permitted trucks to carry heavier loads on

Pennsylvania roads. 87

The truckers won their treble damages antitrust suit in the district
court.

88 The court found that (1) the railroads' publicity campaign had

been malicious and fraudulent in its use of the third-party technique, 89

and (2) that the purpose of the publicity campaign had been to destroy

the truckers' goodwill among the general public and their customers. 90

The railroads appealed and the Third Circuit Court of Appeals affirmed. 91

The Supreme Court granted certiorari. 92

A unanimous Court, in an opinion written by Justice Black, reversed. 93
The Court based its holding on three grounds. 94 First, the Court looked

to its holdings in United States v. Rock Royal Co-op95 and Parker v.
Brown96 for the proposition that

where a restraint upon trade or monopolization is the result of

valid governmental action, as opposed to private action, no viola-

tion of the Act can be made out. . . . [U]nder our form of govern-
ment the question whether a law . . . should pass, or if passed

be enforced, is the responsibility of the appropriate legislative or

executive branch of government so long as the law itself does not

violate some provision of the Constitution. 97

Building on that construction, the Court held that ''the Sherman Act does

not prohibit two or more persons from associating together in an attempt

to persuade the legislature or the executive to take particular action with

respect to a law that would produce a restraint or a monopoly." 98 The

detail by the Pennsylvania district court. Noerr Motor Freight, Inc. v. Eastern R.R. Presidents

Conference, 155 F. Supp. 768, 777-801 (E.D. Pa. 1957).
87
365 U.S. at 130.

'"Noerr Motor Freight, 155 F. Supp. 768.

"Id. at 816.
90
Id.

9I 273 F.2d 218 (1959) (per curiam).
92 362 U.S. 947 (1960).
93
365 U.S. at 145.

94The three grounds generally recognized are: (1) the essential dissimilarity between

petitioning activity and traditional Sherman Act violations; (2) the absence of any indica-
tion that Congress intended the Sherman Act to regulate political activity; and (3) the first

amendment right to petition. A fourth ground, a corollary to the second and third, is that
a representative democracy requires an unrestricted flow of information from the people

to the government. See id. at 136-38.
95 307 U.S. 533 (1939).
96 317 U.S. 341 (1943).
97
365 U.S. at 136 (footnote omitted).

"Id.



1984] ANTITRUST ABROAD 625

Court pointed out the "essential dissimilarity" between the conduct com-

plained of in Noerr and activities traditionally prohibited by the antitrust

laws." As a related point, the Court noted that a contrary holding would

"substantially impair the power of government to take actions through

its legislature and executive that operate to restrain trade," 100 and would

raise serious constitutional questions.
101 These considerations led the Court

to hold that the Sherman Act did not apply to "mere solicitation of

governmental action with respect to the passage and enforcement of

laws."
102

The final two grounds of the Court's holding express distinct, but

closely related, ideas. The second ground is that a representative democracy

requires information to flow freely from the constituent to the

representative.
103 The Court held that the Sherman Act would not operate

to block governmental access to information possessed by businesses simply

because that information might persuade the legislature or executive to

enact anticompetitive laws.
104 The Court recognized that to hold activity

such as the railroads' publicity campaign violates the antitrust laws would

"impute to the Sherman Act a purpose to regulate, not business activity,

but political activity, a purpose which would have no basis whatever in

the legislative history of that Act." 105

The third ground embodied in the Court's holding is a complement

to the second. That is, not only must government have unrestricted ac-

cess to the opinions and desires of the people, but the people also have

a guaranteed right to express themselves to their representative in

government:

[A] construction of the Sherman Act [that would forbid associa-
tions for the purpose of influencing the passage or enforcement

of laws] would raise important constitutional questions. The right

of petition is one of the freedoms protected by the Bill of Rights,

and we cannot, of course, lightly impute to Congress an intent
to invade these freedoms. 106

While the Court specifically stated in a footnote to its opinion that its

view of the Sherman Act rendered it unnecessary to decide the first amend-

99
Id. at 136. The Court listed examples of the kinds of agreements the Sherman Act

traditionally prohibits, including price fixing, boycotts, and market division. Id.
[00

Id. at 137.

l0l
Id. at 138.

102
Id.

,0i
Id. at 137.

104
Id. The Court explained that Congress and the states are free to enact anticompetitive

legislation without violating the Sherman Act. Id. n.17.
i0S

Id. at 137.

,06
Id. at 138.



626 INDIANA LAW REVIEW [Vol. 17:613

ment question, 107 later cases developed which relied heavily on the first

amendment underpinning of Noerr. 108

Having determined that the Sherman Act did not apply to the "mere
solicitation" of government action, the Court next discussed whether the

railroads' anticompetitive purpose operated to take their activities outside

the protection of the rule that political activity is beyond the scope of

antitrust regulation.
109 The Court concluded that even if the railroads'

sole purpose had been to destroy the truckers as competitors, such a pur-

pose would be insufficient to transform otherwise lawful conduct into a

violation of the Sherman Act. 110 Anticompetitive intent prompting peti-

tioning activity was held not to constitute an antitrust violation. 111

The Court also viewed the "third-party technique" as being clearly

within the rule protecting political activity; and although the Court

deplored the ethics of the technique, it remained outside the Sherman Act's

reach.
112

Nevertheless, the Court warned that not all activity denominated

as governmental petitioning would immunize actors from antitrust

liaibility.
113 The Court said: "There may be situations in which a publicity

campaign, ostensibly directed toward influencing governmental action, is

a mere sham to cover what is actually nothing more than an attempt to
interfere directly with the business relationships of a competitor and the

application of the Sherman Act would be justified." 114 Although the "sham
exception" did not come into play in Noerr, the Court's language pro-
vided the basis for its subsequent holding in California Motor Transport
Co. v. Trucking Unlimited. 115

l07
/tf. at 132 n.6. The Court noted: "The answer to the truckers' complaint also inter-

posed a number of other defenses, including the contention that the activities complained

of were constitutionally protected under the First Amendment .... Because of the view
we take of the Sherman Act, we find it unnecessary to consider any of these other defenses."

Id.

,0i
See, e.g., First American Title Co. v. South Dakota Land Title Ass'n, 45 Antitrust

& Trade Reg. Rep. (BNA) 293 (8th Cir. 1983); United States v. Southern Motor Carriers
Rate Conference, 1982-1 Trade Cas. (CCH) 164,659 (5th Cir. 1982); City of Kirkwood v.

Union Elec. Co., 1982-1 Trade Cas. (CCH) 164,574 (8th Cir. 1982); International Travel
Arrangers, Inc. v. Western Airlines, Inc., 623 F.2d 1255 (8th Cir. 1980), cert, denied, 449

U.S. 1063 (1981); In re Airport Car Rental Antitrust Litig., 474 F. Supp. 1072 (N.D. Cal.

1979) (all interpreting the Noerr-Pennington doctrine as constitutionally based).
109

365 U.S. at 138-40.
110

Id. at 138-39.
n,

Id. at 140.

]l2
Id. at 140-41. The Court stated: "Insofar as [the Sherman Act] sets up a code of

ethics at all, it is a code that condemns trade restraints, not political activity . . . ." Id. at 140.
in

Id. at 144.
],4

Id.

niSee 404 U.S. 508; see infra notes 134-51 and accompanying text.



1984] ANTITRUST ABROAD 627

B. United Mine Workers of America v. Pennington

The Noerr doctrine was enlarged four years later with the Supreme

Court's opinion in United Mine Workers of America v. Pennington. " 6

The Court held that concerted efforts to induce public officials to take

action detrimental to competition was not a violation of the Sherman Act,

even when it was part of a broader scheme that was itself a violation

of the Act." 7 The antitrust allegations, made in a cross-claim, charged
that the United Mine Workers and the large mining operators agreed to
solve the coal industry's problem of overproduction by eliminating the

smaller companies. The United Mine Workers agreed to abandon their

efforts to control working time and to abandon their opposition to rapid

mechanization in the mines. In exchange, the union was to receive higher
wages for its members and larger payments by mine operators into the

UMW welfare fund. The large mines and the union allegedly agreed that
the union would impose the higher wage scale on all operators, including

small ones, without regard for their ability to pay. 118

In addition, the cross-claim alleged that the large mine operators had

persuaded the Secretary of Labor to impose a minimum wage for coal
miners working in mines that sold their product to the Tennessee Valley

Authority (TVA). 119 It was also alleged that the conspirators discouraged

the TVA from purchasing non-contract coal from small mines on the open
market. 120 Independent of this petitioning activity, the large coal mines

allegedly conspired to dump large tonnages of coal on the spot market
to drive down prices and drive the small operators out of the market
entirely.

121

The jury's verdict for the small mine owner was overturned by the

Supreme Court, in part because the efforts to influence the Secretary of

Labor and the TVA were ruled protected by the Noerr doctrine. 122 The
Supreme Court held that evidence introduced at trial regarding attempts

to influence the Secretary of Labor and the TVA should have been
excluded. 123

Most of the initial commentary resulting from the Pennington deci-

sion focused on the Court's discussion of the labor exemption to antitrust

law.
124

Yet, the Court's discussion of the Noerr doctrine was of equal

116381 U.S. 657
1X1

Id. at 670.
Ui

Id. at 659-60
119

Id. at 660.
i20

Id.

121
Id. at 661.

l22
Id. at 670.

i2i
Id.

,2
*See Note, Labor Law—Antitrust Law—Exemption of Labor Union from Sherman

Act, 7 B.C. Ind. & Com. L. Rev. 158 (1965); Note, When Do Union Agreements with



628 INDIANA LAW REVIEW [Vol. 17:613

importance. Pennington added much to the definition of antitrust immunity
for government petitioning first established in Noerr. Unlike the conduct

in Noerr, the defendants in Pennington were not engaged in purely political

activity.
125 The allegations of dumping coal on the spot market indicated

a conspiracy that would, standing alone, violate antitrust laws.
126

In Pennington, all other activity that was not governmental petition-

ing remained susceptible to antitrust liability on remand. Justice Douglas

pointed this out in his concurrence:

On the new trial the jury should be instructed that if there were
an industry-wide collective bargaining agreement whereby

employers and the union agreed on a wage scale that exceeded

the financial ability of some operators to pay and that if it was

made for the purpose of forcing some employers out of business,
the union as well as the employers who participated in the ar-
rangement with the union should be found to have violated the

antitrust laws.
127

The Pennington Court emphasized the distinction between the defendants'

private actions and their actions in the political arena. The Court deter-

mined that petitioning activity, which was one part of a broader course

of anticompetitive conduct, was protected under the Noerr doctrine, but

that the remainder of the defendants' conduct was not. 128 Therefore, the

Court concluded that evidence of the petitioning activity should not have

been put before the jury and that admitting such evidence could not be

considered harmless error. 129

In Pennington, the Court announced that "[jJoint efforts to influence

public officials do not violate the antitrust laws even though intended to

eliminate competition. Such conduct is not illegal, either standing alone

or as part of a broader scheme itself violative of the Sherman Act." 130

The Court's discussion of the antitrust immunity is instructive in that the
focus remains, as in Noerr, on political activity, which is outside the scope

of the Sherman Act. 131 Despite the recognition of the constitutional under-

Non-Labor Groups Violate the Antitrust Laws?, 51 Cornell L.Q. 576 (1966); Comment,
Labor Law—Employers' Right to Close Plant Due to Union Activities, 2 Ga. St. B.J. 521
(1966); Comment, Labor and Antitrust Law: Union Combinations with Non-Labor Groups,
27 Mont. L. Rev. 107 (1965); Note, Labor Law—Application of Antitrust Law to Union
Activities—Extra Unit Agreements, 44 N.C.L. Rev. 474 (1966); Comment, Union Activity
Falls Within the Ambit of the Sherman Antitrust Act When a Conspiracy Between Labor
and Management is Found, 11 N.Y.L.F. 549 (1965); Note, Collective Bargaining Under
the Antitrust Laws, 61 Nw. U.L. Rev. 156 (1965).

,25
381 U.S. at 669-70.

]26
Id. at 670.

[21
Id. at 672-73 (Douglas, J., concurring).

]2
*Id. at 670.

129
Id.

nQ
Id.

n,
Id.



1984] ANTITRUST ABROAD 629

pinnings to the doctrine in Noerr, 1 * 2 the emphasis of the Court in Penn-

ington remained one of statutory construction. 133

C California Motor Transport v. Trucking Unlimited
The third major development of the Noerr-Pennington doctrine came

in 1972 with the Supreme Court's decision in California Motor Transport
v. Trucking Unlimited. 134 One group of trucking companies filed an an-
titrust suit alleging that another group of trucking companies had con-

spired to bring meritless actions before state regulatory agencies and courts.

The complaint alleged that the truckers' purpose was to defeat the plain-

tiffs' efforts to gain operating rights in California so that the defendants

would monopolize the freight-hauling business in the area. 135 The district

court dismissed the complaint on the ground that the defendants' activities

were protected under the Noerr-Pennington doctrine. The Ninth Circuit

Court of Appeals reversed on two grounds: First, the Noerr-Pennington

immunity did not extend to efforts to influence adjudicatory agencies and

courts;
136 and second, even if it did, the defendants' activities were within

the sham exception articulated in Noerr. ni

The Supreme Court granted certiorari 138 and affirmed on the second
ground. Justice Douglas, writing for the majority, rejected the circuit

court's contention that the Noerr-Pennington doctrine did not extend to

attempts at petitioning through courts and administrative tribunals. 139 The

Court affirmed the circuit court's view, however, that the defendants' ac-

tivities in California Motor Transport came within the sham exception
to the doctrine.

140

In extending Noerr-Pennington protection to activities directed at

courts, the Supreme Court observed that the doctrine was based on two

grounds and then stressed the first amendment rationale in plainly con-
stitutional language: 141

li2See supra text accompanying note 106.
1 "There is no first amendment language in Pennington characterizing the Noerr im-

munity. The Court's entire discussion of the doctrine is of the construction of the Sherman

Act.
,34404 U.S. 508.
135

/tf. at 509.
I36432 F.2d 755, 760 (1971).
137

/tf. at 763 (citing Noerr, 365 U.S. at 144).
I38402 U.S. 1008 (1971).
I39404 U.S. at 510.
140M at 516.
""The shift in emphasis by the Court from statutory construction to first amendment

protection is distinct. One commentator observed that in California Motor Transport the
Court virtually abandoned Noerr 's focus on the proper interpretation of the Sherman Act

in favor of an emphasis on the essential first amendment protection the Noerr rule affords

the individual or group trying to influence governmental decision-making. Note, Corporate

Lobbyists Abroad, supra note 2, at 1258 n.31.



630 INDIANA LAW REVIEW [Vol. 17:613

The same philosophy [that the right of petition is one of the

fundamental freedoms protected by the first amendment] governs

the approach of citizens or groups of them to administrative agen-

cies . . . and to courts, the third branch of Government. Certainly

the right to petition extends to all departments of the Govern-

ment. The right of access to the courts is indeed but one aspect

of the right of petition.
142

Thus, in clear language, the Court defined the constitutional rationale

skirted in Noerr. 143

The Court concluded that it could not hold "that groups with com-

mon interests may not, without violating the antitrust laws, use the chan-
nels and procedures of state and federal agencies and courts to advocate

their causes and points of view respecting resolution of their business and

economic interests vis-a-vis their competitors" 144 because such a holding

would violate the first amendment right to petition and the right to
association.

145 The extension of the doctrine to court petitioning was largely

based on first amendment protections instead of a judicial construction

of the Sherman Act. The result of California Motor Transport was the
protection of concerted petitioning in administrative agency hearings and

in the courts, provided that the petitioning was not a sham. 146 Despite

the extension of the doctrine, the defendants in the case were not afforded

its protection because the Court determined that their particular petition-

ing was within the sham exception. 147

The finding of a sham was predicated upon the baselessness of the
proceedings brought before the tribunals. 148 The plaintiffs alleged that the
proceedings were filed automatically, without probable cause, and without

regard for the merits of the case. 149 The Court explained the application
of the sham exception:

One claim, which a court or agency may think baseless, may go
unnoticed; but a pattern of baseless, repetitive claims may emerge
which leads the factfinder to conclude that the administrative and

judicial processes have been abused. That may be a difficult line
to discern and draw. But once it is drawn, the case is established

that abuse of those processes produced an illegal result ....
Insofar as the administrative or judicial processes are involved,

142404 U.S. at 510.
" l

Id. at 510-11.

>"Id.

]4i
Id. at 510. The Court's inclusion of the right of association reinforces the shift to

full focus on the first amendment rationale for Noerr-Pennington.
]t6

Id. at 510-11.
]tl

Id. at 511-12.
" %

Id. at 513.
it9

Id. at 512.



1984] ANTITRUST ABROAD 631

actions of that kind cannot acquire immunity by seeking refuge

under the umbrella of "political expression." 150

After California Motor Transport, lower courts using the sham exception

were directed by this language and often held that a single lawsuit could

not constitute a sham. 151

Over the course of eleven years, the Supreme Court developed a doc-

trine establishing that attempts to influence the government through

legislative, executive, or judicial petitioning are beyond the reach of an-

titrust laws.
152 Such activity is protected when it stands alone or when

it is part of a broader scheme that violates the antitrust laws, provided

that the petitioning conduct is not a sham. Whether the same holds true

for governmental petitioning that occurs outside the United States remains

to be determined by the Court.

V. Petitioning Foreign Governments

A. Petitioning Cases Prior to Noerr-Pennington

Long before the Noerr-Pennington doctrine ever came into use,

businesses operating abroad were persuading foreign governments to take

official actions that, in effect, were harmful to rivals. American Banana

Co. v. United Fruit Co. is one example. 153 Decided in 1909, the case is

the oldest United States Supreme Court decision dealing with the applica-

tion of United States antitrust laws to activities occurring outside the

United States. 154 American Banana was a private action for treble damages
under Section 7 of the Sherman Act. 155 The plaintiff complained that the

defendant had monopolized and restrained trade in bananas, thereby in-

juring the plaintiff and violating the Sherman Act. 156 The plaintiff had

purchased a banana plantation in Panama from a grower named

i50
Id. at 513.

i5l See Huron Valley Hosp., Inc. v. City of Pontiac, 466 F. Supp. 1301 (E.D. Mich.

1979), vacated, 666 F.2d 1029 (6th Cir. 1981); MCI Communications Corp. v. American
Tel. & Tel. Co., 462 F. Supp. 1072 (N.D. 111.), aff'd, 594 F.2d 594 (7th Cir. 1978), cert,
denied , 440 U.S. 971 (1979); Mountain Grove Cemetery Ass'n v. Norwalk Vault Co., 1977-2

Trade Cas. (CCH) 161,709 (D. Conn. 1977); Central Bank v. Clayton Bank, 424 F. Supp.

163 (E.D. Mo. 1976), aff'd, 553 F.2d 102 (8th Cir.), cert, denied , 433 U.S. 910 (1977).
'"Only bona fide efforts to influence domestic governments are beyond the reach of

the Sherman Act. For an example of illegitimate petitioning efforts, see Sage Int'l, Ltd.

v. Cadillac Gage Co., 507 F. Supp. 939 (E.D. Mich. 1981).
153213 U.S. 347. American Banana preceded Noerr by fifty-two years. The case is rife

with petitioning efforts on the part of the defendant, who sought the assistance of the civil
government, the military, and the courts to oust its competition from the banana export

market. Id. at 354-55.
l54Graziano, supra note 41, at 101.
lSiSee 15 U.S.C. § 15 (1982).
,56213 U.S. at 355.



632 INDIANA LAW REVIEW [Vol. 17:613

O'Connell. 157 Prior to the sale, O'Connell had begun constructing a

railroad from the plantation to the coast as a means to get his product

to the export market.
158 The defendant allegedly approached O'Connell

and informed him that he would either have to combine with them or

stop the construction of his railroad.
159

It was claimed that the defen-

dants persuaded the Governor of Panama to recommend that Costa Rica
be allowed to administer the land over which the railroad was to run. 160

After the defendant and the government of Costa Rica allegedly interfered

with O'Connell's banana export business, O'Connell sold the plantation

and the railroad to the plaintiff. 161 Shortly afterward, Costa Rican of-

ficials and soldiers seized the plantation and stopped work on the

railroad.
162 A Costa Rican court declared that the plantation belonged

to a third party, who promptly sold the land to the defendant's agents. 163

The amount of petitioning in the case was substantial. The defendant

allegedly sought to influence the Governor of Panama, the Costa Rican

government, Costa Rica's military, and the Costa Rican courts. 164 The
Supreme Court held that the complaint did not state a cause of action

under the Sherman Act because the acts complained of occurred outside

of the United States and were legal under the laws of the nations where

they occurred. 165

Justice Holmes, writing for the majority, relied on the act-of-state
doctrine

166
for the holding. The Court stated that

it is a contradiction in terms to say that within its jurisdiction

it is unlawful to persuade a sovereign power to bring about a

result that it declares by its conduct to be desirable and proper.

It does not, and foreign courts cannot, admit that the influences

were improper or the results bad. It makes the persuasion lawful

by its own act. The very meaning of sovereignty is that the decree
of the sovereign makes law. 167

In effect, the Court held that successful petitioning was protected from

antitrust liability because it resulted in official governmental action that

the American courts will not judge. 168

n7
Id. at 354.

nt
Id.

""Id.

160
Id.

,6,
Id.

li2
Id. at 354-55

]6,
Id. at 355.

,6i
Id. at 354-55

> ei
Id. at 357-59

166
Id. at 358.

167
Id.

i6i
Id.



1984] ANTITRUST ABROAD 633

American Banana reflected the ''territorial view" of extraterritorial

jurisdiction under the Sherman Act. 169 Another view had gained prom-

inence by the time the Court considered United States v. Sisal Sales Co. 170

By 1927, the emphasis in determining extraterritorial antitrust jurisdiction

had shifted away from the physical location where the activity had occur-

red to the effects within the United States of acts committed elsewhere. 171

In Sisal, the government brought an action under Sections 1 and 2 of

the Sherman Act, alleging that five American corporations and one Mex-

ican corporation had conspired inside the territory of the United States

to monopolize the import of sisal to this country.
172 The complaint charged

that the defendants had persuaded the Mexican government to enact legisla-

tion that discriminated against their competition.
173 The result was that

only the Mexican corporation was able to purchase sisal from its Mex-

ican producers, and Sisal Sales Co. became the sole importer of the com-

modity into the United States. 174

The Supreme Court held that although the discriminatory Mexican

legislation had contributed to the conspirators' goals, it did not excuse

them from liability by the operation of the act-of-state doctrine. 175 The

Court distinguished American Banana on the grounds that the conspiracy
in Sisal was formed inside the United States,. and that the effect of the

Sisal conspiracy within the United States was substantial. 176 Thus, the Court

held that the Sherman Act provided a remedy. 177 Sisal thus stands for

the proposition that when some acts in furtherance of a conspiracy in
restraint of trade occur in the United States, and there is a direct effect

within the United States, American citizens can be held liable for some
actions taken abroad and involving actions of foreign governments. 178 As
one commentator observed, Sisal established some limits on extraterritorial
petitioning:

The Sisal case thus retreated from the broad implication of
American Banana that a company could never be prosecuted under
American antitrust laws for petitioning a foreign government to

act in a discriminatory fashion. Sisal made clear that such peti-
tioning is punishable under the Sherman Act where the conspiracy

169

170

171

172

173

See supra note 32 and accompanying text.

274 U.S. 268 (1927).

See generally Townsend, supra note 9, at 44-47.

274 U.S. at 271-74.

Id. at 273.
174

Id. at 273-74.
n5

Id. at 276.
176

Id.

ni
Id.

xl%
Id.



634 INDIANA LAW REVIEW [Vol. 17:613

in question commences in this country and its anticompetitive ef-

fects on American trade are substantial.
179

These cases were decided prior to the development of Noerr-

Pennington. Since then, federal courts have faced a more direct assertion

of antitrust liability predicated upon foreign governmental petitioning. 180

B. Foreign Petitioning After Noerr-Pennington

Two circuit courts have since entertained the question whether Noerr-
Pennington makes attempts to influence foreign governments immune from
antitrust liability.

181 However, these circuits announced conflicting answers

to that question.

1. Occidental Petroleum v. Buttes Gas & Oil Co.—The earlier case,
Occidental Petroleum v. Buttes Gas and Oil Co., 182 held that the Noerr-

Pennington antitrust immunity does not extend to efforts to influence

foreign governments. 183 The case was a private action for treble damages

in which the plaintiff alleged that the defendants had instigated an inter-

national boundary dispute in the Persian Gulf, which resulted in the plain-

tiff 's inability to enjoy the benefits of its oil concession in the Gulf.
184

Occidental had acquired an offshore oil concession in the Trucial States

from the ruler of one state, Umm al Qaywayn, in 1969. 185 The conces-
sion gave Occidental exclusive rights to explore for, extract, and sell oil

from the territorial waters of Umm al Qaywayn. 186 Later, the defendants
acquired a similar concession from the Ruler of Sharjah, an adjacent state,

which granted them offshore rights to territorial waters next to the plain-

tiff 's concession.
187 When the explorations began, the parties worked

together harmoniously and exchanged information from undersea testing

in 1970.
188 Their cooperation ended when Occidental discovered a major

I80i

'Note, Corporate Lobbyists Abroad, supra note 2, at 1267 (footnote omitted).

'See, e.g., Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690
(1962); Coastal States Mktg. v. Hunt, 694 F.2d 1358 (5th Cir. 1983); Bulkferts, Inc. v.

Salatin, Inc., 1983-1 Trade Cas. (CCH) 165,272 (S.D.N.Y. 1983); Dominicus Americana
Bohio v. Gulf & W. Indus., Inc., 473 F. Supp. 680; United States v. AMAX, Inc., 1977-1
Trade Cas. (CCH) 161,467 (N.D. 111. 1977).

'"See Coastal States Mktg., 694 F.2d 1358; Occidental Petroleum Corp. v. Buttes Gas

& Oil Co., 331 F. Supp. 92 (CD. Cal. 1971), off 'd per curiam, 461 F.2d 1261 (9th Cir.),
cert, denied, 409 U.S. 950 (1972).

I,2
331 F. Supp. 92, aff'd per curiam, 461 F.2d 1261, cert denied, 409 U.S. 950. The

Ninth Circuit, in a brief per curiam opinion, affirmed "for the reasons stated in the district
court's opinion." 461 F.2d at 1261. Thus, all cites will be to the opinion of the lower court.

1,3
331 F. Supp. at 107-08.

,%i
Id. at 95.

,9,
Id. at 98.

lu
Id.

' %1
Id. at 98-99.

nt
Id. at 99.



1984] ANTITRUST ABROAD 635

oil field nine miles seaward from the lower water mark off the island

of Abu Musa. The island belonged to the Ruler of Sharjah, whose claim
extended three miles into the waters surrounding the island. At first, the

extensive oil find by Occidental appeared to be outside the territory of

Sharjah. 189

After the oil was discovered, a boundary dispute erupted which even-

tually involved Umm al Qaywayn, Sharjah, Iran, and Great Britain. The
complaint alleged that the defendants induced and procured the Ruler of

Sharjah to claim ownership of the oil-rich portion of the plaintiff's

concession.
190 This allegedly was done by submitting to the British Political

Agent, who had authority to approve or reject such claims pursuant to
a treaty then in force between Britain and the Trucial States, a backdated

decree which represented that the Ruler of Sharjah had claimed territorial

waters extending twelve miles seaward from the low water mark off Abu
Musa, thereby placing the plaintiff's concession within the Sharjahn

claim.
191 When the British agent rejected the decree, the defendants in-

duced the government of Iran to claim the territorial waters in which the

plaintiff's concession was located. 192 After at least one incident in which

the British naval forces prevented the plaintiff from entering its conces-

sion, the Ruler of Umm al Qaywayn requested that the plaintiff stop its
operations until the border dispute could be resolved. 193

Occidental alleged that the defendants intended to extract oil and gas

from the plaintiff's concession area once the British withdrew from the

Persian Gulf in 1971, with the approval of the Ruler of Sharjah. 194 The
defendants responded with five grounds supporting their motion to dismiss,

including that their conduct was protected as governmental petitioning

under the Noerr-Pennington doctrine. 195 The district court refused to ex-
tend the Noerr-Pennington doctrine to foreign governmental petitioning. 196

In arguing for the foreign extension of the doctrine, the defendants

relied heavily on Continental Ore Co. v. Union Carbide and Carbon
Corp. 191 as an implied extension by the Supreme Court of the Noerr-

Pennington immunity to foreign petitioning. In Continental Ore, the Court

held that the antitrust immunity did not apply to the petitioning of an

agent of a Canadian governmental agency when that agent was not per-
forming any governmental function and was in fact a commercial

enterprise.
198

Electro Met of Canada was a wholly-owned subsidiary of

li9
id.

l90
Id. at 100.

"7tf. at 100-01.
i92

Id. at 101.
l9i

Id.

194
Id.

,9i
Id. at 101-02.

196
Id. at 107-08.

" 7 370 U.S. 690 (1962).
]9t

Id. at 707-08.



636 INDIANA LAW REVIEW [Vol. 17:613

Union Carbide and had been appointed by the Canadian government as

the exclusive wartime purchasing agent for the Canadian Metals

Controller.
1 ^ The plaintiff, Continental Ore, alleged that, through Union

Carbide's influence, Continental Ore had been eliminated from the Cana-

dian vanadium market by Electro Met of Canada. 200 Continental Ore of-
fered proof of Union Carbide's influencing efforts, but the offer was

denied by the district court. 201 The Supreme Court reversed, 202 rejecting

Union Carbide's claim that Noerr protected its conduct in influencing pur-

chasing decisions made by its subsidiary pursuant to powers delegated by
the Canadian Government. 203 Noerr was deemed inapplicable on factual

grounds because the conduct sought to be protected was "wholly dissimilar

to that of the defendants in Noerr.'
1204 The important dissimilarity was

that Union Carbide was "engaged in private commercial activity, no ele-

ment of which involved seeking to procure the passage or enforcement

of laws." 205 Thus, Noerr was simply distinguished on its facts.

The defendants in Occidental Petroleum argued that if the Supreme

Court had not believed that the Noerr-Pennington doctrine could be ap-

plied to petitioning foreign governments through their agents, there would

have been no need to discuss the difference between private and public

conduct. 206 The defendants suggested that the Supreme Court in Continen-

tal Ore assumed that the Noerr doctrine would apply to extraterritorial

peitioning when influencing governmental actions was intended. 207 The
district court in Occidental Petroleum rejected the idea that the Supreme

Court had impliedly extended Noerr protection to efforts to influence

foreign sovereigns. 208 In the district court's view, "an at least equally

tenable interpretation of Continental Ore is that the Court deemed it un-

necessary, in view of the facts, to decide the legal question at all." 209

Absent binding precedent, the district court examined the rationales sup-

porting Noerr-Pennington to determine the validity of foreign extension.

Because the court viewed the doctrine as primarily grounded in the

first amendment, it concluded that "the case's [sic] rationales do not

readily fit into a foreign context . . . ."
21 ° The court's review of the

Noerr rationales was succinct. The doctrine was seen as "a desire to avoid
a construction of the antitrust laws that might trespass upon the First

199
Id. at 695.

200
Id.

201
Id. at 703.

202
Id. at 704.

20i
Id. at 707-08.

204
Id. at 707.

20i
Id.

206
331 F. Supp. at 107-08.

207
Id.

20,
Id.

209
Id. at 107.

2]0
Id. at 107-08.



1984] ANTITRUST ABROAD 637

Amendment right of petition." 211 The court observed that the ' 'constitu-
tional freedom 'to petition the Government' carries limited if indeed any

applicability to the petitioning of foreign governments." 212

The court recognized that a second basis for the Noerr-Pennington

doctrine was the Supreme Court's concern that a representative democracy

have continued access to the opinions of those it represents. 213 "The per-

suasion of Middle Eastern states alleged in the present case is a far cry

from the political process with which Noerr was concerned," the court

observed. 214 It concluded that because the interests asserted in Occidental

Petroleum were dissimilar from those which Noerr protected, no wholesale

application of the doctrine outside the United States was justified. 215

In deciding against foreign application of the Noerr-Pennington doc-

trine, the district court emphasized the doctrine's constitutional underpin-

nings. The Ninth Circuit Court of Appeals affirmed per curiam for the

reasons stated in the district court's opinion, which was regarded as "ex-

tensive and well researched." 216

2. Coastal States Marketing v. Hunt.—Ten years later, in Coastal
States Marketing v. Hunt, 211 an action under Section 1 of the Sherman

Act, 218 the Fifth Circuit Court of Appeals affirmed the district court's

directed verdict in favor of the defendants by giving foreign application

to the Noerr-Pennington doctrine. 219 The defendants had been granted
an oil concession by the government of Libya in 1957 for exploration

and exploitation rights. 220 These defendants, Nelson Bunker Hunt and his
brothers, assigned half of their interest to British Petroleum Ltd.; together,

they discovered oil in the Sarir oil field in 1961. 221 The oil field was
developed and a pipeline was constructed to the Libyan coast. By 1967,
the Hunts and British Petroleum were exporting the "Sarir crude." 222

In 1971, Libya nationalized British Petroleum's interest in the Sarir

field, assigning it to the Libyan-owned Arabian Gulf Exploration Com-
pany (AGEC). 223 In response, British Petroleum launched a worldwide
publicity campaign claiming title to the crude in newspaper notices. 224 Ad-
ditionally, the company investigated the movement of crude from the Sarir

2u
Id. at 108 (citation omitted).

212
Id. (footnote omitted).

21
'Id.

2,4
Id.

215
Id.

216
461 F.2d at 1261.

217694 F.2d 1358 (5th Cir. 1983).
2ii

Id. at 1362 (citing 15 U.S.C. § 1 (1976)).
219
694 F.2d at 1366-67.

120
Id. at 1360.

221
Id.

222
Id.

223
Id.

224
Id.



638 INDIANA LAW REVIEW [Vol. 17:613

field and it sent notices to those it identified as buyers. Later, the com-

pany filed twenty-nine lawsuits around the world, claiming title to the

crude oil exported by AGEC. 225

The plaintiff entered into contracts with AGEC in May 1973 to pur-
chase Sarir crude. It also arranged to refine the crude at a refinery at

Montedison, Italy. An agent of British Petroleum contacted the plaintiff
and warned against involvement with Sarir crude because of the title

dispute.
226

In June 1973, the Hunts' remaining interest in the Sarir field was

also nationalized by the Libyan Government.
227 A short time later, a British

Petroleum agent contacted the Hunts and suggested that they combine

their efforts to claim the crude, " 'or to take other joint action to protect

our respective rights.'
" 228 The Hunts joined in twenty-one of the twenty-

nine lawsuits and also initiated their own worldwide publicity campaign
to inform crude oil purchasers about the title dispute.

229 One of the lawsuits
was a conversion action filed in a Texas state court against Coastal States,

which counterclaimed for tortious interference with business relations. The

Texas courts denied both claims. 230

The Hunts resorted to the courts in another incident involving the

plaintiff, in which Hunt brought an attachment proceeding against the

oil tanker Hilda's cargo because he believed it contained Sarir crude. 231

All the while, the publicity campaign continued. 232 Coastal States alleged

that the overall effect was to restrain trade in Sarir crude because the

publicity had had a negative effect on Coastal States' efforts to market

its products refined from the disputed oil. 233 Coastal States also alleged

that, on several occasions, the Hunts had contacted Coastal States'

customers to inform them directly of the title dispute. The circuit court
noted that "[t]here was evidence that these communications with Coastal's

customers frustrated potential sales by Coastal." 234 Eventually Coastal

States was unable to obtain a credit extension, in part because it was

dealing with Sarir crude. 235 By August, 1973, the plaintiff's economic

22i
id.

226
Id.

221
Id.

22%
Id.

229
Id.

230
Id. at 1361; see Hunt v. Coastal States Producing Co., 570 S.W.2d 503 (Tex. Civ.

App. 1978), aff'd, 583 S.W.2d 332 (Tex. 1979).
23 '694 F.2d at 1361; see Hunt v. A Cargo of Petroleum Products Laden on Steam

Tanker Hilda, 378 F. Supp. 701 (E.D. Pa. 1974), aff'd mem., 515 F.2d 506 (3d Cir.),

cert, denied, 423 U.S. 869 (1975).
232694 F.2d at 1361.
2
"Id.

214
Id.

21,
Id. In an interesting aside, the court stated: "Whether this fact raises an inference

or is mere coincidence, two of the banks [that refused to extend Coastal's credit] had



1984] ANTITRUST ABROAD 639

health had deteriorated to the point that it was forced to assign its right

in Sarir crude to another firm.
236 Contending that it had lost million:

of dollars in profits due to the assignment, Coastal States filed the an-

titrust action in October of 1974.
237

In the antitrust action, Coastal States claimed that the publicity cam-

paign by the Hunts was a secondary boycott that sought to intimidate,

and succeeded in intimidating, Coastal States' potential customers and

bankers. 238 The defendants moved for summary judgment, in part on the
grounds that all of their conduct had been protected by the Noerr-

Pennington doctrine. 239 To support that claim, the defendants relied on
four pretrial stipulations which described the Hunts' purpose in initiating

the lawsuits as "to establish legal title to the expropriated Sarir crude

oil."
240 The defendants' motion for summary judgment was denied. At

trial, Coastal States introduced evidence that the purpose behind the Hunts'

conduct was to render the crude oil unmarketable. 241 Nevertheless, at the

close of the plaintiff's evidence, the district court directed a verdict in

the defendants' favor on the ground that the Noerr-Pennington doctrine

applied.
242 Coastal appealed to the Fifth Circuit, which affirmed. 243

Coastal States' first contention, that the Hunts' "secondary boycott"

was outside the protection of the doctrine, was rejected as being "without

merit."
244 The court observed that the publicity campaign initiated by Hunt

was similar to the publicity campaign initially protected in Noerr. 2 * 5

The circuit court's conclusion that the Noerr-Pennington doctrine ap-

plied extraterritorially followed from its view that Noerr was entirely based

on a construction of the Sherman Act and not on constitutional grounds. 246

Discussing Noerr, the Fifth Circuit observed:

[Noerr] was not a first amendment decision. While the Court's
opinion in California Motor Transport stressed the first amend-
ment underpinnings of petitioning immunity, we do not view that
opinion as overruling Noerr' s clear holding that the Sherman Act

simply does not extend to joint efforts to influence government

officials.
247

employees of Standard Oil Company of Ohio (Sohio) on their boards of directors. Sohio
is owned in part by [British Petroleum]." Id.

236
Id.

2%1
Id.

2ii
Id. at 1362.

2Z9
Id.

240
Id. The exact language of the stipulations is set forth at id. n.13.

241
Id. at 1362.

2i2
Id. at 1363.

24
7tf. at 1372-73.

24A
Id. at 1364.

245
Id.

246
Id. at 1364-65.

247
Id. (footnotes omitted).



640 INDIANA LAW REVIEW [Vol. 17:613

Thus, the Fifth Circuit, in characterizing the Supreme Court's opinion

in Noerr as being based on a construction of the Sherman Act rather

than on the constitutional right to petition, arrived at a conclusion directly

opposite to that of the Ninth Circuit's in Occidental Petroleum.
248

The Fifth Circuit relied in part on Continental Ore Co. v. Union Car-

bide & Carbon Corp. 249 as support for foreign extension of the petition-
ing immunity. According to the Fifth Circuit, the Supreme Court's result

in Continental Ore was best explained by the interpretation that the Court

assumed the Noerr-Pennington doctrine applied to petitioning foreign

governments. 250 Again, the Fifth Circuit in doing so adopted a viewpoint

that is totally at odds with that of the court in Occidental Petroleum. 251

The Fifth Circuit stated that "the fact that the Court [in Continental Ore]

distinguished Noerr on factual grounds instead of simply holding it inap-

plicable does support our conclusion that petitioning immunity is not

limited to the domestic political arena." 252 The strength of that support

is certainly dubious and points to the problems inherently present when

courts attempt to look behind the language of the Supreme Court's opin-

ions to what was "really meant." In fact, neither circuit can know with
any degree of certainty whether its reading of Continental Ore is correct.

To base a decision whether to extend the petitioning immunity outside
the United States on judicial tea leaves is unacceptable.

The Fifth Circuit did not depend solely on Continental Ore, however;

it also relied on the official position of the Department of Justice's An-

titrust Division that the Noerr-Pennington doctrine is not limited to

domestic petitioning. 253 These guidelines were not available to the Occiden-

tal Petroleum court; had they been, they might have affected the out-

come of that case. 254 For this combination of reasons, the Fifth Circuit
declined to follow Occidental Petroleum. 255 As the Fifth Circuit explained:

We reject the notion that petitioning immunity extends only so
far as the first amendment right to petition and then ends abruptly.
The Sherman Act, as interpreted by Noerr, simply does not

penalize as an antitrust violation the petitioning of a government

2i *Compare id. with Occidental Petroleum, 331 F. Supp. at 108; see supra text accom-

panying notes 210-15.
249 370 U.S. 690 (1962), cited in 694 F.2d at 1365.
250694 F.2d at 1365. The view is shared by Graziano, supra note 41, at 132.
25l

Cy. Occidental Petroleum, 331 F.Supp. at 107-08; see supra text accompanying notes

206-09.
252694 F.2d at 1365.
253694 F.2d at 1366 (citing Antitrust Guide for International Operations, supra note

24, at E-l, E-17, E-18).

25 The Antitrust Division's guidelines were published six years after the district court
decided Occidental Petroleum.

255694 F.2d at 1366.



1984] ANTITRUST ABROAD 641

agency. We see no reasons why acts that are legal and protected
if done in the United States should in a United States court

become evidence of illegal conduct because performed abroad. 256

It appears that the court would accept the view that the first amendment

basis for the doctrine is insufficient to extend Noerr-Pennington protec-

tion to foreign governmental petitioning.
257 But because the Fifth Circuit

adopted a view of the doctrine that was based totally on the construction

of the Sherman Act, its perceptions regarding the applicability or inap-

plicability of the Bill of Rights to interaction with foreign sovereigns was

not an insurmountable barrier to its extension of the Noerr doctrine to

the petitioning of foreign governments. The court posed an interesting

question as to why activity that is protected when performed within the
United States should become illegal when performed outside the country. 258

It did not consider as a possible response that political petitioning within

the country is subject to the checks included in an open, democratic

government, while petitioning in totalitarian regimes would not be sub-

ject to the same kinds of safeguards. 259

In fact, the Fifth Circuit rejected any link between the political per-

suasion of the foreign government involved and the validity of the peti-

tioning immunity: 260 "The political character of the government to which

the petition is addressed should not taint the right to enlist its aid."
261

The court seemed to agree that petitioning is political conduct wherever
it occurs, and political conduct is beyond the scope of the Sherman Act,

wherever the Act may reach. 262

Coastal States asserted that the Hunts' threats to litigate claims to

the Sarir crude were unprotected in any event because they were not

directed at any government. 263 That claim was also rejected, as the Fifth

Circuit explained:

Given that petitioning immunity protects joint litigation, it

would be absurd to hold that it does not protect those acts

reasonably and normally attendant upon effective litigation.
... If litigation is in good faith, a token of that sincerity is
a warning that it will be commenced and a possible effort to com-
promise the dispute. 264

256
id.

257At least one commentator has argued against that position. See Davis, supra note

78, at 444-47.

258694 F.2d at 1366.
259See Note, Corporate Lobbyists Abroad, supra note 2, at 1273.
260694 F.2d at 1366-67.
26,

Id. at 1367.

2i2See id. at n.29.
263

Id. at 1367.

264
Id.



642 INDIANA LAW REVIEW [Vol. 17:613

Finally, the Fifth Circuit rejected Coastal States' claim that the peti-

tioning activity which occurred in the courts was removed from the pro-

tection of the Noerr-Pennington doctrine by operation of the sham
exception.

265 The court held the plaintiff bound to stipulations which pro-

vided that the Hunts' purpose in the campaign, the investigations, and

the litigation was to settle their title dispute. 266

VI. Analysis of the Conflict

The differing results of the Fifth and Ninth Circuits may be explained
by their differing views of the "true" rationale underlying the Noerr opi-

nion. Both courts limited their analysis to the question: Is the Noerr-

Pennington doctrine a first amendment doctrine, or is it one of statutory
construction? Neither court recognized fully that the two rationales are

interwoven to support the doctrine; neither analyzed whether other reasons

support application in the foreign context. As a result, the Fifth and Ninth

Circuits avoided critical considerations in determining whether the Noerr-

Pennington doctrine should be applied to the petitioning of foreign

governments.

The Ninth Circuit subscribed to the view that the Noerr-Pennington

doctrine is a first amendment doctrine, based entirely on the right to peti-
tion the government for redress of grievances. 267 The Occidental Petroleum

analysis was direct: Since the Noerr-Pennington doctrine is based on the

first amendment, and since the first amendment protections are presumably
without force outside the United States' territory, the Noerr-Pennington

doctrine has no validity when applied to petitioning outside the United
States.

268

The Occidental Petroleum analysis was flawed in one important

respect. It failed to recognize that the Noerr-Pennington doctrine was based

on both statutory construction and the first amendment, and that the two

rationales are inextricably combined. The constitutional character of the

doctrine was formally recognized by the Supreme Court in California

Motor Transport. 269 Yet, that opinion must be read in tandem with the
earlier opinions that avoided the constitutional question. The validity of
foreign extension should have been tested on both grounds. The Occiden-
tal Petroleum analysis failed to consider the question of whether the

Supreme Court's construction of the Sherman Act is applicable to con-
duct which occurs outside the United States. It should have considered

26S
Id. at 1371.

266
Id.

"'Occidental Petroleum Corp. v. Buttes Gas & Oil Co., 461 F.2d 1261 (9th Cir. 1972)
{per curiam). The Ninth Curcuit adopted the reasoning of the district court, as reported
at 331 F. Supp. 92 (CD. Cal. 1971).

26,
331 F. Supp. at 107-08.

26'404 U.S. 508 (1972); see supra notes 141-47 and accompanying text.



1984] ANTITRUST ABROAD 643

whether the policy reasons which supported the creation of the domestic

doctrine supported foreign extension, and whether there were other policy

considerations involved unique to the foreign context.

In comparing the Fifth and Ninth Circuits' characterizations of the

Noerr rationales, it appears the Fifth Circuit's analysis 270 is more closely

aligned to that of the Noerr opinion. The Fifth Circuit correctly recognized

that, initially, the Noerr-Pennington doctrine was announced because the

Court determined that the Sherman Act was not intended to regulate

political activity.
271

In Noerr, the Supreme Court also strongly intimated,

however, that if the Sherman Act were applied to regulate political activity,

such an application probably would be unconstitutional. 272 The Fifth Cir-

cuit's characterization of Noerr was accurate, but the doctrine does not

rest on Noerr alone.

Just as the Ninth Circuit artificially viewed the Noerr-Pennington doc-

trine in a vacuum of constitutional law, the Fifth Circuit viewed the
Supreme Court's construction of the Sherman Act in a vacuum. The Fifth

Circuit recognized that the development of the doctrine included Califor-

nia Motor Transport v. Trucking Unlimited, 213 which extended petition-
ing immunity to activities directed at courts and administrative hearings. 274

However, the Fifth Circuit seemed to read California Motor Transport
selectively for the extension, while ignoring the Supreme Court's belated

but express recognition of the constitutional rationale underlying the Noerr-

Pennington doctrine.

The Coastal States rationale was based purely on statutory
construction.

275
It viewed the Noerr-Pennington doctrine as a limitation

on the reach of the antitrust laws, and stated that the limitation should

apply to any antitrust case involving the petitioning of a government

agency, whether domestic or foreign. 276 Through this construction, the

Fifth Circuit extended the Noerr-Pennington doctrine as far as the Sher-

man Act can reach. Because the Fifth Circuit viewed the doctrine in other
than its constitutional terms, its application was not limited to the ter-

ritorial boundaries of the United States. 277

The question of foreign extension cannot be answered simply by
deciding whether the doctrine is constitutionally or statutorily based. To
employ such an analysis is to ignore the full history of the doctrine, which

includes Supreme Court approval of both rationales. At its core, the Noerr-

Pennington doctrine is both: It reflects a construction of the Sherman

210
See 694 F.2d at 1364-67.

27l Noerr, 365 U.S. at 137.
212

Id. at 138.

273404 U.S. 508 (1972), cited in 694 F.2d at 1363.
274404 U.S. at 510-11.
275694 F.2d at 1364-65.
216

Id. at 1366.
211

Id.



644 INDIANA LAW REVIEW [Vol. 17:613

Act that removes political activity from the sphere of regulated conduct,

and that removal is based on the belief that to regulate political conduct

would violate the first amendment. The Fifth and Ninth Circuits would

have done better to ask whether there are any reasons to develop one

set of rules to govern petitioning activity within the United States and

another to govern extraterritorial petitioning.

One reason supporting different treatment is that the policies underly-
ing the doctrine's domestic application do not readily support foreign ex-

tension. The weight of scholarly opinion is that the first amendment
guarantees neither the right to petition foreign governments nor free

association outside the United States.
278

It is the law of the place which

must determine these assertions of rights when made outside the territory
of the United States.

Another major policy reason supporting the Noerr-Pennington doc-

trine is the need to maintain the free flow of information between the

constituent and his elected representative. 279 Perpetuation of an effective

constituent-representative relationship is an important part of democracy

in the United States; however, it is not a relevant consideration when
petitioning occurs between an American business operating abroad and

a foreign ruler. Where there is no constituency relationship, that policy
is inapplicable.

In addition, when the Noerr-Pennington doctrine is applied
domestically, the governmental entities who are petitioned can be presumed
to have the economic well-being of the United States in mind. A similar
presumption would be ill-advised in the case of foreign petitioning. The

economic health of the United States is not likely to be considered by

the executive or legislature of a foreign government when it enacts laws
with an economic effect outside its territory.

While policies which brought about the domestic doctrine are inap-

plicable in the foreign setting, the international business environment in-

troduces new considerations which support foreign extension of the Noerr-
Pennington doctrine. Those reasons are (1) that American businesses

operating abroad will face competitive disadvantages unless United States

antitrust laws are construed so as not to discourage their use of foreign

political systems; (2) that foreign application of the Noerr-Pennington doc-

trine is consistent with the act-of-state doctrine; and, (3) that foreign ex-

21i
See, e.g., B. Hawk, Common Market and International Antitrust: A Com-

parative Guide 145-46 (1979); Fischel, Antitrust Liability for Attempts to Influence Govern-

ment Actions: The Basis and Limits of the Noerr-Pennington Doctrine, 45 U. Chi. L. Rev.

80, 120-21 (1977); Fugate, The Department of Justice's Antitrust Guide for International

Operations, 17 Va. J. Int'l L. 645, 693 (1977); Graziano, supra note 41, at 132; McManis,

Questionable Corporate Payments Abroad: An Antitrust Approach, 86 Yale L.J. 215, 240
(1976); Note, Corporate Lobbyists Abroad, supra note 2, at 1275-77; Note, Immunities to

Extraterritorial Application of U.S. Antitrust Law, 12 J. Int'l L. & Econ. 487, 500 n.27 (1978).
21
'Noerr, 365 U.S. at 137.



1984] ANTITRUST ABROAD 645

tension of the doctrine is consistent with the position of the executive

branch which should, under the principle of the separation of powers,

set foreign policy.

American businesses are likely to face competitive disadvantages unless

the Noerr-Pennington doctrine is applied extraterritorially. 280 If the peti-

tioning of foreign sovereigns can lead to antitrust liability in the United

States, some American businesses may consider the risks too great and
decide against the pursuit of competitive advantage through political means.

At the same time, foreign businesses, which are not subject to U.S. an-

titrust liability, will be able to act to enhance their market position using

political means. The result would be to discourage some United States

businesses from participating in foreign politics when there exists the poten-

tial for future allegations of an anticompetitive effect in the United States.

Foreign political activity by U.S. businesses ought not to be discouraged.

The conduct covered by the Noerr-Pennington doctrine is lawful petition-

ing, whether it is to secure the passage of legislation, or to bring lawsuits

to challenge title to expropriated property. This conduct is undertaken

in recognition of the fact that politics is yet another forum in which com-

petition is possible. That fact remains unchanged whether the conduct

is undertaken within the United States or abroad. If U.S. antitrust laws

are applied to discourage United States businesses from participating in

one of several competitive forums, the result to those businesses is unfair.

The second reason supporting foreign extension of the Noerr-
Pennington doctrine is that to do so would be consistent with the act-of-

state doctrine.
281 The act-of-state doctrine already operates to protect some

antitrust defendants from liability for successful actions to influence the

acts of a foreign sovereign. If petitioning is successful and results in an

official action by a foreign government, then United States courts are

asked to balance relevant considerations to determine whether they ought

to hear any resultant antitrust case. 282 The act-of-state doctrine recognizes
that United States courts sitting in judgment on the validity of the of-

ficial acts of foreign sovereigns could embarrass or impede the executive

branch in its conduct of foreign affairs. Such judicial inquiries could also

offend the foreign sovereign whose acts are being scrutinized. If it ap-

pears that embarrassment, impediment, or offense will result, American

courts will not judge the acts of a foreign sovereign nor the influencing

efforts by American businesses which precipitated the sovereign's actions.

In these situations, the act-of-state doctrine
283

provides an effective defense

to allegations that petitioning a foreign sovereign has brought about a

significant anticompetitive effect within the United States.

280Hawk, supra note 65, at 1001.
28

'Id.

2i2See Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 428 (1964); see supra notes

59-64 and accompanying text.
2Si See supra notes 49-68 and accompanying text.



646 INDIANA LAW REVIEW [Vol. 17:613

While the act-of-state doctrine can operate to immunize successful

petitioning activity from antitrust liability, there is no similar protection

for the antitrust defendant whose petitioning is unsuccessful. Nevertheless,

the policies underlying the act-of-state doctrine are just as applicable to

the case in which petitioning a foreign government has been unsuccessful.

If the Noerr-Pennington doctrine is not extended to foreign petitioning

cases, unsuccessful petitioners remain potentially liable for their participa-

tion in foreign politics. The issue is whether there is a compelling reason

to punish an antitrust defendant whose petitioning of a foreign govern-

ment was unsuccessful, even though his conduct and intentions may have
been substantially identical to those of a successful petitioner who is im-
munized by the act-of-state doctrine.

Special "punishment" for the unsuccessful petitioner is unwarranted.

In the unsuccessful petitioning case, a safeguard exists to make certain
that antitrust liability is not entirely avoided; that is, only the petitioning

activity is immunized. 284 If the petitioning is unsuccessful, then, in the

typical case, there will have been other conduct involved that caused the

anticompetitive effect complained of. 285 The remainder of that conduct,
the broader scheme of anticompetitive activity, is not protected by the

Noerr-Pennington doctrine. 286 In this way, foreign extension of the doc-

trine would not operate as a complete bar to antitrust liability in cases

involving unsuccessful petitioning activity.

Additionally, to punish an antitrust defendant for being unsuccessful

places him in an undesirable position of business uncertainty. At the time

the defendant petitions the foreign sovereign, he will be unable to deter-

mine whether his actions would have antitrust enforcement consequences.

This total absence of notice is unduly harsh and is likely to have one

of two consequences: either prospective defendants will be deterred from

political competition entirely; or, they will be encouraged to succeed at

all costs. Neither consequence is desirable.

Denial of antitrust immunization is also unwarranted for the defen-

dant who elected to direct his petitioning at a foreign government. Since
the same activity would clearly be immunized from antitrust activity when
performed domestically, the issue is whether the defendant who petitions

284Pennington, 381 U.S. at 670. Thus, the "punishment" here referred to is the ad-

missiblity of evidence of the defendant's unsuccessful petitioning activity to develop an an-

titrust case against him. Evidence of petitioning the government is inadmissible when such

activity occurs domestically, under the Noerr-Pennington doctrine, and when it occurs both

extraterritorily and successfully, under the act-of-state doctrine.
2S5A possible exception to the "typical case" is when the defendant's petitioning activity

consists primarily of application to adjudicatory bodies. In that situation, it would seem

possible that the cost to the antitrust plaintiff of contesting worldwide lawsuits, as in Coastal

States, might be sufficiently high to cause a diminution in the plaintiff's ability to com-

pete. Thus, an anticompetitive effect could be achieved through unsuccessful petitioning

activity alone.
2,6Pennington, 381 U.S. at 670.



1984] ANTITRUST ABROAD 647

extraterritorially should be punished for acting outside the United States.

An affirmative response fails to recognize that much modern business is
conducted in an international marketplace. American businesses must act

extraterritorially in order to compete. They should not be forced to avoid

competition for favorable political treatment, especially when that same

conduct is recognized as appropriate when it occurs at home.

Finally, foreign extension of the Noerr-Pennington doctrine is ap-

propriate because it is consistent with the view adopted by the executive

branch. Judicial inquiry into the politics of a foreign nation is involved

whenever the courts examine foreign petitioning. This kind of inquiry

places the courts in the position of questioning the internal political af-

fairs of a foreign sovereign, and it is likely to offend the other nation's

sovereignty. As such, it comes within the area of foreign relations which

is primarily within the control of the executive. The separation of powers
doctrine counsels that once the executive has stated a policy in the foreign

policy area, any subsequent considerations by the courts should reflect

that policy.

Regarding foreign governmental solicitation, the Department of Justice,

Antitrust Division, adopted guidelines in 1977 that describe the policy of

the executive branch.
287 This policy was developed during two years of study

by both the Department of Justice and the President's Export Council: 288

The only question ... is whether the Noerr-Pennington doc-

trine applies to efforts to cause a foreign government to impose

restraints on U.S. commerce. While the Noerr case turns in part

on U.S. domestic constitutional considerations, the Department

does not consider it to be limited to the domestic area. 289

Because the Department of Justice and the President's Export Council

have determined that the U.S. ought not impose antitrust liability for

foreign petitioning activity, U.S. courts should defer to that statement

of policy.

It would be helpful if these guidelines, as they relate to the petition-

ing immunity, were updated and clarified. After seven years, 290 it remains

unclear whether the Noerr-Pennington doctrine is fully operative outside

the United States. For example, it is presently unknown whether the sham
exception applies in the same manner extraterritorially as it applies

domestically. Because foreign governmental systems are widely varied, iden-

111
See generally Antitrust Guide for International Operations, supra note 24, at E-l

to E-18.

2
**See Antitrust Guide for International Operations, supra note 24, reprinted in Seven-

teenth Annual Advanced Antitrust Law Seminar: International Trade and the An-
titrust Laws, 199 (1977).

289See Antitrust Guide for International Operations, supra note 24, at E-18 (footnote

omitted).
290The Antitrust Division's guidelines were promulgated in 1977. See id. at E-l.



648 INDIANA LAW REVIEW [Vol. 17:613

tifying sham activity extraterritorially will be more difficult and cannot

be dealt with in a generalized manner. Revised guidelines should address

application of the sham exception in systems other than representative

democracies, where domestic application is analogous.

The uncertainty remains whether extraterritorial application of the

Noerr-Pennington doctrine is coextensive to domestic application of the

doctrine. Because of the flexibly applied act-of-state doctrine, there may
be no need to invoke the Noerr-Pennington doctrine in successful extrater-

ritorial petitioning cases. Whether selective application of the Noerr-

Pennington doctrine to unsuccessful extraterritorial petitioning is desired

should be addressed in updated guidelines.

Private antitrust litigators would be greatly assisted by a better defini-

tion of the executive branch's view of the foreign reach of Noerr-

Pennington. Additionally, the courts would benefit from greater direc-

tion in an area better left to executive leadership. If the view that the

doctrine should be extended is to be followed, precise guidelines are needed

so that the courts can be consistent in their decisions with the executive

implementation of foreign policy. As more circuit courts face the ques-
tion of foreign application of the Noerr-Pennington doctrine, it may
become necessary for the Supreme Court to resolve this conflict that has

emerged between the Fifth and Ninth Circuits. The Supreme Court should

consider those policies unique to foreign petitioning discussed here, and

extend the Noerr-Pennington doctrine to attempts to influence foreign

governments.

VII. Conclusion

Businesses operating internationally are subject to the antitrust laws

of the United States through the exercise of "extraterritorial jurisdiction."

When they become involved in antitrust litigation for conduct which oc-
curred outside the United States, it is not uncommon for defendants to
argue that their conduct was somehow legal or compelled by the govern-
ment of another nation. To avoid problems in foreign relations and to
advance international comity, the courts have adopted doctrines, such as

act-of-state and sovereign compulsion, so that American courts will not

be placed in a position of judging the laws of another nation.

A different situation arises when the government or a private plain-
tiff alleges that the defendant has violated antitrust laws by inducing or

attempting to induce a foreign nation to take action which would be
detrimental to the defendant's competitor. That kind of activity is pro-

tected under the Noerr-Pennington doctrine when performed within the
United States because of its political character. Courts are split, however,

as to whether the petitioning activity should also be protected when an
antitrust defendant has petitioned a foreign government. The Fifth and
Ninth Circuits, the only courts that have considered the question, have

expressed opposing views on the subject. The view expressed by the Fifth



1984] ANTITRUST ABROAD 649

Circuit in Coastal States Marketing v. Hunt, that the Noerr-Pennington

doctrine does apply extraterritorially, is the better view, especially in light

of the policy considerations unique to foreign petitioning and the official

position adopted by the Department of Justice in 1977. But because of

the uncertainty in the area as a result of the conflict in the circuits, it

would be advisable for the Antitrust Division of the Justice Department

to update those guidelines to explain precisely when and how the Noerr-
Pennington doctrine should be applied extraterritorially.

Pamela R. Kelley