Law School Case Brief
United States v. Aluminum Co. of Am. - 148 F.2d 416 (2d Cir. 1945)
In construing the Sherman Act, a court should not impute to Congress intent to punish all whom its courts can catch, for conduct which has no consequences within the United States. On the other hand, it is settled law that any state may impose liabilities, even upon persons not within its allegiance, for conduct outside its borders that has consequences within its borders which the state reprehends; and these liabilities other states will ordinarily recognize.
The United States alleged violations of the Sherman Act, 15 U.S.C.S. §§ 1, 2, through interstate and international monopolization of the virgin ingot market and sought dissolution of defendant appellee aluminum company. The United States alleged that appellee defendant aluminum companies and others had entered into a conspiracy in restraint of trade and a monopoly in production of virgin ingot, perpetuated through unlawful practices. The district court dismissed the complaint. Appellant United States sought review.
May a state impose liabilities even upon persons not within its allegiance, for the conduct outside its borders that has consequences within its borders?
The United States Court of Appeals reversed the district court's judgment, so far as it held that appellees were not monopolizing the ingot market because it found violations of the Sherman Act in appellees' unrelenting intent to exercise their existing power to monopolize the market. The Court explained that is was only concerned with whether Congress chose to attach liability to the conduct outside the United States of persons not in allegiance to it.
Among other findings, the Court concluded that defendant Alcoa's control over the ingot market must be reckoned at over 90 percent with that representing the proportion which its production bore to imported "virgin" ingot. The Court also held that the agreement of 1936, which abandoned the system of unconditional quotas and substituted a system of royalties, violated Section 1 of the Sherman Act. It is settled law- as defendant Aluminum Limited itself agreed- that any state may impose liabilities, even upon persons not within its allegiance, for conduct outside its borders that has consequences within its borders which the state reprehends; and these liabilities other states will ordinarily recognize. Based as it was upon the fact that, in 1936, 1937 and the first quarter of 1938, the gross imports of ingot increased. It by no means followed from such an increase that the agreement did not restrict imports; and incidentally it so happens that in those years such inference as is possible at all, leads to the opposite conclusion. The underlying doctrine was that all factors which contribute to determine prices, must be kept free to operate unhampered by agreements. For these reasons, the Court held that the agreement of 1936 violated Section 1 of the Sherman Act.
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