Second Circuit dismisses claim for excessive service fees for EURO currency exchanges holding that Sherman Act does not reach foreign antitrust activity occurring within and outside United States that causes injury to foreign customer where that injury is independent of any injury to domestic customer
John Sniado alleged that he paid supra-competitive service fees to exchange EURO-zone currencies in European countries, which were the result of price-fixing conspiracies among European banks. He thereupon sued a variety of European banks in district court.
The district court dismissed the complaint under Section 6a of the Foreign Trade Antitrust Improvements Act of 1982 (FTAIA) [15 U.S.C. Section 6a, a 1982 amendment to the Sherman Act] because Sniado's complaint alleged that the effect of the European conspiracy on U.S. gave rise to a claim, but not to his particular claim. The relevant language of the FTAIA reads, "Sections 1 to 7 of this title [the Sherman Act] shall not apply to conduct involving trade or commerce (other than import trade or import commerce) with foreign nations." 15 U.S.C. Section 6a.
The U.S. Court of Appeals for the Second Circuit initially vacated the dismissal and remanded for further pretrial proceedings. The U.S. Supreme Court then decided F. Hoffmann-La Roche Ltd. v. Empagran S.A., 124 S.Ct. 2359 (2004). See 2004 International Law Update 83. It held that the Sherman Act does not reach foreign antitrust activity occurring within and outside United States that causes injury to a foreign customer where that injury is independent of any injury to a domestic U.S. customer. Thus, Section 6a(2) would require Sniado to allege that the European conspiracy's effect on domestic commerce gave rise to his claim.
The Second Circuit now vacates and dismisses the appeal in light of Empagran for lack of subject matter jurisdiction. After Empagran changed the law in the Second Circuit, Sniado submitted an amended complaint in which he failed to allege that the currency exchange fees in the U.S. reached supra-competitive levels. Neither did he sufficiently allege a connection between the European conspiracy and the effect on U.S. commerce.
"[Sniado] urges us now, however, to infer from the general allegations in his amended complaint that "the domestic component' of the alleged "world-wide conspiracy' was "necessary ... for the conspiracy's overall success.' Thus, his alleged injury in Europe, i.e., payment of excessive fees, was dependent on the conspiracy's effect on United States commerce."
"However, such an inference, even if reasonable, is too conclusory to avert dismissal. Nor are we inclined at this juncture to remand for Sniado to re-amend his complaint to restate facts in support of this alternative theory." [Slip op. 7-8]
Citation: Sniado v. Bank Austria AG, 2004 WL 1753473 (2d Cir. August 5).
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