Timberlane Lumber Co. v. Bank of America
549 F.2d 597 (1976)
Timberlane bought some assets
in Honduras to start harvesting timber for import into the US.
Some of the other Honduran
timber companies, (who were financed by Bank of America), conspired
against Timberlane in order to drive them out of business.
Timberlane sued Bank of
America in the US for violating anti-trust laws.
The Trial Court dismissed the
case. Timberlane appealed.
Thee Trial Court found that
they did not have subject matter jurisdiction to hear the case because it involved acts that
occurred outside of US territory.
The Appellate Court found they
had jurisdiction and remanded the case.
The Appellate Court found
there should be a three part test to determine if US anti-trust laws can
reach an extraterritorial act:
Did the alleged act result
in some effect on American foreign commerce?
Was the effect large enough
to present a cognizable injury to the plaintiff?
Are the interests of the US
sufficiently strong to justify an assertion of extraterritorial
authority?
In this case, the Court
found that it was reasonable to conclude that:
The purpose of the Honduran
conspiracy was to affect the export of lumber to the US,
The magnitude of the
conspiracy was sufficient to be a civil violation of the Sherman
Anti-Trust Act.
That even though some of
the defendants were Honduran, and the acts took place in Honduras, there
was no conflict of laws or policy with the Honduran government, so it
was ok to claim jurisdiction.
On remand, the Court looked at
the three-part test, and found that there was not enough to claim
jurisdiction. So the case was dismissed.
The Court found that:
The purpose of the
conspiracy was to effect Honduran commerce, not US commerce.
The conspiracy had a
negligible effect on US commerce.
