Business Law Chapter 23 Homework United States Sells Product Price Substantially Less

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197

CHAPTER 23

INTERNATIONAL LAW IN A GLOBAL ECONOMY

ANSWERS TO QUESTIONS

AT THE ENDS OF THE CASES

CASE 23.1—QUESTIONS (PAGE 448)

WHAT IF THE FACTS WERE DIFFERENT?

Suppose that, after this decision, Jazz fully compensated Fuji for infringing sales of the LFFPs. Would Jazz

have acquired the right to refurbish those LFFPs in the future? Explain. In at least one case, cited by the

court in the Fuji case, an accused infringer was held to have received an implied license on the payment

of full compensation for its past infringement. In other cases in which judgments were not paid, the

infringers were held not to have acquired such licenses. Arguments against such “awards” might turn on

the culpability or knowledge of the infringer. Arguments in their favor might focus on the economic

equities of a situation.

THE GLOBAL DIMENSION

How does prohibiting the importing of goods that infringe U.S patents protect those patents outside the

United States? Prohibiting the importing of goods that infringe U.S. patents into the United States

CASE 23.2—QUESTIONS (PAGE 450)

WHAT IF THE FACTS WERE DIFFERENT?

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Suppose that after Inn Foods learned of the investigation, the company told U.S. Customs and Border

Protection that it was working to correct the “errors” and would “advise” as soon as that happened.

Would this have undercut the government’s case? Why or why not? No. Inn Foods never made any

“corrections.” The company never filed amended information but continued to submit invoices that it

knew were deliberately false. A failure to “correct” the false documentation, in the face of an assertion

that it would do so, would support the government’s case and the court’s inference that Inn Foods acted

with fraudulent intent.

THE LEGAL ENVIRONMENT DIMENSION

Inn Foods passed on the cost savings from the lower duties to the growers when it paid them the

difference between the understated value of the products and their actual value. Should this in any way

absolve Inn Foods of liability for fraud? Explain your answer. No. The fact that the growers may

CASE 23.3—QUESTIONS (PAGE 453)

1A. What are the ramifications for the defendants of the ruling in this case? Because the U.S. Court

of Appeals for the Second Circuit vacated the lower court’s dismissal of the plaintiffs’ claims, the case

will return to the lower court “for further proceedings consistent with this opinion.” Many or most, if

not all, of the corporate defendants—and others—could face huge claims for aiding and abetting the

South African government in maintaining its apartheid system.

2A. How might such “prudential concerns” as the principle of comity affect the eventual outcome?

The U.S. Court of Appeals for the Second Circuit acknowledged that “the views of foreign nations are an

important consideration under the doctrine of international comity, [but] we have not held them to be

dispositive. At this stage in the litigation, we express no view as to what level of deference to their views

is appropriate in this particular case. Instead, we remand to the district court so that it may carefully

consider whether any of these doctrines require dismissal” of the plaintiffs’ claims.

ANSWERS TO QUESTIONS IN THE REVIEWING FEATURE

AT THE END OF THE CHAPTER

1A. Foreign Sovereign Immunities Act

Because the armed forces of Honduras contracted to purchase weapons from a U.S. company (Robco),

this would fall under the commercial activity exception to the FSIA. The sales contract was an action

CHAPTER 23: INTERNATIONAL LAW IN A GLOBAL ECONOMY 199

taken in connection with a commercial activity carried on in the United States, and the sale has a direct

effect in the United States. Therefore, the FSIA would not bar this lawsuit.

2A. Act of state doctrine

The act of state doctrine provides that the judicial branch of one country will not examine the validity of

public acts committed by a recognized foreign government within its own territory. Here, the newly

democratic government of Honduras is seeking to reduce the size of its military. The U.S. government

3A. Doctrine of deference

The principle of comity is a doctrine of deference. Under this principle, one nation will defer and give

effect to the laws and judicial decrees of another country, as long as those laws are consistent with the

law and public policy of the accommodating nation. The principle of comity is based on respect and is a

customary courtesy extended to other nations. If a U.S. court extends comity to the new Honduran

government’s law pertaining to arms dealing, then it would dismiss Robco’s case.

4A. Doctrine to collect damages

Under the principle of comity, one nation will defer and give effect to the laws and judicial decrees of

ANSWER TO DEBATE THIS QUESTION IN THE REVIEWING FEATURE AT

THE END OF THE CHAPTER

The U.S. federal courts are accepting too many lawsuits initiated by foreigners that concern

matters not relevant to this country. Our federal courts are already overwhelmed by normal lawsuits

that concern purported wrongs committed on U.S. soil that involve residents of this country. Why

should we become the preferred jurisdiction for lawsuits that involve human rights issues in other

countries? Why should we become the preferred jurisdiction for purported employment discrimination

that might have taken place outside of the U.S.? We are not the world’s conscience.

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ANSWERS TO QUESTIONS AND CASE PROBLEMS

AT THE END OF THE CHAPTER

23-1A. Comity

(Chapter 23—Page 443)

The law could pose problems for some businesspersons because certain legal terms or phrases in

23-2A. QUESTION WITH SAMPLE ANSWER: Dumping

Yes, it is a reasonable approach to rely on the producers’ financial re–cords, which are reasonably

23-3A. Comity

(Chapter 23—Page 443)

Comity is, in the words of the court, “the recognition which one nation allows within its territory to the

legislative, executive, or judicial acts of another nation, having due regard both to international duty and

23-4A. Dumping

(Chapter 23—Page 450)

A jury found that TKSC unlawfully dumped its products into the U.S. market and awarded more than

$10.5 million in damages to Goss. TKSC appealed to the U.S. Court of Appeals for the Eighth Circuit,

which affirmed the award. The appellate court explained that unlawful dumping can occur when a

foreign corporation, intending to injure or destroy a certain market in the United States, sells a product

23-5A. Comity

(Chapter 23—Page 443)

According to the principle of comity, which is most likely to be applied in this case, the court would not

23–6A CASE PROBLEM WITH SAMPLE ANSWER: Sovereign immunity

The key international legal principles at play here are comity and sovereign immunity. Comity requires

one nation to give effect to the laws and judicial decrees of another. Sovereign immunity prevents the

U.S. courts from exercising jurisdiction over foreign nations unless certain conditions are met. In this

23–7A Dumping

(Chapter 23—Page 450)

Dumping is the sale of imported goods at “less than fair value.” “Fair value” can be determined from the

price of the goods in the exporting country. (The goal is to undersell the businesses in the importing

country to obtain a larger share of its markets.) In the United States, an added tariff, known as an

antidumping duty, is sometimes assessed on the imported goods. The pivotal question is whether the

SWU contracts should be considered contracts for sales of goods or for provisions of services (to which

the dumping concept does not apply). Because the feed uranium delivered by a utility to an enricher was

23–8A. International agreements and jurisdiction

(Chapter 23—Page 412)

The Supreme Court explained in an earlier case (Garamendi, 533 U.S. 396) that “state law ‘must give

23-9A. A QUESTION OF ETHICS: Sovereign immunity

(a) The doctrine of sovereign immunity, which is codified in the Foreign Sovereign

Immunities Act (FSIA), generally provides foreign states with immunity from suit in U.S. courts.

(3) either the victim or the claimant was a U.S. national at the time those acts took place. In the Hurst

case, the plaintiffs met those requirements: Libya was designated as a sponsor of terrorism at the time

of the incident; Libya was not denied a chance to arbitrate; and all of the victims were U.S. citizens.

(Note: The FSIA does not create a cause of action against a foreign state. The state-sponsored

terror exception only waives the immunity of a foreign state without creating a cause of action against

23–10A. SPECIAL CASE ANALYSIS: Aliens Torts Claims Act

Case No. 23.3

Khulumani v. Barclay National Bank Ltd.

United States Court of Appeals,

Second Circuit, 2007.

504 F.3d 254.

a. Issue: What was the plaintiffs’ claim in this case? The plaintiffs claimed that the

defendants had “aided and abetted” the government of South Africa in its maintenance of a repressive

system of apartheid. These actions allegedly economically benefited the corporate defendants.

b. Rule of Law: On what U.S. law did the plaintiffs base this claim and what was the

defendants’ response? The plaintiffs provided, as a U.S. legal basis for their claim, the Alien Tort Claims

Act (ATCA). According to the defendants, this action raised “prudential concerns” that included, in an

international context, the principle of comity and the political question doctrine.

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c. Applying the Rule of Law: How did the trial court respond to the parties’ contentions,

what was the appellate court’s position, and why? The trial court (a federal district court in the

“Southern District of New York”) dismissed the plaintiffs’ complaint, holding that allegedly aiding and

abetting violations of international law does not provide a basis for jurisdiction under the ATCA. The U.S.

Court of Appeals for the Second Circuit vacated this dismissal, ruling to the contrary that “a plaintiff may

plead a theory of aiding and abetting liability under the ATCA.” With respect to the concerns of the

defendants, the appellate court reasoned that “a policy of case-specific deference to the political

branches” could be appropriate in determining the status of the plaintiffs’ claim and should be part of

the lower court’s analysis.

d. Conclusion: Did the court issue an ultimate ruling with respect to the plaintiffs’ claim in

this case? Explain. No, the court did not ultimately rule on the defendants’ liability with respect to the