## Facts

- Dee-K Enterprises, Inc. and Asheboro Elastics Corp. bought extruded rubber thread (ERT) as U.S. end users for manufacturing elastic products.
- Plaintiffs alleged that Southeast Asian ERT producers formed an international cartel to fix prices, restrict output, and allocate customers to raise and stabilize ERT prices, including in the United States.
- The alleged cartel conduct (meetings, coordination, and production/price decisions) occurred largely outside the United States, though ERT was sold to U.S. customers through distributors or a U.S. subsidiary.
- The district court denied class certification; most defendants settled, were dismissed, or did not appear, and the remaining defendants proceeded to trial.
- After an eight-day jury trial on a Sherman Act § 1 claim, the jury found (1) a price-fixing conspiracy intended to affect U.S. commerce, but (2) no “substantial effect” on U.S. commerce under the court’s instruction.
- The district court entered judgment for defendants; plaintiffs appealed challenging the “substantial effect” instruction and related rulings.

## Issues

1. Whether, when the alleged price-fixing scheme is planned and implemented primarily abroad but results in sales into the United States, the Sherman Act may be conditioned on proof that the conspiracy had a substantial effect on U.S. commerce.
2. Whether the district court’s “substantial effect” jury instruction misstated the governing law or improperly made such an effect a predicate for liability.
3. Whether other challenged trial-management and evidentiary rulings warranted reversal.

## Decision

- The Fourth Circuit affirmed the judgment for defendants.
- It held that, because the alleged conspiracy involved primarily foreign conduct, the district court did not abuse its discretion by applying a substantial-effect requirement and submitting that question to the jury.
- The court rejected the contention that an effects-based limitation is confined to “wholly foreign” conduct and is inapplicable when price-fixed goods are sold into the United States.
- Given the jury’s explicit finding of no substantial effect on U.S. commerce under the instructions provided, plaintiffs were not entitled to relief absent a showing that the instruction was legally erroneous or misleading.

## Legal Principles

- When an antitrust conspiracy is primarily foreign in its planning and execution, application of the Sherman Act may depend on proof that the conduct had a direct, substantial, and reasonably foreseeable effect on U.S. commerce and that the effect gives rise to the claim.
- An effects-based limitation is not categorically limited to transactions that never involve U.S. imports; it may apply even when goods affected by the conspiracy are sold into the United States, if the core conduct is foreign.
- A verdict finding no substantial effect on U.S. commerce forecloses Sherman Act liability where such an effect is properly required and presented to the jury.

## Conclusion

The Fourth Circuit upheld a defense judgment in an international price-fixing case, ruling that where the alleged cartel conduct was primarily foreign, the district court could require and submit to the jury a substantial-effect-on-U.S.-commerce element; the jury’s finding of no substantial effect barred recovery.


Dee-K Enters., Inc. v. Heveafil Sdn. Bhd., 299 F.3d 281 (4th Cir. 2002)