## Facts

- Filetech S.A. (formerly known as Filetech S.A.R.L.) was a French company that compiled consumer data and sold marketing lists, largely to customers in France; Filetech U.S.A., Inc. was formed in New York to pursue U.S. operations but had little or no meaningful U.S. business activity.
- France Telecom, S.A. was, at the time of suit, wholly owned and operated by the French government and provided telephone services in France; it also compiled subscriber information to create marketing lists and related products.
- France Telecom, Inc. was France Telecom’s U.S. subsidiary.
- French data-protection law allowed telephone subscribers to opt out of computerized processing of their personal data for marketing uses.
- To comply with French law, France Telecom created and maintained an opt-out list (commonly called the “Orange List”) identifying subscribers who did not want their data used for marketing.
- France Telecom did not provide the Orange List to competitors; instead, it offered to sell marketing lists with the opt-out names removed.
- Filetech alleged that France Telecom’s exclusive control over the Orange List gave it monopoly power and that refusing to share the list forced competitors to buy France Telecom’s “cleansed” lists rather than compete on equal terms.
- France Telecom’s U.S.-related activity tied to these marketing-list products was small; the record reflected invoicing U.S. customers totaling about $15,000 since 1993.
- Filetech sued in the Southern District of New York, alleging monopolization in violation of § 2 of the Sherman Act.
- The district court initially dismissed on international comity grounds. The Second Circuit vacated and remanded, instructing the district court to address subject-matter jurisdiction first, including issues under the Foreign Sovereign Immunities Act (FSIA) and the Foreign Trade Antitrust Improvements Act (FTAIA).
- On remand, defendants moved to dismiss under Rule 12(b)(1) for lack of subject-matter jurisdiction.

## Issues

1. Whether France Telecom was a “foreign state” or instrumentality entitled to presumptive immunity under the FSIA, and whether the FSIA commercial-activity exception supplied jurisdiction based on (a) commercial activity in the United States or (b) foreign acts causing a “direct effect” in the United States.
2. Whether the FTAIA allowed application of the Sherman Act to the alleged foreign monopolization by showing a direct, substantial, and reasonably foreseeable effect on U.S. domestic or import commerce (and that the effect gave rise to the claim).
3. If neither FSIA nor FTAIA requirements were met, whether the court lacked subject-matter jurisdiction and therefore had to dismiss without reaching international comity.

## Decision

- The court granted defendants’ Rule 12(b)(1) motion and dismissed the complaint for lack of subject-matter jurisdiction.
- France Telecom was treated as a foreign-state instrumentality under the FSIA and therefore presumptively immune.
- Filetech did not establish that its action was “based upon” qualifying commercial activity carried on in the United States; the challenged conduct centered on France Telecom’s control of the Orange List and related practices in France, while U.S. sales and contacts were minimal.
- Filetech also failed to show that France Telecom’s conduct abroad caused a “direct effect” in the United States as required by the FSIA commercial-activity exception.
- Separately, Filetech failed to meet the FTAIA’s requirement of a direct, substantial, and reasonably foreseeable effect on U.S. commerce stemming from the alleged foreign conduct.
- Because subject-matter jurisdiction was lacking, the court did not proceed to decide the case on international comity grounds.

## Legal Principles

- FSIA provides the exclusive basis for subject-matter jurisdiction over a foreign state or its instrumentality in U.S. courts; such entities are presumptively immune unless a statutory exception applies.
- Under the FSIA commercial-activity exception, jurisdiction may exist if the action is based upon (a) commercial activity carried on in the United States with substantial U.S. contact, (b) an act performed in the United States in connection with commercial activity elsewhere, or (c) an act outside the United States in connection with commercial activity elsewhere that causes a “direct effect” in the United States.
- For FSIA purposes, small or incidental U.S. sales are not enough where the alleged wrongful conduct and the main market effects occur abroad and the suit is not based on the U.S. transactions.
- A “direct effect” in the United States requires an immediate consequence in the United States from the foreign conduct; remote or derivative impacts are insufficient.
- Under the FTAIA, foreign anticompetitive conduct generally falls outside the Sherman Act unless it produces a direct, substantial, and reasonably foreseeable effect on U.S. domestic or import commerce (and the domestic effect is connected to the plaintiff’s claim).
- When FSIA immunity is not displaced by an exception, or when FTAIA’s requirements are not met, a federal court lacks subject-matter jurisdiction and must dismiss under Rule 12(b)(1).

## Conclusion

The court dismissed Filetech’s Sherman Act § 2 monopolization claim because France Telecom, as a French state-owned entity, remained immune from suit under the FSIA’s commercial-activity framework and, in any event, Filetech did not show that the alleged French conduct produced the kind of direct and substantial U.S. commercial effects required to apply U.S. antitrust law under the FTAIA.


Filetech S.A.R.L. v. France Telecom, 212 F. Supp. 2d 183 (2001)