## Facts

- Motorola Mobility LLC manufactured and sold cell phones and used LCD panels purchased from foreign manufacturers alleged to have fixed LCD panel prices in violation of Sherman Act § 1.
- About 1% of the LCD panels were purchased by Motorola and delivered to it in the United States for domestic assembly into phones.
- About 99% of the LCD panels were purchased abroad by Motorola’s foreign subsidiaries and delivered abroad.
- Of the foreign-subsidiary purchases, approximately 42% of panels were incorporated into phones abroad and then sold and shipped to Motorola in the United States for resale.
- Approximately 57% of panels were incorporated into phones sold abroad and never entered U.S. commerce.
- For purposes of the appeal, the court assumed the existence of price fixing; AU Optronics had been criminally convicted for LCD price fixing in a separate proceeding.
- Motorola’s damages theory sought recovery for overcharges paid by its foreign subsidiaries for the panels, and Motorola disclaimed a damages theory based on overcharges to Motorola for purchases of finished phones.
- The district court granted partial summary judgment to defendants, holding the FTAIA barred Sherman Act claims based on the foreign-subsidiary purchases; the order was certified for interlocutory appeal.
- After rehearing, the Seventh Circuit affirmed the partial summary judgment, leaving only the claim based on the small set of panels directly purchased by Motorola in the United States.

## Issues

1. Whether the FTAIA permits a Sherman Act § 1 damages claim based on LCD panels purchased abroad by Motorola’s foreign subsidiaries, including panels later incorporated into phones imported into the United States.
2. Whether Motorola could treat itself and its subsidiaries as a single purchaser (or “economic unit”) so that Motorola would be treated as the direct purchaser of the panels for federal antitrust standing and damages.
3. Whether the foreign panel transactions fell within the FTAIA’s “import trade or import commerce” exclusion because phones containing the panels were later imported into the United States.

## Decision

- The Seventh Circuit affirmed the district court’s partial summary judgment for defendants as to the 99% of panel purchases made abroad by Motorola’s foreign subsidiaries.
- The court held the FTAIA barred Motorola’s claims for those foreign purchases because any domestic effect from later U.S. sales did not “give rise to” Motorola’s claimed injury, which was the subsidiaries’ foreign overpayments for panels.
- The court rejected Motorola’s argument that later importation of finished phones converted the earlier foreign panel sales into “import commerce” for FTAIA purposes.
- The court rejected Motorola’s attempt to bypass limits on recovery by treating the corporate group as a single purchaser; the subsidiaries were separate legal entities and were the direct purchasers of the panels.
- The court indicated Motorola retained a viable Sherman Act claim for the panels it directly purchased and received in the United States (about 1% of purchases).

## Legal Principles

- The FTAIA generally excludes from the Sherman Act conduct involving foreign commerce, except for import commerce or where the conduct has a direct, substantial, and reasonably foreseeable effect on specified U.S. commerce and that effect gives rise to the plaintiff’s claim.
- For “import commerce,” the relevant inquiry is the allegedly price-fixed transaction; downstream importation of finished goods does not necessarily transform an upstream foreign sale into import commerce.
- The FTAIA’s “gives rise to” requirement is not satisfied when the claimed injury is tied to foreign transactions suffered by foreign purchasers, even if downstream goods enter U.S. markets.
- Corporate separateness matters for federal antitrust damages: a parent generally cannot recover for overcharges paid by legally distinct subsidiaries that were the direct purchasers.
- Illinois Brick’s direct-purchaser rule reinforces that allowing a parent to recover for subsidiaries’ purchases would functionally permit indirect-purchaser recovery and expand federal antitrust damages beyond the direct-purchaser limitation.

## Conclusion

The Seventh Circuit held that federal antitrust damages claims based on foreign subsidiaries’ purchases of price-fixed inputs abroad are barred by the FTAIA when the alleged U.S. effects do not give rise to the plaintiff’s claimed injury, and later importation of finished goods does not by itself make the upstream foreign transactions “import commerce”; only Motorola’s claim for the small set of panels directly purchased in the United States could proceed.


Motorola Mobility LLC v. AU Optronics Corp., 775 F.3d 816 (7th Cir. 2015)