## Facts

- Timberlane Lumber Co., an Oregon company, sought to acquire and operate a bankrupt lumber mill in Honduras and export lumber to the United States.
- Timberlane obtained a controlling interest in the mill by purchasing claims held by employee-creditors.
- Two competing Honduran lumber companies, backed by Bank of America interests, refused to sell their interests and pursued litigation in Honduran courts.
- The Honduran court proceedings resulted in a judgment affecting control of the mill and led to the mill’s shutdown.
- Timberlane alleged Bank of America entities and associated Honduran and U.S. individuals conspired to prevent Timberlane from producing and exporting Honduran lumber to the U.S., preserving defendants’ control over Honduran lumber exports and excluding Timberlane as a competitor in U.S. import markets.
- Timberlane asserted claims under Sherman Act §§ 1–2 and the Wilson Tariff Act.

## Issues

1. Whether the act of state doctrine required dismissal because adjudication would necessitate passing on acts of Honduras through its courts.
2. Whether U.S. antitrust statutes applied to the alleged conduct abroad and whether the case should be dismissed for lack of subject matter jurisdiction based on insufficient effects on U.S. commerce.
3. Whether related employee tort suits were properly dismissed on forum non conveniens grounds.

## Decision

- The Ninth Circuit vacated the dismissals and remanded all consolidated actions for further proceedings.
- The court held the act of state doctrine did not mandate dismissal where the core allegations concerned a private anticompetitive scheme, even though foreign judicial proceedings were involved.
- The court rejected a rigid “effects-only” approach to extraterritorial antitrust jurisdiction and required a fact-based, comity-sensitive analysis before declining jurisdiction.
- The court concluded the employee tort dismissals on forum non conveniens were premature given their connection to the same alleged course of conduct and the need for further development.

## Legal Principles

- The act of state doctrine is not automatic; it does not bar adjudication of U.S. claims merely because foreign judicial actions appear in the factual background, particularly where the challenged conduct is primarily private behavior.
- Extraterritorial application of U.S. antitrust law requires more than identifying some effect on U.S. commerce; courts must consider whether exercising jurisdiction is reasonable in light of comity and competing sovereign interests.
- A “jurisdictional rule of reason” for antitrust jurisdiction over foreign conduct considers, among other factors: the magnitude and foreseeability of U.S. effects, conflicts with foreign law or policy, parties’ nationality, the comparative significance of domestic versus foreign effects, and the risk of interference with foreign sovereign interests.
- Dismissal doctrines such as forum non conveniens should not be applied prematurely where related claims share a factual core with a remanded principal action and where further factual development may alter the balance of convenience.

## Conclusion

The Ninth Circuit reinstated a transnational antitrust action and related tort suits, holding that foreign court involvement did not itself trigger act of state abstention and that extraterritorial antitrust jurisdiction must be evaluated under a multi-factor comity-based “jurisdictional rule of reason,” requiring further factual development on remand.


Timberlane Lumber Co. v. Bank of Am., N.T. & S.A., 549 F.2d 597 (9th Cir. 1976)