Goss International Corporation v. Man Roland Druckmaschinen Aktiengesellschaft

On December 3, 2003, a jury found Japanese-based Tokyo Kikai Seisakusho, Ltd. (TKS), liable to Goss International Corporation (Goss), under the Antidumping Act of 1916 (the 1916 Act), 15 U.S.C. § 72 (repealed 2004), which made it unlawful for foreign persons to sell imported articles within the United States at a price substantially less than the actual market value or wholesale price at the time of exportation, with the intent of destroying or injuring an industry in the United States. The judgment, inclusive of statutory treble damages, attorney fees, and costs, amounted to more than $35,000,000.

During the pendency of TKS's appeal, Congress prospectively repealed the 1916 Act. See Miscellaneous Trade & Technical Corrections Act of 2004, Pub.L. No. 108-429, § 2006, 118 Stat. 2434, 2597 (2004). Shortly thereafter, the Japanese government passed "The Special Measures Law concerning the Obligation to Return Profits Obtained pursuant to the Antidumping Act of 1916 of the United States, etc., Law No. 162, 2004"1 (Special Measures Law), a clawback statute2 allowing Japanese nationals to sue for the recovery of any judgment entered against them under the 1916 Act.

On June 15, 2006, the district court granted Goss's motion for preliminary injunction, prohibiting TKS from filing suit in Japan under the Special Measures Law. On June 19, 2006, TKS paid the judgment in full, and the district court entered a satisfaction of judgment on June 21, 2006. On June 23, 2006, TKS filed this interlocutory appeal. In light of the changed circumstances since the district court entered its preliminary injunction, we vacate the district court's preliminary injunction.

Goss and TKS both manufacture and supply newspaper printing presses and press additions. Goss was the major manufacturer of large printing presses in the United States for more than a century and enjoyed dominance in the United States printing press market into the late 1990s. Goss Int'l Corp. v. Man Roland Druckmaschinen Aktiengesellschaft (Goss I), 434 F.3d 1081, 1084-85 (8th Cir.), cert. denied, ___ U.S. ___, 126 S.Ct. 2363, 165 L.Ed.2d 280 (2006).

In the 1970s, TKS began selling its presses and press additions in the United States. By the 1980s, TKS obtained contracts with large United States newspapers, including The Wall Street Journal, The Washington Post, and the Newark Star-Ledger. Between 1991 and 2000, TKS began "dumping" its products, that is, selling them in the United States at prices substantially below the market value of its similar products in Japan. During that period, TKS sold $125,000,000 worth of printing press additions in the United States. Goss, on the other hand, lost contracts because customers expected Goss to lower its prices to match TKS's prices. In 2000, Goss did not make a single printing press equipment sale. See id. at 1085.

In March 2000, Goss brought a civil action against TKS alleging violations of the 1916 Act. See id. at 1087. On December 3, 2003, a jury found in Goss's favor and awarded $10,539,949 in damages. See id. at 1087-88. The district court statutorily trebled the damages, pursuant to the 1916 Act, and entered judgment against TKS in the amount of $31,619,847, plus interest and costs. See id. at 1088. The district court also awarded $3,484,158 in attorney fees and expenses, and $681,475.05 in costs. TKS appealed.

On December 3, 2004, Congress repealed the 1916 Act. Because the repeal was prospective, it did not affect Goss's judgment. Japan considered the prospective repeal to be inconsistent with the United States's obligations under World Trade Organization (WTO) agreements.3 Consequently, on December 8, 2004, Japan enacted the Special Measures Law, a clawback statute authorizing Japanese corporations and/or Japanese nationals to sue in Japanese courts for recovery of the full amount of any judgment, plus interest, attorney fees and costs, awarded under the 1916 Act. Special Measures Law, art. 3, 6. The Special Measures Law holds any wholly-owned parent companies and subsidiaries of the party that prevailed under the 1916 Act jointly and severally liable for the clawback judgment. Id. Goss Graphic Systems Japan (Goss Japan), which is located in Tokyo, is a wholly-owned subsidiary of Goss.

On November 24, 2004, by stipulation of the parties, TKS agreed not to file a lawsuit under the Special Measures Law until after TKS exhausted its appeal in the antidumping action. The stipulation also required TKS to provide Goss fourteen days' notice of its intention to pursue a remedy under the Special Measures Law. On January 26, 2006, our court affirmed the jury verdict and damages award in the antidumping action, see Goss I, 434 F.3d at 1084, and on June 5, 2006, the United States Supreme Court denied TKS's petition for writ of certiorari, see Tokyo Kikai Seisakusho, Ltd. v. Goss Int'l Corp., ___ U.S. ___, 126 S.Ct. 2363, 165 L.Ed.2d 280 (2006).

The same day the Supreme Court denied TKS's petition, TKS notified Goss of its intent to file suit under the Special Measures Law. Goss filed a motion for preliminary and permanent antisuit injunction to prevent TKS "from usurping the Court's jurisdiction and frustrating the Court's judgment." On June 15, 2006, the district court issued a preliminary antisuit injunction enjoining TKS from filing suit under the Special Measures Law. Goss Int'l Corp. v. Tokyo Kikai Seisakusho, Ltd. (Goss P.I.), 435 F.Supp.2d 919, 931 (N.D.Iowa 2006). On June 19, 2006, TKS paid the judgment in full, and the district court entered a satisfaction of judgment on June 21, 2006. On August 9, 2006, pursuant to TKS's motion, the district court terminated TKS's bond stating, "[t]he supersedeas bond, which was posted to protect the original judgment of the court, cannot be held in a speculative fashion to protect a possible award for attorney fees and costs spent on a possible decision granting a permanent anti-suit injunction that may possibly be appealed."

A. Proper Standard for Issuance of a Foreign Antisuit Injunction

The propriety of issuing a foreign antisuit injunction is a matter of first impression for our circuit. Other circuits having decided the issue agree that "federal courts have the power to enjoin persons subject to their jurisdiction from prosecuting foreign suits." Kaepa, Inc. v. Achilles Corp., 76 F.3d 624, 626 (5th Cir.1996); see Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 926 (D.C.Cir.1984) (citing Cole v. Cunningham, 133 U.S. 107, 116-17, 10 S.Ct. 269, 33 L.Ed. 538 (1890)). The circuits are split, however, on the level of deference afforded to international comity in determining whether a foreign antisuit injunction should issue.

The First, Second, Third, Sixth, and District of Columbia Circuits have adopted the "conservative approach," under which a foreign antisuit injunction will issue only if the movant demonstrates (1) an action in a foreign jurisdiction would prevent United States jurisdiction or threaten a vital United States policy, and (2) the domestic interests outweigh concerns of international comity. See Quaak v. Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren, 361 F.3d 11, 17 (1st Cir. 2004) (adopting the "conservative approach," which questions "whether the foreign action either imperils the jurisdiction of the forum court or threatens some strong national policy" and "accords appreciably greater weight to considerations of international comity"); see also Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 161 (3d Cir.2001) (same): Gau Shan Co. v. Bankers Trust Co., 956 F.2d 1349, 1355 (6th Cir.1992) (same); China Trade & Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33, 35-37 (2d Cir.1987) (same): Laker Airways, 731 F.2d at 926-34 (same). Under the conservative approach, "[c]omity dictates that foreign antisuit injunctions be issued sparingly and only in the rarest of cases," Gau Shan Co., 956 F.2d at 1354 (citing Laker Airways, 731 F.2d at 927); see also China Trade, 837 F.2d at 35-36 (holding an antisuit injunction "effectively restricts the jurisdiction of the court of a foreign sovereign," thus, such orders "should be used sparingly, and should be granted only with care and great restraint" (internal quotation marks and citations omitted)).

In contrast, the Fifth and Ninth Circuits follow the "liberal approach," which places only modest emphasis on international comity and approves the issuance of an antisuit injunction when necessary to prevent duplicative and vexatious foreign litigation and to avoid inconsistent judgments. See Kaepa, Inc., 76 F.3d at 627-28 (concluding a district court does not abuse its discretion by issuing an antisuit injunction when litigation of the same action in a foreign forum "would result in inequitable hardship and tend to frustrate and delay the speedy and efficient determination of the cause" (internal quotations omitted)); see also E. & J. Gallo Winery v. Andina Licores S.A., 446 F.3d 984, 989-91 (9th Cir.2006) (applying the Fifth Circuit's standard for issuance of an antisuit injunction (citing Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 335 F.3d 357, 364 n. 19, 366-67 (5th Cir.2003))). The Seventh Circuit similarly has indicated its agreement with the liberal approach. See Allendale Mut. Ins. Co. v. Bull Data Sys., Inc., 10 F.3d 425, 430-31 (7th Cir.1993).

Under either the conservative or liberal approach, "[w]hen a preliminary injunction takes the form of a foreign antisuit injunction, [courts] are required to balance domestic judicial interests against concerns of international comity." Karaha Bodas Co., 335 F.3d at 366. We agree with the observations of the First Circuit that the conservative approach (1) "recognizes the rebuttable presumption against issuing international antisuit injunctions," (2) "is more respectful of principles of international comity," (3) "compels an inquiring court to balance competing policy considerations," and (4) acknowledges that "`issuing an international antisuit injunction is a step that should "be taken only with care and great restraint" and with the recognition that international comity is a fundamental principle deserving of substantial deference.'" Quaak, 361 F.3d at 18 (quoting Canadian Filters (Harwich) Ltd. v. Lear-Siegler, Inc., 412 F.2d 577, 578 (1st Cir.1969)). Likewise, we agree with the Sixth Circuit's observation the liberal approach "conveys the message, intended or not, that the issuing court has so little confidence in the foreign court's ability to adjudicate a given dispute fairly and efficiently that it is unwilling even to allow the possibility." Gau Shan Co., 956 F.2d at 1355.

Although comity eludes a precise definition, its importance in our globalized economy cannot be overstated. Compare Hilton v. Guyot, 159 U.S. 113, 164, 16 S.Ct. 139, 40 L.Ed. 95 (1895) (defining comity as "the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation"), with Turner Entm't Co. v. Degeto Film GmbH, 25 F.3d 1512, 1519 n. 10 (11th Cir.1994) (noting commentators have defined comity using terms such as, "courtesy, politeness, convenience or goodwill between sovereigns, a moral necessity, expediency, reciprocity or consideration of high international politics concerned with maintaining amicable and workable relationships between nations" (internal quotation marks omitted). Indeed, the "world economic interdependence has highlighted the importance of comity, as international commerce depends to a large extent on `the ability of merchants to predict the likely consequences of their conduct in overseas markets.'" See Quaak, 361 F.3d at 19 (quoting Gau Shan Co., 956 F.2d at 1355)). We also note, the Congress and the President possess greater experience with, knowledge of, and expertise in international trade and economics than does the Judiciary. The two other branches, not the Judiciary, bear the constitutional duties related to foreign affairs. For these reasons, we join the majority of our sister circuits and adopt the conservative approach in determining whether a foreign antisuit injunction should issue.

In the absence of guidance from our circuit or the Supreme Court regarding the standard for issuing an antisuit injunction, the district court noted the split of authority and concluded under either the conservative or the liberal approach, "it is settled that considerations of comity have diminished force when, as here, one court has already reached judgment." Goss P.I., 435 F.Supp.2d at 928 (citing Paramedics Electromedicina Comercial, Ltda. v. G.E. Med. Sys. Info. Techs., Inc., 369 F.3d 645, 655 (2d Cir.2004)). In reaching this conclusion, the district court relied on the seminal case of Laker Airways Ltd. v. Sabena, Belgian World Airlines, wherein the Court of Appeals for the District of Columbia Circuit made an exhaustive inquiry into the propriety of issuing a foreign antisuit injunction. See Laker Airways, 731 F.2d at 909-59.4

As an initial matter, the district court noted the parties agreed the district court had equitable power to issue a foreign antisuit injunction to enjoin a party before it from pursuing litigation in a foreign forum, and "the All Writs Act, 18 U.S.C. § 1651, empowers the court to issue an injunction barring TKS from filing suit under the Japanese Special Measures Law." Goss P.I., 435 F.Supp.2d at 924-25.

The district court next determined TKS's proposed invocation of the Special Measures Law was "a direct attack on [the] court's judgment in favor of Goss and a frontal assault on the jurisdiction of [the] court and the federal judiciary as a whole," an assault instituted "`for the sole purpose of terminating' [the] court's judgment in Goss's favor." Id. at 929 (quoting Gau Shan Co., 956 F.2d at 1356 (quoting Laker Airways, 731 F.2d at 915)). The district court reasoned TKS's proposed litigation was "clearly vexatious and oppressive" because TKS effectively sought to terminate the district court's judgment in favor of Goss, and "thereby in a single filing attempting to undo six years of federal court litigation." Id. The district court acknowledged that the issuance of an antisuit injunction "would be deeply offensive to the Japanese government" and "may have international repercussions," but nonetheless determined "its interest in protecting the integrity of its judgments and jurisdiction outweighs concerns over international comity." Id. The district court concluded:

The fact that the legislative and executive branches were aware of this court's judgment and deliberately chose not to undo it through a retroactive repeal of the 1916 Act must inform the weight this court must give to international comity in this case. It is not the province of this court or the federal judiciary in general to rewrite the foreign policy of the United States government, as expressed by the legislative and executive branches of government.

Id. at 930.

Thus, the district court found the factors weighed in Goss's favor and issued a preliminary injunction. Id. at 931. In doing so, the district court stressed the order enjoined only TKS, not the Japanese government or judiciary, from availing itself of the Special Measures Law until the district court determined the merits of Goss's permanent injunction motion.

On appeal, TKS argues, because the judgment has been paid, a Japanese suit under the Special Measures Law would not threaten the jurisdiction of the United States. TKS further argues the United States would be deeply offended if a foreign court granted an antisuit injunction under similar circumstances. TKS concedes a United States court may properly enjoin a party from seeking an order in a foreign court that would deprive the United States court of jurisdiction over a claim properly before it, but a United States court may not prevent a foreign national from taking recourse to its own courts for relief under a foreign statute that does not interfere with the jurisdiction of the United States courts. TKS further contends, under the district court's rationale, all actions under foreign clawback statutes are subject to injunction because all foreign clawback statutes would deprive United States courts of jurisdiction. Finally, TKS claims no vital American policy is being protected by the antisuit injunction.

Our standard of review over the issuance of a preliminary injunction is a familiar one. "We review the District Court's material factual findings for clear error, its legal conclusions de novo, and the court's equitable judgment—the ultimate decision to grant the injunction—for an abuse of discretion." Heartland Acad. Cmty, Church v. Waddle, 335 F.3d 684, 689-90 (8th Cir.2003).

An abuse of discretion occurs when a relevant factor that should have been given significant weight is not considered, when an irrelevant or improper factor is considered and given significant weight, or when all proper and no improper factors are considered, but the court in weighing those factors commits a clear error of judgment.

Baker Elec. Coop., Inc. v. Chaske, 28 F.3d 1466, 1472 (8th Cir.1994) (quotation omitted).

At the outset of our review, we acknowledge the district court's unenviable task to navigate the uncharted waters of foreign antisuit injunctions. We begin our review with a discussion of the instructive Laker Airways case relied upon by the district court. Laker Airways (Laker) brought an antitrust action against four foreign airlines and four domestic corporations in the United States District Court for the District of Columbia. Laker Airways, 731 F.2d at 917. Shortly after Laker filed the lawsuit, the foreign defendants filed an action in the United Kingdom's High Court of Justice, requesting a declaration of non-liability and an injunction to prevent Laker from pursuing remedies in the United States courts under United States antitrust laws. Id. at 918. The requested relief stemmed from the alleged incompatibility between United States antitrust laws with their consequent treble damages on the one hand, and the Bermuda II Treaty and the British Protection of Trading Interests Act on the other. Id. The United Kingdom's High Court of Justice granted the injunction, which effectively terminated Laker's pending United States litigation as to the four foreign defendants. Id. In the district court, Laker successfully enjoined the remaining domestic defendants and two foreign airline defendants in a second antitrust action from filing any action in a foreign court that "would interfere with the district court's jurisdiction over the matters alleged in the complaint." Id. at 918-19.

On appeal, the Laker Airways defendants argued "the injunction was unnecessary to protect the district court's jurisdiction and violate[d] their right to take part in the `parallel' actions commenced in the English courts." Id. at 921. A divided panel affirmed the decision, concluding an injunction by the United Kingdom's High Court of Justice would have stripped the United States court of control over Laker's pending litigation. Id. at 955-56. The court did not reach this conclusion without much deliberation, first recognizing "the fundamental corollary to concurrent jurisdiction must ordinarily be respected: parallel proceedings on the same in personam claim should ordinarily be allowed to proceed simultaneously, at least until a judgment is reached in one which can be pled as res judicata in the other." Id. at 926-27. The court cautioned that while foreign antisuit injunctions only operate on the parties within the court's jurisdiction, "they effectively restrict the foreign court's ability to exercise its jurisdiction." Id. at 927.

In deciding the propriety of issuing an antisuit injunction, the Laker Airways court established factors to be considered, which included protecting United States jurisdiction, preserving important United States public policies, and balancing domestic interests with the principles of international comity. Id. at 926-45. The court recognized the futility of an interest balancing test in determining prescriptive jurisdiction because the "courts are forced to choose between a domestic law which is designed to protect domestic interests, and a foreign law which is calculated to thwart the implementation of the domestic law in order to protect foreign interests allegedly threatened by the objectives of the domestic law." Id. at 948. While acknowledging the domestic courts' obligation "to apply international law and foster comity," the court conceded that, when in doubt, "national interests will tend to be favored over foreign interests." Id. at 951. The court concluded, to protect properly the jurisdiction of the United States over the prescriptive jurisdiction of its United States antitrust laws, the district court acted within its discretion by enjoining the defendants from pursuing an injunction in the United Kingdom's High Court of Justice. Id. at 955-56. The court recognized, however, along with this act of preserving its own jurisdiction ran "the risk that counterinjunctions or other sanctions will eventually preclude Laker from achieving any remedy, if it is ultimately entitled to one under United States law. In either case the policies of both countries are likely to be frustrated at the cost of substantial prejudice to the litigants' rights." Id. at 953.

As in Laker Airways, most cases dealing with foreign antisuit injunctions involve simultaneous litigation in both United States and foreign courts. In Gau Shan Co. v. Bankers Trust Co., for example, a borrower brought an action in a United States district court against its lender for fraud in connection with a loan note. Gau Shan Co., 956 F.2d at 1352. When the lender tried to file an action in Hong Kong against the borrower for failure to pay the loan note, the United States court granted the borrower's motion for a foreign antisuit injunction. Id. The Sixth Circuit reversed, holding a parallel suit did not threaten United States jurisdiction and international comity precluded the issuance of an antisuit injunction. Id. at 1355-59. The court reasoned, "The possibility that a holding of a Hong Kong court might permit [the lender] to gain control of [the borrower] is not a threat to the jurisdiction of the United States courts; rather, it is merely a threat to [the borrower]'s interest in prosecuting its lawsuit." Id. at 1356. Similarly, in China Trade & Dev. Corp. v. M.V. Choong Yong, the Second Circuit reversed the issuance of an antisuit injunction, concluding parallel litigation in the United States and Korea concerning a Korean corporation's liability did not frustrate an important United States policy or threaten the jurisdiction of the United States courts. China Trade, 837 F.2d at 34.

Other courts have upheld the issuance of a foreign antisuit injunction in the face of parallel litigation. For example, in Quaak v. Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren, when investors filed a securities fraud class action lawsuit in a United States district court against Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren (KPMG-B), KPMG-B was also a defendant in a contemporaneous criminal action in Belgium. Quaak, 361 F.3d at 14. The class action plaintiffs sought documents from KPMG-B, but KPMG-B claimed Belgian law prohibited KPMG-B from releasing the information. Id. at 14-15. Thereafter, KPMG-B instituted an action in the Belgian judicial system seeking to enjoin the class action plaintiffs from "taking any step" toward the discovery requests and to impose substantial penalties on parties pursuing discovery procedures. Id. The class action plaintiffs countered this move by filing a motion in the United States action and obtaining a foreign antisuit injunction against KPMG-B to prevent KPMG-B from pursuing the Belgian injunctive action. Id. On appeal, the First Circuit affirmed the injunction, agreeing with the district court that the character of the foreign action, the public policy of protecting investors against fraud, and the need to protect the court's jurisdiction all counterbalanced comity concerns under the peculiar circumstances of the case. Id. at 20.5

The case before us does not fit within the category of cases in which foreign antisuit injunctions have been considered. We do not believe the rationale of those cases compels an injunction in the present case.

First, although the All Writs Act, 28 U.S.C. § 1651(a), authorizes federal courts to "issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law," the Act does not create an independent source of federal jurisdiction. Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28, 31, 123 S.Ct. 366, 154 L.Ed.2d 368 (2002) (quoting 28 U.S.C. § 1651(a) and declaring the All Writs Act does not establish the original jurisdiction to support removal jurisdiction); see Achtman v. Kirby, McInerney & Squire, LLP, 464 F.3d 328, 333-34 (2d Cir.2006) (rejecting the district court's assertion that an injunction issued pursuant to the All Writs Act provided the court with subject matter jurisdiction concluding, "[t]o hold otherwise would make mincemeat of the limited grants of jurisdiction bestowed upon us"); Sprint Spectrum L.P. v. Mills, 283 F.3d 404, 413 (2d Cir.2002) (noting the All Writs Act, while not conferring an independent basis of jurisdiction, "`provides a tool courts need in cases over which jurisdiction is conferred by some other source'" (quoting United States v. Tablie, 166 F.3d 505, 507 (2d Cir.1999) (per curiam))); Phillips Beverage Co. v. Belvedere S.A., 204 F.3d 805, 806 (8th Cir.2000) (concluding the district court had continuing jurisdiction, therefore the All Writs Act provided the district court the authority to prevent a party from making an end run around the district court's previous denial of interim relief by enjoining the party from seeking relief elsewhere); Westinghouse Elec. Corp. v. Newman & Holtzinger, P.C., 992 F.2d 932, 937 (9th Cir.1993) (concluding the All Writs Act does not operate to confer jurisdiction upon the district court, rather the Act only aids jurisdiction the district court already possesses).6 In this case, at the time the district court issued the preliminary antisuit injunction, the district court clearly possessed jurisdiction over the case and parties pursuant to 28 U.S.C. § 1331, and TKS had not paid the monetary judgment. Thus, the district court retained ancillary enforcement jurisdiction until satisfaction of the judgment. See Peacock v. Thomas, 516 U.S. 349, 356-57, 116 S.Ct. 862, 133 L.Ed.2d 817 (1996) ("Without jurisdiction to enforce a judgment entered by a federal court, `the judicial power would be incomplete and entirely inadequate to the purposes for which it was conferred by the Constitution.'" (quoting Riggs v. Johnson County, 6 Wall. 166,