Justin Desautels-stein, Extraterritoriality, Antitrust, and the Pragmatist Style

• Publication year: 2008

EXTRATERRITORIALITY, ANTITRUST, AND THE PRAGMATIST STYLE†

Justin Desautels-Stein^*

ABSTRACT

In the last decades of the 20th century, David Kennedy and Martti Koskenniemi made the case that the modern structure of international legal argument was characterized by "pragmatism." Taking this idea as its baseline, this Article's central argument is that legal pragmatism embodies a dominant style of contemporary legal reasoning, and that as Kennedy and Koskenniemi might have suggested, it is on display in some of the canonical antitrust decisions having an international dimension. The Article also seeks to show that pragmatism's ostensible triumph is best understood as a contest of three distinctly legal pragmatisms: "eclectic pragmatism," as evidenced in the work of Thomas Grey and Daniel Farber, "economic pragmatism," as espoused by Richard Posner, and "experimental pragmatism," represented in the work of Charles Sabel, William Simon, and Michael Dorf. While these three styles are hardly determinative, they do suggest meaningfully different orientations, as illustrated in an analysis of F. Hoffman LaRoche Ltd. v. Empagran, the U.S. Supreme Court's most recent extraterritorial antitrust decision. The irony, once one sees the three pragmatisms in action, is that they all fail to offer anything resembling the promise of a truly pragmatist moment of legal decision.

INTRODUCTION .............................................................................................. 501

I. ECLECTIC PRAGMATISM: A DOMINANT STYLE OF LEGAL

REASONING?........................................................................................ 509

A. Pragmatism in Context: From the Vernacular to the

Philosophical .............................................................................. 509

B. Legal Pragmatism and the Eclectic Style ................................... 511

II. THE LAW OF EXTRATERRITORIAL JURISDICTION ............................... 514

A. Pragmatism in International Law .............................................. 514

B. Sovereignty/Jurisdiction and Internal/External Rules ................ 516

C. The Rules of Jurisdiction ............................................................ 518

1. Comity .................................................................................. 518

2. The Effects Test and the Rule of Reasonableness ................. 522

III. EXTRATERRITORIAL ANTITRUST AND THE PRAGMATIST STYLE ........ 525

A. From Alcoa to Empagran ........................................................... 526

1. Alcoa and the Effects Test .................................................... 526

2. The Consequentialism of Timberlane ................................... 527

3. The Apolitical Attitude in Hartford Fire ............................... 529

4. Empagran and the Eclectic Style .......................................... 530

IV. PRAGMATISM FIGHTS BACK: WHAT ECONOMICS AND EXPERIMENTALISM MIGHT OFFER EXTRATERRITORIAL ANTITRUST ......................................................................................... 537

A. An Economic Pragmatist View ................................................... 538

1. Policy Analysis ..................................................................... 545

2. Reasonableness .................................................................... 548

3. The Turn to Economic Analysis ............................................ 548

4. Conclusion ............................................................................ 550

B. An Experimental Pragmatist View ............................................. 551

1. Globalization, Deliberation, Experimentalism ..................... 558

2. Comity Recast ....................................................................... 560

3. Deliberation and Information Pooling ................................. 562

4. Rolling-Rule Regimes ........................................................... 563

CONCLUSION .................................................................................................. 564

INTRODUCTION

In law school and law practice, a standard method for approaching legal questions begins with the identification of a central set of issues and its governing rules and standards.¹Although this step of choosing the authoritative rule will itself require a degree of strategic thinking,²only then does the standard call for an analysis of the nexus between the issue and the rule, and finally an estimation of the appropriate conclusion. If the legal reasoner happens to be in law school, she will likely characterize her conclusion in an exam or essay as being the "right" one-an answer that has balanced the countervailing arguments and concluded that one course of action is somehow superior to the other. In the context of practice, a lawyer will be less concerned with the supposed right answer, and more interested in the conclusion that has marshaled the very best non-frivolous arguments in support of her client. By way of example, take the Supreme Court's extraterritorial antitrust decision in F. Hoffmann-La Roche Ltd. v. Empagran S.A.³If called upon to provide a short summary to a professor or partner, the student or associate would identify the "issue" as whether foreign nationals, seeking redress for injuries caused by foreign defendants, on foreign soil, could apply U.S. antitrust law to their claims in U.S. court.⁴The Foreign Trade Antitrust Improvements Act (FTAIA) provided the "rule."⁵The Court's "analysis" phase consisted of a brief but unconvincing look at the statute's language and legislative history and a more substantial consideration of how the exercise of U.S. jurisdiction over those foreign actors might adversely affect the international legal order.⁶The "conclusion," or the holding of the case, was that the plaintiffs would lack standing if it could be proved that their injuries were independent of any anticompetitive effects in the United States.⁷

This explanation, however vague and imprecise, describes a working theory of contemporary legal reasoning. Regardless of whether the point is to identify the "right" answer on an exam or the "best" result for a client, when we hear talk of what it means to "think like a lawyer," this is it.

Sort of. Predictably, this description fails to identify at least one critical step in the process of legal reasoning, either as performed by the jurist or the court. Once the reasoner has found her issues and rules, but before she moves on to the analysis, what decision has she made with respect to the style of her analysis in reaching her conclusion?⁸When she attempts to connect the issues and the rules, in what manner will she develop the analysis? Which technique will she choose to drive the course of her reasoning? In many classrooms and law offices, these questions will be met with a single response: the sound of crickets. Although law journals continue to offer examinations of the ways, both old and new, that jurists reason their way through legal problems, training in the craft appears to largely ignore them.

For generations, however, the questions of what it meant to think like a lawyer, and what it meant to apply the tools of legal reasoning, were quite clear.⁹Nineteenth century lawyers, for example, utilized what is known today as Classical Legal Thought (CLT).¹⁰Also known as "formalism,"¹¹the classical style of legal reasoning began with a series of premises regarding the clear separation of public and private authority, the sanctity of individual autonomy, and the formal power of deductive logic.¹²Legal reasoning in the classical period typically entailed identifying a relevant concept, such as "freedom of contract," and deducing a conclusion based on the apparent boundaries of that right.¹³The style was crisp, guided by its unwavering confidence in natural and absolute divisions of power. In the early decades of the twentieth century, writers under the banner of Legal Realism attacked the black and white attitude of the classical style.¹⁴For these scholars, CLT was a style of legal reasoning shot through with contradictions and indeterminacies: an approach to legal decision-making that began with the articulation of formal principles from which practitioners could deduce legal conclusions was inevitably arbitrary.¹⁵Perhaps even more importantly, the classical style failed to capture what was most essential for any type of legal analysis appropriately attuned to its social milieu-explicit considerations of policy consequences.¹⁶

Id.

Where the classical style rigidly separated law and politics, legal realists smashed that divide.¹⁷

The deconstruction of the classical style was not just an Ivory Tower affair.¹⁸As David Kennedy and William Fisher explain, "[b]y the 1950s, it had become common sense that the legal materials did not generate unique solutions to individual cases."¹⁹But despite the widespread acceptance of CLT's faults and the customary ability to identify deductive errors and stale recitations of the rhetoric of "tradition," Legal Realism failed to offer practitioners a steady replacement for the received forms of legal analysis.²⁰

The resolution appeared in the 1950s and 1960s with the advent of the Legal Process approach, generated by Henry Hart, Jr. and Albert Sacks.²¹This approach not only instructed the legal reasoner to first understand that law is a purposive policy instrument (as taught by the Realists), but also to focus on the institutional and procedural aspects of the legal order.²²Indeed, for the jurist informed by Legal Process, her adventure in legal reasoning was primarily guided by an eye for the competing jurisdictional realms occupied by the courts, Congress, and administrative agencies.²³As for the style of decision, Legal Process scholars suggested that the aim was to produce a "reasoned elaboration" that monitored the procedures constituting the multiple legal orders, and appropriately balanced the principles and political considerations...