Texas District Court Tosses Case Over Alleged Conspiracy Involving Section 232 Tariffs
The U.S. District Court for the Southern District of Texas dismissed a case brought by Indian steel company JSW Steel that alleged a conspiracy by four U.S. steel companies to engage in a boycott of JSW via the U.S.'s Section 232 national security tariffs. In the Feb. 17 order, Judge Keith Ellison said that JSW "failed to plausibly allege a conspiracy" regarding the defendant, and didn't sufficiently allege that the defendants knew any specific information about the company's business prospects (JSW Steel (USA) v. Nucor Corp., S.D. Texas #21-01842).
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JSW imports steel slab from India, Mexico and Brazil. Prior to the establishment of the Section 232 tariffs in 2018, the alleged conspirators and defendants in the case -- Nucor, U.S. Steel, AK Steel and Clevenald-Cliffs -- met with the president, Congress and the Commerce Department to advocate for the trade-restricting measures.
After the tariffs went into effect, JSW sought to buy steel slab from AK Steel, which in turn requested a creditworthiness check of JSW. After JSW refused to comply, AK Steel nevertheless offered to sell the company the steel slab provided that it accept certain technical exceptions for the product and a credit check. At this point, JSW called off the order, alleging a conspiracy by AK Steel to boycott sales to JSW. The company further details a similar episode with U.S. Steel.
After JSW filed suit alleging violations of the Sherman Act, Clayton Acts and the Texas Free Enterprise and Antitrust Act, the defendants moved to dismiss the case. Under the Sherman Act, a claimant must show that the defendants engaged in a conspiracy that restrained trade in the relevant market. Nucor argued the Sherman Act claims fail since there is no agreement restraining trade. JSW countered by alleging that Nucor was receiving confidential information from the other defendants regarding what quantities of slab U.S. Steel and AK Steel were capable of producing.
"The Court agrees with Nucor’s assertion that JSW mischaracterizes its objection, which was based on public, rather than proprietary, information about the collective capabilities of the domestic industry in the aggregate," the opinion said. The court also found fault with JSW's claim that trade association meetings involving all the defendants gave them a chance to conspire. "Common attendance at trade association meetings is insufficient to infer a conspiracy," Ellison said.
"The Court concludes that JSW has failed plausibly to allege that Nucor entered into a conspiratorial agreement in violation of Sherman Act § 1," the opinion said. "JSW fails to offer factual allegations that would reasonably substantiate an inference of conspiracy. For this reason alone, the Court must dismiss the Sherman Act claim." Nevertheless, the court said that JSW's claims are barred the Noerr-Pennington doctrine, which bars claims against joint advocacy efforts of public officials under the First Amendment. "Joint efforts by competitors to influence government decision-makers are protected by the Noerr-Pennington doctrine and cannot be a basis for liability," Ellison said.
JSW also made state law claims, which the court also rejected. For starters, the Noerr-Pennington doctrine applies to state-law claims as well, the judge said. Further, the Texas Free Enterprise and Antitrust Act has the same standards as the Sherman Act for establishing a violation.
"Despite Plaintiff’s lengthy Complaint and briefing, it has failed to sufficiently allege a Sherman Act claim because: (A) it does not plausibly allege a conspiracy among Defendants; (B) the Noerr-Pennington doctrine applies to the Defendants’ alleged conduct related to the Section 232 tariffs; and (C) JSW has failed to plausible allege an antitrust injury," the judge said.