5th Circuit Dismisses Steel Importer's Antitrust Suit Against 3 US Steel Makers

Judges Carl Stewart, James Dennis and Leslie Southwick upheld the district court's finding that JSW forfeited its claim that the steel companies' conduct in petitioning for the rejection of JSW's Section 232 steel tariff exclusions could be used as "context for non-petitioning conduct" or to establish the "purpose and character of the challenged refusal to deal." The judges also rejected JSW's antitrust claims regarding the steel companies' dealings with the importer following the rejection of the company's exclusion requests.

JSW alleged that representatives of AK Steel Holding Corp., U.S. Steel Corp. and Nucor Corp. "met frequently at government and industry trade group events" before and after the Section 232 duties from President Donald Trump's first administration took effect "to organize their scheme to exploit the exclusion process to their benefit." The three companies filed "thousands" of nearly identical and simultaneous objections to requests for exclusions from the tariffs, the complaint said.

The U.S. steel companies said they could make the slab for which JSW filed exclusions in the U.S. in sufficient quantities and to certain technical specifications. After its exclusions were denied, JSW sought to buy the slab from AK Steel and U.S. Steel. Both companies requested that the importer "establish its creditworthiness as a precondition to any transaction," with AK Steel asking for "either financial statements or a standby letter of credit."

JSW refused, instead offering to provide a "documentary letter of credit." AK Steel still offered to supply the slab, though the importer "ended the discussions" since the manufacturer offered "technical deviations" in its slab that "ran contrary" to its certifications that it can make the exact products subject to JSW's exclusion requests. Likewise, JSW didn't buy from U.S. Steel, nor did it provide proof of creditworthiness, after U.S. Steel offered slab with technical deviations and delays in providing the slab.

The district court rejected JSW's claims that the steel companies conspired to use the Section 232 exclusion process against the importer, relying on the Noerr-Pennington doctrine established by the Supreme Court. This doctrine says that "parties who petition the government for governmental action favorable to them cannot be prosecuted under the antitrust laws even though their petitions are motivated by anticompetitive intent."

While JSW said the steel companies' certifications to the Commerce Department's Bureau of Industry and Security can't form the basis of an antitrust action, which the 5th Circuit agreed with, it still claimed that the court can consider the "protected petitioning conduct as context" for the steel companies' "later refusal to deal to establish the plausibility" of the antitrust conspiracy. The court rejected this invitation, finding that the importer failed to plead that AK Steel's and U.S. Steel's exclusion objections could be used as context for the conspiracy allegation involving the companies' post-objection conduct.

Since JSW didn't raise this claim in its complaint or in "opposition to the motion to dismiss" filed by the steel companies, the appellate court said it won't consider the petitioning conduct.

The court then dismissed the remaining conspiracy allegations regarding the steel companies' post-objection dealings, finding them "insufficient to support a plausible claim for relief under the Sherman Act." The appellate court said the main inquiry is whether the alleged conduct results from "independent decision or from an agreement, tacit or express."

JSW alleged that the creditworthiness requirements and "significant deviations from JSW's requested" slab were "pretextual and based on a conspiracy." The court said on the creditworthiness requirements there's "no allegation that AK Steel or U.S. Steel singled out JSW in requiring proof of creditworthiness as a condition for the sale of steel slab, nor does JSW allege it was otherwise creditworthy." And despite the importer's refusal to submit the creditworthiness documents, the steel makers still "substantively responded to JSW's slab order inquiry with exception sheets, comments, and deviation lists."

And while JSW said AK Steel and U.S. Steel imposed creditworthiness requirements for the "first time ever," the complaint doesn't allege that JSW "had previously purchased steel from either," the court said. In addition, the court rejected JSW's "reliance on AK Steel and U.S. Steel's technical deviations from the requested steel" to demonstrate a "concerted effort to boycott JSW." The court said the deviations "are consistent with what was presented to JSW in its later dealings with AK Steel and U.S. Steel," and, as such, make the "conspiratorial inference on this basis ... unreasonable."