During proceedings in the District Court, these Chinese vitamin C manufacturers (as well as China Pharmaceutical Group Ltd. (CPG), Weisheng Pharmaceutical Co. Ltd., Aland Jiangsu Nutraceutical Co. and Northeast Pharmaceutical Co. Ltd., which settled earlier in the case), were found to have reached an agreement to control export quantities and raise prices by restricting their exports of vitamin C to create a shortage of supply in the international market. The District Court also concluded that “[t]he Chinese law relied upon by defendants did not compel their illegal conduct. Although defendants and the Chinese government argue to the contrary, the provisions of Chinese law before me do not support their position, which is also belied by the factual record.”
The Chinese corporate defendants appealed the decision, supported by amicus briefs from the Chinese Ministry of Commerce, again arguing that Chinese law had compelled them to engage in price-fixing in violation of U.S. laws, and thus they should be excused from liability under principles of comity or the doctrine of foreign sovereign compulsion. The U.S. Court of Appeals for the Second Circuit overturned the District Court’s judgment, holding that it was “bound to defer” to the Chinese government’s characterization of its law.
Writing on behalf of a unanimous court, Justice Ginsburg held that “[a] federal court should accord respectful consideration to a foreign government’s submission, but is not bound to accord conclusive effect to the foreign government’s statements.” Agreeing with the class plaintiffs (and the official position of the United States, as advocated by the Solicitor General), the Court pointed to Federal Rule of Civil Procedure 44.1 (in determining foreign law, “the court may consider any relevant material or source . . . whether or not submitted by a party”), and remanded the case to the Court of Appeals to consider the evidence of foreign law, as the District Court had done.
“Today’s unanimous Supreme Court decision is an important victory for our class of vitamin C purchasers in the United States, whose rights to receive compensation as victims of a foreign price-fixing cartel have been vindicated. We look forward to making our case once again to the Second Circuit that the District Court’s judgment should be affirmed based on all of the evidence,” said Hausfeld partner Melinda Coolidge.
The purchasers are represented by Michael D. Hausfeld, Brian A. Ratner, Brent W. Landau, and Melinda Coolidge of Hausfeld in Washington, D.C.; James T. Southwick and Shawn L. Raymond of Susman Godfrey in Houston; and William A. Isaacson, Michael Gottlieb, and Aaron Nathan of Boies, Schiller & Flexner in Washington, D.C.
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