In a decision filed on August 7, 2012, in a federal court
in New York, a judge ruled that a Chinese company could not evade jurisdiction
of the U.S. courts and must face the prospect of a trial for colluding to fix
the price of vitamin C exported from China into the United States. Two Chinese subsidiaries
of the company, however, were dismissed for lack of personal jurisdiction. The
court demonstrates the challenges Chinese companies face as they increase their
level of activity and scope of operations in the United States.
Judge Brian Cogan of the Eastern District of New York
denied the motion to dismiss of defendant North China Pharmaceutical Group
Corp. ("North China Pharmaceutical") after ruling that the Shijiazhuang-based
company is subject to the U.S. federal antitrust laws, as well as New York's "long-arm"
statute. In particular, the court held that there were several facts produced
in discovery that established personal jurisdiction over North China
Pharmaceutical. First, the court held that the plaintiffs established in
discovery that there were sufficient facts to support their claim that the deputy
general manager of North China Pharmaceutical attended meetings with other
conspirators to fix the price, and to limit the supply, of vitamin C -
notwithstanding that the same individual filled a variety of roles at other
companies that the court dismissed from the case.
The court spent several
pages of the decision distinguishing this case from other price-fixing cases in
New York where personal jurisdiction over a foreign alleged conspirator was not
established. For example, the court noted that, unlike companies dismissed in
other cases, North China Pharmaceutical's economic interests were "aligned"
with those of other conspirators. There were also facts establishing that North
China Pharmaceutical was represented at cartel meetings which allegedly took
place in China. The court dismissed, however, two subsidiaries of North China Pharmaceutical
because the facts alleged by the plaintiffs were inadequate to create an
inference that the subsidiaries were themselves represented at any cartel
meetings. These facts, the court held, were sufficient to
establish personal jurisdiction over North China Pharmaceutical for purposes of
the federal antitrust laws.
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