NEW YORK- (Mealey's) A federal judge in New York on March
14 entered judgment for $153.3 million after trebling a jury's $54.1 million
verdict in favor of a direct purchaser class on its allegations that Chinese
corporations participated in an illegal cartel to fix prices and limit supply
for exports of vitamin C to the United States (In re Vitamin C Antitrust
Litigation [Animal Science Products, Inc., et al. v. Hebei Welcome
Pharmaceutical Co. Ltd., et al.], No. 06-md-1738, No. 05-cv-0453, E.D.
N.Y.; See February 2013).
The jury concluded that Hebei Welcome Pharmaceutical Co.
Ltd. and North China Pharmaceutical Group Corp. (NCPGC) "knowingly entered into
an agreement or conspiracy with the purpose of or predictable effect of fixing
the price or limiting the supply of Vitamin C."
The jury rejected the defendants' argument that they were
compelled by the Chinese government to enter into the agreements from Dec. 1,
2001, to June 30, 2006, and that they "faced the prospect of penalties or
sanctions for not complying with the directives or commands of the Chinese
U.S. Judge Brian M. Cogan of the Eastern District of New
York trebled the jury's damage award and entered judgment against the
defendants, jointly and severally, after deducting $9 million received from
Purchasers of vitamin C in the United States alleged that
in December 2001, at a meeting of the Western Medicine Department of the
Association of Importers and Exporters of Medicines and Health Products of
China, vitamin C manufacturers - including Hebei Welcome Pharmaceutical Co.
Ltd., NCPGC, China Pharmaceutical Group Ltd. (CPG),Weisheng Pharmaceutical Co.
Ltd., Aland Jiangsu Nutraceutical Co. and Northeast Pharmaceutical Co. Ltd.-
and the association reached an agreement whereby Chinese manufacturers of
vitamin C agreed to control export quantities and raise prices by restricting
their exports of vitamin C to create a shortage of supply in the international
The purchasers brought a putative class action under
Section 1 of the Sherman Act and Sections 4 and 16 of the Clayton Act.
Judge Cogan denied the Chinese corporations' omnibus
motion for summary judgment in September 2011, concluding 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. I decline to defer to the Chinese government's
statements to the court regarding Chinese law." The judge denied the
defendants' motion for permission to take an interlocutory appeal.
In May 2012, the direct purchasers reached a $9.5 million
settlement with Aland. It was the first civil settlement with a Chinese
company in a U.S.
antitrust cartel case.
On Feb. 8, Judge Cogan denied NCPGC's motion for summary
judgment. NCPGC argued that it is not a vitamin C manufacturer but
instead is an investment holding company that has an indirect ownership
interest in manufacturer Hebei Welcome.
The judge concluded that, based on NCPGC's website's
description of it as a "leading pharmaceutical manufacturer" with "output and
sales volume of" vitamin C "ranking in the forefront of the world" and a
document listing NCPGC as one of the "[s]everal manufacturing companies" that supported
the chamber's proposed coordinated production termination, "a reasonable jury
could conclude that NCPGC was involved in vitamin C manufacturing."
On Feb. 20, the judge denied CPG's motion for summary
judgment as untimely. CPG argued that the purchasers' attempt to pierce
the corporate veil of Weisheng, which is a wholly owned subsidiary of
CPG, in order to reach CPG must fail because the purchasers failed to
plead facts sufficient to support the elements of veil piercing under Chinese
Opening arguments began Feb. 25. CPG and Weisheng
reached a $22.5 million settlement soon before the jury was charged on March
13. The jury rendered its verdict on March 14.
The purchasers are represented by Michael D. Hausfeld,
Brian A. Ratner and Brent W. Landau of Hausfeld in Washington, D.C.; James T.
Southwick, Shawn L. Raymond and Suyash Agrawal of Susman Godfrey in Houston;
William A. Isaacson, Tanya Chutkan and Jennifer Milici of Boies, Schiller &
Flexner in Washington; and Alanna Rutherford of Boies Schiller in New York.
NCPGC and Hebei Welcome are represented by Darrell
Prescott and Catherine Yunie Stillman of Baker & McKenzie in New York and Daniel Mason of Zelle Hofmann Voelbel &
Mason in San Francisco.
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