By Louis M. Solomon
re Vitamin C Antitrust Litigation, 06-MD-1738 (BMC)(JO) (E.D.N.Y. Sept. 2011) [enhanced version available to lexis.com subscribers], addresses on summary judgment the
Vitamin C cartel's arguments over the so-called "foreign sovereign compulsion"
(FSC) and related defenses. In rejecting reliance on those defenses and
thereby denying the motions for summary judgment, the decision contains
extended discussion of several important international litigation issues.
The defendants in the case "do not
dispute that the cartel agreements at issue violate the antitrust laws" except
for a single defense: "that they were compelled by the Chinese government
to fix prices". The motion for summary judgment relied on the FSC defense
as well as defenses based on comity and the Act of State Doctrine. The
motion was supported by an amicus brief filed by the Chinese government
explaining the Chinese government's regulation of vitamin C. The District
Court found: "According to the Ministry, defendants' actions were
compelled by the Chinese government".
The rulings in the case that are
noteworthy from an international practice perspective include:
prove non-U.S. law, the Court applied Fed. R. Civ. P. 44.1 [enhanced version ] and found what it concluded was Chinese law based on
plaintiffs' reliance on the "plain language" of various official directives and
statements and not on the basis of any expert (defendants used an expert;
plaintiffs did not).
analyzing what degree of deference should be accorded to the non-U.S.
government's own statement of non-U.S. law, the Court acknowledged that, prior
to the enactment of Rule 44.1, "the Supreme Court held that such statements
should be considered 'conclusive'. Still, the Court quoted the more
recent decision from the Second Circuit, Karaha Bodas Co. v. Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara, 313 F.3d 70 (2d Cir. 2002) [enhanced version / unenhanced version available from lexisONE Free Case Law], stating that "a foreign
sovereign's views regarding its own laws merit - although they do not command -
some degree of deference". The District Court went on to reject China's
statement on the basis of the Court's own reading of Chinese law as well as on
the basis of a highly detailed analysis of what the official statement did and
did not say. The Court made no finding that the Chinese government was
ill-motivated or had not attempted to meet the plaintiffs' claims fully.
the Court's discussion of comity, the Court analyzed the Supreme Court's
decision in Hartford Fire Ins. Co. v. California, 509 U.S. 764 (1993) [enhanced version / unenhanced version], The Court observed - just as we have in our e-book (International
Practice: Topics and Trends) discussion titled "is comity a limited doctrine" - that "[i]t is thus not
clear that a comity analysis is still permitted in the absence of the type of
true conflict envisioned by Hartford Fire - i.e., that the only instance
where a true conflict does not exist, and comity should not be considered,
where the "defendant can comply with both United States and foreign law, 'even
where the foreign state has a strong policy to permit or encourage [the conduct
that violates American law']" (meaning that a true conflict exists only where
the defendants were "required . . . to act in some fashion prohibited by the
law of the United States", or there "their compliance with the laws of both
countried is otherwise impossible"). The Court did not discuss whether,
even assuming Chinese law would have been violated by the defendants' conduct,
the Court could still find defendants' conduct unlawful under U.S. law (see our
discussion of a recent case refusing to apply a French block statute prohibition, even
assuming it prohibited the defendant's compliance with U.S. discovery rules).
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