The U.S. Supreme Court has retried a Chinese company's vitamin C price monopoly case to overturn a Chinese company's successful ruling

The US Supreme Court (SCOTUS) has vacated a judgment in favor of defendant Chinese manufacturers North China Pharmaceutical Group Corp. (NCPGC) and Hebei Welcome Pharmaceutical Co. Ltd. in a case alleging vitamin C price-fixing.

In an opinion entered today (14 June) following a unanimous decision, SCOTUS vacated a September 2016 Second Circuit judgment, which had overturned a USD 147m damages award for plaintiffs Animal Science Products Inc. and The Ranis Company Inc. SCOTUS also ordered that the case be remanded for further consideration.

Background

US dietary supplement companies Animal Science Products and Ranis initially filed complaints in 2005 alleging NCPGC, Hebei Welcome and other Chinese suppliers had regular meetings to limit supply and fix prices.

A district court denied the defendants’ initial motion to dismiss and subsequent motion for summary judgment. The court rejected the defendants’ argument that Chinese law required them to set prices and reduce quantities of vitamin C sold abroad.

China’s Ministry of Commerce (MOFCOM) had filed an amicus brief in support of the motion to dismiss, explaining that it is the administrative authority authorized to regulate foreign trade, and stating that the alleged conspiracy in restraint of trade was actually a pricing regime mandated by the Chinese government.

As reported, in March 2013, a New York jury rendered a verdict in favor of Ranis as a representative of the direct purchaser class. A February 2014 judgment subsequently awarded the plaintiffs approximately USD 147m in damages and enjoined the defendants from engaging in future anticompetitive behavior.

NCPGC and Hebei Welcome subsequently appealed the judgment to the Second Circuit.

In September 2016, the appellate panel overturned the jury verdict and vacated the district court judgment for damages. The judges found that the principles of international comity required the district court to abstain from exercising jurisdiction in the case.

The next month, the direct purchasers asked the Second Circuit to reconsider its decision. The petition for rehearing or rehearing en banc was denied in November 2016.

Animal Science Products and Ranis filed a petition for writ of certiorari with SCOTUS in April 2017.

In June 2017, SCOTUS asked the Department of Justice's (DoJ) Acting Solicitor General to file briefs expressing the views of the US in the case. The Solicitor General’s November 2017 brief requested SCOTUS grant the petition, limited to the second question presented. According to the brief, SCOTUS should review the Second Circuit's holding that MOFCOM's amicus brief conclusively established the content of Chinese law.

In January 2018, the petition was granted limited to the second question presented, which was related to whether a court may exercise independent review of an appearing foreign sovereign’s interpretation of its domestic law, or whether a court is “bound to defer” to a foreign government’s legal statement, as a matter of international comity, whenever the foreign government appears before the court.

14 June Decision

According to the 14 June opinion, a federal court should accord respectful consideration to a foreign government’s submission in a case, but is not bound to accord conclusive effect to the foreign government’s statements. Because the Second Circuit ordered dismissal of the current case on the ground that the foreign government’s statements could not be gainsaid, SCOTUS vacated the Second Circuit’s judgment and remanded the case for further consideration.

The opinion noted that Federal Rule of Civil Procedure 44.1 specifies that a court’s determination of foreign law “must be treated as a ruling on a question of law,” rather than as a finding of fact. In ascertaining foreign law, courts are not limited to materials submitted by the parties; instead, they “may consider any relevant material or source . . . , whether or not . . . admissible under the Federal Rules of Evidence.”