In re Vitamin C Litigation and the Level of Deference Accorded Foreign Governments in Interpreting Their Own Laws

The views and opinions expressed in this article are those of the author only.

Anna Rasmussen

Vol. 39 Associate Editor

In 2008, two vitamin C U.S. corporate purchasers brought a multi-district antitrust class action suit against two entities which were incorporated under Chinese law, Hebei Welcome Pharmaceutical and North China Pharmaceutical Group Corporation in the case of In re Vitamin C Litigation.[1] The plaintiffs allege that the defendants “conspired to fix the price and supply of vitamin C sold to U.S. companies on the international market.”[2] The defendants argue that they were compelled to fix the quantity and price of vitamin C sold abroad under Chinese law.[3] The court must determine whether the laws of China in fact did compel the defendants to engage in this behavior in violation of U.S. anti-trust law.[4] The Ministry of Commerce of the People’s Republic of China submitted an amicus curiae brief on behalf of the Chinese Government stating that the laws of China required the defendants to engage in quantity-fixing and price-fixing of vitamin C sold to the U.S.[5] The district court ruled that the law of China did not require the defendants to engage in price-fixing in violate U.S. antitrust law.[6] Central to this determination was their finding that “when interpreting Chinese law it had ‘substantial discretion to consider different types of evidence’ beyond the Ministry’s official statements.”[7] In 2016, the Second Circuit reversed the district court’s decision holding that “the district court abused its discretion by not abstaining, on international comity grounds, from asserting jurisdiction because the court erred by concluding that Chinese law did not require Defendants to violate U.S. antitrust law and further erred by not extending adequate deference to the Chinese Government’s proffer of the interpretation of its own laws.”[8] Comity “is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience and to the rights of its own citizens or of other persons who are under the protection of its laws.”[9] To determine whether a court should abstain from asserting jurisdiction, courts apply the “comity balancing test” set out in Timberlane Lumber Co. v. Bank of Am., N.T. & S.A., 549 F.2d 597, 614-15 (9th Cir. 1976) and Mannington Mills, Inc. v. Congoleum Corp., 595 F.2d 1287, 1297-98 (3d Cir. 1979). The Supreme Court has relied only on the first factor of the test which is the “degree of conflict with foreign law or policy.” Animal Sci. Prods at 184-85. To determine the degree of conflict, the court must decide the level of deference to give to the Ministry’s brief.[10] In the Second Circuit’s opinion, the court acknowledges that “there is competing authority on the level of deference owed by U.S. courts to a foreign government’s official statement regarding its own laws and regulations.”[11] Contrary to the level of deference applied by the district court, the Second Circuit held that “when a foreign government, acting through counsel or otherwise, directly participates in U.S. court proceedings by providing a sworn evidentiary proffer regarding the construction and effect of its laws and regulations, which is reasonable under the circumstances presented, a U.S. court is bound to defer to those statements.”[12] Therefore, the Second Circuit reversed the decision of the court below and held that the district court should have deferred to the Ministry’s opinion and thus should have found that the there was a direct conflict between Chinese law and U.S. anti-trust law.[13] The plaintiffs sought certiorari in January, and on June 26, 2017, the U.S. Supreme Court invited the Acting Solicitor General to file a brief expressing the position of the government.[14] Then, on November 14, 2017, Solicitor General Noel Francisco submitted an amicus curiae brief urging the Court to grant certiorari to determine the level of deference that should be accorded to a foreign government’s interpretation of its own laws. In its brief, the government expresses its opinion that, “[a] federal court determining foreign law should give substantial weight to a foreign government’s characterization of its own law. But a submission from a foreign government need not be treated as conclusive in all circumstances, and it does not preclude the court from considering other relevant material.”[15] The government’s amicus brief notes the importance of this questions stating, “the degree of deference that a court owes to a foreign government’s characterization of its own law is an important and recurring question, and foreign sovereigns considering making their views known to federal courts should understand the standards that will be applied to their submissions.”[16] If the Supreme Court takes this case, which is likely considering that the Supreme Court’s invited the Solicitor General to file a brief stating the government’s position, which it rarely does, it will provide much needed clarity on the level of deference given to foreign governments.

[1] Animal Sci. Prods. v. Hebei Welcome Pharm. Co. (In re Vitamin C Antitrust Litig.), 837 F.3d 175, 178 (2d Cir. 2016). [2] Id. [3] Id. at 186 [4] Id. at 182. [5] Id. at 186. [6] Id. at 182. [7] Id. (citing In re Vitamin C Antitrust Litig., 810 F. Supp. 2d at 525-26). [8] Id. 182-83. [9] Id. at 185 (quoting Hilton v. Guyot, 159 U.S. 113, 163-64 (1895)). [10] Id. at 186. [11] Id. [12] Id. at 189. [13] Id. at 194. [14] Holland & Knight LLP, The United States Supports Certiorari in the Vitamin C Antitrust Litigation, JD Supra, Nov. 17, 2017. [15] Brief for the United States as Amicus Curiae at 6, Animal Sci. Prods. v. Hebei Welcome Pharm. Co. (In re Vitamin C Antitrust Litig.), 837 F.3d 175, 178 (2d Cir. 2016). [16] Id. at 12.