Yesterday the Supreme Court handed down a decision in the long running Chinese Vitamin C price-fixing case. Plaintiffs had won a verdict in the district court, which when trebled, was $147 million. The Second Circuit reversed, however, holding that the district court should have dismissed the complaint on the grounds that the defendants’ price fixing actions were mandated by Chinese law. The Chinese government had filed declarations to that effect. The Supreme Court reversed the Second Circuit and held that a foreign government’s interpretation of its own law is not “binding” on U.S. courts. ANIMAL SCIENCE PRODUCTS, INC., ET AL. v. HEBEI WELCOME PHARMACEUTICAL CO. LTD. ET AL. The decision can be found here.
According to the Second Circuit, federal courts are “bound to defer” to the foreign government’s construction of its own law, whenever that construction is “reasonable.” The Chinese government had submitted an official statement on the meaning and interpretation of its domestic law [supporting the defendants’ argument that their actions were compelled by Chinese law]. Because the Second Circuit found the Chinese government’s interpretation “reasonable” the district court was required to dismiss the complaint. In re Vitamin C Antitrust Litigation, 837 F. 3d 175, 189 (2016).
SUPREME COURT DECISION EXCERPTS
We hold otherwise. A federal court should accord respectful consideration to a foreign government’s submission but is not bound to accord conclusive effect to the foreign government’s statements. Instead, Federal Rule of Civil Procedure 44.1 instructs that, in determining foreign law, “the court may consider any relevant material or source . . . whether or not submitted by a party.” As “[t]he court’s determination must be treated as a ruling on a question of law,” Fed. Rule Civ. Proc. 44.1, the court “may engage in its own research and consider any relevant material thus found,” Advisory Committee’s 1966 Note on Fed. Rule Civ. Proc. 44.1, 28 U. S. C. App., p. 892 (hereinafter Advisory Committee’s Note). Because the Second Circuit ordered dismissal of this case on the ground that the foreign government’s statements could not be gainsaid, we vacate that court’s judgment and remand the case for further consideration.
As the Court of Appeals correctly observed, Rule 44.1 does not address the weight a federal court determining foreign law should give to the views presented by the foreign government. See 837 F. 3d, at 187. Nor does any other rule or statute. In the spirit of “international comity,” Société Nationale Industrielle Aérospatiale v. United States Dist. Court for Southern Dist. of Iowa, 482 U. S. 522, 543, and n. 27 (1987), a federal court should carefully consider a foreign state’s views about the meaning of its own laws. See United States v. McNab, 331 F. 3d 1228, 1241 (CA11 2003); cf. Bodum USA, Inc. v. La Cafetière, Inc., 621 F. 3d 624, 638–639 (CA7 2010) (Wood, J., concur- ring). But the appropriate weight in each case will depend upon the circumstances; a federal court is neither bound to adopt the foreign government’s characterization nor required to ignore other relevant materials.
Relevant considerations include the statement’s clarity, thoroughness, and support; its context and purpose; the transparency of the foreign legal system; the role and authority of the entity or official offering the statement; and the statement’s consistency with the foreign government’s past positions.
Judged in this light, the Court of Appeals erred in deeming the Ministry’s submission binding, so long as facially reasonable.
The case will now go back to the Second Circuit for ruling in light of the standards set forth by the Supreme Court.
No one should expect a stampede of price-fixing cases against Chinese sellers. This was an unusual case in that much of the evidence the plaintiffs relied on was posted on the Internet. Otherwise, there are obvious high hurdles to obtaining sufficient evidence to prove a Chinese cartel, even assuming there are others.