Tuesday, September 18, 2018

Attorney K. Todd Wallace is a featured presenter at the Acadiana Society for Human Resource Management (ASHRM) Annual Conference

Attorney K. Todd Wallace is a featured presenter at the Acadiana Society for Human Resource Management (ASHRM) Annual Conference

K Todd Wallace is the legal update presenter at Acadiana SHRM's Annual Conference and Expo in Lafayette, Louisiana, discussing significant legal challenges facing HR professionals.

The law firm of Wallace Meyaski, LLC announced that attorney Kenneth Todd Wallace will be the legal update presenter at the upcoming Annual Conference and Expo in Lafayette, Louisiana, of the Acadiana Society for Human Resource Management (ASHRM) on September 12, 2018. ASHRM was formed in 1978 by local Human Resource Professionals, and is an affiliate of the national Society for Human Resource Management (SHRM). 

Mr. Wallace’s presentation will provide an overview of the current legal issues facing Human Resource managers, personnel, and practitioners in today’s work environment. His presentation will focus on discrimination based on Title VII, the Americans with Disabilities Act, and other laws. He explains that today the challenges for Human Resource professionals are greater than ever: “It has become quite clear that there is a growing legal trend towards expanding Title VII protection. The courts are reviewing matters that, in many cases, are matters of first impression, meaning that the legal issues have not yet been raised by litigant employees.  These decisions have profound impacts on employers and their policies and procedures, while prompting many employers to ensure that their internal practices are evolving with the expansion of Title VII protection.”

Mr. Wallace will also address other challenges facing HR professional.  Mr. Wallace recounts that in preparing for his presentation, he ran an internet search for “greatest Human Resource challenges” and found many blogs and articles on this subject. “The number of ‘Greatest Challenges’ differs according to the various writers, from ‘Top 5 trends and challenges for HR in 2018’ (https://www.humanresourcesonline.net/top-5-trends-and-challenges-for-hr-in-2018/), to ‘The 15 Biggest HR Challenges in 2018’ (https://www.benefitnews.com/slideshow/the-15-biggest-hr-challenges-in-2018), but all shortlists of such ‘Greatest Challenges’ include technology and the human nature that is still at the basis: ‘communications,’ ‘keeping up with laws and regulations,’ ‘finding and nurturing talent’, and ‘new technologies.’ Many of these issues will be addressed by colleagues as part of the ASHRM conference. My personal challenge as part of this conference is to provide a legal update that is both educational and practical.  Understanding the legal trends is part of it; helping an HR professional to apply the principles learned by these legal trends is the other goal of this presentation.”

Other presenters at the Annual conference include:

Steve Rizzo “Motivate This!”
Tracy Butz “Candid Conversations that Drive Results”
Sherry Johnson “The Future of HR: Promoting Business Success in a Changing Global Workplace”
Aileen Bennet “The Inward Facing Brand”
Rob Roux & John Williams “Sexual Harassment”


ASHRM was formed in 1978 by local Human Resource Professionals. In February 1980, the organization was chartered with the Society for Human Resource Management (SHRM), which is a worldwide organization of Human Resource Professionals.

The mission of the chapter is to:

  • Encourage the professionalism of Human Resource Administrators
  • Raise standards of performance in all aspects of Human Resource Administration
  • Encourage adherence to SHRM's code of ethics
  • Provide opportunities for exchange of information and cooperative research among members
The vision of the chapter is to provide networking opportunities and local support to Human Resource Professionals in order to help them become better leaders with in their organizations.  

Details about the Annual Conference are at: https://www.runmyclub.com/ashrm/eventcalendar.asp

About K. Todd Wallace

Kenneth Todd Wallace is an attorney and founding partner of the law firm Wallace Meyaski LLC. He has nearly 20 years of experience in the legal and business professions with established excellence in trial advocacy, negotiation, strategic and initiative planning, employment law compliance, government relations, mergers and acquisitions, and team building. He received his Juris Doctor, cum laude, from Loyola University College of Law, New Orleans, LA. While at Loyola, he served as the Managing Editor of the Loyola Law Review, and as a member of the William C. Vis International Commercial Arbitration Team. Before law school, he received his Bachelor of Arts, Political Science, from the University of North Carolina, Chapel Hill, NC.

Facebook page of the Law Firm: https://www.facebook.com/WallaceMeyaski/

*** K. Todd Wallace is an attorney at Wallace Meyaski in New Orleans. He has nearly 20 years of experience in the legal and business professions with established excellence in trial advocacy, negotiation, strategic and initiative planning, government relations, mergers and acquisitions, and team building. See http://www.walmey.com/our-attorneys/k-todd-wallace/

Sunday, September 2, 2018

K Todd Wallace, Seventh Circuit reverses the district court’s denial of a motion to dismiss a complaint alleging anticompetitive activities

Seventh Circuit reverses the district court’s denial of a motion to dismiss a complaint alleging anticompetitive activities occurring outside the United States pursuant to the Foreign Trade Antitrust Improvements Act

Two groups of plaintiffs filed class action suits against a number of defendants. Group one includes individuals who purchased potash in the United States directly from the defendants. The second group includes individuals who purchased potash products indirectly from the defendants. The Defendants are seven companies whose principal mining operations are located in Canada, Russia, and Belarus. They include Agrium Inc., Potash Corporation of Saskatchewan Inc. (“PCS”), The Mosaic Company, JSC Uralkali, JSC Silvinit, JSC Belarusian Potash Company (“BPC”), and JSC International Potash Company (“IPC”). Agrium, PCS, and Mosaic operate potash mines in the Canadian province of Saskatchewan. These three companies own Canpotex Ltd., a Canadian corporation that is named as a coconspirator but not as a defendant. Canpotex is a joint export marketing and distribution company tasked with coordinating the offshore sales of the potash supply of each of its three stakeholders.

The complaint alleges that the Defendants accounted for about 71% of the world’s potash supply. From 2003 to 2008, potash prices in the United States increased by 600% for no apparent reason. The Plaintiffs allege that the prices increased because the Defendants jointly agreed to restrict output and increase prices of potash. The potash industry is an oligopoly made up of high market concentration. The Plaintiffs also allege that the industry is marked by a high degree of cooperation, which provides the defendants with opportunities to conspire and share information, particularly for the three Defendants involved with Canpotex. All of the anticompetitive activity alleged in the complaint is said to have occurred outside of the United States. The Defendants moved to dismiss the Sherman Act claim for lack of subject matter jurisdiction under the Foreign Trade Antitrust Improvements Act (“FTAIA”). The district court denied the motion and the Defendants appeal.

The United States Court of Appeals for the Seventh Circuit reversed the district court’s decision and dismissed this suit pursuant to the FTAIA. The Sherman Act looks to determine whether the challenged anticompetitive conduct stems from an independent decision or from an agreement, tacit or expressed. The Court found that the FTAIA limits the applicability of the Sherman Act. The Sherman Act does not regulate the competitive conditions of other nations’ economies. It can reach outside the borders of the United States, but only when the conduct has an effect on American commerce. However, the FTAIA makes it clear that the Sherman Act does not prevent American exporters from entering into business arrangements as long as it only adversely affects foreign markets.

The Court applied the FTAIA’s requirements to the Plaintiff’s complaint, finding that it bars this suit. “The flaw in the district court’s reasoning is that it essentially conflates the ‘import commerce’ exception and the “direct effects” exception. If foreign anticompetitive conduct can ‘involve’ U.S. import commerce even if it is directed entirely at markets overseas, then the ‘direct effects’ exception is effectively rendered meaningless. Under the district court’s reading of the statute, a foreign company that does any import business in the United States would violate the Sherman Act whenever it entered into a joint‑selling arrangement overseas regardless of its impact on the American market. This would produce the very interference with foreign economic activity that the FTAIA seeks to prevent.” 657 F.3d 660‑61.

“The import‑commerce exception captures foreign anticompetitive conduct (thus bringing it back within the Sherman Act’s reach) if the overseas anticompetitive conduct actually ‘involves’ the U.S. import market. The direct‑effects exception captures foreign anticompetitive conduct that has a direct, substantial, and reasonably foreseeable effect on U.S. domestic or import commerce regardless of whether the overseas anticompetitive conduct actually ‘involves’ the U.S. import market.” “ Contrary to what the district court seemed to think, it is not enough that the defendants are engaged in the U.S. import market, though that may be relevant to the analysis. Rather, the import trade or commerce exception requires that the defendants’ foreign anticompetitive conduct target U.S. import goods or services.” 657 F.3d 661 (internal citation omitted).

The Court stated that the complaint offers very little information concerning the relationship between the Defendants’ alleged overseas anticompetitive conduct and the American domestic market for potash. “The problem with these generalized allegations is the absence of specific factual content to support the asserted proposition that prices in China, India, and Brazil serve as a benchmark for prices in the United States and that this benchmark, if it exists, has a strong enough relationship with the domestic potash market to raise a plausible inference that the defendants’ foreign anticompetitive conduct has a direct, substantial, and reasonably foreseeable effect on domestic or import commerce. That is, the complaint only generally alludes to a link between the cartelized prices in these three foreign markets and American potash prices.” 657 F.3d 662.

According to the Seventh Circuit, these general allegations are not enough to permit an inference that the increase in potash prices in another country due to the Defendants’ anticompetitive behavior had anything to do with the increased prices in the United States. The Court states that without something more, the Plaintiffs’ complaint fails to satisfy the direct and substantial effect test of the FTAIA. The complaint relied too heavily on chain‑of‑events allegations that the Court finds to be too cryptic and unreliable. Therefore, the Court holds that the complaint does not contain sufficient factual content to plead a plausible direct, substantial, and reasonably foreseeable connection between the alleged foreign anticompetitive activity and the domestic potash market.

Citation: Minn–chem v. Agrium Inc., 657 F.3d 650 (7th Cir. 2011).

*** K. Todd Wallace is an attorney at Wallace Meyaski in New Orleans. He has nearly 20 years of experience in the legal and business professions with established excellence in trial advocacy, negotiation, strategic and initiative planning, government relations, mergers and acquisitions, and team building. See http://www.walmey.com/our-attorneys/k-todd-wallace/

Todd Wallace, China’s attempt to control vitamin C market leads to multi-national legal discussion

China’s attempt to control vitamin C market leads to multi-national legal discussion

Plaintiffs-Appellees, Animal Science Products, Inc. and The Ranis Company, Inc., along with various U.S. vitamin C purchasers, brought a multi-district antitrust class action against Defendants-Appellants Hebei Welcome Pharmaceutical and North China Pharmaceutical Group Corporation, entities incorporated under the laws of China. In their complaint, Plaintiffs alleged that Defendants conspired to fix the price and supply of vitamin C sold to U.S. companies on the international market in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 4, 1.

Beginning in the 1970s, China, the leading producer and exporter of vitamin C, started implementing various export controls in order to retain a competitive edge over other producers of vitamin C on the world market. In 1990s, as a result of a reduction in vitamin C prices, the Government facilitated industry-wide consolidation and implemented regulations to control the prices of vitamin C exports. In 2001, China supplied 60% of the worldwide vitamin C market. 

In 2005, various vitamin C purchasers in the United States, including Plaintiffs-Appellees, filed numerous suits against Defendants-Appellants. The Plaintiffs alleged that in December 2001 Defendants colluded with an entity referred to as both, the Western Medicine Department of the Association of Importers and Exporters of Medicines and Health Products of China and the China Chamber of Commerce of Medicines & Health Products Importers & Exporters, (the “Chamber”), and agreed to restrict their exports of Vitamin C in order to create a shortage of supply in the international market, all with the purpose and effect of fixing prices. 

Defendants moved to dismiss the complaint on the basis that they acted pursuant to Chinese regulations regarding vitamin C export pricing. Furthermore, they argued that they were required by the Chinese Government to coordinate prices and create supply shortage. Moreover, Defendants argued that the district court should dismiss the complaint pursuant to the act of state doctrine, the doctrine of foreign sovereign compulsion, and/or principles of international comity.

In support of Defendants’ motion to dismiss, the Ministry of Commerce of the People’s Republic of China (the “Ministry’) filed an amicus curiae brief representing that it is the highest authority within the Chinese Government authorized to regulate foreign trade; and that the Chamber is a Ministry-supervised entity authorized by the Ministry to regulate vitamin C export prices and output levels. As presented, the Chamber was an instrumentality of the State that was required to implement the Ministry’s administrative rules and regulations with respect to vitamin C trade. The Ministry also presented evidence that the Chamber created a vitamin C Subcommittee (the “Subcommittee”) in 1997, and a “price verification and chop” policy (“PVC”) implemented in 2002, all with the aim to regulate the vitamin C industry. As explained, before 2002, only companies that were members of the Subcommittee were allowed to export vitamin C, and were granted an “export quota license” if its export price and volume complied with the Subcommittee’s coordinated export price and export quota. 

The Ministry also represented that, in 2002, the Chamber implemented the PVC system, which was in place during the time of the antitrust violations alleged in this case. The implementation of the PVC system was announced by an official notice (“the 2002 Notice”). The 2002 Notice gave the right to the Chamber “to coordinate export prices and industry self-discipline.” Under this system, vitamin C manufacturers were required to submit documentation to the Chamber indicating both the amount and price of vitamin C it intended to export. The Chamber affixed a “chop” to the contract signalizing that the contract had been reviewed and approved by the Chamber only if the price of the contract was at or above the minimum acceptable price set by coordination through the Chamber. 

The district court denied Defendants’ motion to dismiss in order to allow for further discovery with respect with whether Defendants’ assertion that the actions constituting the basis of the antitrust violations were compelled by the Chinese Government.
After further discovery, Defendants moved for summary judgment. The district court denied Defendants’ motion for summary judgment, determining that “Chinese law did not compel Defendants’ anticompetitive conduct” in any of the relevant time periods.
In March 2013, after a jury trial, the jury found Defendants liable for violations of Section 1 of the Sherman Act. The district court then awarded Plaintiffs approximately $147 million in damages and issued a permanent injunction barring Defendants from further violating the Sherman Act. Defendants appealed the judgment.

The United States Court of Appeals for the Second Circuit vacated and reversed the judgment based on international comity at issue in Defendants’ motion to dismiss and remanded the case with instructions to dismiss Plaintiffs’ complaint with prejudice.
The Court addressed the question of what laws and standards control when U.S. antitrust laws are violated by foreign companies that claim to be acting at the express direction or mandate of a foreign government.
“The central issue that we address is whether principles of international comity required the district court to dismiss the suit. As part of our comity analysis we must determine whether Chinese law required Defendants to engage in anticompetitive conduct that violated U.S. antitrust laws. Within that inquiry, we examine the appropriate level of deference to be afforded a foreign sovereign’s interpretation of its own laws. […]”
“We review for abuse of discretion a district court’s denial of a motion to dismiss on international comity grounds. JP Morgan Chase Bank v. Altos Hornos de Mexico, 412 F.3d 418, 422 (2d Cir. 2005). An abuse of discretion ‘occurs when (1) the court’s decision rests on an error of law or clearly erroneous factual finding, or (2) its decision cannot be located within the range of permissible decisions.’ CBS Broad. Inc. v. FilmOn.com, Inc., 814 F.3d 91, 104 (2d Cir. 2016) (alterations and internal quotation omitted). The determination of foreign law is ‘a question of law, which is subject to de novo review.’ Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (‘Pertamina’), 313 F.3d 70, 80 (2d Cir. 2002) (internal quotation omitted). In determining foreign law, “we may consider any ‘relevant material or source, including the legal authorities supplied by the parties on appeal as well as those authorities presented to the district court below.’ Carlisle Ventures, Inc. v. Banco Espanol de Credito, S.A., 176 F.3d 601, 604 (2d Cir. 1999); see Fed. R. Civ. P. 44.1.”
“[…] Comity is both a principle guiding relations between foreign governments and a legal doctrine by which U.S. courts recognize an individual’s acts under foreign law. See In re Maxwell Commc’n Corp., 93 F.3d 1036, 1046 (2d Cir. 1996). ‘Comity, in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other.’ Hilton v. Guyot, 159 U.S. 113, 163-64 (1895) (internal quotations omitted). ‘[I]t 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.’ Id. This doctrine ‘is not just a vague political concern favoring international cooperation when it is in our interest to do so [but r]ather it is a principle under which judicial decisions reflect the systemic value of reciprocal tolerance and goodwill.’ Societe Nationale Industrielle Aerospatiale v. U.S. Dist. Court of S. Dist. of Iowa, 482 U.S. 522, 555 (1987). […]”
“The principles of comity implicate a federal court’s exercise of jurisdiction. O.N.E. Shipping Ltd. v. Flota Mercante Grancolombiana, S.A., 830 F.2d 449, 452 (2d Cir. 1987). Defendants do not dispute that the district court had subject matter jurisdiction over Plaintiffs’ claims, see Hartford Fire Ins. Co. v. California, 509 U.S. 764, 796 (1993) (collecting cases) (’[I]t is well established by now that the Sherman Act applies to foreign conduct that was meant to produce and did in fact produce some substantial effect in the United States.’); rather, Defendants argue that principles of international comity required the district court to abstain from exercising that jurisdiction here, see O.N.E. Shipping Ltd., 830 F.2d at 452. […]”
To determine whether to abstain from asserting jurisdiction on comity grounds the Court applies the multi-factor 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).
“Combined and summarized here, the enumerated factors from Timberlane Lumber and Mannington Mills (collectively the ‘comity balancing test’) guiding our analysis of whether to dismiss on international comity grounds include: (1) Degree of conflict with foreign law or policy; (2) Nationality of the parties, locations or principal places of business of corporations; (3) Relative importance of the alleged violation of conduct here as compared with conduct abroad; (4) The extent to which enforcement by either state can be expected to achieve compliance, the availability of a remedy abroad and the pendency of litigation there; (5) Existence of intent to harm or affect American commerce and its foreseeability; (6) Possible effect upon foreign relations if the court exercises jurisdiction and grants relief; (7) If relief is granted, whether a party will be placed in the position of being forced to perform an act illegal in either country or be under conflicting requirements by both countries; (8) Whether the court can make its order effective; (9) Whether an order for relief would be acceptable in this country if made by the foreign nation under similar circumstances; and (10) Whether a treaty with the affected nations has addressed the issue. Mannington Mills, Inc., 595 F.2d at 1297-98; Timberlane Lumber Co., 549 F.2d at 614.”
The Court then applied the ten factors to this case.
“Since our adoption of the comity balancing test, the Supreme Court, in determining whether international comity cautioned against exercising jurisdiction over antitrust claims premised entirely on foreign conduct, relied solely upon the first factor—the degree of conflict between U.S. and foreign law—to decide that abstention was inappropriate. Hartford Fire, 509 U.S. at 798 (’The only substantial question in this litigation is whether there is in fact a true conflict between domestic and foreign law.’ (internal quotation omitted)). The Court explained that just because ‘conduct is lawful in the state in which it took place will not, of itself, bar application of the United States antitrust laws.’ Id. Thus, in that case, the degree of conflict between the laws of the two states had to rise to the level of a true conflict, i.e. ‘compliance with the laws of both countries [must have been] impossible,’ to justify the Court’s abstention on comity grounds. Id. at 799. In other words, ‘[n]o conflict exists . . . ‘where a person subject to regulation by two states can comply with the laws of both.’ Id. (quoting Restatement (Third) of Foreign Relations Law § 403, cmt. e). After determining that there was not a true conflict, the Court reflected that there was ‘no need in this litigation to address other considerations that might inform a decision to refrain from the exercise of jurisdiction on the ground of international comity.’ Id.”
“We read Hartford Fire narrowly and interpret the modifying phrase ‘in this litigation’ in reference to the ‘other considerations that might inform a decision’ as suggesting that the remaining factors in the comity balancing test are still relevant to an abstention analysis. Id.; see Mujica v. AirScan Inc., 771 F.3d 580, 600 (9th Cir. 2014). […] That a true conflict was lacking in Hartford Fire does not, in the inverse, lead us to conclude that the presence of such a conflict alone is sufficient to require dismissal and thereby vitiate the need to consider the remaining factors.”
In order to determine whether a “true conflict” exists, the Court first determined what the law of each country requires.
“The Sherman Act prohibits ‘[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce.’ 15 U.S.C. § 1. While this language has been interpreted to outlaw only unreasonable restraints in trade, see, e.g., State Oil Co. v. Khan, 522 U.S. 3, 10 (1997), certain types of anticompetitive conduct are ‘so plainly anticompetitive that no elaborate study of the industry is needed to establish their illegality,’ Nat. Soc. of Prof’l Eng’rs v. United States, 435 U.S. 679, 692 (1978). ‘Price-fixing agreements between two or more competitors, otherwise known as horizontal price-fixing agreements, fall into the category of arrangements that are per se unlawful.’ Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006). Thus, if Chinese law required Defendants to enter into horizontal price-fixing agreements, ‘compliance with the laws of both countries is [] impossible,’ Hartford Fire, 509 U.S. at 799, and there is a true conflict.”
Court’s interpretation of the record as to Chinese law hinges on the amount of deference that the Court extended to the Chinese Government’s explanation of its own laws.
“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. In the seminal case United States v. Pink, 315 U.S. 203 (1942), the Supreme Court considered, inter alia, the extraterritorial reach of a 1918 decree nationalizing Russia’s insurance business. The record before the Pink Court included expert testimony and ‘voluminous’ other evidence bearing on the proper interpretation of the 1918 decree and its extraterritorial effect. Id. at 218. This evidence included an official declaration of the Russian Government explaining the intended extraterritorial effect of the decree. See id. at 219-20. The Court ‘d[id] not stop to review’ the whole body of evidence, however, id. at 218, because it determined that the official declaration was ‘conclusive’ as to the extraterritorial effect of the decree, id. at 220.
Since 1942, several courts have cited Pink for the proposition that an official statement or declaration from a foreign government clarifying its laws must be accepted as conclusive, while others intimated that while the official statements of a foreign government interpreting its laws are entitled to deference, U.S. courts need not accept such statements as conclusive. In the present case, however, the district court “[…] relied on three authorities—Rule 44.1, Villegas Duran v. Arribada Beaumont, 534 F.3d 142 (2d Cir. 2008), and Karaha Bodas, 313 F.3d 70—for the proposition that the Second Circuit, in particular, has ‘adopted a softer view toward the submissions of foreign governments.’ In re Vitamin C Antitrust Litig., 584 F. Supp. 2d at 557.”

The Court disagreed.
“Contrary to the district court’s reasoning, we find no support for the argument that Rule 44.1, adopted in 1966 long after Pink was decided, modified the level of deference that a U.S. court must extend to a foreign government’s interpretation of its own laws. Rule 44.1 provides that, when determining foreign law, a court ‘may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence.’ Fed. R. Civ. P. 44.1. According to the advisory committee notes, the rule has two purposes: (1) to make a court’s determination of foreign law a matter of law rather than fact, and (2) to relax the evidentiary standard and to create a uniform procedure for interpreting foreign law. Fed. R. Civ. P. 44.1 advisory committee’s notes to 1966 adoption. The advisory committee notes suggest that Rule 44.1 was meant to address some of the challenges facing litigants whose claims and defenses depended upon foreign law and to provide courts with a greater array of tools for understanding and interpreting those laws. Id. Rule 44.1 explicitly focuses on what a court may consider when determining foreign law, but it is silent as to how a court should analyze the relevant material or sources. Thus, courts must still evaluate the relevant source material within the context of each case. See, e.g., Curley v. AMR Corp., 153 F.3d 5, 14-15 (2d Cir. 1998) (explaining that because ‘Mexican law is much different’ than New York state law and ‘its sources do not lie in precedent cases’ the court must ‘consider the text of the constitution, civil code and statutory provisions . . . and give them preponderant consideration’ when analyzing Mexican law). Finding no authority to the contrary, we conclude that Rule 44.1 does not alter the legal standards by which courts analyze foreign law, and thus, the rule does not abrogate or ‘soften’ the level of deference owed by U.S. courts to statements of foreign governments appearing in U.S. courts.”
The Court also disagreed with district court’s adoption of the decision in Vilegas Duran to bolster its conclusion that this court has adopted a softer view toward submissions of foreign governments.
“[…] We consider Villegas Duran inapplicable to the present case for two reasons. First, because the Chilean Government did not appear before the court in that case, either as a party or as an amicus, the level of deference the court afforded the Chilean affidavit does not guide our application here. Second, Villegas Duran was overturned by the Supreme Court, Duran v. Beaumont, 560 U.S. 921 (2010), in light of Abbott v. Abbott, 560 U.S. 1 (2010). […]”
And it also disagreed with district court’s reliance on the decision in Karaha Bodas, 313 F.3d 70.
“[…] In that case, a judgment creditor of an oil and gas company owned and controlled by the Republic of Indonesia sought to execute upon funds held in New York trust accounts. Id. at 71. The Republic of Indonesia joined the appeal as a party with an affected interest, and in so doing, sought to clarify the applicable Indonesian law as well as the Indonesian Government’s relationship with the gas company. Id. Citing to our sister circuits in Amoco Cadiz and Access Telecom, we credited the Republic of Indonesia’s interpretation and explained that ‘a foreign sovereign’s views regarding its own laws merit—although they do not command—some degree of deference.’ Id. at 92. We clarified that, ‘where a choice between two interpretations of ambiguous foreign law rests finely balanced, the support of a foreign sovereign for one interpretation furnishes legitimate assistance in the resolution of interpretive dilemmas.’ Id.”
“It is noteworthy that, while we suggested in Karaha Bodas that deference to a foreign sovereign’s interpretation need not be ‘conclusive’ in every case, we ultimately adopted the Republic of Indonesia’s interpretation of its own regulation. […]”
“Consistent with our holding in Karaha Bodas and the Supreme Court’s pronouncements in Pink, we reaffirm the principle 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. If deference by any measure is to mean anything, it must mean that a U.S. court not embark on a challenge to a foreign government’s official representation to the court regarding its laws or regulations, even if that representation is inconsistent with how those laws might be interpreted under the principles of our legal system. Cf. Abbott, 560 U.S. at 20. […] Not extending deference in these circumstances disregards and unravels the tradition of according respect to a foreign government’s explication of its own laws, the same respect and treatment that we would expect our government to receive in comparable matters before a foreign court. Cf. Hilton v. Guyot, 159 U.S. 113, 191 (1895). […]”
The Court takes into consideration the official statements of the Ministry, and concludes that “[…] Chinese law required Defendants to engage in activities in China that constituted antitrust violations here in the United States.”
“[…] [W]e find it reasonable to view the entire PVC regime as a decentralized means by which the Ministry, through the Chamber, regulated the export of vitamin C by deferring to the manufacturers and adopting their agreed upon price as the minimum export price. In short, by directing vitamin C manufacturers to coordinate export prices and quantities and adopting those standards into the regulatory regime, the Chinese Government required Defendants to violate the Sherman Act. See United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 224 n.59 (1940) (’[I]t is [] well settled that conspiracies under the Sherman Act are not dependent on any overt act other than the act of conspiring.’).”
Disagreeing with district court’s finding problematic the possibility that the “defendants [made] their own choices and then ask[ed] for the government’s imprimatur,” the Court states,
“Whether Defendants had a hand in the Chinese government’s decision to mandate some level of price-fixing is irrelevant to whether Chinese law actually required Defendants to act in a way that violated U.S antitrust laws. Moreover, inquiring into the motives behind the Chinese Government’s decision to regulate the vitamin C market in the way it did is barred by the act of state doctrine. ‘In essence, the act of state doctrine is a principle of law designed primarily to avoid judicial inquiry into the acts and conduct of the officials of the foreign state, its affairs and its policies and the underlying reasons and motivations for the actions of the foreign government.’ O.N.E. Shipping Ltd., 830 F.2d at 452. The act of state doctrine precludes us from discrediting the Subcommittee or the PVC process as ad hoc protectionist regimes that were intended to provide governmental sanction to an otherwise privately formed cartel. By focusing on the Defendants’ role in the regulatory regime, as opposed to the regime itself, the district court erroneously required Defendants to show that the government essentially forced Defendants to price-fix against their will in order to show that there was a true conflict between U.S. antitrust law and Chinese law. This demands too much. It is enough that Chinese law actually mandated such action, regardless of whether Defendants benefited from, complied with, or orchestrated the mandate. Thus, we decline to analyze why China regulated vitamin C in the manner it did and instead focus on what Chinese law required. See id. at 453.”
The Court concluded that “Because we hold that Defendants could not comply with both U.S. antitrust laws and Chinese law regulating the foreign export of vitamin C, a true conflict exists between the applicable laws of China and those of the United States.”
Having determined that Chinese law required Defendants to violate U.S. antitrust law, the Court turns to analyze whether the remaining factors weigh in favor of dismissal based on principles of international comity. The Court held that the remaining factors in the comity balancing test decidedly weight in favor of dismissal and counsel against exercising jurisdiction in the instant case.
“All Defendants are Chinese vitamin C manufacturers with their principal places of business in China, and all the relevant conduct at issue took place entirely in China. Although Plaintiffs may be unable to obtain a remedy for Sherman Act violations in another forum, complaints as to China’s export policies can adequately be addressed through diplomatic channels and the World Trade Organization’s processes. […] Moreover, there is no evidence that Defendants acted with the express purpose or intent to affect U.S. commerce or harm U.S. businesses in particular. […]” And concluded that “[w]hile it was reasonably foreseeable that China’s vitamin C policies would generally have a negative effect on Plaintiffs as participants in the international market for vitamin C, as noted above, there is no evidence that Defendants’ antitrust activities were specifically directed at Plaintiffs or other U.S. companies.”
“Furthermore, according to the Ministry, the exercise of jurisdiction by the district court has already negatively affected U.S.-China relations. […] The Chinese Government has repeatedly made known to the federal courts, as well as to the United States Department of State in an official diplomatic communication relating to this case, that it considers the lack of deference it received in our courts, and the exercise of jurisdiction over this suit, to be disrespectful and that it ‘has attached great importance to this case.’ Doc. No. 111, Diplomatic Correspondence between Embassy for the People’s Republic of China and the United States Department of State, April 9, 2014; cf. Société Nationale Industrielle Aérospatiale, 482 U.S. at 546. […]”
“Currently, the district court’s judgment orders Defendants to comply with conflicting legal requirements. This is an untenable outcome. It is unlikely, moreover, that the injunctive relief the Plaintiffs obtained would be enforceable in China. If a similar injunction were issued in China against a U.S. company, prohibiting that company from abiding by U.S. economic regulations, we would undoubtedly decline to enforce that order. See Corporacion Mexicana De Mantenimiento Integral, S. De R.L. De C.V. v. Pemex-Exploracion Y Produccion,No. 13-4022, 2016 WL 4087215 (2d Cir. Aug. 2, 2016). […]”
“Simply put, the factors weigh in favor of abstention. Recognizing China’s strong interest in its protectionist economic policies and given the direct conflict between Chinese policy and our antitrust laws, we conclude that China’s ‘interests outweigh whatever antitrust enforcement interests the United States may have in this case as a matter of law.’ O.N.E. Shipping Ltd., 830 F.2d at 450. Accordingly, we hold that the district court abused its discretion by failing to abstain on international comity grounds from asserting jurisdiction, and we reverse the district court’s order denying Defendants’ motion to dismiss.”
The Court thus concluded that “[a]ccording appropriate deference to the Ministry’s official statements to the district court and to this Court on appeal, we hold that Defendants were required by Chinese law to set prices and reduce quantities of vitamin C sold abroad and doing so posed a true conflict between China’s regulatory scheme and U.S. antitrust laws such that this conflict in Defendants’ legal obligations, balanced with other factors, mandates dismissal of Plaintiffs’ suit on international comity grounds.”
The Court reversed the district court’s order denying Defendants’ motion to dismiss, and remanded with instructions to dismiss Plaintiffs’ complaint with prejudice. 

CITATION: In Re Vitamin C Antitrust Litigation, 837 F.3d 175 (2nd Cir. 2016)

*** K. Todd Wallace is an attorney at Wallace Meyaski in New Orleans. He has nearly 20 years of experience in the legal and business professions with established excellence in trial advocacy, negotiation, strategic and initiative planning, government relations, mergers and acquisitions, and team building. See http://www.walmey.com/our-attorneys/k-todd-wallace/