By Mark Ritchie, Law Office of Mark Ritchie, P.C.
U.S. Supreme Court Treats Circuit Split by Recommending Less Vitamin C
On June 14, 2018, the Court issued its opinion in Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co., Ltd.,[i]addressing a circuit split on the weight given to foreign governments’ interpretation of their own laws in U.S. proceedings.[ii] Rejecting the more deferential standard employed by the United States Court of Appeals for the Second Circuit,[iii]the Court adopted an ad hoc approach affording substantial, but not dispositive, weight to a foreign government’s interpretations of its own law. While respecting other nations’ views, the Animal Science Products test guards against foreign governments that seek to influence legal outcomes with inconsistent, implausible, or plainly disingenuous interpretations of foreign law.
In the underlying In re Vitamin C Antitrust Litigation, a group of U.S.-based purchasers filed suit against four Chinese corporate sellers for allegedly violating the Sherman Act by fixing prices and quantities of vitamin C exported to the United States.[iv] The Chinese sellers moved to dismiss the complaint under the act of the state doctrine, the foreign sovereign compulsion doctrine, and principals of international comity, asserting that the price and quantity-fixing was required under Chinese law. The Ministry of Commerce of the People’s Republic of China filed an amicus curae brief in support of the Defendants’ motion to dismiss, asserting that under the current Chinese export system, the Defendants’ trade association is required to certify each export contract’s compliance with coordinated quotas and price fixing standards.[v]
The District Court denied the Defendants’ motion as well as a later motion for summary judgment supported which was by an additional statement from the Ministry and expert testimony.[vi] At trial, the jury found that the Chinese sellers had agreed to fix prices and quantities of vitamin C exports and also found that the sellers were not compelled to enter into those agreements. The trial court entered judgment for the purchasers, awarding $147 million in treble damages and enjoining further violation of the Sherman Act by the Defendants.[vii]
The Second Circuit subsequently reversed on grounds that the Defendants’ motion to dismiss should have been granted and that the District Court erred in not deferring to the Ministry’s characterization of Chinese law. Mindful of competing lines of authority on the issue,[viii]the Court of Appeals for the Second Circuit settled on a highly deferential approach, consistent with both the seminal case of United States v. Pink[ix]and Second Circuit precedent on determining foreign law: [x]
[W]hen 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.[xi]
The Animal Science Products Approach – Equal Parts Respect, Flexibility, and Skepticism
In its historical analysis, the Court noted that under common law, issues of foreign law were treated as questions of fact, which had “a number of undesirable practical consequences.”[xii] With the adoption of Federal Rule of Civil Procedure 44.1, determinations of foreign law were transformed into questions of law subject to de novo review.[xiii] This shift in characterization also freed courts to consider all relevant materials, not just materials submitted by the parties, without regard to admissibility under the Federal Rules of Evidence.[xiv]
Writing for the unanimous Court, Justice Ginsburg acknowledged that federal courts should “carefully consider a foreign state’s views about the meaning of its own laws” in recognition of “the spirit of international comity.”[xv] Even so, comity does not necessarily mean that a foreign state’s interpretation of its own law should control, and “the appropriate weight [given the foreign state’s characterization] will depend upon the circumstances.”[xvi] Indeed, Justice Ginsburg states explicitly that “a federal court is neither bound to adopt the foreign government’s characterization[,] nor required to ignore other relevant materials,”[xvii]especially when the circumstances surrounding the foreign government’s submission are suspicious.[xviii] Having rejected the deferential approach of the Second Circuit in Vitamin C, the Court instead attempts to provide a practical (if entirely ad hoc) framework for analyzing a foreign government’s submission:
Given the world’s many and diverse legal systems, and the range of circumstances in which a foreign government’s views may be presented, no single formula or rule will fit all cases in which a foreign government describes its own law. 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.[xix]
Practical Effects of Animal Science Products
Setting aside any long-term impact the opinion might have on international relations, the ad hoc approach adopted by Animal Science Products is both helpful and problematic. On the one hand, the Court made clear that a foreign government’s disingenuous assertions are not automatically entitled to deference. On the other hand, federal courts were already empowered to reject such submissions even under the highly deferential Vitamin C standard.[xx]
Ultimately, the importance of the Animal Science Products opinion stems less from its resolution of a relatively minor split of authority and more from the difficult questions it leaves unanswered. While the opinion lists a number of “relevant considerations” that should be taken into account when a foreign government offers interpretation of its own laws, the Court failed to provide even general direction on how these considerations should be analyzed. Thus, Animal Science Products opens the door to more frequent appellate challenges of rulings, leaving us to wait for guidance and clarity from future opinions.
[i]138 S. Ct. 1865, 1873 (2018).
[ii]The cases listed by the Court establishing the split of authority differ from those mentioned by the Second Circuit in In re Vitamin C Antitrust Litigation, 837 F.3d 175 (2d Cir. 2016). In comparison to Vitamin C; the Court raises cases from the Seventh, Eleventh, and D.C. Circuit Courts of Appeals adopting less deferential approaches to the foreign law question at issue here. Id. at 1872 n.3 (citing In re Oil Spill by Amoco Cadiz, 954 F.2d 1279 (7th Cir. 1992); United States v. McNab, 331 F.3d 1228 (11th Cir. 2003); and McKesson HBOC, Inc. v. Islamic Republic of Iran, 271 F.3d 1101 (D.C. Cir. 2001), vacated in part on other grounds, 320 F.3d 280 (D.C. Cir. 2003)).
[iii]In re Vitamin C Antitrust Litig., 837 F.3d 175 (2d Cir. 2016).
[iv]Animal Sci. Products, 138 S. Ct. at 1870.
[v]Id. at 1870 and n.1.
[vi]Id. at 1871.
[vii]Id. at 1871–72.
[viii]Under the Second Circuit’s analysis, several cases have interpreted the Court’s decision in United States v. Pink as requiring that courts accept official statements or declarations from a foreign government clarifying its laws as “conclusive,” while others have suggested that such statements or declarations are only entitled to a measure of deference. In re Vitamin C Antitrust Litigation, 837 F.3d at 186–87 (citing cases).
[ix]315 U.S. 203 (1942).
[x]Specifically, Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 313 F.3d 70 (2d Cir. 2002).
[xi]In re Vitamin C Antitrust Litig., 837 F.3d at 189.
[xii]Animal Science Products, 138 S. Ct. at 1872–73.
[xiii]Id. at 1873.
[xiv]Id. (quoting Fed. R. Civ. P.44.1).
[xv]Id. (internal quotes omitted).
[xviii]Id. In context, Justice Ginsburg’s comment that “offer[ing] an account in the context of litigation . . . may be cause for caution in evaluating the government’s submission,” id., seems deliberately ironic.
[xix]Id. at 1873–74.
[xx]See In re Vitamin C Antitrust Litigation, 837 F.3d at 189 (requiring deference only when foreign government’s interpretation is “reasonable under the circumstances presented”).