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Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co. Ltd.

United States Supreme Court

June 14, 2018

ANIMAL SCIENCE PRODUCTS, INC., ET AL., PETITIONERS
v.
HEBEI WELCOME PHARMACEUTICAL CO. LTD., ET AL.

          Argued April 24, 2018

          ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT No. 16-1220

         Petitioners, U.S.-based purchasers of vitamin C ( U.S. purchasers), filed a class-action suit, alleging that four Chinese corporations that manufacture and export the nutrient (Chinese sellers), including the two respondents here, had agreed to fix the price and quantity of vitamin C exported to the United States, in violation of §1 of the Sherman Act. The Chinese sellers moved to dismiss the complaint on the ground that Chinese law required them to fix the price and quantity of vitamin C exports, thus shielding them from liability under U.S. antitrust law. The Ministry of Commerce of the People's Republic of China (Ministry) filed an amicus brief in support of the motion, 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. The U.S. purchasers countered that the Ministry had identified no law or regulation ordering the Chinese sellers' price agreement, highlighted a publication announcing that the Chinese sellers had agreed to control the quantity and rate of exports without government intervention, and presented supporting expert testimony-

         The District Court denied the Chinese sellers' motion in relevant part, concluding that it did not regard the Ministry's statements as "conclusive, " particularly in light of the U.S. purchasers' evidence. When the Chinese sellers subsequently moved for summary judgment, the Ministry submitted another statement, reiterating its stance, and the U.S. purchasers pointed to China's statement to the World Trade Organization that it ended its export administration of vitamin C in 2002. The court denied this motion as well. The case was then tried to a jury, which returned a verdict for the U.S. purchasers.

         The Second Circuit reversed, holding that the District Court erred by denying the Chinese sellers' motion to dismiss the complaint. When a foreign government whose law is in contention submits an official statement on the meaning and interpretation of its domestic law, the court concluded, federal courts are "bound to defer" to the foreign government's construction of its own law, whenever that construction is "reasonable." Inspecting only the Ministry's brief and the sources cited therein, the court found the Ministry's account of Chinese law "reasonable."

         Held: A federal court determining foreign law under Federal Rule of Civil Procedure 44.1 should accord respectful consideration to a foreign government's submission, but the court is not bound to accord conclusive effect to the foreign government's statements.

         Rule 44.1 fundamentally changed the mode of determining foreign law in federal courts. Before adoption of the rule in 1966, a foreign nation's laws had to be "proved as facts." Talbot v. Seeman, 1 Cranch 1, 38. Rule 44.1, in contrast, specifies that a court's determination of foreign law "must be treated as a ruling on a question of law." And in ascertaining foreign law, courts are not limited to materials submitted by the parties, but "may consider any relevant material or source." Appellate review, as is true of domestic law determinations, is de novo. The purpose of these changes was to align, to the extent possible, the process for determining alien law and the process for determining domestic law.

         Neither Rule 44.1 nor any other rule or statute addresses the weight a federal court determining foreign law should give to the views presented by a foreign government. In the spirit of "international comity, " Societe Nationals Industrielle Aerospatiale v. United States Dist. Court for Southern Dist. of Iowa, 482 U.S. 522, 543, and n. 27, a federal court should carefully consider a foreign state's views about the meaning of its own laws. The appropriate weight in each case, however, 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. No single formula or rule will fit all cases, but 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 Second Circuit's unyielding rule is inconsistent with Rule 44.1 and, tellingly, with this Court's treatment of analogous submissions from States of the United States. If the relevant state law is established by a decision of "the State's highest court, " that decision is "binding on the federal courts, " Wainwright v. Goode, 464 U.S. 78, 84, but views of the State's attorney general, while attracting "respectful consideration, " do not garner controlling weight, Arizonans for Official English v. Arizona, 520 U.S. 43, 76-77, n. 30. Furthermore, because the Second Circuit riveted its attention on the Ministry's submission, it did not address evidence submitted by the U.S. purchasers. The court also misperceived the pre-Rule 44.1 decision of United States v. Pink, 315 U.S. 203. Under the particular circumstances of that case, this Court found conclusive a declaration from the government of the Russian Socialist Federal Soviet Republic on the extraterritorial effect of a decree nationalizing assets: The declaration was obtained by the United States through official "diplomatic channels, " id., at 218; there was no indication that the declaration was inconsistent with the Russian Government's past statements; and the declaration was consistent with expert evidence in point.

         The Second Circuit expressed concern about reciprocity, but the United States has not historically argued that foreign courts are bound to accept its characterizations or precluded from considering other relevant sources. International practice is also inconsistent with the Second Circuit's rigid rule. Pp. 7-12.

837 F.3d 175, vacated and remanded.

          OPINION

          GINSBURG JUSTICE.

         When foreign law is relevant to a case instituted in a federal court, and the foreign government whose law is in contention submits an official statement on the meaning and interpretation of its domestic law, may the federal court look beyond that official statement? The Court of Appeals for the Second Circuit answered generally "no, " ruling that federal courts are "bound to defer" to a foreign government's construction of its own law, whenever that construction is "reasonable." In re Vitamin C Antitrust Litigation, 837 F.3d 175, 189 (2016).

         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.

         I

         Petitioners, U.S.-based purchasers of vitamin C (hereinafter U.S. purchasers), filed a class-action suit against four Chinese corporations that manufacture and export the nutrient (hereinafter Chinese sellers). The U.S. purchasers alleged that the Chinese sellers, two of whom are respondents here, had agreed to fix the price and quantity of vitamin C exported to the United States from China, in violation of §1 of the Sherman Act, 15 U.S.C. §1. More particularly, the U.S. purchasers stated that the Chinese sellers had formed a cartel "facilitated by the efforts of their trade association, " the Chamber of Commerce of Medicines and Health Products Importers and Exporters (Chamber). Complaint in No. l:05-CV-453, Docket No. 1, ¶43. The Judicial Panel on Multidistrict Litigation consolidated the instant case and related suits for pretrial proceedings in the United States District Court for the Eastern District of New York.

         The Chinese sellers moved to dismiss the U.S. purchasers' complaint on the ground that Chinese law required them to fix the price and quantity of vitamin C exports. Therefore, the Chinese sellers urged, they are shielded from liability under U.S. antitrust law by the act of state doctrine, the foreign sovereign compulsion doctrine, and principles of international comity. The Ministry of Commerce of the People's Republic of China (Ministry) filed a brief as amicus curiae in support of the Chinese sellers' motion. The Ministry's brief stated that the Ministry is "the highest administrative authority in China authorized to regulate foreign trade, " App. to Pet. for Cert. 190a; that the Chamber is "an entity under the Ministry's direct and active supervision" and is authorized to regulate vitamin C exports, id., at 196a; and that the conspiracy in restraint of trade alleged by the U.S. purchasers was in fact "a regulatory pricing regime mandated by the government of China, " id., at 197a.[1]

         In response, the U.S. purchasers disputed that Chinese law required the Chinese sellers to engage in price fixing. Among other things, the U.S. purchasers noted that the Ministry had not identified any written law or regulation expressly ordering the Chinese sellers' price agreement.[2]They also highlighted a Chamber announcement that the manufacturers "were able to reach a self-regulated agreement . . . whereby they would voluntarily control the quantity and pace of exports . . . without any government intervention." App. 109. In addition, the U.S. purchasers presented expert testimony that the Chinese Government's authorization of a Vitamin C Subcommittee within the Chamber did not necessarily mean that the subcommittee's price fixing was mandated by law.

         The District Court denied the Chinese sellers' motion to dismiss the complaint in relevant part. In re Vitamin C Antitrust Litigation,584 F.Supp.2d 546, 559 (EDNY 2008). That court acknowledged that the Ministry's ami-cus brief was "entitled to substantial deference." Id., at 557. The court, however, did not regard the Ministry's statements as "conclusive, " emphasizing particularly that the U.S. purchasers had submitted evidence suggesting that the price fixing was voluntary. Ibid. The record, the District Court determined, ...


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