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


Wilson Sonsini Goodrich & Rosati filed the respondents’ brief in the United States Supreme Court on behalf of Hebei Welcome Pharmaceutical and North China Pharmaceutical Group (NCPG) in the closely watched case concerning vitamin C exported from China. In Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co. Ltd., No. 16-1220, the Court will decide the circumstances in which U.S. judges should defer to legal submissions made by the Chinese government. The U.S. Supreme Court is scheduled to hear arguments on April 24, 2018.

In In re Vitamin C Antitrust Litigation, the plaintiffs alleged that the two China-based companies, Hebei Welcome and NCPG, along with several alleged co-conspirators, had engaged in price fixing in violation of U.S. antitrust laws in connection with vitamin C exported from China. The main issue before the Second Circuit was whether the Chinese government had required the challenged conduct, for if the conduct was required then the Chinese companies could not comply with both Chinese law and the U.S. Sherman Act, a circumstance under which U.S. courts decline to exercise jurisdiction based on principles of international comity.

In the lower court, before the U.S. District Court for the Eastern District of New York, the Ministry of Commerce of the People’s Republic of China (MOFCOM) said that the conduct at issue was, in fact, compelled. This marked the first time MOFCOM had ever appeared in a U.S. court. However, the district court declined to credit MOFCOM and rejected the argument. All companies other than Hebei Welcome and NCPG then settled, and trial proceeded against those two, resulting in a $150 million treble damage judgment. NCPG and Hebei Welcome appealed to the U.S. Court of Appeals for the Second Circuit, and the Chinese government submitted an amicus brief on appeal and a formal Diplomatic Note to the U.S. State Department protesting the trial court decision. WSGR was not present at trial, but represented Hebei Welcome and NCPG on the appeal.

In a ruling issued in September 2016, the Second Circuit said that, because the Chinese government filed a formal and reasonable statement in the district court asserting that Chinese law required the defendants to set prices and reduce the quantities of vitamin C sold abroad, and because the Chinese companies could not simultaneously comply with Chinese law and U.S. antitrust laws, the district court should not have exercised jurisdiction. The Second Circuit therefore vacated the district court judgment and remanded the case with instructions to dismiss the plaintiffs’ complaint with prejudice.

HeBei Welcome Pharmaceutical Co., Ltd. manufactures vitamin C and related products in China. Its products include ascorbic acid, sodium ascorbate, calcium ascorbate, coated vitamin C, directly compressible vitamin C, L-ascor-bate-2-polyhosphate, and mineral active water. The company is based in Shijiazhuang.

The WSGR team that prepared the brief on behalf of Hebei Welcome and NCPG included partners Jonathan Jacobson (Picture), Susan Creighton, and Scott Sher, and associates Daniel Weick, Brad Tennis, Justin Cohen, and Elyse Dorsey.

Involved fees earner: Jonathan Jacobson – Wilson Sonsini Goodrich & Rosati; Susan Creighton – Wilson Sonsini Goodrich & Rosati; Scott Sher – Wilson Sonsini Goodrich & Rosati; Daniel Weick – Wilson Sonsini Goodrich & Rosati; Bradley Tennis – Wilson Sonsini Goodrich & Rosati; Justin Cohen – Wilson Sonsini Goodrich & Rosati; Elyse Dorsey – Wilson Sonsini Goodrich & Rosati;

Law Firms: Wilson Sonsini Goodrich & Rosati;

Clients: Hebei Welcome Pharmaceutical Co. Ltd.;

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Author: Ambrogio Visconti