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

904 F. Supp. 2d 310
CourtDistrict Court, E.D. New York
DecidedNovember 16, 2012
DocketNos. 06-MD-1738 (BMC)(JO), 05-CV-0453
StatusPublished
Cited by6 cases

This text of 904 F. Supp. 2d 310 (Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co.) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co., 904 F. Supp. 2d 310 (E.D.N.Y. 2012).

Opinion

MEMORANDUM DECISION AND ORDER

COGAN, District Judge.

This litigation arises out of allegations that defendants, several Chinese vitamin C manufacturers, conspired to “suppress competition by fixing the price and controlling export sale volumes of vitamin C offered for sale to customers in the United States and elsewhere.” Defendants move to dismiss, for lack of subject matter jurisdiction, the Third Amended Complaint insofar as it refers to claims by foreign purchasers of vitamin C. Defendants also move to exclude or strike evidence related to foreign purchasers, including the inclusion of foreign purchaser claims in the damages calculations performed by Professor Bernheim, plaintiffs’ expert. Finally, defendants move to exclude or strike evidence referring to sales made by two non-defendants that are alleged to be co-eonspirators. For the reasons set forth below, defendants’ motions are denied.

BACKGROUND

The Court previously certified a class of Direct Purchaser plaintiffs who “directly purchased vitamin C for delivery in the United States, other than pursuant to a contract containing an arbitration clause, from any Defendants or their co-conspirators, other than Northeast Pharmaceutical (Group) Co. Ltd., from December 1, 2011 to June 30, 2006” (the “Direct Purchaser Damages Class”). Defendants argue that “taken literally, this class definition would sweep in claims by foreign purchasers involving solely foreign sales by foreign defendants.” Specifically, in a number of cases, defendants sold vitamin C for delivery in the United States directly to businesses located in Japan, China, Canada, or Europe, and those businesses, in turn, resold the vitamin C to U.S. customers.

[314]*314Defendants assert that sales to these foreign purchasers are outside the scope of the antitrust laws and any U.S. entities that acquired vitamin C through an intermediary foreign purchaser are, in fact, indirect purchasers and are thus excluded from the Direct Purchaser Damages Class.1 Defendants take issue with the damages calculations performed by plaintiffs’ expert, Professor Bernheim, because he relied on U.S. customs data regarding vitamin C deliveries through U.S. ports, even though some of these deliveries were the result of foreign resales of vitamin C to U.S. customers rather than direct sales by defendants to U.S. customers.

Plaintiffs paint a very different picture of the foreign purchasers. They argue that what defendants “call ‘foreign purchasers’ are either multinational corporations with a substantial presence in the United States or overseas brokers purchasing vitamin C delivered in the United States” and what defendants “call ‘foreign sales by foreign defendants’ are actually shipments of vitamin C by Defendants directly from China to ports in the United States, without stops in any other country.” The purchases were not foreign purchases that were then resold to U.S. buyers, according to plaintiffs. Rather, all of the purchases were made directly from defendants for delivery in the United States. Plaintiffs offer two examples of these kinds of purchases.

One example involves Mitsubishi International Food Ingredients, Inc. (“MIFI”), an Ohio-based subsidiary of the Japanese multinational Mitsubishi Corporation. In 2005 MIFI contracted to purchase $63,000 worth of vitamin C from one defendant, Weisheng, which agreed to ship the vitamin C directly from China to Pennsylvania. Two months later, MIFI purchased $61,200 of vitamin C, again to be shipped directly from China to Pennsylvania, but the contract for this transaction was executed by a Mitsubishi executive in Japan.

The second example involves instances where a U.S. company worked with a foreign broker to purchase vitamin C for delivery in the U.S. Although Ranis purchased vitamin C directly from defendants, it also used the services of a Canadian broker, Pacific Resource Trading. Other contracts offered by defendants show that He-Ro Chemicals Ltd., a Hong Kong-based broker, purchased vitamin C from defendant Hebei to be shipped directly from China to California. Lastly, a British Virgin Islands company, Sannex Products Ltd., purchased vitamin C from Aland, a former defendant (it has settled), to be shipped directly to Charles Bowman & Co. in Michigan. Indeed all of the exhibits that defendants provide show U.S. locations as the destinations for the vitamin C to be delivered.

DISCUSSION

The core of defendants’ argument is that the foreign purchaser claims fall outside of the Court’s subject matter jurisdiction and are barred by the Foreign Trade Antitrust Improvements Act, 15 U.S.C. § 6a (“FTAIA”). The FTAIA “excludes from the Sherman Act’s reach much anticompetitive conduct that causes only foreign injury.” F. Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 158, [315]*315124 S.Ct. 2359, 2363, 159 L.Ed.2d 226 (2004).

1. The FTAIA and Jurisdiction

There is currently an unsettled legal question concerning whether the FTAIA “affects the subject-matter jurisdiction of the district court or if, on the other hand, it relates to the scope of coverage of the antitrust laws.” Minn-Chem, Inc. v. Agrium, Inc., 683 F.3d 845, 851 (7th Cir.2012). A line of recent Supreme Court cases has emphasized that questions about a statute’s reach are merits issues, not issues of subject matter jurisdiction. See Morrison v. Nat’l Australia Bank Ltd., — U.S. -, 130 S.Ct. 2869, 2877, 177 L.Ed.2d 535 (2010) (“But to ask what conduct § 10(b) [of the Securities Exchange Act] reaches is to ask what conduct § 10(b) prohibits, which is a merits question. Subject-matter jurisdiction, by contrast, refers to a tribunal’s power to hear a case.”) (internal quotation marks omitted). See also Arbaugh v. Y & H Corp., 546 U.S. 500, 516, 126 S.Ct. 1235, 1245, 163 L.Ed.2d 1097 (2006) (“when Congress does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as nonjurisdictional in character.”). In light of this line of cases, the Seventh Circuit has held that “the FTAIA sets forth an element of an antitrust claim, not a jurisdictional limit on the power of the federal courts.” Minn-Chem, 683 F.3d at 852. The Third Circuit has also concluded that “the FTAIA constitutes a substantive merits limitation rather than a jurisdictional limitation.” Animal Sci. Prods., Inc. v. China Minmetals Corp., 654 F.3d 462, 467-68 (3d Cir.2011).

Since Morrison, however, the Second Circuit has not opined on whether the FTAIA is jurisdictional. Under pre-Morrison Second Circuit law, the FTAIA was considered to be a limitation on the subject matter jurisdiction of the federal courts. See Sniado v. Bank Austria AG, 378 F.3d 210, 212 (2d Cir.2004) (“affirmfing] the district court’s dismissal of [the] complaint for lack of subject matter jurisdiction under § 6a(2) of the FTAIA”); Filetech S.A. v. France Telecom S.A., 157 F.3d 922 (2d Cir.1998). Even

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
904 F. Supp. 2d 310, Counsel Stack Legal Research, https://law.counselstack.com/opinion/animal-science-products-inc-v-hebei-welcome-pharmaceutical-co-nyed-2012.