NEW YORK, Jan 26 (Reuters) - A federal judge on
Thursday ruled that purchasers of Vitamin C from four Chinese
companies could pursue as a class claims that the companies
conspired to raise prices by limiting exports to buyers in the
United States.
U.S. District Judge Brian Cogan in Brooklyn certified two
groups of plaintiffs in the long-running litigation brought by
commercial buyers of vitamin C who alleged the price-fixing deal
struck in 2001 violated antitrust laws and sent spot prices of
the vitamin soaring.
The first class can seek monetary damages from three
companies: Hebei Welcome Pharmaceutical Co Ltd, Jiangsu
Jiangshan Pharmaceutical Co Ltd and Weisheng Pharmaceutical Co
Ltd.
An attorney for the plaintiffs, William Issacson of Boies
Schiller & Flexner, previously told Reuters that the plaintiffs'
expert had estimated potential damages to be $58.4 million. If
the first class prevails, they could receive up to three times
the total amount of damages, the judge ruled.
The judge ruled that a second class can seek a court order
forcing those same three companies plus a fourth defendant,
Northeast Pharmaceutical Co Ltd, to stop violating U.S.
antitrust laws barring price-fixing.
At least 139 entities directly purchased Vitamin C from the
defendants since 2001, making them eligible to pursue their
claims as members of each separate class, according to the
ruling.
"The most significant question posed by this lawsuit will
generate common answers among all class members: did the
defendants' price-fixing agreement cause an artificial increase
in the market price of vitamin C?" Judge Cogan wrote. "Because
the answer to this question could not logically vary between
class members, the answer will be applicable to all members of
this proposed class.
Calls for comment to attorneys for the defendants were not
immediately returned Thursday afternoon.
In September, Cogan rejected defendants' key defense -- that
they were required under Chinese law to coordinate production
and prices of their exports. The defendants had argued that they
should be shielded from the U.S. lawsuit under a doctrine which
protects foreign companies that are compelled by their own
governments to go against U.S. law.
In 2006, China's Ministry of Commerce filed a brief
supporting the defendants' argument, saying that a ruling
against the defendants would "improperly penalize" the companies
for "the sovereign acts of their government and would adversely
affect implementation of China's trade policy."
But Cogan disagreed in last year's ruling, writing that "the
Chinese law relied upon by defendants did not compel their
illegal conduct."
By November 2001, the defendants had captured more than 60
percent of the global market for Vitamin C, thanks in part to
their low manufacturing costs, according to the September
decision. China's share of Vitamin C imports to the U.S. rose
from 60 percent in 1997 to more than 80 percent by 2002.
The case is In re: Vitamin C Antitrust Litigation, in the
U.S. District Court for the Eastern District of New York, No.
06-md-1738.
For the plaintiffs: William Isaacson, Alanna Rutherford, and
Tanya Chutkan of Boies, Schiller & Flexner, and James Southwick
and Suyash Agrawal of Susman Godfrey, and Michael Hausfeld and
Brian Ratner of Hausfeld.
For the defendants: James Serota and Kenneth Lapatine of
Greenberg Traurig for Northeast Pharmaceutical Group Co. Ltd.;
Richard Goldstein and Stephen Bomse of Orrick, Herrington &
Sutcliffe for Jiangsu Jiangshan Pharmaceutical Co. Ltd.; Charles
Critchlow, Darrell Prescott, and Douglas Tween of Baker &
McKenzie for Hebei Welcome Pharmaceutical Co., Ltd.; and Daniel
Mason, Joseph Bell and Jiangxiao Hou of Zelle Hoffman Voelbel &
Mason for Weisheng Pharmaceutical Co Ltd.
(Reporting by Jessica Dye)
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