Supreme Court Backs Trump, Vitamin Purchasers in China Clash

(Bloomberg) -- The U.S. Supreme Court revived the possibility of a $148 million price-fixing award in favor of vitamin purchasers, agreeing with the Trump administration in a clash against the Chinese government.

Ruling unanimously against the Chinese vitamin makers targeted by the suit, the justices said U.S. courts aren’t bound by China’s assertion that the companies were following that country’s laws. The ruling reversed a federal appeals court decision that had thrown out the award.

President Donald Trump’s administration helped make the case for the purchasers during the April argument session, while China’s Ministry of Commerce backed that country’s companies. The showdown came as the two countries were threatening to slap tariffs on each other.

The fight stemmed from a 2005 lawsuit filed by two U.S. vitamin C purchasers, Animal Science Products Inc. and Ranis Co. They claim North China Pharmaceutical Group Corp. and its manufacturing unit, Hebei Welcome Pharmaceutical Co., were part of a group that used a Chinese membership organization to fix the prices and quantities of vitamin C exported to the U.S.

China contended that its companies were simply following their country’s export laws and that U.S. courts generally must defer to a foreign nation’s interpretation of its own laws.

Writing for the court, Justice Ruth Bader Ginsburg rejected that argument, saying a U.S. 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."

The ruling sent the case back to a federal appeals court in New York.

The Trump administration didn’t take a position on the requirements of Chinese law. But the Justice Department said U.S. courts have broad latitude to consider various sources when interpreting foreign law and don’t necessarily have to accept the foreign government’s view.

The case is Animal Science v. Hebei Welcome Pharmaceutical, 16-1220.

©2018 Bloomberg L.P.