A recent summary judgment decision from the U.S. District Court for the Northern District of California has rejected manufacturers’ arguments that principles of international comity require deference to a Korean Supreme Court ruling that overturned conspiracy findings and associated fines levied by the Korea Fair Trade Commission (“KFTC”). The U.S. court’s ruling reinforces the need for international manufacturers to expect and prepare for aggressive civil litigation by U.S. indirect purchasers following investigations by other competition authorities – even if not subject to liability in their home jurisdiction.
The opinion, In re Korean Ramen Antitrust Litig., No. 3:13-cv-04115-WHO, 2017 WL 6623036 (N.D. Cal. Dec. 28, 2017) (Dkt. No. 668), concerns indirect purchaser claims that an alleged conspiracy to fix the price of ramen in Korea also resulted in increased prices for ramen manufactured in the United States. In moving for summary judgment, defendants claimed that plaintiffs only sought to “piggyback” on a 2012 order by the KFTC (finding that certain Korean manufacturers sought to fix the prices of Korean ramen products), which was subsequently overturned by Korea’s Supreme Court. (Dkt. No. 548 at p. 1). Specifically, the Korean Supreme Court was critical of hearsay testimony provided by the leniency applicant and ultimately concluded that evidence of price information exchanges was insufficient to prove an agreement to fix prices, especially in light of other evidence suggesting competitive behavior in certain pricing strategies. (Id. at pp. 4-5). Asserting principles of international comity, defendant manufacturers argued that the Supreme Court of Korea’s ruling undermined the foundation of indirect purchasers’ claims and should not be re-litigated in a U.S. court. (Dkt. No. 541 at pp. 12-13 (“In determining whether to apply adjudicatory comity retrospectively . . . a court should ordinarily defer to the foreign judgment unless the judgment was obtained by fraud, was by an incompetent court or there are other import reasons to refuse to accord it weight.” (citing Hilton v. Guyot, 159 U.S. 113, 205-06 (1895))).
In denying defendants’ summary judgment motions, the court narrowed defendants’ arguments on the scope of comity and the applicability of the Korean Supreme Court’s decision on the U.S. plaintiffs. Specifically, the court determined that an appeal to adjudicatory comity must consider “where the conduct in question took place, ‘conduct’ including not only the actions of the defendants but the injury suffered by plaintiffs.” (2017 WL 6623036 at *14). The court observed a distinction between when comity is necessary (“a situation where, for example, Korean plaintiffs are trying to recover for injuries suffered in Korea at the hands of United States or Korean corporations”), versus the gist of indirect purchasers’ claims (whether defendants’ alleged conduct “impacted sales of products in the United States violate federal and state antitrust and unfair competition laws”). (Id. at *15). According to the U.S. District Court for the Northern District of California, because the KFTC and Korean Supreme Court did not expressly determine claims of U.S. indirect purchasers, international comity was not offended if a U.S. jury were to “weigh the evidence and inferences differently, applying the law of the United States as instructed.” (Id. at *16).
In a prior publication, we noted increasing international cooperation between competition authorities in light of more aggressive enforcement by agencies outside the United States and European Union. Thus, In re Korean Ramen Antitrust Litigation is an example of the U.S. plaintiffs’ bar being lifted by this rising tide – even in the absence of any pending U.S. investigation. This specific decision also demonstrates that such follow-on civil litigation is viable even where a defendant is cleared of liability in a foreign jurisdiction. (Cf. In re Vitamin C Antitrust Litig., No. 13-4791-CV, 2016 WL 5017312 (2d Cir. Sept. 20, 2016) (holding that international comity required reversal of price-fixing verdict against manufacturers acting pursuant to Chinese law regulating the export of vitamin C, but suggesting such outcomes were less likely as China transitions toward a market-driven economy)). Accordingly, companies involved in the international manufacture and distribution of goods should prepare for and expect such actions when faced with foreign investigations. The retention of knowledgeable U.S. counsel early on in the process may provide critical insight regarding jurisdictional differences in procedures and privileges and may impact the corporation’s likely subsequent defense before a U.S. court.
Client Alert 2018-015
