COVID-19 and Suing the Chinese Communist Party (CCP) and the Chinese Government?

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Dean Reuter:  Welcome to Teleforum, a podcast of The Federalist Society's practice groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group teleforum calls, become a Federalist Society member today at fedsoc.org.

 

 

Dean Reuter:  Welcome to The Federalist Society's Practice Group Teleforum conference call. I'm Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society.

 

       As always, please note that all expressions of opinion are those of the experts on today's call. Also, this call is being recorded for use as a podcast in the future and will likely be transcribed.

 

      We're very pleased to welcome to Teleforum today four featured guests, including a moderator for this program. Our moderator, Karen Lugo, is the Founder of Libertas-West Project. She's going to moderate and she will introduce our other speakers. But, as always, we'll be looking for questions from the audience, so please have those in mind for when we get to that portion of the program.

 

      With that, Karen Lugo, the floor is yours.

 

Karen Lugo:  Thank you, Dean. First, I would like to say thank you to all of our presenters today for their participation in the call. I will provide relevant biographical information as each commentator is introduced, but their full bios, as well as important supplemental information that relates to today's discussion, will be available at The Federalist Society announcement page for this teleforum.

 

      This conversation, as we all know, takes place against a constantly developing background. By some counts, the COVID-19 pandemic has infected more than 6 million people, the worldwide death toll is over 380,000, and the economic devastation is being measured in trillions of dollars.

 

      An Australian study that suggests laboratory manipulation of the virus is currently under peer review. On the diplomatic and international relations front, Victor Davis Hanson describes China's current modus operandi as, "If it's going to be blamed for spreading the virus due to its deceit anyway, it might as well not let such a pandemic go to waste." The Chinese reaction has devolved from "So what," as he says, to the current, "What exactly are you going to do about it?"

 

      So, today, we will look at several potential avenues for doing something about it. We will start with Attorney Matthew Moore of the Berman Law Group. His work includes national class actions and mass torts, and he provides complex litigation strategy and support.

 

      Matthew, you're up first.

 

Matthew Moore:  Thank you, Karen. And I appreciate being here today.

 

      I want to go back to March 11, which, at this point, seems like a lifetime ago considering everything that's happened since then. I was in Las Vegas. We were opening an office in Las Vegas, and I was there with my colleague, Jeremy Alters, and we were literally watching the strip start to empty and shut down, which is something that never happens. And, at the same time, we received a call from Russell and Ted Berman, the owners of the firm, and they said we have to sue China.

 

      And my first thought was, "That sounds very difficult." I'm not sure how exactly you do that. But that same day, a Chinese general took to Twitter and started tweeting that the U.S. military was behind the virus, that they had sent troops to Wuhan, or sent people to Wuhan, to purposely spread the virus. And it was just becoming very infuriating, and I got fully on board with the concept.

 

      But I only had about eight hours, initially, to draft the complaint, and we wanted to get it filed. We wanted China to be on notice. And so I knew, at that time, that there would be a need to amend, which we did early in May. But here we are on June 3 and 42 million people are out of work, 108,000 people are dead, millions of businesses may never recover, and trillions of dollars in losses have happened in our economy.

 

      So saying that the coronavirus pandemic is an unprecedented event does not do justice to the position we find ourselves in. It's definitely a crisis of epic proportions. Whether it's a political solution or a court-driven solution, it must be addressed, and China is the ultimate source of this wrong.

 

      So when we amended, I knew that we had to develop our jurisdictional allegations a little more fully and also include more of the facts that have come to light since the filing.

 

      I'm going to address the jurisdictional issues in a moment, but factually, the need for action, to me, has only become more persuasive. When I drafted the complaint, the wet market was the dominant theory, but I found it compelling that China's only Level 4 pathogens lab, which was devoted to the study of coronaviruses, was in Wuhan and, coincidentally, also near the seafood market that has been blamed.

 

      And, at the time, some considered that a conspiracy theory. But, given what we know now, I think it's impossible to have a conversation about the virus and not discuss the lab. The lab's director, Dr. Shi Zhengli, is known as "the bat lady of China," and she's made it her life's work to study and manipulate bat coronaviruses. She's published this work extensively in the scientific journal Nature. And, in fact, in February, she published another article stating that COVID-19 was a 96.2 match to one of the bat viruses she has studied or worked with.

 

      At this point, now, she's saying, "Well, we have no live samples of it," but I've stopped, personally, believing anything that comes out of China in relation to the virus.

 

      The other treasure trove of facts came to us from a Dr. Wang Huiyao. He's a Chinese-born scientist now working in Germany. He's very well respected by those in China who wish there was more transparency from their government. He's exposed their environmental disasters. He's exposed the massive defects in their Three Gorges Dam project. So he's a well-known man.

 

And he was able to provide us with a timeline of how the infection developed in December and early January, as well as copies of the official notices that were given to the lab and the doctors from the CCP people, local agents, to stay quiet.

 

      And one thing that has not been reported much—and this also came from Dr. Wang—is that, after the SARS outbreak in 2003, China spent billions of dollars building an early detection system that was managed by, or is managed by, their equivalent of the CDC.

 

      Dr. Wang was able to provide the details of how the CCP purposely prevented that system from being used. It's meant to -- whenever there's more than three cases of anything that's out of whack with what should be there—any types of pneumonia, anything SARS-related—it's supposed to be reported so that the government can act within hours rather than days.

 

      Well, the CCP told the CDC to basically stay out of it, and they prevented the system from being used, and they actively concealed the virus and failed to contain it and warn about it when it knew in December how dangerous it would be. And, then, of course, we know what happened.

 

      So I can appreciate that a suit like this, in light of the FSIA, is not an easy endeavor. And, when we amended our complaint, we did allege that the CCP is a distinct and nongovernmental entity and not subject to sovereign immunity. And we also included the Wuhan Health Commission and the Hubei Health Commission. And the Wuhan Health Commission, based on what we learned from Dr. Wang, seems very instrumental in what happened, and they are controlled by the CCP.

 

      When you read § 1603 of the FSIA, it very clearly states that sovereign immunity applies to a foreign state or its agents, its organs, its instrumentalities. The case law that has developed around this always analyzes this in terms of instruments of the state, political subdivisions of the state; things that are subservient to the state.

 

      When you look at the CCP and how the CCP is developed, no one describes it as subservient. No one describes it as a subdivision. If anything, they're on top of the government. They are in a position superior. And this has not been fully tested in our courts. There have been a few random cases, and there is a court in Michigan that would agree with our position, but it hasn't been tested. But textually, it doesn't fall into what is a political subdivision, agent, or organ, at least in my opinion.

 

      But, apart from the CCP, assuming that we have to deal with sovereign immunity, we have at least three exceptions.

 

      First, under § 1605, we have alleged the commercial activity exception and the noncommercial tort exception. We also have alleged an exception in our amended complaint under 1605(b), which was enacted in 2016, largely in response to court cases that have sprung up around 9/11.

 

      But, whether it is because of China's promotion of the exotic animal trade, which is a $75 billion industry, or because of the Wuhan lab, China acts like any market participant in both of these things. It raises animals sold in the markets and, as far as the lab is concerned, the China Academy of Sciences expressly touts their joint ventures and their prowess in acting like a private enterprise in the development of drugs, intellectual property, their joint ventures with foreign companies such as U.S. pharmaceutical companies. Either enterprise, if it is a source of the virus, has now had a direct effect on the United States.

 

      For the tort exception, China allowed 5 million people to leave Wuhan when it knew that many of them would be harboring the virus. And many of those people got on direct flights to major U.S. cities. Those people were, in effect, as we've said other places, viral bombs that triggered torts here on our soil. And the discretionary act bar that has been held not to apply, where a foreign state has committed egregious acts against the precepts of humanity and/or the failure to warn of an inherent danger, which I think is quite obvious here.

 

      We've also invoked the 1605(b) exception because these acts were dangerous to human life, and we also believe that it'll be demonstrated that they were political.

 

      And just two weeks ago, on this topic generally, the Supreme Court issued its opinion in Opati v. The Republic of Sudan, and Justice Gorsuch made it clear that sovereign immunity is a gesture of grace and comity, and that Congress has the authority to shape its boundaries, as it did there, allowing punitive damages to be applied to terrorist acts that were committed before the law was amended. And there are members of Congress that are acting to amend the FSIA now, and we are certainly supporting those efforts.

 

      I understand the delicate nature of diplomacy, but there is nothing delicate about what China has done here, and there needs to be nothing delicate about our response. And, if not now, when? This pandemic transcends historical views of sovereign immunities. It wasn't designed to protect what has happened here. I don't think we can suffer more ill effects than we have already suffered at the hands of what's happened.

 

      I also wanted to touch on another case that was brought by the State of Missouri, just quickly. The Missouri suit actually combines our two lawsuits. We filed a PPE hoarding case on April 8 and the Missouri suit combines both of those. It's fundamentally different on one level because it is suing to seek redress for state interests that have been harmed, as well as for its citizens.

 

And, of course, we can't act on behalf of states' interests, but any affected Missourians would certainly be members of our classes. They have alleged different sovereign immunity allegations. I think we've made them more refined because we've alleged the CPP is definitely a distinct entity. They also have different defendants. We've brought in the Wuhan Health Commission and the Hubei Health Commission because we believe they played key roles. But it'll certainly be interesting to see how this develops and how these cases proceed.

 

Karen Lugo:  Thank you, Matthew. Next, we will hear from Tatiana Sainati. She is an Associate at Wiley Law. She specializes in complex commercial litigation and cases under the Foreign Corrupt Practices Act. Tatiana has served as a legal advisor to Judge Rosemary Barkett on the Iran-United States Claims Tribunal in The Hague. She also advised on complex, politically sensitive, state-to-state cases. So we will now turn to Tatiana.

 

Tatiana Sainati:  Thank you so much. And thank you to everyone for having me here today. It's a privilege to speak with you all, and these cases certainly raise a fascinating host of legal and political questions.

 

      I certainly agree that some response is required, but I will admit to being skeptical that these lawsuits are the best route to achieving that end.

 

      I think, in terms of some of the legal hurdles that I think these lawsuits will face, first, is the jurisdictional issue and the issue of defendants' immunity. From my perspective, adding the Communist Party is probably not going to circumvent the immunity of the Chinese government that the Foreign Sovereign Immunities Act provides.

 

      There are a couple of cases already, one from a Florida District Court, holding that the People's Communist Party of Cuba is a foreign state or subdivision thereof. That case relied on a New York court holding that China Central Television is a foreign state because it was the mouthpiece off the Chinese Communist Party.

 

I think, when you look at these cases, what the courts are doing is seeing what the relationship is and in what way the entity alleged acts for the state concerned. And whether it's China acting on behalf of the Communist Party or the Communist Party acting on behalf of China, I think it will be a hard case to prove that those two entities aren't really one and the same.

 

      If we are in a world where we're going to have to look at one of the exceptions to foreign sovereign immunity in the Act, again, I think it's a pretty high hurdle, in these circumstances, to come within one of those exceptions.

 

      When it comes to the commercial activity exception, the key issue there is typically what acts is the complaint based upon. In this case, a lot of the acts in the various complaints that have been put forward are based on China's responses to the COVID virus. And that's the government's response to a public health crisis, which is peculiarly sovereign in nature.

 

      If you look at the specific acts—issues like censoring doctors, messaging to the public, deciding who to let in and out of the country, deciding whether or not to shut down borders and which borders to shut down and when—those are all the types of acts that can only be performed by a state acting as a state. They're not acts that an individual can perform in his or her own name.

 

      And I think the same issues are going to arise with the tortious activity exception. So most of the courts to have looked at this exception have said that the entire tort has to take place in the United States for that exception to apply.

 

The quintessential example would be a foreign diplomat running someone over while speeding in the United States. That's a tort that takes place entirely in the United States. And I think a lot of the acts in these complaints took place in China, so they won't fall cleanly within it.

 

      There was another thing that struck me in looking at some of the tort allegations specific in these complaints, and that's this idea that China, perhaps, owes a duty to the citizens of the United States, which got me wondering whether that is reciprocal. Does the United States also owe a duty to Chinese citizens? Can we be sued for things that our government does by the citizens of China if they think that it's caused them harm?

 

      And I think this really gets to a larger policy issue with some of these cases and pursuing China's actions in our court system. Foreign sovereign immunity is a matter of grace and comity, to be sure, but it's a doctrine that a bedrock of international relations and one that we have, as a nation, recognized long before the enactment of the Foreign Sovereign Immunities Act. It's a doctrine that we have embraced since our founding.

 

      It was Chief Justice Marshall in The Schooner Exchange in 1812 who said, and I'll quote it, "The perfect equality and absolute independence of sovereigns, and the common interest impelling them to mutual intercourse and interchange of good offices with each other, has given rise to a class of cases in which every sovereign is understood to waive the exercise of a part of that complete exclusive territorial jurisdiction which has been stated to be the attribute of every nation."

 

      Justice Marshall was talking about immunity and the granting of immunity to foreign sovereigns. That's a reciprocal obligation. It's something that the United States, in our courts, give to China so that China will give it back to us.

 

      To be sure, Congress can decide to eliminate some of the jurisdictional hurdles in the Foreign Sovereign Immunities Act by, for example, enacting the COVID Act and allowing U.S. citizens to sue China in relation to the COVID crisis. But because of the reciprocal nature of sovereign immunity, if we do that, we are risking surrendering our national sovereignty abroad.

 

      In 2016, we passed the Justice Against Sponsors of Terrorism Act, which was legislation allowing victims of state-sponsored terrorism to sue foreign governments, and immediately after its passage, Senator Mitch McConnell warned about the unintended ramifications that Act could have.

 

      And I think we're already getting whispers of some of the unintended ramifications these suits could have. China has said it would sue the United States for our response to H1N1, the AIDS epidemic, to the 2008 financial crisis. So I think we really have to ask ourselves whether we're willing to risk our national sovereignty; whether we're willing to allow the United States to be hailed into Chinese courts.

 

      Again, I fully agree that we need to figure out a response to this crisis, but I'm not sure that the lawsuits are the surest route. Thank you.

 

Karen Lugo:  Thank you, Tatiana.

 

      We will now hear from Scott Kieff, who was International Trade Commissioner for four years. He is now the Fred C. Stevenson Research Professor of Law at George Washington University, and he has worked with other partners to produce a statute that's focused on COVID-19 antitrust violations.

 

      Professor Kieff, you have the floor.

 

Prof. Scott Kieff:  Well, I join my colleagues in thanking everybody for joining us for this and to The Federalist Society for hosting the discussion and to the other panelists for sharing ideas.

 

      I agree, this stuff is tricky. And I think we're all interested in it on a range of levels— intellectually, professionally—because, if you're a practicing lawyer, these are great puzzles to puzzle through. Of course, personally, because we might fall on one or more sides of some of these issues now or later.

 

      But at the same time, sometimes it can help to be simultaneously creative and careful. Creative in thinking about a range of options and careful in just being specific and detailed about the pathway of the logic.

 

      So let me try to weave a path in between the two sets of ideas that have already been offered—one, in effect, in favor of lawsuits against China and one expressing a lot of reservation or skepticism about those ideas—and instead suggest a whole range of middle-ground solutions that are related to the first set of lawsuits mentioned, conceptually, but slightly different in a couple of ways.

 

      So, first of all, for actions against a nation state, it's always important to keep in mind that a huge amount of public international law is explicitly made available for the very purposes that are largely carved out of domestic law. So while it might be that a suit against a country is not allowed inside a U.S. court, a suit between countries in international tribunals is what those international tribunals are set up for.

 

      So I think we should notice that there have been a number of lawsuits over the last many years, some, in fact, involving activities of China, but not only China. And so we should flag public international law and other forms of international law and international tribunals.

 

      The other thing we should flag is lawsuits that arise out of what a state actor might have done. So some former colleagues, when I used to be at the McKool Smith Firm, and I had put an effort together to help those victims of the atrocities in the Sudan. And that is, in fact, a case that is currently underway. It's still underway. I was involved in the phase in which it went up on appeal to the Second Circuit and got, as we requested, remanded back to the district court. The district court in that case had tried to toss the action out under a related doctrine to sovereign immunity, the so-called act-of-state doctrine.

 

      And this is a case that's been written up in a number of different settings. It's the Kashef v. BNP Paribas case, and it highlights that actions, like those being discussed by Matt and his colleagues, can be brought against commercial actors that are acting in furtherance of what the nation state was doing. So in the case of the Kashef case, the allegations against BNP are that it was financing the operations of the nation state.

 

      So in the case of China, it is worth recognizing that China has a pretty muscular commercial set of activities around the world, and those activities park a lot of valuable stuff, including money, in a lot of jurisdictions and act through a lot of financial and business firms. And I just think it's worth keeping in mind lawsuits that could be brought against those more commercial actors.

 

      Similarly, as Karen mentioned, I have explored, in other settings, including in my former role as a commissioner at the ITC, how to think about what China does when it is coordinating price and output up and down the value chain of production for a particular good. In the particular case that I had written about in that role, it was steel, but we can imagine a range of manufactured goods, a range of raw materials, a range of services -- all of those markets have fluctuated quite a bit in the days of COVID. And if it turned out there were old-fashioned collusion going on in price or quantity or quality, there could be a range of traditional antitrust-type causes of actions that could be brought in a range of jurisdictions inside the U.S. and other similar nation states, the U.K. in particular, that would allow pretty traditional thinking to get to pretty significant causes of actions.

 

      Yes, in response to the Financial Times' legal hackathon, some colleagues and I at GW and some friends at the Constantine Cannon firm, thinking about life through the lenses of our work that we've all done individually on neutral services, compliance services, and whistleblower cases, we thought about suggesting a whistleblower antitrust statute, and that's another topic we certainly should consider.

 

      So there are a whole range of topics that weave a middle ground between the two positions already suggested. All of these raise some complications, including some strategy questions. But I think we can be careful to highlight some very straight-down-the-middle of the strike zone, well-established consensus views that provide a lot of confidence that, at least the types of actions I've been describing, are very, in a sense, creative but rather, at the same time, very mundane or ordinary in applying well-established concepts.

 

      So I'll stop there and open it up for questions because I do recognize that there are a lot of wrinkles to all of this, but I hope that helps provide food for thought.

 

      Let me also just invite -- I have a number of materials to provide folks if they're interested in follow up. They can ping me. We can provide on the webpage for the teleforum or direct by email sites to support a lot of this stuff. Thanks so much.

 

Karen Lugo:  Thank you very much, Scott. We will move to just a very, very quick rebuttal response round.

 

I did want to pose two questions. And I won't assign them, so if anyone would like to pick up on answers to these, I would appreciate it.

 

      First of all, Senator Marsha Blackburn has introduced the Stop COVID Act. And I'm wondering, just briefly, if something like this leads to another kind of exception to sovereign immunity in the sense of something like strict liability and if that is the case, what happens when a country, like the United States, were to develop, say, a bioweapon that was defensive, at least in intention? And so, would there be, when it comes to the sense of strict liability and accident -- my question is what are we stepping into there?

 

      And, then, secondly, most are probably aware that the Court of Arbitration in The Hague recently ruled for the Philippines in a major case against Beijing’s claims in the South China Sea. This has resulted in kind of a non-event for China. So if there were even to be a path to any kind of recourse, what is the potential for making China comply?

 

      So I will start in the same order of original presentation. So, Matthew, you have like two minutes. Thank you.

 

Matthew T. Moore:  Thank you. And, yes, for the rebuttal portion. So I actually do want to touch on something that Tatiana said about the issue of the CCP and whether our courts have recognized that it's a separate entity.

 

      The way the case against the China State Television has been reported, there has been a frequent misconception, I think, about that case. There's a line in the case that is actually a statement of the court of what the plaintiff said, where the plaintiff said that China State Television was a mouthpiece of the CCP. And that is the line that has been used and relied upon in these other cases.

 

However, the actual holding of the case, both in the district court that's unpublished and in the appellate court, was that the China State Television was a mouthpiece and an instrumentality of the PRC, of the government, and not the CCP.

 

      The case in Florida about Cuba basically just repeated that line. It did not go into great analysis. And, in fact, that Florida case was pro-plaintiff. They were finding that the Party was responsible because they were going to allow the plaintiff to get damages.

 

      So I don't think that the contours of how the CCP has been treated has actually, truly, been analyzed. And, as I said, there is the Michigan case, which would agree with our position.

 

      Also, just quickly, I'm not trying to be flip, but it's easy to go down these slippery slope arguments about diplomacy and do we want China suing us? Well, I would say, we're trying to give the man on the street an opportunity to become whole. We think that China has more to lose than we do in any fight, and if they want to sue us, then sue us. I think our court systems can handle this.

 

Tatiana Sainati:  Yeah. So the question on the Stop COVID Act, I believe that, yes, that would, in fact, create another statutory exception to sovereign immunity. And I do think that it does open the door for other states to decide that they don't want to respect America's sovereign and America's immunity in their court systems.

 

And I don't really think this is a slippery slope or a parade of horribles argument. There is a reason that the doctrine of foreign sovereign immunity has been a bedrock of our policy as a country since our founding. It's because it's necessary to our functioning in a global community.

 

      And I agree with some of the ideas about using international forums as a way to hold China accountable. I do hesitate to cavalierly overturn a longstanding doctrine of respecting foreign sovereign immunity in our courts as a way to make Americans whole after this crisis because we have a lot to lose in China, too. I believe there's over $100 billion in U.S. interests invested in China that they could go after if they decided to sue us. And it's just not necessarily the most fruitful way to engage in these circumstances, from my perspective.

 

      Thank you.

 

Karen Lugo:  Professor Kieff?

 

Hon. F. Scott Kieff:  So I loved your comment about the Philippines case. That certainly was on my mind in making my suggestion as one of the examples.

 

I think everybody agrees that, so far, the formal response by China to cases like that is to formally ignore them. That is to say, to refuse and reject even the power of the body rendering the judgment.

 

At the same time, China wants to do business around the world politically, economically, militarily, and so forth, so China does, in its behavior, yield to judgments like that, even when formally saying it does not.

 

      So I think the first thought to bear in mind is just because they say they are ignoring it doesn't mean they are ignoring it.

 

      The second thought is we, the United States, have been supporting many of these international tribunals for quite some time without getting any direct benefit from them. I think we've been supporting them out of a sense that they're good for the world and good for the world we all want to live in. But I think we can walk and chew gum at the same time on that front. It could be that these bodies are simultaneously good for the world and amenable to our own claims as well.

 

Karen Lugo:  Thank you. Dean, I think we're ready to go to audience question and answer.

 

Dean Reuter:  One question pending, so let's -- two questions pending now, so let's check in with our first caller. Go ahead, caller from 216.

 

Juscelino Colares:  Hi, yeah. Juscelino Colares, Cleveland, Ohio. I'm calling to ask a question. I've enjoyed very much the presentations.

 

But you discussed issues that involve the potential merits of a lawsuit. I would love to hear a little bit more about what might be the concerns from a federal judge's perspective in terms of his or her prudential concerns in exercising jurisdiction in a case like this where the Legislative and the Executive Branch have still not formulated a complete approach?

 

There hasn't been a Legislative commission or study yet on COVID-19 to make a determination in the finding potential statutory changes. So is it likely that a federal judge -- and I'm not keeping up with the Florida lawsuit, or suits.

 

My question then boils down to whether a federal district court judge would be reluctant to exercise jurisdiction for cases like this at this stage? Granting, in light of the fact that the political branches has not yet made findings, and given that it's possible that the Foreign Sovereign Immunities Act may actually undergo changes that might make federal courts more friendly to such suits.

 

So I would just like for the participants to go into this discussion of whether a federal judge might want to refrain from exercising jurisdiction, deferring to the political branches in the sense that they haven't yet acted.

 

Matthew T. Moore:  Hi, this is Matthew. I just wanted to address, at least in our case and with Judge Ungaro. Judge Ungaro has set, at this point, a status conference for September 4. She has recognized that we started our service of process and that takes time. So I think, as we get into the summer, there's going to be more chance for things to develop.

 

Certainly, with Congress -- and we'll certainly get a better sense of as we get more into this, of the aftermath of this first wave of where we've been. I think there'll be time for this to develop and see what Congress does.

 

      Going back to Justice Marshall and the original sovereign immunity complaint, the other thing that Justice Marshall said was that there's no inherent right to immunity. It is a function of grace and comity. And Justice Gorsuch, just two weeks ago, made it very clear that sometimes grace and comity gives way to what Congress wants to do.

 

      So I think there's still time to see what's going to happen legislatively. As I said, we'd welcome the changes. I would think that the judge might be inclined to possibly abate or see what happens, but I don't anticipate there's going to be an issue with the ruling.

 

Karen Lugo:  Dean, I think we're ready for the next question.

 

Dean Reuter:  Checking in now with the caller from 949. And it looks like we'll still have two questions after this one. Go ahead, caller.

 

John Shu:  Hello, everyone. It's John Shu in Newport Beach, California. Thank you very much for your great presentation.

 

      In all honesty, what would a plaintiff do if the Chinese government were just to shrug its shoulders, even if a court was inclined to grant everything that a plaintiff would want, including a default judgment?

 

Matthew T. Moore:  Well, we've done this before. We've sued China before. We sued China in the Chinese drywall case, and in that case, China's state entities—the state-owned entities that were manufacturing drywall—did not want to show up to the table. But the judge in that case made it clear that he was going to start attaching assets that were sitting nearby in his harbor. He sits in New Orleans. And the Chinese entities showed up, and they did argue about jurisdiction. And one of those entities ended up having to answer to the complaint and ended up settling.

 

John Shu:  Yes, but are you speaking of a New Orleans case?

 

Matthew T. Moore:  Yes.

 

John Shu:  Okay. So, with respect, there's a huge difference between the Taishan Gypsum Company or a [inaudible 00:40:40] company. There's a huge difference between that and the actual CCP. And that's where I'm a little concerned for the plaintiff's position.

 

Matthew T. Moore:  But I thought your question was if there is a default, what happens? I think that, in that case, that you can attach assets in the United States. There is definitely a mechanism for that. There have been mechanisms for that in the Cuba cases. So I do believe that there is a way to attach, that there is a way to still collect, that there is still mechanisms.

 

I also, personally, don't think that China is going to sit this one out. I think that this is such a big event for everybody in the world, and that they want to be a dominant superpower. They want to be the dominant economic force. They can't do that without us. They still need us, even if they manage to eclipse us. They still need our economy to be working. They need us to be a customer. So I don't, personally, see that they're just going to sit this one out completely.

 

John Shu:  Well, thank you very much.

 

Dean Reuter:  Checking in now with the caller from area code 513. Go right ahead, caller.

 

Charles Miller:  Thank you, Dean. This is Charles Miller in Cincinnati. We have, for a while in the United States, have experienced what we refer to as private attorney general actions where litigants are bringing cases that typically are kind of done by the states.

 

Here, we have World Health Organization regulations that are out there that typically apply to reporting diseases and things that could become pandemics. And I'm just curious if this isn't just an issue of sovereign immunity and tort cases and things like that, but this is really more an instance of a private secretary of state conducting foreign policy as individuals through the federal court system and what the implications of that would be.

 

Karen Lugo:  Tatiana, do you have thoughts on that? Or anyone?

Tatiana Sainati:  So --

 

Hon. F. Scott Kieff:  So this is -- Oh, go ahead.

 

Tatiana Sainati:  No. Please, go ahead.

 

Hon. F. Scott Kieff:  So this is Scott. I'll just mention that that kind of concern was motivating the federal court in New York in the Kashef v. BNP case in the decision to dismiss the case and let it go up on appeal. The name for that doctrine is the state action doctrine.

 

But, yes, it's true you don't want private parties interfering with the political power of the United States, and, yes, it's true you don't want that interference to come in a range of ways, including with lawsuits. So, in concept, sure, that's a concern. It just turns out if you imagine that to be a balloon, if you blow that balloon up too big, it starts to foreclose a lot of activity. And recognition suggests that the balloon shouldn't be and has not been blown up that big. It is, actually, a pretty limited size.

 

So in a setting where the political branches of the United States government have a firm position, and in a setting where that position is firm and enduring, I think the conflict is greatest. But, of course, in a setting where the position is neither firm nor enduring, it seems strange to let the answer be, "Wait until our political branches agree and convince each other to a firm and enduring answer." Because, then, you would be foreclosing a whole lot of commercial-oriented disputes that would, with a range of state actors, at least be infused by concerns about active state.

 

And in the case of China, a nation state that unembarrassingly reports that it is a combined state actor and commercial actor, it's not clear that there is much commerce in China that China does outside of China that is not heavily infused with the state.

 

Dean Reuter:  Let's check in with what could be our final question of the day. Go ahead, caller.

 

Caller 4:  I just have a question as far as the theory that the virus was created, and it's a product of active research, and it was designed with gain and function in mind to actually make it more infective than it generally would have.

 

Wouldn't the theory be like an agency theory where, even if it was a foreign agent, for example, like a spy or something; a malevolent actor that came over and did damage here, where you had said that the tort has to completely happen on the United States' territory. Well, it did because it was a foreign agent that came from a laboratory and came here.

 

I think the theory would be the same as like an architect of a dam where the architect, if it was negligently created, would be responsible for downstream damage and deaths and anything else that would happen from that.

 

So I'd just like to hear some comments on that as far as that this is a little different in that there was an agent that arrived on our shores in this territory that did the damage. Thank you.

 

[CROSSTALK]

 

Matthew T. Moore:  No, go ahead.

 

Tatiana Sainati:  It's certainly an interesting way of looking at the issue. I think what it would come down to, honestly, is which test a court decided to apply. As I mentioned, a lot of courts have adopted this entire tort theory where the entire tort—so all of the actions leading up to the harm that occurs in the United States—has to be committed in the United States.

 

And, I think, under that test, even if the agent comes to the United States and is causing harm in the United States, the creation took place overseas and that's where it would get tricky, from my perspective.

 

Matthew T. Moore:  And I think that entire tort concept, I think, is from the D.C. Circuit and the D.C. cases, and so I'm happy I'm in Florida and I'm in the Eleventh. But we do talk about in our complaint about those agents. We do talk about the fact that these people came to this country with the virus, and they were allowed to leave and they were allowed to get here.

 

Whether the virus was natural or created is still not known. We think, if nothing else, the virus originated in the lab. It certainly originated in Wuhan, and we think it originated in that lab. Whether it got out because it was accidentally -- one of the researchers accidentally contracted it—they were known to have lax security—or whether it was intentional.

 

However it happened, then the actions of the government, the actions of the CCP, were, we believe, intentional. But, yes, we definitely ascribe to the theory that the tort happened in the United States when those people were here, when those agents were here, and started infecting people.

 

[CROSSTALK]

 

Dean Reuter:  Go ahead, Professor.

 

Hon. F. Scott Kieff:  That’s okay. I was just going to very briefly mention that, regardless of what triggered the thing and where it happened, I think it's just also worth keeping in mind that the actual harm up and down U.S. society, other than the true tragedy of the individual human beings whose lives were lost from COVID, is the vast amount of disruption since its arrival.

 

And a lot of that disruption has been significantly augmented by a lot of heavy fluctuation in price and quantity and quality, up and down a range of value chains. And those markets are really big candidates here for both ordinary fraud-type causes of action, and ordinary antitrust-type causes of action.

 

Dean Reuter:  Karen, it looks like we've got one more question. Shall we check in with the final caller?

 

Karen Lugo:  Yes, great.

 

Dean Reuter:  Very good. Go right ahead, caller.

 

John Preparian (sp):  Yeah, hi. This is John Preparian from New York, and I just want to thank The Federalist Society. I'm so glad to be a card-carrying member because this was a great topic to hear.

 

I was just curious if anyone on the panel could address whether there are any other formulations of lawsuits against China emanating out of, let's say, Canada, United Kingdom, Australia?

 

Matthew T. Moore:  Well, I can address that because we've been contacted by people from 47 countries, the firm has, including law firms and individuals. A suit has been filed in Italy. A suit is about to be filed in the Caribbean. We've been in discussions with people who are looking to file suits in Australia, Malaysia, other parts of Europe. There is definitely a sort of global coalition forming around China's bad acts.

 

Hon. F. Scott Kieff:  Yeah, I'll just echo that we've, in my discussions with colleagues around both neutral work and strategic consulting work in this space, as well as the academic side of thinking through what can happen and what its implications are, the discussions are thick not thin, rich not poor, diverse not narrow, including the countries you mentioned, and a number of others:  Japan, Korea, Israel. There are a lot of commercial players around the world who we, in the United States, play with a fair amount and fairly well, and they're all thinking things like this through collaboratively and individually.

 

Matthew T. Moore:  Yes, we are working with the people that have contacted us. We're part of the lawsuit in Italy. We're going to be part of lawsuit in the Caribbean. It is our goal to sort of build this globally because, again, this is an unprecedented time and the crisis of epic proportions. And I think it's good that the world is holding China to task on this.

 

Dean Reuter:  Karen, it looks like we're out of questions from our audience.

 

Karen Lugo:  I have one final question. Shifting back to focus on the political aspects of this. I have traveled to Israel with Nitsana Darshan-Leitner and taken seminars from her, studying her ability to win settlements for terror victims and in cases where it's one country against another.

 

And she has commented, in light of the COVID discussions and China, as to how certain, at times, governments will not enforce -- even if the case reaches a point of settlement, governments sometimes will back down just because of the political sensitivity.

 

So, again, we look to whether there's a really forceful congressional statement, what the Executive’s posture is. But, Tatiana, I know when you worked at The Hague, you might've been involved with cases where there was this kind of balancing. What is your insight when it is a matter of -- it bounces back from the courts again into the political sphere?

 

Tatiana Sainati:  Well, I do think that the political sphere has a different and, arguably, maybe, is better equipped to deal with this type of situation and holding China accountable in these circumstances because there are a number of options that the states have, that the executive has, and a number of different pressures that they can bring to bear that just aren't available to the courts.

 

And they can also do things in a way—and this is something that I think you do see when you move into the strictly political state-to-state sphere of, for lack of a better term, face-saving-type measures that allow victims to get some form of reparations, some form of payment—but in a way that allows a government to go back to its own citizens and feel that they have saved face.

 

      So I think that that's always an option. If it doesn't work out in the courts, that by no means is indicative of that the United States can't, or the rest of the world can't, take steps to figure out what happened here and to hold China responsible for any wrongdoing that happened.

 

Karen Lugo:  Professor Kieff, do you have a quick thought on that?

 

Hon. F. Scott Kieff:  Well, just to say that it is complicated, and the incentive structures and the strategies are complicated. So, as a party seeking recompense, there's often an attraction to get one's own state involved thinking that that brings with it muscular leverage. And, in some sense, it does, but it also brings with it internal political economy problems, which sometimes means you get traded for some other political goal internally, in your own country.

 

And so I would just flag those individual potential plaintiffs or plaintiff advocates out there that getting your own state involved can, in some ways, be good and can, in some ways, really lead to illusory disappointing feelings because the benefit of the power can be swapped for some other broader national goal.

 

Karen Lugo:  Thank you. Well, and on that note, Dean, I guess it goes back to you. And there is the teleforum tomorrow on the anniversary of Tiananmen Square.

 

Deal Reuter: Very good. Yes, I do want to remind our callers to check our website, monitor your emails, for upcoming teleforum conference calls. The next scheduled teleforum conference call is tomorrow at 1:30 Eastern Time at this same number where we'll be talking about the Chinese government's record on human rights as we mark the anniversary of Tiananmen Square.

 

      Today, however, my thanks to Scott Kieff, Tatiana Sainati, Matthew Moore, and, especially, Karen Lugo, our moderator. I want to thank our audience as well for dialing in. Please check our website for those upcoming calls. And, until that next call, we are adjourned. Thank you very much, everyone.

 

[Music]

 

Dean Reuter:  Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.