Courthouse Steps: Animal Science Products v. Hebei Welcome Pharmaceutical

Litigation Practice Group Teleforum

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Animal Science Products, a U.S. company, sued Hebei Welcome Pharmaceutical Co., a Chinese company, for violating U.S. antitrust laws by coordinating prices and artificially decreasing supply. Hebei moved to dismiss the case, stating that they were acting according to Chinese law. The district court denied the dismissal, and the jury trial found in favor of Animal Science Products, ordering Hebei to pay them $147 million in damages. 

Hebei appealed, and the circuit court reversed the district court's denial to dismiss. The circuit court reasoned that the district court had erred in not deferring to the Chinese government's interpretations of its laws, as the Chinese government had appeared in court to defend Hebei's actions.

John Shu will join us to discuss his perceptions of the oral argument in this important case.


John Shu, Attorney and Legal Commentator


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Event Transcript

Dean Reuter:                     Welcome to the Federal Society's Practice Group podcast. The following podcast, hosted by the Federal Society's Litigation Practice Group, was recorded on Friday, April 27th, 2018 during a live courthouse steps teleforum conference call held exclusively for Federalist Society members. Welcome to a special courthouse steps edition of the Federalist Society's Practice Group teleforum conference call as today we discuss the Animal Science Products case and deference to foreign government's legal system. My name is Dean Reuter. I'm the director of practice groups, vice president and general counsel here at the Federalist Society.

                                                Please note that all expressions of opinion are those of the expert on today's call. Also, this call is being recorded for use as a podcast in the future, and will very likely be transcribed. We're very pleased to welcome returning guest, John Shu. He's an attorney and legal commentator. He's been featured on several teleforum conference calls, so he needs no further introduction. He's going to give us background and then talk about what's transpired to date in opening remarks of about 15 minutes. But as always, we'll be looking to you for questions, so please have those in mind for when we get to that portion of the program. With that, John Shu, the floor is yours.

John Shu:                             Thank you, Dean. Today's case is Animal Science Product versus Hebei Welcome Pharmaceutical. And it's pronounced hebei. It's from the north of China, and it literally means river north, meaning north of the Yellow River. The case is about international comity. In this case, with the United States and the People's Republic of China. How much discretion, if any, do US courts give to a foreign government's interpretation of its domestic law when appearing before the US tribunal? Now, a foreign interpretation of its own domestic law can mean a court, or it can mean a regulatory agency, like we have here in the United States.

                                                And so in this particular case, we have a situation not where the Supreme People's Court had come down with a decision, but we have regulations from the Chinese Ministry of Commerce, which is analogous to our Department of Commerce. The legal issue here surrounds price fixing. Animal Science Products is a vitamin C producer, and they put in vitamin C into cattle products and other animal products. And they had a deal with certain companies, including Hebei Welcome, and they found out about alleged price fixing. Well, the Chinese company says they had to price fix because the Ministry of Commerce requires that in China.

                                                And it was very interesting because this is the first time that the Chinese government has ever appeared in front of the US Supreme Court. The Ministry of Commerce appeared as amicus with Carter Phillips representing the Chinese government. But at any rate, the plaintiffs won at the US District Court in the eastern district of New York, and they won a judgment. $50 million cash judgment times three, triple damages for 150 million in toto. Second circuit though tossed it out. And they said that they were, "Bound to defer to a foreign government's legal statement."

                                                And what happened was that the Chinese Ministry of Commerce issued a statement that Hebei Welcome was required to price fix, and therefore they didn't do anything wrong with respect to Chinese law. And now, we are here because we're wondering how far and to what extent do our courts give deference to a foreign government's view, especially when it's an administrative agency and not a court. By the way, I would note that the district court said that the Chinese government's interpretation of its own regulations, which here the United States would be a Seminole Rock or Auer question, "Did not sound like a frank and straight forward explanation of Chinese law, but rather more like a carefully crafted and phrased litigation position."

                                                I would note for our listeners who are not that familiar with Chinese systems that in China, many companies are still state-owned enterprises, and China also has a significant investments through its sovereign wealth fund. And with that, I'll turn to the actual argument. It was very interesting in the sense that we had justices who were very concerned about wordsmithing. And when I say, "Wordsmithing," it's because the second circuit said, "Bound do defer." That they are bound to defer to a foreign government's legal statement and they used language also from the ninth circuit. I'm refraining from making a ninth circuit joke, sorry. And then here, we do have a circuit split, because the US Court of Appeals for the fifth, sixth, seventh, eleventh and the District of Columbia do not have the same standard.

                                                But if you look through the transcript of the oral argument, you have different hypotheticals and different wordsmithing suggested by the justices. So for example, you have reasonable confidence, to what extent does the court have reasonable confidence in the foreign government's analysis of its own law? Is it a reasonable discretion? Things like that. And so I think it's unusual because usually the justices don't get that involved with the actual wordsmithing itself. But here, I think they were very concerned about it because they're trying to find a standard that is clear for the lower courts to follow, but I think from the oral argument, they're a little suspicious of the second circuit's bound to defer.

                                                And bound to defer, as I read it, means bound like they have to defer. Not bound as they are inclined to defer. Some administrative law issues for those who are interested about that. Because the entity from the People's Republic of China was the Ministry of Commerce, and not the [Supremes 00:06:49] People Court, Justice Gorsuch was particularly aggressive early on in the questioning by saying, for example, "We actually do outsource saying what the law is sometimes in US domestic law. Chevron for example. We give conclusive weight to a determination by an agency as to what the law is. So why, as a matter of comity, wouldn't we do the same to an administrative agency of a foreign sovereign?"

                                                My own feeling is that the Justice Gorsuch was probably trying to T up an answer where they petitioner would say, "We don't give any deference at all. Overturn Chevron please." And I'm sure Justice Gorsuch would have jumped at that opportunity. Unfortunately for our Justice from Colorado, that doesn't work out quite the way he wanted to. But it is an interesting question as to where some of the questioning was headed. Justice Briar of course is very famous in his desire to try and smooth out international comity issues. He tends to believe that we are ... Our US system may go ahead and take into consideration other country's laws, other country's legislations as examples.

                                                He wasn't particularly aggressive, I don't think, in this case. But he certainly did inject some of that into the example. And we do have some comparisons in the sense that Justice Ginsburg brought up the issue of, "Well, we give deference to ..." and in this case substantial deference, that's the wordsmithing again, "To states and state attorneys general on their interpretations of state law. Why shouldn't we do the same?" And it's a pretty good question. People do point out that in most of those cases, the states do not have a financial interest in what's going on, or in the state itself. State meaning a state like Oklahoma, not state as in Obamacare two.

                                                And so that makes a big difference in incorporating that part of the analysis. Justice Briar was also concerned that here in the United States, there's a specific exemption, the Webb Pomerene exemption for price fixing and other anti-trust no-nos, and whether that should be also applied to the Chinese law. And one thing that I think would have flipped Justice Scalia around for sure is that all of the justices discussed to what extent can they use information from the foreign government? Can they use information that's available, such as the legislative history? Debates, other courts, other filings. For example, there was some question to the Ministry of Commerce as to why there was inconsistency between what the Ministry of Commerce filed in this particular case with what they filed with the World Trade Organization back in 2002.

                                                And it's not clear to me that the Ministry of Commerce had a satisfactory answer. But I think the justices had a problem with the fact that because in the Chinese system, particularly the Ministry of Commerce, it's not considered an independent agency as we would have certain commissions or certain agencies that are considered independent. And certainly, even the [Supremes 00:10:40] People's Court is not independent as we know it here in the United States with Article Three.

                                                And then finally, Justice Roberts and Justice Briar were concerned because there are some 192 countries who have highest legal authorities. We have a little bit fewer than a thousand federal judges. And those justices were very concerned that our judges here in the United States are not necessarily familiar with the legal systems of 192 different companies ... Or sorry, 192 different countries. And that's why the court gave amicus time to the United States, not in the form of the Justice Department, but the United States lawyer that was there was representing the State Department and its concerns about how to smooth over the international comity issues that are involved.

                                                And I think judging from how the oral argument went, which is very dangerous, I know. But there's a lot of concern about the actual words, "Bound to defer." It seems to me that many of the justices who fired off questions were not happy with the second circuit's formulation in that it seems to give far too much weight, and that's another wordsmith formulation, substantial weight and respectful weight, to the foreign country's analysis and interpretation of its own laws. And really, the US system is unique. I think it does point out that the US system is unique, even compared to our parent system, the British system. But especially in civil systems, whether it be France or China or Japan, or I think looking further even, as we do more and more business with countries in the Middle East, we're going to have some difficulty because there, it's not really clear who the supreme power is.

                                                Does it come from the government agencies? Does it come from the king? Does it come from the top theocracy interpreter? And so while the court did not get into that because they were very focused on China and its own problems, I think it's a reasonable question to ask with respect to international comity questions, particularly with business statutes such as price fixing, export rules, and so on and so forth. The only real case, US Supreme Court case that the court focused on is a case called United States versus Pink. And that case is from World War Two era. It was argued in December, 1941, and decided in February, 1942.

                                                And it was about a Russian insurance company, the First Russian Insurance Company. That was the name, First Russian Insurance Company, which was created in 1907 under the Empire. By 1941, of course the USSR had already came into being, and so the question was whether the New York superintendent of insurance could interpret the Russian laws, or Soviet laws, that applied to US assets, or assets in the United States, from a government company to a government that no longer existed. But I think Pink was problematic for many of the justices because it was really more of a question of not international comity, but whether New York State could exert any power or authority over foreign policy issues. And Justice Douglas writing for the majority had ruled that power over foreign affairs or external affairs as he called it is exclusively vested in the national government.

                                                And I think the respondents and the amicus for the Ministry of Commerce had a lot of trouble distinguishing that. And so with that, I'm open to taking questions and I hope you find this issue interesting because I think these international comity issues will continue to grow as the United States and US companies do more and more interactions and transactions with companies across the world.

Dean Reuter:                     Thank you very much. In a moment we'll all hear an announcement that will say the floor mode is on. After you hear that announcement, if you have a question, push the star button and then the pound button on your telephone. Once again, if you have a question for our expert, we're speaking with John Shu. Push the star button and then the pound button on your telephone. Let me see if I can ask the first question here. It sounded, from your presentation, that ... I mean, you mentioned international comity. This case concerns China. Was there any discussion of foreign courts and whether or not this case would affect how foreign courts behave towards US laws and the US government or the agency or courts interpretation of US laws?

John Shu:                             Yes. That's an excellent question, thank you. There was discussion about that. The justices seemed pretty confident that foreign courts would not give the same level of deference to US interpretation of US law in their jurisdictions and when they are applying the second circuit standard of bound to defer and in that regard. And there was some discussion about China in particular, whether the Supreme People's Court, or even the Ministry of Commerce, if the situation were reversed, would give the same level of deference to even the US Supreme Court's ruling on for example the Pomerene anti-trust exemption.

                                                And I think the justices were pretty confident that the answer was no. I would say that this didn't necessarily come up during the oral argument, but the second circuit actually laid out what they called the multi-factor balancing test. And they borrowed a little bit from the ninth circuit, but the 10 factors I thought were not unreasonable, but it was the application of the 10 factors that were troublesome to the justices.

                                                So the 10 factors that the second circuit came up with for a balancing test were degree of conflict with foreign law or policy, nationality of the parties, locations, principle places of businesses or corporations, the relative importance of alleged violation of conduct compared with conduct abroad, the extent to which enforcement by either country may be expected to achieve compliance and whether there was a remedy abroad, existence of intent to harm or otherwise adversely affect American commerce, possible effect on foreign relations if the court exercises jurisdiction, and if relief is granted, whether one party or the other will be placed in the position of being forced to perform an illegal act, such as in this case where there was price fixing involved, and whether the court can actually effect its order and enforce it.

                                                And then of course related to that is whether a US order would be acceptable to the foreign nation and vice versa. And then last but not least, whether a treaty exists that actually affected the issue. So here, there's no treaty with China, even a multi-lateral treaty involving China, that involves price fixing. I thought it was interesting that the second circuit mentioned the nationality of the parties because I think that gives a lot of room for a litigant to say, "Well, country ABC is number one on the corruption list." Or something like that. I think that the State Department would flip out if that ever happened and a court decided to put that into an actual judgment.

                                                Part of the reason for declining to give deference was because of the level of alleged corruption that existed, especially if that corruption happened to be one of our allies, or a country where we had US military bases, even if not an exact ally. And again, pointing to the State Department being an amicus, the second circuit did think about any possible effects on foreign relations, which I think some would argue should not be a consideration at all in Article Three.

Dean Reuter:                     Once again, if you have a question for our expert, push the star button then the pound button on your telephone. Our lines are wide open. You mentioned the second circuit's 10 factor balancing test, which strikes me as one that Justice Scalia, since you invoked his name, would see as suspect to manipulation by any court. That is that you could, if there's the 10 factor balancing test involved, you could begin with your answer and work your way through the 10 factor balancing test in a way that leads you to your answer. Was there any discussion of that, or skepticism of something so intricate?

John Shu:                             No. The oral argument did not really touch upon the 10 factor test. I have a suspicion though that the justices in general probably frown upon that. I mean, Justice Scalia in the past has had expressed his doubts even regarding a three factor balancing test, and I think a 10 factor test, just in general, is too unwieldy. And especially where I think a lot of the justices are pretty convinced that their colleagues in the lower courts are just not familiar enough with the laws, and even the legal systems of different countries that they could factor such a test into it. And I can't imagine.

                                                For example, one of the factors of, like I mentioned, about effect on foreign relations. I don't think it's practical to expect a US federal judge to be an expert on foreign relations. And I think it would be dangerous to expect them to call up the State Department, no matter who is the President or Secretary of State at the time, but to call up the State Department and say, "Hey, what do you think is going to happen with our relations with Timbuktu if we do this?" Separation of powers issues aside.

Dean Reuter:                     We do have a couple question in our audience now, so let's turn to our first caller.

Speaker 3:                           Phone has been turned-

Cory Andrews:                  Hey, John. This is Cory Andrews from Washington DC. Thanks for the presentation. I found especially interesting your comments about Justice Gorsuch sort of. I agree with you that sounded like a stalking horse, almost a rhetorical question with the analogy to Chevron. And I was wondering whether any of the other justices picked up on that, and also, how did the participant respond? And then maybe taking a step back more broadly as a long time observer of the court, where do you think things are going with Chevron? Especially in light of, if you're familiar with it, the case earlier this week involving USPTO? Seemed to have some tea leaves for Chevron. Thanks.

John Shu:                             Thank you for that excellent question. Yeah, it wasn't just ... Like you said, it wasn't just Justice Gorsuch who was concerned about the Chevron issue. But the petitioner's counsel, I think he either A, ignored it because he didn't want to anger the other justices, or B, he kind of whiffed on it. He tried to talk about using the different steps of Chevron and then Justice Gorsuch just cut him off. I think because he wasn't getting to the issue that the justice wanted to.

                                                But even Justice Briar was very concerned a potential Chevron issue because Justice Briar seemed to want to discuss whether the foreign sovereign's interpretation, if it's an administrative agency, to what extent is it binding? And what if it conflicts with a prior administrative ruling, or even a prior case from that foreign sovereign? And in the PTO case, the other PTO case that happened this week, not the oil states case, but the FAS case, we have a question there where Justice Briar had said that Chevron should be treated, "More like a rule of thumb." And that's quote, not as a, "Black letter law."

                                                That's a little unusual from Justice Briar, and so if you take that into consideration with what happened in this case, especially where you have a foreign ministry that allegedly gave two different interpretations to two different fora under two different financial conditions, then I think Chevron ... It's not unreasonable to think that the court as a whole is very concerned about Chevron, and then to a lesser extent, Seminole Rock and Auer. A-U-E-R. Justice Scalia, of course, has very been suspicious about an administrative agency's right to interpret its own regulations, and here, we have in China the Ministry of Commerce doing exactly that.

Dean Reuter:                     Once again, if you'd like to join the queue, push the star button and then the pound button on your telephone. We've got plenty of time left. Just one caller with a question, so let's turn now to our next caller.

Laura Peterson:                Hi, Laura Peterson in Washington. Thanks very much for your presentation. I had a two part question. The first part was well addressed by the prior caller, so my question is ... My remaining question is to what extent is it important that the violation under consideration here is a per se violation of our anti-trust laws?

John Shu:                             Well, surprisingly little, Laura. And thanks for the question. Even Hebei Welcome Pharmaceuticals freely admits that it price fixed. Its defense is that it was required to by the Chinese government. And I think the reason that they went into the Pomerene exemption here in the United States is to see if there was any equivalent over there in China. Now apparently the civil law doesn't quite get into that, but the Ministry of Commerce regulations, in this case the export regulations for vitamin C, they say, the Ministry says that it required the pharmaceutical entity to go ahead and price fixed.

                                                And so therefore, that should be an affirmative defense to the civil suit in New York. Second circuit happened to agree with that and so that's why it vacated everything. But I think the petitioners were correct to point out that the Ministry of Commerce said something else in 2002 to the World Trade Organization. You have to remember at that time, China was just entering the World Trade Organization, and it had to comply with certain rules and certain requirements in order to become a member of the WTO. And the financial interests at that time were different. Not just in terms of dollar amount. Obviously since 2002, partially because of its entry into the WTO, the Chinese economy has exploded. But even at that time, China was supposed to begin shedding much of its state-owned enterprises and other companies that had a substantial interest from the Chinese government. It's not clear if that ever happened and I think that was a matter of some concern to the State Department, and to a lesser extent, to the justices, particularly Chief Justice Roberts.

Laura Peterson:                Thanks very much.

John Shu:                             Thank you.

Dean Reuter:                     Our lines are now wide open. If you have a question, push the star button then the pound button on your telephone. While we wait, let me see if I can formulate another question here, and that's the idea that a country is not is not a country is not a country, or at least so it seems if the judges are applying a balancing test, in a lot of ways, I guess it's to discern one country's system from another and decide, given the state of the legal system in that foreign country, how much the judges ought to pay attention to it or defer to it. Was there any reluctance on the part of the court that you sensed? And if I've characterized this correctly, is there any reluctance on the part of the court and in courts going down this road of assessing other systems across the world?

John Shu:                             Yes, particularly from Justice Briar and Chief Justice Roberts in that they were both convinced that their colleagues don't know anything about foreign law. I think in all seriousness, they do have a valid concern in that US District Court judges, and even US Circuit judges, nobody expects them to be experts in any one other country and its particular system of laws and regulations, let alone 192 different countries. And I believe that the justices, all nine of them, have reservations about requiring US judges, federal judges, to even have a working knowledge of so many different systems. And that's really what would be required if the second circuit balancing test were to be accepted in its entirety, which I honestly don't think is going to happen, not just because there's 10 different steps, but also because it's just simply impracticable.

Dean Reuter:                     Well, and I guess that's where I was headed with my question. Even if the judges, and when you become a judge you get training in the 192 legal systems and it's updated to reflect changes on the ground, is that the proper role of a US judge to be assessing the systems of other countries? Was there any reluctance based specifically on that? Or was it all based on the inability of judges to obtain the knowledge necessary?

John Shu:                             Yeah, it was more about our own judges not being able to obtain the knowledge. But even Justice Kagan had some concerns about dealing with foreign entities in that international comity is supposed to go both ways when you're talking about two different countries. And Justice Kagan flat out asked the Ministry of Commerce, in the form of Carter Phillips, "Do the Chinese courts give the same deference that you would want the second circuit and us to give to the Ministry of Commerce?" And the Ministry of Commerce was forced to admit that they were not able to find any examples of that.

                                                But I thought that the actual transcript was interesting, because what Carter Phillips said was, "I looked for Chinese law on this particular question. I couldn't find a single instance." Now presumably, because the Ministry of Commerce is his client, instead of spending thousands of dollars on Westlaw, he could have just asked them. And, "Does the Supreme People's Court give the same deference to US judgment?" But I don't think he did. Or if he did, he didn't get the answer that he wanted, because instead of saying, "I looked for Chinese law," he could have just said, "Well, the Supreme People's Court either does or does not." And I thought that was pretty interesting.

Dean Reuter:                     That is interesting. Once again, if you have a question, our lines are open. Push the star button then the pound button on your telephone. I can't help, my mind keeps coming back to the Foreign Corrupt Practices Act for some reason. And that, I'm just wondering in this whole mish mash of issues, I'm imagining a foreign government that if it doesn't require bribes, at least implicitly allows them as a way of doing business. But the Foreign Corrupt Practices Act I understand would hold liable a US company that engages in those, maybe their customs or maybe it's just a way of doing business. And then you mentioned within the 10 factor balancing test, one of them is whether there was an illegal act. And I guess my question is is that illegal act, is that an illegal act under US law, or under the Foreign Countries law?

John Shu:                             Well, the second circuit test didn't specify. Presumably when it says illegal act, it's the illegal act with respect to the litigation in question. For example, price fixing in this particular case. I would add though that the Foreign Corrupt Practices Act, as you mentioned, Dean, is very interesting in that it doesn't just apply to US companies. It also applies to foreign companies doing business in the United States. So for example, if Chanel, which as significant operations in the United States, particularly here in Beverly Hills, or over there on the Upper West Side, if Chanel decides that it's going to bribe somebody in Mozambique, the Justice Department can hit it with an FCPA violation here.

                                                And so I don't know that the courts would be okay with waiving FCPA charges against such a company, especially when the FCPA isn't the statute in question, or isn't the act in question. Bribery or other acts like that are side issues. They're still illegal and bad, but they're not the actual act where the court is trying to figure out that the foreign government gives a specific exemption to it. So for example, I can't think of a single country that says, "Hey, we have a statute or a regulation that says bribery's okay." I mean, it may be part of the culture, it may be part of the way business has been done for thousands of years, but I don't think there's an actual regulation or a statute in any country that says, "Hey, you can go ahead and bribe our government officials."

                                                And so in that case, I think the FCPA would certainly stand because I think even for the most flexible justice, that's bowing and giving substantial deference, or reasonable deference, or respectful deference to thousands of years of tradition and culture. Even though it was good in Fiddler on the Roof, probably not so good in a US District Court litigation.

Dean Reuter:                     Interesting. You've made a distinction here, and let me mention to the audience again, if you have a question, push the star button then the pound button on your telephone, and I'll maybe work through what might be my last question. You'd made a distinction between foreign courts and agencies. Was there any discussion of the different sorts of agency activities? Let's assume it is a foreign agency rather than a foreign court. In the United States, we have the APA process for notice and comment rule making. There's also sub-APA guidance that's issued, sometimes in the form of letters or advisory letters, or FAQs on websites. And the American courts will often times defer to that sort of agency action. Did that come up in whether or not US courts should be deferring to less formal agency actions of foreign governments?

John Shu:                             No, it didn't. At least not during oral arguments, and it didn't come up in the briefings that I read either. I think it's because they just didn't go that far. I don't think the district court of the second circuit even thought as far as did the Ministry of Commerce follow its own policies and procedures in creating the regulation in question, as would be required here in the United States to follow the Administrative Procedures Act. I think, this is pure speculation on my part. Again, for the record, this is pure speculation on my part. But I think it's because they don't know. They just ... The judges just didn't know if there is even an Administrative Procedure Act in China. There isn't.

                                                And I don't think they know, and they wouldn't have access to the record that are there. The Chinese system is not as transparent as the US system. And it's not something that you could easily find. And even if you could easily find, even just having a Mandarin reader isn't enough. You have to have somebody who's sophisticated enough to read Mandarin legal language. And that's difficult to find. Now, try expanding that to 192 different countries and potentially at least 192 different dialects. In China itself, there are many dialects, even if the same ideograph is used in different provinces of China, the same ideograph can mean different things.

                                                And one of the justices did point that out with respect to language in that what's the record that the United States judge is going to use. Is it a translation that was done in the United States? Was it an official translation from the foreign country's language to English? And isn't there something that's, as the saying goes, lost in translation? I think these are all valid questions.

Dean Reuter:                     Interesting. Well, speaking of questions, I'll give a final opportunity for our audience to ask questions. If you have a question, push the star button and then the pound button. The time is now. Believe we've had our final question, so with that, John Shu, let me give you a chance to express a final thought and I'll roll in a final question for myself, and that's is this one, just given the timing of the argument, likely to not be decided until near the end of the term? Or is this going to be quickly resolved?

John Shu:                             I think they're going to, as they usually do, they reserve the end of the term for the hot button sexy cases, the ones that have all the people on CNN jumping up and down in anger. I actually think there's a lot of agreement amongst the justices on the core issue of the case, which is do we ... Are US courts required to give deference, absolute deference to the foreign government? And I think the answer to that is going to be no. I think the only question is going to be to what extent, and that's where the wordsmithing comes in. Respectful, substantial, reasonable deference, and I do think that no matter what the court decides or comes up with in terms of its wordsmithing, there is going to be a lot more litigation on this in the future. Because what's substantial? Or what's reasonable? What's reasonable to somebody in California? Well, it's not reasonable to anybody else in the rest of the world. That was a California joke.

Dean Reuter:                     I got it.

John Shu:                             Yeah. But so I do think it's a problem. For some reason, Justice Ginsburg was particularly focused on The European Union, and that tells me that there was probably another case that came up through maybe even making it to the pool. But they, for some reason, decided on this one. And so I think that the second circuit 10 factor test is not long for its life in the judicial annals. But it's going to depend on what the Supreme Court comes up with. I don't think that it's going to come up with a huge, multi-factor test like the second circuit did. And I mean, this case, at least this case is clear in that the illegal act, the price fixing, is illegal per se.

                                                And even the pharmaceutical company itself freely admits that it price fixed. So there weren't any difficult questions of fact as to whether that actually happened. And that makes the analysis a little easier for the high court. I would also notice that Justice Kagan was very concerned that other countries don't give the same level of deference as the second circuit said to our cases. And she really pressed hard the Ministry of Commerce, not just for Chinese law, but other existing law. And Carter Phillips was kind of stuck and he had to admit that he wasn't aware of any, but kind of hung his head a little bit and said that he hadn't looked through the different 192 laws and 192 sets of regulations. And I think that just brings a huge practical problem to this kind of analysis when if you were to follow the second circuit's standard of, "Bound to defer." It's just not possible. It's not practically possible.

Dean Reuter:                     Interesting. Well, my thanks to you, John Shu, for joining us today and for your insightful comments. I also want to thank the audience for joining us and for your thoughtful questions as well. A reminder to our audience to check the Federalist Society's website, monitor your emails for announcements about upcoming tele-forum conference calls. But until that next call, we are adjourned. Thank you so much. Thank you for listening. We hope you enjoyed this Practice Group podcast. For materials related to this podcast, and other Federalist Society multimedia, please visit the Federalist Society's website at