Antitrust Law Daily Wrap Up, ANTITRUST—EDNY: Vitamin C Conspiracy Defendant’s Challenge to Piercing of Corporate Veil Barred as Untimely, (Feb 21, 2013)

By E. Darius Sturmer, J.D.

The federal district court in Brooklyn has refused to permit the Hong Kong-based corporate parent of a Chinese vitamin manufacturer to seek a determination of foreign law and judgment on the pleadings, or summary judgment in its favor, on a purchaser class’s price fixing claims because the company’s motion was untimely (In re Vitamin C Antitrust Litigation, February 20, 2013, Cogan, B.).

In the suit, the complaining purchasers sought to establish the liability of the holding company, China Pharmaceutical Group Ltd. (CPG), by piercing the corporate veil of its subsidiary, Weisheng Pharmaceutical Co. Ltd. According to the plaintiffs, CPG “owns, controls, and dominates” Weisheng, and therefore could be reached under either the “alter ego” or “agency” theories recognized by U.S. law. CPG, on the other hand, argued that because Weisheng is a Chinese corporation, the purchasers had to plead facts sufficient to support the elements of veil-piercing under Chinese law.

The court noted that although August 31, 2009, had been established as the deadline for dispositive motion papers on liability to be served, CPG apparently only perceived Chinese law as a possible impediment to the plaintiffs’ claims in the summer of 2012. Because the issue relates to liability, the court said, CPG should have made the inquiry years ago so as to comply with the 2009 deadline. It would be inappropriate to “allow CPG to reopen motion practice on liability years after it closed merely because, through an expert, it thought of a better way to conceptualize its argument,” in the court’s view.

A contention by CPG that it could not have raised the issue before the August 2009 deadline because the plaintiffs did not assert their alter-ego or agency veil-piercing claims until October 16, 2009, was rejected by the court. Every iteration of the complaint in the action—from the initial complaint filed over four years prior to the dispositive motion deadline, to the currently operative complaint filed over eight months prior to that deadline—alleged that CPG owned, controlled, and dominated Weisheng. Moreover, CPG anticipated the plaintiffs’ alter-ego and agency veil piercing theories well before the plaintiffs submitted their opposition to CPG’s summary judgment motion that October. In its initial brief in support of its summary judgment motion, CPG noted that it had addressed the theories in its 2006 motion to dismiss.

The case is No. 06-MD-1738 (BMC)(JO).

Attorneys: Alanna Rutherford (Boies, Schiller & Flexner LLP) for the plaintiffs. Dale C. Christensen (Seward & Kissel LLP) for the defendants.

Companies: Animal Science Products, Inc.; Hebei Welcome Pharmaceutical Co., Ltd.; China Pharmaceutical Group Ltd.; Weisheng Pharmaceutical Co. Ltd.

Cases: Antitrust NewYorkNews