Tainted China Milk Ends Up In The US. In The Courts, Anyway.
China Hearsay (welcome back, Stan!) just posted on how parents of some Chinese children who "died or became ill after drinking infant milk formula contaminated with melamine say they will sue a subsidiary of a Chinese milk powder manufacturer based in the U.S. state of Maryland." The basis for suing in the United States is that "Qingdao Shengyuan Milk Co. Ltd., a dairy products manufacturer based in the eastern China city of Qingdao, had a Delaware-registered investment subsidiary with offices in Maryland, rendering it subject to U.S. law."
The story comes from Radio Free Asia, and a parent claims to have "a Maryland-based lawyer who will represent us in this collective compensation suit.” The article then talks about how the parents are "willing to pay for the legal fees and expenses" and the parents have already been requested to "send initial legal fees" and the "U.S. lawyers were hoping for a preliminary hearing in a Maryland district court soon."
China Hearsay questions how such a law suit can be brought in the US against "the U.S. subsidiary of a Chinese enterprise based on a tort that occurred in China" and calls it "kinda weak from a jurisdictional standpoint."
Without knowing all of the facts, it is always difficult to comment on any case, but since I am blogging here and not giving a legal opinion to a client, I can say that this story is behind "kinda weak." It makes no sense at all.
First off, it is quite unusual for a plaintiff's law firm that handles $100 million lawsuits (that is how this one is described) on a contingency fee basis (also so described) to require its clients to pay initial expenses. Second, I find it very strange that the US lawyers are "hoping for a preliminary hearing in a Maryland district court soon." Plaintiffs should not be wanting a preliminary hearing as that hearing is likely going to be an attempt by defendants to get the case thrown out for lack of jurisdiction. And that is the third thing. I just do not see how a US court can assert jurisdiction over a tort claim involving a Chinese defendant, a Chinese plaintiff, and a tort that happened in China. I also do not see the basis for suing the US subsidiary of a Chinese company.
Now there are two potential arguments that can be made here, neither of which am I terribly familiar. One is that the courts of China are so corrupt they are rejecting these cases, therefore, the US court needs to take this on. A few years back, I was representing a Russian company in Alaska Federal Court against a US plaintiff who seized my client's vessel when it came into Alaska. After we convinced the Court to release the vessel, the American plaintiff asked the Court to hold onto the case against my Russian client because of a purported inability to receive a fair trial in Russia. I argued that if the US were to take on every case involving claims arising in a country with a corrupt legal system, the US would end up trying all of Nigeria's tort cases. I won.
The other possible argument I see here is to make a claim under the Alien Tort Claims Act. There are maybe three people who understand that act and I know only one.
I am betting nothing much ever comes of a US lawsuit, but we will be monitoring the situation and reporting back. Any tort lawyers out there who think differently?
http://www.chinalawblog.com/cgi-bin/mt/mt-t.cgi/2890
Tainted China Milk Ends Up In The US. In The Courts, Anyway.:
Comments
It sounds like one of those "ambulance chasing" law firms pitched their services to some families in China.
Shengyuan (Synutra) had minimal levels of melamine in their products. It seems it was in the stockfeed they had used, something that is making everyone check their feed suppliers now.
Posted by: David Oliver | October 23, 2008 11:26 PM
Desperation calls for desperate acts.
If all cases are tossed into the circular file in China, then ambulance chasing or not, it is a way to publicize the case and the suffering that is getting blown off by the CCP, owners of both the media, the courts and all the milk companies.
Posted by: Hunxuer | October 24, 2008 1:29 AM
But Dan, could the Russian company see Alaska from their office?
Posted by: Richard Gould | October 24, 2008 1:54 AM
I wonder how the case in LA of "Isreali terror victims vs Bank of China" is progressing? Well, maybe the suing party isn't all Isrealis, but also Sudanese, Zimbabwe human rights activists, etc. Anyways, that should be a very interesting case as the BOC is being accused of being a launderer of terrorism financing.
Posted by: Surly | October 24, 2008 1:51 PM
I commented at China Hearsay, but I too have my doubts that this case will go very far. On the whole, having litigated business torts on plaintiff's and defense sides, and then doing some international stuff on defense, I really don't see this case moving far at all just b/c I don't see enough connection between the U.S. corporation and the damage caused.
From a practical standpoint, I highly doubt any judge will want a part of the ATCA for this one. Much easier to just toss the case than have to dredge through a rather obscure law, especially when the outcome looks pretty bleak for the plaintiffs anyways.
Posted by: Thomas Chow | October 25, 2008 11:13 PM
The ATCA pops to mind right away, of course, but it isn't a viable basis in this instance. The kinds of torts that are recognized under the Act are a select few that have ripened into customary international law, and therefore, are part of federal common law. Some read the ATCA even more narrowly to include only those torts that comprised the "law of nations" at the time the statute was enacted in the late 18th century (e.g. piracy, assaults on diplomats).
Although the 2nd Cir. has in the last 25 years permitted revival of the statute to include gross human rights abuses, other circuits have shown a reluctance to do so -- often dismissing ATCA cases on procedural grounds.
In any event, by any standard, adulterating food products -- even if knowledge or recklessness could be proven -- does not meet the ATCA's jurisdictional threshold.
Posted by: Juli Schwartz | October 27, 2008 12:16 PM
I, too, expect that if there is a preliminary hearing at this early stage then there was probably a motion for dismissal for lack of jurisdiction as well as a possible Rule 12(b) motion for for failure to state a claim. I just can't see this dispute being seriously litigated in a US district court in Maryland, even if the plaintiffs' firm in question pleaded jurisdiction on the basis of the ATCA. The ATCA is a statute that merely grants US district courts jurisdiction in those instances where a tort was committed "in violation of the law of nations or a treaty of the United States"; it does not create a new or distinct cause of action. The human rights cases arising in foreign countries and successfully brought in the US district courts were construed as tort cases involving violations of the law of nations, e.g. international treaties and conventions banning torture and certain other human rights violations. The ATCA was not intended and has never been interpreted to grant a US district court jursidiction over all torts, only those involving a violation of the law of nations or a treaty to which the US is a signatory and adopted into US law. My best guess based on the sparse information we have is that the plaintiffs' firm in question is going to argue there was some violation of a treaty or convention to which the US is a signatory. What alleged violation they intend to argue I don't know but I can't see the district judge in Maryland saying, "Yeah you're right, those poor Chinese victims need to clog up my docket with a case where the alleged tort occurred in China, the victims are all in China and the witnesses are all in China." Even if the judge ruled the ATCA granted jurisdiction here, that judge would also likely dismiss on the basis of forum non conveniens. I've no doubt that the Maryland law firm in question knows this but they have been able to convince some uninformed clients to pay them for the effort. Don't know about anyone else here but it smacks of the kind of behavior that rightly earns plaintiff's attorneys the bad reputation they have with so many in and out of the legal profession.
Posted by: Wayne Parker | October 29, 2008 1:12 PM
Mr. David Oliver had mentioned that, Shengyuan (Synutra) had minimal levels of melamine in their products. ======But the melamine levels of Synutra is among the top three according to China's official reports.
Posted by: David | January 19, 2009 10:12 AM