McKesson Corp. v. Islamic Republic of Iran
752 F. Supp. 2d 12
D.D.C.2010Background
- McKesson sues Iran for expropriation and withheld dividends relating to Pak Dairy, a jointly owned Iranian venture dissolved after the 1979 revolution.
- Iranian government assumed Pak Dairy board control, cutting off McKesson’s dividends and impairing its 31% equity interest.
- Litigation spans 28 years with multiple appeals; Treaty of Amity and customary international law previously found to create causes of action; Treaty litigation status shifted over time.
- Prior judgments (2000) awarded McKesson damages and simple interest through May 26, 2000; 2009 ruling recognized Iranian-law based claims and rejected act of state defense.
- Court reinstates 2000 damages framework and awards prejudgment interest, plus compound interest from May 27, 2000, to present, totaling $43,980,205.58.
- Final judgment directs calculation of additional attorneys’ fees and costs in a later proceeding.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Treaty of Amity provides a remedy in Iranian law for expropriation | McKesson has a Treaty-based remedy in Iranian law | Treaty relief must be pursued in Iran or is exclusive | McKesson entitled to judgment under Iranian-law Treaty claim |
| Whether Civil Responsibility Act supports damages for wrongful acts by Iran | Act authorizes full damages including lost dividends and equity | Liability disputed under Iranian statutory limits | Iran liable under Civil Responsibility Act for full damages through 2000 judgment |
| Whether Civil Code supports compensating the value of McKesson’s investment | Conversion and full compensation require value of equity and dividends | Remedy limited to return of shares | Court awards damages consistent with 2000 ruling (full value of investment) |
| Whether Commercial Code supports damages for minority shareholder oppression | Code remedies oppression and delayed dividends | Only dividend value remedy implied | Damages including full equity value and unpaid dividends under Commercial Code |
| Appropriate prejudgment interest methodology under Iranian and federal law | Compound interest required to achieve full compensation | Simple interest previously recognized; no compound interest | Award compound interest from May 27, 2000, to present at 7.77% annual rate; total damages $43,980,205.58 |
Key Cases Cited
- McKesson Corp. v. Islamic Republic of Iran, 539 F.3d 485 (D.C. Cir. 2008), 539 F.3d 485 (D.C. Cir. 2008) (McKesson V—Treaty does not provide a US-law remedy in this court; Iranian-law claims reconsidered on remand)
- McKesson HBOC, Inc. v. Islamic Republic of Iran, 320 F.3d 280 (D.C. Cir. 2003), 320 F.3d 280 (D.C. Cir. 2003) (McKesson IV—precedential corporate and Treaty-related prior rulings)
- McKesson HBOC, Inc. v. Islamic Republic of Iran, 271 F.3d 1101 (D.C. Cir. 2001), 271 F.3d 1101 (D.C. Cir. 2001) (McKesson III—law-of-the-case on Treaty rights and remand issues)
- McKesson Corp. v. Islamic Republic of Iran, 52 F.3d 346 (D.C. Cir. 1995), 52 F.3d 346 (D.C. Cir. 1995) (Foundational discussion of expropriation and state responsibility)
- Foremost-McKesson, Inc. v. Islamic Republic of Iran, 905 F.2d 438 (D.C. Cir. 1990), 905 F.2d 438 (D.C. Cir. 1990) (Earlier proceedings and framework of McKesson litigation)
- McKesson I, Foremost-McKesson, Inc. v. Islamic Republic of Iran, N/A (N/A) (Early case in this line establishing foundational principles)