This аppeal arises from a multi-district antitrust class action brought against Defendants-Appellants Hebei Welcome Pharmaceutical and North China Pharmaceutical Group Corporation, entities incorporated under the laws of China. Plaintiffs-Appellees, Animal Science Products, Inc, and The Ranis Company, Inc., U.S. vitamin C purchasers, allege that Defendants conspired to fix the price and supply of vitamin C sold to U.S. companies on the international market in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 4, 16. This appeal follows the district court’s denial of Defendants’ initial motion to dismiss, In re Vitamin C Antitrust Litig.,
Here, because the Chinese Government filed a formal statement in the district court asserting that Chinese law required Defendants to set prices and reduce quantities of vitamin C sold abroad, and because Defendants could not simultaneously comply with Chinese law and U.S. antitrust laws, the principles of international comity required the district court to abstain from exercising jurisdiction in this case. Thus, we VACATE the judgment, REVERSE the district court’s order denying Defendants’ motion to dismiss, and REMAND with instructions to dismiss Plaintiffs’ complaint with prejudice.
BACKGROUND
For more than half a century, China has been a leading producer and exporter of vitamin C. In the 1970s, as China began to transition from a centralized state-run command economy to a market economy, the Chinese Government began to implement various export controls in order to retain a competitive edge over other producers of vitamin C on the world market. In the intervening-years, the Government continued to influence the market and develop policies to retain that competitive edge. In the 1990s, for example, as a result of a reduction in vitamin C prices, the Government facilitated industry-wide consolidation and implemented regulations to control the prices of vitamin C exports. By 2001, Chinese suppliers had captured 60% of the worldwide vitamin C market.
In 2005, various vitamin C purchasers in the United States, including Plaintiffs Animal Science Products, Inc. and The Ranis Company, filеd numerous suits against Defendants, Chinese vitamin C manufacturer Hebei Welcome Pharmaceutical Co. and its holding company, North China Pharmaceutical Group Corporation. These cases were-transferred to the Eastern District of New York by the Judicial Panel on Multi-district Litigation for coordinated or consolidated pretrial proceedings. The Plaintiffs allege, inter alia, that in December 2001 Defendants and their co-conspirators established an illegal cartel with the “purpose and effect of fixing prices, controlling the support of vitamin C to be exported to the United States and worldwide, and committing unlawful practices designed to in-
Rather than deny the Plaintiffs’ allegations, Defendants instead moved to dismiss on the basis that they acted pursuant to Chinese regulations regarding vitamin C export pricing and were, in essence, required by the Chinese Government, specifically the Ministry of Commerce of the People’s Republic of China (the “Ministry”), to coordinate prices and create a supply shortage. Defendants argued that the district court should dismiss the complaint pursuant to the act of state doctrine, the doctrine of foreign sovereign compulsion, and/or principles of international comity. In an historic act, the Ministry filed an amicus curiae brief in support of Defendants’ motion to dismiss.
In its brief to the district court, the Ministry represented that it is the highest authority within the Chinese Government authorized to regulate foreign trade. The Ministry explained that the Chamber, which Plaintiffs refer to as an “association,” is entirely unlike a “trade association” or the “chamber of commerce” in the United States and, consistent with China’s state-run economy, is a “Ministry-supervised entity authorized by the Ministry to regulate vitamin C export prices and -output levels.” Joint App’x at 153. The Ministry’s amicus brief describes the Chamber as follows:
To meet the need of building the socialist market economy and deepening the reform of foreign economic and trade management system, the China Chamber of Commerce of Medicines & Health Products Importers & Exporters was established in May 1989 in an effort to boost the sound development of foreign trade in medicinal products. As a social body formed along business lines and enjoying the status of legal person, the Chamber is composed of economic entities registered in the People’s Republic of China dealing in medicinal items as authorized by the departments under the [S]tate Cotmcil responsible for foreign economic relations arid trade as well as organizations empowered by them. It is designated to coordinate import and export business in Chinese andWestern medicines and provide service for its member enterprises. Its over 1100 members are scattered all over China. The Chamber abides by the state laws and administrative statutes, implements its policies and regulations governing foreign trade, accepts the guidance and supervision of the responsible departments under the States Council. The very purpose is to coordinate and supervise the import and export operations in this business, to maintain business order and protect fair competition, to safeguard the legitimate rights and interests of the state, the trade and-the members and to promote the sound, development of foreign trade in medicinal items.
Joint App’x at 157 n.10 (emphasis in original). According to the Ministry, the Chamber was an instrumentality of the State that was required to implement the Ministry’s administrative rules and regulations with respect to the vitamin C trade.
In support of Defendants’ motion to dismiss, the Ministry also provided evidence of two Ministry-backed efforts by the Chamber to regulate the vitamin C industry: (1) a vitamin C Subcommittee (“the Subcommittee”) created in 1997 and (2) a “price verification and chop” policy (“PVC”) implemented in 2002. The Chamber created the Subcommittee to addrеss “intense competition and challenges from the international [vitamin C] market.” Joint App’x at 159. Before 2002, only companies that were members of the Subcommittee were allowed to export vitamin C. Under this regime, a vitamin C manufacturer qualified for the Subcommittee and was granted an “export quota license” if its export price and volume was in compliance with the Subcommittee’s coordinated export price and export quota. In short, the Ministry explained to the district court that it compelled the Subcommittee and its licensed-members to set and coordinate vitamin C prices and export volumes.
In 2002, the Chamber abandoned the “export quota license” regime and implemented the PVC system, which the Ministry represented was in place during the time of the antitrust violations alleged in this case. To announce the new regime, the Ministry issued an official notice, a copy of which is attached to the Ministry’s brief in support of Defendants’ motion to dismiss. This document, hereinafter “the 2002 Notice,” explains that the Ministry adopted the PVC regime, among other reasons, “in order to acсommodate the new situations since China’s entry into [the World Trade Organization], maintain the order of market competition, make active efforts to avoid anti-dumping sanctions imposed by foreign countries on China’s exports, promote industry self-discipline and facilitate the healthy development of exports.” Special App’x at 301. The 2002 Notice, furthermore, refers to “industry-wide negotiated prices” and states that “PVC procedure shall be convenient for exporters while it is conducive for the chambers to coordinate export price and industry self-discipline.” Special App’x at 302. According to the Ministry, under this system, vitamin C manufacturers were required to submit documentation to the Chamber indicating .both the amount and price of vitamin C it intended to export. The Chamber would then “verify” .the contract price and affix a “chop,” i.e., a special seal, to the contract, which signaled that the contract had been reviewed and approved by the Chamber. A
Defendants moved to dismiss the complaint based on the act of state doctrine, the defense of foreign sovereign compulsion, and the principle of international comity. The district court (Trager, J.) denied the motion in order to allow for further discovery with respect to whether Defendants’ assertion that the actions constituting the basis of the antitrust violations were compelled by the Chinese Government. In the district court’s view, the factual record was “simply-too ambiguous to foreclose further inquiry into the voluntariness of defendants’ actions.” In re Vitamin C Antitrust Litig.,
After further discovery, Defendants moved for summary judgment asserting the same three defenses that were the basis for their motion to dismiss. In re Vitamin C Antitrust Litig.,
The case ultimately went to trial. In March 2013, a jury found Defendants liable for violations of Section 1 of the Sherman Act. The district court awarded Plaintiffs approximately $147 million in damages and issued a рermanent injunction barring Defendants from further violating the Sherman Act. This appeal followed.
DISCUSSION
The central issue that we address is whether principles of international comity required the district court to dismiss the suit. As part of our comity analysis we must determine whether Chinese law required Defendants to engage in anti-competitive conduct that violated U.S. antitrust laws. Within that inquiry, we examine the appropriate level of deference to be afforded a foreign sovereign’s interpretation of its own laws. We hold that the district court abused its discretion by not abstaining, on international comity grounds, from asserting jurisdiction because the court erred by concluding that Chinese law did not require Defendants to violate U.S. antitrust law and further erred by not extending adequate deference to the Chinese Govern
A. Standard of Review
We review for abuse of discretion a district court’s denial of a motion to dismiss oh international comity grounds. JP Morgan Chase Bank v. Altos Hornos de Mexico,
B. International Comity
Defendants argue that the district court erred by not dismissing Plaintiffs’ complaint on international comity grounds. Comity is both a principle guiding relations between foreign governments and a legal doctrine by which U.S. courts recognize an individual's acts under foreign law. See In re Maxwell Commc’n Corp.,
The principles of comity implicаte a federal court’s exercise of jurisdiction. O.N.E. Shipping Ltd. v. Flota Mercante Grancolombiana, S.A.,
To determine whether to abstain from asserting jurisdiction on comity grounds we apply the multi-factor balancing test set out in Timberlane Lumber Co. v. Bank of Am., N.T. & S.A.,
Since our adoption of the comity balancing test, the Supreme Court, in 'determining whether international comity cаutioned against exercising jurisdiction over antitrust claims premised entirely on foreign conduct, relied solely upon the first factor — the degree of conflict between U.S. and foreign law — to decide that abstention was inappropriate. Hartford Fire,
We read Hartford Fire narrowly and interpret the. modifying phrase “in this litigation” in -reference to the “other considerations that might inform a decision” as suggesting that the remaining factors in the comity balancing test are still relevant to an abstention analysis. Id.; see Mujica v. AirScan Inc.,
Some courts, after Hartford Fire, have gone further and do not require a true conflict between laws before applying the remaining factors in the comity balancing test. See, e.g., Mujica,
C. True Conflict Analysis
To determine whether Defendants could have sold and distributed vitamin C while in compliance with both Chinese and U.S. law, and thus whether a “true conflict” exists, we must determine conclusively what the law of each country requires.
The Sherman Act prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce.” 15 U.S.C. § 1. While this language has been interpreted to outlaw only unreasonable restraints in trade, see, e.g., State Oil Co. v. Khan,
The Ministry, as amicus, has proclaimed on behalf of the Chinese Government that Chinese law, specifically the PVC regime during the relevant period, required Defendants, as manufacturers of vitamin C, to fix the price and quantity of vitamin C sold abroad. The Ministry mainly relies on the reference to “industry-wide negotiated prices” contained in the 2002 Notice to support its position. Plaintiffs, however, аrgue that the Ministry’s statements are not conclusive and that because the 2002 Notice does not explicitly mandate price fixing, adherence to both Chinese law and U.S. antitrust law is possible. Our interpretation of the record as to Chinese law thus hinges on the amount of deference that we extend to the Chinese Government’s explanation of its own laws.
1. Standard of Deference
There is competing authority on the level of deference owed by U.S. courts to a foreign government’s official statement regarding its own laws and regulations. In the seminal case United States v. Pink,
Since 1942, several courts have cited Pink for the proposition that an official statement or declaration from a foreign government clarifying its laws must be
Other courts, however, have intimated that while the official statements of a foreign government interpreting its laws are entitled to deference, U.S. courts need not accept such statements as conclusive. For example, in Amoco Cadiz, presented with conflicting interpretations of a French law, the Seventh Circuit held that “[a] court of the United States owes substantial deference to the construction France places upon its domestic law.... Giving the conclusions of a sovereign nation less respect than those of [a United States] administrative agency is unacceptable.” In re Oil Spill by the Amoco Cadiz,
The district court below, at the motion to dismiss stage, relied on three authorities — Rule 44.1, Villegas Duran v. Arribada Beaumont,
Contrary to the district court’s reasoning, we find no support for the argument that Rule 44.1, adopted in 1966 long after Pink was decided, modified the level of deference that a U.S. court must extend to a foreign government’s interpretation of its own laws. Rule 44.1 provides that, when determining foreign law, a court “may consider any relevant mаterial or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence.” Fed. R. Civ. P. 44.1. According to the advisory committee notes, the rule has two purposes: (1) to make, a court’s determination of foreign law a matter of law rather than fact, and (2) to relax the evidentiary standard and to create a uniform procedure for interpreting foreign law. Fed. R. Civ. P. 44.1 advisory committee’s notes to 1966 adoption. •The advisory committee notes suggest that Rule 44.1 was meant to address some of the challenges facing litigants whose claims and defenses depended upon foreign law and to provide courts with a greater array of tools for understanding and interpreting those laws. Id. Rule 44.1 explicitly focuses on what a court may consider when determining foreign .law, but it is silent as to hoio a court should analyze the relevant material or sources. Thus, courts must still evaluate the relevant source material within the context of each case. See, e.g., Curley v. AMR Corp.,
.The district court looked to our decision in Villegas Duran to bolster its conclusion that this court has adopted a softer view toward submissions of foreign governments. In re Vitamin C Antitrust Litig.,
Finally, the district court also relied on our decision in Karaha Bodas,
It is noteworthy that, while we suggested in Karaha Bodas that deference to a foreign sovereign’s interpretation need not
Consistent with our holding in Karaha Bodas and the Supreme Court’s pronouncements in Pink, we reaffirm the principle that when a foreign government, acting through: counsel or otherwise, directly participates in U.S. court proceedings by providing a sworn evidentiary proffer regarding the construction and effect of-its laws-and regulations, which is reasonable under the circumstances presented, a U.S. court is bound to defer to those statements. If deference by any measure is to mean anything, it must mean that a U.S. court not embark on a challenge to a foreign government’s official representation to the court regarding its laws or regulations, even if that representation is inconsistent with how those laws might be interpreted under the, principles of our legal system. Cf. Abbott,
2. Applying Deference to the Ministry’s Brief
The official statеments of the Ministry should be credited and accorded deference. On that' basis, we conclude, as Defendants and the Ministry proffer, that Chinese law required Defendants to engage in activities in China that constituted
The 2002 Notice, inter alia, demonstrates that from 2002 to 2005, the relevant time period alleged in the complaint, Chinese law required Defendants to participate in the PVC regime in order to export vitamin C. This regulatory regime allowed vitamin C manufacturers the export only of vitamin C subject to contracts that complied with the “industry-wide negotiated” price. Although the 2002 Notice does not specify how the “industry-wide negotiated” price was set, we defer to the Ministry’s reasonable interpretation that the term means what it suggests — that members of the regulated industry were required to negotiate and agree upon a price. It would be nonsensical to incorporate into a government policy the concept of an “industry-wide negotiated” price and require vitamin C manufacturers to comply with that minimum price point if there were no, directive to agree upon such a price. Moreover, while on their face the terms “industry self-discipline,” “coordination,” and “voluntary restraint” may suggest that the Defendants were not required to agree to “industry-wide negotiated” prices, we defer to the Ministry’s reasonable explanation that these are terms of art within Chinese law connoting the government’s expectation that private actors actively self-regulate to achieve the government's policy goals in order to minimize the need for the government to resort to stronger enforcement methods.
We reiterate that deference in this case is particularly important because of the unique and complex nature of the Chinese legal- and economic-regulatory system and the stark differences between the Chinese system and ours. As the district court recognized, “Chinese law is not as transparent as that of the United States or other constitutional or parliamentary governments.” In re Vitamin C Antitrust Litig.,
Instead of viewing the ambiguity surrounding China’s laws as a reason to defer to the Ministry’s reasonable interpretation, the district court, recognizing generally the unique features of China’s system, attempted to parse out Defendants’ precise legal role within China’s complex vitamin C market regulatory framework.
The problems with the district court’s approach were threefold. ■ First, it determined that whether Chinese law compelled Defendants’ anticompetitive conduct depended in part on whether Defendants petitioned the Chinese Government to approve and sanction such conduct. Second, it relied on evidence that China’s price-fixing laws were not enforced to conclude that China’s price fixing laws did not exist. And third, it determined that if Chinese law did not compel the exact anticompeti-tive conduct alleged in the complaint, then there was no true conflict.
Whether Defendants had a hand in the Chinese government’s decision to mandate some level of price-fixing is irrelevant to whether Chinese law actually required Defendants to act in a way that violated U.S antitrust laws.
Similarly, inquiring into whether the Chinese Government actually enforced the PVC regime as applied to vitamin C exports confuses the question of what Chinese law required with whether the vitamin C regulations were enforced.
Finally; the district court made a conceptual error about the potential difference between- foreign compulsion and a true conflict. The district court credited Plaintiffs’ argument that because there was evidence that Defendants routinely agreed to export vitamin C at a price well above the agreed upon price of $3.35/kg, the Defendants alleged anticompetitive conduct was not compelled. But this conclusion misses the mark. Even if Defendants’ specific conduct was not compelled by the 2002 Notice, that type of compulsion is not required for us to find a true cоnflict between the laws of the two sovereigns. It is sufficient “if compliance with the laws of both countries is impossible.” Hartford Fire,
Because we hold that Defendants could not comply with both U.S. antitrust laws and Chinese law regulating the foreign export of vitamin C, a true conflict exists between the applicable laws of China and those of the United States.
D. Applying the Remaining Comity Factors
' Having determined that Chinese law required Defendants to violate U.S. antitrust law, we now consider whether the remaining factors weigh in' favor of dismissal based on principles of international comity. The district court, both at the motion to dismiss and the summary judgment stages, did not apply the remaining factors because it determined that Chinese law did not require price fixing. In re Vitamin C Antitrust Litig.,
The remaining factors in the comity balancing test are: (1) nationality of the parties, locations or principal places of business of corporations; (2) relative importance of the alleged violation of conduct here compared to that abroad; (3) the extent to which enforcement by either state can be expected to achieve compliance, the availability of a remedy abroad and the pendency of litigation there; (4) existence of intent to harm or affect American commerce and its foreseeability; (5) possible effect upon foreign relations if the court exercises jurisdiction and grants relief; (6) if relief is granted, whether a party will be placed in the position of being forced to perform an act illegal in either country or be under conflicting requirements by both countries; (7) whether the court can make its order effective; (8) whether an order for relief would be acceptable in this country if made by the foreign nation under ' similar circumstances; and (9) whether a treaty with the affected nations has addressed the issue. Mannington Mills, Inc.,
All Defendants are Chinese vitamin C manufacturers with their principle places of business in China, and all the relevant conduct at issue took place entirely in China. Although Plaintiffs may be unable to obtain a remedy for Sherman Act violations in another forum, complaints as to China’s export policies can adequately be addressed through diplomatic channels and the World Trade Organization’s processes. Both the U.S. and China are members of the World Trade Organization and are subject to the same rules on export restrictions. Moreover, there is no evidence that Defendants acted with the express purpose or intent to affect U.S. commerce or harm U.S. businesses in particular. Rather, according to the Ministry," the regulations at issue governing Defendants’ conduct were intended to assist China in its transition from a state-run command economy to a market-driven economy, and the resulting price-fixing was intended to ensure China remained a competitive participant in the global vitamin C market and to prevent harm to China’s trade relations. While it was reasonably foreseeable that China’s vitamin C policies would generally have a negative effect on Plaintiffs as participants in the international market for vitamin C, as noted above, there is no evidence that Defendants’ antitrust activities were specifically directed at Plaintiffs or other U.S. companies.
Furthermore, according to the Ministry, the exercise of jurisdiction by the district court has already .negatively affected U.S.-China relations. See Joint App’x at 1666, U.S. Vitamin Fine “unfair and inappropriate” Says Mofcom, Global Competition Review, Katy Oglethorpe, March 21, 2013. (quoting the Chinese government as stating that the district court’s judgment “will cause problems for the international community and international enterprises, and 'will eventually harm the interests of the United States due to the increase in international disputes”). The Chinese Government has repeatedly made known to the federal courts, as well as to the United States Department of State in an official diplomatic communication relating to this case, that it considers the lack of deference it received in our courts, and the exercise of jurisdiction over this suit, to be disre
Currently, the district court’s judgment orders Defendants to comply with conflicting legal requirements. This is an untenable outcome. It is unlikely, moreover, that the injunctive relief the Plaintiffs obtained would be enforceable in China. If a similar injunction were issued in China against a U.S. company, prоhibiting that company from abiding by U.S. economic regulations, we would undoubtedly decline to enforce that order. See Corporacion Mexicana De Mantenimiento Integral, S. De R.L. De C.V. v. Pemex-Exploracion Y Produccion, No. 13-4022,
Simply put, the factors weigh in favor of abstention. Recognizing China’s strong interest in its protectionist economic policies and given the direct conflict between Chinese policy and our antitrust laws, we conclude that China’s “interests outweigh whatever antitrust enforcement interests the United States may have in this case as a matter of law.” O.N.E. Shipping Ltd.,
We further note that while we abstain from adjudicating Plaintiffs’ claims with respect to the Defendants’ conduct, the Plaintiffs are not withоut recourse to the executive branch, which is best suited to deal with foreign policy, sanctions, treaties, and bi-lateral negotiations. Because we reverse and remand for dismissal on the basis of international comity, we do not address the act of state, foreign sovereign compulsion, or political question defenses.
CONCLUSION
According appropriate deference to the Ministry’s official statements to the district court and to this Court on appeal, we hold that Defendants were required by Chinese law to set prices and reduce quantities of vitamin C sold abroad and doing so posed a true conflict between China’s regulatory scheme and U.S. antitrust laws such that this conflict in Defendants’ legal obligations, balanced with other factors, mandates dismissal of Plaintiffs’ suit on
Notes
. District Judge David D. Trager passed away in January 2011, at which point this case was reassigned to District Judge Brian M. Cogan.
. Because we vacatе the judgment and reverse the district court’s denial of Defendants’ motion to dismiss, we do not address the subsequent stages of this litigation nor the related arguments on appeal.
. We set forth here only those facts necessary to resolve the issues on appeal. Unless otherwise noted, the facts have been taken from the allegations in Plaintiffs’ Second Amended Complaint, E.D.N.Y. Dkt. No. 1:06-md-1738, Doc. 179, which we accept as true for purposes of resolving a motion to dismiss, Ashcroft v. Iqbal,
. The parties explicitly disagree over the nature and authority of this entity.. Plaintiffs characterize this entity as an "association” much like a trade association in the United States, while Defendants describe this entity as a government-controlled "Chamber” of producers, unique to China's state-controlled regulatory regime.
. As Judge Trager noted, the. Ministry's appearance in this case is historic because it is the first time any entity of the Chinese Government has appeared amicus curiae before any U.S. court. On appeal, the Ministry also appears amicus curiae before this Court.
. In an annex to its brief to the district court, the Ministry prоvided the Mitnick Declaration, which contained a copy of all regulations cited by the Ministry. The Ministry noted that all documents were properly authenticated consistent with Rule 902(3) of the Federal Rules of Evidence, which governs the self-authentication of foreign documents.
. "Under § 402 of the Foreign Trade Antitrust Improvements Act of 1982 ("FTAIA"), the Sherman Act does not apply to conduct involving foreign trade or commerce, other than import trade or import commerce, unless 'such, conduct has a direct, substantial, and reasonably foreseeable effect’ on domestic or import commerce,” Hartford Fire,
. Although we adopted the Republic of Indonesia’s “reading of the relevant Indonesian law,” we declined to accept fully Indonesia’s argument on appeal because it had "not identified any Indonesian statute or regulation” in support of its position. Karaha Bodas,
. ’ Similarly; while the documentary evidence shows that when China transitioned from the export quota regime to the PVC regime the role of the Subcommittee within China’s regulatory framework changed from a governmental group whose membership was mandatory to a non-governmental trade organization whose membership was voluntary, we again defer to the Ministry’s reasonable interpretation that the PVC regime required industry-wide coordination of prices regardless of whether membership in the Subcommittee was required.
. We note that if the Chinese Government had not appeared in this litigation, the district court’s careful and thorough' treatment of the evidence before it in analyzing what Chinese law required at both the -motion to dismiss and summary judgment stages would have been entirely appropriate.
. To use a domestic example, it would be equally inappropriate for a U.S. court, when analyzing U.S. insurance law, to inquire into the lobbying efforts of U.S. insurance companies for the purposes of determining whether U.S. insurance law applied to those companies.
. To use аnother domestic example, it would be inappropriate for a U.S, court, when analyzing whether U.S. labor laws required factory workers to wear safety masks, to examine evidence of how. often factory owners were punished for such, violations or how many factory owners actually complied with the safety mask regulations.
. We take judicial notice of the diplomatic communication from the Embassy of the People’s Republic of China to the United States State Department dated April 9, 2014, Sprague & Rhodes Commodity Corp. v. Instituto Mexicano Del Café,
. We note that it may not be reasonable in all, cases to abstain on comity grounds from asserting jurisdiction at the motion to dismiss stage and that a trial court may need the opportunity to consider the countervailing interests and policies on the record that follows discovery. In this case, however, dismissal is appropriate because, after limited discovery, the record before the court at the motion to dismiss stage was sufficient to determine what Chinese law required and whether abstention was appropriate.