Empagran v. F. Hoffmann-La Roche Ltd. - vitamins price fixing litigation

Hoffmann-LaRoche Inc. and Roche Vitamins Inc.

On June 28, 2005, a unanimous panel of the United States Court of Appeals for the District of Columbia Circuit affirmed the 2001 dismissal of a putative class action brought on behalf of all foreign purchasers of vitamin products, handing a significant victory to the firm's clients Hoffmann-LaRoche Inc. and Roche Vitamins Inc. in the Vitamins Price Fixing Litigation.

The Empagran plaintiffs had sought damages under the U.S. antitrust laws arising from billions of dollars in foreign purchases of vitamin products. Those claims were initially dismissed by Chief Judge Hogan of the United States District Court for the District of Columbia in 2001, on the ground that plaintiffs' alleged injuries in foreign commerce failed to satisfy the requirements of the Foreign Trade Antitrust Improvements Act of 1982 ("FTAIA").

In 2003, however, a divided panel of the D.C. Circuit reversed, holding that foreign purchaser plaintiffs could proceed with their U.S. antitrust claims so long as plaintiffs were injured by unlawful "conduct" that also had U.S. domestic effects.

In 2004, the Supreme Court reversed the D.C. Circuit and adopted the construction of the FTAIA advocated by defendants and various amici, including the U.S. government and numerous foreign governments. Specifically, the Court held that plaintiffs' asserted injury had to arise from the U.S. effects of the challenged conduct, and that it was not sufficient to allege merely that some other party had been injured in U.S. commerce. The Supreme Court then remanded the case to the D.C. Circuit to consider in the first instance the legal viability of plaintiffs' so-called "alternative theory"--that the FTAIA might nonetheless be satisfied if the foreign plaintiffs could show that their foreign injuries would not have been possible but for the U.S. domestic effects given the economic interdependence of U.S. and foreign vitamins markets.

On remand from the Supreme Court, the same D.C. Circuit panel that had ruled 2-1 in favor of the plaintiffs in 2003 unanimously held that the so-called "alternative theory" failed to satisfy the requirements of the FTAIA, and that the appropriate legal test was not "but for" causation, but rather "proximate cause." Finding that plaintiffs' alleged foreign injuries were proximately caused by the "foreign effects of price-fixing outside of the United States," and that such injuries were at best only indirectly caused by the conspiracy's alleged U.S. effects, the panel ruled that plaintiffs' claims failed to meet the jurisdictional requirements of the FTAIA.

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