Shearman & Sterling LLP | Antitrust Blog | Northern District Of California Rules International Comity Does Not Require Deference To Korean Supreme Court In <em >In Re Korean Ramen</em ><br >  
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  • Northern District Of California Rules International Comity Does Not Require Deference To Korean Supreme Court In In Re Korean Ramen
    On December 28, 2017, Judge William Orrick of the United States District Court for the Northern District of California denied a motion for summary judgment by defendants facing antitrust claims alleging a conspiracy to fix the prices of Korean ramen.  In re Korean Ramen Antitrust Lit., No. 3:13-cv-4115-WHO (N.D. Cal. Dec. 28, 2017).  In so ruling, Judge Orrick rejected defendants’ argument that principles of international comity required the Court to defer to a Korean Supreme Court decision overturning conspiracy findings and fines levied by the Korean Fair Trade Commission (“KFTC”).  The Court also ruled that there was sufficient evidence that the conspiracy impacted ramen prices in the United States, in particular for ramen manufactured in the United States, and that plaintiffs should therefore be permitted to move forward with their claims.

    The Korean Ramen litigation arose out of a 2012 enforcement action by the KFTC in which the Commission found that the four defendant companies—Nongshim, Ottogi, Samyang Korea, and Korea Yakult Co. Ltd.—conspired to fix the prices of ramen noodles manufactured in Korea.  The companies were collectively fined 135.4 billion won ($115.4 million), but those fines were overturned by the Korean Supreme Court in December 2015.  Class actions by direct and indirect purchasers were filed in 2013 in the Northern District of California, and the court approved direct and indirect purchaser classes in January 2017.

    Defendants filed two separate motions for summary judgment.  Defendant Nongshim argued  that principles of international comity required Judge Orrick to defer to the Korean Supreme Court’s decision in overturning the KFTC’s conspiracy findings and fines.  Nongshim further argued that the same principles counseled against any finding that a conspiracy existed, in light of the Korean government’s role in setting prices, as explained and relied upon by the Korean Supreme Court in its decision overturning the KFTC findings and fines.  Judge Orrick rejected this argument.

    International comity “is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws.”  In re Simon, 153 F.3d 991, 998 (9th Cir. 1998) (internal quotation omitted).  There are two doctrines recognized under “international comity.”  Of relevance to this case is the concept of adjudicatory comity, which “may be viewed as a discretionary act of deference by a national court to decline to exercise jurisdiction in a case properly adjudicated in a foreign state.”  Mujica v. AirScan Inc., 771 F.3d 580, 599 (9th Cir. 2014) (quoting In re Maxwell Commc’ns Corp. plc by Homan, 93 F.3d 1036, 1047 (2d Cir. 1996)).  When considering whether to respect a foreign tribunal’s decisions under comity principles, courts look at a number of factors, including:  (1) the strength of the various governments’ interests; (2) the adequacy of the foreign forum; (3) any conflicts between the laws of the jurisdictions; (4) and the extraterritorial reach of the laws at issue.  Id. at 600-604.  However, the most important factor is where the conduct in question took place, which requires examining both where the actions of the defendants took place and where the plaintiffs suffered injury.

    In this case, Judge Orrick rejected defendant Nongshim’s appeal to comity based in large part on contextual differences between the Korean Supreme Court’s decision and the decision faced by a U.S. court.  Though noting that the Korean Supreme Court found significant procedural and weight of evidence defects in the KFTC’s findings, that court’s task was to decide whether the KFTC’s finding of a conspiracy and the resulting fines on defendants were adequately supported under Korean law.  The question before Judge Orrick, on the other hand, was whether defendants’ conduct, to the extent it impacted sales in the United States, violated the antitrust and unfair competition laws of the United States

    Furthermore, Judge Orrick emphasized that relying on international comity in deferring to the Korean Supreme Court’s decision would infringe on the jury’s fact-finding.  While acknowledging that the Korean Supreme Court addressed the same kind of credibility and weight of evidence issues that a United States jury typically would undertake, the evidentiary standards in the United States may well differ from those in Korea, making comity inappropriate in the context of the Korean Supreme Court’s findings.

    Finally, Judge Orrick acknowledged the dispute between the parties regarding the level of control that the Korean government exercised over the pricing of ramen during the relevant time period.  Although defendant Nongshim argued that the Korean government exercised significant control over pricing in the ramen market, plaintiffs made very different arguments about the impact of the Korean government’s involvement on prices paid by U.S. consumers.  Again, Judge Orrick concluded that a jury is the proper vehicle for a determination of the impact of the Korean government on pricing in the relevant market, and that principles of comity do not foreclose this fact-finding role.

    This case represents an interesting example of the potential interplay between governmental investigations and litigation involving transnational cartels.  While guilty pleas or verdicts can bind defendants, the converse is not true—not-guilty verdicts or judgments in criminal proceedings in the United States cannot bind plaintiffs, and with this decision, neither can not-guilty or similar findings by foreign courts on disputed issues of fact normally decided by juries.