Wednesday, September 26, 2018

U.S. Court of Appeals for the Third Circuit, Humphrey v. GlaxoSmithKline PLC, Docket No. 17-3285, Precedential


RICO: Conduct committed abroad: Subject matter jurisdiction: (Jurisdiction):
(Antitrust: foreign injury, foreign entities).
(Goodwill: Property interest).

Section 1964(c) of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961–1968, creates a private right of action for a plaintiff that “is injured in his [or her] business or property” as a result of conduct that is proscribed by the statute. In RJR Nabisco, Inc. v. European Community, the Supreme Court determined that, although a litigant may file a civil suit against parties for racketeering activity committed abroad, § 1964(c)’s private right of action is only available to a litigant that can “allege and prove a domestic injury to its business or property.”

To establish liability pursuant to § 1962(c), a plaintiff must establish the existence of an enterprise that exists “separate and apart from the pattern of activity in which [the enterprise] engages.” RICO defines “enterprise” as “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” Plaintiffs can show the presence of an enterprise by pointing to a “group of persons associated together for a common purpose of engaging in a course of conduct.”

The Court explained that “absent clearly expressed congressional intent to the contrary, federal laws will be construed to have only domestic application.” This presumption against extraterritoriality “avoids the international discord that can result when U.S. law is applied to conduct in foreign countries.” It also ensures that Congress—rather than the judiciary—is responsible for navigating the “delicate field of international relations.” Nevertheless, the Court concluded that RICO can reach extraterritorial conduct. However, the Court held that 18 U.S.C. § 1964(c) does not allow recovery for injuries suffered in foreign territories. The Court explained that “nothing in § 1964(c) provides a clear indication that Congress intended to create a private right of action for injuries suffered outside of the United States.” Thus, although RICO creates a cause of action for misconduct committed abroad, § 1964(c) requires a “domestic injury.”

(…) There is no consensus on what specific factors must be considered when deciding whether an injury is domestic or foreign.

(…) Because this case does not involve Article III standing, but rather presents an issue of statutory standing, subject matter jurisdiction is not implicated, and the parties incorrectly relied on Rule 12(b)(1).

(…) (The decision not to name GSK China as a defendant is likely an attempt to downplay ties to China.)

(…) In Cevdet Aksut Ogullari Koll. Sti. v. Cavusoglu, the district court found that a plaintiff’s principal place of business and the location of its operations were merely helpful considerations in determining whether the effects of an alleged injury were domestic or foreign. There, a Turkish corporation “asserted that its domestic business was injured because it had . . . annual sales to customers in the United States prior to transacting with the RICO enterprise.” The court held that, even if it were to assume that the plaintiff lost earnings from customers located in the United States, it nonetheless could ascertain no “domestic injury to the plaintiff’s business because its business was entirely located in and operated out of Turkey.” The “plaintiff’s injury was felt in the only place it had ever been located, in Turkey.” (245 F. Supp. 3d 650 (D.N.J. 2017).

The court’s analysis in Dandong Old N.-E. Agric. & Animal Husbandry Co. v. Hu is more analogous to our inquiry. The plaintiff there was a Chinese company that was one of the largest purchasers of soybeans produced in the United States. It alleged, inter alia, that the defendant’s RICO misconduct caused the plaintiff to lose contracts with soybean suppliers in the United States. The plaintiff claimed the loss of much of its market share and that its business operations slowed as a result of its inability to receive soybeans from U.S. suppliers at the same volume as before the defendant’s alleged misconduct. The plaintiff also alleged that it was forced to terminate 90 of its China-based employees. The court disregarded the location of the predicate acts that were alleged and instead focused only on where the plaintiff felt the effects of the alleged injury. That analysis caused the court to conclude that the plaintiff failed to establish a domestic injury. The trial court found that “any deprivation of the plaintiff’s money was felt in China. And, in sharp contrast to Elsevier, the Plaintiff was not deprived of its property in the United States because, indeed, the Plaintiff received all of the soybeans for which it contracted with U.S. suppliers.” (Dandong Old N.-E. Agric. & Animal Husbandry Co., 2017 WL 3328239 at *6). The plaintiff’s principal place of business was in China, all the terminated employees were fired in China, any expenses resulting from the alleged misconduct were paid from China, and the plaintiff’s business operated only out of China. The court found that the foreign plaintiff’s allegation that it lost prospective business opportunities from U.S. suppliers insufficient to establish that the plaintiff experienced a domestic injury because such a claim, without more, “is far too attenuated to suffice as a domestic injury under RICO.” For these reasons, the Dandong court ultimately held that “regardless of where the conspirators’ conduct took place, the plaintiff’s injury was felt in China, the only place its business had ever been located.” Although other courts have reached similar results, Dandong’s approach to determining the location of the alleged injury is particularly helpful because it is nuanced and the court considered the totality of the circumstances without relying on any single circumstance.

With this background as our guide, we must determine if Plaintiffs here have alleged a plausible domestic injury under § 1964(c). We begin with RJR Nabisco’s clear command: the analysis of whether a plaintiff has alleged a domestic injury must focus principally on where the plaintiff has suffered the alleged injury. “Nothing in § 1964(c) provides a clear indication that Congress intended to create a private right of action for injuries suffered outside of the United States.”

(…) Given the intangible nature of the alleged injuries here, our inquiry must focus primarily upon where the effects of the predicate acts were experienced. This will better allow for appropriate consideration of the nuanced nature of intangible interests.

(…) Whether an alleged injury to an intangible interest was suffered domestically is a particularly fact-sensitive question requiring consideration of multiple factors. These include, but are not limited to, where the injury itself arose; the location of the plaintiff’s residence or principal place of business; where any alleged services were provided; where the plaintiff received or expected to receive the benefits associated with providing such services; where any relevant business agreements were entered into and the laws binding such agreements; and the location of the activities giving rise to the underlying dispute.

Applying these principles to the allegations here, we have no difficulty concluding that Plaintiffs have not alleged a domestic injury. Rather, it is clear that the alleged injuries were suffered in China. As the District Court noted, at all relevant times, Plaintiffs lived in China; had their principal place of business in China; provided services in China (albeit to some American companies – but even they were operating in China); entered the Consultancy Agreement in China and agreed to have Chinese law govern it; met with Defendants’ representatives only in China.

(…) It is unclear whether an allegation of harm to goodwill constitutes a showing of “a concrete financial loss and not mere injury to a valuable intangible property interest.” Maio, 221 F.3d at 483 (fn. 101).

(…) RJR Nabisco observed that “there is good reason not to interpret § 1964(c) to cover foreign injuries just because the Clayton Act, a federal antitrust statute, does so.” RJR Nabisco, 136 S.Ct. at 2109. First, the Clayton Act explicitly authorizes foreign entities to bring suit under the statute. Id. Further, and as the Court described in F. Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155 (2004), the Foreign Trade Antitrust Improvements Act of 1982 excludes from the reach of antitrust laws “most conduct that ‘causes only foreign injury.’” RJR Nabisco, 136 S.Ct. at 2109 (citing Empagran, 542 U.S. at 158). (Fn. 129)


(U.S. Court of Appeals for the Third Circuit, Sept. 26, 2018, Humphrey v. GlaxoSmithKline PLC, Docket No. 17-3285, Precedential)


Même si le comportement illicite au sens de RICO a été commis à l’étranger, le lésé peut agir devant la cour de district fédérale. Dite cour est donc a priori compétente et la présente affaire ne pose pas de question de « jurisdiction ». Pour espérer l’emporter, le lésé doit alléguer et prouver un dommage « domestique » causé à son activité économique ou à ses biens. Si, comme en l’espèce, l’affaire présente des éléments d’extranéité, il peut être difficile de juger si le dommage est ou non « domestique ». Il le sera si, l’ensemble des circonstances ayant été considérées, nombre de ces circonstances pointent en direction des Etats-Unis et non en direction d’un état étranger. Est rappelé le principe de la présomption contre l’application extraterritoriale du droit fédéral, ladite présomption étant renversée en cas d’indication contraire du Congrès, exprimée clairement. Les circonstances importantes à considérer sont le lieu d’où le dommage est survenu, le lieu de résidence de la demanderesse, le lieu de ses activités principales, le lieu où les services ont été fournis, le lieu où la demanderesse a reçu ou devait recevoir le produit de ces services, le lieu de la conclusion du contrat, le droit applicable, et le lieu des activités à l’origine du litige.
Dans une affaire antérieure, la cour de district fédérale avait jugé que le siège de l’entreprise lésée et le lieu d’exercice de ses opérations ne sont pas dispositifs quant à déterminer si le dommage est « domestique » ou non. Dans cette affaire, une entreprise turque, au siège en Turquie, soutenait qu’une entreprise partenaire RICO avait porté préjudice à ses affaires « domestiques » (soit celles sur sol U.S.), le dommage consistant en une baisse de son chiffre d’affaires annuel aux Etats-Unis. La cour a jugé que même si tel devait être le cas, aucun dommage « domestique » n’avait été causé, du fait que les activités de l’entreprise turque étaient localisées en Turquie, menées par des opérateurs économiques en Turquie, et que le dommage avait été ressenti en Turquie uniquement.
Dans une autre affaire antérieure, la cour a considéré la totalité des circonstances et a retenu que la demanderesse RICO, une entreprise chinoise, était une des principales acheteuses de soja en provenance des U.S. La demanderesse soutenait avoir perdu des parts de marché aux Etats-Unis du fait du comportement de l’entreprise RICO, défenderesse. Elle alléguait en outre avoir en conséquence été contrainte de licencier une partie de son personnel en Chine. La cour a retenu le lieu où les effets découlant de l’illicéité ont été ressenti, soit la Chine uniquement, en précisant par ailleurs que la demanderesse avait reçu la contrepartie de tous les contrats passés avec les vendeurs U.S. L’allégation de pertes d’opportunités futures est insuffisante pour établir un dommage « domestique » au sens de RICO.
En l’espèce, la condition du dommage « domestique » n’est pas établie. Tous les points de contact sont localisés en Chine (la demanderesse est établie en Chine, lieu où elle déploie l’essentiel de ses activités commerciales, le contrat en discussion a été conclu en Chine, la loi applicable à ce contrat étant le droit chinois, et les contacts entre parties ont eu lieu en Chine).

No comments:

Post a Comment