Fourth Circuit Affirms Dismissal of Contaminated Infant Formula Action

Last month, I posted on an Indiana appeals court decision, which dismissed a helicopter product liability action on forum non conveniens.  Last week, the Fourth Circuit similarly affirmed the dismissal of a product liability action on grounds of forum non conveniens, holding that the action should instead be adjudicated in China.  The Fourth Circuit’s decision highlighted two important notions when considering whether to dismiss an action for forum non conveniens.  First, the Court’s decision emphasized that the doctrine of forum non conveniens does not limit “adequate” remedies to solely judicial remedies.  Second, the Fourth Circuit’s decision stressed that the doctrine of forum non conveniens is “concerned with convenience” and not simply the locus of the alleged wrongful conduct.

In 2008, Chinese officials became aware of reports that infants in China had died or become severely ill after consuming infant formula.  An investigation revealed that the formula was contaminated with melamine, a chemical which is unfit for human consumption.  The contaminated formula was manufactured and distributed in China by a Chinese subsidiary, Synutra Incorporated (“Synutra”).  As a result, in September 2008, Synutra recalled the “U-Smart” line of formula products, acknowledging that batches of its products were found to be contaminated.  In December 2008, the Chinese government established a fund to compensate the children and families affected by the contaminated infant formula.  Approximately 95% of the 300,000 infants accepted compensation from the fund, thus waiving their rights to sue.  Some victims, however, opted to bring civil lawsuits in lieu of accepting compensation from the fund. 

On January 15, 2009, some Chinese residents commenced an action against Synutra in the United States District Court of Maryland alleging Synutra’s role in producing, marketing, and distributing contaminated U-Smart products.  Synutra moved to dismiss on the basis of forum non conveniens.  The district court dismissed the complaint, finding that the action should be adjudicated in China, and Plaintiffs appealed.  On appeal, Plaintiffs argued, among other things, that China was not an adequate alternative forum because Chinese courts and government officials were obstructing the contaminated infant formula actions.  Specifically, Plaintiffs presented affidavits from Chinese lawyers asserting that Chinese courts continued to delay these cases and that government officials even pressured one lawyer to withdraw from a contaminated infant formula litigation.  Thus, Plaintiffs argued that China was not an adequate forum because they could not obtain a judicial remedy in lieu of the fund in China. 

In response to Plaintiffs’ contentions, the Fourth Circuit emphasized that the “doctrine of forum non conveniens does not limit adequate remedies to judicial ones.”  Indeed, the Court deemed China adequate because “even if the Chinese courts were not open to Plaintiffs, another remedy is undisputedly available to then, namely, the Fund.”  Moreover, the Court stated that even if forum non conveniens did, in fact, require the existence of an adequate alternative judicial remedy, Synutra nevertheless met its burden of showing substantial evidence that a judicial remedy was available in China.  Indeed, despite conflicting evidence, the Court found that Synutra had presented sufficient evidence proving that China’s highest court was ready to hear the infant formula contamination cases.  In fact, Synutra presented evidence rebutting Plaintiffs’ claim that the delay was a result of the Chinese courts’ resistance to the particular subject matter by instead presenting evidence that the delays may have been caused by defects in the complaints.           

Lastly, the Fourth Circuit rejected Plaintiffs’ contention that the district court improperly focused on where Plaintiffs’ injuries occurred (China) rather than where Synutra made its allegedly faulty decision (Maryland).  The Court emphasized that the doctrine of forum non conveniens is “ultimately concerned with convenience, not simply the locus of the alleged wrongful conduct.”  The Court stated that although the locus of the alleged wrongful conduct is a factor to consider, it is just one of several private and public interest considerations that need to be weighed by the Court in determining whether an alternative forum is more convenient.  Here, the Court emphasized that the contaminated infant formula was manufactured, marketed, distributed and consumed in China, the evidence would derive from Chinese witnesses and lastly, adjudicating the action in the United States would require the application of complex issues of Chinese law.  Furthermore, the Court emphasized that China had a greater interest in adjudicating the action given that the contaminated infant formula was distributed through the channels of the Chinese commerce and consumed by Chinese citizens.