Chinese Exporter Appeals Racketeering Lawsuit Against Competitors

A Chinese garlic exporter appealed the dismissal of its racketeering lawsuit against its Chinese competitors and their U.S. representatives. Harmoni International says a U.S. law firm, a New Mexico garlic farmer and others involved in the garlic trade with China are conspiring to fraudulently obtain lower antidumping duty rates while inflating Harmoni’s (see 1603100018). Though charges of racketeering were dismissed in Los Angeles federal court in November, the District Court recently allowed that part of the case to proceed to the Ninth Circuit, where Harmoni filed its appeal on June 29.

Those same allegations came up in the context of a recent Commerce Department antidumping duty administrative review on garlic from China (see 1706150059). Finding it likely that the law firm, Hume & Associates, and the New Mexico farmers it represented worked with Chinese exporters to raise AD duties on Harmoni, Commerce ended the review of Harmoni and allowed it to keep its zero percent AD duty rate.

The L.A. federal court dismissed Harmoni’s racketeering allegations because it judged that the exporter failed to demonstrate the alleged conspiracy was the direct cause of lost sales and profits. Other issues in the case remain unresolved, including allegations that other Chinese exporters were involved in the purported scheme.

But on June 26, the District Court allowed Harmoni to appeal the “proximate causation” clause before the other parts of the case are resolved by entering partial final judgment only on the dismissal of the racketeering claims. “A resolution of whether [Harmoni’s] allegations are sufficient to plead a [racketeering] violation would clarify the pleadings and assist both sides in developing their respective litigation strategies, thereby streamlining the proceedings,” it said. “Indeed, an adverse ruling on appeal may even entirely obviate [Harmoni’s] ability to pursue a [racketeering] claim premised upon the instant allegations.”

The defendants, including Hume and the New Mexico farmer, argued the court couldn’t enter final judgment on part of the case because other Chinese exporters have not been served with the lawsuit. The court disagreed, finding the difficulty in serving those Chinese defendants may cause the case to go on indefinitely. “Barring plaintiffs wholly conceding their claim against the enterprise’s alleged ‘mastermind,’ Bai, [Harmoni] would be cornered into absorbing additional burden and expense, while remaining uncertain as to whether that burden will ultimately be rendered moot by a subsequent unsuccessful appeal to the Ninth Circuit,” it said. “There is no just reason to allow the uncertain, time-consuming service of a foreign defendant (who has previously refused to permit service through his attorney) to keep [Harmoni] in a state of limbo that could last years.”

Email ITTNews@warren-news.com for a copy of the L.A. court’s recent order entering partial judgment.