A federal judge in Philadelphia Friday dismissed a civil complaint against UK-based GlaxoSmithKline brought by a British private investigator and his American wife and their China-based company.
Peter Humphrey and Yu Yingzeng, his wife and business partner, sued GSK a year ago. They alleged they spent months in Chinese jails after GSK duped them into investigating an innocent internal whistleblower who the company had fired and wanted to silence.
Judge Nitza Quinones Alejandro granted GSK’s motion to dismiss. He said the RICO statute doesn’t cover harm suffered outside the United States. He also said the federal court didn’t have jurisdiction to hear the other claims.
Judge Alejandro’s memorandum opinion is here (pdf).
Humphrey and Yu were arrested in China in 2013. They were charged in a Shanghai court with illegally obtaining private information.
He was sentenced to two and a half years in prison, and Yu received a two-year sentence.
GlaxoSmithKline had hired their Shanghai-based firm, ChinaWhys, to investigate e-mails from a former employee that alleged widespread bribery at the British drugmaker. The ex-employee was also suspected of circulating a sex tape of former GSK China head Mark Reilly with his girlfriend.
Humphrey appeared on China Central Television two months after his arrest and said he was sorry for illegally selling personal information.
In a second appearance on CCTV, Humphrey said he and his wife “deeply regret” breaking any Chinese law. He said ChinaWhys would not have worked with GSK if the drugmaker had informed him about the full details of the whistleblower emails.
Humphrey previously worked for Reuters as a journalist in the 1980s and 90s.
The couple were released early from prison in June 2015.
China police arrested Reilly in 2014. He and two China nationals who worked for GSK were charged with offering bribes to hospital personnel and doctors to boost GSK’s sales.
Reilly was given a three-year prison sentence. The sentence was suspended and he was deported.
In September 2014, a court in Changsha, China fined GSK $490 million following a conviction for bribery. China’s Ministry of Public Security said in 2013 that GSK had used 700 travel agents to deliver the illegal payments since 2007.
In 2016, GSK paid the SEC a $20 million civil penalty to settle charges that it violated the Foreign Corrupt Practices Act. The SEC said China-based subsidiaries spent millions of dollars on pay-to-prescribe schemes for several years to pump up sales.
In their U.S. lawsuit (pdf) against GSK, Humphrey and Yu alleged the drugmaker violated federal racketeering and conspiracy laws under 18 USC §1962 and were liable under state law for fraud, negligence, and civil conspiracy.
They said GSK’s actions inflicted emotional distress on them and destroyed their investigation business.
The judge dismissed their entire complaint.
They were represented in their claims against GSK by lawyers from Boies Schiller (New York) and Philadelphia’s Gallagher & Turchi.
GSK was represented by Paul Hastings (New York) and DLA Piper (Philadelphia).
Richard L. Cassin is the publisher and editor of the FCPA Blog.