What China's tainted milk may not bring: lawsuits

The government is giving families free care but may ban legal action over contaminated formula, which has affected more than 50,000 babies.

Li Fangping, a prominent human rights lawyer, is busy organizing victims of the poisoned infant formula scandal rocking China and offering pro bono help. But he is not planning to sue Sanlu, the formula manufacturer – not yet.

A case that in the United States would attract swarms of lawyers eyeing the prospect of millions of dollars in damages is primarily a political, not legal, issue in China.

For reasons to do with China’s still-developing law and its authoritarian political system, lawyers are treading carefully around the Sanlu incident, in which four babies have died and nearly 53,000 suffered kidney problems after drinking adulterated powdered milk.

The government is seeking to forestall legal repercussions by pledging free medical care for all babies affected by the tainted milk. Mr. Li is holding his fire until he sees how fully that pledge is kept.

"We are still waiting to see how the government's compensation policy works," he says. "If consumers accept it there will be no need for a lawsuit" against Sanlu.

"Going to court is not the most obvious thing to do in China" to seek remedy, says Jerry Cohen, a top US scholar of Chinese law and professor at New York University.

Instead, Li and more than 70 other lawyers offering their help gratis are concentrating on cases where hospitals are not abiding by the Health Ministry's public promise that treatment will be free. They are advising the parents of victims about the practicalities of claiming compensation from the government for the expenses they incur in treating their babies.

More than 1,000 parents have called Li and his colleagues, he says, complaining that hospitals around the country are charging to treat babies whose milk-induced kidney stones are below a certain size, or offering only a free scan but not free treatment, or denying babies treatment unless parents pay for a bed.

The central government has promised to pay all the medical costs arising from the scandal, the extent of which is still being discovered: On Sunday a Hong Kong hospital reported the first case outside mainland China of a child found with kidney stones after drinking tainted milk.

But it is unclear whether the authorities intend to reclaim the money they spend from Sanlu. For the time being, Sanlu and 21 other companies whose baby formula was found to include the toxic chemical melamine are offering victims no more than reimbursement for the money they spent on their poisoned product.

"If their children recover, and the government has paid for their healthcare, how can they sue Sanlu?" asks Liu Renwen, a legal scholar at the China Academy of Social Sciences. "I don't think many will try."

The 1986 principles of Chinese tort law do not allow citizens to claim damages for moral or spiritual suffering – what US lawyers call "pain and suffering" – only material damages to compensate for medical bills, for example.

That is changing, however, and Chinese courts are increasingly granting moral damages. Four years ago two families from the province of Anhui won damages from another infant formula manufacturer whose substandard milk powder was blamed for their babies' malnutrition.

Neither won more than $4,300 for their pain and suffering, however, which is hardly a large sum for major milk producers such as Sanlu.

"Damages are so low in China that companies can get away with it," says Dan Harris, partner in the Seattle law firm HarrisMoure, which specializes in Chinese business law. "Why bother to recall if only 20 people are going to sue you and win $20,000 each?"

At the same time, the Chinese government is nervous about the political impact of legal cases where plaintiffs might air their grievances openly. In the Sanlu case, victims' parents might ask why the company had been exempted from government inspection of its baby formula, for example.

When parents of children killed by their collapsing schools in the Sichuan earthquake tried to sue the local authorities, courts refused to hear the cases, and officials pressured families to accept out-of-court settlements as compensation for their children's lives.

"To the extent that they believe this could ventilate well-grounded frustrations with the [ruling Communist] party, the government will not be too eager to allow access to the courts," says Professor Cohen, the scholar of Chinese law.

"The record so far suggests that the Chinese government may be cautious in limiting access to the courts" in this case, Cohen continues. "Cases in very controversial areas and cases likely to cause class action litigation have not been allowed to proceed."

Li, as he contemplates the possibility of a lawsuit against Sanlu, says that because "this case has become politicized, it is unclear whether it can be resolved through a legal process.

"The government is trying to ensure social stability, and they do not want to see all the victims' parents to gather together, so they probably will not allow a class action suit," he expects.

"Individuals should be able to sue companies," Li argues, but in the interest of social stability "the government just takes money out of the national budget" to compensate victims of scandals such as the Sanlu incident.

"This kind of remedy will last for quite a while," he says.