Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Mich.: Court upholds earlier ruling dismissing solar panel producer’s predatory pricing claims against Chinese competitors, (Sep 8, 2015)

By Edward L. Puzzo, J.D.

There was not a sufficient basis to amend or alter the court’s previous judgment dismissing a predatory pricing claim by a Michigan-based solar panel producer against Chinese competitors, the federal district court in Detroit has ruled (Energy Conversion Devices Liquidation Trust v. Trina Solar Limited, September 4, 2015, Cleland, R.).

Complaint. Michigan-based solar panel producer Energy Conversion Devices (ECD), now in bankruptcy, filed a lawsuit on October 4, 2013 alleging that various Chinese solar panel competitors used their alternative energy trade association to illegally conspire to fix prices and dump their solar panels in the United States at “irrationally low or below-cost prices,” for the purpose of driving domestic American producers such as ECD out of business, in violation of the Sherman Act and the Michigan Antitrust Reform Act. Chinese based or controlled producers of photovoltaic solar panels, it was alleged, reduced prices in tandem by about 75%, causing such disruption to the American market that defendants collectively increased their market share to 80%. Having eliminated most of their American competition by these illegal activities, it was alleged, defendants were now free to raise prices immune from American competition.

Transfer denied. ECD sought to transfer venue of its lawsuit from the Eastern District of Michigan to the Northern District of California, where an earlier action by another solar panel manufacturer against the same defendants was pending, but on June 18, 2014, the motion to transfer venue was denied.

Predatory pricing claim fails. On October 31, 2014, the court ruled that ECD failed to sufficiently allege an antitrust injury. The complaint was found adequate in asserting that the defendants engaged in below-cost pricing. However, it was ruled, evidence of below cost pricing alone was not sufficient to allow an inference of probable recoupment and injury to competition without an allegation that the competitors had a “dangerous probability of recouping its investment in below-cost prices.”

The court also noted that the complaint did not allege that defendants intend to raise prices to, and sustain prices at, supracompetitive levels sufficient to recoup the losses with interest that were allegedly sustained as a result of below-cost pricing. Rather, the complaint merely stated that, in light of defendants’ 80 percent market share, the defendants had the ability to raise prices to such a level. As a result, the court dismissed ECD’s complaint.

Reconsideration denied. ECD next requested that the court reconsider its order dismissing its predatory pricing claims, but on August 21, 2015 the court denied reconsideration, finding the plaintiff failed to demonstrate a palpable defect in the court’s conclusion that the plaintiff was required to plead a dangerous probability of recoupment in order to state a claim of an unlawful predatory pricing scheme in violation of Section 1 of the Sherman Act.

Leave to amend complaint and judgment denied. ECD’s most recent motion was for the court to amend or alter its judgment and grant leave to file an amended complaint.

Motions to alter or amend judgment may be granted if there is a clear error of law, newly discovered evidence, an intervening change in controlling law, or to prevent manifest injustice, the court explained. ECD alleged that (1) as a result of discovery after the court entered judgment, there was now a basis for pleading a dangerous probability of recoupment; and (2) because of the new evidence, ECD now has evidence of a concerted predatory pricing scheme.

Courts reviewing a motion to amend a complaint filed after judgment has been entered must consider the competing interest of protecting the finality of judgments and the expeditious termination of litigation, the court stated. If complaint amendments after an adverse judgment were routinely allowed, plaintiffs could use the court as a sounding board to discover holes in their arguments, then reopen the case by amending their complaint to take account of the court's decision, thereby sidestepping the narrow grounds for obtaining post-judgment relief under Rules 59 and 60.

In the view of the court, the allegations of ECD’s proposed amended complaint were substantially similar to the allegations in its earlier complaint. What was not clear from ECD’s motion was when they discovered the new evidence on which its proposed amended complaint was based and whether it was discovered early enough for plaintiff to file a Rule 15 motion prior to the court’s entry of judgment. Regardless, the court found it unlikely that this newly discovered pricing and profit data would have any effect on whether ECD could allege a dangerous probability of recoupment—that is, the intention and capability of maintaining supracompetitive prices— beyond the information apparently available to plaintiff before the court entered judgment. Based on the prior pleadings and case history, it was more likely that ECD did not allege a dangerous probability of recoupment in its original complaint or later only because it believed it was not required to so plead, an argument the court has previously rejected. Consequently, the court ruled that ECD did not show that its Rule 15 and 59 motions should be granted either in light of newly discovered evidence or in order to prevent manifest injustice.

The case is Civil Action No. 2:13-cv-14241-RHC-RSW.

Attorneys: W. Gordon Dobie (Winston & Strawn LLP) for Energy Conversion Devices Liquidation Trust. Daniel Edward Laytin (Kirkland & Ellis LLP) for Trina Solar Ltd. and Trina Solar U.S., Inc. Jonathan C. Sanders (Simpson Thacher & Bartlett LLP) for Yingli Green Energy Holding Co Ltd. and Yingli Green Energy Americas, Inc. Catherine T. Dobrowitsky (Rivenoak Law Group, P.C.) for Suntech America, Inc.

Companies: Trina Solar Ltd; Trina Solar U.S., Inc.; Yingli Green Energy Holding Co Ltd.; Yingli Green Energy Americas, Inc.

Cases: Antitrust MichiganNews