Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Mich.: GE’s refrigerant compressor price fixing claims not time-barred, (Mar 16, 2015)

By Greg Hammond, J.D.

A global producer of refrigerant compressors was not entitled to dismissal of claims that it engaged in a conspiracy to fix prices and restrain competition in the market for refrigerant compressors. The federal district court in Detroit denied the producer’s motion to dismiss, finding—in part—that supplemental briefs are needed to address antitrust standing and whether plaintiff General Electric Company’s (GE) claims are barred under the Foreign Trade Antitrust Improvement Act (In re Refrigerant Compressors Antitrust Litigation, March 13, 2015, Cox, S.).

GE alleged that Danfoss AS and related companies engaged in a long-standing cartel to illegally raise and fix the prices of, and illegally restrict capacity and competition in the manufacture and sale of, refrigerant compressors sold in the United States and elsewhere in the world. As a result of Danfoss’ and co-conspirators’ conduct, GE asserted that it paid prices at supra-competitive levels, reducing the attractiveness of its products to customers’ in terms of price and quality, and thereby damaging its business. Refrigerant compressors are devices that compress a refrigerant gas.

GE brought three causes of action, including a Sherman Act claim and claims for common law fraud and conspiracy. Danfoss moved to dismiss, challenging GE’s: (1) standing; (2) antitrust claims as barred by the statute of limitations; (3) damages claimed before September 2006 and after February 2009; and (4) common law fraud and conspiracy claims as barred by the statute of limitations.

Standing. Danfoss first raised the issue of whether GE has federal antitrust standing to assert claims as a minority owner of a joint venture that purchased refrigerant compressors and whether those purchases are barred under the Foreign Trade Antitrust Improvement Act (FTAIA). The court, however, declined to rule on these two issues, until after the parties file supplemental briefs addressing the Seventh Circuits recent decision in Motorola Mobility LLC.

Statute of limitations. The complaint was also challenged on statute of limitations grounds. The court found that Section 5(i) of the Clayton Act extends GE’s damages period back to September 2006. Section 5(i) states that, “Whenever any civil or criminal proceeding is instituted by the United States to prevent, restrain, or punish violations of any of the antitrust laws, but not including an action under section 15a of this title, the running of the statute of limitations in respect to every private or State right of action arising under said laws and based in whole or in part on any matter complained of in said proceeding shall be suspended during the pendency therefor and for one year thereafter.”

The court found that the government initiated a criminal action against defendant Ernesto Heinzelmann that is still pending. Nevertheless, Danfoss argued that GE is not entitled to Section 5(i) tolling because (1) there is an insufficient overlap between GE’s complaint in this case and the indictment in the Heinzelmann action; and (2) given the status of the Heinzelmann action, in which only an indictment has been filed since the case was filed in 2011, allowing tolling would violate the purpose behind the tolling provision.

The court rejected both arguments, finding that Danfoss failed to offer any legal precedent for its arguments. Further, “logic and precedent dictate that the starting point of this Court’s analysis is the language of the statute itself,” the court noted, concluding that because the criminal action against Heinzelmann is still pending, tolling appears to be required under the plain language of the statute.

Damages. Danfoss’ attempts to limit damages claimed during certain time periods were also rejected. First, the court found that absent any tolling, GE could pursue damages back to February 15, 2009, which is within four years of when GE filed its complaint. GE is also able to seek damages prior to September 2006, because it adequately alleged fraudulent concealment, which tolls the statute of limitations. Specifically, allegations that the defendants made representations that their pricing activities were based on market forces and that they concealed their conspiracy by announcing higher price increase ranges than the agreed-upon price ranges, along with specific dates and actions taken, were sufficient to adequately allege wrongful concealment. In addition, taking the allegations in GE’s complaint as true, with regard to actions it took prior to governmental investigations and after it learned the Department of Justice had commenced an antitrust investigation concerning the compressor industry, GE met the due diligence element.

Common law claims. The court dismissed GE’s common law fraud claim as barred by Kentucky’s 10-year statute of limitations. The state-law conspiracy count, however, was not dismissed, because GE sufficiently pleaded fraudulent concealment for purposes of its conspiracy claim under the Sherman Act. The statute of limitations for the state-law conspiracy claim was consequently tolled.

The case number is 2:09-md-02042.

Attorneys: Carl H. von Ende (Miller, Canfield, Paddock and Stone, PLC) for General Electric Co. Brett A. Rendeiro (Varnum LLP) for Danfoss AS. Elizabeth A. McGovern (Reed Smith LLP) for Danfoss Commercial Compressors, Ltd., Danfoss, Inc., Danfoss Scroll Technologies, LLC, and Danfoss Turbocor Compressors, Inc.

Companies: General Electric Co.; Danfoss AS; Danfoss Commercial Compressors, Ltd.; Danfoss, Inc.; Danfoss Scroll Technologies, LLC; Danfoss Turbocor Compressors, Inc.

Cases: Antitrust MichiganNews