Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Mich.: Interlocutory appeal denied in automotive wire harness price fixing case, (Sep 9, 2013)

By Peter Reap, J.D., LL.M.

Lear Corporation and Kyungshin-Lear Sales and Engineering, LLC (K-L Sales), two defendants in an action alleging a conspiracy to rig bids, fix prices, and allocate markets for automotive wire harness systems (WHS) and related products, failed to demonstrate that exceptional circumstances existed justifying an interlocutory appeal of the denial of their motions for dismissal, the federal district court in Detroit has ruled (In re Automotive Parts Antitrust Litigation (Wire Harness Cases), September 6, 2013, Battani, M.).

Background. Automobile dealers and end payors brought the underlying action against manufacturers or sellers of wire harness products that are manufactured or sold in the United States. WHS are the “central nervous systems” of automotive vehicles and consist of wires or cables and data circuits that run throughout the vehicles.

Previously, KL Sales unsuccessfully moved for dismissal of these indirect purchaser complaints. In rejecting KL Sales’ arguments for dismissal, the court reviewed the allegations regarding all of the defendants, including status as co-conspirators; the other defendants’ agreements with other manufacturers of wire harnesses and related products to fix prices and rig bids; the time frame of the conspiracy; market conditions conducive to collusion; and Lear’s five percent market share. The court then determined that the allegations of the indirect purchaser plaintiffs rendered KP Sales’ involvement in the conspiracy plausible when viewed in light of the alleged market conditions. The court reached the same conclusion relative to Lear.

Analysis. KL Sales and Lear argued that interlocutory appeal was appropriate because there was a basis for disagreement as to the sufficiency of the allegations in the complaints linking them to conduct by others in the market. KL Sales asserts that under Twombly, its behavior was ambiguous because it had not been investigated or even contacted by the Department of Justice; it merely was “a peripheral “outlier,” it asserted. Lear argued that the absence of any case law from this circuit addressing the particular facts presented—the import of guilty pleas by other defendants relative to defendants that have not pleaded guilty—rendered this matter ripe for interlocutory appeal.

The parties disagreed as to whether a controlling and contestable legal issue was presented by the extension of Twombly to general allegations of conspiracy against a defendant who has not pleaded guilty or admitted wrongdoing when other defendants have. Accordingly, the court would direct its attention to whether there was substantial ground for difference of opinion on the court’s conclusion.

In the Sixth Circuit, the district courts have interpreted the “substantial ground for difference of opinion… regarding the correctness of the decision” as meaning: (1) the question is difficult, novel and either a question on which there is little precedent or one whose correct resolution is not substantially guided by previous decisions; (2) the question is difficult and of first impression; (3) a difference of opinion exists within the controlling circuit; or (4) the circuits are split on the question.

Here, in reading the complaints as a whole, the court concluded that the allegations were sufficient to state a claim that KL Sales and Lear participated in the conspiracy. There was no uncertainty about the existence of an agreement inasmuch as many participants in the conspiracy had pleaded guilty to criminal charges, the court explained. Even in the absence of admitted involvement by KL Sales and Lear, the allegations were sufficient to establish that this was not an “exceptional” case appropriate for interlocutory review, the court determined.

The allegations advanced by the plaintiffs in their complaints nudged the claims from conceivable to plausible, according to the court. This was not the bare parallel conduct case rejected by Twombly. KL Sales and Lear failed to satisfy show the existence of grounds for a substantial difference of opinion as to the outcome of the issue.

Moreover, judicial economy interests weighed against an interlocutory appeal. This multi-district litigation involved numerous other defendants and allegations of price-fixing of numerous automotive component parts. Affording the appellate court the opportunity to address all of the issues at one time at the conclusion of the litigation would facilitate a speedier resolution of this matter than reviewing a portion of the litigation at this time, the court decided.

The case is No. 2:12-cv-00100, Master File No. 12-md-02311.

Attorneys: David H. Fink (Fink + Associates Law) for T.M. Morris Manufacturing Company, Inc. Andrew Marovitz (Mayer Brown LLP) for Lear Corp. Jeffrey G. Heuer (Jaffe Raitt Heuer & Weiss, PC) for Kyungshin-Lear Sales And Engineering, LLC.

Companies: Kyungshin-Lear Sales And Engineering, LLC; Lear Corp.

Cases: Antitrust MichiganNews