Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Mich.: Interlocutory appeal rejected for auto component manufacturers challenging price-fixing allegations, (Aug 6, 2014)

By Edward L. Puzzo, J.D.

Automotive component manufacturers accused of price-fixing by motor home manufacturers were not entitled to an interlocutory appeal of the court’s determination that antitrust claims had been adequately pleaded, because they were unable to show that resolution of the adequacy issue was not substantially guided by previous court decisions, the federal district court in Detroit has ruled (In Re: Automotive Parts Antitrust Litigation, August 5, 2014, Battani, M).

Background. Direct purchaser plaintiffs (DPPs)—manufacturers of motor vehicles and their component parts—brought a series of class actions alleging a price-fixing conspiracy by the manufacturers of certain automotive parts, including automotive wire harness systems, instrument panel clusters (IPCs), heater control panels (HCPs), and fuel senders. The actions followed a series of antitrust investigations into the conduct of the defendants by regulatory agencies in Europe, Japan, and the United States, which resulted in certain guilty pleas.

In this segment of the consolidated litigation, motor home manufacturers Tiffin Motor Homes and Fleetwood Enterprises, by its bankruptcy trustee, alleged that defendants Denso Corporation, Sumitomo Electric, and Tokai Rika engaged in a price-fixing conspiracy regarding automotive heater control panels (HCPs).

On April 30, 2014, the court ruled that the DPPs had antitrust standing, that the defendants’ concealment of their pricing and bidding conduct tolled the statute of limitations, and that the DPPs were entitled to injunctive relief. Subsequently, the defendants requested that the court amend its April 30, 2014 order and permit an interlocutory appeal of the decision. The issue they proposed for certification for appeal was whether allegations regarding price-fixing prosecutions resulting in guilty pleas, government statements detailing targeted conduct, and allegations regarding general industry conduct adequately “stated a claim for a substantially broader conspiracy than the government charged.”

Exceptional circumstances required. Interlocutory appeals in the federal system are generally disfavored and are reserved for exceptional cases, the court observed. Under In re City of Memphis (293 F. 3d 345, 6th Cir. 2002), the party seeking an interlocutory appeal had the burden of showing exceptional circumstances. Exceptional circumstances were shown by (1) a controlling question of law, (2) as to which there is substantial ground for difference of opinion, and (3) that an immediate appeal from the order may materially advance the ultimate termination of the litigation.

The court agreed that the application of the pleading standard to the DPPs’ complaint involved a controlling question of law, and further agreed that that an immediate appeal from the order might materially advance the ultimate termination of the litigation. The court did not find, however, that there was a substantial ground for a difference of opinion regarding the correctness of the decision. It did not involve a question for which there was little precedent, was a difficult question of first impression, or where a difference of opinion existed within or between circuits.

The court noted that there was no uncertainty about the existence of an agreement between the defendants to coordinate price quotes to Toyota, another automotive manufacturer. Defendant Tokai Rica had pleaded guilty to obstruction of justice in destroying electronic and paper documents likely to contain evidence of antitrust crimes in the United States and elsewhere. The court also noted that the ongoing investigation into price-fixing in automotive component parts had resulted in myriad guilty pleas not limited to matters involving Toyota. The DPPs’ allegations, the court continued, alleged factors that rendered the HCP market conductive to conspiratorial conduct and that, in fact, a conspiracy thrived in the HCP market. The allegations in the DPPs’ complaint articulated a plausible antitrust claim based upon the structure of the market, the government investigations and the guilty pleas.

The expansive government investigation, the number of guilty pleas involving numerous component parts, the length of time involved, and the overlap of manufacturers and defendants created an inference that price-fixing was commonplace in the automotive component parts market, the court continued. The DPPs’ did not rely on guilt by association to “nudge” their claim from conceivable to plausible. Instead, the court continued, the allegations created a reasonable expectation that discovery may reveal further evidence of an illegal agreement involving other targets.

These allegations were sufficient to show that this was not an “exceptional” case whose resolution was not substantially guided by previous decisions, the court ruled. Thus, the court concluded, the defendants failed to satisfy the necessary requirements for interlocutory review.

The case Master File No. is 12-md-02311.

Attorneys: Darryl Bressack (Fink + Associates Law), Douglas A. Abrahams (Kohn, Swift and Graf, PC), and Jayne Goldstein (Pomerantz Hufford Grossman Dahlstrom & Gross, LLP) for Tiffin Motor Homes, Inc., and SLTNTRST LLC. Brian C. Smith (Wilmer Cutler Pickering Hale and Door LLP) for Denso Corp. Daniel M. Wall (Latham & Watkins) for Sumitomo Electric Industries, Ltd., and Sumitomo Wiring Systems, Ltd. David F. DuMouchel (Butzel Long) for Tokai Rika Co., Ltd., and Tram, Inc.

Companies: Tiffin Motor Homes, Inc.; SLTNTRST LLC; Denso Corp.; Sumitomo Electric Industries, Ltd.; Sumitomo Wiring Systems, Ltd.; Tokai Rika Co., Ltd.; Tram, Inc.

Cases: Antitrust MichiganNews