Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Mich.: Korean auto parts seller eludes price fixing suit on jurisdictional grounds, (Jul 27, 2015)

By Greg Hammond, J.D.

A Korean company that allegedly sold or marketed valve timing control devices throughout the United States was dismissed from an automotive parts price fixing class action suit for lack of personal jurisdiction. In granting the company’s motion to dismiss, the federal district court in Detroit found that an alter-ego theory was inapplicable to assert general jurisdiction over the Korean company, and specific jurisdiction could not be exerted where the company did not purposefully avail itself of the privilege of acting in or causing a consequence in the United States (In re Automotive Parts Antitrust Litigation, July 23, 2015, Battani, M.).

Automobile dealerships and vehicle purchasers filed suit against Delphi Powertrain Systems Korea Ltd. and other auto parts sellers, alleging that Delphi engaged in a conspiracy to unlawfully fix, raise, maintain and/or stabilize prices, rig bids for, and allocate the market and customers in the United States for valve timing control devices. Delphi allegedly sold or marketed substantial quantities of valve timing control devices throughout, had substantial aggregate contacts with, and targeted customers in the United States. Delphi moved to dismiss for lack of personal jurisdiction.

General jurisdiction. Noting that Delphi is a Korean company with its principal place of business in Korea, the court first found that Delphi is not “at home” in the United States. Nevertheless, the plaintiffs claimed that the court may exercise general jurisdiction over the company because it is an alter-ego of defendant Delphi Automotive LLP. The court rejected this argument, however, noting that Delphi is a subsidiary of Delphi Automotive and that the alter-ego theory does not permit a subsidiary to be subjected to personal jurisdiction based on the actions of its parent corporation.

Specific jurisdiction. The plaintiffs additionally argued that specific jurisdiction was appropriate, since Delphi purposefully availed itself of the privilege of acting in or causing a consequence in the United States by: (1) participating in a conspiracy designed to have an effect in the United States; (2) placing products in the stream of commerce with intent to harm consumers in the United States; and (3) causing harmful effects in the United States. All three arguments were rejected.

With regard to the conspiracy theory, the plaintiffs argued that Delphi created a substantial connection with the United States by participating in a conspiracy with other defendants, over whom the court may exercise jurisdiction. However, there was no basis for imputing the actions of the other defendants on Delphi in analyzing jurisdiction in the absence of an explicit legal precedent, the court concluded.

While the plaintiffs may have created an inference that Delphi could have predicted its goods would reach the United States, the stream of commerce argument was still unavailing. The court noted that merely placing products into the stream of commerce with the potential that they may end up in a specific forum was insufficient.

Finally, the plaintiffs asserted that the brunt of the harm from the conspiracy was felt in the United States. However, the court found that the allegations specific to Delphi involve sales in Korea to third parties in Korea. Because Delphi had no contacts with the United States, and it did not expressly aim its tortious conduct at the United States, the United States could not be deemed the focal point of Delphi’s conduct, the court concluded.

Jurisdictional discovery. The plaintiffs’ request for jurisdictional discovery, in the event the court found the exercise of personal jurisdiction over Delphi unwarranted, was also denied. There was no reasonable basis for expecting that further discovery would reveal contacts sufficient to support personal jurisdiction.

The case number is 12-md-02311.

Attorneys: Devon P. Allard (Miller Law Firm) for End-Payor Plaintiffs. Adam T. Schnatz (The Miller Law Firm), Bernard Persky (Robins Kaplan LLP), and Brendan H. Frey (Mantese Honigman Rossman & Williamson, PC) for Automobile Dealer Plaintiffs. Margaret M. Zwisler (Latham & Watkins LLP) for Delphi Powertrain Systems Korea Ltd.

Companies: Delphi Powertrain Systems Korea Ltd.

Cases: Antitrust MichiganNews