Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Mich.: Mitsubishi unable to steer clear of auto parts price fixing claims, (Apr 23, 2015)

By Greg Hammond, J.D.

Automobile dealership and end-payor plaintiffs sufficiently alleged that a manufacturer of HID ballasts and its subsidiaries engaged in a price fixing and bid rigging conspiracy. The manufacturer’s motion to dismiss the conspiracy claims was consequently denied by the federal district court in Detroit (In re Automotive Parts Antitrust Litigation, April 22, 2015, Battani, M.).

Background. Mitsubishi Electric Corp. and its subsidiaries, Mitsubishi Electric US Holdings, Inc. and Mitsubishi Electric Automotive America, Inc. (collectively, Mitsubishi), are partly in the business of manufacturing and selling HID ballasts—electrical devices that limit the amount of electrical current flowing to a HID headlamp. Automobile dealership plaintiffs and end-payor plaintiffs filed suit against Mitsubishi and other companies for allegedly participating in a conspiracy to fix the prices and rig bids for automotive parts, including HID ballasts. Mitsubishi moved to dismiss the plaintiffs’ consolidated amended class action complaints.

The two questions the court decided was whether the indirect purchaser plaintiffs alleged a plausible antitrust conspiracy when no Mitsubishi defendant pleaded guilty to collusion on HID ballasts, and whether plaintiffs have advanced a claim against the Mitsubishi subsidiaries.

Participation. Despite the Mitsubishi defendants’ arguments that the claims against them were based on “threadbare allegations,” rendering the complaints deficient, the court found that the plaintiffs met their pleading obligations. First, the court found that because there was concrete evidence of the existence of the conspiracy, as well as other allegations giving rise to an inference that the Mitsubishi defendants participated in the conspiracy, Mitsubishi’s argument that the plaintiffs only alleged “mere involvement” in an industry alleged to be “rife” with antitrust violations was unpersuasive.

Second, although Mitsubishi did not plead guilty to price fixing HID ballasts, the court stated that Mitsubishi was not immune from conduct that fell outside its plea agreement for other component parts. In the instant case, the court noted that there were multiple guilty pleas specific to the HID ballast market; there was an overlap in the years of the HID conspiracy and conspiracies for which Mitsubishi pleaded guilty; and there was a strong inference of involvement arising from Mitsubishi’s agreement to cooperate in the HID ballasts investigations. The complaint’s factual allegations consequently created a reasonable expectation that discovery will reveal evidence of illegal agreement beyond the parties that pleaded guilty and beyond the extent admitted by some defendants.

Lastly, the court found that allegations of high barriers to entry and inelastic demand created an inference that the market was conducive to collusion.

Subsidiary participation. Mitsubishi additionally argued that the plaintiffs’ complaints failed to meet pleading standards because there were no allegations concerning the involvement of the Mitsubishi subsidiaries in the alleged conspiracy. The court rejected this argument, however, finding that the plaintiffs sufficiently alleged that the subsidiaries participated in the conspiracy and therefore were not required to differentiate between the participating defendants relative to the overt acts. The motion to dismiss was consequently denied.

The case number is 12-md-02311.

Attorneys: Adam T. Schnatz (The Miller Law Firm), Bernard Persky (Robins Kaplan LLP), and Brendan H. Frey (Mantese Honigman Rossman & Williamson, PC) for Automobile Dealership Plaintiffs. Marc M. Seltzer (Susman Godfrey, LLP) for End-Payor Plaintiffs. Charles B. Sklarsky (Jenner and Block) for Mitsubishi Electric Corp., Mitsubishi Electric Automotive America, Inc., and Mitsubishi Electric U.S. Holdings, Inc.

Companies: Mitsubishi Electric Corp.; Mitsubishi Electric US Holdings, Inc.; Mitsubishi Electric Automotive America, Inc.

Cases: Antitrust MichiganNews