Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Mich.: Personal jurisdiction discovery allowed in refrigerant compressor bid rigging action, (Sep 19, 2014)

By Linda O’Brien, J.D., LL.M.

In an action brought by purchasers of freezers and refrigerators against refrigeration compressor manufacturers for conspiring to rig bids and artificially inflate prices, the federal district court in Detroit has granted the parties’ request to conduct limited discovery on this issue of whether personal jurisdiction existed over foreign manufacturer Danfoss A/S and related companies. Thus, the defendants’ motion to dismiss was denied without prejudice (In re Refrigerant Compressors Antitrust Litigation, September 18, 2014, Cox, S.).

Hermetic compressors are a critical component in refrigeration products. The compressors are sold through a yearly bidding process in which refrigerator and freezer manufacturers compete. Prices for the compressors are determined in the course of a few days at the bidding meetings. Refrigeration equipment manufacturer General Electric Company (GE) and other direct and indirect purchasers filed a series of class action suits against compressor manufacturers—including Danfoss A/S, Danfoss Flensburg GMBH, and Danfoss, LLC—alleging that the manufacturers conspired to set the price of refrigerant compressors and restrain competition in the market, causing GE to pay inflated prices for the compressors. GE’s complaint asserted fraud and conspiracy claims and violations of Section 1 of the Sherman Act. Danfoss A/S was the foreign parent corporation of Danfoss Flensburg GMBH and Danfoss, LLC. Danfoss A/S moved for dismissal for lack of personal jurisdiction.

In considering the motion to dismiss, the court could determine the motion based on affidavits, could permit discovery, or could conduct an evidentiary hearing. GE asserted that, based on affidavits, it made a prima facie showing of general and specific jurisdiction over Danfoss based upon the alter-ego theory of personal jurisdiction. Under the alter-ego theory, a non-resident parent company is amenable to suit in the forum state if the company exerts so much control over the subsidiary that the two are one and the same for purposes of jurisdiction.

According to the court, relevant factors to consider when determining the application of the alter-ego theory include (1) the sharing of employees and corporate officers, (2) the engagement in the same business, (3) the use of the same address and telephone, (4) the sharing of assets, (5) the completion of the same jobs, (6) the maintenance of common books, tax returns, and financial statements, and (7) the exertion of control over the daily affairs of another corporation. The court determined that, after review of the submitted affidavits, the parties should engage in limited discovery on the issue of personal jurisdiction.

The case is No. 13-12638.

Attorneys: David M. Schnorrenberg (Crowell & Moring) for General Electric Co. Carrie Maylor DiCanio (Anderson Kill PC) for Danfoss A/S, Danfoss Flensburg GMBH, and Danfoss, LLC.

Companies: General Electric Co.; Danfoss A/S; Danfoss Flensburg GMBH; Danfoss, LLC

Cases: Antitrust MichiganNews