Antitrust Law Daily Wrap Up, ANTITRUST—EDMI: Newly Added Party Denied Request to Rule Claims Related Back to Prior Claims , (Apr 15, 2013)

By Jody Coultas, J.D.

The federal district court in Detroit has denied a request by a newly-added defendant in an antitrust case filed by indirect purchaser of freezers and refrigerators against hermetic compressor manufacturers to rule that the claims asserted against it did not relate back to any prior claims (In re: Refrigerant Compressors Antitrust Litigation, April 11, 2013, Cox, F.).

Hermetic compressors are the critical engine in refrigeration products. The compressors were sold through a yearly bidding process by which refrigerator and freezer manufacturers compete. Prices for the compressors are determined in the course of a few days at the bidding meetings. The compressor manufacturers allegedly created a sham bidding system by secretly meeting before the bidding process, sharing bids, and agreeing on prices.

The purchasers alleged that the manufacturers engaged in a long-running, world-wide conspiracy to fix the prices of, and to allocate customers and markets for, hermetic compressors. Prices were allegedly artificially inflated for compressors, and the overcharges were allegedly passed on to end payors in the form of inflated prices for the compressors and products containing them, such as refrigerators and freezers.

In an April 9 decision, the court held that the indirect purchasers had standing to assert antitrust claims under North Carolina and Minnesota law against the manufacturers, but lacked standing under the antitrust laws of several other states. The indirect purchasers also stated California, Massachusetts, New Mexico, and Rhode Island consumer protection claims against the manufacturers, but failed to state consumer protection claims under Florida, New Hampshire, North Carolina, Wisconsin, and the District of Columbia law.

The newly-added defendant, Danfoss Flensburg GmbH, filed a supplemental brief asserting a challenge that only applies to it, that was not included in the previously-filed motions to dismiss. Specifically, Danfoss contended that the claims asserted against it did not relate back to any prior complaints and were, therefore, time-barred.

An amendment to a pleading relates back to the date of the original pleading when the amendment changes the party or the naming of the party against whom a claim is asserted, if Federal Rule of Civil Procedure 15(c)(1)(B) is satisfied and if, within the period for serving the summons and complaint, the party to be brought in by amendment: (i) received such notice of the action that it will not be prejudiced in defending on the merits; and (ii) knew or should have known that the action would have been brought against it, but for a mistake concerning the property party’s identity.

The court denied Danfoss’ request for a ruling that the claims asserted against it in the IP Plaintiff’s complaint did not relate back to any prior complaints. For many years, the Sixth Circuit interpreted Rule 15 to preclude relation back when a plaintiff seeks to add, rather than substitute, a new party. The IP Plaintiffs’ did not replace or substitute one Danfoss entity for another. Rather, it added an entirely new Danfoss entity and kept all six of the previously-named Danfoss entities as defendants. Thus, there would be no relation back under Rule 15. However, the Sixth Circuit has acknowledged that Krupski v. Costa Crociere S.p.A., 130 S.Ct. 2485 (2010) changed the law as it relates to relation back under Rule 15 but has not ruled on the issue of whether Krupski abrogated the Sixth Circuit’s rule that categorically barred the addition of new parties under the rule.in. In another case the Sixth Circuit suggested that there was no longer a categorical bar, at least where the newly-added defendant is related to the original defendant. Therefore, the court denied the request without prejudice.

The case is No. 2:09-md-02042.

Attorneys: Elizabeth A McGovern (Reed Smith) for Danfoss, Inc. Fred K. Herrmann (Kerr, Russell and Weber, PL) for Whirlpool, SA.

Companies: Danfoss Flensburg GmbH

Cases: Antitrust StateUnfairTradePractices MichiganNews