Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: Best Buy properly denied protective order barring discovery of its market monitoring practices, (Jul 29, 2014)

By Linda O’Brien, J.D., LL.M.

In multidistrict class action litigation against cathode ray tube manufacturers for an alleged international price fixing conspiracy, consumer electronics retailer Best Buy was properly denied a protective order barring discovery directed to the retailer’s setting of prices for finished CRT products, the federal district court in San Francisco has decided. Thus, the retailer’s objection to a special master’s order granting in part and denying in part its motion for protective order was denied (In re Cathode Ray Tube (CRT) Antitrust Litigation, July 28, 2014, Conti, S.).

Best Buy, along with other direct purchaser plaintiffs (DAPs), filed a multidistrict class action against cathode ray tube (CRT) manufacturers that involved allegations of an international conspiracy to fix prices on CRT’s included in products purchased by Best Buy and other manufacturers and retailers. In May 2014, Best Buy moved for a protective order barring discovery of its competitive intelligence practices before a special master. The defendant manufacturers had sought two forms of discovery into Best Buy’s competitive intelligence practices: (1) a deposition of a Best Buy designee concerning its market monitoring activities for CRT finished products and (2) interrogatories regarding Best Buy executives’ participation in the competitive intelligence practices. The special master denied Best Buy’s motion as to the deposition and granted the protective order as to the interrogatories. Best Buy filed an objection to the special master order.

Relevance. The court determined that the discovery of information regarding Best Buy’s competitive intelligence program directed at setting the prices of finished CRT products was relevant. To determine whether information sought is discoverable under Federal Rule of Civil Procedure 26, the material sought must be relevant to a party’s claim or defense and the burden of the discovery is weighed against its likely benefit. According to the court, the U.S. Supreme Court decision in Kiefer-Stewart Co. v. Jos. E. Seagram & Sons, Inc., 340 U.S. 211 (1951), which held that antitrust violations by a plaintiff cannot immunize defendants from liability for their own violations, did not bar all discovery into an antitrust plaintiff’s activities. In this case, the defendants’ contention that Best Buy and other DAPs passed along any CRT overcharges to indirect purchasers was potentially relevant to the amount of any pass-through to other plaintiffs and the fact of any damages. Moreover, the discovery sought by the defendants was relevant to rebut any arguments by Best Buy that competitor contacts and price monitoring was indicative of a conspiracy.

Burden of discovery. Additionally, the burden of responding to the defendants’ request for depositions did not outweigh the likely benefits. The court noted that the discovery sought was relevant to the defendants’ defenses and central to the issue of pass-through of the overcharges to other plaintiffs. Furthermore, the amount in controversy in the case was enormous and the parties had already propounded extensive discovery. Finally, examination by deposition on the issue would entail significantly less expenditure of time, money, and effort than through interrogatories, the court concluded.

The case is No. C-07-5944-SC.

Attorneys: David Martinez (Robins Kaplan Miller & Ciresi LLP) for Best Buy Co., Inc. Eliot A. Adelson (Kirkland & Ellis LLP) for Hitachi, Ltd. Calvin Lee Litsey (Faegre Baker Daniels LLP) for Technicolor SA.

Companies: Best Buy Co., Inc.; Hitachi, Ltd.; Technicolor SA

Cases: Antitrust CaliforniaNews