Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: Class certification granted in optical disk drive price fixing suit, (Feb 9, 2016)

By Linda O’Brien, J.D., LL.M.

The federal district court in San Francisco has granted class certification to a class of indirect purchasers in a consolidated class action against manufacturers of optical disk drives (ODDs) for conspiring to fix prices (In re Optical Disk Drive Antitrust Litigation, February 8, 2016, Seeborg, R.).

Optical discs, such as CDs and DVDS, are mediums for storing data. ODDs are devices that allow data to be read from and written to optical discs. The ODD devices can be standalone products or can be incorporated into other products, such as computers. Direct and indirect purchasers of ODDs filed separate complaints against various manufacturers and sellers of the products—including Sony Corp., LG Electronics, Inc., and Toshiba Corp—alleging that the defendants conspired to fix the prices of ODDs between 2004 and 2009.

In October 2014, motions for class certification by both the direct purchaser plaintiffs (DPPs) and indirect purchaser plaintiffs (IPPs) were denied for failure to establish viable methodologies for establishing class-wide antitrust injury and damages. The DPPs entered into settlements disposing of their claims. The IPPs also reached settlements with certain defendants. As to their remaining claims, the IPPs now renew their motion for class certification.

The proposed class, according to the court, consists of all persons and entities that purchased computers containing ODDs and stand-alone ODDs. The IPPs seek class certification under Federal Rule of Civil Procedure 23(b)(3), which requires them to show questions of law or fact common to the members of the class predominate and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.

Class-wide injury. The court first determined that the IPPs made an adequate showing of a methodology for proving antitrust injury to all or nearly all of the direct purchasers on a class-wide basis. The plaintiffs’ expert presented an econometric analysis to show that prices in the ODD market during the class period were linked so all direct purchasers would have likely been impacted by a conspiratorial overcharge. Further, the IPPs submitted additional graphic evidence to show that prices paid by defendants Dell and HP effectively served as a “floor” and any artificial maintenance of that floor would impact prices paid by other customers. In the court’s view, the plaintiffs’ expert presented theories to explain why class-wide impact would have existed, a means for testing the data to demonstrate that it did, and a calculation for what the overcharges were.

Pass-through. The IPPs also demonstrated that those overcharges were passed through by the DPPs to the plaintiffs. According to the court, the IPPs alleged that the price fixing consisted of efforts to slow the decline in prices that was naturally occurring and there were no allegations that prices of ODDs were ever driven up. In support of their claims, the IPPs offered evidence that in competitive markets, economic theory consistently predicted pass-through rates at or near 100 percent because in a cost-declining market, competition will generally drive prices down. At this stage of the litigation, the IPPs have presented a sufficient theory and methodology to allow them to prove pass-through on a class-wide basis, the court concluded.

The case is No. 3:10-cv-02143-RS.

Attorneys: Dianne M. Nast (Nastlaw LLC) for CMP Consulting Services, Inc., KI, Inc. and Lieff, Cabraser, Heimann & Bernstein, LLP. John F. Cove, Jr. (Boies Schiller & Flexner LLP) and Ian T. Simmons (O’Melveny & Myers LLP) for Sony Corp., Sony Optiarc America Inc., and Sony Optiarc, Inc.

Companies: CMP Consulting Services, Inc.; Ki, Inc.; Sony Corp.; Sony Optiarc America, Inc.; Sony Optiarc, Inc.

Cases: Antitrust CaliforniaNews