Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: Korean noodle manufacturer’s settlement of price fixing action made in good faith, (Nov 12, 2015)

By Linda O’Brien, J.D., LL.M.

A settlement by a Korean manufacturer of ramen noodles in a price fixing conspiracy action by direct and indirect purchasers was made in good faith and bars non-settling defendants from seeking contribution or indemnity from the settling manufacturer, the federal district court in San Francisco has decided (Fenerjian v. Nong Shim Company, Ltd., November 10, 2015, Orrick, W.).

Background. In July 2012, the Korean Fair Trade Commission (KFTC) determined that four Korean companies—Nongshim Co., Ltd., Ottogi Co. Ltd., Samyang Foods Co. Ltd., and Korea Yakult Co. Ltd.—conspired to fix the prices of Korean noodles in Korea. Subsequently, in 2013, direct purchasers (food retailers and distributors) and indirect purchasers filed suit in the United States, alleging that the four Korean companies and their distributors in the United States—including Nongshim America, Inc., Ottogi America, Inc., Sam Yang (USA), Inc., and Paldo Co., Ltd.—conspired to fix the prices of Korean noodles (also referred to as ramen noodles) sold in the United States. Direct and indirect purchasers alleged causes of action for: (1) price fixing conspiracy in violation of the Sherman Act; (2) price fixing conspiracy in violation of California’s Cartwright Act; (3) violations of various state antitrust and restraint of trade laws; and (4) violations of various state consumer protection laws.

In November 2014, the court denied the companies’ motions to dismiss, finding that the purchasers sufficiently pleaded that a conspiracy to raise prices in Korea also related to the noodles imported to, and sold in, the United States. In April 2015, Samyang Korea’s motion to dismiss the indirect purchasers’ federal and state antitrust and state consumer protection claims was also denied.

Samyang Korea reached settlements with both the direct and indirect purchaser plaintiffs, requiring the total payment of $1.5 million and cooperation in providing discovery. As part of the settlements, Samyang Korea sought a determination that the settlements were entered into in good faith and a corresponding bar order.

The court found that the settlements were in good faith. Under California law, a determination by the court that the settlement was made in good faith bars any other joint tortfeasor from further claims against the settling tortfeasor for contribution or indemnity. A settlement is made in good faith if it is within the reasonable range of the settling party’s proportionate share of liability to the plaintiff.

According to the court, the motion was unopposed, except for an objection presented by non-settling defendants relating to a potential discovery dispute, which was resolved at a prior hearing. The total recovery of $1.5 million in this case was the equivalent of five percent damages calculation in proportion to Samyang’s $27 million in profits from its U.S. exports. Looking at the determination of the KFTC that a two percent premium rate should be applied, the five percent was reasonable.

The reasonableness of the amount was reinforced by Samyang’s potential defenses and recognition that a settling defendant should pay less in settlement than if the company were found liable at trial. The settlements also had non-monetary value in the form of Samyang’s agreement to cooperate in discovery. Finally, a determination that the settlements made in good faith prevented contributory and indemnity claims by the non-settling defendants was consistent with both the Sherman Act and Cartwright Act, which do not provide for contribution, the court concluded.

The case is No. 3:13-cv-04115-WHO.

Attorneys: Alan R. Plutzik (Bramson Plutzik Mahler & Birkhaeuser, LLP) for Stephen Fenerjian and Rockman Co. USA, Inc. Thomas C. Bright (Cera LLP) for M.T. Trading Corp. Christopher L. Lebsock (Hausfeld LLP) and Gregory Bradley Linkh (Glancy Prongay & Murray LLP) for The Plaza Co. Anne Choi Goodwin (Squire Patton Boggs US LLP) for Nong Shim Co., Ltd. Mark C. Dosker (Squire Patton Boggs US LLP) for Nongshim America, Inc. Joel Steven Sanders (Gibson, Dunn & Crutcher LLP) for Ottogi Co., Ltd. and Ottogi America, Inc. Elizabeth Dianne Mann (Mayer Brown LLP) for SamYang Foods Co., Ltd.

Companies: Rockman Co. USA, Inc.; M.T. Trading Corp.; The Plaza Co.; Nong Shim Co., Ltd; Nongshim America, Inc.; Ottogi Co., Ltd.; Ottogi America, Inc.; Samyang Foods Co., Ltd.

Cases: Antitrust CaliforniaNews