Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: Late addition of new parties to CRT price fixing complaint allowed, (Apr 2, 2014)

By Jeffrey May, J.D.

A plaintiff in an action against manufacturers of cathode ray tubes (CRTs) for conspiring to fix prices was permitted by the federal district court in San Francisco to file a first amended complaint (FAC), adding new defendants, even though more than 21 days had passed since service of the original complaint and no defendant had responded to the complaint. The court denied the request of the newly named defendants, Thomson SA and Thomson Consumer Electronics, Inc., to strike the FAC’s references to them (In re Cathode Ray Tube (CRT) Antitrust Litigation, March 28, 2014, Conti, S.).

Tech Data Corporation, which describes itself as one of the world’s largest distributors of IT products and services, filed its first complaint in December 2012. The suit was subsequently combined with other actions in multidistrict litigation proceedings. In early 2013, the parties stipulated that no defendant would have to respond to Tech Data’s complaint until the court ruled on certain other issues. As a result, no defendant had responded to Tech Data’s original complaint by either responsive pleading or motion before the FAC was filed in September 2013 adding Thomson SA—a French holding company—and Thomson Consumer Electronics Corporation—its wholly owned subsidiary, which manufactured CRTs.

The Thomson defendants unsuccessfully argued that Tech Data had no right to amend its FAC after 21 days if no defendants had responded to it. They challenged the amendment as improper under Federal Rules of Civil Procedure 15 and 21.

According to the Thomson defendants, Rule 15(a)(1)(B) limits the timeframe for amendment without leave to within 21 days after service of the original pleading or 21 days after a responsive pleading or Rule 12(b) motion. If 21 days passes from the date of service, but no opposing party ever files a responsive pleading or Rule 12 motion, a plaintiff cannot amend without a court order, it was argued. The Thomson defendants further contended that Rule 21 would require Tech Data to obtain leave of the court before joining additional parties even if Rule 15(a)(1) might otherwise apply, since the proceedings in this case were relatively advanced and the Thomson defendants could suffer prejudice if they were added to the suit.

Rule 15(a)(1) states: “A party may amend its pleading once as a matter of course within: (A) 21 days after serving it, or (B) if the pleading is one to which a responsive pleading is required, 21 days after service of a responsive pleading or 21 days after service of a motion under Rule 12(b), (e), or (f), whichever is earlier.” In all other cases, parties may only amend with a court order or the opposing party’s written consent, the court explained. The court found no support in either Rule 15 or in advisory committee notes to Rule 15’s 2009 amendments, which explain that 21-day amendment allowance, for the Thomson defendants’ position.

The court also concluded that Rule 21, which refers generally to adding and dropping parties by motion (particularly in the context of joinder), did not limit Rule 15’s provisions allowing Tech Data to amend by right. It was not evident that Rule 21 was more specific than Rule 15, such that it would override Rule 15, the court explained. Rule 15(a) provided specific guidelines for parties seeking to amend pleadings.

The Thomson defendants’ equity and policy argument also failed to sway the court. Tech Data alleged enough facts to warrant adding the Thomson defendants to their FAC. The court declined to adopt the Thomson defendants’ argument that Tech Data’s amendment was too late.

Service of complaint. Although the Thomson defendants had continued to refuse to accept service of the FAC, the court advised them that they could not base their refusal on a belief that a foreign defendant may not be served via its domestic counsel. If there was some other issue with service of process, the parties should raise it in a later motion, the court noted.

The case is No. C-07-5944-SC (MDL No. 1917).

Attorneys: Melissa Willett (Boies, Schiller & Flexner) and Mitchell E. Widom (Bilzin Sumberg Baena Price & Axelrod, LLP) for Tech Data Corp. Calvin L. Litsey (Faegre Baker Daniels LLP) for Technicolor S.A. and Thomson Consumer Electronics, Inc.

Companies: Tech Data Corp.; Thomson SA; Thomson Consumer Electronics, Inc.

Cases: Antitrust CaliforniaNews