Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: Lithium ion battery purchasers largely allowed to proceed with price fixing claims, (Oct 6, 2014)

By Greg Hammond, J.D.

Indirect and direct purchasers of lithium ion batteries were given the go ahead to continue with their antitrust claims against a number of Japanese and Korean manufacturers, and their U.S. subsidiaries, for allegedly fixing battery cell prices. In mostly denying the manufacturers’ nine motions to dismiss, the federal district court in Oakland, California, determined that the purchasers adequately alleged antitrust standing (In re Lithium Ion Batteries Antitrust Litigation, October 2, 2014, Rogers, Y.).

Purchasers of lithium ion batteries filed suit against 17 corporations and their subsidiaries, alleging a multi-year conspiracy to fix the prices of lithium ion battery cells—chemical cores of rechargeable batteries that are found in consumer electronics, or as standalone products. The direct purchaser plaintiffs (DPPs) seek injunctive relief and money damages under federal antitrust law, while the indirect purchaser plaintiffs (IPPs) seek injunctive relief under federal antitrust law and money damages under state antitrust and consumer protection laws. The defendant corporations—including LG Chem., Ltd., Samsung SDI Co., Ltd., Panasonic Corp., Sanyo Electric Co. Ltd., Sony Corp., Hitachi Maxell, Ltd., GS Yuasa Corp., NEC Corp., Toshiba Corp., and their subsidiaries—filed nine motions to dismiss the DPPs’ and IPPs’ claims.

IPP claims. In support of their motions to dismiss the IPPs’ second consolidated amended complaint, the defendants raised six issues: (1) whether the IPP’s have standing under Associated General Contractors of California, Inc. v. California State Council of Carpenters (1983-1 Trade Cases ¶65,266) (AGC); (2) whether the IPPs have Article III standing to assert claims on behalf of putative classes comprised of Montana residents and of municipal governments outside of California; (3) whether Missouri bars indirect purchaser claims pursuant to Illinois Brick Co. v. Illinois (1977-1 Trade Cases ¶61,460); (4) whether Illinois, Montana, and South Carolina law authorize the IPPs to bring class-action claims, as opposed to individual claims; (5) whether the conduct pleaded, which is not alleged to have occurred within New Hampshire, states a claim under New Hampshire’s consumer protection law; and (6) whether the Deceptive Trade Practices Act of Arkansas applies to price fixing as alleged in this case.

The court first determined that the IPPs adequately alleged facts that satisfy AGC for pleading purposes, because: (1) the nature of the alleged injury is of the type intended to be redressed by antitrust laws; (2) the supracompetitive overcharge is traceable through a distribution chain; (3) the IPPs alleged they suffered some damage, and provided a method of demonstrating such damage; and (4) the limited risk of duplicative recovery and the complexity in apportioning damages factors weigh in favor of antitrust standing.

Second, the court found that the IPPs lacked Article III standing to bring their claim under Montana’s Unfair Trade Practices and Consumer Protection Act, because none of the named IPPs are from Montana. Further, the second amended complaint was dismissed to the extent it seeks to name a nationwide class of municipal governments or state-specific classes of such governments for states outside California, because there is a lack of specificity on how such state and federal sovereigns would or even could proceed.

The court also determined that: (1) the IPPs’ indirect-purchaser status alone does not bar them from bringing their claim under Missouri’s Merchandising Practices Act; (2) the IPPs may bring their class-action claims in Illinois and South Carolina, as those two states’ class-action bans are procedural, not substantive; and (3) the horizontal conspiracy to fix prices alleged in the IPPs’ complaint is prohibited by the Arkansas Deceptive Trade Practices Act’s unconscionable catch-all provision. However, the IPPs’ New Hampshire claim was dismissed, as the state’s Consumer Protection Act only covers conspiratorial conduct that occurs within the territorial limits of New Hampshire.

DPP claims. The defendants also jointly moved to dismiss the DPPs’ second consolidated amended complaint for failure to plead antitrust standing under Illinois Brick and AGC. The court first granted the motion to dismiss with regard to Circuit City’s alleged purchases of Hitachi batteries and camcorders from Hitachi America Ltd., but otherwise rejected the request to dismiss the DPPs’ complaint for failure to plead facts sufficient to invoke the Royal Printing Co. V. Kimberly-Clark Corp. (1980-2 Trade Cases ¶63,310) exception to Illinois Brick. In addition, the court determined that the DPPs have standing to pursue their claims under AGC, as all five AGC factors weighed in favor of standing.

Individual motions to dismiss. Seven individual motions to dismiss were also filed against the DPPs and IPPs. However, the court determined that there were no persuasive reasons for dismissing any of the individual defendants from the case, and rejected arguments that: (1) meetings and communications alleged in the complaints are innocuous exchanges of information; (2) any prices exchanged were not necessarily exchanged pursuant to an illegal arrangement; and (3) the allegations are just as amenable to interpretation as innocent conduct as liable conduct. Consequently, the court found that the DPPs and IPPs adequately pleaded facts demonstrating each of the individual defendants engaged in the alleged conspiracy. Nevertheless, the court granted limited discovery for GS Yuasa and Toshiba Corp., to determine whether it would be appropriate to allow those two companies to bring an early motion for summary judgment.

The case number is 13-MD-2420 YGR.

Attorneys: Jeff D. Friedman (Hagens Berman Sobol Shapiro LLP) for Kevin Young. Lindsey A. Davis (Zelle Hofmann Voelbel & Mason LLP) for The Stereo Shop. Nicole M. Acchione (Trujillo Rodriguez & Richards, LLP) for A-1 Computers Inc. Beth Targan Seltzer (Barrack Rodos and Bacine) for First Choice Marketing Inc. Allan Steyer (Steyer Lowenthal Boodrookas Alvarez & Smith LLP) for Automation Engineering, LLC. Todd Anthony Seaver (Berman DeValerio) for Univision-Crimson Holding, Inc. Kenneth P. Ewing (Steptoe & Johnson LLP) for LG Chem Ltd., and LG Chem America, Inc. Jeffrey L. Kessler (Winston & Strawn LLP), and Roxann E. Henry (Morrison and Foerster LLP) for Panasonic Corp., Panasonic Corp. of North America, and Sanyo Electric Company, Ltd.

Companies: LG Chem., Ltd., Samsung SDI Co., Ltd., Panasonic Corp., Sanyo Electric Co. Ltd., Sony Corp., Hitachi Maxell, Ltd., GS Yuasa Corp., NEC Corp., Toshiba Corp.

Cases: Antitrust CaliforniaNews