Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: Manufacturers could assert downstream pass-on defense in TFT-LCD price-fixing action, (Sep 22, 2014)

By Linda O’Brien, J.D., LL.M.

In a class action by indirect purchasers against manufacturers of thin-film transistor liquid crystal display panels for conspiring to fix prices, the defendants were entitled under Florida law to assert a downstream pass-on defense in relation to the plaintiffs’ damages. However, disputed issues of fact remained regarding the extent of the plaintiffs’ downstream pass-on rates as to preclude summary judgment to quantify those rates (In re TFT-LCD (Flat Panel) Antitrust Litigation, September 18, 2014, Illston, S.).

Retailers Office Depot and BrandsMart and distributor Tech Data—which purchased electronic products for resale to customers—filed suit against manufacturer AU Optronics Corporation and its subsidiary, AU Optronics Corporation America, for their role in a conspiracy to fix the prices of thin-film transistor liquid crystal display panels (TFT-LCDs) that were incorporated into LCD products sold throughout the United States. The plaintiffs alleged that AU and other manufacturers conspired to fix, raise, and maintain the prices for LCD panels in violation of the Sherman Act and the Florida Unfair and Deceptive Trade Practices Act (FDUTPA). AU moved for partial summary judgment as to the plaintiffs’ damages under the FDUTPA.

To pursue a claim under the FDUTPA, a plaintiff must show that a deceptive or unfair practice caused actual damages to the plaintiff. The defendants contended that the plaintiffs passed along to customers all or part of any overcharges they incurred when purchasing finished LCD products. The plaintiffs argued that the FDUTPA did not allow a downstream pass-on defense.

The court determined that the defendants should be allowed to present evidence of a downstream defense. Although there was no precedent that precluded the downstream pass-on defense, the court noted that other state laws that permitted only the recovery of actual damages was consistent with the applicability of the defense.

Moreover, there was a risk of duplicate recovery if the defense was precluded. To preclude the defense would potentially allow the plaintiffs to receive a windfall since they would recover the full extent of any overcharges without reduction of any amount they recouped by reselling the products to customers. However, disputed issues of fact remained regarding the existence and extent of the plaintiffs’ downstream pass-on rates, according to the court. Thus, the defendants’ motion to quantify the plaintiffs’ pass-on rates set forth by expert testimony was denied.

The case is No. 3:11-cv-03763-SI (MDL No. 1827).

Attorneys: Stuart H. Singer (Boies, Schiller & Flexner, LLP) for Interbond Corporation of America, Office Depot, Inc., and Tech Data Corp. David Bedford Esau (Carlton Fields Jorden Burt) for TracFone Wireless, Inc. Christopher Alan Nedeau (Nossaman LLP) for AU Optronics Corp., and AU Optronics Corporation America. Christopher B. Hockett (Davis Polk & Wardwell) for Chi Mei Optoelectronics Corp., and Chi Mei Optoelectronics U.S.A., Inc. Austin Van Schwing (Gibson, Dunn & Crutcher LLP) for Chunghwa Picture Tubes, Ltd. Harrison J. Frahn, IV (Simpson Thacher & Bartlett LLP) for HannStar Display Corp.

Companies: Interbond Corporation of America; Office Depot, Inc.; Tech Data Corp.; TracFone Wireless, Inc.; AU Optronics Corp.; AU Optronics Corporation America.; Chi Mei Optoelectronics Corp.; Chi Mei Optoelectronics U.S.A., Inc.; Chunghwa Picture Tubes, Ltd.; HannStar Display Corp.

Cases: Antitrust CaliforniaNews