Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: Price fixing claims against LCD makers not dismissed for ineffective opt-out, (Apr 9, 2014)

By Jeffrey May, J.D.

In multi-district litigation against manufacturers of thin-film transistor liquid crystal display (LCD) panels for participating in a global price fixing conspiracy, the claims of eMachines—predecessor-in-interest to Gateway, Inc. subsidiary Gateway U.S. Retail, Inc.—were not dismissed as to defendants LG Display, Hitachi, and Toshiba, which settled with a Direct Purchaser Plaintiff (DPP) class, on the ground that eMachines failed to specifically opt out of the DPP class. The federal district court in San Francisco denied the defendants’ motion to dismiss based on ineffective opt-out grounds; however, it dismissed without prejudice the Sherman Act claim of Acer America Corporation—parent of Gateway—for lack of standing (In re: TFT-LCD (Flat Panel) Antitrust Litigation, April 8, 2014, Illston, S.)

Acer’s December 2010 letter to the DPP class administrator, stating that “[b]oth Acer and Gateway would like to be excluded from the Direct Purchaser Litigation Classes … “ was a sufficient exercise of eMachines’ optout rights, the court ruled. Acer and Gateway intended the letter “to exercise their opt-out rights for all of their LCD panel and product purchases, including those made by their predecessor-in-interest, eMachines.” Gateway acquired eMachines in 2004 and changed its name to Gateway U.S. Retail, Inc. As of December 31, 2009, eMachines/Gateway U.S. Retail had no employees or offices, and transacted no material business of its own.

It was reasonable for Acer, Gateway, and eMachines to believe that the letter was an effective exercise of the opt-out rights of all three companies under the circumstances, in the court’s view. For more than five years, eMachines had been known as Gateway U.S. Retail, Inc. and had been for nearly a year nothing more than a holding company for Gateway, transacting no business of its own.

Statute of limitations. The court also ruled that the plaintiffs filed the action before the statute of limitations on their California state law claims expired. The viability of plaintiffs’ California claims hinged on whether the statute of limitations was tolled for the 53 days between December 20, 2006 and February 2, 2007. The plaintiffs could reasonably rely upon the pendency of two indirect purchaser class action complaints, which alleged violations of the California Cartwright Act and California’s consumer protection laws, filed in the Eastern and Southern Districts of New York, to toll the statute of limitations during that period, in the court’s view.

The plaintiffs conceded that their California law claims against three of the five NEC defendants were barred by the statute of limitations. Thus, the court dismissed with prejudice the plaintiffs’ state law claims against those three firms. However, the court denied the defendants’ motion to dismiss to the extent it was premised on the statute of limitations having run against defendants NEC LCD Technologies, Ltd., and NEC Electronics America, Inc. The statute of limitations was originally tolled when the two defendants were named in the Indirect-Purchaser Plaintiffs’ Consolidated Amended Complaint. The statute of limitations with respect to those firms only began running against them after an amended complaint omitting the firms as defendants was filed on December 5, 2008.

The court also denied the defendants’ motion to dismiss to the extent it is based on plaintiffs’ use of group pleading. The defendants unsuccessfully contended that the plaintiffs made only vague and conclusory allegations without distinguishing between individual entities within each corporate family.

Acer standing. Because Acer conceded that its complaint, as written, did not support an exception to the indirect purchaser rule, the court granted the defendants’ motion to dismiss Acer’s Sherman Act claim. However, the claim was dismissed with leave to amend because the Gateway parent contended that, if granted leave, it could amend its complaint to conform with the requirements of the Illinois Brick doctrine. An amended complaint must be filed no later than May 9.

The case is No. C 13-3349 SI (MDL. No. 1827).

Attorneys: David Bedford Esau (Carlton Fields, PA) and Hsiang James H. Lin (TechKnowledge Law Group LLP) for ACER America Corp., Gateway, Inc., and Gateway US Retail, Inc. Christopher Alan Nedeau (Nossaman LLP) for Hitachi, Ltd. George Dominic Niespolo (Duane Morris LLP) for NEC Corp., Toshiba Corp., and LG Display Co., Ltd.

Companies: Acer America Corp.; Gateway, Inc.; Gateway US Retail, Inc.; Hitachi, Ltd.; NEC Corp.; Toshiba Corp.; LG Display Co., Ltd.

Cases: Antitrust CaliforniaNews