Antitrust Law Daily Wrap Up, ANTITRUST—NDCal: Price fixing claims of CRT product purchasers survive motion to dismiss, (Aug 23, 2013)

By Jeffrey May, J.D.

In an action against manufacturers of cathode-ray tubes (CRTs) for conspiring to fix prices, the federal district court in San Francisco has, for the most part, denied the defendants' motion to dismiss the claims of direct action plaintiffs (DAPs). A Special Master's report and recommendation on the defendants' motion to dismiss the DAP complaints was adopted in part and modified in part (In re: Cathode Ray Tube (CRT) Antitrust Litigation, August 21, 2013, Conti, S.).

Each DAP alleged that it bought at least one CRT product—an electronic product containing a CRT color display tube, color picture tube, or monochrome display tube—from a defendant or an entity owned or operated by a defendant. These manufacturers included Chungwa Picture Tubes LTD, Koninklijke Philips Electronics N.V., LG Electronics, Inc., Panasonic Corporation, Toshiba Corporation, and related companies. The DAPs were indirect purchasers of the allegedly price-fixed CRTs under antitrust law—not direct purchasers—the court explained.

The DAPs asserted federal and state antitrust claims. Generally, federal antitrust plaintiffs have standing only if they are direct purchasers of the allegedly price-fixed goods. However, the court had already held that the DAPs might have federal antitrust standing under the “ownership or control” exception to the Illinois Brick indirect purchaser doctrine by establishing that they were harmed by a price fixing conspiracy between a manufacturer and an entity it owned or controlled. At this stage, the court refused to rule on the adequacy of the DAPs' allegations of ownership and control.

Statute of limitations. For purposes of the defendants' statute of limitations arguments for dismissal of the state antitrust law claims, the court refused to resolve the fact-intensive allegations of fraudulent concealment. The defendants had suggested that the DAPs had actual notice (or at least inquiry notice) of the factual basis for their claims four years before they filed their complaints. At that time, the European Commission issued a press release about certain defendants being raided in connection with a worldwide antitrust investigation of CRT pricing. The court agreed with the Special Master that the defendants' notice argument turned on disputed issues of fact, not law. Thus, the motion to dismiss the state law claims on statute of limitations grounds was denied.

Due process. The court also rejected the defendants' argument that subjecting them to state antitrust laws would violate their right to due process, which demands significant contacts between the parties or occurrences and the state whose law is to be applied. The defendants' direction of price-fixed goods into certain states rendered the defendants subject to those states' antitrust and consumer protection laws, the court ruled. Although the DAPs' pleadings on the issue were “somewhat bare,” they made it clear enough that the defendants conspired to fix prices on CRT products and then sold those goods to businesses and consumers in the various states. The application of those states' laws to the defendants' conduct was not arbitrary or unfair. The court rejected these same due process arguments offered by the defendants to refute the plaintiffs' prudential standing to assert the state law claims.

Standing. The court denied the defendants' motion to dismiss claims asserted under California, Washington, Arizona, Illinois, and Michigan law for lack of standing. The defendants contended that the DAPs lacked standing under these state laws, arguing that dismissal was required under Associated General Contractors v. California State Counsel of Carpenters (AGC), 459 U.S. 519 (1983). The DAPs conceded that AGC applied to their California and Washington claims, but they argued that AGC did not apply to their Arizona, Michigan, and Illinois claims. The court concluded that Michigan and Illinois courts would probably follow the AGC factors for determining standing, but Arizona courts would not.

In any event, the DAPs met AGC's standing requirements, according to the court. The Special Master's determination to the contrary was overruled. For purposes of the motion to dismiss, the DAPs had sufficiently pled an antitrust injury. The CRTs themselves and CRT products remained inextricably intertwined. Moreover, the CRTs were discrete, identifiable parts of the CRT product's supply chain, such that any CRT-related prices and overcharges could be traced along with the physical CRT down a chain of causation from allegedly anticompetitive conduct to antitrust injury. Thus, the overcharges could have been passed on to CRT product purchasers in a traceable way. The DAPs also adequately alleged that their injuries were sufficiently direct and that the harm was not speculative.

State laws repealing Illinois Brick. The court denied the defendants' motion to dismiss the DAPs' Nebraska state antitrust claims based on pre-2002 purchases. The defendants contended that the DAPs could not sue for purchases prior to the date that Nebraska passed its statute repealing Illinois Brick.

According to the defendants, Nebraska's 2002 amendment of its antitrust law to provide indirect-purchaser standing meant that no such standing existed before 2002. The court disagreed. The DAPs could not, however, recover for purchases predating law changes with respect to indirect purchasers in New York (pre-December 3, 1998 purchases) and Nevada (purchases before October 1, 1999), the court held.

Philips and LG's separate joint motion to dismiss. The court did not adopt the Special Master's recommendation that the DAPs' state and federal claims against defendants Philips Electronics and LG Electronics be dismissed. In a separate joint motion to dismiss, Philips and LG claimed that they actually withdrew from the conspiracy by June 2001, and, as a result, all of the DAPs' state and federal claims were barred on statute of limitations grounds. The court found that the parties' withdrawal and fraudulent concealment arguments raised factual questions inappropriate for decision at this stage.

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

Attorneys: Astor Henry Lloyd Heaven , III (Crowell and Moring LLP) for Target Corp. Douglas Wald (Arnold & Porter LLP) for LG Electronics, Inc. Joel Steven Sanders (Gibson, Dunn & Crutcher LLP ) for Chunghwa Picture Tubes, Ltd. Christopher M. Curran (White & Case LLP) for Hitachi, Ltd. David L. Yohai and Diana Arlen Aguilar (Weil, Gotshal, & Manges, LLP) for Panasonic Corp. James Landon McGinnis (Sheppard Mullin Richter & Hampton LLP) for Samsung SDI Co., Ltd. Bijal Vijay Vakil (White & Case LLP) for Toshiba Corp. Ethan E. Litwin (Hughes Hubbard & Reed LLP) for Philips Electronics North America Corp.

Companies: Chunghwa Picture Tubes, Ltd.; Koninklijke Philips Electronics N.V.; LG Electronics, Inc.; Panasonic Corp.; Toshiba Corp.

Cases: Antitrust CaliforniaNews