Antitrust Law Daily Wrap Up, ANTITRUST—NDCal: Retailers’ California Cartwright Act Claims Reinstated Against Some LCD Manufacturers, (May 9, 2013)

By Jeffrey May, J.D.

The federal district court in San Francisco has reinstated electronics retailers' California Cartwright Act claims against five liquid crystal display (LCD) panel manufacturers and their affiliates for conspiring to fix LCD prices. The claims had been dismissed on due process grounds (In Re: TFT-LCD (Flat Panel) Antitrust Litigation, May 6, 2013, Illston, S.).

Electronics retailers, such as Target Corporation; Sears, Roebuck & Company, and RadioShack Corporation, initiated an antitrust action in 2010, seeking to recover damages resulting from the alleged price fixing conspiracy. LCD panels are used in computer monitors, flat panel television sets, and other electronic devices. The retailers pursued claims under the Sherman Act and state antitrust and unfair competition laws.

The California antitrust claims were previously dismissed on the ground that application of California law would violate the defendants’ due process rights because the plaintiffs had failed to establish that purchases of price-fixed goods occurred in California.

In February, the U.S. Court of Appeals in San Francisco in a related action reversed dismissal of AT&T Mobility LLC's California law claims against the LCD manufacturers on the ground that the due process clause forbids the application of California law to AT&T’s claims based on out-of-state purchases. The appellate court instructed the district court on remand to assess whether AT&T alleged sufficient conspiratorial conduct within California, such that the application of California law to each defendant was "neither arbitrary nor fundamentally unfair."

In light of the Ninth Circuit decision, the retailers moved for reconsideration of the dismissal of their Cartwright Act claims. The court granted in part and denied in part the motion.

The plaintiffs alleged various instances of conspiratorial conduct with California, the court noted. They alleged that particular employees of the defending companies engaged in communications, partly in California, in which competitive pricing information was shared and which "were meant to advance the conspiracy’s presence in and control over the U.S. market for LCD Panels and LCD Products," according to the court.

The plaintiffs alleged sufficient conspiratorial conduct with respect to defendants Chi Mei Corporation, AU Optronics Corporation, LG Display Company, and Sharp Corporation. Although the court described the allegations against Toshiba Corporation as "bare," it also reinstated the claims against that manufacturer.

The court declined the retailers' request to reconsider its prior dismissal of California Cartwright Act claims as against HannStar Display Corporation and Chunghwa Picture Tubes. The retailers contended that HannStar's and Chunghwa's plea agreements in criminal price fixing cases were sufficient to establish conspiratorial conduct in California. The plea agreements acknowledged that "acts in furtherance of the conspiracy . . . were carried out in California." However, this statement did not indicate which defendant carried out which act. Thus it could not satisfy the Ninth Circuit’s express instructions to conduct a defendant-by-defendant analysis with respect to conspiratorial conduct, the court explained.

The litigation is No. M 07-1827 SI, MDL No. 1827.

Attorneys: Janet Irene Levine (Crowell & Moring LLP) for plaintiffs. Carl Lawrence Blumenstein (Nossaman LLP) for AU Optronics Corp.

Companies: AU Optronics Corp., Target Corp., Sears, Roebuck & Co., RadioShack Corp., Chi Mei Corp., LG Display Co., and Sharp Corp., Toshiba Corp., HannStar Display Corp., Chunghwa Picture Tubes.

Cases: Antitrust CaliforniaNews