Antitrust Law Daily Wrap Up, ANTITRUST—W.D. Wash.: Indirect purchaser Costco’s Sherman Act claims in TFT-LCD price-fixing action can proceed, (Sep 12, 2014)

By Linda O’Brien, J.D., LL.M.

The federal district court in Seattle has refused to dismiss a retailer’s antitrust claims in a class action against manufacturers of thin-film transistor liquid crystal display panels for conspiring to fix prices (Costco Wholesale Corporation v. AU Optronics Corporation, September 11, 2014, Jones, R.).

A series of class action suits were filed against manufacturer AU Optronics Corporation, its subsidiary, AU Optronics Corporation America, and other manufacturers for allegedly engaging 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. Retailer Costco indirectly purchased their LCD panels through its buying of finished products containing the panels from a number of different vendors and opted out of participation of a class of direct purchasers. The cases were consolidated in the U.S. District Court for the Northern District of California for coordinated pretrial proceedings. After the case was returned to the originating district for trial, the defendants moved for summary judgment.

Control exception. The court found that the defendants waived summary judgment as to the timing of the control exception by failing to file a timely motion. The U.S. Supreme Court decision in Illinois Brick Co. v. Illinois, 1977-1 Trade Cases ¶61,460, 431 U.S. 720 (1977), generally confers standing to recover for antitrust injuries only on plaintiffs who purchase products directly from a defendant who violates antitrust laws. However, the control exception confers standing on an indirect purchaser who purchases goods from a direct purchaser under the control of a price fixer. In this case, Costco did not purchase products containing alleged price-fixed TFT-LCD panels directly from any defendant.

The multi-district litigation (MDL) court, in denying the defendants’ motion for summary, found that there were issues of material fact as to the application of the control exception to Costco’s purchases from certain vendors. In their present motion, the defendants contended that the date-of-suit rule applied –meaning the control exception depended on the conspirator’s control of the direct purchaser when the plaintiff purchased the product and also on a showing that the price fixer had control on the date the plaintiff filed suit. The court noted that the defendants provided no adequate justification for waiting to assert the date-of-suit rule under after the MDL court completed summary judgment rulings. Thus, the motion was untimely since it could have been brought in pretrial proceedings when the MDL court allocated time for dispositive motions.

Date-of-suit rule. Additionally, in declining to adopt the date-of-suit rule, the court stated that it would follow the same approach as the MDL court’s ruling. The court noted that the MDL was aware of the defendants’ evidence and arguments regarding the timing of control and also based its ruling on a line of cases from the Ninth Circuit that did not support the date-of-suit rule. Finally, the motion for summary judgment was not an opportunity for the defendants to relitigate factual or legal issues, or to litigate issues that should have been raised before the MDL court, the court concluded.

The case is No. 3:14-cv-04123.

Attorneys: Cori Gordon Moore (Perkins Coie) for Costco Wholesale Corp. Carl L. Blumenstein (Nossaman LLP) for AU Optronics Corp. and AU Optronics Corp. America. Brett J. Hartman (Davis Polk & Wardwell) for Chi Mei Optoelectronics Corp. and CMO Japan Co. Ltd. Elizabeth Ann Gillen (Simpson Thacher & Bartlett) for Hannstar Display Corp.

Companies: Costco Wholesale Corp.; AU Optronics Corp.; AU Optronics Corp. America; Chi Mei Optoelectronics Corp.; CMO Japan Co. Ltd.; Hannstar Display Corp.

Cases: Antitrust WashingtonNews