Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—E.D. Mich.: Wire harness system manufacturers obtain partial dismissal of End-Payors’ claims, (Jul 24, 2014)

By Greg Hammond, J.D.

Manufacturers and sellers of wire harness systems obtained a partial dismissal of End-Payor Plaintiffs’ (EPPS) claims that they violated state consumer unfair trade practices laws. The federal district court in Detroit dismissed South Carolina Unfair Trade Practices Act (SCUTPA) claims—on the ground that the statute prohibits consumer protection class actions—but allowed Arkansas Deceptive Trade Practices Act (ADPTA) claims to proceed (In re: Automotive Parts Antitrust Litigation (Wire Harness Cases), July 23, 2014, Battani, M.).

Background. EPPs filed a putative class action against wire harness system (WHS) manufacturers and sellers, bringing claims under state antitrust, unfair competition, and consumer protection laws. The EPPs seek restitution, damages, and other relief. In their corrected third amended complaint, EPPs alleged violations of the SCUTPA and ADPTA for the first time. The WHS manufacturers and sellers moved to dismiss the complaint.

SCUTPA. The SCUTPA states, “[a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of an unfair or deceptive method, act or practice declared unlawful by [sec.] 39-5-20 may bring an action individually, but not in a representative capacity, to recover actual damages.” Persuaded by the Supreme Court’s Shady Grove decision, stating that “[a] federal rule…cannot govern a particular case in which the rule would displace a state law that is procedural in the ordinary use of the term but is so intertwined with a state right or remedy that it functions to define the scope of the state-created right,” the court found that the EPPs could not bring their SCUTPA claim on behalf of the putative class. Consequently, the motion to dismiss this claim was granted.

ADPTA. The ADPTA provides that a private cause of action may be brought if a plaintiff suffers “actual damage or injury.” However, the WHS manufacturers and sellers argued that the “actual damages” requirement could not be met in the instant case, citing Wallis v. Ford Motor Co.—a state court case that held “[w]here the only alleged injury is the diminution in value of the product, a private cause of action is not cognizable under the ADTPA.” The court disagreed, distinguishing Wallis from the instant case. It found that unlike Wallis, where the plaintiff failed to allege any personal or property damage, the EPPs claimed that in the instant case, the alleged illegal conspiracy to raise prices caused damage at the time of purchase. Consequently, the motion to dismiss this claim was denied.

The case number is 2:12-cv-00103 (Master File No. 12-md-02311).

Attorneys: Todd F. Flood for Susan Lacava. Craig D. Bachman (Lane Powell PC) for Furukawa Electric Co., Ltd. Howard B. Iwrey (Dykema Gossett) for Lear Corp. Andrea M. Price (Barrasso Usdin Kupperman Freeman & Sarer) and Daniel M. Wall (Latham & Watkins) for Sumitomo Electric Industries, Ltd. John V. Biernacki (Jones Day) for Yazaki Corp. Greg Hanthorn (Jones Day) for Yazaki North America, Inc.

Companies: Furukawa Electric Co., Ltd.; Lear Corp.; Sumitomo Electric Industries, Ltd.; Yazaki Corp.; Yazaki North America, Inc.

Cases: StateUnfairTradePractices MichiganNews