The Court disagrees with Plaintiff's distinction. As shown above, Hitachi and Hitachi America cannot conspire as a matter of law. Moreover, Hitachi and Hitachi Data cannot conspire as a matter of law. For the same reasons these companies cannot conspire, Hitachi Data and Hitachi America, sister subsidiaries of Hitachi, cannot conspire to restrain trade. They all act pursuant to the same interests and goals: the distribution of Hitachi products. Two sister subsidiaries of the same parent over which the parent has legal control are legally incapable of conspiring in violation of § 1 for the same reasons Copperweld found that a parent and its wholly-owned subsidiary could not conspire. Accordingly, the Court hereby GRANTS Defendants' motions for summary judgment with respect to Count I which alleges conspiracy in violation of § 1 of the Sherman Act.
II. Allegations of Alter-Ego Relationship between Hitachi, Hitachi America and Hitachi Data as basis for liability of Hitachi and Hitachi America
Bell Atlantic alleges Hitachi and Hitachi America are the alter egos of Hitachi Data and therefore, Hitachi and Hitachi America are legally responsible for Hitachi Data's wrongdoing.
A. Conspiracy under the Sherman Act and Alter Ego Theory
Bell Atlantic asserts that Defendants are attempting to "have it both ways." On the one hand, Hitachi and Hitachi America claim that they cannot be liable under § 1 of the Sherman Act because they are too closely related. On the other hand, Hitachi and Hitachi America claim that they cannot be liable under an alter ego theory because the corporations are separate entities engaging in separate activities.
Plaintiff's attempt to equate § 1 conspiracy liability with alter ego liability fails because § 1 deals with federal antitrust policies and the alter ego doctrine is governed by California corporation law. The two legal principles have different purposes and policy considerations. It does not follow that because Hitachi, Hitachi America and Hitachi Data are legally incapable of conspiring in violation of federal antitrust laws, that Hitachi, the parent, is the alter ego of its subsidiaries. In United National Records, Inc. v. MCA, Inc., 616 F. Supp. 1429 (N.D. Ill. 1985) the court discredited an attempt to find an alter ego relationship between companies simply because they are legally incapable of conspiring for antitrust purposes. Id. at 1433.
B. Alter Ego Liability
Courts will "pierce the corporate veil" in situations where evidence exists that the subsidiary is a "mere instrumentality" of the parent. In other words, a parent creates the subsidiary to shield it from liability rather than for reasons of business efficiency. In California, the necessary elements of alter ego claim are 1) unity of interest and ownership such that the separate personalities of the two corporations no longer exist and 2) that an inequitable result will occur if the corporate veil is not pierced and the challenged conduct is treated as that of the subsidiary alone. Mesler v. Bragg Management Co., 39 Cal. 3d 290, 300, 216 Cal. Rptr. 443, 702 P.2d 601. However, a parent is not liable for the wrongful acts of its subsidiary simply because the parent wholly-owns the subsidiary. United Nat'l Records, Inc. v. MCA, Inc., 616 F. Supp. 1429, 1432 (N.D. Ill. 1985).
Whether Hitachi America and Hitachi Data are "mere instrumentalities" of Hitachi and each other is a factual issue. Bell Atlantic is entitled to discovery on the alter ego issue. Genuine issues of material fact remain regarding its claim that the subsidiaries are "mere instrumentalities" of Hitachi. Accordingly, without further discovery on this issue, summary judgment is inappropriate at this stage. The Court will reserve ruling on the disposition of Plaintiff's remaining claims
until the resolution of the alter ego issue because Bell Atlantic has not accused Hitachi America or Hitachi of any direct antitrust violations. The whole basis of Hitachi's and Hitachi America's liability is their connection to Hitachi Data.
Accordingly, the Court hereby DENIES without prejudice Defendants Hitachi's and Hitachi America's motions for summary judgment on Plaintiff's remaining claims, including Plaintiff's alter ego allegations.
1. Defendants Hitachi's, Hitachi America's and Hitachi Data's motions for summary judgment are GRANTED on Count I of the Complaint.
2. Defendants Hitachi's and Hitachi America's motions for summary judgment with respect to Plaintiff's remaining claims, including Plaintiff's alter ego allegations, are DENIED without prejudice. Defendants are directed to renew their motion for summary judgment after Plaintiff has had a reasonable opportunity to conduct discovery with respect to its alter ego allegations.
IT IS SO ORDERED.
DATE: March 29, 1994
HONORABLE JAMES WARE
United States District Judge