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In re Lithium Ion Batteries Antitrust Litigation

United States District Court, N.D. California

May 12, 2017

LG Chem, Ltd., et al. This Order Relates to: Flextronics International USA



         Plaintiff Flextronics International USA, Inc. (“Flex USA”) brings this antitrust action, asserting its own claims and claims based upon the purchases of 277 affiliates (collectively, “Flextronics”) who have assigned their claims to Flex USA. They filed their original complaint in this action on July 15, 2016, and filed a first amended complaint (“FAC”) on December 9, 2016. (Dkt. No. 32.) The FAC alleges that defendants and their co-conspirators fixed the price of lithium ion batteries (“LIB”). Defendants Panasonic Corporation, Panasonic Corporation of North America; Sanyo Electric Co., Ltd.; Sanyo North America Corporation; LG Chem, Ltd.; LG Chem America Inc.; Samsung SDI America, Inc.; Samsung SDI Co., Ltd.; Sony Corporation; Sony Energy Devices Corporation; Sony Electronics, Inc.; Toshiba Corporation; Hitachi Maxell, Ltd.; Maxell Corporation of America; NEC Corporation; and NEC TOKIN Corporation (“Defendants”)[1] move to dismiss the FAC pursuant to Rules 8(a), 12(b)(1) and 12(b)(6) for lack of standing under Article III of the United States Constitution and failure to state a claim. Specifically, Defendants contend that: (1) the FAC's claims based on foreign purchases are barred by the applicable four-year statute of limitations; (2) the foreign affiliates cannot allege injury in fact for purposes of standing; (3) the FAC does not allege express assignments by the 277 affiliates adequately; (4) the FAC does not allege facts sufficient to state a claim under the Foreign Trade Antitrust Improvements Act (FTAIA), 15 U.S.C. § 6(a), for claims based on foreign purchases; and (5) the affiliates' purchases are barred by Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977).

         For the reasons set forth herein, the motion to dismiss is Denied. While Defendants' arguments may ultimately prevail, such issues are more suitable for resolution at summary judgment upon an adequate record. For pleading purposes, the arguments fail.

         I. Applicable Standard

         A motion to dismiss pursuant to Rule 12(b)(1) is a challenge to the court's subject matter jurisdiction. A challenge pursuant to Rule 12(b)(1) may be facial or factual. See White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). In a facial attack, the jurisdictional challenge is confined to the allegations pleaded in the complaint. See Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004). While the plaintiff bears the burden to establish jurisdiction, on a facial challenge the court assumes the allegations in the complaint are true and draws all reasonable inferences in favor of the party opposing dismissal. Id.

         To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678 (citation omitted); see also Fed. R. Civ. P. 12(b)(6). “A pleading that offers ‘labels and conclusions' or a ‘formulaic recitation of the elements of a cause of action will not do.' Nor does a complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'” Iqbal, 556 U.S. at 678 (citation omitted). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements” will not suffice. Id. at 679.

         II. Discussion

         A. Statute of Limitations The original complaint in this action was filed on July 15, 2016. Defendants argue that the claim is time-barred under the applicable four-year statute of limitations and that neither of the FAC's alleged bases for tolling-fraudulent concealment and tolling under American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974) and related authority-apply. Further, Defendants contend that the allegations indicated that the alleged assignments of claims by the affiliates had not been made by the time of the original complaint, further establishing the affiliates' claims were not filed timely. Flextronics counters that the allegations of the FAC set forth sufficient facts to support tolling under both fraudulent concealment and American Pipe, and that the assignments were timely. The Court addresses each issue in turn.

         On the fraudulent concealment argument, Defendants contend that first direct purchaser complaint in this MDL acknowledged the existence of a government investigation into potential antitrust violations in the LIB market as of May 2011. That first complaint filed in the MDL alleged that Sony disclosed, in a May 2011 corporate filing, that its United States subsidiary received a subpoena from the Department of Justice Antitrust Division “seeking information about its secondary battery business.” (See Carte v. Samsung SDI Co., Ltd., et al., No. 4:12-cv-05268-YGR, Dkt. No. 1 [“Carte Complaint”] ¶ 64.) Thus, Defendants argue, plaintiffs would necessarily have been on notice more than four years prior to the filing of their complaint.

         However, the Carte Complaint further alleged that, around August 20, 2012, LG Chem confirmed that it was also a target of DOJ's investigation. (Carte Complaint ¶ 66.) The FAC alleges that plaintiffs were not on notice of their potential claims until, at least, the August 20, 2012 public announcement of the government's investigations into price-fixing in the lithium-ion battery market. (FAC ¶ 262.) The FAC alleges that plaintiffs could not have known about this activity sooner because of Defendants' efforts to conceal their conspiracy, including making false and misleading public statements, withholding information from customers, and destroying documents. (FAC ¶¶ 262- 275.)

         The Court agrees with plaintiffs that the possible awareness of the existence of the DOJ investigation based upon the content of Sony's disclosure alone was not, on its face, sufficient notice of a potential conspiracy as of May 2011. The allegations in the Carte Complaint do not so contradict the allegations of fraudulent concealment in the instant complaint as to justify dismissing it at the pleading stage on these grounds.

         With respect to the question of whether American Pipe tolling applies to plaintiffs' claims, the Court likewise finds the allegations sufficient. Under American Pipe and its progeny, the commencement of a class action lawsuit “tolls the running of the statute of limitations for all purported members of the class” until class certification is denied or the class member opts out. American Pipe, 414 U.S. at 554-55. Tolling applies where the legal claims asserted in the individual action and pending class action concern the same “evidence, memories, and witnesses.” Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 355 (1983) (Powell, J., concurring). The legal claims in the follow-on action need not be “identical in every respect to the class suit for the statute to be tolled.” Tosti v. City of Los Angeles, 754 F.2d 1485, 1489 (9th Cir. 1985).

         Defendants argue that the doctrine is inapplicable to plaintiffs' claims based on purchases made outside the United States. The class definition in the Carte Complaint included only “individuals and entities who . . . purchased Lithium-ion Rechargeable Batteries in the United States directly from one or more of the Defendants.” (Carte Complaint ¶ 28, emphasis supplied.) The FAC here alleges that Flex USA and its affiliates purchased LIB packs directly from Defendants during the relevant period, and identify certain model or series numbers of batteries purchased from Defendants. (FAC ¶¶ 6, 7.) The nature of the claims alleged here is the same as in the Carte Complaint even though the FAC does not specifically allege whether the purchases of plaintiff and the affiliates were in the United States. Plaintiffs need not allege additional details of where purchases were made, when, or from whom at the pleading stage. See In re: Lithium Ion Batteries Antitrust Litig., No. 15-CV-02987-YGR, 2016 WL 5793457, at *3-4 (N.D. Cal. Oct. 4, 2016) (citing In re TFT-LCD, 2009 WL 4874872 at *4 (N.D.Cal. Oct. 6, 2009)). Thus, the FAC sufficiently alleges a basis for tolling under American Pipe on the face of the pleading. To the extent that additional facts would undermine the applicability of such tolling, the information can be developed in discovery.

         Defendants' reliance on In re Cathode Ray Tube (CRT) Antitrust Litigation is misplaced. In re CRT, 27 F.Supp.3d 1015 (N.D. Cal. 2014). There, American Pipe principles did not toll the statute of limitations on state-law causes of action and, to the extent that Plaintiffs there relied upon indirect purchases for standing, they could not toll claims based on ...

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