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In re Resistors Antitrust Litigation

United States District Court, N.D. California

September 5, 2017

IN RE RESISTORS ANTITRUST LITIGATION.

          ORDER RE MOTIONS TO DISMISS RE: DKT. NOS. 202, 203, 204, 205

          JAMES DONATO United States District Judge

         This consolidated antitrust class action alleges a price-fixing conspiracy for linear resistors, a tiny but essential component that is ubiquitous in electronic devices. Before the Court are four separate motions to dismiss. The Court grants them in part and denies them in part.

         BACKGROUND

         There are two classes of plaintiffs in this consolidated action: the direct purchaser plaintiffs (“DPPs”) and indirect purchaser plaintiffs (“IPPs”).[1] Each set of plaintiffs has filed their own operative complaint. See Dkt. Nos. 140 (DPP complaint); 141 (IPP complaint). Both complaints name the same five corporate families as defendants. See Dkt. No. 140 ¶¶ 13-28; Dkt. No. 141 ¶¶ 51-62.[2] And both complaints allege a price-fixing conspiracy in the linear resistor industry that began in 2003. Dkt. No. 140 ¶¶ 2, 53; Dkt. No. 141 ¶ 5. The DPPs assert a single legal claim against defendants for violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Dkt. No. 140 ¶¶ 188-191. The IPPs assert three claims: violation of Section 1 of the Sherman Act, 15 U.S.C. § 1 (but seeking only injunctive relief); violations of the antitrust and restraint of trade laws of California, Iowa, Michigan, Minnesota, Nebraska and New York; and violations of the consumer protection and unfair competition laws of California, Florida, Nebraska and New York. Dkt. No. 141 ¶¶ 181-219.

         Defendants have jointly moved to dismiss the DPP complaint and IPP complaint. Dkt. Nos. 204, 205. The U.S. subsidiary defendants have filed consolidated motions to be dismissed from both complaints. Dkt. Nos. 202, 203.

         DISCUSSION

         I. DIRECT PURCHASER PLAINTIFFS' COMPLAINT

         A. STATUTE OF LIMITATIONS

         The main argument in defendants' joint motion to dismiss the DPPs' complaint is that it fails to state a claim within the limitations period. The parties agree, as they must, that the applicable statute of limitations is four years under 15 U.S.C. § 15b. Dkt. No. 204 at 9; Dkt. No. 218 at 18. Plaintiffs do not dispute that the outer boundary of the limitations period is August 24, 2011, for most defendants, and May 27, 2012, for defendants Kamaya and HDK. Dkt. No. 204 at 1, 4 n.4. Defendants say that the DPPs' allegations “do not give rise to a plausible 11-year conspiracy that falls within the limitations period, ” and that the complaint “fails to establish fraudulent concealment to toll the statute of limitations.” Dkt. No. 228 at 1.

         Neither contention is well taken. DPPs argue in opposition to defendants' motion that they have plausibly alleged a conspiracy “from at least as early as July 9, 2003 until August 1, 2014, ” in a manner that is consistent with the pleading standards set out by the United States Supreme Court in Bell Atlantic Corporation v. Twombly, 550 U.S. 544 (2007). Dkt. No. 218 at 1, 8-10. This is so. Defendants overlook the Court's determinations in the motion to dismiss order in In re Capacitors Antitrust Litigation, 106 F.Supp.3d 1051 (N.D. Cal. 2015) (“Capacitors I”), a highly analogous case. As the Court made clear, in the motion to dismiss context, it must treat the plaintiff's allegations as true and draw all reasonable inferences in plaintiff's favor. Id. at 1060. The complaint in Twombly did not offer any “independent allegation of actual agreement” among defendants. Id. at 1061 (quoting Twombly, 550 U.S. at 564). A complaint passes muster under Twombly, however, if the allegations in it “rise above mere speculation, even if the Court has doubts about them, ” and in making this evaluation, the Court considers the complaint as a whole. Id. at 1063-64.

         Under this guidance, the Court has no difficulty finding that DPPs have plausibly alleged a price-fixing conspiracy among defendants beginning in July 2003 and reaching into the limitations period. The DPP complaint alleges that on July 9, 2003, defendants ROHM, Panasonic, HDK and KOA attended a meeting of the Passive Components Business Committee of the Japan Electronics and Information Technology Industries Association (“JEITA”). Dkt. No. 140 ¶ 73. At that meeting, the “participants agreed on a procedure for facilitating coordination of industry behavior in their subsequent meetings, ” including the type of information to be exchanged, e.g., “current sales and changes in production of resistors” and “your company's estimated forecast and outlook.” Id. The complaint also specifically alleges that “[s]eeking to salvage their profitability admid a collapse in prices brought on by elimination of tariff barriers and a global recession, defendants at least as early as July 2003 agreed to work together -- i.e. conspired -- to artificially stabilize and increase resistor prices and preserve their position in global resistor markets.” Id. ¶ 2.

         The complaint includes detailed examples of meetings that were held throughout the next decade plus, where the defendants are alleged to have done just that within and outside the context of JEITA meetings. See, e.g., id. ¶¶ 74 (minutes of meetings in 2003 and 2004 in which “participants facilitated their common scheme to reduce competition through this procedure”); 75 (summer 2006 meeting where defendants “met and exchanged monthly resistor sales information . . . in order to coordinate their market behavior”); 76 (internal 2006 Panasonic email reporting that a contact at ROHM had stated, “We plan to raise prices to Nokia for the 1005 type [resistor.]”); 78 (plans to “share competitive information” at a May 2007 Passive Components Committee Meeting); 80 (notes of late 2007 meeting among defendants reflecting discussion of capacity and price); 86 (2008 Panasonic-HDK correspondence re pricing to specific customers and efforts to coordinate pricing strategies); 89 (2010 JEITA meeting in which “all companies presented competitively sensitive sales information”); 93 (2011 JEITA Resistors Working Group meeting in which participants exchanged sales percentages and other internal financial information); 95 (“detailed discussions of each company's sales information” during an August 2011 JEITA Passive Components Committee meeting); 98 (2013 JEITA meeting in which sales performance was shared). These are only a sampling of plaintiffs' detailed allegations that go through the years. See id. ¶¶ 70-101. DPPs end their chronological narrative with the allegation that in June 2014, a manager of KOA acknowledged to KOA's board of directors that the antitrust-related risk “has already materialized, ” and a director added, “I realize the situation is becoming serious, and we cannot get away by saying ‘[w]e did not know.' Business practices we are so accustomed to may no longer be deemed legitimate activities.” Id. ¶ 100. And in July 2014, JEITA itself is alleged to have announced “an internal investigation into creating an antitrust compliance structure, ” with the Electronic Components Working Group announcing plans to “look into current antitrust compliance issues arising from its activities.” Id. ¶ 101.

         It might be that some of these allegations, if viewed in isolation or as only a part of a subset of the allegations here, would not have been enough to cross the Twombly bar. But complaints are not reviewed in paper thin slices. As held in Capacitors I, the Court evaluates all of the allegations as a whole, and when viewed in that way, DPPs have plausibly stated a conspiracy beginning in 2003 and extending into the limitations period. It is important to keep in mind that the Twombly standard “does not impose a probability requirement at the pleading stage; it simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal agreement.” 550 U.S. at 556. And the fact that the allegations might get a little thinner toward the end of the time period alleged does not necessarily lessen the plausibility of the allegations for that later time period. While it does appear that there are fewer direct allegations of price fixing here than there were in Capacitors, DPPs have met the Rule 8 / Twombly bar.

         In addition, DPPs are not barred as a matter of law from seeking damages for the pre-limitations period conduct because DPPs have sufficiently alleged fraudulent concealment, which tolls the statute of limitations. Defendants try to make much of the fact that DPPs have “fail[ed] to sufficiently plead ‘due diligence.'” Dkt. No. 204 at 16. But our circuit has made clear that “[t]he requirement of diligence is only meaningful . . . when facts exist that would excite the inquiry of a reasonable person.” Conmar Corp. v. Mitsui & Co. (U.S.A.), Inc., 858 F.2d 499, 504 (9th Cir. 1988) (citations omitted). In Conmar, the circuit concluded that “no due diligence need be demonstrated for Conmar to survive summary judgment” because there was a “genuine issue of material fact whether the facts publicly available were sufficient to excite Conmar's inquiry.” Id. at 504-05. That conclusion applies with force here, where the earlier stage of the proceedings calls for an even more plaintiff-friendly view of the facts. DPPs have alleged facts in their complaint that plausibly show that they ...


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