MDL No. 1917 In Re: Cathode Ray Tube (CRT) Antitrust Litigation, No. 3:2007cv05944 - Document 2714 (N.D. Cal. 2014)
Court Description: ORDER DENYING (2677 in 3:07-cv-05944-SC) Objection to the Special Master's Order Granting in Part and Denying in Part Best Buy's Motion for a Protective Order, filed by Magnolia Hi-Fi, Inc., Best Buy Co., Inc., Best Buy Purchasing LLC, Best Buy.com LLC, Best Buy Stores, L.P., Best Buy Enterprise Services, Inc.. Signed by Judge Samuel Conti on 7/28/2014. (sclc2, COURT STAFF) (Filed on 7/28/2014)
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MDL No. 1917 In Re: Cathode Ray Tube (CRT) Antitrust Litigation Doc. 2714 1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 United States District Court For the Northern District of California 9 10 11 12 13 14 15 16 ) ) ) ) ) ) This Order Relates To: ) ) Best Buy Co., Inc., et al. v. Hitachi, Ltd., et al., No. 11-cv- ) ) 05513-SC; ) ) Best Buy Co., Inc., et al. v. Technicolor SA, et al., No. 13-cv- ) ) 05264-SC ) ) ) ) IN RE: CATHODE RAY TUBE (CRT) ANTITRUST LITIGATION MDL No. 1917 Case No. C-07-5944-SC ORDER DENYING BEST BUY'S OBJECTIONS TO THE SPECIAL MASTER'S ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR PROTECTIVE ORDER 17 18 I. INTRODUCTION 19 Now before the Court is Direct Action Plaintiffs ("DAPs") the 20 Best Buy entities'1 ("Best Buy") objection to the Special Master's2 21 Order ("Order") granting in part and denying in part Best Buy's 22 motion for protective order. ECF No. 2689 ("Objection") (filed 23 24 25 26 27 28 1 The Best Buy entities are Best Buy Co, Inc., Best Buy Purchasing LLC, Best Buy Enterprise Services, Inc., Best Buy Stores, L.P., BestBuy.Com, LLC, and Magnolia Hi-Fi, LLC. ECF No. 2689 ("Objection") at 1 n.1. 2 On December 17, 2013 the Court appointed the Honorable Vaughn R. Walker, United States District Judge (Retired), as a Special Master to assist the Court with discovery matters. ECF No. 2272. Dockets.Justia.com 1 under seal).3 2 the Court should deny the objection and affirm the Special Master's 3 order. 4 Court order a hearing and set a briefing schedule as permitted by 5 Local Rule 72-2, the Court finds neither is necessary. 6 L.R. 72-2 ("Unless otherwise ordered by the assigned District 7 Judge, no response need be filed and no hearing will be held 8 concerning the motion. 9 written order at any time . . . ."). Defendants oppose Best Buy's objection, and argue ECF No. 2685 ("Response"). Although Best Buy requests the See Civ. The District Judge may deny the motion by As a result, Best Buy's United States District Court For the Northern District of California 10 objection is ripe for disposition without oral argument. 11 7-1(b). 12 Civ. L.R. and DENIES the objection. As set forth below, the Court AFFIRMS the Special Master 13 14 II. BACKGROUND The parties are familiar with the factual and procedural 15 16 background of the case, so an exhaustive review is unnecessary. 17 The facts relevant to the motion are set forth below. 18 are allegedly manufacturers of cathode ray tubes ("CRTs") and, in 19 some cases, of finished products as well. 20 other DAPs, alleges that Defendants conspired to fix prices for 21 CRTs. Defendants Best Buy, along with the The DAPs do not allege that Defendants conspired to fix the 22 23 24 25 26 27 28 3 Best Buy previously filed an objection to the Special Master's order that exceeded the five page limit under Civil Local Rule 722. ECF No. 2677. After Defendants pointed out the issue, Best Buy filed an amended version. ECF No. 2689. The Court's order appointing the discovery master sets forth the procedure for objections to the Special Master's orders and incorporates the procedures (including page limits) contained in Civil Local Rule 72-2. ECF No. 2272, at 4-5. Accordingly, Best Buy's earlier objection is STRICKEN except for the accompanying Declaration of David Martinez and exhibits containing the record necessary for the Court's review of the Special Master's order. ECF No. 2677-1 (filed under seal). 2 1 prices of products containing CRTs. 2 bought at least one CRT product from a defendant or an entity owned 3 or operated by a defendant. 4 Each DAP alleges that it On May 16, 2014, Best Buy filed a motion for a protective 5 order barring discovery into Best Buy's competitive intelligence 6 practices before the Special Master. 7 Decl.") Ex. 1 ("Mot.") at 1 (filed under seal). 8 intelligence practices are a part of Best Buy's broader price match 9 guarantee program, by which Best Buy agrees to match any lower ECF No. 2677-1 ("Martinez United States District Court For the Northern District of California 10 prices offered by their competitors. 11 amount to: (1) contacting competitors to confirm customers' 12 pricing, (2) monitoring competitor advertisements and other records 13 publicly displaying pricing information, and (3) subscribing to 14 industry analyst reports and attending analyst calls. 15 Mot. at 2. The competitive These practices Id. Defendants seek two forms of discovery into Best Buy's 16 competitive intelligence practices. First, they seek to depose 17 Best Buy's Rule 30(b)(6) designee regarding Best Buy's: 18 19 20 21 22 [P]ractices, policies and procedures concerning Your market monitoring activities for CRT Finished Products including, but not limited to the following: (a) Your competitive intelligence activities; (b) Your use of third-party data sources and market share/data analyses; and (c) Your knowledge, use and tracking of Your competitor's [sic] pricing for CRT Finished Products during the Relevant Time Period . . . . 23 24 Objection at 2-3. Second, Defendants propounded two 25 interrogatories also seeking information regarding the competitive 26 intelligence practices, including (1) the participation of Best 27 Buy's executives in the competitive intelligence practices or other 28 market monitoring activities, and (2) Best Buy's "executives', 3 1 employees', or agents' participation in any meetings with [Best 2 Buy's] competitors." 3 Id. at 3. In the briefing before the Special Master, Best Buy argued 4 that the information sought in these requests was irrelevant under 5 Supreme Court precedent and subsequent case law, and, even if 6 relevant, the burden of ordering discovery outweighed any potential 7 benefit. 8 information sought was both relevant and discoverable. 9 Decl. Ex. 2 ("Opp'n") at 2 (filed under seal). Mot. at 4-9. Defendants disagreed, arguing that the Martinez After a telephone United States District Court For the Northern District of California 10 conference on June 23, 2014 at which both Best Buy and Defendants' 11 counsel were heard, the Special Master issued an order denying Best 12 Buy's motion as to the Rule 30(b)(6) deposition and granting a 13 protective order as to the interrogatories. 14 Buy filed an objection with the Court seeking review of the Special 15 Master's order. On July 7, 2014, Best ECF No. 2677. 16 17 III. LEGAL STANDARDS 18 A. Review of Orders by the Special Master 19 The Court reviews the Special Master's factual findings for 20 clear error, his legal conclusions de novo, and his procedural 21 decisions for abuse of discretion. 22 ECF No. 302 (appointing the initial special master). Fed. R. Civ. P. 53(f)(3)-(5); 23 B. Motion for Protective Order 24 Federal Rule of Civil Procedure 26(c) permits the Court, upon 25 a showing of good cause, to "issue an order to protect a party or 26 person from annoyance, embarrassment, oppression, or undue burden 27 or expense." 28 deciding whether the information sought is discoverable. The Court must undertake a two-step inquiry in 4 First, 1 the Court must determine if the material sought is "relevant to any 2 party's claim or defense." 3 be clearly admissible at trial so long as the request is 4 "reasonably calculated to lead to the discovery of admissible 5 evidence." 6 discovery sought against its likely benefit. 7 (b)(2)(C)(iii). Id. Id. at (b)(1). Such evidence need not Second, the Court must weigh the burden of the Id. at 8 9 United States District Court For the Northern District of California 10 IV. DISCUSSION While Best Buy's objection dices the issues differently, their 11 objection challenges the Special Master's answers to two key 12 questions. 13 intelligence practices function relevant, particularly 14 Supreme Court's decision in Kiefer-Stewart Co. v. Joseph E. Seagram 15 & Sons, Inc., 340 U.S. 211 (1951) and subsequent case law? 16 if such evidence is relevant, does the burden of discovery outweigh 17 its likely benefit? 18 decisions on both questions de novo. First, is evidence of how Best Buy's competitive given the Second, The Court reviews the Special Master's 19 A. Relevance of the Competitive Intelligence Program 20 First, Best Buy argues, citing the Supreme Court's decision in 21 Kiefer-Stewart and subsequent cases, that the evidence sought is 22 irrelevant because "[i]t is black letter law that evidence of an 23 antitrust plaintiff's own conduct is irrelevant and cannot excuse 24 the defendants' conspiratorial conduct." 25 Life Mufflers v. Int'l Parts Corp., 392 U.S. 134, 139-40 (1968); 26 Kiefer-Stewart, 340 U.S. at 214, overruled on other grounds, 27 Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 781-82 28 (1984); Memorex Corp. v. IBM Corp., 555 F.2d 1379, 1381-82 (9th 5 Mot. at 5 (citing Perma 1 Cir. 1977); Wilk v. Am. Med. Ass'n, 719 F.2d 207, 232 (7th Cir. 2 1983)). 3 Best Buy cites cases from other district courts rejecting several 4 arguments as to the relevance of a plaintiff's communications with 5 third parties or sales practices. 6 Staple Antitrust Litig., No. 3:03CV1516, 2005 WL 6457181, at *4 7 (W.D.N.C. May 9, 2005) (rejecting relevance argument based on the 8 need to "rebut any inference that communication amongst competitors 9 necessarily means the parties are engaging in an illegal Anticipating some of Defendants' arguments in opposition, See, e.g., In re Polyester United States District Court For the Northern District of California 10 conspiracy"); In re Auto. Refinishing Paint Antitrust Litig., No. 11 MDL 1426, 2006 WL 1479819, at *8 (E.D. Pa. May 26, 2006) (casting 12 aside the contention that discovery might show, inter alia, the 13 highly competitive nature of the relevant industry, and the prices 14 that "Defendants may have charged in a 'but for' world"); In re 15 Aspartame Antitrust Litig., No. 2:06-CV-1732-LDD, 2008 WL 2275528, 16 at *4 (E.D. Pa. Apr. 8, 2008) (denying a motion to compel as to 17 plaintiffs' communications with third parties despite the argument 18 such communications were relevant to show "buying power, market 19 position and demand elasticity"). 20 the policy concerns underlying the antitrust laws would be 21 undermined by permitting discovery into downstream activities. 22 Mot. at 7 (citing Meijer, Inc. v. Abbott Labs., 251 F.R.D. 431, 23 433-34 (N.D. Cal. 2008)). 24 Finally, Best Buy argues that In opposition, Defendants offer three reasons why the 25 discovery they seek is relevant. 26 discovery into the competitive intelligence program is relevant 27 because it shows how Best Buy and their competitors priced their 28 products. Opp'n at 2. First, Defendants argue that This is likely to lead to the discovery of 6 1 admissible evidence here, Defendants contend, because the indirect 2 purchaser plaintiffs ("IPPs") claim that Best Buy and other 3 retailers passed on 100 percent of the conspiratorial CRT 4 overcharges and because Best Buy is likely to be an important 5 third-party witness in the IPPs' case. 6 claim that discovery into the competitive intelligence program is 7 relevant to Best Buy's ability to show injury-in-fact. 8 11. 9 relevant as it will enable them to rebut charges by Best Buy (or Id. Second, Defendants Id. at 10- Finally, Defendants contend that the discovery sought is United States District Court For the Northern District of California 10 other plaintiffs) that competitor contacts and price monitoring is 11 indicative of a conspiracy. 12 arguments Defendants rely principally on two cases. 13 cite to Judge Illston's orders, also involving Best Buy's 14 competitive intelligence practices, in the In re TFT-LCD Flat Panel 15 Antitrust Litigation, No. 07-MD-1827 (N.D. Cal.). 16 cases, Best Buy submitted to discovery on their competitive 17 intelligence practices, the Court denied a motion in limine to 18 exclude evidence obtained regarding those practices, and the 19 evidence was admitted in both the direct purchaser trial and 20 individual opt-out trials. 21 (N.D. Cal.) ECF Nos. 5776, 8298). 22 re Urethane Antitrust Litigation, No. 04-MD-1616-JWL, 2010 WL 23 5287675 (D. Kan. Dec. 17, 2010) is "precisely on point." 24 12. 25 responses to discovery requests seeking information related to 26 plaintiffs' communications with competitors, finding that the 27 information sought was potentially relevant to "refute plaintiffs' 28 claims that similar conduct by defendants is indicative of Id. at 11-13. In support of these First, they In the TFT Opp'n at 11-12, n.38 (citing 07-MD-1827 Second, Defendants argue that In Opp'n at In Urethane, the Magistrate Judge granted a motion to compel 7 1 collusion." Id. at *5; see also In re Urethane Antitrust Litig., 2 No. 04-1616-JWL, 2011 WL 1327988, at *5-6 (D. Kan. Apr. 5, 2011) 3 (affirming the Magistrate's decision). In his order, the Special Master rejected Best Buy's argument 4 5 that the discovery sought was irrelevant. 6 Special Master found that: 7 Discovery directed to the settling of prices for finished products charged by Best Buy and other retailers could well lead to discovery of relevant evidence concerning the extent to which, if at all, alleged overcharges were passed on by Best Buy and/or by entities above Best Buy in the distribution channels for products containing CRTs as well as both the fact of damages and their amounts, if any. 8 9 United States District Court 10 For the Northern District of California Specifically, the 11 12 Order at 1. In doing so, the Special Master disagreed with Best 13 Buy's reliance on Kiefer-Stewart and other cases discussing 14 discovery into an antitrust plaintiff's practices and competitor 15 contacts. 16 subpart (g) of Interrogatory No. 16, which requests Best Buy 17 identify its "executives', employees' and agents' participation in 18 any meetings with" competitors, "seems foreclosed by the Keifer- 19 Stewart line of cases." Id. Nonetheless, the Special Master did remark that Id. at 2. The Court agrees with the Special Master in every relevant 20 21 respect.4 22 4 23 24 25 26 27 28 Here, the discovery sought is relevant for three The Court does question the Special Master's conclusion that the type of inquiry in Interrogatory No. 16(g) would be barred by the Kiefer-Stewart line of cases. The Court would agree with this view were it to find, as it seems the Special Master did, that discovery into Best Buy's competitive intelligence practices is relevant only as to the issues of pass-through and damages. However the Court goes a step further than the Special Master and finds that the discovery sought by Defendants is also relevant to rebut any charges that competitive contacts and price monitoring are circumstantial evidence of an illegal conspiracy. See Urethane, 2011 WL 1327988, at *6. Nonetheless, as discussed infra, the Court concurs with the Special Master's weighing of the burdens and benefits of Defendant's interrogatories. Therefore, the Special 8 1 reasons. First, the Court concurs with the Special Master's conclusion 2 3 that Kiefer-Stewart and its progeny do not bar all discovery into 4 an antitrust plaintiff's activities. 5 concluded that antitrust violations by a plaintiff cannot immunize 6 defendants from liability for their own violations. 7 214. 8 aspects of that principle to the discovery context, Best Buy has 9 not offered any support for the blanket contention that an Specifically, Kiefer-Stewart 340 U.S. at While the subsequent cases cited by Best Buy apply various United States District Court For the Northern District of California 10 antitrust plaintiff's activities are always irrelevant and outside 11 the scope of discovery. 12 cases concluded, information about plaintiffs' activities is 13 relevant in cases, such as this one, where the amount of any pass- 14 through to indirect purchasers is likely to be an issue. 15 e.g., Polyester Staple, 2005 WL 6457181, at *4-5 (concluding that 16 discovery into downstream activities by plaintiffs was potentially 17 relevant to the amount of any pass-through). 18 Defendants cannot claim that Best Buy's activities immunize them 19 from liability does not mean the information sought cannot be 20 relevant for other purposes. 21 To the contrary, as one of Best Buy's See, Simply because Second, and relatedly, Best Buy's argument that "the policy 22 precluding discovery into an antitrust plaintiff's conduct bars 23 Defendants' discovery irrespective of any relevance" also fails. 24 Objection at 4. 25 antitrust laws militates against permitting broad discovery against 26 antitrust plaintiffs where, for instance, the discovery sought It may be true that the policy underlying the 27 28 Master's decision granting in part and denying in part the motion need not be disturbed. 9 1 would simply enable the defendant to shift attention away from an 2 otherwise illegal and actionable scheme or assert an improper pass- 3 on defense. 4 Unlike the situation at issue in the cases cited by Best Buy, here 5 discovery about the downstream pricing activities of Best Buy is 6 not being sought to allege a price fixing conspiracy by Best Buy. 7 Accordingly, permitting discovery here does not run the risk of 8 chilling private enforcement of the antitrust laws, as in the cases 9 offered by Best Buy. However such a policy is not implicated in this case. See, e.g., Perma Life Mufflers, 392 U.S. at United States District Court For the Northern District of California 10 139-40; Meijer, 251 F.R.D. at 433-34. 11 seeking the instant discovery because it is directly relevant to 12 the question of how, and in what amount, any potential overcharges 13 were passed through to other plaintiffs. 14 Instead, Defendants are Best Buy dedicates much of its reply brief and objection to 15 two remaining points. First, Best Buy contends that discovery into 16 the results of the competitive intelligence practices, which they 17 concede might be relevant, would simply be duplicative given the 18 extent of previous discovery on pass-through. 19 argues that the court should distinguish between this allegedly 20 completed discovery on pass-through and discovery into "how Best 21 Buy obtained competitor information," which they argue is wholly 22 irrelevant. 23 about having already submitted to discovery into its pricing 24 practices and their relevance to the pass-through issue go to the 25 Court's weighing of the benefits and burdens of discovery -- not to 26 the relevance issue. 27 pass-through itself and "how" the competitive intelligence program 28 works were a meaningful one, that distinction would only undermine The Court is unmoved. Second, Best Buy First, Best Buy's complaints Second, even if the distinction between the 10 1 Defendants' arguments as to pass-through and damages. 2 how the competitive intelligence program operates might still be 3 admissible (or at least lead to the discovery of admissible 4 evidence) at trial to rebut allegations that competitor contacts 5 and price monitoring are indicative of the existence of a 6 conspiracy as they were in TFT. 7 1327988, at *6. 8 9 Evidence of See also Urethane, 2011 WL As a result the Court concurs with the Special Master's findings as to the relevance of the discovery sought here. The United States District Court For the Northern District of California 10 discovery sought by Defendants is relevant to the issues of pass- 11 through, injury, and to rebut any argument that competitor 12 communications and price monitoring are indicative of an improper 13 conspiracy. 14 B. Weighing the Burdens and Benefits of Discovery 15 Next, the Court must weigh the burden of discovery against its 16 likely benefits. 17 the Court considers "the needs of the case, the amount in 18 controversy, the parties' resources, the importance of the issues 19 at stake in the action, and the importance of discovery in 20 resolving those issues." 21 Fed. R. Civ. P. 26(b)(2)(C)(iii). In doing so, Id. In Best Buy's briefing before the Special Master, it argued 22 that because it has already submitted to prior discovery on the 23 issue of pass-through and competitive contacts, the burden of 24 discovery is greater than its likely benefit. 25 Buy points to a 2012 document production and prior 30(b)(6) 26 deposition involving information relevant to Best Buy's pricing and 27 "the competitive landscape," as rendering the current requests 28 duplicative and burdensome. Mot. at 2-3. 11 Specifically, Best Further, they complain 1 that the 30(b)(6) deposition at issue involves 26 topics, including 2 "dozens of sub-topics." 3 enormous financial stakes in this case, and contending that Best 4 Buy mischaracterized the extent of discovery already taken in this 5 case. 6 nothing extraordinary or burdensome about requiring a corporate 7 plaintiff to submit to a deposition, even if it involves multiple 8 days or deponents, particularly where, as here, a discovery 9 protocol explicitly allows just such a scenario." Opp'n at 2-3, 14. Id. at 9. Defendants counter, noting the Specifically, they note that "[t]here is Id. at 14. United States District Court For the Northern District of California 10 Furthermore, Best Buy complains that in the time since the Special 11 Master's order, Defendants have noticed four more depositions which 12 they apparently intend to take between now and September 5, 2014. 13 Objection at 3. 14 The Special Master concluded that while the burden of 15 responding to Defendants' interrogatories outweighed the benefits, 16 the same was not true with regard to the 30(b)(6) deposition. 17 Court agrees. 18 already concluded, the discovery sought here is relevant and 19 important not just to parties' claims or defenses, but to one of 20 the most central remaining issues in the litigation -- the question 21 of pass-through. 22 the Court is loath to deny discovery on the issue to any party. 23 Second, as mentioned above, the amount in controversy in this case 24 is enormous, and, as in any complex multidistrict litigation, the 25 parties have all submitted to and propounded extensive discovery. 26 Third, the parties are all sophisticated, well-advised by able (and 27 expensive) lawyers, and certainly not lacking in resources. 28 The First, and most importantly, as the Court has Given the centrality of this issue to the case, Finally, additional factors convince the Court that the 12 1 Special Master appropriately weighed the burden of discovery. 2 First, the objected deposition topic on the competitive 3 intelligence program is only one of 26 topics to be covered at the 4 30(b)(6) deposition -- the remainder of which Best Buy does not 5 object to. 6 dispute), the parties understood that Defendants would take further 7 30(b)(6) deposition testimony once Best Buy completed document 8 discovery. 9 required by Interrogatories Nos. 16 and 17, examination on this Furthermore, as Defendants state (and Best Buy does not Particularly when compared to the level of detail United States District Court For the Northern District of California 10 issue in a 30(b)(6) deposition would entail significantly less 11 expenditure of time, money, and effort. 12 favor of the deposition and against the interrogatories, the Court 13 shares the Special Master's concern that requiring answers to the 14 interrogatories may require Best Buy to go through a lengthy and 15 expensive process of reviewing its competitive intelligence 16 program's records to identify what may well be a large number of 17 individuals who participated in the program. 18 that this inquiry, if completed would lead to the discovery of 19 significant evidence above that gained in the 30(b)(6) deposition. 20 IV. CONCLUSION 21 Further militating in It seems unlikely As a result, the Court AFFIRMS the Special Master's order 22 granting in part and denying in part Best Buy's motion for a 23 protective order and DENIES Best Buy's objection. 24 25 IT IS SO ORDERED. 26 27 28 Dated: July 28, 2014 UNITED STATES DISTRICT JUDGE 13
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