Motorola, Inc. v. AU Optronics Corporation et al, No. 3:2009cv05840 - Document 43 (N.D. Cal. 2010)
Court Description: ORDER DENYING TATUNG COMPANY OF AMERICA'S MOTIONS TO DISMISS (SI, COURT STAFF) (Filed on 7/19/2010)
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Motorola, Inc. v. AU Optronics Corporation et al Doc. 43 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 IN RE: TFT-LCD (FLAT PANEL) ANTITRUST LITIGATION / 10 This Order Relates To: 11 AT&T MOBILITY LLC, et al., 12 13 14 Plaintiffs, v. ORDER DENYING TATUNG COMPANY OF AMERICA’S MOTIONS TO DISMISS AU OPTRONICS CORP., et al., Defendants. ____________________________________/ 16 MOTOROLA, INC, 17 Plaintiff, v. 19 AU OPTRONICS CORPORATION, et al., 20 Defendants. 21 MDL. No. 1827 No. C 09-4997 SI; No. C 09-5840 SI 15 18 No. M 07-1827 SI / 22 23 24 On June 23, 2010, the Court held a hearing on Tatung Company of America’s motion to dismiss the complaints in these cases. For the reasons set forth below, the Court DENIES the motions. 25 26 27 28 BACKGROUND On October 20, 2009, plaintiff Motorola, Inc. (“Motorola”) filed an individual complaint in the Northern District of Illinois against numerous domestic and foreign defendants for violations of state Dockets.Justia.com United States District Court For the Northern District of California 1 and federal antitrust laws. Pursuant to the Judicial Panel on Multidistrict Litigation’s April 20, 2007 2 transfer order consolidating pretrial proceedings for a number of actions and this Court’s July 3, 2007 3 related case pretrial order #1, the case was designated as related to MDL No. 1827, M 07-1827 and 4 transferred to this Court. Also on October 20, 2009, the AT&T plaintiffs1 filed an individual complaint 5 in this Court against numerous domestic and foreign defendants for violations of state and federal 6 antitrust laws. Pursuant to the Judicial Panel on Multidistrict Litigation’s April 20, 2007 transfer order 7 consolidating pretrial proceedings for a number of actions and this Court’s July 3, 2007 related case 8 pretrial order #1, the Clerk of this Court designated this case as related to MDL No. 1827, M 07-1827. 9 The Motorola and AT&T complaints allege a global price-fixing conspiracy by suppliers of 10 liquid crystal display (LCD) panels used in a range of electronic products, including mobile wireless 11 handsets, two-way radios, computer monitors, and televisions. Motorola is a provider of mobile 12 wireless telecommunications services and sells mobile wireless devices and two-way radios; both of 13 these products incorporate LCD panels. Motorola Amended Compl. ¶¶ 23, 25. Motorola brings suit 14 based on its own purchases of LCD panels and products, as well as purchases made by a number of 15 Motorola subsidiaries that have assigned their claims to Motorola. Id. ¶ 24. 16 Plaintiff AT&T Mobility is a provider of mobile wireless telecommunications services and sells 17 mobile handsets to its customers. AT&T Amended Compl. ¶ 5. Plaintiff AT&T2 is a provider of voice 18 and data communications services, including traditional and long-distance services, internet access 19 services, private enterprise network services, and other telecommunications services. Id. ¶ 6. The 20 amended complaint alleges that AT&T Mobility purchased more than 300 million mobile wireless 21 handsets for resale to its customers, and that “as a result of defendants’ conspiracy to fix the price of 22 LCD Panels, the prices of these handsets containing LCD Panels were also were artificially inflated.” 23 Id. ¶ 5. In addition, the AT&T plaintiffs allege that defendants’ conspiracy raised the price of LCD 24 panels incorporated into products such as desktop computers and notebook computers that AT&T 25 1 26 27 Plaintiffs are AT&T Mobility LLC; AT&T Corp.; AT&T Services, Inc.; Bellsouth Telecommunications, Inc.; Pacific Bell Telephone Company; AT&T Operations, Inc.; AT&T Datacomm, Inc.; and Southwestern Bell Telephone Company. 2 28 With the exception of AT&T Mobility, the amended complaint refers to all of the other plaintiffs collectively as “AT&T.” Id. ¶ 26. 2 1 Mobility and AT&T purchased for their own internal use between 1996 and 2006. Id. ¶¶ 5-6. 2 3 United States District Court For the Northern District of California 4 LEGAL STANDARDS I. Federal Rule of Civil Procedure 12(b)(1) 5 Federal Rule of Civil Procedure 12(b)(1) allows a party to challenge a federal court’s jurisdiction 6 over the subject matter of the complaint. As the party invoking the jurisdiction of the federal court, the 7 plaintiff bears the burden of establishing that the court has the requisite subject matter jurisdiction to 8 grant the relief requested. See Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 376-78 9 (1994) (citation omitted). A complaint will be dismissed if, looking at the complaint as a whole, it 10 appears to lack federal jurisdiction either “facially” or “factually.” Thornhill Publishing Co., Inc. v. 11 General Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th Cir. 1979). When the complaint is challenged for 12 lack of subject matter jurisdiction on its face, all material allegations in the complaint will be taken as 13 true and construed in the light most favorable to the plaintiff. NL Indus. v. Kaplan, 792 F.2d 896, 898 14 (9th Cir. 1986). 15 16 II. Federal Rule of Civil Procedure 12(b)(6) 17 Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it 18 fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to dismiss, 19 the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. 20 Corp. v. Twombly, 550 U.S. 544, 570 (2007). This “facial plausibility” standard requires the plaintiff 21 to allege facts that add up to “more than a sheer possibility that a defendant has acted unlawfully.” 22 Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). While courts do not require “heightened fact pleading 23 of specifics,” a plaintiff must allege facts sufficient to “raise a right to relief above the speculative level.” 24 Twombly, 550 U.S. at 544, 555. 25 In deciding whether the plaintiff has stated a claim upon which relief can be granted, the court 26 must assume that the plaintiff’s allegations are true and must draw all reasonable inferences in the 27 plaintiff's favor. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the 28 court is not required to accept as true “allegations that are merely conclusory, unwarranted deductions 3 1 of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). 2 If the Court dismisses the complaint, it must then decide whether to grant leave to amend. The 3 Ninth Circuit has “repeatedly held that a district court should grant leave to amend even if no request 4 to amend the pleading was made, unless it determines that the pleading could not possibly be cured by 5 the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (citations and internal 6 quotation marks omitted). 7 United States District Court For the Northern District of California 8 DISCUSSION 9 Tatung Company of America (“TUS”) moves to dismiss the complaints filed by AT&T and 10 Motorola on three grounds. First, TUS contends that plaintiffs have failed to allege that they are direct 11 purchasers with respect to TUS, and thus plaintiffs are barred from asserting their Sherman Act claims 12 against TUS. Second, TUS contends that plaintiffs have failed to state a federal antitrust claim against 13 TUS under the federal pleading standard mandated by Twombly, 550 U.S. 544 (2007). Third, TUS 14 moves to dismiss the state law claims to the extent those claims are predicated on the federal claims, and 15 because plaintiffs have failed to state a claim under the various state statutes alleged in the complaints. 16 17 18 I. Federal claims 19 TUS contends that plaintiffs’ federal antitrust claims are barred under Illinois Brick Co. v. 20 Illinois, 431 U.S. 720 (1977). TUS argues that it is not an LCD manufacturer, that TUS is itself a direct 21 purchaser of finished products containing LCDs or a direct or an indirect purchaser of LCDs themselves, 22 and thus that TUS’s customers are indirect purchasers who may not sue for damages under Illinois 23 Brick. In support, TUS relies on the same declarations and evidence submitted in connection with 24 TUS’s motion to dismiss the direct purchaser plaintiffs’ first amended consolidated complaint in the 25 MDL, as well as a new declaration from TUS executive Mr. Chen.3 TUS argues that the evidence it has 26 submitted shows that TUS, Chunghwa Picture Tubes, and Tatung Company of Taiwan are distinct 27 28 3 The declarations are found at Docket Nos. 471, 472, 856 Ex. C, 1560 Ex. A, and 1561 Ex. A). 4 United States District Court For the Northern District of California 1 corporate entities, and that there is no factual basis for Sherman Act liability against TUS. TUS’s 2 arguments in this regard are largely identical to the arguments previously asserted in connection with 3 its motion to dismiss the direct purchaser consolidated class complaint, as well as TUS’s motion for 4 reconsideration. The primary difference between the instant motion and those other motions is the 5 addition of Mr. Chen’s most recent declaration, which states that “TUS does not now nor has it ever 6 manufactured handsets or handheld devices containing LCD panels, including cell phones and PDAs,” 7 and “TUS does not now nor has it ever sold handsets or handheld devices containing LCD panels, 8 including cell phones and PDAs.” Feb. 19, 2010 Chen Decl. ¶¶ 2-3. 9 In response, plaintiffs argue that TUS and defendant Chunghwa Picture Tubes, Ltd. (“CPT”) are 10 considered a single entity for purposes of the antitrust laws in view of their close affiliation and alleged 11 common ownership. Plaintiffs rely on Royal Printing Company v. Kimberly-Clark Corp., 621 F.2d 323 12 (9th Cir. 1980), in which the Ninth Circuit held that “Illinois Brick does not bar an indirect purchaser’s 13 suit where the direct purchaser is a division or subsidiary of a co-conspirator.” Id. at 326. The court 14 explained that Illinois Brick’s rationale of preventing potentially duplicative recoveries from both direct 15 and indirect purchasers does not apply where the direct purchaser is an affiliate of the corporation 16 accused of an antitrust violation. Id.; see also Freeman v. San Diego Ass’n of Realtors, 322 F.3d 1133, 17 1145-46 (9th Cir. 2003) (applying Royal Printing and holding that “indirect purchasers can sue for 18 damages if there is no realistic possibility that the direct purchaser will sue its supplier over the antitrust 19 violation”). Plaintiffs rely on the same evidence and arguments submitted by the direct purchaser class 20 plaintiffs in opposition to TUS’s earlier motions raising the same contentions. 21 For the reasons set forth in the Court’s March 3, 2009 and March 28, 2010 orders, the Court 22 holds that, at this stage of the litigation, TUS has not shown that it is not a proper defendant under Royal 23 Printing. The Court recognizes that the factual record is disputed as to the degree of control exercised 24 by Chunghwa and/or Tatung Company of Taiwan over TUS, as well as the nature of the corporate 25 affiliation between Chunghwa and TUS. As stated in the March 28, 2010 order, the Court finds it 26 unnecessary to resolve these factual disputes at this time, as the record is not fully developed and there 27 is a sufficient basis in the record to allow the cases to proceed against TUS. TUS may renew its 28 5 United States District Court For the Northern District of California 1 arguments upon a fuller factual record in a motion for summary judgment.4 With regard to the new 2 declaration by Mr. Chen, even if it is true that TUS has never manufactured or sold handsets or handset 3 devices, TUS could still be liable for purchases made to AT&T for products other than handsets or 4 handset devices, and TUS could still be liable to both sets of plaintiffs based on the complaints’ 5 allegations that TUS joined in the LCD price-fixing cartel. See Paper Sys. Inc. v. Nippon Paper Indus. 6 Co., 281 F.3d 629, 632 (7th Cir. 2002) (“Nothing in Illinois Brick displaces the rule of joint and several 7 liability, under which each member of a conspiracy is liable for all damages caused by the conspiracy’s 8 entire complaint.”). 9 TUS also argues that the complaints’ allegations of a conspiracy involving TUS do not meet the 10 pleading standard set forth by Twombly. TUS argues that “other than their conclusory and incorrect 11 allegations of control,” plaintiffs have failed to plausibly allege that TUS joined the alleged conspiracy 12 and played a role in it. The Court disagrees, and finds that the allegations are sufficient under Twombly. 13 The complaints allege that TUS sold and distributed LCD products manufactured by Chunghwa 14 throughout the United States; contains allegations about the Tatung corporate family and ownership of 15 Chunghwa and TUS; and alleges that subsidiaries such as TUS “played a significant role in the 16 conspiracy” and were “active, knowing participants in the conspiracy.” See, e.g., AT&T Amended 17 Compl. ¶¶ 43-45, 86-87, 118; Motorola Amended Compl. ¶¶ 10, 38-40, 116. The Court previously held 18 similar allegations in the direct purchaser class complaint adequately alleged TUS’s role in the alleged 19 conspiracy. 20 21 II. State law claims 22 TUS also moves to dismiss plaintiffs’ state law claims on numerous grounds. By orders filed 23 on June 28, 2010, the Court granted defendants’ joint motion to dismiss the state law claims. 24 Accordingly, the Court finds it unnecessary to address the separate arguments raised by TUS with 25 respect to the state law claims. If plaintiffs allege state law claims against TUS in the amended 26 4 27 28 Contrary to TUS’s assertions, plaintiffs have submitted more than marketing statements in support of their allegations regarding the close corporate affiliation between Chunghwa and TUS, and thus regardless of whether such statements could provide a basis for denying TUS’s jurisdictional challenge, there is other evidence in support of plaintiffs’ allegations of control. 6 1 complaints, TUS may renew these contentions. 2 3 CONCLUSION 4 Accordingly, for the foregoing reasons, the Court DENIES the motions to dismiss filed by 5 Tatung Company of America. (Docket Nos. 1560 and 1561 in C 07-1827; Docket No. 36 in C 09-4997; 6 and Docket No. 27 in C 09-5840). 7 8 IT IS SO ORDERED. 9 United States District Court For the Northern District of California 10 Dated: July 19, 2010 SUSAN ILLSTON United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7
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