Costco Wholesale Corp. v. Au Optronics Corp. et al, No. 3:2011cv00058 - Document 297 (N.D. Cal. 2012)

Court Description: ORDER DENYING DEFENDANTS' JOINT MOTION AND TOSHIBA'S SEPARATE MOTION FOR PARTIAL SUMMARY JUDGMENT FOR LACK OF STANDING UNDER ILLINOIS BRICK AND IN RE ATM FEE (Illston, Susan) (Filed on 11/19/2012)
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Costco Wholesale Corp. v. Au Optronics Corp. et al Doc. 297 1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 9 IN RE: TFT-LCD (FLAT PANEL) ANTITRUST LITIGATION / United States District Court For the Northern District of California 10 This Order Relates to: 11 AT&T Mobility LLC, et al. v. AU Optronics Corp., et al., C 09-4997 SI 12 13 14 15 16 17 18 19 No. M 07-1827 SI MDL. No. 1827 Case Nos. C 09-4997 SI; C 10-4572 SI; C 101064 SI; C 10-0117 SI; C 10-4945 SI; C 110058 SI ORDER DENYING DEFENDANTS’ JOINT MOTION AND TOSHIBA’S SEPARATE MOTION FOR PARTIAL SUMMARY JUDGMENT FOR LACK OF STANDING UNDER ILLINOIS BRICK AND IN RE ATM FEE Best Buy Co., Inc., et al. v. AU Optronics Corp., et al., C 10-4572 SI Dell Inc., et al. v. Sharp Corp., et al., C 10-1064 SI Electrograph Systems, Inc., et al. v. Epson Imaging Devices Corp., et al., C 10-0117 SI Target Corp., et al. v. AU Optronics Corp., et al., C 10-4945 SI Costco Wholesale Corp. v. AU Optronics Corp., et al., C 11-0058 SI / 20 21 Currently before the Court are defendants’ joint motion and Toshiba’s separate motion for partial 22 summary judgment for lack of standing under Illinois Brick and In Re ATM Fee. Having considered the 23 moving papers and the arguments of the parties, and for good cause appearing, the Court hereby 24 DENIES the motions. Docket 6342 and 6367. 25 26 BACKGROUND 27 In Illinois Brick, the Supreme Court held that only direct purchasers of price-fixed goods may 28 bring suit under the federal antitrust laws. Illinois Brick Co. v. Illinois, 431 US 720 (1977). Subsequent Dockets.Justia.com 1 cases have outlined limited exceptions to the Illinois Brick rule and held that indirect purchasers may 2 have standing to bring suit in one of the following three situations: (1) a pre-existing cost-plus contract 3 with the direct purchaser exists; (2) the indirect purchaser establishes a price-fixing conspiracy between 4 the manufacturer and the middle-man, making the latter entities co-conspirators as to the price paid by 5 the plaintiffs; and (3) customers of the direct purchaser own or control the direct purchaser, or a 6 conspirator owns or controls the direct purchaser. Royal Printing v. Kimberly-Clark Corp., 621 F. 2d 7 323 (9th Cir. 1980); Freeman v. San Diego Ass'n of Realtors, 322 F. 3d 1133 (9th Cir. 2003). In a recent decision, the Ninth Circuit clarified the scope of the latter two of these exceptions. 9 See In Re ATM Fee Antitrust Litigation, 686 F.3d 741 (9th Cir. 2012). Plaintiffs, automated teller 10 United States District Court For the Northern District of California 8 machine (“ATM”) cardholders, alleged that the defendants, bank members of an ATM network, engaged 11 in horizontal price fixing by conspiring to fix the fees the banks paid to ATM owners (“interchange 12 fees”) when cardholders retrieve cash from an ATM not owned by their bank. ATM Fee held that the 13 manufacturer-middleman/co-conspirator exception did not apply because this exception is only 14 applicable if the co-conspirators fix the price paid by the plaintiff, but in that case plaintiff cardholders 15 did not pay the price-fixed fee, the ATM network owners did. Id. at 744. With respect to the 16 ownership/control exception, ATM Fee held that the “no realistic possibility” inquiry that the Ninth 17 Circuit had recognized in Freeman is not a separate exception to the Illinois Brick rule, and does not 18 apply outside the ownership or control context. Id. at 756-58. 19 In two separate motions for summary judgment, a joint group of defendants1 and Toshiba2 20 (generally “defendants”) argue that pursuant to the holding in In Re ATM Fee, plaintiffs lack standing 21 to pursue Sherman and Clayton Act claims because they purchased finished products only and not the 22 1 23 24 25 26 27 LG Display Co., Ltd. and LG Display America, Inc.; Epson Imaging Devices Corporation and Epson Electronics America, Inc.; AU Optronics Corporation and AU Optronics Corporation America; Philips Electronics North America Corporation; Chunghwa Picture Tubes, Ltd.; HannStar Display Corporation; Mitsui & Co. (Taiwan), Ltd.; Sharp Corporation and Sharp Electronics Corporation; Samsung SDI, Inc., Samsung SDI Co., Ltd., and Samsung SDI America, Inc.; Sanyo Consumer Electronics Co., Ltd.; Hitachi, Ltd., Hitachi Displays, Ltd. (n/k/a Japan Display East, Inc.) and Hitachi Electronic Devices (USA), Inc.; Chimei Innolux Corporation (f/k/a Chi Mei Optoelectronics Corporation), Chi Mei Corporation, Chi Mei Optoelectronics USA, Inc., CMO Japan Co., Ltd., Nexgen Mediatech, Inc. and Nexgen Mediatech USA, Inc. 2 28 Toshiba Corporation, Toshiba Mobile Display Co., Ltd., Toshiba America Electronic Components, Inc., and Toshiba America Information Systems, Inc. 2 1 price-fixed good, and because no Illinois Brick exception applies. 2 3 LEGAL STANDARD 4 Summary judgment is proper if the pleadings, the discovery and disclosure materials on file, and 5 any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled 6 to judgment as a matter of law. See Fed. R. Civ. P. 56(a). The moving party bears the initial burden of 7 demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 8 323 (1986). The moving party, however, has no burden to disprove matters on which the non-moving 9 party will have the burden of proof at trial. The moving party need only demonstrate to the Court that United States District Court For the Northern District of California 10 there is an absence of evidence to support the non-moving party’s case. Id. at 325. 11 Once the moving party has met its burden, the burden shifts to the non-moving party to “set out 12 ‘specific facts showing a genuine issue for trial.’” Id. at 324 (quoting then Fed. R. Civ. P. 56(e)). To 13 carry this burden, the non-moving party must “do more than simply show that there is some 14 metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 15 475 U.S. 574, 586 (1986). “The mere existence of a scintilla of evidence ... will be insufficient; there 16 must be evidence on which the jury could reasonably find for the [non-moving party].” Anderson v. 17 Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). 18 In deciding a summary judgment motion, the Court must view the evidence in the light most 19 favorable to the non-moving party and draw all justifiable inferences in its favor. Id. at 255. 20 “Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from 21 the facts are jury functions, not those of a judge . . . ruling on a motion for summary judgment.” Id. 22 However, conclusory, speculative testimony in affidavits and moving papers is insufficient to raise 23 genuine issues of fact and defeat summary judgment. Thornhill Publ'g Co., Inc. v. GTE Corp., 594 F.2d 24 730, 738 (9th Cir.1979). The evidence the parties present must be admissible. Fed. R. Civ. P. 56(c)). 25 26 27 28 DISCUSSION 3 Plaintiffs3 are retailers, distributors, original equipment manufacturers (OEMs), and other 2 businesses which purchased finished products containing price-fixed LCD panels from defendants, co- 3 conspirators, and other related entities. These Direct Action Purchasers (“DAPs”) claim that as a result 4 of these purchases, they sustained damages in the form of overcharges. Defendants argue that plaintiffs 5 lack standing to sue because they did not directly purchase the price-fixed good, namely, the LCD panel, 6 and no Illinois Brick exception applies. The parties do not dispute that the first two Illinois Brick 7 exceptions are inapplicable. They do, however, interpret the holdings of ATM Fee differently, and they 8 dispute how the ownership/control exception, as explained in ATM Fee, applies to the case at hand. 9 Additionally, defendants argue that the exceptions must be evaluated on a purchase-by-purchase basis, 10 United States District Court For the Northern District of California 1 and that plaintiffs cannot demonstrate whether each individual finished product contains a panel made 11 by an alleged conspirator. 12 13 1. Ownership/Control Exception 14 Defendants contend that because plaintiffs purchased finished products containing price-fixed 15 LCD panels, not the raw panels themselves, they have no standing, even though the plaintiffs’ purchases 16 were made from defendants, co-conspirators and affiliates. They urge this Court to hold that ATM Fee 17 changed and narrowed the scope of Royal Printing Company v. Kimberly-Clark Corp., 621 F.3d 323, 18 326 (9th Cir. 1980), by limiting the ownership/control exception to cases in which the seller of the price- 19 fixed good (here, the LCD panels) owns/controls the direct purchaser.4 Defendants argue that this 20 excludes cases in which a co-conspirator owns/controls the direct purchaser and cases in which the 21 direct purchaser owns/controls the seller or co-conspirator. 22 The Court disagrees with defendants’ interpretation of ATM Fee. In Royal Printing, the Ninth 23 24 25 3 Toshiba has withdrawn its motion as to Eastman Kodak Company and Nokia Corporation and Nokia Inc. Docket Nos. 6473 and 6601. 4 26 27 28 Toshiba argues that Royal Printing is no longer supportable because its reasoning was based on the theory that applying Illinois Brick to cases where parental control existed would close off every avenue for private enforcement, but a subsequent case held that Illinois Brick does not preempt lawsuits under state indirect purchaser antitrust statutes. The Court disagrees with Toshiba: state antitrust enforcement would not replace federal antitrust liability, which was Illinois Brick’s concern. See Illinois Brick, 431 U.S. at 745-46. 4 1 Circuit outlined the ownership/control exception and held that “Illinois Brick does not bar an indirect 2 purchaser’s suit where the direct purchaser is a division or subsidiary of a co-conspirator.” As this Court 3 stated in a previous Order in the Direct Purchaser action, Royal Printing was not concerned with the 4 relationship between the manufacturer of a price-fixed product and the direct purchaser; rather, it was 5 concerned with the relationship between the conspirator and the direct purchaser. Docket No. 4108. 6 Indeed, the facts in Royal Printing confirm this: Royal Printing sought damages for its purchases from 7 a co-conspirator’s wholesaling division, but had never bought any of the parent company’s products 8 from that division -- it had only bought products of other defendant manufacturers. Royal Printing. 621 9 F.2d at 324. United States District Court For the Northern District of California 10 ATM Fee did not purport to change the Royal Printing standard, but rather applied it to the 11 complicated facts of that case. Nowhere in the ATM Fee decision did the court mandate that the 12 ownership/control relationship be limited only to a manufacturer/seller and direct purchaser. That the 13 facts of that particular case involved only a seller and direct purchasers does not restrict the standard in 14 Royal Printing, which involved multiple sellers and direct purchasers. To the contrary, ATM Fee 15 expressly cited the Royal Printing standard and then held that the ATM cardholder plaintiffs, who 16 alleged only that the direct purchaser banks owned/controlled the ATM Network (the seller), could not 17 establish ownership/control based on the “ordinary, contemporary, and common meaning” of the word 18 “control.” ATM Fee, 686 F.3d at 756-58. The Court’s determination hinged on the facts surrounding 19 stock ownership and board control of the ATM Network and STAR, rather than any purported change 20 in ownership/control standard itself. Indeed, the ATM Fee case effectively refutes defendants’ claim 21 that the ownership/control exception can only apply downstream, id. at 757-58, by analyzing whether 22 direct purchaser bank defendants owned/controlled seller ATM Network/STAR. 23 The ATM Fee opinion never suggested any intention to alter the standard in Royal Printing. The 24 ATM Fee discussion recognized that the touchstone question is ownership or control, and clarified that 25 the “realistic possibility of suit” inquiry outlined in Royal Printing is not a separate exception -- it is 26 an analysis to be done in connection with the ownership/control exception. As the Court noted, 27 “Freeman outlines that, whether a realistic possibility of suit exists, depends on the ownership or control 28 between the direct purchaser and the seller.” ATM Fee, at 756. In this case, plaintiffs argue that the 5 1 there is evidence of ownership/control between the direct purchaser and a co-conspirator, and they 2 contend that they have standing based on the ownership/control exception outlined in Royal Printing 3 and affirmed by ATM Fee.5 The joint defendants argue that plaintiffs are unable to demonstrate that the sellers of LCD panels 5 own/control the direct purchasers in this action. They point to the example of the LG entities and assert 6 that LG Display, an alleged co-conspirator, owns/controls LG Electronics, a direct purchaser, and that 7 plaintiffs admit LG Electronics has never been a division or subsidiary of LG Display, an alleged co- 8 conspirator. They also assert that mere corporate “affiliation” is not sufficient to meet the ownership/ 9 control standard. Joint Motion at 18. Toshiba asserts that plaintiffs lack standing because TMD, the 10 United States District Court For the Northern District of California 4 only Toshiba entity that manufactured LCD panels during the relevant period, did not own or control 11 TAIS, Toshiba’s U.S. subsidiary, and a direct purchaser. 12 However, as discussed supra, ownership/control may exist if the direct purchaser owns/controls 13 the seller/manufacturer or if a co-conspirator owns/controls the direct purchaser. Thus, the ownership/ 14 control exception will apply if, as plaintiffs allege, LG Electronics owns/controls LG Display, and TAIS 15 is owned by a co-conspirator (TSB, in this case).6 Using the example of the LG entities, LG Display 16 was formed as a joint venture, with two shareholders, each owning a 50% interest: LG Electronics (an 17 alleged conspirator) and Royal Phillips. See Iovieno Decl., Exh. 78, No. 2. However, Royal Philips had 18 19 20 21 22 23 24 5 In asserting that plaintiffs lack standing even if the ownership/control exception applies, because they only bought finished products, and not the price-fixed LCD panels, defendants misconstrue not only the holding in Royal Printing, but the very reasoning of the ownership/control exception. As the court in ATM Fee explained, Royal Printing created the ownership/control exception because Illinois Brick would close off “every avenue for private enforcement” if only direct purchasers could sue as “the co-conspirator parent will forbid its subsidiary or division to bring a lawsuit that would only reveal the parent’s own participation in the conspiracy.” ATM Fee, 686 F.3d at 756 (quoting Royal Printing, 631 F.3d at 326-27). These cases make clear that indirect purchasers may sue even if, and precisely because, they did not purchase the price-fixed good, if it falls within the ownership/control exception. See ATM Fee, at 756. 6 25 26 27 28 To the extent defendants argue that plaintiffs lack standing for finished products purchased by or sold to a systems integrator, ODM or other third party before reaching the Direct Action purchasers, the Court finds that a genuine issue of material fact exists as to whether these parties actually buy pricefixed panels directly from panel manufacturers or whether they are retained by direct purchaser companies to merely assemble finished products. Plaintiffs assert that these intervening companies do not directly purchase price-fixed panels from alleged conspirators and sell them to indirect purchasers, and plaintiffs provide evidence in the form of deposition testimony and an expert report to support these assertions. See Opposition at 9, 17-18; Iovieno Decl., Exh. 61; Exh. 67. 6 1 acquired a 50% interest in LG Electronic’s TFT-LCD panel business to form LG Philips, the 2 predecessor to LG Display. See id. Nos. 1-2. Moreover, LG Display’s Shareholder Committee 3 consisted exclusively of members affiliated with LG Electronics or Royal Philips, see id. at 14; 36-61, 4 and under the terms of the joint venture agreement, LG Display and LG Electronics agreed to maintain 5 joint ownership of patents relating to TFT-LCD that were not assigned to LG Display, see id. at 62.7 6 This evidence supports plaintiffs’ contention that LG Electronics owns/controls LG Display. Like LG, Toshiba argues that the only panel-making seller in the Tohiba family is its joint 8 venture, TMD, and TMD does not own/control the direct purchaser, TAIS. However, it is undisputed 9 that the direct purchaser, TAIS, is wholly owned by Toshiba America, Inc., which is wholly owned by 10 United States District Court For the Northern District of California 7 the parent company, TSB, an alleged co-conspirator.8 Toshiba Motion at 7. Further, the evidence 11 demonstrates that TSB controls TMD, and TMD was formed as a joint venture between TSB and 12 Matsushita in April 2002. See Iovieno Decl., Exh. 4 at TSB_LCD _0058000. At the time of formation, 13 TSB owned a 60% interest in TMD, transferred its panel manufacturing business to TMD, and appointed 14 six of TMD’s board members. Id., Exh. 4, 20 at TSB_LCD_0247635, 25 at 32:10–32:21. 15 This evidence is sufficient to establish standing to present these claims at trial. 16 17 2. Proof of Injury and Ownership/Control 18 Defendants also argue that plaintiffs cannot provide evidence sufficient to show standing because 19 they cannot identify the manufacturer of each LCD panel in the finished products they purchased and 20 thus, they are unable to demonstrate that the products contain panels made by alleged conspirators or 21 that the finished products were sold by a direct purchaser which is owned/controlled by a conspiring 22 seller/manufacturer. 23 The Court has addressed related issues of proof for purposes of standing in its prior orders. See 24 Docket 4848, 4683. The Court noted that “[t]he difficulties that defendants have seized on involve 25 7 26 27 28 Cf. ATM Fee, 686 F.3d at 757-58 (“to control STAR [the ATM Network], the Bank Defendants must have had control of Concord’s board of directors. . .”). 8 To the extent plaintiffs rely on the jury verdict from the direct-purchaser class action, the Court notes that this verdict is likely to be vacated as part of a settlement agreement between the class and the Toshiba entities, which has received preliminary approval from the Court. Docket No. 6988. 7 1 matters of proof of the plaintiffs' claims. They do not equate to a lack of standing.” Docket No. 4683. 2 Here, LG’s motion revives the issue of standing of the DAP plaintiffs, which involves the same type of 3 analysis of proof of injury. Additionally, in a separate Order, the Court considered that plaintiffs in 4 antitrust cases benefit from an “especially lenient burden” in demonstrating proof of impact and that the 5 nature of the TFT-LCD industry renders a panel-by-panel proof requirement “inappropriately strict.” 6 The Court thus held, “[i]t is therefore unnecessary for plaintiffs to provide evidence of panel-by-panel 7 impact. Rather, plaintiffs may resort to generalized methods of proof.” Docket No. 4848. As these 8 Orders indicate, for purposes of standing plaintiffs are not required to identify impact based on each 9 individual panel. United States District Court For the Northern District of California 10 Additionally, defendants argue that because plaintiffs cannot identify the manufacturer of the 11 LCD panels in each of the products they purchased, they cannot satisfy the factual predicate to establish 12 ownership/control of the direct purchasers of those products. Plaintiffs dispute this claim, arguing that 13 there is sufficient evidence to demonstrate that the ownership/control exception applies. Plaintiffs point 14 to a chart submitted by defendants that lists the 151 entities from which plaintiffs purchased the LCD 15 products that form the basis for their federal claims. See Berger Decl., Exh. X. Defendants acknowledge 16 that plaintiffs have submitted evidence sufficient on summary judgment to show “downstream, parental 17 ownership or control” of 47 of the 149 direct purchasers identified in plaintiffs’ expert reports. See Joint 18 Reply at 12-13. They dispute, however, plaintiffs’ evidence for the following categories of purchasers: 19 33 direct purchasers who own/control conspiring sellers, 90 direct purchasers with “attenuated 20 relationships” with conspiring sellers, 29 direct purchasers only minimally owned by a conspiring seller, 21 and 42 direct purchasers which plaintiffs do not discuss. Id. at 13-16. Defendants’ claims about the 22 evidence of these purchases are without merit. Because ownership/control may be demonstrated 23 between a direct purchaser and a co-conspirator, rather than just a seller, sufficient evidence exists to 24 create a genuine issue of material fact regarding the ability of plaintiffs to show that the product they 25 purchased was manufactured by any of the co-conspirators. This is particularly compelling based on 26 the apparent control/ownership between various defendant entities, including their joint ventures, as 27 discussed supra, and when viewed in light of the fact that defendants held an overwhelming market 28 8 1 share during the conspiracy period, as this Court has previously identified.9 Dkt. 4683. Accordingly, 2 the Court finds that defendants have failed to meet their burden in demonstrating the absence of 3 evidence to support plaintiffs’ claim of standing under Royal Printing and ATM Fee. 4 5 For the foregoing reasons and for good cause shown, the Court hereby DENIES defendants’ joint 6 motion and Toshiba’s separate motion for partial summary judgment for lack of standing under Illinois 7 Brick and In Re ATM Fee. Master Docket Nos. 6342 & 6367. 8 9 United States District Court For the Northern District of California 10 IT IS SO ORDERED. Dated: November 19, 2012 SUSAN ILLSTON United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 9 28 Defendants’ LCD panels were used in 97.4% of LCD TVs, 93.2% of notebook computers, and 87.88% of desktop monitors sold during the relevant period. Dkt. 4683. 9