Proview Technology, Inc. et al v. AU Optronics Corporation et al, No. 3:2012cv03802 - Document 35 (N.D. Cal. 2013)


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Proview Technology, Inc. et al v. AU Optronics Corporation et al Doc. 35 1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 9 United States District Court For the Northern District of California 10 11 12 13 IN RE: TFT-LCD (FLAT PANEL) ANTITRUST LITIGATION / This Order Relates to: No. M 07-1827 SI MDL. No. 1827 Case No. C 12-3802 SI ORDER GRANTING IN PART DEFENDANTS’ JOINT MOTION TO DISMISS PROVIEW’S SECOND AMENDED COMPLAINT Proview Technology Inc., et al. v. AU Optronics Corp., et. al., C 12-3802 SI / 14 Currently before the Court is defendants’ joint motion to dismiss Proview’s Second Amended 15 Complaint. Pursuant to Civil Local Rule 7-1(b), the Court finds these matters suitable for disposition 16 without oral argument and therefore VACATES the hearings currently scheduled for March 22, 2013. 17 Having considered the moving papers and the arguments of the parties, and for good cause appearing, 18 the Court hereby GRANTS in part and DENIES in part Defendants’ motion. Docket No. 7607. 19 20 BACKGROUND 21 Plaintiffs include four entities: Proview Technology Inc. (“PTI”), a California corporation; and 22 three of its affiliated Original Equipment Manufacturers (“OEMs”) in Taiwan and China, Proview 23 Technology Co., Ltd., Proview Group Limited, and Proview Optronics Co., Ltd. (collectively, “Proview 24 OEMs”). PTI sells TFT-LCD products such as computer monitors and televisions to retailers in the 25 United States. PTI receives the products from its affiliated OEMS through a process by which PTI 26 instructs the Proview OEMs to purchase LCD Panels for delivery in Asia and manufacture into LCD 27 products, which PTI purchases and imports into the United States. Second Amended Complaint 28 (“SAC”), ¶¶ 14-15, 132-33. Plaintiffs filed this action on July 20, 2012, seeking to recover damages for 1 a “a long-running conspiracy by manufacturers of liquid crystal display panels ("LCD Panels").” 2 Complaint at ¶1. On October 17, 2012, Plaintiffs amended the complaint as of right, and on January 14, 3 2013, they further amended the complaint after seeking and receiving Defendants’ consent. This Second 4 Amended Complaint alleges that during the conspiracy period (January 1, 1996-December 11, 2006), 5 plaintiffs directly and indirectly purchased LCD products from defendants and their co-conspirators. 6 SAC, ¶ 2. As a result of defendants’ and their co-conspirators’ conspiracy, the complaint alleges, 7 plaintiffs paid artificially-inflated prices for LCD panels. Id. Plaintiffs seek relief under the Sherman 8 Act, the California Cartwright Act and Unfair Competition Laws, and an unjust enrichment theory. Id. 9 at 160-78. Defendants move to dismiss Plaintiffs’ claims based on a number of different theories, as United States District Court For the Northern District of California 10 detailed below. 11 12 LEGAL STANDARD 13 Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it 14 fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to dismiss, 15 the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. 16 Corp. v. Twombly, 550 U.S. 544, 570 (2007). This “facial plausibility” standard requires the plaintiff 17 to allege facts that add up to “more than a sheer possibility that a defendant has acted unlawfully.” 18 Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). While courts do not require “heightened fact pleading 19 of specifics,” a plaintiff must allege facts sufficient to “raise a right to relief above the speculative level.” 20 Twombly, 550 U.S. at 544, 555. 21 In deciding whether the plaintiff has stated a claim upon which relief can be granted, the court 22 must assume that the plaintiff’s allegations are true and must draw all reasonable inferences in the 23 plaintiff’s favor. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the 24 court is not required to accept as true “allegations that are merely conclusory, unwarranted deductions 25 of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). 26 If the court dismisses the complaint, it must then decide whether to grant leave to amend. The 27 Ninth Circuit has “repeatedly held that a district court should grant leave to amend even if no request 28 to amend the pleading was made, unless it determines that the pleading could not possibly be cured by 2 1 the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (citations and internal 2 quotation marks omitted). 3 4 DISCUSSION Defendants raise numerous challenges to Plaintiffs’ SAC. In their Opposition, Plaintiffs do not 6 oppose dismissal of certain claims alleged in the SAC, and thus, only four issues raised in the motion 7 remain to be decided.1 First, Defendants argue that PTI, as an indirect purchaser, lacks standing to bring 8 claims under the Sherman Act. Second, Defendants assert that the Proview OEMs, as foreign 9 companies, are barred from bringing Sherman Act claims by the Foreign Trade Antitrust Improvements 10 United States District Court For the Northern District of California 5 Act (“FTAIA”). Third, Defendants argue that PTI’s Cartwright Act claim does not comport with due 11 process because no purchases were made within California. Lastly, Defendants argue that Plaintiffs’ 12 state claims are untimely, and their tolling theories do not cure the untimeliness. 13 14 1. Standing for PTI's Sherman Act claim 15 Defendants argue that PTI lacks standing to pursue its Sherman Act claim because it indirectly 16 purchased LCD products from the Proview OEMs and is thus barred by the “direct purchaser” rule in 17 Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977). Defendants allege that PTI cannot invoke the 18 ownership/control exception to the Illinois Brick bar against standing for indirect purchasers, because 19 it does not sufficiently allege "control" of the PTI OEMs by PTI. Defendants also allege that even if 20 PTI were a direct purchaser, it never opted out of the DPP Class and therefore its claims have been 21 extinguished by that action. Plaintiffs argue that PTI exercises sufficient control over the Proview 22 OEMs to qualify for the ownership/control exception, and that Plaintiffs have sufficiently alleged this 23 control in the SAC. See SAC, ¶¶ 14-15, 118, 132. 24 The ownership and control exception to the Illinois Brick bar against standing for indirect 25 purchasers encompasses relationships involving “such functional economic or other unity between the 26 direct purchaser and either the defendant or the indirect purchaser, that there effectively has been only 27 1 28 Plaintiffs do not oppose dismissal of the Proview OEMs’ claims under the Cartwright Act and the UCL and Plaintiffs’ claims for unjust enrichment. See Opposition at 2, n.1. 3 one sale.” Sun Microsystems, Inc. v. Hynix Semiconductor Inc., et al, 608 F.Supp.2d 1166, 1180 (N.D. 2 Cal. 2009); see, e.g., Jewish Hosp. Ass'n v. Stewart Mech. Enters., 628 F.2d 971, 975 (6th Cir.1980); 3 Royal Printing Co. v. Kimberly-Clark Corp., 621 F.2d 323, 326-27 (9th Cir.1980); In re Mercedes-Benz 4 Anti-Trust Litig., 157 F.Supp.2d 355, 355 (D.N.J.2001) ("[T]he rationale of Illinois Brick's bar to 5 indirect purchaser suits does not apply where the supposed intermediary is controlled by one or the other 6 of the parties"). The Ninth Circuit recently addressed the ownership and control exception in the context 7 of the relationship between direct purchasers and defendants/co-conspirators. In Re ATM Fee Antitrust 8 Litigation, 686 F.3d 741, 756-58 (9th Cir. 2012). The Court explained that “control" means "to exercise 9 restraint or direction over; dominate, regulate, or command," United States v. Bennett, 621 F.2d 1131, 10 United States District Court For the Northern District of California 1 1139 n.2 (9th Cir. 2010) (quoting Webster's College Dictionary 297 (Random House 1991)), or to have 11 "the power or authority to guide or manage," id. (quoting Webster's New Collegiate Dictionary 285 (9th 12 ed. 1983)). ATM Fee, 686 F.3d at 757. The Ninth Circuit further described the "power or authority to 13 guide or manage" that is required to demonstrate "the type of control necessary to meet the exception 14 to Illinois Brick." Id. at 758. Paradigmatic examples of “situations where an ownership or control 15 relationship between an indirect purchaser and a direct purchaser” may exist include parent-subsidiary 16 relationships or one company's stock ownership of another. Jewish Hosp. Ass'n, 628 F.2d at 975. 17 The Court finds that Plaintiffs’ SAC fails to adequately allege that its claims fall within the 18 control exception to Illinois Brick. Although Plaintiffs allege – conclusorily – that the Proview OEMs 19 act as agents for PTI and that PTI has “control of” the Proview OEMs, the SAC fails to allege sufficient 20 facts to support or explain the type of control exercised by PTI or to demonstrate that it is adequate to 21 meet the exception. That PTI “instructed its affiliated OEMs . . . to purchase LCD panels” does not, by 22 itself, demonstrate that PTI controlled the Proview OEMs. 23 Defendants' motion to dismiss PTI’s Sherman Act claims and gives Plaintiffs leave to amend their 24 complaint.2 Accordingly, the Court GRANTS 25 26 27 28 2 In light of this finding, the Court need not reach the issue of whether PTI, as a “direct purchaser” may assert a Sherman Act claim even though it did not opt out of the Direct Purchaser Class (“DPP”) Action. 4 1 2. Effect of FTAIA on the Proview OEM’s Sherman Act Claims Defendants argue that as foreign entities with no nexus to the U.S., the Proview OEMs made 3 their direct purchases entirely in foreign commerce and are therefore barred by the FTAIA from bringing 4 Sherman Act claims. Defendants argue that the Proview OEMs have failed to adequately plead any 5 exception to FTAIA’s bar on foreign purchases, and that an amendment will not cure their claims in 6 light of the fact that they did not opt out of the DPP Action. The Proview OEMs argue that the FTAIA 7 does not bar its Sherman Act claims for “U.S.-related commerce not already included in PTI’s claims” 8 because the alleged conspiracy “deliberately targeted the U.S. Market and involved both domestic and 9 international conduct” and because the purchases were “based on contract terms and pricing negotiated 10 United States District Court For the Northern District of California 2 by PTI specifically for U.S. bound LCD products.” Opposition at 6. The Proview Plaintiffs largely rely 11 on this Court’s orders in the Dell and Motorola cases. The Proview Plaintiffs argue that their claims are 12 based on panel purchases which are “nearly identical” to the purchases by Dell and Motorola’s foreign 13 affiliates, and that the Court should find here, as it did there, that the SAC adequately pleads an 14 exception to the FTAIA. 15 The Court concludes that the Proview SAC does not allege enough facts to adequately plead an 16 exception to the FTAIA. In both the Dell and Motorola cases, plaintiffs had alleged that a global price 17 for all TFT-LCD products purchased from defendants had been negotiated in the U.S. at Dell’s and at 18 Motorola’s U.S. offices. The Providew Plaintiffs’ SAC does not allege similar facts. At most, the SAC 19 alleges that “[t]he prices Plaintiffs used in purchase orders placed with Defendants were based on price 20 and quantity determinations based on U.S. Negotiations.” SAC, ¶¶ 136. The Court does not find this 21 clear enough or specific enough to allege a domestic effect to qualify for an exception to the FTAIA. 22 The lack of specificity is exacerbated by the SAC’s allegations that Defendants met with the Proview 23 OEMs’ representatives in Asia to negotiate contract terms and pricing. Id. at ¶ 134. Further, unlike the 24 Dell and Motorola complaints, the SAC does not identify whether any “price and quantity 25 determinations based on U.S. Negotiations” were binding on the Proview OEMs. Accordingly, the 26 Court concludes that Plaintiffs have not alleged sufficient facts to bring the Proview OEMs’ Sherman 27 Act claims within the domestic injury exception to the FTAIA and GRANTS Defendants’ motion to 28 dismiss the Proview OEMs’ Sherman Act claims on this ground, with leave to amend the complaint. 5 1 3. Plaintiffs’ Cartwright Act Claims 2 Defendants seek to dismiss Plaintiffs’ state law claims on the grounds that they are time-barred 3 and are barred by due process concerns. Because Plaintiffs concede that the Proview OEMs’ state law 4 claims are not tolled by class action tolling, they are untimely; only PTI’s state law claims remain to be 5 decided. 6 a. 8 Defendants argue that PTI’s Cartwright Act and UCL claims are untimely. Plaintiffs filed suit 9 on July 20, 2012, some 5-1/2 years after the DOJ’s December 11, 2006 announcement of its 10 United States District Court For the Northern District of California 7 investigation into the conspiracy. Because these claims have four-year statutes of limitations, 11 Defendants contend that Plaintiffs’ claims are untimely unless tolled; and they challenge the factual 12 adequacy of the allegations supporting the various tolling theories alleged in the SAC. Plaintiffs 13 conceded that certain claims were untimely and that certain tolling theories were inapplicable,3 but argue 14 that PTI’s state law claims were tolled to the extent identified in this Court’s Order involving 15 ViewSonic. See Docket No. 7255. In that Order, the Court found that ViewSonic, a reseller, could rely 16 on the filings of Hee v. LG Philips LCD Co. Ltd. and Selfridge v. LG Philips Co., Ltd., to toll its 17 California claims, but the tolling was limited to the defendants, products, and conspiracy periods 18 identified in the Hee, Selfridge, and IPP-CAC actions. PTI contends that application of the same tolling 19 principles to its complaint renders its claims timely. Tolling of PTI’s Cartwright Act and UCL claims 20 The Court concludes that like ViewSonic, PTI may rely on Hee and Selfridge to toll its state 21 claims, but the tolling will similarly be limited to the defendants, products, and conspiracy periods 22 identified in Hee, Selfridge, and the IPP-CAC. Accordingly, the Court DENIES Defendants’ motion 23 to dismiss PTI’s state law claims on the grounds that they are barred by the statute of limitations. 24 25 As discussed below however, the claims are dismissed without prejudice based on due process concerns 26 27 28 3 Plaintiffs concede that class action tolling does not toll the Proview OEMs’ state law claims and that 15 U.S.C. § 16(i) does not toll state law claims. Accordingly, defendants’ motion to dismiss these claims is GRANTED. 6 1 b. 2 Defendants argue that PTI has failed to make sufficiently individualized allegations of each 3 Defendants’ alleged conspiratorial activity, in light of the Ninth Circuit’s recent decision in AT&T 4 Mobility LLC v. AU Optronics Corp., and its order directing that due process must be analyzed on an 5 individualized, defendant-by-defendant basis. No. 11-16188, 2013 WL 540859 (9th Cir. Feb. 14, 2013). 6 The Court agrees. Due Process In AT&T Mobility, the Ninth Circuit held, “the Cartwright Act can be lawfully applied without 8 violating a defendant's due process rights when more than a de minimis amount of that defendant's 9 alleged conspiratorial activity leading to the sale of price-fixed goods to plaintiffs took place in 10 United States District Court For the Northern District of California 7 California.” AT&T Mobility LLC, at *6. The Court remanded to this Court to make an individual 11 assessment “with respect to each Defendant as to whether Plaintiffs have alleged sufficient 12 conspiratorial conduct within California, that is not ‘slight and casual,’ such that the application of 13 California law to that Defendant is ‘neither arbitrary nor fundamentally unfair.’” Id. at *7 (emphasis 14 added). Based on the Ninth Circuit’s holding, the Court concludes that Plaintiffs must adequately allege 15 conspiratorial conduct of each Defendant in California. Accordingly, because the SAC fails to do this, 16 the Court GRANTS Defendants’ motion to dismiss PTI’s Cartwright Act claims on due process grounds, 17 and the Court gives Plaintiffs leave to amend the complaint. 18 19 c. 20 Defendants challenged Plaintiff’s unjust enrichment claims for a number of reasons, including 21 its timeliness. Plaintiffs concede that any claim for unjust enrichment is time-barred. See Opposition 22 at 2, n.1. Accordingly, the Court GRANTS Defendants’ motion to dismiss Plaintiffs’ unjust enrichment 23 claim. Plaintiff’s Unjust Enrichment Claims 24 25 26 27 /// 28 7 1 CONCLUSION 2 For the foregoing reasons and for good cause shown, the Court hereby GRANTS in part and 3 DENIES in part Defendants’ joint motion. Any amended complaint must be filed by April 5, 2013. 4 Docket No. 7607. 5 6 IT IS SO ORDERED. 7 8 Dated: March 20, 2013 SUSAN ILLSTON United States District Judge 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8

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