Spectrum Scientifics, LLC et al v. Celestron Acquisition, LLC et al, No. 5:2020cv03642 - Document 502 (N.D. Cal. 2023)
Court Description: ORDER Denying 174 Plaintiffs' Motion for Summary Judgment. Signed by Judge Edward J. Davila on 9/12/2023. (ejdlc1, COURT STAFF) (Filed on 9/12/2023)Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
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Spectrum Scientifics, LLC et al v. Celestron Acquisition, LLC et al Doc. 502 Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 1 of 18 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 AURORA ASTRO PRODUCTS LLC, et al., 8 Plaintiffs, 9 v. 10 ORDER DENYING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT CELESTRON ACQUISITION, LLC, et al., 11 United States District Court Northern District of California Case No. 5:20-cv-03642-EJD Defendants. 12 Re: ECF No. 174 Direct Purchaser Plaintiffs (“DPPs” or “Plaintiffs”) move for summary judgment against 13 14 Defendant Ningbo Sunny Electronic Co., Ltd. (“Ningbo Sunny”). ECF No. 174. Having 15 considered all the papers and pleadings on file, the Court had determined that the matter is suitable 16 for decision without oral argument pursuant to Civil Local Rule 7-1(b). For the reasons discussed 17 herein, Plaintiffs’ motion is DENIED. 18 I. BACKGROUND Without reiterating the entirety of the parties’ lengthy legal history, the instant putative 19 20 antitrust class action follows on the heels of Defendants’ six-week trial before the Undersigned in 21 Optronic Techs. Inc. v. Ningbo Sunny et al., No. 5:16-cv-06370-EJD (N.D. Cal.) (the “Orion 22 Action”), a private antitrust action that involved substantially similar causes of action and factual 23 allegations as described in the FAC.1 24 25 26 27 28 1 The Second Amended Complaint was the operative complaint at the time Plaintiffs moved for summary judgment. Shortly after this motion was filed, the parties stipulated to file the Third Amended Complaint (“TAC”) at ECF No. 188. See ECF Nos. 176, 180. Before ruling on the instant motion, the Court ordered DPPs to substitute class representatives and file a Fourth Amended Complaint (“FAC”). See ECF No. 486. Because the FAC is substantively identical to the TAC and to avoid any confusion, the Court will cite the FAC at ECF No. 495 and the Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 1 Dockets.Justia.com Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 2 of 18 1 2 A. Orion Action In the Orion Action, telescope distributer Optronic Technologies Co. (“Orion”) filed an antitrust suit in this District against its competitors Ningbo Sunny and its U.S. subsidiaries, Meade 3 and Sunny Optics, Inc. 4 Orion initiated the action based on allegations of horizontal price fixing, market division 5 and retaliation in the U.S. consumer telescope market by Chinese manufacturer Ningbo Sunny, its 6 7 U.S. subsidiaries Sunny Optics, Inc. (“Sunny Optics”), Meade Instruments, Inc. (“Meade”), and co-conspirators who had settled with Orion pre-suit. See Optronic Techs. Inc. v. Ningbo Sunny et 8 al., No. 5:16-cv-06370-EJD, ECF No. 41. Orion alleged that Ningbo Sunny and a Chinese 9 manufacturer entered multiple agreements with one another to ensure that they jointly controlled 10 the supply of telescopes into the U.S. by agreeing not to compete in the supply market, charging 11 United States District Court Northern District of California supracompetitive prices, restricting trade, and engaging in other anticompetitive conduct. Id. ¶¶ 12 13 14 33–34. The complaint alleged that the relevant market is “telescopes for beginner to intermediate consumers” encompassing telescope manufacturers and distributors. Id. ¶¶ 26, 31–49. Following a six-week trial, on November 26, 2019, the jury found Ningbo Sunny liable for 15 violations of §§ 1 and 2 of the Sherman Act and § 7 of the Clayton Act and awarded over 16 17 $52,000,000 in damages against defendants’ co-conspirators. See Optronic, No. 5:16-cv-06370EJD, ECF No. 501 (N.D. Cal. Nov. 26, 2019). 18 19 After the verdict, Ningbo Sunny and Sunny Optics (collectively, “Sunny Defendants”) and Meade filed for bankruptcy on December 4, 2019. This court entered a partial judgment for Orion 20 and against the Sunny Defendants on December 5, 2019, encompassing the Sherman Act §§ 1 and 21 2, Clayton Act § 7, California UCL, and California Cartwright Act claims. On April 10, 2020, the 22 United States Bankruptcy Court for the Central District of California permitted the district court to 23 enter a final judgment against the Sunny Defendants and Meade. Final judgment was entered as to 24 Ningbo Sunny on April 15, 2019. Optronic, No. 5:16-cv-06370-EJD, ECF No. 637 (N.D. Cal. 25 April 15, 2019). 26 27 28 substituted class representatives. Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 2 Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 3 of 18 1 Sunny Defendants appealed. On December 6, 2021, the Ninth Circuit affirmed in part the 2 judgment and vacated in part only with respect to the valuation of a settlement set-off, which was 3 remanded for further proceedings. Optronic Techs., Inc. v. Ningbo Sunny Elec. Co., 20 F.4th 466 4 (9th Cir. 2021). 5 B. 6 On October 19, 2020, Plaintiffs initiated this antitrust putative class action on behalf of 7 similarly situated DPPs alleging violations of the Sherman Act §§ 1 and 2; violation of the 8 Clayton Act § 7; and violations of California’s Cartwright Act and Unfair Competition Law.2 Named Plaintiffs Aurora Astro Products LLC (“Aurora”) and Pioneer Cycling & Fitness, 9 United States District Court Northern District of California DPP Class Action 10 LLP (“Pioneer”) are Washington and Minnesota limited liability company and partnership, 11 respectively, that sold telescopes in their retail stores. FAC ¶¶ 12–13. Named Plaintiff Jason 12 Steele is a resident of Texas who directly purchased a telescope from Defendant Celestron. Id. ¶ 13 13. Defendant Synta Technology and its affiliates (collectively, “Synta” or “the Synta Entities”), 14 see id. ¶¶ 16, 19–35, are a group of “related entities, holding companies, and shell corporations 15 controlled by David Shen,” who owns—either directly, or indirectly through his family 16 members—multiple telescope manufacturing and distribution companies. Id. ¶¶ 15. Defendant 17 Ningbo Sunny, a company located in China, and its U.S. subsidiary Meade export and sell 18 telescopes in the U.S. Id. ¶¶ 38–39. The Ningbo Sunny Co-Conspirators are a group of related 19 entities controlled by Wenjun (“Peter”) Ni, the founder and CEO of Ningbo Sunny. Id. ¶¶ 37, 40, 20 43. The FAC alleges the Synta Entities are involved in a long-running conspiracy with Ningbo 21 22 Sunny and its affiliates (“the Ningbo Sunny Entities”) to commit antitrust violations. Id. ¶ 2. 23 Peter Ni allegedly authorized or entered collusive agreements between Defendants and the Synta 24 co-conspirators and Ningbo Sunny to: jointly fix prices offered to distributors; restrict and set 25 distributors’ trade and credit terms; and block competitors from purchasing Meade by 26 27 28 2 Spectrum Scientifics LLC and Radio City LLC are no longer class representatives in the FAC. Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 3 Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 4 of 18 1 orchestrating the acquisition of Meade using the Synta Defendants’ support and assistance to 2 coordinate its pricing, sales, and manufacturing practices with Synta and Celestron to effectively 3 monopolize the U.S. market. Id. ¶ 40. DPPs allege that they were injured as a result of 4 Defendants conspiracy and request equitable relief, compensatory and treble damages, restitution, 5 disgorgement, and punitive damages. United States District Court Northern District of California 6 The FAC specifically alleges that Defendant Synta manufactures higher-end telescope 7 products while Ningbo Sunny manufactures lower-end models pursuant to the parties’ 8 arrangement not to compete. Id. ¶¶ 75–76. Under this arrangement, DPPs allege that Synta will 9 not manufacture or offer to quote a competitive price on products offered by Ningbo Sunny, and 10 Ningbo Sunny will do the same. Id. ¶ 74. In 2005, Synta acquired Celestron, which eventually 11 became the dominant U.S. telescope distributor because of Defendants’ conspiratorial conduct. Id. 12 ¶ 76. DPPs further allege that Ningbo Sunny had acquired Meade with Celestron and Synta’s 13 financial and other assistance. Id. ¶¶ 95–100. Synta and Ningbo Sunny sell their telescopes to 14 distributors through distributor brands, including their wholly owned subsidiaries Celestron and 15 Meade, which then sell the telescopes through stores, dealers, and the internet to U.S. consumer. 16 Id. ¶ 78. Celestron and Meade “account for the vast majority of consumer telescopes sold in the 17 United States.” Id. 18 The FAC alleges two relevant markets: (1) consumer telescope and telescope accessory 19 manufacturing for import into the United States (the “Manufacturing Market”) and (2) a 20 downstream market from the Manufacturing Market, or the market for consumer telescope 21 distribution (the “Distribution Market”). FAC ¶¶ 73, 77. 22 After filing of the complaint, the Court authorized alternative service on Ningbo Sunny 23 “sufficient to put Foreign Defendants on notice of these actions pursuant to Rule 4 of the Federal 24 Rules of Procedure.” ECF No. 78. Accordingly, Ningbo Sunny was served in January 2021 via 25 personal service on (1) Ningbo Sunny’s appellate counsel, (2) Ningbo Sunny’s wholly owned and 26 controlled U.S. subsidiary, Meade, (3) via e-mail to a Ningbo Sunny-affiliated email address and 27 (4) priority international mail to Peter Ni at Ningbo Sunny Electronic Co., Ltd. in China. ECF 28 Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 4 Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 5 of 18 1 Nos. 89; 89-1 ¶¶ 13–16. Ningbo Sunny has not appeared in this action. DPPs contend that, following the judgment in the Orion Action, Ningbo Sunny 2 3 “defrauded the Court and smuggled $4.2 million in receivables out of the country” before 4 absconding from the jurisdiction and now refusing to appear in this action. DPPs now move for 5 summary judgment against Ningbo Sunny. Pl.’s Mot. for Summ. J. Against Def. Ningbo Sunny 6 (“Mot.”), ECF No. 174 at 1. 7 II. 8 United States District Court Northern District of California 9 LEGAL STANDARD Summary judgment is proper where the pleadings, discovery, and affidavits show that there is “no genuine issue as to any material fact and that the moving party is entitled to judgment 10 as a matter of law.” Fed. R. Civ. P. 56(c). A fact is “material” if it would affect the outcome of 11 the suit under the governing law, and a disputed issue is “genuine” if the “evidence is such that a 12 reasonable jury could return a verdict for the non-moving party.” Anderson v. Liberty Lobby, Inc., 13 477 U.S. 242, 248–49 (1986). 14 The party moving for summary judgment bears the initial burden of identifying those 15 portions of the record which demonstrate the absence of a genuine issue of material fact. See 16 Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the nonmoving party bears the burden 17 of proof at trial, “the burden on the moving party may be discharged by ‘showing’—that is, 18 pointing out to the district court—that there is an absence of evidence to support the nonmoving 19 party’s case.” Id. at 325. If the moving party can meet this initial burden, the burden then shifts to 20 the non-moving party to produce admissible evidence and set forth specific facts showing that a 21 genuine issue of material fact does indeed exist for trial. See Nissan Fire & Marine Ins. Co. v. 22 Fritz Cos., Inc., 210 F.3d 1099, 1103 (9th Cir. 2000). If the non-moving party produces enough 23 evidence to show a genuine issue of material fact exists, then it defeats the motion; otherwise, the 24 moving party is entitled to summary judgment. Id. 25 In considering a motion for summary judgment, the Court must view the evidence in the 26 light most favorable to the non-moving party. See Tolan v. Cotton, 572 U.S. 650, 655 (2014). 27 The Court may not weigh conflicting evidence as to a disputed fact nor may it make credibility 28 Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 5 Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 6 of 18 1 determinations; any disputed factual issues must be resolved in favor of the non-moving party. 2 See T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630–31 (9th Cir. 1987). 3 However, the Court need not credit the non-moving party’s version of events where it is blatantly 4 contradicted by the record. See Orn v. City of Tacoma, 949 F.3d 1167, 1171 (9th Cir. 2020). 5 III. Ningbo Sunny has been served but has not appeared or otherwise defended this action. 6 United States District Court Northern District of California ANALYSIS 7 DPPs seek summary judgment against Ningbo Sunny. While unusual, Plaintiffs are not precluded 8 from electing to move for summary judgment rather than seeking default judgment under Fed. R. 9 Civ. P. 55. Allstate Prop. & Cas. Ins. Co. v. Kim, No. 13-CV-62157, 2014 WL 11706415, at *2 10 (S.D. Fla. June 10, 2014) (granting plaintiff’s motion for summary judgment where defendant was 11 served but did not appear) (collecting cases). Generally, “summary judgment in antitrust cases is 12 disfavored.” Fortner Enters., Inc. v. U.S. Steel Corp., 394 U.S. 495, 505 (1969). 13 Accordingly, the Court will consider the evidence to determine whether summary 14 judgment is appropriate. Heinemann v. Satterberg, 731 F.3d 914, 917 (9th Cir. 2013) (a district 15 court may not grant summary judgment by default when failure to oppose the motion). 16 A. The Answering Defendants’ Opposition to DPPs’ Motion Although Ningbo Sunny has not appeared, the other Defendants in this action—Celestron 17 18 Acquisition, LLC, Synta Canada Int’l Enterprises, Ltd., SW Technology Corp., Olivon 19 Manufacturing Co., Ltd., Olivon USA, LLC, Corey Lee, Sylvia Shen, Jean Shen, Joseph Lupica, 20 Dave Anderson, Laurence Huen, Suzhou Synta Optical Technology Co., Ltd., Nantong Schmidt 21 Opto Electrical Technology Co., Ltd., Pacific Telescope Corp., David Shen, Jack Chen, and Synta 22 Technology Corp. (collectively, the “Answering Defendants”)—together oppose DPP’s motion. 23 See Defs.’ Opp’n and Obj. to Pl. Radio City’s Mot. for Summ. J. Against Def. Ningbo Sunny 24 Electronics (“Opp’n”), ECF No. 177.3 25 26 27 28 Plaintiffs contend that the Court need not consider the Answering Defendants’ opposition to Plaintiffs’ motion for summary judgment because Answering Defendants have not filed a crossmotion and therefore lack standing. See, e.g., Dixon v. Cnty. of Alameda, No. C 95-4617-SI, 1997 WL 220311, at *6 n.8 (N.D. Cal. Apr. 18, 1997); Eckert v. City of Sacramento, No. 07-CV-00825Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 6 3 Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 7 of 18 1 Answering Defendants assert that they will be unduly prejudiced if the Court enters 2 judgment against Ningbo Sunny because a ruling on the motion in advance of a full determination 3 on the merits of the claims in this case could result in inconsistent judgments amongst multiple 4 defendants. Opp’n at 6–9. United States District Court Northern District of California 5 Answering Defendants rely on Frow v. De La Vega, where the Supreme Court considered 6 entry of default against one defaulting defendant where multiple defendants were named in the 7 action. 82 U.S. 552, 554 (1872). “The Court held in Frow that, where a complaint alleges that 8 defendants are jointly liable and one of them defaults, judgment should not be entered against the 9 defaulting defendant until the matter has been adjudicated with regard to all defendants.” In re 10 First T.D. & Inv., Inc., 253 F.3d 520, 532 (9th Cir. 2001). The Ninth Circuit extended Frow’s 11 application to defendants who are “‘similarly situated,’ such that the case against each rests on the 12 same legal theory,” regardless of if they are jointly or severally liable. Garamendi v. Henin, 683 13 F.3d 1069, 1082–83 (9th Cir. 2012) (quoting id.). 14 Following Frow, Answering Defendants argue it would be prejudicial to enter a judgment 15 against Ningbo Sunny at this stage of litigation because this action similarly presents a situation 16 where the liability of one defendant necessarily depends upon the liability of others. Opp’n at 8– 17 9. Answering Defendants thus contend the Court may not enter judgment against Ningbo Sunny 18 until the matter has been adjudicated as to all Defendants. 19 Even assuming that the rule in Frow is applicable under these circumstances, Answering 20 Defendants’ argument is not persuasive. The Frow rule was created to avoid a situation where it 21 would be “incongruous and illegal” to permit plaintiff to prevail as to the defaulting defendant 22 such that entering default would result in inconsistent judgments. Frow, 82 U.S. at 554; see, e.g., 23 First T.D., 253 F.3d at 532 (finding that it would be “incongruous and unfair” if the trustee were 24 25 26 27 28 GEB-GGH, 2009 WL 3211278, at *3 (E.D. Cal. Sept. 30, 2009); Fraioli v. Lemcke, 328 F.Supp.2d 250, 263 n. 4 (D.R.I. 2004) (“[S]ince none of the defendants in this case have filed cross claims against each other, the defendants are not adverse parties who are entitled to object to each others’ motions for summary judgment.”). However, the Court will address Answering Defendants’ opposition to the extent they argue the Court’s decision to enter judgment against Ningbo Sunny will impact their defense on the merits. Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 7 United States District Court Northern District of California Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 8 of 18 1 able to obtain a default judgment against the defaulting defendants, when those who answered 2 were able to defeat the trustee’s claims as a matter of law); Deveraux v. Sison, No. CV-18-04882- 3 PHX-DJH, 2020 WL 5725183, at *2 (D. Ariz. Sept. 23, 2020) (holding that Frow prevents entry 4 of default judgment against a defendant where contradictory judgments might result). 5 The principal concern identified in Frow is outcome-based: whether entering judgment as 6 to a defaulting defendant could result in inconsistent judgments, in which case the action must be 7 adjudicated as to all defendants to ensure that “liability of all defendants must be uniform.” 8 Shanghai Automation Instrument Co. v. Kuei, 194 F. Supp. 2d 995, 1008–09 (N.D. Cal. 2001). 9 The Frow rule is not a “per se” rule that militates denial of default judgment any time a plaintiff 10 seeks to hold multiple defendants jointly and severally liable. In re Uranium Antitrust Litig., 473 11 F. Supp. 382, 388 (N.D. Ill. 1979), rev’d and remanded on other grounds, 617 F.2d 1248 (7th Cir. 12 1980); Shanghai, 194 F. Supp. 2d at 1008–09 (“[W]here uniformity of liability is not logically 13 required by the facts and theories of the case, the risk of inconsistent judgments is not sufficiently 14 extreme to bar entry of default judgment as a matter of law.”). 15 Thus, joint and several liability is not dispositive of whether Frow precludes entry of 16 judgment. Indeed, “there are [] situations which do not technically involve joint liability but 17 which demand consistency in judgments . . . . In contrast, there are situations such as in In re 18 Uranium Antitrust Litigation, supra, where it was theoretically proper to hold some defendants 19 liable, e.g. for conspiracy to commit anti-trust violations, but other defendants innocent.” 20 Shanghai, 194 F. Supp. 2d at 1008 (citing Uranium, 617 F.2d at 1258). The latter is precisely the 21 situation before this Court. 22 Here, it is possible that only a small group of the 18 named defendants might be found to 23 have conspired to fix the price of consumer telescopes while the remaining defendants are 24 exonerated. The Seventh Circuit recognized this much in Uranium when it observed that, despite 25 the fact that “[a]nti-trust liability under Section 1 of the Sherman Act is joint and several[,]. . . . 26 [s]uch a finding of liability as to nine defendants is not inconsistent with a finding of no liability as 27 to the other twenty, because liability is potentially ‘several’ as well as ‘joint.’” Uranium, 617 F.2d 28 Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 8 United States District Court Northern District of California Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 9 of 18 1 at 1257. The Seventh Circuit considered the district court’s entry of default judgment against 2 some but not all defendants who were charged with conspiring to violate the antitrust laws and 3 found that Frow does not preclude the entry of default judgment under such circumstances. Id. 4 Accordingly, there is no significant risk of inconsistent judgments amongst the multiple 5 Defendants in this action that would preclude entry of judgment against Ningbo Sunny before the 6 action is adjudicated as to all Defendants. 7 B. 8 Plaintiffs move for summary judgment based on nonmutual offensive collateral estoppel. Application of Non-Mutual Offensive Collateral Estoppel 9 A prior private antitrust action may have an offensive collateral estoppel effect on a subsequent 10 private antitrust action where all the requirements of collateral estoppel are satisfied. See GAF 11 Corp. v. Eastman Kodak Co., 519 F. Supp. 1203, 1211 (S.D.N.Y. 1981). Plaintiffs argue Ningbo 12 Sunny is precluded from contesting liability for its antitrust violations in reliance on the factual 13 findings in the Orion Action. 14 “Issue preclusion, or collateral estoppel, precludes relitigation of an issue already litigated 15 and determined in a previous proceeding between the same parties.” Pike v. Hester, 891 F.3d 16 1131, 1138 (9th Cir. 2018). Issue preclusion is available when a party demonstrates that the 17 following four requirements are met: 18 19 20 21 22 23 24 25 26 27 28 (1) there was a full and fair opportunity to litigate the issue in the previous action; (2) the issue was actually litigated; (3) there was final judgment on the merits; and (4) the person against whom collateral estoppel is asserted was a party to or in privity with a party in the previous action. Wolfson v. Brammer, 616 F.3d 1045, 1064 (9th Cir. 2010). Even when all these factors are satisfied, district courts have “broad discretion” to determine when plaintiff’s offensive use of collateral estoppel should be applied. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331 (1979); Appling v. State Farm Mut. Auto. Ins. Co., 340 F.3d 769, 775 (9th Cir. 2003). 1. “Actually Litigated” and Final Judgment on the Merits Both the Orion Action complaint and the FAC in this action allege violations of the Sherman Act §§ 1 and 2, Clayton Act § 7, Cal. Bus. & Prof. Code §§ 17200 et seq., and Cal. Bus. Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 9 Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 10 of 18 1 & Prof. Code §§ 16700 et seq. and assert overlapping theories of liability with respect to the 2 alleged Sherman Act §§ 1 and 2 violations. 3 “The offense of monopolization under Section 2 of the Sherman Act has two elements: 4 “(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or 5 maintenance of that power as distinguished from growth or development as a consequence of a 6 superior product, business acumen, or historical accident.” High Tech. Careers v. San Jose 7 Mercury News, 996 F.2d 987, 989–90 (9th Cir. 1993). The Court will first address monopoly 8 power in the relevant markets alleged in the Orion Action and the instant action. United States District Court Northern District of California 9 “Monopoly power is the power to control prices or exclude competition in the relevant 10 market and exists whenever prices can be raised above the competitive market levels.” High Tech. 11 Careers, 996 F.2d at 990 (internal citations and quotation marks omitted). A trier of fact must 12 first determine the relevant market before determining whether a party possesses monopoly power. 13 Id. “Defining the relevant market requires identifying those competitors who have the actual or 14 potential ability to deprive each other of significant levels of business.” Id. This factual inquiry is 15 defined by the jury. Oahu Gas Service, Inc. v. Pacific Resources, Inc., 838 F.2d 360, 363 (9th Cir. 16 1988), cert. denied, 488 U.S. 870 (1988). 17 Here, the alleged markets in both actions are materially the same. The Orion Action 18 alleged “the telescope market for beginner to intermediate consumers was the relevant market,” 19 which encompasses both the distribution and manufacturing markets alleged in this action. For 20 example, the Orion complaint alleges that “[i]n telescope manufacturing, price competition has 21 been restrained or eliminated, . . . for products where Ningbo Sunny and the Settling 22 Coconspirators have agreed to divide the market between them.” Optronic, No. 5:16-cv-06370- 23 EJD, ECF No. 41 ¶ 117. It similarly alleges that “[a]t the telescope distribution level, price 24 competition has been restrained or eliminated, . . . for products where Ningbo Sunny and the 25 Settling Manufacturer, through their wholly-owned distributor subsidiaries, have agreed to divide 26 the market between them.” Id. ¶ 119. Likewise, DPPs allege a manufacturing market and a 27 distribution market. FAC ¶¶ 73, 77. 28 Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 10 Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 11 of 18 1 DPPs assert that Ningbo Sunny actually litigated its antitrust liability in the Orion Action 2 since there was a final judgment on the merits. Indeed, “the requirement of determining whether 3 the party against whom an estoppel is asserted had a full and fair opportunity to litigate is a most 4 significant safeguard.” Parklane, 439 U.S. at 328 (quoting Blonder-Tongue Lab’ys, Inc. v. Univ. 5 of Illinois Found., 402 U.S. 313, 328 (1971)). United States District Court Northern District of California 6 During the six-week trial, the jury heard evidence alleging Ningbo Sunny’s antitrust 7 liability that included collusion between Ningbo Sunny and other competitive market participants 8 to “divide markets, fix prices, and unlawfully concentrate the telescope market.” Mot. at 11. 9 DPPs include evidence considered by the jury during the Orion trial in support of its motion. For 10 example, Orion introduced evidence of Ningbo Sunny’s acquisition of Meade in violation of the 11 Clayton Act, § 7, including emails between Ningbo Sunny and other market competitors seeking 12 “financial help” to purchase Meade, ECF No. 174-6; emails from market competitors to Ningbo 13 Sunny asking Meade not to compete with them for sales to certain customer-distributors, ECF No. 14 174-15; and emails from market competitors to Ningbo Sunny stating that Peter Ni “will not be a 15 competitor”, ECF No. 174-15. 16 At trial, Ningbo Sunny challenged DPPs’ evidence. The jury found DPPs had met their 17 burden and found Ningbo Sunny liable for: (1) price or credit term fixing in violation of § 1; (2) 18 market allocation in violation of § 1; (3) attempted monopolization in violation of § 2; (4) 19 conspiring to monopolize the market for telescopes and accessories in violation of § 2; and (5) 20 acquiring Meade created a reasonable likelihood of substantially lessening competition or creating 21 a monopoly in the telescope manufacturing market in violation of the Clayton Act, § 7. Mot. at 22 10; Verdict Form, ECF No. 174-18 Ex. 16. Ningbo Sunny therefore presented a complete defense 23 on the merits as to each claim. 24 In this action, DPPs claim that Ningbo Sunny engaged in price-fixing and agreed to 25 allocate product markets with its market competitors in violation of Sherman Act, § 1, and that 26 Ningbo Sunny conspired and attempted to monopolize the consumer telescope market in violation 27 of § 2. In support, Plaintiffs submit Orion trial exhibits which include emails from a market 28 Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 11 Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 12 of 18 1 competitor stating that: “[t]he best way in the future is to divide the products and sell them into 2 different markets to reduce conflicts”, ECF No. 174-17; emails from Ningbo Sunny to a market 3 competitor stating that Ningbo Sunny “will take prompt action to avoid conflict in the 4 astronomical market,” including “abandoning the small OEM customers so as to protect big 5 customers”, ECF No. 174-29; emails from Ningbo Sunny to market competitors in which Ningbo 6 Sunny reveals business information about pricing of products, ECF No. 174-27; an email from a 7 market competitor to Ningbo Sunny regarding Ningbo Sunny’s “same” payment terms as a market 8 competitor, ECF No. 174-14; emails between market competitors and co-conspirators with Meade 9 stating that they intended to “dominate the telescope industry”, ECF No. 174-30; as well as other 10 conversations demonstrating collusion to fix prices, divide the market, and buy out competitors. United States District Court Northern District of California 11 12 13 In sum, Ningbo Sunny was a party to the previous action and “actually litigated” its antitrust liability in the Orion Action only, resulting in a final judgment on the merits. 2. Full and Fair Opportunity to Litigate and Privity 14 Plaintiffs contend that the first and fourth requirements—full and fair opportunity to 15 litigate and privity—are satisfied because Ningbo Sunny was a defendant in the Orion Action and 16 thus a “party in the previous action.” Mot. at 9. In support, Plaintiffs include the operative 17 complaint in the Orion Action, the First Amended Complaint (“Orion Complaint”), which names 18 Ningbo Sunny as a defendant. ECF No. 174-3, Ex. 1 ¶ 10. The Orion Complaint and the FAC in 19 this action identify Ningbo Sunny as a company located in Yuyao, Zhejiang, China led by Peter Ni 20 and alleged identical causes of action based on the same theories of liability. Id.; FAC ¶¶ 38, 40. 21 The Orion Complaint asserts four causes of action: (1) price fixing and collusion between 22 competitors to allocate the market and to fix credit terms in violation of Sherman Act § 1; (2) 23 monopolization and attempted monopolization in violation of Sherman Act § 2 and the Clayton 24 Act § 7; (3) violation of California unfair competition law (“UCL”); and (4) collusion to restrain 25 trade in violation of the California Cartwright Act. Here, the FAC asserts the same four causes of 26 action. The FAC alleges, in relevant part, the Sunny Defendants colluded to fix prices, fix credit 27 terms, divide the market, and allocate products in violation of Sherman Act § 1 and monopolized, 28 Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 12 Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 13 of 18 1 United States District Court Northern District of California 2 attempted to monopolize, and conspired to monopolize in violation of § 2. In the Orion Action the jury found the Sunny Defendants liable for conspiring to 3 monopolize but did not find them liable for an actual monopoly violation. However, DPPs cannot 4 rely on these claims to assert offensive collateral estoppel as to causation and damages because 5 each finding of liability turned on whether Orion had shown by a preponderance of the evidence 6 that Sunny Defendants’ misconduct harmed Orion. Whether Ningbo Sunny harmed the DPP 7 class, and the extent of these damages, are triable issues not litigated in the Orion Action. See 8 Univac Dental Co. v. Dentsply Int’l, Inc., 702 F. Supp. 2d 465, 488 (M.D. Pa. 2010) 9 (recommending that “issue preclusion not be extended to the issues of causation and damages, 10 matters that are unique to the plaintiffs and questions which the parties should be required to fully 11 litigate at trial.”). 12 For example, Claim One of the verdict form asked whether Orion had proven “that 13 Defendants agreed with a competitor to fix the price or credit terms for telescopes and 14 accessories” in violation of Section 1. See Optronic, No. 5:16-cv-06370-EJD, ECF No. 501 at 1. 15 An element of this claim required the jury to find that “this conduct caused injury to Orion’s 16 business or property”. Id. While DPPs also allege that Ningbo Sunny colluded to fix prices 17 and/or credit terms, the Orion verdict did not decide whether Ningbo Sunny’s anticompetitive 18 conduct harmed DPPs’ business or property—the jury made this finding only as to Orion. In this 19 action, DPPs must show they suffered harm arising from the wrongful conduct of Ningbo Sunny. 20 The same is true of Claim Two, which asked whether Orion had proven “that Defendants 21 agreed with a competitor or a potential competitor, either (a) not to compete with each other in the 22 manufacture or sale of telescopes and accessories, or (b) to divide customers or potential 23 customers between them” in violation of Section 1. See Optronic, No. 5:16-cv-06370-EJD, ECF 24 No. 501 at 2 (emphasis in original). The jury found that “this conduct caused injury to Orion’s 25 business or property” with respect to Claim Two. Id. DPPs likewise must show they suffered 26 harm arising from Ningbo Sunny’s collusion not to compete and/or divide customers. 27 28 Claim Three asked whether Orion had shown by a preponderance of the evidence that all Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 13 Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 14 of 18 1 the elements of attempted monopolization are satisfied. See Optronic, No. 5:16-cv-06370-EJD, 2 ECF No. 501 at 3. Claim Four asked whether Sunny Defendants conspired to monopolize. Id. at 3 4. Both claims required the jury to find harm to Orion’s business or property in reaching their 4 conclusion. In sum, DPPs have therefore failed to meet their burden of demonstrating the absence of 5 6 triable issues pertaining to antitrust injury and damages.4 7 3. 8 The Parklane factors weigh against application of collateral estoppel under these circumstances. Even if the elements of collateral estoppel are satisfied, plaintiffs offensively asserting 9 collateral estoppel must overcome additional hurdles. The Parklane Court cautioned district 10 courts to use their discretion sparingly with respect to offensive collateral estoppel. In doing so, 11 United States District Court Northern District of California the Supreme Court articulated the following additional considerations that should be weighed 12 13 14 15 when a plaintiff employs offensive collateral estoppel: (1) whether the plaintiff “could easily have joined in the earlier action” and (2) “where. . . the application of offensive estoppel would be unfair to a defendant.” Parklane, 439 U.S. 322 at 331. The second concern raised by Parklane asks whether the application of offensive collateral 16 estoppel would be unfair to the defendants. For example, situations raising fairness concerns 17 18 include where “the judgment relied upon as a basis for the estoppel is itself inconsistent with one or more previous judgments in favor of the defendant . . . [or] procedural opportunities available to 19 the petitioners that were unavailable in the first action of a kind that might be likely to cause a 20 21 22 23 24 25 26 27 28 different result.” Id. at 332. Another situation may arise where a defendant is sued for nominal damages in the first action, in which case “he may have little incentive to defend vigorously, particularly if future suits are not foreseeable.” Id. at 330. The Univac court recommended the “narrow application” of offensive non-mutual issue preclusion such that defendant would be “collaterally estopped from contesting the general elements of an antitrust violation in this case by this prior litigation.” Univac Dental Co., 702 F. Supp. 2d at 492. This application would prevent defendant from disputing “either the issue of: (1) Dentsply’s possession of monopoly power; or (2) the question of Dentsply's conscious maintenance of that power . . . .” Id. The Undersigned does not find a narrow application of issue preclusion is appropriate in this case for the reasons discussed in Section III.B.3. Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 14 4 United States District Court Northern District of California Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 15 of 18 1 Here, the Sunny Defendants “had every incentive to litigate the [] lawsuit fully and 2 vigorously.” Parklane, 439 U.S. at 332. The damages in the Orion Action were far from nominal. 3 Orion’s complaint sought over $30 million in damages, and by the time of trial, Orion was seeking 4 over $40 million. Moreover, there are no previous judgments in Defendants’ favor, and the Sunny 5 Defendants timely appealed following the trial. The Ninth Circuit panel affirmed in part and 6 vacated in part the judgment in this case. 7 Specifically, the panel affirmed that: (i) the district court properly admitted the expert 8 report and testimony of Dr. Jose Sasian and Dr. J. Douglas Zona; (ii) the district court did not 9 abuse its discretion by giving the jury a mid-trial curative instruction limiting the scope of the 10 testimony of the rebuttal expert on damages, Dr. Celeste Saravia; (iii) Orion presented sufficient 11 evidence to support the jury’s verdict in Orion’s favor on its Sherman Act § 1 claims; (iv) 12 evidence supported the jury’s verdict for Orion on its Sherman Act § 2 claims of attempted 13 monopolization and conspiracy to monopolize the global telescope manufacturing market; (v) the 14 panel affirmed the jury’s verdict for Orion on its Clayton Act § 7 claim; (vi) the district court did 15 not abuse its discretion in imposing injunctive relief against Ningbo Sunny under Clayton Act § 16 16; and (vii) Orion offered substantial evidence in support of the district court’s finding that the 17 conspiracy between Sunny and Synta continued post 2016.5 Optronic Techs., Inc., 20 F.4th 466. 18 In sum, Ningbo Sunny has had ample opportunity to litigate and defend the merits of the suit such 19 that the application of collateral estoppel would not be procedurally unfair. Turning to the next Parklane consideration, the Court must also determine whether 20 21 permitting the application of offensive collateral estoppel will “reward a private plaintiff who 22 could have joined in the previous action.” Parklane, 439 U.S. at 332. The Parklane Court was 23 concerned that the offensive application of collateral estoppel would create perverse incentives, 24 observing that “[s]ince a plaintiff will be able to rely on a previous judgment against a defendant 25 26 27 28 5 The panel vacated in part only with respect to the valuation of the settlement set-off, which it remanded for further proceedings consistent with its opinion. Optronic Techs., Inc., 20 F.4th at 488. Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 15 Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 16 of 18 1 but will not be bound by that judgment if the defendant wins, the plaintiff has every incentive to 2 adopt a ‘wait and see’ attitude, in the hope that the first action by another plaintiff will result in a 3 favorable judgment.”6 Id. at 330. The Court finds no such issue here. Here, Plaintiff Jason Steele is an individual consumer who directly purchased from United States District Court Northern District of California 4 5 Defendant Celestron. Like Orion, Plaintiffs Aurora and Pioneer and are businesses that sell 6 consumer telescopes purchased from telescope manufacturers but Plaintiffs argue that they do not 7 participate on the same side of the consumer telescope market as Orion. Plaintiffs participate on 8 the purchaser and consumer side while Orion participates on the manufacturing and distribution 9 side. Mot. at 18. Furthermore, Plaintiffs contend that they were not aware of the Orion Action at 10 the time it was litigated. Id. at 17. The Court finds that Plaintiffs have provided adequate 11 explanation of why they did not join the previous action. Finally, the Court turns to the fairness considerations regarding the other Defendants. 12 13 Parklane Hosiery, 439 U.S. at 330–331. Citing AIG, Defendants argue that the application of 14 offensive, non-mutual issue preclusion as to Ningbo Sunny would prejudice the other Defendants 15 who were not party to the Orion Action. Opp’n at 4 (discussing AIG Ret. Servs., Inc. v. Altus Fin. 16 S.A., No. 05-CV-1035-JFW (CWX), 2011 WL 13213602 (C.D. Cal. July 21, 2011)). In AIG, 17 plaintiff alleged that multiple defendants conspired to defraud AIG into joining a bid to defraud 18 the Insurance Commissioner for the State of California who was overseeing a competitive bidding 19 process for the assets of ELIC Estate pursuant to a judicially supervised rehabilitation plan. AIG 20 Ret. Servs., Inc., 2011 WL 13213602. Plaintiff sought to collaterally estop one defendant, 21 Artemis, from challenging the jury’s finding in a previous action that Artemis conspired “to obtain 22 assets of the ELIC Estate by fraud and that the conspiracy caused harm to the ELIC Estate.” Id. at 23 *2. The other defendants in AIG were not party nor privy to the previous action. The court noted, 24 25 26 27 28 In the context of the “wait and see” approach, some courts following Parklane have focused primarily on situations where plaintiffs had opted out of the class litigation and then asserted offensive collateral estoppel in a later suit to collaterally estop the defendant after a class victory. See, e.g., Premier Elec. Constr. Co. v. NECA, 814 F.2d 358 (7th Cir. 1987); Transocean Tender Offer Sec. Litig., 455 F. Supp. 999 (N.D. Ill. 1978). This is distinguishable from the instant action because the Orion Action was not a class action suit. Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 16 6 Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 17 of 18 1 amongst other concerns, the potentially prejudicial situation that would result from collaterally 2 estopping defendant Artemis “from arguing that it joined a conspiracy in this case while the other 3 defendants would be presenting evidence and vigorously arguing that the conspiracy Artemis 4 allegedly joined never existed, which would result in juror confusion even with appropriate 5 limiting instructions.” Id. at *6. The Undersigned finds this case raises similar concerns. 6 7 but not as to the co-conspirators, who had settled with Orion pre-suit. None of the Answering 8 Defendants in the DPP action were party or privy to the Orion Action. The jury made the 9 following findings: 10 11 United States District Court Northern District of California Here, the Orion Action resulted in a jury verdict against the Sunny Defendants and Meade 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1.) Ningbo Sunny, Synta, and Celestron unlawfully fixed the prices of telescopes, 2.) Ningbo Sunny, Synta, and Celestron illicitly colluded together to assist Ningbo Sunny illegally acquire Meade Instruments, Corp. (“Meade”), 3.) Ningbo Sunny, Synta, Celestron, and Meade illegally allocated the market for telescopes and telescope accessories, and 4.) Ningbo Sunny, Synta, Celestron, and Meade conspired to monopolize the market for telescopes and telescope accessories. Mot. at 1. The Answering Defendants argue that it would be unfair and prejudicial to give any issue preclusive effect in this matter because Plaintiffs would be allowed to argue that, based on the Orion Action, Ningbo Sunny conclusively joined the conspiracy to fix prices and monopolize the telescope market while the Answering Defendants argue that they never joined a conspiracy and/or that the conspiracy never existed, both of which would likely confuse the jury. Opp’n at 4– 5. The Court agrees. This situation is similar to the situation in AIG, which the court found to be unfair to the other defendants. AIG Ret. Servs., 2011 WL 13213602, at *6. The AIG court reasoned that, “[i]f the Court allowed issue preclusion while simultaneously protecting the rights and interests of the other defendants, there would be minimal efficiency gains and a substantial likelihood of jury confusion and prejudice.” Id. at *7. Other district courts have expressed similar concerns. See Schwab v. Philip Morris USA, Inc., No. CV 04-1945 (JBW), 2005 WL 2401645 (E.D.N.Y. Sept. 27, 2005) (“First, the application to only one of many defendants would confuse the jury, making administration of the case difficult.”); see also Grisham v. Philip Morris, Inc., Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 17 Case 5:20-cv-03642-EJD Document 502 Filed 09/12/23 Page 18 of 18 1 670 F.Supp. 2d 1014, 1037 (C.D. Cal. 2009). In addition to fairness concerns, non-mutual offensive collateral estoppel would not serve 2 3 the interest of judicial economy in this case. Because the Sunny Defendants were the only 4 Defendants in this action who were found liable in the Orion Action, DPPs must still prove that 5 Answering Defendants joined the alleged conspiracies. AIG Ret. Servs., 2011 WL 13213602, at 6 *6. Therefore, it is unlikely that any preclusive effects would save significant time or judicial 7 resources. Id. (collecting cases). In short, the Parklane considerations weigh against application of non-mutual offensive 8 United States District Court Northern District of California 9 collateral estoppel because it would be prejudicial to the other Defendants and its application does 10 not serve judicial economy in this case. 11 IV. 12 13 14 15 CONCLUSION For the foregoing reasons, the Court DENIES Plaintiffs’ motion for summary judgment against Defendant Ningbo Sunny. IT IS SO ORDERED. Dated: September 12, 2023 16 17 EDWARD J. DAVILA United States District Judge 18 19 20 21 22 23 24 25 26 27 28 Case No.: 5:20-cv-03642-EJD ORDER DENYING PLS.’ MOT. FOR SUMM. J. 18
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