AT & T Mobility LLC v. AU Optronics Corp.

• Citation: 707 F.3d 1106
• Decision Date: 14 February 2013
• Docket Number: No. 11–16188.,11–16188.
• Parties: 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.; Southwestern Bell Telephone Company, Plaintiffs–Appellants, v. AU OPTRONICS CORPORATION; AU Optronics Corporation America, Inc.; Chi Mei Corporation; Chi Mei Optoelectronics Corporation; Chi Mei Optoelectroncis USA, Inc.; CMO Japan Co., Ltd.; Nexgen Mediatech, Inc.; Nexgen Mediatech USA, Inc.; Chunghwa Picture Tubes Ltd.; Tatung Company of America, Inc.; Epson Imaging Devices Corporation; Epson Electronics America, Inc.; Hannstar Display Corporation; LG Display Co., Ltd.; LG Display America, Inc.; Samsung Electronics Co., Ltd.; Samsung Semiconductor, Inc.; Samsung Electronics America, Inc.; Sharp Corporation; Sharp Electronics Corporation; Toshiba Corporation; Toshiba America Electronics Components, Inc.; Toshiba Mobile Display Technology Co., Ltd.; Toshiba America Information Systems, Inc., Defendants–Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

707 F.3d 1106

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.; Southwestern Bell Telephone Company, Plaintiffs–Appellants,

v.AU OPTRONICS CORPORATION; AU Optronics Corporation America, Inc.; Chi Mei Corporation; Chi Mei Optoelectronics Corporation; Chi Mei Optoelectroncis USA, Inc.; CMO Japan Co., Ltd.; Nexgen Mediatech, Inc.; Nexgen Mediatech USA, Inc.; Chunghwa Picture Tubes Ltd.; Tatung Company of America, Inc.; Epson Imaging Devices Corporation; Epson Electronics America, Inc.; Hannstar Display Corporation; LG Display Co., Ltd.; LG Display America, Inc.; Samsung Electronics Co., Ltd.; Samsung Semiconductor, Inc.; Samsung Electronics America, Inc.; Sharp Corporation; Sharp Electronics Corporation; Toshiba Corporation; Toshiba America Electronics Components, Inc.; Toshiba Mobile Display Technology Co., Ltd.; Toshiba America Information Systems, Inc., Defendants–Appellees.

No. 11–16188.

United States Court of Appeals,Ninth Circuit.

Argued and Submitted Nov. 9, 2012.

Filed Feb. 14, 2013.

Ethan P. Schulman (argued), Crowell & Moring LLP, San Francisco, CA, for Plaintiffs–Appellants.

Richard S. Taffet (argued), Bingham McCutchen LLP, New York, NY, for Defendants–Appellees.

Emilio E. Varanini (argued), for Amicus Curiae the State of California.

Appeal from the United States District Court for the Northern District of California, Susan Illston, District Judge, Presiding. D.C. No. 3:09–cv–04997–SI.

Before: RONALD M. GOULD and MILAN D. SMITH, JR., Circuit Judges, and KEVIN T. DUFFY, District Judge.^*

OPINION

M. SMITH, Circuit Judge:

The district court has certified to us pursuant to 28 U.S.C. § 1292(b) “the question whether the application of California antitrust law to claims against defendants based on purchases that occurred outside California would violate the Due Process Clause of the United States Constitution.” Because the underlying conduct in this case involves not just the indirect purchase of price-fixed goods, but also the conspiratorial conduct that led to the sale of those goods, we answer in the negative. To the extent a defendant's conspiratorial conduct is sufficiently connected to California, and is not “slight and casual,” the application of California law to that conduct is “neither arbitrary nor fundamentally unfair,” and the application of California law does not violate that defendant's rights under the Due Process Clause. See Allstate Ins. Co. v. Hague, 449 U.S. 302, 312–13, 101 S.Ct. 633, 66 L.Ed.2d 521 (1981).

We therefore reverse the district court's order dismissing Plaintiffs' California law claims,¹ and remand for further proceedings consistent with this opinion.

BACKGROUND AND PROCEDURAL HISTORY

Plaintiffs–Appellants AT & T Mobility LLC, AT & T Corporation, AT & T Services, Inc., BellSouth Telecommunications, Inc., Pacific Bell Telephone Company, AT & T Operations, Inc., AT & T Datacomm, Inc., and Southwestern Bell Telephone Company (collectively, Plaintiffs) are entities that provide voice and data communication services, and also sell mobile wireless handsets. Collectively, they do business in many parts of the world, including in California, though only one of them alleges that its principal place of business is located in California. Defendants–Appellees AU Optronics Corporation of America, Inc., Chi Mei Corporation, Chi Mei Optoelectronics Corporation, Chi Mei Optoelectronics USA, Inc., CMO Japan Co., Ltd., Nexgen Mediatech, Inc., Nexgen Mediatech USA, Inc., Chunghwa Picture Tubes Ltd., Tatung Company of America, Inc., Epson Imaging Devices Corporation, Epson Electronics America, Inc., and Hannstar Display Corporation (collectively, Defendants) ² are manufacturers and distributors of liquid crystal display (LCD) panels, whose respective headquarters and principal places of business are located in Asia and the United States, including California. Plaintiffs allege that between 1996 and 2006, they purchased billions of dollars worth of mobile handsets containing Defendants' LCD panels. They further allege that the prices they paid for those handsets were artificially inflated because Defendants had orchestrated a global conspiracy to fix the prices of LCD panels.

Plaintiffs sued Defendants in the United States District Court for the Northern District of California under the Clayton Act,³ the Sherman Act,⁴ California's Cartwright Act,⁵ California's UCL, and, in the alternative, the laws of a number of other states, seeking to recover damages caused by their direct and indirect purchases of LCD panels from Defendants. The Cartwright Act provides a private cause of action for indirect purchasers of price-fixed goods, whereas the antitrust laws of some other states do not. See Clayworth v. Pfizer, Inc., 49 Cal.4th 758, 111 Cal.Rptr.3d 666, 233 P.3d 1066, 1082–83 (2010) (discussing the effect of Ill. Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), and California's legislative response). None of Plaintiffs' purchases at issue in this case was made in California.

After filing their initial complaint, Plaintiffs filed a first amended complaint (FAC). Defendants moved to dismiss Plaintiffs' California law claims in the FAC on the ground that the Due Process Clause of the Fourteenth Amendment forbids the application of California law to those claims. The district court granted Defendants' motion to dismiss, holding that the Due Process Clause requires that “in order to invoke the various state laws at issue, plaintiffs must be able to allege that ‘the occurrence or transaction giving rise to the litigation’—plaintiffs' purchases of allegedly price-fixed goods—occurred in the various states.”

The district court granted Plaintiffs leave to amend their complaint to specify each state in which the “purchases of price-fixed goods” were made. In this second amended complaint (SAC), Plaintiffs also included more detailed allegations regarding Defendants' California conduct that they claimed violated California law. They alleged that “defendants engaged in and implemented their conspiracy in the U.S. through the offices they maintained in California,” and that Defendants entered into agreements to fix the prices of LCD panels in California. Plaintiffs offered significant detail as to what conspiratorial conduct took place in California. They alleged, for example, that specific employees of particular Defendants, operating from offices in California, participated in illegally obtaining and sharing their co-conspirators' pricing information.

Defendants moved to dismiss the SAC, in response to which Plaintiffs maintained that “they may pursue all of their claims under California law because defendants' price-fixing conduct in California creates the significant contacts between California and plaintiffs' claims required by Due Process.” The district court disagreed, and dismissed Plaintiffs' California law claims that were not based on purchases that took place in California.

The district court granted Plaintiffs' motion to certify the dismissal order for immediate appeal under 28 U.S.C. § 1292(b), and we granted permission to appeal.

STANDARD OF REVIEW

We review de novo a dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Frey v. California., 982 F.2d 399, 401 (9th Cir.1993). We also “review de novo questions of law, including due process claims.” Buckingham v. Sec'y of U.S. Dept. of Agr., 603 F.3d 1073, 1080 (9th Cir.2010).

DISCUSSION

Plaintiffs challenge the district court's conclusion that it violates Defendants' due process rights to apply California antitrust law to claims involving the purchase of price-fixed goods outside of California. They allege that the application of California law to all Defendants is constitutionally permissible because Defendants conspired, in California and in violation of California law, to fix the prices of goods that Plaintiffs eventually purchased elsewhere.

In its order dismissing Plaintiffs' FAC, the district court grounded its due process analysis on the view that “[i]n a price-fixing case, the relevant ‘occurrence or transaction’ is the plaintiff's purchase of an allegedly price-fixed good.” Accordingly, the court concluded that the application of the antitrust laws of any state other than the state where the Plaintiffs purchased the allegedly price-fixed goods would violate Defendants' rights to due process. The court applied the same reasoning in its order dismissing Plaintiffs' SAC, which we review on interlocutory appeal.

The district court's conclusion ignores conduct that may give rise to a cause of action under the Cartwright Act. A modern “price-fixing case” is not a creature of common law, but instead arises under federal antitrust laws ⁶ or the antitrust laws of various states.⁷ The “relevant transaction or occurrence” for purposes of a due process analysis is therefore informed, at least in part, by the scope of conduct that gives rise to liability under the relevant statutes. A reading of the plain text of the Cartwright Act reveals that the district court's place-of-purchase focus severely truncates the scope of anticompetitive conduct that the Act proscribes.

The Cartwright Act enumerates a relatively broad array of anticompetitive and conspiratorial conduct that constitutes a “trust.” Cal. Bus. & Prof.Code § 16720. The Act declares that “every trust is unlawful, against public policy and void,” id. § 16726, and provides a private right of action to “[a]ny person who is injured in his or her business or property by reason of anything forbidden or declared unlawful by this chapter,” id. § 16750.⁸ The unlawful activities described in section 16720 include the sale of price-fixed goods in California. Id. § 16720(d). But that section includes other conduct, such as the initial agreement to fix those prices—without reference to where those goods...