California v. Infineon Technologies Ag

• Decision Date: 31 August 2007
• Docket Number: No. C 06-4333 PJH.,C 06-4333 PJH.
• Citation: 531 F.Supp.2d 1124
• Parties: State of CALIFORNIA, et al., Plaintiffs, v. INFINEON TECHNOLOGIES AG, et al., Defendants.
• Court: U.S. District Court — Northern District of California

531 F.Supp.2d 1124

State of CALIFORNIA, et al., Plaintiffs, v. INFINEON TECHNOLOGIES AG, et al., Defendants.

No. C 06-4333 PJH.

United States District Court, N.D. California.

August 31, 2007.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Charles M. Kagay, Kathleen E. Foote, Office of the Attorney General, Spiegel, Liao & Kagay, LLP, Emilio Eugene Varanini, IV, State Attorney General's Office, San Francisco, CA, Clyde E. Sniffen, Jr., State of Alaska Department of Law, Anchorage, AK, Nancy M. Bonnell, Phoenix, AZ, Bradford Justus Phelps, Office of the Attorney General of Arkansas, Little Rock, AR, Michael Andrew Undorf, Delaware Department of Justice, Wilmington, DE, Emilian Bucataru, Office of the Attorney General, Lizabeth A. Leeds, Antitrust Division Office of the Attorney General State of Florida, Patricia A. Conners, Attorney General's Office, Tallahassee, FL, Rodney I. Kimura, Department of the Attorney General, Honolulu, HI, Brett Talmage Delange, Office of the Attorney General, Boise, ID, Blake Lee Harrop, Office of the Attorney General, Chicago, IL, Jane Bishop Johnson, .Louisiana Department of Justice, Baton Rouge, LA, John Robert Tennis, Attorney General, Antitrust Division, Baltimore, MD, D. J. Pascoe, Michigan Department of Attorney General, Lansing, MI, Kristen Marie Olsen, Office of the Attorney General; St. Paul, MN, Bridgette W. Wiggins, Sondra S. McLemore, Mississippi Attorney General's Office, Jackson, MS, Deyonna D. Young, Albuquerque, NM, Todd A. Sattler, North Dakota Office of Attorney General, Bismarck, ND, Thomas A. Bates, Oklahoma Attorney General's Office, Oklahoma City, OK, Tim David Nord, Oregon Department of Justice, Financial Fraud/Consumer Protection, Salem, OR, Alexis Leslie Barbieri, James A. Donahue, III, Jennifer Jane Kirk, Pennsylvania Office of the Attorney General, Harrisburg, PA, C. Havird Jones, Jr., South Carolina Attorney General's Office, Columbia, SC, Victor J. Domen, Jr., Nashville, TN, Ronald J. Ockey, Office of the Attorney General, Salt Lake City, UT, Sarah Oxenham Allen, Office of the Atty. General, Richmond, VA, Brady R. Johnson, Attorney General, Seattle, WA, Douglas Lee Davis, Attorney General, Charleston, WV, Eric J. Wilson, Wisconsin Department of Justice, Gwendolyn J. Cooley, Attorney General, Madison, WI, Christina Moylan, Maine Office of the Attorney General, Augusta, ME, Edmund F. Murray, Jr., Rhode Island Department of Attorney General, Providence, RI, K. D. Sturgis, Raleigh, NC, Maryellen Buxton Mynear, Attorney General, Frankfort, KY, for Plaintiffs.

Joshua Stewart Stambaugh, Kaye. Scholer, LLP, Peter Bruce Nemerovski, Steven H. Bergman, Kenneth Ryan O'Rourke, O'Melveny & Myers, LLP, Los Angeles, CA, Joel Steven Sanders, George Charles Nierlich, III, Gibson, Dunn & Crutcher, LLP, Emilio Eugene Varanini, IV,

State

Attorney General's Office, Joshua David Hess, Gibson, Dunn' & Crutcher, LLP, David C. Brownstein, Heller, Ehrman, White & McAuliffe, LLP, Jonathan Edward Swartz, Thelen, Reid, Brown, Raysman & Steiner, LLP, San. Francisco, CA, Harrison J. Frahn, IV, Simpson, Thacher & Bartlett, Palo Alto, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS

PHYLLIS J. HAMILTON, District Judge.

Defendants' motion to dismiss plaintiffs' complaint came on for hearing before this court on February 7, 2007, Plaintiffs; forty individual states acting through than. Attorneys General, and certain namedgovernment entities (collectively "plaintiffs" or "plaintiff States"), appeared through their respective counsel.¹ Defendants appeared through their "counsel, Julian Brew, Ronald C. Redcay, Joel S. Sanders, Peter Nemerovski, Kenneth R. O'Rourke, Harrison J. Frahn, Gary L. Hailing, and Robert B. Pringle. Having read all the papers submitted and carefully considered the relevant legal authority, the court hereby GRANTS defendants' motion to dismiss in part and DENIES the motion to dismiss in part, for the reasons stated at the hearing, and as follows.

BACKGROUND

The instant case is closely related to a separate antitrust MDL action that is currently pending before the court, In re namic Random Access Memory Antitrust Litigation, M 02-1486 PJH. Both actions generally allege a horizontal price-fisting conspiracy in the U.S. market for dynamic random access memory ("DRAM"), carried out by numerous manufacturer defendants. Whereas the MDL case, however, is comprised of numerous private actions brought by individuals and entities seeking relief against defendants, the present action has been brought by forty individual plaintiff States, acting through their respective Attorneys General, as well as certain government entities located within the forty states.

A. Background Allegations

DRAM is a semiconductor high-speed memory chip that is used to store electronic data in a wide variety of electronic products, including personal computers and servers. See First Amended Complaint ("FAC"), ¶ 9. DRAM is sold worldwide, with the United States DRAM market accounting for a significant share of global DRAM sales — more than $5 billion annually. See id. at ¶ 31.

The complaint alleges that over a four year period beginning in 1998, the defendants² — various manufacturers of DRAM who collectively control the majority of U.S. DRAM sales — conspired together to unlawfully fix, raise, and maintain the price for DRAM in the U.S. market. See id. at ¶ 34. Defendants' conspiracy was allegedly effectuated through coordinated participation in meetings, frequent price communications, and coordinated supply reductions. See, e.g., id. at ¶¶ 35-36, 39, 42, 60, 69, 79. Plaintiffs allege that, as a result of defendants' unlawful activity, DRAM prices were artificially inflated during the conspiracy period, forcing consumers and businesses who purchased DRAM during the period to pay more for DRAM than they would have in a free and competitive market. See id. at ¶¶ 89-91.

Plaintiffs define the victims of defendants' illegal price fixing cartel to include: (1) the plaintiff States themselves, since they were and are "purchasers of electronic products;" and (2) the "end user consumers" in the various plaintiff States, since they, too, are purchasers of electronic products. See FAC at 114. To that end, plaintiff States, acting through their various Attorneys General, proceed against defendants in various representative capacities — i.e., "on their own behalf, and on behalf of state agencies, political subdivisions, natural persons and/or businesses as warranted by federal and state laws." Id. In addition, certain state agencies and/or political subdivisions located within the plaintiff States also proceed as named plaintiffs, and are pursuing the instant action in a representative capacity on behalf of similarly situated entities. See generally FAC (named plaintiffs include, for example, City and County of San Francisco, County of Santa Clara, and the Los Angeles Unified School District "on behalf of all other political subdivisions similarly situated"); see also id. at ¶ 12.

All plaintiffs seek to recover "as damages, restitution, and/or disgorgement of the illegal overcharges that consumers paid as a result of the DRAM manufacturers' price fixing." See id.

B. plaintiffs' Claims

The instant complaint sweeps broadly. Although it is presented as stating only three "claims for relief," those claims for relief are further divided into several "counts," which collectively state numerous federal and state law claims alleged by varying combinations of different plaintiff groups. See generally FAC. Regardless whether styled as a claim for relief or a specific count, each of plaintiffs' grounds for relief is based on the allegations that defendants engaged in an unlawful conspiracy to restrain trade in the DRAM market:

1. First Claim for Relief (Sherman Act)

Plaintiffs' first claim for relief alleges that defendants violated section 1 of the Sherman. Act, and is further broken down into three separate counts. See FAC at ¶¶ 98-113. Count one alleges a claim by all forty plaintiff States against all defendants, and seeks injunctive relief against them to prevent and restrain the antitrust violations alleged by plaintiffs. Plaintiffs further allege that included among all plaintiff States are both direct and indirect purchasers of PRAM. See id. at 101(c), 102.

Count two alleges a claim for damages under section 1 of the Sherman Act, brought by only seven plaintiff States. See FAC at ¶¶ 105-108. These seven plaintiff States allege that they are entitled to damages against defendants as direct purchasers of DRAM, by virtue of certain assignment clauses contained in contracts that were entered into between the seven plaintiff States and certain Original Equipment Manufacturers ("OEM"). Id.

Count three alleges a claim for damages under section 1 of the Sherman Act, brought by twenty plaintiff States. See id. at ¶ 111. As do the plaintiff States who proceed pursuant to count two, these twenty plaintiff States allege that they, too, are entitled to damages as direct purchasers of DRAM from defendants. They do not, however, rely on the same grounds for claiming direct purchaser status. Rather, these twenty plaintiff States at issue allege that they can recover as classic direct purchasers, because their state agencies and/or political subdivisions purchased DRAM directly from defendant Micron through one of Micron's company divisions, Crucial Technology. Id. at ¶¶ 110-12

2. Second Claim for Relief (Cartwright Act)

Plaintiffs' second claim for relief alleges defendants' violation of California's state antitrust statute, the Cartwright Act. This claim is alleged by seventeen plaintiff States and named plaintiffs the City and County of San Francisco, the County of Santa Clara, and the Los Angeles Unified School District, the latter three proceeding as class representatives for other state agencies and political subdivisions...