Fenerjian v. Nongshim Co.

• Citation: 72 F.Supp.3d 1058
• Decision Date: 04 November 2014
• Docket Number: Case No. 13–cv–04115–WHO
• Court: U.S. District Court — Northern District of California
• Parties: Stephen Fenerjian, et al., Plaintiffs, v. Nongshim Company, Ltd, et al., Defendants.

72 F.Supp.3d 1058

Stephen Fenerjian, et al., Plaintiffs

v.Nongshim Company, Ltd, et al., Defendants.

Case No. 13–cv–04115–WHO

United States District Court, N.D. California.

Signed November 4, 2014

Alan R. Plutzik, Michael Stuart Strimling, Bramson Plutzik Mahler & Birkhaeuser, LLP, Walnut Creek, CA, Jeffrey S. Nobel, Nicole Anne Veno, Robert A. Izard, Izard Nobel, LLP, West Hartford, CT, Thomas C. Bright, Gold Bennett Cera & Sidener LLP, Christopher L. Lebsock, Michael P. Lehmann, Stephanie Yunjin Cho, Hausfeld LLP, San Francisco, CA, Byron Seho Ahn, Marc Gene Reich, Reich Radcliffe and Kuttler LLP, Newport Beach, CA, Reginald Von Terrell, The Terrell Law Group, Oakland, CA, Manuel Juan Dominguez, Cohen Milstein Sellers & Toll, Palm Beach Gardens, FL, for Plaintiffs.

Anne Choi Goodwin, J. Brady Dugan, Kate E. Kim, Mark C. Dosker, Squire Patton Boggs (US) LLP, George Arnold Nicoud, III, Joel Steven Sanders, Lindsey Elizabeth Haswell, Gibson, Dunn & Crutcher LLP, San Francisco, CA, Joel Steven Sanders, Minae YU, Gibson, Dunn & Crutcher LLP, Elizabeth Dianne Mann, Justin Robert Dickerson, Mayer Brown LLP, Edward W. Suh, Michael Kwonchun Suh, Law Offices of Michael K. Suh And Associates, Seong H. Kim, Steptoe And Johnson LLP, Matthew David Taggart, Attorney at Law, Los Angeles, CA, Edward B. Schwartz, Dla Piper U.S. LLP, Washington, DC, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART MOTIONS TO DISMISS

Re: Dkt. Nos. 80, 83, 87, 89, 102, 110, 112

WILLIAM H. ORRICK, United States District Judge

INTRODUCTION

On July 12, 2012, the Korean Fair Trade Commission found that four Korean companies conspired to fix the prices of Korean Noodles in Korea. The following year, direct and indirect purchaser plaintiffs filed the present suits in the United States against the four Korean companies and their purported distributors in the United States, alleging that they conspired to fix the prices of Korean Noodles sold in the United States. Defendants move to dismiss on the grounds that plaintiffs have not plausibly pleaded a conspiracy to fix prices of Korean Noodles in the United States.

Plaintiffs have plausibly pleaded that the conspiracy to raise prices in Korea also related to Korean Noodles imported to, and sold in, the United States. But plaintiffs have not plausibly pleaded that all of the American distributors were controlled by their purported Korean counterparts or that all of defendants' Korean Noodles in fact increased in price in the United States. Plaintiffs have therefore not plausibly pleaded that all defendants were involved in the conspiracy and defendants' motions are GRANTED IN PART and DENIED IN PART.

The motions of defendants Sam Yang USA, Yakult Korea, and Paldo Company LTD. are GRANTED and all claims against Sam Yang USA, Yakult Korea, and Paldo Company LTD. are DISMISSED WITH LEAVE TO AMEND. The motions of Nongshim Korea, Nongshim USA, Ottogi Korea, Ottogi USA, and Samyang Korea are GRANTED with respect to the state-law claims for which no named plaintiff has standing. The indirect purchaser plaintiffs' claims under the laws of Arkansas, Arizona, the District of Columbia, Hawaii, Iowa, Kansas, Maine, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oregon, Rhode Island, South Dakota, Tennessee, Utah, Vermont, West Virginia and Wisconsin are DISMISSED WITH LEAVE TO AMEND.

The motions of defendants Nongshim Korea, Nongshim USA, Ottogi Korea, Ottogi USA, and Samyang Korea are GRANTED with respect to the claims under New York's Deceptive Practices Act and unjust enrichment under Michigan and New York law and DENIED with respect to the Sherman Act claims and state-law antitrust and consumer protection claims under the laws California, Massachusetts, Michigan, Florida, and New York, and with respect to the unjust enrichment claim under Massachusetts law.

BACKGROUND¹

Defendants Nongshim Co., Ltd., Ottogi Co. Ltd., Samyang Foods Co. Ltd., and Korea Yakult Co. Ltd. (collectively, the “Korean Defendants”) manufacture Korean Noodles in Korea.² The Korean Noodles are sold in Korea as well as imported for sale elsewhere, including in the United States. On July 12, 2012, the Korean Fair Trade Commission (“KFTC”) issued an order finding the Korean Defendants conspired to increase the price of Korean Noodles in Korea. Direct Purchaser Consolidated Complaint, Dkt. No. 61 (“DPCC”) ¶ 4; Indirect purchaser consolidated complaint, Dkt. No. 62 (“IPCC”) ¶ 3. The KFTC fined the Korean Defendants 136 billion won (approximately $120 million). DPCC ¶ 5; IPCC ¶ 4.

Following the K FTC's order, between July and September 2013, various direct and indirect purchasers of defendants' Korean Noodles filed price-fixing conspiracy actions against the Korean Defendants and their alleged American counterparts: Nongshim America, Inc., Ottogi America, Inc., Sam Yang (USA), Inc., and Paldo Company, Ltd.³ (collectively, the “U.S. Defendants”), alleging that the Korean and U.S. Defendants conspired to raise the price of Korean Noodles sold in the United States. Plaintiffs allege that they paid more for Korean Noodles as a result of the price-fixing conspiracy than they would have paid in a competitive market. The various actions were consolidated and plaintiffs filed two consolidated complaints: a direct purchaser consolidated complaint and an indirect purchaser consolidated complaint. See Dkt. No. 61 (DPCC); Dkt. No. 62 (IPCC).

The direct purchaser plaintiffs are food retailers and distributors that purchased Korean Noodles directly from defendants. DPCC ¶¶ 11–16. The direct purchaser plaintiffs are The Plaza Market, Plaintiff Pacific Groservice, Inc. d/b/a/ Pitco Foods, Summit Import Corporation, Rockman Company U.S.A. Inc., Seoul Shopping,⁴ and California Market, LLC d/b/a Gaju Market. Id. They allege a cause of action for price-fixing conspiracy in violation of Sections 1 and 3 of the Sherman Act, 15 U.S.C. §§ 1, 3. The direct purchaser plaintiffs seek to represent a class of:

All Persons and entities in the United States and its territories who purchased Korean Noodles directly from any Defendant at any time from May 21, 2001 through December 31, 2010. The Class excludes the Defendants, co-conspirators, and any of their parents, subsidiaries or affiliates. The Class also excludes all judicial officers presiding over this action and their immediate family members and staff, and any juror assigned to this action.

DPCC ¶ 43.

The indirect purchaser plaintiffs, Stephen Fenerjian, Joyce Beamer, Kendal Martin, Nicholas Halloran, Anthony An, Eleanor Pelobello, Jill Bonnington, Kenny Kang, Christina Nguyen, and Thu–Thuy Nguyen, are individuals who purchased Korean Noodles manufactured by defendants from non-party food retailers in California, Massachusetts, Michigan, Florida, and New York. IPCC ¶¶ 10–19. They allege causes of action for (i) price-fixing conspiracy in violation of Section 1 of the Sherman Act,⁵ 15 U.S.C. § 1 ; (ii) price-fixing conspiracy in violation of California's Cartwright Act, Cal. Bus. & Code §§ 16700, et seq.; (iii) violations of antitrust and restraint of trade laws⁶ of Arizona, California, District of Columbia, Iowa, Kansas, Maine, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Mexico, New York, North Carolina, North Dakota, Oregon, South Dakota, Tennessee, Vermont, West Virginia, Wisconsin⁷ ; (iv) violations of state consumer protection laws of Arkansas, California, District of Columbia, Florida, Hawaii, Massachusetts, Missouri, Nebraska, New Hampshire, New Mexico, New York, Rhode Island, Utah, and Vermont; and (v) unjust enrichment and disgorgement under the common laws of Arizona, District of Columbia, Hawaii, Iowa, Kansas, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nevada, New Mexico, New York, North Carolina, Rhode Island, South Dakota, Tennessee, Vermont, West Virginia, and Wisconsin.

The indirect purchaser plaintiffs seek to represent the following class for their causes of action for price-fixing conspiracy in violation of the Sherman Act and California's Cartwright Act (first and second causes of action):

All persons and entities that purchased Korean Ramen Noodle Products indirectly from one or more Defendants in the United States for their own use and not for resale from May 2001 to the present. Specifically excluded from this Class are any Defendant; the officers, directors or employees of any Defendant; any entity in which any Defendant has a controlling interest; and any affiliate, legal representative, heir or assign of any Defendant. Also excluded are the judge to whom this case is assigned and any member of the judge's immediate family.

DPCC ¶ 34(a). The indirect purchaser plaintiffs seek to represent various subclasses in connection with their state-law claims in the alternative, in the event that I determine that the California Cartwright Act does not apply to the class identified above. See DPCC ¶¶ 35–36, 193, 199.

I. DEFENDANTS

A. Defendants Nongshim Korea and Nongshim America

Nongshim Co., Ltd. (“Nongshim Korea”) is a leading food company in Korea. It has had a high market share of Korean Noodles in Korea since the 1990s. Since 2010, its sales represent approximately 70% of the Korean Noodles business in Korea. DPCC ¶ 17; IPCC ¶ 20.

Nongshim Korea owns Nongshim Holdings USA, which in turn owns Nongshim America, Inc. Plaintiffs allege that Nongshim America is wholly owned and controlled by, and under the direction of, Nongshim Korea. DPCC ¶ 19; IPCC ¶ 25. There is overlap between the leadership of Nongshim Korea and Nongshim America. Mr. Dong Wong Shin is vice chairman of the board and co-chief executive officer of Nongshim Korea and also chairman of the board of Nongshim America. DPCC ¶ 20. Mr. Jun Park is president and co-chief executive officer of Nongshim Korea and is director of Nongshim America. DPCC ¶ 21; IPCC ¶ 25. Nongshim America, Inc. is headquartered in Rancho Cucamonga, California, and has other locations in...