In re Automotive Parts Antitrust Litig.

• Decision Date: 25 September 2014
• Docket Number: Master File No. 12–md–02311.,2:12–cv–00503.,Nos. 2:12–cv–00502,s. 2:12–cv–00502
• Citation: 50 F.Supp.3d 836
• Parties: In re AUTOMOTIVE PARTS ANTITRUST LITIGATION. In re Bearings.
• Court: U.S. District Court — Eastern District of Michigan

50 F.Supp.3d 836

In re AUTOMOTIVE PARTS ANTITRUST LITIGATION. In re Bearings.

Master File No. 12–md–02311.

Nos. 2:12–cv–00502

2:12–cv–00503.

United States District Court, E.D. Michigan, Southern Division.

Signed Sept. 25, 2014.

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' COLLECTIVE MOTION TO DISMISS INDIRECT PURCHASER ACTIONS

MARIANNE O. BATTANI, District Judge.

Before the Court is Defendants' Collective Motion to Dismiss End–Payor Plaintiffs' Consolidated Amended Class Action Complaint (Doc. No. 73 in 12–503), and Automobile Dealer Plaintiffs' Consolidated Class Complaint (Doc. No. 82 in 12–502). Defendant movants include JTEKT Corporation, JTEKT North America Corporation, Nachi–Fujikoshi Corporation, Nachi America Inc., NTN Corporation, NTN USA Corporation, NSK Ltd., NSK Americas, Inc., Schaeffler AG, Schaeffler Group USA Inc., and AB SKF. SKF USA, Inc. joined the motion.

On August 21, 2013, Automobile Dealer Purchaser Plaintiffs filed their Consolidated Class Action Complaint, (Doc. No. 67 in 12–502), and on October 23, 2013, End–Payor Plaintiffs filed their Corrected Consolidated Amended Class Action Complaint (Doc. No. 70 in 12–503). In their motion, Defendants challenge the sufficiency of the allegations of conspiracy to fix prices on Bearing products filed by two different groups of plaintiffs—automobile dealers and end-payors.

I. INTRODUCTION

Automobile Dealer Plaintiffs and End–Payor Plaintiffs (collectively “Indirect Purchaser Plaintiffs” or “IPPs”) bring class actions against Defendants under federal and state law based on Defendants' alleged conspiracy to fix prices and allocate the market for automotive Bearings. Defendants manufacturer or sell Bearings in the United States. The Automobile Dealer Plaintiffs (“ADPs”), including Martens Cars of Washington, Inc., Landers Auto Group No. 1, Inc. d/b/a Landers Toyota, Hammett Motor Company, Inc., Superstore Automotive, Inc., Lee Pontiac–Oldsmobile–GMC Truck, Inc., Westfield Dodge City, Inc., V.I.P. Motor Cars Ltd., Desert European Motorcars, Ltd., Landers McLarty Fayetteville TN, LLC, Dale Martens Nissan Subaru, Inc., Green Team of Clay Center Inc., McGrath Automotive Group, Inc., Table Rock Automotive, Inc. d/b/a Todd Archer Hyundai, Archer–Perdue, Inc. d/b/a Archer–Perdue Suzuki, Landers McLarty Lee's Summit, Mo. LLC d/b/a Lee's Summit Chrysler Dodge Jeep Ram, and d/b/a Lee's Summit Nissan, Bonneville and Son, Inc., Holzhauer Auto and Truck Sales, Inc., Pitre, Inc. d/b/a Pitre Buick GMC, Patsy Lou Chevrolet, Inc., John Greene Chrysler Dodge Jeep, LLC, SLT Group II, Inc. d/b/a Planet Nissan Subaru of Flagstaff, Herb Hallman Chevrolet, Inc. d/b/a Champion Chevrolet, Charles Daher's Commonwealth Motors, Inc. d/b/a Commonwealth Chevrolet, Commonwealth Kia, Commonwealth Honda, Commonwealth Nissan, Inc. d/b/a Commonwealth Nissan, Ramey Motors, Inc., Thornhill Superstore, Inc. d/b/a Thornhill GM Superstore, Dave Heather Corporation d/b/a Lakeland Toyota Honda Mazda Subaru, Central Salt Lake Valley GMC Enterprises, LLC d/b/a Salt Lake Valley Buick GMC, Capitol Chevrolet Cadillac, Inc., Capitol Dealerships, Inc. d/b/a Capitol Toyota, Beck Motors, Inc., Stranger Investments d/b/a Stephen Wade Toyota, John O'Neil Johnson Toyota, LLC, Hartley Buick GMC Truck, Inc., Lee Oldsmobile–Cadillac, Inc. d/b/a Lee Honda, Lee Auto Malls–Topsham, Inc. d/b/a Lee Toyota of Topsham, Landers of Hazelwood, LLC d/b/a Landers Toyota of Hazelwood, Cannon Chevrolet–Oldsmobile–Cadillac–Nissan, Inc., Cannon Nissan of Jackson, LLC, Hudson Charleston Acquisition, LLC d/b/a Hudson Nissan, Shearer Automotive Enterprises III, Inc., and Apex Motor Corporation “filed their Consolidated Class Complaint on behalf of themselves and all others similarly situated.” (Doc. No. 67 in 12–502). In their proposed class action, Automobile Dealer Plaintiffs allege that “manufacturers and suppliers of automotive bearings, globally and in the United States” engaged in “a lengthy conspiracy to suppress and eliminate competition in the bearings industry by agreeing to fix, stabilize, and maintain the prices of these products....” (Doc. No. 67 in 12–502, Ex. 1 ¶ 1).

In their Corrected Consolidated Amended Class Action Complaint (Doc. No. 70 in 12–503), End–Payor Plaintiffs (“EPPs”) Rebecca Lynn Morrow, Erica J. Shoaf, Tom Halverson, Sophie O'Keefe–Zelman, Stephanie Petras, Melissa Barron, John W. Hollingsworth, Meetesh Shah, Michael J. Tracy, Jane Taylor, Keith Uehara, Jennifer Chase, Darrel Senior, James E. Marean, Ron Blau, Roger D. Olson, Nilsa Mercado, Darcy C. Sherman, David Bernstein, Ellis Winston McInnis, IV, Thomas N. Wilson, Lauren C. Primos, Robert P. Klingler, Jessica DeCastro, Lori Curtis, Virginia Pueringer, Nathan Croom, Richard Stoehr, Edward T. Muscara, Michael Wick, Tenisha Burgos, Jason Grala, Kathleen A. Tawney, Kelly Klosterman, Kent Busek, Cindy Prince, Paul Gustafson, France H. Gammell–Roach, William Dale Picotte, Phillip G. Young, Jesse Powell, Alena Farrell, Jane FitzGerald, Arthur Stukey, Hanne Rice, Robert M. Rice, Jr., Stacey R. Nickell, and Carol Ann Kashishian, on behalf of themselves and all others similarly situated, “bring a class action against Defendants, suppliers of Automotive Bearings ... globally and in the United States, for engaging in a massive conspiracy to unlawfully fix and artificially raise the prices of Bearings.” (Doc. No. 70 in 12–503 at ¶ 1).

In their motion, Defendants challenge the sufficiency of the complaints, asserting that the facts alleged do not support the existence of a global conspiracy by all Defendants over a nine-year period. Defendants also argue that Indirect Purchaser Plaintiffs lack both antitrust and constitutional standing, and that all state claims must be dismissed for a variety of reasons.

Defendants waived oral argument on the motion, which was scheduled for June 4, 2014. The Court has reviewed all of the filings, and for the reasons that follow, the motion is GRANTED in part and DENIED in part.

II. SUMMARY OF THE FACTUAL ALLEGATIONS

According to their complaints, Plaintiffs purchased Bearings indirectly from Defendants and their co-conspirators as part of purchasing or leasing a new vehicle or as a replacement when repairing a damaged vehicle. Automotive Bearings “are used to decrease the rotational friction between a vehicle and the surface” on which it runs, to “help maintain balance in the event of speed changes or sudden braking,” and generally to “allow for smooth driving.” (Doc. No. 67 at ¶ 149; Doc. No. 70 at ¶ 102). Indirect Purchaser Plaintiffs identify several groups of Defendants: the JTEKT group (Doc. No. 67 at ¶¶ 111–115; Doc. No. 70 at ¶¶ 69–72), which includes JTEKT Corporation and Koyo Corporation of U.S.A.; the Nachi group, which includes Nachi–Fujikoshi Corporation and Nachi America Inc., (Doc. No. 67 at ¶¶ 117–120; Doc. No. 70 at ¶¶ 73–77); NSK group, which includes NSK Ltd., and NSK Americas, Inc. (Doc. No. 67 at ¶¶ 121–126; Doc. No. 70 at ¶¶ 78–83); Schaeffler group, which includes Schaeffler AG and Schaeffler Group USA Inc., (Doc. No. 67 at ¶¶ 127–132; Doc. No. 70 at ¶¶ 84–89); SKF Defendants, which includes AB SKF and SKF USA, Inc. (Doc. No. 67 at ¶¶ 133–139; Doc. No. 70 at ¶¶ 90–94); and NTN group, which includes NTN Corporation and NTN USA Corporation (Doc. No. 67 at ¶¶ 140–45; Doc. No. 70 at ¶¶ 95–98).

IPPs include allegations about Defendants' size and global sales, conditions in the market that are conducive to antitrust conspiratorial conduct, the numerous opportunities to conspire presented by industry trade shows, industry organizations, and through buying and selling Bearings with competitors. “The U.S. market size for Automotive Bearings was $2.71 billion in 2008.” (Doc No. 67 at ¶ 162; Doc. No. 70 at ¶ 107). According to IPPs, a small number of manufacturers, including Defendants, dominate the Automotive Bearings market. (See e.g. Doc. No. 70 at ¶ 108). The top three suppliers control nearly 75 percent of the U.S. market. (Doc. No. 70 at ¶ 123). Nachi provides bearings for “60% of all passenger automobiles and light trucks on the road.” (Doc. No. 67 at ¶ 153). Schaeffler supplies bearings to “nearly all automotive manufacturers,” including “Volkswagen, Fiat, Jaguar, Land Rover, Porsche, Toyota, BMW, Mercedes, Daimler Chrysler, GM and Ford.” (Doc. No. 67 at ¶ 154). NSK's main customers include Honda, Mitsubishi, Nissan, and Toyota, (Doc. No. 67 at ¶ 155), and SKF's lists “Alfa Romeo, Chrysler, Ferrari, Volvo, BMW, Jaguar, Kia, Nissan, Porsche, Saab, Volkswagen, Mercedes, Ford, General Motors, Audi, Honda, Mazda, Hyundai, and Toyota” as main customers. (Doc. No. 67 at ¶ 156). As evidence of the conspiracy, IPPs observe that Bearings prices increased even as demand decreased during the Class Period. (Doc. No. 67 at ¶¶ 164–165).

IPPs allege that the market structure is conducive to price fixing and market allocation. There are significant barriers to entry in the market for Bearings. For example start-up costs are high in light of the costs associated with manufacturing plants and equipment, energy, transportation, distribution infrastructure, and skilled labor. (Doc. No. 67 at ¶¶ 167–168). Moreover, Defendants own patents for Bearings. (Doc. No. 67 at ¶ 170). In addition, demand is inelastic. (Doc. No. 67 at ¶¶ 171–73). The market is highly concentrated; the top three suppliers control nearly 75 percent of the market in the United States. (Doc. No. 67 at ¶ 174).

IPPs further allege that Defendants and their co-conspirators had opportunities to conspire. For example, Defendants can meet privately at trade shows. (Doc. No. 67 at ¶ 175). Six Defendants—NSK, NTN, Schaeffler, Nachi–Fujikoshi, Koyo, and SKF—make up the bulk of the seven member World Bearing Association (“WBA”). (Id. at ¶ 176). Trade meetings are not the only opportunities to conspire alleged in the CACAC. IPPs allege that distributers organized golf outings attended by Defendants' employees, who were paired at the various events. (...