In re Cathode Ray Tube (CRT) Antitrust Litig.

• Decision Date: 01 February 2018
• Docket Number: MDL No. 1917,Case No. C-07-5944 JST
• Parties: IN RE: CATHODE RAY TUBE (CRT) ANTITRUST LITIGATION This Order Relates To: ALL DIRECT PURCHASER ACTIONS
• Court: U.S. District Court — Northern District of California

IN RE: CATHODE RAY TUBE (CRT) ANTITRUST LITIGATION

This Order Relates To: ALL DIRECT PURCHASER ACTIONS

MDL No. 1917

Case No. C-07-5944 JST

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

February 1, 2018

ORDER SETTING ASIDE DEFAULT

ECF Nos. 5183, 5215

Before the Court is the Direct Purchaser Plaintiffs' ("DPPs")'s motion for entry of default judgment, ECF No. 5183, and Defendants Irico Group Corporation ("Irico Group") and Irico Display Devices Co., Ltd. ("Irico Display") (collectively "the Irico Defendants")'s motion to set aside default, ECF No. 5215. The Court grants the motion to set aside default and denies the motion for entry of default judgment as moot.

I. INTRODUCTION

The facts regarding the conspiracy in this multidistrict litigation case ("MDL") are well known to the parties, see, e.g., ECF No. 4260, and the Court will summarize them only briefly here. The case arises from an alleged conspiracy to fix prices of cathode ray tubes ("CRTs"), a now-obsolete technology used in the manufacture of televisions and computer monitors. The alleged conspiracy ran from March 1, 1995 through November 25, 2007.

The DPPs filed a class action complaint on behalf of themselves and all others similarly situated in November 2007, alleging a violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, and Section 4 of the Clayton Act, 15 U.S.C. § 15. Numerous additional actions followed. The Judicial Panel on Multidistrict Litigation ("JPML") transferred all related actions to this Court on February 15, 2008.

The DPPs served the complaint and summons on the Irico Defendants on June 3, 2008. ECF No. 336. Several weeks later, attorneys from Pillsbury Winthrop Shaw Pittman, LLP ("Pillsbury") entered appearances on behalf of the Irico Defendants. ECF No. 308. On May 18, 2009, the Irico Defendants joined a number of other Defendants in filing a motion to dismiss the then operative Consolidated Amended Complaint. ECF No. 479. The Court denied the motion on March 30, 2010. ECF No. 665. Although the order denying the motion to dismiss set a deadline to answer of April 29, 2010, the Irico Defendants failed to file an answer or any other motion. Id.

At the time the DPPs filed their original complaint in 2007, ECF No. 1, Irico Group was a State-Owned Enterprise of the State Council of the People's Republic of China. ECF No. 5214 at 7. According to a declaration by Wenkai Zhang, the legal counsel at Irico Group, Irico decided not to answer the complaint "because it believed that Irico Group and Irico Display were immune from suit in the United States." ECF No. 5215-1 ¶ 5. "[T]he Irico entities . . . believed they were immune from DPP's suit under notion of foreign sovereign immunity and accordingly did not participate in this action beyond joining a motion to dismiss." ECF No. 5214 at 8.

On June 23, 2010, Pillsbury notified the Court that it had ceased its representation of the Irico Defendants, at their request, in May 2009. ECF Nos. 729, 730. The next day, the Court granted Pillsbury's motion to withdraw as counsel for the Irico Defendants but required it to "continue to accept service of papers for the Irico Entities for forwarding purposes until substitute counsel appears on behalf of the Irico Entities." ECF No. 732.

On June 23, 2016, the Pillsbury firm filed an administrative motion asking that it "no longer be required to forward pleadings in this case" to the Irico Defendants. ECF No. 4681. The DPPs and Indirect Purchaser Plaintiffs ("IPPs") filed a response that proposed Pillsbury "only be required to accept service of default papers for Irico." ECF No. 4690. The Court then filed an order regarding the Irico entities which instructed "any plaintiff with pending affirmative claims against the Irico Entities to advise the Court in writing by July 5, 2016 of the following: (1) the date on which it filed its operative claims against the Irico Entities; (2) whether the Irico Entities have been served with those claims; and (3) whether the Irico Entities have answered those claims . . . . If the answer to question three is negative, the filing party should show good causewhy it has not previously requested entry of default as to the Irico Entities." ECF No. 4694 at 2. The DPPs filed a response explaining that they intended to move for default judgment but that it was premature to do so as litigation was ongoing against the other defendants (all defendants were jointly and severally liable) and the DPPs' damages study was not yet complete. ECF No. 4705 at 2-3. The IPPs explained that good cause existed for the lack of entry of default because there is no deadline to do so, among other reasons. ECF No. 4706. On July 6, 2016, the Court ordered the DPPs to apply for entry of default against the Irico Defendants within ten days, reasoning that in their effort to show good cause, the DPPs conflated entry of default with entry of default judgment. ECF No. 4709. On July 18, 2016, the Court ordered the IPPs to file entry of default against the Irico Defendants within ten days under similar reasoning. On July 18, 2016, the DPPs filed for entry of default. ECF No. 4724. On July 20, 2016, the IPPs filed for entry of default. ECF No. 4725. The clerk entered default against both. ECF Nos. 4727, 4729. A month later, the IPPs filed a letter of non-opposition to Pillsbury's motion, stating they no longer planned to seek default judgment against the Irico Defendants. ECF No. 4734. On November 11, 2016, the Court granted the motion as to the IPPs, but not the DPPs. ECF No. 5003 (see case caption).

The DPPs moved for default judgment against the Irico Defendants on August 3, 2017. ECF No. 5183. After some disputed matters regarding forwarding service, Davis Wright Tremaine, LLP appeared in this action on behalf of the Irico Defendants on September 8, 2017. ECF No. 5200. On October 2, 2017, Davis Wright Tremaine withdrew as counsel and Baker Botts, LLP was substituted as counsel for the Irico Defendants. ECF No. 5211. On October 25, 2017, the Irico Defendants filed an opposition to the motion for default judgment, ECF No. 5214, and filed a motion to set aside the default, ECF No. 5215. On December 7, 2017, the DPPs filed an opposition to the motion to set aside the default, ECF No. 5228, and a reply regarding the motion for default judgment, ECF No. 5222. On December 21, 2017, the Irico Defendants filed a reply regarding the motion to set aside the default.

II. JURISDICTION

Before the Court can proceed to decide the motions, it must determine whether it has jurisdiction over the Irico Defendants. Because the question of personal jurisdiction is hotlydisputed, the Court considers that question at the outset. Peterson v. Islamic Republic of Iran, 627 F.3d 1117, 1125 (9th Cir. 2010) ("A court has a duty to assure itself of its own jurisdiction.").

The Irico Defendants argue that the Court lacks subject matter jurisdiction over them under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. §§ 1602 et seq. ("FSIA"). ECF No. 5214 at 6. The FSIA is the exclusive source of subject matter jurisdiction in actions involving a foreign state. Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 428-29 (1989); Siderman de Blake v. Republic of Argentina, 965 F.2d 699, 706 (9th Cir. 1992); MOL, Inc. v. Peoples Republics of Bangladesh, 736 F.2d 1326, 1328 (9th Cir. 1984). An entity's status under the FSIA is determined as of the time the complaint was filed. Dole Food Co. v. Patrickson, 538 U.S. 468, 478 (2003).

To determine whether a court had jurisdiction over a defendant under the FSIA, the Ninth Circuit applies the following burden shifting framework:

[T]he defendant must establish a prima facie case that it is a sovereign state and that the plaintiff's claim arises out of a public act. A presumption then arises that the foreign state is protected by immunity. Once the plaintiff has met the threshold of alleging that the defendant was not entitled to immunity due to one of the FSIA exceptions, the defendant may make either a facial or factual challenge to the district court's subject matter jurisdiction.

Terenkian v. Republic of Iraq, 694 F.3d 1122, 1131 (9th Cir. 2012) (citations and quotations omitted).

The Irico Defendants argue "[s]hould DPP's challenge the applicability of the FSIA in this case, they bear the burden of demonstrating that the Court may properly invoke its subject matter jurisdiction." ECF No. 5215 at 14. As a general matter, a plaintiff has the burden of establishing that the court has personal jurisdiction over the defendant. Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977) ("It is clear that the party seeking to invoke the jurisdiction of the federal court has the burden of establishing that jurisdiction exists."). Jurisdictional analysis under the FSIA is consistent with this framework. The Ninth Circuit explains that "the structure of the FSIA—which codifies the background rule that foreign states are immune from suit and execution, and then creates narrow exceptions—suggest [sic] that courts must begin with the presumption that a foreign state is immune and then the plaintiff must provethat an exception to immunity applies." Peterson, 627 F.3d at 1125.

The Court now applies the burden-shifting framework outlined in Terenkian.

A. Sufficiency of the Zhang Declaration

Before applying the appropriate tests to determine whether the Court has jurisdiction, the Court must address the evidence submitted by the Irico Defendants to support their motion: a two page declaration by Wenkai Zhang, who has served as legal counsel at Irico Group from January 2, 2017 through the present. ECF No. 5215-1 ¶ 2. The DPPs ask the Court to disregard this evidence.

Specifically, the DPPs argue that the Zhang Declaration lacks foundation, because it states only that Zhang served as legal counsel since 2017, which provides him "no basis to testify about Group's and Display's corporate ownership and...