In re Circuit Breaker Litigation

Decision Date01 April 1997
Docket NumberNo. CV 88-3012 CBM.,CV 88-3012 CBM.
Citation984 F.Supp. 1267
PartiesIn re CIRCUIT BREAKER LITIGATION.
CourtU.S. District Court — Central District of California

David Steven Olson, Carlsmith, Ball, Wichman, Case & Ichiki, Los Angeles, CA, Robert E. Currie, Latham & Watkins, Costa Mesa, CA, Alan L. Barry, James J. Jagoda, Amy J. Gast, Wallenstein & Wagner, Chicago, IL, for Plaintiff Square D Co.

Holly A. McNulty, Shield & Smith, Los Angeles, CA, Ann M. Ghazarians & Brewer, Los Angeles, CA, for Intervenor Connecticut Indemnity Co.

Brian E. Brick, Arthur Paul Berg, Berg & Brick, LaCanada, CA, for Intervenor Industrial Indemnity Co.

Paul D. Loreto, Robert P. Damone, Norby & Brodeur, Orange, CA, for Intervenor Gulf Ins. Co.

Jean M. Lawler, Murchison & Cumming, Los Angeles, CA, for Intervenor Home Ins. Co.

Maxwell M. Blecher, Donald R. Pepperman, Blecher & Collins, Los Angeles, CA, David Alan Huffaker, Alan H. Stanfill, George Oakes, Throckmorton Beckstrom Oakes & Tomassian, Pasadena, CA, Becky V. Christiansen, Becky V. Christiansen Law Office, Glendora, CA, for Defendant General Circuit Breaker & Electric Supply Inc. and Xavier Contreras.

J. Scott Bennett, Ray H. Shatzer, J. Scott Bennett Law Offices, Lake Elsinore, CA, Defendants for Panelboard Specialties Wholesale Elec., Inc. and Jamie Contreras.

Jeffrey Bradpiece Law Offices, Torrance, CA, for Defendant AC Circuit Breaker-Electrical Supply.

John S. McGeeney, Leonard C. Peterson, Paul Hastings Janofsky & Walker, Los Angeles, CA, John B. Stephens, Paul, Hastings, Janofsky & Walker, Costa Mesa, CA, Edward J. Cummings, Jr., Edward J. Cummings Jr. Law Offices, Niskayuna, NY, Robert D. Gilbert, General Elec., Fairfield, CT, Mansfield C. Neal, Jr., Mansfield C. Neal Law Office, Schenectady, NY, James P. Flynn, James P. Flynn Law Office, Plainville, CT, Norman A. Dupont, Shapiro, Hinds & Mitchell, Los Angeles, CA, for Counter-Defendant General Elec.

Jonathan D. Fink, G. Forsythe Bogeaus, Michael L. Wachtell, Buchalter, Nemer, Fields & Younger, Los Angeles, CA, John J. Verscaj, Francis J. Higgins, Margaret A. McGreal, Matthew A. Phillips, Bell, Boyd & Lloyd, Chicago, IL, for Counter-Defendant Underwriters Laboratories.

Joseph D. Lee, Gregory P. Stone, Marsha Hymanson, Ted G. Dane, Munger, Tolles & Olson, Los Angeles, CA, for Counter-Defendant Westinghouse Elec. Corp.

Ronald J. Nessim, Bird, Marella, Boxer, Wolpert & Matz, Los Angeles, CA, for Counter-Claimant MCCB, Inc. and Ricardo Contreras.

Michael J. Emling, Michael J. Emling Law Offices, Long Beach, CA, for Counter-Claimants Pecon Intern. Inc., General Magnetics/Electric and Julia Contreras.

ORDER RE: PLAINTIFFS' MOTIONS FOR PARTIAL SUMMARY JUDGMENT AGAINST DEFENDANTS' ANTITRUST AND INTENTIONAL INTERFERENCE COUNTERCLAIMS, AND UL'S MOTION TO STRIKE THE DECLARATIONS OF SMITH AND WEINSTEIN

CONSUELO BLAND MARSHALL, District Judge.

The matters before the Court, the Honorable Consuelo B. Marshall, United States District Judge, presiding, are Plaintiffs' Motions for Partial Summary Judgment on Defendants' Antitrust and Intentional Interference for Prospective Economic Advantage Counterclaims, and UL's Motion to Strike the Declarations of Richard L. Smith and Roy Weinstein.1 Upon consideration of the record, papers, and oral argument, the Court issues the following Order, GRANTING partial summary judgment in favor of Plaintiffs' on Defendants' antitrust and intentional interference with prospective economic advantage counterclaims, and DENYING UL's Motion to Strike.

Background

Plaintiffs are Square D Company ("Square D"), General Electric Company ("GE"), Westinghouse Electric Corporation ("Westinghouse"), and Underwriters Laboratories, Inc. ("UL"). Defendants are Panelboard Specialties and Wholesale Electric, Inc., and Jaime Contreras ("PBS"), Pencon International d/b/a General Magnetics & Electric Wholesale, Inc., and the Estate of Charley Contreras ("Pencon/GMEW"), and General Circuit Breaker & Electric Supply, Inc., and Xavier Contreras ("GCB").

This litigation commenced in 1988, when Plaintiffs, three circuit breaker manufacturers and a certification agency, separately sued eleven circuit breaker reconditioning companies for trademark infringement and unfair competition. Since then, many of the cases have settled, and one case went to trial.2 Defendants, the remaining circuit breaker reconditioners, have raised a number of affirmative defenses, and counterclaimed for, inter alia, antitrust violations under the Sherman Act and intentional interference with prospective economic advantage.

Plaintiffs brought motions for partial summary judgment against all three remaining Defendants on Defendants' antitrust and intentional interference counterclaims. The Court heard arguments on these motions on January 6, 1997.3

ANTITRUST DISCUSSION

Defendants allege that Plaintiffs violated the Sherman Act, 15 U.S.C. § 1 by "engag[ing] in a continuing combination and conspiracy to unreasonably restrain trade and commerce in the sale and distribution of molded case circuit breakers and to eliminate secondary distributors of reconditioned molded case circuit breakers." (See, e.g., GCB 2d Am. Countercls. ¶¶ 9-19; PBS 2d Am. Countercls. ¶¶ 9-24; Pencon/GMEW 1st Am. Countercls. ¶¶ 11-25.)

According to Defendants, Plaintiffs conspired to suppress and eliminate competition of entities engaged in the sale and distribution of reconditioned molded case circuit breakers by:

(1) filing in bad faith the lawsuits that constitute In re Circuit Breaker Litigation;

(2) falsely disparaging Defendants and misrepresenting facts (including issues of safety) to government agencies in an effort to induce governmental entities to commence investigations into the sale of reconditioned molded case circuit breakers (3) forming, through the National Electrical Manufacturers Association ("NEMA"), a "Task Force on Rebuilt Circuit Breakers," to formulate means to eliminate competition in the reconditioned circuit breaker market;

(4) preparing, distributing, and developing false or misleading ads, statements, press releases, and media articles about Defendants;

(5) through NEMA, withdrawing a test standard applicable to molded case circuit breakers;

(6) refusing to implement a UL standard for reconditioned circuit breakers; and

(7) inducing third parties to cease doing business with Defendants.4

I. Summary Judgment Law

"A party against whom a ... counterclaim ... is asserted ... may, at any time, move with or without supporting affidavits for a summary judgment in the party's favor as to all or any part thereof." Fed.R.Civ.P. 56(b). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).

In moving for summary judgment, the movant assumes no obligation to negate or disprove matters on which the opponent will have the burden of proof at trial. In order to demonstrate that "there is no genuine issue as to any material fact" and that it is "entitled to judgment as a matter of law," the moving party need only show the Court that there is an absence of evidence to support an essential element of the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2553-54, 91 L.Ed.2d 265 (1986). "A failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. at 323, 106 S.Ct. at 2552.

Once the moving party has demonstrated the complete absence of proof on an essential element of the other party's case, the burden shifts to the opponent to come forward with sufficient evidence for a reasonable jury to find in its favor on that element. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986). In response, the opposing party "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). "The mere existence of a scintilla of evidence in support of [the opponent's] position will be insufficient. . . ." Anderson, 477 U.S. at 252, 106 S.Ct. at 2512.

II. Summary Judgment in Sherman Act Cases

In Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986), the Supreme Court held that, in order to withstand a motion for summary judgment, claimants seeking damages under § 1 of the Sherman Act "must establish that there is a genuine issue of material fact as to whether [the opposing party] entered into an illegal conspiracy that caused [the claimants] to suffer a cognizable injury." In addition, the claimants "must also show more than a conspiracy in violation of the antitrust laws; they must [also] show an injury to them resulting from the illegal conduct." Id. at 586, 106 S.Ct. at 1355-56.

Plaintiffs may discharge their initial summary judgment burden by "proffering a `plausible and justifiable' alternative interpretation of its conduct that rebuts [Defendants'] allegation[s] of a conspiracy." T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 632 (9th Cir.1987). If Plaintiffs meet this initial burden, Defendants must come forward with evidence that is capable of sustaining a rational inference of conspiracy and that tends to exclude the possibility that Plaintiffs acted independently. American Ad Mgmt. v. GTE Corp., 92 F.3d 781 (9th Cir.1996); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S 574, 588, 106 S.Ct. 1348, 1356-57, 89 L.Ed.2d 538 (1986).

While the inferences to be drawn from the underlying facts must generally be viewed in the light most favorable to the party opposing a motion for summary judgment, "antitrust law limits the range of permissible inferences from ambiguous evidence in a § 1 case." Matsush...

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