In re Elec. Carbon Products Antitrust Litigation

• Decision Date: 30 August 2004
• Docket Number: MDL No. 1514.
• Citation: 333 F.Supp.2d 303
• Parties: In re ELECTRICAL CARBON PRODUCTS ANTITRUST LITIGATION.
• Court: U.S. District Court — District of New Jersey

Page 303

333 F.Supp.2d 303

In re ELECTRICAL CARBON PRODUCTS ANTITRUST LITIGATION.

MDL No. 1514.

United States District Court, D. New Jersey.

August 30, 2004.

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Lisa J. Rodriguez, Esquire, Trujillo Rodriguez & Richards, LLC, Haddonfield, NJ, and Allyn Z. Lite, Esquire, Lite Depalma Greenberg & Rivas, LLC, Newark, NJ, Co-Liaison Counsel for Class Plaintiffs.

Steven A. Asher, Esquire, Fox Rothschild, LLP, Philadelphia, PA, and Melissa H. Maxman, Esquire, Duane Morris, LLP, Philadelphia, PA, and Warren Rubin, Esquire, Law Offices of Bernard M. Gross, PC, Philadelphia, PA, and Howard J. Sedran, Esquire, Levin Fishbein Sedran & Berman, Philadelphia, PA, Executive Committee for Class Plaintiffs.

Robert M. Osgood, Esquire, Jonathan C. Cross, Esquire, Sullivan & Cromwell, LLP, New York, NY, Counsel for Defendants Morgan Crucible Company, PLC, Morganite Industries, Inc., Morganite, Inc., Morgan Advanced Materials & Technology, Inc., and National Electrical Carbon Products, Inc.

Matthew M. Neumeier, Esquire, Brian D. Hansen, Esquire, Jenner & Block, LLP, Chicago, IL, and Joseph A. Martin, Esquire, Archer & Greiner, PC, Haddonfield, NJ, Counsel for Defendants Schunk of North America, Schunk Graphite Technology, and Hoffman Carbon, Inc.

Jerome S. Fortinsky, Esquire, Shearman & Sterling, LLP, New York, NY, and Michael J. Vassalotti, Esquire, Brown & Connery, LLP, Westmont, NJ, Counsel for Defendant SGL Carbon, LLC.

OPINION

SIMANDLE, District Judge.

Presently before the Court are eight motions to dismiss filed by nine corporate defendants in this multi-district case which involves allegations that these corporate defendants, and others, "engaged in a worldwide conspiracy" between January 1990 and December 2001 "the purpose and effect of which was to fix, raise, maintain, or stabilize prices, and to allocate markets and customers for Electrical Carbon Products sold in the United States and elsewhere," in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. (Third Am. Compl. ¶ 1.) The defendants involved in the present motions fall within three corporate groups: (1) the "Morgan Defendants," namely Morgan Crucible Company PLC, Morganite Industries, Inc., Morganite, Inc., Morgan Advanced Materials & Technology, Inc., and National Electrical Carbon Products, Inc., (2) the "Schunk Defendants," namely Schunk of North America, Schunk Graphite Technology, and Hoffman Carbon, Inc., and (3) SGL Carbon, LLC. Each company in each group asserts that the claims against it must be dismissed because the plaintiffs have failed to plead a sufficient factual basis for their claim that the defendants engaged in an antitrust conspiracy and have failed to allege, with sufficient particularity, that the defendants fraudulently concealed the conspiracy such that the four-year statute of limitations tolled during the 1990s.

The Court has considered the positions of the parties, including the oral arguments of counsel on July 28, 2004 and August 13, 2004, and has determined, for the reasons stated herein, that the defendants' motions should be denied because the plaintiffs have plead their claims with sufficient factual specificity.

I. BACKGROUND

Consolidated before this Court are multi-district civil actions filed on behalf of companies which purchased Electrical Carbon from five specified company groups between January 1, 1990 and December 31, 2001.¹ (Third Am. Compl. ¶ 1.) The involved companies are Morgan Crucible, PLC and five of its subsidiaries,² Le Carbone Lorraine S.A. and one of its subsidiaries,³ Ludwig Schunk Stiftung e.V. and six affiliated companies,⁴ SGL Carbon AG and one of its subsidiaries,⁵ and C. Conradty Nuernberg GmbH. The plaintiffs allege that, between January 1990 and December 2001, these defendants "engaged in a worldwide conspiracy, the purpose and effect of which was to fix, raise, maintain, or stabilize prices, and to allocate markets and customers for Electrical Carbon Products sold in the United States and elsewhere." (Third Am. Compl. ¶ 1.) The allegations are based, in large part, on investigations undertaken by the United States Department of Justice and by the European Commission into whether there was an "international cartel engaged in fixing prices in the Electrical Carbon Products industry." (Third Am. Compl. ¶¶ 41, 51.) The United States investigation led to criminal charges against Morganite, Inc. for conspiring to fix prices of Electrical Carbon Products in the United States and against Morgan Crucible PLC, Ian Norris, Robin D. Emerson, F. Scott Brown, and Jacobus Johan Anton Kroef for obstruction of justice through document destruction and witness tampering.⁶ (Third Am. Compl. ¶¶ 41-50.) The European investigation resulted in the imposition of million-euro fines on Le Carbone Lorraine, Schunk GmbH, Schunk Kohlenstoff-Technik GmbH, SGL Carbon A.G., Hoffmann & Co., and Conradty.⁷ (Id. ¶¶ 51-54.)

By late 2002, actions were filed in several district courts by companies who had purchased Electrical Carbon Products from the defendants seeking relief pursuant to Section 1 of the Sherman Act, 15 U.S.C. § 1, and Sections 4 and 16 of the Clayton Act.⁸ The actions were combined for pretrial proceedings before the undersigned District Judge pursuant to a May 13, 2003 Transfer Order of the Judicial Panel on Multidistrict Litigation, and have since been consolidated into one master action, Civil No. 03-2182 (District of New Jersey).

The matter is presently before the Court on the plaintiffs' Third Amended Consolidated Complaint and the motions of defendants Morgan Crucible Company, PLC ("Morgan Crucible"), Morganite Industries, Inc. ("Morganite Industries"), Morganite, Inc. ("Morganite"), Morgan Advanced Materials & Technology, Inc. ("MAMAT"), National Electrical Carbon Products, Inc. ("National Electric"), Schunk of North America ("Schunk"), Schunk Graphite Technology ("Schunk Graphite"), Hoffman Carbon, Inc. ("Hoffman Carbon"), and SGL Carbon, LLC ("SGL Carbon"), to dismiss the Complaint for failure to provide adequate notice of the charges and for failure to plead fraudulent concealment with particularity.⁹ The Court heard the oral arguments of counsel for the Schunk defendants and the Morgan defendants on July 28, 2004, and for SGL Carbon on August 13, 2004.

II. DISCUSSION

A. Conspiracy Allegations

Defendants Morgan Crucible, Morganite Industries, Morganite, MAMAT, National Electric, Schunk, Schunk Graphite, Hoffman Carbon and SGL Carbon first argue that the Third Amended Complaint must be dismissed because the allegations that they engaged in a conspiracy to fix the price of Electrical Carbon Products in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, are "vague and wholly conclusory" and are "based on bare legal conclusions," such that they do not provide sufficient notice of the dispute as required by Fed.R.Civ.P. 8(a).

Rule 8(a) provides for "notice pleading," such that a plaintiff has sufficiently alleged a cause of action by providing a "short and plain statement of the claim showing that the [plaintiff] is entitled to relief." Fed.R.Civ.P. 8(a); see also Leatherman v. Tarrant County Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993); MCM v. Andrews-Bartlett & Assoc., 62 F.3d 967, 976 (7th Cir.1995). To state a claim for relief under Section 1 of the Sherman Act, the plaintiffs must allege:

1. a contract, combination or conspiracy;

2. a restraint of trade; and

3. an effect on interstate commerce.

Fuentes v. South Hills Cardiology, 946 F.2d 196, 198 (3d Cir.1991) (citing Weiss v. York Hospital, 745 F.2d 786, 812 (3d Cir.1984)). Here, the defendants assert that the plaintiffs have not provided a "short and plain statement" of the first factor because they have instead made "wholly conclusory claims that defendants combined or conspired to restrain trade" of the broad "Electrical Carbon Products" market, without providing any supporting factual allegations. Plaintiffs argue, though, that the defendants have been provided sufficient notice of the Sherman Act claims because they have, in the Third Amended Complaint, identified "the conspiracy's participants, purpose, and motive." (Pl. Br. at 18 (quoting Fuentes, 946 F.2d at 202)).

In a detail-rich Third Consolidated Amended Class Action Complaint consisting of twenty-nine pages, the plaintiffs have plead that the conspiracy's participants included the defendants involved in these motions, the other defendants, and "various individuals, partnerships, corporations and associations other than the Defendants named in this Complaint." (Third Am. Compl. ¶¶ 13-40.) They have further plead that the purpose of the conspiracy was to "fix, raise, maintain, or stabilize prices, and to allocate markets and customers for Electrical Carbon Products sold in the United States and elsewhere," (id. ¶ 1), and that the motive was to "reduce competition" such that they could charge "artificially high price[s] in the United States and elsewhere," (id. ¶ 71).

The defendants, though, assert that these allegations are not sufficient, first, because they fail to provide notice of the specific products within the broad electrical carbon products market that are at issue, and second, because they fail to provide notice of the conduct that each specific defendant is alleged to have taken in furtherance of the conspiracy. The Court finds, though, that the allegations provide sufficient notice.

First, the Court finds that electrical carbon products at issue are sufficiently defined in paragraph 7(a) which provides:

As used in this Complaint ... "Electrical Carbon Products" refers to carbon brushes and current collectors used in the manufacture of direct current electric motors, automotive applications and other transit applications as well as consumer products, and also refers to mechanical carbon products for use in pump and compressor industries. Carbon...