In re Intel Corp. Microprocessor Antitrust Lit.

• Decision Date: 12 July 2007
• Docket Number: Civil Action No. 05-485-JJF.,No. MDL 05-1717 JJF.,MDL 05-1717 JJF.
• Citation: 496 F.Supp.2d 404
• Parties: In re INTEL CORP. MICROPROCESSOR ANTITRUST LITIGATION Phil Paul, on behalf of himself and all others similarly situated, Plaintiffs, v. Intel Corporation, Defendant.
• Court: U.S. District Court — District of Delaware

496 F.Supp.2d 404

In re INTEL CORP. MICROPROCESSOR ANTITRUST LITIGATION Phil Paul, on behalf of himself and all others similarly situated, Plaintiffs, v. Intel Corporation, Defendant.

No. MDL 05-1717 JJF.

Civil Action No. 05-485-JJF.

United States District Court, D. Delaware.

July 12, 2007.

COPYRIGHT MATERIAL OMITTED

Michael D. Hausfeld, Esquire; Daniel A. Small, Esquire; Brent W. Landau, Esquire and Allyson B. Baker,. Esquire of Cohen, Milstein, Hausfeld & Toll, P.L.L.C., Washington, DC, Michael P. Lehmann, Esquire; Thomas P. Dove, Esquire and Alex C. Turan, Esquire of Furth Lehmann & Grant LLP, San Francisco, CA, James L. Holzman, Esquire; J. Clayton Athey, Esquire and Laina M. Herbert, Esquire of Prickett Jones & Elliott, P.A., Wilmington, DE, Interim Liaison Counsel for the Class Plaintiffs.

David M. Balabanian, Esquire; James L. Hunt, Esquire; Christopher B. Hockett, Esquire and Nora C. Cregan, Esquire of Bingham McCutchen LLP, San Francisco, CA, Richard A. Ripley, Esquire of Bingham McCutchen LLP, Washington, DC, Richard L. Horwitz, Esquire and W. Harding Drane, Jr., Esquire of Potter Anderson & Corroon LLP, Wilmington, DE, for Defendant Intel Corporation.

MEMORANDUM OPINION

FARNAN, District Judge.

Pending before the Court is Defendant Intel Corporation's Motion To Dismiss The First Amended Consolidated Complaint (D.I. 217 in Civil Action No. 05-485 and D.I. 307 in MDL Docket No. 05-1717).¹ For the reasons discussed the Court will grant-in-part and deny-in-part Defendant's Motion.

BACKGROUND

The background related to this action has been set forth by the Court in its previous decision (D.I.299) addressing the Motion To Dismiss Class Plaintiffs Foreign Conduct Claims filed by Defendant Intel Corporation ("Intel"). In re Intel Corp. Microprocessor Litig., 2007 WL 685564, *1-2 (D.Del. Mar. 7, 2007). By way of brief summary, Class Plaintiffs filed multiple class action lawsuits against Intel after it was sued by Advanced Micro Devices, Inc. and AMD International Sales & Service, Ltd. (collectively, "AMD"). Those lawsuits have been consolidated here.

Class Plaintiffs represent United States consumers who purchased computers containing Intel x86 microprocessors. The allegations of Class Plaintiffs' First Amended Consolidated Complaint (the "Complaint") are similar to, and at times, identical to the allegations of AMD's Complaint. Class Plaintiffs allege seven causes of action, including: (1) Section 2 of the Sherman Act, 15 U.S.C. § 2 (Count I); (2) Section 16720 of the California Business and Professional Code for unlawful trust in restraint of trade and commerce (Count II); (3) the prohibition against monopolies under California state tort law (Count III); (4) Section 1700 et seq. of the California Business and Professional Code for unfair competition (Count IV); (5) antitrust and restraint of trade violations under the laws of nineteen states and the District of Columbia (Count V); (6) consumer protection and/or unfair competition violations under the laws of twenty-two states and the District of Columbia (Count VI); and (7) unjust enrichment and disgorgement of profits under the common law of California, or alternatively the common law of the other States at issue and the District of Columbia (Count VII). Class Plaintiffs seek a variety of relief, including punitive damages, treble damages, disgorgement of profits, the establishment of a constructive trust from which the Class Plaintiffs can seek restitution based on the disgorgement of profits, the costs of bringing this lawsuit, and reasonable attorneys' fees.

By the instant Motion, Intel requests the Court to dismiss the Complaint pursuant to Rule 12(b)(6) for failure to state a claim and lack of standing. The parties have fully briefed Intel's Motion, and therefore, this matter is ready for the Court's review.

STANDARD OF REVIEW

Pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court may dismiss a complaint for failure to state a claim upon which relief may be granted. Fed.R.Civ.P. 12(b)(6). Rule 12 § (b)(6) is also invoked for questions of antitrust standing. Maio v. Aetna, Inc., 221 F.3d 472, 481 n. 7 (3d Cir.2000).

The purpose of a motion to dismiss is to test the sufficiency of a complaint, not to resolve disputed facts or decide the merits of the case. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir.1993). While the Court must accept as true all allegations in the complaint and must draw all reasonable factual inferences in the light most favorable to the plaintiff, the "[f]actual allegations must be enough to raise a right to relief above the speculative level ..." Bell Atlantic Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007).² Heightened fact pleading is not required, but enough facts must be alleged to state a claim to relief that is plausible on its face. Id. at 1974. The Court is not required to accept legal conclusions alleged or inferred from the pleaded facts. "[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Twombly, 127 S.Ct. at 1969. The burden of demonstrating that dismissal is appropriate rests on the movant.

DISCUSSION

I. Whether Class Plaintiffs Have Stated A Claim Under Federal Or State Antitrust Laws

A. Antitrust Standing

To demonstrate standing for the purposes of pursuing an antitrust claim, Class Plaintiffs must demonstrate the Constitutional standing requirements of Article III, § 2, namely a "case" or "controversy." However, the Constitutional standing requirements are "augmented by consideration of prudential limitations." City of Pittsburgh v. West Penn Power Co., 147 F.3d 256, 264 (3d Cir.1998). Specifically, Class Plaintiffs must demonstrate that they have antitrust standing and are the proper parties to bring a private antitrust action. Id. In Associated General Contractors of California v. California State Council of Carpenters, 459 U.S. 519, 537-545, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983), the Supreme Court outlined five factors that courts should consider when determining whether a party has standing to bring a private action under the antitrust laws. These factors include: (1) whether plaintiffs alleged injury is the type of injury that the antitrust laws were intended to redress (i.e., the antitrust injury requirement); (2) the causal connection between the antitrust violation and the harm to the plaintiff, including the defendant's intent to cause that harm; (3) whether the injury is a direct injury or a speculative injury; (4) whether there are more direct victims of the alleged antitrust violations; and (5) the potential for duplicative recovery or complex apportionment of damages. West Penn, 147 F.3d at 264 (restating the Associated General Contractors ("AGC ") factors).

Intel contends that Class Plaintiffs cannot demonstrate antitrust injury because they received the benefit of Intel's alleged price cuts and rebates. According to Intel, Class Plaintiffs cannot allege antitrust injury, because low prices benefit consumers, regardless of how those prices are set. Intel further contends that Class Plaintiffs cannot demonstrate that the remaining AGC factors support their assertion that they have antitrust standing.

In response, Class Plaintiffs contend that the heightened prudential standing requirements represented by the AGC five-factor test are not relevant to Class Plaintiffs' antitrust claims. Class Plaintiffs point out that their only federal claim is a claim for injunctive relief under Section 16 of the Clayton Act, 15 U.S.C. § 16, and Class Plaintiffs contend that Section 16 is not as demanding as Section 4. Under Section 16, Class Plaintiffs contend that they need only establish a threat of antitrust injury.

Although Class Plaintiffs seek damages under state antitrust laws, Class Plaintiffs contend that the AGC factors do not apply to those claims. Rather, Class Plaintiffs contend that the appropriate standing analysis for these claims must look to state law, not federal law, because state law permits indirect purchasers to bring antitrust claims. In the alternative, Class Plaintiffs contend that the AGC factors weigh in favor of Class Plaintiffs' standing, and in any event, standing is a fact-intensive inquiry best left to later stages of the proceedings when the parties have the benefit of a more fully developed factual record.

The Court begins its analysis by determining whether it is appropriate to apply the AGC five-factor test to all of Class Plaintiffs' claims. The Court has reviewed the parties' arguments concerning this issue and concludes that it is appropriate to apply the AGC factors if not directly, at least as a guide, in evaluating Class Plaintiffs' state law antitrust claims. Relying on D.R. Ward Construction Co. v. Rohm & Haas Co., 470 F.Supp.2d 485 (E.D.Pa. 2006), Class Plaintiffs contend that the AGC factors are inapplicable to state law claims, even where the applicable state law has a "permissive" harmonization statute that allows federal courts to use federal law as a guide in interpreting them. However, the Court finds D.R. Ward to be inconsistent with the prevailing approach to this question by courts applying the laws of states that have rejected the Illinois Brick prohibition on indirect purchaser suits. Lorix v. Crompton Corp., 720 N.W.2d 15, 18-19 (Minn.2006); Kanne v. Visa U.S.A., Inc., 272 Neb. 489, 723 N.W.2d 293, 301 (2006); Strang v. Visa U.S.A., Inc., 2005 WL 1403769, *3-5 (Wis. Cir. Ct. Feb. 8, 2005); Peterson v. Visa U.S.A., Inc., 2005 WL 1403761, *3-6 (D.C. Super. Apr. 22, 2005); Southard v. Visa U.S.A., Inc., 2004 WL 3030028, *3-4 (Iowa Dist. Nov. 17, 2004).

The Court further agrees with Intel, that Class Plaintiffs' argument against the use of federal law as a guideline blurs the distinction between the question of standing and the question of whether indirect purchasers may sue for antitrust injury. That numerous ...