In re Lithium Ion Batteries Antitrust Litig.

• Decision Date: 02 October 2014
• Docket Number: Case No.: 13-MD-2420 YGR
• Parties: IN RE: LITHIUM ION BATTERIES ANTITRUST LITIGATION This Order Relates to: All Direct and Indirect Purchaser Actions
• Court: U.S. District Court — Northern District of California

IN RE: LITHIUM ION BATTERIES ANTITRUST LITIGATION This Order Relates to: All Direct and Indirect Purchaser Actions

Case No.: 13-MD-2420 YGR

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

October 2, 2014

OMNIBUS ORDER RE: MOTIONS TO DISMISS THE SECOND CONSOLIDATED AMENDED COMPLAINTS OF DIRECT AND INDIRECT PURCHASER PLAINTIFFS

(DKT. NOS. 401, 424-31.)

TABLE OF CONTENTS

Introduction..............................................................4

Part 1: Background....................................................6

Part 2: Phase 2 Motion to Dismiss the IPP-SCAC.......................................8

I. Overview of Classes and Claims Asserted....................................................8

II. Analysis .................................................................................................................................10

A. IPP Antitrust Standing Under AGC.......................................................10

1. The Framework of Antitrust Standing.........................10

2. Determining the Content of State-Law Antitrust Standing Doctrine...................13

a. Framework for Ascertaining State Law...................................15

b. Review of Proffered Authorities..................................16

3. Application of AGC to the IPP-SCAC....................................22

a. First Factor: Nature of Plaintiffs' Injuries and Market Participation......................23

b. Second Factor: Directness of Injury............................................28

c. Third Factor: Speculative Nature of the Harm..................................29

d. Final Factors: Risk of Duplicative Recovery and Unduly Complex Apportionment of Damages................................................30

B. Article III Standing ...........................................................................................................32

C. Application of Illinois Brick to Missouri Law..................................................36

D. Class Action Claims in Illinois and South Carolina...........................................38

E. New Hampshire Claims .................................................................................................... 41

F. Price-Fixing under Arkansas's Deceptive Trade Practices Act.................................. 42

III. Conclusion as to Phase 2 Motion.................................... 44

Part 3: Phase 3 Motion to Dismiss the DPP-SCAC................................. 44

I. DPP Antitrust Standing under Illinois Brick and Royal Printing...............................46

II. DPP Antitrust Standing under AGC...........................51

A. Legal Standard..........................................52B. DPP Antitrust Standing under AGC for Purchases of Batteries........................................52

C. DPP Antitrust Standing under AGC for Purchases of Battery Products...........................53

1. Antitrust Injury............................................................................................................53

2. Other AGC Factors...................................................................................................... 54

III. Conclusion as to Phase 3 Motion...................................................................................... 55

Part 4: Individual Motions to Dismiss ..............................................................................................55

I. Relevant Procedural Background.........................................................................................56

II. Legal Standard ......................................................................................................................56

III. Analysis .............................................................................................................................58

A. Motion of MCA and HML (Dkt. No. 427)....................................................................... 58

B. Motion of LGCAI (Dkt. No. 425)..................................................................................... 61

C. Motion of NEC Corp. (Dkt. No. 426)...............................................................................62

D. Motion of PNA and SNA (Dkt. No. 429).........................................................................63

E. Motion of GS Yuasa (Dkt. No. 424).................................................................................65

1. Pre-2004 Allegations..................................................................................................66

a. Predecessor-in-Interest ............................................................................................ 66

b. Joint Ventures..........................................................................................................68

2. Post-2004 Allegations................................................................................................. 70

3. Conclusion as to GS Yuasa.........................................................................................71

F. Motion of SEL and SEND (Dkt. No. 431)........................................................................71

1. SEL .............................................................................................................................71

2. SEND .......................................................................................................................... 72

G. Motion of Toshiba Corp. (Dkt. No. 430).......................................................................... 75

IV. Conclusion as to Individual Motions ................................................................................ 76

Conclusion ........................................................................................................................................77

INTRODUCTION

This multidistrict litigation stems from allegations of a multi-year conspiracy among Japanese and Korean corporations and their U.S. subsidiaries to fix the prices of lithium ion battery cells, the chemical core of rechargeable batteries found ubiquitously in consumer electronics products. Two groups of plaintiffs, denominated the direct purchaser plaintiffs ("DPPs") and indirect purchaser plaintiffs ("IPPs"), seek to represent putative classes of persons, businesses, and, in the case of the IPPs, municipal and regional governments injured by the alleged overcharge. The DPPs sue for both injunctive relief and money damages under the federal antitrust laws, and seek to represent classes of purchasers who bought lithium ion batteries and products containing them for purposes of resale. The IPPs, by contrast, sue for injunctive relief under federal antitrust law, but seek money damages under state antitrust and consumer protection laws. The IPPs seek to represent classes of purchasers who bought lithium ion batteries and battery products for their own use.

The Court has instituted a phased approach to challenging the DPPs' and IPPs' pleadings. (Dkt. Nos. 276, 395.) The first phase has already transpired: on January 21, 2014, the Court issued a comprehensive order dismissing without prejudice the DPPs and IPPs' respective Consolidated Amended Complaints. (Dkt. No. 361 ("Jan. 21 Order").) Now before the Court are the second and third phases of motions to dismiss, which together comprise nine different motions attacking the sufficiency of the DPPs' and IPPs' second consolidated amended complaints on a variety of grounds. (Dkt. Nos. 415 ("DPP-SCAC"), 419 ("IPP-SCAC").) Two of the motions are jointly filed motions challenging, respectively, the IPP-SCAC (Phase 2) and the DPP-SCAC (Phase 3). The remaining seven motions, filed as part of Phase 3, raise issues pertaining to particular corporate "families" not addressed in the joint motions.¹

This Order has four parts. In Part 1, the Court briefly sets forth the portions of this case's factual and procedural background that are essential to the motions at hand. In Part 2, the Court considers defendants' fully briefed "Phase 2" joint motion to dismiss the IPP-SCAC. (Dkt. Nos. 401 ("Phase 2 Motion"), 413 ("Phase 2 Opp'n"), 432 ("Phase 2 Reply").)² The Phase 2 Motion raises six different issues of law, foremost among them questions of antitrust standing³ related to Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519 (1983) ("AGC"). The Court heard oral argument on the Phase 2 Motion on May 9, 2014. (Dkt. No. 449 ("May 9 Tr.").) As set forth herein, the Court holds that the IPPs have satisfied the requirements of AGC for purposes of the pleading stage. With respect to the remaining five sets of challenges (Sections B-F), the IPP-SCAC survives three. The Court dismisses without prejudice the IPP's proposed statewide damages class for Montana. The Court also dismisses without prejudice the IPPs' proposed nationwide damages class of non-state and non-federal governments, and all but one of the IPPs' proposed statewide damages classes of such governments. The California governmental class survives. Further, the Court dismisses with prejudice the IPPs' claim under New Hampshire's Consumer Protection Act. The motion is otherwise denied. Accordingly, the Court GRANTS IN PART AND DENIES IN PART the Phase 2 Motion.

In Part 3, the Court turns to defendants' jointly filed Phase 3 motion, which raises antitrust standing challenges that overlap in some respects with those raised in their Phase 2 Motion, but this time target the DPP-SCAC. (Dkt. Nos. 428 ("Phase 3 Motion"), 451 ("Phase 3 Opp'n"), 465("Phase 3 Reply").) Specifically, the Phase 3 Motion reprises an earlier challenge to the DPPs' antitrust standing under Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) and Royal Printing Co. v. Kimberly Clark Corp., 621 F.2d 323 (9th Cir. 1980), and challenges for the first time their standing under AGC. The Court took oral argument on the Phase 3 Motion on August 8, 2014. (Dkt. No. 502 ("Aug. 8 Tr.").) As set forth herein, the Court finds that the DPPs have adequately pleaded the...