Oliver v. SD-3C LLC

• Court: U.S. Court of Appeals — Ninth Circuit
• Writing for the Court: PAEZ
• Citation: Oliver v. SD-3C LLC, 751 F.3d 1081 (9th Cir. 2014)
• Decision Date: 14 May 2014
• Docket Number: No. 12–16421.,12–16421.
• Parties: Dan OLIVER; Jeannie Oliver; Joe Solo; Bernard Gross; Susan Keelin; Walter Kvasnik; Kou Srimounghanch; Humberto Gonzalez; Samuel D. Leggett; Brian Albee; Mary Louise Fowler; Joe Shaw, On their own behalves and on behalf of all others similarly situated; Rhonda Shultz, Plaintiffs–Appellants, v. SD–3C LLC; Panasonic Corporation; Panasonic Corporation of North America; Toshiba Corporation; SanDisk Corporation, Defendants–Appellees.

751 F.3d 1081

Dan OLIVER; Jeannie Oliver; Joe Solo; Bernard Gross; Susan Keelin; Walter Kvasnik; Kou Srimounghanch; Humberto Gonzalez; Samuel D. Leggett; Brian Albee; Mary Louise Fowler; Joe Shaw, On their own behalves and on behalf of all others similarly situated; Rhonda Shultz, Plaintiffs–Appellants,

v.SD–3C LLC; Panasonic Corporation; Panasonic Corporation of North America; Toshiba Corporation; SanDisk Corporation, Defendants–Appellees.

No. 12–16421.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 5, 2013.

Filed May 14, 2014.

Amanda Bonn (argued), Susman Godfrey LLP, Los Angeles, CA; Max L. Tribble Jr., Joseph S. Grinstein, Eric J. Mayer, Susman Godfrey LLP, Houston, TX, for Plaintiffs–Appellants Dan Oliver, Jeannie Oliver, Joe Solo, Bernard Gross, Susan Keelin, Walter Kvasnik, Kou Srimounghanch, Humberto Gonzalez, Samuel D. Leggett, Brian Albee, Mary Louise Fowler, and Joe Shaw, on their own behalves and on behalf of all others similarly situated, and Rhonda Shultz.

Christopher B. Hockett (argued), Davis Polk & Wardwell LLP, Menlo Park, CA, for Defendant–Appellee SD–3C, LLC; Jeffrey L. Kessler, Winston & Strawn LLP, New York, NY, for Defendants–Appellees Panasonic Corporation and Panasonic Corporation of North America; Richard S. Taffet, Bingham McCutchen LLP, New York, NY, for Defendant–Appellee SanDisk Corporation; and Daniel M. Wall, Latham & Watkins, San Francisco, CA, for Defendant–Appellee Toshiba Corporation.

Before: RONALD M. GOULD and RICHARD A. PAEZ, Circuit Judges, and DAVID A. EZRA, District Judge.^*

OPINION

PAEZ, Circuit Judge:

In this antitrust suit, Plaintiffs, purchasers of SD digital memory cards, allege that Defendants Panasonic Corporation, Toshiba Corporation, SanDisk Corporation, and SD –3 C, LLC (collectively “Defendants”) violated federal and state antitrust laws by conspiring to fix the price for SD cards and engaging in improper practices with respect to the licensing of Defendants' patents to other manufacturers of SD cards. The district court dismissed Plaintiffs' claims as time-barred. Reviewing de novo, we reverse. Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954, 960 (9th Cir.2010).¹

Recently, in a related action, Samsung Electronics Co., Ltd. v. Panasonic Corp., 12–15185, 747 F.3d 1199, 2014 WL 1328318 (9th Cir. Apr. 4, 2014), we held that the district court erred in concluding that the Clayton Act's four-year statute of limitations barred Samsung Electronics Company's antitrust claims for damages and injunctive relief against Panasonic Corporation, Panasonic Corporation of North America, and SD–3C. In this case, unlike the plaintiff in Samsung, Plaintiffs only seek injunctive relief under section 16 of the Clayton Act, 15 U.S.C. § 26. Because Plaintiffs seek only injunctive relief under federal law, their federal antitrust claim is subject to the equitable doctrine of laches and not the four-year statute of limitations in section 4B of the Clayton Act, 15 U.S.C. § 15b. Taking Plaintiffs' allegations in the First Amended Complaint (“FAC”) as true, as we must at this stage of the litigation, we conclude that they are sufficient to establish that laches is not a bar to Plaintiffs' federal antitrust claim. Accordingly, we reverse and remand for further proceedings.

I

In giving factual context for the federal and state antitrust claims, Plaintiffs allege essentially the same facts regarding the development of SD cards as those alleged in Samsung. We therefore draw liberally from our Samsung opinion in setting the stage for Plaintiffs' lawsuit and their challenge to the district court's dismissal order.

SD cards are the dominant form of flash memory card on the market, and are widely used in consumer electronics devices such as cellular phones and digital cameras. In 1999, Panasonic, Toshiba, and SanDisk developed SD cards as a modified proprietary format of the flash memory cards then available, created the SD Group to promote their use, and created SD–3C to license the format to manufacturers. In 2003, Defendants created a standard license (the “2003 license”) that contained a clause imposing a 6 percent royalty on SD cards sold by manufacturers who were not members of the SD Group.

In 2005 and 2006, Defendants developed two new forms of SD cards: the high capacity SD card (“SDHC”) which was the same physical size as the first-generation product, but used distinct software to give it a substantially higher storage capacity than the original; and the much smaller microSD card, designed for use in mobile phones. By its terms, the 2003 license did not cover these new formats. The SD group met in the fall of 2006 and adopted an “Amended and Restated SD Memory Card License Agreement” (the “2006 license”), which contained the same 6 percent royalty terms for non-SD Group manufacturers of the two new formats as the 2003 license had required for the original cards.

The 2006 license also included a “fair market price” provision pursuant to which Defendants were authorized to determine the “fair market price” of SD cards and to use that price as a baseline in calculating royalties. Plaintiffs allege that this provision shows that Defendants, who control 70 percent of the SD market, intended to “agree upon and charge a ‘fair market price’ for their SD [c]ards,” i.e. to fix the price for SD cards in violation of federal and state antitrust laws.² Plaintiffs further allege that, in addition to fixing the price of SD cards, Defendants' licensing practices violate antitrust laws because Defendants do not separately license certain patents that are part of the SD–3C patent pool and, furthermore, refuse to negotiate the terms of the SD Card License.

Plaintiffs filed their lawsuit on March 15, 2011 and, of note here, they allege that they purchased SD cards on or after March 15, 2007. Plaintiffs' first claim for relief seeks an injunction under section 16 of the Clayton Act, 15 U.S.C. § 26, to enjoin Defendants' alleged violations of section 1 of the Sherman Act, 15 U.S.C. § 1. Unlike the corporate plaintiff in Samsung, Plaintiffs do not seek treble damages under section 4 of the Clayton Act, 15 U.S.C. § 15, as a remedy for Defendants' unlawful acts. Plaintiffs' second claim for relief alleges violations of California's antitrust law, the Cartwright Act, Cal. Bus. & Prof.Code § 16720. Plaintiffs seek treble damages in connection with this claim. Plaintiffs' third, fourth, and fifth claims for relief are for: (1) unlawful conduct in violation of California's Unfair Competition Law (“UCL”), Cal. Bus. & Prof.Code § 17200; (2) violations of the antitrust laws of various states, e.g. Arizona, the District of Columbia, and Kansas; ³ and (3) unjust enrichment and disgorgement of profits.

As in Samsung, the district court dismissed Plaintiffs' claims on the ground that they were time-barred. The district court held that the four-year statute of limitations set forth in section 4B of the Clayton Act, 15 U.S.C. § 15b, applied to Plaintiffs' claims for injunctive relief and reasoned that Defendants' allegedly unlawful conduct began well before the start of the four-year limitations period. Oliver v. 3D–3C, LLC, No. C 11–01260 JSW, 2012 WL 1835740, at *3 (N.D.Cal. May 21, 2012). The district court dismissed Plaintiffs' state law claims on the same ground. Id. Given the narrow ground on which the district court dismissed Plaintiffs' lawsuit, we need only determine whether the court properly dismissed Plaintiffs' federal antitrust claim as time barred.

II

Although a claim for injunctive relief under section 16 is “analogous” to a claim for damages under section 4, section 16 provides a distinct cause of action. Int'l Tel. & Tel. Corp. v. Gen. Tel. & Electronics Corp., 518 F.2d 913, 926 (9th Cir.1975)disapproved of on other grounds by California v. Am. Stores Co., 495 U.S. 271, 110 S.Ct. 1853, 109 L.Ed.2d 240 (1990) (“Clayton Act [§ ] 16 provides a private equitable remedy, analogous to the private legal remedy of Clayton Act [§ ] 4, as a method of enforcement of the prohibitions of Clayton Act [§ ] 7.”). Unlike damages claims under section 4, which are subject to section 4B's four-year statute of limitations, there is no statute of limitations for injunctive relief claims under section 16. Claims for injunctive relief, however, are subject to the equitable defense of laches.⁴Id. at 928. And, “in computing the laches period,” section 4B's four-year statute of limitation is used as a “guideline.” Id.; see also Samsung, 747 F.3d at 1205, 2014 WL 1328318 at *4. Therefore, in applying laches, we look to the same legal rules that animate the four-year statute of limitations under section 4 B. Ordinarily, “[a] cause of action in antitrust accrues each time a plaintiff is injured by an act of the defendant and the statute of limitations runs from the commission of the act.” Pace Indus., Inc. v. Three Phoenix Co., 813 F.2d 234, 237 (9th Cir.1987) (citing Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971)). As we discussed in our Samsung opinion, however, there are recognized exceptions to this general rule.

First, “[i]n the context of a continuing conspiracy to violate the antitrust laws, ... each time a plaintiff is injured by an act of the defendant[ ] a cause of action accrues to him to recover the damages caused by that act.” Zenith, 401 U.S. at 338, 91 S.Ct. 795. “[A]s to those damages, the statute of limitations runs from the commission of the act.” Id. In order to restart the statute of limitations, there must be a new overt act that: (1) is “new and independent ... [and] not merely a reaffirmation of a previous act,” and (2) “inflict[s] new and accumulating injury on the plaintiff.” Pace, 813 F.2d at 238.

Second, the limitations period may start to run after the defendant's initial violation of the antitrust law, if it is “uncertain” or “speculative” whether the defendants' antitrust violation has...