Optronic Techs., Inc. v. Ningbo Sunny Elec. Co., Case No. 5:16-cv-06370-EJD
| Decision Date | 20 September 2019 |
| Docket Number | Case No. 5:16-cv-06370-EJD |
| Citation | 414 F.Supp.3d 1256 |
| Parties | OPTRONIC TECHNOLOGIES, INC., Plaintiff, v. NINGBO SUNNY ELECTRONIC CO., LTD., et al., Defendants. |
| Court | U.S. District Court — Northern District of California |
Matthew Brooks Borden, Ronald James Fisher, Jonas Noah Hagey, BraunHagey & Borden LLP, Jeffrey Michael Theodore, San Francisco, CA, for Plaintiff.
David Raymond Garcia, Helen Cho Eckert, Leo David Caseria, Sheppard Mullin Richter & Hampton LLP, Los Angeles, CA, Dylan Ian Ballard, Joy O. Siu, Michael W. Scarborough, Nadezhda Nikonova, Sheppard, Mullin, Richter & Hampton LLC, San Francisco, CA, Thomas J. Dillickrath, Sheppard Mullin Richter and Hampton LLP, Washington, DC, for Defendants.
ORDER DENYING MOTION FOR SUMMARY JUDGMENT; GRANTING IN PART AND DENYING IN PART CROSS-MOTION FOR SUMMARY JUDGMENT
This case is about telescopes and antitrust law. Plaintiff Optronic Technologies, Inc. ("Orion") has brought claims under Sections 1 and 2 of the Sherman Act, Section 7 of the Clayton Act, California's Unfair Competition Law ("UCL"), and California's Cartwright Act against Defendants Ningbo Sunny Electronic Co., Ltd. ("Sunny"), Sunny Optics, Inc. and Meade Instruments, Inc. ("Meade") (collectively "Defendants"). The court has federal question jurisdiction over Orion's federal law claims pursuant to 28 U.S.C. §§ 1331 and 1337, and Orion's state law claims under the Court's supplemental jurisdiction provided by 28 U.S.C. § 1367. Orion moves for summary judgment on its claims under Section 1 of the Sherman Act, Section 7 of the Clayton Act, and the California laws. Defendants cross move for summary judgment on all of Defendants' claims. The court has considered the parties' papers1 and their oral argument. The court denies Orion's motion, and grants in part and denies in part Defendants' motion.2
The constellation of stars in this litigation is as follows: Orion is a brand and distributor of telescopes and other optical products. Orion does not manufacture its products, but largely imports them. Sunny is a Chinese telescope manufacturer. It has two subsidiaries: Meade and Sunny Optics, Inc. Sunny acquired Meade in 2013. Meade manufactures and distributes telescopes. Sunny's principal is Peter Ni. Prior to this case, Orion entered into a settlement agreement with several other entities in the telescope manufacturing and marketing universe. Three of the parties to the "Settlement Agreement" (Caseria Ex. 40) are Suzhou Synta Optical Technology Co. Ltd. ("Suzhou Synta"), Synta Technology Corp. ("Synta Tech"), and Celestron Acquisition LLC ("Celestron") (collectively, the "Synta Entities"). Celestron, a subsidiary of Suzhou Synta is, by far, the largest distributor of telescopes in the United States. Defendants contend that Suzhou Synta is a Chinese telescope manufacturer and that Synta Tech, another subsidiary, is an importer of Suzhou Synta's telescopes. The nature of the relationship between Suzhou Synta and Synta Tech is disputed by the parties. David Shen is the principal of the Synta Entities. Suzhou Synta and Sunny are the largest manufacturers of telescopes sold in the United States.
In early 2013, Meade became available for acquisition. Orion bid $4.5 million on Meade, but Meade announced that it had entered into a merger agreement with a third-party Jinghua Optics & Electronics ("JOC"). In the weeks following that announcement, Sunny made an unsolicited bid of $5.5 million, which Meade accepted. Sunny and Meade closed their deal in July 2013. In 2014, Orion attempted to acquire various assets, including valuable URLs, from Hayneedle, an online retailer (the "Hayneedle Assets"). The deal fell apart for disputed reasons.
Until 2016, Orion marketed and sold telescopes manufactured by Sunny and by Synta Suzhou. Orion purchased telescopes made by Sunny through an individual named Joyce Huang, who works for the Synta Entities. After the Synta Entities and Orion executed the Settlement Agreement, Orion sent a demand letter to Defendants. In response, Sunny ceased selling Orion its telescopes. Orion filed this litigation in November of that year.
Summary judgment is appropriate "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). A fact is "material" where it would affect the outcome of the case, and a dispute is "genuine" where a reasonable fact finder could decide for either party. O'Brien as Tr. of Raymond F. O'Brien Revocable Tr. v. XPO CNW, Inc. , 362 F. Supp. 3d 778, 782 (N.D. Cal. 2018). "In considering a motion for summary judgment, the court may not weigh the evidence or make credibility determinations." Id. (quotations and citation omitted). The court must draw all reasonable inferences in favor of the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A court may grant summary judgment on an entire claim or defense, or on a "part of each claim or defense." Fed. R. Civ. P. 56(a). "If the court does not grant all the relief requested by the motion, it may enter an order stating any material fact—including an item of damages or other relief—that is not genuinely in dispute and treating the fact as established in the case." Fed. R. Civ. P. 56(g).
Orion first argues that Sunny violated Section 1 of the Sherman Act by conspiring with the Synta Entities to acquire Meade. Defendants contend that Orion lacks both the Article III standing and the antitrust standing required for it to bring this claim. "For Article III purposes, an antitrust plaintiff establishes injury-in-fact when he has suffered an injury which bears a causal connection to the alleged antitrust violation." In re Online DVD-Rental Antitrust Litig. , 779 F.3d 914, 922 (9th Cir. 2015) (citation and quotations omitted). A private antitrust plaintiff must demonstrate an antitrust injury, which consists of (1) an "injury of the type the antitrust laws were intended to prevent that also (2) flows from that which makes defendants' acts unlawful." Id. (quotations omitted). Once a plaintiff has established standing, the elements of a claim under Section 1 are: (1) a contract, combination, or conspiracy (2) "that unreasonably restrained trade under either a per se rule of illegality or a rule of reason analysis; and (3) that the restraint affected interstate commerce." Solyndra Residual Tr. ex rel. Neilson v. Suntech Power Holdings Co. , 62 F. Supp. 3d 1027, 1039 (N.D. Cal. 2014) (citing Tanaka v. Univ. of S. Cal. , 252 F.3d 1059, 1062 (9th Cir. 2001) ).
Defendants argue that Orion has not suffered an injury-in-fact nor an antitrust injury because there was no possibility that Orion would have acquired Meade regardless of any alleged misconduct by Defendants. In February 2013, Orion sent Meade a letter indicating its interest in acquiring Meade for $4.5 million. Caseria Ex. 27 at 1. Meade chose to proceed with a different offer from JOC. Eckert Ex. 1; see Caseria Ex. 28 (). In April, JOC attempted to reduce its offer from $5 million to $4 million, prompting Meade to re-open the bidding process. Eckert Ex. 3 at 1. In early May, Meade reached out to Orion and explained that it was "no longer under an agreement to deal with another party [i.e. , JOC] exclusively." Eckert Ex. 4. Orion declined to provide another offer. Eckert Ex. 5 at 1. JOC subsequently offered $4.5 million, which Meade accepted, and the proposed merger was announced on May 17, 2013. Caseria Ex. 28 at 1. In June, Sunny made an unsolicited bid of $5.5 million. FAC Ex. 1 at B-2. Meade then terminated the proposed merger with JOC and accepted Sunny's offer on July 16, 2013. Id.
This timeline shows that Orion would not have acquired Meade in the absence of Defendants' alleged conduct; JOC would have. JOC and Meade had announced their merger—for the amount that Orion had already offered—when Defendants swooped in. Orion points to the testimony of its CEO, Peter Moreo, that Meade had contacted Orion to say that "JOC attempted to retrade or lower the price" and to ask if Orion would like to rebid. Hagey Ex. 10 at 252:22-253:11. However, this testimony does not create a factual dispute. Peter Moreo admits that he does not remember when this outreach occurred. Id. at 252:15-16 (); 252:24 ("I don't remember one hundred percent."); see City of Vernon v. S. California Edison Co. , 955 F.2d 1361, 1370 (9th Cir. 1992) (). And his testimony is entirely consistent with the timeline supported by Defendants' evidence. JOC did indeed attempt to lower its price, but that was before JOC and Meade ultimately agreed to and announced their merger. The timeline of Meade's negotiations indicates that Orion was not in a position to acquire Meade, regardless of Defendants' alleged misconduct.
Orion makes another argument that absent the alleged unlawful conduct, it would have had an additional $11.4 to $30.6 million to invest in purchasing Meade. But those figures arise from damages estimated by its damages expert, Dr. Zona, and are based on the period from November 2013 to May 2018. Zona Rep. ¶ 105; id. ¶¶ 103-118, 132. Dr. Zona's report does not indicate that Orion could have had more money to spend on Meade in the first half of 2013.
The court finds that there is no genuine dispute that Defendants did not cause Orion's failure to acquire Meade. See Fed. R. Civ. P. 56(g) ; see...
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