Zenith Radio Corp. v. Matsushita Elec. Indus. Co.

• Decision Date: 23 April 1980
• Docket Number: 74-3247. MDL No. 189.,Civ. A. No. 74-2451
• Citation: 494 F. Supp. 1161
• Parties: ZENITH RADIO CORPORATION v. MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD. et al. NATIONAL UNION ELECTRIC CORPORATION v. MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD. et al. In re JAPANESE ELECTRONIC PRODUCTS ANTITRUST LITIGATION.
• Court: U.S. District Court — Eastern District of Pennsylvania

494 F. Supp. 1161

ZENITH RADIO CORPORATION v. MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD. et al.

NATIONAL UNION ELECTRIC CORPORATION v. MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD. et al.

In re JAPANESE ELECTRONIC PRODUCTS ANTITRUST LITIGATION.

Civ. A. Nos. 74-2451, 74-3247. MDL No. 189.

United States District Court, E. D. Pennsylvania.

April 14, 1980.

As Amended April 23, 1980.

COPYRIGHT MATERIAL OMITTED

Blank, Rome, Comisky & McCauley by Edwin P. Rome, William H. Roberts, John Hardin Young, Arnold I. Kalman, Kathleen H. Larkin, Norman E. Greenspan, Lawrence S. Bauman, Philadelphia, Pa., for Zenith Radio Corporation and National Union Electric Corporation, plaintiffs.

Morton P. Rome, Wyncote, Pa., for National Union Electric Corporation, plaintiff.

Philip J. Curtis, John Borst, Jr., Glenview, Ill., for Zenith Radio Corporation, plaintiff.

Mudge, Rose, Guthrie & Alexander by Donald J. Zoeller, John P. Hederman, Thomas P. Lynch, Howard C. Crystal, Robert A. Jaffe, Shelly B. O'Neill, Mark K. Neville, Jr., New York City, Drinker, Biddle & Reath by Patrick T. Ryan, Philadelphia, Pa., for Tokyo Shibaura Elec. Co., Ltd. and Toshiba America, Inc., defendants; defense coordinating counsel.

Duane, Morris & Heckscher by Henry T. Reath, Terry R. Broderick, Philadelphia, Pa., Crummy, Del Deo, Dolan & Purcell by John T. Dolan, Newark, N.J., Baker & McKenzie by Hoken S. Seki, Thomas E. Johnson, Chicago, Ill., for Mitsubishi Electric Corporation, moving defendant.

Reid & Priest by Charles F. Schirmeister, Robert J. Lynch, New York City, L. Peter Farkas, Washington, D.C., for Mitsubishi Corporation and Mitsubishi International Corporation, defendants.

Weil, Gotshal & Manges by Ira M. Millstein, A. Paul Victor, John F. Carney, Joel B. Harris, Kevin P. Hughes, Robert K. Hood, H. Adam Prussin, Jeffrey L. Kessler, Stuart Peim, Lenore Liberman, Gayle E. Hanlon, Alan Rothstein, Makoto Matsuo, New York City, Morgan, Lewis & Bockius by Raymond T. Cullen, Philadelphia, Pa., for Matsushita Elec. Indus. Co., Inc., Matsushita Elec. Corp. of America, Matsushita Electronics Corp., Matsushita Elec. Trading Co., and Quasar Electronics Corp., defendants.

Metzger, Shadyac & Schwarz by Carl W. Schwarz, Michael E. Friedlander, William H. Barrett, Stephen P. Murphy, William B.T. Mock, Jr.; Tanaka, Walders & Ritger by Lawrence R. Walders, B. Jenkins Middleton, Washington, D.C., Pepper, Hamilton, & Scheetz, Philadelphia, Pa., for Hitachi, Ltd., Hitachi Sales Corporation of America, and Hitachi Kaden Hanbai Kabushiki Kaisha, defendants.

Wender, Murase & White by Peter J. Gartland, Gene Yukio Matsuo, Peter A. Dankin, Lance Gotthoffer, New York City, for Sharp Corporation and Sharp Electronics Corporation, defendants.

Whitman & Ransom by Patrick H. Sullivan, Dugald C. Brown, Kevin R. Keating, Michael S. Press, New York City, Pepper, Hamilton & Scheetz by Charles J. Bloom, Philadelphia, Pa., for Sanyo Elec., Inc., Sanyo Elec. Co., Ltd., and Sanyo Elec. Trading Co., Ltd., defendants.

Arnstein, Gluck, Weitzenfeld & Minow by Louis A. Lehr, Jr., Stanley M. Lipnick, John L. Ropiequet, Chicago, Ill., for Sears, Roebuck & Co., defendant.

OPINION

(INTRODUCTION TO SUMMARY JUDGMENT MOTIONS; SUBJECT MATTER JURISDICTION)

I. PRELIMINARY STATEMENT

This is the first of a series of opinions which will address, piecemeal, the plethora of issues presented by the voluminous summary judgment motions before us in this massive litigation. This opinion will discuss the contention raised in the motion of Mitsubishi Electric Corporation (MELCO) that an American court lacks subject matter jurisdiction over an antitrust claim against a foreign defendant such as MELCO whose actions took place in a foreign land (Japan). The motion will require us to examine the extraterritorial reach of the United States antitrust laws and to define both a methodology and appropriate standards for determining when exercise of that extraterritorial jurisdiction is appropriate. Because this opinion is the first in a series, we will also use it to set forth background material which we can incorporate by reference in subsequent opinions addressing the summary judgment motions.

The plaintiffs in this action are Zenith Radio Corporation ("Zenith") and National Union Electric Corporation ("NUE"). NUE, the corporate successor to Emerson Radio Co. and one of the pioneers in the radio and TV industry, ceased all production of television receivers in February of 1970.¹ That December, it filed the first of these suits,² alleging that the Japanese defendants and others had conspired to take over the American consumer electronic products industry and thereby to drive NUE out of business. In 1974, Zenith filed an action making similar allegations.³ The NUE action was then transferred to this district for coordinated or consolidated pretrial proceedings with the Zenith action;⁴ the transfer was later made unconditional and the actions were consolidated for trial.⁵

The ten principal defendants are Japanese manufacturers of consumer electronic products (Matsushita Electric Industrial Co., Ltd.; Toshiba Corporation; Hitachi, Ltd.; Sharp Corporation; Sanyo Electric Co., Ltd.; Sony Corporation; and Mitsubishi Electric Corporation ("MELCO")); a Japanese trading company (Mitsubishi Corporation); and two American companies (Sears, Roebuck & Co. and Motorola, Inc.). Fourteen other defendants are subsidiaries of the principal Japanese defendants. Of the twenty-four defendants, fifteen are defendants in both suits, seven in the Zenith action only, and two in the NUE action only.⁶ In addition to the twenty-four named defendants, the plaintiffs have identified scores of alleged coconspirators whose business operations traverse the globe, ranging from small Japanese companies to such world industrial giants as N.V. Phillips Gloeilampenfabrieken and General Electric.

In capsule form, plaintiffs' complaints allege that the Japanese defendants and their coconspirators are and have been participants in a conspiracy which, by artificially lowering export prices, has for more than twenty years sought the methodical destruction of the United States domestic consumer electronic products industry.⁷ The defendants are accused of carrying out the aims of this conspiracy by flooding the United States market with imported goods at prices so attractive to consumers that domestic producers suffered serious losses, and were either unable to compete or able to do so only by moving some or all of their own production facilities to Mexico and the Far East.⁸

The particular offenses charged in the complaints span the entire range of the antitrust laws. The overall conspiracy is alleged to violate §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, and § 73 of the Wilson Tariff Act, 15 U.S.C. § 8. Plaintiffs also allege actual and attempted monopolization under § 2 of the Sherman Act. Additionally, they allege that the Japanese defendants have violated § 801 of the Revenue Act of 1916, better known as the 1916 Antidumping Act, 15 U.S.C. § 72, by "commonly and systematically," with predatory intent, selling their products in this country for substantially less than their actual market value or wholesale price in Japan. The defendants are also charged with violating the Robinson-Patman Act, 15 U.S.C. § 13(a), by discriminating in price among American purchasers.⁹ Finally, Zenith charges that Sears, Motorola, and the Matsushita and Sanyo defendants violated § 7 of the Clayton Act, 15 U.S.C. § 18, in connection with the Japanese companies' acquisitions of interests in domestic consumer electronic products manufacturers.¹⁰ The plaintiffs' papers seek to portray a unitary worldwide conspiracy said to have lasted over a period of some thirty years and to have involved approximately one hundred manufacturers, exporters, and importers of consumer electronic products of various national origins.

The defendants maintain that, notwithstanding their voluminous submissions, plaintiffs have failed to elucidate their claims with any degree of precision. They also deny both the legal and factual validity of the plaintiffs' claims. Additionally, certain of the defendants have asserted counterclaims against Zenith, attacking Zenith on two fronts. First, they allege that Zenith, acting alone and in combination and conspiracy with others, engaged in territorial allocations, price discrimination, and horizontal and vertical price fixing arrangements, and effected certain "key dealer preferences" in violation of the Robinson-Patman Act and §§ 1 and 2 of the Sherman Act. Second, they accuse Zenith and its coconspirators of seeking to interfere with its competitors, including the counterclaimants, "by every means available, including the submission of complaints, petitions, testimony and other information to various federal governmental agencies and officials, federal courts, and the United States Congress which were based upon sham, false and misleading allegations and information, without regard to the truth or merits of the claims made." The counterclaiming defendants thus invoke the "sham litigation" theory of antitrust liability recognized in Otter Tail Power Co. v. United States, 410 U.S. 366, 93 S.Ct. 1022, 35 L.Ed.2d 359 (1973).¹¹

Pending before us currently are motions by all defendants seeking summary judgment against both Zenith and NUE. Some are joint motions; others are motions by individual defendants, some of which are joined by other defendants; some motions are addressed to discrete legal issues; others are omnibus motions addressed to several issues. These motions, which number several dozen, raise a wide variety of issues, both factual and legal, and may be catalogued as follows: (1) an attack upon subject matter jurisdiction (the motion addressed herein); (2) a motion asserting that NUE lacks standing to sue under the doctrine of Bangor Punta Operations, Inc. v. Bangor & Aroostook R.R., 417 U.S. 703, 94 S.Ct. 2578, 41 L.Ed.2d 418...