Motorola, Inc. v. AU Optronics Corporation et al

Filing 213

ORDER DENYING SAMSUNG SDI'S MOTION TO DISMISS MOTOROLA'S SEVENTEENTH CLAIM FOR RELIEF (SI, COURT STAFF) (Filed on 11/14/2011)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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IN RE: TFT-LCD (FLAT PANEL) ANTITRUST
LITIGATION
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No. M 07-1827 SI
MDL No. 1827

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This Order Relates To:

No. C 09-5840 SI

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MOTOROLA MOBILITY, INC.,

ORDER DENYING SAMSUNG SDI’S
MOTION TO DISMISS MOTOROLA’S
SEVENTEENTH CLAIM FOR RELIEF

United States District Court
For the Northern District of California

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Plaintiff,
v.

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AU OPTRONICS CORPORATION, et al.,

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Defendants.

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Now before the Court is the motion by Samsung SDI Co., Ltd. and Samsung SDI America, Inc.

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(collectively, “SDI”) to dismiss Motorola Mobility, Inc.’s seventeenth claim for relief. Pursuant to Civil

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Local Rule 7-1(b), the Court finds this matter suitable for disposition without oral argument and

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therefore VACATES the hearing currently scheduled for November 18, 2011. Having considered the

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parties’ papers, and for good cause appearing, the Court hereby DENIES SDI’s motion.

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Motorola’s seventeenth claim for relief is a breach of contract claim against SDI. According to

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the Third Amended Complaint (“TAC”), SDI “entered into multiple contracts for the sale of LCD Panels

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and/or LCD Products” to Motorola. TAC at ¶321. SDI allegedly breached a term in these contracts that

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provided that SDI would “compl[y] with all applicable laws.” Id. at ¶324.

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The sole basis for SDI’s motion is its assertion that Motorola’s breach of contract claim is

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untimely. The parties agree that Motorola’s breach of contract claim is governed by the Illinois

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Commercial Code, which establishes a four-year limitations period for breach of contract claims. See

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810 I.L.C.S. § 5/2-725(1) (“An action for breach of any contract for sale must be commenced within 4

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years after the cause of action has accrued.”). SDI claims that Motorola’s claims accrued on the date

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it delivered its LCD panels to Motorola. See 810 I.L.C.S. § 5/2-725(2) (“A cause of action accrues when

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the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach. A breach of

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warranty occurs when tender of delivery is made . . . .”). By any account, this delivery occurred more

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than four years before the date Motorola first brought its claims against SDI. Cf. TAC at ¶161 (alleging

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that Motorola first learned of the government’s investigation into the conspiracy in November 2006).

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Motorola argues that its claims were tolled by SDI’s fraudulent concealment. See 810 I.L.C.S. § 5/2-

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725(4) (“This Section does not alter the law on tolling of the statute of limitations nor does it apply to

United States District Court
For the Northern District of California

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causes of action which have accrued before this Act becomes effective.”).

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Courts in Illinois have split on the question whether fraudulent concealment applies to breach

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of contract claims. In Best Bearings, Inc. v. Challenger Parts Rebuilders, Inc., 294 N.E.2d 118 (Ill.

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App. 1973), the Appellate Court of Illinois held that fraudulent concealment does not apply to breach

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of contract claims. Id. at 406 (“We agree that the plaintiff’s cause of action brought for breach of the

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sales contract under the Commercial Code was barred by the time provisions contained in Section

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2-725.”). Some federal courts have followed this result. See Karpowicz v. GMC, 1997 U.S. Dist.

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LEXIS 7478, at *15 (N.D. Ill., May 22, 1997) (“Even a claim of fraudulent concealment does not toll

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the statute of limitations, because the breach of warranty is deemed to occur at the time of delivery,

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regardless of the purchaser’s knowledge.”); Dohra v. Alcon (Puerto Rico), Inc., 1994 U.S. Dist. LEXIS

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10173, at *4 (N.D. Ill., July 25, 1994) (“Because Illinois courts have consistently declined to apply the

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discovery rule to the warranty statute of limitations, we hold that fraudulent concealment does not

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provide a tolling exception to that limitations period.”).

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Other courts, however, have recognized the doctrine of fraudulent concealment in the breach of

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contract context. See Clark v. Robert W. Baird Co., Inc., 142 F. Supp. 2d 1065, 1075-76 (N.D. Ill. 2001)

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(“Although the ‘discovery rule’ is not typically applied to straight breach of contract claims in Illinois,

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. . . Mr. Clark may avoid the application of the statute of limitations if he can show that the defendants

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fraudulently concealed his cause of action from him.” (citation omitted)); Continental Grain Co. v.

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Pullman Standard, Inc., 690 F.Supp. 628, 634 (N.D. Ill. 1988).
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Given the Illinois Commercial Code’s explicit statement that it does not “alter the law on tolling

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of the statute of limitations,” the Court agrees that fraudulent concealment may serve to toll Motorola’s

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breach of contract claim. Further, the Court finds that Motorola’s TAC adequately alleges that

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defendants fraudulently concealed the price-fixing conspiracy. Motorola therefore had five years from

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November 2006 to file suit. See 735 I.L.C.S. 5/13-215 (“If a person liable to an action fraudulently

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conceals the cause of such action from the knowledge of the person entitled thereto, the action may be

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commenced at any time within 5 years after the person entitled to bring the same discovers that he or

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she has such cause of action, and not afterwards.”). Accepting Motorola’s allegations as true, its claims

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against SDI are timely.

United States District Court
For the Northern District of California

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Accordingly, the Court hereby DENIES SDI’s motion to dismiss Motorola’s seventeenth cause
of action. Docket No. 167 in 09-5840; Docket No. 3528 in 07-1827.

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IT IS SO ORDERED.
Dated: November 14, 2011
SUSAN ILLSTON
United States District Judge

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