Dell Inc. et al v. Sharp Corporation et al

Filing 87


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1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 IN RE: TFT-LCD (FLAT PANEL) ANTITRUST LITIGATION / No. M 07-1827 SI MDL No. 1827 10 This Order Relates To: No. C 10-1064 SI 11 DELL, INC., et al., ORDER GRANTING DELL’S MOTION FOR LEAVE TO AMEND COMPLAINT United States District Court For the Northern District of California 9 12 13 14 15 Plaintiffs, v. SHARP CORPORATION, et al., Defendants. / 16 17 Plaintiffs Dell, Inc. and Dell Products L.P. (collectively, “Dell”) have filed a motion for leave 18 to file a second amended complaint. Pursuant to Civil Local Rule 7-1(b), the Court finds this matter 19 suitable for disposition without oral argument and therefore VACATES the hearing currently scheduled 20 for August 5, 2011. Having considered the papers of the parties, and for good cause appearing, the 21 Court hereby GRANTS Dell’s motion. 22 23 BACKGROUND 24 Dell filed this action on March 12, 2010, seeking to recover for an alleged price-fixing 25 conspiracy in the market for thin-film transistor liquid-crystal display (“TFT-LCD”) panels. Dell’s first 26 amended complaint named as defendants entities from five of the corporate families at the heart of these 27 MDL proceedings: Sharp, Hitachi, Toshiba, Epson, and Hannstar. Dell did not bring suit against two 28 additional corporate families: AU Optronics Corporation and AU Optronics Corporation America 1 (collectively, “AUO”); and Chimei Innolux Corporation, Chi Mei Optoelectronics Corporation, Chi Mei 2 Optoelectronics USA, Inc., CMO Japan Co., Ltd., Nexgen Mediatech, Inc., and Nexgen Mediatech 3 USA, Inc. (collectively, “CMO”). 4 According to Dell, it did not initially sue AUO or CMO “because it believed there was a 5 meaningful opportunity to engage in settlement discussions with some of those Defendants . . . .” 6 Declaration of Debra D. Bernstein in Support of Dell Inc.’s and Dell Products L.P.’s Motion for Leave 7 to Amend Complaint (“Bernstein Decl.”), ¶2. Instead, Dell entered into tolling agreements with both 8 entities while it attempted to settle its potential claims against them. Id. at ¶3. 9 United States District Court For the Northern District of California 10 Dell has been unable to reach a settlement with either AUO or CMO. Id. at ¶¶4-5. It therefore seeks to amend its complaint to add AUO and CMO as defendants. 11 12 LEGAL STANDARD 13 Once a party has amended its complaint, further amendments may only be made with leave of 14 the court. See Fed. R. Civ. P. 15(a)(2). Rule 15(a)(2) provides that “[t]he court should freely give leave 15 when justice so requires,” which represents a public policy strongly in favor of amendments. See 16 Chodos v. West Publishing Co., 292 F.3d 992, 1003 (9th Cir. 2002) (“It is generally our policy to permit 17 amendment with ‘extreme liberality’ . . . .”). “When considering a motion for leave to amend, a district 18 court must consider whether the proposed amendment results from undue delay, is made in bad faith, 19 will cause prejudice to the opposing party, or is a dilatory tactic.” Id. A court may also deny leave to 20 amend “if amendment of the complaint would be futile.” Gordon v. City of Oakland, 627 F.3d 1092, 21 1094 (9th Cir. 2010). 22 23 DISCUSSION 24 The sole objection AUO raises against Dell’s motion is its assertion that Dell’s proposed 25 amendment would be futile because Dell’s claims are subject to arbitration.1 AUO has produced a Long 26 Term Agreement (“LTA”) entered into by Dell and AUO in 2004. The LTA “applies to all purchases 27 28 1 CMO does not object to Dell’s proposed second amended complaint. 2 of TFT-LCD products and components of TFT-LCD . . . by Dell Products L.P. and Dell Inc.’s other 2 subsidiaries and affiliates . . . directly and indirectly from AU Optronics Corp. and its subsidiaries and 3 affiliates.” Declaration of Patrick J. Richard in Support of AU Optronics Corporation and AU Optronics 4 Corporation America’s Opposition to Dell Inc. and Dell Products L.P.’s Motion for Leave to Amend 5 Complaint (“Richard Decl.”), Exh. A at 1. The LTA also provides for arbitration of “all disputes arising 6 out of, relating to, or in connection with this LTA . . . .” Richard Decl., Exh. A. at 4 ¶5.6. AUO argues 7 that this arbitration provision renders Dell’s proposed amendment futile because all of its claims would 8 be subject to dismissal. See Sparling v. Hoffman Const. Co., Inc., 864 F.2d 635, 638 (9th Cir. 1988) 9 (holding that district court did not err in dismissing plaintiffs’ claims that were subject to arbitration); 10 United States District Court For the Northern District of California 1 Open Road Ventures, LLC v. Daniel, 2009 WL 3809812, at *4 (N.D. Cal., Nov. 13, 2009) (“When all 11 of the issues contained in the pending litigation are to be submitted to arbitration, the action may be 12 dismissed rather than stayed.”). 13 Given the broad language of the LTA’s arbitration clause, the Court agrees with AUO that some 14 of Dell’s claims are subject to arbitration. See Simula, Inc. v. Autoliv, Inc., 175 F.3d 716 (9th Cir. 1999). 15 Dell’s proposed second amended complaint alleges that it “held in-person negotiations with Defendants 16 and their co-conspirators on the price and volume of TFT-LCD Products it purchased.” See Proposed 17 Second Amended Complaint at ¶34. Dell also alleges that defendants, including AUO, “combined and 18 conspired to sell TFT-LCD Products to Dell at artificially inflated prices, and, in fact, did sell Dell those 19 products at artificially inflated prices.” Id. at ¶2. As this Court recently held in a related case, claims 20 of this nature relate to “purchases of TFT-LCD products and components of TFT-LCD.” Richard Decl., 21 Exh. A at 1, 4 ¶5.6; see Order Granting AU Optronics Corporation’s Motion to Compel Arbitration (July 22 6, 2011), Master Docket No. 3034. 23 The Court, however, rejects AUO’s argument that the LTA’s arbitration clause bars the entirety 24 of Dell’s claims. The LTA provides that it is only effective between May 1, 2004, and January 31, 25 2007. Richard Decl., Exh. A at 1, 5 ¶5.7. Thus, Dell’s claims are not subject to arbitration to the extent 26 27 28 3 1 that they are based upon purchases that occurred before May 1, 2004.2 Dell urges the Court to defer determining the arbitrability of its claims, arguing any such 3 determination would be premature. It asserts that the Court should not consider the arbitrability of any 4 of its claims until the complaint has been amended and AUO has been added as a party. Some courts 5 have been reluctant to address arbitrability in the context of a motion to amend. See, e.g., Mylan 6 Pharmaceuticals, Inc. v. Kremers Urban Development, 2003 WL 22711586, at *4 (D. Del., Nov. 14, 7 2003) (“The court furthermore finds it inappropriate to determine the arbitrability of Mylan’s claims on 8 a motion to amend.”). In this case, however, both parties have been involved in this MDL for years. 9 It is unclear what benefit would be achieved by putting off the question. Dell, for example, does not 10 United States District Court For the Northern District of California 2 argue that it will be better prepared to address arbitrability once its complaint has been amended. 11 Accordingly, the Court sees no reason to delay, which would do nothing more than burden the parties 12 and the Court with another motion. 13 On the merits, Dell argues that its claims fall outside the scope of the arbitration clause in the 14 LTA. It argues that the LTA was a limited agreement that did nothing but establish rebates on Dell’s 15 purchases of LCD panels from AUO. It has provided the Court with a Master Purchase Agreement 16 (“MPA”) executed by Dell and AUO that purports to govern purchases of LCD panels. Bernstein Decl., 17 Exh. B. The MPA does not contain an arbitration clause. See id. 18 The Court cannot agree with Dell’s interpretation of the LTA. The plain language of the 19 agreement does not limit its scope to rebates; the LTA states that it applies to “all purchases of TFT- 20 LCD products.” While the LTA includes a section about rebates, it also contains other provisions that 21 discuss, for example, sales volume and supplier prioritization. These terms are inconsistent with an 22 agreement that is limited to rebates. Further, while the MPA lacks an arbitration clause, nothing in the 23 MPA is inconsistent with the arbitration clause found in the LTA. Given that the two agreements can 24 be harmonized, the Court rejects Dell’s argument that the MPA’s provisions (or lack thereof) trump 25 those in the LTA. 26 27 28 2 The LTA also provides that it only applies to purchases of notebook and monitor panels and explicitly excludes “TV panels and ABVU panels.” Id. at 1 ¶1. The parties have not indicated whether this distinction impacts any of Dell’s claims. 4 1 Dell also claims that the LTA was superseded by later LTAs between Dell and AUO, neither of 2 which contains an arbitration clause. Dell has provided the Court with two LTAs bearing effective dates 3 of April 2, 2007, and May 2, 2009. Both LTAs contain the following language: “This LTA sets forth 4 the entire agreement and understanding of the parties relating to the subject matter contained herein, and 5 merges all prior discussions and agreements except any effective LTA entered into between the parties 6 for Products, both oral and written, between the parties.” Bernstein Decl., Exh. C at ¶3.5; Exh. D at 7 ¶3.5. These provisions, however, appear to be nothing more than integration clauses. They do not 8 purport to “supersede” the 2004 LTA, as Dell argues; rather, they explicitly remove such LTAs from 9 their scope. United States District Court For the Northern District of California 10 In light of the Court’s finding that some of Dell’s claims are subject to arbitration, AUO requests 11 that the Court stay Dell’s claims against it pending the outcome of arbitration. The Court declines to 12 do so. The bulk of Dell’s claims against AUO are not subject to arbitration, and, in light of the many 13 other defendants in this case it would make little sense to stay the claims against AUO. This is 14 especially true given that AUO is a defendant in many other proceedings in this MDL and must 15 therefore conduct its defense regardless of whether this matter is stayed. 16 17 CONCLUSION 18 For the foregoing reasons and for good cause shown, the Court GRANTS Dell’s motion to file 19 a second amended complaint. To the extent Dell’s claims are based upon purchases made under the 20 2004 LTA, Dell’s claims shall be STAYED pending arbitration. Docket No. 2950 in 07-1827; Docket 21 No. 67 in 10-1064. 22 23 IT IS SO ORDERED. 24 25 Dated: August 3, 2011 SUSAN ILLSTON United States District Judge 26 27 28 5

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