Costco Wholesale Corp. v. Au Optronics Corp. et al

Filing 279

ORDER GRANTING DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT RE COSTCO LOST SALES CLAIMS 6080 in case 3:07-md-01827-SI; 171 in case 3:11-cv-00058-SI (Illston, Susan) (Filed on 9/22/2012)

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1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 IN RE: TFT-LCD (FLAT PANEL) ANTITRUST LITIGATION 8 9 United States District Court For the Northern District of California 10 / This Order Relates to: No. C 11-0058 SI COSTCO WHOLESALE CORPORATION, ORDER GRANTING DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT RE COSTCO “LOST SALES” CLAIMS 11 12 No. M 07-1827 SI MDL. No. 1827 Plaintiff, v. 13 AU OPTRONICS CORPORATION, et al., 14 Defendants. / 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Currently before the Court is defendants’ motion for partial summary judgment as to Costco Wholesale Corporation’s lost-sales claims. Pursuant to Civil Local Rule 7-1(b), the Court found this matter suitable for disposition without oral argument. Having considered the parties’ papers, and for good cause appearing, the Court hereby GRANTS defendants’ motion. Costco asserts two types of damages claims resulting from defendants’ alleged TFT-LCD pricefixing conspiracy: (1) damages from overcharges paid by Costco on certain LCD products purchased by Costco from 1999 through 2006, and (2) damages from “lost sales,” that is, sales of LCD products Costco did not make but would have made if the price of the LCD products it purchased had been lower. See Motion at 1. Defendants seek summary adjudication on the latter category of damages. They argue that Costco has adduced no evidence that would allow it to meet its burden of proving the amount of its “lost sales” damages. In the Ninth Circuit, “[p]laintiffs in an antitrust suit have the burden of proving damages.” 1 Knutson v. Daily Review, Inc., 468 F. Supp. 226, 229 (N.D. Cal. 1979). Two separate proofs are 2 required: “the Fact of damage and the Amount of damage.” Id. (citing Story Parchment Co. v. Paterson 3 Parchment Co., 282 U.S. 555, 562 (1931); Flitkote Co. v. Lysfjord, 246 F.2d 368, 392 (9th Cir. 1957); 4 Newberry v. Washington Post Co., 438 F. Supp. 470, 483 (D.D.C. 1977)). To prove the fact of damage, 5 a plaintiff “must establish with reasonable probability the existence of a causal connection between 6 defendants’ violation of the antitrust law and plaintiffs’ revenue-impairing injury.” Id. (citing Pac. 7 Coast Agr. Export Ass’n v. Sunkist Growers, Inc., 526 F.2d 1196, 1205-1206 (9th Cir. 1975); Flitkote, 8 246 F.2d at 392). In order to prove the amount of damage, “plaintiffs must show the extent of the 9 financial impact of defendants’ antitrust violation.” Id. “[T]his can be accomplished through proof of United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 lost profits.” Id. In Knutson, the court set forth the standard for proving lost-profits damages: In calculating damages for antitrust violations, the trier of fact can rely upon probable and inferential as well as direct and positive proof. It is permitted to make a “just and reasonable estimate of the damage (suffered by plaintiffs) based on relevant data” presented, and these findings will be sustained even if the result is only approximate. The essential requirement is only that plaintiffs develop a reasonable theory for calculating the amount of damages and that they introduce the data necessary to make this calculation. However, “even where the defendant by his own wrong has prevented a more precise computation, the (trier of fact) may not render a verdict based on speculation or guesswork.” The burden may be relaxed, but it is never eliminated. Id. at 229-230 (internal citations omitted). 19 Costco contends that it will rely on testimony from its damages expert and its long-time 20 employees to prove its “lost sales” claims at trial. Costco claims that it will prove “some causal 21 connection” between defendants’ alleged price-fixing conspiracy and “some loss of anticipated revenue” 22 through the testimony of Costco employees “with decades of experience in assessing LCD product prices 23 and sales volumes at Costco.” See Opp’n at 2 (citing deposition testimony of Costco employees). Once 24 it has made such a showing, Costco maintains that “its burden of proof as to ‘the amount of damage’ is 25 significantly lower.” Id. at 3 (citing Flintkote, 246 F.2d at 392). To prove its “lost sales” damages 26 amount, Costco indicates that it will use its damages expert, Dr. Bernheim, to confirm “that Defendants’ 27 conspiracy raised the prices to Costco,” and then it “will rely on its management witnesses to estimate 28 the impact these higher prices had on sales.” Id. at 7. Costco emphasizes that these “estimate[s] [will 2 1 not be] based on speculation or guesswork, but on the relative simplicity of the Costco business model 2 and long-observed relationships between prices and volumes.” Id. at 8. The Court agrees with defendants that Costco cannot meet its burden of proving the amount of 4 its “lost sales” damages. As defendants point out, Costco has presented “no expert methodology, 5 calculation, or other evidence of any lost sales damages.” Motion at 3. While it is true that Costco need 6 only “establish with reasonable probability the existence of some causal connection between defendants’ 7 wrongful act and some loss of anticipated revenue,” it must also provide “relevant data” from which an 8 estimate of the amount lost-sales damages can be based. Flintkote, 246 F.2d at 230. Defendants argue, 9 and the Court agrees, that Costco has not “introduce[d] the data necessary to make this calculation.” Id. 10 United States District Court For the Northern District of California 3 None of Costco’s witnesses “with decades of experience in assessing LCD product prices and sales 11 volumes at Costco” is a damages expert. Nor are they suited to provide competent, non-speculative lay 12 testimony on the esoteric subject of Costco’s alleged “lost sales” damages in this relatively new product 13 industry. See Fed. R. Evid. 701(c) (“If a witness is not testifying as an expert, testimony in the form of 14 an opinion is limited to one that is . . . not based on scientific, technical, or other specialized knowledge 15 within the scope of Rule 702.”). And even if they could, Costco has provided no evidentiary or 16 experimental basis to estimate either the volume of Costco’s additional LCD Product sales in a “but for” 17 world, or the profit margin on such sales. Costco’s burden of proving the amount of its lost-sales 18 damages may “be relaxed, but it is never eliminated.” See Flintkote, 246 F.2d at 230. 19 20 Accordingly, the Court GRANTS defendants’ motion for summary judgment on Costco’s lostsales claims. Master Docket No. 6080; Docket No. 171 in C 11-0058 SI. 21 22 23 IT IS SO ORDERED. Dated: September 22, 2012 24 SUSAN ILLSTON United States District Judge 25 26 27 28 3

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