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

Filing 82

ORDER GRANTING DEFENDANTS' JOINT MOTION TO DISMISS IN PART AMENDED COMPLAINT (Illston, Susan) (Filed on 11/28/2011)

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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 11-0058 SI

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COSTCO WHOLESALE CORPORATION,

ORDER GRANTING DEFENDANTS’
JOINT MOTION TO DISMISS IN PART
AMENDED COMPLAINT

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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Currently before the Court is defendants’ second motion to dismiss in part the complaint of

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plaintiff Costco Wholesale Corporation (“Costco”). In its order on defendants’ original motion to

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dismiss, this Court held that Washington law applied to Costco’s suit. See Order Granting in Part

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Defendants’ Joint Motion to Dismiss Complaint, Master Docket No. 3396 (August 29, 2011) (“Costco

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Order”). In response, Costco filed an amended complaint, adding new allegations to support its Illinois-

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and California-law causes of action. Defendants again seek dismissal of these claims. 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 December 2, 2011. Having considered the

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parties’ papers, and for good cause appearing, the Court hereby GRANTS defendants’ motion.1

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As set forth in Costco’s amended complaint, Costco is a Washington corporation headquartered

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The Court GRANTS defendants’ unopposed request for judicial notice and DENIES
defendants’ motion to strike as moot.

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in Washington. Its purchasing process is largely controlled by its headquarters, which selects the

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products Costco stores carry. Am. Compl. at ¶7 (“[T]he basic choice of vendors was made from the

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company’s headquarters in Washington.”); see also Compl. at ¶6 (“Costco’s negotiations for the

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purchase of LCD Products . . . were controlled from the company’s headquarters in Washington.”).

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Regional offices decide on the amount of a given product their stores need. Am. Compl. at ¶7

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(“Decisions among approved vendors and as to volumes to purchase were made in, and Costco purchase

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orders for LCD Products were created in and issued from, regional offices located in multiple states .

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. . .”). The final invoices, however, are billed to and paid from Costco’s headquarters in Washington.

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Id.

United States District Court
For the Northern District of California

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Consistent with its longstanding view that the most significant transaction in a price-fixing case

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“is the plaintiff’s purchase of an allegedly price-fixed good,” Order Granting Defendants’ Joint Motion

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to Dismiss, Master Docket No. 1822, at 11 (June 28, 2010) (“Motorola Order), this Court held that

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Costco’s purchasing process warranted application of Washington law. Costco Order at 5-7. The Court

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found that Costco’s injury originated in Washington when Costco “negotiat[ed] for the purchase of LCD

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Products,” and that Costco was injured in Washington when it “overpa[id] for LCD products.” Id. at

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6. The Court found these contacts more significant than the contacts Costco attributed to California,

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which primarily consisted of actions defendants took in furtherance of the conspiracy through their

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California-based subsidiaries.

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Costco now asserts that “California is at the center of this case,” and argues that California law

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should apply to all of its claims. It provides three reasons for this assertion. First, it argues that “Costco

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purchased and sold more . . . LCD Products in California than in any other state during the Relevant

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Period.” Am. Compl. at ¶7. According to the amended complaint, “[a]bout 40% of all Costco purchases

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were ordered from and received in California.” Id. Second, Costco argues that it has a unique

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relationship with California due to its 1993 merger with Price Club, a company based in San Diego.

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Id. at ¶6. According to the amended complaint, “the two companies were not fully integrated for some

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years, and the company had two principal executive offices, in San Diego, California, and Kirkland,

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Washington.” Id. Costco alleges that “[m]any headquarters functions continued in California for years

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after the merger,” and claims that the two companies were not fully integrated until after 1999. Id.
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Third, Costco argues that eight defendants and “many of the non-Defendant vendors of LCD Products

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most relevant to Costco’s indirect purchaser claim have their United States headquarters in California.”

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Motion at 4.

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Costco’s new allegations have not changed this Court’s view that Washington bears the most

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significant relationship to this case. Although sales of LCD products in California may constitute a

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significant portion of Costco’s business, those products were selected in Washington, the negotiation

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over the terms of purchase took place in Washington, the invoices were sent to Washington, and

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payment issued from Costco’s Washington headquarters. In the Court’s view, these events are all more

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significant to Costco’s claims than the issuance of a purchase order.

United States District Court
For the Northern District of California

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Costco’s merger with Price Club also does not influence this Court’s opinion. Even accepting

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Costco’s allegation that “[m]any headquarters functions continued in California for years after the

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merger,” Costco has not alleged that these functions related to the purchasing process. In fact, it has

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alleged quite the opposite; decisions relating to Costco’s purchase of LCD Products were made from

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its headquarters in Washington.

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Finally, although many parties related to this litigation may be located in California, that is not

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a significant enough contact to justify application of California law. This Court has repeatedly rejected

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the argument that the actions defendants took within California warrant invocation of California law.

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See, e.g., Motorola Order at 12. The presence of Costco’s non-Defendant suppliers of LCD products

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in California carries even less weight.

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Thus, as set forth in its prior order, the Court finds that Costco’s purchasing process was

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controlled from Washington and that Costco was injured in Washington. Washington therefore has the

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most significant contacts with Costco’s claims. Accordingly, Washington law applies.

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For the foregoing reasons and for good cause shown, the Court hereby GRANTS defendants’

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motion to dismiss in part amended complaint. Docket No. 58 in 11-0058; Docket No. 3922 in 07-1827.

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IT IS SO ORDERED.
Dated: November 29, 2011
SUSAN ILLSTON
United States District Judge

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