Office Depot, Inc. v. AU Optronics Corporation et al

Filing 79

ORDER GRANTING IN PART MOTIONS TO DISMISS COMPLAINT re #46 , #50 (Illston, Susan) (Filed on 1/18/2012) Modified on 1/19/2012 (ysS, COURT STAFF).

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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 11-2225 SI 11 OFFICE DEPOT, INC., 12 ORDER GRANTING IN PART MOTIONS TO DISMISS COMPLAINT Plaintiff, United States District Court For the Northern District of California 9 13 v. 14 AU OPTRONICS CORPORATION, et al., 15 Defendants. / 16 17 On January 13, 2012, the Court heard argument on two motions to dismiss in this matter: a joint 18 motion filed by most of the defendants, and a motion filed by defendants NEC Corporation, NEC LCD 19 Technologies, Ltd., and NEC Electronics America, Inc. (collectively, “NEC”). Having considered the 20 moving papers and the arguments of the parties, and for good cause appearing, the Court hereby 21 GRANTS IN PART both motions. 22 23 BACKGROUND 24 Office Depot is a “global supplier of office products and services” incorporated in Delaware and 25 headquartered in Florida. On March 31, 2011, it filed this action in the Southern District of Florida, 26 seeking to recover for a “long-running conspiracy . . . to fix, raise, stabilize, and maintain prices for 27 Liquid Crystal Display panels (‘LCD Panels’).” Compl. at ¶1. Office Depot filed a first amended 28 complaint (“FAC”) on September 19, 2011. The FAC contains four claims: 1) a claim under the 1 Sherman Act; 2) a claim under the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”); 3) 2 a claim under California’s Cartwright Act; and 4) a claim under California’s Unfair Competition Law. 3 FAC at ¶¶274-305. 4 Defendants now move to dismiss Office Depot’s FAC. 5 6 LEGAL STANDARD Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint that 8 fails to state a claim upon which relief may be granted. To survive a Rule 12(b)(6) motion to dismiss, 9 the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. 10 United States District Court For the Northern District of California 7 Corp. v. Twombly, 550 U.S. 544, 570 (2007). This “facial plausibility” standard requires the plaintiff 11 to allege facts that add up to “more than a sheer possibility that a defendant has acted unlawfully.” 12 Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). While courts do not require “heightened fact pleading 13 of specifics,” a plaintiff must allege facts sufficient to “raise a right to relief above the speculative 14 level.” Twombly, 550 U.S. at 544, 555. 15 In deciding whether the plaintiff has stated a claim upon which relief may be granted, the Court 16 must assume that the plaintiff’s allegations are true and must draw all reasonable inferences in the 17 plaintiff’s favor. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the 18 Court is not required to accept as true “allegations that are merely conclusory, unwarranted deductions 19 of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). 20 21 DISCUSSION 22 23 As stated above, defendants have filed two motions to dismiss Office Depot’s complaint: a joint motion and a separate motion that pertains only to NEC. 24 25 I. Defendants’ Joint Motion 26 Defendants’ joint motion to dismiss raises four grounds for dismissal. First, defendants argue 27 that Office Depot’s claims are untimely. Second, defendants contend that Office Depot’s state-law 28 claims are precluded by due process principles. Third, they assert that Office Depot’s jury trial demand 2 1 must be stricken as to certain claims. Finally, they argue that Office Depot’s FAC impermissibly relies 2 on group pleading. 3 4 A. 5 Defendants first argue that Office Depot’s claims are untimely. Office Depot filed suit on March 6 31, 2011, more than four years after the DOJ’s December 11, 2006, announcement of its investigation 7 into the conspiracy.1 Because the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”), the 8 California Cartwright Act, and the California Unfair Competition Law each has a four-year statute of 9 limitations, defendants contend that Office Depot’s claims under those statutes must be dismissed. Timeliness of Office Depot’s Claims United States District Court For the Northern District of California 10 Office Depot raises two bases for tolling that it asserts make its claims timely. First, it asserts 11 that the indirect-purchaser class action complaints tolled the statutes of limitations from December 14, 12 2006, to November 5, 2007. See Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538, 554 (1974) (“[T]he 13 commencement of a class action suspends the applicable statute of limitations as to all asserted members 14 of the class who would have been parties had the suit been permitted to continue as a class action.”). 15 Second, it asserts that the direct-purchasers’ class action complaints, by virtue of equitable and cross- 16 jurisdictional tolling, tolled the statues of limitations from November 5, 2007, until December 27, 2010, 17 the date Office Depot opted out of the direct-purchaser class. The Court finds that Office Depot’s 18 FDUTPA claims are timely, but that its California claims are not. 19 20 1. Tolling Based on Indirect-Purchaser Complaints 21 Office Depot initially identified two indirect-purchaser class actions that it asserts included 22 California and Florida indirect-purchaser claims and that included Office Depot as a class member. See 23 Audio Video Artistry v. Samsung Elecs. Co. Ltd., Case No. 2:06-cv-32848 (W.D. Tenn.) (filed December 24 14, 2006); Chris Ferencsik v. LG Philips LCS Co., Ltd., et al., Case No. 06-6714 (E.D.N.Y.) (filed 25 December 20, 2006). 26 1 27 28 This Court has treated a plaintiff’s allegations of fraudulent concealment as sufficient, as a pleading matter, to toll the statute of limitations until the DOJ announced its investigation on December 11, 2006. See Order Granting in Part and Denying in Part Defendants’ Motions to Dismiss Complaints, Master Docket No. 666, at 27-28 (August 25, 2008). 3 Defendants argue, however, that the plaintiffs in these cases lacked standing to bring claims 2 under California or Florida law. See Pecover v. Electronic Arts, Inc., 633 F. Supp. 2d 976, 984-85 (N.D. 3 Cal. 2009) (“The named plaintiffs in this action purchased the video game at issue in California and the 4 District of Columbia and have alleged no basis for standing to bring claims under the laws of other 5 states.”). The plaintiffs were residents of Tennessee and New York, respectively, and the complaints 6 did not allege that they purchased the LCD products elsewhere. Defendants contend that, because these 7 plaintiffs lacked standing, their class actions could not toll Office Depot’s state-law claims. See Palmer 8 v. Stassinos, 236 F.R.D. 460, 465 (N.D. Cal. 2006) (“[T]he filing of Palmer and Hammer’s putative class 9 action cannot have tolled the statute of limitations as to the UCL claim [because] Palmer and Hammer 10 United States District Court For the Northern District of California 1 lacked standing to assert claims under the UCL.”); but see In re Morgan Stanley Mortg. Pass-Through 11 Certificates Litig., --- F.Supp.2d ----, 2011 WL 4089580 (S.D.N.Y. 2011) (reaching opposite conclusion 12 after noting that “there is no conclusive Supreme Court or Second Circuit authority and lower courts 13 are divided”). 14 As for the California statute of limitations, the Court finds that tolling would be inappropriate. 15 It is apparent from the face of the complaints Office Depot has identified that the plaintiffs lacked 16 standing. Accordingly, the Court agrees with defendants that Office Depot may not rely on these 17 purported class actions to toll its California claims. In re Morgan Stanley Mortg. Pass-Through 18 Certificates Litig., --- F. Supp. 2d ----, 2011 WL 4089580 (S.D.N.Y. 2011) (“There may be 19 circumstances where the representative so clearly lacks standing that no reasonable class member would 20 have relied.”). 21 The Court, however, finds that American Pipe tolling applies to the Florida statute of limitations. 22 Office Depot has recently asked this that this Court take judicial notice of two class actions: Jafarian 23 v. LG Philips LCD Company Ltd., Case No. 07-0994 (N.D. Cal., Feb. 16, 2007), and Eisler v. AU 24 Optoelectronics Co., Ltd., et al, Case No. 3:07-cv-60289-JIC, 2007 U.S. Dist. Ct. Pleadings 60289 (S.D. 25 Fla., March 1, 2007). Both cases were purported class actions that included FDUTPA claims, brought 26 by Florida residents. They are sufficient to toll the Florida statute of limitations. See Sacred Heart 27 Health Sys., Inc. v. Humana Military Healthcare Servs., Inc., 2008 WL 2385506 (N.D. Fla., June 9, 28 2008). 4 1 2. Tolling Based on Direct-Purchaser Complaints 2 Because its California claim was not tolled by any indirect purchaser class action, Office Depot 3 contends that the claim was tolled by the direct purchaser class-action complaint under the doctrines of 4 cross-jurisdictional and equitable tolling. 5 For this argument, Office Depot relies on Hatfield v. Halifax PLC, 564 F.3d 1177 (9th Cir. 6 2009). Hatfield, however, held only that California residents could take advantage of equitable tolling 7 based upon class actions filed in other jurisdictions. Id. at 1189 (“Although we conclude that California 8 would allow its resident class members to reap tolling benefits under its equitable tolling doctrine, the 9 same cannot be said for the non-resident class members.”). Because Office Depot is based in Florida, United States District Court For the Northern District of California 10 the Court concludes that it cannot take advantage of California’s equitable tolling. 11 12 B. 13 Next, defendants assert that Office Depot’s state-law claims must be dismissed because those 14 claims are based upon purchases made in other states. This Court has previously held that, “in order 15 to invoke the various state laws at issue, [a plaintiff] must be able to allege that ‘the occurrence or 16 transaction giving rise to the litigation’ – which is [plaintiff’s] purchase of allegedly price-fixed goods 17 – occurred in the various states.” See Order Granting Defendants’ Joint Motion to Dismiss and Granting 18 Plaintiffs Leave to Amend, Master Docket No. 1823, at 3-5 (June 28, 2010). Office Depot alleges that 19 it purchased TFT-LCD products in Florida, and defendants appear to concede that Office Depot’s 20 Florida law claims do not violate due process. Cf. Reply at 2. Due Process 21 Whether Office Depot may bring a claim under California law is a harder question. Office 22 Depot’s complaint alleges only that it “purchased LCD products by purchase orders to California.” FAC 23 at ¶289. At oral argument, Office Depot explained that it purchased LCD products from companies 24 located in California, issuing the purchase orders from its headquarters in Florida. 25 The Court agrees with defendants that Office Depot’s allegations are inadequate to support the 26 application of California law. Because Office Depot is headquartered in Florida, and because its 27 purchase orders emanated from that location, its “purchase of allegedly price-fixed goods” took place 28 in that state. Office Depot has not alleged that it dealt with the defendants in California, or that 5 1 California otherwise had any direct relevance to the specific purchases that form the basis of its 2 complaint. Without more, due process precludes the application of California law. See Allstate 3 Ins. Co. v. Hague, 449 U.S. 302, 308 (1981) (“In order to ensure that the choice of law is neither 4 arbitrary nor fundamentally unfair, . . . the Court has invalidated the choice of law of a State which has 5 had no significant contact or significant aggregation of contacts, creating state interests, with the parties 6 and the occurrence or transaction.”). 7 C. 9 Next, defendants argue that Office Depot signed contracts with Samsung, Sharp, and Toshiba 10 United States District Court For the Northern District of California 8 that contained jury waiver provisions.2 The Court agrees that these defendants may insist on a bench 11 trial for any dispute arising out of purchases made pursuant to those contracts. Office Depot remains 12 entitled to a jury trial for its indirect-purchaser claims, as well as for any claims based upon direct 13 purchases that were not made pursuant to the contracts. Jury Waiver 14 The Court does not agree with defendants’ contention that the jury waiver provisions were 15 intended to apply retroactively. The language defendants rely on – that the agreements “supersede[] all 16 other prior agreements” – indicates that the new agreements were intended to replace any prior 17 contracts, not alter the terms of the previous business dealings between the parties. See, e.g., Arens 18 Decl., Exh. 1 (“This Agreement will supersede all other prior agreements and shall remain in force until 19 it is replaced by a subsequent agreement.”). Nothing suggests that the contracts were intended to apply 20 retroactively. 21 22 D. 23 Finally, defendants contend that Office Depot’s complaint impermissibly relies on group 24 pleading. This Court has addressed similar arguments numerous times in this MDL and has concluded 25 that allegations substantially similar to those in Office Depot’s compliant satisfy federal pleading 26 standards. See, e.g., Order Denying Defendants’ Joint Motion to Dismiss the Second Amended Group Pleading 27 28 2 The Court GRANTS defendants’ unopposed request for judicial notice. 6 1 Complaint, Master Docket No. 3590, at 3-4 (September 15, 2011); Order Denying Defendants’ Joint 2 Motion to Dismiss, Master Docket No. 3614, at 4-5. Accordingly, the Court DENIES defendants’ 3 motion to dismiss on this basis. 4 5 II. NEC’s Motion 6 NEC’s motion raises two grounds for dismissal of Office Depot’s claims against it. First, NEC 7 asserts that Office Depot executed a settlement agreement that released its claims against NEC. Second, 8 NEC contends that Office Depot’s allegations are insufficient to state a claim against it. 9 United States District Court For the Northern District of California 10 A. 11 On March 10, 2009, Office Depot and NEC Corporation of America3 signed a Settlement and 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Release Release Agreement to resolve a dispute unrelated to this MDL. The release provides that: each Party . . . hereby forever releases, discharges and acquits the other Party . . . from and against any and all claims . . . and liabilities of every kind and nature and consequential damages, in all cases past, present and future, which the Releasers may now have or may hereafter have on account of and arising out of any matter, cause, thing, or event, known or unknown, express or implied of whatsoever nature or kind, in law or in equity, for claims asserted or claims that could have been asserted arising out of or in any way related to the Dispute, the Contract, or any other purchase or sale transaction which occurred between the parties prior to the Effective Date. Dunavan Decl., Exh. A at ¶2. The Court agrees with NEC that some of Office Depot’s claims fall within the scope of this Release. By its own terms, the Release applies to Office Depot’s purchases from NEC Corporation of America, or from any of the other NEC entities. Accordingly, the Court agrees that all such claims must be dismissed. The Court agrees with Office Depot, however, that the release is limited to transactions that occurred “between the parties.” To the extent Office Depot’s claims against NEC are based upon co-conspirator liability for purchases made from other sources, including indirect purchases of NEC panels, the Release does not bar its claims. 26 27 3 28 NEC Corporation of America is a subsidiary of NEC Corporation. See Dunavan Decl., ¶3. It is not named as a defendant in this action. 7 1 B. 2 NEC next argues that Office Depot’s allegations against it are too spare to state a claim. NEC 3 is correct that Office Depot’s complaint does not include many allegations against it. Paragraphs 130 4 and 210 of Office Depot’s complaint, however, contain the following allegations: 5 Adequacy of Allegations 130. Defendant NEC joined the Conspiracy by participating in multi-lateral meetings and bilateral meetings and discussions with, among others, Samsung, Toshiba, Hitachi, Sharp, and LG to share information and reach agreement on prices for LCD Products beginning as early as 1998. In these discussions with its competitors and fellow Conspirators, NEC exchanged price and supply information and also agreed on prices, price increases, and production limits and quotas for LCD panels. 6 7 8 11 210. By 2001, Sharp employees were engaging in bilateral discussions with competitors to share price information for both TFT-LCD panels and STN-LCD panels used for mobile wireless handset applications. For example, a March 29, 2001 email from Sharp’s Masa Fukada to Ming Shi of Sharp shows Mr. Fukada communicating future “competitor price” data for both STN-LCD panels and TFT-LCD panels from Epson, Hitachi, Matsushita, NEC and others. 12 FAC at 130, 210. While these allegations are not voluminous, they are sufficient to inform NEC, at best 13 a minor player in the conspiracy, of the basis for the charges against it. 9 United States District Court For the Northern District of California 10 14 NEC argues that these allegations do not create a plausible basis for concluding that it 15 participated in the overarching conspiracy. The Court disagrees. The conspiracy in this case is well- 16 established. Although NEC may have played only a limited role, Office Depot’s allegations sufficiently 17 allege that NEC played some role. NEC’s arguments that it did not participate in the full conspiracy, 18 that it otherwise withdrew, or that Office Depot should have garnered more compelling evidence given 19 the amount of discovery in this MDL are all better considered on summary judgment. 20 Finally, NEC contends that Office Depot’s complaint impermissibly relies on group pleading. 21 The Court disagrees. The complaint contains plausible allegations of NEC’s involvement in the 22 conspiracy, and alleges that NEC’s subsidiaries assisted the parent company in carrying the conspiracy 23 out. NEC’s contention that its subsidiaries did not play any role in the conspiracy is better addressed 24 following discovery. 25 26 27 // 28 // 8 1 CONCLUSION 2 For the foregoing reasons and for good cause shown, the Court hereby GRANTS IN PART 3 defendants’ joint motion to dismiss and GRANTS IN PART NEC’s motion to dismiss or, in the 4 alternative, for summary judgment. Docket Nos. 3949, 3954 in 07-1827; Docket Nos. 46, 50 in 11- 5 2225. 6 7 IT IS SO ORDERED. 8 9 Dated: January 18, 2012 SUSAN ILLSTON United States District Judge United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9

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