IN RE CAPACITORS ANTITRUST LITIGATION

Filing 1546

ORDER RE #963 NISSEI ELECTRIC CO., LTD.'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION AND #1213 RELATED MOTION TO STRIKE. Signed by Judge James Donato on 3/7/2017. (jdlc2S, COURT STAFF) (Filed on 3/7/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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IN RE CAPACITORS ANTITRUST
LITIGATION.

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Master File No. 14-cv-03264-JD
ORDER RE NISSEI ELECTRIC CO.,
LTD.’S MOTION TO DISMISS FOR
LACK OF PERSONAL JURISDICTION
AND RELATED MOTION TO STRIKE
Re: Dkt. Nos. 963, 1213

United States District Court
Northern District of California

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After taking under submission the motion to dismiss for lack of personal jurisdiction by

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defendant Nissei Electric Co., Ltd., the Court announced that it was denied at a recent status

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conference. See Dkt. No. 1534. This order details the grounds for the denial.
DISCUSSION

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I.

PLAINTIFFS’ MOTION TO STRIKE (DKT. NO. 1213)
As an initial matter, the direct purchaser plaintiffs (“DPPs”) and indirect purchaser

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plaintiffs (“IPPs”) ask that the Court strike the new arguments raised and evidence submitted by

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Nissei on reply, which relate to successor liability under Japanese law. The request is granted.

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Raising new arguments in a reply brief is a classic form of sandbagging that is barred

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under Paragraph 15 of the Court’s Standing Order for Civil Cases. Nissei knew that the successor

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liability issue would be an issue in the Court’s resolution of the jurisdictional motion. Nissei’s

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brief opens with the representation that on September 15, 2010, it “entered into an agreement to

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purchase certain assets of a company also called Nissei Electric Co., Ltd., which at the time was

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involved in bankruptcy proceedings . . . (‘Dissolved Nissei’).” Dkt. No. 963 at 4. Nissei says the

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two companies have different names and are different legal entities.1 The Court will refer to the

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prior, acquired Nissei entity as “Dissolved Nissei.”
After stating these facts in the opening brief, Nissei forewent a substantive discussion of

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successor liability in favor of a cursory footnote saying only that “[t]o the extent that plaintiffs rely

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on the activities of Dissolved Nissei to support their claims -- either of substance or jurisdiction --

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against Nissei, this is improper.” Dkt. No. 963 at 4 n.4. Nissei cited a decision from the Central

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District of California for the proposition that the “general rule of successor liability, recognized in

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all jurisdictions” is that a purchasing corporation does not assume the debts and liabilities of the

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selling corporation, even when a corporation purchases all or most of the assets of another
corporation. Id. (quoting Me. State. Ret. Sys. v. Countrywide Fin. Corp., Case No. 2:10-CV-0302

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United States District Court
Northern District of California

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MRP (MANx), 2011 WL 1765509, at *5 (C.D. Cal. Apr. 20, 2011)). But Nissei failed to

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acknowledge that Maine State Retirement System expressly states that a choice-of-law analysis is

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to be conducted on the successor liability question even if the court’s jurisdiction is based on

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federal question (and which in that case led to the choice of Delaware law). See id. at *2-4. Nor

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did Nissei say anything at all about a choice-of-law issue or the applicability of Japanese law

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anywhere else in its opening brief. That Nissei chose to contend that Japanese law applies and

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precludes successor liability in the reply brief is all the more surprising and improper because it

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omitted any mention of those arguments in its discovery dispute letter that was filed after the filing

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of its opening brief and before plaintiffs had filed their opposition. See Dkt. No. 1074.
Nissei’s Japanese law argument was improperly raised for the first time in reply. Dkt.

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No. 1202. While Nissei criticizes plaintiffs for asking to strike the argument rather than asking for

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permission to further reply to it, Dkt. No. 1214, plaintiffs were within their rights to ask for the

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former. Nissei did not follow the Standing Order, and the Court will not permit this kind of

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sandbagging. See Cal. Sportfishing Protection Alliance v. Pacific States Indus., Inc., Case No. 15-

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Some of Nissei’s discussion is literally impossible to follow. In the reply brief, Nissei refers to
the entities by their Japanese names in Japanese characters, and says that “[t]he fact that ニッセイ
and 日精 share the same English translation is unremarkable, and actually quite pervasive.” Dkt.
No. 1202 at 1 n.1. This is a meaningless statement to non-speakers of Japanese and of no value to
the Court or opposing parties in addressing Nissei’s arguments.
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cv-01482-JD, 2015 WL 5569073, at *2 (N.D. Cal. Sept. 22, 2015). The new reply arguments

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about the applicability and content of Japanese law will not be considered.

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II.

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NISSEI’S MOTION TO DISMISS (DKT. NO. 963)
On the merits of Nissei’s motion, plaintiffs have done enough to defeat it at this stage.

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Nissei’s motion to dismiss for lack of personal jurisdiction is brought under Federal Rule of Civil

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Procedure 12(b)(2). Dkt. No. 963. The party asserting personal jurisdiction bears the burden of

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proving its existence. Action Embroidery Corp. v. Atlantic Embroidery, Inc., 368 F.3d 1174, 1177

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(9th Cir. 2004). A district court has discretion to decide the mode of resolving this kind of motion,

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and where the court determines that it will receive only written materials, “these very limitations
dictate that a plaintiff must make only a prima facie showing of jurisdictional facts through the

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United States District Court
Northern District of California

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submitted materials in order to avoid a defendant’s motion to dismiss.” Data Disc, Inc. v. Systems

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Technology Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977); see also Schwarzenegger v. Fred

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Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). All factual conflicts in the parties’

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affidavits are to be resolved in favor of the party asserting jurisdiction, namely the plaintiffs.

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Action Embroidery, 368 F.3d at 1177.

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Nissei does not presently contend that plaintiffs cannot proceed on a successor liability

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theory because they failed to plead it adequately. Compare Dkt. No. 1074 with Dkt. Nos. 963,

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1202. Instead, as crystallized by the parties’ briefing on this motion, the pending dispute is

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whether Nissei bears successor liability for “Dissolved Nissei” such that the Court can exercise

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specific jurisdiction over Nissei. See Dkt. No. 1202. Plaintiffs’ main contention is that successor

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liability exists here under the “mere continuation” exception under California law, because “(1) no

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adequate consideration was given for the predecessor corporation’s assets and made available for

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meeting the claims of its unsecured creditors; [and] (2) one or more persons were officers,

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directors, or stockholder of both corporations.” Dkt. No. 1179-5 at 8 (quoting Ray v. Alad Corp.,

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19 Cal. 3d 22, 29 (1977)). Under Ray, this is a disjunctive test, see 19 Cal. 3d at 29 (requiring

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showing of “one or both”), although Nissei argues that the first, “inadequate consideration” prong

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is not optional under the case law. Dkt. No. 1202 at 5-6 (citing cases).

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In any event, plaintiffs have made an adequate prima facie showing on the first prong. See

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Dkt. No. 1179-5 at 8-9. They argue, for example, that Nissei paid “nothing . . . for various

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factories, offices, and land,” and that “[e]qually dubious are the low-ball estimates given to the

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Hanamaki and Okaya factories and appurtenant properties.” Id. at 8 (citing Exh. 17 at

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Nissei0000549_EN). The page they cite, Dkt. No. 1179-23 at ECF page no. 4, does in fact show

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that a June 25, 2010 Letter of Intent included a number of real estate items such as “warehouse

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site,” “factory,” “office,” and “storage” with an “asking price (JPY)” of “0.” Nissei suggests that

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plaintiffs’ numbers are taken “primarily [from] a non-binding letter of intent,” and that a different

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document, the “Asset Transfer Agreement,” in fact “establishes that Nissei paid 145,800,000 JPY
-- almost half the consideration paid -- for real property at the Hanamaki, Okaya, and Ichinohe

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United States District Court
Northern District of California

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factories.” Dkt. No. 1202 at 6 (citing “NISSEI000057-NISSEI000060”). Nissei’s point is not

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easy to follow because it cites those documents only by Bates numbers, without providing any

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docket numbers that would help the Court find those pages. But even after chasing them down,

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see Dkt. No. 1179-12 at ECF page nos. 18-21, the Court does not see how the items in that chart

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(e.g., “1-18-4 Motodate, Hanamaki-shi, Iwate-ken,” listed as a “residence”) match up to the items

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plaintiffs were pointing to in their brief; where Nissei got the 145,800,000 JPY number; or why

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any of the numbers Nissei has put forward are not “low-ball estimates” or “inadequate

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consideration.”

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This dispute over the value of consideration paid for real estate is typical of the many,

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intensely factual disagreements the parties are engaged in here, and the nature of those disputes

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warrants denial of the motion. When the Court resolves a Rule 12(b)(2) motion on the papers, as

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it has the discretion to do, it is not in a position to “‘weigh’ the affidavits in order to resolve

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disputed issues,” and without further evidence, there is “no way to select one set of facts as more

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credible than the other.” Data Disc, 557 F.2d at 1284-85. Although Nissei, citing that very case,

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states “the Court must reject even otherwise plausible factual allegations if they are contradicted

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by affidavit,” Dkt. No. 963 at 5 (citing Data Disc at 1284), that is simply wrong. What the circuit

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said is the opposite, and it expressly disapproved any framework under which a defendant could

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“obtain a dismissal simply by controverting the facts established by a plaintiff through his own

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affidavits and supporting materials.” Data Disc, 557 F.2d at 1285.

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The bar for avoiding dismissal in this context is much lower than Nissei believes it to be,
and plaintiffs have met it. In response to plaintiffs’ attempt to make a prima facie showing of

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personal jurisdiction, Dkt. No. 1179-5, Nissei has not disputed anything other than the

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applicability of successor liability here. See Dkt. No. 1202. For the reasons stated above,

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plaintiffs have, on a prima facie basis, satisfied the applicable successor liability test under

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California law under the “mere continuation” exception, and the Court consequently rules in

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plaintiffs’ favor and denies Nissei’s motion to dismiss. This does not necessarily decide the

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jurisdiction question once and for all. “[A]t any time when the plaintiff avoids a preliminary

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United States District Court
Northern District of California

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motion to dismiss by making a prima facie showing of jurisdictional facts, he must still prove the

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jurisdictional facts at trial [or at an evidentiary hearing] by a preponderance of the evidence.”

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Data Disc, 557 F.2d at 1285 n.2. The Court reserves until a later time the decision on whether to

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put plaintiffs to the test at trial or at a “plenary pretrial proceeding.” Id.
CONCLUSION

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Plaintiffs’ motion to strike the Kitamura declaration and new arguments and evidence on

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reply is granted. Dkt. No. 1213. Defendant Nissei’s motion to dismiss for lack of personal

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jurisdiction is denied, without prejudice to renewal at a later time if warranted by the facts and the

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law. Dkt. No. 963.

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IT IS SO ORDERED.
Dated: March 7, 2017

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JAMES DONATO
United States District Judge

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