State of New York v. Intel Corporation

Filing 274

MEMORANDUM OPINION. Signed by Judge Leonard P. Stark on 12/7/2011. (rpg)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
STATE OF NEW YORK, by,
Attorney General Eric T. Schneiderman,
Plaintiff,
v.

Civ. No. 09-827-LPS

INTEL CORPORATION,
Defendant.

Richard L. Schwartz, Esquire, Emily Granrud, Esquire, Jeremy R. Kasha, Esquire, James Yoon,
Esquire and Saami Zain, Esquire, OFFICE OF THE ATTORNEY GENERAL OF THE STATE
OF NEW YORK, New York, NY.
Attorneys for Plaintiff.

Robert A. Van Nest, Esquire, Paula L. Blizzard, Esquire and Brook Dooley, Esquire of KEKER
& VAN NEST, San Francisco, CA.
Donn P. Pickett, Esquire and Frank M. Hinman, Esquire of BINGHAM MCCUTCHEN LLP,
San Francisco, CA.
DanielS. Floyd, Esquire of GIBSON, DUNN & CRUTCHER LLP, Los Angeles, CA.
Joseph Kattan, PC, of GIBSON, DUNN & CRUTCHER LLP, Washington, DC.
Richard L. Horwitz, Esquire and W. Harding Drane, Jr., Esquire of POTTER ANDERSON &
CORROON LLP, Wilmington, DE.
Attorneys for Defendant.

MEMORANDUM OPINION

December 7, 2011
Wilmington, Delaware

~~\.(\;:

STARK, U.S. District Judge:
Pending before the Court is the Motion for Partial Summary Judgment on Statute of
Limitations Grounds (Docket Item ("D.I.") 166 and, hereinafter, the "Summary Judgment
Motion") filed by defendant Intel Corporation ("Intel" or "Defendant"). For the reasons
discussed below, the Court will grant the motion.

BACKGROUND

I.

Plaintiff, the State ofNew York ("Plaintiff' or "New York"), filed the complaint
("Complaint") in this action on November 4, 2009 against Intel. (D.I. 1) The Complaint alleges:
Intel has engaged in a systematic worldwide campaign of illegal,
exclusionary conduct to maintain its monopoly power and prices in
the market for x86 microprocessors, the "brains" of Personal
Computers ("PCs"). By exacting exclusive or near-exclusive
agreements from large computer makers ("Original Equipment
Manufacturers" or "OEMs") in exchange for payments totaling
billions of dollars, and threatening retaliation against any company
that did not heed its wishes, Intel robbed its competitors of the
opportunity to challenge Intel's dominance in key segments of the
market. This illegal behavior was highly detrimental to consumers,
competition, and innovation.
(!d.~

1; see also id.

~~

2-9 (discussing, inter alia, Intel's alleged behavior and resulting harm))

Plaintiff asserts violations of Section 2 ofthe federal Sherman Act, 15 U.S.C. § 2 (Claim One),
and two state statutes- (1) New York's antitrust law (the "Donnelly Act"), N.Y. Gen. Bus. Law
§ 340 et seq. (Claim Two), and (2) Section 63(12) ofNew York's Executive Law, N.Y. Exec.
Law§ 63(12) (the "Executive Law"), a statute permitting New York's Attorney General to seek
relief with respect to certain "repeated fraudulent or illegal acts" (Claims Three and Four). (See
D.I. 1)
New York's claims essentially fall into two categories: direct and indirect. (See D.I. 167

1

at 1-2; D.I. 215 at 1) "The direct claims allege that Intel overcharged OEMs for microprocessors,
and that the OEMs assigned to New York any antitrust claims that they might have under
assignment clauses in New York's computer purchase contracts." (D.I. 167 at 1; see also D.I. 1 ~
251) New York asserts its direct claims under both the Sherman and Donnelly Acts. (D.I. 167 at
1; see D.I. 1 ~~ 258, 261) The indirect claims assert that computer purchasers incurred indirect
overcharges "because OEMs passed on microprocessor overcharges to consumers in the
computer market." (D .I. 167 at 1) New York attempts to present these indirect claims not only
on its own behalf, as well as on behalf of its local governments and agencies (as computer
purchasers themselves) (so-called "Indirect Proprietary Claims"), but also on behalf of New York
consumers who purchased computers (so-called "Indirect Representative Claims"). (See D.I. 167
at 1-2; D.I. 1 ~~ 261-63,268, 272) The indirect claims asserted by New York are brought solely
pursuant to state law. (See D.I. 167 at 2; D.I. 1 ~~ 261-63, 268, 272)
As to its state-based Donnelly Act and Executive Law claims, Plaintiff, as parens patriae,
seeks redress on behalf of New York consumers-at-large, including natural persons and
governmental entities. Specifically, in Claim Two of its Complaint, New York seeks to recover
treble damages under the Donnelly Act on four separate grounds: (i) for harms allegedly suffered
by the State itself as a purchaser of computers containing Intel microprocessors; (ii) as assignee
of the claims previously owned by the OEMs that purchased Intel microprocessors; (iii) on behalf
of New York non-state local entities that purchased computers containing Intel microprocessors;
and (iv) on behalf of New York consumers who purchased computers containing Intel
microprocessors. (See D.I. 1 ~~ 14, 259-63 and Prayer for Relief) Plaintiffs Executive Law
claims seek to recover damages sustained as a result oflntel' s alleged violations on behalf of "all

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natural persons." (See id.) The Complaint alleges anti competitive conduct dating back to 2001.
(See D.I. 167 at 2; see also D.I. 1 ,-r,-r 257,260,266, 270; D.I. 168, Declaration of DanielS. Floyd,

dated May 16, 2011 ("Floyd Decl."), at Nos. 14 & 15)
Intel answered the Complaint on January 5, 2010. (D.I. 14) On May 27,2011, Intel filed
its Summary Judgment Motion, seeking summary judgment on the basis that several of New
York's claims fall outside the applicable limitations period. (D.I. 166) Specifically, Intel
contends it is entitled to judgment on (a) direct Sherman Act damages claims for OEM
microprocessor purchases occurring before November 4, 2005; (b) direct Donnelly Act and
Executive Law damages and penalties claims for OEM microprocessor purchases occurring
before November 4, 2006; and (c) all indirect damages and penalties claims based on computer
purchases occurring before November 4, 2006. 1 (See id. at 1; D.I. 167)
After briefing on the motion was completed, the Court heard argument on October 27,
2011 (see Transcript of October 27, 2011 hearing (D.I. 247) (hereinafter "Tr.")).

II.

LEGAL STANDARDS
'The court shall grant summary judgment if the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R.
Civ. P. 56( a). The moving party bears the burden of demonstrating the absence of a genuine
issue ofmaterial fact. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574,
586 n.1 0 (1986). An assertion that a fact cannot be- or, alternatively, is- genuinely disputed
must be supported either by citing to "particular parts of materials in the record, including

1

The parties clarified at the October hearing that "November 4th" is the operative date,
not "November 3rd," as some documents had erroneously stated. (See Tr. at 3, 5, 27-28, 56, 58)
3

depositions, documents, electronically stored information, affidavits or declarations, stipulations
(including those made for the purposes of the motion only), admissions, interrogatory answers, or
other materials," or by "showing that the materials cited do not establish the absence or presence
of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the
fact." Fed. R. Civ. P. 56(c)(l)(A) & (B). Ifthe moving party has carried its burden, the
nonmovant must then "come forward with specific facts showing that there is a genuine issue for
trial." Matsushita, 475 U.S. at 587 (internal quotation marks omitted). The Court will "draw all
reasonable inferences in favor of the nonmoving party, and it may not make credibility
determinations or weigh the evidence." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S.
133, 150 (2000).
To defeat a motion for summary judgment, the non-moving party must "do more than
simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475
U.S. at 586; see also Podohnik v. US Postal Service, 409 F.3d 584, 594 (3d Cir. 2005) (stating
party opposing summary judgment "must present more than just bare assertions, conclusory
allegations or suspicions to show the existence of a genuine issue") (internal quotation marks
omitted). However, the "mere existence of some alleged factual dispute between the parties will
not defeat an otherwise properly supported motion for summary judgment;" and a factual dispute
is genuine only where "the evidence is such that a reasonable jury could return a verdict for the
nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242,247-48 (1986). "Ifthe
evidence is merely colorable, or is not significantly probative, summary judgment may be
granted." !d. at 249-50 (internal citations omitted); see also Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986) (stating entry of summary judgment is mandated "against a party who fails to

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make a showing sufficient to establish the existence of an element essential to that party's case,
and on which that party will bear the burden of proof at trial"). Thus, the "mere existence of a
scintilla of evidence" in support of the non-moving party's position is insufficient to defeat a
motion for summary judgment; there must be "evidence on which the jury could reasonably find"
for the non-moving party. Anderson, 477 U.S. at 252.
III.

DISCUSSION

Intel seeks summary judgment on New York's claims that fall outside the applicable
limitations period. The Court will grant Intel's motion.
A.

Sherman Act

With respect to New York's Sherman Act damages claims for microprocessor purchases,
there appears to be no real dispute that claims arising before November 4, 2005 are time-barred.
New York acknowledges that "[a]s to its Sherman Act direct purchaser claims, New York does
not dispute that the applicable statute of limitations is four years, extending back from the
November [4], 2009 filing of its complaint." (D.I. 215 at 1; see also Tr. at 27)
B.

Donnelly Act and Executive Law

With respect to New York's Donnelly Act and Executive Law damages and penalties
claims for microprocessor purchases occurring before November 4, 2006, Intel contends there
were no other proceedings operating to toll the limitations period. Intel further asserts that these
claims are barred under Delaware's Borrowing Statute, 10 Del. C. § 8121, which requires the
Court to apply the shorter of Delaware's statute oflimitations or the statute oflimitation of the
state in which the claim arose. (See D.I. 166 at 1; D.I. 167 at 2-4; D.I. 218 at 2-6) Specifically,
Delaware's Borrowing Statute provides:

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Where a cause of action arises outside of this State, an action
cannot be brought in a court of this State to enforce such cause of
action after the expiration of whichever is shorter, the time limited
by the law of this State, or the time limited by the law of the state
or country where the cause of action arose, for bringing an action
upon such cause of action. Where the cause of action originally
accrued in favor of a person who at the time of such accrual was a
resident of this State, the time limited by the law of this State shall
apply.
10 Del. C.§ 8121 (emphasis added).
The statute of limitations for antitrust claims under the Delaware Antitrust Act is three
years. See 6 Del. C. § 2111 ("Any action to enforce this chapter shall be forever barred unless
commenced within 3 years after the cause of action accrued. For purposes of this section, a cause
of action for a continuing violation is deemed to accrue at any time during the period of such
violation.").
New York asks the Court to apply New York's longer statutes of limitations: four years
for the Donnelly Act claims, and six years for the Executive Law claims. New York contends
these longer periods apply because the injury was suffered in New York, and the Complaint was
filed here out of the interest of efficiency2 rather than forum shopping. (See D.I. 215 at 2, 4-6;

see also Tr. at 10-11, 28-29, 31-32, 56-57) The Court agrees with Intel, however, that the
Borrowing Statute limits all ofNew York's state-law claims (both Donnelly Act and Executive
Law claims) to a three-year recovery period.

2

New York explains that its filing in Delaware is particularly efficient because Delaware
is also the site of a pending multi-district litigation, In re Intel Corp. Microprocessor Antitrust
Litig., MDL Docket No. 05-1717-LPS. (See D.I. 215 at 6) Also pending in this district is the
member suit brought by Advanced Micro Devices, Inc. and AMD International Sales & Service,
Ltd. against Intel Corporation and Intel Kabushiki Kaisha, alleging antitrust claims under the
Sherman Act and violations of the California Business and Professions Code. See Advanced
Micro Devices, Inc. v. Intel Corp., C.A. No. 05-441 (D. Del.) (filed June 27, 2005).
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In reaching this conclusion, the Court must- as even New York concedes -"begin with
the literal language of the [B]orrowing [S]tatute." (Tr. at 28) The language of the statute is
clear. As between New York's and Delaware's statutes oflimitations, the Court is to apply
"whichever is shorter," which here is Delaware's three year statute of limitations. The statute
contains no exception for when a party chooses to file suit in Delaware for purported "efficiency"
reasons and Delaware's statute of limitations is shorter than the limitations period of the state in
which the claim arose. New York, for whatever reason, chose to file in Delaware, so its claims
must be analyzed pursuant to Delaware's forum laws. Those laws, again, require the application
of the shorter limitations period ofthree years.
With respect to New York's indirect damages and penalties claims based on computer
purchases occurring before November 4, 2006, New York argues that, "as to the natural persons
for whom New York is seeking damages under its Donnelly Act parens patriae and Executive
Law claims, the statute of limitations was tolled by the filing of a class action complaint
containing Donnelly Act claims of which they were potential members at least as early as July
13, 2005." (D.I. 215 at 2; see also id. at 7-16) New York insists that the class action tolling
doctrine under American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974), applies here under
both Delaware or New York law. (See D.I. 215 at 2, 7-16; see also Tr. at 33-36)
Intel replies that the tolling doctrines on which New York relies are inapplicable here. In
Intel's view, American Pipe provides for tolling only for a class action that follows an earlier
class action that was denied because of lack of an adequate class representative. See also Yang v.
Odom, 392 F.3d 97 (3d Cir. 2004). The instant action, Intel contends, is not a class action, and

the previously filed class action against Intel, see Paul v. Intel Corp., C.A. No. 05-485 (D. Del.
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(filed July 12, 2005), was not defeated due to lack of an adequate class representative. (See Tr. at
57; see also D.I. 218 at 1, 6-10)
The Court agrees with Intel's analysis of American Pipe and its non-applicability to this
case. The instant case is not a class action. Moreover, there has been no determination in the
earlier (and still pending) class action that there was an inadequate class representative.
Therefore, the statute of limitations was not tolled.

IV.

CONCLUSION
For the reasons set forth above, the Court will grant Intel's Summary Judgment Motion.

A separate Order, consistent with this Memorandum Opinion, will be entered.

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