Wallach et al v. Eaton Corporation et al

Filing 81

MEMORANDUM ORDER denying #66 MOTION to Amend/Correct #63 Order on Motion to Dismiss/Failure to State Claim, Defendants Original Equipment Manufacturers' Motion to Amend the Court's September 30, 2011 Order and to Certify it for Interlocutory Appeal, denying #71 MOTION for Certificate of Appealability. Signed by Judge Sue L. Robinson on 9/26/2012. (nmfn)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

MARK S. WALLACH, AS CHAPTER 7
TRUSTEEFORTHEBANKRUPTCY
ESTATE OF PERFORMANCE
TRANSPORTATION SERVICES, INC., and
TAURO BROTHERS TRUCKING
COMPANY, jointly and on behalf of the
estate and all others similarly situated,

)
)
)
)
)
)
)
)
)
Plaintiffs,
)
)
v.
)
EATON CORPORATION, DAIMLER
)
TRUCKS NORTH AMERICA LLC, NAVISTAR )
INTERNATIONAL CORPORATION,
)
INTERNATIONAL TRUCK AND ENGINE
)
CORPORATION, PACCAR INC.,
)
KENWORTH TRUCK COMPANY,
)
PETERBILT MOTORS COMPANY, VOLVO
)
TRUCKS NORTH AMERICA and MACK
)
TRUCKS, INC.,
)
)
)
Defendants.

Civ. No. 10-260-SLR

MEMORANDUM ORDER
At Wilmington this JlR"*' day of September 2012, having reviewed defendants'
motions for certification of interlocutory appeal and the papers filed in connection
therewith;
IT IS ORDERED that said motions (D.I. 66 & 71) are denied, for the reasons that
follow:
1. Background. On September 30, 2011, in response to defendant Eaton and
defendant OEMs' motions to dismiss, the court issued an opinion and order granting in

part and denying in part said motion. (D.I. 62 and 63) On October 11, 2011 and October
21, 2011 respectively, the OEMs and Eaton filed motions to amend the court's September
30, 2011 order to include a certification for interlocutory appeal pursuant to 28 U.S.C. §
1292(b). (D.I. 66 and 71) Briefs in support of the parties' respective positions were filed
thereafter.
2. Standard. 28 U.S.C.A. § 1292(b) states:
When a district judge, in making in a civil action an order not otherwise
appealable under this section, shall be of the opinion that such order involves
a controlling question of law as to which there is substantial ground for
difference of opinion and that an immediate appeal from the order may
materially advance the ultimate termination of the litigation, he shall so state
in writing in such order. The Court of Appeals which would have jurisdiction
of an appeal of such action may thereupon, in its discretion, permit an appeal
to be taken from such order, if application is made to it within ten days after
the entry of the order: Provided, however, That application for an appeal
hereunder shall not stay proceedings in the district court unless the district
judge or the Court of Appeals or a judge thereof shall so order.
Accordingly, "[t]he order must (1) involve a 'controlling question of law,' (2) offer
'substantial ground for difference of opinion' as to its correctness, and (3) ... 'materially
advance the ultimate termination of the litigation."' Katz v. Carte Blanche Corp., 496 F.2d
747, 754 (3d Cir. 1974). However, "these three criteria do not limit the Court's discretion to
grant or deny an interlocutory appeal. Leave to file [such] appeal may be denied for
reasons apart from this specified criteria, including such matters as the appellate docket or
the desire to have a full record before considering the disputed legal issue." In re
SemCrude, L.P., 407 B.R. 553, 557 (D. Del. 2009). Ultimately, "entertaining an
interlocutory appeal under § 1292(b) is appropriate only when the party seeking leave to
appeal 'establishes [that] exceptional circumstances justify a departure from the basic

2

policy of postponing review until after the entry of final judgment.' In part, this stems from
the fact that '[p]iecemeallitigation is generally disfavored."' Chase Bank USA, N.A. v.
Hess, 2011 WL 4459604, at *1 (D. Del. Sept. 26, 2011) (citations omitted).
3. Discussion. Defendants argue that the existence and applicability of a general
coconspirator, i.e., a complete involvement, exception to the Illinois Brick direct purchaser
rule are controlling questions of law for which there is a substantial ground for difference of
opinion. The thrust of defendants' argument is that the court, in its opinion, acknowledged
some uncertainty about the exception's existence and, assuming it does not exist,
plaintiffs would not have standing to sue. (D. I. 67 at 1-5; D. I. 72 at 6-7) While the court
did acknowledge some uncertainty, ultimately the court concluded that Hess
//,

2

r and Hess

read together, affirm the existence of the exception. See Hess//, 602 F.3d at 244

("[W]e adopted a 'limited' coconspirator exception [in Hess

~-").

The court also notes, as

the Hess I court did, that the Seventh Circuit has adopted the exception. Hess I, 424 F.3d
at 379 (citing Paper Sys. Inc. v. Nippon Paper Indus. Co., Ltd., 281 F.3d 629 (7th Cir.
2002)). Defendants' focus on Kansas v. UtiliCorp United, Inc., 497 U.S. 199, 216 (1990),
is unpersuasive. Although the Supreme Court in UltiCorp observed that the "possibility of
allowing an exception [to the Illinois Brick direct-purchaser rule], even in rather meritorious
circumstances, would undermine the rule," UtiliCorp, 497 U.S. at 216, the court
emphasizes that the Third and Seventh Circuits had the benefit of the UltiCorp decision

1

Howard Hess Dental Labs. Inc. v. Dentsply lnt'l, Inc., 424 F.3d 363, 369 (3rd
Cir. 2005) ("Hess f')
2

Howard Hess Dental Labs. Inc. v. Dentsply lnt'l, Inc., 602 F.3d 237, 259 (3rd
Cir. 201 0) ("Hess If')

3

when they reached their arguably contrary conclusions. As the Third Circuit explained in
Hess I, circuit courts have uniformly accepted the possibility of a complete involvement
defense. Hess I, 424 F.3d at 382. While the cited cases were not Illinois Brick-specific
cases, the fact that courts have found that certain conspiring plaintiffs could be barred
from suit is suggestive of the fact that these circuits would adopt, as the Third Circuit has,
a coconspirator exception. In light of these facts, the court declines to characterize the
Third Circuit law as a substantial ground for difference of opinion, thus justifying piecemeal
appellate review.
4. With respect to the applicability of the exception, defendants argue that the
court's finding of complete, voluntary and substantially equal participation was in error in
light of plaintiffs' admission that Eaton had to "policeD" its agreement with the OEMs by
threatening litigation. (D.I. 67 at 6 (citing D.l. 1 at 1J87)) As defendants' explain, there
would be "no need to police the OEMs if the OEMs' participation was voluntary and
substantially equal." (/d.) While the court doubts that its application of the exception on a
motion to dismiss would properly be considered a controlling question of law, see, e.g., In
re Semcrude, L.P., 2010 WL 4537921, at *3 (D. Del. Oct. 26, 201 0) (largely fact-sensitive

inquires are not controlling issues of law), the court nevertheless notes that the admission
was made in the original, now mooted, complaint.
5. Defendants' final argument is that the Illinois Brick coconspirator exception
cannot be applicable unless the OEMs engaged in a price fixing conspiracy as well. In
support of this position, defendants cite to the Third Circuit cases of McCarthy v. Recordex
Service, Inc., 80 F.3d 842, 854-55 (3d Cir. 1996) (a case not cited in any previous brief)

4

and Hess /. The court does not read McCarthy or Hess I to definitively mandate the
existence of a price fixing conspiracy. McCarthy appears most directly concerned with the
failure to join upstream defendants and, in the case at bar, the upstream defendants, the
OEMs, have been joined. Further, to the extent that McCarthy holds that a plaintiff needs
to allege that the "intermediaries immediately upstream ... colluded ... to overcharge,"
McCarthy, 80 F.3d at 855, plaintiffs have set forth such allegations. Hess/, in a footnote,

discussed how an exclusive dealing conspiracy in combination with an RPM conspiracy
could be profitable to dealers; as the Court explained:
[l]t would presumably not have been profitable for the dealers to have joined
a conspiracy in which they were overcharged (the exclusive-dealing
conspiracy). However, the dealers might have joined such a conspiracy if
they were compensated in some fashion. Plaintiffs argue that Dentsply
conspired to fix the prices that its dealers charge. This is effectively a
horizontal price-fixing conspiracy at the dealer level (which could
presumably be profitable to the dealers).
Hess/, 424 F.3d at 379, n.12 (emphasis in original). In the case at bar, a price fixing
conspiracy has not been alleged; however, plaintiffs' complaint does assert that the OEMs
were compensated (via a share in monopoly rents). 3
6. Conclusion. For the reasons discussed above, the court declines to amend its
order to include a certification for interlocutory appeal.

United State Distnct Judge

3

In this regard, plaintiffs' theory of the case could run afoul of the Illinois Brick
duplication and apportionment policy positions (see D. I. 62 at 6); discovery will
illuminate these concerns with more clarity.

5