Wire Harness - Dealership Actions
Filing
99
OPINION AND ORDER Granting in Part and Denying in Part Collective Defendants' Motion to Dismiss Indirect Purchaser Actions (See Doc. 230 in 12-02311). Signed by District Judge Marianne O. Battani. (BThe)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
_________________________________
IN RE: AUTOMOTIVE PARTS
ANTITRUST LITIGATION
MASTER FILE NO. 12-md-02311
_________________________________
In Re: Wire Harness Cases
HON. MARIANNE O. BATTANI
_________________________________
THIS DOCUMENT RELATES TO:
Dealership Actions
End-Payor Actions
2:12-cv-00102
2:12-cv-00103
_________________________________/
OPINION AND ORDER GRANTING IN PART AND
DENYING IN PART COLLECTIVE DEFENDANTS’
MOTION TO DISMISS INDIRECT PURCHASER ACTIONS
Before the Court is Defendants’ Collective Motion to the Dismiss End-Payors’
Corrected Consolidated Amended Class Action Complaint and the Automobile Dealers’
Consolidated Class Complaint (Doc. No. 230). Automobile Dealer Plaintiffs and End
Payor Plaintiffs (collectively “Indirect Purchaser Plaintiffs” or “IPPs”) bring class actions
against Defendants under federal and state law based on Defendants’ alleged
conspiracy to rig bids, fix prices, and allocate the market for automotive wire harness
systems and related products. Although the IPPs filed separate complaints, Collective
Defendants analyze the complaints together for purposes of this motion, and the Court
does the same.
The Court heard oral argument on the motion on December 6, 2012, and at the
conclusion of the argument, took this matter under advisement. For the reasons that
follow, the motion is GRANTED in part and DENIED in part.
I. INTRODUCTION
Collective Defendants are manufacturers or sellers of Wire Harness Products
that are manufactured or sold in the United States. In their motion, they challenge the
complaints alleging conspiracy to fix prices on products filed by two different groups of
plaintiffs–automobile dealers and end-payors. The Automobile Dealer Plaintiffs
(“ADPs”), including Martens Cars of Washington, Inc., Landers Auto Group No. 1, Inc.,
d/b/a Landers Toyota, Hammett Motor Company, Inc., Superstore Automotive, Inc., Lee
Pontiac-Oldsmobile-GMC Truck, Inc., Westfield Dodge City, Inc., V.I.P. Motor Cars Ltd.,
Desert European Motorcars, Ltd., Landers McLarty Fayetteville TN, LLC, Dale Martens
Nissan Subaru, Inc., Green Team of Clay Center Inc., McGrath Automotive Group, Inc.,
Table Rock Automotive, Inc., d/b/a Todd Archer Hyundai, Archer-Perdue, Inc., d/b/a/
Archer-Perdue Suzuki, Lee’s Summit Chrysler Jeep Dodge, Bonneville and Son, Inc.,
Holzhauer Auto and Truck Sales, Inc., Pitre, Inc., d/b/a/ Pitre Buick GMC, Patsy Lou
Chevrolet, Inc., John Greene Chrysler Dodge Jeep, LLC, SLT Group II, Inc., d/b/a
Planet Nissan Subaru of Flagstaff, Herb Hallman Chevrolet, Inc., d/b/a/ Champion
Chevrolet, Charles Daher’s Commonwealth Motors, Inc., d/b/a Commonwealth
Chevrolet, Commonwealth Kia, Commonwealth Honda, Commonwealth Volkswagen,
Inc., d/b/a Commonwealth Volkswagen, Commonwealth Nissan, Inc., d/b/a
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Commonwealth Nissan, Ramey Motors, Inc., Thornhill Superstore, Inc., d/b/a Thornhill
GM Superstore, Dave Heather Corporation, d/b/a Lakeland Toyota Honda Mazda
Subaru, Central Salt Lake Valley GMC Enterprises, LLC, d/b/a Salt Lake Valley Buick
GMC, Capitol Chevrolet Cadillac, Inc., Capitol Dealerships, Inc., d/b/a Capitol Toyota,
Beck Motors, Inc., filed this Consolidated Class Complaint on behalf of themselves and
all others similarly situated. In their proposed class action, Automobile Dealer Plaintiffs
allege that the largest suppliers of Automotive Wire Harness Systems engaged in a
“massive, more than decade-long conspiracy to unlawfully fix and artificially raise the
prices of these products.” (Doc. No. 85 at ¶ 1).
In their Corrected Consolidated Amended Class Action Complaint (Doc. No.
174), End-Payor Plaintiffs (“EPPs”) Rebecca Lynn Morrow, Erica Shoaf, Ifeoma Adams,
Melissa Barron, John Hollingsworth, Meetesh Shah, Gary Arthur Herr, Michael Tracy,
Jane Taylor, Jennifer Chase, Darrel Senior, AGA Realty LLC, James Marean, Ron
Blau, Roger Olson, Susan Olson, Nilsa Mercado, Darcy Sherman, Curtis Gunnerson,
David Bernstein, Ellis Winston McInnis, Thomas Wilson, Lauren C. Primos, Robert
Klingler, Jessica DeCastro, Lori Curtis, Virginia Pueringer, Nathan Croom, Richard
Stoehr, Edward Muscara, Michael Wick, Ian Groves, Tenisha Burgos, Jason Grala,
Peter Brook, Kathleen Tawney, Kelly Klosterman, Melinda Harr, DDS PC, Cindy Prince,
Paul Gustafson, Frances Gammell Roach, William Picotte, Phillip Young, Becky
Bergeson, Jessee Powell, Alena Farrell, Jane FitzGerald, Arthur Stukey, Janne Rice,
Robert Rice, Jr., Stacey Nickell, Carol Ann Kashishian, and Susan LaCava, on behalf of
themselves and all others similarly situated, bring a class action for damages, injunctive
relief, and other relief pursuant to federal antitrust laws and state antitrust, unfair
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competition, and consumer protection laws.
Both Automobile Dealer Plaintiffs and End-Payor Plaintiffs bring their actions
under Section 16 of the Clayton Act (15 U.S.C. § 26) to secure equitable and injunctive
relief against Defendants for violating Section 1 of the Sherman Act (15 U.S.C. § 1).
They also assert claims for actual and exemplary damages pursuant to state antitrust,
unfair competition, and consumer protection laws, and seek to obtain restitution,
recover damages, and secure other relief against Defendants for violations of the laws
of various states.
Defendants are manufacturers or sellers of Wire Harness Systems (“WHS”),
which are the “central nervous systems” of automotive vehicles and consist of wires or
cables and data circuits that run throughout the vehicles. (Doc. No. 85 at ¶ 130; Doc.
No. 174 at ¶ 124). According to the EPPs, wire harness systems include “automotive
electrical wiring, lead wire assemblies, cable bond, automotive wiring connectors,
automotive wiring terminals, electronic control units, fuse boxes, relay boxes, junction
blocks, power distributors, and speed sensor wire assemblies.” (Doc. No. 174 at ¶ 3).
The ADPs include two additional products in their definition of wire harness products:
automotive wire harnesses themselves and high voltage wiring. (Doc. No. 85 at ¶ 3).
In their Consolidated Class Complaint, Automobile Dealer Plaintiffs identify
several groups of Defendants: the Delphi group, the Fujikura group (Doc. No. 85 at ¶¶
91-93), the Furukawa group (Doc. No. 85 at ¶¶ 94-97), the Lear group (Doc. No. 85 at
¶¶ 98-101), the Leoni group (Doc. No. 85 at ¶¶ 102-107), the Sumitomo group (Doc.
No. 85 at ¶¶ 108-114), the S-Y Systems and Yazaki group (Doc. No. 85 at ¶¶ 115-120),
the Tokai Rika group (Doc. No. 85 at ¶¶ 121-123) and the G.S. Electech group (Doc.
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No. 85 at ¶¶ 124-126). End-Payor Plaintiffs identify the same Defendants but add
DENSO Corporation and DENSO International America, Inc. (See Doc. No. 174 at ¶¶
83-83). The Defendant groups control about 90% of the global market, which is in
excess of a 21.9 billion dollar industry. (Doc. No. 85 at ¶¶ 140-141; Doc. No. 174 at ¶
143). The groups are made up of affiliated entities as follows:
The Delphi group, which controls 16.71% of the global
market, includes Defendants Delphi Automotive LLP, Delphi
Automotive Systems LLC (“Delphi LLC”), DPH Holdings
Corporation, and Delphi Furukawa Wiring Systems LLC.
(Doc. No. 85 at ¶¶ at ¶ 137; Doc. No. 174 at ¶¶ 72-82).
The Fujikura Group includes Fujikura, Ltd. and Fujikura
America, Inc. and controls 2.69% of the global market. (Doc.
No. 85 at ¶¶ 148; Doc. No. 174 at ¶¶ 86-88).
The Furukawa group, which controls almost 4% of the global
market (Doc. No. 85 at ¶¶ 146; Doc. No. 174 at ¶¶ 89-92,
162), includes Furukawa Electric, American Furukawa, Inc.,
Furukawa Wiring Systems, America, Inc. (Id.).
The Lear group includes Lear Corporation and KyungshinLear Sales and Engineering, LLC. and controls almost 5% of
the global market. (Doc. No. 85 at ¶¶ 98-101; Doc. No. 174
at ¶¶ 93-96, 162).
The Leoni group controls 6% of the global market for WHS
and includes Leoni AG, Leoni Wiring Systems, Inc.,
Leonische Holding, Inc., Leoni Kabel, GMBH, and Leoni
Wire Inc. (Doc. No. 85 at ¶¶ 02-102-107; Doc. No. 174 at
162).
The Sumitomo group, which is the “second largest
manufacturer of WHS,” controls 24%of the global market. It
includes Sumitomo Electric Industries, Ltd., Sumitomo
Wiring Systems, Ltd., Sumitomo Electric Wiring Systems,
Inc., K&S Wiring Systems, Inc., Sumitomo Wiring (U.S.A.)
Inc., and Sumitomo Electric Wintec America, Inc. (Doc. No.
85 at ¶¶ 108-114; Doc. No. 174 at ¶ 103).
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The S-Y Systems group includes S-Y Systems Technologies
Europe, GMBH, Yazaki Corporation, S-Y Systems
Technologies, America, LLC, Yazaki North America, Inc.
(Doc. No. 85 at ¶ 143; Doc. No. 174 at ¶¶ 110-114).
Defendants Yazaki Corporation and Yazaki North America,
Inc. make up the Yazaki Group. The Yazaki group
controlled almost 30% of the global market as of 2009.
(Doc. No. 85 at ¶ 142). Wire Harness System sales
comprise 77% of its business, and it supplies Toyota,
Chrysler, Ford, Renault-Nissan, Honda, and General Motors.
(Id.)
The Tokai Rika group includes TRAM, Inc. and Tokai Rika
Co., Ltd. (Doc. No. 84 at ¶¶ 121-123; Doc. No. 174 at ¶¶
115-117).
The G.S. Electech group includes G.S. Electech, Inc. and
G.S.W. Manufacturing, Inc. (Doc. No. 85 at ¶¶ 124-126;
Doc. No. 174 at ¶¶ 118-120).
II. FACTUAL ALLEGATIONS
The IPPs allege that they were injured because some portion of an overcharge
resulting from the conspiracy was passed through the distribution chain to them. EndPayor Plaintiffs “purchased Automotive Wire Harness Systems indirectly from one or
more of the Defendants. By way of example, an owner of a vehicle may indirectly
purchase an Automotive Wire Harness System from Defendants as part of purchasing
or leasing the new vehicle.” (Doc. No. 174 at ¶ 141). The WHS could be purchased
indirectly as a replacement when repairing a damaged vehicle. (Id.) The ADPs
purchased the products indirectly, not from the auto parts suppliers, but from original
equipment manufacturers (“OEMs”). (Doc. No. 85 at ¶ 139). Automobile OEMs install
Wire Harness Systems “in new vehicles as part of the automotive manufacturing
process.” (Doc. No. 85 at ¶ 133). Wire Harness Systems also are installed in vehicles
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to replace worn out, defective, or damaged automotive Wire Harnesses. (Id.)
The purchase process involves a Request for Quotation (RFQ) issued by OEMs
to the parts suppliers. Auto parts suppliers submit quotations or bids in response, and
the supplier that is selected typically supplies the part for four to six years, or the life of
the model at issue. (Id. at ¶ 135; Doc. No. 174 at ¶ 139). The bid process begins
about three years before the start of production. (Id.) Component manufacturers also
purchase WHS directly. (Doc. No. 85 at ¶ 134).
According to IPPs’ complaints:
Defendants and the co-conspirators supplied Automotive
Wire Harness Systems to OEMs for installation in vehicles
manufactured and sold in the United States and elsewhere.
Defendants and their co-conspirators manufactured
Automotive Wire Harness Systems (a) in the United States
(including in all of the states having laws permitting recovery
of damages by indirect purchasers, as listed infra), for
installation in vehicles manufactured and sold in the United
States (including all of the states having laws permitting
recovery of damages by indirect purchasers as listed infra),
(b) in Japan, and possibly other countries, for export to the
United States (including all of the states having laws
permitting recovery of damages by indirect purchasers, as
listed infra) and installation in vehicles manufactured and
sold in the United States (including all of the states having
laws permitting recovery of damages by indirect purchasers
as listed infra), and (c) in Japan, and possibly other
countries, for installation in vehicles manufactured in Japan,
and possibly other countries, for export to and sale in the
United States (including all of the states having laws
permitting recovery of damages by indirect purchasers, as
listed infra).
(Doc. No. 85 at ¶ 158; Doc. No. 174 at ¶ 140).
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A. Market Conditions
The Indirect Purchaser Plaintiffs allege that although costs remained steady,
Defendants increased prices for WHS. (Doc. No. 85 at ¶¶ 152-155; Doc. No. 174 at ¶¶
151-153). Other market conditions make the WHS market “particularly attractive” to
collusion. (Doc. No. 85 at ¶ 156; Doc. No. 174 at ¶ 154). Specifically, high start-up
costs hinder new entrants to business, in particular, costs associated with
“manufacturing plants, equipment, energy, transportation, distribution infrastructure,
skilled labor, and long-standing customer relationships.” (Doc. No. 85 at ¶ 158; Doc.
No. 174 at ¶¶ 155-157). In addition, demand for WHS is highly inelastic: there are no
close substitutes for the products, which are essential. (Doc. No. 85 at ¶¶ 161-163;
Doc. No. 174 at ¶¶ 158-160). Lastly, the WHS market is highly concentrated, making it
more susceptible to collusion. (Doc. No. 85 at ¶¶ 164-165; Doc. No. 174 at ¶¶ 161162).
In addition to market conditions favorable to collusion, IPPs allege that
Defendants had ample opportunities to conspire. They regularly attended industry
events, which provided an opportunity to meet “under the guise of legitimate business.”
(Doc. No. 85 at ¶¶ 166-167; Doc. No. 174 at ¶ 163). Several examples are identified:
the North American International Auto Show and the Automotive Aftermarket Products
Expo. (Id.)
B. Investigations
Government investigations into the suppliers of WHS originated in Europe after
several European OEMs brought a complaint to the European Commission (“EC”).
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(Doc. No. 85 at ¶ 169; Doc. No. 174 at ¶ 165). In February 2010 and in June 2010, the
EC conducted raids on the offices of several defendants. (Doc. No. 85 at ¶¶ 170-75;
Doc. No. 174 at ¶ 166). Also in February 2010, Japan’s Fair Trade Commission
(“JFTC”) raided the Tokyo offices of Furukawa Electric, Sumitomo Electric, and Yazaki
Corporation, seeking evidence of collusion in the industry. (Doc. No. 85 at ¶ 172; Doc.
No. 174 at ¶ 168). Finally, FBI investigators raided three Detroit-area Japanese auto
parts makers as part of a federal antitrust investigation. (Doc. No. 85 at ¶ 174; Doc. No.
174 at ¶ 170).
On January 19, 2012, the JFTC issued Cease and Desist orders against Fujikura
Ltd., and Yazaki Corporation, and fined Sumitomo Electric, Fujikura Ltd., and Yazaki
Corporation based on bidding practices relating to WHS. (Doc. No. 85 at ¶ 177).
According to the JFTC, “Sumitomo Electric, Fujikura Ltd., and Yazaki Corporation all
violated Japan’s Antimonopoly Act by rigging bids to OEMs Toyota, Honda, Nissan, and
Fuji (manufacturer of Subaru-brand vehicles) on wire harnesses and related
products. . . [by] appointing the designated successful bidder and managing to have
the designated successful bidder win the bidding.” (Doc. No. 85 at ¶ 179). The JFTC
stated that the conspiracy began as early as July 2000, and that Furukawa Electric also
had participated in the bid-rigging conspiracy. (Doc. No. 85 at ¶¶ 180-81).
Several companies and their employees pleaded guilty. Furukawa Electric and
three of its executives pleaded guilty to conspiracy to rig bids, allocate customers, and
fix prices of WHS sold to automobile manufacturers in the United States and
elsewhere. (Doc. No. 85 at ¶¶ 183-196; Doc. No. 174 at ¶¶ 172-181). In January 2012,
Yazaki Corporation and four of its executives agreed to plead guilty to conspiring to rig
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bids, fix prices, and allocate customers for WHS, beginning in January 2000 through
February 2010. (See Doc. No. 85 at ¶¶ 197-206; Doc. No. 174 at ¶¶ 182-183). In April
2012, Fujikura, Inc. agreed to plead guilty to a conspiracy from January 2006 through
February 2010. (Doc. No. 85 at ¶¶ 207-08; Doc. No. 174 at ¶ 186). G.S. Electech, Inc.
also agreed to plead guilty to the same conduct involving speed sensor wire
assemblies. (Doc. No. 85 at at ¶¶ 212–213; Doc. No. 174 at ¶ 185). In March 2012,
DENSO pleaded guilty to antitrust violations relating to electronic control units. (Doc.
No. 174 at ¶ 184). To date, Defendants pleading guilty have agreed to pay criminal
fines totaling $770.75 million. (Doc. No. 174 at ¶ 187).
Automobile Dealer Plaintiffs assert that they absorbed a significant portion of the
overcharges they paid due to these illegal activities and they have suffered damages in
the “states where they reside, compensable by indirect purchaser laws.” (Doc. No. 85
at ¶ 215). EPPs allege that they have been injured in their business and property by
Defendants’ conspiracy and have paid more for WHS that they would have in the
absence of the unlawful conduct (Doc. No. 174 at ¶ 260).
Automobile Dealers Plaintiffs and End-Payor Plaintiffs allege that they were
unable to discover through the exercise of reasonable diligence, the existence of the
conspiracy until February 2010, when the EC raids first were publicized. (Doc. No. 85
at ¶ 234; Doc. No. 174 at ¶¶ 204-206, 208-216). They allege that as a result of the
fraudulent concealment the statute of limitations is tolled. (Doc. No. 85 at ¶ 241; Doc.
No. 174 at ¶¶ 207, 217).
Based on these allegations, IPPs advance federal and state law claims. In their
Collective Motion to Dismiss End-Payors’ and Automobile Dealers’ Complaints in their
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entirety, Collective Defendants challenge the sufficiency of the complaints, standing,
and whether the indirect purchaser plaintiffs can bring claims under the antitrust laws,
the consumer protection laws, and the unjust enrichment laws of various states.
III. STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(b)(6) allows district courts to dismiss a
complaint which fails “to state a claim upon which relief can be granted.” To survive a
motion to dismiss for failure to state a claim under Rule 12(b)(6), the plaintiff must show
that his complaint alleges facts which, if proven, would entitle him to relief. First Am.
Title Co. v. DeVaugh, 480 F.3d 438, 443 (6th Cir. 2007). “A complaint must contain
either direct or inferential allegations with respect to all material elements necessary to
sustain a recovery under some viable legal theory.” Weiner v. Klais & Co., 108 F.3d 86,
88 (6th Cir. 1997). When reviewing a motion to dismiss, the Court “must construe the
complaint in the light most favorable to the plaintiff, accept all factual allegations as
true, and determine whether the complaint contains enough facts to state a claim to
relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007). Although the federal procedural rules do not require that the facts alleged in the
complaint be detailed, “‘a plaintiff's obligation to provide the ‘grounds' of his ‘entitlement
to relief’ requires more than labels and conclusions, and a formulaic recitation of a
cause of action's elements will not do.' ” Twombly, 550 U.S. at 555; Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (“Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.”).
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IV. ANALYSIS
A. Sufficiency of the Antitrust Allegations
Collective Defendants rely on the arguments advanced in Defendants’ Collective
Memorandum in Support of Defendants’ Collective Motion to Dismiss the Direct
Purchaser Actions to challenge the sufficiency of the antitrust allegations. In addition,
they argue that ADPs and EPPs as indirect purchasers bear “even greater” pleading
burdens that Direct Purchaser Plaintiffs. Here, as indirect purchasers, ADPs and EPPs
seek recovery for losses attributable to the purchase of finished vehicles incorporating
wire harness systems and losses attributable to purchases of aftermarket replacement
parts.
Collective Defendants distinguish the IPPs from the Direct Purchaser Plaintiffs in
that in addition to the IPPs’ failure to support a broad industry-wide conspiracy, they
have failed to plausibly allege that any overcharge paid by an OEM for a WHS was
passed through the chain of distribution. Here, the complaints lack any allegations
regarding the aftermarket for any of the parts--there is no conduct relating to pricing in
the aftermarket, and there are numerous variables that play a part in how prices
charged are reached.
Collective Defendants’ strategy is to disassemble the guilty pleas. The Court
disregards this strategy because, here, the allegations suggest a broad industry-wide
conspiracy. Consequently, the existence of inferences that undermine a conspiracy
doe not undermine the sufficiency of the complaint, provided one such inference
suggests a plausible conspiracy. See Watson Carpet & Floor Covering, Inc. v. Mohawk
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Indus., Inc., 648 F.3d 452, 454-55 (6th Cir. 2011) (observing that when “a complaint
specifically alleges an express agreement to restrain trade and conduct by defendants
consistent with the agreement, a defendant cannot prevail at the pleading stage by
offering alternative explanations for the allegedly unlawful behavior”). Therefore, the
Court looks beyond each allegation, standing alone, to the guilty pleas that demonstrate
an express agreement existed to fix prices and allocate customers in a market with
conditions ripe for conspiratorial conduct. The factual allegations create “a reasonable
expectation that discovery will reveal evidence of illegal agreement” beyond those
parties that have pleaded guilty. Twombly, 550 U.S. at 556. Accord In re Polyurethane
Foam Antitrust Litig., 799 F. Supp. 2d 777, 782 (N.D. Ohio 2011) (relying on “specific
admissions” made during a governmental investigation that supported the “existence of
a conspiratorial agreement”). Accordingly, the Court denies Collective Defendants’
request to dismiss the complaints based upon the sufficiency of the allegations and
considers Collective Defendants’ argument that constitutional standing is lacking.
B. Constitutional Standing
1. Injury-in-fact
“Article III of the Constitution confines the federal courts to adjudicating actual
‘cases' and ‘controversies.’” National Rifle Ass'n of Am. v. Magaw, 132 F.3d 272, 279
(6th Cir. 1997). The “requirement limits the Court's authority to legal issues ‘which are
traditionally thought to be capable of resolution through judicial process,’ ” Club Italia
Soccer & Sports Org., Inc. v. Charter Twp. of Shelby, Mich., 470 F.3d 286, 291 (6th Cir.
2006) overruled on other grounds as recognized by Davis v. Prison Health Servs., 679
13
F.3d 433 (6th Cir. 2012) (citing Owen of Georgia, Inc. v. Shelby Cnty., 648 F.2d 1084,
1089 (6th Cir. 1981)), a limitation that insures “that the litigants possess ‘a personal
stake in the outcome of the controversy.’” Id. (citing Baker v. Carr, 369 U.S. 186, 208
(1962)).
To demonstrate Article III standing, a plaintiff must first allege that he has
suffered an injury that is (a) concrete and particularized and (b) actual or imminent,
rather than conjectural or hypothetical. Lujan v. Defenders of Wildlife, 504 U.S. 555,
560 (1992). Second, the alleged injury must be fairly traceable to the defendant's
conduct, and not the result of the independent action of a third party. Id. Third, the
plaintiff must allege that a favorable federal court decision is likely to redress the
alleged injury. Id. at 561.
According to Collective Defendants, Indirect Purchaser Plaintiffs have not
alleged that they suffered an actual injury because of the alleged conspiracy, and the
relevant facts to not support the existence of an injury. In the absence of an injury, they
lack standing to sue under Article III of the Constitution. Specifically, Collective
Defendants contend that IPPs have not alleged facts that support their contention that
an overcharge to the direct purchasers was passed on to the ADPs and EPPs in the
purchase or lease of vehicles containing the price-fixed WHS or in the purchase of
stand-alone WHS in the aftermarket or as a replacement part. Because ADPs and
EPPs are indirect purchasers, their complaints must include two allegations: (1)
Collective Defendants overcharged the direct purchasers; and (2) some or all of the
overcharge was passed on to them through each of the various intermediate levels of
the distribution chain. See In re Graphics Processing Units Antitrust Litig., 253 F.R.D.
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478, 502 (N. D. Cal. 2008) (“In re GPU”) (observing that “indirect purchasers must prove
that an overcharge was levied on direct purchaser of the defendants’ products, who
then passed all or some of that overcharge through to the indirect purchasers”).
To challenge the plausibility that the conspiracy caused an injury, Collective
Defendants note not only the protracted distribution chain for vehicles, but also the
lengthy passage of time between the submission of WHS bids to the OEMs and the
actual manufacture of the products. They raise the minimal cost percentage of a WHS
relative to a finished vehicle. Lastly, Collective Defendants contend that Indirect
Purchaser Plaintiffs did not meet their pleading burden because they do not include
allegations as to whether an identifiable portion of the overcharges resulting from pricefixing was passed on at each step in the chain–-tracking the product itself is not
enough. There is no allegation as to how the overcharge impacted the OEM’s sale
price of the finished product to a dealer or how the overcharge could have impacted the
negotiated sale price to an end-payor.
The Court recognizes that IPPs face a difficult challenge in succeeding on their
claims. They must show that every reseller in the chain passed on some or all of the
alleged overcharge to demonstrate that the price of their vehicle was higher than it
would have been because of the overcharge on the wire harness system.
Nevertheless, the Sixth Circuit has made it clear that “an economic injury is sufficient to
confer standing upon a party.” Club Italia Soccer & Sports Org., 470 F.3d at 294.
Collective Defendants have cited no authority requiring an indirect purchaser to allege
the detailed mechanics of the pass-through process to plead injury-in-fact and
causation for purposes of constitutional standing to survive a Rule 12(b)(6) motion. To
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the contrary, the cases cited by Collective Defendants are procedurally distinguishable
in that the issue of the pass-through process was being considered at the class
certification or summary judgment stage. See e.g. In re GPU, 253 F.D.R. at 502
(discussing certification of subclasses under Rule 23(b)(3)); A&M Supply Co. v.
Microsoft Corp., 654 N.W.2d 572, 575 (Mich. Ct. App. 2002) (appeal of class
certification order); Karofsky v. Abbott Labs., No. CV-95-1009, 1997 WL 34504652 (Me.
Super. Ct. Oct. 16, 1997) (class certification); In re New Motor Vehicles Canadian Exp.
Antitrust Litig., 632 F. Supp. 2d 42, 59 n.21 (D. Me. 2009) (summary judgment motion).
In contrast, here, for purposes of Rule 12(b)(6), the allegations need not be
detailed. Indirect Purchaser Plaintiffs have alleged that Wire Harness Systems “follow a
traceable physical chain of distribution” from Defendants to Plaintiffs and “any costs
attributable to wire harness systems can be traced through the chain of distribution to
Plaintiffs and members of the Classes. (Doc. No. 85 at ¶ 231; Doc. No. 174 at ¶ 201).
They have met their pleading obligations. The shortcomings identified in Collective
Defendants’ laundry list of missing allegations are allegations addressing how OEMs
price their vehicles and how the price of component parts affects the price of the
finished vehicle: including, how estimated demand impacts price; whether OEMs
simply absorb the overcharges by reduced profit margin on each vehicle; and whether
OEMs sometimes sell cars below cost of production because of competition. The
shortcomings may provide a basis for Collective Defendants to prevail on a motion for
summary judgment, but do not provide a basis for dismissal under Rule 12(b)(6).
In sum, a buyer who is induced to pay an unlawfully inflated price for goods or
services obviously suffers an actual injury, that is, an injury-in-fact. Chattanooga
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Foundry and Pipe Works v. City of Atlanta, 203 U.S. 390, 396 (1906). Here, even if the
Automobile Dealer Plaintiffs passed the overcharge on to the End-Payor Plaintiffs,
ADPs are not deprived of standing to sue. S. Pacific Co. v. DarnellTaenzer Lumber
Co., 245 U.S. 531, 534 451 (1918) (observing “that the plaintiff who has subsequently
passed on the overcharge to his customers is no more deprived of standing to sue than
is the claimant whose loss happens to be covered by insurance”). Accordingly, the
Court rejects this ground as a basis for dismissal and turns to Collective Defendants’
residency argument.
2. Residency
The parties disagree as to whether Indirect Purchaser Plaintiffs have standing to
pursue claims in states where no named plaintiff resides. Specifically, no Automobile
Dealer Plaintiff resides in Hawaii1, Maine, Montana, North Dakota, South Carolina, or
Vermont; no End-Payor Plaintiff resides in the District of Columbia. Collective
Defendants rely on case law from this district to support their position that IPPs may not
proceed in any state without a resident plaintiff. See In re Refrigerant Compressors
Antitrust Litigation, No. 09-md-02042, 2012 WL 2917365 (E.D. Mich. July 17, 2012)
(holding that the antitrust class action plaintiffs had no standing to sue in states where
no would-be representative of the plaintiff class lived or allegedly was injured) (citing In
re Packaged Ice Antitrust Litig., 779 F. Supp. 2d 657 (E.D. Mich. 2011)). In response to
1
It appears that one ADP resides in Hawaii. That complaint in that case was filed
under seal as required by state law. Because the attorney general declined to
prosecute the action, the complaint has been unsealed, and the ADP has been given
permission to proceed by the deputy attorney general. (See Doc. No. 390, Ex. 2).
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Collective Defendants’ argument, IPPs challenge whether a decision on standing
should be deferred until class certification.
Generally, an Article III court determines whether a plaintiff has standing at the
outset of a case. See Cent. States Se. & Sw. Areas Health & Welfare Fund v. MerckMedco Managed Care, LLC, 433 F.3d 181, 197-98 (2d Cir. 2005). Exceptions exist
however, and in Ortiz v. Fibreboard Corp., 527 U.S. 815, 831 (1999), the Supreme
Court reiterated one such exception it articulated in Amchem Prod., Inc. v. Windsor,
521 U.S. 591, 612 (1997). Notably, the Supreme Court endorsed postponing the
standing determination until after a class certification ruling because the certification
issues are “logically antecedent to Article III concerns.” In Amchem Prods., the district
court rejected the defendant’s adequacy challenge to a class of plaintiffs that had
merely been exposed to asbestos. The defendants argued that the class did not meet
the amount in controversy requirements for diversity jurisdiction. That group of plaintiffs
had not suffered an injury that the proposed settlement compensated. The Court
deferred ruling on the motion to dismiss.
Courts have reached different conclusions as to what impact, if any, Ortiz and
Amchem create in the context of an indirect purchaser antitrust class action. The Sixth
Circuit has not weighed in, but it has applied the rationale in an ERISA class action law
suit. In Fallick v. Nationwide Ins. Mut. Co., 162 F.3d 410 (6th Cir. 1998), the plaintiff
sought to represent members of several of the defendant’s benefit plans, including
plans to which the plaintiff did not belong. The appellate court reversed the lower
court’s dismissal of those allegations pertaining to the plans in which the plaintiff did not
participate for lack of standing. The Sixth Circuit reasoned that the plaintiff could
18
represent plans other than his own because his challenge was “to the general practices
affecting all of the plans.” Id. at 422. Thus, once a named plaintiff’s standing has been
established, his capacity to seek relief for absent members of the proposed class are to
be determined under Rule 23. Id.
In Hovering v. Transnation Title Ins. Co., 545 F. Supp. 2d 662, 667 (E.D. Mich.
2008), the district court found “no reason not to apply the same rationale” to the class
action case before it, which involved a Michigan plaintiff bringing claims under the
insurance laws of other states. The plaintiff challenged the defendant’s practice of
overcharging on title insurance policy premiums where residential properties were
refinanced within two years of a prior mortgage loan and title policy. Id. at 664.
According to the plaintiff, the insurance companies filed title insurance rates that
committed to charging less on a policy premium when “the second transaction was
within two years of the previous policy issuance.” Id. In reaching its conclusion that a
decision on standing should be deferred until class certification had been decided, the
district court noted:
Even if the plaintiff has standing to assert claims in
[Michigan]. . .to proceed as a representative of a class he
must still establish that this claim is typical of those individual
whose claims arise under the laws of other states and he
can represented those individual adequately. That
determination must be made before the Court can decide
whether the plaintiff has standing to maintain a class action
as the named plaintiff; and therefore the decision on class
certification is logically antecedent to the determination of
standing. For example, with the facts presented in the
complaint, the plaintiff certainty could not file an individual
suit only seeking relief under Arizona law; however, a
member of his proposed class from that state likely would
have suffered an injury that could be redressed under
Arizona law. The defendant has not seriously challenged
19
the plaintiff’s standing to assert his claim arising from the
alleged overcharge on his own refinancing transaction. The
question whether he has standing to proceed as a class
representative will be subsumed in the class certification
decision. . . .
Id. at 667-68. Accord In re Polyurethane Foam Antitrust Litig.. 799 F. Supp. 2d 777,
806 (N.D. Ohio 2011) (because “the supposed standing deficiencies. . .arise because
the [i]ndirect [p]urchaser [p]laintiffs invoke state antitrust and consumer protection
statutes for each state from which putative class members are drawn,” the first step is
to “determine whether the [i]ndirect [p]urchaser [p]laintiffs may, as class
representatives, advance their state-law claims at class certification”).
In contrast to the Hovering decision, in deciding a standing issue raised by the
manufacturers of refrigerant compressors, the district court in In re Refrigerant
Compressors, 2012 WL 2917365, held that the antitrust class action plaintiffs had no
standing to sue in states where no would-be representative of the plaintiff class lived or
allegedly was injured. Only indirect purchaser plaintiffs residing in and having been
injured in a particular state possessed constitutional standing to assert claims under the
laws of those states. Accord In re GPU I, 527 F. Supp. 2d at 1026-27 (holding that
standing could “be addressed before class certification where. . .the court is not
considering a global class settlement”) (citation omitted).
Although there is no definitive Sixth Circuit authority, the Court finds the better
path is to defer this issue until the class certification stage. The Indirect Purchaser
Plaintiffs allege injury based on price-fixing, bid-rigging, and customer allocation. They
advance claims for relief under the statutes of the jurisdictions in which they reside but
seek similar relief for absent class members under the antitrust and consumer
20
protection statutes of other states. The plaintiffs do not seek relief for themselves
under the laws of the states where no plaintiff resides. See Ramirez v. STI Prepaid
LLC, 644 F. Supp. 2d 496 (D. N.J. 2009) (rejecting the defendants' argument that the
plaintiffs could not bring claims based on the violation of consumer protection laws in
states where the named plaintiffs did not suffer injury); In re Bayer Corp. Combination
Aspirin Prods. Mktg. & Sales Practices Litig., 701 F. Supp. 2d 356, 377 (E.D. N.Y.
2010) (explaining that “[w]hether the named plaintiffs have standing to bring suit under
each of the state laws alleged is ‘immaterial’ because they are not bringing those claims
on their own behalf, but are only seeking to represent other, similarly situated
consumers in those states.”); Indergit v. Rite Aid Corp., 2009 WL 1269250, at *4 (S.D.
N.Y. May 4, 2009) (observing that “once a named plaintiff establishes individual
standing, the issue of whether a named plaintiff can assert claims on behalf of absent
class members is determined at the class certification stage of the litigation”).
The Court recognizes this approach permits the IPPs to engage in discovery
regarding alleged violations of state laws in the absence of absolute certainty that any
individual suffered an injury under those laws. See In Re Wellbutrin XL Antitrust Litig.,
260 F.R.D. 143, 155 (E.D. Pa. 2009) (“In re Wellbutrin”) (finding that certifying a class
action without named plaintiffs who have standing to assert each claim would “allow
named plaintiffs in a proposed class action, with no injuries in relation to the laws of
certain states referenced in their complaint, to embark on lengthy class discovery with
respect to injuries in potentially every state in the Union.”). Here, the nature of the
claims, however, provides the Court with ample reason to address the standing issues
in the context of class certification. Consequently, the Court denies Collective
21
Defendants' request to dismiss the claims brought under the laws of states in which no
named IPPs reside.
In sum, the Court finds that IPPs may proceed with their federal antitrust claims.
Collective Defendants also challenge the state law claims, and the Court now considers
the arguments advanced to support dismissal of those claims.
C. Availability of Relief under State Law
Automobile Dealer Plaintiffs do not distinguish between state antitrust and
consumer protection statutes in their complaint. They seek relief under the laws of
thirty states and the District of Columbia: Arizona (Doc. No. 85 at ¶ 261), Arkansas
(Doc. No. 85 at ¶ 262), California (Doc. No. 85 at ¶ 263), District of Columbia (Doc. No.
85 at ¶ 264), Florida (Doc. No. 85 at ¶ 265), Hawaii (Doc. No. 85 at ¶ 266), Illinois (Doc.
No. 85 at ¶ 267), Iowa (Doc. No. 85 at ¶ 268), Kansas (Doc. No. 85 at ¶ 269), Maine
(Doc. No. 85 at ¶ 270), Massachusetts (Doc. No. 85 at ¶ 271), Michigan (Doc. No. 85 at
¶ 272), Minnesota (Doc. No. 85 at ¶ 273), Mississippi (Doc. No. 85 at ¶ 274), Missouri
(Doc. No. 85 at ¶ 275), Montana (Doc. No. 85 at ¶ 276), Nebraska (Doc. No. 85 at ¶
277), Nevada (Doc. No. 85 at ¶ 278), New Hampshire (Doc. No. 85 at ¶ 279), New
Mexico (Doc. No. 85 at ¶ 280), New York (Doc. No. 85 at ¶ 281), North Carolina (Doc.
No. 85 at ¶ 282), North Dakota (Doc. No. 85 at ¶ 283), Oregon (Doc. No. 85 at ¶ 284),
South Carolina (Doc. No. 85 at ¶ 285), South Dakota (Doc. No. 85 at ¶ 286),
Tennessee (Doc. No. 85 at ¶ 287), Utah (Doc. No. 85 at ¶ 288), Vermont (Doc. No. 85
at ¶ 289), West Virginia (Doc. No. 85 at ¶ 290), and Wisconsin (Doc. No. 85 at ¶ 291).
In IPPs’ response brief, however, they indicate that ADPs are not seeing relief
under the consumer protection laws of Arizona, Kansas, Michigan, Minnesota, New
22
Mexico, North Dakota, North Carolina, Rhode Island, South Dakota, or the District of
Columbia. (Doc. No. 390 at 21 n.16, n.17, and 23 n.18). In addition ADPs do not
oppose dismissal of their antitrust claim under Massachusetts or Missouri law. (Doc.
No. 390 at 32).
Accordingly, the Court declines to address arguments raised relative
to the dismissal of those claims.
EPPs bring antitrust claims under the laws of twenty-three states and the District
of Columbia: Arizona (Doc. No. 174 at ¶ 236) California (Doc. No. 174 at ¶ 237),
District of Columbia (Doc. No. 174 at ¶ 238), Iowa (Doc. No. 174 at ¶ 239), Kansas
(Doc. No. 174 at ¶ 240), Maine (Doc. No. 174 at ¶ 241), Massachusetts (Doc. No. 174
at ¶ 242), Michigan (Doc. No. 174 at ¶ 243), Minnesota (Doc. No. 174 at ¶ 244),
Mississippi (Doc. No. 174 at ¶ 245), Nebraska (Doc. No. 174 at ¶ 246), Nevada (Doc.
No. 174 at ¶ 247), New Hampshire (Doc. No. 174 at ¶ 248), New Mexico (Doc. No. 174
at ¶ 249), New York (Doc. No. 174 at ¶ 250), North Carolina (Doc. No. 174 at ¶ 251),
North Dakota (Doc. No. 174 at ¶ 252), Oregon (Doc. No. 174 at ¶ 253), South Dakota
(Doc. No. 174 at ¶ 254), Tennessee (Doc. No. 174 at ¶ 255), Utah (Doc. No. 174 at ¶
256), Vermont (Doc. No. 174 at ¶ 257), West Virginia (Doc. No. 174 at ¶ 258),
Wisconsin (Doc. No. 174 at ¶ 259). EPPs do not oppose dismissal of their antitrust
claim under Massachusetts law. (Doc. No. 390 at 32).
End-Payor Plaintiffs bring consumer protection claims under the laws of
California (Doc. No. 174 at ¶ 265), the District of Columbia (Id. at ¶ 266), Florida (Id. at
¶ 267), Hawaii (Id. at ¶ 268), Massachusetts (Id. at ¶ 269), Missouri (Id. at ¶ 270),
Montana (Id. at ¶ 271), New Mexico (Id. at ¶ 272), New York (Id. at ¶ 273), North
Carolina (Id. at ¶ 274), Rhode Island (Id. at ¶ 275), and Vermont (Id. at ¶ 276). In their
23
response brief, EPPs agreed to dismissal of their claim under § 30-14-201(1) of
Montana law, which they included inadvertently. (Doc. No. 390 at p. 31 n.31).
Neither complaint specifically identifies the source of state law upon which their
claims of unjust enrichment are based. ADPs “incorporate by reference the allegations
in the preceding paragraphs.” (Doc. No. 85 at ¶ 296). EPPs likewise “incorporate by
reference the allegations in the preceding paragraphs.” (Doc. No. 174 at ¶ 277).
Collective Defendants challenge the viability of the state law claims on numerous
grounds. The Court first turns to the arguments raised relative to IPPs’ state antitrust
claims. Collective Defendants raise numerous grounds for dismissal: lack of antitrust
standing; the claims predate the enactment of the state statute; statutory prohibitions on
class actions; and failure to state a claim under the relevant statute. The Court
addresses the arguments below.
1. Antitrust Standing
In response to the prohibition against antitrust actions by indirect purchasers set
forth by the Supreme Court in Illinois Brick Co. v. Illiniois, 431 U.S. 720 (1977), many
states enacted repealer provisions, allowing state actions for indirect purchasers. In
California v. ARC Am. Corp., 490 U.S. 93, 105-06 (1989), the Supreme Court held that
state indirect purchaser statutes are not preempted by federal law.
Nevertheless, courts are required to determine whether a particular plaintiff is a
proper party to bring a private antitrust action. NicSand, Inc. v. 3M Co., 507 F.3d 442,
450 (6th Cir. 2007) (observing that antitrust claimant must show more than mere “injury
causally linked” to a competitive practice). In its decision in Associated Gen.
Contractors of Cal., Inc. v. Cal, State Council of Carpenters, 459 U.S. 519, 535 (1983)
24
(“AGC”), the Supreme Court interpreted the Clayton Act provision permitting recovery
by “any person who shall be injured in his business or property by reason of anything
forbidden in the antitrust laws”. The Court concluded that even when a plaintiff
plausibly alleges an injury-in-fact sufficient for constitutional standing, the plaintiff still
must establish antitrust standing. “It is reasonable to assume that Congress did not
intend to allow every person tangentially affected by an antitrust violation to maintain an
action to recover threefold damages for the injury to his business or property.” Id.
(quoting Blue Shield of Virginia, Inc. v. McCready, 457 U.S. 465, 477 (1982)).
In AGC, the Supreme Court articulated a number of factors that courts should
consider in analyzing the relationship between a plaintiff's harm and a defendant's
wrongdoing: (1) the causal connection between the violation and the harm, and whether
the harm was intended; (2) the nature of injury and whether it was one Congress sought
to redress; (3) the directness of the injury, and whether damages are speculative; (4)
the risk of duplicate recovery or complexity of apportioning damage; and (5) the
existence of more direct victims. AGC, 459 U.S. at 537-45. A plaintiff need not prevail
on every factor, instead, the courts balance the factors, “giving great weight to the
nature of the plaintiff's alleged injury.” Id. Collective Defendants maintain that the
balancing test weighs against standing.
Indirect Purchaser Plaintiffs argue AGC does not apply to claims brought under
the state antitrust statutes. They distinguish AGC because it interprets federal antitrust
law in a different context. They conclude that it was never intended to apply to indirect
purchasers’ claims of price-fixing under state law because Illinois Brick barred these
25
claims under federal law. The Court agrees with IPPs that the facts giving rise to the
claims in AGC are distinguishable.
The plaintiff labor union in AGC, sued a multi-employer association with whom it
had a contract, as well as some of the association’s members. AGC, 459 U.S. at 520.
The plaintiff alleged that the defendants conspired to coerce third parties and other
association members to enter into business relationships with nonunion companies. Id.
According to the plaintiffs, the conspiracy diminished the trade of certain unionized
firms and restrained the union's business activities. In analyzing the facts before it, the
Supreme Court found the claims fell within the scope of contact law, labor law, or
common-law fraud, but did not state a claim under antitrust law. Id. at 527.
Despite the different factual context, the Court rejects IPPs’ argument that AGC
does not factor into the standing analysis. The issue of applicability of AGC is one that
is governed by state law because this Court is sitting in diversity. Erie R.R. v.
Tompkins, 304 U.S. 64 (1938). Therefore, to determine the applicability, this Court
must apply the substantive law of the state's highest court. Id. Moreover, where a clear
rule of law cannot be gleaned from the state's highest court, the duty of this court is to
“ascertain from all available data what the state law is and apply it.” Bailey v. V & O
Press Co., 770 F.2d 601, 604 (6th Cir. 1985).
In support of their respective positions, the parties provide charts and case and
statutory authority in their exhibits referencing the twenty-four states identified as
sources of antitrust violations. (See Doc. No. 237, Ex. D; Doc. No. 390, Ex. 3). The
Court has reviewed the authority, which demonstrates that some states apply the AGC
factors, some states have enacted harmonization statutes that require courts to
26
interpret the state antitrust laws in accordance with federal law, some states allow
consideration of federal law, and some have declined to adopt the AGC factors. Before
turning to the specific states at issue, the Court considers whether, assuming that the
factors articulated in AGC apply, IPPs have standing.
a. Antitrust Injury
In assessing whether a plaintiff suffered an antitrust injury, courts assess the
relevant market. Here, the parties dispute whether IPPs were participants in the
relevant market, which Collective Defendants characterize as the WHS market.
Collective Defendants contend that because IPPs bought vehicles containing the Wire
Harness Systems, they were not participants in the WHS market, they were participants
in the vehicle market. Specifically, Collective Defendants note that the only allegations
of fixed prices relate to the WHS, not the finished products containing the WHS. Yet,
Indirect Purchaser Plaintiffs participated in the vehicle market, a market that is
secondary to the allegedly price-fixed market. See In re Dynamic Random Access
Memory (DRAM) Antitrust Litig., 536 F. Supp. 2d 1129, 1137-38, 1141 (N. D. Ca. 2008)
(“In re (DRAM II”).
Some courts have rejected a strict “market-participant” test, and allowed indirect
purchasers to bring claims arising out of the purchase of finished products containing
allegedly-restrained products. In re TFT-LCD (Flat Panel) Antitrust Litig., 586 F. Supp.
2d 1109, 1121 (N.D. Ca. 2008) (“In re Flat Panel”) (citing D.R. Ward Constr. Co. v.
Rohm & Haas Co., 470 F.Supp.2d 485, 491 (E.D. Pa. 2006) (finding standing where
“plaintiffs allege that they paid an inflated price for plastics additives due to [the]
defendants' price-fixing agreement, thereby implying that the direct harm of the
27
price-fixing conspiracy was passed through the stream of commerce to them,
purchasers of products containing plastics additives”). See also Novell, Inc. v. Microsoft
Corp., 505 F.3d 302, 316 (4th Cir. 2007) (observing that the market participant
requirement test is not rigid). In In re (Flat Panel), the court considered allegations
similar to those advanced by IPPs and found them sufficient to establish factual
questions about the relevant market. 586 F. Supp. 2d at 1123. Notably, the plaintiffs
had alleged that the markets were inextricably linked and intertwined, that the
component had no utility except as a component, and that the demand for the product
drove the demand for the component. Id. See also Provice v. Cleveland Press Pub.
Co., 787 F. 2d 1047, 1052 (6th Cir. 1986) (observing that a plaintiff’s “injury must be
‘inextricable intertwined’ with the injury sought to be inflicted on the relevant market”).
In the alternative, the In re (Flat Panel) court observed that even if the plaintiffs
were not participants in the relevant market, the allegations still favored standing under
the first factor of AGC because the plaintiffs had alleged that the products were
“identifiable, discrete physical objects that did not change form or become an
indistinguishable part of the product in which they are contained, therefore they follow
“a traceable physical chain from the defendants to the OEMS to the purchasers of the
finished products.” 586 F. Supp. 2d at 1123. Accord In re GPU II, 540 F. Supp. 2d
1085, 1098 (N.D. Ca. 2007) (observing that allegations that the price-fixed component
part was “a separate and removable part of a finished computer, [and] any overcharge
would be passed on to the consumer” favored standing. Similar allegations are
included in the complaints in this case.
28
The markets for Automotive Wire Harness Systems and the
market for cars are inextricably linked and intertwined
because the market for Automotive Wire Harness Systems
exists to serve the vehicle market. Without the vehicles, the
Automotive Wire Harness Systems have little to no value
because they have no independent utility. Indeed, the
demand for vehicles creates the demand for Automotive
Wire Harness Systems. As Lear stated in its 2010 Annual
Report: “Our sales are driven by the number of vehicles
produced by the automotive manufacturers, which is
ultimately dependent on consumer and fleet demand for
automotive vehicles.”
(Doc. No. 174 at ¶ 200; Doc. No. 85 at ¶ 230).
In sum, IPPs have alleged that they paid higher prices for automobiles containing
WHS and that the price-fixed products remain unchanged after incorporation. They
further allege that Wire Harness Systems had no independent utility and that the
demand for vehicles create the demand for Wire Harness Systems. (Doc. No. 85 at ¶¶
130, 230-31; Doc. No. 174 at ¶¶ 124, 200-201). These allegations sufficiently allege
the existence of an antitrust injury. Therefore, the Court considers whether the
allegations satisfy the next AGC factor.
b. Directness of Injury
Collective Defendants assert that the distribution chain is complex and numerous
market factors affect the prices paid by IPPs. Therefore, the relevant market is
separated by the distribution chain, which renders IPPs’ claimed injuries speculative.
They have cited several cases supporting their position. First, in In re Dynamic
Random Access Memory (DRAM) Antitrust Litig., 516 F. Supp.2d 1072 (N. D. Cal.
2007) (“In re Dram I”), the court applied the AGC factors to a claim of price-fixing of a
component part and found standing lacking. The court noted that there was no “direct
29
link in the causation chain” between the challenged conduct and the increased prices of
the finished goods, and that the damage would be speculative and difficult to apportion
inasmuch as the relevant market allegations would be for finished goods containing the
component part. Even after the plaintiffs amended their complaint, their allegations
were insufficient to convince the court that they had standing to pursue their antitrust
claims. In re DRAM II, 536 F. Supp. 2d at 1136-37. Accord In re Potash Antitrust Litig,
667 F. Supp. 2d 907, 915, 945-46 (N.D. Ill. 2009) (holding that an indirect purchaser of
agricultural fertilizer containing price-fixed ingredient lacked antitrust standing due to
lack of allegation of a “chain of causation” between the alleged restraint in the market
and their injury”). See also Strange v. Visa U.S.A. Inc., No. 03-cv-011323, 2005 WL
1403769 (Wis. Cir. Ct. Feb. 8, 2005) (holding that any injury resulting from a transaction
fee imposed by credit card companies on merchants that resulted in higher prices paid
by plaintiffs for goods and services purchased from merchants too remote and
speculative to confer antitrust standing on the plaintiffs).
Nevertheless, there also is case law to the contrary. Specifically, in In re Flash
Memory Antitrust Litig., 643 F. Supp. 2d 1133, 1155 (N.D. Cal. 2009), the court
summarized:
In [In re Flat Panel] and [In re GPU I], the courts found that
indirect purchasers of components had satisfied their burden
of pleading directness of injury by alleging that the cost of
the component was traceable through the product
distribution chain. Compare [In re Flat Panel], 586
F.Supp.2d at 1123 (directness requirement met based on
allegations that cost of component part comprised a
substantial amount of the finished product cost and could be
traced through the distribution chain); GPU II, 540
F.Supp.2d at 1098 (same) with DRAM I, 516 F. Supp. 2d at
30
1092 (directness requirement not met where the “complaint
sets forth no allegations that, within the final purchase price
of a given product purchased by plaintiffs for ‘end use,’ the
ultimate cost of DRAM is somehow directly traceable or
distinguishable”).
Here, IPPs have alleged a chain of causation.
Automotive Wire Harness Systems are identifiable, discrete
physical products that remain essentially unchanged when
incorporated into a vehicle. As a result, Automotive Wire
Harness Systems follow a traceable physical chain of
distribution from the Defendants to Plaintiffs and the
members of the Classes, and any costs attributable to
Automotive Wire Harness Systems can be traced through
the chain of distribution to Plaintiffs and the members of the
Classes.
(See e.g. Doc. No. 174 at ¶ 201; Doc. No. 85 at ¶ 231). Because IPPs have alleged
that they can trace overcharges through the distribution chain, they have satisfied this
AGC factor.
c. Speculative Nature of the Harm
Pursuant to the AGC factors, courts consider whether the harm alleged is too
speculative. Collective Defendants present several arguments to support their position
that the harm here is so speculative as to undercut standing. For example, one hurdle
IPPs must overcome to establish that the alleged overcharge influenced the price paid
by IPPs is the sheer number of components in a finished vehicle. Another hurdle is the
existence of many other factors that play into the cost of a vehicle. Collective
Defendants conclude that these hurdles weigh against standing.
The Court recognizes the difficulties IPPs face in prevailing on the merits.
However, IPPs have alleged that the component parts remain separate and traceable
and that the impact of Defendants’ conspiracy on Plaintiffs’ businesses was substantial.
31
ADPs allege that an analysis of automobile dealer profit margins and other data
indicates that automobile dealers were substantially injured by higher but-for-prices
regardless of the pass on of some portion of such prices to end users. (Doc. No. 85 at ¶
214). They further allege that they did absorb a significant portion of the overcharges
that they paid due to Defendants’ illegal activities. (Id.) Similarly, EPPs allege that
competition was restrained, and they paid supracomepetitive, artificially inflated prices.
(See Doc. No. 174 at ¶ 202). These allegations distinguish this case from those cases
involving component part that mingle with the finished product to the extent that the
manufacturers could not be identified.
Although it may prove to be impossible to calculate and apportion damages for
IPPs, they have alleged that they can show what portion of the WHS price resulted from
the conspiracy, and the extent to which the overcharge amount affected the price paid
for the finished vehicle. They have met their pleading burden.
d. Duplicative Recovery
Next, Collective Defendants claim there is a pronounced risk of duplicative
recovery. End-Payor Plaintiffs and Automotive Dealer Plaintiffs seek overlapping
damages. Moreover, in this case, there is a direct purchaser class. Collective
Defendants conclude that standing cannot be condoned given the nature of this case.
The risk of duplicative recovery analysis is impacted by the fact that state
statutes authorize indirect purchasers to bring these claims. States have explicitly
repealed Illinois Brick, and this Court declines to undermine what the state legislatures
have condoned. Here, IPPs have indicated that the alleged overcharges are distinct
and traceable. Other courts have recognized that such allegations lessen the risk of
32
duplicative recovery. See In re Flash Memory, 643 F. Supp. 2d at 1156 (citing In re
Flat Panel, 586 F.Supp.2d at 1124; In re GPU II, 540 F.Supp.2d at 1098).
Because the Court finds that the pleadings are sufficient to demonstrate that the
AGC factors do not undermine standing, there is no need to determine whether the
various states identified in the ADPs and EPPs’ complaints apply those factors, whether
mandatory, permissive, or not at all in assessing the existence of antitrust standing.
2. Date of enactment of statute
Collective Defendants ask the Court to dismiss antitrust claims brought under the
laws of Hawaii, Nebraska, New Hampshire, and Utah because the conduct at issue
occurred before the statutes were enacted. Specifically, Hawaii and Nebraska enacted
their indirect purchaser statutes in 2002; Utah enacted its statute in 2006; and New
Hampshire enacted its indirect purchaser statute in 2008. According to Collective
Defendants, the statutes either expressly apply prospectively or the state courts have
refused to apply the statutes retroactively. The Court considers the arguments below,
but is mindful that although a date of enactment may limit damages, it does not
preclude any claim alleged here in its entirety.
a. Hawaii
In 2002, the Hawaii legislature amended the state's unfair competition law,
H.R.S. § 480–2, to provide that “[a]ny person may bring an action based on unfair
methods of competition. . . .” Based on this amendment, Collective Defendants argue
that ADPs’ antitrust claims under the law of Hawaii must be dismissed.
33
The argument that the passage of the 2002 amendment “impl[ies] that state law
had imposed an Illinois Brick limitation on lawsuits alleging price-fixing was flatly
rejected in In re Static Random Access Memory (SRAM) Antitrust Litig., 07-MD-01819
CW, 2010 WL 5094289 at *5 (N.D. Cal. Dec. 8, 2010). Accordingly, the Court declines
to limit the price-fixing claim based on the 2002 amendment.
b. Utah
In 2006, the Utah legislature amended that state's antitrust laws to provide that
actions “may be brought under this section regardless of whether the plaintiff dealt
directly or indirectly with the defendant.” Utah Code Ann. § 76-10-918. This statute took
effect on May 1, 2006. See Utah Const. Art. VI § 25 (unless otherwise ordered, an act
of the legislature takes effect “sixty days after the adjournment of the session at which it
passed”). Collective Defendants argue that IPPs cannot seek recovery for conduct that
occurred prior the respective effective dates.
IPPs do not respond to the argument. The Court finds that Illinois Brick was
applied prior to the 2006 amendment. See e.g., Boisjoly v. Morton Thiokol, Inc., 706 F.
Supp. 795, 805 (D. Utah 1988). Accordingly, IPPs’ antitrust claim is limited to pricefixing that occurred after the 2006 amendment.
c. Nebraska
Before the state legislature amended the Junkin Act, it allowed “[a]ny person who
shall be injured in his business or property” by an antitrust violation to bring a suit for
damages. Neb. Rev. Stat. § 59-821 (2000). The July 20, 2002, amendment specified
that an injured person could bring suit regardless of “whether such injured person dealt
34
directly or indirectly with the defendant.” In re Flat Panel Antitrust Litig., 2011 WL at
3738985 (citing 2002 Neb. Laws L.B. 1278; Neb. Rev. Stat. § 59-821 (2011)). The
court in that case rejected the defendants’ argument that the amendment did not apply
retroactively in the absence of expressed intention by the legislature even as it
conceded that the state courts generally did not give amendments retroactive effect.
The federal court held that the decision by the state supreme court in Arthur v.
Microsoft Corp., 676 N.W.2d 29 (Neb. 2004), showed that the highest court would allow
an indirect purchaser standing to sue for antitrust violations even before the 2002
amendment. Therefore, the Court finds no time limitation applies.
d. New Hampshire
New Hampshire enacted its indirect purchaser statute effective January 1, 2008.
See N.H. Rev. Stat. Ann. § 356:11. IPPs do not dispute that the statute was intended
to operate prospectively. Accordingly, IPPs cannot seek recovery under the New
Hampshire statute for any conduct that occurred prior to January 1, 2008.
3. Sufficiency of the Nexus Between Conduct and Intrastate
Commerce
The parties are in agreement that the antitrust statutes of certain states require a
plaintiff to allege a nexus between the defendant’s conduct and intrastate commerce.
Specifically, included in those states are Mississippi, Nevada, New York, North
Carolina, South Dakota, Tennessee, and West Virginia. The District of Columbia also
requires nexus allegations. The parties disagree as to whether the allegations in the
complaints satisfy the pleading requirements.
35
ADPs allege that the anticompetitive conduct complained of was “intentionally
directed at the market for Automotive Wire Harness Systems in all states allowing
indirect purchasers to collect damages, [including the states identified above] and that
the conduct “had a substantial and foreseeable effect on intrastate commerce by raising
and fixing prices for Automotive Wire Harness Systems through those states.” (Doc.
No. 85 at ¶ 259). In addition, ADPs allege that specific plaintiffs had their principal
places of business in the states identified above, that they purchased WHS and
vehicles containing WHS during the class period, and that the specific ADPs were
injured in those states through payment of inflated prices. (Doc. No. 85 at ¶¶ 22-23, 3435, 31-33, 38-39, 60-61, 64-65, 72-73, 84-85). Lastly, ADPs allege that Defendants
“manufactured Automotive Wire Harness Systems for installation in vehicles
manufactured and sold” in “all of the states having laws permitting recovery of damages
by indirect purchasers.” (Doc. No. 85 at ¶ 138). They conclude that these allegations
satisfy their burden.
End-Payor Plaintiffs allege that “price competition was restrained, suppressed,
and eliminated throughout” these states; that WHS prices “were raised, fixed,
maintained and stabilized at artificially high levels throughout” each state, and that
plaintiffs and other consumers were “deprived of free and open competition” and “paid
supracompetitive, artificially inflated prices” within each state. (Doc. No. 174 at ¶¶
238(a)-(b), 245(a)(-(b), 250(a)-(b); 251(a)-(b), 254(a)-(b), 255(a)-)(b), and 258(a)-(b)).
The Court considers whether these allegations satisfy the requirement in the challenged
states and District of Columbia.
36
a. Tennessee
Under Tennessee Code Annotated § 47-25-101 (2001) (emphasis added),
[a]ll arrangements, contracts, agreements, trusts, or
combinations between persons or corporations made with a
view to lessen, or which tend to lessen, full and free
competition in the importation or sale of articles
imported into this state, or in the manufacture or sale of
articles of domestic growth or of domestic raw material, and
all arrangements, contracts, agreements, trusts, or
combinations between persons or corporations designed, or
which tend, to advance, reduce, or control the price or the
cost to the producer or the consumer of any such product or
article, are declared to be against public policy, unlawful,
and void.
The provision was interpreted in Freeman Indus., LLC v. Eastman Chem. Co.,
172 S.W.3d 512, 516 (Tenn. 2005). The state court concluded that “the proper
standard for determining whether a case falls within the scope of the [statute] is a
substantial effects standard.” Id. Because the out-of-state plaintiff in the case before
the court never alleged that it purchased the price-fixed product from a defendant with
ties to Tennessee, the court found the standard was not satisfied. That is not the case
here, where in-state IPPs allege they purchased vehicles containing price-fixed
products in Tennessee. Accordingly, the Court rejects Collective Defendants’ request
for dismissal.
b. District of Columbia and Other States
The same outcome holds for the other states at issue. IPPs purchased pricefixed products that entered the state and therefore became subject to the antitrust laws
of that particular state and the District of Columbia. IPPs have presented authority to
37
establish that their allegations satisfy the law of the District of Columbia. Sun Dun, Inc.
of Washington v. Coca-Cola Co., 740 F. Supp. 381, 397 (D. Md. 1990) (allowing
discovery to ascertain whether an interstate link could be established even though none
of the defendants, nor the plaintiff were residents or citizens of the District of Columbia).
Further, IPPS have met the requirements of Mississippi, In re GPU II Antitrust Litig., 540
F. Supp. 2d at 1099 (holding that allegations that the defendants' conspiracy affected
commerce within Mississippi, satisfied requirement that the majority of an antitrust
conspiracy occur within the state) (citing Standard Oil Co. of Kentucky v. State, 107
Miss. 377, 65 So. 468, 471 (1914), overruled in part on other grounds sub nom.
Mladinich v. Kohn, 250 Miss. 138, 164 So.2d 785 (1964)). The allegations likewise
satisfy South Dakota's antitrust statute, S.D. Codified Laws § 37-1-3.1, which reads: “a
contract, combination or conspiracy between two or more persons in restraint of trade
or commerce any part of which is within this state is unlawful.” In re GPU II Antitrust
Litig., 540 F. Supp. 2d at 1099.
The allegations also meet the pleading requirements relative to Nev. Rev. Stat.
Ann. § 598A.060(1), which prohibits conduct that is part of a conspiracy in restrain of
trade in Nevada. See In re Flat Panel Antitrust Litig., 599 F. Supp. 2d at 1189 (finding
similar allegations sufficient to state a claim under the Nevada statute).
The allegations before this Court differ from those found lacking and insufficient
under New York law. Specifically, in H-Quotient, Inc. v. Knight Trading Grp., Inc., 03
CIV. 5889 (DAB), 2005 WL 323750 (S.D. N.Y. Feb. 9, 2005), the plaintiff included no
allegation that intrastate conduct, or New York's local interests, were affected by the
challenged conduct. That is not the case here.
38
Pursuant to the North Carolina Unfair and Deceptive Trade Practices Act
(“NCUDTPA”), N.C. Gen Stat. § 75-1 et seq, “[u]nfair methods of competition in or
affecting commerce, and unfair or deceptive acts or practices in or affecting commerce,
are declared unlawful.” In Lawrence v. UMLIC-Five Corp., No. 06 CVS 20643, 2007
WL 2570256, at *5-6 (N.C. Super. Ct., June 18, 2007), the state court held that a
foreign plaintiff may proceed under the NCUDTPA against a resident defendant even
when the injury did not occur in North Carolina, provided the injuries have a “substantial
in-state effect on North Carolina trade or commerce.” Jacobs v. Cent. Transp. Inc., 891
F.Supp. 1088, 1112 (E.D.N.C.1995), aff'd in relevant part, rev'd in part, 83 F.3d 415
(4th Cir. 1996). EPPs include a North Carolina resident who was injured when he
purchased a WHS. This allegations satisfied EPPs’ burden. Accord In re Flonase
Antitrust Litig., 692 F. Supp. 2d 524, 540-41 (E.D. Pa. 2010) (considering whether
allegations that large amounts of product sold in North Carolina at artificially inflated
prices satisfied the substantial in-state effect required by the statute).
Lastly, West Virginia antitrust law “is directed towards intrastate commerce.”
State ex rel. Palumbo v. Graley’s Body Shop, Inc., 425 S.E.2d 177, 183 n.11 (W. Va.
1992). The allegations in the complaints here allege an impact on intrastate commerce.
In sum, IPPs have alleged that WHS were transported into these states and
purchased by IPPs. Therefore, the price-fixed products entered into the stream of
commerce in these states and caused injury, thereby triggering the antitrust laws of the
states. As is the case with many other allegations in IPPs’ complaints, they still will
have to prove those pleaded facts.
39
4. Availability of Class Action in Illinois
Collective Defendants argue that the ADPs’ claim on behalf of themselves and
as representatives of classes of Illinois consumers must be dismissed. Illinois does not
allow an indirect purchaser plaintiff to maintain an antitrust claim as a class action. 740
Ill. Comp. Stat. §10/7(2); In re Digital Music Antitrust Litig., 812 F. Supp. 2d 390, 415-16
(2011) (dismissing putative class action under Illinois antitrust law).
In Shady Grove Orthopedic Assoc. v. Allstate ins. Co., 559 U.S. 393, 130 S.Ct.
1431, 1445 (2010), the Supreme Court held that Rule 23 applies in federal court unless
it “abridge[s], enlarge[s] or modif[ies] any substantive right” under the Rules Enabling
Act, 28 U.S.C. §2072(b). Although ADPs agree that the Act bars class actions, they
maintain that the bar is procedural and inapplicable in federal courts.
The dispute turns on the language of the statute itself. It reads:
Any person who has been injured in his business or
property, or is threatened with such injury, by a violation of
[the Illinois antitrust statute] may maintain an action in the
Circuit Court for damages, or for an injunction, or both,
against any person who has committed such violation. . . .
No provision of this Act shall deny any person who is an
indirect purchaser the right to sue for damages. . . .
Provided further that no person shall be authorized to
maintain a class action in any court of this State for indirect
purchasers asserting claims under this Act, with the sole
exception of this State's Attorney General, who may
maintain an action parens patriae as provided in this
subsection.
740 Ill. Comp. Stat. 10/7(2).
The court in In re Digital Music Antitrust Litig., 812 F. Supp. 2d 390, 416 (S.D.
N.Y. 2011), considered the very argument raised here and concluded that the
40
procedure was “so bound up with the state-created right or remedy that it defines the
scope of that substantive right or remedy.” The court based its conclusion on several
factors: that the procedural rule was contained in the same paragraph of the same
statute as the substantive right; and that the policy judgment reflected in the statute
addresses management of duplicative recovery by entrusting class actions to the
attorney general. Id. ADPs do not challenge the reasoning and fail to demonstrate it is
faulty. Accordingly, the Court dismisses ADPs’ antitrust claim under Illinois law.
D. Availability of Relief under State Consumer Protection Laws
Although End-Payor Plaintiffs did not oppose dismissal of their claims under
Montana law, they proceed on their claims that Defendants engaged in unfair
competition or unfair, unconscionable, deceptive or fraudulent acts in violation of the
laws of California (Doc. No. 174 at ¶ 265), the District of Columbia (Id. at ¶ 266), Florida
(Id. at ¶ 267), Hawaii (Id. at ¶ 268), Massachusetts (Id. at ¶ 269), Missouri (Id. at ¶ 270),
New Mexico (Id. at ¶ 272), New York (Id. at ¶ 273), North Carolina (Id. at ¶ 274), Rhode
Island (Id. at ¶ 275), and Vermont (Id. at ¶ 276).
The Court already dismissed some of the consumer protection claims brought by
ADPs. The remaining claims are brought under the laws of Arkansas (Doc. No. 85 at ¶
262), California (Doc. No. 85 at ¶ 263), Florida (Doc. No. 85 at ¶ 265), Hawaii (Doc. No.
85 at ¶ 266), Illinois (Doc. No. 85 at ¶ 267), Iowa (Doc. No. 85 at ¶ 268), Maine (Doc.
No. 85 at ¶ 270), Massachusetts (Doc. No. 85 at ¶ 271), Mississippi (Doc. No. 85 at ¶
274), Missouri (Doc. No. 85 at ¶ 275), Montana (Doc. No. 85 at ¶ 276), Nebraska (Doc.
No. 85 at ¶ 277), Nevada (Doc. No. 85 at ¶ 278), New Hampshire (Doc. No. 85 at ¶
279), New York (Doc. No. 85 at ¶ 281), Oregon (Doc. No. 85 at ¶ 284), South Carolina
41
(Doc. No. 85 at ¶ 285), Tennessee (Doc. No. 85 at ¶ 287), Utah (Doc. No. 85 at ¶ 288),
Vermont (Doc. No. 85 at ¶ 289), West Virginia (Doc. No. 85 at ¶ 290), and Wisconsin
(Doc. No. 85 at ¶ 291).
Collective Defendants raise several arguments in support of dismissal, including
failure to plead fraud with particularity, failure to allege unconscionable conduct or
aggravating circumstances, the prohibition on price-fixing claims brought under the
consumer protection laws, lack of standing, failure to allege a sufficient nexus between
conduct and commerce; failure to meet the definition of consumer; remoteness; and
class action restrictions. The arguments are discussed below.
1. Pleading Fraud with Particularity
Collective Defendants maintain that neither ADPs nor EPPs allege fraud or
deception with any particularity. At most their complaints allege that Defendants
“wrongfully concealed” their actions by “using code names and arranging meetings at
private residences and remote locations. (See e.g. Doc. No. 85 at 236, 238). None of
those statements is identified. Further, EPPs admit that they had no direct contact or
interaction with any of the Defendants and had no means of obtaining any facts or
information concerning any aspect of Defendants’ dealings with OEMs or other direct
purchasers. (Doc No. 175 at ¶¶ 205, 206). Based upon the allegations, Collective
Defendants conclude that the consumer protection claims under Florida, Michigan,
Minnesota, North Dakota, and South Dakota law fail to meet Rule 9(b)’s requirement
that a Plaintiff allege “with particularity the circumstances constituting fraud or mistake.”
See Fed. R. Civ. P. 9(b). Because IPPs only bring a consumer protection claim under
42
Florida law, and not the law of the other states raised in Collective Defendants’ brief,
the Court limits its discussion to the consumer protection law of Florida.
Collective Defendants cite In re Packaged Ice Antitrust Litig., 779 F. Supp. 2d
642, 665 (E.D. Mich. 2011), as support for their position that IPPs have failed to state a
claim under the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”), Fla.
Stat. § 501.204, because the allegations must be pled with the particularity required
under Rule 9(b). The decision in In re Packaged Ice, referenced three unpublished
decisions in reaching its conclusion. Id. at 665. See Sunoptic Technologies, LLC v.
Integra Luxtec, Inc., No. 08-cv-878, 2009 WL 722320 at *4 (M.D. Fla. Mar. 18, 2009);
Wrestlereunion, LLC v. Live Nation Television Holdings, Inc., No. 8:07-cv-2093, 2008
WL 3048859 *3 (M.D. Fla. Aug. 4, 2008); Fla. Digital Network, Inc. v. N. Telecom, Inc.,
No. 6:06-cv-889, 2006 WL 2523163 *5 (M.D. Fla. Aug. 30, 2006).
In a published opinion, Galstaldi v. Sunvest Communities USA, LLC, 637 F.
Supp. 2d 1045, 1058 (S.D. Fla. 2009), the federal district court rejected the notion that
Rule 9(b) applies to FDUTPA claims. The court observed that “FDUTPA was enacted
to provide remedies for conduct outside the reach of traditional common law torts such
as fraud, and therefore, ‘the plaintiff need not prove the elements of fraud to sustain an
action under the statute.’” Id. at 1058 (citations omitted). The court concluded that Rule
9(b) does not apply to FDUTPA claims; thus, its requirements cannot serve as a basis
to dismiss those claims. In addition, in State, Office of Atty. Gen., Dep't of Legal Affairs
v. Wyndham Int'l, Inc., 869 So.2d 592, 598 (Fla. Dist. Ct. App. 2004), the state
appellate court held that “[a] deceptive or unfair trade practice constitutes a somewhat
unique tortious act because, although it is similar to a claim of fraud, it is different in
43
that, unlike fraud, a party asserting a deceptive trade practice claim need not show
actual reliance on the representation or omission at issue.”
Accordingly, the Court finds that Rule(9) is inapplicable to Plaintiff's FDUTPA
claims, and the claims survive.
2. Unconscionable Conduct/Aggravating Circumstances
Next, Collective Defendants challenge ADPS’ claims under the consumer
protection statute of Arkansas and EPPs’ claims under the statutes of the District of
Columbia, New Mexico, and North Carolina. The arguments are addressed below.
a. Arkansas
Under Arkansas law, deceptive and unconscionable trade practices are
prohibited including, among other things “[e]ngaging in any other unconscionable, false,
or deceptive act or practice in business, commerce, or trade.” See Ark. Stat. Ann. §
4-88-107(a) (10). To state a claim under the Arkansas Deceptive Trade Practices Act
(“ADTPA”), the ADPs must allege that Defendants engaged in an “unconscionable,
false, or deceptive act or practice.” In Independence City v. Pfizer, Inc., 534 F. Supp.
2d 882, 886 (E.D. Ark. 2008), aff’d 552 F.3d 659 (8th Cir. 2009), the court observed that
the Arkansas Supreme Court defined an unconscionable act as one that “affronts the
sense of justice, decency, or reasonableness, including acts that violate public policy or
a statute.” Moreover, the Act is construed liberally inasmuch as it was enacted “to
protect the interest of both the consumer public and legitimate business community.
Curtis Lumber Co. v. La. Pacific Corp., 618 F.3d 762, 780 (8th Cir. 2010). See also In
re Flash Memory Antitrust Litig., 643 F. Supp. 2d 1133, 1156-57 (N.D. Cal. 2009).
44
Because the statute does not limit itself to unconscionable acts–false or
deceptive acts are all that is needed under the statute–ADPs have stated a claim.
b. District of Columbia
Section 28-3904, entitled “Unlawful trade practices,” makes it unlawful to
enforce unconscionable terms or provisions of sales. The statute details factors to
consider:
(1) knowledge by the person at the time credit sales are
consummated that there was no reasonable probability of
payment in full of the obligation by the consumer;
(2) knowledge by the person at the time of the sale or lease
of the inability of the consumer to receive substantial
benefits from the property or services sold or leased;
(3) gross disparity between the price of the property or
services sold or leased and the value of the property or
services measured by the price at which similar property or
services are readily obtainable in transactions by like buyers
or lessees;
(4) that the person contracted for or received separate
charges for insurance with respect to credit sales with the
effect of making the sales, considered as a whole,
unconscionable; and
(5) that the person has knowingly taken advantage of the
inability of the consumer reasonably to protect his interests
by reasons of age, physical or mental infirmities, ignorance,
illiteracy, or inability to understand the language of the
agreement, or similar factors.
Id.
Nevertheless, the statute does not include an exclusive or exhaustive list, District
Cablevision Ltd. P’ship v. Bassin, 828 A.2d 714, 723 (D.C. 2003), and courts have
allowed plaintiffs to proceed with a claim of price-fixing under the statute without
45
additional unconscionable allegations. See In re Flat Panel, 586 F. Supp. 2d at 1126.
“A main purpose of the [Act] is to ’assure that a just mechanism exists to remedy all
improper trade practices.’” Id. (citing D.C.Code § 28-3901(b)(1)). “Trade practices that
violate other laws, including the common law, also fall within the purview of the
[statute].” Id.; Accord Osbourne v. Capital City Mortg. Corp., 727 A.2d 322, 325-26
(D.C. 1999). Based on the case law, the Court finds EPPs have met their burden.
c. New Mexico
Under the law of New Mexico, unfair or deceptive trade practices as well as
“unconscionable trade practices in the conduct of any trade or commerce” are
prohibited. N.M. Rev. Stat. § 57-12-2. The statute “defines an unconscionable trade
practice as ‘an act or practice. . .which to a person's detriment: (1) takes advantage of
the lack of knowledge, ability, experience or capacity of a person to a grossly unfair
degree; or (2) results in a gross disparity between the value received by a person and
the price paid.” N.M. Rev. Stat. § 57-12-2(E).
To support their claim under New Mexico’s Unfair Practices Act, EPPs allege
that the conspiracy resulted in significant artificial increases in the price of WHS,
leading to a “gross disparity” between the value received by the New Mexico plaintiff
and class and the prices paid by them for the WHS. (Doc. No. 174 at ¶ 272(b)).
Collective Defendants ask for dismissal of these state law claims because merely
pleading that the price of a product was unfairly high is insufficient to state a claim
under the statute. See GPUI, 527 F. Supp. 2d at 1029-30 (finding that
unconscionability requires something more than merely alleging that the price of a
product was unfairly high” and dismissing price fixing claim).
46
The Court finds EPPs have satisfied their pleading obligation. As noted by the
district court in In re Flat Panel, 586 F. Supp. 2d at 1127, the defendants’ reliance on In
re GPU I, in misplaced. In that case, the indirect purchasers' claims under the New
Mexico statute were dismissed because the plaintiffs had not alleged that as a result of
the price-fixing conduct, a “gross disparity in the value of products received and the
amount that they paid for those products” existed. Id. See also In re Chocolate, 602 F.
Supp. 2d 851 F. Supp. 2d at 902-905; In re New Motor Vehicles, 350 F. Supp. 2d at
196. Accordingly, EPPs’ claims conform to the pleading requirements of Rule 12(b)(6).
d. North Carolina
The North Carolina Unfair Trade Practices Act (“UTPA”), N.C. Gen. Stat. §
75-1.1, contains broad-sweeping language that declares unlawful, “Unfair methods of
competition in or affecting commerce, and unfair or deceptive acts or practices in or
affecting commerce.” Collective Defendants assert that a plaintiff must allege some
type of egregious or aggravating circumstances to state a claim under the UTPA. See
Dalton v. Camp, 548 S.E.2d 704, 711 (N.C. 2001).
In Dalton, the court articulated the elements of a claim for unfair trade practices.
To prevail, “a plaintiff must show: (1) defendant committed an unfair or deceptive act or
practice, (2) the action in question was in or affecting commerce, and (3) the act
proximately caused injury to the plaintiff.” 548 S.E.2d at 711 (citing Spartan Leasing
Inc. v. Pollard, 101 N.C.App. 450, 461, 400 S.E.2d 476, 482 (1991)). The Dalton court,
which was presented with a breach of contract claim, added that ”[s]ome type of
egregious or aggravating circumstances must be alleged and proved before the [Act's]
provisions may [take effect].” Id. (quoting Allied Distribs., Inc. v. Latrobe Brewing Co.,
47
847 F.Supp. 376, 379 (E.D. N.C.1993). Because the Act allows for treble damages,
allegations beyond a breach of contract must be pleaded. The rationale is consistent
with an earlier decision of the state court.
Specifically, in ITCO Corp. v. Michelin Tire Corp., Commercial Div., 722 F.2d 42,
47-48 (4th Cir. 1983) on reh'g, 742 F.2d 170 (4th Cir. 1984), the court held “that proof of
conduct violative of the Sherman Act is proof sufficient to establish a violation of the
North Carolina Unfair Trade Practices.” Price-fixing is the type of commercial conduct
the Act was designed to target. The need for allegations of aggravating circumstances
relates to claims wherein a plaintiff seeks recovery for breach of contract. See Branch
Banking & Trust Co. v. Thompson, 418 S.E.2d 694, 700 (N.C. Ct. App. 1992).
Therefore, the Court denies Collective Defendants’ request for dismissal on this basis.
3. Price Fixing
Collective Defendants object to IPPs’ relabeling of antitrust price-fixing claims as
state consumer protection claims. They assert that the relabeling renders claims of
price-fixing under the laws of several states subject to dismissal. At the outset the
Court narrows its discussion to those states where IPPs actually pursue claims under
the consumer protection law. ADPs bring a claim under Arkansas law. EPPs advance
claims under the laws of New Mexico and Rhode Island.
a. Arkansas
Collective Defendants assert that the Arkansas consumer protection statute
does not cover price-fixing. To state a claim under the Arkansas Deceptive Trade
Practices Act (“ADTPA”), the ADPs must allege that Defendants engaged in an
48
“unconscionable, false, or deceptive act or practice.” Ark. Code Ann. § 4-88-107(a)(10).
See GPU I, 527 F. Supp. 2d at 1029-31 (dismissing consumer protection claims under
the Arkansas statute because price-fixing claims are “not the kind of conduct
prohibited”). The GPU I decision referenced State ex rel. Bryant v. R & A Inv. Co., Inc.,
985 S.W.2d 299, 302 (Ark. 1999) (holding that the statute was broad enough to
encompass usury), wherein the Supreme Court of Arkansas addressed the history and
scope of the provision:
The words ‘and unconscionable’ were added to section 488-107(a) and (b) by Act 587 of 1993. Section 4-88-107(b)
illustrates that liberal construction of the DTPA is
appropriate, as it provides that ‘[t]he deceptive and
unconscionable trade practices listed in this section are in
addition to and do not limit the types of unfair trade
practices actionable at common law or under other
statutes of this state.’
Id. (emphasis added). The state supreme court also noted the remedial purpose of the
Act in advocating a liberal construction. And for that reason, the court in In re
Chocolate Confectionary Antitrust Litig., 602 F. Supp. 2d 538, 583 (M.D. Pa. 2009)
rejected the argument raised here by Collective Defendants. The Court finds the
reasoning persuasive. The statute does not limit its protection to unconscionable acts.
It merely requires false or deceptive acts or practices. Accordingly, the Court will allow
the price-fixing claim under the consumer protection law of Arkansas to proceed.
b. New Mexico
In the Court’s discussion of the parties’ argument as to the requirement that
EPPs must allege aggravating factors to pursue a consumer protection claim under the
law of New Mexico, it set forth authority allowing price-fixing claims under the statute.
49
The Court reiterates Collective Defendants’ position that In re GPU I, 527 F. Supp. 2d
at 1029-1031, is authority for its position lacks merit. The In re GPU I decision merely
held the indirect purchasers' claims under the New Mexico statute failed to state a claim
because they never alleged a “gross disparity in the value of products received and the
amount that they paid for those products” existed as a result of price-fixing conduct.
See also In re Chocolate, 602 F. Supp. 2d 851 F. Supp. 2d at 902-905; In re New Motor
Vehicles, 350 F. Supp. 2d at 196. Therefore, Collective Defendants’ argument provides
no basis for dismissal of the consumer protection act claims.
c. Rhode Island
The Rhode Island Unfair Trade Practice and Consumer Protection Act
(“RIUTPCPA”) prohibits “[u]nfair methods of competition and unfair or deceptive acts or
practices in the conduct of any trade or commerce.” R.I. Gen. Laws § 6-13.1-2.
Collective Defendants note that price-fixing claims under the Rhode Island consumer
protection law were dismissed in In re GPU I, 527 F. Supp. 2d at 1029-1031, and in In
re DRAM I, 516 F. Supp. 2d at 1117.
The statute enumerates twenty methods of unfair or deceptive competition,
including conduct that “creates a likelihood of confusion or of misunderstanding.” Id. §
6-13.1-1(6)(xii). In looking to determine whether a practice is “unfair” under the statute,
state courts consider:
(1) Whether the practice, without necessarily having been
previously considered unlawful, offends public policy as it
has been established by statutes, the common law, or
otherwise-whether, in other words, it is within at least the
penumbra of some common-law, statutory, or other
established concept of unfairness; (2) whether it is immoral,
unethical, oppressive, or unscrupulous; (3) whether it causes
50
substantial injury to consumers (or competitors or other
businessmen).
Ames v. Oceanside Welding & Towing Co., Inc., 767 A.2d 677, 681 (R.I. 2001) (citing
FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 244-45 n. 5 (1972)).
In reviewing these factors several courts have determined that price-fixing
injuries fall within the scope of the statute and have allowed consumers alleging a pricefixing claim to proceed under the RIUTPCPA. In re Chocolate Confectionary Antitrust
Litig., 602 F. Supp. 2d 538, 586 (M.D. Pa. 2009) (citing In re Flat Panel, 586 F. Supp.
2d at 1129-30; In re (DRAM II), 536 F. Supp. 2d at 1144-45 (observing that price fixing
is ”likely to offend public policy[,]” as reflected by statutes proscribing anticompetitive
activity).
Therefore, the EPPs’ claim under the consumer protection act of Rhode Island
survives.
4. Standing under New York Law
The New York General Business Law (“GBL”) § 349(a), prohibits “[d]eceptive
acts or practices in the conduct of any business, trade or commerce in the furnishing of
any service in this state.” To advance a claim under § 349, a plaintiff must allege a
deceptive act or practice” directed at a consumer and one that resulted in actual injury
to the plaintiff. JPMorgan Chase Bank, N.A. v. Controladora Comercial Mexicana
S.A.B. De C.V., 920 N.Y.S.2d 241 (Sup. Ct. 2010). Collective Defendants assert that
New York courts dismiss claims brought under this provision when the plaintiffs allege
price-fixing, but do not allege any misrepresentation directed at the indirect purchasers.
New York v. Daicel Chem. Indus., Ltd., 840 N.Y.S.2d 8 (N.Y. App. Div. 2007) (noting
51
that the “provision applies to conduct premised on the deception of consumers”).
Accord Paltre v. Gen. Motors Corp., 810 N.Y.S.2d 496 (N.Y. App. Div. 2006)
(dismissing claim under § 349 because the alleged misrepresentations were either not
directed at consumers or were not materially deceptive). Because the IPPs admit that
they had no direct contact with Defendants, they cannot state a claim under New York
law.
Nevertheless, authority exists demonstrating that an antitrust claim may be
viable under § 349. Cox v. Microsoft Corp., 778 N.Y.S.2d 147, 148 (N.Y. App. Div.
2004). In support of their claim, EPPs allege that New York consumers paid inflated
prices, that Defendants took efforts to conceal their agreement from New York plaintiffs
and the indirect class. (Doc. No. 174 at ¶ 273). Similar allegations satisfied the court
that the claim was viable in In re DRAM II, 536 F. Supp. 2d at 1143-44. Accord In re
Flat Panel, 586 F. Supp. 2d at 1128 (citing In re GPU I, 527 F. Supp. 2d at 1030)
(denying motion to dismiss claim under § 349 where “Plaintiffs have alleged at least in a
conclusory fashion that defendants have engaged. . .in deceptive acts to conceal the
alleged agreement to fix prices.”). Accordingly, the claim can proceed.
5. Nexus between Conduct and Intrastate Commerce
Collective Defendants challenge claims under the consumer protection laws of
California, Montana, New Hampshire, New York, and North Carolina. According to
Collective Defendants, the complaints lack any allegations that any of the offending
conduct took place within the state or had an effect on intrastate commerce. The
arguments are analyzed state by state below; however, the Court only considers claims
52
under California and Montana law as those are the only jurisdictions addressed in IPPs’
response brief. (See Doc. No. 390 at 25-26).
a. California
Collective Defendants argue that IPPs do not allege any of the challenged
conduct took place in California; therefore, the claim under California law fails. In
Meridian Project Sys. Inc. v. Hardin Constr. Co., 404 F. Supp. 2d 1214, 1225 (E. D. Cal.
2005), the court dismissed an unfair competition claim under California law against an
out-of-state defendant because “no specific intrastate misconduct” was alleged in the
complaint. The dismissal was warranted because the plaintiff explicitly alleged that the
misconduct occurred in Illinois. Under case law from California, “claims by
nonCalifornia residents where none of the alleged misconduct or injuries occurred in
California” do not state a claim. See Norwest Mortgage, Inc. v. Superior Court, 85
Cal.Rptr.2d 18 (Cal Ct. App. 1999).
Clearly the statute does not apply to extraterritorial conduct, but IPPs assert that
the allegations here are distinguishable. They have included allegations that
anticompetitive conduct caused supracomepetitive price effects nationwide, which they
assert meets the “intrastate effects” requirement. To support their position, they cite In
re Packaged Ice, 779 F. Supp. 2d 642, 664 (E. D. Mich. 2011) (citing cases holding that
nationwide price-fixing schemes sufficient to satisfy the intrastate effects element). The
Court agrees that the allegations are sufficient to survive this motion.
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b. Montana
IPPs bring a claim under Montana’s Unfair Trade Practices Act (“MUTPA”). See
Mont. Code Ann. § 30-14-101 et seq. Collective Defendants rely on In re DRAM I, 516
F. Supp. 2d at 1104, to support their position that claims under the MUTPA must be
dismissed where the plaintiff fails to allege “any conduct or activity taking place within
the state that sets forth a basis for connecting the individual claims with representative
claims under. . .Montana. . .statutes.”
Here ADPs allege that plaintiffs and members of the proposed classes
“purchased new vehicles containing Automotive Wire Harness Systems or Automotive
Wire Harness Systems themselves from OEMs. . .in each state having laws permitting
recovery of damages by indirect purchasers. . .who in turn purchased Automotive Wire
Harness Systems from Defendants.” (Doc No. 85 at ¶ 139). ADPs also allege that the
challenged conduct was “intentionally directed at the market for Automotive Wire
Harness Systems in all states allowing indirect purchasers to collection damages. . .and
had a substantial and foreseeable effect on intrastate commerce by raising and fixing
prices for Automotive Wire Harness Systems throughout those states.” (Doc. No. 85 at
¶¶ 259, 292). These allegations satisfy their burden.
7. Availability of Protection of Businesses
Collective Defendants also dispute Automobile Dealer Plaintiffs’ ability to bring
claims under the consumer protection laws of Massachusetts, Montana, and Missouri.
The Court considers the parties’ arguments below.
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a. Massachusetts
Although Collective Defendants assert that ADPs may not bring claims under
Missouri, Montana, and Massachusetts law, the only case law offered is from
Massachusetts. In Ciardi v. F. Hoffmann-La Roche, Ltd., 762 N.E.2d 303, 309 (Mass.
2002), the state court allowed individuals who were indirect purchasers of vitamin
products to sue for anticompetitive conduct under § 9 of the Massachusetts consumer
protection statute. In contrast, § 11 of the Mass. Gen. Laws Ann. ch. 93A, which
governs consumer protection claims of unfair or deceptive trade practices as between
businesses, In re TJX Cos. Retail Sec. Breach Litig., 564 F.3d 489, 495 (1st Cir. 2009),
has not been extended to indirect purchasers. Specifically, under § 11, “the court
shall. . .be guided in its interpretation of unfair methods of competition by those
provisions of chapter ninety-three known as the Massachusetts Antitrust Act.”
Accordingly, “the Illinois Brick approach is taken under the Massachusetts Antitrust Act
and G.L. c. 93A, § 11.” Ciardi, 762 N.E.2d at 321. Consequently, this Court is bound to
enforce the bar prohibiting an indirect purchaser business plaintiff from proceeding, and
the Court finds Collective Defendants’ request for dismissal of ADPs’ consumer
protection law claims must be granted.
b. Missouri
Collective Defendants cite the Missouri statute, Mo. Rev. Stat. § 407.025, which
provides a private civil cause of action for persons who purchase or lease merchandise
primarily for “personal, family or household purposes.” They conclude that the
language of the statute precludes the Automobile Dealer Plaintiffs. This Court agrees.
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ADPs argue that as “‘intermediaries’ they are protected because they purchase
vehicles in bulk not for their own commercial use,” but to pass them “to persons and
entities who will devote the automobiles to ‘personal, family, or household purposes.’ ”
(Doc. No. 390 at 28). ADPs’ position is contrary to the plain language of the statute,
which limits the claims to the actual consumers, not the intermediaries. ADPs have
offered no authority from Missouri to support their expansive interpretation of the
statutory language. Accordingly, the Court dismisses the ADPs’ claim under the
consumer protections laws of Missouri.
c. Montana
Montana’s statute similarly provides a private right of action to consumers,
defined as persons how purchase or lease “goods primarily for personal, family or
household uses.” Mont. Code § 30-14-133. Again the Court finds no basis for allowing
ADPs to proceed under Montana consumer protection law.
8. Remoteness
Collective Defendants’ request that the Court dismiss the consumer protection
claims brought under Arkansas, Nebraska, New York, and Vermont on the basis of
remoteness. The Court already rejected Collective Defendants’ remoteness argument
relative to antitrust considerations under AGC. Because the allegations advanced in
support of the antitrust claims support the consumer protection claim, the Court finds it
unnecessary to repeat the analysis, and the request is denied.
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9. Class Action Bar
Collective Defendants assert that IPPs are barred from bringing their consumer
protection claims under the laws of Kansas, Mississippi, Montana, and South Carolina
because each of these states prohibits class actions. In the response brief, IPPs assert
that ADPs have not brought a consumer protection claim under either Mississippi or
Kansas law. IPPs respond only to the arguments under Montana and South Carolina
law. Because the authority cited is applicable to both states, the Court makes no
separate analysis.
Collective Defendants rely on In re DRAM I, 516 F. Supp. 2d at 1004, to support
their argument that the statutes of Montana and South Carolina do not allow private
class action suits for money damages. Specifically, Mont. Code Ann. § 30-14-133(1)
allows consumers to “bring an individual, but not a class action.” Likewise, S.C. Code
Ann. § 39-5-140 only authorizes individual actions.
Although the language is quite clear, Collective Defendants have not met their
burden to show dismissal is required. In re DRAM I, was decided three years before
Shady Grove. Collective Defendants do not provide any analysis or support post Shady
Grove to support their position. Shady Grove, 130 S.Ct. at 1437-38, made it clear that
class certification in federal court is governed by Rule 23. Moreover, more recent
authority rejected South Carolina’s class prohibition as a basis for dismissal of a class
action. In re Optical Disk Drive Antitrust Litig., 3:10-MD-2143 RS, 2012 WL 1366718
(N.D. Cal. Apr. 19, 2012).
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D. Unjust Enrichment
In support of their unjust enrichment claim, End-Payor Plaintiffs assert that as a
result of the unlawful conduct Defendants have and continue to be unjustly enriched
(Doc. No. 174 at ¶ 278). According to EPPs, it would be inequitable to allow
Defendants to retain their “ill-gotten gains.” (Id. at ¶ 279). ADPs allege the same (see
Doc. No. 85 at ¶¶ 298-99), but add that pursuit of remedies against the OEMs, from
whom ADPs purchased vehicles containing price-fixed wire harness systems, would be
futile because the OEMs were not part of the conspiracy (Doc. No. 85 at ¶ 300).
The Court agrees with Collective Defendants that IPPs’ failure to identify the
unjust enrichment laws of any particular jurisdiction subjects the causes of action to
dismissal. There is no federal common law of unjust enrichment, see In re Wellbutrin
XL Antitrust Litig., 260 F. R. D. 143, 167 (E. D. Pa. 2009), and courts have recognized
that a federal remedy would be contrary to the Supreme Court’s holding in Illinois Brick.
See In re Motor Vehicles Canadian Exp. Antitrust Litig., 250 F. Supp. 2d 160, 211 (D.
Me. 2004). Accord In re Chocolate Confectionary Antitrust Litig., 602 F. Supp. 2d 538,
587 (M.D. Pa. 2009). Therefore, the Court grants Collective Defendants’ request to
dismiss IPPs’ respective claims of unjust enrichment.
E. Injunctive Relief
Indirect Purchaser Plaintiffs ask the Court for an injunction preventing
Defendants from “continuing and maintaining” the price-fixing conspiracy. (Doc. No. 85
at 84, Prayer for Relief at ¶ E; Doc. No. 174 at 94, Prayer for Relief at ¶ E). The
request is authorized under the Clayton Act, which provides that “[a]ny person, firm,
58
corporation, or association shall be entitled to sue for and have injunctive relief, in any
court of the United States having jurisdiction over the parties, against threatened loss or
damage by a violation of the antitrust laws.” 15 U.S.C. § 26.
In challenging the request, Collective Defendants argue that the complaints lack
the factual support necessary to establish a real or immediate threat of future harm.
Specifically, Collective Defendants contend that the relief is undermined by the guilty
pleas, the JFTC Orders, and the widespread publicity garnered by enforcement agency
investigations since February 2010.
The Court finds the allegations in the respective complaints are sufficient, at this
stage of the proceedings, to satisfy IPPs’ burden to allege the existence of “some
cognizable danger of recurrent violation.” United States v. W. T. Grant Co., 345 U.S.
629, 633 (1953). The purpose of an injunction is to prevent future violations. Swift &
Co. v. United States, 276 U.S. 311, 326 (1928). Speculation by Collective Defendants’
that the orders, pleas, and publicity will prevent further misconduct fails to demonstrate
the threat of future injury is implausible, particularly in light of the length of the
conspiracy alleged and the market conditions. This Court is not in a position to render
an assessment that injunctive relief cannot be had at this stage of the proceedings.
Accordingly, the Collective Defendants’ request is denied.
V. CONCLUSION
For the reasons discussed above, the Court GRANTS in part and DENIES in
part Collective Defendants’ motion.
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ADPs’ antitrust claims under Massachusetts, Missouri, and Illinois are
DISMISSED. The applicable statutes of limitation limit damages under the laws of Utah
and New Hampshire. ADPs’ consumer protection claims under Arizona, Iowa, Kansas,
Massachusetts, Michigan, Mississippi, Missouri, Montana, New Hampshire, New
Mexico, Nebraska, New York, North Carolina, North Dakota, Rhode Island, South
Dakota, Vermont, and the District of Columbia are DISMISSED.
End-Payor Plaintiffs’ antitrust claims under the laws of Massachusetts are
DISMISSED.
IT IS SO ORDERED.
s/Marianne O. Batani
MARIANNE O. BATTANI
UNITED STATES DISTRICT JUDGE
Date: June 6, 2013
CERTIFICATE OF SERVICE
I hereby certify that on the above date a copy of this Opinion and Order was
served upon all parties of record via the Court’s ECF Filing System.
s/Bernadette M. Thebolt
Case Manager
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