Bearings - End-Payor Actions
Filing
106
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS COLLECTIVE MOTION 73 TO DISMISS INDIRECT PURCHASER ACTIONS. Signed by District Judge Marianne O. Battani. (KDoa) Modified on 9/25/2014 (KDoa).
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
_________________________________
IN RE: AUTOMOTIVE PARTS
ANTITRUST LITIGATION
MASTER FILE NO. 12-md-02311
_________________________________
In Re: Bearings
HON. MARIANNE O. BATTANI
_________________________________
THIS DOCUMENT RELATES TO:
Dealership Actions
End-Payor Actions
2:12-cv-00502
2:12-cv-00503
_________________________________/
OPINION AND ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANTS’ COLLECTIVE
MOTION TO DISMISS INDIRECT PURCHASER ACTIONS
Before the Court is Defendants’ Collective Motion to Dismiss End-Payor Plaintiffs’
Consolidated Amended Class Action Complaint (Doc. No. 73 in 12-503), and
Automobile Dealer Plaintiffs’ Consolidated Class Complaint (Doc. No. 82 in 12-502).
Defendant movants include JTEKT Corporation, JTEKT North America Corporation,
Nachi-Fujikoshi Corporation, Nachi America Inc., NTN Corporation, NTN USA
Corporation, NSK Ltd., NSK Americas, Inc., Schaeffler AG, Schaeffler Group USA Inc.,
and AB SKF. SKF USA, Inc. joined the motion.
On August 21, 2013, Automobile Dealer Purchaser Plaintiffs filed their
Consolidated Class Action Complaint, (Doc. No. 67 in 12-502), and on October 23,
2013, End-Payor Plaintiffs filed their Corrected Consolidated Amended Class Action
Complaint (Doc. No. 70 in 12-503). In their motion, Defendants challenge the
sufficiency of the allegations of conspiracy to fix prices on Bearing products filed by two
different groups of plaintiffs–automobile dealers and end-payors.
I. INTRODUCTION
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 fix prices and allocate the
market for automotive Bearings. Defendants manufacturer or sell Bearings in the United
States. 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, Landers McLarty Lee’s Summit, Mo. LLC d/b/a Lee’s Summit Chrysler Dodge
Jeep Ram, and d/b/a Lee’s Summit Nissan, 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 Nissan, Inc. d/b/a Commonwealth Nissan,
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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.,
Stranger Investments d/b/a Stephen Wade Toyota, John O’ Neil Johnson Toyota, LLC,
Hartley Buick GMC Truck, Inc., Lee Oldsmobile-Cadillac, Inc. d/b/a Lee Honda, Lee
Auto Malls-Topsham, Inc. d/b/a Lee Toyota of Topsham, Landers of Hazelwood, LLC
d/b/a Landers Toyota of Hazelwood, Cannon Chevrolet-Oldsmobile-Cadillac-Nissan,
Inc., Cannon Nissan of Jackson, LLC, Hudson Charleston Acquisition, LLC d/b/a
Hudson Nissan, Shearer Automotive Enterprises III, Inc., and Apex Motor Corporation
“filed their Consolidated Class Complaint on behalf of themselves and all others
similarly situated.” (Doc. No. 67 in 12-502). In their proposed class action, Automobile
Dealer Plaintiffs allege that “manufacturers and suppliers of automotive bearings,
globally and in the United States” engaged in “a lengthy conspiracy to suppress and
eliminate competition in the bearings industry by agreeing to fix, stabilize, and maintain
the prices of these products. . . .” (Doc. No. 67 in 12-502, Ex. 1 ¶ 1).
In their Corrected Consolidated Amended Class Action Complaint (Doc. No. 70 in
12-503), End-Payor Plaintiffs (“EPPs”) Rebecca Lynn Morrow, Erica J. Shoaf, Tom
Halverson, Sophie O’Keefe-Zelman, Stephanie Petras, Melissa Barron, John W.
Hollingsworth,, Meetesh Shah, Michael J. Tracy, Jane Taylor, Keith Uehara, Jennifer
Chase, Darrel Senior, James E. Marean, Ron Blau, Roger D. Olson, Nilsa Mercado,
Darcy c. Sherman, David Bernstein, Ellis Winston McInnis, IV, Thomas N. Wilson,
Lauren C. Primos, Robert P. Klingler, Jessica DeCastro, Lori Curtis, Virginia Pueringer,
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Nathan Croom, Richard Stoehr, Edward T. Muscara, Michael Wick, Tenisha Burgos,
Jason Grala, Kathleen A. Tawney, Kelly Klosterman, Kent Busek, Cindy Prince, Paul
Gustafson, France H. Gammell-Roach, William Dale Picotte, Phillip G. Young, Jesse
Powell, Alena Farrell, Jane FitzGerald, Arthur Stukey, Hanne Rice, Robert M. Rice, Jr.,
Stacey R. Nickell, and Carol Ann Kashishian, on behalf of themselves and all others
similarly situated, “bring a class action against Defendants, suppliers of Automotive
Bearings. . .globally and in the United States, for engaging in a massive conspiracy to
unlawfully fix and artificially raise the prices” of Bearings.” (Doc. No. 70 in 12-503 at ¶
1).
In their motion, Defendants challenge the sufficiency of the complaints, asserting
that the facts alleged do not support the existence of a global conspiracy by all
Defendants over a nine-year period. Defendants also argue that Indirect Purchaser
Plaintiffs lack both antitrust and constitutional standing, and that all state claims must be
dismissed for a variety of reasons.
Defendants waived oral argument on the motion, which was scheduled for June
4, 2014. The Court has reviewed all of the filings, and for the reasons that follow, the
motion is GRANTED in part and DENIED in part.
II. SUMMARY OF THE FACTUAL ALLEGATIONS
According to their complaints, Plaintiffs purchased Bearings indirectly from
Defendants and their co-conspirators as part of purchasing or leasing a new vehicle or
as a replacement when repairing a damaged vehicle. Automotive Bearings “are used to
decrease the rotational friction between a vehicle and the surface” on which it runs, to
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“help maintain balance in the event of speed changes or sudden braking,” and generally
to “allow for smooth driving.” (Doc. No. 67 at ¶ 149; Doc. No. 70 at ¶ 102). Indirect
Purchaser Plaintiffs identify several groups of Defendants: the JTEKT group (Doc. No.
67 at ¶¶ 111-115; Doc. No. 70 at ¶¶ 69-72), which includes JTEKT Corporation and
Koyo Corporation of U.S.A.; the Nachi group, which includes Nachi-Fujikoshi
Corporation and Nachi America Inc., (Doc. No. 67 at ¶¶ 117-120; Doc. No. 70 at ¶¶ 7377); NSK group, which includes NSK Ltd., and NSK Americas, Inc. (Doc. No. 67 at ¶¶
121-126; Doc. No. 70 at ¶¶ 78-83); Schaeffler group, which includes Schaeffler AG and
Schaeffler Group USA Inc., (Doc. No. 67 at ¶¶ 127-132; Doc. No. 70 at ¶¶ 84-89); SKF
Defendants, which includes AB SKF and SKF USA, Inc. (Doc. No. 67 at ¶¶ 133-139;
Doc. No. 70 at ¶¶ 90-94); and NTN group, which includes NTN Corporation and NTN
USA Corporation (Doc. No. 67 at ¶¶ 140-45; Doc. No. 70 at ¶¶ 95-98).
IPPs include allegations about Defendants’ size and global sales, conditions in
the market that are conducive to antitrust conspiratorial conduct, the numerous
opportunities to conspire presented by industry trade shows, industry organizations, and
through buying and selling Bearings with competitors. “The U.S. market size for
Automotive Bearings was $2.71 billion in 2008.” (Doc No. 67 at ¶ 162; Doc. No. 70 at ¶
107). According to IPPs, a small number of manufacturers, including Defendants,
dominate the Automotive Bearings market. (See e.g. Doc. No. 70 at ¶ 108). The top
three suppliers control nearly 75 percent of the U.S. market. (Doc. No. 70 at ¶ 123).
Nachi provides bearings for “60% of all passenger automobiles and light trucks on the
road.” (Doc. No. 67 at ¶ 153). Schaeffler supplies bearings to “nearly all automotive
manufacturers,” including “Volkswagen, Fiat, Jaguar, Land Rover, Porsche, Toyota,
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BMW, Mercedes, Daimler Chrysler, GM and Ford.” (Doc. No. 67 at ¶ 154). NSK’s
main customers include Honda, Mitsubishi, Nissan, and Toyota, (Doc. No. 67 at ¶ 155),
and SKF’s lists “Alfa Romeo, Chrysler, Ferrari, Volvo, BMW, Jaguar, Kia, Nissan,
Porsche, Saab, Volkswagen, Mercedes, Ford, General Motors, Audi, Honda, Mazda,
Hyundai, and Toyota” as main customers. (Doc. No. 67 at ¶ 156). As evidence of the
conspiracy, IPPs observe that Bearings prices increased even as demand decreased
during the Class Period. (Doc. No. 67 at ¶¶ 164-165).
IPPs allege that the market structure is conducive to price fixing and market
allocation. There are significant barriers to entry in the market for Bearings. For
example start-up costs are high in light of the costs associated with manufacturing
plants and equipment, energy, transportation, distribution infrastructure, and skilled
labor. (Doc. No. 67 at ¶¶ 167-168). Moreover, Defendants own patents for Bearings.
(Doc. No. 67 at ¶ 170). In addition, demand is inelastic. (Doc. No. 67 at ¶¶ 171-73).
The market is highly concentrated; the top three suppliers control nearly 75 percent of
the market in the United States. (Doc. No. 67 at ¶ 174).
IPPs further allege that Defendants and their co-conspirators had opportunities to
conspire. For example, Defendants can meet privately at trade shows. (Doc. No. 67 at
¶ 175). Six Defendants--NSK, NTN, Schaeffler, Nachi-Fujikoshi, Koyo, and SKF--make
up the bulk of the seven member World Bearing Association (“WBA”). (Id. at ¶ 176).
Trade meetings are not the only opportunities to conspire alleged in the CACAC. DPPs
allege that distributers organized golf outings attended by Defendants’ employees, who
were paired at the various events. (Doc. No. 67 at ¶¶ 177-78). Defendants and their
co-conspirators had the opportunity, through these events, to “engage in private
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meetings, conversations and communications to discuss pricing and customer
allocation for Bearings sold in the United States.” (Doc. No. 67 at ¶ 178). In addition,
Defendants had opportunities to trade information because of the numerous
acquisitions in the Bearings industry over the past five years. (Doc. No. 67 at ¶ 179).
Because Defendants and their co-conspirators routinely produced and sold Bearings to
each other, senior level employees “would meet or communicate to discuss and finalize
these arrangements, thereby creating “additional opportunities for Defendants to collude
on customer allocation and pricing structures in the U.S. Bearings market.” (Doc. No.
67 at ¶ 180).
Finally, IPPs advance allegations about the investigations in the United States
and other jurisdictions. The United States, Canada, Japan, Europe, Australia,
Singapore, and Korea coordinated global antitrust investigations into industrial and
automotive Bearings. (Doc. No. 67 at ¶ 181). The DOJ is investigating NTN,
Schaeffler, and NSK. (Doc. No 67 at ¶¶ 182-85). On-site inspections have taken place
in Korea, and the Australia Competition and Consumer Commission instituted civil
proceedings against a sister company of Defendant Koyo for cartel conduct relating to
the supply of ball and roller bearings. (Doc. No. 67 at ¶ 203).
After JTEKT sought and received leniency from the Japan Fair Trade
Commission (“JFTC”), JTEKT admitted its participation in the cartel and cooperated
with the JFTC investigation. (Doc. No. 67 at ¶ 186). In July 2011, the JFTC inspected
facilities of NSK, NTN, JTEKT, and Nachi-Fujikoshi for evidence of violations of the
antimonopoly law. (Doc. No. 67 at ¶ 187). NTN and NSK confirmed the inspections in
annual reports. (Doc. No. 67 at ¶¶ 188-89). JTEKT confirmed its inspection with a
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press release on its website. (Doc. No. 67 at ¶ 190).
In addition to the allegations regarding investigations of Defendants in other
jurisdiction, IPPs requested, and the Court took judicial notice of guilty pleas of two
Defendants in the United States. (Doc. No. 88 in 12-502; Doc. No. 101 in 12-503).
JTEKT Corporation pleaded guilty to conspiring to fix prices, rig bids, and allocate
markets with respect to Bearings from as early as 2000 to at least July 2011, and
JTEKT paid a $102.37 million fine. NSK, Ltd. likewise pleaded guilty to a conspiracy to
fix prices for Bearings from 2000 until at least 2011, and agreed to pay a $68.2 million
fine.
Based on these allegations, IPPs advance state law antitrust, consumer
protection, and unjust enrichment claims. In their motion to dismiss the complaints in
their entirety, 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 when it fails “to state a claim upon which relief can be granted.” 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
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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.”). Under Iqbal, a civil complaint will only survive
a motion to dismiss if it “contain[s] sufficient factual matter, accepted as true, to state a
claim for relief that is plausible on its face. . . . Exactly how implausible is ‘implausible’
remains to be seen, as such a malleable standard will have to be worked out in
practice.” Courie v. Alcoa Wheel & Forged Prods., 577 F.3d 625, 629-630 (6th Cir.
2009).
IV. ANALYSIS
A. Procedural Background
When the United States Judicial Panel on Multidistrict Litigation (“Judicial Panel”
or “Panel”) transferred actions sharing “factual questions arising out of an alleged
conspiracy to inflate, fix, raise, maintain, or artificially stabilize prices of automotive wire
harness systems” to the Eastern District of Michigan, (12-md-02311, Doc. No. 2), in
February 2012, it is unlikely that the the scope and extent of antitrust conspiratorial
conduct in the automotive component parts industry was on the radar. Even after the
Judicial Panel expanded MDL No. 2311 in June 2012 to include alleged conspiracies to
fix the prices of three additional component it is unlikely that the Panel could foresee the
inclusion of twenty-five additional component part cases. Although the Judicial Panel
predicted centralizing litigation in this District would eliminate duplicative discovery,
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prevent inconsistent pretrial rulings, and conserve resources, the Court finds that
conserving the Court’s resources requires a more streamlined approach in resolving
collective motions to dismiss. The Court already has addressed these arguments
because the defendants in the four component part cases advanced many of the same
arguments and relied on much of the same authority albeit in differing factual
backdrops.
Accordingly, those arguments raised in this motion that have been addressed in
the Court’s prior rulings on motions to dismiss other component part complaints by
indirect purchasers, will not be addressed in this opinion.
B. Sufficiency of the Antitrust Allegations
Defendants characterize the complaints as advancing legal conclusions
unsupported by factual allegations as required by Iqbal, 566 U.S. at 679. The Court
disagrees. Defendants’ efforts to distinguish the allegations regarding this conspiracy
from those deemed sufficient in prior component parts are not persuasive.
Subsequent to a wide-ranging investigation by governmental authorities into a
conspiracy involving automotive parts, JTEKT Corporation and NSK Ltd. pleaded guilty
to participating in a conspiracy to fix prices and rig bids of Bearings in the United States.
Moreover, admissions and findings of participation in a conspiracy to fix the prices of
bearings is not limited to the United States. Defendants NTN, NSK, and Nachi-Fujikoshi
were fined by the JFTC a total of $142 million for collusive conduct. Although the JFTC
did not fine JTEKT because it revealed the conspiracy to the FJTC, (Doc. No. 67 at ¶¶
9-10; Doc. No. 70 at ¶¶ 125-137), JTEKT was fined $5 million in Canada for
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participating in a bearings conspiracy. (Doc. No. 67 at ¶¶ 14, 210-11; Doc. No. 70 at ¶¶
153-55). In addition, JTEKT’s subsidiary was fined for price-fixing bearings from 2000
to 2011 by the Australian Competition and Consumer Commission. In addition to the
factual allegations regarding these Defendants, IPPs allege that a leniency applicant
under the Antitrust Criminal Penalty Enhancement and Reform Act is likely in this case,
given the length and nature of the conspiracy. (Doc. No. 67 at ¶¶ 214-15; Doc. No. 70
at ¶ 168). A conspirator that is accepted into the leniency program is not charged with a
criminal offense and is not required to plead guilty.
These allegations about the investigations and the guilty pleas are not the only
basis upon which to assess the sufficiency of the complaints. The Court is mindful of
the market conditions conducive to antitrust conspiratorial conduct. See Watson
Carpet & Floor Covering, Inc. v. Mohawk 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”). Based on the guilty pleas, an inference arises that not only were
the market conditions alleged to be conducive to the birth of an antitrust conspiracy, the
conditions allowed an antitrust conspiracy to flourish for eleven years. See e.g. In re
Packaged Ice Antitrust Litig., 723 F. Supp. 2d at 1014 (“oligarchic sellers” and
“prohibitive entry barriers” conducive to collusion). These are the types of allegations
deemed sufficient in Standard Iron Works v. ArcelorMittal, 639 F. Supp. 2d 877, 883
(N.D. Ill. 2009). In that case, the plaintiffs alleged that the steel market in the United
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States was conducive to an antitrust conspiracy given “significant barriers to entry,
including high capital requirements and regulatory barriers.” Id. The plaintiffs also
alleged that restrains in place on imported steel, including transportation costs, “trade
duties, and currency exchange rates” protected domestic producers from foreign
competition and allowed the domestic producers to raise prices. Id. Likewise, in this
case, the market conditions support an inference that the conspiracy encompassed
entities beyond those pleading guilty and beyond their admitted targets.
Lastly, the Court recognizes that the Bearings investigation grew out of a broader
investigation into the auto parts industry generally, an industry rife with price-fixing.
Many of the companies pleading guilty to bid-rigging, price-fixing, and market allocation
of automotive parts during this same time frame had multiple OEMS as targets.
Therefore, even though the United States guilty pleas do not include admissions that
multiple OEMs were targeted, the Court finds that all of the conduct by various
defendants named in MDL 2311 is relevant to support the existence of the Bearings
conspiracy. See e.g. In re Flash Memory Antitrust Litig., 643 F. Supp. 2d 1133, 1149
(N.D. Cal. 2009) (addressing how an earlier conspiracy might create an inference
strengthening the existence of a latter conspiracy). Notably, in United States v.
Andreas, 216 F.3d 645 (7th Cir. 2000), the appellate court acknowledged that “evidence
concerning a prior conspiracy may be relevant and admissible to show the background
and development of a current conspiracy.” In re Flash Memory, 643 F. Supp. 2d at
1149. Here, the component parts in the MDL involve allegations of a similar scheme in
each part, and thus, provide context as to how the. . .conspiracy operated. Andreas.
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216 F.3d at 665; see also High Fructose, 295 F.3d at 661 (same); In re Static Random
Access Memory (SRAM) Antitrust Litig., 580 F. Supp. 2d 896, 903 (N.D. Cal. 2008)
(recognizing that guilty pleas in the earlier litigation did not support the existence of the
second conspiracy on their own, but finding the guilty pleas did “support an inference of
a conspiracy in the related industry”). The allegations here are easily distinguished from
those deemed inadequate in In re Elevator Antitrust Litig., 502 F.3d 47, 52 (2d Cir.
2007) (no guilty pleas in the United States) because two Defendants have pleaded
guilty to engaging in antitrust conduct in the United States. Those Defendants also
were involved in antitrust conduct abroad.
In assessing the complaints as a whole, the Court finds that they allege 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 and beyond the extent admitted by JTEKT Corporation
and NSK Ltd. 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” as opposed to government investigations coupled with
parallel conduct). Despite Defendants’ characterization to the contrary, these
complaints bear no resemblance to the typical complaint found lacking under Twombly.
See Starr v. Sony BMG Music Entm't, 592 F.3d 314, 324 (2d Cir. 2010) (observing that
courts dismissed complaints alleging generic conduct or complaints advancing only
13
legal conclusions). Accord Standard Iron Works, 639 F.Supp. 2d at 883.
Accordingly, the Court denies Defendants’ request to dismiss the complaints
based upon the sufficiency of the allegations and considers Defendants’ argument that
constitutional standing is lacking.
C. Standing
The parties dispute whether IPPs have satisfied the constitutional requirement for
standing; specifically, whether each plaintiff alleged a “personal injury fairly traceable to
the defendant’s allegedly unlawful conduct” that is “likely to be redressed by the
requested relief.” Allen v. Wright, 268 U.S. 747, 751 (1984). Defendants assert that
the standing requirement is not satisfied under any state law invoked by IPPs because
IPPs have not alleged facts to establish that they suffered an injury-in-fact and that IPPs
lack standing to proceed in states where no plaintiff resides. The Court had addressed
these arguments in other component part cases and finds no grounds for reaching a
different conclusion on the sufficiency of the allegations. The Court’s reasoning is
summarized below.
1. Injury-in-fact
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
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injury. Id. at 561.
Because ADPs and EPPs are indirect purchasers, their complaints must include
two allegations: (1) 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. 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”); D.R. Constr., Co. v. Rohm & Haas Co., 470 F. Supp. 2d 485, 492-93
(E.D. Pa. 2006) (finding that the plaintiffs’ allegations “that they paid inflated prices for
products with plastics additives due to an overcharge on plastics additives which was
passed on to them from the intervening links within the distribution chain, that plaintiffs'
overpayment for products containing plastics additives was caused by the conspiracy
among defendants to charge inflated prices for plastics additives, and that judicial relief
will compensate plaintiffs for these injuries, restoring plaintiffs to the position they were
in prior to the price-fixing scheme” satisfied standing).
The allegations in the complaints satisfy IPPs’ pleading burden. EPPs have
alleged that they have purchased indirectly from one or more of Defendants during the
Class Period. (Doc. No. 70 at ¶¶ 9, 174, 179, 183, 201, 214, 216, 218). ADPs have
alleged the brands of vehicles they sell, and each is manufactured by an OEM supplied
by one or more of the Defendants. (Doc. No. 67 at ¶¶ 15, 233, 266-67, 245, 281, 283,
284). The same is true of replacement Bearings. Each Complaint details how Bearings
follow a traceable path through the distribution chain and that overcharges for Bearings
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were passed through that distribution chain from OEMs to Auto Dealers and
End-Payors. (Doc. No. 67 at ¶¶ 232-235, 237-245; Doc. No. 70 at ¶¶ 179-183). They
allege a physical chain of distribution from Defendants to Plaintiffs and that the costs
are traceable. (Doc. No. 67 at ¶ 236; Doc. No. 70 at ¶ 182).
IPPs have alleged that Defendants caused them economic injury because the
overcharges affected the price of vehicles containing Bearings as well as stand-alone
Bearings purchased as replacement parts. Consequently, there is a reasonable
inference here that Defendants’ anticompetitive conduct harmed businesses and
impacted the prices that consumers paid for new vehicles. The Court is not persuaded
that the allegations are too remote or contrary based upon Defendants’ position that the
price-fixed product does not make up a substantial portion of the finished good’s costs.
In sum, the Court finds IPPs have met their pleading burden. See In re
Processed Egg Prod. Antitrust Litig., 851 F. Supp. 2d 867, 887 n.15 (E.D. Pa. 2012)
(addressing the indirect purchaser plaintiffs’ allegation that they paid supracompetitive
prices for shell eggs and egg products); Fond du Lac Bumper Exch., Inc. v. Jui Li Enter.
Co., 09-CV-00852 2012 WL 3841397 at *4 (E.D. Wis. Sept. 5, 2012) (indirect
purchasers alleging they are participants in the AM parts market, because they are “end
users of AM parts, and that they are being injured because the higher prices defendants
charge for AM parts are being passed on to end users by direct purchasers and others
in the chain of distribution paid inflated prices” satisfied Article III standing
requirements).
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2. Residency
Next, the parties disagree as to whether Indirect Purchaser Plaintiffs have
standing to pursue claims in states where they do not reside. According to Defendants,
no Automobile Dealer Plaintiff resides in or, consequently, suffered an injury in North
Dakota; no End-Payor Plaintiff resides in or suffered injury in the District of Columbia.
In the previous opinions addressing this argument by indirect purchasers, the Court
distinguished the authority relied upon by Defendants and deemed it unpersuasive.
See e.g. 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)).
North Dakota does not require in-state residency to state a claim, and there is no
definitive legal authority as to whether the District of Columbia statutes require
residency. See In re Processed Egg Products, 851 F. Supp. 2d at 889-891.
Consequently, the Court denies their motion to dismiss these claims on the basis of lack
of residency. Further, as this Court recognized in prior decisions in MDL 2311, even
though standing generally is determined at the outset of a case, see Cent. States Se. &
Sw. Areas Health & Welfare Fund v. Merck-Medco Managed Care, LLC, 433 F.3d 181,
197-98 (2d Cir. 2005), exceptions exist. See Ortiz v. Fibreboard Corp., 527 U.S. 815,
831 (1999); Amchem Prod., Inc. v. Windsor, 521 U.S. 591, 612 (1997) (postponing the
standing determination until after a class certification ruling because the certification
issues are “logically antecedent to Article III concerns”). The Court recognizes that the
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Sixth Circuit has not decided the applicability, if any, of Ortiz and Amchem to an indirect
purchaser antitrust class action; however, the Sixth Circuit has applied the same
rationale to an ERISA class action law suit. See Fallick v. Nationwide Ins. Mut. Co., 162
F.3d 410 (6th Cir. 1998). This Court finds no basis to alter its previous conclusion that
the rationale is persuasive. Because the Court finds that IPPs have standing to proceed
with their state law claims, it considers Defendants’ challenge to the viability of the state
law claims on other grounds.
D. Due Process
Defendants assert that due process requires dismissal of EPPs’ state law claims
because no named plaintiff has alleged where any purported injury occurred.
Defendants are correct that for the law of a state to apply to a particular claim, the state
“ ‘must have a significant contact or significant aggregation of contacts’ to the claims
asserted by each member of the plaintiff class, contacts ‘creating states interests,’ in
order to ensure that the choice of [a state’s] law is not arbitrary or unfair.” Phillips
Petroleum Co. v. Shutts. 472 U.S. 797, 818-19 (1985) (quoting Allstate Ins. Co. v.
Hague, 449 U.S. 302, 312-13 (1981) (plurality opinion)). Nevertheless, the facts giving
rise to the discussion in Shutts set it apart from the facts at hand. The Supreme Court
considered whether the application of Kansas law to a nationwide class action suit
brought by gas company investors seeking to recover interest on royalties complied with
due process. In deciding that it did not, the Supreme Court noted that the defendant did
not reside in Kansas, 99% of the gas leases involved in the suit lacked a connection to
Kansas, as did 97% of the plaintiffs. In contrast, EPPs’ claims are connected to the
various state laws under which they proceed because they reside in those states. EPPs
18
allege that they purchased Bearings for personal use, and they allege they paid
artificially inflated prices for Bearings during the Class period. (Doc. No. 70 at ¶¶ 9, 2168). Accordingly, Shutts does not preclude their claims.
E. Availability of Relief under State Law
IPPs advance claims based on antitrust, consumer protection, and unjust
enrichment laws of various states. Defendants argue for dismisssal based upon the
limitations period applicable to each state antitrust, consumer protection, and unjust
enrichment claim governing the timeliness of IPPs causes of action. The statutes of
limitations range from two to six years. The first indirect purchaser complaint against
any Defendant was filed May 23, 2012. Defendants contend that any violation prior to
the applicable statute of limitations period is not actionable.
IPPs have alleged that they did not discover their claims or facts sufficient to
place them on notice of the claims until July 2011 when announcements of the
government investigations into Bearings price-fixing became public. (Doc. No. 67 at ¶¶
220-228, 247-249; Doc. No. 70 at ¶¶ 186-87, 189, 195). According to IPPs, prior to that
time there was no information sufficient to suggest any of Defendants was involved in a
criminal conspiracy to price-fix Bearings.
In the alternative, IPPs allege that the doctrine of fraudulent concealment applies.
The Court agrees that to the extent that the doctrine is applicable, the complaints here
have alleged facts to support the elements. A plaintiff must plead three elements to
establish fraudulent concealment:
(1) wrongful concealment of their actions by the defendants;
(2) failure of the plaintiff to discover the operative facts that
19
are the basis of his cause of action within the limitations
period; and (3) plaintiff's due diligence until discovery of the
facts.
Dayco Corp. v. Goodyear Tire & Rubber Co., 523 F.2d 389, 394 (6th Cir. 1975). A
plaintiff must plead the factual allegations underlying a claim of fraudulent concealment
with particularity. Friedman v. Estate of Presser, 929 F.2d 1151, 1160 (6th Cir. 1991).
IPPs allege that they had no knowledge of the conspiracy until July 2011 because of
Defendants’ affirmative concealment. (Doc. No. 67 at ¶ 267; Doc. No. 70 at ¶ 194).
IPPs also allege that they did not discover the conduct nor were their facts prompting an
inquiry. Notably, the allegations found to be sufficient for wrongful concealment in
Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430, 446-47 (6th Cir. 2012), were not
extensive. In that case, the plaintiffs relied on findings from the European Commission
that conspirators “established security rules to prevent a paper trail. . .and used a
coding-system to hide the identity of the producers in their documents and
spreadsheets.” Id. at 447. These allegations satisfied the Sixth Circuit, inasmuch as
they demonstrated “active steps to hide evidence, as opposed to simply meeting in
secret.” Id. at 447 (citing Bridgeport Music, Inc. v. Diamond Time, Ltd., 371 F.3d 883,
891 (6th Cir. 2004) (explaining that “hiding evidence” can constitute affirmative
concealment)).
The Court found similar allegations sufficient to demonstrate wrongful
concealment in other component part cases, see e.g. In re Auto. Parts Antitrust Litig.,
12-MD-02311, 2013 WL 2456584 (E.D. Mich. June 6, 2013), and Defendants have not
provided grounds for distinguishing the situation here from the decision in those cases.
20
Accordingly, the Court denies Defendants’ request to dismiss on statute of limitations
grounds.
1. Antitrust Claims
Indirect Purchaser Dealer Plaintiffs advance state antitrust claims under the laws
of Arizona, California, Hawaii, Illinois, Iowa, Kansas, Maine, Michigan, Minnesota,
Mississippi, Nebraska, Nevada, New Hampshire, New Mexico, New York, North
Carolina, North Dakota, Oregon, South Dakota, Tennessee, Utah, Vermont, West
Virginia, Wisconsin, and the District of Columbia. Defendants raise several grounds for
dismissal, including, standing for component parts purchasers, the sufficiency of the
nexus between conduct and interstate commerce, and availability of class action
antitrust claims.
a. Antitrust Standing for Component Parts Purchasers
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
federal law does not preempt state indirect purchaser statutes.
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)
21
(“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.
This Court concluded in the prior component part cases that 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). Defendants contend that the
antitrust laws of twenty-five jurisdictions invoked by IPPs either apply the ACG factors,
look to federal law to interpret their state statutes, or apply a similar remoteness
analysis to state antitrust clams. Nevertheless, the Court finds that the AGC factors do
22
not undermine standing. Because there is no material distinction between the
allegations made in the prior component part cases and those allegations made relative
to Bearings, the Court finds no reason to alter the conclusion it reached in resolving this
issue in previous parts. Notably, the Court finds the first factor, whether IPPs suffered
an antitrust injury, satisfied because even though IPPs may not be direct participants in
the Bearings market, they purchased vehicles containing Bearings or as replacement
parts. See 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 price-fixing conspiracy was
passed through the stream of commerce to them, purchasers of products containing
plastics additives”)). Here, as was the case in In re (Flat Panel), 586 F. Supp. 2d at
1123, IPPs have advanced allegations that the markets are inextricably linked and
intertwined. (Doc. No. 55 at ¶ 203; Doc. No. 58 at ¶ 139).
Specifically, IPPs have alleged that the markets for Bearings and cars are
inextricably intertwined, that the demand for cars creates the demand for Bearings, that
the Bearings market exists to serve the vehicle market and bearings have little to no
value outside the vehicle. (Doc. No. 67 at ¶ 235; Doc. No. 70 at ¶ 181). The Bearings in
this lawsuit only have one use–inserted into vehicles. (Doc. No. 67 at ¶ 40; Doc. No. 70
at ¶ 181). In addition Bearings remain identifiable, discrete physical products,
unchanged by the manufacturing process or incorporation into vehicles, follow a
traceable physical chain, and have their own part numbers that allow tracking through
23
the chain of distribution. (See Doc. No. 67 at ¶¶ 236-238). Bearings can be replaced.
(Doc. No. 67 at ¶ 240). Although IPPs concede that Bearings are incorporated into
other types of machinery, (Doc. No. 67 at ¶ 162; Doc. No. 70 at ¶ 107), these
allegations meet IPPs’ pleading burden to show the harm in the market results from
Defendants’ antitrust violations. The Court’s conclusion is not altered by IPPs’ status
relative to market participation. Standing under antitrust law can be established even
where the market participant test is blurry. D.R. Ward Constr. Co., 470 F. Supp. 2d at
502-502; In re Flat Panel, 586 F. Supp. 2d at 1123.
Likewise, the directness of the injury factor is satisfied here, and the Court rejects
Defendants’ assertion that the distribution chain is so complex and the factors affecting
prices paid by IPPs too numerous to satisfy the pleading requirements. Because IPPs
asserted that “the cost of the component was traceable through the product distribution
chain,” they have alleged a chain of causation (See Doc. No. 67 at ¶¶ 103-106; Doc.
No. 70 at ¶ 216). Therefore, according to IPPs, they can trace overcharges through the
distribution chain, and this AGC factor is satisfied. In re Flash Memory Antitrust Litig.,
643 F. Supp. 2d 1133, 1155 (N.D. Cal. 2009).
Similarly, the harm alleged becomes less speculative in light of IPPs’ assertion
that the component parts remain separate and traceable. In re Flash Memory Antitrust
Litig., 643 F. Supp. 2d at 1155 (citation omitted); In re Graphics Processing Units
Antitrust Litig., 540 F. Supp. 2d 1085, 1098 (N.D. Calif. Nov. 7, 207) (In re GPU II). In
addition, IPPs advance allegations as to how to measure the harm. (Doc. No. 67 at ¶¶
243-44).
24
Lastly, the Court finds that the existence of three classes does not render the
IPPs’ claims ripe for duplicative recovery. Here, IPPs have indicated that the alleged
overcharges are distinct and traceable. Other courts have recognized that such
allegations lessen the risk of 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).
In sum, the Court is satisfied that the AGC factors do not undermine standing.
Therefore, the Court declines to dismiss the claims brought under the laws of Arizona,
California, District of Columbia, Hawaii, Illinois, Iowa, Kansas, Maine, Michigan,
Mississippi, Nebraska, Nevada, New Hampshire, New Mexico, New York, North
Carolina, north Dakota, Oregon, South Dakota, Tennessee, Utah, Vermont, West
Virginia, or Wisconsin on this basis.
In addition, Defendants ask the Court to find antitrust claims brought under the
laws of New Hampshire and Utah are barred because the conduct at issue occurred
before the Illinois Brick repealer statutes were enacted. Specifically, Utah enacted its
statute in 2006, and New Hampshire enacted its indirect purchaser statute in 2008.
According to Defendants, the statutes either expressly apply prospectively or the state
courts have refused to apply the statutes retroactively. The Court previously held that
even if the date of enactment limits damages, it does not preclude any claim alleged
here in its entirety. Accordingly, the Court finds that Utah Code Ann. § 76-10-918m,
which took effect on May 1, 2006, limits IPPs’ antitrust claim to price-fixing that occurred
after the 2006 amendment. Likewise, N.H. Rev. Stat. Ann. § 356:11 bars recovery for
claims brought under the law of New Hampshire for conduct that occurred prior to
25
January 1, 2008.
b. Sufficiency of the Nexus Between Conduct and Intrastate
Commerce
The parties are in agreement that the antitrust statutes of certain jurisdictions
require a plaintiff to allege a nexus between a defendant’s conduct and intrastate
commerce; boilerplate allegations are insufficient. The parties disagree as to whether
the allegations in the complaints satisfy the pleading requirements. Those jurisdictions
at issue include the District of Columbia, Mississippi, Nevada, New York, South Dakota,
Tennessee, and West Virginia.
In general, Defendants challenge the nexus in the EPPs’ complaint based upon
EPPs’ failure to allege either that they were residents of the identified states and District
of Columbia or that they purchased Bearings in those states where they resided. The
Court rejects Defendants’ argument. Even if EPPs failed to allege that their purchases
occurred in the jurisdictions in which they resided, the Court finds the pleadings create a
reasonable inference that the purchases occurred where the individual plaintiffs reside.
EPPs’ complaint, read in the light most favorable to their claims, warrants the inference
even given the length of the alleged conspiracy and the increased burden created in
purchasing vehicles in jurisdictions outside of a plaintiff’s resident state. Finally, EPPs
allege that they were injured in the states in which they resided by Defendants’
conspiratorial conduct because they were forced to pay inflated prices.
ADPs include businesses in each of the identified jurisdictions. They too allege
that they indirectly purchased and received Bearings and vehicles containing Bearings.
They allege they paid inflated prices. For example, EPPs allege that Defendants
26
entered into an unlawful agreement in restraint of trade in the District of Columbia.
They allege that the conspiracy restrained, suppressed, and eliminated price
competition relative to Bearings because the prices were fixed, thereby depriving
“Plaintiffs and members of the Damages Class” of free and open competition. (Doc. No.
70 at ¶ 216(a)). They also allege the illegal conduct “substantially affected” commerce
in the District. Id. ADPs allege the same (Doc. No. 67 at ¶ 283(a)), and that one of the
plaintiffs purchased and received vehicles and Bearings in the District of Columbia.
(Doc. No. 67 at ¶ 26). These types of allegations are sufficient to state a claim under
the District of Columbia. See 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).
Case law supports the sufficiency of the nexus stated in IPPs’ antitrust claim
under Mississippi law inasmuch as three Mississippi residents are alleged to have
purchased Bearings in Mississippi indirectly from one or more Defendant, (Doc. No. 70
at ¶¶ 40-42), and four businesses in Mississippi allege that they purchased and
received Bearings and vehicles containing Bearings at inflated prices, in Mississippi,
and displayed, sold, serviced, and advertised their vehicles in Mississippi during the
Class Period. (Doc. No. 67 at ¶¶ 27-28, 91-92, 101-104). IPPs allege that the prices of
Bearings “were raised, fixed, maintained, and stabilized at artificially high levels through
Mississippi,” and, that the competition for prices of Bearings was “restrained,
suppressed, and eliminated throughout Mississippi.” (Doc. No. 67 at ¶ 291, Doc. No. 70
at ¶ 222). See In re GPU II, 540 F. Supp. 2d at 1099 (holding that allegations that the
27
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) (the defendants sold and
distributed products in Mississippi), overruled in part on other grounds sub nom.
Mladinich v. Kohn, 250 Miss. 138, 164 So.2d 785 (1964)); California v. Infineon Techs.
AG., 531 F. Supp. 2d 1124, 1158-1159 (N.D. Cal. 2007) (observing that the Mississippi
Antitrust Act should be construed to require allegations of at least some activity or
conduct occurring in intrastate commerce or trade).
The same factual allegations are advanced by Nevada residents: they purchased
Bearings indirectly from one or more of the Defendants, at inflated prices, in Nevada
because of Defendants’ conspiracy. (Doc. No. 67 at ¶¶ 67-68, 293; Doc. No. 70 at ¶¶
48, 224). ADPs also allege that they advertised, sold and serviced vehicles in Nevada
during the Class Period. (Id.) The allegations meet the pleading requirements relative
to Nev. Rev. Stat. Ann. § 598A.060(1), which prohibits conduct that is part of a
conspiracy in restraint of trade in Nevada. See In re Flat Panel, 599 F. Supp. 2d at
1189 (finding similar allegations sufficient to state a claim under the Nevada statute).
Defendants next contend that the antitrust claims under New York law fail
because IPPs have not alleged a sufficient impact on intrastate commerce. Again,
EPPs allege that Defendants raised and maintained Bearings prices throughout New
York, depriving IPPs of free and open competition, and causing EPPs to pay artificially
inflated prices. (Doc. No. 67 at ¶¶ 35-36, 93, 94, 296(a)-(c), 316(a)-(i); Doc. No. 70 at
¶¶ 51-52, 227(a)-(c), 251(a)-(e)). The allegations advanced by IPPs differ from those
found lacking and insufficient under New York law because IPPs have alleged that they
28
paid artificially high prices in New York. See 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 allegations of intrastate conduct or that New York's local interests were
affected by the challenged conduct).
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.” IPPs have alleged they purchased price-fixed products that entered the
state. IPPs allege that plaintiffs reside in South Dakota, and purchased Bearings, and
ADPS allege they “purchased, displayed, sold, serviced and advertised vehicles in
South Dakota during the Class Period.” (Doc. No. 67 at ¶¶ 87-88; Doc. No. 70 at ¶ 59).
Independent Purchaser Plaintiffs allege the prices paid were supracompetitive, because
they were fixed at artificially high levels throughout the state and had a substantial effect
on South Dakota commerce. (Doc. No. 67 at ¶ 300; Doc. No. 70 at ¶ 231). The law
does not require that Defendants sell the price-fixed products themselves in South
Dakota, and these allegations satisfy the pleading standards. See In re GPU II Antitrust
Litig., 540 F. Supp. 2d at 1099.
The Tennessee state court, in Freeman Indus., LLC v. Eastman Chem. Co., 172
S.W.3d 512, 516 (Tenn. 2005), found a claim brought under Tennessee Code
Annotated § 47-25-101 (2001), must meet the “substantial effects standard.” In contrast
to the out-of-state plaintiff in Freeman Indus., who never alleged that it purchased the
price-fixed product from a defendant with ties to Tennessee, here, in-state EPPs allege
they purchased vehicles containing price-fixed products in Tennessee. (Doc. No. 70 at
29
¶¶ 60, 232). Accordingly, the Court rejects Collective Defendants' request for dismissal
of this claim.
Lastly, the Court finds EPPs have stated a claim under West Virginia antitrust
law, which “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) (citation omitted). EPPs have
alleged, albeit through inference, the purchase of Bearings in West Virginia. (Doc. No.
70 at ¶ 235). EPPs allege an impact on intrastate commerce in that “price competition
was restrained, suppressed, and eliminated throughout” the state. (Doc. No. 70 at ¶
222(a)). They further allege that they paid “supracompetitive, artificially inflated prices”
that had “a substantial effect on West Virginia commerce.” (Id.) These allegations, read
in the light most favorable to EPPs, demonstrate that once the price-fixed products
entered the state’s commerce, and were purchased by EPPs, an antitrust injury
occurred.
In sum, the Court rejects Defendants’ nexus argument.
c. Class Action
Defendants argue that the ADPs’ claim on behalf of themselves and other
similarly situated automotive dealers in Illinois must be dismissed. This Court agrees,
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). The Court agrees that Shady Grove Orthopedic Assoc. v. Allstate Ins. Co., 559
U.S. 393, 130 S.Ct. 1431, 1445 (2010) (holding that Rule 23 applies in federal court
30
unless it “abridge[s], enlarge[s] or modif[ies] any substantive right” under the Rules
Enabling Act, 28 U.S.C. §2072(b)) bars the claim. Accord In re Digital Music Antitrust
Litig., 812 F. Supp. 2d 390, 416 (S.D. N.Y. 2011). Accordingly, the Court dismisses
ADPs’ antitrust claim under Illinois law.
2. Consumer Protection Claims
In their consumer protection claims, IPPs seek relief under the laws of Arkansas,
California, Montana, New Mexico, New York, North Carolina, and South Carolina.
Defendants raise several arguments in support of dismissal, including failure to meet
particular pleadings standards, failure to allege a sufficient nexus between conduct and
commerce, failure to meet the definition of consumer, and state bars against class
actions.
a. Special Pleading Requirements
Defendants challenge IPPs’ claims under the consumer protection statutes of
Arkansas, New Mexico, and New York based on their position that the claims fail to
include special pleading requirements. The Court addressed these arguments in prior
component part cases, has reviewed the authority cited by the parties, and finds no
grounds for altering its prior analysis.
Under Arkansas law, the the Arkansas Deceptive Trade Practices Act (“ADTPA”),
Ark. Stat. Ann. § 4-88-107(a) (10), is construed liberally. 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). Although Defendants contend
that price-fixing claims are not allowed under the ADTPA, many courts have allowed
31
such claim under the Act. In re Aftermarket Filters Antitrust Litig., 08 C 4883, 2009 WL
3754041 (N.D. Ill. Nov. 5, 2009); In re: Chocolate, 602 F. Supp. 2d at 583 (N.D. Pa.
2009) (and cases cited therein). Accordingly, defendants' motion to dismiss plaintiffs'
claims under the ADTPA is denied.
To support their claim under New Mexico’s Unfair Practices Act, N.M. Rev. Stat.
§ 57-12-2. IPPs allege that the conspiracy resulted in artificially inflated price levels of
Bearings, leading to a “gross disparity” between the value received by the New Mexico
plaintiff and class and the prices paid for the Bearings. (Doc. No. 67 at ¶ 315; Doc. No.
70 at ¶ 250). The allegations differ from those found lacking in GPU II, 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). See In re
Chocolate, 602 F. Supp. 2d at 586; In re New Motor Vehicles, 350 F. Supp. 2d at 196.
Accordingly, the allegations conform to the pleading requirements of Rule 12(b)(6).
This Court also rejects Defendants’ contention that because IPPs included no
allegation that they were aware of a defendant's deceptive acts, their claim is defective
under New York law. In the case before this Court, the anticompetitive conduct is
“imbued with a degree of subterfuge,” which is sufficient to sustain a claim under New
York law. See Leider v. Ralfe, 387 F.Supp.2d 283, 296 (S.D.N.Y.2005) (rejecting a §
349 claim where the defendant's conduct was not secretive) (citations omitted). IPPs
have alleged that Defendants engaged in materially deceptive conduct because they
have alleged Defendants took measures to conceal their price-fixing activities. (Doc. No.
67 at ¶¶ 252-56, 296, 316;Doc. No. 70 at ¶¶ 190-93, 227, 251). Consequently, the §
349 claim is viable. See In re Dynamic Random Access Memory (DRAM) Antitrust
32
Litig., 536 F.Supp.2d 1129, 1143-44 (N.D. Cal. 2008); In re GPU II, 527 F. Supp. 2d at
1030.
b. Nexus between Conduct and Intrastate Commerce
Defendants challenge claims under the consumer protection laws of California,
Montana, New York, and North Carolina because the complaints lack allegations that
any of the offending conduct took place within the state or had an effect on intrastate
commerce in these states.
Defendants’ argument as to the viability of the consumer protection claim under
California law rests on their position that EPPs do not allege any of the challenged
conduct took place in the particular state. The Court addressed the same argument in
prior component part cases and concluded that IPPs had satisfied their pleading
obligations, distinguishing Meridian Project Sys. Inc. v. Hardin Constr. Co., 404 F. Supp.
2d 1214, 1225 (E.D. Cal. 2005), because the plaintiff explicitly alleged that the
misconduct occurred in Illinois, not California. 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). Here, EPPs allege that California residents
purchased Bearings indirectly from one or more Defendants at artificially inflated prices.
(Doc. No. 70 at ¶¶ 8, 19-20, 200, 202, 204-05, 215(d), 242(e)). The Court finds these
allegations are sufficient.
Defendants advance the same challenge to EPPs’ claim under Montana's Unfair
33
Trade Practices Act (“MUTPA”), Mont. Code Ann. § 30-14--101 et seq. This Court
previously rejected this argument, observing that where plaintiffs have alleged their
purchased vehicles containing the component part in states permitting recovery of
damages by indirect purchasers. Collective Defendants’ reliance on In re DRAM I, 516
F. Supp. 2d at 1104, is misplaced. EPPs alleged that price competition was restrained
in Montana. (Doc. No. 70 at ¶ 207(a)). EPPs have alleged that Defendants’ conduct
was directed at the automotive parts market in all states, including Montana; that the
conduct had the reasonably foreseeable effect of raising the price for finished products
in all states, including Montana, and EPPs purchased price-fixed products in Montana,
paying supracompetitive prices for those products. (Id.)
As for the sufficiency of the nexus relative to the New York claim, the Court again
finds the pleadings are sufficient. Under New York General Business Law § 349 (1984),
commercial misconduct occurring within New York is prohibited. To prevail on a claim
under § 349, “a plaintiff must establish three elements: the challenged act or practice
was consumer-oriented; it was misleading in a material way; and the plaintiff suffered
injury as a result of the deceptive act.” In re Flat Panel, 586 F. Supp. 2d at 1127. The
shortcomings raised by Defendants with regard to EPPs' New York consumer protection
claim have been addressed by this Court in prior component part cases. EPPs include
two New York residents. As the Court previously stated, the allegations, read in the light
most favorable to EPPs, suggests that the purchases took place in New York. EPPs
allege Defendants engaged in deceptive commercial misconduct regarding the “prices
at which Bearings were sold, distributed or obtained in New York.” (Doc. No. 70 at ¶
251(a)). The allegations describe conduct occurring in New York.
34
The North Carolina Unfair Trade Practices Act (“NCUTPA”), 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.” Under the statute, a “conspiracy in restraint of trade or commerce
in the state of North Carolina is hereby declared to be illegal.” Id. To bring a claim
under the North Carolina Unfair Trade Practices Act (“NCUTPA”), a plaintiff must allege
that the defendants’ conduct had a substantial effect on in-state business. Merk & Co.
v. Lyon, 941 F. Supp. 1443, 1463 (M.D. N.C. 1996). Accord Duke Energy Int'l, LLC v.
Napoli, 748 F. Supp. 2d 656, 677 (S.D. Tex. 2010) (holding that “[a] plaintiff who does
not allege a substantial effect on in-state North Carolina operations fails to state a claim
under the NCUTPA”). Defendants argue that no claim is stated because the IPPs’
complaints address nationwide effects that impact North Carolina no more than any
other state. The Court disagrees. The cases upon which Defendants rely merely
articulate the constitutional limitation of the NDCDTPA. IPPs allege that North Carolina
IPPs were harmed by paying supracompetitive, artificially inflated prices” for Bearings.
(Doc. No. 67 at ¶¶63-64; Doc. No. 70 at ¶ 252(d)). These allegations demonstrate that
the application of North Carolina law is “neither arbitrary or unfair..” Duke Energy, 748
F. Supp. 2d at 677. Therefore, the Court denies Defendants’ request for dismissal on
this basis. Accord In re Flonase Antitrust Litig., (“In re Flonase II”) 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).
In sum, the Court denies Defendants’ request for dismissal of the consumer
35
protection claims on the sufficiency of the nexus between Defendants’ conduct and
intrastate commerce. These allegations satisfy the pleading burden.
c. Protection of Businesses
“The purpose of the District of Columbia’s consumer protection statute is not
protection of “merchants in their commercial dealings with suppliers or other
merchants.” Ford v. ChartOne, Inc., 908 A.2d 72, 83-84 (D.C. 2006) (observing that the
District of Columbia Consumer Protection Procedures Act polices conduct arising out of
a consumer-merchant dispute). Accord Dist. Cablevision Ltd. P'ship v. Bassin, 828
A.2d 714, 717 (D.C. 2003). ADPs do not oppose dismissal of their consumer protection
claim under D.C. law. Accordingly, it is dismissed.
d. Class Action Bar
Defendants assert that Auto Dealer Plaintiffs are barred from bringing their
consumer protection claims under South Carolina law because it prohibits class actions.
See South Carolina Unfair Trade Practices Act (SCUTPA”), S.C. Code § 39-5-140(a).
The Court was persuaded in prior component part cases that Defendants are correct.
See Stalvey v. American Bank Holdings, Inc., No. 4:13-cv-714, 2013 WL 6019320 at *4
(D. S.C., Nov. 13, 2013) (distinguishing Shady Grove and holding that the text of the
SCUTPA that prohibits class actions, is part of the “substantive portions of South
Carolina law and [is] not trumped by Federal Rule of Civil Procedure 23, even in light of
the Shady Grove decision”). See also In re MI Windows and Doors, Inc. Products
Liability Litig., No. 2:11–cv–00167–DCN, 2012 WL 5408563 (D. S.C. Nov. 6, 2012).
Defendants argue that EPPs cannot maintain their consumer protection claims
36
as a class action under Montana law. In Shady Grove Orthopedic Assoc. v. Allstate Ins.
Co., 559 U.S. 393 (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). A federal rule “cannot govern a particular case in
which the rule would displace a state right or remedy that is procedural in the ordinary
sense of the term but is so intertwined with a state right or remedy that it functions to
define the scope of the state-created right.” Id. Although the decision in In re Packaged
Ice Antitrust Litig., 779 F. Supp. 2d 642, 661 (E.D. Mich. 2011), included a footnote
suggesting that a class action under the Montana consumer protection statute would be
barred in federal court, the Montana statute addresses class actions only in the context
of the procedures available to enforce the right in state court. Mont. Code §30-14-133.
As the Court held previously, the prohibition does not alter the substantive scope of the
right to relief, and in the absence of governing authority to the contrary, the Court
declines to dismiss on this ground.
3. Unjust Enrichment Claims
Defendants challenge IPPs’ unjust enrichment claims on four grounds.
According to Defendants, the state unjust enrichment claims must be dismissed
because Defendants gave consideration, because IPPs did not confer a benefit directly
on Defendants, because IPPs voluntarily entered into purchasing arrangements for
Bearings or vehicles containing Bearings and received the benefit of their bargains, and
because IPPs failed to meet special pleading requirements in certain states.
Before turning its attention to the specific arguments, the Court recognizes that
37
although the particular elements of unjust enrichment vary from jurisdiction to
jurisdiction, when stripped to its essence, a claim of unjust enrichment requires IPPs to
allege sufficient facts to show that Defendants received a benefit, and under the
circumstances of the case, retention of the benefit would be unjust. See In re Flonase
II, 692 F. Supp. 2d at 54 (holding that a claim of unjust enrichment requires a plaintiff to
plead two elements: “receipt of a benefit and unjust retention of the benefit at the
expense of another”). In support of their unjust enrichment claims, IPPs allege that as a
result of the challenged conduct, “Defendants have been unjustly enriched by the
receipt of, at a minimum, unlawfully inflated prices and unlawful profits” from the sales of
Bearings, that “Defendants have benefitted from their unlawful acts,” and that “it would
be inequitable for Defendants to be permitted to retain any of the ‘ill-gotten gains’
resulting from the overpayments.” (Doc. No. 67 at ¶¶ 322-323; Doc. No. 70 at ¶¶ 35657).
Although the Court agrees that these particular allegations are conclusory, the
Court does not read these allegations in isolation, but in light of all of the factual
allegations in the complaints. An unjust enrichment claim is used to prevent a
defendant from “profit[ing] by his own wrong.” Restatement (Third) of Restitution &
Unjust Enrichment § 3. Here, IPPs allege that Defendants profited from their antitrust
conspiracy. The Court has addressed the arguments advanced here in other
component part cases and, after reviewing the cases, finds no basis for altering its
analysis. Therefore, the Court dismisses IPPs’ claim of unjust enrichment under
California law, as it does not recognize a cause of action for unjust enrichment. See Hill
v. Roll Int'l Corp., 195 Cal. App. 4th 1295, 1307, 128 Cal. Rptr. 3d 109 (2011); Levine v.
38
Blue Shield of Cal., 189 Cal. App. 4th 1117, 1138, 117 Cal. Rptr. 3d 262 (2010). Accord
Fraley v. Facebook, 830 F. Supp. 2d 785, 814 (N.D. Cal. 2011). For the reasons that
follow, the Court declines to dismiss any of the other unjust enrichment claims.
a. Consideration
Defendants argue that their retention of the payment is not unjust given the
consideration they have provided. There is no dispute that Defendants gave Bearings
to their direct customers. Nevertheless, the Court disagrees with Defendants that the
exchange of Bearings for payment bars IPPs’ unjust enrichment claims. The issue is
whether the transaction was unjust. IPPs allege that they overpaid for Bearings
because Defendants fixed the prices of Bearings. The facts alleged in their complaints
meet their pleading burden, see In re K-Dur Antitrust Litig., 338 F. Supp. 2d 517, 545
(D.N.J. 2004) (the exchange of “any consideration” does not bar recovery under an
unjust enrichment theory), inasmuch as the allegations create an inference that the
consideration was not reasonable, valuable, or adequate. Defendants have failed to
cite a single case finding that payment or receipt of anything of value from a defendant
will defeat a plaintiff's claims for unjust enrichment. “Determinations that depend on
evaluating whether a benefit received approximates the value paid are primarily
questions of fact, and as such, are not appropriately addressed on a motion to dismiss.”
Id. at 546.
Moreover, the Court finds the cases upon which Defendants’ rely are not
persuasive for either of two reasons. First, they address consideration in the context of
general contractor/subcontractor relationships and cannot be read to cover the price-
39
fixing claims advanced here. Accordingly, the Court rejects the request for dismissal of
all the unjust enrichment claims of Kansas, Massachusetts, Missouri, Nevada, New
Hampshire, South Dakota, Tennessee, Utah, Vermont, and Wisconsin on the ground
that Defendants gave consideration. See e.g. Tradesmen Int'l, Inc. v. United States
Postal Serv., 234 F. Supp. 2d 1191, 1205 (D. Kan. 2002) (principles preventing a
subcontractor from recovering against a property owner in unjust enrichment are equally
applicable to a sub-subcontractor's claim of unjust enrichment against the general
contractor); County Asphalt Paving Co., Inc. v. Mosley Const., Inc., 239 S.W.3d 704
(Mo. Ct. App. 2007) (holding that an owner cannot be unjustly enriched by retaining the
benefits of work performed by subcontractors where the owner has paid the general
contractor in full); Browyer v. Davidson, 584 P.2d 686, 687 (Nev. 1978) (subcontractor’s
failure to enforce his lien rights precluded his claim that the defendant was unjustly
enriched by the benefits retained); Mangiardi Bros. Trucking, Inc. v. Dewey Envtl., LLC,
12-CV-481-JD, 2013 WL 1856338 (D. N.H. Apr. 30, 2013) (observing that although it is
unfair that contractors were not fully compensated for their services, it is equally unfair
that a party which did not receive a benefit should have to pick up the slack); Paschall's,
Inc. v. Dozier, 407 S.W.2d 150 (Tenn. 1966) (action against homeowners for materials
and labor furnished in construction of bathroom addition to house); Concrete Prods.
Co., a Div. of Gibbons & Reed v. Salt Lake Cnty., 734 P.2d 910, 911 (Utah 1987)
(holding that the defendant county had not been unjustly enriched by the plaintiff’s
delivery of concrete for curbs and gutters to a third-party who never paid); Ray Reilly's
Tire Mart, Inc. v. F.P. Elnicki, Inc., 537 A.2d 994, 995 (Vt. 1987) (citing Morrisville
Lumber Co., Inc. v. Okcuoglu, 531 A.2d 887, 889 (Vt. 1987) (holding that “retention of a
40
benefit is not unjust” where owner did not accept material or deal directly with the
subcontractor); Tri-State Mech., Inc. v. Northland Coll., 681 N.W.2d 302, 305-06 (Wisc.
Ct. App. 2004) (observing that the plaintiff could not recover under a theory of unjust
enrichment where an unpaid subcontractor brought claim against the owner that has
received the benefits, but has already paid for the benefits conferred).
Second, the unjust enrichment claims that failed in the cases upon which
Defendants’ rely are factually inapposite. Because the essence of an unjust enrichment
case turns on the facts, the Court cannot extend the facts of a claim turning on the
terms of a contract or the liability of a principal for its agent to the price-fixing claims
advanced here. See Ferola v. Allstate Life Ins. Co., 050996, 2007 WL 2705534 (Mass.
Super. Aug. 30, 2007) (executor cannot recover because decedent purchased annuity
and received benefits under the contract); Parker v. West Dakota Insurers, Inc., 605
N.W. 2d 181, 187 (S.D. 2000) (rejecting former employee’s unjust enrichment claim to
collect post-employment renewal commissions from her employer--a contractually
based argument for unjust enrichment); American Movie Classics v. Rainbow Media
Holdings, 508 F. App’x 826 (10th Cir. 2013) (rejecting an unjust enrichment claim under
Utah law against the principal where agent was paid in full). Accordingly, the Court
denies Defendants’ request to dismiss the unjust enrichment claims on the basis of
consideration.
b. Direct Benefit
In the alternative, Defendants assert that IPPs’ claims under Arizona, Florida,
41
Iowa, Kansas, Michigan, Minnesota, New York, North Carolina, North Dakota, Rhode
Island, South Carolina, Utah, and the District of Columbia fail because a plaintiff must
allege that it directly conferred some advantage on the defendant. In re Aftermarket
Filters Antitrust Litig., No. 08 C 4883, 2010 WL 1416259 at *2-3 (N.D. Ill. Apr. 1, 2010).
Here, as indirect purchasers, any benefit conferred by the IPPs was to others in the
chain of distribution, not Defendants, and the parties dispute whether the lack of direct
contact dooms the unjust enrichment claims. The Court holds that it does not. The
“critical inquiry [i]s not whether the benefit is conferred directly on the defendant, but
whether the plaintiff can establish the relationship between his detriment and the
defendant's benefit ‘flow from the challenged conduct.” In re Cardizem CD Antitrust
Litig., 105 F. Supp. 2d 618, 669 (E.D. Mich. 2000) (Edmunds, J.). See e.g. Yee v. Nat'l
Gypsum Co., CV-09-8189-PHX-DGC, 2010 WL 2572976 (D. Ariz. June 22, 2010)
(involving a proposed class action arising out of the manufacture and sale of allegedly
defective drywall, wherein the plaintiff alleged only that he paid the purchase price for
the drywall, and not that he conferred a benefit on the manufacturer); In re Porsche
Cars N. Am., Inc., 880 F. Supp. 2d 801, 843 (S.D. Ohio 2012) (dismissing an unjust
enrichment claim arising out of a Florida plaintiff’s purchase of a vehicle containing
defective coolant tubes because there was no direct link to the manufacturer); In re
Processed Eggs, 851 F. Supp. 2d at 929 (Florida courts require “some benefit” to flow
to the defendant, it finds no requirement that the benefit be bestowed through direct
contact); Romano v. Motorola, Inc., No. 07-CIV-60517, 2007 WL 4199781 at *2 (S.D.
Fla. Nov. 26, 2007) (refusing to dismiss a claim of unjust enrichment even though the
plaintiff purchased a product through a manufacturer's “retail outfit” because the
42
defendant still directly benefitted through profits arising out of the sale); Sheet Metal
Workers Local 441 Health & Welfare Plan v. GlaxoSmithKline, PLC, 737 F. Supp. 2d
380, 434 (E.D. Pa. 2010) (rejecting claim that the antitrust injury suffered by Iowa
plaintiffs was too remote); Commercial Fed. Bank v. Qwest Corp., 695 N.W.2d 41 (Iowa
Ct. App. 2004) (subcontractors seeking unjust enrichment claim against owner); In re
Processed Eggs, 851 F. Supp. 2d at 929-930 (no requirement under Kansas law that
the benefit flow directly from the plaintiff to the defendants, and acknowledging that
courts have upheld unjust enrichment claims brought by indirect purchasers of pricefixed parts); In re Static Random Access Memory (SRAM) Antitrust Litig., 07-MD-01819
CW, 2010 WL 5094289 at *7 (N.D. Cal. Dec. 8, 2010) (Michigan law does not require a
benefit to be conferred directly by plaintiff to a defendant) (citing Kammer Asphalt
Paving Co., Inc. v. East China Township Schools, 443 Mich. 176, 187-88, 504 N.W.2d
635 (1993)); Morris Pumps v. Centerline Piping, Inc., 729 N.W.2d 898 (Mich. Ct. App.
2006); In re Cardizem CD Antitrust Litig., 105 F. Supp. 2d 618, 670-71 (E.D. Mich.
2008); Schumacher v. Schumacher, 627 N.W.2d 725, 729 (Minn. Ct. App. 2001)
(remanding dismissal of claim for unjust enrichment for consideration of whether the
defendants benefitted by illegal or unlawful conduct); Sperry v. Crompton Corp., 26
A.D.3d 488, 810 N.Y.S.2d 498, 499-500 (N.Y. App. Div. 2006) (affirming the dismissal
of an unjust enrichment claim brought by New York indirect purchasers because the
alleged connection between plaintiffs and defendants was simply too attenuated, but
observing “a plaintiff need not be in privity with the defendant to state a claim for unjust
enrichment”); Baker Constr. Co. v. City of Burlington, No. COA09-13, 2009 WL
3350747, at *1 (N.C.App. Oct. 20, 2009) (rejecting a claim by the plaintiff construction
43
company against the subsequent owner of the property, noting that “[w]here a third
person benefits from a contract entered into between two other persons[,] the mere
failure of performance by one of the contracting parties does not give rise to a right of
restitution against the third person”); Opp v. Matzke, 559 N.W.2d 837, 839-40 (N.D.
1997) (no direct benefit requirement); In re TFT-LCD (Flat Panel) Antitrust Litig., M
07-1827 SI, 2011 WL 4501223 (N.D. Cal. Sept. 28, 2011) (declining to dismiss unjust
enrichment claim under Rhode Island law on the defendant’s direct benefit argument);
Myrtle Beach Hosp., Inc. v. City of Myrtle Beach, 341 S.C. 1, 3, 532 S.E.2d 868, 869,
873 (2000) (rejecting unjust enrichment claim where benefit to defendant was
“incidental”); Rawlings v. Rawlings, 240 P.3d 754, 761 (Utah 2010) (recognizing the
flexible nature of the claim); In re Processed Eggs, 851 F. Supp. 2d at 934 (no
requirement of direct benefit to defendant under Utah law); Minebeaq Co. Ltd. v. Pabst,
444 F. Supp. 2d 168, 186 (D.C. 2006) (involving payment for a patent by joint venture
partner); In re (Flat Panel), 2011 WL 4501223 at * 12 (rejecting argument that “the
District of Columbia requires a ‘direct relationship’ between an unjust enrichment
plaintiff and the defendant”).
c. Benefit of the Bargain
Defendants also assert that IPPs’ unjust enrichment claims fail because IPPs
entered into a voluntary agreement and received the benefit of their respective
bargains. Defendants challenge claims brought under the laws of Arizona, Arkansas,
District of Columbia, Florida, Illinois, Iowa, Massachusetts, Michigan, Minnesota,
Missouri, Nebraska, New Hampshire, New Mexico, New York, North Carolina, North
Dakota, Oregon, Rhode Island, South Carolina, and Utah as subject to dismissal on this
44
ground. The Court has reviewed the case law cited by Defendants and finds that the
authority does not support dismissal of a price-fixing claim on this basis–the cases do
not stand for the proposition that a plaintiff must allege that he dealt directly with the
defendants. Specifically, IPPs had no contractual relationship with Defendants, a fact
that distinguishes IPPs’ unjust enrichment claims from the cases cited by Defendants.
See e.g. USLife Title Co. of Ariz. v. Gutkin, 732 P.2d 579, 585 (Ariz. Ct. App. 1986)
(rejecting the plaintiff's unjust enrichment claim where the plaintiff had already received
the quitclaim deed for which it had bargained); Frein v. Windsor Weeping Mary LP, 366
S.W.3d 367, 372 (Ark. Cr. App. 2009) (observing that “the concept of unjust enrichment
has no application when an express written contract exists”); Fort Lincoln Civic Ass'n,
Inc. v. Fort Lincoln New Town Corp., 944 A.2d 1055, 1076 (D.C. 2008) (dismissing an
unjust enrichment claim because it advanced the same theory behind a breach of
contract claim); Prohias v. Pfizer, Inc., 485 F. Supp. 2d 1329, 1336 (S.D. Fla. 2007)
(rejecting the plaintiffs’ unjust enrichment claim involving deceptive advertising of a drug
because the plaintiffs continued to pay for the drug even after they had “knowledge as
to its alleged limitations,” thus they were not “actually injured or aggrieved by the
allegedly misleading advertisement”); La Throp v. Bell Fed. Sav. & Loan Ass'n, 370
N.E.2d 188, 195 (Ill. 1977) (rejecting the plaintiffs' unjust enrichment claim that the
defendant should pay interest on impoundment funds, observing that “the absence of a
provision to pay interest on the impoundment funds is equivalent to an agreement that it
should not be paid”); Smith v. Stowell, 125 N.W.2d 795, 800 (Iowa 1964) (express
written agreement covered the subject matter of the dispute); Ferola v. Allstate Life Ins.
Co., 050996, 2007 WL 2705534 (Mass. Super. Aug. 30, 2007) (when claim arises in
45
“the context of a contract, in order for defendant's retention of money received to be
unfair, the plaintiff must allege that consideration failed”); Isom v. NE Lots LLC, No.
288378 (Mich. Ct. App. Jan. 14, 2010) (a party cannot use unjust enrichment to alter the
terms of a contract); Zinter v. Univ. of Minnesota, 799 N.W.2d 243, 247 (Minn. Ct. App.
2011) (no claim where contract covered the parties’ relationship); Am. Standard Ins.
Co. of Wisconsin v. Bracht, 103 S.W.3d 281, 293 (Mo. App. S.D. 2003) (when an
express contract governs the subject matter, a claim of unjust enrichment does not
apply); Farmers New World Life Ins. Co. v. Jolley, 747 S.W.2d 704, 707-08 (Mo. App.
W.D. 1988) (holding that plaintiff's entering into an agreement with known risks
precluded recovery under an unjust enrichment claim when an anticipated contingency
occurred); Washa v. Miller, 546 N.W.2d 814, 819 (Neb. 1996) (“unjust enrichment is
recognized only in the absence of an agreement between the parties”); Clapp v.
Goffstown Sch. Dist., 977 A.2d 1021, 1025 (N.H. 2009) (citing 42 C.J.S. Implied
Contracts § 38 (2007) (noting that “unjust enrichment. . .is not a means for shifting the
risk one has assumed under contract”); Arena Res., Inc. v. Obo, Inc., 238 P.3d 357, 361
(N.M. Ct. App. 2010) (rejecting unjust enrichment claim, noting that, in general, a
contract had to be enforced as written absent “fraud, real hardship, oppression, mistake,
unconscionable results, and the other grounds of righteousness, justice and morality”);
Vitale v. Steinberg, 307 A.D.2d 107, 111, 764 N.Y.S.2d 236 (2003) (in New York, the
state courts reject claims for unjust enrichment when express contracts govern the
same subject matter); Britt v. Britt, 359 S.E.2d 467, 470 (N.C. 1987) (the parties’
agreement governs whether a defendant was unjustly enriched); Jerry Harmon Motors,
Inc. v. Heth, 316 N.W.2d 324, 328 (N.D. 1982) (“a person is not unjustly enriched by
46
retaining benefits involuntarily acquired which law and equity give him absolutely without
any obligation on his part to make restitution”) (citation omitted); High v. Davis, 584 P.2d
725, 736 (Or. 1978) (observing that a quitclaim deed establishes the parties’ agreement
in a property transaction, and the purchaser assumes the risk of defective title); Doe v.
Burkland, 808 A.2d 1090, 1095 (R.I. 2002) (reinstating unjust enrichment counterclaim
as well as others dismissed by the lower court because it ignored the allegation that
valid consideration provided for the property-sharing agreement) (citing Rhode Island
Hosp. Trust Co. v. The Rhode Island Covering Co., 190 A.2d 219 (R.I. 1963)); Johnston
v. Brown, 357 S.E. 2d 450, 452 (S.C. 1987) (reversing dismissal of unjust enrichment
claim in light of evidence of lack of an agreement); S. Title Guar. Co., Inc. v. Bethers,
761 P.2d 951, 955 (Utah Ct. App. 1988) (citation omitted) (when a plaintiff enters into a
“transaction at arm’s length and the plaintiff received what he bargained for” he cannot
bring a claim for unjust enrichment).
The Court finds the case law is not applicable to the facts before it. In contrast to
the relationships involved in the case law cited by Defendants, here the parties were not
in a direct bargaining relationship. Instead, IPPs’ unjust enrichment claims arise out of
the alleged antitrust violations that resulted in payment of overcharges by IPPs.
Further, IPPs allege that they had no knowledge of the antitrust conspiracy, they were
not in a contractual relationship with Defendants, and, consequently, the Court denies
Defendants’ request for dismissal.
d. Special Pleading Requirements
47
Lastly, Defendants argue that Arizona, Hawaii, Illinois, Massachusetts,
Minnesota, Mississippi, North Dakota, South Carolina, Tennessee, Utah, and West
Virginia have special pleading requirements that render the complaints inadequate.
According to Defendants, certain states require a plaintiff bringing an unjust
enrichment claim to plead the absence of a legal remedy, or exhaustion of legal
remedies, or, in some states, a duty or a mistake of fact. None of the cases cited by
Defendants to support their position is persuasive because the cases can be
distinguished factually or by procedural stage in which the decision was rendered. See
e.g. In re Digital Music Antitrust Litig., 812 F. Supp. 2d 390, 412 (S.D.N.Y. 2011) (citing
In re Flonase II, 692 F. Supp. 2d at 543 (denying a motion to dismiss an unjust
enrichment claim under Arizona law because the plaintiffs could plead alternative
remedies at the pleading stage)); In re Horizon Organic Milk Plus DHA Omega-3 Mktg.
& Sales Practice Litig., 955 F. Supp. 2d 1311, 1337 (S.D. Fla. 2013) (“although most
equitable remedies are not available under Florida law when adequate legal remedies
exist, the rule does not apply to claims of unjust enrichment”); Porter v. Hu, 169 P.3d
994, 1007 (Haw. Ct. App. 2007) (appeal of a jury verdict, not a decision about the
sufficiency of the pleadings); Davis v. Four Seasons Hotel Ltd., CIV. 08-00525
HG-BMK, 2011 WL 5025521 (D. Haw. Oct. 20, 2011) (same); Martis v. Grinnell Mut.
Reinsurance Co., 905 N.E.2d 920, 928 (Ill. Ct. App. 2009) (observing that “[w]hen an
underlying claim of fraud, duress or undue influence is deficient, a claim for unjust
enrichment should also be dismissed”); Fernandes v. Havkin, 731 F. Supp. 2d 103, 114
(D. Mass. 2010) (assessing merits of summary judgment of an unjust enrichment claim
arising out of a mortgage contract and acknowledging other decisions on summary
48
judgment holding that the “mere availability” of an adequate remedy at law is a bar to a
claim of unjust enrichment”); Southtown Plumbing, Inc. v. Har-Ned Lumber Co., Inc.,
493 N.W.2d 137, 140 (Minn. Ct. App. 1992) (involving appeal of direct verdict in favor of
defendants because plaintiffs failed to pursue their legal remedy under the mechanic’s
lien statute); Willis v. Rehab Solutions, PLLC, 82 So. 3d 583, 588 (Miss. 2012)
(appealing a jury verdict, arguing that unjust enrichment was not the proper measure of
damages); Apache Corp. v. MDU Res. Grp., Inc., 603 N.W.2d 891, 895-96 (N.D. 1999)
(assessing the merits of an unjust enrichment claim relative to a third-party beneficiary’s
entitlement to enforce the defendant’s contract after the defendant breached its
contract, and concluding that the plaintiff’s impoverishment resulted from a valid
contractual arrangement so the result was not contrary to equity); Ellis v. Smith Grading
& Paving, Inc., 294 S.C. 470, 366 S.E.2d 12, 15 (S.C. Ct. App.1988) (outlining elements
of claim, with no reference to a requirement to allege the existence of a duty); Freement
Indus. LLC v. Eastman Chem Co., 172 S.W.3d 512, 526 (Tenn. 2005) (“a plaintiff is not
required to exhaust all remedies against the party with whom the plaintiff is in privity if
the pursuit of the remedies would be futile”); In re (Flat Panel) Antitrust Litig., 599 F.
Supp. 2d at 1192-93 (denying the futility exception in a case involving Tennessee
indirect purchasers, advancing a price-fixing claim against the defendantmanufacturers, where there were no allegations that resellers were involved in the
conspiracy because futility was “self-evident”); Nickerson Co. v. Energy W. Mining Co.,
No. 20090221-CA- 2009 WL 4681778 at *2 (Utah Ct. App. Dec. 10, 2009) (addressing
summary judgment argument that “one must first exhaust his legal remedies before he
may recover on the basis of the equitable doctrine of quantum meruit”); Wittenberg v.
49
First Indep. Mortg. Co., No. 3:10-CV-58, 2011 WL 1357483 at *15 (N.D. W.Va. Apr. 11,
2011) (dismissing the plaintiff’s unjust enrichment claim because the conduct at
issue–the securitization of the plaintiff’s loan–was neither unlawful nor unauthorized).
In sum, the Court has reviewed the case law upon which Defendants’ rely and in
large measure finds it distinguishable. For the most part, the state cases cited by
Defendants did not involve indirect purchasers of price-fixed products. IPPs have
alleged a lengthy conspiracy by Defendants to fix the prices of IPCs. The allegations,
viewed in the light most favorable to IPPs, satisfy their burden to advance claims of
unjust enrichment.
With the exception of California, which does not recognize a claim of unjust
enrichment, the allegations in the complaints before the Court create a reasonable
inference of unjustness regardless of the particularities of any state law.
F. Injunctive Relief
Indirect Purchaser Plaintiffs ask the Court for an injunction “preventing and
restraining the violations alleged” in their complaints. (Doc. No. 67 at ¶ 274; Doc. No.
70 at ¶ 207). The request is authorized under the Clayton Act, which provides that
“[a]ny person, firm, 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, Defendants argue that the complaints lack the factual
support necessary to establish a real or immediate threat of future harm. Specifically,
Defendants contend that the relief is undermined by the guilty pleas, the overseas
investigations and enforcement actions, and the public statements by Defendants
50
acknowledging the DOJ investigation. Further, Defendants contend that there has been
no unlawful conduct alleged after 2011.
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 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 Defendants’ request is denied.
V. CONCLUSION
For the reasons discussed above, the Court GRANTS in part and DENIES in part
Defendants’ motion.
ADPs’ antitrust claims under Illinois are DISMISSED. The applicable statutes of
limitation limit damages under the laws of Utah and New Hampshire. ADPs’ South
Carolina consumer protection class action is BARRED, ADPs’ consumer protection
claims under the District of Columbia is DISMISSED.
IPPs’ unjust enrichment claim under California law is DISMISSED.
IT IS SO ORDERED.
Date: September 25, 2014
s/Marianne O. Battani
51
MARIANNE O. BATTANI
United States District Judge
CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing Order was served upon counsel of record via the Court's ECF System to
their respective email addresses or First Class U.S. mail to the non-ECF participants on September 25, 2014.
s/ Kay Doaks
Case Manager
52
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