Occupant Safety Systems - Direct Purchaser Actions

Filing 99

OPINION AND ORDER DENYING DEFENDANTS COLLECTIVE 75 MOTION TO DISMISS DIRECT PURCHASER ACTIONS. Signed by District Judge Marianne O. Battani. (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: Occupant Safety Restraints

HON. MARIANNE O. BATTANI

_________________________________
THIS DOCUMENT RELATES TO:

2:12-cv-00601

Direct Purchaser Actions
_________________________________/
OPINION AND ORDER DENYING DEFENDANTS’ COLLECTIVE
MOTION TO DISMISS DIRECT PURCHASER ACTIONS
Before the Court is Defendants’ Collective Motion to Dismiss Direct Purchaser
Plaintiffs’ (DPPs) Amended Class Action Complaint (12-601, Doc. No. 75). Prior to the
hearing on the motion scheduled for June 4, 2014, Defendants waived oral argument.
The Court has reviewed all of the filings, and for the reasons that follow, the motion is
DENIED.
I. INTRODUCTION
On February 7, 2012, 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 its transfer order, the Judicial Panel noted that the majority of cases
were pending in the Eastern District, as was the first filed action, that several
defendants were located in this district, and that a related criminal investigation was
underway in this district. (Id.) The Panel determined that centralizing litigation in this
District would eliminate duplicative discovery, prevent inconsistent pretrial rulings and
conserve resources. (Id.) After complaints were filed alleging conspiracies to fix prices
of three additional component parts, the Judicial Panel determined that including all
actions in MDL No. 2311 would result in the most efficient handling of the case. The
Judicial Panel noted the existence of similar conspiracies with overlapping defendants
arising from the same government investigation as well as an overlap of parties and
counsel. The additional component part cases were transferred to this Court for
coordinated pretrial proceedings, and In re: Automotive Wire Harness Systems Antitrust
Litigation was renamed “In re: Automotive Parts Antitrust Litigation.” (Doc. No. 117 in
12-2311). There are now twenty-nine component part cases pending. (See Doc. No.
753 in 12-2311).
On July 13, 2013, Direct Purchaser Plaintiffs filed their Consolidated Amended
Class Action Complaint (“CACAC”), alleging Defendants conspired to rig bids, fix, raise,
and maintain prices for Occupant Safety Systems (“OSS”) sold in the United States.
(Doc. No. 65 in 12-601). Defendants assert that the Direct Purchasers’ CACAC must
be dismissed for four reasons: it fails to meet the minimum requirements for pleading
an antitrust conspiracy; damages are unavailable to DPPs because they lack standing
to bring a claim for money damages under the Sherman Act; the statute of limitations

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bars claims accruing before July 21, 2008; and DPPs are not entitled to injunctive relief
because the allegations of threatened future injury are not plausible.
II. FACTUAL ALLEGATIONS
After Defendants filed their motion to dismiss, DPPs filed a Second Consolidated
Amended Class Action Complaint (“SCACAC”) to extend the class period and to reflect
the guilty pleas and criminal informations filed after the first consolidated amended
complaint was filed. (See Doc. No. 85). The SCACAC contains party allegations, class
allegations, and allegations about the product, the nature of the conspiracy, the market
conditions, and guilty pleas entered by Defendants. The parties stipulated that
Defendants could supplement their motion or merely reincorporate their motion.
Defendants did not file any supplemental pleadings. In referencing the allegations set
forth below, the Court cites to the Consolidated Amended Class Action Complaint for
the most part inasmuch as the parties’ briefs cite to that pleading. Any allegations
advanced solely in the SCACAC will reference that document.
A. The Parties
Direct Purchaser Plaintiffs, Beam’s Industries, Inc. and Findlay Industries, Inc.
bring this class action against Defendants for damages and injunctive relief under the
antitrust laws of the United States arising out of DPPs’ purchase of Occupant Safety
Systems (“OSS”), which includes seat belts, airbags, steering wheels or steering
systems, and safety electronic systems. (Doc. No. 65 at ¶¶ 13, 14, 8). Plaintiffs
purchased OSS directly from one or more Defendants during the Class Period. (Doc.
No. 65 ¶¶ 13, 14).
According to paragraphs 20-28 in the CACAC, Defendants directly or through
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their subsidiaries, manufactured, marketed or sold OSS in the United States.
Defendants include four corporate groups: Takata Corporation, TK Holdings, Inc.
(collectively “Takata”); Tokai Rika Co., Ltd. and TRAM, Inc. (collectively “Tokai Rika”);
TRW Automotive Holdings Corporation (“TRW Automotive”), TRW Deutschland Holding
GMBH (“TRW Deutschland”) ( collectively “TRW”); and the Autoliv group, which has
received preliminary approval of a proposed settlement. (See Doc. No. 97). DPPs
allege that others participated in the conspiracy, and Defendants are jointly and
severally liable. (Doc. No. 65 at ¶ 31).
B. Class Allegations
DPPs bring this action on behalf of themselves and all others similarly situated.
They allege that they purchased OSS during the Class Period, which is defined in the
CACAC as “from at least as early as January 1, 2003, through the present.” (Doc. No.
81 at ¶ 7).
C. Product and Nature of the Conspiracy
DPPs claim that they were injured by a conspiracy among Defendants to fix
prices on OSS, which “are designed to protect drivers and passengers from bodily
harm.” (Doc. No. 65 at ¶ 43). DPPS allege that OSS parts are installed in new vehicles
and as replacements parts. (Doc. No. 65 at ¶ 47). According to DPPs, Defendants
rigged bids for Requests for Quotations issued by Original Equipment Manufacturers
(“OEMs”). (Doc. No. 65 at ¶¶ 67-69). Suppliers to OEMs purchased OSS parts at the
price determined by the OEMs during the RFQ process. (Doc. No. 65 at ¶ 73).
D. Market Conditions

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DPPs allege that market conditions are conducive to collusion. Because there
are high barriers to entry into the market, the industry is heavily concentrated. (Doc.
No. 65 at ¶ 49). Defendants dominate the market. (Doc. No. 65 at ¶ 50). Autoliv,
TRW, Takata, and Tokai Rika, together, “control nearly three-quarters of the global
market.” (Doc. No. 65 at ¶ 50). In its 2011 Annual Report, Autoliv claimed sales
represented more than 33% of the global OSS market, (id.), with over $18.1 billion in
sales globally, and $4.2 billion in the United States. (Doc. No. 65 at ¶ 51). TRW and
Takata each account for 20% of the global market. (Id.)
According to DPPs, Defendants have the ability and expertise to manufacture
OSS and the parts included in the definition of OSS for use in any motor vehicle, and
Defendants sell OSS to every “significant automobile manufacturer in the United States,
Western Europe, and Japan.” (Doc. No. 65 at ¶ 53f).
Barriers to entry in the market for OSS exist, including significant start-up capital
expenditures; concentration in the market; (Doc. No. 65 at ¶¶ 56-57); relatively inelastic
pricing, and a lack of viable substitute products. (Doc. No. 65 at ¶¶ 58-59).
E. Investigations and Guilty Pleas
Investigations into anticompetitive conduct in the OSS market are ongoing in the
United States and other jurisdictions. (Doc. No. 65 at ¶ 76). On February 23, 2010, the
Federal Bureau of Investigation raided TRAM, Inc., as part of a Department of Justice
(“DOJ”) antitrust probe. (Doc. No. 65 at ¶ 77). The following year, in February 2011,
the FBI raided TK Holdings, Inc., a wholly-owned subsidiary of Takata Corporation,
which subsequently acknowledged in its 2011 Annual Report that TK Holdings, Inc. was
the subject of an investigation. (Doc. No. 65 at ¶ 78). Further, the vice president of
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marketing and public relations indicated that a subpoena was received seeking
communications with competitors dating back to January 1, 2005, relating to seat belts,
air bags, steering wheels, and safety electronics. (Id.) On the same date, Autoliv ASP,
Inc. received a grand jury subpoena from the DOJ, relating to its subsidiary, seeking
documents and information into antitrust activity. (Doc. No. 65 at ¶ 79). Autoliv
subsequently pleaded guilty to conspiring to rig bids and to fix, stabilize, and maintain
the prices of seat belts, airbags, and steering wheels sold to automakers in the United
States and elsewhere. (Doc. No. 65 at ¶ 84). Autoliv paid a $15.5 million criminal fine.
(Id.)
TRW also has admitted it is under investigation in the United States and
elsewhere, (Doc. No. 65 at ¶ 81), and on September 25, 2012, TRW Deutschland
pleaded guilty to engaging in a conspiracy to rig bids for, and to fix, stabilize and
maintain the prices of seat belts, airbags, and steering wheels in the United States, and
it paid a $5.1 million criminal fine. (Doc. No. 65 at ¶ 89).
On October 9, 2013, the DOJ charged Takata with a conspiring to rig bids and fix
prices of seatbelts manufactured for Honda, Nissan, Toyota, Subaru, and Mazda
automobiles. (Doc. No. 81 at ¶¶ 97, 98). Takata pleaded guilty on December 5, 2013,
to engaging in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of
seat belts sold to automakers in the United States and elsewhere.” (Doc. No. 81 at ¶
99) and received a $71.3 million criminal fine. The following month, the Department of
Justice charged employees of Takata with involvement in the conspiracy. (Doc. No. 81
at ¶ 101-104).
Although Tokai Rika has not pleaded guilty to antitrust violations in the OSS
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market, it has pleaded guilty to a heater control panel conspiracy relative to Toyota and
pleaded guilty to obstruction of justice. (Doc. No. 65 at ¶ 91). Tokai Rika admitted it
destroyed documents and deleted electronic data likely to contain evidence of antitrust
crimes. (Id. at ¶ 92).
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
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
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A. Plausibility of the Antitrust Claim
Section 1 of the Sherman Act prohibits “[e]very contract, combination in the form
of trust or otherwise, or conspiracy, in restraint of trade or commerce.” 15 U.S.C. § 1. In
Twombly, the Supreme Court considered the pleading requirements needed to
withstand a motion to dismiss a Section 1 Sherman Act claim. It held that a complaint
must contain “enough factual matter (taken as true) to suggest” the existence of an
agreement. 550 U.S. at 556.
Asking for plausible grounds to infer an agreement does not
impose a probability requirement at the pleading stage; it
simply calls for enough facts to raise a reasonable
expectation that discovery will reveal evidence of illegal
agreement. And, of course, a well-pleaded complaint may
proceed even if it strikes a savvy judge that actual proof of
those facts is improbable, and that a recovery is very remote
and unlikely.
Id.
The Court begins its analysis here, as it has in all of the component part cases,
with a recap of the facts before the Supreme Court in Twombly. The plaintiffs brought a
consumer antitrust class action against local telephone and telecommunications carriers
alleging the defendants conspired to restrain trade. According to the plaintiffs, the
defendants engaged in parallel conduct to “inhibit the growth” of companies new to the
market and agreed not to compete with each other. 550 U.S. at 550-551. The
defendants moved to dismiss the complaint on the ground that it failed to include factual
allegations from which an express or tacit agreement could be inferred. Id. at 552.
Because the Supreme Court dismissed the antitrust claim in Twombly, the
decision does not stand as an example of the type of allegations that would satisfy the
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plausibility standard. Nevertheless, the Supreme Court provided general guidance. It
indicated that a “heightened fact pleading of specifics” is not needed to state an antitrust
conspiracy claim, 550 U.S. at 570, although parallel behavior is not enough.
In a subsequent decision, Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Supreme
Court addressed whether Twombly was limited to antitrust claims or applied universally.
Iqbal, 556 U.S. at 684. The Supreme Court summarized its decision in Twombly as
follows:
Our decision in Twombly illustrates the two-pronged
approach. There, we considered the sufficiency of a
complaint alleging that incumbent telecommunications
providers had entered an agreement not to compete and to
forestall competitive entry, in violation of the Sherman Act,
15 U.S.C. § 1. Recognizing that § 1 enjoins only
anticompetitive conduct ‘effected by a contract, combination,
or conspiracy,” Copperweld Corp. v. Independence Tube
Corp., 467 U.S. 752, 775, 104 S.Ct. 2731, 81 L.Ed.2d 628
(1984), the plaintiffs in Twombly flatly pleaded that the
defendants ‘ha[d] entered into a contract, combination or
conspiracy to prevent competitive entry. . .and ha[d] agreed
not to compete with one another.’ 550 U.S., at 551, 127
S.Ct. 1955 (internal quotation marks omitted). The complaint
also alleged that the defendants' ‘parallel course of
conduct. . .to prevent competition’ and inflate prices was
indicative of the unlawful agreement alleged. Ibid.
(internal quotation marks omitted).
The Court held the plaintiffs' complaint deficient under Rule
8. In doing so it first noted that the plaintiffs' assertion of an
unlawful agreement was a ‘legal conclusion’ and, as such,
was not entitled to the assumption of truth. Id., at 555, 127
S.Ct. 1955. Had the Court simply credited the allegation of a
conspiracy, the plaintiffs would have stated a claim for relief
and been entitled to proceed perforce. The Court next
addressed the ‘nub’ of the plaintiffs' complaint ”the
well-pleaded, nonconclusory factual allegation of parallel
behavior’ to determine whether it gave rise to a ‘plausible
suggestion of conspiracy.’ Id., at 565-566, 127 S.Ct. 1955.
Acknowledging that parallel conduct was consistent with an
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unlawful agreement, the Court nevertheless concluded that it
did not plausibly suggest an illicit accord because it was not
only compatible with, but indeed was more likely explained
by, lawful, unchoreographed free-market behavior. Id., at
567, 127 S.Ct. 1955. Because the well-pleaded fact of
parallel conduct, accepted as true, did not plausibly suggest
an unlawful agreement, the Court held the plaintiffs'
complaint must be dismissed. Id., at 570, 127 S.Ct. 1955.

Iqbal, 556 U.S. at 679-80.
This Court has addressed and rejected arguments about the sufficiency of the
complaints in other automotive component parts cases similar to those raised in this
case. This Court held that those cases could proceed because the complaints included
sufficient allegations to inform the defendants what wrongdoing they were alleged to
have committed and enabled the defendants to respond to the allegations. Further, the
Court concluded that after reviewing the allegations together, the complaints contained
plausible grounds to infer an agreement. Plausible grounds were set forth in allegations
about the government investigations, which were used to bolster the plausibility of § 1
claims; the guilty pleas by multiple defendants; the structure of the particular component
part industry; and the allegations demonstrating the defendants’ opportunity to meet and
collude.
Although DPPs advance similar allegations here, Defendants argue that
shortcomings in the allegations advanced in this case warrant dismissal; in particular,
those allegations relating to the status of the direct purchaser plaintiffs, the product
definition and the limited guilty pleas. The Court discusses the distinctions below.
1. Status of Purchasers
Defendants assert that DPPs included only boilerplate allegations and failed to
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allege that they are suppliers, what particular product they purchased, or even when a
purchase was made. Further, Defendants point to the absence of allegations regarding
whether DPPs purchased OSS for new vehicles or repair parts, what prices were paid,
or from whom the purchases were made or for which vehicle platform.
Despite Defendants’ focus on allegations that could be added to the CACAC,
there is no heightened pleadings requirement for stating an antitrust claim. Allegations
of who, what, when and where are not the litmus test for determining whether a
defendant is on notice of the claims. In re Southeastern Milk Antitrust Litig., 555 F.
Supp. 2d 934, 943-44 (E.D. Tenn. 2008) (citation omitted). Here, DPPs allege that they
purchased OSS directly from one or more Defendants during the relevant time period.
(Doc. No. 65 at ¶¶ 13-14). They have alleged what OSS encompass. They have
satisfied their pleading burden. See Starr v. Sony BMG Music Entertainment, 592 F.3d
314, 325 (2d Cir. 2010) (rejecting the contention that Twombly requires a plaintiff to
identify specifically the time, place, or person related to each allegation of conspiracy);
In re Packaged Ice Antitrust Litig., 723 F. Supp. 2d 987, 1005–06 (E.D. Mich. 2010)
(rejecting the dismemberment approach and observing that the plaintiffs identified the
corporate players and executives, the general nature of the agreements, locations and
time frames so as to enable the defendants to respond).

2. Product Definition and Market Allegations
Here, Defendants contend that the CACAC fails because it lacks allegations as
to how the parts falling within the definition of Occupant Safety Systems are related, and
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which particular parts were purchased. The allegations are similar to those articulated
in the in the wire harness complaint, in that there were no allegations as to which
plaintiff purchased which particular part. This Court's obligation is not to read each
allegation in isolation nor to nitpick a complaint line by line, paragraph by paragraph.
DPPs allege they purchased the OSS, and they allege what is included within the OSS
definition. The allegations create an inference that DPPs purchased all of the particular
parts identified as part of OSS.
Defendants further contend that the market allegations are generic. (See Doc.
No. 65 at ¶¶ 49-59). In this case, Direct Purchaser Plaintiffs include allegations
reflecting a market conducive to the type of collusive activity that took place: the market
is highly concentrated, with high barriers to entry, and inelastic pricing. The Court finds
these allegations sufficient, given DPPs’ assertions relative to Defendants’ ability to
control the market and the number of Defendants that have pleaded guilty to
participating in a conspiracy to fix prices and allocate market shares in the United
States. (Doc. No. 65 at ¶¶ 55-59; 84, 89). A review of case law demonstrates that these
allegations meet DPPs’ pleading burden. See Starr, 592 F.3d at 323-24 (citing studies
showing coordinated price increases likely when four leading firms controlled 50-80% of
market); In re Packaged Ice Antitrust Litig., 723 F. Supp. 2d 987, 1014 (E.D. Mich.
2010) (“oligarchic sellers” conducive to collusion as are “prohibitive entry barriers”);
Standard Iron Works v. Arcelormittal, 639 F. Supp. 2d 877, 883 (N. D. Ill. 2009) (“high
barriers to entry” conducive to collusion); In re Carbon Black Antitrust Litig., No. A-0310191, 2005 WL 102966 at *6 (D. Mass. Jan. 18, 2005) (denying motion to dismiss
because the plaintiffs alleged, among other things, market conditions that would
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facilitate the maintenance of an illegal agreement).
Although no Defendant has pleaded guilty to a conspiracy involving electronic
safety systems, it is undisputed that price-fixing in the OSS market occurred. Not only
do Defendants have notice of the claims against them, the allegations create “a
reasonable expectation that discovery may reveal further evidence of an illegal
agreement” including electronic safety. See In re Packaged Ice Antitrust Litig., 723 F.
Supp. 2d at 1007-08. DPPs allege that they purchased OSS within the time period of
the conspiracy alleged in the complaint. The market is conducive to antitrust behavior.
Consequently, the Court finds the CACAC passes the plausibility standard.
3. Scope of Guilty Pleas
Three of the four Defendant groups have admitted they met and agreed to
allocate supply, rig bids, and fix prices of products falling within the definition of OSS. In
addition, Tokai Rika pleaded guilty to obstruction of justice in that it destroyed electronic
data and paper documents likely to contain evidence of antitrust crimes in the Untied
States and elsewhere. Nevertheless, the parties disagree as to how far these pleas can
be stretched. Defendants assert that the DPPs have overreached in the CACAC in that
the factual allegations do not support the existence of a conspiracy beyond the
Japanese and German OEMs identified in the plea agreements and the specific parts.
Moreover, the time frames covered in the guilty pleas are not the same.

The existence of variations in the content of the guilty pleas does not render a
conspiracy beyond Japanese and German OEMs implausible. DPPs allege that they
paid more for OSS than otherwise would have been the case in a competitive market.
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DPPs further allege that Defendants knew and intended that their actions regarding the
sale of OSS to motor vehicle manufacturers would have a direct impact on prices for
OSS sold to all direct purchasers of OSS throughout the United States.
A review of these factual allegations and the inferences favorable to DPPs, which
must be drawn by the Court, distinguish this case from those relied upon by
Defendants. Specifically, this case presents “the ‘larger picture’ from which inferences
of a wider conspiracy can be drawn. . . .” In re Iowa Ready-Mix Concrete, 786 F. Supp.
2d 975, 979 ( N.D. Iowa 2011) (involving bilateral agreements and geographically
limited market). The ongoing investigation into price-fixing in automotive component
parts has resulted in myriad guilty pleas. Here, the CACAC describes the guilty pleas of
several Defendants and executives. The executives admitted they met and agreed to
allocate supply, rig bids, and fix prices for OSS. Consequently, the viability of DPPs’
CACAC does not build on allegations of parallel conduct. Compare In re Travel Agent
Commission Antitrust Litig., 583 F.3d 896 (6th Cir. 2009) (alleging only parallel conduct
with “no setting” to suggest the existence of an agreement). Defendants have notice of
which Defendants already pleaded guilty to antitrust conduct in the relevant market.
Although DPPs have alleged a conspiracy that expands beyond price-fixing OSS sold to
Japanese and German OEMs, they have limited their claims to defendants operating in
the OSS market. Compare In re TFT-LCD (Flat Panel) Antitrust Litig., MDL No. 1827,
2010 WL 2629728 (N.D.Cal. June 29, 2010) (rejecting the plaintiffs’ position that the
defendants’ involvement in a conspiracy relating to one product renders more plausible
a conspiracy claim relating to a product deemed a close substitute). The CACAC
identifies the time frame of the conspiracy, and the market conditions that support the
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plausibility of a broader conspiracy than that to which Defendants have pleaded guilty.
In contrast to the plaintiffs in Twombly, here, Defendants have admitted to participating
in an antitrust conspiracy, and the guilty pleas make clear that at least three of the four
groups of defendants availed themselves of the opportunities to conspire in the OSS
market.
When read in its entirety, the allegations in the CACAC articulate a plausible
antitrust claim based upon the market structure, the government investigations, and the
guilty pleas. Compare In re Air Cargo Shipping Servs. Antitrust Litig. No. MD 06-1775,
2009 WL 3443405 at *1 (E.D.N.Y. Aug. 21, 2009) (holding that admissions of pricefixing by so many defendants rendered a conspiracy claim plausible). The fact that
Defendants did not plead guilty to wide-ranging conduct does not limit the civil action.
Id. at 1011. Relatively few defendants plead guilty to all of the charges against them,
and limitations on government resources may play as much a role in the agreement as
the conduct involved. In re High Fructose Corn Syrup Antitrust Litig., 295 F.3d 664-665
(7th Cir. 2002).
At this stage of the litigation, these allegations are sufficient. DPPs identified the
parties to the conspiracy, their market share, the government investigation into the
parties’ conduct, the products involved, the geographic market affected, and the time
frame of the conspiracy. Compare Mich. Div. Monument Builders of N. Am. v. Mich.
Cemetery Ass'n, 458 F. Supp. 2d 474, 480-85 (E.D. Mich. 2006) (dismissing an antitrust
conspiracy claim where plaintiffs used the term defendants generically without any
allegations as to each individual defendant). DPPs also alleged methods used to
implement the conspiracy. The key to the CACAC’s survival is whether it contains
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plausible grounds to infer an agreement; not whether an agreement is probable. In re
Travel Agent Comm'n Antitrust Litig., 583 F.3d 896, 907 (6th Cir. 2009). Such grounds
exist.
B. Viability of Claim for Damages
The parties dispute whether DPPs may bring a claim for damages under the
Sherman Act, which requires DPPs to demonstrate they have antitrust standing. See
Static Control Components, Inc. v. Lexmark Int'l, Inc., 697 F.3d 387, 402 (6th Cir. 2012)
aff’d on other grounds, 2014 WL 1168967 (S. Ct. March 25, 2014). “[S]tanding in an
antitrust case is more onerous than the conventional Article III inquiry.” NicSand, Inc. v.
3M Co., 507 F.3d 442, 450 (6th Cir. 2007) (en banc).
In Static Control Components, 697 F.3d at 402, the Sixth Circuit addressed the
factors assessed and balanced when deciding whether a claimant has satisfied his
burden to adequately plead antitrust standing. First, the plaintiff must allege “the causal
connection between the antitrust violation and harm to the plaintiff and whether that
harm was intended to be caused.” Id. Second, the court considers “the nature of the
plaintiff's alleged injury including the status of the plaintiff as consumer or competitor in
the relevant market.” Third, the court looks at “the directness or indirectness of the
injury, and the related inquiry of whether the damages are speculative.” Fourth, the
court must assess “the potential for duplicative recovery or complex apportionment of
damages.” Finally, the court must consider ”the existence of more direct victims of the
alleged antitrust violation.” Id. (citations omitted).
After reviewing the allegations set forth in the CACAC, the Court is satisfied that
DPPs have adequately pleaded antitrust standing. First, the complaint includes
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allegations that each DPP purchased OSS directly from one or more of the Defendants
during the Class Period, and that Defendants’ conspiracy impacted the prices DPPs
paid for OSS. (Doc. No. 65 at ¶¶ 13-144, 114-15, 122). According to DPPs, the
conspiracy impacts “not only multiple bids submitted to OEMs, but also prices paid by
all other direct purchasers of Occupant Safety Systems.” (Id. at ¶ 66). The allegations
of price increases above and beyond what the price would have been in a competitive
market satisfies DPPs’ burden. See In re Ductile Iron Pipe Fittings (DIPF) Direct
Purchaser Antitrust Litig., CIV. 12-711, 2013 WL 812143 (D.N.J. Mar. 5, 2013) (finding it
unnecessary for the direct purchasers to “state the actual price that they paid” because
they alleged the purchases were made directly from the defendants during the time
frame of the conspiracy to fix prices). These allegations meet DPPs’ burden relative to
the first and second factors. Moreover, because DPPs purchased OSS directly from
Defendants, there is no need for complex apportionment of damages. As direct
purchasers they are direct victims of the alleged conspiracy, and the third factor is
satisfied.
The CACAC meets the balancing test despite the existence of OEMs and the
lack of detailed allegations regarding the connection between OSS sold to the identified
OEMS and those purchased by DPPs. To link their purchases of OSS to the alleged
conspiracy, DPPs link their purchases to the conspiracy with an allegation that they
purchased OSS in the United States from one or more of the Defendants, and that the
anticompetitive conduct impacted the independent bid process, resulting in
supracompetitive prices paid by direct purchasers, who “pay the winning bidder at least
the winning price.” (Doc. No. 65 at ¶ 73). Further, DPPs allege that the conspiracy was
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intended to and did affect the sales prices of OSS to buyers in the United States. (Doc.
No. 65 at ¶ 122).
The allegations, when viewed in the light most favorable to DPPs, satisfy their
burden. In sum, DPPs have “causally linked” their antitrust injury to “an illegal
presence in the market.” Brunswick v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489
(1977). They allege they paid a higher price for OSS purchased from Defendants than
they would have paid absent the alleged conspiracy. In re Titanium Dioxide Antitrust
Litig., No. 10-0318, 2012 WL 3711890, at * 10 (D.Md. Aug. 28, 2012) (citing Hanover
Shoe v. United Shoe Mach. Corp., 392 U.S. 481, 489 (1968)).
Further, DPPs have established standing under Article III of the Constitution.
They have alleged personal injuries “fairly traceable to the defendant’s allegedly
unlawful conduct and likely to be redressed by the requested relief.” Allen v. Wright,
468 U.S. 737, 751 (1984). Specifically, DPPs have articulated the impact of the alleged
conspiracy–they were harmed by paying higher prices because of the conspiracy. They
have satisfied their pleading burden.
C. Sufficiency of the Fraudulent Concealment Allegations
DPPs filed the initial OSS complaint on July 21, 2012, and allege a conspiracy
from at least as early as January 1, 2003. Defendants maintain that any claims for
damages suffered from the conspiracy before July 21, 2008, are barred because the
statute requires claims be brought “within four years after the cause of action accrued.”
15 U.S.C. § 15b; Klehr v. A.O. Smith Corp., 521 U.S. 179, 189-90 (1997).
Whether the claims prior to July 2008 are barred turns on whether the statute
was tolled by the fraudulent concealment doctrine. A plaintiff must plead three
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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
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).
Because DPPs’ failure to discover the operative facts during the limitations period is not
at issue, the Court limits its discussion to the two disputed elements.
1. Wrongful Concealment
To show “wrongful concealment,” a plaintiff must show something more than
silence or an unwillingness to reveal wrongful conduct. Hamilton Cnty. Bd. of Comm'rs
v. Nat'l Football League, 491 F.3d 310, 319 (6th Cir. 2007); Browning v. Levy, 283 F.3d
761, 770 (6th Cir. 2002). A plaintiff must allege the existence of a “trick or contrivance
intended to exclude suspicion and prevent inquiry.“ Pinney Dock & Transp. Co. v. Penn
Cent. Corp., 838 F.2d 1445, 1467 (6th Cir. 1988) (quotation omitted).
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 codingsystem 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
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(citing Bridgeport Music, Inc. v. Diamond Time, Ltd., 371 F.3d 883, 891 (6th Cir. 2004)
(explaining that “hiding evidence” can constitute affirmative concealment)).
Here, DPPs allege that their earliest notice came in February 2011, the date that
several Defendants were raided. (Doc. No. 65 at ¶¶ 98, 99). Although Defendants
assert that DPPs had notice earlier because Tokai Rika was raided in February 2010,
the CACAC allegations are that there was no information in the public domain about the
rigged bids for OSS; Defendants met and communicated in secret, and agreed to keep
the facts from discovery. (Doc. No. 65 at ¶¶ 103, 106). Defendants represented
publicly that their pricing and bidding activities were unilateral, and monitored and
enforced adherence to the conspiracy and destroyed documents. (Doc. No. 81 at ¶¶
88, 98h).
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). Defendants have not
provided grounds for distinguishing the situation here; their position about notice in 2010
implicates factual disputes outside the scope of this motion. Accordingly, the Court
finds that DPPs have met their burden to show wrongful concealment.
2. Due Diligence
In deciding whether DPPs have satisfied their burden as to this element, the
Court again uses the decision in Carrier Corp., 673 F.3d at 448-49 (declining to hold
that the plaintiffs’ efforts were insufficient to satisfy the third element “at such an early
stage of litigation and without the benefit of discovery”) (citing Jones v. TransOhio Sav.
Ass'n, 747 F.2d 1037, 1043 (6th Cir.1984) (noting the panel's reluctance to dismiss
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fraudulent concealment allegations prior to discovery)) to guide its analysis. See also
Duncan v. Leeds, 742 F.2d 989, 993 (6th Cir. 1984) (addressing the need to construe
allegations of fraudulent concealment liberally and in the plaintiff's favor at such an early
stage in the litigation). The Sixth Circuit deemed dismissal appropriate if, and only if, “it
is obvious from the complaint that the plaintiff conducted absolutely no investigation.”
Id. (citation omitted). Actions that would deceive a reasonably diligent plaintiff toll the
statute.
In Carrier Corp., the Sixth Circuit was satisfied that due diligence had been
pleaded because the plaintiff detailed the steps it had taken once it became aware of
the EC investigation. See 673 F.3d at 448. In the CACAC, DPPs allege that they had
no knowledge and that they could not have discovered the conduct earlier through the
exercise of reasonable diligence. (Doc. No. 65 at ¶ 111). Their only argument
advanced that DPPs ignored available information that would have aroused suspicion
and prompted an investigation arises out of the DOJ raid on Tokai Rika. Again, the
dispute is factual. The Court credits the allegation, as it must under Rule 12(b)(6).
DPPs assert that until the February 2001 search of TK Holdings, Inc, information in the
public domain did not suggest a conspiracy to fix prices or rig bids of OSS. Although as
the DOJ investigation has unfolded it has become evident that antitrust conspiratorial
conduct in the auto parts industry is rampant, the conduct remained, for the most part,
hidden in 2010. In sum, DPPs have included allegations as to each element that must
be proven to toll the statute of limitation.
D. Sufficiency of the Injunctive Relief Request
DPPs ask the Court for an injunction preventing Defendants from “continuing and
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maintaining” the price fixing conspiracy. (Doc. No. 65, Prayer for Relief at ¶ D). 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 CACAC lacks the factual
support necessary to establish a real or immediate threat that DPPs will be harmed
again. Specifically, Defendants contend that DPPs were not the target of antitrust
activity and any real threat of future harm has been eliminated by the guilty pleas. The
Court addressed the same arguments in the prior component part cases. The analysis
applies with equal force to the OSS complaint.
DPPs have alleged facts from which a “cognizable danger of recurrent violation”
can be inferred. See United States v. W. T. Grant Co., 345 U.S. 629, 633 (1953).
Specifically, DPPs allege a decade-long conspiracy in a market with high barriers to
entry. (Doc. No. 65 at The same market conditions exist today. See In re Static
Random Access Memory (SRAM) Antitrust Litig., 264 F.R.D. 603, 611 (N.D. Cal. 2009)
(certifying a nationwide class for injunctive relief based upon similar allegations). DPPs
further allege a continuing conspiracy with a Class Period through the present, involving
contracts signed pursuant to RFQs that last for at least five years. The fact that some
Defendants have pleaded guilty does “not obviate the threat that a conspiracy will
persist or resume in the future.” In re TFT-LCD (Flat Panel) Antitrust Litig., 267 F.R.D.
583, 597 (N.D. Cal. 2010) amended in part, M 07-1827 SI, 2011 WL 3268649 (N.D. Cal.
July 28, 2011) (certifying a nationwide injunctive class under Rule 23(b)(2)).
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V. CONCLUSION
For the reasons discussed above, the Court DENIES the motion.
IT IS SO ORDERED.
Date: August 29, 2014

s/Marianne O. Battani
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 August 29, 2014.
s/ Kay Doaks
Case Manager

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