MARIANNE O. BATTANI, District Judge.
Before the Court is MELCO Defendants' Motion to Dismiss the Auto Dealer Plaintiffs' and the End-Payors Plaintiffs' Consolidated Amended Class Action Complaints (Case No. 13-1702, Doc. No. 71 (sealed), Doc. No. 73 (redacted); Case No. 13-1703, Doc. No. 51 (sealed) and 53 (redacted)). MELCO Defendants include Mitsubishi Electric Corporation ("MEC") and two subsidiaries, Mitsubishi Electric US Holdings, Inc. ("MEUSH"), and Mitsubishi Electric Automotive America, Inc. ("MEAA").
The Court scheduled a hearing on the motion for January 28, 2015; however, the parties waived oral argument. For the reasons that follow, the motion is
Automobile Dealership Plaintiffs ("ADPs"), and End-Payor Plaintiffs ("EPPs") (collectively referred to as "Indirect Purchaser Plaintiffs" or "IPPs") filed separate consolidated class action complaints advancing federal and state law claims based upon their allegations that Defendants "manufactured, marketed, and/or sold" HID Ballasts in the United States to numerous Original Equipment Manufacturers ("OEMs"), (Doc. No. 25 at ¶¶ 113-126; Doc. No. 9 at ¶¶ 83-95), and engaged in a conspiracy to "unlawfully fix, artificially raise, maintain and/or stabilize prices, rig bids for, and allocate the market and customers in the United States relative to HID Ballasts from July 1, 1998, through the present." (
Defendants include DENSO Corporation and DENSO International America, Inc., Ichikoh Industries Ltd., Panasonic Corporation and Panasonic Corporation of North America, which have entered into a proposed settlement, Stanley Electric Co., Ltd. and Stanley Electric U.S. Co., Inc., Koito Manufacturing Co., Ltd. and its subsidiary, North American Lighting, Inc., and MELCO Defendants; however, the Court has dismissed Ichikoh Industries, Ltd. for lack of personal jurisdiction.
Indirect Purchaser Plaintiffs' complaints detail international government investigations that resulted in the guilty pleas of many businesses for their part in the price-fixing and bid-rigging of various automotive component parts. For example, DENSO Defendants agreed to pay a $78 million criminal fine, based on antitrust violations in the automotive component market, albeit not specifically for HID Ballasts. The Japan Fair Trade Commission ("JFTC") has raided the offices of several Defendants, Stanley Electric Co., Ltd., and Koito Manufacturing Co., Ltd. The JFTC fined Defendant Ichikoh Industries, Ltd. $13.1 million "for violating antitrust laws by forming a cartel to fix automotive lamps" some of which "contain HID Ballasts as a component part." (Doc. No. 25 at ¶ 159; Doc. No. 9 at ¶ 125).
Three of the named Defendants have agreed to plead guilty and pay fines based on their involvement in the HID Ballasts price-fixing conspiracy in the United States, including Panasonic Corporation, Stanley Electric Co., and Koito Manufacturing Co., Ltd. Specifically, in July 2013, Panasonic Corporation agreed to plead guilty and pay a $45.8 million criminal fine. (Doc. No. 25 at ¶ 6; Doc. No. 9 at ¶ 6). In November 2013, the Department of Justice ("DOJ") announced that Stanley Electric Co., Ltd. agreed to plead guilty and pay a $1.44 million criminal fine for its role in the conspiracy. (Doc. No. 25 at ¶ 9; Doc. No. 9 at ¶ 9). In January 2014, the DOJ announced that Koito Manufacturing Co., Ltd. agreed to plead guilty and pay a $56.6 million criminal fine for its role in the conspiracy. (Doc. No. 25 at ¶ 10; Doc. No. 9 at ¶ 9).
Although MEC did not plead guilty to the same conspiracy, in September 2013, it agreed to plead guilty for its role in the conspiracy to rig bids and fix prices of alternators, starters, and ignition coils, and to pay a $190 million criminal fine. (Doc. No. 25 at ¶ 207; Doc. No. 9 at ¶ 131). In addition, MEC and its subsidiaries have pledged to cooperate in the DOJ's automotive parts investigation. Pursuant to the guilty plea, in exchange for the cooperation, the DOJ agreed to refrain from criminally prosecuting MEC and its subsidiaries for price-fixing certain automotive parts, including HID Ballasts. (Doc. No. 25 at ¶¶ 8, 167; Doc. No. 9 at ¶¶ 8, 131). MEC also admitted to destroying and/or altering documents in an effort to cover up its unlawful activity after a co-conspirator's office was searched, conduct "approved by their senior managers in Japan." (Doc. No. 25 at ¶ 245; Doc. No. 9 at ¶ 206). In addition to the facts alleged in the complaints, the Court has taken judicial notice of the September 18, 2014, Grand Jury indictment filed in
According to IPPs, Defendants "employ[ed] measures to keep their conduct secret, including, but not limited to, using code names and meeting at remote locations." (Doc. No. 25 at ¶ 242; Doc. No. 9 at ¶ 204);
IPPs allege the market for HID Ballasts has high barriers to entry and allege what those barriers are. (Doc. No. 25 at ¶¶ 144-45, 147, 148-50; Doc. No. 9 at ¶¶ 111-12, 114, 155-17). In addition, IPPs allege that despite a decrease in the demand for automobiles in the United States, Defendants increased the prices for HID Ballasts. (Doc. No. 25 at ¶¶ 138-42; Doc. No. 9 at ¶¶ 105-109). According to IPPs, in a competitive markets, falling or steady demand should not have yielded higher prices for HID Ballasts. (
Federal Rule of Civil Procedure 12(b)(6) allows district courts to dismiss a complaint which fails "to state a claim upon which relief can be granted." To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6), the plaintiff must show that his complaint alleges facts which, if proven, would entitle him to relief.
In
550 U.S. at 556.
In addition, the Court may consider those documents for which it has taken judicial notice.
In their motion, MELCO Defendants advance arguments raised in the Defendants' collective motions to dismiss the IPPs' complaints, including the timeliness of the claims, the viability of the requests for injunctive relief, standing, and the sufficiency of the allegations. Because the Court addresses those arguments in the collective motion, it limits its discussion to the added grounds for dismissal put forth by MELCO Defendants in their motion: whether Indirect Purchaser Plaintiffs have alleged a plausible antitrust conspiracy when no MELCO Defendant has pleaded guilty to collusion on HID Ballasts; and, whether IPPs have advanced a claim against the MELCO subsidiaries.
According to MELCO Defendants, the claims against them are based on threadbare allegations rendering the complaints deficient. The Court addresses the sufficiency of the allegations below.
MELCO Defendants contend that dismissal of MEC is appropriate because, even thought they participate in the market, mere involvement in an industry alleged to be "rife" with antitrust violations does not state a claim.
MELCO Defendants next argue that the fact that MEC entered into a plea agreement relative to different component parts does not establish liability.
Here, there are several guilty pleas specific to the HID Ballast market and numerous guilty pleas by market participants of other component parts. In addition, there is an overlap in the years of the HID conspiracy, and the conspiracies for which MEC pleaded guilty. There is also an overlap in the OEMs targeted by MEC and its alleged co-conspirators. Finally, the Court finds a strong inference of involvement arises from MEC's agreement to cooperate in the HID Ballasts investigation. MELCO Defendants' desire to confine any inference drawn from the guilty plea to the specific behavior admitted by MEC ignores the wide-ranging, ongoing investigation by governmental authorities into the conspiracy and case law upholding the use of admitted conduct to support the existence of the conspiracy beyond those entities that have pleaded guilty. The factual allegations in the complaint creates "a reasonable expectation that discovery will reveal evidence of illegal agreement" beyond those parties that have pleaded guilty and beyond the extent admitted by some Defendants.
According to IPPs' complaints, prices for vehicular lighting equipment rose even as demand for vehicles fell in 2007-2009. (Doc. No. 25 at ¶¶ 138-142, Doc. No. 9 at ¶¶ 105-109`). In addition, IPPs allege there are high barriers to entry, and demand is inelastic. (Doc. No. 25 at ¶¶144-150. Doc. No. 9 at 111-117). The allegations create an inference that the market was conducive to collusion. The inference is not undermined by MELCO Defendants' assertion that only a fraction of cars have HID Ballasts.
MELCO Defendants argue that the factual allegations tying them to the HID Ballast market are boilerplate. Nevertheless, IPPs allege MELCO Defendants had opportunities to conspire and that their alleged co-conspirators have provided examples of meetings regarding particular customers.
In sum, the complaints, viewed in their entirety, meet IPPs' pleading obligations relative to MEC. Therefore, the Court directs its attention to the arguments advanced relative to the subsidiaries.
MELCO Defendants also argue that IPPs' complaints fail to meet pleading standards because there are no allegations regarding the involvement of MEUSH and MEAA in the alleged conspiracy. The Sixth Circuit typically expects the plaintiffs alleging a price-fixing conspiracy to "specify how [each] defendant [was] involved in the alleged conspiracy."
The Court is satisfied that the complaints comply with
This result is consistent with the Court's holding in other component part cases. For example, in
According to the Indictment, the FBI raided MEAA's offices in July 2011. Finally IPPs allege that senior managers in Japan approved the destruction of documents in the United States and Japan. (Doc. No. 25 at ¶ 245; Doc. No. 9 at ¶ 206). Consequently, viewed in their entirety, the allegations support an inference that the subsidiaries participated in a price-fixing conspiracy aimed at the United States under the direction of MEC.
In sum, the Court finds that the allegations contained within IPPs' complaints are substantially similar to those alleged in other cases within this multidistrict litigation, which the Court found sufficient to defeat a Rule 12(b)(6) motion.