Indirect Purchasers of LG & Phillips Have Standing
SAN FRANCISCO (CN) - Phillips and LG cannot dismiss claims that they conspired to fix the prices of cathode ray tubes, a federal judge ruled.
Cathode ray tubes, or CRTs, are vacuum tubes consisting of an electronic gun that rapidly shoots rays across a florescent-backed, glass screen to produce images. Although liquid crystal and plasma display panels made the technology obsolete, prices for the tubes remained steady, raising suspicions among regulators.
More than 30 complaints were filed against CRT manufacturers within six months of the Nov. 8, 2007, announcement from the European Commission about a worldwide antitrust investigation, complete with raids, of CRT pricing.
Multidistrict litigation over the claims is ongoing in the Northern District of California. The case includes claims from indirect purchasers, which allegedly overpaid for products containing the tubes, whereas direct purchasers bought the tubes themselves.
Previously the court sorted out standing issues surrounding the so-called direct purchaser plaintiffs, which are actually indirect purchasers under antitrust law since they represent retailers that bought televisions and monitors containing CRTS.
That December 2012 decision found that this group had "standing to sue for alleged overcharges passed on to them when they purchased an FP (finished product) containing an allegedly price-fixed CRT from an entity allegedly owned or controlled by an allegedly conspiring defendant."
Retailers did not have standing, however, to sue for overcharges passed on from any other seller of finished products, according to the ruling.
The defendants later moved to dismiss the claims of the so-called direct action plaintiffs (DAPs), which are also indirect purchasers that allegedly bought at least one CRT product from a defendant or entity owned by a defendant.
As the court-appointed special master in the case, retired U.S. District Judge Charles Legge applied the logic from the December opinion on standing. He thus recommended that the court deny the "co-conspirator" and "cost-plus" exceptions to the rule derived from the U.S. Supreme Court's 1977 ruling in Illinois Brick Co. v. Illinois.
U.S. District Judge Samuel Conti agreed last week and blocked the defendants from challenging "the DAPs' right to proceed under the ownership or control exception."
Conti also agreed with Legge's recommendation that the argument of the defendants concerning the statute of limitations "turned on disputed issues of fact, not law."
The defendants' due process challenge failed as well. "The DAPs make it clear enough that defendants are alleged to have conspired to fix prices on CRT products and then sold those goods to businesses and consumers in the various states alleged in the DAPs' complaints," Conti wrote. "This not a slight and casual connection, nor is the application of those states' laws to defendants' conduct arbitrary or unfair."
Conti additionally adopted Legge's recommendation to deny dismissal based on the defendants' prudential standing interest, with some modifications, but grant dismissal on the unjust enrichment claims associated with several states.
The 37-page opinion denied Phillips and LG's motion to dismiss.