Chinese Companies Want Solyndra Case Tossed

OAKLAND, Calif. (CN) - Three Chinese solar energy companies seek dismissal of an antitrust complaint from U.S. solar panel-maker Solyndra.

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Solyndra originally sued Suntech Power Holdings, Trina Solar and Yingli Green Energy under the Sherman Antitrust Act, claiming they conspired to corner the U.S. solar panel market by dumping panels at less than cost.

The tactic paid off, according to Solyndra, which filed for Chapter 11 bankruptcy and laid off its entire workforce in September 2011.

The bankruptcy proved a headache for the Obama administration, as Solyndra had received $535 million in federal loan guarantees under the Energy Policy Act of 2005, as amended by the American Recovery and Reinvestment Act, one of the many so-called federal "bailouts." Solyndra also received $25 million in tax breaks from California's Alternative Energy and Advance Transportation Financing authority.

Solyndra claims the Chinese companies conspired to ruin it because its photovoltaic system for commercial and industrial rooftop energy systems was an obstacle to their plan to dominate the U.S. market.

And Solyndra claims the Chinese companies conspired to do this in part with money from U.S. investors.

Now the Chinese companies seek dismissal Solyndra's first amended complaint, in a 35-page filing in Federal Court.

The memo provides several arguments for dismissal.

"First, Plaintiff fails to allege a plausible conspiracy," the companies wrote. "Plaintiff does not-and cannot-allege any direct communication between Defendants regarding price, and certainly no facts that would give rise to a plausible inference of a conspiracy to lower prices. Instead, Plaintiff attempts to cobble together a case based on nothing more than evidence that is consistent with the rational, self-interested business behavior of Defendants in a rapidly evolving, increasingly competitive and commoditized market. Indeed, Defendants' alleged behavior has benefitted consumers through lower prices. Plaintiff's conspiracy allegations also fail for the separate and distinct reason that Plaintiff adduces no support for its contention that Defendants will recoup the losses purportedly incurred through predatory pricing. Plaintiff's own allegations demonstrate the opposite, which

Plaintiff seeks to disguise by improperly relying on unrelated government dumping actions.

"Second, for the same reasons set out above, Plaintiff has not pled and cannot plead antitrust injury. Solyndra engaged in an acknowledged premium-pricing strategy; its financial misfortune is the natural consequence of vibrant competition, the very competition that the U.S. antitrust laws are designed to protect and promote.

"Third, Plaintiff fails to plead adequate product and geographic markets. Plaintiff effectively asserts that the requisite product market is the market for its own products, an allegation that is insufficient under well-established case law. Similarly, despite alleging a worldwide market for sales of the relevant products, Plaintiff then inexplicably defines the relevant geographic market as the United States. Its claims fail for this reason as well.

"Finally, the Complaint fails to state a claim under the applicable California state-law statutes. Plaintiff's claims under the Cartwright Act and for tortious interference with prospective economic advantage fall with its Sherman Act claim as a matter of law. This Court should decline to exercise supplemental jurisdiction over the remaining state law claims for unfair competition and interference with contractual relations, but, even if the Court does consider those claims, each of them fails adequately to plead the requisite elements under California law.

"Simply put, Plaintiff has alleged nothing more than ordinary, healthy competition in a highly competitive market. The Complaint should be dismissed."

Senior U.S. District Judge Saundra Armstrong will hear the motion on June 4.

The Chinese companies are represented by Daniel E. Laytin, with Kirkland & Ellis of Chicago; James Kreissman, with Simpson Thacher & Bartlett of Palo Alto; and James Donato, with Shearman & Sterling of San Francisco.

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