Judge Has Some Tough Words for Toshiba

     OAKLAND, Calif. (CN) — A federal judge Tuesday declined to rule on Toshiba’s motions to dismiss or send to arbitration Dell’s price-fixing antitrust complaint involving lithium ion batteries, but indicated she would reject both motions.
     U.S. District Judge Yvonne Gonzalez Rogers heard arguments Tuesday on Toshiba’s motions to dismiss Dell’s claims accusing it, Samsung and 11 other defendants of conspiring to fix the prices of lithium ion batteries, and a second motion to compel Dell to arbitrate its sole claim against Toshiba. Gonzalez did not say when she would rule.
     The June 2015 lawsuit, in which Dell also accused four defendants of breaching master purchase agreements with it, is related to a multidistrict class action pending in the Northern District of California. That antitrust complaint claims the defendants rigged battery prices from Jan. 1, 2000 to May 31, 2011.
     In its motion to dismiss, Toshiba said Dell did not provide enough information about the antitrust claim assignments it received from its subsidiaries. It said Dell failed to identify the assignors, what they bought, from whom they bought them, and where they bought them, rendering the complaint too “indefinite and unintelligible” to file a response.
     Toshiba asked for an order requiring Dell to provide that information if Gonzalez rejects its motion to dismiss.
     “We believe Dell has to say what they purchased, from who and when,” Toshiba attorney J. Frank Hogue said at the Tuesday hearing. “Dell has to establish that it is at least a direct purchaser. None of that is disclosed in its one-sentence paragraph.”
     Dell said in its opposition to dismissal that it gave all of that information to Toshiba in July, and that when Dell asked Toshiba to withdraw its motion, Toshiba refused.
     Gonzalez was irked by that.
     “You filed your motion and counsel immediately responded with assignments and asked you to withdraw, and you refused,” she told Toshiba’s Hogue. “I do not take kindly to churning cases.”
     Hogue said Toshiba did not withdraw its motion because Dell hadn’t provided enough information to determine which assignments came from its foreign subsidiaries. That information is crucial, Hogue said, because the Seventh Circuit has dismissed claims based on foreign assignments.
     Dell attorney Debra Bernstein countered that any deficiencies related to assignments should be cured in discovery, not by dismissal.
     Gonzalez seemed to agree.
     “This isn’t fraud,” she told Hogue in reference to his concerns about foreign commerce. “That’s what discovery is for.”
     Bernstein told Gonzalez that Dell’s complaint meets pleading requirements and that giving Toshiba more detailed information won’t make a difference to the case.
     In its opposition to dismissal, Dell said Toshiba is the only defendant that has attacked the specificity of its assignments, and that Samsung and LG Chem “encountered no difficulty in answering Dell’s complaint and the allegations made regarding assignments.”
     Dell settled or dismissed its claims against Panasonic, Sony, Sanyo and GS Yuasa this year. In addition to Toshiba, it is still pursuing claims against Samsung and LG Chem.
     Sony agreed in September to pay $19 million to settle claims in the related multidistrict class action. It was the first to settle in that case.
     “We think they have everything they need,” Bernstein told Gonzalez. “Frankly, if they really looked at the complaint, they would have all of the information they say they are seeking.”
     As for Toshiba’s motion to compel Dell to arbitrate its antitrust claim, Gonzalez asked whether she should interpret Dell’s master purchase agreements for the batteries with Panasonic and Sanyo based on Texas law or Ninth Circuit law.
     Both parties agree that the master purchase agreements contain arbitration clauses.
     Bernstein told Gonzalez that Dell has interpreted the agreements based on Texas law, where, it says, the defendants negotiated their price-fixing scheme. Toshiba indicated it would support interpretation under either set of laws.
     At issue is Dell’s contention that all of the defendants are responsible for the batteries Dell bought from any other defendant during the price-fixing scheme, including purchases it made under the Panasonic and Sanyo agreements.
     But Toshiba says it is not a signatory to the agreements, and if it is to be held responsible for the inflated battery purchases under them, it can compel Dell to arbitrate without being a signatory based on equitable estoppel.
     Dell said in its opposition to compel arbitration that it never agreed to arbitrate with Toshiba, and that equitable estoppel does not apply to the case.
     “Toshiba has failed to identify a single equitable reason why it, as a stranger to the [master purchase agreements] and the sole defendant seeking arbitration, should be allowed to destroy the unity of this litigation by invoking an arbitration right that none of the signatories chose to invoke,” Dell said in its opposition.
     Debra Bernstein is with Alston & Bird of Atlanta; Hogue is based in Washington, D.C.

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