SAN FRANCISCO (CN) — In a $250 million antitrust class action Monday, a federal judge dealt a blow to indirect buyers of optical disk drives, granting summary judgment to Samsung, Toshiba and others in a long-running conspiracy case accusing them of fixing prices around the world.
U.S. District Judge Richard Seeborg found that the indirect purchasers failed to prove that the defendants overcharged direct purchasers for the drives, and that the direct purchasers passed on the overcharges to them.
“Even if no evidence existed to the contrary, this single piece of secondary evidence from the deposition testimony of one corporate representative falls woefully short of meeting IPPs’ burden to show proof of pass-through,” Seeborg wrote.
A slew of plaintiffs in 2010, including HP, accused disk-drive makers of bid-rigging and price-fixing in a scheme that gave them control of 90 percent of the optical disk drive market. It allowed them to make more than $45 billion between 2004 and 2008, the class claimed.
The Department of Justice revealed in 2009 that it was investigating antitrust violations in the optical disk drive industry. Hitachi-LG Data Storage pleaded guilty to criminal antitrust violations paid a $21.1 million criminal fine. Some of its employees went to prison.
Indirect purchasers’ attorney Jeff Friedman, with Hagens Berman Sobol Shapiro in Berkeley, was disappointed with the Monday ruling.
“The court found we had presented sufficient evidence of a longstanding price fixing conspiracy. It’s a shame that sometimes our system appears to let wrongdoers get away with illegal behavior and rewards their efforts to avoid responsibility,” he said in an email.
Seeborg found that the indirect buyers failed to show an industry-wide conspiracy. They showed that the defendants probably targeted only Dell and HP.
Their best evidence of an overarching conspiracy consisted of pricing charts that indicated the defendants targeted Dell, HP, Lenovo, IBM and Acer. But much of the evidence barely mentioned the last three companies, and some contained pricing information only for Dell, Seeborg found.
Seeborg did grant summary judgment on the buyers’ failure to prove pass-through, rejecting deposition testimony of a corporate representative for Circuit City and a report from the plaintiffs’ expert, Dr. Kenneth Flamm.
“While he displays in theory how pass-through could have worked, his expert report does not identify and cannot substitute the necessary record evidence to support that it actually occurred in this case,” Seeborg wrote.
“The evidence that Dr. Flamm points to is often tangentially related and at best, of uncertain application to the pass-through issue,” he added.
Also Monday, Seeborg granted summary judgment against Acer, finding it had not proved the defendants targeted it in a conspiracy.
He also granted summary judgment against the bankruptcy trustees of Circuit City and Radio Shack, for failing to prove they had been harmed by the alleged conspiracy.
Seeborg found that the Foreign Trade Antitrust Improvements Act precludes claims based on Category 1 sales — foreign sales to foreign consumers — because they fall outside the scope of federal and state antitrust laws.
But Category 2 sales — foreign sales to consumers in the United States — and Category 3 sales — domestic sales to consumers in the United States — may proceed for the defendants remaining in the indirect purchaser and Acer cases. Those defendants in the omnibus order include Samsung and Toshiba.
Category 1 sales account for about 36 percent of Dell’s optical disk drive purchases and about 60 percent of HP’s purchases. Category 2 sales account for about 26 percent of Dell’s purchases and about 28 percent of HP’s purchases. Category 3 sales account for about 38 percent of Dell’s purchases and about 12 percent of HP’s purchases.
Seeborg so far has awarded $180 million in class action settlements to indirect purchasers in the multidistrict litigation. In November he granted final approval of a $50.5 million settlement with Philips and Pioneer. In December 2016, he granted final approval of a $124.5 million settlement with Sony, Panasonic, NEC and Hitachi-LG.
Direct buyers, who ended their litigation last year, have been awarded nearly $75 million.
Samsung is represented by Ian Simmons with O’Melveny & Myers in Washington, D.C., and Toshiba by Belinda Lee with Latham & Watkins in San Francisco. They could not be reached for comment after business hours Monday.