Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-05944/USCOURTS-cand-3_07-cv-05944-230/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 15:1 Antitrust Litigation

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

In re: CATHODE RAY TUBE (CRT) 

ANTITRUST LITIGATION

This Document Relates to:

Schultze Agency Servs., LLC v. 

Hitachi Ltd., No. 12-cv-2649-SC

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Case No. C 07-5944 SC

MDL No. 1917

ORDER GRANTING IN PART AND 

DENYING IN PART TOSHIBA'S 

MOTION TO DISMISS SCHULTZE 

AGENCY SERVICES, LLC'S FIRST 

AMENDED COMPLAINT

I. INTRODUCTION

Now before the Court is the Toshiba Defendants'1 Rule 12(b)(6) 

motion to dismiss Plaintiff Schultze Agency Services, LLC's2 first 

amended complaint. ECF No. 1980 ("FAC"). The Philips Defendants 

join in the motion.3 The motion is fully briefed. ECF Nos. 2108

("Mot."), 2245 ("Opp'n"), 2282 ("Reply"). The Court finds it 

appropriate for resolution without oral argument, Civ. L.R. 7-1(b). 

 1 The Toshiba Defendants are Toshiba Corporation, Toshiba America 

Information Systems, Inc., and Toshiba America Electronic 

Components, Inc.

2 Schultze is suing on behalf of Tweeter Opco LLC and Tweeter Newco 

LLC (collectively "Tweeter"). The parties and the Court 

accordingly refer to Tweeter, not Schultze, where appropriate.

3 The Philips Defendants are Koninklijke Philips N.V. and Philips 

Electronic North America Corp. 

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The motion is GRANTED in part and DENIED in part.

II. BACKGROUND

The parties are familiar with the general facts of this case, 

which is an antitrust action concerning the alleged price-fixing of 

cathode-ray tubes ("CRTs"). A brief factual summary relevant to 

the instant motion follows.

The Toshiba Defendants are companies that are all alleged to 

have manufactured, marketed, sold, or distributed CRT Products in 

the United States, either directly or through subsidiaries or 

affiliates. FAC ¶¶ 58-63. The Philips Defendants are Dutch 

companies alleged to have done the same things. Id. ¶¶ 43-47. 

Plaintiffs allege that the Toshiba and Philips Defendants

participated in an international conspiracy to fix the prices of 

CRTs, and that they never effectively withdrew from it. Plaintiffs 

also contend that the Toshiba and Philips Defendants, as well as

other Defendants, were highly interrelated, as when they formed 

CRT-related joint ventures. Plaintiffs state that they bought 

price-fixed CRT Products "directly from Defendants and coconspirators, and/or Defendants' and co-conspirators' subsidiaries 

and affiliates, and/or any agents controlled by Defendants, 

Defendants' subsidiaries and affiliates, co-conspirators or coconspirators' affiliates," as well as from original equipment 

manufacturers ("OEMs") and other suppliers. 

The Toshiba Defendants now move to dismiss. The Philips 

Defendants join this motion.

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III. LEGAL STANDARD

A motion to dismiss under Federal Rule of Civil Procedure 

12(b)(6) "tests the legal sufficiency of a claim." Navarro v. 

Block, 250 F.3d 729, 732 (9th Cir. 2001). "Dismissal can be based 

on the lack of a cognizable legal theory or the absence of 

sufficient facts alleged under a cognizable legal theory." 

Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 

1988). "When there are well-pleaded factual allegations, a court 

should assume their veracity and then determine whether they 

plausibly give rise to an entitlement to relief." Ashcroft v. 

Iqbal, 556 U.S. 662, 664 (2009). However, "the tenet that a court 

must accept as true all of the allegations contained in a complaint 

is inapplicable to legal conclusions. Threadbare recitals of the 

elements of a cause of action, supported by mere conclusory 

statements, do not suffice." Id. at 678 (citing Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 555 (2007)). The allegations made in a 

complaint must be both "sufficiently detailed to give fair notice 

to the opposing party of the nature of the claim so that the party 

may effectively defend against it" and "sufficiently plausible" 

such that "it is not unfair to require the opposing party to be 

subjected to the expense of discovery." Starr v. Baca, 652 F.3d 

1202, 1216 (9th Cir. 2011).

Claims sounding in fraud are subject to the heightened 

pleading requirements of Federal Rule of Civil Procedure 9(b), 

which requires that a plaintiff alleging fraud "must state with 

particularity the circumstances constituting fraud." See Kearns v. 

Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009). "To satisfy 

Rule 9(b), a pleading must identify the who, what, when, where, and 

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how of the misconduct charged, as well as what is false or 

misleading about [the purportedly fraudulent] statement, and why it 

is false." United States ex rel Cafasso v. Gen. Dynamics C4 Sys., 

Inc., 637 F.3d 1047, 1055 (9th Cir. 2011) (internal quotation marks 

and citations omitted).

IV. DISCUSSION

A. Ownership or Control

The Toshiba and Philips Defendants argue first that Plaintiffs 

have failed to allege facts that would support federal antitrust

standing under the "ownership or control" exception of Illinois 

Brick v. Illinois, 431 U.S. 720 (1977). That case, now quite 

familiar to all parties in this MDL,4 set forth several exceptions 

to the general rule that plaintiffs who purchased allegedly pricefixed goods indirectly -- i.e., not from the ultimate price-fixer -

- lack standing to bring a federal antitrust case. See In re ATM 

Fee Antitrust Litig., 686 F.3d 741, 749 (9th Cir. 2012). One 

exception, the "ownership or control" exception, provides for 

standing when a plaintiff bought the allegedly price-fixed good 

from an entity owned or controlled by the ultimate price-fixer. 

Id.

The Court finds for Tweeter. Tweeter's allegations are 

sufficient to invoke the ownership or control exception at this 

time. Tweeter pleads that it purchased CRT Products from 

Defendants, their affiliates or agents, or any agents that 

Defendants or their subsidiaries controlled, and that it was 

 4 See, e.g., ECF No. 1470 ("Order Re: Defs.' Joint Mot. for S.J.") 

("S.J. Order.")).

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injured when it paid artificially high prices for those products. 

Defendants contend that this is insufficient pleading, and that 

Tweeter should essentially have to name all of the entities from 

which it purchased CRT Products. But in this long-running case, in 

which significant evidence of the alleged conspiracy is in the 

record, and Defendants have long had notice of the claims against 

them, the Court does not find it necessary to require Tweeter to 

adhere to Defendants' pinpoint pleading standards. Further, 

Defendants continually point to Tweeter's allegations that they 

purchased CRT Products "from original equipment manufacturers 

('OEMs'), as well as other suppliers," but this pleading comes 

directly after the sentence stating that Plaintiffs purchased CRT 

Products from entities that would entitle Plaintiffs to the 

ownership or control exception at the pleading stage.5

This is sufficient to entitle Tweeter to invoke the ownership 

or control exception as a pleading matter. Whether they have the 

facts to prove it is a different issue. The motion is accordingly 

DENIED on these grounds.

B. Massachusetts Law

Tweeter also asserts a cause of action under the Massachusetts 

Consumer Protection Act ("MCPA"), Mass. Gen. Laws ch. 93A, § 1 et 

seq. Tweeter cites specifically Section 9 of the MCPA, which

provides a cause of action for "[a]ny person, other than a person 

entitled to bring action under section eleven of this chapter, who 

has been injured by another person's use or employment of any 

 5 Defendants also point to the fact that the Court dismissed 

Sharp's complaint against the Thomson defendants, ECF No. 1960, but 

that concerned different parties, different pleadings, and a 

different issue on a motion to dismiss.

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method, act or practice declared to be unlawful by section two [of 

this chapter]." Section 2 of the MCPA makes unlawful "[u]nfair 

methods of competition and unfair or deceptive acts or practices in 

the conduct of any trade or commerce," and the parties do not 

dispute that the activity Tweeter alleges would fall under this 

section. The parties' dispute involves whether Tweeter can bring a 

claim under Section 9 at all, or whether their claim can only arise 

under Section 11. Defendants contend that the two sections of the 

MCPA are mutually exclusive, and that Twitter may only bring a 

claim under Section 11, which provides a cause of action for

entities that participate in trade or commerce (as Tweeter 

undisputedly does) but prohibits indirect purchaser suits.6

 

Defendants also argue that Tweeter did not comply with the MCPA's 

notice provisions.

i. Sections 9 and 11 of the MCPA

Tweeter responds, first, that Section 9 is not limited to 

consumer claims, because it provides a cause of action for "any 

person," and corporations are persons under Massachusetts law. 

Opp'n at 13 (citing Mass. Gen. Laws ch. 4, § 7(23) ("person" 

includes corporations)). Tweeter contends that it satisfies each 

element of a Section 9 claim: (1) it is a "person," since 

corporations are persons in Massachusetts; (2) it is not "entitled" 

to bring a claim under Section 11, since Section 11 is reserved for 

direct-purchaser claims; and (3) it has been injured by Defendants' 

alleged unlawful practices. Tweeter concludes that even if Section 

 6 The parties agree that Massachusetts does not permit indirect 

purchaser suits, an interpretation that is in line with 

Massachusetts law. See Ciardi v. F. Hoffman-La Roche, Ltd., 762 

N.E.2d 303, 312 (Mass. 2002).

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11 does not provide a cause of action for it, Section 9 must, since 

interpreting Section 11 as being the exclusive avenue for 

businesses to bring antitrust claims in Massachusetts would result 

in allowing indirect-purchaser businesses to file meritless claims,

rendering the statute's language about being "entitled" to bring a 

claim essentially meaningless. 

Defendants oppose this argument, citing a Supreme Judicial 

Court of Massachusetts case holding that the MCPA "creates a sharp 

distinction between a business person and an individual who 

participates in commercial transactions on a private, 

nonprofessional basis. For example, where § 9 affords a private 

remedy to the individual consumer . . . an entirely different 

section, § 11, extends the same remedy to '[a]ny person who engages 

in the conduct of any trade or commerce.'" Reply at 8 (citing 

Lantner v. Carson, 373 N.E. 2d 973, 976 (Mass. 1978)). That case 

rejects interpretations of the MCPA under which "the 'persons' 

covered by § 9 and 11 would be identical," because "[s]ection 11 

would thus be superfluous merely a repetition of § 9." Id. The 

First Circuit is similarly clear: "By their terms . . . the two 

sections of chapter 93A that create private rights of action are 

mutually exclusive . . . section 11 affords no relief to consumers 

and, conversely, section 9 affords no relief to persons engaged in 

trade or commerce." Cont'l Ins. Co. v. Bahnan, 216 F.3d 150, 156

(1st Cir. 2000). 

The Court agrees with Defendants. Tweeter's argument is 

engaging, but ultimately, the Supreme Judicial Court's reasoning 

and statutory interpretation must prevail. The Court declines to 

collapse Sections 9 and 11: Section 9 applies to persons 

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(individual consumers or corporations) not involved in trade or 

commerce. Section 11 provides a cause of action to persons who are 

so involved, but Massachusetts law still does not provide an 

antitrust cause of action for indirect purchasers. This does not 

mangle statutory interpretation, as Tweeter contends. It only 

means that, while corporations engaged in commerce can bring suits 

under Section 11 and potentially win them, a corporation engaged in 

commerce whose suit is based on indirect purchases will not have 

standing under Section 11.

Tweeter makes several further arguments based purportedly on 

policy and common sense -- that corporations engaged in trade 

should be able to bring the same kinds of unfair competition suits 

that individual consumers can -- but the Court declines to address 

these points. They are the domain of the Massachusetts legislature 

and courts of appeal. 

Finally, since Tweeter's claim under either provision of the 

MCPA is barred, the Court need not address whether it met the 

statutory notice requirements.

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V. CONCLUSION

As explained above, the Toshiba Defendants' Rule 12(b)(6) 

motion to dismiss Plaintiff Schultze Agency Services first amended 

complaint is GRANTED in part and DENIED in part. Tweeter's federal 

antitrust claim is undisturbed, but Tweeter's Massachusetts 

Consumer Protection Act claim is DISMISSED WITH PREJUDICE.

IT IS SO ORDERED.

Dated: March 13, 2014

UNITED STATES DISTRICT JUDGE

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