Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_15-cv-02987/USCOURTS-cand-4_15-cv-02987-4/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 

NORTHERN DISTRICT OF CALIFORNIA 

IN RE: LITHIUM ION BATTERIES 

ANTITRUST LITIGATION

This Document Relates To: 

Case No. 4:15-CV-02987-YGR 

DELL INC., ET AL., 

Plaintiffs, 

V. 

LG CHEM LTD., ET AL., 

Defendants. 

Master Case No. 4:13-MD-02420 

MDL No. 2420 

Individual Case No. 15-CV-02987-YGR 

ORDER DENYING DEFENDANT TOSHIBA 

CORPORATION’S MOTION TO COMPEL 

ARBITRATION WITH DELL

Re: Dkt. No. 1311, 1312, 1369 

Plaintiffs bring this action against defendants LG Chem, Ltd. and LG Chem America, Inc. 

(collectively, “LG Chem”), Samsung SDI Co., Ltd. and Samsung SDI America, Inc. (collectively, 

“Samsung”), and Toshiba Corporation for alleged antitrust violations relating to the sales of 

lithium ion batteries, cells, and packs spanning a period of eleven years.1 Presently, the following 

claims remain: (i) violation of the Sherman Act, 15 U.S.C. § 1 against Samsung and Toshiba; (ii) 

violation of the Sherman Act, 15 U.S.C. § 1 against LG Chem but limited to January 2000 through 

September 30, 2009; and (iii) breach of contract against Samsung. 

Now before the Court is defendant Toshiba’s motion to compel plaintiffs into arbitration 

and stay this action pending arbitration. (Dkt. No. 1312.) Having carefully considered the 

pleadings, the papers submitted on this motion, and oral arguments at the hearing on September 

27, 2016, and for the reasons set forth herein, the Court DENIES Toshiba’s motion.2

 

 1

 Plaintiffs have dismissed claims against eight of the thirteen defendants in this case 

namely, Panasonic Corporation and Panasonic Corporation of North America (collectively, 

“Panasonic”), Sanyo Electric Co. Ltd. and Sanyo North America Corporation (collectively, 

“Sanyo”), Sony Corporation, Sony Energy Devices Corporation, and Sony Electronics, Inc. 

(collectively, “Sony”), and GS Yuasa Corporation. 

2

 Plaintiffs and Toshiba each filed an administrative sealing motion (Dkt. Nos. 1311, 

1369) in connection with their briefing on Toshiba’s motion to compel. The material in question 

is subject to an earlier Stipulated Protective Order, allowing the parties to designate certain 

documents produced in discovery as highly confidential. (Dkt. No. 193.) The Court finds the 

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I. BACKGROUND

This action alleges a global anti-trust conspiracy to “fix, raise, stabilize, and maintain the 

prices” of lithium ion batteries (“LIBs”) from at least January 1, 2000 through at least May 31, 

2011. According to the complaint, defendants engaged in continuous communications with each 

other “to set prices collusively” and “devis[e] mechanisms to nullify competition in procurements 

by their customers.” (Compl. ¶ 7.) 

Throughout this period, plaintiffs allege that they directly purchased more than $3.1 billion 

worth of LIBs collectively from defendants and their co-conspirators. (Id. at ¶¶ 6, 25.) Plaintiffs 

further allege that some of these purchases were made pursuant to master purchase agreements 

(“MPAs”) with Panasonic, Sanyo, Samsung, and Sony. (Id. at ¶ 27.) 

Relevant to this motion, the Panasonic and Sanyo MPAs contained arbitration provisions. 

The Panasonic arbitration provision provides that: “[A]ny remaining dispute, controversy or claim 

arising out of or related to the subject matter of this Agreement, shall be submitted to final and 

binding arbitration before and in accordance with the commercial rules of the American 

Arbitration Association.” (Dkt. No. 1311-7 at ¶ 18.1.) The Sanyo arbitration provision provides 

that: “Any dispute which cannot be resolved between the parties . . . shall be resolved finally and 

conclusively by binding arbitration conducted in the applicable location of the events that give rise 

to the dispute, and if in the United States, in accordance with the rules of the American Arbitration 

Association.” (Dkt. No. 1311-8 at ¶ 17.1.) Both MPAs also note that the laws of the state of 

Texas apply to the agreements. (Dkt. No. 1311-7 at ¶ 18.10; Dkt. No. 1311-8 at 17.1.) 

Toshiba and LG Chem did not enter into any MPAs with plaintiffs. Plaintiffs entered into 

an MPA with Samsung, but that MPA did not include an arbitration provision. Here, Toshiba 

seeks to enforce the arbitration provisions in the Panasonic and Sanyo MPAs to compel plaintiffs 

 

requests are sufficiently justified with respect to the underlying documents under the applicable 

“good cause” standard and, therefore, GRANTS the motions to seal the documents in question 

solely for purposes of resolving the instant motion. See Kamakana v. City & Cty. of Honolulu, 447 F.3d 1172, 1179–80 (9th Cir. 2006). The Court DENIES the motion to seal the designated 

excerpts in the parties’ papers relating to this motion. 

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into arbitration.3

II. LEGAL FRAMEWORK

The Federal Arbitration Act (the “FAA”) requires a district court to stay judicial 

proceedings and compel arbitration of claims covered by a written and enforceable arbitration 

agreement. 9 U.S.C. § 3. A party may bring a motion in the district court to compel arbitration. 9 

U.S.C. § 4. In ruling on the motion, the court’s role is typically limited to determining whether: 

(i) an agreement exists between the parties to arbitrate; (ii) the claims at issue fall within the scope 

of the agreement; and (iii) the agreement is valid and enforceable. Lifescan, Inc. v. Premier 

Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). 

“Both the arbitrability of the merits of a dispute and the question of who has the primary 

power to decide arbitrability depend on the agreement of the parties.” Goldman, Sachs & Co. v. 

Reno, 747 F.3d 733, 738 (9th Cir. 2014) (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 

938, 943 (1995); see also Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 1069, 1072 (9th Cir. 

2013). However, these questions are decided by the arbitrator instead of courts where “the parties 

clearly and unmistakably” express that intention. See AT&T Techs., Inc. v. Commc’ns Workers of 

Am., 475 U.S. 643, 649 (1986); see also Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68–69 

(2010) (“[P]arties can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as whether the 

parties have agreed to arbitrate or whether their agreement covers a particular controversy.”). An 

arbitration clause including an agreement to follow a particular set of arbitration rules may 

constitute such an expression where those rules provide for the arbitrator to decide questions of 

arbitrability. See Poponin v. Virtual Pro, Inc., No. 06-CV-4019, 2006 WL 2691418, at *9 (N.D. 

Cal. Sept. 20, 2006) (finding the ICC Rules of Arbitration clearly “provide for the arbitrator to 

decide arbitrability”). In such circumstances, the Court’s inquiry is limited to determining 

whether the assertion of arbitrability is “wholly groundless.” See Qualcomm Inc. v. Nokia Corp., 

466 F.3d 1366, 1371 (Fed. Cir. 2006) (applying Ninth Circuit law). 

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 Toshiba is the only party in this action that is seeking to compel arbitration. LG Chem 

and Samsung have already filed answers to plaintiffs’ complaint. 

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Non-signatories to an arbitration agreement may, at times, be able to compel signatories 

into arbitration in situations where state contract law would allow such litigant to do so. See 

Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631–32 (2009); see also Kramer v. Toyota Motor 

Corp., 705 F.3d 1122, 1130 n.5 (9th Cir. 2013) (explaining that Andersen clarified that a “litigant 

who is not party to an arbitration agreement may invoke arbitration if the relevant state contract 

law allows the litigant to enforce the agreement”) (citing Arthur Andersen, 556 U.S. at 632). 

III. DISCUSSION

Toshiba proffers two arguments: First, Toshiba argues that because a valid arbitration 

agreement exists between plaintiffs and Panasonic and Sanyo, and those parties agreed to arbitrate 

arbitrability, the Court must allow the arbitrator to decide whether such agreements extend to 

Toshiba. Second, Toshiba argues that under the doctrine of equitable estoppel, it can enforce the 

arbitration agreement against plaintiffs. The Court addresses each, in turn. 

A. Applicability of the Arbitration Agreement to Toshiba 

The parties do not dispute that plaintiffs entered into MPAs with Panasonic and Sanyo, and 

that each MPA included an arbitration provision. The parties also do not dispute that the 

arbitration provisions involved an agreement to arbitrate arbitrability. Despite conceding that it 

did not enter into any agreements with plaintiffs, Toshiba contends that the existence of valid 

arbitration agreements is dispositive, and the determination of whether Toshiba falls within the 

scope of that agreement should be reserved for an arbitrator. 

Toshiba, however, offers no support for its proposition that, simply because an arbitration 

agreement exists, Toshiba, as a non-signatory to such agreements, can compel plaintiffs into 

arbitration. Rather, the cases cited by Toshiba state merely the general proposition that antitrust 

claims arising under purchase contracts are arbitrable, see Mitsubishi Motors Corp. v. Soler 

Chrysler Plymouth, Inc., 473 U.S. 614, 636–40 (1985); apply arbitration agreements to nonsignatories through the applications of principles of estoppel, see JLM Indus., Inc. v. Stolt-Nielsen 

SA, 387 F.3d 163, 177 (2d Cir. 2004); or discuss that issues regarding the scope of an arbitration 

clause are reserved for the arbitrator if that is what the parties agreed, see, e.g., In re Cathode Ray 

Tube Antitrust Litig., No. 07-CV-5944, 2014 WL 7206620, at *4 (N.D. Cal. Dec. 18, 2014). 

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These cases do not support Toshiba’s assertion that it can compel plaintiffs into arbitration simply 

on the grounds that plaintiffs entered into arbitration agreements with Panasonic and Sanyo. 

To the contrary, the Ninth Circuit has recently addressed the issue, and held otherwise. In 

Mohamed v. Uber Technologies, Inc., -- F.3d --, 2016 WL 4651409 (9th Cir. 2016), the Ninth 

Circuit held that Uber could compel the plaintiffs into arbitration based on the arbitration 

agreements plaintiffs signed with Uber. However, the Ninth Circuit also held that another 

defendant, Hirease, could not do so where it was “not identified as a party or a signatory to the 

agreement between Uber and the drivers,” and other principles of contract law and equity did not 

otherwise allow Hirease to enforce the arbitration provision as a non-signatory. Id. at *8–10. 

Mohamed reaffirms the fundamental policy of requiring parties to abide by previously agreed 

upon dispute resolution terms. See Volt Info. Scis., Inc. v. Bd. of Trustees of Leland Stanford 

Junior Univ., 489 U.S. 468, 479 (1989) (noting that the FAA’s “primary purpose” is “ensuring 

that private agreements to arbitrate are enforced” and that arbitration is a “matter of consent, not 

coercion”); EEOC v. Waffle House, Inc., 534 U.S. 279, 293 (2002) (noting that the FAA does not 

“require parties to arbitrate when they have not agreed to do so”) (internal citations and quotations 

omitted); cf. Rajagopalan v. Noteworld, LLC, 718 F.3d 844, 846 (9th Cir. 2013) (noting that 

where the question “is not whether a particular issue is arbitrable, but whether a particular party is 

bound by the arbitration agreement” that the “liberal federal policy regarding the scope of 

arbitrable issues is inapposite”) (emphasis in original). Here, no such agreement to arbitrate 

disputes with Toshiba exists. 

Accordingly, Toshiba cannot compel plaintiffs into arbitration absent the existence of 

special circumstances that would allow it to do so by virtue of plaintiffs’ arbitration agreements 

with Panasonic and Sanyo. 

B. Equitable Estoppel Doctrine 

Toshiba next argues that it can compel plaintiffs into arbitration based on their arbitration 

agreements with Panasonic and Sanyo pursuant to the doctrine of equitable estoppel. Nonsignatories may enforce arbitration agreements only where the relevant state contract law would 

allow the litigant to do so. Kramer, 705 F.3d at 1130 n.5 (explaining that Andersen clarified that a 

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“litigant who is not party to an arbitration agreement may invoke arbitration if the relevant state 

contract law allows the litigant to enforce the agreement”) (citing Arthur Andersen, 556 U.S. at 

632). Because both arbitration provisions indicate that the laws of the state of Texas apply to the 

contracts, the Court applies Texas equitable estoppel law to determine whether Toshiba can 

compel plaintiffs into arbitration.4

Under Texas law, “[w]hether an arbitration agreement binds a nonsignatory is a gateway 

matter to be determined by the court, rather than the arbitrator.” Glassell Producing Co., Inc. v. 

Jared Res., Ltd., 422 S.W.3d 68, 81 (Tex. Ct. App. 2014). Texas law recognizes six theories 

under which a non-signatory can be bound to an arbitration clause, including one form of equitable 

estoppel, namely, “direct benefits” estoppel.5 See Glassell, 422 S.W.3d at 80–82 (holding that 

direct benefit estoppel is the “only form of equitable estoppel recognized in Texas”) (citing In re 

Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 192–94 (Tex. 2007)); see also Hays v. HCA 

Holdings, Inc., No. 15-432, 2015 WL 5737963, at *4 (W.D. Tex. Sept. 30, 2015) (citing In re 

 4

 Toshiba argues that state law may not be the proper law to apply in this context. Toshiba 

contends, citing In re Labatt Food Service, L.P., 279 S.W.3d 640 (Tex. 2009), that the Texas 

Supreme Court has expressed uncertainty as to whether state or federal law governs the 

enforcement of arbitration provisions by or against non-signatories. Id. at 643 (noting that neither 

the FAA nor the U.S. Supreme Court have addressed whether state law or federal law should 

apply). However, months after the Texas Supreme Court’s decision in Labatt, the U.S. Supreme 

Court actually decided the issue and held that state contract law governs whether equitable 

estoppel can be used in the context of non-signatory enforcement of arbitration agreements. 

Arthur Andersen, 556 U.S. at 631–32; see also Kramer, 705 F.3d at 1130 n.5 (explaining that 

Andersen clarified that a “litigant who is not party to an arbitration agreement may invoke 

arbitration if the relevant state contract law allows the litigant to enforce the agreement”) (citing 

Arthur Andersen, 556 U.S. at 632). 

5

 The Texas Supreme Court has rejected the “concerted misconduct” theory of equitable 

estoppel. Under concerted misconduct estoppel, some courts have held that a non-signatory may 

enforce the arbitration agreement where it is charged with “interdependent and concerted 

misconduct” with a party that is a signatory to the arbitration agreement. See Grigson v. Creative 

Artists Agency, LLC, 210 F.3d 524, 528 (5th Cir. 2000). The Texas Supreme Court in In re 

Merrill Lynch held, however, that Texas law does not recognize “concerted misconduct” estoppel 

explaining that conspiracy “is a tort, not a rule of contract law.” In re Merrill Lynch, 235 S.W.3d 

at 194; see also Al Rushaid v. Nat. Oilwell Varco, Inc., 814 F.3d 300, 305 (5th Cir. 2016) (stating 

that the Texas Supreme Court has foreclosed the “concerted misconduct” theory of equitable 

estoppel); see also Glassell, 422 S.W.3d at 81 (explaining that the Texas Supreme Court “rejected 

the second prong of Grigson, which includes intertwined claims or concerted misconduct”). 

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Merrill Lynch, 235 S.W.3d at 194).6 Under the direct benefits theory of estoppel, equitable 

estoppel will allow parties to apply arbitration agreements to non-signatories where the claim 

“seeks a direct benefit from a contract containing an arbitration clause.” In re Weekley Homes, 

L.P., 180 S.W.3d 127, 131–32 (Tex. 2005). In other words, equitable estoppel applies “if liability 

arises solely from the contract or must be determined by reference to it. On the other hand, claims 

can be brought in tort (and in court) if liability arises from general obligations imposed by law.” 

Id. at 132; see also In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 739–40 (Tex. 2005). 

Accordingly, an analysis of whether direct benefits estoppel applies begins with an analysis of the 

pleadings to determine the nature of plaintiffs’ claims. See Al Rushaid, 814 F.3d at 305.

Here, plaintiffs bring only one claim against Toshiba: a violation of 15 U.S.C. § 1. 

(Compl. ¶¶ 293–303.) Plaintiffs have alleged that Toshiba conspired with other parties to “fix, 

raise, stabilize, and maintain prices” for LIBs, and as a result, plaintiffs have been harmed “by 

being forced to pay inflated, supra-competitive prices” for LIBs. (Id. at ¶¶ 296, 299.) Plaintiffs 

argue that such a claim does not fall within the purview of direct benefits estoppel because it does 

not depend on an interpretation of the MPAs. Plaintiffs further argue that even if they had never 

entered into any MPAs with any party, they could still have brought antitrust claims against 

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 Some courts have suggested that the Texas Supreme Court has implied that an 

“intertwined claims” theory of equitable estoppel may also be viable in Texas. See Hays, 2015 

WL 5737963, at *4 (citing In re Merrill Lynch, 235 S.W.3d at 192–94). In In re Merrill Lynch, 

the Texas Supreme Court acknowledged that federal circuit courts have “estopped signatory 

plaintiffs from avoiding arbitration with nonsignatories using an “intertwined-claims” test.” In re 

Merrill Lynch, 235 S.W.3d at 193. Citing the Second Circuit, the Texas Supreme Court explained 

that under such test, a non-signatory defendant may compel arbitration where it has a “‘close 

relationship’ with one of the signatories and the claims are ‘intimately founded in and intertwined 

with the underlying contract obligations.’” Id. (citing Thomson-CSF, S.A. v. Am. Arbitration 

Ass’n, 64 F.3d 773, 779 (2d Cir. 1995)). The Texas Supreme Court further explained that the 

“close relationship” requirement is generally limited to “instances of strategic pleading by a 

signatory who, in lieu of suing the other party for breach, instead sues that party’s nonsignatory 

principals or agents for pulling the strings.” Id. Such strategic pleading does not appear to be 

present here where Toshiba is distinctly separate from Panasonic and Sanyo, and Toshiba does not 

appear to have had any relationship to the Panasonic and Sanyo MPAs. Accordingly, because 

Toshiba would not satisfy the “intertwined claims” test, the Court need not decide whether such 

test is viable under Texas law. See Ross v. Am. Exp. Co., 547 F.3d 137, 146–48 (2d Cir. 2008) 

(holding that defendant could not avail itself of the arbitration agreement where its only 

connection to the signatory defendants was as a co-conspirator in a conspiracy to violate the 

antitrust laws). 

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defendants. 

Toshiba, on the other hand, argues that plaintiffs’ claims rely on the existence of the MPAs 

for several reasons including that (i) plaintiffs’ purchases from Panasonic and Sanyo were 

governed by the MPAs and plaintiffs allege that Toshiba is jointly and severally liable for such 

purchases and (ii) the MPAs support plaintiffs’ jurisdictional allegation that negotiations of 

worldwide prices of LIBs occurred in the United States. However, neither of these reasons meets 

the “direct benefits” standard applied under Texas law. For instance, in Al Rushaid, the Fifth 

Circuit, applying Texas direct benefits estoppel, held that direct benefits estoppel did not apply to 

claims involving allegations of bribery, even though they were related to contracts containing 

arbitration agreements. Al Rushaid, 814 F.3d at 305–06. The Fifth Circuit explained that the nonsignatories could not seek the benefit of the arbitration agreements because plaintiffs were not 

trying to enforce those contacts against them, and instead, liability was “premised on ‘general 

obligations imposed by law.’” Id. (citing In re Weekley Homes, L.P., 180 S.W.3d at 131–32). 

Toshiba’s argument that plaintiffs’ claims rely on or are dependent on the MPAs does not 

persuade. For one, the vast majority of cases upon which Toshiba relies do not apply the direct 

benefits test for equitable estoppel under Texas law. See, e.g., In re Apple & AT&TM Antitrust 

Litig., 826 F. Supp. 2d 1168, 1176–78 (N.D. Cal. 2011) (applying the “intertwined claims” theory 

of estoppel to enforce an arbitration agreement where the class was defined as those who 

purchased an iPhone and entered into the two-year service agreement containing the arbitration 

agreement); JLM Indus., 387 F.3d at 177 (applying “intertwined claims” theory); Amisil Holdings 

Ltd. v. Clarium Cap. Mgmt., 622 F. Supp. 2d 825, 841 (N.D. Cal. 2007) (applying estoppel based 

on the fact that the claims either referred to or presumed the existence of the agreement); Larson v. 

Speetjens, No. 05-CV-3176, 2006 WL 2567873, at *7 (N.D. Cal. Sept. 5, 2006) (applying a direct 

benefits standard under California law, the court held that the arbitration agreement was 

enforceable because the claims were based on a breach of fiduciary duty “created by the 

[a]greements”). Those that do apply the direct benefits test under Texas law are readily 

distinguishable. See, e.g., Meyer v. WMCO-GP, LLC, 211 S.W.3d 302, 307 (Tex. 2006) (applying 

equitable estoppel but parties conceded that damages could not be calculated without reference to 

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the agreement); Hays, 2015 WL 5737963, at *5–6 (finding that direct benefits estoppel did not 

apply to wrongful termination or negligence claims but did apply to the tortious interference 

claims as they depended on plaintiff’s employment agreement). 

Plaintiffs have not brought claims against Toshiba based on the MPAs, but have instead 

brought a single, independent statutory claim under the Sherman Act. While relevant, the MPAs 

are just one piece of a much larger claim. The Court therefore finds that direct benefits estoppel 

does not apply in the instant matter. See In re Weekley Homes, 180 S.W.3d at 131–32; see also In 

re E. Rio Hondo Water Supply Corp., No. 13-12-00538, 2012 WL 5377898, at *6 (Tex. Ct. App. 

Oct. 29, 2012) (holding that direct benefits estoppel did not apply where plaintiff could claim that 

damages were caused by defendant even if they had not entered into a contract). Thus, the Court 

DENIES Toshiba’s motion to compel plaintiffs into arbitration. 

IV. CONCLUSION

For the foregoing reasons, the Court DENIES Toshiba’s motion to compel plaintiffs into 

arbitration. The Court DENIES Toshiba’s motion to stay proceedings pending arbitration as moot. 

This Order terminates Docket Numbers 1311, 1312, and 1369. 

IT IS SO ORDERED. 

Dated: October 4, 2016 

______________________________________ 

 YVONNE GONZALEZ ROGERS

 UNITED STATES DISTRICT COURT JUDGE

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