Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-05944/USCOURTS-cand-3_07-cv-05944-228/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:

Dell Inc. v. Hitachi Ltd., No. 

13-cv-2171

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Case No. C 07-5944 SC

MDL No. 1917

ORDER DENYING TOSHIBA'S MOTION 

TO DISMISS DELL'S FIRST AMENDED 

COMPLAINT

I. INTRODUCTION

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

motion to dismiss Plaintiffs Dell Inc. and Dell Products L.P.'s

("Plaintiffs") first amended complaint. ECF No. 1726 ("FAC"). The 

motion is fully briefed. ECF Nos. 1998 ("Mot."), 2193 ("Opp'n"), 

2230 ("Reply"). The Court finds it appropriate for resolution 

without oral argument, Civ. L.R. 7-1(b), and DENIES it.

II. BACKGROUND

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

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

 1 The Toshiba Defendants are Toshiba Corporation, Toshiba America 

Information Systems, Inc., and Toshiba America Electronic 

Components, Inc.

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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 ¶¶ 61-64. Plaintiffs allege that the Toshiba 

Defendants participated in an international conspiracy to fix the 

prices of CRTs, and that they never effectively withdrew from it. 

Id. ¶¶ 149-51. Plaintiffs also contend that the Toshiba Defendants 

and other Defendants were highly interrelated, as when they formed 

CRT-related joint ventures. See id ¶¶ 95-96. Plaintiffs state 

that they bought price-fixed CRT Products "directly from Defendants 

and co-conspirators, and/or Defendants' and co-conspirators' 

subsidiaries and affiliates, and/or any agents controlled by 

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

original equipment manufacturers ("OEMs") and other suppliers. See

id. ¶¶ 20, 61-64. The Toshiba Defendants now move to dismiss. 

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 

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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 

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

The Toshiba Defendants argue that Plaintiffs have failed to 

allege facts that would support standing under the "ownership or 

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control" exception of Illinois Brick v. Illinois, 431 U.S. 720 

(1977). That case, now quite familiar to all parties in this MDL,2

set forth several exceptions to the general rule that plaintiffs 

who purchased allegedly price-fixed 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.

Plaintiffs respond that the Toshiba Defendants had previously 

stipulated not to raise this argument on a motion to dismiss, and 

in any event that their allegations are enough to support standing 

at this time.

Plaintiffs and the Toshiba Defendants entered the stipulation 

in question on October 1, 2013, ECF No. 1969 ("Stip."), after the 

Court issued its August 21, 2013 Order on the Defendants' Joint 

Motion to Dismiss Certain Direct Action Plaintiffs' ("DAP") 

Complaints, ECF No. 1856 ("Aug. 21 Order"). The relevant parts of 

the Stipulation read as follows:

The Stipulating Plaintiffs’ Complaints do not seek to 

proceed under the "cost-plus" and "co-conspirator" exceptions to Illinois Brick;

The undersigned Defendants' request to dismiss the 

Stipulating Plaintiff's Complaints as they pertain to 

the Stipulating Plaintiffs’ right to proceed under the "ownership or control" exception to Illinois Brick is 

denied for the reasons set forth in the August 21, 2013 

Order; and

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

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

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By virtue of this Stipulation, the undersigned 

Defendants and the Stipulating Plaintiffs do not waive 

any of their appeal rights to the Illinois Brick issues 

addressed and resolved in this Stipulation.

Stip. ¶¶ 5-7. 

In support of their argument that the Stipulation bars the 

Toshiba Defendants from raising the ownership or control issue on a 

motion to dismiss, Plaintiffs also include an email from the 

Toshiba Defendants' counsel concerning the Stipulation:

Certain of the defendants are planning on moving to 

dismiss the Sharp, Dell, and Tech Data complaints on the 

basis of Illinois Brick. Recall that Judge Conti 

previously granted similar motions with respect to the "cost-plus" and "coconspirator" exceptions to Illinois 

Brick, while denying such motions with respect to the 

"ownership and control" exception.

Rather than briefing this issue, we propose resolving 

this issue in the attached stipulation. We could add 

language to the stipulation that closely follows Judge 

Conti’s ruling on the issue. Everyone would preserve 

their appeal rights. Please let me know what you think.

ECF No. 2193-1 ("Bernstein Decl.") Ex. A ("Lau Ltr.").

The Toshiba Defendants read the Stipulation and the Lau Letter 

to permit them to base a motion to dismiss on the inadequacy of 

Plaintiffs' pleadings. Here they point to the August 21 Order, 

which granted Defendants' motion to dismiss to the extent that it 

challenged the DAPs' right to proceed under Illinois Brick's "costplus" or "co-conspirator" exceptions, but denied it to the extent 

that it challenged the DAPs' rights to proceed under the ownership 

or control exception. Aug. 21 Order at 5. 

The Court's decision there was based on Defendants' statement 

that they raised the issue in their motion to dismiss only to 

preserve it for appeal, not to brief and argue it fully. See ECF 

Nos. 1664 ("R&R on Joint MTD") at 4-5, 1706 ("Joint Obj'ns to R&R") 

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at 24. Defendants' litigation position was based on their 

contention that the Court's ruling on ownership or control was 

wrong as a matter of law, so far as it held that the exception can 

apply to "the purchase of a finished product from an entity 

allegedly owned or controlled by an allegedly conspiring 

Defendant." Joint Obj'ns to R&R at 24. Recognizing that the 

Court's earlier holding as to the availability of the ownership or 

control exception constituted the law of the case, Defendants did 

not attempt to re-litigate it. Id. In a footnote, Defendants 

clarified further that the issue of proving the exception is a 

different question, and noted that the adequacy of the DAPs' 

pleading of the exception were not before the case's former Special 

Master at the hearing on that motion. Id. at 24 n.21. 

Accordingly, the Court stated in its August 21 Order that it 

expressed "no view as to whether the DAPs will be able to prove 

what is needed to establish the ownership or control exception" and 

made "no ruling on the adequacy of the DAPs' allegations of 

ownership and control." Aug. 21 Order at 5. The Toshiba 

Defendants' position is apparently that since the Court made no 

ruling as to how a party should plead the ownership or control 

exception, its holding only extends to the legal issue of whether 

the exception applies at all in a fact pattern like this one.

The Court finds for Plaintiffs. The stipulation and the 

Court's prior orders all indicate that the ownership or control 

exception was not to be re-litigated. In any event, the Court

finds Plaintiffs' allegations sufficient to entitle them to the 

ownership or control exception at this time. Plaintiffs pled that 

they purchased CRT Products from Toshiba, Toshiba's affiliates or 

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agents, or any agents that Toshiba or its subsidiaries controlled, 

and that it was injured when it paid artificially high prices for 

those products. This is sufficient to entitle them to the 

ownership or control exception as a pleading matter. Whether they 

have the facts to prove it is a different issue. Toshiba's motion 

is accordingly DENIED on these grounds.

V. CONCLUSION

As explained above, the Toshiba Defendants' motion to dismiss 

Plaintiffs Dell Inc. and Dell Products L.P.'s first amended 

complaint is DENIED.

IT IS SO ORDERED.

Dated: March 13, 2014

UNITED STATES DISTRICT JUDGE

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