Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_07-md-01819/USCOURTS-cand-4_07-md-01819-77/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

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

IN RE: STATIC RANDOM ACCESS MEMORY

(SRAM) ANTITRUST LITIGATION,

 /

No. C 07-01819 CW

ORDER GRANTING

INDIRECT PURCHASER

PLAINTIFFS’ MOTION

FOR LEAVE TO FILE

FIFTH AMENDED

COMPLAINT

The Indirect Purchaser Plaintiffs Class (IP Plaintiffs) move

for leave to file a Fifth Amended Consolidated Complaint (5AC). 

The only remaining Defendants in the case after settlement, Samsung

and Cypress, oppose the motion. Having considering all of the

papers filed, the Court grants IP Plaintiffs’ motion.

BACKGROUND

IP Plaintiffs’ operative complaint alleges that Defendants

engaged in a conspiracy to raise the prices of SRAM and that they

engaged in a continuous exchange of confidential pricing, quantity

and other business information. IP Plaintiffs’ claims for relief

include: (1) violation of Section 1 of the Sherman Act, 15 U.S.C.

§ 1; (2) violation of the California Cartwright Act; (3) violation

of the California Unfair Competition Law; (4) violation of state

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antitrust and unfair competition laws; (5) violation of state

consumer protection and unfair competition laws; and (6) unjust

enrichment and disgorgement of profits.

Included in these claims is one brought under New York’s

consumer protection statute, N.Y. Gen. Bus. Law § 349. The

proposed 5AC seeks to add a claim under New York’s antitrust

statute, N.Y. Gen. Bus. Law § 340 et seq., also known as the

Donnelly Act. The Donnelly Act provides that a successful

plaintiff “shall recover three-fold the actual damages sustained

thereby.” Id. § 340(5). IP Plaintiffs did not assert a Donnelly

Act claim earlier because New York Law prohibits “an action to

recover a penalty, or minimum measure of recovery created or

imposed by statute” to be “maintained as a class action.” N.Y.

C.P.L.R. § 901(b). See Sperry v. Crompton Corp., 8 N.Y.3d 204, 214

(N.Y. App. Div. 2007) (the “three-fold damages” provision is

“regarded as a penalty insofar as class actions are concerned.”). 

In Shady Grove Orthopedic Associates v. Allstate Ins. Co., 130

S. Ct. 1431, 1438 (Mar. 31, 2010), the Supreme Court held that

§ 901(b) is a procedural rule that conflicts with the class action

requirements of Federal Rule of Civil Procedure 23. Therefore,

plaintiffs who bring actions in federal court and assert diversity

jurisdiction are not barred by § 901(b) from bringing class actions

that seek statutory penalties or minimum recoveries under New York

law. IP Plaintiffs move for leave to amend their complaint in

light of Shady Grove. 

DISCUSSION

Federal Rule of Civil Procedure 15(a) provides that leave of

the court allowing a party to amend its pleading “shall be freely

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given when justice so requires.” Leave to amend lies within the

sound discretion of the trial court, which discretion “must be

guided by the underlying purpose of Rule 15 to facilitate decision

on the merits, rather than on the pleadings or technicalities.”

United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981) (citations

omitted). Thus, Rule 15’s policy of favoring amendments to

pleadings should be applied with “extreme liberality.” Eminence

Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).

The Supreme Court has identified four factors relevant to

whether a motion for leave to amend should be denied: undue delay,

bad faith or dilatory motive, futility of amendment and prejudice

to the opposing party. Foman v. Davis, 371 U.S. 178, 182 (1962). 

The Ninth Circuit holds that these factors are not of equal weight;

“it is the consideration of prejudice to the opposing party that

carries the greatest weight.” Eminence Capital, 316 F.3d at 1048. 

“Absent prejudice, or a strong showing of any of the remaining

Foman factors, there exists a presumption under Rule 15(a) in favor

of granting leave to amend.” Id. (emphasis in original) (citation

omitted). 

Defendants argue that amendment at this stage in the case

would cause them severe prejudice. Fact and expert discovery

closed on December 11, 2009 and July 8, 2010 respectively; and the

deadline to file case dispositive motions was July 15, 2010. A

two-month trial in this case is set to begin on January 31, 2011. 

Defendants have already filed their motions for summary judgment.

Defendants claim that amendment would “necessitate further

discovery, including depositions of the New York class

representatives.” Opp. at 2. Defendants argue that, although the

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claim under the Donnelly Act is similar to IP Plaintiffs’ claims

under the Sherman Act, the Donnelly Act claim is different in that

it allows a defendant to prove, as a defense, that a plaintiff

passed on the allegedly illegal overcharge to some other entity. 

N.Y. Gen. Bus. Law § 340(6) (“In actions where both direct and

indirect purchasers are involved, a defendant shall be entitled to

prove as a partial or complete defense to a claim for damages that

the illegal overcharge has been passed on to others who are

themselves entitled to recover . . . .”). Defendants assert that

they did not have an opportunity to elicit facts from IP

Plaintiffs’ New York class representative that might aid in their

pass-through defense. 

IP Plaintiffs point out that the New York sub-class is limited

to individuals “who indirectly purchased SRAM and/or products

containing SRAM, for end use and not for resale . . .” 4AC ¶¶ 138,

139(r) (emphasis added). Thus, members of the IP Plaintiffs’ class

who passed on Defendants’ allegedly illegal overcharge to others

would be excluded from the class. Defendants argue that one New

York class representative, CHP Media, Inc. may have resold some of

its SRAM purchases because it is a business entity. IP Plaintiffs

counter with deposition testimony from CHP representative Charles

Smith in which he stated that CHP does not sell electronics. 

Micheletti Decl., Ex. A at 27:12-13. Although this testimony makes

it appear that Defendants will have trouble establishing a passthrough defense, IP Plaintiffs have not shown that Defendants had a

fair opportunity to elicit facts to establish their pass-through

defense. However, enough time remains before the start of trial

for Defendants to conduct the depositions necessary to establish

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this defense and to move for summary judgment based on it. 

Defendants also argue that the new claim would prejudice them

because it allows for treble damages whereas IP Plaintiffs only

seek injunctive relief for their Sherman Act claim. This argument

has no merit because the IP Plaintiffs class already includes

purchasers of SRAM from the District of Columbia, New Mexico and

North Dakota, each of which explicitly permits indirect purchasers

to seek treble damages for violation of their respective antitrust

statutes. See D.C. Stat. Ann. §§ 28-45-8(a)(1), 28-4508(a); N.M.

Stat. Ann. § 57-1-3(a); N.D. Cent. Code Ann. § 51-08.1-08(2)-(3). 

Lastly, Defendants assert that IP Plaintiffs’ motion is

untimely because it has been over three years since the original

complaint in this case was filed. However, IP Plaintiffs moved for

leave to amend their complaint very soon after the United States

Supreme Court decided Shady Grove. IP Plaintiffs have not

demonstrated any undue delay, bad faith or dilatory motive in

bringing this motion. 

CONCLUSION

For the foregoing reasons, the Court grants IP Plaintiffs’

motion for leave to file their 5AC. IP Plaintiffs shall file their

5AC forthwith. If necessary, Defendants may propound additional

deposition questions, in writing or by video conference, to New

York Class Representatives within one week from the date of this

order. Defendants may then file a five page supplement to their

motion for summary judgment on this single issue one week

thereafter. IP Plaintiffs’ five page supplemental opposition will

be due on August 31, and Defendants’ three page supplemental reply

will be due on September 15. The motion will be heard on the same

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date as the other case dispositive motions, October 14, 2010 at

2:00 p.m. The August 12, 2010 hearing is vacated. 

IT IS SO ORDERED.

Dated: 08/04/10 

CLAUDIA WILKEN

United States District Judge

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