Developments in the Capacitor Cartel Litigation: Class Counsel Appointed and the Antitrust Division Intervenes
In July, we wrote about two putative class action lawsuits alleging that Panasonic, Samsung, and other electronics manufacturers had formed a cartel to boost prices of certain electronic capacitors. Since then, the cases have been consolidated, interim lead co-counsel have been appointed, the Antitrust Division has confirmed its own investigation, and the court has set a preliminary case schedule.
Recall that the original plaintiffs accused the manufacturers of coordinating not just the pricing but also the production lead times for their aluminum and tantalum electrolytic capacitors. Three more lawsuits followed, which led Judge James Donato to consolidate all five actions into In re Capacitors Antitrust Litigation, No. 14 Civ. 3264 (N.D. Cal.). Since he issued that order on October 2, several more cases have been filed and are in the process of being designated as related to the consolidated action. Some of these plaintiffs allege that they purchased the capacitors directly from the defendants; other plaintiffs bought the capacitors from distributors (the “first-level indirect purchaser plaintiffs”), or bought products containing those capacitors from distributors (the “indirect product purchaser plaintiffs”).
The parties and the court have also recently resolved questions as to the appropriate forum and interim lead counsel for the litigation. First, after direct purchaser plaintiff eIQ Energy, Inc. filed suit in the District of New Jersey, two of the California plaintiffs initiated proceedings before the Judicial Panel on Multidistrict Litigation (the “JPML”) and moved to transfer all capacitor cartel actions to the Northern District of California. Before the JPML ruled, however, eIQ Energy agreed to litigate in California as part of a consolidated action. It then voluntarily dismissed its New Jersey action without prejudice and refiled in the Northern District. Second, Judge Donato appointed the Joseph Saveri Law Firm as interim lead class counsel for the direct purchaser plaintiffs. With respect to the indirect purchaser plaintiffs — both the first-level purchasers and the indirect product purchasers — Judge Donato selected Cotchett, Pitre & McCarthy to serve as interim lead counsel.
Perhaps most notably, the DOJ has intervened in the consolidated action, confirming the widely held belief that the Antitrust Division is investigating the capacitors industry. As we noted in our July 30 post, the media have long reported that the DOJ is proceeding in conjunction with China’s National Development and Reform Commission, which enforces Chinese antitrust law. We discussed the benefits that accrue to cooperating whistleblower defendants under the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (“ACPERA”), chief among them prosecutorial leniency and reduced civil liability. At the time, observers believed that one manufacturer had applied to DOJ agencies for leniency, thereby blowing the whistle on its co-conspirators. Some of the plaintiffs’ filings name Panasonic as the likely cooperator in an “amnesty plus” capacity, which (if true) means that Panasonic voluntarily reported the capacitor cartel while under investigation for unrelated wrongdoing.
Not surprisingly, the DOJ’s recent filing does not disclose whether it is working with a cooperator or whether any of the capacitor manufacturers have applied for leniency. It does confirm, however, that a federal grand jury is investigating Sherman Act violations in the industry. The DOJ moved to intervene in the instant civil action for the purpose of seeking a stay of discovery until November 1, 2015. Judge Donato allowed the DOJ to intervene, but granted a stay of discovery only until April 15, 2015. He also stated that the defendants will eventually have to provide the plaintiffs with all documents previously produced to the grand jury.
Finally, Judge Donato has set a preliminary case schedule. Consolidated complaints from both the direct purchasers and the indirect purchasers will be filed by November 14, 2014. Motions to dismiss will be filed on December 19, with the opposition due on January 16, 2015 and replies due on February 6, 2015. Judge Donato will hold a hearing on any motions to dismiss on March 4, 2015 at 9:30 a.m. He also set a “target timeframe” for subsequent litigation in this matter. Issues relating to the Foreign Trade Antitrust Improvements Act are targeted for resolution in the third quarter of 2015, with class certification to follow in the fourth quarter. Judge Donato tentatively set first quarter 2016 as the target timeframe for summary judgment.