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From Antitrust Law Daily, June 7, 2013

Indirect Purchasers’ Claims Proceed in Automotive Wire Harness Price Fixing Case

By William Zale, J.D.

Automotive wire harness indirect purchasers—automobile dealers and end payors—have standing to pursue federal antitrust claims of a price fixing conspiracy by manufacturers and sellers based on guilty pleas that suggested a broad, industry-wide conspiracy, the federal district court in Detroit has ruled (In re Automotive Parts Antitrust Litigation (Wire Harness Cases), June 6, 2013, Battani, M.). The court also considered and dismissed in part the indirect purchasers’ claims under state antitrust and consumer protection laws. In separate opinions, the court considered motions to dismiss by individual defendants.

The indirect purchaser plaintiffs (IPPs) brought class actions based on an alleged conspiracy to rig bids, fix prices, and allocate the market for automotive wire harness systems (WHS) and related products. The defendants are manufacturers or sellers of wire harness products that are manufactured or sold in the United States. WHS are the “central nervous systems” of automotive vehicles and consist of wires or cables and data circuits that run throughout the vehicles.

According to the end-payor plaintiffs (EPPs), wire harness systems include automotive electrical wiring, lead wire assemblies, cable bond, automotive wiring connectors, automotive wiring terminals, electronic control units, fuse boxes, relay boxes, junction blocks, power distributors, and speed sensor wire assemblies. The automobile dealer plaintiffs (ADPs) include two additional products in their definition of wire harness products: automotive wire harnesses themselves and high voltage wiring.

Federal antitrust claims. The court rejected the defendants’ challenge to the sufficiency of the indirect purchasers’ federal antitrust allegations, noting the guilty pleas demonstrated that an express agreement existed to fix prices and allocate customers in a market with conditions ripe for conspiratorial conduct. The factual allegations created a reasonable expectation that discovery would reveal evidence of illegal agreement beyond those parties that had pleaded guilty, according to the court.

The indirect purchasers asserted an injury-in-fact for purposes of constitutional standing by alleging that they were induced to pay unlawfully inflated prices and that any costs attributable to wire harness systems can be traced through the chain of distribution to the named plaintiffs and members of the classes, the court determined.

State law claims. The court denied the defendants’ motion to dismiss on the ground that the IPPs lacked to standing to pursue claims under the laws of states in which no named IPPs reside. The better path was to defer the issue until the class certification stage, according to the court.

The ADPs sought relief under the laws of 30 states and the District of Columbia, without distinguishing between antitrust and consumer protection statutes. The EPPs brought antitrust claims under the laws of twenty-three states and the District of Columbia. The EPPs brought state consumer protection claims under the law of eleven states and the District of Columbia.

The ADPs’ Illinois antitrust claim was dismissed because Illinois does not allow an indirect purchaser plaintiff to maintain an antitrust claim as a class action. The court dismissed without opposition the ADPs’ Massachusetts and Missouri antitrust claims and the EPPs’ Massachusetts antitrust claims.

In 2006, the Utah legislature amended that state's antitrust laws to provide that actions “may be brought under this section regardless of whether the plaintiff dealt directly or indirectly with the defendant.” Utah Code Ann. §76-10-918. The IPPs’ antitrust claim was limited to price fixing that occurred after the 2006 amendment, the court determined. Under a New Hampshire indirect purchaser statute, N.H. Rev. Stat. Ann. § 356:11, the IPPs cannot seek recovery under the New Hampshire statute for any conduct that occurred prior to January 1, 2008. The court held that indirect purchaser statutes in Hawaii and Nebraska in 2002 did not require the application of time limits to claims under the laws of those states.

The parties agreed that the laws of Mississippi, Nevada, New York, North Carolina, South Dakota, Tennessee, and West Virginia, and the District of Columbia require a plaintiff to allege a nexus between the defendant’s conduct and intrastate commerce. The court denied the motion to dismiss on this ground noting that the IPPs alleged that WHS were transported into these states and purchased by IPPs.

The defendants contended that the relabeling of antitrust price-fixing claims as state consumer protection claims rendered under the laws of several states subject to dismissal. The court narrowed its discussion to the law of those states’ laws under which the IPPs actually pursued the claims and held that the ADPs could proceed with price fixing under the laws of Arkansas and the IPPs could proceed with claims under New Mexico law and Rhode Island law.

The ADPs indicated that they are not seeing relief under the consumer protection laws of Arizona, Kansas, Michigan, New Mexico, North Dakota, North Carolina, Rhode Island, South Dakota, or the District of Columbia. The court dismissed the ADPs’ claims under those states’ consumer protection laws and also dismissed the ADPs’ consumer protection claims under the laws of Iowa, Massachusetts, Mississippi, Missouri, Montana, New Hampshire, Nebraska, New York, North Carolina, and Vermont.

The case is Master File No. 12-md-02311.

Attorneys: Adam T. Schnatz (The Miller Law Firm) for indirect purchaser plaintiffs. Craig D. Bachman (Lane Powell PC) for Furukawa Electric Co., Ltd. Andrew Marovitz (Mayer Brown LLP) for Lear Corp. Andrea M. Price (Barrasso Usdin Kupperman Freeman & Sarer) Sumitomo Electric Industries, Ltd. John V. Biernacki (Jones Day) for Yazaki Corp. Brian C. Smith (Wilmer Cutler Pickering Hale and Door LLP) for Denso Corp. David F. DuMouchel (Butzel Long) for Tokai Rika Co., Ltd. Randall E. Kahnke (Faegre Baker Daniels) for TRAM, Inc. James L. Cooper (Arnold & Porter LLP) for Fujikura Ltd. Jeffrey G. Heuer (Jaffe, Raitt) for Kyungshin-Lear Sales and Engineering, LLC. Donald M. Barnes (Porter Wright Morris & Arthur LLP) for G.S. Electech, Inc. David A. Ettinger (Honigman, Miller, Schwartz and Cohn LLP) for NSK, Ltd. A. Paul Victor (Winston & Strawn LLP) for NTN Corp. Alison R. Welcher (Sherman & Sterling LLP) for Schaeffler AG. Michael L. Brown (Alston & Bird LLP) Autoliv, Inc. Robert J. Wierenga (Schiff Hardin LLP) for TK Holdings, Inc. Benjamin W. Jeffers (Dykema Gossett) for AB SKF. Jennifer M. Stewart (Winson & Strawn LLP) for Nippon Seiki Co., Ltd. Danielle Garten (Arnold & Porter LLP) for McGuire Bearing Co. Companies: Furukawa Electric Co., Ltd.

Companies: Lear Corp.; Sumitomo Electric Industries, Ltd.; Denso Corp.; Tokai Rika Co., Ltd.; TRAM, Inc.; Fujikura Ltd.; Kyungshin-Lear Sales and Engineering, LLC.; G.S. Electech, Inc.; NSK, Ltd.; NTN Corp.; Schaeffler AG.; Autoliv, Inc.; TK Holdings, Inc.; AB SKF.; Nippon Seiki Co., Ltd.; McGuire Bearing Co.

MainStory: TopStory Antitrust StateUnfairTradePractices MichiganNews

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