Man in violation of privacy law

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

From Antitrust Law Daily, November 5, 2014

Korean noodle manufacturers, distributors unable to toss price-fixing claims

By Greg Hammond, J.D.

A number of Korean noodle manufacturers and their American distributors were unable to dispose of direct and indirect purchasers’ claims that the companies engaged in a conspiracy to raise the prices of Korean noodles imported to the United States. The federal district court in San Francisco partially denied the companies’ motions to dismiss, finding that the purchasers sufficiently pleaded that a conspiracy to raise prices in Korea also related to the noodles imported to, and sold in, the United States (Fenerjian v. Nongshim Co., Ltd., November 4, 2014, Orrick, W.).

Background. In July 2012, the Korean Fair Trade Commission (KFTC) determined that four Korean companies—Nongshim Co., Ltd., Ottogi Co. Ltd., Samyang Foods Co. Ltd., and Korea Yakult Co. Ltd.—conspired to fix the prices of Korean noodles in Korea. Subsequently, in 2013, direct and indirect purchaser plaintiffs filed suit in the United States, alleging that the four Korean companies and their distributors in the United States—including Nongshim America, Inc., Ottogi America, Inc., Sam Yang (USA), Inc., and Paldo Co., Ltd.—conspired to fix the prices of Korean noodles sold in the United States. Direct and indirect purchasers alleged causes of action for: (1) price-fixing conspiracy in violation of the Sherman Act; (2) price-fixing conspiracy in violation of California’s Cartwright Act; (3) violations of various state antitrust and restraint of trade laws; and (4) violations of various state consumer protection laws.

The defendants moved to dismiss the direct and indirect purchasers’ claims on the grounds that: (1) the purchasers failed to plausibly plead a conspiracy to fix prices in the United States; (2) their claims are barred by the statute of limitations; (3) the court lacks subject matter jurisdiction over the purchasers’ claims pursuant to the Foreign Trade Antitrust Improvements Act (FTAIA); (4) the indirect purchaser plaintiffs (IPPs) lack standing to assert claims under state laws where they neither reside nor purchased the Korean noodles from; (5) the IPPs’ state-law consumer protection and unfair competition claims fail because the underlying price-fixing claims fail; and (6) the IPPs’ claim under New York’s Deceptive Acts Law fails because they failed to plead deceptive conduct.

Sherman Act claims. Preliminarily, the court noted that the conspiracy by the Korean defendants to fix prices in Korea is not actionable in the United States and is not the object of the purchasers’ causes of action. Instead, the question is whether the complaints adequately allege a conspiracy to fix prices of Korean noodles sold in the United States, and whether plaintiffs have pleaded that each defendant was a member of that conspiracy.

The court determined that the purchasers plausibly alleged a conspiracy to raise prices of Korean noodles sold in the United States, but failed to demonstrate that each of the Korean manufacturers and their U.S. distributors were involved in the conspiracy. Specifically, it found that the purchasers adequately alleged the participation of Nongshim Korea, Nongshim America, Ottogi Korea, Ottogi America, and Samyang Korea in the conspiracy. However, Sam Yang USA’s motion to dismiss was granted, because the purchasers failed to allege that Samyang Korea controlled or owned Sam Yang USA, which was required to demonstrate Sam Yang USA participated in the conspiracy to fix prices. In addition, Yakult Korea and Paldo Co., Ltd.’s motion to dismiss was granted, because the purchasers alleged that the prices of Yakult Korea’s noodles were only “expected” to increase in the United States, not that the prices actually increased. Consequently, the purchasers failed to plausibly allege that either Yakult Korea or Paldo Co., Ltd. participated in the alleged conspiracy to fix prices of Korean noodles sold in the United States.

Statute of limitations. The purchasers’ claims were not time barred by the applicable four-year statute of limitations, the court decided. Specifically, it was determined that the discovery rule and alleged fraudulent concealment tolled the statute of limitations until the KFTC’s announcement in July 2012. Contrary to the defendants’ arguments: there was no reason to believe that the public had access to any conspiratorial discussions; knowledge of price increases alone did not inform a potential plaintiff of antitrust violations; and Korean newspaper articles about the KFTC’s investigation were not sufficient reasons for a potential plaintiff to inquire into the existence of a conspiracy to raise prices in the United States.

FTAIA. The FTAIA did not apply to or bar the plaintiffs’ claims in this case. According to the court, the FTAIA limits the Sherman Act’s application to foreign commerce. However, conduct is brought back within the Sherman Act’s reach if it both: (1) sufficiently affects American commerce, and (2) has an effect of a kind that antitrust law considers harmful. Because the purchasers alleged that the Korean defendants manufactured Korean noodles in Korea, imported the noodles to the United States, and sold them to plaintiffs in the United States, the court determined that the facts were sufficient to establish that the conduct at issue relates to import commerce and is therefore outside the scope of the FTAIA.

Indirect purchaser plaintiffs’ claims. The court additionally found that: (1) the IPPs lacked standing to assert claims under the laws of states in which they did not reside or purchase products; (2) the IPPs’ state-law consumer protection and unfair competition claims against Sam Yang USA, Yakult Korea, and Paldo failed because the underlying price-fixing claims failed; and (3) the IPPs’ New York Deceptive Acts and Practices Act claims failed because their alleged harm was not caused by any purported misrepresentation made by the defendants, and there were no allegations that any of the IPPs actually saw the supposed misrepresentations made to the media about the reasons for Korean noodle price increases in the United States.

The case number is 13-cv-04115-WHO.

Attorneys: Alan R. Plutzik (Bramson Plutzik Mahler & Birkhaeuser, LLP) for Stephen Fenerjian. Anne Choi Goodwin (Squire Patton Boggs LLP) for Nongshim Co., Ltd. and Nongshim America, Inc. Joel Steven Sanders (Gibson, Dunn & Crutcher LLP) for Ottogi Co., Ltd. George Arnold Nicoud, III (Gibson, Dunn & Crutcher LLP) for Ottogi America, Inc. Elizabeth Dianne Mann (Mayer Brown LLP) for Samyang Foods Co., Ltd.

Companies: Nongshim Co., Ltd.; Nongshim America, Inc.; Ottogi Co., Ltd.; Ottogi America, Inc.; Samyang Foods Co., Ltd.; Sam Yang (USA), Inc.; Korea Yakult Co. Ltd.; Paldo Co., Ltd.

MainStory: TopStory Antitrust CaliforniaNews

Antitrust Law Daily

Introducing Wolters Kluwer Antitrust Law Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.


A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.