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From Antitrust Law Daily, January 20, 2017

Ramen noodle purchasers granted class certification for price fixing claims

By E. Darius Sturmer, J.D.

Proposed classes of Korean ramen noodle purchasers alleging a price fixing conspiracy among manufacturers and distributors were entitled to certification of separate direct and indirect purchaser classes for purposes of their federal and state antitrust claims, the federal district court in San Francisco has ruled. The purchasers satisfied each of the requirements for certification enumerated in Federal Rule of Civil Procedure 23(a) and (b). The court rejected the defendants’ arguments that the econometric models used by the plaintiffs’ experts were inherently unreliable and inadmissible, and thus could not be used to prove injury on a classwide basis, along with contentions that the plaintiffs otherwise failed to show ascertainability, typicality, and predominance of common questions (In re Korean Ramen Antitrust Litigation, January 19, 2017, Orrick, W.).

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, alleged direct purchasers (consisting of food retailers and distributors) and indirect purchasers filed suit in the United States, alleging that the four companies and their distributors in the United States conspired to fix the prices of Korean noodles sold in the United States. The plaintiffs alleged that the manufacturers and distributors engaged in a price fixing conspiracy in violation of the Sherman Act and California’s Cartwright Act, and violated various state antitrust and consumer protection laws.

Expert opinions. The opinions of the plaintiffs’ economics experts were sufficiently reliable to support certification by a preponderance of the evidence and were admissible, the court determined. One expert’s failure to consider discounts and incentives offered to direct purchasers did not amount to a material omission that would undermine the reliability of his regression analysis. The defendants’ criticisms as to the expert’s cost inputs—and the role they played in setting his but-for price—rested primarily on disputes of fact and the reasonableness of assumptions made by the experts on both sides, and did not warrant exclusion under Daubert, in the court’s view. Likewise, the conclusions to be drawn from the experts’ regression models and correlation analyses would ultimately come down to which experts input the more plausible facts and used the right assumptions to determine costs.

Additional assertions that an expert for the indirect purchaser plaintiffs failed to account for significant variations in sales prices to differently situated members of the proposed class and failed to offer any methodology to determine pass through rates on a classwide basis were unavailing, the court found.

Typicality. An argument that the direct purchaser plaintiffs were inadequate to represent the class because they were differently situated geographically and structurally was rejected. That these plaintiffs paid different prices for their Korean ramen, bought in different quantities, and therefore suffered different damages, did not create conflicts between class members that precluded a finding of typicality, the court said. A similar contention with respect to the indirect purchasers was also rejected. While the defendants identified many individual types of consumers and showed that they bought noodles from different channels, they "fail[ed] to show how those differences separated them from each other with respect to the overcharge claim at issue," the court stated.

The case is No. 13-cv-04115-WHO.

Attorneys: Alan R. Plutzik (Bramson Plutzik Mahler & Birkhaeuser, LLP) and Gregory Bradley Linkh (Glancy Prongay & Murray LLP) for Rockman Co. [USA], Inc., M.T. Trading Corp. and The Plaza Co. Edward Ghiyun Kim (Squire Patton Boggs [US] LLP) for Nong Shim Co., Ltd. and Nongshim America, Inc. Joel Steven Sanders (Gibson, Dunn & Crutcher LLP) for Ottogi Co., Ltd.

Companies: Rockman Co. [USA], Inc.; M.T. Trading Corp.; The Plaza Co.; Nong Shim Co., Ltd.; Nongshim America, Inc.; Ottogi Co., Ltd.

MainStory: TopStory Antitrust CaliforniaNews

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