Antitrust and Unfair Competition Law

Northern District of California Grants Motion to Certify Class in In re Capacitors Antitrust Litig. (No. III), 2018 WL 5980139 (N.D. Cal. 11/14/2018)

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Robert E. Connolly
Law Office of Robert E. Connolly

In the capacitor private class action litigation, U.S. District Judge James Donato agreed to certify a class of plaintiffs led by four distribution companies that purchased capacitors from mostly Asia-based electronics companies. In re Capacitors Antitrust Litigation (No. III), ase No. 17-md-02801-JD, 2018 WL 5980139 (N.D. Cal. Nov. 14, 2018). Capacitors are found in every device that runs on electricity. A complex device such as a cell phone typically has hundreds of capacitors. This civil litigation followed the Antitrust Division’s capacitor grand jury which to date has resulted in eight corporate guilty pleas for fixing the price of electrolytic capacitors sold in the United States. There are several types of capacitors. The Direct Purchaser Plaintiffs (DPPs) alleged a single conspiracy among the defendant electrolytic capacitor manufacturers and film capacitor manufacturers.

Class certification requires the class meet four requirements under Federal Rule of Civil Procedure 23: “sufficiently numerous parties, common questions of law or fact, typicality of claims or defenses and adequacy of representation.” *2. One of the provisions of Rule 23(b) must also be met.Id. DPPs sought certification under Rule 23(b)(3): “questions of law or fact common to class members predominate over any questions affecting only individual members” and a class action is “superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed R. Civ. P 23(b)(3). Under the recent Supreme Court class certification cases of Comcast Corp. v. Behrend, 569 U.S. 27 (2013) and Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), the Court’s evaluation of plaintiffs’ ability to meet these standards must be “rigorous.”

Plaintiffs’ Motion to Certify the Class

The criteria at issue in the motion before the court was defendants’ challenge to predominance. For class certification, Judge Donato noted that the DPPs did not need to prove the fact of a conspiracy to obtain class certification, but only that the issue is common to the class and “is capable of class wide resolution in one stroke.” 2018 WLat *5 (citing Wal-Mart, 564 U.S. at 350). The Court found that the record established that the existence of a conspiiracy to fix prices was amenable to class wide proof, relying on the guilty pleas already entered. Id. (“To a considerable degree the fact of a conspiracy to fix process has already been established by the criminal pleas.”) The Court also cited a core of incriminating emails and other evidence submitted by the DPPs indicating frequent meetings, exchange of prices among the defendants and other incriminating evidence. Id.

The next question, and the main area of battle between the litigants, was whether plaintiffs could prove antitrust injury/impact through class wide proof. The Court noted that the plaintiffs were required to show that the fact of injury was capable of class wide proof. But the plaintiffs were not required to show that the amount of injury was capable of class wide proof stating, “it is well established that damage calculations alone cannot defeat certification.” Id. at *3 (citing Yokoyama v. Midland Nat’l Life Ins. Co., 594 F. 3d 1087, 1094 (9th Cir. 2010)). The Court found that the plaintiffs established class wide proof of injury though two experts’ witnesses: Drs. James T. McClave and J. Douglas Zona. Dr. McClave’s study was most relevant. While the defendants disputed Dr. McClave’s conclusions, Judge Donato found they did not identify any methodological flaws sufficiently grave to bar admission of his work. The Court stated that the defendants’ objections to the studies done, particularly by Dr. James T. McClave, “may be grist for good cross-examination at trial,” but that the question was whether Dr. McClave practiced “junk science.” Id. at *6. On this score the Court found that: “The materials presented to the Court show that his work is sound and reliable, and consistent with established econometric methods. Id. The Court also noted “the prevailing view, which the Court agrees with, is that ‘price fixing affects all market participants, creating an inference of class-wide impact even when prices are individually negotiated.”’ Id. *7 (citing, In re Urethane Antitrust Litigation, 768 F. 3d 1245,12564 (10th Cir. 2014)). Judge Donato noted that there are a number of procedural tools to deal with individualized damages such as appointment a magistrate or special master.

The last issue the Court dealt with was whether it was proper to include purchasers of both electrolytic capacitors and film capacitors in a single class. The DPP’s alleged a single capacitor conspiracy including both electrolytic and film capacitors. The Court held that there was sufficient evidence to find that the question of whether there was a single conspiracy was subject to common question of law and fact because there was evidence that both types of capacitors were discussed at some meetings and some personnel of some defendants attended both types of meetings. “These are sufficient for present purposes.” Id. at *10. The Court did not address the specific arguments made by the defendants as to why film customers should be excluded from the class. All of the guilty pleas in the Antitrust Division’s capacitor investigations were specifically for fixing the price of electrolytic capacitors.” In fact, but not noted by Judge Donato, the Antitrust Division conducted two separate grand juries and shut down its investigation of film capacitors without taking any action. (The “film only” defendants have appealed on this issue.)

Based on the above, the Court found that a class action was clearly superior to individual proceedings, especially on the questions of conspiracy, impact and fact of damages. The Court noted that “any remaining individualized questions on the calculation and distribution of damages can be managed.” Id.

Defendants’ Daubert Motion to Exclude Expert Testimony

In discussing the class certification issue the Court already addressed the motion to exclude the expert testimony since the issues overlapped. Before considering the expert testimony as to whether there were common questions of fact regarding injury or impact, the Court already found that the proffered expert testimony was not “junk science.” The Court, therefore, denied the Daubert motions, except noting that Dr. Zona could not testify about his conclusion “that defendants engaged in the alleged conspiracy.”*11.

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