California v. Infineon Technologies AG

531 F. Supp. 2d 1124, 35 A.L.R. 6th 627, 2007 U.S. Dist. LEXIS 67475, 2007 WL 2523363
CourtDistrict Court, N.D. California
DecidedAugust 31, 2007
DocketC 06-4333 PJH
StatusPublished
Cited by23 cases

This text of 531 F. Supp. 2d 1124 (California v. Infineon Technologies AG) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
California v. Infineon Technologies AG, 531 F. Supp. 2d 1124, 35 A.L.R. 6th 627, 2007 U.S. Dist. LEXIS 67475, 2007 WL 2523363 (N.D. Cal. 2007).

Opinion

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO DISMISS

PHYLLIS J. HAMILTON, District Judge.

Defendants’ motion to dismiss plaintiffs’ complaint came on for hearing before this *1129 court on February 7, 2007. Plaintiffs, forty individual states acting through their Attorneys General, and certain named government entities (collectively “plaintiffs” or “plaintiff States”), appeared through their respective counsel. 1 Defendants appeared through their counsel, Julian Brew, Ronald C. Redcay, Joel S. Sanders, Peter Nemer-ovski, Kenneth R. O’Rourke, Harrison J. Frahn, Gary L. Hailing, and Robert B. Pringle. Having read all the papers submitted and carefully considered the relevant legal authority, the court hereby GRANTS defendants’ motion to dismiss in part and DENIES the motion to dismiss in part, for the reasons stated at the hearing, and as follows.

BACKGROUND

The instant case is closely related to a separate antitrust MDL action that is currently pending before the court, In re Dynamic Random Access Memory Antitrust Litigation, M 02-1486 PJH. Both actions generally allege a horizontal price-fixing conspiracy in the U.S. market for dynamic random access memory (“DRAM”), carried out by numerous manufacturer defendants. Whereas the MDL case, however, is comprised of numerous private actions brought by individuals and entities seeking relief against defendants, the present action has been brought by forty individual plaintiff States, acting through their respective Attorneys General, as well as certain government entities located within the forty states.

A. Background Allegations

DRAM is a semiconductor high-speed memory chip that is used to store electronic data in a wide variety of electronic products, including personal computers and servers. See First Amended Complaint (“FAC”), ¶ 9. DRAM is sold worldwide, with the United States DRAM market accounting for a significant share of global DRAM sales — more than $5 billion annually. See id. at ¶ 31.

The complaint alleges that over a four year period beginning in 1998, the defendants 2 — various manufacturers of DRAM who collectively control the majority of U.S. DRAM sales — conspired together to unlawfully fix, raise, and maintain the price for DRAM in the U.S. market. See id. at ¶ 34. Defendants’ conspiracy was allegedly effectuated through coordinated participation in meetings, frequent price communications, and coordinated supply reductions. See, e.g., id. at ¶¶ 35-36, 39, 42, 60, 69, 79. Plaintiffs allege that, as a result of defendants’ unlawful activity, DRAM prices were artificially inflated during the conspiracy period, forcing consumers and businesses who purchased DRAM during the period to pay more for *1130 DRAM than they would have in a free and competitive market. See id. at ¶¶ 89-91.

Plaintiffs define the victims of defendants’ illegal price fixing cartel to include: (1) the plaintiff States themselves, since they were and are “purchasers of electronic products;” and (2) the “end user consumers” in the various plaintiff States, since they, too, are purchasers of electronic products. See FAC at ¶ 4. To that end, plaintiff States, acting through their various Attorneys General, proceed against defendants in various representative capacities — i.e., “on their ovm behalf, and on behalf of state agencies, political subdivisions, natural persons and/or businesses as warranted by federal and state laws.” Id. In addition, certain state agencies and/or political subdivisions located within the plaintiff States also proceed as named plaintiffs, and are pursuing the instant action in a representative capacity on behalf of similarly situated entities. See generally FAC (named plaintiffs include, for example, City and County of San Francisco, County of Santa Clara, and the Los Ange-les Unified School District “on behalf of all other political subdivisions similarly situated”); see also id. at ¶ 12.

All plaintiffs seek to recover “as damages, restitution, and/or disgorgement of the illegal overcharges that consumers paid as a result of the DRAM manufacturers’ price fixing.” See id.

B. Plaintiffs’ Claims

The instant complaint sweeps broadly. Although it is presented as stating only three “claims for relief,” those claims for relief are further divided into several “counts,” which collectively state numerous federal and state law claims alleged by varying combinations of different plaintiff groups. See generally FAC. Regardless whether styled as a claim for relief or a specific count, each of plaintiffs’ grounds for relief is based on the allegations that defendants engaged in an unlawful conspiracy to restrain trade in the DRAM market:

1. First Claim for Relief (Sherman Act)

Plaintiffs’ first claim for relief alleges that defendants violated section 1 of the Sherman Act, and is further broken down into three separate counts. See FAC at ¶¶ 98-113. Count one alleges a claim by all forty plaintiff States against all defendants, and seeks injunctive relief against them to prevent and restrain the antitrust violations alleged by plaintiffs. Plaintiffs further allege that included among all plaintiff States are both direct and indirect purchasers of DRAM. See id. at ¶¶ 101(c), 102.

Count two alleges a claim for damages under section 1 of the Sherman Act, brought by only seven plaintiff States. See FAC at ¶¶ 105-108. These seven plaintiff States allege that they are entitled to damages against defendants as direct purchasers of DRAM, by virtue of certain assignment clauses contained in contracts that were entered into between the seven plaintiff States and certain Original Equipment Manufacturers (“OEM”). Id.

Count three alleges a claim for damages under section 1 of the Sherman Act, brought by twenty plaintiff States. See id. at ¶ 111. As do the plaintiff States who proceed pursuant to count two, these twenty plaintiff States allege that they, too, are entitled to damages as direct purchasers of DRAM from defendants. They do not, however, rely on the same grounds for claiming direct purchaser status. Rather, these twenty plaintiff States at issue allege that they can recover as classic direct purchasers, because their state agencies and/or political subdivisions purchased DRAM directly from defendant Micron, *1131 through one of Micron’s company divisions, Crucial Technology. Id. at ¶¶ 110-12.

2. Second Claim for Relief (Cartwright Act)

Plaintiffs’ second claim for relief alleges defendants’ violation of California’s state antitrust statute, the Cartwright Act.

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Bluebook (online)
531 F. Supp. 2d 1124, 35 A.L.R. 6th 627, 2007 U.S. Dist. LEXIS 67475, 2007 WL 2523363, Counsel Stack Legal Research, https://law.counselstack.com/opinion/california-v-infineon-technologies-ag-cand-2007.