In re Industrial Diamonds Antitrust Litigation

167 F.R.D. 374, 1996 WL 380234
CourtDistrict Court, S.D. New York
DecidedJuly 3, 1996
DocketNo. MDL-948 (WCC)
StatusPublished
Cited by63 cases

This text of 167 F.R.D. 374 (In re Industrial Diamonds Antitrust Litigation) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Industrial Diamonds Antitrust Litigation, 167 F.R.D. 374, 1996 WL 380234 (S.D.N.Y. 1996).

Opinion

OPINION AND ORDER

CONNER, Senior District Judge.

This litigation presently consists of three individual lawsuits consolidated for all pretrial purposes in this court by the Judicial Panel on Multidistrict Litigation.1 The plain[377]*377tiffs in these actions are purchasers of industrial diamond products. They allege that beginning in November 1987, defendants violated section 1 of the Sherman Act, 15 U.S.C. § 1, by conspiring to fix, raise, stabilize and maintain the prices of industrial diamond products. Plaintiffs bring these actions under sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15, 26, seeking treble damages, costs, attorney’s fees and injunctive relief. Plaintiffs have made a motion, pursuant to Fed.R.Civ.P. 23(a) and 23(b)(3), for class certification. For the reasons set forth below, their motion is granted in part.

BACKGROUND

Defendants General Electric Co. (“GE”), De Beers Consolidated Mines, Ltd. and De Beers Centenary, A.G. (collectively, “De Beers”) mine or manufacture industrial grade diamonds, which are widely used for cutting, extruding, drilling, grinding and polishing hard materials and metals. De Beers sells both natural and synthetic industrial diamonds, while GE sells only synthetics. Synthetic industrial diamonds can be carbon-based or made from cubic boron nitride (CBN). Carbon-based industrial diamonds, whether natural or synthetic, are used for work with nonferrous materials, including tungsten carbide, glass, ceramics and cement. CBN products, which can be subjected to higher temperatures, are used for work with ferrous metals. Synthetic industrial diamonds are manufactured in two structures: polycrystalline and single crystals. Industrial diamonds range in size from powder to large crystals.

GE produces a wide range of industrial diamond products, which may be grouped into several product “families.” These families are: metal bonded saw diamonds used for sawing, drilling and grooving materials like concrete, stone, ceramic and glass; RVG or MBG diamond products, which are carbon-based diamond products used for grinding nonferrous materials like tungsten carbide and glass; CBN diamonds used for grinding ferrous materials; polycrystalline tool blanks, which are carbon-based diamonds that may be cut into various shapes for use as tools or dies in machining nonferrous materials or extruding wire; CBN tool blanks used for machining ferrous materials; and drilling products used in drilling oil and gas wells and in certain mining operations.

According to GE, it offered more than 8000 distinct industrial diamond products for sale during the proposed class period. See Affidavit of Stephen C. Francis, dated Dec. 14, 1994, at ¶ 3. GE established list prices for many of these products,2 but only a small percentage of customers paid the list price in any given transaction. See id., at ¶¶5-6. Instead, individual customers negotiated a variety of discounts, rebates, credits or special service arrangements with GE. See id., at ¶¶7-10. Furthermore, GE also designs and develops products specifically for particular customers. There are no list prices for those products; GE sets a price based on the cost of production and on negotiations with the purchaser.3 See id., at ¶ 5.

Plaintiffs allege that worldwide sales of industrial diamond products total at least $600,000,000 per year. The worldwide market is divided among De Beers (approximately 39%), GE (approximately 45%) and others (approximately 16%). Plaintiffs estimate that United States trade in industrial diamonds, including exports, totals at least $230,000,000 per year. Prices for industrial diamond products have, on average, declined during the proposed class period.

[378]*378Plaintiffs contend that GE and De Beers, in an effort to halt this decline, conspired to stabilize prices for industrial diamond products. According to the allegations in the complaints, which we accept as true in deciding this motion, De Beers and GE began exchanging price information in November 1987. In August 1990, GE asked De Beers to assist it in restricting supplies of diamond manufacturing equipment to Asian companies. In January 1991, GE discontinued plans to manufacture a certain type of high-grade diamond around the time that De Beers opened a facility to manufacture the same type of diamond. In early 1992, after exchanging price information, De Beers and GE almost simultaneously raised their list prices.4 Plaintiffs allege that as a result of defendants’ actions, plaintiffs have been injured by paying artificially high prices for industrial diamond products. Plaintiffs also assert that GE and De Beers fraudulently concealed the existence of the alleged conspiracy, thereby tolling the statute of limitations on plaintiffs’ claims.

Plaintiffs seek certification of a class consisting of:

all persons and entities located in the United States that purchased diamonds for industrial applications directly from one of the defendants, or a corporation or other person owned or controlled by one of the defendants, at any time during the period of November 1, 1987, through May 23, 1994 (excluding (i) any federal, state and local government purchaser, and (ii) any defendant or other manufacturer of industrial diamonds, and any parent, subsidiary or affiliate of any defendant or other manufacturer of industrial diamonds).

GE opposes the certification of a class, although it does not challenge the dates selected by plaintiffs for the proposed class period.

DISCUSSION

Plaintiffs bear the burden of establishing that they have satisfied the requirements for class certification, which are set forth in Fed.R.Civ.P. 23. See In re Alcoholic Beverages Litigation, 95 F.R.D. 321, 324 (E.D.N.Y.1982). The court must conduct a rigorous inquiry before granting class certification in order to ensure that the requirements of Rule 23 are met. See General Telephone Co. v. Falcon, 457 U.S. 147, 161, 102 S.Ct. 2364, 2372-73, 72 L.Ed.2d 740 (1982). In evaluating a motion for class certification, however, the court does not have the authority to conduct a preliminary inquiry into the merits of the case, and hence the substantive allegations contained in the complaint are accepted as true. See Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177-78, 94 S.Ct. 2140, 2152-53, 40 L.Ed.2d 732 (1974); Shelter Realty Corp. v. Allied Maintenance Corp., 574 F.2d 656, 661 n. 15 (2d Cir.1978). Furthermore, because of the important role that class actions play in the private enforcement of the antitrust statutes, courts resolve doubts about whether a class should be created in favor of certification. See In re Potash Antitrust Litigation, 159 F.R.D. 682, 688-89 (D.Minn.1995); In re Infant Formula Antitrust Litigation, 1992 WL 503465, at *3 (N.D.Fla. Jan. 13, 1992); Cumberland Farms, Inc. v.

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Bluebook (online)
167 F.R.D. 374, 1996 WL 380234, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-industrial-diamonds-antitrust-litigation-nysd-1996.