Distribution, Competition, and Antitrust / IP Law

Northern District of California Antitrust Roundup

The Roundup

There have been several notable developments in the past few days in antitrust cases in the Northern District of California. I’ll summarize them briefly here.

In In re High-Tech Employee Antitrust Litigation, Case No. 11-CV-02509-LHK, 2012 U.S. Dist. LEXIS 55302 (N.D. Cal. Apr. 18, 2012) (Koh, J.), the court granted in part and denied in part a motion to dismiss in the private case alleging a conspiracy to fix and suppress employee compensation and to restrict employee mobility among high-tech companies. According to plaintiffs, the conspiracy consisted of an interconnected web of express bilateral agreements, each with the active involvement and participation of a company under the control of the late Steve Jobs and/or a company whose board shared at least one member of Apple’s board of directors. From 2005 to 2007, each pair of defendants in a bilateral agreement allegedly entered into nearly identical “Do Not Cold Call” agreements, whereby each company allegedly placed the names of the other company’s employees on a “Do Not Cold Call” list and instructed recruiters not to cold call the employees of the other company.

In its order, the court rejected Defendants’ argument that the plaintiffs had not pled the “who, what, where and when” of an alleged overarching conspiracy. “Plaintiffs here have alleged much more than mere parallel conduct, despite not having any discovery before filing . . . . Plaintiffs’ [complaint] details the actors, effect, victims, location, and timing of the six bilateral agreements between Defendants.” The court also determined that the plaintiffs’ conspiracy theory was plausible in light of basic economic principles, despite the fact that many “pairings” of the companies allegedly involved did not feature Do Not Cold Call arrangements. In the court’s view, “it is plausible to infer that even a single bilateral agreement would have the ripple effect of depressing the mobility and compensation of employees of companies that are not direct parties to the agreement. Plaintiffs’ allegations of six parallel bilateral agreements render the inference of an anticompetitive ripple effect that much more plausible.” The court also determined that plaintiffs had alleged antitrust injury.

The court did dismiss the plaintiff’s California Unfair Competition Law (Bus. and Prof. Code § 17200) claim because higher compensation (in absence of the alleged conspiracy) did not support restitution or disgorgement relief under Section 17200.

In In re Optical Disk Drive Antitrust Litigation, Case No. 3:10-md-2143 RS, 2012 U.S. Dist. LEXIS 55300 (N.D. Cal. Apr. 19, 2012) (Seeborg, J.), the court found that an amended conspiracy complaint alleging a “substantially narrower, and more plausible” conspiracy was adequately pled and survived a motion to dismiss. The amended complaint makes clear that the defendants allegedly fixed the prices only of Optical Disc Drives (“ODDs”), and not also products that contain ODDs. (In a prior order, the court had found that allegations that the defendants fixed prices of ODD-containing products was implausible.) The court also determined, among other things, that purchasers of “external” ODDs, consisting of little more than an internal ODD in a case, are direct purchasers of ODDs and within the Illinois Brick rule.

Finally, in the LCD cases, In re TFT-LCD (Flat Panel) Antitrust Litigation, Case No. 3:07-MD-1827 SI (Apr. 20, 2012) (Illston, J.)., the court split the price-fixing litigation into two stages, following the suggestion of direct purchasers’ counsel. The first stage will focus on whether defendants conspired to raise prices and overcharged direct purchasers; the second stage will be devoted to indirect purchaser claims. Both the direct and indirect purchasers will be able to present conspiracy evidence in the first phase; only the directs will be able to present damages evidence in the first phase.

(See here for prior LCD coverage.)

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About Howard Ullman

Antitrust, competition, and IP law enthusiast.

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