Case 3:14-cv-03264-JD Document 1546 Filed 03/07/17 Page 1 of 5
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`IN RE CAPACITORS ANTITRUST
`LITIGATION.
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`Master File No. 14-cv-03264-JD
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`ORDER RE NISSEI ELECTRIC CO.,
`LTD.’S MOTION TO DISMISS FOR
`LACK OF PERSONAL JURISDICTION
`AND RELATED MOTION TO STRIKE
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`Re: Dkt. Nos. 963, 1213
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`After taking under submission the motion to dismiss for lack of personal jurisdiction by
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`defendant Nissei Electric Co., Ltd., the Court announced that it was denied at a recent status
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`conference. See Dkt. No. 1534. This order details the grounds for the denial.
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`DISCUSSION
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`I.
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`PLAINTIFFS’ MOTION TO STRIKE (DKT. NO. 1213)
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`As an initial matter, the direct purchaser plaintiffs (“DPPs”) and indirect purchaser
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`plaintiffs (“IPPs”) ask that the Court strike the new arguments raised and evidence submitted by
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`Nissei on reply, which relate to successor liability under Japanese law. The request is granted.
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`Raising new arguments in a reply brief is a classic form of sandbagging that is barred
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`under Paragraph 15 of the Court’s Standing Order for Civil Cases. Nissei knew that the successor
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`liability issue would be an issue in the Court’s resolution of the jurisdictional motion. Nissei’s
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`brief opens with the representation that on September 15, 2010, it “entered into an agreement to
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`purchase certain assets of a company also called Nissei Electric Co., Ltd., which at the time was
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`involved in bankruptcy proceedings . . . (‘Dissolved Nissei’).” Dkt. No. 963 at 4. Nissei says the
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`Case 3:14-cv-03264-JD Document 1546 Filed 03/07/17 Page 2 of 5
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`two companies have different names and are different legal entities.1 The Court will refer to the
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`prior, acquired Nissei entity as “Dissolved Nissei.”
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`After stating these facts in the opening brief, Nissei forewent a substantive discussion of
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`successor liability in favor of a cursory footnote saying only that “[t]o the extent that plaintiffs rely
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`on the activities of Dissolved Nissei to support their claims -- either of substance or jurisdiction --
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`against Nissei, this is improper.” Dkt. No. 963 at 4 n.4. Nissei cited a decision from the Central
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`District of California for the proposition that the “general rule of successor liability, recognized in
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`all jurisdictions” is that a purchasing corporation does not assume the debts and liabilities of the
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`selling corporation, even when a corporation purchases all or most of the assets of another
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`corporation. Id. (quoting Me. State. Ret. Sys. v. Countrywide Fin. Corp., Case No. 2:10-CV-0302
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`MRP (MANx), 2011 WL 1765509, at *5 (C.D. Cal. Apr. 20, 2011)). But Nissei failed to
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`acknowledge that Maine State Retirement System expressly states that a choice-of-law analysis is
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`to be conducted on the successor liability question even if the court’s jurisdiction is based on
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`federal question (and which in that case led to the choice of Delaware law). See id. at *2-4. Nor
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`did Nissei say anything at all about a choice-of-law issue or the applicability of Japanese law
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`anywhere else in its opening brief. That Nissei chose to contend that Japanese law applies and
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`precludes successor liability in the reply brief is all the more surprising and improper because it
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`omitted any mention of those arguments in its discovery dispute letter that was filed after the filing
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`of its opening brief and before plaintiffs had filed their opposition. See Dkt. No. 1074.
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`Nissei’s Japanese law argument was improperly raised for the first time in reply. Dkt.
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`No. 1202. While Nissei criticizes plaintiffs for asking to strike the argument rather than asking for
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`permission to further reply to it, Dkt. No. 1214, plaintiffs were within their rights to ask for the
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`former. Nissei did not follow the Standing Order, and the Court will not permit this kind of
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`sandbagging. See Cal. Sportfishing Protection Alliance v. Pacific States Indus., Inc., Case No. 15-
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`1 Some of Nissei’s discussion is literally impossible to follow. In the reply brief, Nissei refers to
`the entities by their Japanese names in Japanese characters, and says that “[t]he fact that ニッセイ
`and 日精 share the same English translation is unremarkable, and actually quite pervasive.” Dkt.
`No. 1202 at 1 n.1. This is a meaningless statement to non-speakers of Japanese and of no value to
`the Court or opposing parties in addressing Nissei’s arguments.
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`Case 3:14-cv-03264-JD Document 1546 Filed 03/07/17 Page 3 of 5
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`cv-01482-JD, 2015 WL 5569073, at *2 (N.D. Cal. Sept. 22, 2015). The new reply arguments
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`about the applicability and content of Japanese law will not be considered.
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`II.
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`NISSEI’S MOTION TO DISMISS (DKT. NO. 963)
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`On the merits of Nissei’s motion, plaintiffs have done enough to defeat it at this stage.
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`Nissei’s motion to dismiss for lack of personal jurisdiction is brought under Federal Rule of Civil
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`Procedure 12(b)(2). Dkt. No. 963. The party asserting personal jurisdiction bears the burden of
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`proving its existence. Action Embroidery Corp. v. Atlantic Embroidery, Inc., 368 F.3d 1174, 1177
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`(9th Cir. 2004). A district court has discretion to decide the mode of resolving this kind of motion,
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`and where the court determines that it will receive only written materials, “these very limitations
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`dictate that a plaintiff must make only a prima facie showing of jurisdictional facts through the
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`submitted materials in order to avoid a defendant’s motion to dismiss.” Data Disc, Inc. v. Systems
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`Technology Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977); see also Schwarzenegger v. Fred
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`Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). All factual conflicts in the parties’
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`affidavits are to be resolved in favor of the party asserting jurisdiction, namely the plaintiffs.
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`Action Embroidery, 368 F.3d at 1177.
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`Nissei does not presently contend that plaintiffs cannot proceed on a successor liability
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`theory because they failed to plead it adequately. Compare Dkt. No. 1074 with Dkt. Nos. 963,
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`1202. Instead, as crystallized by the parties’ briefing on this motion, the pending dispute is
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`whether Nissei bears successor liability for “Dissolved Nissei” such that the Court can exercise
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`specific jurisdiction over Nissei. See Dkt. No. 1202. Plaintiffs’ main contention is that successor
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`liability exists here under the “mere continuation” exception under California law, because “(1) no
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`adequate consideration was given for the predecessor corporation’s assets and made available for
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`meeting the claims of its unsecured creditors; [and] (2) one or more persons were officers,
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`directors, or stockholder of both corporations.” Dkt. No. 1179-5 at 8 (quoting Ray v. Alad Corp.,
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`19 Cal. 3d 22, 29 (1977)). Under Ray, this is a disjunctive test, see 19 Cal. 3d at 29 (requiring
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`showing of “one or both”), although Nissei argues that the first, “inadequate consideration” prong
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`is not optional under the case law. Dkt. No. 1202 at 5-6 (citing cases).
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`Case 3:14-cv-03264-JD Document 1546 Filed 03/07/17 Page 4 of 5
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`In any event, plaintiffs have made an adequate prima facie showing on the first prong. See
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`Dkt. No. 1179-5 at 8-9. They argue, for example, that Nissei paid “nothing . . . for various
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`factories, offices, and land,” and that “[e]qually dubious are the low-ball estimates given to the
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`Hanamaki and Okaya factories and appurtenant properties.” Id. at 8 (citing Exh. 17 at
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`Nissei0000549_EN). The page they cite, Dkt. No. 1179-23 at ECF page no. 4, does in fact show
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`that a June 25, 2010 Letter of Intent included a number of real estate items such as “warehouse
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`site,” “factory,” “office,” and “storage” with an “asking price (JPY)” of “0.” Nissei suggests that
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`plaintiffs’ numbers are taken “primarily [from] a non-binding letter of intent,” and that a different
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`document, the “Asset Transfer Agreement,” in fact “establishes that Nissei paid 145,800,000 JPY
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`-- almost half the consideration paid -- for real property at the Hanamaki, Okaya, and Ichinohe
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`factories.” Dkt. No. 1202 at 6 (citing “NISSEI000057-NISSEI000060”). Nissei’s point is not
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`easy to follow because it cites those documents only by Bates numbers, without providing any
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`docket numbers that would help the Court find those pages. But even after chasing them down,
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`see Dkt. No. 1179-12 at ECF page nos. 18-21, the Court does not see how the items in that chart
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`(e.g., “1-18-4 Motodate, Hanamaki-shi, Iwate-ken,” listed as a “residence”) match up to the items
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`plaintiffs were pointing to in their brief; where Nissei got the 145,800,000 JPY number; or why
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`any of the numbers Nissei has put forward are not “low-ball estimates” or “inadequate
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`consideration.”
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`This dispute over the value of consideration paid for real estate is typical of the many,
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`intensely factual disagreements the parties are engaged in here, and the nature of those disputes
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`warrants denial of the motion. When the Court resolves a Rule 12(b)(2) motion on the papers, as
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`it has the discretion to do, it is not in a position to “‘weigh’ the affidavits in order to resolve
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`disputed issues,” and without further evidence, there is “no way to select one set of facts as more
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`credible than the other.” Data Disc, 557 F.2d at 1284-85. Although Nissei, citing that very case,
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`states “the Court must reject even otherwise plausible factual allegations if they are contradicted
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`by affidavit,” Dkt. No. 963 at 5 (citing Data Disc at 1284), that is simply wrong. What the circuit
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`said is the opposite, and it expressly disapproved any framework under which a defendant could
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`Case 3:14-cv-03264-JD Document 1546 Filed 03/07/17 Page 5 of 5
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`“obtain a dismissal simply by controverting the facts established by a plaintiff through his own
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`affidavits and supporting materials.” Data Disc, 557 F.2d at 1285.
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`The bar for avoiding dismissal in this context is much lower than Nissei believes it to be,
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`and plaintiffs have met it. In response to plaintiffs’ attempt to make a prima facie showing of
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`personal jurisdiction, Dkt. No. 1179-5, Nissei has not disputed anything other than the
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`applicability of successor liability here. See Dkt. No. 1202. For the reasons stated above,
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`plaintiffs have, on a prima facie basis, satisfied the applicable successor liability test under
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`California law under the “mere continuation” exception, and the Court consequently rules in
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`plaintiffs’ favor and denies Nissei’s motion to dismiss. This does not necessarily decide the
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`jurisdiction question once and for all. “[A]t any time when the plaintiff avoids a preliminary
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`motion to dismiss by making a prima facie showing of jurisdictional facts, he must still prove the
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`jurisdictional facts at trial [or at an evidentiary hearing] by a preponderance of the evidence.”
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`Data Disc, 557 F.2d at 1285 n.2. The Court reserves until a later time the decision on whether to
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`put plaintiffs to the test at trial or at a “plenary pretrial proceeding.” Id.
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`CONCLUSION
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`Plaintiffs’ motion to strike the Kitamura declaration and new arguments and evidence on
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`reply is granted. Dkt. No. 1213. Defendant Nissei’s motion to dismiss for lack of personal
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`jurisdiction is denied, without prejudice to renewal at a later time if warranted by the facts and the
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`law. Dkt. No. 963.
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`IT IS SO ORDERED.
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`Dated: March 7, 2017
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`JAMES DONATO
`United States District Judge
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