Case 3:14-cv-03264-JD Document 927 Filed 10/14/15 Page 1 of 9
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`ALLISON A. DAVIS (CA State Bar No. 139203)
`SANJAY M. NANGIA (CA State Bar No. 264986)
`DAVIS WRIGHT TREMAINE LLP
`505 Montgomery Street, Suite 800
`San Francisco, California 94111
`Telephone:
`(415) 276-6580
`Facsimile:
`(415) 276-6599
`Email:
`allisondavis@dwt.com; sanjaynangia@dwt.com
`
`NICK S. VERWOLF (Pro Hac Vice)
`DAVIS WRIGHT TREMAINE LLP
`777 108th Avenue NE
`Suite 2300
`Bellevue, WA 98004-5149
`Telephone:
`(425) 646-6100
`Facsimile:
`(425) 646-6199
`Email:
`nickverwolf@dwt.com
`
`Attorneys for Defendants Shizuki Electric Co., Inc.
`and American Shizuki Corporation
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`
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`SAN FRANCISCO DIVISION
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`Case No. 3:14-cv-03264-JD
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`DEFENDANT SHIZUKI ELECTRIC CO.,
`INC.’S AND AMERICAN SHIZUKI
`CORPORATION’S MOTION TO
`DISMISS THE DIRECT PURCHASER
`PLAINTIFFS’ AND FLEXTRONICS’
`SECOND AMENDED CONSOLIDATED
`COMPLAINT
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`Date: November 18, 2015
`Time: 10:00 a.m.
`Judge: Hon. James Donato
`Location: Courtroom 11
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`
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`IN RE CAPACITORS ANTITRUST
`LITIGATION
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`THIS DOCUMENT RELATES TO:
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`ALL DIRECT PURCHASER CLASS
`ACTIONS AND FLEXTRONICS
`INTERNATIONAL USA, INC.’S CLAIMS
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`DEFENDANTS SHIZUKI ELECTRIC’S AND ASC’S MOTION TO DISMISS
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`Case 3:14-cv-03264-JD Document 927 Filed 10/14/15 Page 2 of 9
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`NOTICE OF MOTION AND MOTION
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`TO ALL PARTIES AND THEIR COUNSEL OF RECORD:
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`PLEASE TAKE NOTICE that on November 18, 2015 at 10:00 a.m., or as soon thereafter,
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`as the matter may be heard, Defendants Shizuki Electric Co., Inc. (“Shizuki Electric”) and
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`American Shizuki Corporation (“ASC”) will and hereby do move the Court, pursuant to
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`Rule 12(b)(6) of the Federal Rules of Civil Procedure for an order dismissing all claims against
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`them in the Direct Purchaser Plaintiffs’ (“DPPs”) and Flextronics International USA, Inc.’s
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`(“Flextronics”) (collectively, “Plaintiffs”) Second Amended Consolidated Class Action Complaint
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`(“SAC”) for failure to state a claim upon which relief can be granted. This motion is based upon
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`this Notice of Motion; the accompanying Memorandum of Points and Authorities; the complete
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`files and records in these consolidated actions; oral argument of counsel; and such other and
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`further matters as the Court may consider.
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`STATEMENT OF ISSUE TO BE DECIDED
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`1.
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`Whether Plaintiffs have sufficiently alleged that Defendants Shizuki Electric and
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`ASC were a party to the alleged conspiracy to meet the pleading standards dictated under Bell
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`Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)?
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`Case 3:14-cv-03264-JD Document 927 Filed 10/14/15 Page 3 of 9
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`PRIOR RELEVANT ORDERS
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`Pursuant to the Court’s request at the case management conference on September 30, 2015,
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`below is a list of the prior orders of the Court that are cited in this brief and relate to this motion.
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`Title/Order
`Date
`May 26, 2015 Order On Motion To Dismiss
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`Docket Number
`710
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`DEFENDANTS SHIZUKI ELECTRIC’S AND ASC’S MOTION TO DISMISS
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`Case 3:14-cv-03264-JD Document 927 Filed 10/14/15 Page 4 of 9
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`MEMORANDUM OF POINTS AND AUTHORITIES
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`I.
`INTRODUCTION
`About one year after this litigation commenced, Plaintiffs named Shizuki Electric,1 a
`Japanese corporation, and its American subsidiary, ASC, as Defendants. Plaintiffs’ voluminous
`complaint, twice amended, musters only a few meager allegations concerning each.2 While
`Plaintiffs sporadically try to connect Shizuki Electric with a few meetings early in the alleged
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`conspiracy period, the alleged conduct that Plaintiffs describe at those meetings is merely
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`legitimate business practice. As for ASC, the paltry allegations against it are plainly insufficient
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`under this Court’s prior order (see Dkt. No. 710, Order on Motions to Dismiss (the “May 26
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`Order”)) and it should be dismissed.
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`II.
`LEGAL STANDARD
`A defendant prevails on a motion to dismiss if the plaintiff fails to allege “enough facts to
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`state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
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`(2007). The “facial plausibility” standard requires the plaintiff to allege facts that add up to “more
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`than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662,
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`678 (2009). To state a claim against a defendant for involvement in a conspiracy, Plaintiffs must
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`“allege that each individual defendant joined the conspiracy and played some role in it because, at
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`the heart of an antitrust conspiracy is an agreement and conscious decision by each defendant to
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`join it.” In re Lithium Ion Batteries Antitrust Litig., No. 13-MD-2420 YGR, 2014 WL 309192, at
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`*13 (N.D. Cal. Jan. 21, 2014) (internal marks and citation omitted).
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`In undertaking this analysis, the Court need not accept conclusory statements; rather,
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`meaningful factual matter is required. Iqbal, 556 U.S. at 678 (“[T]he tenet that a court must
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`accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.
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`Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements,
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`do not suffice.”) (citing Twombly, 550 U.S. at 555); In re Transpacific Passenger Air Transp.
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`1 Shizuki Electric was listed as Shizuki Electric Co., Ltd. in the SAC; however the proper
`designation is Shizuki Electric Co., Inc.
`2 DPPs named Defendants in their Amended Complaint. Flextronics did not list ASC and Shizuki
`Electric as Defendants in its original complaint.
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`DEFENDANTS SHIZUKI ELECTRIC’S AND ASC’S MOTION TO DISMISS
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`Case 3:14-cv-03264-JD Document 927 Filed 10/14/15 Page 5 of 9
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`Antitrust Litig., No. C 07-05634 CRB, 2011 U.S. Dist. LEXIS 49853, at *39 (N.D. Cal., May 9,
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`2011) (citing Twombly, 550 U.S. at 556) (“A Section 1 claim requires a complaint with enough
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`factual matter (taken as true) to suggest that an agreement was made.”).
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`Further, a complaint must allege facts establishing each defendant’s participation and
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`specific role in the alleged conspiracy in order to satisfy Twombly. See, e.g. Total Benefits
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`Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 436 (6th Cir. 2008)
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`(“Generic pleading, alleging misconduct against defendants without specifics as to the role each
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`played in the alleged conspiracy, was specifically rejected by Twombly.”); Lubic v. Fid. Nat’l Fin.,
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`Inc., No. C08-0401 MJP, 2009 U.S. Dist. LEXIS 62092, at *14-15 (W.D. Wash. July 20, 2009)
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`(“A complaint must allege that each individual defendant joined the conspiracy and played some
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`role in it because, at the heart of an antitrust conspiracy is an agreement and a conscious decision
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`by each defendant to join it.”) (citation and internal quotation marks omitted).
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`III. ARGUMENT
`A.
`The SAC’s Allegations Against Shizuki Electric Fail
`Plaintiffs’ SAC spans over a hundred pages and contains 468 paragraphs. Yet Plaintiffs’
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`allegations against Shizuki Electric, discussed below, are contained in only a handful. At its core,
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`the SAC fails to allege Shizuki Electric’s conscious participation in the conspiracy.
`The first reference to Shizuki Electric’s alleged conduct is simply a broad statement
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`referring to approximately twenty participants at the “cartel’s” regular meetings. The paragraph
`alleges that Defendants, including Shizuki Electric, “participated in or were informed of” the
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`regular meetings. SAC ¶ 196 (emphasis added). There is a critical difference between
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`participating in and merely being informed of meetings. The SAC does not state which is
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`applicable to Shizuki Electric.
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`Additionally, even if Shizuki Electric could be said to have participated in regular
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`meetings, this paragraph fails to assert that Shizuki Electric affirmatively agreed to join an
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`antitrust conspiracy. See May 26 Order at 13 (dismissing AVX because the “allegations fall short
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`of alleging ‘an agreement and a conscious decision’ by AVX to join it”). Plaintiffs have merely
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`alleged “a sheer possibility that [Shizuki Electric] has acted unlawfully.” Iqbal, 556 U.S. at 678.
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`Case 3:14-cv-03264-JD Document 927 Filed 10/14/15 Page 6 of 9
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`While Plaintiffs assign labels to the meetings such as “cartel,” this is of no consequence.
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`Plaintiffs’ hyperbolic characterization is simply a conclusory narrative; not facts. Twombly, 550
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`U.S. at 555 (“[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’
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`requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of
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`action will not do.”) (internal citations omitted).
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`The next reference to Shizuki Electric again occurs in a general paragraph applicable to
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`approximately twenty other Defendants. This paragraph alleges that “all participants” understood
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`that “other participants in cartel activities entered into agreements and understandings with each
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`other on behalf of all entities within their respective corporate enterprises on whose behalf they
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`attended and participated.” SAC ¶ 198. Again, this conclusory paragraph references no particular
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`agreements that Shizuki Electric was a party to or even had knowledge of. In fact, it does not even
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`state what the unlawful nature of the “agreements” was.
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`Next, in three subparts of paragraph 212, Plaintiffs allege that Shizuki Electric attended
`meetings – in just three quarters during the thirteen-year alleged conspiracy period3 – with other
`Defendants and lawfully shared business information:
`• Plaintiffs allege that Defendants, including Shizuki Electric, attended meetings in
`the third quarter of 2002 at which they discussed the demand for film capacitors in
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`the U.S., including volumes and shipments for products that used film capacitors.
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`Id. ¶ 212(a).
`• The SAC alleges that Shizuki Electric attended meetings in the first quarter of 2003
`at which the attendees discussed business conditions and demand for capacitors.
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`Id. ¶ 212(c).
`• Plaintiffs allege that Shizuki Electric attended meetings in the second quarter of
`2003 at which volumes and prices of capacitors were discussed, as well as
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`anticipated price increases. Id. ¶ 212(d).
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`There is nothing inherently unlawful about the forgoing alleged discussions. Krehl v. Baskin–
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`Robbins Ice Cream Co., 664 F.2d 1348, 1357 (9th Cir. 1982) (irregular price exchanges among
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`3 Plaintiffs define “Class Period” as 2002 to present. SAC ¶ 1.
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`Case 3:14-cv-03264-JD Document 927 Filed 10/14/15 Page 7 of 9
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`sales representatives who lack pricing authority is “idle ‘shop talk’” and not price fixing
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`evidence); see also In re Baby Food Antitrust Litig., 166 F.3d 112, 133 (3d Cir. 1999) (approving
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`of lower court’s observation that “courts generally reject conspiracy claims that ‘seek to infer an
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`agreement from ... communications despite a lack of independent evidence tending to show an
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`agreement and in the face of uncontradicted testimony that only informational exchanges took
`place.’”). What is more, there is no allegation that Shizuki Electric agreed to fix prices or enter
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`any other unlawful agreement. Plaintiffs have not alleged that Shizuki Electric “played some role”
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`in the alleged antitrust conspiracy nor exhibited a “conscious decision” to join it. In re Lithium
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`Ion Batteries Antitrust Litig., No. 13-MD-2420 YGR, 2014 WL 309192, at *13.
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`Finally, in paragraph 212(b), the SAC’s allegations appear to escape the bounds of
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`plausibility. Plaintiffs list Shizuki Electric, along with several other Defendants, as having
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`attended meetings during the fourth quarter of 2002 at which the attendees discussed pricing for
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`tantalum capacitors. SAC ¶ 212(c). But as Plaintiffs acknowledge, Shizuki Electric is alleged to
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`manufacture film capacitors; not tantalum capacitors. See id. ¶ 98. The SAC thus essentially
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`asserts that Shizuki Electric attended a meeting where information on a product that Shizuki
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`Electric did not produce was discussed, and this attendance indicates a conscious participation by
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`Shizuki Electric to join the conspiracy. This subparagraph is irrelevant as to Shizuki Electric and
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`should be ignored.
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`Allegations Against ASC are Too Paltry
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`B.
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`To withstand Twombly, a complaint must present sufficient allegations against each
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`individual company; not simply its affiliate. See May 26 Order at 15 (“Plaintiffs argue that they
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`are not required to ‘plead the precise role in the conspiracy of each individual company in each
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`corporate family,’ and try to rely on their general allegations against the ‘larger Fujitsu corporate
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`family.’ Dkt. No. 519 at 38-39. That is not a sound approach.”). The only allegations referencing
`ASC are contained in two paragraphs. First, Plaintiffs identify ASC as a subsidiary of Shizuki
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`Electric that engaged in the sale of capacitors manufactured by it or its parent. Id. ¶ 99. Second,
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`Plaintiffs allege it assisted with sale or delivery of its parent corporation’s capacitors to U.S.
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`companies. Id. ¶ 119. There is no more. No nefarious (or any other) conduct is alleged.
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`The SAC is also notable for what it omits. It wholly fails to allege any conscious
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`participation in the alleged conspiracy by ASC. There are no allegations that ASC or any ASC
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`employee or representative attended any of the alleged conspiracy meetings or communicated with
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`other capacitor manufacturers regarding allegedly unlawful topics. SAC ¶ 206 (describing alleged
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`cartel meetings among manufacturers); ¶¶ 209-30 (describing bilateral meetings and discussions
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`among manufacturers). In fact, Plaintiffs fail to allege any communications at all between an ASC
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`employee and any employee from any other manufacturer or distributor of capacitors. Nor are
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`there any allegations that ASC or any ASC representative or employee even had awareness of an
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`alleged conspiracy much less participated in any. Additionally, while Plaintiffs include some
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`allegations that certain Defendants’ exert control over their respective American subsidiary’s
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`business, ASC (and any relationship with its foreign parent company, Shizuki Electric) is
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`conspicuously absent from such allegations. Id. ¶¶ 236-307. ASC is not even named in the list of
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`subsidiaries alleged to have acted “to effectuate and achieve the cartel’s aims and purposes.” Id.
`¶¶ 238-239.4
`The lack of any factual allegations to support any claims against ASC make it subject to
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`dismissal under the authority of Twombly.
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`4 In any event, courts require more than “boilerplate assertions of an agency relationship with the
`parties whose participation in the conspiracy is more directly alleged” in order to demonstrate that
`the “American subsidiaries themselves made a conscious decision to conspire with their Korean or
`Japanese parents.” In re Lithium Ion Batteries Antitrust Litig., 2014 WL 309192, at *13 (emphasis
`in original); see also May 26 Order at 14.
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`Case 3:14-cv-03264-JD Document 927 Filed 10/14/15 Page 9 of 9
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`IV. CONCLUSION
`For the foregoing reasons, Defendants’ Shizuki Electric and ASC should be dismissed.
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`The SAC fails to allege Shizuki Electric’s conscious participation in the conspiracy. And the
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`allegations against ASC are too sparse to adequately allege ASC’s individual involvement.
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`DATED: October 14, 2015
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`DAVIS WRIGHT TREMAINE LLP
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`
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`By: /s/ Allison A. Davis
`Allison A. Davis (State Bar No. 139203)
`Sanjay M. Nangia (State Bar No. 264986)
`505 Montgomery Street, Ste. 800
`San Francisco, CA 94111-6538
`Telephone: (415) 276-6580
`Facsimile: (415) 276-6599
`allisondavis@dwt.com,
`sanjaynangia@dwt.com
`
`Nick Verwolf (Pro Hac Vice)
`777 108th Avenue NE, Ste. 2300
`Bellevue, WA 98004-5149
`Telephone: (425) 646-6100
`Facsimile: (425) 646-6199
`Email: nickverwolf@dwt.com
`
`Attorneys for Defendants
`Shizuki Electric Co., Inc. and American
`Shizuki Corporation
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