2:09-md-02042-SFC Doc # 245 Filed 06/13/11 Pg 1 of 31 Pg ID 6013
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MICHIGAN
`SOUTHERN DIVISION
`
`In re: Refrigerant Compressors
`Antitrust Litigation
`
`Case No. 2:09-md-02042
`
`Honorable Sean F. Cox
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`___________________________/
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`OPINION & ORDER
`ON “DEFENDANTS’ JOINT MOTION TO DISMISS CLAIMS
`BY DIRECT PURCHASER PLAINTIFFS” (DOCKET ENTRY NO. 164)
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`This matter is before the Court on “Defendants’ Joint Motion to Dismiss Claims by
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`Direct Purchaser Plaintiffs” (Docket Entry No. 164). The parties have fully briefed the issues
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`and the Court heard oral argument on May 26, 2011. For the reasons set forth below, the Court
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`shall:
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`1)
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`2)
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`3)
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`4)
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`Rule that the only persons or entities that have standing to assert federal
`antitrust claims in this action are those persons or entities who directly
`purchased compressors from a Defendant;
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`Deny Defendants’ request to dismiss claims prior to June 2004, or after
`December 2006, under Twombly;
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`Defer decision on Defendants’ challenge based on the Foreign Trade
`Antitrust Improvements Act because the Court cannot meaningfully
`address that argument until after an amended complaint is filed; and
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`Rule that Direct Purchaser Plaintiffs have not pleaded fraudulent
`concealment with the requisite particularity and, therefore, they cannot
`recover any damages incurred prior to February 25, 2005.
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`Thus, the Court shall grant the motion in part, defers decision on one ground for dismissal until
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`after an amended complaint has been filed, and shall deny the motion in part.
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`2:09-md-02042-SFC Doc # 245 Filed 06/13/11 Pg 2 of 31 Pg ID 6014
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`BACKGROUND
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`Beginning in February 2009, Direct Purchaser Plaintiffs and Indirect Purchaser Plaintiffs
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`filed complaints in various jurisdictions asserting claims against Defendants. Those actions were
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`consolidated for pretrial proceedings by the United States Judicial Panel on Multidistrict
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`Litigation.
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`The Indirect Purchaser Plaintiffs’ complaints have since been combined in a Second
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`Consolidated Amended Complaint, which seeks certification of a nationwide class, and asserts
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`state-law antitrust claims, consumer protection / unfair competition claims, and unjust
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`enrichment claims.
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`The Direct Purchaser Plaintiffs’ (“DP Plaintiffs”) complaints have been combined in a
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`Master Amended Complaint (“MAC”) which seeks class action certification and asserts federal
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`antitrust claims. The DP Plaintiffs’ MAC is the subject of the pending motion.
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`DP Plaintiffs filed their MAC on June 30, 2010. (Docket Entry No. 155). DP Plaintiffs
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`“bring this action under Section 4 of the Clayton Act, 15 U.S.C. § 15, to recover damages,
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`including treble damages,” for injuries sustained by plaintiffs and the Class resulting from
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`Defendants’ alleged violation of the Sherman Act, 15 U.S.C. §1. (MAC at ¶ 6).
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`The MAC states that this action is brought on behalf of plaintiffs and all individuals and
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`entities that purchased “Refrigerant Compressor Products” directly from one or more Defendants
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`“during the period from and including January 1, 2004 up to and including December 31, 2008
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`(the ‘Class Period’).” (MAC at ¶ 1). DP Plaintiffs seek to have the following class certified:
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`All persons or entities (but excluding government entities and defendants, their
`officers, directors, and employees, as well as defendants’ parents, predecessors,
`successors, subsidiaries, affiliates) who purchased Refrigerant Compressor
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`Products in the United States, its territories or possessions, directly from any
`defendant, or from any of their parents, predecessors, successors, subsidiaries, or
`affiliates, at any time during the period from and including January 1, 2004 up to
`and including December 31, 2008. “Refrigerant Compressor Products” are
`compressors of less than one horsepower (“Compressors”), as well as products
`containing such Compressors. Compressors does not include compressors used in
`air conditioners, and Refrigerant Compressor Products does not include air
`conditioners.
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`(MAC at ¶ 47) (emphasis added). “The Class definition encompasses those who brought a
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`Refrigerant Compressor Product directly from a defendant, even if the Compressor contained
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`therein was manufactured by an affiliated entity, principal, agent, or co-conspirator.” (MAC at ¶
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`48).
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`The MAC defines “Refrigerant Compressor Products” as “fractional compressors, that is,
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`compressors of less than one horsepower (‘Compressors’), as well as products, containing such
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`Compressors.” (MAC at ¶ 1) (emphasis added). “Fractional compressors (meaning those less
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`than one horsepower), which are the Compressors at issue [in this case], are used for refrigeration
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`purposes or in refrigeration products, such as, among others, condensers, residential and
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`commercial refrigerators, freezers and water coolers.” (MAC at ¶ 59). “Compressors” and
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`“Refrigerant Compressor Products,” as defined by DP Plaintiffs in the MAC, do not include
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`compressors used in air conditioners or air conditioners. (MAC at ¶ 1).
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`DP Plaintiffs allege that Defendants “conspired to inflate, fix, raise, maintain, or
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`artificially stabilize prices and to commit other anti-competitive acts for the purpose and effect of
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`unlawfully inflating, fixing, raising, maintaining, or artificially stabilizing prices of Compressors,
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`which had the effect of unlawfully inflating, fixing, raising, maintaining, or artificially stabilizing
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`prices of Refrigerant Compressor Products.” (MAC at ¶ 3) (emphasis added). DP Plaintiffs
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`allege that Defendants “have engaged in a wide-ranging conspiracy during the Class Period to
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`raise, fix, maintain or stabilize the price of Compressors sold in the United States and
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`elsewhere,” and that “[i]ncreases in the prices for Compressors increased the prices for
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`Refrigerant Compressor Products.” (MAC at ¶¶ 60-61). The MAC alleges that Defendants
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`carried out the alleged antitrust conspiracy “through regular, secret meetings and
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`communications throughout the entire Class Period, during which the prices of Compressors, as
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`well as other market information relating to Compressors, were discussed and exchanged.”
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`(MAC at ¶ 62).
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`There are six named DP Plaintiffs in the MAC: 1) Appliance Parts Distributors, Inc.
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`(“APD”); 2) B & B Appliance Parts of Mobile, Inc. (“B & B”); 3) OK TV & Appliances, LLC
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`(“OK TV”); 4) Sanden Vendo America, Inc. (“Sanden Vendo”); 5) The Mitchell Company, Inc.
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`(“Mitchell”); and 6) Wettstein and Sons, Inc. (“Wettstein”). (MAC at ¶¶ 12-17). For each of the
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`named DP Plaintiffs, the MAC alleges that entity “purchased Refrigerant Compressor Products
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`directly from one or more defendants,” without specifying whether that entity purchased
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`compressors, or products containing compressors, and without specifying the Defendant(s) from
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`whom the entity purchased. (Id.). The MAC also fails to specify where or when each named DP
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`Plaintiff purchased the Refrigerant Compressor Products.
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`There are sixteen named Defendants in the MAC: 1) Tecumseh Products Company; 2)
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`Tecumseh Compressor Company; 3) Tecumseh do Brasil, Ltda.; 4) Tecumseh do Brasil USA,
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`LLC; 5) Whirlpool Corporation; 6) Whirlpool S.A.; 7) Embraco North America, Inc.; 8) Danfoss
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`A/S; 9) Danfoss, Inc.; 10) Danfoss Commercial Compressors, Ltd.; 11) Danfoss Scroll
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`Technologies, LLC f/k/a Scrolll Technologies, LLC; 12) Danfoss Turbocor Compressors, Inc.;
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`13) Appliances Components Companies SpA; 14) ACC USA, LLC; 15) Panasonic Corporation
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`f/k/a Matsushita Electric Industrial Co., Ltd.; and 16) Panasonic Corporation of North America.
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`The pending Joint Motion to Dismiss is brought by all of the above Defendants, with the
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`exception of the following Defendants: Tecumseh Products Company, Tecumseh Compressor
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`Company, Tecumseh do Brasil, Ltda., and Tecumseh do Brail USA (“the Tecumseh
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`Defendants”). The MAC alleges that each of the Moving Defendants manufactured, marketed or
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`sold “Refrigerant Compressor Products in the United States,” without specifying whether that
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`entity manufactured, marketed or sold compressors or products containing compressors. (MAC
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`at ¶¶ 18-38).
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`LEGAL STANDARD
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`The instant motion is brought pursuant to FED. R. CIV. P. 12(b)(1), lack of subject-matter
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`jurisdiction, and FED. R. CIV. P. 12(b)(6), failure to state a claim for upon which relief can be
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`granted.
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`Where subject matter jurisdiction is challenged pursuant to FED. R. CIV. P. 12(b)(1), the
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`plaintiff has the burden of proving jurisdiction in order to survive the motion. Moir v. Greater
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`Cleveland Regional Transit Authority, 895 F.2d 266, 269 (6th Cir. 1990).
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`When ruling on a motion to dismiss pursuant to FED. R. CIV. P. 12(b)(6), the court must
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`construe the complaint in a light most favorable to the plaintiff and accept all the well-pleaded
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`factual allegations as true. Evans-Marshall v. Board of Educ., 428 F.3d 223, 228 (6th Cir. 2005).
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`However, “the tenet that a court must accept as true all of the allegations contained in a
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`complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, __ U.S. __, 129 S.Ct. 1937,
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`1948 (2009). Although a heightened fact pleading of specifics is not required, the plaintiff must
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`bring forth “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.
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`Twombly, 550 U.S. 544, 570 (2007). In practice, a complaint must contain either direct or
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`inferential allegations respecting all the material elements to sustain a recovery under some
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`viable legal theory. Lillard v. Shelby County Bd. of Educ., 76 F.3d 716, 726 (6th Cir. 1996).
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`ANALYSIS
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`The Moving Defendants filed their Joint Motion to Dismiss on August 30, 2010 (Docket
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`Entry No. 164), in order to assert challenges to the DP Plaintiffs’ MAC that are common to all of
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`them. Each of those challenges is discussed below.
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`I.
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`Federal Antitrust Standing
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`Defendants claim that, under existing Supreme Court authority, Illinois Brick and
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`Utilicorp, the so-called “Direct Purchaser” Plaintiffs in this action lack standing to seek damages
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`under the federal antitrust laws because they do not allege that they are direct purchasers of
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`compressors, the product that was the subject of the alleged conspiracy. Illinois Brick v. Illinois,
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`431 U.S. 720 (1977); Kansas v. Utilicorp United, Inc., 497 U.S. 199 (1990).
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`In their response, DP Plaintiffs assert that “certain of the named [DP] Plaintiffs
`1
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`purchased Compressors directly from Defendants,” while “others purchased products containing
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`Compressors” from Defendants. (Pls.’ Resp. Br., Docket Entry No. 197, at 2). They take the
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`position that both groups have federal antitrust standing.
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`As to those unidentified named DP Plaintiffs who did not purchase compressors from
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`DP Plaintiffs’ brief does not identify which named DP Plaintiffs allegedly purchased
`1
`compressors from Defendants. At the hearing, Counsel for DP Plaintiffs asserted that three of
`the named DP Plaintiffs directly purchased compressors from a Defendant.
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`Defendants, but did purchase products containing compressors, they claim those entities have
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`standing because “[direct purchasers from a conspirator of products containing a price-fixed
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`component have standing under the United States antitrust law.]” (Id. at 4). In support of this
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`second argument, DP Plaintiffs assert that Defendants “fail to acknowledge the federal antitrust
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`cases most directly on point, which analyze price-fixing of an input in an integrated product.
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`Several courts have confronted situations where plaintiffs directly purchased ‘finished’ goods
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`from one or more members of a cartel of manufacturers who also made, and fixed the price of, a
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`component of those goods.” (Pls.’ Br. at 4). DP Plaintiffs rely primarily on two cases: In re
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`Sugar Industry Antitrust Litig., 579 F.2d 13 (3d Cir. 1978) and In re Linerboard Antitrust Litig.,
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`305 F.3d 145 (3d Cir. 2002).
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`As to those unidentified named DP Plaintiffs who did purchase compressors directly from
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`a Defendant, DP Plaintiffs contend that it is undisputed that group has standing. (Pls.’ Br. at 4
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`n.5).
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`A.
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`Only Those Persons Or Entities Who Directly Purchased Compressors From
`A Defendant Have Federal Antitrust Standing In This Action.
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`In Hanover Shoe, Hanover Shoe, Inc. alleged that United Shoe Machinery Corp. had
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`monopolized the shoe manufacturing machinery industry, in violation of the Sherman Act, and
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`sought treble damages under the Clayton Act for overcharges paid in leasing certain machinery
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`from United. Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968). “United
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`defended, in part, on the ground that Hanover had passed on the overcharge to its customers and,
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`Section 4 of the Clayton Act, 15 U.S.C. § 15, authorizes any person injured by a
`2
`violation of the antitrust laws to sue for treble damages, costs, and attorney fees.
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`as a result, had suffered no injury.” Utilicorp , 497 U.S. at 206. The Supreme Court “rejected
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`the defense for two reasons. First, noting that a wide range of considerations may influence a
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`company’s pricing decisions, [it] concluded that establishing the amount of an overcharge shifted
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`to indirect purchasers ‘would normally prove insurmountable.’” Id. at 206-207 (quoting Hanover
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`Shoe, supra, at 493). Second, the Court “reasoned that a pass-on defense would reduce the
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`effectiveness of § 4 actions by diminishing the recovery available to any potential plaintiff.”
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`Utilicorp, 497 U.S. at 207.
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`In Illinois Brick, the Supreme Court considered the question of whether an offensive use
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`of a pass-on theory is consistent with “Hanover Shoe’s restrictions on the defensive use of pass-
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`on.” Illinois Brick, 431 U.S. at 728. The Court held that it is not and ruled “that the overcharged
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`direct purchaser, and not others in the chain of manufacture or distribution, is the party ‘injured
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`in his business or property’ within the meaning” of Section 4 of the Clayton Act. Id. at 729. In
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`other words, the Court declined to construe Section 4 of the Clayton Act “to permit offensive use
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`of a pass-on theory against an alleged violator that could not use the same theory as a defense in
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`an action by direct purchasers.”
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`In that case, the State of Illinois and various local governmental entities sued Illinois
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`Brick Company and other concrete block manufacturers for conspiring to raise the costs of
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`concrete blocks. The governmental entities brought that action under the Clayton Act, alleging
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`that the concrete block manufacturers had engaged in a combination and conspiracy to fix the
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`prices of concrete block in violation of the Sherman Act.
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`The concrete blocks were the subject of the alleged antitrust conspiracy. The concrete
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`blocks were purchased directly from the concrete block manufacturers “by masonry contractors
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`and used by them to build masonry structures; those structures are incorporated into entire
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`buildings by general contractors and sold to” the governmental entities. Id. at 726.
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`The complaint alleged that the amounts paid by the governmental entities “for concrete
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`block were more than $3 million higher by reason of this price-fixing conspiracy. The only way
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`in which the antitrust violation alleged could have injured” the governmental entities is via a
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`pass-on theory (i.e., if all or part of the overcharge was passed on by the masonry and general
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`contractors to the governmental entities rather than being absorbed by them). Id. at 727. Having
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`rejected the offensive use of a pass-on theory, the Court ruled that the governmental entities had
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`suffered no antitrust injury within the meaning of § 4 because Illinois Brick had not sold any
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`concrete blocks to them.
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`The Illinois Brick Court declined to allow the offensive use of a pass-on theory for
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`several reasons. First, the Court concluded that allowing offensive but not defensive use of pass-
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`on would create a serious risk of multiple liability for defendants. Illinois Brick, 431 U.S. at 730-
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`31.
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`Second, the Court concluded that “the reasoning of Hanover Shoe cannot justify unequal
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`treatment of plaintiffs and defendants with respect to the permissibility of pass-on arguments,”
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`explaining:
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`The principal basis for the decision in Hanover Shoe was the Court’s perception
`of the uncertainties and difficulties in analyzing price and out-put decisions ‘in the
`real economic world rather than an economist’s hypothetical model,’ 392 U.S., at
`493, 88 S.Ct., at 2231 and of the costs to the judicial system and the efficient
`enforcement of the antitrust laws of attempting to reconstruct those decisions in
`the courtroom. This perception that the attempt to trace the complex economic
`adjustments to a change in the cost of a particular factor of production would
`greatly complicate and reduce the effectiveness of already protracted treble-
`damages proceedings applies with no less force to the assertion of pass-on
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`theories by plaintiffs than it does to the assertion by defendants. However ‘long
`and complicated’ the proceedings would be when defendants sought to prove
`pass-on, ibid., they would be equally so when the same evidence was introduced
`by plaintiffs. Indeed, the evidentiary complexities and uncertainties involved in
`the defensive use of pass-on against a direct purchaser are multiplied in the
`offensive use of pass-on by a plaintiff several steps removed from the defendant in
`the chain of distribution.
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`Illinois Brick, 431 U.S. at 732. In other words:
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`Permitting the use of pass-on theories under s 4 essentially would transform
`treble-damages actions into massive efforts to apportion the recovery among all
`potential plaintiffs that could have absorbed part of the overcharge from direct
`purchasers to middlemen to ultimate consumers. However appealing this attempt
`to allocate the overcharge might seem in theory, it would add whole new
`dimensions of complexity to treble-damages suits and seriously undermine their
`effectiveness.
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`Id. at 737. Thus, the Illinois Brick Court understood Hanover Shoe “as resting on the judgment
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`that the antitrust laws will be more effectively enforced by concentrating the full recovery for the
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`overcharge in the direct purchasers rather than by allowing every plaintiff potentially affected by
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`the overcharge to sue only for the amount it could show was absorbed by it.” Id. at 735.
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`The respondents in Illinois Brick argued, with some support from lower courts, “that
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`pass-on theories should be permitted for middlemen that resell goods without altering them.” Id.
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`at 743. The Illinois Brick Court, however, rejected the attempt “to carve out exceptions to the
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`Hanover Shoe rule for particular types of markets.” Id. at 744.
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`In Utilicorp, the Supreme Court reaffirmed the direct purchaser rule set forth in Hanover
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`Shoe and Illinois Brick and again declined to carve out exceptions to it. In that case, the plaintiff
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`utilities sued a pipeline company and several gas producers under § 4 of the Clayton Act, alleging
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`that defendants had unlawfully conspired to inflate the price of the gas they supplied to the
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`utilities, and sought treble damages for both the amount overcharged and the decrease in sales to
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`customers caused by the overcharge. The petitioner states then filed separate § 4 actions against
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`those same defendants for the same alleged antitrust violations, on behalf of state residents who
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`purchased gas from the utilities. The actions were consolidated and the trial court dismissed the
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`claims asserted by the states on behalf of the resident customers because, under Hanover Shoe
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`and Illinois Brick, the utilities had suffered antitrust injury as direct purchasers of gas but their
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`customers, as indirect purchasers, had not. The Court of Appeals affirmed.
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`The Supreme Court also affirmed, noting that like the governmental entities in Illinois
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`Brick, “the consumers in this case have the status of indirect purchasers. In the distribution
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`chain, they are not the immediate buyers from the alleged antitrust violators. They bought their
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`gas from the utilities, not from the suppliers said to have conspired to fix the price of gas. Unless
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`we create an exception to the direct purchaser rule established in Hanover Shoe and Illinois
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`Brick, any antitrust claim against the defendants is not for them, but for the utilities to assert.”
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`Utilicorp, 497 U.S. at 207.
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`The petitioner urged the Court to adopt an exception to the direct purchaser rule, asserting
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`that none of the rationales underlying Hanover Shoe or Illinois Brick existed in the case. The
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`Court declined to carve out an exception to the direct purchaser rule. In doing so,
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`the Court explained that “[t]he rationales underlying Hanover Shoe and Illinois Brick will not
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`apply with equal force in all cases. We nonetheless believe that ample justification exists for our
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`stated decision not to ‘carve out exceptions to the [direct purchaser] rule for particular types of
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`The only way that the alleged antitrust violation could have injured the utilities’
`3
`customers is via an offensive pass-on theory (i.e., if all or part of the overcharge for the gas was
`passed on by the utilities to their customers).
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`markets.’ Illinois Brick, 431 U.S., at 744, 97 S.Ct., at 2074. The possibility of allowing an
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`exception, even in rather meritorious circumstances, would undermine the rule.” Id. at 216
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`(emphasis added). Thus, the Court concluded that “even assuming that any economic
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`assumptions underlying the Illinois Brick rule might be disproved in a specific case, we think it
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`an unwarranted and counterproductive exercise to litigate a series of exceptions. Having stated
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`the rule in Hanover Shoe, and adhered to it in Illinois Brick, we stand by our interpretation of §
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`4” of the Clayton Act. Id. at 217.
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`Here, DP Plaintiffs seek to avoid the direct purchaser rule and the Supreme Court’s
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`rejection of an offensive pass-on theory, set forth in the above cases, by relying on several cases
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`from outside the Sixth Circuit. The two cases DP Plaintiffs rely on most heavily are In re Sugar
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`Industry Antitrust Litig., 579 F.2d 13 (3d Cir. 1978) and In re Linerboard Antitrust Litig., 305
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`F.3d 145 (3d Cir. 2002). Notably, however, the Sixth Circuit has not endorsed the approach
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`taken in those cases.
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`Moreover, as explained below, even if the exception set forth in those cases were adopted
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`by the Sixth Circuit, it would not aid the DP Plaintiffs here.
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`In In re Sugar, a decision issued prior to Utilicorp., the Third Circuit reversed the trial
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`court’s grant of summary judgment in favor of defendants. In re Sugar Industry Antitrust Litig.,
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`579 F.2d 13 (3d Cir. 1978). In that antitrust action, it was alleged that twelve defendant refiners
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`of sugar engaged in a conspiracy to fix the price of sugar. A few of those defendants also used
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`the sugar to manufacture food products, which they sold to wholesalers. One such wholesaler,
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`Stotter, sued, alleging it was injured by virtue of being charged more for various food products
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`which contained sugar.
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`The Third Circuit noted that Supreme Court precedent “bans Clayton Act suits by persons
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`who are not direct purchasers from the defendant antitrust violator,” but questioned whether such
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`precedent also bars “a suit by a plaintiff who purchases directly from the alleged offender but
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`buys a product which incorporates the price-fixed product as one of its ingredients.” Id. at 16.
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`Although the court acknowledged that there would “be some additional complications underlying
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`the damage claims,” it concluded that fact “must not be allowed to obscure the fact that the
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`plaintiff did purchase directly from the alleged violator.” The court further stated:
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`True, the price-fixed commodity had been combined with other ingredients to
`form a different product. But just as the sugar sweetened the candy, the price-
`fixing enhanced the profits of the candy manufacturers. The situation is the same
`as if the general contractor which sold the building to the plaintiff in Illinois Brick
`were the manufacturer of the concrete block which went into the structure.
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`Id. The court concluded that the concern which the Supreme Court expressed about the
`4
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`proration of overcharge among a number of entities in the chain would therefore not be present.
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`The Third Circuit concluded that, although the plaintiff did not purchase the allegedly
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`price-fixed product directly, it was not barred from bringing a federal antitrust claim because it
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`purchased a product containing the price-fixed product directly from the alleged violator, who
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`made both the price-fixed product (sugar) and the product containing the price-fixed product
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`(candy).
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`It is unclear whether the Third Circuit’s decision violates the direct purchaser rule as set
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`forth in Illinois Brick and Utilicorp. Arguably, it does because the plaintiff did not directly
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`If the general contractor who sold the building to a plaintiff in Illinois Brick had also
`4
`been the manufacturer of the concrete blocks that were the subject of the alleged conspiracy, then
`there would have been no pass-on theory.
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`purchase the sole product that was the subject of the conspiracy (sugar). On the other hand, it
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`may not because, under those unique circumstances, there is no pass-on theory in play. In the
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`situation presented in In re Sugar, the plaintiff asserting antitrust injury (Stotter) does not allege
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`an offensive pass-on theory at all because the defendant at issue made both the price-fixed
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`product (sugar) and the finished product containing the price-fixed product (candy) and, thus,
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`there was no middleman. In other words, Stotter was not asserting a pass-on theory because the
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`Defendant violator that sold it the candy also manufactured the price-fixed sugar and therefore
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`there was no middleman and thus no issue as to whether or not that middleman absorbed the
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`overcharge for the sugar.
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`Here, however, no named DP Plaintiff has alleged that it bought a finished product
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`containing a compressor from a Defendant who both manufactured the compressors and used
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`those compressors to manufacture that finished good. To the contrary, the MAC asserts claims
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`on behalf of persons or entities who bought a finished product from a Defendant even though the
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`compressor in that product was manufactured by someone other than that Defendant. (See MAC
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`at ¶ 48). The only way that such persons/entities could assert an antitrust injury is via an
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`offensive pass-on theory (i.e., if all or part of the overcharge for compressors was passed on to
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`them by the manufacturer of the finished product). See Illinois Brick, 431 U.S. at 727. Thus,
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`even if the Sixth Circuit had adopted the rule set forth in In re Sugar, it would not aid DP
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`Plaintiffs here.
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`DP Plaintiffs’ reliance on General Refactories Co. v. Stone Container Corp., 1999 WL
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`14498 (N.D. Ill. 1999) and In re Linerboard, 305 F.3d 145 (3d Cir. 2002) is similarly misplaced.
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`In that litigation, the plaintiffs were purchasers of corrugated containers and corrugated sheets
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`who alleged that defendants conspired to “artificially limit and otherwise reduce the market
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`supply of linerboard in the United States, a primary determinant of the price of corrugated
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`sheets.” General Refactories Co. v. Stone Container Corp., 1999 WL 14498 (N.D. Ill. 1999). 5
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`The plaintiffs further alleged that the defendants conspired to fix the prices of corrugated sheets.
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`Id. at *1 The defendants were “major integrated manufacturers and sellers of linerboard,
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`corrugated sheets and corrugated boxes.” In re Linerboard, 305 F.3d at 148 n.1.
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`In General Refractories Co., the district court denied a motion seeking to dismiss the
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`antitrust claims for lack of standing under Illinois Brick, in an unpublished decision which
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`discusses the issue of standing in a single paragraph. Although the district court noted that the
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`plaintiffs had alleged a conspiracy to fix both linerboard and corrugated sheets (see General
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`Refactories Co., supra, at *1), when it discussed the standing issue, it relied on In re Sugar and
`6
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`concluded that plaintiffs who directly purchased corrugated sheets from the integrated
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`manufacturer had standing. Id. at *3. The Third Circuit affirmed, based on In re Sugar. In re
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`Linerboard, 305 F.3d at 159-60.
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`This case can be distinguished from In re Linerboard in two important respects. First,
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`“Corrugated sheets are made by gluing a fluted sheet which is not made of linerboard,
`5
`known as the corrugating medium, between facing sheets of linerboard.” In re Linerboard
`Antitrust Litig., 305 F.3d at 148 n.1.
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`The district court noted that the plaintiffs’ complaint alleged that the defendants
`6
`“embarked upon a nationwide combination and conspiracy, the purpose of which was fix, raise,
`and maintain and stabilize the price of corrugated sheets in the United States,” that they “agreed
`among themselves to fix, raise, maintain and stabilize the prices of corrugated sheets in the
`United States,” and that defendants “agreed among themselves to implement and coordinate
`increases in the prices of corrugated sheets in the United States.” General Refactories Co.,
`supra, at *1 (emphasis added).
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`although the court did not focus on this, the plaintiffs in In re Linerboard alleged a conspiracy to
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`fix both linerboard (a component) and corrugated sheets (a finished product). Here, DP Plaintiffs
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`allege only a conspiracy to fix the price of compressors, which they claim had the ultimate effect
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`of increasing prices for compressor products. That is, the DP Plaintiffs do not allege that
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`Defendants conspired to fix the price of finished products that contain compressors. That is a
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`fundamental difference because the plaintiffs in In Re Linerboard alleged that the defendants had
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`conspired to increase the price of corrugated sheets and that the plaintiffs were direct purchasers
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`of corrugated sheets.
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`Second, even if the plaintiffs in In Re Linerboard had not alleged that the defendants
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`conspired to fix the price of corrugated sheets, the case could still be distinguished from this case
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`because, as explained above in discussing In Re Sugar, no named DP Plaintiff has alleged that it
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`bought a finished product containing a compressor from a defendant who both manufactured the
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`compressors and used those compressors to manufacture that finished good.
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`At best, these decisions reflect that the Third Circuit has concluded that the direct
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`purchaser rule does not apply in situations where a plaintiff purchases a product containing a
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`price-fixed component directly from an alleged violator who makes both the component and the
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`product containing the component. Again, such a rule, even if it were adopted by the Sixth
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`Circuit, would not apply here.
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`Accordingly, the Court concludes that the only persons or entities who have standing to
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`assert federal antitrust claims in this action are those persons or entities who directly purchased
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`compressors from a Defendant. Thus, any named DP Plaintiff who did not purchase compressors
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`from a Defendant lacks standing and must be dismissed from this action.
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`B.
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`Although The Parties Agree That Any Named DP Plaintiffs Who Directly
`Purchased Compressors From A Defendant Would Have Federal Antitrust
`Standing, The MAC Does Not Identify Which, If Any, Named DP Plaintiff
`Purchased Compressors From A Defendant.
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`DP Plaintiffs, as the parties asserting federal jurisdicti