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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MICHIGAN
`SOUTHERN DIVISION
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`In re: Refrigerant Compressors
`Antitrust Litigation
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`___________________________/
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`Case No. 2:09-md-02042
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`Honorable Sean F. Cox
`United States District Court
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`MEMORANDUM OPINION
`REGARDING THE COURT’S JUNE 7, 2012 ORDER
`GRANTING IN PART AND DENYING IN PART DIRECT PURCHASER
`PLAINTIFFS’ MOTION FOR LEAVE TO FILE A SECOND AMENDED
`MASTER AMENDED COMPLAINT
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`Following this Court’s Opinion & Order on the Defendants’ Joint Motion to Dismiss as
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`to the Direct Purchaser (“DP”) Plaintiffs’ Master Amended Complaint, DP Plaintiffs filed two
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`motions for reconsideration, which this Court denied. The matter is now before the Court on DP
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`Plaintiff’s Motion for Leave to File A Second Amended Master Amended Complaint. (Docket
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`Entry No. 271). The parties fully briefed the issues and oral argument was heard on June 7,
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`2012. On that same date, this Court issued an Order (Docket Entry No. 295) that granted the
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`motion in part and denied it in part. This memorandum opinion sets forth the Court’s reasons for
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`doing so.
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`BACKGROUND
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`The background of this action and the claims asserted by the DP Plaintiffs are fully set
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`forth in this Court’s June 13, 2011 Opinion & Order. (Docket Entry No. 246). The Court
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`includes here relevant details as to the Opinion & Order itself, and events since that Opinion &
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`Order was issued.
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`Defendants filed a “Joint Motion to Dismiss Claims by Direct Purchaser Plaintiffs”
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`(Docket Entry No. 164). Following full briefing by the parties and oral argument, the Court
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`granted that motion in part, denied it in part, and deferred ruling on one issue until after an
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`amended complaint was filed. More specifically, the Court: 1) ruled that the only persons or
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`entities that have standing to assert federal antitrust claims in this action are those persons or
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`entities who directly purchased compressors from a Defendant; 2) denied Defendants’ request to
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`dismiss claims prior to June 2004, or after December 2006, under Twombly; 3) deferred decision
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`on Defendants’ challenge based on the Foreign Trade Antitrust Improvements Act because the
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`Court cannot meaningfully address that argument until after an amended complaint is filed; and
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`4) ruled that Direct Purchaser Plaintiffs have not pleaded fraudulent concealment with the
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`requisite particularity and, therefore, they cannot recover any damages incurred prior to February
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`25, 2005.
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`As to the standing issue, this Court’s June 13, 2011 Opinion & Order states, in pertinent
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`part:
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`Here, DP Plaintiffs seek to avoid the direct purchaser rule and the
`Supreme Court’s rejection of an offensive pass-on theory, set forth in the above
`cases, by relying on several cases from outside the Sixth Circuit. The two cases
`DP Plaintiffs rely on most heavily are In re Sugar Industry Antitrust Litig., 579
`F.2d 13 (3d Cir. 1978) and In re Linerboard Antitrust Litig., 305 F.3d 145 (3d
`Cir. 2002). Notably, however, the Sixth Circuit has not endorsed the approach
`taken in those cases.
`Moreover, as explained below, even if the exception set forth in those
`cases were adopted by the Sixth Circuit, it would not aid the DP Plaintiffs here.
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`. . . .
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`At best, these decisions reflect that the Third Circuit has concluded that the direct
`purchaser rule does not apply in situations where a plaintiff purchases a product
`containing a price-fixed component directly from an alleged violator who makes
`both the component and the product containing the component. Again, such a
`rule, even if it were adopted by the Sixth Circuit, would not apply here.
`Accordingly, the Court concludes that the only persons or entities who
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`have standing to assert federal antitrust claims in this action are those persons or
`entities who directly purchased compressors from a Defendant. Thus, any named
`DP Plaintiff who did not purchase compressors from a Defendant lacks standing
`and must be dismissed from this action.
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`(6/13/11 Opinion & Order at 12). Because of the way the MAC was drafted, however, it was
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`impossible to tell which, if any, of the named DP Plaintiffs purchased compressors directly from
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`a Defendant. Accordingly, the Court granted “DP Plaintiffs’ request to file an amended
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`complaint in order to specify which, if any, of the DP Plaintiffs have federal antitrust standing by
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`virtue of having directly purchased compressors from a Defendant.” (Id. at 18). In doing so, the
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`Court instructed that the amended complaint was to “specifically identify: 1) each named DP
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`Plaintiff who directly purchased compressors from a Defendant; 2) the Defendant(s) from whom
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`that named DP Plaintiff directly purchased compressors; and 3) where and when such purchases
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`are alleged to have taken place.” (Id. at 18).
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`As to the alleged fraudulent concealment, the Court ruled that “because DP Plaintiffs
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`have not pleaded fraudulent concealment with particularity, any claims accruing before February
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`25, 2005 are time-barred.” (Id. at 29). The Court also denied DP Plaintiffs’ request to file an
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`amended complaint that would plead fraudulent concealment with more particularity. (Id. n.9).
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`Following this Court’s June 13, 2011 Opinion & Order, DP Plaintiffs filed a Motion for
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`Reconsideration (Docket Entry No. 247) on June 27, 2011, and an Amended Motion for
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`Reconsideration (Docket Entry No. 255) on June 30, 2011. In those motions, DP Plaintiffs asked
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`“this Court to reconsider its holding that the only persons or entities with standing to assert
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`federal antitrust claims in this action are those persons or entities who directly purchases
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`compressors from a Defendant. Specifically, DP Plaintiffs respectfully ask this Court to
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`reconsider whether director purchasers of condensers (which integrate compressors as a key
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`component) have standing to assert claims in this action . . .” (Docket Entry No. 255 at 2).
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`This Court denied those motions in an order issued on August 2, 2011. In doing so, the
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`Court explained:
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`With respect to the standing issue, DP Plaintiffs continue to advance the same or
`similar arguments that were made by them in opposing Defendants’ Joint Motion
`to Dismiss. A motion for reconsideration, however, “is not properly used as a
`vehicle to re-hash old arguments.” Smith v. Mount Pleasant Schools, 298
`F.Supp.2d 636, 637 (E.D. Mich. 2003) (citing Sault Ste. Marie Tribe of Chippewa
`Indians v. Engler, 146 F.3d 367, 374 (6th Cir. 1998); Hamilton v. Gansheimer,
`536 F.Supp.2d 825, 842 (N.D. Ohio 2008) (Courts should not reconsider prior
`decision where the motion for reconsideration renews arguments already
`considered.); L.R. 7.1(h)(3) (the court will not grant motions for reconsideration
`“that merely present the same issues ruled upon by the court.”).
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`(8/2/11 Order at 2).
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`On August 23, 2011, DP Plaintiffs filed their “First Amended Master Amended
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`Complaint” (“FAMAC”). (Docket Entry No. 267). That FAMAC included amended allegations
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`to clarify which of the DP Plaintiffs have federal anti-trust standing by virtue of having directly
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`purchased compressors from a Defendant, and modified the class period to begin no earlier than
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`February 25, 2005, in accordance with this Court’s June 13, 2011 Opinion & Order.
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`Shortly after having filed its FAMAC, on September 7, 2011, DP Plaintiffs filed the
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`instant Motion For Leave To File Second Amended Master Amended Complaint. (Docket Entry
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`No. 271). In this motion, DP Plaintiffs seek leave to file a Second Amended Master Amended
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`Complaint in order “to include three additional categories of allegations not explicitly authorized
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`by the Court’s MTD Opinion & Order: 1) allegations relating to Embraco North America, Inc.’s
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`and Panasonic Corporation’s criminal plea agreements; 2) allegations that provide a more
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`complete picture of the price-fixing conspiracy alleged in the FAMAC (these allegations were
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`formerly included in the MAC in paragraphs regarding fraudulent concealment and were not
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`included in the FAMAC consistent with this Court’s MTD Opinion & Order), and 3) allegations
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`regarding Condensing Units.” (DP Pls.’ Motion at ¶ 10).
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`ANALYSIS
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`At this stage of the litigation, DP Plaintiffs may not file an amended complaint without
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`leave of the Court. Fed. R. Civ. P. 15(a)(2). “The court should freely give leave when justice so
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`requires.” Id.
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`1.
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`Allegations Regarding Plea Agreements
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`DP Plaintiffs contend that they wish to amend their operative complaint in order to
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`include allegations regarding Embraco North America, Inc. and Panasonic Corporation’s guilty
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`pleas in criminal cases. Those pleas were entered in November and December of 2010. DP
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`Plaintiffs assert that because such guilty pleas can be used as prima facie evidence of
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`Defendants’ price-fixing conspiracy in this action, they would like to include these allegations in
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`their operative complaint.
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`In response, Defendants assert that filing an amended complaint to include these
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`allegations is unnecessary, because that evidence “may be introduced as evidence in accordance
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`with 15 U.S.C. § 16(a).” (Defs.’ Response Br. at 1 n.1). “Nevertheless, Defendants do not
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`specifically oppose such amendments if the Court deems them appropriate.” (Id.).
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`The Court concludes that DP Plaintiff should be granted leave to file an amended
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`complaint that contains these allegations.
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`2.
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`Allegations Regarding Conspiracy
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`In their motion, DP Plaintiffs assert that “in accordance with the Court’s ruling on
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`fraudulent concealment, DP Plaintiffs removed all allegations relating to fraudulent concealment
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`from the FAMAC, modified the class period to begin no earlier than February 25, 2005, and
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`modified the Class definition. See MTD Opinion & Order at 29 n.9, 30.” (DP Pls.’ Br. at 1).
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`As an initial matter, this Court did not order DP Plaintiffs to remove all allegations
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`relating to fraudulent concealment. This Court merely ruled that “because DP Plaintiffs have not
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`pleaded fraudulent concealment with particularity, any claims accruing before February 25, 2005
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`are time-barred.” (6/13/11 Opinion & Order at 29 & 30).
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`That said, DP Plaintiffs did remove the allegations relating to fraudulent concealment,
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`under the belief that this Court’s Order required them to do so. DP Plaintiffs would like to add
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`these factual allegations back into their complaint because, even though the Court ruled against
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`them on the fraudulent concealment issue, they would like these factual allegations in the
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`complaint to provide detail as to the alleged conspiracy. They identify the factual allegations
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`they wish to add on page seven of their brief. DP Plaintiffs assert that they “are requesting leave
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`to amend to include the aforementioned facts and information for the sole purpose of more
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`completely describing Defendants’ price-fixing conspiracy that is the basis for DP Plaintiffs’
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`claims, and are not seeking to re-plead fraudulent concealment.” (DP Pls’ Br. at 7).
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`While it is not necessary to add these allegations back in to the DP Plaintiffs’ operative
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`complaint in order to state a price-fixing conspiracy claim, the Court sees no harm in allowing
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`them to do so, especially given that they will already be amending the complaint to include the
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`allegations regarding the guilty pleas by two Defendants. DP Plaintiffs made a timely request to
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`file an amended complaint and the Court fails to see how adding these factual allegations back
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`into the complaint prejudices Defendants.
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`3.
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`Allegations Regarding Condensing Units
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`Defendants’ real opposition to this motion concerns DP Plaintiffs’ final request, wherein
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`they wish to amend the complaint in order to add allegations regarding Condensing Units.
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`As the Court explained in its June 13, 2011 Opinion & Order, the DP Plaintiffs were
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`seeking to avoid the direct purchaser rule and the Supreme Court’s rejection of an offensive
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`pass-on theory by relying on several cases from outside of the Sixth Circuit. The two cases DP
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`Plaintiffs relied on most heavily are In re Sugar Industry Antitrust Litig., 579 F.2d 13 (3d Cir.
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`1978) and In re Linerboard Antitrust Litig., 305 F.3d 145 (3d Cir. 2002). This Court found DP
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`Plaintiffs’ reliance on those cases misplaced for two reasons. First, the Court noted that “the
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`Sixth Circuit has not endorsed the approach taken” in either of those cases. (6/13/11 Opinion &
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`Order at 12). Second, the Court concluded that “even if the exception set forth in those cases
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`were adopted by the Sixth Circuit, it would not aid the DP Plaintiffs here.” (Id.). The Court
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`explained that, at best, the decisions DP Plaintiffs rely on “reflect that the Third Circuit has
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`concluded that the direct purchaser rule does not apply in situations where a plaintiff purchases a
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`product containing a price-fixed component directly from an alleged violator who makes both
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`the component and the product containing the component. Again, such a rule, even if it were
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`adopted by the Sixth Circuit, would not apply here.” (Id. at 16).
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`In seeking leave to amend, DP Plaintiffs once again argue that DP Plaintiffs who are
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`“direct purchasers of Condensing Units from Defendants have standing to assert antitrust claims
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`regarding such products.” (DP Pls.’ Br. at 13). They assert that in the proposed SAMAC, “DP
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`Plaintiffs would allege that they purchased Condensing Units containing price-fixed
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`Compressors directly from a Defendant; and the Condensing Unit was either (1) manufactured
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`by a Defendant or one of their affiliated entities, principals, agents, or co-conspirators, or (2) was
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`manufactured, sold or transferred to the Defendant by a co-conspirator.” (Id.). The Court denied
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`this request in its June 7, 2012 Order.
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`First and foremost, the Sixth Circuit has not endorsed the exception created by the Third
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`Circuit.
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`Second, while DP Plaintiffs assert that some DP Plaintiffs could have standing under the
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`Third Circuit’s exception for a plaintiff who purchases a product containing a price-fixed
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`component directly from an alleged violator who makes both the component and the product
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`containing the component, their proposed SAMAC would go well beyond that exception in that
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`it would include allegations as to DP Plaintiffs who brought a Condensing Unit from one
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`Defendant that contained a compressor made by another defendant.
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`Defendants ask the Court to sanction DP Plaintiff’s counsel, pursuant to 28 U.S.C. §
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`1927 for needlessly increasing the cost of this litigation. Defendants contend that the Court has
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`already rejected DP Plaintiffs’ standing argument twice (once in connection with the Joint
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`Motion to Dismiss and once in denying DP Plaintiffs’ motions for reconsideration) and that DP
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`Plaintiffs’ counsel had no reasonable basis for asking the Court to consider the issue a third time.
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`While the Court agrees that there was no reasonable basis for this request given the
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`Court’s prior rulings, the Court declines to sanction counsel. Nevertheless, the Court cautions
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`counsel that it will not hesitate to impose sanctions under § 1927 in the future if warranted.
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`DP Plaintiffs shall file their Second Amended Master Amended Complaint, with the
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`amendments allowed by the Court in this Memorandum Opinion, no later than Wednesday,
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`June 20, 2012. Barring a very exceptional circumstance, the Court will not allow further
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`amendments.
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`Dated: June 8, 2012
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`S/Sean F. Cox
`Sean F. Cox
`United States District Judge
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`I hereby certify that a copy of the foregoing document was served upon counsel of record on
`June 8, 2012, by electronic and/or ordinary mail.
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`S/Jennifer Hernandez
`Case Manager
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