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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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`OPINION & ORDER DENYING WITHOUT PREJUDICE
`REQUEST BY DEFENDANT DANFOSS FLENSBURG GMBH FOR RULING THAT
`CLAIMS ASSERTED AGAINST IT IN THE IP PLAINTIFFS’ TCAC DO NOT RELATE
`BACK TO ANY PRIOR COMPLAINTS
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`This Multi District Litigation matter involves putative class action claims asserted against
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`multiple corporate Defendants by: 1) Direct Purchaser (“DP”) Plaintiffs (who assert federal
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`antitrust claims); and 2) Indirect Purchaser (“IP”) Plaintiffs (who assert state-law antitrust,
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`consumer protection act, and unjust enrichment claims). This Court has previously ruled with
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`respect to Motions to Dismiss as to the DP Plaintiffs’ claims. In another Opinion & Order issued
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`this date, this Court addressed the remaining challenges in the Defendants’ Motions to Dismiss
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`that challenge the IP Plaintiffs’ claims.
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`There is one additional challenge, however, that a newly-added Defendant, Danfoss
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`Flensburg GmbH, raised in a supplemental brief filed on July 20, 2012. This new Danfoss
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`Defendant, that was added in the IP Plaintiffs’ most recent complaint, asks the Court to rule that
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`the claims asserted against it do not relate back to any prior complaints. For the reasons below,
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`the Court shall deny this request without prejudice.
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`BACKGROUND
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`1
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`This case has a fairly lengthy history, that is more fully set forth in another Opinion &
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`Order issued on April 9, 2013. (Docket Entry No. 343). The Court includes here just those
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`background facts that are necessary in order to address the challenge asserted by the newly-
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`added Danfoss Defendant.
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`Beginning in February 2009, the DP Plaintiffs and IP Plaintiffs filed complaints in
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`various jurisdictions asserting claims against Defendants. Those actions were consolidated for
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`pretrial proceedings by the United States Judicial Panel on Multi district Litigation.
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`Case Management Order No. 1
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`The Court issued Case Management Order No. 1 (the “CMO”) on May 26, 2010. (D.E.
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`No. 152). The CMO provides that the DP & IP Plaintiffs shall separately file Master Amended
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`Complaints including each Defendant no later than June 30, 2012. (Id. at 8). It also provides
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`that Defendants may thereafter file motions to dismiss the master amended complaints. (Id. at 9-
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`10).
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`The IP Plaintiffs’ First Two Consolidated Amended Complaints
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`The IP Plaintiffs filed their Consolidated Amended Complaint on June 30, 2010. (D.E.
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`No. 154). It asserted claims against multiple Defendants, including six different corporate
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`“Danfoss Entities”: 1) Danfoss’s A/S; 2) Danfoss, Inc.; 3) Danfoss Commercial Compressors,
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`Ltd.; 4) Danfoss Compressor, LLC; 5) Danfoss Scroll Technologies, LLC; and 6) Danfoss
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`Turbocor Compressors, Inc. (Id. at ¶¶ 44-49). It did not name Danfoss Flensburg GMBH,
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`formerly Danfoss Compressors GmbH, (hereinafter “Danfoss Flensburg”) as a Defendant.
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`On September 21, 2010 (D.E. No. 174), the IP Plaintiffs filed their Second Consolidated
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`2
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`Amended Complaint (“SCAC”). (D.E. No. 174). In it, they seek certification of a nationwide
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`class, and assert state-law antitrust claims, consumer protection / unfair competition claims, and
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`unjust enrichment claims against multiple Defendants. The SCAC also did not name Danfoss
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`Flensburg as a Defendant.
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`Motions to Dismiss The IP Plaintiffs’ Claims
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`As permitted by the CMO, beginning on August 30, 2010, Defendants filed a Joint
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`Motion to Dismiss the IP Plaintiffs’ claims (D.E. No. 162), asserting numerous challenges. In
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`addition, two separate motions challenging the IP Plaintiffs’ complaints were also filed by: 1) the
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`Tecumseh Defendants (D.E. No. 166); and 2) Appliances Components Companies S.p.A.
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`(Docket Entry No. 218).1
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`This Court’s Ruling On Defendants’ Twombly Challenge And The IP Plaintiffs’ Request To
`File Another Consolidated Amended Complaint
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`On June 7, 2012, this Court heard oral argument on the “Twombly challenge” set forth in
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`Defendants’ Joint “Motion to Dismiss the Indirect Purchaser Plaintiffs’ Consolidated Amended
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`Complaint” (D.E. No. 162).
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`During that hearing, counsel for the IP Plaintiffs orally requested to file another amended
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`complaint, in order to include additional factual allegations as to the conspiracy.
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`After the hearing, the Court ruled that “the Indirect Purchaser Plaintiffs’ current operative
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`complaint, the ‘Second Consolidated Amended Complaint’, fails to state a claim under Twombly,
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`except as to the claims asserted against Defendants Panasonic Corporation and Embraco North
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`America, Inc., for the approximately three-year period set forth in the respective plea
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`1Whirlpool Corporation also filed its own motion challenging both the DP and IP
`Plaintiffs’ claims against it, but it has been dismissed from this action.
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`3
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`agreements.” (D.E. No. 294). On June 11, 2012, this Court also issued a Memorandum
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`Opinion, setting forth the basis for that ruling. (D.E. No. 300).
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`On June 21, 2012, the IP Plaintiffs filed a “Motion to Amend or Clarify the Court’s June
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`7, 2012 Order and for Leave to File a Third Consolidated Amended Complaint” (D.E. No. 307).
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`In that motion, the IP Plaintiffs asked the Court to clarify that the Court’s June 7, 2009 Order did
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`not foreclose the IP Plaintiffs from seeking leave to file another amended complaint.
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`The parties were scheduled to appear before this Court on June 29, 2012, at 2:30 p.m.,
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`for the continuation of the hearing on the motions challenging the IP Plaintiffs’ claims. (See
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`6/20/12 Docket Entry).
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`On the morning of June 29, 2012, the IP Plaintiffs filed two separate submissions titled
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`“Indirect Purchaser Plaintiffs; Supplemental Motion to Amend or Clarify the Court’s June 7,
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`2012 Order and for Leave to File a Third Consolidated Amended Complaint” (D.E. Nos. 311 &
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`312). Those submissions attached proposed Third Consolidated Amended Complaints which,
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`among other things, added another Danfoss Defendant that had not been named as a Defendant
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`in earlier complaints – Danfoss Flensburg.
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`On the afternoon of June 29, 2012, the Court did not continue the motion hearing.
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`Rather, the Court held a Status Conference with the parties to discuss the IP Plaintiffs’ recent
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`filings and the most efficient manner with proceeding. During the Status Conference, the parties
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`were able to resolve certain issues. Specifically, “[a]s stated on the record on June 29, 2012,
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`Defendants and the IP Plaintiffs agreed” as follows:
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`1.
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`2.
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`Defendants do not oppose the IP Plaintiffs’ requests to file an amended
`complaint, as requested in Docket Entry Nos. 307, 311 and 312.
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`Defendants reserve all issues raised in their pending Motions to Dismiss.
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`4
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`3.
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`4.
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`5.
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`6.
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`The IP Plaintiffs will enter into a stipulation and order with Defendant
`Whirlpool Corporation (similar to Docket Entry No. 310) that dismisses
`their claims against Whirlpool Corporation with prejudice.
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`On or before July 6, 2012, the IP Plaintiffs shall file their Revised Third
`Consolidated Amended Complaint. The amended pleading shall be the
`same pleading attached to the IP Plaintiffs’ Motion to Amend or Clarify
`the Court’s June 7, 2012 Order and for Leave to File a Third Consolidated
`Amended Complaint (Docket Entry No. 307-2), with only the following
`additions or changes:
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`a.
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`b.
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`c.
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`d.
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`The two named IP Plaintiffs in the “Tag-Along” Gaffett and Strong
`Electric actions (i.e., Nat Gaffet and Strong Electric) shall be
`included as named IP Plaintiffs in the Revised Third Consolidated
`Amended Complaint.2
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`The two additional named IP Plaintiffs identified in Docket Entry
`Nos. 311 & 312 (i.e., Peter Jacobus and Steve Larson) may be
`included as named IP Plaintiffs in the Revised Third Consolidated
`Amended Complaint.
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`The IP Plaintiff may correct any “scrivener’s errors” regarding the
`allegations specific to the existing named IP Plaintiffs in Docket
`Entry No. 307-2.
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`The IP Plaintiffs may delete Whirlpool Corporation as a
`Defendant.
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`Barring a very exceptional circumstance, no further amendments shall be
`permitted.
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`Following the filing of the IP Plaintiffs’ Revised Third Amended
`Complaint, the briefing schedule for supplemental briefs addressing the
`pending motions to dismiss shall be as follows:
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`a.
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`No later than July 20, 2012, Defendants may file brief addressing
`the IP Plaintiffs’ Revised Third Amended Complaint.
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`2As such, the Motions to Dismiss directed to the tag-along Defendants were terminated.
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`b.
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`c.
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`No later than August 3, 2012, the IP Plaintiffs may file responses
`to those briefs.
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`No later than August 10, 2012, Defendants may file reply briefs.
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`(D.E. No. 313).
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`On July 6, 2012, the IP Plaintiffs filed their revised Third Consolidated Amended
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`Complaint (“TCAC”). (D.E. No. 314). This is now the operative complaint. In the TCAC, the
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`IP Plaintiffs added Danfoss Flensburg as a named Defendant.
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`Thereafter, the IP Plaintiffs and Defendants filed supplemental briefs regarding the
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`remaining issues raised in the Defendants’ Motions to the Dismiss. Another Opinion & Order,
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`issued this date, addresses the remaining challenges contained in those motions.
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` Rather than file its own Motion to Dismiss, Danfoss Flensburg filed a supplemental brief
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`(D.E. No. 320), asserting a challenge that only applies to it, that was not included in the
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`previously-filed Motions to Dismiss. Thus, the challenge asserted by Danfoss Flensburg was not
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`made in a formal motion.
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`ANALYSIS
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`Danfoss Flensburg asserts that the claims asserted against it in the TCAC do not relate
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`back to any prior complaints.3 If the Court agrees, then certain portions of the remaining claims
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`asserted against it would be time-barred.
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`Rule 15 of the Federal Rules of Civil Procedure governs the relation back of
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`3Danfoss Flensburg’s opening supplemental brief also asserts that, as of the date it was
`filed, it had not been properly served with the TCAC. It therefore reserved the right to make
`challenges later but did not ask the Court for any relief at that time. Its supplemental reply brief
`does not address service.
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`6
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`amendments. It provides, in pertinent part, that “[a]n amendment to a pleading relates back to
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`the date of the original pleading” when:
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`(C)
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`the amendment changes the party or the naming of the party against whom
`a claim is asserted, if Rule 15(c)(1)(B) is satisfied and if, within the period
`provided by Rule 4(m) for serving the summons and complaint, the party to
`be brought in by amendment:
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`(i)
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`(ii)
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`received such notice of the action that it will not be prejudiced in
`defending on the merits; and
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`knew or should have known that the action would have been brought
`against it, but for a mistake concerning the property party’s identity.
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`Fed. R. Civ. P. 15 (c)(1)(C).
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`For many years, the Sixth Circuit interpreted Rule 15 to preclude relation back when a
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`plaintiff seeks to add, rather than substitute, a new party. See In re Kent Holland Die Casting &
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`Plating, Inc., 928 F.2d 1448, 1449 (6th Cir. 1991); Marlowe v. Fisher Body, 489 F.2d 1057,
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`1064 (6th Cir. 1973); Freese v. Continental Airlines, Inc., 412 Fed. App’x 770, 771 (6th Cir.
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`2011); Beverly v. Meva Formwork Sys., Inc., 2012 WL 4009711 (6th Cir. Sept. 12, 2012).
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`Here, it is undisputed that the IP Plaintiffs’ TCAC did not replace or substitute one
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`Danfoss entity for another. Rather, it added an entirely new Danfoss entity as a defendant and
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`kept all six of the previously-named Danfoss entities as defendants. Thus, under the Sixth
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`Circuit precedent that had existed for years, there would be no relation back under Rule 15.
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`But the issue is now complicated by a 2010 Supreme Court decision, Krupski v. Costa
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`Crociere S.p.A. 560 U.S. __, 130 S.Ct. 2485, 177 L.Ed.2d 48 (2010).
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`Danfoss Flensburg contends that under Sixth Circuit precedent, an amendment which
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`adds a new party does not relate back to the original complaint for statute of limitation purposes.
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`It asserts that “[w]hile some commentators have argued that Krupski liberalizes the requirements
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`for relation back under Rule 15(c), the Sixth Circuit has made clear that it does not apply to the
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`situation where a plaintiff seeks to add a new party, as is the case here.” (Danfoss Flensburg’s
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`Br. at 7). It contends that, under Smith, there is no relation back. Smith v. City of Akron, 2012
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`WL 1139003 (6th Cir. Apr. 6, 2012).
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`In Smith, however, the Sixth Circuit did not address the situation presented here. Rather,
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`that case involved the situation where the plaintiff names a “John Doe” defendant but then fails
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`to discover that person’s identity and name him within the limitations period. Id. at *2 (“The
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`Rule allows relation back for the mistaken identification of defendants, not for defendants to be
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`named later through ‘John Doe’, ‘Unknown Defendants’ or other missing appellations.”).
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`This Court does not read Smith as addressing the precise issue presented here – whether,
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`following Krupski, the Sixth Circuit would still preclude relation back when a plaintiff adds a
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`new defendant who is related to an existing defendant.
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`In response, the IP Plaintiffs assert that Smith is not on point. They also direct the Court
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`to a district court decision within the Sixth Circuit where the district court concluded that other
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`district courts in the Sixth Circuit had read Krupski “in an unduly narrow fashion. Although
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`Krupski does not expressly resolve whether Rule 15(c)(1)(C) allows for the addition of new
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`parties, the Court believes that a better reading of that decision views it as abrogating the prior
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`Sixth Circuit rule that categorically barred addition of new parties under Rule 15(c).” Erie
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`Indemnity Co. v. Keurig, Inc., 2011 WL 2893013 (N.D. Ohio 2011).
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`Following Krupski, the Sixth Circuit has acknowledged that Krupski has changed the
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`state of the law as it relates to relation back under Rule 15 – but it has not ruled on the issue of
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`whether Krupski abrogated the Sixth Circuit’s rule that categorically barred the addition of new
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`parties under the rule.
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`First, right around the same time that Smith was issued, Freese was issued. Freese v.
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`Continental Airlines, Inc., 412 Fed. App’x 770 (6th Cir. Feb. 3, 2011). In this unpublished
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`opinion, the Sixth Circuit expressed the view that Krupski altered its prior precedent. In that
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`case, the plaintiff initially named one corporate defendant, Continental Airlines, Inc. The
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`plaintiff later sought to amend in order to add a new defendant, ExpressJet. The district court
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`denied the motion to amend as futile, concluding that the statute of limitation had expired and
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`the amendment did not relate back under Rule 15(c). On appeal, the Sixth Circuit stated:
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`With regard to Freese’s motion to name ExpressJet as a new party defendant, the
`district court concluded that her motion did not relate back under Rule 15(c). In
`support of this conclusion the district court looked to Sixth Circuit precedent, see
`In re Kent Holland Die Casting & Plating, Inc., 928 F.2d 1448, 1449 (6th Cir.
`1991), which precludes relation back when the plaintiff seeks to add a new
`defendant.
`. . . .
`At the time of its ruling, the district court correctly applied the law. Since the
`district court’s ruling, in a case factually similar to this matter, the Supreme Court
`addressed relation back under Rule 15(c). Krupski v. Costa Corociere S.p.A., __
`U.S. __, 130 S.Ct. 2485, 177 L.Ed.2d 48 (2010). Accordingly, we REMAND the
`denial of Freese’s motion to amend to the district court for consideration of
`Krupski.
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`Id. at 771.
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`Second, after the parties had filed their supplemental briefs in this case, the Sixth Circuit
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`issued Beverly v. Meva Forwork Sys., Inc., 2012 WL 40009711 (6th Cir. Sept. 12, 2012). That
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`case involves the same situation we have here – the plaintiff originally named one corporate
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`defendant but later sought to add claims against another corporate entity, which was the German
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`parent company of the originally-named defendant. The German company argued there was no
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`relation back because: 1) it lacked actual or constructive knowledge of the suit; and 2) an
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`amendment adding a defendant does not relate back. The district court allowed the amendment
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`but held that the amended complaint did not relate back.
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`On appeal, the Sixth Circuit affirmed the district’s courts ruling because it concluded that
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`the district court properly concluded that the German company did not have constructive or
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`actual notice of the suit. Although it declined to make a ruling, the opinion also contains
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`language that suggests that, following Krupski, the Sixth Circuit no longer categorically bars the
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`addition of new parties under Rule 15(c) – at least where the newly-named defendant is related
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`to the original defendant:
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`Because MEVA Germany lacked constructive notice of Beverly’s suit, we need
`not examine the line of cases in this circuit that preclude relation back under Rule
`15(c) where the plaintiff seeks to add an additional defendant.
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`. . . .
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`While these cases arguably preclude the relation back in this particular situation,
`they differ from the instant case because the new party in those cases was
`unrelated to the original party. Here, where lack of notice to MEVA Germany
`provides an easy basis for resolution, we need not explore whether this factual
`difference affects the analysis. Accordingly, we affirm the judgment of the
`district court.
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`Id. at *4. Beverly suggests that, following Krupski, the Sixth Circuit no longer categorically bars
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`the addition of new parties under Rule 15(c), at least where the newly-named defendant is related
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`to the original defendant.
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`Accordingly, although a formal motion has not been filed by Defendant Danfoss
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`Flensburg, and the Sixth Circuit has not ruled on the precise issue before the Court, it suggested
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`in Beverly that there is no longer a categorical bar, at least where the newly-added defendant is
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`related to the original defendant. The Court shall therefore deny this request without prejudice.
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`Defendant may file a formal motion asserting this same ground if, at a future date, the Sixth
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`Circuit issues a decision indicating otherwise.
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`CONCLUSION & ORDER
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`For the reasons set forth above, Defendant Danfoss Flensburg’s request for a ruling that
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`the claims asserted against it in the IP Plaintiff’s Third Consolidated Amended Complaint do
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`not relate back to any prior complaints is DENIED WITHOUT PREJUDICE.
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`IT IS SO ORDERED.
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`S/Sean F. Cox
`Sean F. Cox
`United States District Judge
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`Dated: April 11, 2013
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`I hereby certify that a copy of the foregoing document was served upon counsel of record on
`April 11, 2013, by electronic and/or ordinary mail.
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`S/Jennifer McCoy
`Case Manager
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`11