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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
`United States District Court
`
`OPINION & ORDER
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`The Indirect Purchaser and Direct Purchaser putative class action cases in this
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`multidistrict litigation (“MDL”) proceeding have been resolved. All that remains in this MDL
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`proceeding is Plaintiff General Electric Company’s (“GE”) individual claims. GE asserts claims
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`against Defendants Danfoss A/S, Danfoss Flensburg GmbH, and Danfoss, LLC (collectively the
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`“Danfoss Defendants”). GE is pursuing its claims against the Danfoss Defendants on its own
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`behalf after having opted out of the Direct Purchaser Class Action Settlement.1
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`The matter is currently before the Court on a “Motion By Defendants Danfoss Flensburg
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`GMBH And Danfoss LLC To Dismiss The Complaint” (Docket Entry No. 470/64) which asserts
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`several grounds for relief. This Court already issued an Opinion & Order that addressed the
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`majority of the issues raised in this motion. As explained in that Opinion, however, this Court
`
`declined “to rule on two issues (whether GE has federal antitrust standing to assert claims based
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`on MABE purchases and whether those purchases are barred under the Foreign Trade Antitrust
`
`Improvement Act) until after the parties had the opportunity to file supplemental briefs
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`1GE asserted claims against the Whirlpool Defendants but those claims have been settled.
`GE also asserts claims against the ACC Defendants and GE has a default judgment as to liability
`against ACC.
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`1
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`2:09-md-02042-SFC Doc # 580 Filed 10/21/16 Pg 2 of 18 Pg ID 16115
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`addressing a relevant decision in a Seventh Circuit case,” Motorola Mobility LLC v. AU
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`Optronics Corp., 775 F.3d 816 (7th Cir. 2015). (Docket Entry No. 535 at 1-2). The parties have
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`since filed supplemental briefs addressing those issues. (Docket Entry Nos. 541 & 542). Thus,
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`the issues have been exhaustively briefed.
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`The Court finds that oral argument would not aid the decisional process and orders that
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`the remaining issues in the motion will be decided upon the briefs. See Local Rule 7.1(f)(2),
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`U.S. District Court, Eastern District of Michigan. For the reasons set forth below, the Court
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`finds the Seventh Circuit’s decision in Motorola persuasive and concludes that GE cannot treat
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`MABE, its minority-owned foreign manufacturing subsidiary, as an extension of itself for
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`purposes of satisfying the FTAIA or avoiding the indirect-purchaser-standing rule. The Court
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`will grant the Danfoss Defendants’ motion, to the extent that it rules that GE cannot pursue
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`federal antitrust claims against the Danfoss Defendants that are based upon MABE’s purchases
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`of refrigerant compressors.
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`BACKGROUND
`
`There is a lengthy history to this MDL proceeding. The Court includes here only those
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`facts that are relevant for purposes of determining the remaining issues before the Court.
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`GE filed its Complaint on February 15, 2013, in the United States District Court for the
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`Western District of Kentucky, Louisville Division. The action was transferred to this Court by a
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`June 17, 2013 Order of the United States Judicial Panel on Multidistrict Litigation, which
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`transferred the action to this Court for inclusion in the coordinated or consolidated pretrial
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`proceedings in this MDL proceeding, which began back in 2009.
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`GE’s eighty-three page Complaint asserts claims against three different groups of
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`2
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`Defendants: 1) the “Embraco Defendants,” which include Whirlpool Corporation, Whirlpool
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`S.A., and Embraco North America, Inc.; 2) the “Danfoss Defendants,” which include Danfoss
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`A/S, Danfoss Flensburg GMBH, and Danfoss, LLC; and 3) the “ACC Defendants,” which
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`include Household Compressors Holding SpA, and ACC USA, LLC. GE’s Complaint
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`summarizes the nature of the action as follows:
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`1.
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`2.
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`3.
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`This lawsuit arises from a long-standing cartel created, maintained, and
`enforced by the Defendants and their co-conspirators (collectively, the
`“Conspirators”) for anticompetitive acts and behavior. They have agreed
`to, and in fact did, illegally inflate, raise, fix, and artificially stabilize the
`price of refrigerant compressors sold in the United States and elsewhere
`in the world. The Defendants also have agreed to, and in fact did
`illegally, restrict capacity, restrict innovation, stabilize market
`shares, allocate customers, territories, and product types, and
`otherwise restrain competition in the manufacture and sale of
`refrigerant compressors in the United States and elsewhere in the
`world. The result of the Conspirators’ conduct has been to
`raise the prices paid by their customers, including Plaintiff, to
`supra-competitive levels, reducing the attractiveness of their
`customers’ products in terms of price and quality, and thereby
`damaging their customers’ businesses. The cartel started at least as
`early as January 1, 1996 and the cartel and its effects will continue
`at least into 2013 (the “conspiracy period”). The exact dates of the
`conspiracy period are not known to Plaintiff, but are likely to be
`revealed during the course of discovery in this litigation.
`
`A refrigerant compressor, in the context of this case, is a device that
`compresses a refrigerant gas. When the gas is later permitted to expand, it
`absorbs and thereby transfers heat, producing a cooling effect used in a
`wide variety of refrigeration products. For example, refrigerant
`compressors are used in household refrigerators, in which the compressors
`are part of the system that creates cold air that keeps food fresh or frozen.
`
`During the conspiracy period, Defendants and their co-conspirators
`Tecumseh and Panasonic have dominated the global and U.S. markets for
`refrigerant compressors. Indeed, the three largest suppliers to the U.S.
`market – Embraco, Panasonic, and Tecumseh – had as of 2008
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`3
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`4.
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`a collective market share in the United States of approximately 85%.
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`Plaintiff General Electric Company is one of the largest manufacturers and
`sellers of refrigeration equipment in the United States. As such, it is one of
`the largest purchasers of refrigerant compressors in the United States.
`Plaintiff General Electric Company has been a target and a victim of the
`Conspirators’ cartel. In particular, Plaintiff is one of the largest
`manufacturers of household refrigerators in the United States and globally,
`and throughout the conspiracy period, household refrigerators
`manufactured and/or sold by Plaintiff have included refrigerant
`compressors supplied by Conspirators. As a result of the cartel, Plaintiff
`has paid supra-competitive prices for compressors and has been deprived
`of innovation that would have resulted in increased efficiency, as well as
`increased sales and profits, in its sales of refrigerators and other
`refrigeration equipment.
`
`(Compl. at 1-2).
`
`GE’s Complaint asserts three causes of action: 1) “Violation of Section 1 of the Sherman
`
`Act, 15 U.S.C. § 1,” its First Cause of Action; 2) “Fraud,” its Second Cause of Action; and 3)
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`“Conspiracy,” its Third Cause of Action.
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`GE’s Complaint contains allegations regarding “MABE purchases” that are relevant to
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`the limited issues currently before the Court. GE’s Complaint alleges that, throughout the
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`conspiracy period, “GE has been a minority owner of a joint venture named Controladora Mabe,
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`S.A. de C.V. (‘MABE’).” (Compl. at ¶ 46). GE alleges that “[d]uring the conspiracy period
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`(and today), GE has owned (and today owns) slightly more than 48% interest in MABE. GE
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`also has minority representation on MABE’s board of directors, and a veto right with respect to
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`some unspecified “categories of board decisions.” (Id.).
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`GE alleges that as part of its joint venture relationship with GE, during the conspiracy
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`period MABE has manufactured residential refrigerators for GE for sale in the United States
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`4
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`pursuant to contract manufacturing agreements between GE and Mabe.” (Compl. at ¶ 47).
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`It also alleges that GE’s procurement teams in the United States have controlled and determined
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`the price and quantity of refrigerant compressors MABE has incorporated into refrigerators it has
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`manufactured for sale by GE in the United States.
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`This Court previously issued an Opinion & Order that addressed multiple issues raised in
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`a “Motion By Defendants Danfoss Flensburg GMBH And Danfoss LLC To Dismiss The
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`Complaint” (Docket Entry No. 470/64). As explained in that Opinion, this Court declined to
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`rule on two issues (whether GE has federal antitrust standing to assert claims based on MABE
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`purchases and whether those purchases are barred under the Foreign Trade Antitrust
`
`Improvement Act) until after the parties have had the opportunity to file supplemental briefs
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`addressing the Seventh Circuit’s decision” in Motorola. The parties have since filed
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`supplemental briefs addressing those issues. (Docket Entry Nos. 541 & 542). 2
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`STANDARD OF DECISION
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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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`2In addition to their supplemental brief, the Danfoss Defendants filed two exhibits that
`GE filed objections to: 1) a “MABE Offering Memorandum” (Docket Entry No. 542-9); and 2) a
`Declaration from Mauricio Serralde Rodriguez, with Exhibits B-C to the Declaration (Docket
`Entry No. 541-10). The Danfoss Defendants responded to those objections. (Docket Entry No.
`549). But because the Court’s analysis does not consider those items, the Court need not address
`those objections.
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`5
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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 determining whether to grant a Rule 12(b)(6) motion, the court primarily considers the
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`allegations in the complaint, although matters of public record, orders, items appearing in the
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`record of the case and exhibits attached to the complaint may also be taken into account. Amini
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`v. Oberlin College, 259 F.3d 493, 502 (6th Cir. 2001) (citing Nieman v. NLO, Inc., 108 F.3d
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`1546, 1554 (6th Cir. 1997)).
`
`ANALYSIS
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`The only issues that remain with respect to the Motion to Dismiss at bar are the Danfoss
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`Defendants’ challenges to GE’s ability to assert federal antitrust claims based on MABE’s
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`refrigerant compressor purchases.
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`GE “is one of the largest manufacturers and sellers of refrigeration equipment in the
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`United States. As such, it is one of the largest purchasers of refrigerant compressors in the
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`United States.” (Compl. at ¶ 4).
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`In this case, GE accuses foreign manufacturers of refrigerant compressors of having
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`violated section 1 of the Sherman Act, 15 U.S.C. § 1, by conspiring and agreeing with each other
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`on the prices they would charge for refrigerant compressors. The alleged conspirators are the
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`named defendants in GE’s complaint, including the Danfoss Defendants.
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`GE manufactured a substantial portion of its refrigerators in the United States, using
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`compressors GE purchased from the alleged conspirators. (GE’s Br., D.E. No. 541 at Pg ID
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`15382). The Danfoss Defendants have not argued that the FTAIA bars GE’s federal antitrust
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`6
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`2:09-md-02042-SFC Doc # 580 Filed 10/21/16 Pg 7 of 18 Pg ID 16120
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`claims concerning those purchases of compressors.
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`But the Danfoss Defendants assert that the FTAIA bars GE’s federal antitrust claims
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`based upon its purchases of refrigerators from MABE, a joint venture in which GE has a
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`minority interest. Thus, the issues that remain before this Court involve only GE’s federal
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`antitrust claims concerning its MABE purchases
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`This Court allowed the parties to file supplemental briefs as to whether GE has federal
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`antitrust standing to assert claims based on MABE purchases and whether those purchases are
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`barred under the FTAIA. The issues have been exhaustively briefed and are ripe for a decision
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`by this Court.
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`As explained below, this Court finds the Seventh Circuit’s decision in Motorola
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`persuasive and concludes that GE cannot treat MABE, its minority-owned foreign manufacturing
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`subsidiary, as an extension of itself for purposes of satisfying the FTAIA or avoiding the
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`indirect-purchaser-standing rule. The Court will therefore grant the Danfoss Defendants’
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`motion, to the extent that it rules that GE cannot pursue federal antitrust claims against the
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`Danfoss Defendants that are based upon MABE’s purchases of refrigerant compressors.
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`I.
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`The Seventh Circuit’s Decision in Motorola
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`The issues currently before this Court, concerning the FTAIA and the Illinois Brick
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`indirect-purchaser limit3 on who has standing to sue for antitrust damages were both before the
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`3Under Illinois Brick Co. v. Illinois, 431 U.S. 720, 746 (1977), only direct purchasers of
`an allegedly price-fixed product may pursue private actions for monetary damages under federal
`antitrust laws.
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`7
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`2:09-md-02042-SFC Doc # 580 Filed 10/21/16 Pg 8 of 18 Pg ID 16121
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`Seventh Circuit, for a second time4, in Motorola. Motorola Mobility, LLC v. Au Optronics
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`Corp., 775 F.3d 816 (7th Cir. 2015). The Seventh Circuit issued that amended opinion after
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`having allowed several parties, including the U.S. Department of Justice, to file amicus curiae
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`briefs.
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`In that case, Motorola (a United States company) accused foreign manufacturers of LCD
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`panels (a component used to make finished cell phones) of having violated section 1 of the
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`Sherman Act by conspiring and agreeing with each other on the prices they would charge for the
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`panels. There was no dispute that Motorola could pursue federal antitrust claims with respect to
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`any panels that Motorola purchased itself and then used to make cellphones. But Motorola also
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`wanted to pursue federal antitrust claims based upon panels that Motorola’s wholly-owned Asian
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`subsidiaries had purchased from the alleged conspirators in Asia, which those subsidiaries then
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`used in Asia to make cellphones that they ultimately sold to and shipped to Motorola in the
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`United States. The district court ruled that Motorola’s claim based on those sales was barred by
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`the FTAIA.
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`The Seventh Circuit affirmed the district court’s ruling, holding that the defendants’ sale
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`of price-fixed panels to foreign purchasers did not give rise to a federal antitrust claim. It
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`concluded that a U.S. parent corporation like Motorola could not treat its foreign manufacturing
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`subsidiaries (who were the direct purchasers of the allegedly price-fixed component at issue) as
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`mere extensions of itself for purposes of either: 1) satisfying the FTAIA; or 2) avoiding the
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`Illinois Brick indirect-purchaser standing rule.
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`4The initial decision in the case, Motorola Mobility LLC v. Au Optronics Corp., 746 F.3d
`842 (7th Cir. 2014), was issued without oral argument and without the panel having heard from
`other interested parties.
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`8
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`2:09-md-02042-SFC Doc # 580 Filed 10/21/16 Pg 9 of 18 Pg ID 16122
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`A.
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`Motorola’s Claims Were Barred By The FTAIA
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`The Seventh Circuit noted that district court had “ruled that Motorola’s suit, insofar as it
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`relates” to the “panels purchased by the foreign subsidiaries, is barred by 15 U.S.C. §§ 6a(1)(A),
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`(2), which are sections of the” FTAIA. Motorola, 775 F.3d at 818. The court noted that the
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`FTAIA “has been interpreted, for reasons of international comity (that is, good relations among
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`nations), to limit the extraterritorial application of U.S. antitrust law” and explained:
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`Sections 6a(1)(A) and (2) provide that the Sherman Act “shall not apply to
`conduct involving trade or commerce (other than import trade or import
`commerce) with foreign nations unless ... such conduct has a direct, substantial,
`and reasonably foreseeable effect ... on trade or commerce which is not trade or
`commerce with foreign nations, or on import trade or import commerce with
`foreign nations,” and also, in either case, unless the “effect [on import trade or
`domestic commerce] gives rise to a claim” under federal antitrust law. See, e.g.,
`F. Hoffmann–La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 161–62, 124 S.Ct.
`2359, 159 L.Ed.2d 226 (2004); Minn–Chem, Inc. v. Agrium, Inc., 683 F.3d 845,
`853–54 (7th Cir.2012) (en banc).
`
`It is essential to understand that these are two requirements. There must be a
`direct, substantial, and reasonably foreseeable effect on U.S. domestic
`commerce—the domestic American economy, in other words—and the effect
`must give rise to a federal antitrust claim. The first requirement, if proved,
`establishes that there is an antitrust violation; the second determines who may
`bring a suit based on it.
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`Id. at 818 (emphasis in original).
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`The Court then concluded that the import commerce exception did not apply with respect
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`to the sales at issue. It explained that “[h]ad the defendants conspired to sell LCD panels to
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`Motorola in the United States at inflated prices, they would be subject to the Sherman Act
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`because of the exception in the Foreign Trade Antitrust Improvements Act for importing” and
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`that scenario was the situation with respect to panels purchased by Motorola that were not
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`involved in the appeal. Id. As to the panels that were purchased abroad and made their way into
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`the United States as part of completed cell phones, however, “Motorola is wrong to argue that it
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`is import commerce. It was Motorola, rather than the defendants, that imported these panels into
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`the United States, as components of the cellphones that its foreign subsidiaries manufactured
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`abroad and sold and shipped to it.”5
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`As a result, the Seventh Circuit proceeded to consider whether the two requirements were
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`met. It noted that Motorola “first must show that the defendants’ price fixing of the panels that
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`they sold abroad and that became components of cellphones also made abroad but imported by
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`Motorola into the United States had ‘a direct, substantial, and reasonably foreseeable effect’ on
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`commerce within the United States.” Id. The Seventh Circuit ultimately assumed, without
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`deciding, that “the requirement of a direct, substantial, and reasonably foreseeable effect on
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`domestic commerce” was satisfied. Id. at 819.
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`But that did not help Motorola because “[w]hat trips up Motorola’s suit is the statutory
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`requirement that the effect of anticompetitive conduct on domestic U.S. commerce give rise to
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`an antitrust cause of action. 15 U.S.C. § 6a(2).” Id. at 819. That is, Motorola could not meet the
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`second requirement – that it is Motorola who may bring a federal antitrust suit for this alleged
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`violation.
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`The court explained that the defendants’ alleged “conduct increased the cost to Motorola
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`5The Seventh Circuit rejected Motorola’s “target theory” as to antitrust liability. See,
`e.g., Motorola, 755 F.3d at at 822 (“Motorola’s ‘target’ theory of antitrust liability would nullify
`the doctrine of Illinois Brick.”). Moreover, in this case the plaintiff’s target theory is even
`weaker because GE has not made any specific allegations that any Danfoss entity targeted GE or
`MABE or sold compressors to MABE during the time of the alleged conspiracy. (See Def.’s Br.,
`D.E. No. 542, at 8).
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`of the cellphones that it bought from its foreign subsidiaries, but the cartel-engendered price
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`increase in the components and in the price of cellphones that incorporated them occurred
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`entirely in foreign commerce.” Id. Thus, Motorola’s foreign subsidiaries were the direct
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`purchasers of the price-fixed panels and this was fatal to Motorala’s attempt to assert claims
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`based on those purchases:
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`Whether or not Motorola was harmed indirectly, the immediate victims of the
`price fixing were its foreign subsidiaries, see F. Hoffmann–La Roche Ltd. v.
`Empagran S.A., supra, 542 U.S. at 173–75, 124 S.Ct. 2359, and as we said in the
`Minn–Chem case “U.S. antitrust laws are not to be used for injury to foreign
`customers,” 683 F.3d at 858. Motorola’s subsidiaries are governed by the laws of
`the countries in which they are incorporated and operate; and “a corporation is not
`entitled to establish and use its affiliates’ separate legal existence for some
`purposes, yet have their separate corporate existence disregarded for its own
`benefit against third parties.” Disenos Artisticos E Industriales, S.A. v. Costco
`Wholesale Corp., 97 F.3d 377, 380 (9th Cir. 1996). For example, although for
`antitrust purposes Motorola contends that it and its subsidiaries are one (the “it”
`we referred to earlier), for tax purposes its subsidiaries are distinct entities paying
`foreign rather than U.S. taxes.
`
`Distinct in uno, distinct in omnibus. Having submitted to foreign law, the
`subsidiaries must seek relief for restraints of trade under the laws either of the
`countries in which they are incorporated or do business or the countries in which
`their victimizers are incorporated or do business. The parent has no right to seek
`relief on their behalf in the United States.
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`Id. at 820.
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`“If Motorola’s foreign subsidiaries have been injured by violations of the antitrust laws
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`of the countries in which they are domiciled, they have remedies; if the remedies are inadequate,
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`or if the countries don’t have or don’t enforce antitrust laws, these are consequences that
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`Motorola committed to accept by deciding to create subsidiaries that would be governed by the
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`laws of those countries.” Id. at 821.
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`B.
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`Motorola’s Claims Were Also Barred By The Illinois Brick Indirect
`Purchaser Rule
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`The Seventh Circuit explained that a “related flaw in Motorola’s case is its collision with
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`the indirect-purchaser doctrine of Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52
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`L.Ed.2d 707 (1977), which forbids a customer of the purchaser who paid a cartel price to sue the
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`cartelist, even if his seller—the direct purchaser from the cartelist—passed on to him some or
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`even all of the cartel’s elevated price. Motorola’s subsidiaries were the direct purchasers of the
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`price-fixed LCD panels, Motorola and its customers indirect purchasers of the panels.” Id. at
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`821.
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`In concluding that Motorola lacked federal antitrust standing, as an indirect purchaser of
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`the panels that its foreign subsidiaries had directly purchased abroad, the Seventh Circuit
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`rejected Motorola’s “target theory” as to why it should be deemed to have standing. Id. at 822
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`(“Motorola’s ‘target theory of antitrust liability would nullify the doctrine of Illinois Brick.”).
`
`II.
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`GE’s MABE Claims Are Likewise Barred By The FTAIA And The Illinois Brick
`Indirect Purchaser Standing Rule
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`Notably, Motorola involved a closely analogous situation as to that presented here. And
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`given that the same counsel represented the plaintiffs in both cases, the same arguments have
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`been made by the plaintiffs in both cases. The Danfoss Defendants’ brief illustrates this with a
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`helpful graphic that the Court summarizes below:
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`KEY FACTS
`
`The Plaintiff:
`
`MOTOROLA
`
`THIS CASE
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`Motorola, a US Company
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`GE, a US Company
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`Plaintiff’s Affiliate at Issue:
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`Foreign (Asian)
`
`Foreign (Various)
`
`Foreign (Mexican)
`
`Foreign (Various)
`
`Alleged Conspirators:
`
`Transaction at Issue:
`
`Direct Seller:
`
`Point of Sale:
`
`Delivery Location:
`
`Purchase/Sale of cell phone
`component
`
`Purchase/Sale of refrigerator
`component
`
`Foreign (Various)
`
`Foreign (Asia)
`
`Foreign (Asia)
`
`Foreign (Various)
`
`Foreign (Mexico)
`
`Foreign (Mexico)
`
`Product Shipped to Plaintiff in
`U.S.:
`
`Finished Cell Phone
`
`Finished Refrigerator
`
`Manufacturing Location of Product
`Shipped to U.S.:
`
`Foreign (Asia)
`
`Foreign (Mexico)
`
`Manufacturer of Product shipped to
`Plaintiff in U.S.:
`
`Foreign (Asia) Wholly-Owned
`subsidiaries of Plaintiff
`
`Foreign (Mexico) Minority-Owned
`subsidiary of Plaintiff
`
`Plaintiff’s Involvement in
`Affiliate’s Negotiations with
`alleged Conspirators:
`
`Plaintiff participated in negotiations
`on price and volume of component
`purchases by its subsidiaries from
`its U.S. location
`
`Nearly identical allegations
`regarding negotiations.
`
`Counsel for Plaintiff:
`
`Crowell & Moring LLP
`
`Crowell & Moring LLP
`
`A.
`
`GE’s MABE Claims Are Barred By The FTAIA
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`The Court concludes that GE’s federal anti-trust claims, to the extent that they are based
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`upon MABE’s purchases of refrigerant compressors, are barred by the FTAIA for the same
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`reason that Motorola’s claims based on panel sales to its foreign subsidiaries were barred in
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`Motorola.
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`Again, the FTAIA limits the extra territorial application of United States antitrust law.
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`Motorola, 775 F. 3d at 818. As explained in Motorola:
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`Sections 6a(1)(A) and (2) provide that the Sherman Act “shall not apply to
`conduct involving trade or commerce (other than import trade or import
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`commerce) with foreign nations unless ... such conduct has a direct, substantial,
`and reasonably foreseeable effect ... on trade or commerce which is not trade or
`commerce with foreign nations, or on import trade or import commerce with
`foreign nations,” and also, in either case, unless the “effect [on import trade or
`domestic commerce] gives rise to a claim” under federal antitrust law. See, e.g.,
`F. Hoffmann–La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 161–62, 124 S.Ct.
`2359, 159 L.Ed.2d 226 (2004); Minn–Chem, Inc. v. Agrium, Inc., 683 F.3d 845,
`853–54 (7th Cir.2012) (en banc).
`
`It is essential to understand that these are two requirements. There must be a
`direct, substantial, and reasonably foreseeable effect on U.S. domestic
`commerce—the domestic American economy, in other words—and the effect
`must give rise to a federal antitrust claim. The first requirement, if proved,
`establishes that there is an antitrust violation; the second determines who may
`bring a suit based on it.
`
`Id. at 818 (emphasis in original).
`
`With respect to any refrigerant compressors that the defendant manufacturers conspired
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`to sell to GE in the United States at inflated prices, those sales are subject to the Sherman Act
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`because of the exception in the FTAIA for importing. Motorola, supra, at 818. That is, the
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`importing exception to the FTAIA applies to those sales.
`
`With respect to refrigerant compressors that MABE purchased in Mexico, however, those
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`sales do not constitute import commerce for the same reason the analogous sales in Motorola did
`
`not. Those sales do not constitute import commerce because it was GE, and not the defendant
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`compressor manufacturers, who imported those compressors into the United States, as
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`components of the refrigeration products that GE’s foreign subsidiary (MABE) manufactured
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`abroad and sold and shipped to GE in the United States. Id.
`
`As a result, this Court proceeds to consider whether the two requirements above were
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`met. GE “first must show” that the defendants’ price fixing of the refrigerant compressors that
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`they sold abroad and that became components of refrigerators also made abroad but imported by
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`GE into the United States had “a direct, substantial, and reasonably foreseeable effect’” on
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`commerce within the United States. Motorola, 775 F.3d at 818. But even if this Court follows
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`the Seventh Circuit’s approach and assumes without deciding that it does, that does not aid GE.
`
`Id. at 819.
`
`Like Motorola, what “trips up” GE’s MABE claim “is the statutory requirement that the
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`effect of anticompetitive conduct on domestic U.S. commerce give rise to an antitrust cause of
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`action. 15 U.S.C. § 6a(2).” Motorola, 775 F.3d at 819. Like Motorola, GE cannot meet the
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`second requirement – that it is GE who may bring a federal antitrust suit for this alleged
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`violation.
`
`Like the situation in Motorola, the Defendants’ alleged antitrust conduct increased the
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`cost to GE of the refrigerators that it bought from its foreign subsidiary MABE, but the
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`cartel-engendered price increase in the refrigerant compressors and in the price of refrigerators
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`that incorporated them occurred entirely in foreign commerce. Id. Thus, GE’s foreign
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`subsidiary (MABE) was the direct purchaser of the allegedly price-fixed refrigerant compressors
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`and that is fatal to GE’s attempt to assert claims based on MABE’s purchases.
`
`Having submitted to Mexican law, MABE must seek relief for restraints of trade under
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`the laws either of the country in which it is incorporated and does business (Mexico) or the
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`countries in which their victimizers are incorporated or do business. As was the case in
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`Motorola, if GE’s minority owned subsidiary (MABE) has been injured by violations of the
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`antitrust laws of Mexico, its remedies are found there. GE has no right to seek relief on MABE’s
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`behalf in the United States. Id. at 820.
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`B.
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`GE’s MABE Claims Are Also Barred By The Illinois Brick Indirect
`Purchaser Rule
`
`The Danfoss Defendants contend that “[b]ecause GE admits that MABE, a Mexican
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`corporation, was the direct purchaser from Defendants of compressors (Compl. ¶49-53, 55), GE
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`has no standing to sue with respect to those sales.” (Defs.’ Br., D.E. No. 470 at 5).
`
`This Court addressed the Illinois Brick indirect purchaser rule previously in this same
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`MDL litigation. See In re Refrigerant Compressors Antitrust Litig., 795 F.Supp.2d 647 (E.D.
`
`Mich. 2011). That opinion addressed a challenge to the “direct purchaser” putative class action
`
`complaint, which sought to assert federal antitrust claims on behalf of persons or entities who
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`directly purchased the allegedly price-fixed compressors and persons or entities who had
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`purchased finished products that contained a refrigerant compressor. This Court concluded “that
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`the only persons or entities who have standing to assert federal antitrust claims in this action are
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`those persons or entities who directly purchased compressors from a defendant.” Id. at 658.
`
`As such, this Court will not include the entire discussion of the rule and its history here.
`
`Under Illinois Brick Co. v. Illinois, 431 U.S. 720, 746 (1977), only direct purchasers of
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`an allegedly price-fixed product may pursue private actions for monetary damages under federal
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`antitrust laws. “While the Supreme Court has expressed reluctance in carving out exceptions to
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`the Illinois Brick rule, limited exceptions do exist.” In re ATM Fee Antitrust Litig., 686 F.3d
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`741,749 (9th Cir. 2012).
`
`GE argues that its “indirect MABE purchases” fall under the so-called “control
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`exception”6 alluded to in a footnote in Illinois Brick. Illinois Brick, 431 U.S. at 736 n.16. (Pl.’s
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`Br., D.E. No. 41 at 11).
`
`But the Sixth Circuit has construed the “control exception” as being “limited to
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`relationships involving such functional economic or other unity between the direct purchaser and
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`either the defendant or the indirect purchaser that there effectively has been only one sale.”
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`Jewish Hosp. Ass’n of Louisville, Ky v. Stewart Mech. Enters., 628 F.2d 971, 975 (6th Cir.
`
`1980).
`
`The Danfoss Defendants’ brief states that they are unaware of any case wherein “the Sixth
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`Circuit has permitted an indirect purchaser claim to proceed under the control exception since
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`Jewish Hospital (which itself ruled against the control exception)” and they assert that “GE has
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`not made any allegation to warrant doing so for the first time in this case.” (Defs.’ Br., D.E. No.
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`542, at 16).
`
`The Court agrees with the Danfoss Defendants.