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2:13-cv-01702-MOB Doc # 117 Filed 04/22/15 Pg 1 of 12 Pg ID 2397
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`
`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MICHIGAN
`SOUTHERN DIVISION
`
`_________________________________
`
`IN RE: AUTOMOTIVE PARTS
`ANTITRUST LITIGATION
`
`_________________________________
`
`MASTER FILE NO. 12-md-02311
`
`In Re: HID Ballasts
`
`HON. MARIANNE O. BATTANI
`
`_________________________________
`
`THIS DOCUMENT RELATES TO:
`
`Dealership Action
`End-Payor Action
`
`_________________________________/
`
`2:13-cv-01702
`2:13-cv-01703
`
`OPINION AND ORDER DENYING MELCO DEFENDANTS’ MOTION TO DISMISS
`THE END-PAYORS’ AND THE AUTO DEALERS’ CONSOLIDATED
`AMENDED CLASS ACTION COMPLAINTS
`
`Before the Court is MELCO Defendants’ Motion to Dismiss the Auto Dealer
`
`Plaintiffs’ and the End-Payors Plaintiffs’ Consolidated Amended Class Action
`
`Complaints (Case No. 13-1702, Doc. No. 71 (sealed), Doc. No. 73 (redacted); Case No.
`
`13-1703, Doc. No. 51 (sealed) and 53 (redacted)). MELCO Defendants include
`
`Mitsubishi Electric Corporation (“MEC”) and two subsidiaries, Mitsubishi Electric US
`
`Holdings, Inc. (“MEUSH”), and Mitsubishi Electric Automotive America, Inc. (“MEAA”).
`
`The Court scheduled a hearing on the motion for January 28, 2015; however, the
`
`parties waived oral argument. For the reasons that follow, the motion is DENIED.
`
`

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`2:13-cv-01702-MOB Doc # 117 Filed 04/22/15 Pg 2 of 12 Pg ID 2398
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`I. RELEVANT FACTS
`
`A. Parties
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`Automobile Dealership Plaintiffs (“ADPs”), and End-Payor Plaintiffs (“EPPs”)
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`(collectively referred to as “Indirect Purchaser Plaintiffs” or “IPPs”) filed separate
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`consolidated class action complaints advancing federal and state law claims based
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`upon their allegations that Defendants “manufactured, marketed, and/or sold” HID
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`Ballasts in the United States to numerous Original Equipment Manufacturers (“OEMs”),
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`(Doc. No. 25 at ¶¶ 113-126; Doc. No. 9 at ¶¶ 83-95), and engaged in a conspiracy to
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`“unlawfully fix, artificially raise, maintain and/or stabilize prices, rig bids for, and allocate
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`the market and customers in the United States relative to HID Ballasts from July 1,
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`1998, through the present.” (See Doc. No. 25 at ¶ 2; Doc. No. 9 at ¶ 2). HID Ballasts
`
`are electrical devices that limit the amount of electrical current flowing to a HID
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`headlamp. (Doc. No. 25 at ¶¶ 3, 130; Doc. No. 9 at ¶¶ 3, 99). ADPs include automobile
`
`dealers that sell automobiles manufactured by various Original Equipment
`
`Manufacturers. (See Doc. No. 25 at ¶¶ 23-112). EPPs include individuals that
`
`purchased certain automobiles (See Doc. No. 9 at ¶¶ 25-82).
`
`Defendants include DENSO Corporation and DENSO International America, Inc.,
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`Ichikoh Industries Ltd., Panasonic Corporation and Panasonic Corporation of North
`
`America, which have entered into a proposed settlement, Stanley Electric Co., Ltd. and
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`Stanley Electric U.S. Co., Inc., Koito Manufacturing Co., Ltd. and its subsidiary, North
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`American Lighting, Inc., and MELCO Defendants; however, the Court has dismissed
`
`Ichikoh Industries, Ltd. for lack of personal jurisdiction.
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`2
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`

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`2:13-cv-01702-MOB Doc # 117 Filed 04/22/15 Pg 3 of 12 Pg ID 2399
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`B. Investigations and Guilty Pleas
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`Indirect Purchaser Plaintiffs’ complaints detail international government
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`investigations that resulted in the guilty pleas of many businesses for their part in the
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`price-fixing and bid-rigging of various automotive component parts. For example,
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`DENSO Defendants agreed to pay a $78 million criminal fine, based on antitrust
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`violations in the automotive component market, albeit not specifically for HID Ballasts.
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`The Japan Fair Trade Commission (“JFTC”) has raided the offices of several
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`Defendants, Stanley Electric Co., Ltd., and Koito Manufacturing Co., Ltd. The JFTC
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`fined Defendant Ichikoh Industries, Ltd. $13.1 million “for violating antitrust laws by
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`forming a cartel to fix automotive lamps” some of which “contain HID Ballasts as a
`
`component part.” (Doc. No. 25 at ¶ 159; Doc. No. 9 at ¶ 125).
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`Three of the named Defendants have agreed to plead guilty and pay fines based
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`on their involvement in the HID Ballasts price-fixing conspiracy in the United States,
`
`including Panasonic Corporation, Stanley Electric Co., and Koito Manufacturing Co.,
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`Ltd. Specifically, in July 2013, Panasonic Corporation agreed to plead guilty and pay a
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`$45.8 million criminal fine. (Doc. No. 25 at ¶ 6; Doc. No. 9 at ¶ 6). In November 2013,
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`the Department of Justice (“DOJ”) announced that Stanley Electric Co., Ltd. agreed to
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`plead guilty and pay a $1.44 million criminal fine for its role in the conspiracy. (Doc. No.
`
`25 at ¶ 9; Doc. No. 9 at ¶ 9). In January 2014, the DOJ announced that Koito
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`Manufacturing Co., Ltd. agreed to plead guilty and pay a $56.6 million criminal fine for
`
`its role in the conspiracy. (Doc. No. 25 at ¶ 10; Doc. No. 9 at ¶ 9).
`
`Although MEC did not plead guilty to the same conspiracy, in September 2013, it
`
`agreed to plead guilty for its role in the conspiracy to rig bids and fix prices of
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`3
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`

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`2:13-cv-01702-MOB Doc # 117 Filed 04/22/15 Pg 4 of 12 Pg ID 2400
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`alternators, starters, and ignition coils, and to pay a $190 million criminal fine. (Doc. No.
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`25 at ¶ 207; Doc. No. 9 at ¶ 131). In addition, MEC and its subsidiaries have pledged to
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`cooperate in the DOJ’s automotive parts investigation. Pursuant to the guilty plea, in
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`exchange for the cooperation, the DOJ agreed to refrain from criminally prosecuting
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`MEC and its subsidiaries for price-fixing certain automotive parts, including HID
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`Ballasts. (Doc. No. 25 at ¶¶ 8, 167; Doc. No. 9 at ¶¶ 8, 131). MEC also admitted to
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`destroying and/or altering documents in an effort to cover up its unlawful activity after a
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`co-conspirator’s office was searched, conduct “approved by their senior managers in
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`Japan.” (Doc. No. 25 at ¶ 245; Doc. No. 9 at ¶ 206). In addition to the facts alleged in
`
`the complaints, the Court has taken judicial notice of the September 18, 2014, Grand
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`Jury indictment filed in United States of America v. Ueda, et al, Case No. 14-20560, and
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`the September 18, 2013, DOJ Release entitled “Seven Mitsubishi Electric Corp. and
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`Hitachi Automotive Supply Ltd. Executives Indicted for Role in Conspiracy to Fix Prices.”
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` (See Doc. No. 106 in 13-1702; Doc. No. 85 in 13-1703).
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`According to IPPs, Defendants “employ[ed] measures to keep their conduct
`
`secret, including, but not limited to, using code names and meeting at remote locations.”
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`(Doc. No. 25 at ¶ 242; Doc. No. 9 at ¶ 204); See Informations filed against Defendants
`
`Panasonic Corporation, Stanley Electric Co., Ltd., and Koito Manufacturing Co., Ltd.,
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`Mitsubishi Electric Corporation. Defendants are alleged to have met on six occasions to
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`discuss the pricing of HID Ballasts.
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`4
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`

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`2:13-cv-01702-MOB Doc # 117 Filed 04/22/15 Pg 5 of 12 Pg ID 2401
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`
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`C. Market Conditions
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`IPPs allege the market for HID Ballasts has high barriers to entry and allege what
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`those barriers are. (Doc. No. 25 at ¶¶ 144-45, 147, 148-50; Doc. No. 9 at ¶¶ 111-12,
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`114, 155-17). In addition, IPPs allege that despite a decrease in the demand for
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`automobiles in the United States, Defendants increased the prices for HID Ballasts.
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`(Doc. No. 25 at ¶¶ 138-42; Doc. No. 9 at ¶¶ 105-109). According to IPPs, in a
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`competitive markets, falling or steady demand should not have yielded higher prices for
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`HID Ballasts. (Id.)
`
`II. STANDARD OF REVIEW
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`Federal Rule of Civil Procedure 12(b)(6) allows district courts to dismiss a
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`complaint which fails “to state a claim upon which relief can be granted.” To survive a
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`motion to dismiss for failure to state a claim under Rule 12(b)(6), the plaintiff must show
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`that his complaint alleges facts which, if proven, would entitle him to relief. First Am.
`
`Title Co. v. DeVaugh, 480 F.3d 438, 443 (6th Cir. 2007). “A complaint must contain
`
`either direct or inferential allegations with respect to all material elements necessary to
`
`sustain a recovery under some viable legal theory.” Weiner v. Klais & Co., 108 F.3d 86,
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`88 (6th Cir. 1997). When reviewing a motion to dismiss, the Court “must construe the
`
`complaint in the light most favorable to the plaintiff, accept all factual allegations as true,
`
`and determine whether the complaint contains enough facts to state a claim to relief that
`
`is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although
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`the federal procedural rules do not require that the facts alleged in the complaint be
`
`detailed, “‘a plaintiff's obligation to provide the ‘grounds' of his ‘entitlement to relief’
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`5
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`

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`2:13-cv-01702-MOB Doc # 117 Filed 04/22/15 Pg 6 of 12 Pg ID 2402
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`requires more than labels and conclusions, and a formulaic recitation of a cause of
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`action's elements will not do.' ” Twombly, 550 U.S. at 555; Ashcroft v. Iqbal, 556 U.S.
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`662, 678 (2009) (“Threadbare recitals of the elements of a cause of action, supported
`
`by mere conclusory statements, do not suffice.”).
`
`In Twombly, the Supreme Court considered the pleading requirements needed to
`
`withstand a motion to dismiss relative to a section 1 Sherman Act claim. It held that the
`
`complaint must contain enough factual matter to “plausibly suggest” an agreement:
`
`Asking for plausible grounds to infer an agreement does not
`impose a probability requirement at the pleading stage; it
`simply calls for enough facts to raise a reasonable
`expectation that discovery will reveal evidence of illegal
`agreement. And, of course, a well-pleaded complaint may
`proceed even if it strikes a savvy judge that actual proof of
`those facts is improbable, and that a recovery is very remote
`and unlikely.
`
`550 U.S. at 556.
`
`In addition, the Court may consider those documents for which it has taken
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`judicial notice. See Rondigo, L.L.C. v. Twp. of Richmond, 641 F.3d 673, 680-81 (6th
`
`Cir. 2011) (court may consider public records if referred to in the complaint and are
`
`central to its claims without converting a motion to dismiss into a motion for summary
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`judgment) (citing Bassett v. Nat’l Collegiate Athletic Ass’n, 528 F.3d 426, 430 (6th Cir.
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`2008)).
`
`III. ANALYSIS
`
`In their motion, MELCO Defendants advance arguments raised in the
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`Defendants’ collective motions to dismiss the IPPs’ complaints, including the timeliness
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`of the claims, the viability of the requests for injunctive relief, standing, and the
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`6
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`

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`2:13-cv-01702-MOB Doc # 117 Filed 04/22/15 Pg 7 of 12 Pg ID 2403
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`sufficiency of the allegations. Because the Court addresses those arguments in the
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`collective motion, it limits its discussion to the added grounds for dismissal put forth by
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`MELCO Defendants in their motion: whether Indirect Purchaser Plaintiffs have alleged
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`a plausible antitrust conspiracy when no MELCO Defendant has pleaded guilty to
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`collusion on HID Ballasts; and, whether IPPs have advanced a claim against the
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`MELCO subsidiaries.
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`A. Participation in the Conspiracy
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`According to MELCO Defendants, the claims against them are based on
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`threadbare allegations rendering the complaints deficient. The Court addresses the
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`sufficiency of the allegations below.
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`1. Participation in the Market
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`MELCO Defendants contend that dismissal of MEC is appropriate because,
`
`even thought they participate in the market, mere involvement in an industry alleged to
`
`be “rife” with antitrust violations does not state a claim. See Hinds Cnty v. Wachovia
`
`Bank N.A., 620 F. Supp. 2d 499, 515 (S.D.N.Y. 2009). The Court agrees that a
`
`conclusory allegation about the market, standing alone, is not enough. However, the
`
`conspiracy alleged here involves allegations beyond those found deficient in Hinds
`
`Cnty. Notably, MELCO Defendants’ alleged co-conspirators have pleaded guilty to
`
`antitrust conduct in the HID Ballast market. Because there is concrete evidence of the
`
`existence of the conspiracy, as well as other allegations giving rise to an inference the
`
`MELCO Defendants participated, the Court finds this argument unpersuasive.
`
`7
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`

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`2:13-cv-01702-MOB Doc # 117 Filed 04/22/15 Pg 8 of 12 Pg ID 2404
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`2. Guilty Plea
`
`MELCO Defendants next argue that the fact that MEC entered into a plea
`
`agreement relative to different component parts does not establish liability. Doe v.
`
`Aramark Educ. Res., inc., 206 F.R.D. 458, 463 (M.D. Tenn. 2002). The Court agrees,
`
`but MEC’s plea agreement likewise does not dictate the parameters of the antitrust
`
`claims alleged. See In re Packaged Ice Antitrust Litigation, 723 F. Supp. 2d 987, 1011-
`
`12 (E.D. Mich. 2010). The fact that MEC may not have pleaded guilty to price-fixing
`
`HID Ballasts does not immunize it from conduct that falls outside the plea itself. See In
`
`re Packaged Ice Antitrust Litigation, 723 F. Supp. 2d 987, 1011-12 (E.D. Mich. 2010)
`
`(observing that “civil litigation” cannot be “circumscribed or defined by the boundaries of
`
`the criminal investigations”) (citing In re Vitamins Litig., No. 99-misc-197, 2000 WL
`
`1475705 at *11 (D. D.C. May 9, 2000) (rejecting the “notion that the guilty pleas and
`
`cooperation agreements and the class settlement foreclose a broader conspiracy.
`
`Guilty pleas are negotiated instruments which take into account not only the culpability
`
`of the accused but the Justice Department's resources and other cases requiring the
`
`government's attention.”).
`
`Here, there are several guilty pleas specific to the HID Ballast market and
`
`numerous guilty pleas by market participants of other component parts. In addition,
`
`there is an overlap in the years of the HID conspiracy, and the conspiracies for which
`
`MEC pleaded guilty. There is also an overlap in the OEMs targeted by MEC and its
`
`alleged co-conspirators. Finally, the Court finds a strong inference of involvement
`
`arises from MEC’s agreement to cooperate in the HID Ballasts investigation. MELCO
`
`Defendants’ desire to confine any inference drawn from the guilty plea to the specific
`
`8
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`

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`2:13-cv-01702-MOB Doc # 117 Filed 04/22/15 Pg 9 of 12 Pg ID 2405
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`behavior admitted by MEC ignores the wide-ranging, ongoing investigation by
`
`governmental authorities into the conspiracy and case law upholding the use of
`
`admitted conduct to support the existence of the conspiracy beyond those entities that
`
`have pleaded guilty. The factual allegations in the complaint creates “a reasonable
`
`expectation that discovery will reveal evidence of illegal agreement” beyond those
`
`parties that have pleaded guilty and beyond the extent admitted by some Defendants.
`
`Twombly, 550 U.S. at 556. Accord In re Polyurethane Foam Antitrust Litig., 799 F.
`
`Supp. 2d 777, 782 (N.D. Ohio 2011) (relying on “specific admissions” made during a
`
`governmental investigation that supported the “existence of a conspiratorial agreement”
`
`as opposed to government investigations coupled with parallel conduct).
`
`3. Economic Factors Conducive to Collusion
`
`According to IPPs’ complaints, prices for vehicular lighting equipment rose even
`
`as demand for vehicles fell in 2007-2009. (Doc. No. 25 at ¶¶ 138-142, Doc. No. 9 at ¶¶
`
`105-109`). In addition, IPPs allege there are high barriers to entry, and demand is
`
`inelastic. (Doc. No. 25 at ¶¶144-150. Doc. No. 9 at 111-117). The allegations create an
`
`inference that the market was conducive to collusion. The inference is not undermined
`
`by MELCO Defendants’ assertion that only a fraction of cars have HID Ballasts.
`
`4. Vagueness
`
`MELCO Defendants argue that the factual allegations tying them to the HID
`
`Ballast market are boilerplate. Nevertheless, IPPs allege MELCO Defendants had
`
`opportunities to conspire and that their alleged co-conspirators have provided examples
`
`of meetings regarding particular customers.
`
`In sum, the complaints, viewed in their entirety, meet IPPs’ pleading obligations
`
`9
`
`

`
`2:13-cv-01702-MOB Doc # 117 Filed 04/22/15 Pg 10 of 12 Pg ID 2406
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`relative to MEC. Therefore, the Court directs its attention to the arguments advanced
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`relative to the subsidiaries.
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`B. Participation of Subsidiaries
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`MELCO Defendants also argue that IPPs’ complaints fail to meet pleading
`
`standards because there are no allegations regarding the involvement of MEUSH and
`
`MEAA in the alleged conspiracy. The Sixth Circuit typically expects the plaintiffs alleging
`
`a price-fixing conspiracy to “specify how [each] defendant [was] involved in the alleged
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`conspiracy.” Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430, 445 (6th Cir. 2012)
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`(quoting In re Travel Agent Comm’n Antitrust Litig., 583 F.3d 896, 905 (6th Cir. 2009)).
`
`Nevertheless, the court in Carrier Corp. found that it is not necessary for the plaintiffs to
`
`“delineate in the complaint the role each subsidiary played in the conspiracy,” where the
`
`plaintiffs alleged that the parent sold the price-fixed product to the subsidiary in the
`
`United States, that the parent exercised control over the subsidiary, and that the parent
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`held out the two companies as a single enterprise with overlapping executives. Id. at
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`445-46.
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`The Court is satisfied that the complaints comply with Carrier. IPPs allege that
`
`the subsidiaries sold HID Ballasts in the United States during the Class Period. Notably,
`
`once IPPs pleaded participation in the conspiracy, they did not need to differentiate
`
`between participating defendants relative to the overt acts. They have met their burden
`
`by alleging the subsidiaries joined the conspiracy and played a role in it, rather than
`
`relying on an allegation that the subsidiaries are liable because MEC joined the
`
`conspiracy.
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`This result is consistent with the Court’s holding in other component part cases.
`
`10
`
`

`
`2:13-cv-01702-MOB Doc # 117 Filed 04/22/15 Pg 11 of 12 Pg ID 2407
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`For example, in In re Automotive Parts Antitrust Litig., No. 2:12-cv-00102, 2013 WL
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`2456613 (E.D. Mich. June 6, 2013), the Court found that the plaintiffs’ allegations
`
`regarding the parent company’s control over the subsidiaries along with the parent
`
`company’s guilty plea were sufficient to withstand a motion to dismiss. Id. at *3.
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`Although the plaintiffs did not detail the specific conduct of the subsidiaries, the
`
`allegations as a whole created an inference that the subsidiaries participated in the
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`conspiracy. Id. at *4. The same inference flows from the allegations in this case even
`
`though neither subsidiary has pleaded guilty given the other allegations supporting the
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`existence of a conspiracy. The Court has taken judicial notice of the September 18,
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`2014, three-count indictment against current and former MEC employees for conspiring
`
`to fix prices of other automotive parts. One of the employees was a former Vice
`
`President of Sales for MEC and later the President of MEAA.
`
`According to the Indictment, the FBI raided MEAA’s offices in July 2011. Finally
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`IPPs allege that senior managers in Japan approved the destruction of documents in
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`the United States and Japan. (Doc. No. 25 at ¶ 245; Doc. No. 9 at ¶ 206).
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`Consequently, viewed in their entirety, the allegations support an inference that the
`
`subsidiaries participated in a price-fixing conspiracy aimed at the United States under
`
`the direction of MEC.
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`IV. CONCLUSION
`
`In sum, the Court finds that the allegations contained within IPPs’ complaints are
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`substantially similar to those alleged in other cases within this multidistrict litigation,
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`11
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`

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`2:13-cv-01702-MOB Doc # 117 Filed 04/22/15 Pg 12 of 12 Pg ID 2408
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`which the Court found sufficient to defeat a Rule 12(b)(6) motion. See e.g. In re
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`Automotive Parts Antitrust Litig. [Bearings], 2014 WL 4209588, at *3-4 (E.D. Mich. Aug.
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`26, 2014); In re Automotive Parts Antitrust Litig. [Wire Harness], 2013 WL 2456013, at
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`*2-3 (E.D. Mich. June 6, 2013). The Court finds no reason to depart from its prior
`
`rulings. Accordingly, MELCO Defendants’ motion is DENIED.
`
`IT IS SO ORDERED.
`
`Date: April 22, 2015
`
`s/Marianne O. Battani
`MARIANNE O. BATTANI
`United States District Judge
`
`The undersigned certifies that the foregoing Order was served upon counsel of record via the Court's ECF System to their
`respective email addresses or First Class U.S. mail to the non-ECF participants on April 22, 2015.
`
`CERTIFICATE OF SERVICE
`
`s/ Kay Doaks
`Case Manager
`
`12

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