United States District Court, E.D. Michigan, Southern Division
IN RE AUTOMOTIVE PARTS ANTITRUST LITIGATION In Re Shock Absorbers THIS DOCUMENT RELATES TO Dealership Actions, End-Payor Actions Nos. 16-03302, 15-03303
OPINION AND ORDER GRANTING IN PART AND DENYING IN
PART MOTION TO DISMISS THE END-PAYORS' AND THE AUTO
DEALERS' CLASS ACTION COMPLAINTS
MARIANNE O. BATTANI, United States District Judge
the Court is Defendants KYB Corporation, f/k/a/ Kayaba
Industry Co., Ltd., (“KYB Industry) and KYB Americas
Corporation (“KYB Corporation”) (collectively
“KYB Defendants”) Collective Motion to Dismiss
the End-Payor Plaintiffs' and Auto Dealer Plaintiffs'
Class Action Complaints (Doc. No. 3 in 16-3302; Doc. No. 23
in 15-3303). In their motion, KYB Defendants challenge the
sufficiency of the allegations of the conspiracy pursuant to
Fed.R.Civ.P. 12(b)(6). The Court has reviewed all of the
filings, The Court has reviewed all of the filings, and for
the reasons that follow, the motion is GRANTED in part and
DENIED in part.
INTRODUCTION AND FACTUAL ALLEGATIONS
the United States Judicial Panel on Multidistrict Litigation
(“Judicial Panel” or “Panel”)
transferred actions sharing “factual questions arising
out of an alleged conspiracy to inflate, fix, raise,
maintain, or artificially stabilize prices of automotive wire
harness systems” to the Eastern District of Michigan,
(12-md-02311, Doc. No. 2), in February 2012, the scope and
extent of alleged antitrust conspiratorial conduct in the
automotive component parts industry grew significantly. In
June 2012, the Judicial Panel expanded MDL No. 2311 to
include alleged conspiracies to fix the prices of three
additional component parts, and to date the number of
component parts has reached forty. Thereafter, Court entered
a briefing order to streamline the resolution of motions
filed in the component parts cases, with a focus on
eliminating duplicative discovery, preventing inconsistent
pretrial rulings, and conserving resources. (See
Doc. No. 793 in 12-2311). In the briefing order, the Court
instructed the parties to identify previously uncited
authority from the Supreme Court of the United States, the
Sixth Circuit, or the highest court of the state under which
the claim was brought when addressing state law claims.
to the extent that no new authority is included, the Court
relies on the analysis set forth in its prior opinions
resolving collective motions to dismiss Indirect Purchaser
Plaintiffs' complaints. To the extent that the parties
argue for a different outcome on a particular claim, but
provided no new authority, or provide new authority to
support a previous outcome, the Court declines to address
these arguments. Instead, the Court directs its attention to
those claims where Defendants advance new authority in
asserting that the Court must dismiss assert that new case
law requires a different resolution from the Court's
Dealer Plaintiffs (“ADPs”) and End-Payor
Plaintiffs (“EPPs”) (collectively “Indirect
Purchaser Plaintiffs” or “IPPs”) bring
class actions against Defendants under federal and state law
based on Defendants' alleged conspiracy to rig bids, fix
the prices, and allocate the market and customers of Shock
Absorbers manufactured or sold in the United States. (Doc.
No. 1 in 16-11256, hereinafter “ADPs' Complaint,
” at ¶ 1; Doc. No. 1 in 15-14080, hereinafter,
“EPPs' Complaint, ” at ¶ 1). Defendants
are manufacturers or sellers of Shock Absorbers that are
manufactured or sold in the United States. (ADP's
Complaint at ¶¶ 1, 4, 144, 145; EPPs' Complaint
at ¶¶ 1, 4, 106). Shock Absorbers, also called
dampers, “are part of the suspension system on
automobiles. They absorb and dissipate energy to help cushion
vehicles on uneven roads leading to improved ride quality and
vehicle handling.” (ADPs' Compl. at ¶ 3).
September 16, 2015, the Department of Justice
(“DOJ”) announced that Defendant Kayaba Industry
Co., Ltd. agreed to plead guilty to criminal Information and
to pay a $62 million fine for participation in a combination
and conspiracy to suppress and eliminate competition in the
automotive parts industry. (ADPs' Complaint at ¶ 7).
It agreed to fix the prices of Shock Absorbers sold in the
United States and elsewhere. (ADPs' Complaint at ¶
7). According to the DOJ, KYB Industries sold Shock Absorbers
“to Fuji Heavy Industries Ltd. (manufacturer of Subaru
vehicles), Honda Motor Co., Ltd., Kawasaki Heavy Industries,
Ltd., Nissan Motor Company Ltd., Suzuki Motor Corporation,
and Toyota Motor Company, and certain of their subsidiaries
(collectively “Vehicle Manufacturers”) in the
United States and elsewhere from as early as the mid-1990s
and continuing until at least December 2012 in violation of
the Sherman Act, 15 U.S.C. § 1.” (ADPs'
Complaint at ¶ 81; EPPs' Complaint at ¶ 98).
to IPPs, KYB Industries is the largest manufacturer of Shock
Absorbers. (See e.g. ADPs' Complaint at ¶
64). IPPs also allege that KYB Defendants acted as a supplier
to Original Equipment Manufacturers (“OEMs”) and
rigged bids to OEMs with their co-conspirators. (ADPs'
Complaint at ¶¶ 66, 67; EPPs' Complaint at
¶ ¶ 1, 120, 121).
their complaints, IPPs allege that market conditions
conducive to an antitrust conspiracy exist. (ADPs'
Complaint at ¶ 70; EPPs' Complaint at ¶ 123).
Specifically, the Shock Absorbers market has high barriers to
entry, which facilitate the formation and maintenance of a
cartel. (ADPs' Complaint at ¶ 162; EPPs'
Complaint at ¶ 88). Those barriers include “costly
and lengthy start-up costs, including multi-million dollar
costs associated with manufacturing plants and equipment,
energy, transportation, distribution infrastructure, and
long-standing customer relationships.” (ADPs'
Complaint at ¶ 72; EPPs' Complaint at ¶ 89).
Defendants own patents, another factor hindering entry into
the market. (ADPs' Complaint at ¶ 73; EPPs'
Complaint at ¶ 90). IPPs further allege inelasticity of
demand. (ADPs' Complaint at ¶¶ 75-77; EPPs'
Complaint at ¶¶ 92-94).
STANDARD OF REVIEW
Rule of Civil Procedure 12(b)(6) allows district courts to
dismiss a complaint which fails “to state a claim upon
which relief can be granted.” To survive a motion to
dismiss for failure to state a claim under Rule 12(b)(6), the
plaintiff must show 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, 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 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'
requires more than labels and conclusions, and a formulaic
recitation of a cause of action's elements will not
do.' ” Twombly, 550 U.S. at 555;
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(“Threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not
Defendants argue that the facts, as alleged in the
complaints, support dismissal because they reveal that IPPs
lack standing to bring the claims and they do not meet the
pleadings standards articulated in Twombly. The
arguments are discussed below.