On October 3, 2011, the Ninth Circuit held that parens patriae actions commenced by state attorneys general are not “class actions” under the Class Action Fairness Act (“CAFA”) and, therefore, could not be removed from federal to state court under the CAFA removal provisions. Washington v. Chimei Innolux Corp., No. 11–16862, 2011 WL 4543086 (9th Cir. Oct. 3, 2011). The California and Washington attorneys general commenced actions under state law in their respective state courts to recover damages for their citizens as a result of price fixing among LCD manufacturers. These actions are based on the same allegations in MDL No. 1827. Defendants removed them asserting jurisdiction under CAFA. CAFA creates subject matter jurisdiction and authorizes removal in a class action where there is minimal diversity of citizenship between a defendant and one named or unnamed putative class member and the amount sought by the class exceeds $5,000,000. Defendants argued that a parens patriae action is just like a class action and the CAFA removal provision should thus apply. Joining the Fourth Circuit, West Virginia ex rel. McGraw v. CVS Pharm., Inc., 646 F.3d 169 (4th Cir.2011), the Ninth Circuit held that the language of CAFA does not permit treating parens patriae actions as class actions. It then affirmed the district court’s remand orders.
Oct
06
Posted by : | On : October 6, 2011
Sep
15
Posted by : | On : September 15, 2011
In antitrust litigation, defendants routinely resist discovery pending a motion to dismiss. They rely on Bell Atlantic Corp. v. Twombly, arguing that they should not be put through the expense of discovery until the Court decides whether the claims are plausible. On September 8, 2011, the United States District for the District of Colorado rejected such tactics. SOLIDFX, LLC v. Jeppesen Sanderson, Inc., 11-CV-01468-WJM-BNB, 2011 WL 4018207 (D. Colo. Sept. 8, 2011). The Court held that Twombly “does not erect an automatic, blanket prohibition on any and all discovery before an antitrust plaintiff’s complaint survives a motion to dismiss.” (citation omitted). It explained that “[w]hen the discovery would not be so burdensome, a closer question is presented, a question calling for the exercise of discretion and the balancing of competing factors.” (citation omitted). The Court noted that “[a] party seeking a protective order under Rule 26(c) has the burden of demonstrating good cause and cannot sustain that burden simply by offering conclusory statements. Accordingly, the party moving for a protective order must make a particular and specific demonstration of fact in support of its request.” The Court denied the stay because the defendant did not make a factual showing of burden.
Plaintiffs would be well advised to press for at least targeted discovery, such as documents produced in government investigations. To extent that no genuine burden exists, such discovery should be obtainable pending a motion to dismiss regardless of its strength.
Sep
13
Posted by : | On : September 13, 2011
On September 6, 2011, the United States District Court for the Eastern District of New York denied summary judgment for vitamin C manufacturers in In re Vitamin C Antitrust Litig., MDL No. 1738 (Decision (Vit C)). The Court rejected defendants’ act of state defense under which defendants claimed immunity contending that Chinese law required them to fix prices.
The Chinese government provided support for defendants, by providing a statement that the scheme was required by the Chinese legal system (the Chamber also filed an amicus brief). The Court disagreed – what at first glance appears surprising is explained by the fact that the Chinese government did not explain many aspects of the law and was vague on other aspects.
The Court acknowledged that trying to apply some foreign legal systems to U.S. law is akin to fitting a round peg in a square hole. For example, experts explained to the Court that “law” in China is not based so much on the written law, but rather a mix of law (as we understand it) and voluntary behavior.
After analyzing these cultural differences, the Court found that the Chinese legal and regulatory system was not sufficiently concrete to justify a finding that the otherwise illegal (within the U.S. Court’s jurisdiction) behavior was required by the Chinese law. Thus, while the behavior was legal under the Chinese system, it was not required. The lack of a requirement to comply with a law was, inter alia, fatal to the defendants. The Court was unconvinced of compulsion because the statement of Chinese law read like a litigation position and the Chinese government had made contrary representations to the WTO.
There are a number of other noteworthy issues. The Court refused to defer to the Chinese government’s evidence on the Chinese law. The Court did not need to set a standard of deference; so it did not so. The jurisprudence is still uncertain on the level of deference to be afforded a foreign government’s statements of foreign law. The Court took notice of a WTO Panel decision (July 5, 2011, not yet (and, may not be) appealed to the Appellate Body), which neither of the parties had made reference. The Court also did not examine the level of deference to a WTO Member’s statements that the WTO affords – both during accession negotiations and at a Panel hearing. The Court appeared to take the findings of the WTO Panel at face value, and not subject it to a factual analysis. This is particularly interesting because at the WTO the U.S.’s position is that Panel and Appellate Body decisions are not “law.”
As an aside, the U.S. recognized China’s market economy status in 2010.
This post was co-authored by Adrian Render.
Jul
07
Posted by : | On : July 7, 2010
On July 3, 2010, the Justice Yates (the trial judge) overturned his decision after a bench trial convicting William Gilman and Edward McNenny of violating the Donnolly Act (New York’s antitrust statute) for rigging bids on insurance contracts. According to the New York Times, he did so based on “newly discovered contradictory statements made by witnesses who cooperated with prosecutors, and the suppression of documents that would have been ‘invaluable’ to the defense.” Gilman and McNenny are the only Marsh executives that were convicted after a trial. As reported in earlier posts, Marsh paid an $850 million civil penalty and was not prosecuted. One former Marsh executive pleaded guilty and others had their cases voluntarily dismissed by the government or were acquitted after a bench trial.
Mar
31
Posted by : | On : March 31, 2010
The Supreme Court held today that district courts must follow Fed.R.Civ. 23 in class actions alleging violations of state law even though the state statute prohibits prosecution of the claim as a class action. In Shady Grove Orthopedic Assoc. v. Allstate Insurance Co., No. 08-1008, 2010 WL 1222272 (Mar. 31, 2010), the Court held that Rule 23 trumps NY CPLR 901(b), which prohibits class actions under New York statutes authorizing a claim for statutory or multiple damages. That statute has barred claims under New York’s antitrust statute (the Donnelly Act) as well its Deceptive Trade Practices Act. Numerous state consumer protection statutes likewise have prohibitions on class actions. Shady Grove breathes life into class actions in federal court under those statutes.