The Ninth Circuit recently held that the Cartwright Act, California’s antitrust law, applies not only to “the indirect purchase of price-fixed goods,” but also where “the conspiratorial conduct that led to the sale of those goods” occurs in California. AT&T Mobility v. AU Optronics Corp. The civil action follows on the heels of a DOJ criminal investigation that resulted in more than $890 million in fines. In 2001, AU Optronics Corporation and other Asian manufacturers of liquid crystal display (LCD) panels had met secretly and agreed to exchange information regarding shipping, production, supply, and demand. The complaint alleges the result was fixed prices of LCDs in the U.S. and other regions.
Unlike federal antitrust law, California’s Cartwright Act provides a private cause of action for damages caused by indirect purchasers of price-fixed goods. The Cartwright Act thus reaches beyond the Sherman Act in the sense that its focus has always been on “the punishment of violators for the larger purpose of promoting free competition.”
The plaintiffs, all of which are companies that provide voice and data communication services and sell mobile wireless handsets, sued a collective of manufacturers and distributers of LCD panels. Plaintiffs alleged that from 1996 to 2006, “they purchased billions of dollars worth of mobile handsets containing Defendants’ LCD panels” at artificially inflated prices due to a global conspiracy to fix the LCD panel prices. The sale of these LCD panels did not occur in California.
Plaintiffs sued under the Clayton Act, the Sherman Act, California’s Cartwright Act, California’s Unfair Competition Law, and in the alternative, other state laws seeking damages caused by these purchases. Defendants moved to dismiss the California-law-based claims, arguing that the claims violated the Due Process Clause because “the occurrence or transaction giving rise to the litigation” did not occur in the State. The district court agreed and dismissed the Plaintiffs’ California state law claims, finding that Plaintiffs failed to show that their “purchases of allegedly price-fixed goods” occurred within the State.
The Ninth Circuit found that there was sufficient conspiratorial conduct to connect the price fixing to California and that consequently, the claims based on California’s Cartwright Act would not violate the Due Process Clause. Specifically, the allegation that Defendants’ agreements and actual conspiracies took place in California was sufficient.
The court relied on Allstate Ins. Co. v. Hague, 449 U.S. 302, where the Supreme Court found that in order for a state’s substantive law to be considered constitutionally permissible and not a violation of the Due Process Clause, “that State must have a significant contact or significant aggregation of contacts, creating state interest, such that choice of its law is neither arbitrary nor fundamentally unfair.” The court rejected Defendants’ argument that showing a “significant contact” required that the price-fixed sales occurred in California. The court found this emphasis on “a single contact—the location of Plaintiff’s injury,” would represent “a return to the ‘wooden’ and now ‘largely abandoned’ lex loci delicti doctrine,” which considers the law of the place where the tort was committed. Rather, because Defendants allegedly engaged in and implemented their conspiracy in California, these actions fell within the language of “transaction or occurrence” and are enough to give California an interest in the matter.
Read the full Ninth Circuit opinion here.
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