Plaintiffs Say Foreign Defendants Must Face Trial in Hard Drive Disk Suspension Antitrust MDL

The indirect purchaser plaintiffs (IPPs) litigating a case against a number of Asian hard drive disk suspension assembly (SAs) manufacturers opposed their bid to have the case tossed based on application of the Foreign Trade Antitrust Improvements Act of 1982 (FTAIA). The IPPs, comprised of putative classes of both resellers, online and brick and mortar retailers, and “end-user” plaintiffs or consumers, claim that the FTAIA, which curbs the reach of U.S. antitrust laws with respect to anticompetitive conduct occurring overseas, does not apply.

As previously reported, the 2019 multidistrict litigation proceeding before Judge Maxine M. Chesney claims that the defendants, and in particular NHK, TDK, and HTI controlled more than  95% of the global production and sales of SAs for more than ten years beginning in 2003. The amended complaint, filed four months ago, accuses the ten Chinese, Japanese, and Thai SA manufacturers of spearheading a global conspiracy to divide the market for SAs, critical components of hard drives used in computers and storage devices that have no independent functionality. 

The result, they claim, was increased prices of SAs and SA-containing devices right through the supply chain to resellers and consumers.

This week’s filing adds that the defendants have conceded that the unified price-fixing scheme “directly imported substantial amounts of SAs into the U.S. Defendants negotiated prices in the U.S., participated in conspiratorial communications in the U.S., sold SAs to companies they knew incorporated SAs into finished products for import to the U.S., and directed their conspiracy at the U.S. import market.”

The IPPs argue this conduct is “import commerce,” and therefore not subject to the FTAIA at all, as multiple courts have reportedly already concluded. They assert entitlement to recover damages resulting from the defendants’ overseas sales of price-fixed SAs that were incorporated into finished products purchased in the U.S., conduct which the Ninth Circuit has held actionable in cases similar to this one.

Alternatively, the IPPS urge that they satisfy the FTAIA, which does not apply to international cartels having a “direct, substantial, and reasonably foreseeable effect” on the U.S., and second, whose conduct “gives rise to a claim” under U.S. law. Here, they claim that their purchase of price-fixed and therefore overpriced finished products in the United States means that the “domestic effects” exception is met.

Lastly, the plaintiffs contend that the manufacturer defendants’ Dormant Commerce Clause and “repackaged” standing arguments knocking their state law claims fare no better than their FTAIA assertions. 

The end-user plaintiffs are represented by interim co-lead counsel Robins Kaplan LLP and Zelle LLP. Cuneo Gilbert & Laduca LLP and Larson • King LLP are interim co-lead counsel for the reseller plaintiffs.