Court Grants Summary Judgment in Favor of Compass Lexecon Clients in re Optical Disk Drive Litigation

On December 18, 2017, Judge Richard Seeborg of the U.S. District Court for the Northern District of California granted summary judgment in favor of Compass Lexecon’s clients in two related matters involving alleged price fixing by manufacturers of optical disk drives (“ODDs”).

In one case, Judge Seeborg granted summary judgment in favor of defendants Samsung, Toshiba, Toshiba Samsung Storage Technology Corporation and BenQ. A class of indirect purchasers of ODDs alleged that supracompetitive prices of ODDs sold to computer manufacturers such as Dell and HP were fully passed through at each level of the computer production and distribution chain, resulting in higher computer prices and/or a reduction in the quality of computers sold to consumers. In support of their claims, indirect purchaser plaintiffs proffered an expert report purporting to show 100% pass-through of the alleged overcharge to consumers.

Compass Lexecon expert Dr. Andres Lerner submitted a report and testified at deposition, identifying fundamental flaws in plaintiffs’ expert’s pass-through analyses and conclusions. Judge Seeborg agreed with Dr. Lerner’s conclusions, stating that “while [plaintiffs’ expert’s] report conveniently theorizes 100% pass-through at every stage of the distribution chain,” it failed to demonstrate that alleged ODD overcharges were passed through either in higher-priced or lower-quality computers. Judge Seeborg granted defendants’ motion for summary judgment, concluding that indirect purchaser plaintiffs and their expert failed to demonstrate a “genuine issue of material fact as to pass-through, which underlies [indirect purchaser plaintiffs’] theory of causation, injury, and damages.”

Judge Seeborg granted summary judgment in favor of defendants in a second price fixing case brought by retailer plaintiffs, Circuit City and Radio Shack. Retailer plaintiffs claimed that as a result of the alleged ODD conspiracy, they were injured on their direct purchases of computers and other products incorporating optical disk technology (including audio devices, DVD players, Blu-ray players and game consoles) from defendants.

Dr. Lerner described various flaws in the theories and empirical analyses of retailer plaintiffs’ experts who purported to show that the alleged ODD conspiracy targeting computer manufacturers would have resulted in higher prices for products sold directly by defendants to Circuit City and Radio Shack, including computers and “Other Products” containing optical disk technology. Judge Seeborg agreed with Dr. Lerner’s conclusions, ruling that retailer plaintiffs and their experts failed to present “any theory as to how the conspiracy would have affected customers other than those specifically targeted, let alone present any evidence that this actually occurred.” As a result, retailer plaintiffs failed to provide “sufficient evidence to proceed with their claims based on purchases incorporating ODDs or ‘Other Products.'”

Dr. Lerner was supported by a team in Compass Lexecon’s Century City office led by Emmett Dacey that included Janin Wimer, Joshua Waller, Joel Moore, Pauline Rouyer, Aren Megerdichian and Renita Lee. The Compass Lexecon team worked closely with counsel representing Defendants, including Ian Simmons of O’Melveny & Myers LLP, and Belinda S. Lee and Brendan A. McShane of Latham & Watkins LLP. The joint defense team also included George Mastoris (Winston & Strawn LLP); Beko Reblitz-Richardson (Boies Schiller Flexner LLP); Mark S. Popofsky (Ropes & Gray LLP); Evan Werbel and Stuart Plunkett (Baker Botts LLP); Eric P. Enson (Jones Day); Lisa M. Kaas (Blank Rome LLP); Jason A. Levine (Vinson & Elkins LLP); and Aharon S. Kaye (Katten Muchin Rosenman LLP).