IN RE CAPACITORS ANTITRUST LITIGATION

Background

This multidistrict antitrust litigation concerns allegations that defendants participated in an international conspiracy to fix capacitor prices. The Direct Purchaser Plaintiff class reached settlements with most defendants, including Hitachi Chemical and Soshin. The court had given final approval to that settlement, called the “Second Round Settlement.”

When class counsel sought authorization to distribute the settlement funds, class members Cisco Systems, Inc. and Aptiv Services US, LLC, formerly Delphi Automotive LLP, argued that they were entitled to substantially larger amounts than class counsel had contemplated. The court referred the allocation dispute to Special Master Jeffrey L. Bleich under Federal Rule of Civil Procedure 53. The Special Master issued a Report and Recommendation, and later issued a Supplemental Report and Recommendation after Cisco and Aptiv objected to part of the original report.

The Dispute Over Incorporated Capacitors

The dispute involved “incorporated capacitors”—capacitors manufactured, sold, and shipped entirely outside the United States, then incorporated abroad into finished products sold or delivered into the United States.

The Special Master concluded that the class had released claims against Hitachi Chemical and Soshin involving incorporated capacitors through the settlement agreements. No party objected to that conclusion, and the court adopted it.

The Special Master also concluded that claims involving incorporated capacitors could be stated under the court’s prior orders. The court noted that its earlier Foreign Trade Antitrust Improvements Act order had left open the possibility that certain transactions involving products sold into the United States could qualify as “import trade or commerce” under the Sherman Act or fall within the Act’s domestic-effects exception.

Court’s Rulings

The court adopted the recommendation that Cisco and Aptiv pursue their incorporated-capacitor claims through the settlement-allocation process. The court stated that they were bound by the settlement agreements because they had not objected to the settlement or opted out to bring their own lawsuit. As a result, class counsel would initially determine how the settlement funds should be distributed, including the amount allocated to Cisco and Aptiv’s claims.

The court also rejected Cisco and Aptiv’s argument that the Special Master had improperly added a new “mens rea” requirement. Mens rea means a required state of mind. The court found that the Special Master had instead properly interpreted the requirement that the defendants’ conduct be “directed at” a U.S. import market. Cisco and Aptiv therefore had to support their claims with evidence that the defendants directed the products toward a U.S. import market. The court stated that this requirement was no more and no less than the law demanded.

The court further agreed that class counsel should decide the allocation amount in the first instance. If Cisco or Aptiv disputed the reasonableness of the final amount, the dispute could be submitted to Special Master Bleich for review. The court requested a further report and recommendation if additional allocation disputes arose.

Disposition

The court adopted the Special Master’s Report and Recommendation and Supplemental Report and Recommendation as stated in the order. It directed the parties to return to Special Master Bleich for any further disputes about the amount allocated to Cisco and Aptiv from the Second Round Settlement.