Antitrust Law Daily Class settlements totaling $45 million in lithium ion battery litigation vacated
Tuesday, September 17, 2019

Class settlements totaling $45 million in lithium ion battery litigation vacated

By Peter Reap, J.D., LL.M.

Ninth Circuit cites the district court’s analysis of Rule 23 requirements as "cursory," along with its overruling of Illinois Brick objections.

In the long-running case brought by indirect purchasers of lithium ion batteries who sued Japanese and Korean battery manufacturers for engaging in an international price fixing conspiracy, the Ninth Circuit has vacated the federal district court in Oakland’s final approval of settlements between a class of indirect purchaser plaintiffs (IPPs) and several defendants totaling almost $45 million. The district court’s analysis of the Rule 23 requirements for class certification was merely "cursory," as was its overruling of an objector’s Illinois Brick objections—a more "fulsome analysis" was required, the appellate court observed. Expressing no opinion on whether the representation, settlement class, and settlements satisfied Rule 23, the approval was vacated and the case remanded to allow the district court to properly exercise its discretion consistent with Rule 23’s "rigorous procedural requirements" (In Re Lithium Ion Batteries Antitrust Litigation, September 16, 2019, per curiam).

Two separate classes—direct and indirect purchasers of lithium ion batteries—sued a collection of Japanese and Korean manufacturers in California federal court for engaging in a scheme to fix the price of lithium ion batteries. According to the complaint, Sony Corporation, which invented the lithium ion battery, dominated the market from 1991 until about 1999, when LG and Samsung entered the market with their own lithium ion batteries. Beginning in about 2002, the plaintiffs alleged, the Japanese and Korean manufacturers began meeting semi-annually to refrain from competing with one another. Evidence of the conspiracy, they contended, could be seen in the fact that all the manufacturers raised their battery prices in unison in 2007, when the price of cobalt increased sharply, and then all kept their prices artificially high in unison in 2008 when the price of cobalt dropped again.

The district court certified a nationwide settlement class and approved settlement agreements between the IPPs and defendants LG Chem, Limited; LG Chem America, Incorporated; Hitachi Maxell, Limited; Maxell Corporation of America; and NEC Corporation (the five manufacturers). The district court approved the IPP’s plan to distribute the settlement fund pro rata to settlement class members, regardless of whether their claims arose in Illinois Brick repealer or non-repealer states. Michael Bednarz, an objecting class member, appealed.

In its order granting final approval, the district court found that the settlements, which totaled $44.95 million, were fair, reasonable, and adequate to the settlement class, and further found that the claims against each of the five manufacturers should be dismissed with prejudice. In addition, the court found that a pro rata plan of distribution, the specifics of which would be considered at a later date, should be approved. It thus ordered the IPPs to submit a proposed distribution plan at the close of the claims period and to submit quarterly reports on the progress and status of the claims program. A partial attorney-fee payment of $4.495 million and expenses of $860,000 were also approved.

The district court did not explain why a nationwide class should be certified and a pro rata distribution plan approved despite substantial differences in state law between repealer and non-repealer states, the Ninth Circuit stated. The final approval order merely paraphrased Rule 23 and concluded that the Rule’s requirements were met. Similarly, the district court summarily overruled Bednarz’s objections, finding "the settlement, and the pro rata allocation among settlement class members, fair and adequate despite these differences [in state law]."

According to the Ninth Circuit, the district court’s analysis of Rule 23’s requirements was "cursory," as was its overruling of Bednarz’s Illinois Brickobjections. A more "fulsome analysis" was required. This was especially true given the district court’s suggestion in a previous order denying certification of a nationwide class that California’s Illinois Brickrepealer law likely would not apply to class members from non-repealer states. The appellate court’s concerns were also magnified by the district court’s recent approval of another set of settlement agreements whose distribution plans specifically account for the difference between repealer and non-repealer states, the court observed.

This case is No. 17-17367.

Attorneys: Steve Berman, Attorney (Hagens Berman) for Indirect Purchaser Plaintiffs. Jeffrey J. Amato (Winston & Strawn LLP) for Panasonic Corp., Panasonic Corp. of North America and Sanyo Electric Co., Ltd.

Companies: Panasonic Corp.; Panasonic Corp. of North America; Sanyo Electric Co., Ltd.

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