Opinion
MDL No. 1917 Case No. C-07-5944-SC
08-20-2014
IN RE: CATHODE RAY TUBE (CRT) ANTITRUST LITIGATION This Order Relates To: Sharp Electronics Corp., et al. v. Hitachi, Ltd., et al., 13-cv-1173-SC Dell Inc., et al. v. Hitachi, Ltd., et al., 13-cv-02171-SC ALL DIRECT PURCHASER ACTIONS
ORDER RE: DELL'S AND SHARP'S ADMINISTRATIVE MOTIONS TO CONFIRM THEIR OPT OUT REQUESTS OR, IN THE ALTERNATIVE, FOR AN ENLARGEMENT OF TIME TO OPT OUT
I. INTRODUCTION
Now before the Court are administrative motions by Sharp Electronics Corporation and Sharp Electronics Manufacturing Company of America, Inc. ("Sharp") and Dell Inc. and Dell Products L.P. ("Dell") to confirm their request to opt out from the Direct Purchaser Plaintiffs' ("DPPs") proposed settlement with the SDI and Hitachi Defendants ("Proposed Settlements") or for a retroactive extension of the time to opt out. ECF Nos. 2696 ("Dell Mot."), 2698 ("Sharp Mot."). Hitachi opposes the motion. ECF Nos. 2712 ("Dell Opp'n"), 2713 ("Sharp Opp'n"). DPPs also filed a responsive brief in support of the motion. ECF No. 2715 ("DPP Br."). The motion is fully briefed and ripe for disposition without oral argument. Civ. L.R. 7-1(b); 7-11. For the reasons set forth below, Dell's motion is GRANTED and Sharp's motion is DENIED.
The SDI Defendants include Samsung SDI Co. Ltd. (f/lk/a Samsung Display Devices Co., Ltd.), Samsung SDI America, Inc., Samsung SDI Brasil, Ltd., Tianjin Samsung SDI Co., Ltd., Samsung Shenzhen SDI Co., Ltd., SDI Malaysia Sdn. Bhd., and SDI Mexico S.A. de C.V. (collectively "SDI"). The DPP's proposed settlement with Hitachi includes Hitachi, Ltd., Hitachi Displays, Ltd. (n/k/a Japan Display Inc.), Hitachi America, Ltd., Hitachi Asia, Ltd., and Hitachi Electronic Devices (USA) Inc. (collectively, "Hitachi"). SDI and Hitachi are collectively referred to as the "Settling Defendants."
II. BACKGROUND
The parties are familiar with the factual and procedural background of the case, so an exhaustive review is unnecessary. The facts relevant to the motion are set forth below. Defendants are allegedly manufacturers of cathode ray tubes ("CRTs") and, in some cases, of finished products as well. In March 2013, Sharp filed a direct action suit against a host of defendants including the Settling Defendants. ECF No. 1604-2. In June 2013, Dell filed its First Amended Complaint, also asserting claims against the Settling Defendants. ECF No. 1726.
On April 14, 2014 the Court granted provisional certification to a class in the Proposed Settlements. ECF No. 2534. Subsequently, the Settlement Administrator set the deadline to opt out of the Proposed Settlements for June 12, 2014. The Settlement Administrator mailed notice to the class members including two addresses for Dell and eight addresses for Sharp. ECF Nos. 2712-1 ("Murray Dell Decl.") ¶¶ 3-4; 2713-1 ("Murray Sharp Decl.") ¶¶ 3-4. One of Dell's notices was returned as undeliverable. Murray Dell Decl. ¶ 4. None of the Sharp notices were returned. Murray Sharp Decl. ¶ 4. The Settlement Administrator also published notice in the Wall Street Journal, established a website with copies of the relevant notices and a Frequently Asked Questions page with the June 12 deadline, and activated a toll-free telephone line with customer service representatives available to answer questions related to the class settlement. Id. at ¶ 6-8.
Before, during, and after the June 12 deadline, both Dell and Sharp have been actively litigating against the Settling Defendants. See Dell Mot. at 1-2 (describing Dell's active participation in discovery); Sharp Mot. at 1-2 (discussing Sharp's litigation against the Settling Defendants). Nonetheless, neither Dell nor Sharp sent an opt out notice to the Settlement Administrator by the June 12 deadline. Instead, on June 26, 2014, after DPPs' counsel contacted counsel for Dell and Sharp and pointed out that opt out requests had not been received from either company, Dell and Sharp immediately submitted opt-out requests. ECF No. 2715-1 ("Saveri Decl.") ¶¶ 3, 6. As a result, both Dell and Sharp were included on the list of opt-outs filed by the DPPs on the court-ordered deadline of June 26, the earliest date on which the Settling Defendants were notified of the list of opt-outs. Id. at ¶ 6. Twelve days later, counsel for both Sharp and Dell contacted SDI and Hitachi's counsel seeking to stipulate to an extension of the opt-out deadline, but Hitachi refused. ECF No. 2698-1 ("Benson Decl."), ¶ 6.
Sharp and Dell now bring these motions seeking alternatively to confirm that their June 26 opt-out was effective or to retroactively extend the opt-out deadline. Hitachi opposes.
III. DISCUSSION
Sharp and Dell make two largely identical arguments in support of their motions. First, they argue that their actions before, during, and after the opt-out deadline sufficiently demonstrated their intent to be excluded from the settlement class. Sharp Mot. at 3-4; Dell Mot. at 3-4. Accordingly, they ask the Court for an order confirming their status as opt-outs from the Proposed Settlements. Alternatively they contend that even if their demonstration of intent to opt out is insufficient, this is a case of excusable neglect and good cause exists for the Court to order an enlargement of time under Federal Rule of Civil Procedure 6(b). Sharp Mot. at 4-5; Dell Mot. at 4-5. The Court will analyze Sharp's and Dell's second argument first. Finding Sharp's neglect inexcusable but Dell's excusable, the Court then turns to the parties' first argument.
A. Excusable Neglect
District Courts have discretion to grant retroactive enlargements of time under Federal Rules of Civil Procedure 6(b) and 60(b)(1) provided a party shows their neglect in missing the applicable deadline was excusable. In determining whether the parties have shown excusable neglect, the Court considers four factors (the "Pioneer factors"): (1) the danger of prejudice to the nonmoving parties, (2) the length of delay, (3) the reason for the delay, and (4) whether the movant acted in good faith. Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 395 (1993); Silber v. Mabon, 18 F.3d 1449, 1455 (9th Cir. 1994).
Dell and Sharp both argue they have satisfied each of these factors. First, Dell and Sharp argue that because they were included in the report on exclusions, the first time the Settling Defendants received information regarding the identify of the opt-outs, the Settling Defendants will not be prejudiced if they are permitted to opt out. Furthermore, Dell and Sharp argue that their delay was minimal -- their opt-out request was postmarked and received 14 days after the opt-out deadline. As to the third factor, the reason for the delay, Dell argues that while they repeatedly checked the Settlement Administrator's "dates to remember" page, the page was never updated to include the opt-out deadline for this particular settlement. Coupled with the ostensible failure of Dell's in-house counsel's to receive notice of the Proposed Settlements, Dell contends their delay resulted from "confusion" and "reasonable mistake." Dell Mot. at 5. Sharp offers no explanation for its failure to opt out prior to the deadline. Finally, it is undisputed that the parties acted in good faith, and did not fail to opt out seeking a tactical advantage.
Hitachi argues that neither party has successfully demonstrated excusable neglect. Specifically, Hitachi argues that extending the opt-out deadline retroactively will be prejudicial as it will undermine certainty and deadlines in the case and that the length of the delay weighs in their favor. Furthermore, they argue that the third factor, the explanation for the delay, does not weigh in either Sharp's or Dell's favor. Specifically they note that Sharp's failure to offer any explanation "'largely moots any further inquiry into the other pertinent factors.'" Sharp Opp'n at 3 (quoting Demint v. NationsBank Corp., 208 F.R.D. 639, 642 n.5 (M.D. Fla. 2002)). As to Dell, they contend that "Dell knew or should have known about the deadline," particularly in light of the numerous other requests for exclusion. Dell Opp'n at 4.
1. Adequacy of Notice
As a preliminary matter, the Court notes that the notice provided in this case was constitutionally adequate. Notice was sent to (and apparently received at) at least one Dell address and multiple Sharp addresses, published in the Wall Street Journal, and posted on the Settlement Administrator's website. The fact that Dell arguably did not receive the class notice does not render the notice constitutionally inadequate. Brannon v. Household Int'l Inc., 236 F. App'x 285, 287 n.1 (9th Cir. 2007) (noting that neither actual nor "individually tailored" notice is constitutionally required). Furthermore, while the success of the procedures is not dispositive, the fact that eighteen corporate families filed timely opt-out notices further indicates notice was adequate.
2. Sharp
As to Sharp, two of the Pioneer factors weigh in their favor. First, it is undisputed that Sharp acted in good faith. Second, Hitachi's suggestion that Defendants will be prejudiced by reduced certainty in deadlines is vague and unconvincing. On the other hand, the DPPs point out that members of the settlement classes may well be prejudiced by including Sharp, a large purchaser of CRTs. This may well be true, but neither Sharp nor the DPPs provide any detail above generalized assertions of prejudice. See DPP Br. at 3-4; Saveri Decl. ¶ 9. Without more, the Court does not ascribe significant weight to this factor.
On the other hand, the remaining factors weigh strongly against a finding of excusable neglect. First, and most importantly, Sharp has offered no explanation as to why it missed the applicable opt-out deadline aside from mentioning that notice was "inadvertently not . . . sent to outside counsel for the Sharp Plaintiffs." See Benson Decl. ¶ 5. Inadvertence and miscommunication are insufficient excuses. See, e.g., In re Static Random Access Memory (SRAM) Antitrust Litig., No. C 07-01819 CW, 2009 WL 2447802, at *2 (N.D. Cal. Aug. 7, 2009) (declining to find excusable neglect due to "miscommunications"); see also Pioneer, 507 U.S. at 392 (stating that "inadvertence . . . [does] not usually constitute 'excusable' neglect."). Sharp received notices (sent to the same address used for other settlements Sharp opted out of), and had every opportunity to review the Settlement Administrator's website or publication notice. While Sharp points out that the Settlement Administrator's "dates to remember" page omitted the opt-out deadline, they do not claim they viewed that page or relied on it for notice of the applicable deadline. See Sharp Mot. at 2. Finally, while Sharp characterizes the two week delay in filing a request for exclusion as "de minimis," they fail to note that after filing their request for exclusion, counsel waited an additional twelve days before contacting opposing counsel seeking their position on Sharp's exclusion from the class. These facts are simply insufficient to justify a finding of excusable neglect. Accordingly, Sharp's motion for a retroactive extension of the opt-out period is DENIED.
3. Dell
Unlike Sharp, Dell's motion provides sufficient detail to demonstrate its neglect was excusable. As with Sharp, the parties agree that Dell has acted in good faith. Similarly, the Court finds that Defendants will not be prejudiced by permitting Dell to opt out of the class. There is at least some support for the DPPs' contention that the members of the settlement class will be prejudiced if Dell, unlike Sharp, is included in the class. The DPPs suggest that Dell's purchases from SDI "exceed $1.6 billion," although they provide no source for that number other than stating the information was gleaned from a conversation with Dell's counsel. Saveri Decl. ¶ 9. While the Court has no way to determine what percentage of the $1.6 billion in purchases Dell considers to be overcharges, and accordingly what amount of that $1.6 billion would constitute recoverable damages in SDI settlement, the Court finds this is enough detail to tip the prejudice factor further in Dell's favor.
Also unlike Sharp, Dell offers an explanation for missing the opt-out deadline. Dell contends that "confusion regarding the opt-out deadline created by the class administrator's settlement website not being properly updated to reflect the opt-out deadline," the alleged "failure to serve Dell with actual notice of the opt-out deadline," and "reasonable mistake regarding the opt-out deadline" caused them to miss the opt-out deadline. Dell Mot. at 5. Furthermore, unlike Sharp, which points to the confusion regarding the Settlement Administrator's "dates to remember" page but does not claim to have ever visited the page or relied on it, Dell states that their counsel visited several pages on the Settlement Administrator's website during the opt-out period and include internet browsing history from the relevant period to prove it. ECF Nos. 2696-2 ("Kent Decl.") ¶ 3; 2696-3 ("Mahurin Whitehead Decl.") ¶¶ 5-9, Ex. 9. While some of Dell's explanations are inapposite, see Silber, 18 F.3d at 1453 (noting that Rule 23 does not require actual notice, only the best notice practicable), the Court finds this explanation shows an appreciable level of diligence and rises above the vague assertions of miscommunication and inadvertence other courts have rejected. See Pioneer, 507 U.S. at 392; SRAM, 2009 WL 2447802, at *2. Accordingly, Dell has also tipped the balance of this factor in its favor.
While the Court finds the length of delay factor weighs against Dell for the same reasons it weighed against Sharp, the Court finds Dell has demonstrated excusable neglect. Accordingly, Dell's motion for a retroactive enlargement of the time to opt out is GRANTED.
B. Confirmation of Sharp's Opt-Out Attempt
Having found that Sharp's neglect is inexcusable, the Court must now determine if Sharp can demonstrate some other ground for its exclusion from the Proposed Settlements. Specifically, Sharp argues that its litigation conduct throughout the relevant period is sufficient to have effectively opted them out of the Proposed Settlements. As a preliminary matter, however, Hitachi disputes whether such an inquiry is even appropriate. Instead, Hitachi contends that the excusable neglect standard is the sole test for determining the efficacy of an opt-out in the Ninth Circuit. In doing so, Hitachi relies on Chief Judge Wilken's statement in In re Static Random Access Memory (SRAM) Antitrust Litigation that "[t]he standard for determining whether [a plaintiff] should be allowed to opt-out of the class after the applicable deadline is whether its failure to comply with the deadline is the result of 'excusable neglect.'" 2009 WL 2447802, at *2; see also Silber, 18 F.3d at 1455 (remanding to the district court to analyze whether the party seeking to opt out could show excusable neglect).
In SRAM, the Court denied Intel's motion for a retroactive enlargement of time to opt out of the certified class. Despite numerous electronic, mail, and publication notices by the Settlement Administrator, at least one of which was received before the opt-out deadline, Intel failed to timely return an opt-out notice. Id. at *1. After being informed of its failure to opt out by a supplier, Intel immediately contacted outside counsel and several defendants to inform them they intended to opt out, and filed an unopposed motion to do so. Id. The Court denied the motion, reasoning that Intel's only explanation -- an "honest mistake" resulting from "miscommunications" -- was insufficiently detailed to justify granting a retroactive enlargement of the deadline. Id. at *2-3.
Sharp disagrees that excusable neglect is the sole basis for concluding it has effectively opted out of the class, instead arguing that the continued prosecution of its case throughout the opt out period was sufficient to express "the operating understanding of all relevant parties: Sharp is not a member of the settlement class." Sharp Mot. at 3. In support of this proposition Sharp relies primarily on two cases, In re Brand Name Prescription Drugs Antitrust Litigation, 171 F.R.D. 213 (N.D. Ill. 1997) and McCubbrey v. Boise Cascade Home & Land Corp., 71 F.R.D. 62 (N.D. Cal. 1976). In McCubbrey, the Court granted final approval and class certification to a settlement releasing class member's claims against a homebuilding company. 71 F.R.D. at 64-65. Prior to doing so, notice was sent via mail and publication to absent class members that "suggest[ed] that inaction will result in barring future litigation, not automatic termination of present suits." Id. at 68. The Defendant sought an order enjoining twenty state court actions filed by members of the putative class before, during, and after opt-out period. Id. at 65. Pointing to the due process implications of binding absent class members, Judge Peckham concluded that "it seems clear that institution of litigation . . . constitutes an effective -- indeed, strident -- expression of a desire not to acquiesce in an impending class settlement." Id. at 71.
In opposition, Hitachi suggests that, even under Sharp's preferred view, Sharp cannot prevail. Sharp Opp'n at 5. Specifically, Hitachi notes the existence of cases holding that the "mere pendency and continued prosecution of a separate suit, which the litigant instituted before commencement of the 'opt-out' period in a related class action, neither registers nor preserves a litigant's 'opt out' of the related class action." Demint v. NationsBank Corp., 208 F.R.D. 639, 641 (M.D. Fla. 2002); see also Bowman v. UBS Fin. Servs., Inc., No. C-04-3525, 2007 WL 1456037, at *1-2 (N.D. Cal. May 17, 2007) (quoting the language from Demint, and citing McCubbrey for the narrower position that filing suit "during [the] opt-out period" was sufficient to express the desire to opt out) (emphasis added); In re Prudential Secs. Inc. Ltd. P'ships Litig.,164 F.R.D. 362, 370 (S.D.N.Y. 1996) ("It is well-established that pendency of an individual action does not excuse a class member from filing a valid request for exclusion."), aff'd 107 F.3d 3 (2d Cir. 1996); Holmes v. CSX Transp., No. Civ.A. 97-3863, 1999 WL 447087, at *4 (E.D. La. 1999) ("Simply continuing with the present lawsuit, in a different court than the class action suit, is not sufficient to provide the court with notice of plaintiff's intent to opt-out of the class.").
Hitachi is right. Assuming arguendo that in some cases a party's litigation conduct may sufficiently demonstrate its intent to be excluded from the class, this is not such a case. First, unlike in McCubbrey, the notice in this case was constitutionally sufficient, and Sharp's case against the Settling Defendants was filed prior to the opt-out period. See Bowman, 2007 WL 1456037, at *1 ("Here, unlike the notice at issue in McCubbrey, the Class Notice complies with the due process requirement that 'the options available to class members and the consequences of their elections be detailed with sufficient clarity to afford absent members a realistic opportunity to evaluate alternative options available to them.'") (quoting McCubbrey, 71 F.R.D. at 67). Second, the weight of authority cited by Hitachi is clear: filing an individual case prior to the opt-out period and continuing to litigate that case through the opt-out period is insufficient. Id. at *2 (collecting cases); see also In re Prudential Ins. Co. of Am. Sales Pracs. Litig., 177 F.R.D. 216, 238 (D.N.J. 1997); In re VMS Secs. Litig., No. 89 C 9448, 1992 WL 203832, at *3 (N.D. Ill. 1992); cf. Brannon, 236 F. App'x at 287 (concluding that ongoing negotiations between the individuals and defendants "did not exclude [plaintiffs] from compliance with the judicially ordered exclusion procedures"); Penson v. Terminal Transp. Co., Inc., 634 F.2d 989, 996 (5th Cir. 1981) (rejecting the argument that an individual's filing of an EEOC charge prior to the entry of a consent decree prevented the application of claim preclusion). Finally, Sharp's reliance on Brand Name Prescription Drugs is misplaced. In that case, the party seeking to confirm the effectiveness of its opt-out request mistakenly sent the required opt-out notice to the court rather than the appropriate post office box. 171 F.R.D. at 215-16. Furthermore, to the extent the case concluded that "[t]he clearest evidence of a desire to pursue its own litigation against the defendants is the filing of its case against the same 23 defendants," it is contrary to the clear weight of authority identified above.
Accordingly, Sharp has failed to show that its actions during the opt-out period sufficiently demonstrated its intent to be excluded from the Proposed Settlements. As a result, their motion is DENIED.
IV. CONCLUSION
For the reasons set forth above, the Court GRANTS Dell's motion for a retroactive enlargement of time to opt out of the Proposed Settlements. Dell's alternative motion to confirm its prior opt-out is DENIED as moot. The Court DENIES Sharp's motions to confirm its opt-out request and its alternative motion for a retroactive enlargement of time to opt out of the Proposed Settlements. IT IS SO ORDERED.
Dated: August 20, 2014
/s/_________
UNITED STATES DISTRICT JUDGE