Judge Denies Dismissal of 2 Auto Parts Antitrust Class Action Lawsuits

A federal judge has denied two groups of defendants’ motions to dismiss auto parts price-fixing class action lawsuits regarding safety systems and bearings, writing that the companies used an incorrect pleading standard and that the direct purchaser plaintiffs had alleged sufficient information.

There are dozens of cases alleging violations of the Sherman Antitrust Act regarding auto parts suppliers that sell to car makers like General Motors and Toyota centralized in U.S. District Court in Michigan. In general, they allege that a few companies dominate at least 50 percent of the market, meet frequently and operate in an economically inelastic market, meaning that prices do not normally affect demand.

In the case of bearings used to reduce friction, the plaintiffs allege that there is a further incentive to create a monopoly because they are mostly produced in standardized sizes and there is evidence that companies will sell to competitors in order to fill orders. The defedants’ chief argument in both cases was that a combination of a potential theory of collusion and isolated criminal investigations or guilty pleas did not form an international conspiracy that would support a plausible Sherman Antitrust Act violation.

U.S. District Judge Marianne O. Battani disagreed in her order denying both motions to dismiss the auto parts price-fixing class action lawsuits. While she did not note that other companies have already decided to settle with direct purchaser plaintiffs that paid tens of millions of dollars to resolve allegations, she did note that the facts of the allegations made by plaintiffs must be taken as true.

If that is the case, the global investigations of an alleged ball bearing monopoly do matter, and “the fact that no Defendant has pleaded guilty to the full range of conduct alleged in the CACAC does not circumscribe this law suit because relatively few defendants plead guilty to all of the charges against them. … Here, the allegations [and government statements] suggest a broad industry-wide conspiracy that began before the time admitted in the guilty pleas.”

Judge Battani took special note to remind the defendants in the automotive safety systems case that her duty “is not to read each allegation in isolation nor to nitpick a complaint line by line, paragraph by paragraph … when read in its entirety, the allegations in the [class action lawsuit] articulate a plausible antitrust claim[.]”

The plaintiffs are represented by Cotchett Pitre & McCarthy LLP, Robins Kaplan Miller & Ciresi LLP and Susman Godfrey LLP, among others.

The Auto Parts Price-Fixing Class Action Lawsuits is In re: Automotive Parts Antitrust Litigation, Case No. 12-md-02311, in the U.S. District Court for the Eastern District of Michigan.