In re SRAM Antitrust Litig.

67 Pages·2009·0.25 MB·English

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No. 09-

In the United States Court of Appeals
for the Ninth Circuit
__________________________
IN RE STATIC RANDOM ACCESS MEMORY (SRAM) ANTITRUST
LITIGATION – ALL INDIRECT PURCHASER ACTIONS
__________________________
On Petition for Appeal From The United States District Court
For the Northern District of California
The Honorable Claudia Wilken
No. M:07-CV-01819-CW
MDL No. 1819
______________
RULE 23(f) PETITION FOR LEAVE TO APPEAL FROM
DISTRICT COURT’S ORDER GRANTING CLASS CERTIFICATION
______________
ROBERT B. PRINGLE
PAUL R. GRIFFIN
PATRICK M. RYAN
JONATHAN E. SWARTZ
Winston & Strawn LLP
101 California Street
San Francisco, CA 94111-5894
[phone]

Liaison Counsel for All Defendants-Petitioners; and
Counsel for Defendants-Petitioners
NEC ELECTRONICS CORPORATION and NEC ELECTRONICS AMERICA, INC.
(Additional Petitioners and Counsel Listed on Signature Page)
______________
Oral Argument Requested
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CORPORATE DISCLOSURE STATEMENT

Cypress Semiconductor Corporation:
Cypress Semiconductor Corporation is a publicly traded corporation, it has
no parent corporation, and no publicly traded entities own more than ten percent of
Cypress Semiconductor Corporation stock.

NEC Electronics Corporation and NEC Electronics America, Inc.:
NEC Electronics America, Inc. is a wholly owned subsidiary of NEC Elec-
tronics Corporation. NEC Electronics Corporation is publicly traded in Japan.
NEC Corporation owns more than ten percent of NEC Electronics Corporation.

Samsung Electronics Company, Ltd., Samsung Electronics America, Inc., and
Samsung Semiconductor, Inc.:
Samsung Semiconductor, Inc. is a non-governmental corporate entity and is
a wholly-owned subsidiary of Samsung Electronics America, Inc. Samsung Elec-
tronics America, Inc. is not a publicly held corporation and is a wholly-owned sub-
sidiary of Samsung Electronics Co., Ltd., a non-governmental corporate entity with
no parent corporation. Samsung Electronics Co., Ltd. is a Korean corporation that
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is publicly traded on the Korean stock exchange. There is no publicly held
corporation that owns ten percent or more of Samsung Electronics Co., Ltd.
DATED: December 9, 2009 WINSTON & STRAWN LLP
By /s/ Patrick M. Ryan
PATRICK M. RYAN
LIAISON COUNSEL FOR ALL DEFENDANTS-
PETITIONERS; AND COUNSEL FOR DEFENDANTS-
PETITIONERS NEC ELECTRONICS CORPORA-
TION AND NEC ELECTRONICS AMERICA, INC.
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TABLE OF CONTENTS
CORPORATE DISCLOSURE STATEMENT.........................................................1
TABLE OF CONTENTS...........................................................................................I
TABLE OF AUTHORITIES....................................................................................II
QUESTIONS PRESENTED......................................................................................3
BACKGROUND .......................................................................................................4
A. SRAM and the Nature of Plaintiffs’ Claims.........................................4
B. Defendants’ Challenge to Representative Plaintiffs’ Standing.............5
C. The District Court’s Class Certification Ruling....................................7
STANDARD FOR GRANTING RULE 23(f) REVIEW..........................................9
REASONS FOR GRANTING THE PETITION.......................................................9
A. The District Court Applied an Incorrect Standard in
Determining Whether Plaintiffs Had Established Standing................10
B. The District Court Erred by Ignoring Undisputed Evidence That
Discredited Plaintiffs’ Methodologies................................................16
CONCLUSION........................................................................................................20

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TABLE OF AUTHORITIES
Page(s)
CASES
Anthony v. Am. Airlines, Inc.,
No. 03 C 3681, 2006 WL 2794777 (N.D. Ill. Sept. 27, 2006)...........................................12, 14
Apex Digital, Inc. v. Sears, Roebuck & Co.,
572 F.3d 440 (7th Cir. 2009)...................................................................................................12
Chamberlan v. Ford Motor Co.,
402 F.3d 952 (9th Cir. 2005).....................................................................................3, 9, 19-20
City of Los Angeles v. Lyons,
461 U.S. 95 (1983).........................................................................................................6, 10, 15
Deirmenjian v. Deutsche Bank, A.G.,
No. CV 06-00774, 2006 WL 4749756 (C.D. Cal. Sept. 25, 2006)..........................................12
Dukes v. Wal-Mart, Inc.,
509 F.3d 1168 (9th Cir. 2007),
vacated for reconsideration en banc, 556 F.3d 919 (9th Cir. 2009)...............................passim
E. Tx. Motor Freight Sys., Inc. v. Rodriguez,
431 U.S. 395 (1977).................................................................................................................11
Ford v. Nylcare Health Plans of the Gulf Coast, Inc.,
301 F.3d 329 (5th Cir. 2002)...................................................................................................14
Gen. Tel. Co. v. Falcon,
457 U.S. 147 (1982).......................................................................................................2, 11, 20
Ill. Brick v. State of Ill.,
431 U.S. 720 (1977)...........................................................................................................16, 17
In re First Am. Corp. ERISA Litig.
258 F.R.D. 610 (C.D. Cal. 2009).............................................................................................11
In re Hydrogen Peroxide Litig.,
552 F.3d 305 (3d Cir. 2009).....................................................................................................20
In re Methionine Antitrust Litig.,
204 F.R.D. 161 (N.D. Cal. 2001).............................................................................................17
In re Polypropylene Carpet Antitrust Litig.
178 F.R.D. 603 (N.D. Ga. 1997)..............................................................................................11
ii
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In re Rubber Chems. Antitrust Litig.,
232 F.R.D. 346 (N.D. Cal. 2005).............................................................................................16
Lujan v. Defenders of Wildlife,
504 U.S. 555 (1992)...........................................................................................................10, 11
McNutt v. Gen. Motors Acceptance Corp. of Ind.,
298 U.S. 178 (1936).................................................................................................................12
Medalie v. Bayer Corp.,
510 F.3d 828 (8th Cir. 2007)...................................................................................................14
Nelsen v. King County,
895 F.2d 1248 (9th Cir. 1990)...........................................................................................10, 15
Perry v. Village of Arlington Heights,
186 F.3d 826 (7th Cir.1999)....................................................................................................12
Rockwell Int’l Corp. v. United States ex rel. Stone,
549 U.S. 457 (2007).................................................................................................................11
Slowiak v. Land O’Lakes, Inc.,
987 F.2d 1293 (7th Cir. 1993).................................................................................................14
State of California v. Infineon Tech. AG,
No. C 06-4333 PJH, 2008 WL 4155665 (N.D. Cal. Sept. 5, 2008).........................................16
Thornhill Pub. Co. Inc. v. Gen. Tel. & Elec. Corp.,
594 F.2d 730 (9th Cir. 1979).............................................................................................12-13
Weisgram v. Marley Co.,
528 U.S. 440 (2000).............................................................................................................2, 17
STATUTES
15 U.S.C. § 1 (Sherman Act)...........................................................................................................5
OTHER AUTHORITIES
Fed. R. App. P. 5..............................................................................................................................1
Fed. R. Civ. P. 23(b)(2)....................................................................................................................8
Fed. R. Civ. P. 23(b)(3)................................................................................................................5, 8
Fed. R. Civ. P. 23(f)...............................................................................................................passim
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RULE 23(f) PETITION FOR LEAVE TO APPEAL FROM
DISTRICT COURT’S ORDER GRANTING CLASS CERTIFICATION
Pursuant to Fed. R. App. P. 5 and Fed. R. Civ. P. 23(f), defendants respect-
fully petition for permission to appeal from the order granting class certification
entered on November 25, 2009, by Judge Claudia Wilken, in In re Static Random
Access Memory (SRAM) Antitrust Litigation, No. M:07-CV-01819 cw (N.D. Cal.).
The order granting class certification (“Order”) is attached as Exhibit A.1
INTRODUCTION
This petition seeks review of the district court’s certification of a class of at
least 100 million people, and perhaps as many as two-thirds of all Americans. This
dwarfs the class certified in Dukes v. Wal-Mart, Inc., 509 F.3d 1168, 1190, 1200
(9th Cir. 2007), vacated for reconsideration en banc, 556 F.3d 919 (9th Cir. 2009),
where this Court granted Rule 23(f) review to consider a 1.5-million member class,
which this Court characterized as “the largest certified class in history.” The Court
should likewise grant Rule 23(f) review here, where the class is exponentially lar-
ger and potential damages are enormous. Left to stand, the ruling below threatens
to sound a “death knell” for defendants who face potential joint-and-several liabil-
ity and trebled damages—on the basis of two manifest errors.
The first error concerns the vital question of the scope of Article III standing

1 Pursuant to Fed. R. App. P. 5, defendants submit no additional attachments. De-
fendants make reference, however, to relevant docket entries throughout the peti-
tion and cite certain materials not available on Pacer as some are under seal, but
will provide the Court with any additional exhibits, upon request.
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in putative class actions. The district court certified a class of all those who indi-
rectly purchased Static Random Access Memory (“SRAM”) between 1996 and
2006, based solely on allegations, and despite the fact that, after three years of dis-
covery, none of the class representatives made any evidentiary showing of injury-
in-fact. Further, the court certified an injunctive class even though they failed to
make any showing of a real and immediate threat of a future injury to them. Given
the stakes, this manifest error alone would warrant Rule 23(f) review.
But there is more. By failing to perform a “rigorous analysis” and “probe
behind the pleadings,” as required by the Supreme Court, General Tel. Co. v. Fal-
con, 457 U.S. 147, 160–61 (1982), the court below committed a second error: In
violation of the Supreme Court’s holding in Weisgram v. Marley Co., 528 U.S.
440, 454 (2000), it failed to consider undisputed evidence that many intermediate
firms in the distribution chain were contractually barred from passing through any
alleged overcharges to indirect purchasers. As explained below, plaintiffs’ expert
admitted that he “ignored the complexities of distribution” and the “number of in-
termediaries or distribution paths” as “irrelevant” to his analysis of plaintiffs’ in-
jury. Yet the district court refused to evaluate whether plaintiffs’ allegations of in-
jury were unreasonable in light of the undisputed contradictory evidence.
Of course, even if the expert testimony had been in conflict, that would sim-
ply underscore the importance of Rule 23(f) review. This case would then present
2
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the same “unsettled and fundamental” issues (Chamberlan v. Ford Motor Co., 402
F.3d 952, 957 (9th Cir. 2005)) raised in Dukes, 2 a case with far fewer members
that nonetheless warranted both Rule 23(f) and en banc review. But since certifi-
cation should have been denied notwithstanding a “battle of the experts,” the
court’s certification decision warrants Rule 23(f) review even apart from Dukes.
QUESTIONS PRESENTED
Should the Court review an order certifying a massive antitrust class of more
than 100 million indirect purchasers based on theories rejected by the Supreme
Court and this Court? The issues include, but are not limited to:
(1) Did the court manifestly err by finding standing (a) based solely on alle-
gations, where undisputed evidence foreclosed the court’s conclusion of injury; (b)
where none of the class representatives made a showing of a past or imminent in-
jury-in-fact to them; and (c) where the representatives refused to permit inspection
of their products to determine if they contained Defendants’ SRAM?
(2) Did the court manifestly err by failing to (a) perform a rigorous analysis
before certifying a class; (b) require plaintiffs to account for the various distribu-
tion paths in an indirect-purchaser class; and (c) evaluate if expert testimony was

2 See Petition for Rehearing En Banc, Dukes v. Wal-Mart Stores, Inc., No. 04-
16688, 2007 WL 1420550, at *5, *7 (9th Cir. Feb. 20, 2007) (requesting rehearing
on issue of whether court can make inquiry into the merits at class certification
stage, where petitioner alleged panel’s holding that the court should avoid resolv-
ing a battle of the experts “part[s] company with courts in the rest of the Nation.”).
3
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rendered unreasonable in light of undisputed evidence? And did the court so err by
following district court opinions that refuse to entertain a battle of the experts at
the class certification stage—an issue this Court is reviewing en banc in Dukes?
BACKGROUND
A. SRAM and the Nature of Plaintiffs’ Claims
Defendants are manufacturers that sold SRAM in the U.S. between 1996 and
2006. SRAM is a type of memory used in many products, including smart phones
and hand-held devices, computers (e.g., servers, mainframes, and smart phones);
and networks (e.g., routers, switches, and firewalls). But many such products use
SRAM substitutes, such as multi-chip packages, flash memory, or DRAM. Non-
defendants possessed 30 to 40 percent of the market share of total SRAM sales.
Defendants and non-defendants alike sell SRAM to customers, large and
small, through various distribution paths. SRAM can be purchased by an SRAM
distributor and resold to an original equipment manufacturer (“OEM”) or pur-
chased by a contract manufacturer. For OEMs, contract manufacturers make indi-
vidual SRAM components and finished products containing SRAM. Thus, OEMs
purchase SRAM from not only SRAM manufacturers, but also distributors and
contract manufacturers. OEMs, in turn, sell SRAM-containing products to con-
sumers not only directly, but indirectly through resellers, distributors, or retailers.
Plaintiffs are individuals and companies who allegedly purchased SRAM in-
4