Jones v. Micron Tech. Inc.

Full title: Michele JONES, et al., Plaintiffs, v. MICRON TECHNOLOGY INC., et al.…

Court: United States District Court, N.D. California.

Date published: Sep 3, 2019

400 F. Supp. 3d 897 (N.D. Cal. 2019)

Opinion

Case No. 18-cv-02518-JSW

2019-09-03

Michele JONES, et al., Plaintiffs, v. MICRON TECHNOLOGY INC., et al., Defendants.

Rio S. Pierce, Jeff D. Friedman, Hagens Berman Sobol Shapiro LLP, Berkeley, CA, Steve W. Berman, Pro Hac Vice, Seattle, WA, Adam Trott, Adam J. Zapala, Mark Francis Ram, Cotchett Pitre & McCarthy LLP, Burlngame, CA, Geoffrey Conrad Rushing, Richard Alexander Saveri, Saveri & Saveri, Inc., San Francisco, CA, William Henry London, Freed Kanner London & Millen LLC, Bannockburn, IL, for Plaintiffs. Harrison J. Frahn, IV Simpson Thacher & Bartlett Palo Alto, CA 94304 Abram J. Ellis Pro Hac Vice John Francis Terzaken, III Pro Hac Vice Simpson Thacher and Bartlett LLP Brian Patrick Quinn, Pro Hac Vice, Ian T. Simmons, Pro Hac Vice, O'Melveny & Myers LLP, Washington, DC, Stephen Joel McIntyre, OMelveny and Myers LLP, James Pearl Los Angeles, CA, Andrew Edward Schouten San Diego, CA 92101 Brian Yanlang Chang, Jacob Michael Hamann, Pro Hac Vice, Jungmin Lee, Pro Hac Vice, Nathan P. Eimer, Pro Hac Vice, Vanessa Greenwood Jacobsen, Pro Hac Vice, Eimer Stahl LLP, Chicago, IL, for Defendants.

JEFFREY S. WHITE, United States District Judge

Rio S. Pierce, Jeff D. Friedman, Hagens Berman Sobol Shapiro LLP, Berkeley, CA, Steve W. Berman, Pro Hac Vice, Seattle, WA, Adam Trott, Adam J. Zapala, Mark Francis Ram, Cotchett Pitre & McCarthy LLP, Burlngame, CA, Geoffrey Conrad Rushing, Richard Alexander Saveri, Saveri & Saveri, Inc., San Francisco, CA, William Henry London, Freed Kanner London & Millen LLC, Bannockburn, IL, for Plaintiffs.

Harrison J. Frahn, IV Simpson Thacher & Bartlett Palo Alto, CA 94304 Abram J. Ellis Pro Hac Vice John Francis Terzaken, III Pro Hac Vice Simpson Thacher and Bartlett LLP Brian Patrick Quinn, Pro Hac Vice, Ian T. Simmons, Pro Hac Vice, O'Melveny & Myers LLP, Washington, DC, Stephen Joel McIntyre, OMelveny and Myers LLP, James Pearl Los Angeles, CA, Andrew Edward Schouten San Diego, CA 92101 Brian Yanlang Chang, Jacob Michael Hamann, Pro Hac Vice, Jungmin Lee, Pro Hac Vice, Nathan P. Eimer, Pro Hac Vice, Vanessa Greenwood Jacobsen, Pro Hac Vice, Eimer Stahl LLP, Chicago, IL, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART MOTIONS TO DISMISS

JEFFREY S. WHITE, United States District Judge

Now before the Court is the motion to dismiss filed by Defendants Micron Technology, Inc., Micron Semiconductor Products, Inc., (together, "Micron"), Samsung Electronics Co., Ltd., Samsung Semiconductor, Inc., (together "Samsung"), Sk Hynix, Inc., and Sk Hynix America, Inc. (together "Hynix") (collectively, "Defendants") and the supplemental motion to dismiss filed by Hynix. The Court has considered the parties' papers, relevant legal authority, and the record in this case, and it finds the motion suitable for disposition without oral argument. See Civil L.R. 7-1(b).

For the reasons set forth below, the Court HEREBY GRANTS in part and DENIES in part Defendants' motions to dismiss and affords Plaintiffs leave to amend.

BACKGROUND

In this putative class action, Plaintiffs allege that Defendants conspired to raise prices in the market for Dynamic Random Access Memory ("DRAM") products. DRAM is a semiconductor memory device. (Dkt. No. 1 (Complaint) ¶ 44.) It stores bits of data in capacitators situated in integrated circuits. (Id. ) DRAM is widely used in digital electronics, including mobile phones, personal computers, servers, tablets, televisions, and cameras. (Id. ) DRAM is a standalone product with no independent utility: it must be inserted into a device (for example, a smartphone or a computer) to serve any function. (Id. ¶¶ 46, 47.)

Defendants manufacture and sell DRAM, customized for use in particular types of end-products. (Id. ¶¶ 50-52.) Defendants primarily sell DRAM to original equipment manufacturers ("OEMs") such as computer, mobile phone, flash drive, and memory card makers. (Id. ¶¶ 53, 56, 59.) OEMs then incorporate DRAM into various products ("DRAM Products") and sell DRAM Products to consumers or to retailers who then sell the items to consumers. (Id. ¶¶ 22-25, 53.) Collectively, Defendants accounted for the bulk of worldwide DRAM sales during the Class Period. (Id. ¶¶ 2, 11, 27-37.)

Plaintiffs represent a class of individuals and entities alleged to have purchased DRAM Products between June or July 1, 2016 and February 1, 2018 ("Class Period"). (Id. ¶¶ 22-26, 244.) Plaintiffs allege they purchased DRAM Products including Lenovo and Apple laptops and Samsung and Motorola mobile phones. (Id. ¶¶ 22-26.) Because Plaintiffs purchased DRAM Products rather than individual DRAM parts or units, Plaintiffs refer to themselves as "indirect purchasers."

Plaintiffs allege that, in early 2016, Defendants conspired to reduce the supply of DRAM in order to drive up prices. (Id. ¶ 138.) According to the Complaint, Defendants signaled, through public statements to investors and at industry conferences, invitation to collude, which the other Defendants accepted by their actions. (Id. ¶¶ 68-133.) Plaintiffs allege that Micron's and Samsung's public statements also reassured each other and Hynix of their continued participation in the conspiracy. (E.g. , id. ¶¶ 6, 89, 95, 98, 100, 102, 104, 106, 110, 114, 118.) Plaintiffs further allege that the nature of the DRAM market, an oligopoly where Defendants were responsible for 96% of worldwide DRAM sales, fostered this collusion. (Id. ¶¶ 2, 149.) Defendants' reduction of DRAM supply, according to Plaintiffs, marked a departure from prior market behavior, where Defendants and other market participants competed primarily, if not solely, on price, aiming to increase their own market share. (E.g. , id. ¶¶ 4-7.)

Plaintiffs allege that this supply reduction resulted in supracompetitive pricing that would not have occurred absent the conspiracy and, further, that this "overcharge" was passed on to end consumers (indirect purchasers), including Plaintiffs, who purchased DRAM Products. (Id. ¶¶ 234-43.) Plaintiffs contend that the conspiracy ended after news broke of an investigation of DRAM price-fixing by a Chinese regulatory agency. (Id. ¶ 134.) The Court will address additional facts as necessary below.

ANALYSIS

A. Requests for Judicial Notice and Incorporation by Reference.

Generally, when evaluating a motion to dismiss under Rule 12(b)(6), district courts may not consider material outside the pleadings. Lee v. City of Los Angeles , 250 F.3d 668, 688 (9th Cir. 2001). There are two exceptions to this rule: the incorporation-by-reference doctrine and judicial notice under Federal Rule of Evidence 201. Each mechanism permits district courts to consider materials outside a complaint, but each does so for different reasons. Khoja v. Orexigen Therapeutics, Inc. , 899 F.3d 988, 1002-03 (9th Cir. 2018).

Under Rule 201, a court may take judicial notice of an adjudicative fact if it is "not subject to reasonable dispute." Fed. R. Evid. 201(b). A fact is "not subject to reasonable dispute" if it is "generally known," or "can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Id. Though a court may take judicial notice of matters of public record and properly consider those matters when evaluating a motion to dismiss, a court may not take judicial notice of disputed facts contained in such public records. Lee , 250 F.3d at 689 (quotations and citations omitted).

Incorporation by reference, on the other hand, is a judicially-created doctrine that treats certain documents as though they are part of the complaint itself. Khoja , 899 F.3d at 1002. This doctrine is a tool to prevent plaintiffs from highlighting only the portions of certain documents that support their claims, while omitting portions of those documents that weaken their claims. Id. (citations omitted). A court may incorporate a document by reference if the complaint refers extensively to the document or the document forms the basis for the plaintiff's claim. Id. (citations omitted). If a document "merely creates a defense" to the complaint's allegations, the document does not necessarily "form the basis of" the complaint. Id. at 1002-03 ("Although the incorporation-by-reference doctrine is designed to prevent artful pleading by plaintiffs, the doctrine is not a tool for defendants to short-circuit the resolution of a well-pleaded claim."). When a court incorporates a document by reference, it may assume all contents of the document are true for the purposes of a motion to dismiss under 12(b)(6). Id. at 1003 (citing Marder v. Lopez , 450 F.3d 445, 448 (9th Cir. 2006) (quotations omitted)).

The Court's analysis, as discussed at length below, circumvents any need to rely upon the supplemental documents submitted by Defendants in support of either motion to dismiss. Even so, the Court notes that it would be inappropriate to incorporate by reference the supplemental documents submitted in support of the motions. In the Court's view, Defendants (in their joint motion and Hynix in its separate motion) attempt to use these documents to create a disputed version of the facts alleged and/or to create a defense to the allegations in the Complaint. See id. ("[I]t is improper to assume the truth of an incorporated document if such assumptions only serve to dispute facts stated in a well-pleaded complaint."); SEB Inv. Mgmt. AB v. Symantec Corp. , No. 18-cv-2902-WHA, 2019 WL 2491935, at *10 (N.D. Cal. June 14, 2019). While the Court is mindful that the incorporation by reference doctrine exists to "prevent artful pleading by plaintiffs," the Court must also be mindful of its duty to draw all reasonable inferences in favor of the pleadings.

Moreover, the causes of action alleged in the Complaint do not depend upon the documents at issue. Unlike, for example, a defamation case, the causes of action do not arise from the statements, context, or contents of the documents themselves. See Knievel v. ESPN , 393 F.3d 1068, 1076 (9th Cir. 2005) (affirming incorporation by reference of layout of allegedly defamatory caption and photograph); see also Khoja , 899 F.3d at 1005 (affirming trial court decision to incorporate Forbes.com article by reference where contents of article alleged to have triggered plummeting stock price). The Court therefore declines to incorporate by reference the documents submitted in support of either motion to dismiss.

Finally, in support of its separate motion to dismiss, Hynix requested judicial notice of several Hynix earnings call transcripts, the disclosure statement submitted to the South Korean Financial Supervisory Service, and a 2017 Hynix business plan.¹ When a Court takes judicial notice of a document, the Court must identify the particular facts it is noticing. Id. at 999. It is improper to judicially notice a transcript when the substance of the transcript is "subject to varying interpretations, and there is a reasonable dispute as to what the [transcript] establishes." Reina-Rodriguez v. United States , 655 F.3d 1182, 1193 (9th Cir. 2011).

1 Defendants did not request the Court take judicial notice of the documents submitted in support of their joint motion to dismiss.

Here, Hynix requests judicial notice of these documents in order to show that it made statements that contradict the Plaintiffs' theory of the case. Hynix and Plaintiffs disagree over whether the full transcripts and the additional corporate documents demonstrate agreement to participate in the alleged conspiracy or demonstrate that Hynix was describing the state of the market and articulating its own business strategy. See Khoja , 899 F.3d at 1001 (judicial notice inappropriate where dispute as to what material establishes). Accordingly, the Court declines to take judicial notice of the documents Hynix submitted in support of its motion.

B. Applicable Legal Standards.

Article III of the Constitution requires that a plaintiff have standing to assert claims in federal court. Lujan v. Defenders of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Challenges to Article III standing implicate a court's subject matter jurisdiction and therefore are properly raised under Federal Rule of Civil Procedure 12(b)(1). White v. Lee , 227 F.3d 1214, 1242 (9th Cir. 2000). "Federal courts are courts of limited jurisdiction," and "[i]t is to be presumed that a cause lies outside this limited jurisdiction," unless otherwise shown. Kokkonen v. Guardian Life Ins. Co. of Am. , 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). Where a challenge is to the plaintiff's standing as alleged, the Court looks only to the allegations in the complaint and assumes the allegations are true. Wolfe v. Strankman , 392 F.3d 358, 362 (9th Cir. 2004). To establish standing, a plaintiff has the burden to demonstrate (i) that he suffered an injury-in-fact (ii) which resulted from the defendant's conduct and (iii) that a favorable ruling would redress the injury. Id.

A motion to dismiss is proper under Federal Rule of Civil Procedure 12(b)(6) where the pleadings fail to state a claim upon which relief can be granted. "[A] plaintiff's obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (" Twombly ") (quoting Fed. R. Civ. P. 8(a) ). A court's inquiry is confined to the allegations in the complaint. Lazy Y Ranch Ltd. v. Behrens , 546 F.3d 580, 588 (9th Cir. 2008). When considering a motion to dismiss, a court construes the complaint in the light most favorable to the non-moving party and accepts all material allegations in the complaint as true. Sanders v. Kennedy , 794 F.2d 478, 481 (9th Cir. 1986).

C. Standing.

1. Article III Standing.

To establish Article III standing, a plaintiff must show (i) that he suffered an injury-in-fact (ii) which resulted from the defendant's conduct and (iii) that a favorable ruling would redress the injury. Wolfe , 392 F.3d at 362. The plaintiff may not "rely on a bare legal conclusion to assert injury-in-fact, or engage in ingenious academic exercise in the conceivable to explain how defendants' actions caused his injury." Maya v. Centex Corp , 658 F.3d 1060, 1068 (9th Cir. 2011). "[S]tanding is claim-and relief-specific:" a plaintiff must establish Article III standing for each of his claims and for each form of relief he seeks." In re Carrier IQ Inc., Consumer Privacy Litig. , 78 F. Supp. 3d 1051, 1064-65 (N.D. Cal. 2015) (internal citations and quotations omitted).

Defendants make two Article III standing arguments. First, Defendants argue that Plaintiffs have not sufficiently pled that their injury is traceable to Defendants' involvement in the purported conspiracy, and, second, Defendants argue that the named Plaintiffs lack Article III standing to bring state law claims of states where they do not reside and were not injured. The Court addresses each argument in turn.

a. Traceability.

In order to satisfy the second requirement of Article III, indirect purchaser complaints must include allegations (i) defendants overcharged direct purchasers and (ii) some or all of that overcharge was passed on to indirect purchasers through each of the various intermediate levels of the distribution chain. In re Auto. Parts Antitrust Litig. , 29 F. Supp. 3d 982, 997 (E.D. Mich. 2014) (citing In re Graphics Processing Units Antitrust Litig. , 253 F.R.D. 478, 502 (N.D. Cal. 2008) ). Accordingly, to satisfy the second requirement of the Article III standing test, the Court must be able to, from the face of the Complaint, infer both that the supracompetitively-priced DRAM component and its supracompetitive price wended their way into the DRAM Products Plaintiffs purchased. Plaintiffs have not satisfied this requirement.

Plaintiffs allege that DRAM is a standalone product. (Complaint ¶ 46.) Plaintiffs have also alleged that consumers purchase DRAM Products from OEMs or from retailers that have purchased DRAM Products from OEMS. (Id. ¶¶ 59, 236.) Plaintiffs have further alleged market conditions, product characteristics, and economic theory that make it "likely" that complete passthrough of increased DRAM prices occurred. (Id. ¶¶ 236-43.)

Where Plaintiffs run into difficulty is the lack of detail concerning the varieties of types, makes, and models of the products implicated in the Complaint. The named Plaintiffs are alleged to have purchased six products—each a type of smartphone or laptop. (Complaint ¶¶ 22-26.) Yet, allegations elsewhere in the Complaint suggest smartphones and laptops, not to mention the particular brands of smartphones and laptops the named Plaintiffs purchased, are barely the tip of the iceberg. (See id. ¶ 44 ("DRAM is widely-used in digital electronics, such as in mobile phones, PCs and servers, tablets, TVs, cameras, and also in industrial applications, such as in automotive, military, and aviation devices.").) Plaintiffs do not list the complete types of products (for example, computers, smartphones, tablets, televisions) they intend to reach. (Id. ¶ 244 (class definition includes customers who purchased "relevant DRAM devices").) Relatedly, Plaintiffs do not identify the pertinent OEMs or retailers who manufactured and/or sold the "relevant" DRAM Products.² Given the nebulous parameters of this market, the Plaintiffs have failed to meet the traceability threshold. Los Gatos Mercantile, Inc. v. E.I. du Pont de Nemours & Co. , No. 13-cv-1180-BLF, 2015 WL 4755335, at *14 (N.D. Cal. Aug. 11, 2015) (" Los Gatos II ") ("Typically, antitrust claims based on sprawling and indefinite markets are readily dismissed by the courts for lack of Article III and antitrust standing."); see also In re Capacitors Antitrust Litig. , 106 F. Supp. 3d 1051, 1063 (N.D. Cal. 2015) (raising concerns about indirect purchaser class who bought wide variety of electronic products containing "one of the most basic functional units in electronics circuits" contained in "virtually every electronic device we use, from toasters to cellphones."). But see TFT-LCD , 586 F. Supp. 2d at 1113–14 (holding Article III standing existed where large universe of types of end-products). This is not to say that Plaintiffs must quantify their damages in order to establish Article III injury: the law does not require Plaintiffs to do so at the pleading stage. Plaintiffs must, however, "demonstrate that the fact of the injury is not speculative." Los Gatos II , 2015 WL 4755335, at *15 (citing Static Random Access Memory Antitrust Litig. , No. 07-md-1819-CW, 2010 WL 5071694, at *8 (N.D. Cal. Dec. 7, 2010) (" SRAM II ")). This Plaintiffs have failed to do.

2 Plaintiffs also do not explain how much a DRAM component makes up of the final cost of each type of DRAM Product. See In re TFT-LCD (Flat Panel) Antitrust Litig. , 586 F. Supp. 2d 1109, 1113–14 (N.D. Cal. 2008) (alleging component comprised 60-70% of end-product cost). This is important because it illustrates the degree to which a DRAM Product's cost is dependent upon or tied to DRAM cost. If a DRAM Product contains three components, of which DRAM is one, it is more likely that an increase in DRAM price will affect the overall price of the DRAM Product than if the DRAM Product contained thirty components. See In re Magnesium Oxide Antitrust Litig. , No. 10-cv-5943, 2011 WL 5008090, at *7 (D.N.J. Oct. 20, 2011) (observing that contested component of end-product would have "minimal foreseeable effect" on price where end-product contained only "trace amount" as opposed to products where contested component was "major ingredient").

b. "Sister State" ³ Claims.

3 "Sister state" is a term courts have coined to describe class actions raising multiple similar state law causes of action.

Courts in the Ninth Circuit have consistently held that a plaintiff in a putative class action lacks standing to assert claims under the laws of states other than those where the plaintiff resides or was injured. E.g. , Van Mourik v. Big Heart Pet Brands, Inc. , No. 17-cv-3889-JD, 2018 WL 1116715, at *1-2 (N.D. Cal. March 1, 2018) (holding named plaintiff, a resident of Texas, lacked standing to bring claims under California law where she did not reside in California and did not suffer injury there); Corcoran v. CVS Health Corp., Inc. , 15-cv-3504-YGR, 2016 WL 4080124, at *2-3 (N.D. Cal. July 29, 2016) (holding named plaintiffs lacked standing to bring claims under the laws of thirty-eight states "to which they have alleged no connection"); Pardini v. Unilever United States, Inc. , 961 F. Supp. 2d 1048, 1061 (N.D. Cal. 2013) (holding plaintiff lacked standing to assert claims under laws of states other than state where plaintiff purchased the product-at-issue). Although Plaintiffs bring claims under the laws of twenty-five states, the named Plaintiffs allege they are residents of only five: California, Florida, Michigan, Kansas, and New Hampshire. The named Plaintiffs do not allege they were injured or had any pertinent connection to the twenty other states invoked by the Complaint. The named Plaintiffs therefore lack standing to bring causes of action based on the laws of states other than California, Florida, Michigan, Kansas, and New Hampshire. See Van Mourik , 2018 WL 1116715, at *1-2.

Plaintiffs point to Melendres v. Arpaio , 784 F.3d 1254 (9th Cir. 2015) to support their argument that determining sister state claim standing is more appropriately resolved at class certification. Melendres is distinguishable. In that case, the Ninth Circuit considered an appeal from a district court judgment (following a bench trial) against Sheriff Joseph Arpaio and the Maricopa County Sheriff's Office, enjoining them from making traffic stops based on a car occupant's race. The injunction applied to stops made during "saturation patrol" (when the defendant officers "saturated" a particular area for the purpose of enforcing immigration laws) and "nonsaturation patrol." Id. at 1258-59. In support of their request to partially decertify the class, the defendants argued that the remaining named plaintiffs, who were stopped during saturation patrols, lacked Article III standing to bring constitutional claims on behalf of class members stopped during nonsaturation patrols. Id.

Unlike the instant case, Melendres did not confront a situation where named plaintiffs brought claims under the laws of multiple states where they did not reside and where they were not injured: in Melendres , all plaintiffs alleged that they suffered the same constitutional injury, only in different factual circumstances. Here, because Plaintiffs bring claims under the laws of multiple states (some antitrust and some not), Plaintiffs technically invoke different legally protected interests. See Restatement (Second) of Torts § 7 cmt. a (1965) (noting that injury involves an actionable invasion of a legally protected interest, while harm denotes personal loss or detriment).

The Court is here called upon to examine whether the named Plaintiffs have standing to bring certain claims , not standing "to obtain relief for unnamed class members" for the same injury. See id. at 1261-62 ; see also DaimlerChrysler Corp. v. Cuno , 547 U.S. 332, 352, 126 S.Ct. 1854, 164 L.Ed.2d 589 (2006) (Article III must be measured claim-by-claim). Plaintiffs must show they have standing for each claim they raise, and Plaintiffs do not have standing to bring claims under the laws of states where they have alleged no injury, residence, or other pertinent connection. See Pardini , 961 F. Supp. 2d at 1061 ; see also In re Packaged Seafood Prod. Antitrust Litig. , 242 F. Supp. 3d 1033, 1096–97 (S.D. Cal. 2017) (" Seafood II ") (discussing Melendres , 784 F.3d at 1261-62 ). Accordingly, Melendres does not, in the Court's view, stand for the proposition that this Court must delay its consideration of standing in sister state cases until class certification.

Plaintiffs also point to In re Chrysler-Dodge-Jeep Ecodiesel Litig. , 295 F. Supp. 3d 927, 953-56 (N.D. Cal. 2018). In that case, Judge Chen, discussing Melendres , concluded that whether a disjuncture between named and unnamed plaintiffs is factual (as it was in Melendres ) or claim-based "appears immaterial." Id. at 955. Judge Chen concluded that Melendres requires courts to postpone considering the named plaintiffs' standing to bring "sister state" claims on behalf of class members until class certification. Id. at 956.

For the reasons explained above, the Court respectfully disagrees with the reasoning in Chrysler-Dodge-Jeep. Further, Chrysler-Dodge-Jeep is factually distinguishable. In that case, there were only seven state laws without named plaintiff representatives. Judge Chen explained that, even if Melendres "did not impose a per se rule," it would be appropriate in the case then before him to defer standing analysis because forty-three of the state laws invoked by the complaint had corresponding plaintiff representatives. Id. Judge Chen was therefore not concerned, as he had been in an earlier case, that he was "subjecting the [defendants] to the expense and burden of nationwide discovery without Plaintiffs first securing actual plaintiffs who clearly have standing and are willing and able to assert claims under these state laws." Id. (distinguishing Carrier , 78 F. Supp. 3d at 1074 (exercising discretion and holding, prior to class certification, that named plaintiffs lacked standing to bring causes of action under the laws of states where they did not reside and were not injured).)

Indeed, courts that have exercised their discretion and ruled on standing in sister state cases prior to class certification often consider the burden of discovery on the defendants. For example, in Carrier , Judge Chen, noting that the named plaintiffs represented only seven of forty-three state laws the complaint invoked, expressed concern that it would be inequitable to require defendants to conduct expensive, virtually nationwide discovery under the distinct possibility that standing would later be held not to exist. 78 F. Supp. 3d at 1072-74. Here, the ratio is not so lopsided, but the Court's concern is the same. Given that only five of the twenty-five non-federal jurisdictions have named plaintiff representatives, the Court is concerned that allowing unrepresented sister state claims to proceed would subject Defendants to discovery in these additional states before Plaintiffs have secured "actual plaintiffs who clearly have standing and are willing and able to assert claims under these state laws." See Carrier , 78 F. Supp. 3d at 1074.

Moreover, Chrysler appears to the Court to be something of an outlier. In Melendres 's wake, multiple opinions issuing from district courts⁴ in the Ninth Circuit, at the pleading stage of a putative class action, have dismissed sister state claims based on the named plaintiff's standing. See e.g. , Van Mourik , 2018 WL 1116715, at *1-2 ; Corcoran , 2016 WL 4080124, at *2-3 ; In re Anthem, Inc. Data Breach Litig. , No. 15-md-02617-LHK, 2016 WL 3029783, at *5 (N.D. Cal. May 27, 2016). But see Kutza v. Williams-Sonoma, Inc. , No. 18-CV-03534-RS, 2018 WL 5886611, at *3 (N.D. Cal. Nov. 9, 2018) (citing Chrysler-Dodge-Jeep , 295 F. Supp. 3d at 955 and deferring decision on standing to class certification stage).

4 This Court addressed this precise issue in an order granting a motion to dismiss in Rivera v. Invitation Homes, Inc. , No. 18-cv-3158-JSW, Dkt. No. 30.

Finally, as multiple opinions issuing from district courts in the Ninth Circuit have noted, the sister state standing approach comports with the Article III requirements.

[I]t is not enough that a named plaintiff can establish a case or controversy between himself and the defendant by virtue of having standing as to just one of many claims he wishes to assert .... Rather, each claim must be analyzed separately , and a claim cannot be asserted on behalf of a class unless at least one named plaintiff has suffered the injury that gives rise to that claim.

Los Gatos Mercantile, Inc. v. E.I. DuPont De Nemours & Co. ("Los Gatos I") , No. 13-cv-1180-BLF, 2014 WL 4774611, at *2–4 (N.D. Cal. September 22, 2014) (emphasis added) (citation omitted). Article III standing is a threshold issue: it is axiomatic that an "Article III court must be sure of its own jurisdiction before getting to the merits." Ortiz v. Fibreboard Corp. , 527 U.S. 815, 831, 119 S.Ct. 2295, 144 L.Ed.2d 715 (1999).

Having determined that it can and should consider standing at this stage, and given the circumstances of this case, the Court concludes that the named Plaintiffs lack standing to bring claims under the laws of the twenty jurisdictions⁵ invoked by the Complaint where they do not reside and have alleged no injury.

5 Those twenty jurisdictions are Arizona, Arkansas, District of Columbia, Illinois, Iowa, Maine, Minnesota, Mississippi, Nebraska, New Mexico, New York, North Carolina, North Dakota, Oregon, South Dakota, Tennessee, Utah, Vermont, West Virginia, and Wisconsin.

2. Antitrust Standing.

Defendants next argue that Plaintiffs have failed to plead antitrust standing. Antitrust standing is distinct from Article III standing: a plaintiff who satisfies constitutional standing requirements is not necessarily a proper party to bring a private antitrust action. See Am. Ad Mgmt., Inc. v. Gen. Tel. Co. of California , 190 F.3d 1051, 1054 (1999). The factors courts apply when evaluating whether a plaintiff has antitrust standing include: (i) the nature of the plaintiff's injury, (ii) the directness of the injury, (iii) the speculative measure of the harm, (iv) the risk of duplicative recovery, and (v) the complexity in apportioning damages. Id. (citing Assoc. Gen. Contractors of California, Inc. v. California State Council of Carpenters , 459 U.S. 519, 535, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983) (" AGC ")). No single factor is dispositive, and a court need not find in favor of the plaintiff on each factor to conclude that antitrust standing exists. Id. at 1055 (citations omitted). The AGC test applies to federal antitrust law and to the laws of states "only to the extent that a state has adopted them. In re Lithium Ion Batteries Antitrust Litig. , No. 13-md-2420-YGR, 2014 WL 4955377, at *7 (N.D. Cal. Oct. 2, 2014) (citing In re Pool Prods. Distrib. Mkt. Antitrust Litig. , 946 F. Supp. 2d 554, 564 (E.D. La. 2013). The Court will first address the AGC test in the context of Plaintiffs' Sherman Act claim, and then the Court will address the applicability of the AGC test to Plaintiffs' state and District of Columbia claims.

Courts give great weight to the nature of a plaintiff's injury. Id. In fact, a showing of antitrust injury is "necessary," though "not always sufficient," to establish antitrust standing. Cargill, Inc. v. Monfort of Colorado Inc. , 479 U.S. 104, 110 n.5, 107 S.Ct. 484, 93 L.Ed.2d 427 (1986). In the Ninth Circuit, there are four requirements for antitrust injury to exist. The (i) plaintiff's injury (ii) must be the result of (iii) unlawful conduct, and (iv) the plaintiff's injury must be the type of injury antitrust laws were intended to prevent. Feitelson v. Google, Inc. , 80 F. Supp. 3d 1019, 1027 (N.D. Cal. 2015) (quoting Am. Ad Mgmt , 190 F.3d at 1055.)

To show that an injury is the type of injury antitrust laws were intended to prevent, a plaintiff must also show that his injury occurred "in the market where competition is being restrained." Am. Ad Mgmt , 190 F.3d at 1057. However, being a consumer or competitor in the allegedly restrained market "is not strictly required." Batteries , 2014 WL 4955377, at *12. As Judge Gonzalez Rogers noted in Batteries , multiple opinions have concluded that allegations demonstrating that component and end-product markets are "inextricably linked" or "inextricably intertwined" may satisfy the antitrust standing test laid out in AGC , even for indirect purchasers. Id. (collecting cases); see also Am. Ad Mgmt. , 190 F.3d at 1057 n.5. Judge Gonzalez Rogers explained that cases in this vein "appear to rest on the tacit premise" that allegations suggesting cross-elasticity of demand between the component and end-products "such that the two are economic complements" satisfy the "relevant market" test. Batteries , 2014 WL 4955377, at *12.

a. AGC Test and Sherman Act Claim.

Plaintiffs rely on Batteries and TFT-LCD to argue that their allegations are sufficient to show that the market for DRAM and the market for DRAM Products are "inextricably intertwined." In Batteries , the court held that plaintiffs had adequately pled inextricable linkage where the plaintiffs pled: (i) they purchased end-products (batteries) with components (cells) traceable to defendants, (ii) that the components did not undergo physical alterations as they moved through the chain of distribution, (iii) that the components were a "substantial part" of the end-product that compromised a "substantial component cost" of the end-product such that the retail price of the end-product was determined in substantial part by the cost of the component, (iv) the manufacturers of the end-components engaged in vigorous price competition with thin net margins, and (v) that price increases could be isolated through regression analysis such that the "impact of the overcharge can be measured and quantified." Id. at *13. In TFT-LCD , the court held that the markets at issue were inextricably intertwined where the complaint alleged (i) the component could be traced through the supply chain, (ii) that the component's price could be traced to show that changes in the prices paid by direct purchasers of the component affect prices paid by indirect purchasers of end-products containing the component, and (iii) the component comprised 60-70% (in other words, a set proportion) of the cost of the end-products at issue. 586 F. Supp. 2d at 1123-24.

As discussed above (see supra Section (C)(1)(a)), the Complaint's allegations fall short of this level of specificity. The Complaint fails to allege, for instance, that DRAM represents a certain portion of DRAM Product cost paid by consumers. Again, as explained above, it is not evident from the Complaint that DRAM price increases are traceable to the costs of DRAM Products—due in part to the variety of DRAM Products implicated by the Complaint. Plaintiffs' allegations may very well be augmented to include factual allegations that fill in these gaps and suggest that the market for DRAM and the market for end-products containing DRAM are "inextricably intertwined," but, as currently constituted, the allegations fall short. The Court holds that Plaintiffs have not sufficiently alleged they suffered anti-trust injury under AGC.

The Court turns now to the second AGC factor, the directness of injury. When assessing directness, the Ninth Circuit directs courts to "look to the chain of causation between" the "injury and the alleged restraint in the market." Am. Ad Mgmt. , 190 F.3d at 1058 (citing AGC , 459 U.S. at 540, 103 S.Ct. 897 ). For the reasons explained in the Court's analysis of the first factor, the Court concludes here that Plaintiffs have not sufficiently alleged a chain of causation between Defendants' purported anticompetitive behavior and Plaintiffs' injury. "To be sure, in most instances, some portion of a price-fixed cost gets passed directly along to the ultimate consumer, and this could readily apply to a DRAM component that was eventually incorporated into an end product." DRAM I , 516 F. Supp. 2d at 1091. However, here, as alleged, DRAM is fairly ubiquitous, incorporated into a wide variety of consumer electronics, and, further, the Complaint does not allege the significance of the DRAM component relative to the overall end product. "It requires no leap of logic to conclude that each product in which DRAM is a component, contains numerous other components, all of which collectively determine the final price actually paid by plaintiffs for the final product. In other words, the price for the actual product paid by plaintiffs is reflective of much more than just the component price for DRAM." Id. This factor, therefore, also weighs against standing.

The third factor "focuses attention on the possibility that an antitrust plaintiff's damages theory is mere speculation because the claimed damages are too indirect and may have been produced by factors independent from any alleged overcharge." Batteries , 2014 WL 4955377, at *15 (citations omitted). Here, for the reasons already explained, the Court holds that Plaintiffs have failed to allege that damages are traceable. The fourth and fifth factors "can be condensed and considered alongside each other." See In re Cathode Ray Tube (CRT) Antitrust Litig. , 07-cv-5944-SC, 2013 WL 4505701, at *11 (N.D. Cal. Aug. 21, 2013) (citing AGC , 459 U.S. at 544, 103 S.Ct. 897 ). The Court holds that, given the problems with traceability, damages, under the facts as alleged, would be difficult to apportion. Under these circumstances, however, the risk of duplicative recovery is a neutral fact because duplicative recovery is often "a necessary consequence" where a parallel direct purchaser case is active, as is the case here. See DRAM I , 516 F. Supp. 2d at 1092-93 (applying AGC but analyzing Cartwright Act⁶ ).

6 In citing to this case, the Court does not intend to suggest it agrees that AGC applies to California law. See Batteries , 2014 WL 4955377, at *8-11.

In sum, after considering the AGC factors, and for all of the reasons explained herein, the Court concludes Plaintiffs have not sufficiently pled antitrust standing. Accordingly, Plaintiffs' Sherman Act claim is dismissed without prejudice for this reason as well.

b. AGC Test and Antitrust Standing for State Law Claims.

The parties' next disagreement is over the applicability of the AGC antitrust standing to the non-federal jurisdiction claims. Defendants argue alternately, in their opening motion and reply brief respectively, that AGC applies to "at least twenty-two" or "twenty" of these jurisdictions. Plaintiffs concede only that AGC analysis applies to Iowa, New Mexico, and Nebraska laws at issue. See Batteries , 2014 WL 4955377, at *9-11 (Nebraska and New Mexico); In re Flash Memory Antitrust Litig. , 643 F. Supp. 2d 1133, 1153-56 (N.D. Cal. 2009) (Iowa and Nebraska). The Court, applying AGC , has already held that Plaintiffs have failed to plead antitrust standing under the Sherman Act, and, therefore, the Court also concludes that Plaintiffs have failed to plead antitrust standing for their Iowa, New Mexico, and Nebraska claims.

For reasons explained above (Section (C)(1)(b))⁷ and below (Section F)⁸ , all but one of the remaining twenty-two non-federal claims contained in the Fourth Claim for Relief must be dismissed.⁹ The Court therefore does not address, statute by statute, whether AGC applies, or, concomitantly, whether Plaintiffs have failed to plead antitrust standing for each of these statutes. The Court notes, however, that importing the federal AGC antitrust standing test to the remaining jurisdictions would be inappropriate without careful jurisdiction-by-jurisdiction analysis. As Judge Alsup wisely and correctly observed:

7 This section addresses the named Plaintiffs' standing to raise sister state claims in a putative class action.

8 This section addresses arguments concerning intrastate effect, the effect of notice requirements on the pleadings, the existence of a private right of action, and other issues specific to the state law claims at issue.

9 In discussing the applicability of the AGC test to antitrust standing under various state laws, the Court sets aside Defendants' contention that Plaintiffs' failure to plead an unlawful agreement infects each of the state claims. Plaintiffs do not appear to contest that the non-federal claims are also dependent upon an adequately-pled unlawful conspiracy. The Court therefore assumes, without deciding, that this is so.

Standing under each state's antitrust statute is a matter of that state's law. It would be wrong for a district judge, in ipse dixit style, to bypass all state's legislatures and all state appellate courts and to pronounce a blanket and nationwide revision of all state antitrust laws.... [T]hat is matter for the state policy makers to decide, not for a federal judge to impose by fiat.

In re Graphics Processing Units Antitrust Litig. , 527 F. Supp. 2d 1011, 1026 (N.D. Cal. 2007). Therefore, in the future, should the parties contest antitrust standing of these non-federal claims, including whether the AGC test applies, the parties should carefully brief the issue and methodically address each pertinent jurisdiction.

As signaled mere sentences ago, there remains one state whose claim Plaintiffs' arguments have yet to defeat. That honor falls to New Hampshire. The Court will therefore examine where the AGC test applies to New Hampshire law.

The Court declines to apply AGC to New Hampshire law. The statutory scheme in question states: "In any action or prosecution under this chapter, the courts may be guided by interpretation of the United States' antitrust laws." N.H. REV. STAT. ANN. § 356:14 (emphasis added). Encouraging reference to federal law, as this statute does, "does not impose a mandate on state courts to conform in fact to federal law." Batteries , 2014 WL 4955377, at *10 (discussing New Hampshire law). Other courts have observed that this statute's language is "permissive," meaning that the statute expresses only a legislative intent for state courts to consult federal precedent as "persuasive or guiding authority." Id. at *10-11 ; see also Donovan v. Digital Equip. Corp. , 883 F. Supp. 775, 785 (D.N.H. 1994). Further, Defendants have cited to no authority that supports the application of AGC to New Hampshire law. Accordingly, the Court denies Defendants' motion to dismiss Plaintiffs' claim under New Hampshire law for lack of antitrust standing.

D. Circumstantial Allegations of Conspiracy.

Plaintiffs' first two causes of action are for violations of the Sherman Act, 15 U.S.C. § 1, and the Cartwright Act, Cal. Bus. & Prof. Code §§ 16720, et seq. (Complaint ¶¶ 275-291.) Section 1 of the Sherman Act prohibits "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations." 15 U.S.C. § 1. In order to state a claim under § 1, a plaintiff must plead evidentiary facts which, if true, will show: (i) a contract, combination, or conspiracy among two or more persons or distinct business entities; (ii) by which the persons or entities intended to harm or restrain trade or commerce; (iii) which actually injures competition. Kendall v. Visa U.S.A., Inc. , 518 F.3d 1042, 1047 (9th Cir. 2008) (citations omitted). Stating a claim under § 1 requires a complaint with enough factual allegations to suggest an agreement was made. Twombly , 550 U.S. at 556, 127 S.Ct. 1955 (citations omitted). "Asking for plausible grounds to infer an agreement does not impose a probability requirement at the pleading stage; it simply calls for enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of illegal agreement." Id. Further, allegations of facts that could just as easily suggest "rational, legal business behavior by the defendants as they could suggest an illegal conspiracy" are insufficient to state a claim for violation of antitrust laws. Kendall , 518 F.3d at 1049 (citing Twombly , 550 U.S. at 554-58 & n.5, 127 S.Ct. 1955 ).

Factual allegations concerning an agreement to restrain trade can take two forms: direct or circumstantial. Direct evidence factual allegations are "explicit and require no inferences to establish the existence of a conspiracy." Oliver v. SD-3C LLC , No. 11-cv-01260-JSW, 2016 WL 5950345, at *4 (N.D. Cal. Sept. 30, 2016) (citations omitted). Factual allegations relying on circumstantial evidence require the court to infer that an impermissible agreement to restrain trade exists. Id. (citations omitted). Plaintiffs concede that they do not attempt to plead antitrust claims using factual allegations based on direct evidence. The Court therefore focuses its analysis entirely on the sufficiency of Plaintiffs' circumstantial allegations.

To successfully plead an agreement to restrain trade using factual allegations based on circumstantial evidence, a plaintiff must present allegations of parallel conduct of the defendants as well as so-called "plus factors." Prosterman v. Am. Airlines, Inc. , 747 F. App'x 458, 461 (9th Cir. 2018), cert. denied , ––– U.S. ––––, 139 S. Ct. 1342, 203 L.Ed.2d 569 (2019). Parallel conduct occurs when competitors act similarly or follow the same course of action—for example, adopting similar policies at or around the same time in response to similar market conditions. In re Musical Instruments and Equip. Antitrust Litig. , 798 F.3d 1186, 1193 (9th Cir. 2015) ; In re Broiler Chicken Antitrust Litig. , 290 F. Supp. 3d 772, 789 (N.D. Ill. 2017). Parallel conduct on its own is not unlawful, even if the conduct is "consciously" parallel. "In an interdependent market, companies base their actions in part on the anticipated reactions of their competitors. And because of this mutual awareness, two firms may arrive at identical decisions independently, as they are cognizant of—and reacting to—similar market pressures." Musical Instruments , 798 F.3d at 1193. Parallel conduct is, therefore, "as consistent with agreement among competitors as it is with independent conduct in an interdependent market." Id. at 1194.

Accordingly, to state a claim under § 1 using circumstantial factual allegations, a plaintiff must plead some "factual enhancement," a "further circumstance pointing toward a meeting of the minds" of the alleged conspirators. Twombly , 550 U.S. at 557, 127 S.Ct. 1955. These factual enhancements are called plus factors. Plus factors "are economic actions and outcomes that are largely inconsistent with unilateral, lawful conduct but largely consistent with explicitly coordinated action." Musical Instruments , 798 F.3d at 1194. Plus factors must "nudge" allegations of unlawful agreements to restrain trade "across the line from conceivable to plausible" and place parallel conduct "in a context that raises a suggestion of a preceding agreement." Twombly , 550 U.S. at 557, 570, 127 S.Ct. 1955.

1. Parallel Conduct. ¹⁰

10 The Court notes that both parties appear to have conflated parallel conduct analysis with plus factor analysis. The existence of parallel conduct does not negate the need for plus factor analysis, and the existence of some plus factors is not necessarily dispositive as to whether parallel conduct has been successfully pled. Both parallel conduct and plus factors must be adequately pled in order to state a claim under § 1 of the Sherman Act.

Plaintiffs allege that before the start of the class period, Defendants "appeared to engage in vigorous supply and price competition" and were competing for market share. (Complaint ¶ 64.) Plaintiffs also allege that, near the beginning of the class period, Defendants adjusted their historical business strategy of competing for market share (id. ¶¶ 73, 86, 90) and adopted the same policy of declining to increase their own supplies of DRAM (id. ¶¶ 73, 90, 96, 97.) That these adjustments are not alleged to have occurred simultaneously is immaterial, and the available case law does not suggest any firm temporal limitation on "parallel." See Interstate Circuit v. United States , 306 U.S. 208, 227, 59 S.Ct. 467, 83 L.Ed. 610 (1939). The Complaint therefore sufficiently alleges parallel conduct. See Broiler Chicken , 290 F. Supp. 3d at 789.

2. Plus Factors.

The Court must next examine whether the Complaint alleges sufficient additional factors to suggest that the parallel conduct "would probably not result from chance, coincidence, independent responses to common stimuli, or mere interdependence unaided by an advance understanding among the parties," and whether the conduct at issue is suggestive of "the sort of restricted freedom of action and sense of obligation that one generally associates with agreement." Twombly , 550 U.S. at 556 n.4, 127 S.Ct. 1955 (citations omitted). In an interdependent market such as an oligopoly¹¹ , "companies base their actions in part on the anticipated reactions of their competitors." Musical Instruments , 798 F.3d at 1193. Therefore, "two firms may arrive at identical decisions independently, as they are cognizant of—and reacting to—similar market pressures." Id. Allegations concerning plus factors are particularly important in oligopolistic markets because such allegations contextualize the significance of the parallel conduct.

11 An oligopoly exists when a market is controlled or dominated by a few large sellers, creating high prices and low output similar to that found in a monopoly. Oligopoly , Black's Law Dictionary (11th ed. 2019).

Plaintiffs identify several plus factors in the Complaint: (i) market conditions, (ii) opportunity for collusion through membership in trade associations and attendance at conferences, (iii) the timing of price increases as pegged to trade association meetings and conferences, (iv) Defendants' statements during investor earnings calls and industry gatherings, which Plaintiffs allege contained invitations to anti-competitive behavior, (v) co-Defendants' public "responsive assurances" and "conduct," (vi) deviation from past behavior and acting against self-interest, and (vii) a history of anticompetitive behavior. Though the Court must ultimately weigh the plus factors together, the Court begins by discussing each in turn.

a. Market Conditions.

The Complaint alleges that the DRAM market is oligopolistic with high barriers to entry: Defendants control 96% of the worldwide DRAM market, and economies of scale and intellectual property rights discourage new entrants to the market. (E.g. , Complaint ¶¶ 11, 140, 145-65.) The Complaint also alleges that DRAM is a commodity and that demand for DRAM is inelastic¹² . (E.g. , id. ¶¶ 11, 141, 166-80.) Though Plaintiffs concede that these conditions, without more, are insufficient to state a claim for violation of the Sherman Act, Plaintiffs argue that these conditions enable collusive conduct—primarily because these conditions make it easier for parties to an anticompetitive agreement to notice and control defections.

12 A commodity is a standardized, homogenous product fungible to consumers in terms of its source. (Complaint ¶ 141.) When demand for a product is inelastic, it means that the product's consumers are not particularly sensitive to price. In other words, for products with inelastic demand, cutting prices will not increase the size of the market, and raising prices will not decrease the size of the market. (Id. ¶ 166.)

Common sense teaches that an oligopolistic market could facilitate unlawful anticompetitive behavior: maintaining fealty to an agreement is easier with a small number of competitors than with a large number. Yet, as the number of firms in a market declines, it also becomes increasingly likely that lawful conscious parallel behavior or interdependent pricing (following each other's pricing decisions) will occur without prior agreement. In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust Litig. , 906 F.2d 432, 443 (9th Cir. 1990) ; Kleen Prods., LLC v. Int'l Paper , 276 F. Supp. 3d 811, 824 (N.D. Ill. 2017), aff'd sub nom. Kleen Prods. LLC v. Georgia-Pac. LLC , 910 F.3d 927 (7th Cir. 2018). Any rational decision within an oligopoly must anticipate, or, at the very least consider, the reactions of the other competitors. Valspar Corp. v. E.I. Du Pont De Nemours and Co. , 873 F.3d 185, 191 (3d Cir. 2017). In fact, seemingly anomalous price hikes in oligopolistic markets are often the result of non-conspiratorial market behavior. E.g. , Washington Cty. Health Care Auth., Inc. v. Baxter Int'l Inc. , 328 F. Supp. 3d 824, 842 (N.D. Ill. 2018). Oligopolies, therefore, present a "special problem" under § 1 analysis: "rational, independent actions ... can be nearly indistinguishable from horizontal price fixing." Id.

The same is true for commodity product markets. A good's fungibility may allow easier detection of defections due to price being the only dynamic variable. Yet, participants in a commodity market are likely to monitor and mimic the behavior of competitors carefully because pricing provides the chief competitive leverage. See Kleen , 276 F. Supp. 3d at 823 ("[I]n a market with a homogeneous product, the competitors will be pressured to match the price cut thus resulting in ‘stating market shares [ ] and reduced profit margins’ for all."). Interdependent pricing therefore may produce "economic consequences that are comparable to those of classic cartels." Petroleum Prods. , 906 F.2d at 444.

Plaintiffs' allegations concerning market characteristics are, therefore, just as likely to be consistent with innocent as unlawful behavior. Allegations concerning the features of the market and its structure are therefore neutral facts. See Kleen , 276 F. Supp. 3d at 823-24 ("In treating the market structure of the [ ] industry as relevant but far from dispositive, the Court is following well-trodden ground."); see also Washington Cty. , 328 F. Supp. 3d at 841 ("... it cannot be the case that allegations that a market is oligopolistic and a product is homogeneous are sufficient to survive a motion to dismiss.").

b. Trade Association Membership and Conference Attendance.

Plaintiffs allege that Defendants are members or leaders, in various permutations, of five industry trade associations which fostered information sharing, provided opportunities for direct communication, and, in Plaintiff's view, facilitated collusion. The Complaint alleges these trade associations afforded "opportunities for social interaction or side conversations among members," (Complaint ¶¶ 184, 189, 190, ) but the allegations do not describe any suspected or actual interactions between Defendants at these trade associations—not to mention interactions that suggest the establishment or confirmation of an agreement to unlawfully restrain trade. Membership in associations and attendance at trade meetings presents nothing more than an opportunity to collude, and an opportunity, without more, is insufficient to state a claim under § 1. See In re Late Fee & Over-Limit Fee Litig. , 528 F. Supp. 2d 953, 963 (N.D. Cal. 2007).¹³

13 Even so, it is not clear to the Court from the Complaint that such "opportunity" existed: the complaint does not allege that Defendants attended each referenced association meeting.

It is well-settled that trade associations often serve legitimate functions, such as providing industry information to members, conducting research to further industry goals, and promoting demand and that, because of these valid purposes, attendance at trade events does not imply an anticompetitive agreement. E.g. , In re Citric Acid Litig. , 191 F.3d 1090, 1097-98 (9th Cir. 1999) (citation omitted) (holding evidence of trade association membership without factual allegations that members used associations for illegal ends did not "tend to exclude the possibility of legitimate behavior"); In re Nat'l Ass'n of Music Merchants, Musical Instruments and Equip. Antitrust Litig. , 09-cv-2002, 2012 WL 3637291, at *2 (S.D. Cal. Aug. 20, 2012) ("Nor does attendance at trade shows or other large meetings imply an agreement or conspiracy."), aff'd sub nom. In re Musical Instruments & Equip. Antitrust Litig. , 798 F.3d 1186 (9th Cir. 2015). Data-gathering and information sharing are perfectly legitimate objectives of trade associations. To hold otherwise would be to discourage legitimate market behavior, which courts are loathe to do. See, e.g. , Kleen , 276 F. Supp. 3d at 834 ("In particular, when the opportunities to conspire coincide with regular means of conducting legitimate businesses, the Court is mindful not to deter the one in its effort to root out the other.")

To the extent Plaintiffs attempt to allege that increases in DRAM prices correlate to certain trade meetings, the Court is unpersuaded. Collectively, over the class period, these industry trade associations held anywhere from twelve to fifteen meetings per year. (Id. ¶¶ 183-202.) As the class period is approximately twenty months long¹⁴ , the Court estimates that anywhere from twenty to thirty pertinent trade association meetings occurred. Plaintiffs have selected four trade association meetings from this set and note DRAM price increases around the times of those meetings. (Id. ¶¶ 203, 204.) Yet, apart from calling these meetings "key," Plaintiffs do not allege facts explaining why these four meetings in particular are noteworthy. In fact, though Plaintiffs allege Defendants were members of the groups that held these meetings, there are no allegations that Defendants attended these four meetings.

14 The Court notes the Complaint is inconsistent as to whether the Class Period begins in June or July of 2016.

c. Defendants' Public Statements and Responsive Behavior.

Plaintiffs' claim depends in large part on the Defendants' public statements. Plaintiffs argue that Micron's and Samsung's public statements invited anti-competitive conduct and that the Defendants' behavior following such statements constituted responsive assurances and conduct. In the Court's view, however, the statements alleged in the Complaint stop short of giving rise to a reasonable inference of illegal collusion. The statements alleged in the Complaint, all of which are statements made during earnings calls or at industry conferences, constitute individual Defendants' indications of their own future behavior and descriptions of their past behavior, predictions of industry trends, and observations about competitor behavior.

For example, Plaintiffs allege that Micron "forecast" that its competitors (including Samsung and Hynix) would make some "really rational decisions" involving "lower supply growth" and no "significant DRAM capacity expansion." (Id. ¶ 68.) Plaintiffs allege that on other occasions, Micron made observations about Samsung's past behavior (e.g. , id. ¶¶ 73, 74), doubled down on its previous forecasts (e.g. , id. ¶ 79), and made observations about what its competitors might do in light of what Micron believed was a new way of thinking about the DRAM market (e.g. , id. ¶ 109). Samsung is alleged to have, on an earnings call, "forecast" its own growth in line with "the market," described its own business strategy to "focus on profitability rather than market share" (e.g. , id. ¶¶ 70, 72), and "affirmed" Micron's observations about the market (e.g. , id. ¶¶ 7, 100). Hynix is alleged to have forecast its own supply growth in earnings calls, affirmed its strategy of keeping its supply growth at 20%, and observed that, in the DRAM market, demand exceeded supply. (E.g. , id. ¶¶ 112, 120.) These statements, and others summarized or quoted in the Complaint, are insufficient to support an inference of conspiracy because they are not "largely inconsistent with unilateral, lawful conduct." See Musical Instruments , 798 F.3d at 1194.

Plaintiffs make much over the sometime use of the word "discipline" in earnings calls and in presentations before investors. Yet, Defendants' statements amount to no more than descriptions of circumstances of their market. (E.g. , Complaint ¶ 114 ("... it reflects a great deal of discipline and thoughtfulness with respect to how the industry participants are considering supply expansion...").) There is a meaningful, if slight, difference between the Defendants' observations that competitors are behaving with "discipline" and circumstances where defendants have called upon their competitors to "exercise" discipline and therefore invited them to behave in a certain way. See, e.g. , Kleen , 276 F. Supp. 3d at 840 ("Of course, if Defendants had crossed the line into encouraging their competitors to exercise discipline, then their talk would become actionable conduct (or at least indicate that a conspiracy was afoot)."); see also TFT-LCD , 586 F. Supp. 2d at 1116 (defendant boasted success in convincing competitors to cut capacity).

Further, as discussed briefly above, oligopolists "watch each other like hawks." In re Text Messaging Antitrust Litig. , 782 F.3d 867, 874-75 (7th Cir. 2015). The Court is not at all surprised that competitors in such a market would be poised to make observations about the behavior of other competitors. Such prognostication, as currently alleged, does not tip the parallel conduct into the realm of the unlawful. See Music Merchants , 2012 WL 3637291, at *5 ("... making announcements about new practices or developments is common and doesn't imply illicit or surreptitious signaling ..."). The comments alleged in the Complaint reflect the trade knowledge of the firms in the industry all knew and what constitutes basic economic common sense: when volume is decreased, price increases. See Kleen , 276 F. Supp. 3d at 841. Likewise, statements by Micron that it did not want to be the first to reduce capacity suggest only that Micron was observing the behavior of its competitors, not that Micron had reached an unlawful agreement with either Samsung or Hynix. Defendants' behavior and statements are consistent with lawful conscious parallelism.

The context of the statements alleged in the Complaint also merits discussion. See id. ("In determining whether certain words shade towards an inference of illegal conduct or innocuous behavior, the Court may consider the forum in which they were uttered."). First, the statements were made in relatively public settings: investor calls and industry conferences. That a comment is made in public, of course, does not inoculate any underlying illegality. See Petroleum Prods. , 906 F.2d at 447 (citing R. Posner, Antitrust Law: An Economic Perspective 146 (1976)). Yet, the fact that a number of these comments were made (i) in response to investor questions, addressing topics about which investors would be concerned or (ii) in speeches or presentations to industry groups weighs against their illegality. See In re Delta/AirTran Baggage Fee Antitrust Litig. , 245 F. Supp. 3d 1343, 1373–74 (N.D. Ga. 2017), aff'd sub nom. Siegel v. Delta Air Lines, Inc. , 714 F. App'x 986 (11th Cir. 2018), cert. denied , ––– U.S. ––––, 139 S. Ct. 827, 202 L.Ed.2d 579 (2019) (noting statements concerning business strategies made publicly on earnings call with investors "precisely the type of information companies legitimately convey to their shareholders"). This Court, like others, is "properly reluctant" to characterize such statements as evidence of unlawful conspiracies. Id. To be clear, the Court is not suggesting that public statements can never constitute circumstantial evidence of a conspiracy. The Court concludes only that the public statements at issue here do not suggest unlawful restraint of trade.

d. Deviation from Past Behavior and Actions Against Self-Interest.

As a preliminary matter, it strikes the Court that deviation from past behavior is a poor plus factor because it merely relabels parallel conduct. Nonetheless, Plaintiffs have sufficiently pled that the Defendants' supply reduction constituted a change in market behavior. Yet, the Court is unable to infer, based on the allegations, that this change in behavior was nefarious. Per the Complaint, Samsung was the market leader, and Samsung was the first to announce it had curbed its DRAM supply. (Complaint ¶¶ 6, 75, 90, 91.) It is just as consistent with innocent behavior as with unlawful behavior that Micron and Hynix would mimic Samsung's actions. See Twombly , 550 U.S. at 557, 127 S.Ct. 1955 ("[W]hen allegations of parallel conduct are set out in order to make a § 1 claim, they must be placed in a context that raises a suggestion of a preceding agreement, not merely parallel conduct that could just as well be independent action."); see also Citric Acid , 191 F.3d at 1102 ("[a] section 1 violation cannot ... be inferred from ... an industry's follow-the-leader pricing strategy"). It is not unlawful for competitors to mimic the actions of another, especially in such a small market. Musical Instruments , 798 F.3d at 1193 ; In re Online Travel Co. (OTC) Hotel Booking Antitrust Litig. , 997 F. Supp. 2d 526, 537 (N.D. Tex. 2014) ("... Defendants' parallel adoption of similar business strategies is not suspicious or suggestive of an agreement.").

The Court is not convinced that the Complaint alleges the Defendants acted against their self-interest. The Complaint alleges that Defendants restricted their output, a move that common sense suggests would raise prices. Selling goods at higher prices can be in an entity's best interest—this is but one method companies use to turn a profit. Defendants' restricting their own output after learning about other output reductions therefore "sheds little light on the existence vel non of an unlawful agreement." See Washington Cty. , 328 F. Supp. 3d at 832. It is possible that output reduction stems from adherence to an unlawful agreement, but "the nature of an oligopoly makes is such that there is a substantial likelihood that—even absent an agreement—[Defendants] would have tried to capitalize on output restrictions signaled by the other, as it was in their independent interest to restrict supply and drive up prices." Id.

e. Historic Behavior.

Plaintiffs next allege that each of the Defendants have been involved in prior price-fixing cases regarding the DRAM market. (Complaint ¶¶ 206-22.) Each Defendant pled guilty or cooperated in exchange for immunity, made specific admissions of guilt, paid large fines, and saw individual employees serve jail time in a criminal price-fixing case. (Id. ) Plaintiffs also identified investigations in the European Union and Canada, civil litigation, and price-fixing investigations of Defendants involving other semiconductor memory products. (Id. ¶¶ 223-33.) Plaintiffs further allege that the current conspiracy was stopped at the initiation of an investigation by a Chinese regulatory body. (Id. ¶¶ 134-39.)

Of all Plaintiffs' purported plus factors, the Defendants' historic behavior comes closest to the requisite "nudge." District courts in the Ninth Circuit have recognized that historic behavior of parties accused of anticompetitive conduct may constitute a plus factor. See Flash , 643 F. Supp. 2d at 1148-49 ; In re Static Random Access Memory Antitrust Litig. , 580 F. Supp. 2d 896, 903 (N.D. Cal. 2008) (" SRAM I "). Yet, allegations concerning the parties' past behavior have varying utility.

Allegations describing settlements are not helpful because parties may wish to settle civil suits for any number of reasons, including the cost of litigation, and settlements often come about prior to any findings of fact. Allegations concerning past or ongoing investigations are also not particularly helpful to suggest a contemporary conspiracy: the scope of an investigation is not always evident to the public or to the Court, and investigations that do not result in a finding of fact or admission suggest only that a government body believed a circumstance appeared suspicious. See In re Graphics Processing Units Antitrust Litig. , 527 F. Supp. 2d 1011, 1024 (N.D. Cal. 2007) (investigation alone "carries no weight" in pleading antitrust); see also In re Packaged Seafood Prod. Antitrust Litigation , No. 15-md-2670-JLS-MDD, 2017 WL 35571, at *8 (S.D. Cal. Jan. 3, 2017) (" Seafood I ") (observing it was improper to conclude investigation supplies sufficient factual material to survive motion to dismiss, but opining "it is perfectly permissible to take as true the fact that a government investigation has been instituted, and that therefore at least several individuals within the governmental chain of command thought certain facts warranted further inquiry into a potential criminal conspiracy." (emphasis in original)). Finally, allegations of investigations or cases outside of the United States are fully unpersuasive: foreign laws may prohibit behavior that is lawful under § 1. See In re Online Travel , 997 F. Supp. 2d at 540. Accordingly, many of Plaintiffs' allegations, particularly those concerning investigations by European or Chinese authorities, do not factor into the Court's analysis.

Plaintiffs' allegations concerning Defendants' guilty pleas, factual admissions, sentences, and fines, however, are another matter—particularly given the factual overlap between the prior events and the ongoing matter. See SRAM I , 580 F. Supp. 2d at 903 ("Although the allegations regarding DRAM guilty pleas are not sufficient to support Plaintiffs' claims standing on their own, they do support an inference of a conspiracy in the SRAM industry."). This historic behavior plus factor, therefore, tips in favor of circumstantially alleging an unlawful conspiracy.

f. Allegations of Plus Factors Examined Together.

Viewing the allegations all together, Plaintiffs fall short of alleging a plausible conspiracy through circumstantial factual allegations. Plaintiffs cannot state a claim under the Sherman Act based solely on parallel conduct and past guilty pleas and admissions regarding anticompetitive behavior. Each of Plaintiffs' plus factors, absent the historic behavior of Defendants, amount to a "restatement of the conscious parallelism endemic to an oligopoly." See Prosterman , 747 F. App'x at 461–62. These factual allegations—public statements and responsive, membership in trade associations, market conditions—are just as consistent with innocent behavior as unlawful behavior, and therefore do not "nudge" the conspiracy from conceivable to plausible. Twombly , 550 U.S. at 570, 127 S.Ct. 1955. Plaintiffs have therefore failed to state a claim for violation of the Sherman Act.

Judicial interpretations of federal antitrust law do not necessarily control how this Court interprets state antitrust law, including California's Cartwright Act. Compare Aryeh v. Canon Bus. Sols., Inc. , 55 Cal.4th 1185, 151 Cal.Rptr.3d 827, 292 P.3d 871, 877–79 (2013) (acknowledging federal antitrust law is instructive for interpreting state antitrust law, but rejecting notion that judicial interpretations of Sherman Act apply fully to the Cartwright Act), and Samsung Elecs. Co. v. Panasonic Corp. , 747 F.3d 1199, 1205 n.4 (9th Cir. 2014), with Cty. of Tuolumne v. Sonora Cty. Hosp. , 236 F.3d 1148, 1160 (9th Cir. 2001) ("analysis under California's antitrust law mirrors the analysis under federal law"). Here, however, the parties appear to agree that Plaintiffs' Cartwright Act claim stands or falls with their Sherman Act claim. See Samsung Elecs. Co. v. Panasonic Corp. , No. 10-cv-3098 JSW, 2015 WL 10890655, at *8 (N.D. Cal. Sept. 30, 2015). Accordingly, Plaintiffs' cause of action based on the Cartwright Act¹⁵ is also dismissed.¹⁶

15 Plaintiffs plead their Cartwright Act claims in both the Second and Fourth Claims for Relief.

16 Though the parties seem to agree that the Sherman Act and the Cartwright Act have similar, if not identical, pleading requirements, the parties disagree, elsewhere in their briefs, as to whether the federal test for antitrust standing applies to California law. As explained more fully above (Section (C)(2)(b)), the Court declines to address this question.

E. Individual Defendants' Roles in Conspiracy.

In their joint motion to dismiss, Defendants argue that the grouped pleadings in the Complaint fall short of describing the affirmative step each individual defendant took to participate in the purported conspiracy.¹⁷ The Complaint alleges the relationships between each of the individual defendants and to which corporate family each individual defendant belongs. (See Complaint ¶¶ 27-37.) The Complaint also alleges that individual corporate participants and their agents: (i) "did not always know the corporate affiliation of their counterparts;" (ii) acted on behalf of every company in their family; and (iii) entered into agreements on behalf of their respective corporate families. (Complaint ¶¶ 40, 41.) These allegations, Plaintiffs argue, are like allegations that district courts in the Northern District have held are sufficient to plead individual entity roles in a purported conspiracy. See In re Capacitors Antitrust Litig. , 154 F. Supp. 3d 918, 928–31 (N.D. Cal. 2015). The Court agrees.

17 Hynix filed a separate motion to dismiss, arguing that the Complaint lacks any factual allegations that Hynix participated in the purported conspiracy. The Court notes that allegations concerning Hynix are significantly sparser than those concerning either Samsung or Micron, but, given the Court's ruling that the Complaint does not sufficiently plead the existence of a conspiracy, the Court declines to address Hynix's separate motion to dismiss. The allegations against Hynix are insufficient to state a claim under the Sherman Act or the Cartwright Act for the same reasons the allegations against all Defendants are insufficient.

In Capacitors , for example, the district court held that allegations of individual defendant participation were sufficient where the complaint alleged the corporate structure of the various defendants, that agents of the defendants acted on behalf of corporate families, and that co-conspirators did not distinguish between the specific corporate affiliations of other co-conspirators. Id. at 928-29. In In re Cathode Ray Tube (CRT) Antitrust Litig. , 738 F. Supp. 2d 1011, 1019–22 (N.D. Cal. 2010), the court held that referring to a corporate family by a single name was acceptable where the complaint defined corporate family members' relationships to each other, alleged that employees engaged in conspiratorial acts on behalf of members of corporate families, alleged that participants did not always know the corporate affiliations of their counterparts and did not distinguish between entities of a corporate family, and alleged that participants entered into agreements on behalf of their respective corporate families. Allegations substantially identical to this appear in the Complaint, and, accordingly, the allegations in the Complaint sufficiently plead the participation of individual defendant corporate entities.

F. State Law Claims.

1. California Unfair Competition Law.

A plaintiff bringing a cause of action under California Business and Professions Code § 17200 ("UCL") may allege a claim for unfair, unlawful, and/or fraudulent behavior. A UCL claim for unlawful behavior is predicated on a violation of a separate statute or common law regime. Cel–Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. , 20 Cal. 4th 163, 180, 83 Cal.Rptr.2d 548, 973 P.2d 527 (1999) ). Plaintiffs concede their UCL claim is based only upon Defendants' unlawful anticompetitive behavior. Because the Sherman Act and Cartwright Act violations are insufficiently pled, it follows that Plaintiffs have failed to sufficiently plead a violation of the UCL. See Digital Sun v. Toro Co. , No. 10-cv-4567-LHK, 2011 WL 1044502, at *5 (N.D. Cal. Mar. 22, 2011) (if underlying claims upon which unlawful UCL claim is based fail, UCL claim also fails).

2. Arizona, New York, and Utah Notice Requirements.

Defendants next argue allege that Plaintiffs failed to comply with provisions under Arizona, New York, and Utah antitrust laws requiring plaintiffs to serve pre-suit notices of an impending action on the states' attorney general. Yet, Defendants fail to cite any authority that stands for the proposition that Plaintiffs are required to plead compliance with these notice requirements. In fact, district courts have explicitly held that these notice requirements do not alter the substantive elements of state antitrust claims and do not constitute pleading requirements. E.g. , In re Generic Pharm. Pricing Antitrust Litig. , 368 F. Supp. 3d 814, 835 (E.D. Pa. 2019) (Arizona, Utah); Carl Wagner & Sons v. Appendagez, Inc. , 485 F. Supp. 762, 773 (S.D.N.Y. 1980) (New York). Accordingly, the Court declines to dismiss Plaintiffs' causes of action under Arizona, New York, or Utah state law based on the Plaintiffs' failure to allege notice to the states' attorneys general.

3. Intrastate Effects.

Defendants next argue that Plaintiffs fail to plead intrastate effects, conduct, or conspiracies for their claims under the laws of Kansas, Michigan, Mississippi, New York, North Carolina, South Dakota, Tennessee, West Virginia, Wisconsin, and the District of Columbia.¹⁸ Plaintiffs do not dispute that they are required to plead intrastate effects for these antitrust statutes but argue that pleading a "national conspiracy" that produced "increased prices in a given state" is sufficient.

18 The state statutes upon which these claims are based are: Kan. Stat. Ann. §§ 50-1-1, et seq. , Mich. Comp. Laws Ann. §§ 445.771, et seq. , Miss. Code Ann. §§ 75-2-1, et seq. , N.Y. Gen. Bus . Laws §§ 340, et seq. , N.C. Gen. Stat. §§ 75-1, et seq. , S.D. Codified Laws §§ 37-1-3.1, et seq. , Tenn. Code Ann. §§ 47-25-101, et seq. , W Va. Code §§ 47-18-1, et seq. , and Wis. Stat. §§ 133.01, et seq.

Plaintiffs point to four paragraphs in the Complaint, Paragraphs 2, 20, 44, and 301. Paragraph 2 alleges that the Defendants control 96% of the "worldwide" DRAM market. Paragraph 20 alleges that Defendants' actions "substantially affected commerce throughout the United States," injuring the Plaintiffs and class members and that the conspiracy "affect[ed] all states." Paragraph 44 alleges that DRAM is widely used in a variety of consumer electronics. And Paragraph 301 states: "Defendants engaged in a continuing contract, combination[,] and conspiracy in restraint of interstate trade and commerce, which had the purpose and effect of fixing, raising, maintaining, and/or stabilizing the price [of] DRAM at artificially high, non-competitive levels in the United States." These allegations, in the Court's view, are not sufficient to plead intrastate effects, even drawing all possible inferences in favor of the Complaint.

In California v. Infineon Techs. AG , 531 F. Supp. 2d 1124, 1155–60 (N.D. Cal. 2007), Judge Hamilton discussed Maryland, Tennessee, and Mississippi state antitrust statutes, each of which she concluded required the plaintiffs to plead intrastate effect. Judge Hamilton held that the allegations regarding intrastate effects for these states were insufficient because the complaint "made with no differentiation among particular states as to which plaintiffs and consumers paid the artificially high prices." Id. at 1156, 1158, 1159-60 (emphasis added). Judge Hamilton held, however, that the allegations concerning Wisconsin's state antitrust statute were sufficient because the plaintiffs alleged that the price-fixing conspiracy "substantially affected the people of Wisconsin and had impacts within the State of Wisconsin." Id. at 1161.

Other district courts have made similar distinctions. In In re Packaged Ice Antitrust Litig. , 779 F. Supp. 2d 642, 664 (E.D. Mich. 2011), for example, the court concluded that allegations under several states' antitrust statutes, including New York's, were sufficient where the complaint described the "effect on competition in each of the named [p]laintiffs' states." In In re Chocolate Confectionary Antitrust Litig. , 602 F. Supp. 2d 538, 581 (M.D. Pa. 2009), the court held allegations were sufficient to state a claim for a violation of South Dakota's antitrust statute where the plaintiffs alleged sales in South Dakota, reduced competition in South Dakota, and noncompetitive pricing throughout the United States. See also In Picone v. Shire PLC , No. 16-cv-12396-ADB, 2017 WL 4873506, at *20 (D. Mass. Oct. 20, 2017) (allegations sufficient to state a claim for violation of Wisconsin antitrust law where complaint described injury occurring in Wisconsin). In contrast, courts have held allegations under state antitrust statutes insufficient where the complaint alleges only that the conspiracy affects interstate commerce without describing the effects in a particular state or in discretely identifiable states. See, e.g. , In re Dynamic Random Access Memory (DRAM) Antitrust Litigation (DRAM I ), 516 F. Supp. 2d 1072 (N.D. Cal. 2007).

Here, the allegations Plaintiffs identify solely describe interstate effects, and the Complaint is devoid of any allegations concerning effects within these particular states. Accordingly, Plaintiffs have failed to plead intrastate effects and have failed to state a claim under the antitrust statutes of Kansas, Michigan, Mississippi, New York, North Carolina, South Dakota, Tennessee, West Virginia, Wisconsin, and the District of Columbia.¹⁹

19 This is not to say that Plaintiffs must allege unique injuries or effects in each of the states whose antitrust laws are invoked. See In re Suboxone (Buprenorphine Hydrochloride & Naloxone) Antitrust Litig. , 64 F. Supp. 3d 665, 698–99 (E.D. Pa. 2014), on reconsideration in part sub nom. In re Suboxone (Buprenorphine Hydrochloride & Nalaxone) Antitrust Litig. , No. 13-cv-md-2445, 2015 WL 12910728 (E.D. Pa. Apr. 14, 2015) (holding allegations of intrastate effect sufficient where plaintiff alleged prices affected "within each state" and that anticompetitive conduct occurred "within the states set forth herein"); see also In re Digital Music Antitrust Litig. , 812 F. Supp. 2d 390, 407–08 (S.D.N.Y. 2011) (allegations sufficient to allege intrastate effect under Mich. Comp. Laws §§ 445.771 -72 and N.Y. Gen. Bus. Law § 340 where plaintiffs alleged sales occurred in all listed states). Bare allegations can be sufficient, but they must be made.

4. Private Rights of Action Under Arkansas and Illinois Antitrust Law.

Defendants next contend that private rights of action are unavailable under the Arkansas Unfair Practices Act and the Illinois Antitrust Act ("IAA"), 740 Ill. Comp. Stat. §§ 10/1, et seq. With respect to the Arkansas Unfair Practices Act, Defendants are correct. There is no private right of action, and this claim therefore is dismissed with prejudice. See In re Cast Iron Soil Pipe and Fittings Antitrust Litig. , No. 14-md-2508, 2015 WL 5166014, at *22 (E.D. Tenn. June 24, 2015).

With respect to the IAA, the question is more complicated, and the parties do not aid the Court with their cursory treatment of the subject. The IAA prohibits private class actions on behalf of indirect purchasers. Plaintiffs argue that this prohibition does not apply to class actions based on IAA in federal court. Defendants, for their part, maintain that federal courts "uniformly hold" that Illinois's state law restrictions also apply in federal court and therefore bar Plaintiffs' IAA claim. In truth, courts are divided on the subject of whether the IAA's bar against indirect purchaser class actions applies in federal court. What the parties neglect to explain is that the origin of the inconsistent treatment of this particular issue by district courts is rooted in the Erie doctrine and its progeny.

Federal courts sitting in diversity must, where a state law conflicts with a federal law, apply federal procedural rules or laws and state substantive law. See Erie R.R. v. Tompkins , 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) ; Hanna v. Plumer , 380 U.S. 460, 470-74, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965). Federal courts apply the federal procedural rules or laws as long as they are constitutional and within the scope of the Rules Enabling Act, 28 U.S.C. § 2072(b) ; Olympic Sports Prods. v. Universal Athletic Sales Co. , 760 F.2d 910, 914-15 (9th Cir. 1985). Federal rules or laws fall outside the Rules Enabling Act where they "abridge, enlarge, or modify any [state] substantive right." Id. (citing 28 U.S.C. § 2072(b).)

Determining whether a rule or law is substantive or procedural is often a fraught task, as there is no bright-line rule distinguishing substance from procedure. In re Cty. of Orange , 784 F.3d 520, 528 (9th Cir. 2015) (citations omitted). A substantive rule is one that creates rights and obligations or is "bound up with [state-created] rights and obligations in such a way that its application in the federal court is required." Id. at 527 (citing Byrd v. Blue Ridge Rural Electric Coop., Inc. , 356 U.S. 525, 535, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958). A procedural rule, meanwhile, is one that outlines "a form and mode of enforcing" the substantive right or obligation. Id. (citing Byrd , 356 U.S. at 536, 78 S.Ct. 893 ).

Because of the difficult nature of this process of sorting the procedural from the substantive, courts must be guided by Erie 's "core policies." Id. (citing Olympic Sports Prods. , 760 F.2d at 913 ). Courts must ask whether application of the federal rule would (i) be outcome determinative, (ii) encourage forum-shopping between state and federal courts, or (iii) lead to "inequitable administration of the laws." Id. (citing Hanna , 380 U.S. at 468, 85 S.Ct. 1136 ). Where applying the federal rule would lead down any of these paths, the court should apply the state law. Id.

Much of the recent confusion in analyzing whether class action prohibitions under state law are procedural or substantive stems from a 2010 Supreme Court case. In Shady Grove Orthopedic Assocs. v. Allstate Ins. Co. , 559 U.S. 393, 130 S.Ct. 1431, 176 L.Ed.2d 311 (2010), the Supreme Court analyzed whether Federal Rule of Civil Procedure 23, which controls class actions in federal court, conflicted with a New York state law. This law, N.Y.C.P.L.R. § 910(b) ("Section 910(b)"), precluded class actions under New York law that sought certain types of damages. The Supreme Court held, in a fractious 5-4 decision, that Rule 23 posed a direct conflict to Section 910(b). Accordingly, the Court concluded that Rule 23 governed and ruled that the putative class action under New York law should be allowed to proceed in federal court.

Here, of course, this Court confronts an entirely different state statute. The plain language of the IAA states "no person shall be authorized to maintain a class action in any court of this State for indirect purchasers asserting claims under this Act, with the sole exception of this State's Attorney General, who may maintain an action parens patriae. " 740 Ill. Comp. Stat. § 10/7(2). As mentioned above, federal district courts have reached different conclusions as to whether the class action prohibition in the IAA applies in federal court. See e.g., Broiler Chicken , 290 F. Supp. 3d at 817–18 (holding IAA restriction on indirect purchaser class actions does not apply to cases brought in federal court); see also, e.g. , In re Effexor Antitrust Litig. , 357 F. Supp. 3d 363, 391-92 (D.N.J. 2018) (collecting cases) (holding IAA restriction on indirect purchaser class actions applies to federal court).

The majority of courts, however, have held that the IAA is distinguishable from the New York law at issue in Shady Grove and concluded that indirect purchaser class actions are barred in federal court under the IAA. In In re Wellbutrin XL Antitrust Litig. , 756 F. Supp. 2d 670, 673–77 (E.D. Pa. 2010), for example, the United States District Court for the Eastern District of Pennsylvania reasoned that the IAA's prohibition on indirect purchaser class actions was intertwined with state substantive rights and remedies. In explaining its conclusion, the court noted that the restriction: (i) only applied to the IAA, (ii) was incorporated in the same statutory provision as the underlying right (and not set out as a separate procedural rule), and (iii) appeared to "reflect a policy judgment about managing the danger of duplicative recoveries." Id. at 677. Accordingly, the court determined the IAA's restriction was "intertwined" with the underlying substantive right and held that allowing the IAA class action claims to proceed in federal court would "abridge, enlarge, or modify" Illinois's substantive rights. Id. at 675.

The Court agrees with this reasoning. Applying Rule 23 and superseding the IAA would, given the nature of this particular statute and the prohibition, exceed the scope of the Rules Enabling Act by "abridg[ing], enlargen[ing], or modify[ing]" Illinois-created substantive rights. Accordingly, applying Rule 23 at the expense of the IAA is inappropriate. Olympic Sports Prods. , 760 F.2d at 914-15 (citing 28 U.S.C. § 2072(b).)

Applying Rule 23 would also contravene Erie 's aims. Allowing Plaintiffs' IAA cause of action to survive would encourage forum-shopping because private plaintiffs would come to view federal court as a sanctuary for a claim they would otherwise be unable to bring in Illinois state court. Plaintiffs' IAA claim is therefore dismissed with prejudice. See United Food & Commercial Workers Local 1776 & Participating Employers Health & Welfare Fund v. Teikoku Pharma USA, Inc. , 74 F. Supp. 3d 1052, 1083–84 (N.D. Cal. 2014) (applying Wellbutrin and holding that IAA's class action prohibition is inextricably intertwined with substantive guarantees of Illinois law); Davidson v. Apple, Inc. , No. 16-cv-4942, 2018 WL 2325426, at *10 (N.D. Cal. May 8, 2018), appeal dismissed sub nom. Siegal v. Apple Inc. , No. 18-cv-80060, 2018 WL 6131860 (9th Cir. Aug. 24, 2018) (holding restriction substantive where incorporated in same statutory provision as underlying right); see also Seafood II , 242 F. Supp. 3d at 1069-70 (no direct conflict between Rule 23 and IAA prohibition where IAA barred class actions except as brought by attorney general).

In their opposition, Plaintiffs explain that they could bring new claims under the Illinois Consumer Fraud and Deceptive Business Practice Act and the Arkansas Deceptive Trade Practices Act. That may be so, but parties may not amend their pleadings by brief. Tietsworth v. Sears , 720 F. Supp. 2d 1123, 1145 (N.D. Cal. 2010). Accordingly, the Court does not now address the viability of these two claims.

5. Florida DUTPA.

Defendants' final set of arguments concerns Plaintiffs' claims under the Florida Deceptive and Unfair Trade Practices Act ("DUTPA"). Defendants argue that indirect purchasers are prohibited from suing under Florida antitrust laws and that Plaintiffs' DUPTA claim is not pled with particularity as required.

While it is true that indirect purchasers may not sue under Florida's antitrust laws, there is no such prohibition against indirect purchasers' bringing a claim under DUTPA. In re Flonase Antitrust Litig. , 692 F. Supp. 2d 524, 544 (E.D. Pa. 2010) (citing Mack v. Bristol–Myers Squibb Co. , 673 So. 2d 100, 103, 107–08 (Fla. Dist. Ct. App. 1996) (reversing trial court's dismissal of indirect purchaser plaintiffs' DUTPA claim)).

Florida law requires that DUTPA claims be pled with particularity. See Wrestlereunion, LLC v. Live Nation Television Holdings, Inc. , No. 07-cv-2093-JDW-MSS, 2008 WL 3048859, at *3 (M.D. Fla. Aug. 4, 2008) (citations omitted). Heightened pleading under Rule 9(b) requires the who, what, where, when, and how of the misconduct charged. Cooper v. Pickett , 137 F.3d 616, 627 (9th Cir. 1997). The circumstances constituting the alleged fraudulent behavior must be pled specifically enough "to give defendants notice of the particular misconduct ... so that they can defend against the charge and not just deny that they have done anything wrong." Bly–Magee v. California , 236 F.3d 1014, 1019 (9th Cir.2001) (quoting Neubronner v. Milken , 6 F.3d 666, 671 (9th Cir. 1993) ). A party alleging fraud must "set forth more than the neutral facts necessary to identify the transaction." In re GlenFed, Inc. Sec. Litig. , 42 F.3d 1541, 1548 (9th Cir.1994), superceded by statute on other grounds. To state a claim for damages under DUTPA, a plaintiff must plead: (i) a deceptive act or unfair practice, (ii) causation, and (iii) actual damages." Rollins, Inc. v. Butland , 951 So. 2d 860, 869 (Fla. Dist. Ct. App. 2006) (citations omitted).

Plaintiffs points to Paragraphs 22 to 26 of the Complaint to show they have pled their DUTPA claim with particularity. These paragraphs identify the specific devices the named plaintiffs purchased. Apart from this, Plaintiffs do not highlight other allegations that purport to satisfy the heightened pleading requirement. Indeed, the Court can find no mention in the Complaint of other details of the indirect purchasers' transactions. In re Fla. Cement & Concrete Antitrust Litig. , 746 F. Supp. 2d 1291, 1322 (S.D. Fla. 2010) ("The [complaint] does not allege sufficient information about what particular products were purchased from which Defendants, or whether these particular indirect purchasers absorbed the alleged price increases..."). Accordingly, Plaintiffs have not pled their DUTPA claim with particularity, and, therefore, this claim is dismissed.

CONCLUSION

For the foregoing reasons, the Court GRANTS in part and DENIES in part Defendants' motions to dismiss. As it is not clear to the Court that leave to amend would be futile, the Court will grant Plaintiffs leave to file an amended complaint that addresses the deficiencies identified herein. See Sparling v. Daou , 411 F.3d 1006, 1013 (9th Cir. 2005) (holding dismissal should generally be without prejudice, unless clear that complaint cannot be saved by amendment). Plaintiffs' amended complaint is due October 11, 2019. The initial case management conference is HEREBY set for December 13, 2019 at 11:00 a.m. The parties' joint case management statement is due December 6, 2019. At this juncture, due to the parties' positions, (see Dkt. No. 75), the Court does not believe a consolidated Indirect Purchaser complaint is necessary.

IT IS SO ORDERED.