Opinion
No. 13-cv-01173 MDL No. 1917 Case No. CV 07-5944 SC
06-09-2014
In re: CATHODE RAY TUBE (CRT) ANTITRUST LITIGATION This Document Relates to: Sharp Elecs. Corp. v. Hitachi, Ltd.
ORDER GRANTING SHARP'S MOTION
FOR LEAVE TO AMEND
I. INTRODUCTION
Now before the Court is Plaintiffs Sharp Corporation and Sharp Electronics Manufacturing Company of America's (collectively, "Sharp") motion for leave to file an amended complaint. ECF No. 2520 ("Mot.") (filed under seal). The Toshiba Defendants ("Toshiba") oppose the motion. ECF Nos. 2538 ("Opp'n"), 2547 ("Reply"). Per Civil Local Rule 7-1(b), the Court finds the motion suitable for decision without oral argument and GRANTS it, as explained below.
Toshiba also asks for leave to file a surreply, ECF No. 2553, which Sharp opposes, ECF No. 2563. The Court GRANTS Toshiba's motion, but does not find either party's surreply brief dispositive.
II. BACKGROUND
Sharp's Complaint and First Amended Complaint alleged various antitrust and unfair competition claims against Toshiba, seeking damages based on both Sharp's purchases from Toshiba and Toshiba's joint and several liability as a co-conspirator defendant. Toshiba's sales to Sharp represent a fairly large sum, but the amount of the other defendants and co-conspirators' sales to Sharp is far larger. Toshiba moved to dismiss Sharp's claims under Rule 12(b)(3) in October 2013, and before the Court considered the motion, the Supreme Court clarified that motions to dismiss based on forum-selection clauses -- like Toshiba's motion to dismiss -- were to be evaluated not under Rule 12(b)(3) but under forum non conveniens doctrine. Atl. Marine Const. Co.., Inc. v. U.S. Dist. Ct. for the W. Dist. of Tex., 134 S. Ct. 568, 580 (2013). After the parties discussed that doctrinal change, the Court evaluated Toshiba's motion to dismiss.
ECF Nos. 2000 ("MTD"), 2195 ("MTD Opp'n"), 2229 ("MTD Reply").
That motion was based on an agreement that Sharp and Toshiba's Japanese parent companies had entered: the Basic Transaction Agreement ("BTA"). See MTD at 1. The Court held that the BTA bound Sharp and Toshiba so far as it concerned cathode ray tube ("CRT") purchases they made from each other -- the commerce that forms the basis of this MDL -- and dismissed with prejudice Sharp's claims against Toshiba under the BTA's forum-selection clause, which stated that litigation related to purchase orders under the BTA was to be conducted in Japan. ECF No. 2435 ("Mar. 13 Order").
Sharp does not challenge the Court's dismissal of its claims based on Toshiba's sales to Sharp. Rather, Sharp's present motion to amend is based on the fact that neither Sharp, Toshiba, nor the Court stated whether Sharp's claims against Toshiba based on joint and several liability were to remain in the case. The March 3 Order dismissed Sharp's claims, though it only discussed dismissal relative to the BTA, so the question of joint and several liability never arose. Sharp asks for leave to amend its complaint to specify that it is only bringing claims for joint and several liability against Toshiba. Sharp contends that these claims are not covered by the BTA and could not have been dismissed per the forum-selection clause, which was the only matter the parties briefed. Toshiba opposes the motion, arguing that even though neither it nor Sharp addressed joint and several liability, all claims against it (including those for joint and several liability) must have been dismissed in the Court's March 13 Order.
III. LEGAL STANDARD
After a party has amended a pleading once as a matter of course, it may only amend further if it obtains leave of the court. Fed. R. Civ. P. 15(a). Rule 15 advises the court that "leave shall be freely given when justice so requires," and the Ninth Circuit instructs that this policy is "to be applied with extreme liberality." Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (quoting Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001) (additional quotations omitted)). The Supreme Court offers additional guidance to district courts in deciding whether to grant leave to amend:
Sharp notes that before a dismissal is made final under Rule 54(b), Rule 15 is the appropriate standard for governing leave to amend, even when a dismissal was with prejudice. The Court agrees, because the Court has not certified any judgments under Rule 54. Toshiba procedurally objects on other grounds, also contending that Sharp's motion is a disguised motion for reconsideration, but the Court does not agree. As discussed in this Order, the posture of the case suggests that a nuanced consideration under Rule 15 is appropriate, and the Court declines to interpret Sharp's Rule 15 motion as something other than what both parties ultimately agree that it is.
In the absence of any apparent or declared reason -such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. -- the leave sought should, as the rules require, be "freely given."Foman v. Davis, 371 U.S. 178, 182 (1962). Consideration of prejudice to the opposing party carries the greatest weight, but absent that or a strong showing of any remaining Foman factor, Rule 15(a) carries a presumption in favor of granting leave to amend. Eminence Capital, 316 F.3d at 1052.
IV. DISCUSSION
Sharp argues that though the dismissal was with prejudice, the Court should grant it leave to amend under Rule 15, primarily because neither party briefed the issue of joint and several liability, and granting leave to amend on that issue would serve substantial justice. See Reply at 11-14. From there the parties argue over who should have raised the issue, based on who should have remembered its import from separate but similar disputes regarding arbitration clauses. Both parties are acquainted with older motions in this case, in which the parties (Toshiba, in one such dispute) argued over whether to separate conspiracy-related joint and several liability claims from direct-purchaser claims in motions to compel arbitration.
This dispute appears to hinge on an assessment of whether Toshiba should have pointed out the missing issue to Sharp, as opposed to Toshiba's enjoying the benefit of Sharp's omission and then claiming waiver. The Court declines to entertain that line of argument, finding that the liberal standard of Rule 15, subject to the Foman factors, governs the Court's resolution of this matter.
Accordingly, the question for the present motion is whether Sharp is entitled to amend its complaint per the Foman factors. Toshiba argues that Sharp's proposed amendment is futile, either because the BTA committed the joint and several claims to the jurisdiction of the Osaka District Court, or because the forum non conveniens doctrine would render the claim futile independently of the BTA.
A. The Foman Factors
Toshiba's brief appears to contest only the futility factor of Foman. As a threshold matter, the Court agrees that the other Foman factors are not at issue. First, Toshiba's long involvement in this litigation does not raise questions of prejudice, especially since Sharp's proposed amendment does not raise novel issues in this case. Second, the Court does not find that Sharp's prompt Rule 15 motion evinces bad faith or undue delay. Finally, Sharp's prior amendments did not concern this particular issue, so this is not a matter of Sharp repeatedly failing to cure a stated deficiency. Accordingly, the Court considers only whether Toshiba has established that Sharp's proposed amendment would be futile. The Court finds that it would not be.
Preliminarily, the Court finds it irrelevant that, as Toshiba states, Sharp's proposed amendment "would not add any new facts or circumstances." Opp'n at 11-12. Proper amendments do not need to add new factual allegations. A proper amendment may also cure a defect in order to present a valid claim, thereby avoiding futility.
i. Futility - BTA Interpretation
As the Court found in its March 13 Order, the BTA governs CRT-related transactions between Sharp and Toshiba, even those conducted by these subsidiary entities through individual agreements and purchase orders governed by the BTA's terms. Mar. 13 Order at 6-8. Toshiba contends, however, that the BTA's "Resolution of Doubt or Disputes" clause, read alongside the forum-selection clause, requires joint and several liability claims between Sharp and Toshiba to be litigated in Japan as well -- even when they are not necessarily related to direct Sharp-Toshiba commerce. Opp'n at 13-15. The Court finds Toshiba's interpretation of the BTA incorrect on these points.
The "Resolution of Doubt or Disputes" clause, Article 21.1 of the BTA, states, "[w]hen there are disputes or doubts that arise in relation to this Agreement or individual Agreement, or when there are unsolved items in this Agreement or individual Agreement, resolutions shall be made between [Sharp and Toshiba] in good faith." ECF No. 2000, Ex. 3 ("BTA") (filed under seal). The forum-selection clause, Article 21.2 of the BTA, states, "[i]n terms of litigation related to this Agreement or the individual Agreement, the Osaka District Court shall be the court of competent jurisdiction." BTA Art. 21.2.
Toshiba contends that a properly alleged joint and several liability claim based on conspiracy-related activity concerning other parties would violate Article 1.1 of the BTA, which requires the parties to "set their foundation on mutual trust and respect for mutual benefits." According to Toshiba, a conspiracy among it and other defendants that resulted in Sharp's paying higher prices would be a breach of this mutual trust and respect. Opp'n at 13-14. Further, Toshiba argues, if there are any doubts concerning how far, exactly, the BTA extends in cases like this, those doubts are to be resolved in the Osaka District Court pursuant to Articles 21.1 and 21.2 Id. at 14-15.
The Court is not convinced by this overbroad interpretation of the BTA. As a matter of contract interpretation involving a forum-selection clause, the Court's task is, first, to decide the clause's scope and applicability, and, second, to determine whether the clause applies to the behavior at issue. See Peterson v. Boeing Co., 715 F.3d 276, 280 (9th Cir. 2013) (holding that enforceability and interpretation of forum-selection clauses is an issue of federal law); Robeson v. Twin Rivers Unified Sch. Dist., No. 2:14-2 WBS KJN, 2014 WL 1392922, at *1-2 (E.D. Cal. Apr. 9, 2014) (applying that principle).
Toshiba cites a case concerning questions of arbitrability, Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. I, 24-25 (1983), but that case is inapposite because the law and policy of arbitration is not identical to that concerning a court's interpretation of a forum-selection clause outside the arbitration context.
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Further, the Court finds that the BTA's plain meaning involves relations between Sharp, Toshiba, their parents, and their subsidiaries, so far as they concern the manufacture and supply of CRTs. The resolution of doubt or disputes arising in relation to the BTA or individual agreements (e.g., purchase orders) that are subject to the BTA's terms is a matter the parties reserved for the Osaka District Court. See Mar. 13 Order at 11-14. However, the Court does not find that the BTA's Resolution of Doubt or Disputes clause renders claims for joint and several liability -- unrelated to the BTA or its individual agreements themselves -- similarly subject to the forum-selection clause. As Sharp correctly notes, under the plain meaning of the term "related to" in that clause, the claims "must involve the [agreement] itself to trigger the clause." Reply at 6 (quoting Coal. for ICANN Transparency Inc. v. Verisign, Inc., 452 F. Supp. 2d 924, 921-32 (N.D. Cal. 2006)). The BTA sends certain disputes and doubts to the Osaka District Court, but those disputes and doubts must at least be related to the Sharp-Toshiba transactions the BTA governs. Any potential conspiracy-related joint and several liability Toshiba may have in relation to other agreements is distinct in scope.
The Court therefore finds Toshiba's interpretation of the BTA too broad and vague to be acceptable in these circumstances. The BTA does not render Sharp's claims against Toshiba for joint and several liability subject to dismissal under the forum-selection clause, so amendment to clarify Sharp's claims against Toshiba would not be futile on that ground.
ii. Futility - Forum Non Conveniens
Toshiba also argues that, separately from issues of the BTA's scope, Sharp's proposed amendment would be futile because the doctrine of forum non conveniens would compel dismissal of Sharp's claims for joint and several liability. On this issue, Toshiba points to the March 13 Order's discussions of the suitability of the Osaka District Court, but the Court notes as a preliminary matter that the March 13 Order's discussion is not entirely apposite. It concerned a forum-selection clause, under which the parties specifically contracted to commit certain issues to a different court. Although a motion to dismiss that applies a forum-selection clause is to be analyzed within the rubric of forum non conveniens doctrine, Atl. Marine, 134 S. Ct. at 580, dismissal under forum non conveniens when a forum-selection clause is not involved requires slightly different balancing inquiries.
"A party moving to dismiss on grounds of forum non conveniens must show two things: (1) the existence of an adequate alternative forum, and (2) that the balance of private and public interest factors favors dismissal." Lockman Found. v. Evangelical Alliance Mission, 930 F.2d 764, 767 (9th Cir. 1991).
The Ninth Circuit has stated that "while a U.S. citizen has no absolute right to sue in a U.S. court, great deference is due plaintiffs because a showing of convenience by a party who has sued in his home forum will usually outweigh the inconvenience the defendant may have shown." Contact Lumber Co. v. P.T. Moges Shipping Co., Ltd., 918 F.2d 1446, 1449 (9th Cir. 1990). Nonetheless, "[a] citizen's forum choice should not be given dispositive weight . . . ." Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255 n.23 (1981). "[I]f the balance of conveniences suggests that trial in the chosen forum would be unnecessarily burdensome for the defendant or the court, dismissal is proper." Id.
Even though the Court found dismissal under the forum- selection clause proper, the Court does not find that the doctrine of forum non conveniens applies here to render Sharp's proposed amendment futile.
a. Adequate Alternative Forum
First, though there is an adequate alternative forum, the Ninth Circuit and Supreme Court have instructed district courts to give substantial (though not dispositive) deference to a plaintiff's choice of forum. Piper Aircraft, 454 U.S. at 255 n.23; Gates Learjet Corp. v. Jensen, 743 F.2d 1325, 1335 (9th Cir. 1984). The most important consideration under the circumstances is whether the balance of conveniences suggests that a trial on the issue of joint and several liability in this Court would be unnecessarily burdensome for Toshiba or the Court. Piper Aircraft, 454 U.S. at 256 n.23. The Court finds that this factor favors Sharp.
b. Private Interest Factors
Second, the Court finds that the private interest factors do not suggest that Toshiba would be unacceptably inconvenienced by dealing with the issue of Sharp's joint and several liability claims in this Court. "Private interest factors include: ease of access to sources of proof; compulsory process to obtain the attendance of hostile witnesses, and the cost of transporting friendly witnesses; and other problems that interfere with an expeditious trial." Contact Lumber, 918 F.2d at 1451; see also Nebenzahl v. Credit Suisse, 705 F.2d 1139, 1140 (9th Cir. 1983).
Toshiba argues that most of its witnesses are located in Japan and that only the Osaka District Court can hear disputes between Sharp and Toshiba. Opp'n at 14-17. The Court finds that this factor does not favor Toshiba. Discovery has proceeded in this MDL with relative ease, with Toshiba having already presented numerous witnesses for deposition. It is possible that Toshiba could be inconvenienced by producing more witnesses, but the Court does not find this an overly burdensome task for this defendant.
The Court also finds that while the parties committed specific disputes to the Osaka District Court via the BTA, the issue of Toshiba's potential joint and several liability is distinct from the issues the parties agreed would be heard abroad. The Court does not find that honoring the parties' agreement on certain limited disputes would splinter this case. This is particularly true here because the issue of joint and several liability seems uniquely well-suited to resolution before this Court, due to the long involvement of nearly every relevant party and the fact that issues of Toshiba's joint and several liability were not specifically committed to a foreign court. Cf. Lockman, 930 F.2d at 770 (finding that the policy favoring an expeditious trial merited a conclusion that the foreign jurisdiction was best, since that jurisdiction was the only forum where the entire case could be tried); Contact Lumber, 918 F.2d at 1452 (finding similarly).
Granted, the fact that Toshiba would be defending its case in two separate jurisdictions does suggest some inconvenience to Toshiba. Still, the Court does not find this inconvenience compelling in this case because Toshiba specifically contracted to have certain claims heard in a foreign court, even while it has participated in this litigation for years, with discovery nearing a close and other deadlines coming expeditiously close. Moreover, this inconvenience does not seem unacceptably burdensome for a multinational corporation like Toshiba.
The Court therefore finds that the private interest factors weigh in favor of rejecting Toshiba's argument on futility.
c. Public Interest Factors
Finally, the Court finds that the public interest factors merit retaining the issue of Toshiba's joint and several liability. "Public interest factors encompass court congestion, the local interest in resolving the controversy, and the preference for having a forum apply a law with which it is familiar." Contact Lumber, 918 F.2d at 1452; see also Nebenzahl, 705 F.2d at 1140. Toshiba contends that by finding Sharp's proposed amendment futile and committing the dispute to the Osaka District Court, the Court would further the goals of judicial efficiency and economy by ensuring that all of Sharp's claims would be heard in one forum. Opp'n at 17. The Court is not convinced. This litigation has proceeded before the undersigned for years, with the Court and the Special Master now being well acquainted with the parties and issues in this case. The Court's calendar on this case is well advanced. Moreover, the parties' contractual resolution of certain jurisdictional matters aside, this forum has a strong interest in resolving this case. See Carijano v. Occidental Petroleum Corp., 643 F.3d 1216, 1232 (9th Cir. 2011). Sharp's allegations regarding joint and several liability concern a worldwide conspiracy to fix prices in the United States. That is a significant factor in favor of keeping this issue in this forum.
Accordingly, the Court finds that the public interest factors weigh in favor of rejecting Toshiba's argument on futility.
iii. Conclusion as to Rule 15
The Court finds that Sharp's motion, considered under the extreme liberality of Rule 15, warrants permitting Sharp to file its amended complaint. The parties could have resolved some of these issues in a more straightforward, timely way, but nevertheless, Sharp has sufficiently shown that it is entitled to amend its pleadings, and Toshiba has failed to show that such an amendment would be either procedurally improper or substantively futile.
V. CONCLUSION
As explained above, the Court GRANTS the Sharp Plaintiffs' motion for leave to amend their complaint.
IT IS SO ORDERED.
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UNITED STATES DISTRICT JUDGE