Court decision backs consumers in price fixing lawsuit against tech giants
SAN FRANCISCO – Consumers won a victory in their fight against a group of technology companies including Sony (NYSE: SNE), Hitachi (NYSE: HIT) and Philips (NYSE: PHG), who are accused of fixing prices of optical disc drives (ODD) common in computers, DVD and Blu-Ray players among other devices.
In a ruling on June 24, Judge Walker rejected a motion to postpone evidence gathering for a class-action lawsuit filed by consumers while the defendants address criminal charges. The judge's ruling allows the attorneys representing consumers to continue to build the case against these corporations that dominate the ODD market.
Published reports state that ODD manufacturers sell 313 million drives a year for use in personal computers, and another 200 million for other applications, with revenue topping $45 billion between 2004 and 2008, and estimated at $14 billion for 2010.
Individual losses vary depending on the number of ODDs purchased, but attorneys believe the amounts are significant. "We intend to prove that the defendants conspired to inflate and sustain prices of ODDs simply to increase profit, all at the expense of consumers," said Steve Berman, founding partner of Hagens Berman and lead attorney representing consumers.
"While the Department of Justice is working on the criminal investigation, we think it is vitally important for us to push forward with our civil class action," said Berman. "While one of the goals of the criminal action is to punish the guilty, our goal is solely to return what we believe are ill-gotten profits to the pockets of consumers."
The relatively small numbers of ODD manufacturers, including the defendants, have a long history of joint ventures and other close working arrangements that gave ample opportunity to share information, the complaint states.
Berman said that the high cost of entry into the ODD market adds to the tight control the defendants have over the ODD marketplace. "When you can lock out competition, it makes it much easier to artificially - and illegally - set prices and bar competition."
Earlier this month, the Department of Justice (DOJ) asked the court to postpone Hagens Berman's efforts to collect evidence, saying the actions could interfere with its criminal investigation. The court's ruling allows the civil case to continue forward parallel to the criminal investigation.
"The court's decision supports our belief that consumers' claims are as important as the criminal investigation and that our prosecution of those claims can commence alongside the DOJ investigation," Berman added.
Some of the defendants have been involved in the DOJ investigations on related issues in the past. Samsung, for example, paid a $300 million fine following claims of price fixing involving Dynamic Random Access Memory chips (DRAM). Hagens Berman was lead counsel in the DRAM litigation.
The DOJ also launched an investigation of Samsung, LG Electronics, Toshiba and Hitachi, among others, probing claims of collusion in the manufacture of liquid crystal displays. The ongoing criminal investigation has led to admissions of guilt by LG Electronics, who paid a $400 million fine and Hitachi who paid $31 million.
On Monday, October 26, 2009, Toshiba Samsung Storage Technology Corp., a joint venture between defendants Toshiba and Samsung Electronics; Hitachi-LG Data Storage, a joint venture between defendants Hitachi and LG Electronics; and Sony Optiarc America confirmed that they received subpoenas from the DOJ concerning a criminal antitrust investigation including possible price fixing charges. In Philips Electronics' 2009 annual report issued a few weeks later, the Dutch electronics company also disclosed it was a subject of the same investigation.
Since the investigation was launched, the defendants have been the subject of a grand-jury investigation. "Rarely does the Department of Justice go to the extent of convening a grand jury unless they have solid reasons to believe that a crime has occurred," Berman added.
Under antitrust law, customers who can prove that they have been overcharged as a result of price fixing may collect damages worth three times the amount of the overcharge. Attorneys intend to prove that the defendants in the ODD case agreed to manipulate prices and overcharged consumers for certain devices.
Hagens Berman is representing consumers in the class-action lawsuit against big tech companies that make optical disc drives. If you purchased a laptop, desktop computer, gaming console or entertainment player that features an optical disc drive after November 1, 2005, you are encouraged to join this lawsuit at /cases-and-investigations/cases/odd.
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About Hagens Berman
Hagens Berman Sobol Shapiro LLP is a consumer-rights class-action law firm with offices in nine cities. The firm has been named to the National Law Journal’s Plaintiffs’ Hot List seven times. More about the law firm and its successes can be found at www.hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.