Case 3:22-cv-02798-MMC Document 58 Filed 11/21/22 Page 1 of 6
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
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`IN RE: HARD DISK DRIVE
`SUSPENSION ASSEMBLIES
`ANTITRUST LITIGATION
`________________________________
`This Document Relates to:
`Flextronics Int'l USA, Inc. v. TDK
`Corporation, Case No. 22-cv-2798
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`Case No. 19-md-02918-MMC
`Case No. 22-cv-02798-MMC
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`ORDER DENYING DEFENDANTS'
`MOTION TO DISMISS
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`Before the Court is defendants' Motion, filed September 9, 2022, "to Dismiss Flex's
`Amended Complaint." Plaintiff Flextronics International USA, Inc. ("Flex") has filed
`opposition, to which defendants have replied. Having read and considered the papers
`filed in support of and in opposition to the motion, the Court rules as follows.1
`In the operative complaint, the Amended Complaint ("AC"), Flex alleges
`defendants entered into a conspiracy to "fix, raise, stabilize, and maintain prices of, and
`allocate market share for, Hard Disk Drive ('HDD') suspension assemblies" from "at least
`as early as 2003" (see AC ¶ 1) through April 2016 (see AC ¶ 126). Flex alleges it
`"indirectly purchase[d]" suspension assemblies when it purchased HDDs from Seagate,
`Toshiba, and Western Digital (see AC ¶¶ 28, 194), which three companies had
`purchased the suspension assemblies contained in their respective HDD products
`directly from defendants (see AC ¶ 167). According to Flex, during the period in which
`the conspiracy was operative, it "purchased (at least) billions of dollars of HDDs
`incorporating affected suspension assemblies . . . at prices that were artificially inflated as
`a result of the conspiracy." (See AC ¶ 201.) Based on said allegations, Flex asserts two
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`1 By order filed October 28, 2022, the Court took the matter under submission.
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`Northern District of California
`United States District Court
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`Case 3:22-cv-02798-MMC Document 58 Filed 11/21/22 Page 2 of 6
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`causes of action, namely, Count I, titled "Violation of California and Tennessee Antitrust
`Statutes," and Count II, titled "Violation of California Business and Professions Code
`§ 17200, et. seq. ['UCL']."
`Flex's initial complaint, in which it raised the same claims as are asserted in the
`AC, was filed on May 11, 2022. By the instant motion, defendants argue Flex's claims
`accrued "as early as 2016 . . . or at the latest in February 2018" (see Defs.' Mot. at 9:4),
`that Flex's claims are barred by the applicable statutes of limitations, which the parties
`agree are four years for Flex's California claims and three years for Flex's Tennessee
`claim, and that Flex has failed to sufficiently plead any exception to the applicable
`statutes of limitations.
`In opposition, Flex argues its claims are timely under the "discovery rule." (See
`AC ¶ 230.)2 Specifically, Flex relies on its allegation that it "did not discover . . .
`[d]efendants entered into a combination and conspiracy to fix prices of, and allocate
`markets for, HDD suspension assemblies, until July 29, 2019, when the DOJ
`[Department of Justice] filed criminal charges against NHK Spring for violating Section 1
`of the Sherman Act." (See AC ¶ 231.) Although Flex acknowledges it "has sophisticated
`procedures in place to routinely monitor input costs, including costs of HDDs and other
`electronic components," it alleges there was "no indication to Flex as a reasonable
`indirect purchaser of [suspension assemblies] that any conspiratorial activity was taking
`place which would artificially inflate the prices of HDDs prior to July 29, 2019." (See AC
`¶ 233).
`The California Supreme Court has held the discovery rule "postpones accrual of a
`cause of action until the plaintiff discovers, or has reason to discover, the cause of
`action." See Norgart v. Upjohn Co., 21 Cal. 4th 383, 397 (1999). Under California law,
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`2 Flex alternatively alleges the running of the statute of limitations was tolled for
`other reasons. (See, e.g., AC ¶¶ 226-29.) In light of the Court's findings as to the
`discovery rule, discussed below, the Court does not address the sufficiency of plaintiff's
`alternative allegations.
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`2
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`Northern District of California
`United States District Court
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`Case 3:22-cv-02798-MMC Document 58 Filed 11/21/22 Page 3 of 6
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`the plaintiff "has reason to discover the cause of action when he has reason at least to
`suspect a factual basis for its elements" and "has reason to suspect when he has notice
`or information of circumstances to put a reasonable person on inquiry." See id. at 398
`(internal quotations and citation omitted); see also id. at 398 n.2 (citing "uniform California
`rule" that limitations period "begins to run no later than the time the plaintiff learns, or
`should have learned, the facts essential to his claims") (internal quotation, citation, and
`emphasis omitted).3
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`The Supreme Court of Tennessee has held "a cause of action accrues when the
`plaintiff knows or in the exercise of reasonable care and diligence should know that an
`injury has been sustained as a result of wrongful or tortious conduct by the defendant."
`See John Kohl & Co. P.C. v. Dearborn & Ewing, 977 S.W. 2d 528, 532 (Tenn. 1998).
`Under Tennessee law, the "knowledge component" may be actual or constructive, and a
`plaintiff has the requisite constructive knowledge when the plaintiff "becomes aware or
`reasonably should have become aware of facts sufficient to put a reasonable person on
`notice that an injury has been sustained as a result of the defendant's negligent or
`wrongful conduct." See id.
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`In asserting Flex cannot establish its claims are timely under the discovery rule,
`defendants rely on four documents that were published more than four years before Flex
`filed its initial complaint and that, according to defendants, suffice to put a reasonable
`person on notice of the claims Flex asserts.
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`Two of those four documents pertain to actions taken by the Japan Fair Trade
`Commission ("JFTC"). The first such document is an article posted July 26, 2016, on the
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`3 In their motion, defendants, in a footnote, assert the discovery rule does not
`apply to plaintiff's UCL claim. As the California Supreme Court has explained, however,
`"the UCL is governed by common law accrual rules," such as "delayed discovery," to "the
`same extent as any other statute." See Aryeh v. Canon Business Solutions, Inc., 55 Cal.
`4th 1185, 1194, 1996 (2013); see also, e.g., In re California Bail Bond Antitrust Litig.,
`2020 WL 3041316, at *18-19 (N.D. Cal. April 13, 2020) (rejecting argument discovery rule
`does not apply "as a matter of law" to price-fixing claim brought under UCL; dismissing
`UCL claim with leave to amend to afford plaintiff leave to allege facts to support
`application of discovery rule).
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`3
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`Northern District of California
`United States District Court
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`Case 3:22-cv-02798-MMC Document 58 Filed 11/21/22 Page 4 of 6
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`Japan Times's website, in which said publication reported that, on such date, the JFTC
`had "searched the offices of TDK Corp. and NHK Spring Co. . . . on suspicion they
`formed a price cartel for electronic parts for hard disk drives," specifically, "suspensions,
`which are used in hard drives in personal computers and gaming consoles" (see Chiu
`Decl. Ex. A),4 and the second is a press release posted February 9, 2018, on the JFTC's
`website, in which the JFTC stated it had "issued a cease and desist order and surcharge
`payment orders to the manufacturers of suspension for Hard Disk Drives," having "found
`that they substantially restrained competition in the field of sales of suspension for the
`Japanese customer by agreeing to maintain sales price of suspension" (see id. Ex. D).
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`The remaining two documents on which defendants rely are articles reporting
`about a statement made by Hutchinson Technology Inc. ("HTI"), one of the defendants in
`the above-titled action. Both articles, one posted July 27, 2016, on Reuter's website (see
`id. Ex. B), and the other posted July 29, 2016, on Competition Policy International's
`website (see id. Ex. C), reported that HTI had announced it had received a letter from the
`Antitrust Division of the DOJ stating the DOJ had "opened an investigation relating to the
`sale of suspension assemblies for use in HDDs," that "neither HTI or any HTI employee
`[was] currently a subject of the DOJ investigation," and that "HTI intend[ed] to cooperate
`with the DOJ's investigation." (See id.; see also id. Ex. B).
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`Under both California and Tennessee law, the issue of whether a plaintiff should
`have discovered sufficient facts to cause the applicable limitations period to begin
`running ordinarily is an issue of fact. See Broberg v. Guardian Life Ins. Co., 171 Cal.
`App. 4th 912, 922 (2009) (holding date "[w]hen a plaintiff reasonably should have
`discovered facts for purposes of . . . application of the delayed discovery rule is generally
`a question of fact"); Hathaway v. Middle Tennessee Anesthesiology, P.C., 724 S.W. 2d
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`4 Defendants' request, unopposed by Flex, that the Court take judicial notice of the
`four documents is hereby GRANTED. See Von Saher v. Norton Simon Museum of Art at
`Pasadena, 592 F.3d 954, 960 (9th Cir. 2010) (holding "[c]ourts may take judicial notice of
`publications introduced to indicate what was in the public realm at the time," but "not
`whether the contents of those articles were in fact true").
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`Northern District of California
`United States District Court
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`Case 3:22-cv-02798-MMC Document 58 Filed 11/21/22 Page 5 of 6
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`355, 360 (Tenn. 1986) (holding "[t]he question of whether due diligence under the
`circumstances required an examination of public records or any other particular form of
`investigation is properly a question for the trier of fact after hearing all the evidence").
`Where, however, "the allegations in the complaint and facts properly subject to judicial
`notice . . . can support only one reasonable conclusion," the issue is subject to
`determination as a matter of law. See Broberg, 171 Cal. App. 4th at 922; see also
`Schmank v. Sonic Automotive, Inc., 2008 WL 2078076, at *3 (Tenn. Ct. App. May 16,
`2008) (holding where "no reasonable trier of fact could conclude that a plaintiff did not
`know, or in the exercise of reasonable diligence should not have known, that he or she
`was injured as a result of the defendant's wrongful conduct, . . . judgment on the
`pleadings or dismissal of the complaint is appropriate").
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`Here, assuming, arguendo, Flex was required to engage in a reasonable
`investigation, prior to July 2019, to determine whether it been injured by its purchases of
`HDDs, the documents on which defendants rely are insufficient to compel a finding that
`Flex's claims are, as a matter of law, time-barred.
`First, although the article discussing the JFTC's investigation, as well as the press
`release discussing the JFTC's finding that a price-fixing conspiracy existed, expressly
`refer to a conspiracy to fix the prices of suspension assemblies (see Chiu Decl. Exs. A,
`D), the press release states the JFTC found the conspiracy restrained competition in
`sales "for the Japanese customer" (see id. Ex. D), which qualification suffices to preclude
`a finding that Flex, as a matter of law, was on inquiry notice as to its claim that
`defendants conspired to restrain trade in California and Tennessee.
`Next, neither of the articles reporting on the DOJ's "investigation relating to the
`sale of suspension assemblies for use in HDDs" (see id. Ex. B, C) states the investigation
`pertained to price-fixing and, consequently, a reasonable person could understand the
`investigation pertained to some other type of activity. See In re Copper Antitrust Litig.,
`436 F.3d 782, 786-87 (9th Cir. 2006) (rejecting argument that plaintiff bringing price-fixing
`claim against bank was, as matter of law, on inquiry notice based on articles reporting
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`Northern District of California
`United States District Court
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`Case 3:22-cv-02798-MMC Document 58 Filed 11/21/22 Page 6 of 6
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`bank was "under investigation by the Commodities Futures Trading Commission").
`Further, even if any of the above four articles, either separately or in combination,
`would cause a reasonable reader to suspect price-fixing, defendants fail to show what
`information Flex would have discovered had it made further inquiry at that time. See id.
`at 789 (denying motion for summary judgment brought on statute of limitations grounds;
`noting lack of showing as to "what facts the plaintiffs' diligent inquiries would have
`revealed").
`Moreover, generally, where courts have found a plaintiff was on inquiry notice as
`to its claim based on publicly available information, the information on which the
`defendant relied had been highly publicized. See, e.g., Maestas v. Sofamor Danek
`Group, Inc., 1999 WL 74212, at *4 ((Tenn. Ct. App. February 16, 1999) (holding statute of
`limitations began running on date "nationwide television program publicized many of the
`allegations that plaintiffs [made]"); see also Dayco v. Goodyear Tire & Rubber Co., 523
`F.3d 389, 394 (6th Cir. 1975) (finding antitrust complaint time-barred, where Congress
`had "conducted hearings that explored some of the same violations complained of by
`[plaintiff]" and "industry-wide publicity was given to a Federal Trade Commission suit
`describing [defendant's conduct] that ended in a cease and desist order"). Here, at the
`pleading stage, there is nothing before the Court to suggest either the JFTC's
`investigation or the DOJ's investigation was publicized beyond the articles and press
`release cited by defendants. See Conmar Corp. v. Mitsui & Co., 858 F.2d 499, 503 (9th
`Cir. 1988) (holding publication of single article in San Francisco Chronicle and single
`article in Wall Street Journal, each of which reported on existing federal investigation into
`defendant's unlawful conduct, insufficient to show plaintiff was, as matter of law, on
`constructive notice as of date articles were published).
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`Accordingly, the motion to dismiss is hereby DENIED.
`IT IS SO ORDERED.
`Dated: November 21, 2022
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`MAXINE M. CHESNEY
`United States District Judge
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`Northern District of California
`United States District Court
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