Cisco Objects As $63M Capacitor Deals Exclude Foreign Buys

Law360 (March 27, 2020, 3:51 PM EDT) — Tech conglomerate Cisco Systems Inc. said Thursday it will challenge the latest round of settlements that capacitor makers have struck to exit buyers’ sweeping price-fixing litigation playing out in San Francisco federal court, as the deals bar purchasers from recouping damages over capacitors bought abroad.

In the fourth round of settlements in the direct capacitor buyers’ long-running case, Florida-based manufacturer Kemet Corp. agreed to pay $62 million and Japanese electronics maker Shizuki Electric Co. Inc. will shell out $1 million to resolve allegations that they participated in a yearslong global price-fixing conspiracy that inflated the price of the tech part.

A hearing on the agreements is slated for April 16, and Cisco announced Thursday that it plans to lodge a challenge, as it said the deals extinguish its right to pursue damages for capacitors that were bought overseas and ultimately incorporated into tech products sold into the U.S.

“These settlements do not provide for recovery of damages related to incorporated capacitors, but the releases of the settlements still release the settlement class members’ ability to separately pursue recovery for incorporated capacitors,” Cisco said. “The settlements thus unfairly deprive settlement class members like Cisco of the ability to recover for damages it has suffered.”

Counsel and representatives for the parties did not respond to requests for comment Friday.

Kemet and Shizuki are among dozens of capacitor makers that have settled out of the direct buyers’ litigation, which dates to July 2014 and went to trial this month.

Nearly two dozen corporate families were originally accused of conspiring to fix prices for aluminum, tantalum and film capacitors — which are ubiquitous in common household electronics, including computers, vehicles and smartphones — from as early as 2002 until 2013. 

In June 2017, U.S. District Judge James Donato blessed the first round of settlements, which totaled $32.6 million and resolved direct buyers’ allegations against Fujitsu Ltd., NEC TOKIN Corp., Nitsuko Electronics Corp., Okaya Electric Industries Co. Ltd. and ROHM Co. Ltd.

Almost exactly a year later, Judge Donato greenlighted the next round featuring settlements from Hitachi Chemical Co. and Soshin Electric Co. Ltd. worth nearly $67 million. The third round, in which Nichicon Corp. agreed to pay direct buyers $90 million and Rubycon Corp. agreed to pay up to $30 million, won final approval in February.

South Carolina-based AVX Corp. also inked a $65 million deal a little over a week into the proceedings, and a spate of manufacturers — including Panasonic Corp., Sanyo North America Corp. and Taitsu Corp. — together agreed to pay more than $200 million to exit the case on the eve of trial.

The settlements left just three defendants standing in the case — Matsuo Electric Co. Ltd., Nippon Chemi-Con Corp. and its subsidiary United Chemi-Con Inc. — of the 22 capacitor companies originally accused of price-fixing. Trial against those companies remains ongoing, but it appears proceedings have been put temporarily on hold amid the public health crisis caused by the outbreak of the novel coronavirus.

Cisco is represented by Daniel A. Sasse and Deborah E. Arbabi of Crowell & Moring LLP.

Kemet is represented by Roxane A. Polidora, Jacob R. Sorensen and Laura C. Hurtado of Pillsbury Winthrop Shaw Pittman LLP.

Shizuki is represented by Allison Ann Davis, Kelly Michelle Gorton, Kaley Louise Fendall, Monder Khoury, Paul C Southwick and Sanjay Mohan Nangia of Davis Wright Tremaine LLP.

The direct buyers are represented by Joseph R. Saveri, Steven N. Williams, James G. Dallal, Anupama K. Reddy and Christopher K.L. Young of Joseph Saveri Law Firm Inc.

The instant case is In re: Capacitors Antitrust Litigation, case number 3:14-cv-03264, and the MDL is In re: Capacitors Antitrust Litigation, case number 3:17-md-02801, in the U.S. District Court for the Northern District of California.

–Additional reporting by Dorothy Atkins, Y. Peter Kang and Bryan Koenig. Editing by Orlando Lorenzo.