Plaintiffs Score With E-Mail Evidence in Multidistrict Price-Fixing Case

What began as a class certification hearing on one of five national, high-tech price-fixing cases pending in San Francisco became a big score for plaintiffs after the judge asked what evidence they had of a conspiracy, then read aloud an e-mail by competing executives that suggests how to keep prices high, and noted, "That's not good for the defense." The suit combines at least 51 antitrust actions against Nvidia and Advanced Micro Devices/ATI Technologies over the pricing of graphics processing units.

Pamela A. MacLean

The National Law Journal

2008-07-07 12:00:00 AM
What began last week as a class certification hearing on one of five national, high-tech price-fixing cases pending in San Francisco became a big score for plaintiffs after the judge asked what evidence they had of a conspiracy, then read aloud an e-mail by competing executives that suggests how to keep prices high.

The suit combines at least 51 separate civil antitrust actions against Nvidia and Advanced Micro Devices/ATI Technologies (AMD) that allege price-fixing in the market for computer chips that control images, known as graphics processing units (GPUs).

It is one of five multidistrict cases, before five separate judges, assigned to San Francisco that assert price-fixing in various types of computer chips, flat panel screens and cathode ray tubes.

After reading the incriminating e-mail during a July 1 hearing, U.S. District Judge William Alsup of the Northern District of California turned to a table of plaintiffs lawyers representing direct purchasers in the GPU multidistrict antitrust case saying, "This is not a bad document for you. It is not a home run but it is a base hit." To make matters worse for the defense, his comment came on the heels of a testy opening by Alsup with company lawyers. Alsup berated the defense lawyers for attempting to keep sealed throughout the public hearing material that they consider trade secrets.

"This court is not a wholly-owned subsidiary of your companies. I am against you hiding information from the public. If we get to summary judgment in this case nothing will be under seal," he said.

Alsup told plaintiffs attorney William Isaacson, of Boies, Schiller & Flexner, that he didn't care "if it is under seal and it is the recipe for Coke, you have my permission to blurt it out." The class certification question has significant ramifications. If granted, the GPU multidistrict litigation, M07-1826WHA, would be only the second of the five multidistrict cases to achieve that status. Only the much earlier dynamic random access memory (DRAM) case has been certified as a class action.

Nvidia and AMD have been accused in as many as 51 civil suits, combined before Alsup, of fixing prices in the GPU market. Graphics processing units are chips used in computers, laptops and other devices generally to display 2D and 3D images.

Alsup at first appeared skeptical of allowing three small direct purchasers of GPU chips, roughly $7.8 million worth, to represent the direct purchaser class including giant companies such as Microsoft, Dell, Apple and others.

"The difference in bargaining power [among plaintiffs] would not defeat claims they are all typical purchasers," Isaacson argued.

AMD attorney Stephen C. Neal of Cooley Godward Kronish in San Francisco countered that the class certification claim was "woefully defective." Neal said that the plaintiffs' expert analysis of pricing "amounts to little more than economic sophistry." Alsup asked Issacson whether the 9 million documents turned over in discovery contained evidence of a conspiracy to fix prices. Issacson pointed to a 2002 e-mail from Nvidia senior vice president of marketing, Dan Vivoli, to ATI's president and chief operating officer, Dave Orton.

Vivoli wrote, in part, "I really think we should work harder together on the marketing front. As you and I have talked about, even though we are competitors, we have the common goal of making our category a well positioned, respected playing field. $5 and $8 stocks are a result of no respect." "That's not good for the defense," said Alsup after reading the e-mail aloud in the courtroom. "A jury would like to see this," he said.

Alsup is one of five judges riding herd over price-fixing claims in the computer chip industry consolidated in San Francisco from multidistrict proceedings in GPU, DRAM, static random access memory, TFT-LCD (flat panel) makers and cathode ray tubes (CRT) cases.

Alsup indicated that he would take the class certification issue under submission at the close of arguments.