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SAN FRANCISCO — An opinion dismissing a sizeable chunk of the consolidated price-fixing lawsuits against eight makers of computer memory chips may be a much bigger win for the companies than it first appeared. The decision by U.S. District Judge Phyllis Hamilton in San Francisco that private indirect purchasers lack standing under California’s Cartwright Act to sue could clear the way for potential dismissal of similar claims by 41 states in a separate part of the case. The Cartwright Act is California’s antitrust law. The 41 state attorneys general sought recovery for alleged overcharges as indirect purchasers of Dynamic Random Access Memory chips, known as DRAMs. The chips are contained in computers, mobile phones, televisions and other electronics purchased by state agencies, schools and other public consumers. Direct buyers of the DRAM chips are not affected by the ruling. Generally, indirect purchasers allege that they paid higher prices for their electronics due to alleged price-fixing on the component memory chip in violation of antitrust law. Hamilton found that indirect buyers making state-law antitrust claims must prove antitrust standing using federal-law factors, which they failed to do. Public v. private Although Hamilton’s June 1 finding that indirect buyers have no standing to sue applies to private consumers of DRAM, it is almost certain a similar motion to kick out the 41 states’ indirect-purchaser claims will be submitted based on the same rationale. “We’re actively considering those questions,” said Kathleen Foote, senior assistant attorney general in San Francisco, representing California. “This particular motion [to dismiss for lack of standing as indirect buyers] has not been filed in our case,” she said. Hamilton’s ruling that indirect purchasers lack standing to sue could have a devastating effect on other unrelated suits as well, including separate cases involving the indirect purchase of flash memory, computer graphic chips and SRAM (Static Random Access Memory), a type of semiconductor memory. All have similar antitrust claims currently pending. The decision “will be highly relevant in the flash memory, SRAM and computer graphic chip cases,” said Joel S. Sanders of the San Francisco office of Los Angeles-based Gibson, Dunn & Crutcher, who represents Micron Technology in the DRAM case. The current litigation is part of multiple private lawsuits filed nationwide and consolidated before Hamilton. The case is divided into at least three basic groups of claims: direct purchasers of the chips, indirect purchasers and 41 state attorneys general. In re Dynamic Random Access Memory Antitrust Litigation, No. 02-1486PJH (N.D. Calif.). The suits grew out of a 2002 U.S. Department of Justice investigation of an international conspiracy to fix DRAM prices. In the end, four companies and 16 individuals were fined $731 million for allegedly conspiring to fix chip prices, according to the DOJ. The private litigation followed in waves over the next few years. Hamilton held that indirect purchasers of the memory chips lacked standing to sue because their purchases of electronics were too remote from purchase of DRAMs. She wrote that plaintiffs here “only purchased the DRAM in question in end products like computers, or as end users; the distribution chain is long and complicated; calculating and apportioning damages would be complex, and the economic analysis speculative; more direct victims exist and have sought relief.” Her decision is in line with other courts that have recently applied the U.S. Supreme Court’s federal antitrust-standing test to state antitrust cases, using Assoc. Gen. Contractors of Calif. v. Calif. State Council of Carpenters, 459 U.S. 519 (1983). “There is a definite trend in courts across the U.S. applying Assoc. General Contractors to state-court claims,” said Kenneth O’Rourke, an O’Melveny & Myers attorney in Los Angeles representing Hynix Semiconductor Inc. in the case. Lawyers for the defendants in the states’ price-fixing case have asked that some states be dismissed on separate grounds. That motion is still pending before Hamilton, but it appears that some states will be eliminated based on her indirect-purchaser holding.

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