As recently reported in Auto News (click here), Nippon Seiki will pay $4.56 million civil settlement to end-payor plaintiffs for price-fixing its instrument panel clusters in a class action proceeding that remains pending in federal court in Detroit. Nippon Seiki has plants in Asia, the United States and the United Kingdom. Honda owns 6.1 percent of the company. This is the first civil court settlement in the wake of an expansive criminal investigation of auto suppliers by the U.S. Department of Justice's antitrust arm. In just over two years, federal prosecutors have won criminal fines of more than $1.8 billion along with guilty pleas from 23 companies and 25 executives.
The Motion for Preliminary Approval of the Proposed Settlement Agreement and Provisional Agreement of a Settlement Class (“Motion”) filed in federal court by the end-payor plaintiffs on December 23, 2013 defines this Settlement Class as “all persons or entities … who purchased or leased, in the United States, for personal use and not for resale, an Instrument Panel Cluster, including(i) as component of a motor vehicle, or (ii) as a stand-alone product.” The Motion recounts that Nippon Seiki agreed to plead guilty on November 8, 2012 to a one-count criminal information and to pay a $1 million criminal fine for participating in a combination and conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing to rig bids for, and to fix, stabilize and maintain the prices of Instrument Panel Clusters sold to an automobile manufacturer in the United States and elsewhere from at least as early as April 2008 and continuing until at least February 2010 in violation of the Sherman Act, 15 U.S.C. § 1.
In seeking approval for the Settlement Agreement, the end-payor plaintiffs similarly allege in the Motion and Settlement Agreement that Nippon Seiki engaged in a conspiracy to raise, fix, maintain/and or stabilize prices and rig bids for its instrument panel clusters. The end-payor plaintiffs maintain that the cash recovery from the Settlement Agreement is significant because it is over four times larger than the fine Nippon Seiki agreed to pay to the United States government pursuant to its guilty plea. The end-payor plaintiffs also assert that it “bears noting that the Settlement Agreement provides that Nippon Seiki’s sales will remain in the case for purposes of computing the treble damages claim against the non-settling Defendants. In other words, [e]nd-[p]ayor plaintiffs and the proposed Settlement Class retain their ability to recover from the remaining Defendants the entire damages caused by the alleged conspiracy, even those attributable to Nippon Seiki, less only the amount paid by Nippon Seiki in settlement. Courts have long recognized that ‘icebreaker’ settlements of this nature provide invaluable assistance to antitrust plaintiffs.”
The Motion also points out that the settlement has significant value to the end-payor plaintiffs because it requires Nippon Seiki to provide “early and comprehensive cooperation in the form of attorney proffers, interviews, documents and depositions related to Instrument Panel Cluster sales in the United States.” Nippon Seiki maintains in the settlement agreement that it is not guilty of the charges, but is settling to "avoid further expense, inconvenience, and the distraction of burdensome and protracted litigation.”