Auto suppliers lose bid to be removed from antitrust suit

Isabella Shaya
AUTOMOTIVE NEWS

Published: June 11, 2013 12:24 pm ET
Updated: June 11, 2013 12:26 pm ET

Related to this story

Topics Automotive, Legal

DETROIT — Several major auto suppliers named in an ongoing federal antitrust lawsuit have lost bids to have the case dismissed or to be removed from the government's probe into wire harness pricing.

Lear Corp., Tokai Rika Co. and its Tram Inc. U.S. subsidiary were among companies that filed motions in July 2012 to be removed from the complaints in the wire harness antitrust litigation, according to court documents.

The civil lawsuit, filed in early 2012, covers the remaining 28 defendants, some of which have pleaded guilty to criminal price-fixing charges.

The civil case, filed by at least 52 individual plaintiffs who bought cars with wire harnesses believed to be manufactured by the defendants, is being tried in U.S. District Court in Detroit by Judge Marianne Battani.

"In several well-reasoned opinions, the court upheld almost the entirety of our complaint, bringing U.S. car purchasers one stop closer to their day in court and to the successful recovery of these alleged overcharges," Hollis Salzman, an attorney for the plaintiffs from law firm Robins, Kaplan, Miller & Ciresi, said in a statement of the June 6 ruling.

In February 2010, the FBI raided Tram offices in Plymouth, Mich., and found that an executive had directed employees to delete electronic data and destroy paper documents, according to court documents.

Japan's Tokai Rika pleaded guilty to fixing prices on heater control panels and destroying evidence in a federal investigation.

The company's motion to dismiss was denied mainly because of the guilty plea, which confirmed the defendant's involvement in an illegal price-fixing conspiracy, according to court documents.

Although the guilty plea does not link Tram and Tokai Rika to the wire harness probe, the company admitted it tampered with evidence, which could have included information on wire harness systems, according to court documents.

David DuMouchel, an attorney with Butzel Long in Detroit that is representing Tokai Rika, said he is disappointed in the court's decision, but plans to move forward with the case as planned.

"We don't believe there's any liability on behalf of Tokai Rika," DuMouchel said.

He said he expects the case to move into the discovery phase of collecting evidence.

Bankruptcy protection?

Lear, which sells automotive wire harness systems, filed for Chapter 11 bankruptcy protection in July 2009. The company tried to use the bankruptcy to avoid lawsuits alleging that it was part of a price-fixing conspiracy among wire harness manufacturers.

But the court ruled that Lear can be sued and liable for its actions after and before its emergence from bankruptcy in November 2009.

In its motion to dismiss, Lear said there are no specific allegations against the company and a lack of evidence that Lear knew it was joining a conspiracy.

The plaintiffs alleged that Lear sold wire harnesses at "supracompetitive" prices after coming out of bankruptcy, court records show.

But the court found sufficient evidence to deny Lear's motion.

Lear spokesman Mel Stephens said the company is disappointed with the court's ruling.

"We maintain our position that we don't believe we have done anything wrong or violated any laws," Stephens said. "We intend to vigorously defend ourselves in this matter."

According to court records, Lear allegedly associated with Furukawa Electric Co., which pleaded guilty to price-fixing and bid-rigging the same products manufactured, sold and distributed by Lear.

The court rejected Lear's claim that the supplier was being regarded as guilty by association.


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Auto suppliers lose bid to be removed from antitrust suit

Isabella Shaya
AUTOMOTIVE NEWS

Published: June 11, 2013 12:24 pm ET
Updated: June 11, 2013 12:26 pm ET

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