The opinion of the court was delivered by: BECKER
[EDITOR'S NOTE: Part 3 of 3]
Q. Evidence of the Participation of Individual Defendants in the Conspiracy
In order for plaintiffs to survive the motion for summary judgment as to any given defendant with respect to the conspiracy aspects of their claims, they must come forward with evidence not only of the existence of a conspiracy to restrain trade, but also of the membership of that defendant in the conspiracy. Accordingly, in the final major facet of our evidentiary review of plaintiffs' Sherman Act § 1 and Wilson Tariff Act conspiracy claims as to television receivers we consider and assess the evidence against each individual defendant advanced to show that defendants' complicity in the alleged scheme.
Prior to commencement of the pretrial evidentiary hearings, we were confronted time and again with the defendants' contention that plaintiffs had consistently lumped all of the defendants together, and had not identified evidence discrete as to each defendant which linked that defendant to the "unitary" conspiracy.
The plaintiffs rejoined that their evidence applied to all of the defendants because they were all involved in the same conspiracy, and that plaintiffs' proffered items of evidence would, if admissible, apply to more than one defendant. That is certainly so in many instances, as in the case of the JFTC testimony. Many other items of evidence are common to many defendants, such as participation in the export control arrangements. Having in mind that we have already discussed all of plaintiffs' primary evidence, we will focus here on matters specially relevant to each defendant. In view of the length of the opinion, we will make the summary as brief as possible.
Before commencing this task, a word is in order about the use of coconspirator declarations, for it is plain that the success of plaintiffs' trial strategy depends at least in part upon the admission under F.R.E. 801(d)(2)(E) of numerous pieces of evidence against all of the defendants on the theory that they are declarations of coconspirators. We explained in section VI.D.6, supra, the requisites for admissibility of coconspirator declarations. If we find by a preponderance of the evidence independent of the coconspirator statements that a conspiracy exists among the declarant and the defendant against whom the statement is offered, the coconspirator statements will be admissible, and must be considered as part of the record in determining whether a genuine issue of material fact exists as to any given defendant. This preliminary determination will be made infra ; our consideration in this section of the evidence of the participation of the individual defendants in the conspiracy will help lay the foundation for that determination.
We shall then take up the evidence as to Sony, which contends that it sold in the United States market at the highest prices, and therefore could not logically be charged with membership in a predatory low price export conspiracy. Next, we shall take up the evidence against MC and MIC, which did not manufacture CEP's, but rather purchased Japanese CEP's for resale, inter alia, in the United States market.
Turning to U.S. companies, we shall take up the evidence as to Sears, which imported Japanese CEP's, and that with respect to Motorola, which on at least one occasion also imported Japanese CEP's. In these respective subparts we shall also discuss plaintiffs' claims against Sears and Motorola arising out of their respective roles in the acquisitions by Sanyo and Matsushita, respectively, of U.S. companies. We shall conclude our review of the evidence of participation by individual defendants in the conspiracy with some comments about plaintiffs' claims against subsidiaries of the Japanese manufacturing defendants. In the case of each defendant, our evidentiary review will be followed by comment as to the legal sufficiency of plaintiffs' evidence measured against the legal principles that have already been outlined.
2. The Matsushita Defendants
We begin the discussion of the plaintiffs' evidence as to the various entities constituting the Matsushita interests by taking up the parent company, Matsushita Electric Industrial Co., Ltd. (MEI).
We will then turn to Matsushita Electric Trading Company, Ltd. (MET), MEI's Japanese sales subsidiary; Matsushita Electronics Corporation of America (MECA), MEI's U.S. sales subsidiary; and Matsushita Electric Corporation (MEC), the MEI-Philips joint venture.
The evidence of any potential significance proffered with respect to MEI consists essentially of the following: (1) documents reflecting its participation in the check price agreements and in the activities of the various groups and associations in Japan; (2) the JFTC materials; (3) the "connection" documents which allegedly show some relationship between MEI's domestic and export prices and activities; (4) the "intent" documents; (5) documents reflecting attendance at meetings concerning possible responses to the 1921 Antidumping Act proceedings; and (6) miscellaneous matters, including the Motorola acquisition and the arrangement with Philips concerning MEC. We take these up in the order mentioned.
Turning to the materials from the Six Company Case, we ruled in the Japanese Materials Evidentiary Opinion that, except for certain export references, the JFTC testimony of witnesses employed by the six companies was admissible under F.R.E. 804(b)(1) against the six companies who jointly defended the Six Company Case. With respect to "export references" we held that the testimony would be admissible only against the witness's employer. Four MEI employees testified: Mitsuo Tsuruta, Hiroyuki Oshima, Takuma ("Ta") Fujio, and Tsuyoji ("Tsu") Fujio. The only export references were in the testimony of the two Fujio's, but those references contain no suggestion of a low price export conspiracy or of any other conspiracy. Rather, they state that "the price on the American market is balanced with the price in Japan."
In terms of the home market aspect of the "unitary" conspiracy, and for the reasons explained in our discussion thereof, see Part VII.G.2.(b), supra, the testimony of the various witnesses in the Six Company Case, including those employed by MEI, was not probative of the alleged high price conspiracy in Japan. Nor is there anything in the testimony of any of the witnesses upon which an inference of "war-chesting" could be built. Indeed, the only reference to profitability at all was a comment by Mr. Tsu Fujio that profits in the Japanese CEP industry were very low (DSS 61).
We held in the Japanese Materials Evidentiary Opinion that protocols are admissible only against the employer of the person who gave the protocol. No MEI employee gave a protocol; hence no protocols are admissible against MEI. Similarly, we held that diaries seized by the JFTC would be admissible only against the employer of the diarist. The only diary entries by an MEI employee are short excerpts from the Tokizane diary, DSS's 56 and 57. However, the Tokizane diary was held to be inadmissible. See Japanese Materials Evidentiary Opinion at 1285-1286.
Plaintiffs' proffers from two other cases before the JFTC the recommendation decision in the Market Stabilization Council case and the consent decision and other materials from the Matsushita Retail Price Maintenance case were held to be inadmissible in our Public Records Opinion; hence they cannot add to plaintiffs' case.
We described in Section VII.H, supra the so-called "connection" documents which allegedly demonstrate a connection between the so-called domestic and export aspects of the "unitary" conspiracy. In our description we explained that the bulk of the "connection" documents are either inadmissible or are not probative of any relationship between the domestic and export markets. Several of the "connection" documents were directed at MEI. The most notable among them, the Japan Victor document, was dealt with at length (at 1303-1310) in the Japanese Materials Evidentiary Opinion, where we held it to be unauthenticated and inadmissible on a number of grounds. The additional export references set forth by plaintiffs' counsel in the February 12, 1980 letter, see n. 152, supra, are no more availing. That letter set forth countless references from the Six Company Case, the vast bulk of which were ruled inadmissible in the Japanese Materials Evidentiary Opinion. None of those materials link MEI to an export conspiracy.
Plaintiffs rely heavily upon the meetings of counsel concerning the Treasury Department's 1921 Antidumping Act proceedings. The only evidence concerning MEI's activities in this area are third-party memoranda relating to discussions among counsel concerning tactics for dealing with the antidumping proceeding and other third-party internal documents relaying hearsay information about the antidumping proceedings which make passing reference to a Matsushita strategy. DSS 1266 contains documents concerning an alleged agreement between J. C. Penney and MEI to split costs and legal fees arising out of the defense of the dumping proceedings. There are, as we suggested earlier in our discussion of the so-called rebate scheme, see n. 211, supra, serious problems of admissibility with many of these documents. They are tainted by primary hearsay and laden with internal hearsay. However, the short of it is that, admissible or not, these documents do not offer evidence probative of collusive behavior. As we explained in Part VI.A.8, supra, an attempt to work out a common response to a common legal problem does not establish the existence of a conspiracy, and is protected activity. In sum, none of the "connection" documents or those relative to the defense of the 1921 Act proceedings serve to link MEI to the alleged "unitary" conspiracy.
We discussed the "intent" documents at Part VII.I, supra. As that discussion demonstrates, those documents, insofar as they are admissible, are meaningless, or at least totally non-probative in establishing the "unitary" conspiracy alleged by plaintiffs. The documents offered to show the intent of MEI are statements purportedly made by K. Matsushita and M. Matsushita appearing in "Denshi" (DSS 112) and an excerpt from the diary of an unknown person that purports to relate the remarks of an unidentified chairman of MEI's board (presumably K. Matsushita) (DSS 116). These documents are not probative of conspiracy, or at least no more so than the statements of Zenith's officials, see pp. 1232-1233, supra, relative to their desire to improve their business and increase their market share.
Plaintiffs' supplementary in limine list contains a potpourri of documents referring to MEI, mostly relating to the Quasar acquisition and to MEI's meetings with Philips concerning the business of the MEI/Philips joint venture, MEC, which we will address in our discussion of plaintiffs' evidence as to non-TV products in Part VIII, infra. None of these documents support plaintiffs' conspiracy claims. ZSX-0021, a 1971 Sanyo memorandum, reports that the president of "Matsushita Electric" complained to Sanyo about prices which he believed were too low. MOT 2507, a 1964 Motorola "trip report," suggests that Motorola attempted, apparently without success, to induce MEI to lower its TV tube price in order to meet the competition. Ex. Westinghouse 12 is a series of memoranda and charts depicting widely varying price quotations that Westinghouse had obtained from many different Japanese manufacturers, including MEI. We need not go so far as to say that these documents establish the existence of competition, although we might; at least they do not tend to establish the existence of a conspiracy between MEI and the other defendants.
Other than the foregoing, there is no evidence in the record of any potential significance as respects MEI. We find that fact revealing, for MEI is the largest consumer electronic products manufacturer in the world, and Konosuke Matsushita, its founder and chairman, is alleged by the plaintiffs, see p. 1232, supra, to be the prime architect of the domestic strategy which led, in plaintiffs' submission, to the "unitary" conspiracy complained of herein. And yet, when we turn from allegations to hard evidence, we find that plaintiffs' evidence against MEI amounts to nothing; certainly there is no significant probative evidence of MEI's participation in the "unitary" conspiracy.
Secondly, plaintiffs point to individual rebate transactions between MET and its private label customers, J.C. Penney and W.T. Grant. Many of the documents offered by plaintiffs to show MET's rebating practices are transactional documents which relate to private label sales.
All plaintiffs have thus advanced, however, is a group of documents which show, at most, the existence of individual rebate transactions. MET has conceded that it paid rebates.
As we have explained above, that does not create a genuine issue of material fact in this case. What would be significant is concerted rebate activity, but plaintiffs have produced no evidence that MET (or any other Matsushita defendant) engaged in any actionable collusive rebate activity.
Plaintiffs also ground their case against MET on the fact that it is a subsidiary of MEI, with interlocking directorships. Indeed, this theory is advanced by plaintiffs with respect to each subsidiary of all the principal Japanese defendants named in the complaint. Most defendants concede the subsidiary and interlocking directorship status, but vigorously argue that far more is needed to establish participation in a conspiracy by a separately incorporated subsidiary. We shall describe our approach to plaintiffs' agency and "functional alter-ego" theories in Part VII.Q.12, infra, and shall not, until then, separately mention this aspect of plaintiffs' claim against each subsidiary. At all events, there is plainly no evidence, direct or circumstantial, of MET's individual participation in the conspiracy.
MECA is MEI's U. S. sales subsidiary. The case against MECA consists principally of (1) its alleged rebates and knowledge of MET's rebates; and (2) miscellaneous matters.
Once again, all that plaintiffs allege with respect to rebates is individual rebate transactions. For example, in its answers to interrogatories
MECA stated that in 1969 and 1970 Magnavox demanded that MECA retroactively cut its TV prices if it wanted to obtain any future business from Magnavox. As a result, MECA refunded to Magnavox $ 46,000, some of which is reflected in document MA 33722-6 on plaintiffs' supplementary list. Similarly, plaintiffs invoke MA 031001-12, transactional documents and correspondence relating to MECA sales to Philco; these are also offered to show rebates. MECA argues that, as a U. S. company, it is not bound by the check price, and that therefore these transactions cannot even be characterized as rebates designed to circumvent the export control arrangements. Although MECA thus denies that it gave "rebates," whether it did is not a material fact on this motion, for, as has already been explained, even if we assume arguendo that rebates were given, that fact could not defeat summary judgment in the absence of evidence of collusive rebating activity.
Plaintiffs have also proffered documents, such as handwritten price sheets (DSS's 1273 and 1275) and general handwritten references to rebates (DSS 1274)
which they allege show that MECA had knowledge of and was involved with rebates given by MET. Assuming arguendo the admissibility of these matters,
and further assuming arguendo that plaintiffs interpret the documents correctly, there is still no evidence suggesting the existence of the agreement posited by the plaintiffs among the Matsushita defendants and the other defendant groups and their importer-coconspirators to grant rebates as part of a predatory low price export conspiracy.
Plaintiffs have also proffered several documents for the purpose of demonstrating communication between MECA and MEI or MET concerning the check prices. However, since the prices at which MECA purchases from MET are affected by the check prices, such communication is to be expected, and is no basis for an inference of unlawful conspiracy.
Finally, plaintiffs have cited a number of miscellaneous documents: telexes concerning a customs check on MET invoices relating to J.C. Penney (DSS 1277); the text of a price assurance given to Treasury by MEI and MECA (DSS 1279); handwritten notes speculating as to what Penney is doing or should do about the dumping proceedings (DSS 1278); handwritten notes concerning a meeting of counsel concerning the 1921 Act proceedings (MA 48332-379); a telex from Isomura (MEI) to Yamato (MECA) referring to an EIAJ meeting at which Penney's suit against Treasury was discussed (DSS 1276); a letter from Kamihira (MEI) to Glenn (J.C. Penney) regarding contract prices being changed from dollars to yen (DSS 1246); various Magnavox documents discussing the pros and cons of purchasing on the basis of fob Japan prices vs. fob U. S. prices, which refer to purchases from MECA (DSS's 1290, 1299, 1319, ZR 54, ZM 328, ZH 206); and telexes from an unidentified source, presumably from one of the Matsushita companies, discussing radio quotas (MA 29466), prices to be charged to MECA's customers (MA 33690, 29453, 2511), and customer information (MA 29447, 33669). We could mention others. The point is that this potpourri of documents, however, shows nothing unusual or suspicious, and goes nowhere toward establishing the existence of the conspiracy alleged in this case. There is no significant probative evidence against MECA in this record.
MEC, which was involved solely in the manufacture and sale of components, is not implicated in plaintiffs' case as to television receivers. Plaintiffs' entire case against MEC is based upon: (1) the MEI-Philips agreements discussed in Part VIII.C, infra; (2) documents purporting to record meetings between MEI and Philips relative to those agreements; and (3) the fact that from January to August, 1973, MEC was a party to the Electron Tube Export Control Arrangement. When we examine plaintiffs' evidence as to non-TV products in Part VIII, infra, we will explain that the MEI-Philips documents do not contain any evidence connecting those companies to the conspiracy alleged by plaintiffs.
Moreover, we have already explained, see Part VII.F, supra, that the various Manufacturers' Agreements, such as the Electron Tube Export Control Agreement, do not help plaintiffs' case.
In sum, there is no evidence against any of the Matsushita defendants which directly or circumstantially involves or gives rise to an inference of involvement of any of the Matsushita defendants in the "unitary" conspiracy charged by the plaintiffs.
3. The Toshiba Defendants
Any discussion of the evidence against Tokyo Shibaura Electric Co., Ltd. ("Toshiba") must begin with what plaintiffs, for the first nine years of this case, heralded as their "smoking gun": the Yajima diaries.
Seiichi Yajima, it will be recalled, was employed by Toshiba and Toshiba Shoji (Toshiba's domestic sales corporation, not named as a party to this litigation) as "Manager of the Second Section of the TV Business Department."
However, in the Japanese Materials Evidentiary Opinion, at 1267-1277, we held the Yajima diaries inadmissible on a host of grounds, but essentially as unintelligible and untrustworthy hearsay. Even assuming admissibility, however, the alleged export references contained in the Yajima diaries are obscure and unintelligible and do not provide any evidence of the low price conspiracy to invade and take over the United States CEP market alleged by plaintiffs.
Plaintiffs have also offered three Toshiba internal memoranda, DSS's 96, 97, and 98, as evidence of Toshiba's involvement in the alleged conspiracy. However, we excluded all of these memoranda in the Japanese Materials Evidentiary Opinion at 1299-1301, on the same grounds that we excluded the diaries.
The other Toshiba-related materials from the Six Company Case are equally unhelpful to plaintiffs' case. Plaintiffs have offered the testimony
of three Toshiba employees as evidence of Toshiba's involvement in the alleged conspiracy: Tadashi Kamakura (DSS 69), Mr. Yajima (DSS 70), and Ryozaburo Kawahara (DSS 71). This testimony does not constitute evidence tending to show Toshiba's involvement in either the home market or export facets of the "unitary" conspiracy.
Plaintiffs have offered the protocols of Mr. Yajima (DSS's 75, 76, 77, and 78), Mr. Kamakura, (DSS's 81 and 82), Mr. Seigo Narita, (DSS's 79 and 80), Mr. Ryunosuke Kamuro (DSS 83), and Mr. Kawahara, (DSS 84), all Toshiba employees, as evidence of Toshiba's involvement in the alleged conspiracy. We have held protocols admissible against the employer of the giver of the protocol. These protocols are not probative of home market high prices or "war-chesting." Moreover, there are no references to export matters in any of these protocols (or in fact in any of the other protocols offered by plaintiffs). Indeed, the record does not reveal that any of these Toshiba employees had any responsibilities with respect to export matters.
With regard to matters common to all six defendants, Toshiba was a signatory to the Manufacturers' Agreements and was a member of the JMEA. However, for reasons explained above, the export control arrangements memorialized in these documents are not a possible source of antitrust injury to the plaintiffs. Toshiba, like all of the six companies, has conceded membership in the numerous groups and associations mentioned in the Six Company Case and in the EIAJ. However, as we have seen, these memberships and attendance at meetings do not constitute evidence of conspiracy. Nor, as we explained in Part VII.G, supra, have plaintiffs adduced any admissible probative evidence of conspiratorial activity by any of the defendants in conjunction with their membership in these groups.
Turning to Toshiba's alleged role in the "rebate scheme," we note that although Toshiba sold private label merchandise to J.C. Penney and Co., Singer Corp., Philco Electronics Corp., and R.H. Macy, as well as to Sears, plaintiffs have only charged Toshiba with granting rebates to Sears. We have already explained that a genuine issue of fact exists on the question whether the Japanese manufacturing defendants, including Toshiba, paid rebates to their U.S. customers. However, we have also explained that the issue of fact is not material in the absence of evidence of concerted activity with respect to the rebate scheme. Plaintiffs have advanced no such evidence.
1. No evidence, direct or circumstantial, that Toshiba discussed or agreed with anyone to sell television receivers in the United States at unreasonably low prices;
2. No evidence, direct or circumstantial, that Toshiba's pricing of television receivers in the United States or Japan was parallel to any other defendant herein or any other competitor;
3. No evidence, direct or circumstantial, that pricing of Toshiba television receivers sold in the United States market was below the competitive price levels for such products in the United States market (and no showing of what the competitive price level was in the United States market); and
4. No evidence, direct or circumstantial, of sales of television receivers in the United States market below any defined level of costs.
This listing is accurate, and could be augmented to detail other areas of plaintiffs' failure to offer evidence in opposition to the motions for summary judgment.
Suffice it instead to say that plaintiffs have simply offered no evidence, direct or circumstantial, which could create a genuine issue of material fact as to Toshiba's involvement in the "unitary" conspiracy.
(b) Toshiba America, Inc. (TAI)
The bulk of plaintiffs' allegations against Toshiba, themselves unavailing, are not even applicable to Toshiba's U.S. sales subsidiary, TAI. There are no references to TAI in the JFTC-related diaries, testimony, or protocols; indeed, TAI never employed any of the witnesses who testified or gave protocols before the JFTC (or whose diaries were seized). Neither is TAI implicated in any way in the Toshiba internal memoranda (DSS's 96-98). TAI was not a signatory to the Manufacturers' Agreements and was not a member of the JMEA, hence was not involved in any check price rules or regulations. TAI was not involved in the Six Company Case or Market Stabilization Council Case, or in any other case before the JFTC, and was not a member of any Japanese group or trade association. Moreover, during the time periods applicable to this litigation, TAI did not sell private label merchandise, and plaintiffs have made no claim that TAI granted illegal rebates to its customers.
With respect to TAI, there is no evidence, direct or circumstantial, of discussions or agreements to sell television receivers in the United States at unreasonably low prices, or that TAI's prices were parallel to any other defendant or any other competitor, or of sales below competitive levels in the U.S. market. Neither is there any evidence of sales by TAI below cost, or that TAI acquired any U.S. CEP manufacturer.
In fact, the only real allegations as to TAI's involvement in the alleged conspiracy are those set forth in plaintiffs' brief in response to defendants' motion for summary judgment at pages 147-56 (see also FPS 1641 et seq.), where they assert the following:
1. TAI is a subsidiary of Toshiba;
2. Toshiba made capital contributions to TAI;
3. Toshiba has guaranteed TAI's loans;
4. TAI sold Toshiba television receivers in the United States;
5. Certain TAI employees were previously employed by Toshiba;
6. TAI was a member of the Japan Light Machinery Information Center; and
7. TAI's income tax returns indicated that TAI lost money during the period 1965 through 1977.
4. The Hitachi Defendants
As with the Toshiba defendants, it is appropriate to begin our discussion of the Hitachi defendants
with the JFTC materials, for among the evidence most strongly stressed by the plaintiffs prior to our Japanese Materials Evidentiary Opinion were the Yamamoto and Yamada diaries.
At the time of the writing of the diaries, Mr. Yamada was Department Manager, Electrical Appliances Department, Consumer Products Division, of Hitachi, Ltd. and Mr. Yamamoto was Manager of the Television Section of the Television Department of Hitachi Kaden. In the Japanese Materials Evidentiary Opinion, at 1277-1283, we held the Yamamoto and Yamada diaries inadmissible on a host of grounds, but essentially as untrustworthy hearsay. We add, however, that the alleged export references contained in these diaries are unintelligible and do not provide any evidence of the home market war chesting conspiracy or the low price export conspiracy to invade and take over the U.S. CEP market alleged by the plaintiffs. Moreover, at the time the diaries were written, neither Mr. Yamada nor Mr. Yamamoto had responsibility in export matters.
Turning to the JFTC testimony, it will be recalled that we made several exceptions to our ruling in the Japanese Materials Evidentiary Opinion excluding "war-chesting" or export references. One of those exceptions was as to the testimony of Mr. Nishi, which we found admissible against his employer, Hitachi.
However, Mr. Nishi's testimony, although it does discuss the success of the Japanese CEP industry in the export field, does not supply any evidence to aid plaintiffs' conspiracy theory. It will be recalled that it was Mr. Nishi who used the "it is our heritage" language which plaintiffs cite frequently as evidence of defendants' predatory intent, but which, as we explained in Part VII.I, supra, does not aid plaintiffs' case one iota. Indeed, Mr. Nishi testified that the ability of the Japanese television manufacturers to compete effectively in export markets was significantly the result of intense competition in the Japanese domestic market.
Plaintiffs have offered the protocols of Mr. Adachi (DSS 85) and Mr. Yamamoto (DSS 86) as further evidence of the alleged conspiracy. Although these protocols are admissible against Hitachi, there is nothing in them having any relationship to export-related matters. The protocols concern only domestic Japanese marketing and prices. Neither the protocols nor any other Japan-side evidence supports plaintiffs' claim of a home market high price war-chesting conspiracy.
Hitachi, Ltd., like all of the six companies, was a signatory to the Manufacturers' Agreements. Both Hitachi, Ltd. and Hitachi Kaden were members of the JMEA, hence subscribers to the Rules. However, as we have seen in our extensive discussion above, the export control arrangements do not advance plaintiffs' case. Hitachi has also conceded membership in the numerous groups and associations discussed above. However, as we have also explained, the evidence relating to those groups and associations is equally nonprobative, and does not tend to show any Hitachi involvement in any conspiracy. As for Hitachi's alleged role in the rebate scheme, plaintiffs have offered DSS's 1359 through 1374 as evidence that the Hitachi defendants participated in rebate activity.
However, neither these documents nor any others constitute any evidence of involvement in concerted rebate activity. Although a genuine issue of fact exists on the question whether the Japanese manufacturing defendants, including Hitachi, paid rebates to their U.S. customers, we have already explained that that issue of fact is not material in the absence of evidence of concerted activity with respect to the rebate scheme.
The plaintiffs have attempted to show, through the DePodwin report, that Hitachi sold television receivers in the United States below cost. For reasons explained in the Expert Testimony Opinion, DePodwin's opinion is inadmissible. In terms of the other aspects of plaintiffs' claims, we can incorporate by reference the Toshiba defendants' catalogue of evidence that plaintiffs have failed to present, see page 1273, supra, for the same failings exist with respect to Hitachi. In sum, plaintiffs have offered no evidence, direct or circumstantial, which would create a genuine issue of material fact as to the involvement of Hitachi or Hitachi Kaden in the "unitary" conspiracy.
We could also rescribe our discussion about the evidence adduced against Toshiba America, Inc., for what was said about TAI (p. 1273, supra ) is transferable to Hitachi's U.S. sales subsidiary, HSCA. Rather, we shall merely incorporate that discussion by reference and note that there is no evidence, direct or circumstantial, of the involvement of HSCA in the alleged conspiracy. Although the plaintiffs set forth in replete detail the intercorporate relationships among Hitachi and its affiliates, this does not supply proof of a conspiracy.
The Sanyo defendants
are involved with the export control arrangements to the same extent as the Matsushita, Toshiba, and Hitachi defendants, with the same lack of consequences insofar as plaintiffs' conspiracy claims are concerned. Looking briefly first at the Six Company Case, we note that unlike the other defendants, there is very little evidence in the record which even purports to be applicable to Sanyo. The JFTC obtained no diaries written by any Sanyo Denki employees; nor did they obtain any other documents from the files of Sanyo Denki which allegedly set forth conspiratorial discussions at any trade association or sub rosa meetings. The plaintiffs have proffered the JFTC testimony of three Sanyo officials, Mr. Hirano (DSS 62), Mr. Yoshioka (DSS 63), and Mr. K. Iue (DSS 74). While this testimony is admissible at least as to domestic matters, neither the testimony nor any other evidence implicates Sanyo in a home market high price "war-chesting" conspiracy. Moreover, the testimony of Mr. Hirano and that of Mr. Iue contains no export reference. While the testimony of Mr. Yoshioka does, we expressly held at page 1294 of the Japanese Materials Evidentiary Opinion that that reference was inadmissible.
Mr. Yoshioka's protocol (DSS 104) was also offered. We have held protocols admissible against the employer, but Mr. Yoshioka's protocol contains no export references.
Plaintiffs cite as a "connection" document in their February 12, 1980 letter, see n. 152, supra, a certain calendar book which was seized by the JFTC in November 1966, but not used by it and not marked as an exhibit in the Six Company case. The calendar was returned to Sanyo Denki by the JFTC following discontinuance of the Six Company case and was produced for plaintiffs' inspection and copying in May, 1979. That document, however, contains only references to the time and place of meetings of some of the sub rosa groups. It is untranslated, but it is represented to us that it does not contain any textual description of the meetings or set forth the purposes of or conversations at the meetings; hence it is equally unavailing, even if admissible. The foregoing are the only "Japan-side" documents which relate specifically to the Sanyo defendants.
Neither have plaintiffs been successful in demonstrating below cost sales by Sanyo. Dr. DePodwin's cost analysis has been excluded.
Although the plaintiffs have invoked scattered references in other documents allegedly showing lack of profitability of certain product lines at certain intervals, this evidence does not begin to amount to probative evidence of below cost sales or predatory pricing.
In sum, our review of the evidence as it relates to Sanyo reveals no evidence that Sanyo discussed or agreed with anyone to sell television receivers into the United States at unreasonably low prices or evidence that Sanyo's pricing of television receivers in the United States or Japan was parallel to that of any other defendant or any other competitor. Indeed, Sanyo's series of rebate programs was unique to Sanyo. Neither is there any evidence that pricing of Sanyo television receivers in the United States market was below competitive price levels. While much heat was generated over the question whether Sanyo disclosed the existence of rebates to U.S. customs (Sanyo contends that it did), we have already explained supra that nondisclosure of rebates would be in Sanyo's self interest and more consistent with rational independent action than with conspiratorial activity. There is just no evidence of Sanyo's participation in the "unitary" conspiracy.
stands in the same shoes as the other Japanese manufacturing defendants with respect to the export control arrangements, having been a signatory to the Manufacturers' Agreements and a member of the JMEA, hence a subscriber to its Rules. For the reasons explained above, the export control arrangements cannot help the plaintiffs. Sharp has also conceded membership in the various trade associations and the sub rosa groups mentioned in the Six Company Case and attendance from time to time at their meetings. However, as we have seen, these memberships and attendance at meetings do not constitute evidence of conspiracy. There were no diaries of Sharp officials seized by the JFTC. Mr. Ogawa, of Sharp, gave testimony before the JFTC (DSS 72 and DSS 73), but his testimony contained no export references. Two Sharp employees, Mr. Saeki and Mr. Maekawa, gave protocols to the JFTC. We excluded Mr. Maekawa's protocol in the Japanese Materials Evidentiary Opinion, and Mr. Saeki's protocol contains no export references. There are no miscellaneous Sharp documents, "smoking guns" or otherwise, which come to us from the JFTC proceedings. Plaintiffs have adduced no admissible evidence of Sharp-related conspiratorial activity in conjunction with the sub rosa groups (or of the groups themselves), either in terms of home market high price "war-chesting" activity or predatory low price export activity.
Sharp sold private label merchandise to a number of American buyers, and a genuine issue of fact exists as to Sharp's participation in the rebate scheme. However, that issue of fact is not material because there is no evidence that Sharp was involved in concerted activity with respect thereto. To the contrary, the documents produced by Midland, one of Sharp's private label customers, showed that Sharp, Hitachi, and JVC, among other Japanese companies, competed with each other for Midland's import business.
In sum, what has been said of the other Japanese manufacturing defendants may also be said of Sharp. Plaintiffs have adduced no evidence, direct or circumstantial, that Sharp discussed or agreed with anyone to sell television receivers into the United States at unreasonably low prices, or that its pricing of television receivers in the United States or Japan was parallel to that of any other defendant or any other competitor, or that Sharp sold television receivers in the United States market below the competitive price levels in that market, or that Sharp sold television receivers in the United States' market below any defined level of cost. For all of these reasons, and for the reasons explained in our more generalized discussion supra, plaintiffs have adduced no evidence, direct or circumstantial, which could create a genuine issue of material fact as to Sharp's involvement in the "unitary" conspiracy. We note, in addition, that Sharp has filed the affidavit of Mr. Y. Fukao, Senior Executive Director of Sharp, controverting in detail plaintiffs' allegations about conspiratorial activity.
Mr. Fukao's affidavit stands essentially uncontroverted.
A similar (uncontroverted) affidavit was filed on behalf of SEC by Mr. T. Tani, Executive Vice President, Treasurer and Controller of SEC. Leaving aside the questions of corporate agency or "functional alter-egos," our review of the evidence reveals that plaintiffs have adduced no evidence, direct or circumstantial, of SEC's involvement in the alleged conspiracy.
7. Melco and Melco Sales, Inc. (MSI)
Plaintiffs' strategy as to the Melco defendants has been essentially threefold. First, as was the case with the other Japanese manufacturing defendants, they have attempted to link Melco to the conspiracy by virtue of its participation in the MITI-related export control arrangements and in the various groups and associations in Japan. Secondly, plaintiffs have made numerous submissions with respect to Melco's alleged involvement in the "rebate scheme." Finally, plaintiffs have devoted considerable efforts to developing the concept of the "Mitsubishi Group," attempting to link the activities of Melco and MSI with those of MC and MIC, discussed infra.
Melco, like the other Japanese manufacturing defendants, was a signatory to the Manufacturers' Agreements and, by virtue of membership in the JMEA, a subscriber to the JMEA Rules. We have already explained how participation in these export control arrangements does not aid plaintiffs' conspiracy case. The plaintiffs have offered the JFTC testimony of two Melco witnesses, Mr. Okuma and Mr. Kihara, but the testimony of neither contains any export references. Plaintiffs also offer the protocols of Mr. Okuma as well as Mr. Ito of Melco, but, again, neither protocol contains any export references. Plaintiffs offer no miscellaneous Melco documents seized in the JFTC proceedings.
Melco, like the other defendants, has conceded membership in numerous groups and associations in Japan, including the various sub rosa groups. However, plaintiffs have not offered any evidence connecting Melco to any conspiratorial activity of either a high price home market war-chesting or a predatory low price export nature.
As we approach plaintiffs' claims about Melco's alleged involvement in the "rebate scheme," and look not just at the "trees" but also at the "forest," it appears that the Melco aspect of the case has taken on a qualitatively different cast than the rest of it. We take a paragraph to explain what that difference is and why, at least in our perception, it is so.
Unlike the other Japanese manufacturing defendants, which essentially conceded that there was a genuine issue of fact on the question of the payment of rebates (though not of material fact), Melco has steadfastly denied paying any rebates at all, and has devoted numerous pages of its briefs to demonstrating the correctness of its position.
Even though it concedes that MSI sells Melco CEP's in the United States and that MSI is a 100% owned subsidiary of Melco USA, Inc., which is in turn a 100% owned subsidiary of Melco, Melco has attempted assiduously to disassociate itself from MSI. Plaintiffs rejoin that Melco caused Melco USA, Inc. to create MSI and contend that Melco in fact interposed Melco USA, Inc. to conceal Melco's control and to act as a "shield."
Melco, however, denies such control. Indeed, Melco and MSI devote an entire section of their response to plaintiffs' supplemental reply memorandum in opposition to motions for summary judgment, filed September 22, 1980, to an attempted demonstration that there is no basis for any of plaintiffs' claims concerning any alleged agency or alter-ego relationship between Melco and MSI.
It appears to us that Melco's "Lone Ranger" position is but another facet of its unceasing effort to resist the personal jurisdiction, venue, and process of this court, which it commenced early in the proceedings. These efforts were rebuffed by our predecessor in the case, Judge A. Leon Higginbotham, Jr., who denied Melco's motion to dismiss the complaint for lack of personal jurisdiction, venue, and adequate service of process. Zenith Radio Corp. v. Matsushita Electric Industrial Co., 402 F. Supp. 262 (E.D.Pa.1975).
We, of course, respect Melco's right to press its resistance to personal jurisdiction, venue, and process, and have, throughout our stewardship in this case, treated those points accordingly. We also understand that the vigor with which Melco has pressed these objections is, at least in part, a function of its feeling that, given Melco's small share of the U.S. CEP market (smaller than any of the other Japanese manufacturing defendants and considerably smaller than most of them), it has been an imposition to require it to expend the staggering counsel fees that defense of this litigation has entailed.
Plaintiffs have also asserted that Melco and MC/MIC are linked by the so-called "Mitsubishi Group," a vestige of the zaibatsu, see Part VII.C, supra, and that they are engaged in the coconspiratorial venture as such. Plaintiffs submit in this regard that the purchase by MSI of MIC's MGA Division is evidence of the connection between Melco and MC and MIC as part of the "Mitsubishi Group." Melco has consistently, throughout this litigation, denied the existence of the "Mitsubishi Group" and has denied any connection with MC or MIC beyond a vendor-vendee relationship.
Notwithstanding the foregoing discussion, we elect not to reach the question of the agency of MSI, the question whether there is a genuine issue of material fact as to Melco's involvement in the rebate scheme, or the question of the Melco-MC/MIC relationship and the "Mitsubishi Group," since at all events these issues of fact cannot be material.
The rebate issue is not material for the same reason as for the other defendants: there is simply no evidence that Melco engaged in any concerted activity with respect to rebates. Neither is there any evidence that Melco discussed or agreed with anyone to sell television receivers into the United States at unreasonably low prices, or that Melco's pricing of television receivers in the United States or Japan was parallel to any other defendant or any other competitor. There is also no evidence that the pricing of Melco television receivers sold in the United States market was below the competitive price levels for such products in the United States market, and the plaintiffs have not adduced any evidence of sales of television receivers by Melco in the United States below cost. The short of it is that there is no evidence of participation by Melco in the "unitary" conspiracy.
For the same reasons we have indicated supra and for those explained in connection with the other defendants, we need not consider the MSI agency or corporate veil-piercing questions or the alleged relationship of Melco and MC/MIC via the "Mitsubishi Group." In the absence of any evidence holding Melco (or MC/MIC, see Part VII.Q.9, infra ) into the conspiracy, and there is none, it is unnecessary to reach the question of the vicarious liability of their subsidiaries or affiliates. We do note that, insofar as independent evidence against MSI (since its creation in 1974) is concerned, plaintiffs have simply adduced no evidence of its conspiratorial involvement.
Sony was a signatory to Manufacturers' Agreements and a member of the JMEA. However, Sony's participation in the export control arrangements does not help NUE for the reasons explained above. NUE has attempted to connect Sony with the alleged price fixing activities of certain groups in Japan. Not only is there a categorical denial of such activities by Sony's president, Mr. Morita, who has filed an affidavit accompanying the summary judgment motion, but the evidence is uncontradicted that Sony was not a member of most of the allegedly offending sub rosa groups in Japan,
nor was it named in the 1966 JFTC proceedings. No Sony diaries were seized by the JFTC and no Sony witnesses testified before or gave protocols to the JFTC. The only allegedly conspiratorial groups to which Sony belonged were the Market Stabilization Council (which Sony joined in 1959), the MD Group, and the TS Group. Our description of the activities of those groups in Part VII.G, supra, makes it clear that even if there were evidence of Sony's participation in their allegedly offending activities, that evidence would not give rise to liability. But there is no evidence offered by NUE to link Sony, through actions or statements of any Sony employees who may have attended such meetings, with any supposed conspiratorial activities.
Moreover, in contrast to its case against the other Japanese manufacturing defendants, NUE does not (and cannot) include Sony in its rebate scheme claims because Sony did not sell to private label or OEM customers, but rather only to its own subsidiary, Sonam, which in turn handled Sony's retail marketing in the United States. Sony thus paid no rebates and, therefore, cannot be implicated in conspiracy claims which posit a predatory low price export conspiracy predicated upon the combination of the check price agreements and the rebate scheme. Moreover, Sonam's prices, the only ones which could affect American television manufacturers, were indisputably much higher than the check prices, and typically higher than the prices of Sonam's American competition, including NUE, mooting plaintiffs' injury claims on still another ground.
The evidence against Sony may fairly be summarized by saying that there is: (1) no evidence that Sony discussed or agreed with anyone to sell television receivers into the United States at unreasonably low prices; (2) no evidence that Sony's pricing of television receivers in the United States or Japan was parallel to that of any other defendant or any other competitor; (3) no evidence that pricing of Sony television receivers sold in the United States market was below the competitive price levels for such products in the United States market, and (4) no evidence of sales of television receivers by Sony in the United States market below any defined level of cost.
As Sony correctly observes, at the heart of the conspiracy complained of by NUE is the claim that all of the Japanese manufacturing defendants sold television receivers in the United States at depressed dumping levels. Although plaintiffs' claims have undergone considerable mutation during the course of this litigation, one thing has never changed the allegation that all of the Japanese defendants engaged in a low price predatory export conspiracy. Moreover, in terms of impact, NUE has alleged that sales of television receivers by "the defendant Japanese Corporations ... at unfairly low and discriminatory prices," eroded the "niche" of Emerson (NUE's predecessor) as a seller of "low leader merchandise." Against this background, Sony argues that any inference of participation by Sony in this low price conspiracy is completely illogical because, consistent with its well-recognized image, Sony has always sold its products in the United States at high (and profitable) price levels.
Perhaps the most impressive authority which Sony has cited to this effect is Zenith's Board Chairman, John J. Nevin, who, in deposition testimony, acknowledged that Sony's products were often priced above even the higher priced television receivers available from American companies. Sony also cites a television interview by Mr. Nevin, wherein he specifically excluded Sony from his comments about "Japanese dumping," and asserted that Sony products had typically been sold in the American market at prices equal to or above the prices of the higher priced American products. Additionally, Sony invokes the deposition testimony of Joseph Wright, Zenith's current Board Chairman, to the effect that Sony's prices were higher than any of the United States producers, and statements from other Zenith executives to similar effect, including that of Vito Brugliera, Manager of Value Engineering, who testified that Sony TV's were so expensive that Zenith did not feel them to be a competitive threat. Finally, Sony has relied upon statements of NUE officials who have admitted that Sony, unlike the other Japanese manufacturing defendants, was not identified with low leader merchandise. Sony also points out (and NUE admits) that Sonam, the United States subsidiary of Sony, has made a profit in every year since November 1963.
Along with its summary judgment motion, Sony has submitted summaries of newspaper advertisements by retailers in the New York and Philadelphia areas which demonstrate that the retail prices of Sony's television sets were consistently higher than those of Emerson. For example, in February 1967, Sony nine-inch sets were selling in New York for over $ 139.00, while Emerson 15-inch sets were selling there for $ 89.84. It is clear from the record that at no time did Emerson regard Sony television receivers as competing with Emerson; rather, Emerson's competition consisted of other lines which, like Emerson, were attempting to carve a niche for themselves at the low end of the television price spectrum.
Additionally, in the years in question, the Sony brand television receivers on the U.S. market were limited almost entirely to very small screen sizes not manufactured by Emerson. Emerson, during the period that it was owned by NUE, did not, like Sony, manufacture television sets of nine inches and less. Joseph McKee, NUE's then Executive Vice President, testified that, "We considered those as toys."
The foregoing facts (and contentions of Sony) are uncontroverted. NUE's only colorable rejoinder is that what is important for purposes of price comparison would be evidence not of retail prices, but of the prices at which Sony sold to its only customer, Sonam. However, even assuming that could be a valid comparison given the parent-subsidiary relationship, plaintiffs have adduced no evidence of low price sales to Sonam which changes the result.
The conclusion we draw from the foregoing is that given the standards for conspiracy proof that we have enunciated in Part VI.D.(4), supra, it is illogical to infer Sony's membership in a low price conspiracy. First, it is incontrovertible that Sony's high television prices were in furtherance of its own economic self-interest. Given the fact that Sony was able to command higher prices for its television sets than most other manufacturers, including NUE, it cannot be said to have been acting contrary to its economic self-interest in charging them. Second, because Sony consistently occupied the high price niche, it lacked an economic motive to conspire to drive NUE from its low price niche. It is at odds with common sense to believe that Sony would have participated in a conspiracy to drive Emerson out of business when that company posed no real competitive threat to Sony. Put differently, Sony's conduct is totally consistent with rational independent economic behavior, or at least far more so than with ...