DRAM Cartel Litigation: Court of Appeal interprets Limitation Act, dismissing appeals against finding that OTC not time-barred

15/04/21

OT Computers Limited (in liquidation) v Infineon Technologies AG and Micron Europe Limited [2021] EWCA (Civ.) 501

The Court of Appeal has handed down its much-anticipated judgment in OT Computers  (in liquidation) v Infineon Technologies AG and Micron Europe Limited, in which the Court has for the first time considered how s.32(1)(b) of the Limitation Act 1980 applies to insolvent companies.  

Section 32(1)(b) provides that, in cases where the defendant’s wrongdoing is concealed from the claimant, time does not begin to run for limitation purposes “until the plaintiff has discovered the … concealment … or could with reasonable diligence have discovered it”.

OT Computers (‘OTC’) is a company formerly in the business of computer assembly and sale. It has been in administration (later liquidation) since early 2002. Infineon and Micron are defendants to a follow-on claim by OTC against manufacturers of dynamic random access memory (‘DRAM’) chips, arising from their involvement in a pan-EEA DRAM cartel. Following a preliminary issues trial, Foxton J ([2020] EWHC 415 (Comm.)) held that, while claims brought against Infineon and Micron by two other computer manufacturers in the same proceedings (‘the Granville Companies’) were time-barred, the claim brought by OTC was not. Infineon and Micron appealed against Foxton J’s judgment relating to OTC.

The Court of Appeal has unanimously dismissed Infineon and Micron’s appeals and upheld Foxton J’s judgment as concerns OTC. Males LJ summarised the issues arising as follows:

“[…] how does that section apply when the defendant deliberately conceals a relevant fact so that (1) it cannot reasonably be discovered by the claimant at the time of the concealment, (2) by the time it could be discovered by a person carrying on business of the relevant kind (here, the assembly and sale of computers), the claimant is in administration, and (3) the matters which would have put a person who continued to carry on such a business on notice of the need for further enquiry would not have come to the notice of a reasonably diligent insolvency practitioner?”

Micron and Infineon contended that Foxton J had erred in taking into account the fact that OTC had fallen into administration and later liquidation when considering whether it could with reasonable diligence have discovered enough about the existence of the cartel to enable it to plead a viable claim. The Judge should instead have proceeded on the basis that OTC was still in the business of assembling and selling computers when information relating to the defendants’ involvement in the DRAM cartel began to emerge (in mid-2002).

The Court of Appeal has rejected that approach, following its recent decision in Canada Square Operations v Potter [2021] EWCA Civ 339 that section 32 was not to be construed restrictively. While purely subjective characteristics of a claimant, such as whether it is “slothful, naïve, shy, nervous, uncurious or ill-informed” are irrelevant to the objective standard to be applied, the Court emphasised that it does not follow that the claimant should be assumed to be someone or something they are not. The facts that OTC could with reasonable diligence have discovered were therefore held to be those discoverable by its officers and employees before it fell into administration, along with what was discoverable thereafter by the reasonable diligence of its administrators. The Court held that any other approach would fail to respect the purpose of section 32(1), which is to ensure that the actual claimant (not a hypothetical one) is not disadvantaged by the defendant’s concealment.

It followed that OTC’s claim was not time-barred. The Court held that it was therefore unnecessary to consider an OTC respondent’s notice point that, if it had continued to trade and not entered into administration and liquidation, OTC would have been in a different position from the Granville Companies whose claims Foxton J had held to be time-barred. The Court nevertheless indicated that it would dismiss that challenge.

Infineon and Micron’s appeals were accordingly dismissed.

The judgment is here.