The founder of one of the world’s leading telescope manufacturers and his B.C.-based relatives are accused in two proposed class-action lawsuits filed on behalf of amateur astronomers who claim they’re victims of a massive price-fixing conspiracy.
Long ago, in a galaxy far, far away — actually, Taiwan, 1980 — a man named Dar Tson “David” Shen started a telescope company.
Four decades later, in a court in Northern California, Shen and his B.C.-based relatives are accused in two proposed class-action lawsuits filed on behalf of amateur astronomers who claim they’re victims of a massive price-fixing conspiracy.
“Since the beginning of time, humans have looked beyond their world into the night sky,” read the opening lines of one of the two suits, filed by plaintiff Daniel Hightower.
“But if you love astronomy and want to share your joy with others, you must pay a price — hundreds of millions of dollars in illegal overcharges.”
A constellation of companies
The proposed class actions are the latest development in a legal battle that saw iconic U.S. telescope company Meade Instruments file for bankruptcy last year after a jury ruled against the firm and its Chinese parent company, Ningbo Sunny, in a $50.4 million US antitrust suit filed by a competitor.
Hightower, a “telescope consumer and amateur astronomy enthusiast,” filed the first claim for a class action at the beginning of June.
Sigurd Murphy, a retired California amateur astronomer and telescope collector, and Keith Uehara, a Hawaiian photographer and amateur astronomer, filed their claim this week.
They’re all seeking to represent amateur astronomers across the United States, a market in which 80 per cent of recreational telescopes are made by either Ningbo Sunny or Shen’s company, Synta Technology.
Neither lawsuit has been certified by a court — but they both accuse Synta and a constellation of associated companies of working with Ningbo Sunny to divide up the telescope market, fix prices, retaliate against any competitors and to “dominate the U.S. market so they could rip off consumers.”
The lawsuits, which both cite the earlier court ruling, claim Shen controlled his companies through “henchmen,” including sisters Sylvia and Jean, both of whom allegedly live in B.C.
According to Hightower’s claim, Sylvia Shen is a member of the executive committee of Celestron, a dominant U.S. telescope retailer, which is owned by Synta, and Jean Shen is in control of both Olivon Canada and Olivon USA, North American telescope companies.
Hightower’s lawsuit claims that both women “participated in, planned and carried out the conspiracy” together with their brother and others, including a B.C.-based “advisor and confidante.”
Synta, Olivon, Celestron and another pair of related companies, Sky-Watcher USA and Sky-Watcher Canada, are accused of being part of a network “directly and indirectly owned and controlled by chairman Shen and his family members.”
“They are operated and run for the common benefit of one another and chairman Shen and have aided, encouraged and co-operated with defendants and their co-conspirators to fix the prices of telescopes, and dominate and allocate the markets for telescope manufacturing and distribution,” Hightower’s lawsuit claims.
A broader story of U.S.-China relations
According to figures published in February by market research company Global Market Research, the worldwide amateur telescope market is predicted to grow to $294 million annually by 2025. The North American market accounts for the largest portion of that amount.
San Francisco-based lawyer Matthew Borden represents Hightower and was part of the team that won the earlier case against Meade and Ningbo Sunny.
In an interview with CBC News, he said the history of Meade and Celestron — both founded in the U.S. but now owned by Chinese parent companies — speak to a larger business trend.
“It’s an interesting, broader story in the U.S where Celestron used to be a manufacturer itself, Meade used to be a manufacturer itself, and once the manufacturers in China figured out they could make a lot more money from having a brand, Synta bought Celestron and Ningbo Sunny bought Meade,” Borden said.
“And then they transferred all the manufacturing over to China.”
Celestron and Meade are the two dominant players in the U.S. telescope market.
Hightower’s lawsuit says the U.S. Federal Trade Commission blocked the two from merging in 1991 and again in 2002, for fear of creating a monopoly. Synta bought Celestron in 2005.
When Meade went up for sale in 2013, Hightower claims Shen made a deal that saw Ningbo Sunny buy the firm.
The companies then “colluded not to compete with one another,” the lawsuit claims. “This conspiracy is revealed in numerous emails.”
The legal action cites documents that were part of the previous court win, including one that allegedly speaks of a “tacit understanding” about not competing for sales to Costco.
The result of the alleged conspiracy is a reduction of consumer choices in telescopes and the elimination of price competition for tens of thousands of customers. The Hightower lawsuit estimates damages at $350 million. The second suit says there are thousands of amateur astronomers in the U.S.
Company disputes lawsuit allegations
Shen could not be reached for comment.
In an email to CBC, Celestron said it would not comment on the ongoing litigation but “unequivocally” rejected the allegations.
“Celestron has rightfully earned its position as the world’s most popular telescope brand through our 60 years of effort from generations of employees,” the company said.
“We are ready to defend Celestron and our collective accomplishments and are confident that the legal system will ultimately find the allegation baseless.”
Olivon and Sky-Watcher did not reply to emails requesting comment by CBC. None of the companies have filed a response to the court.
Borden, Hightower’s lawyer, said the case has widespread implications for amateur astronomers.
“I love astronomy, and I love looking at the stars,” he said. ” What I would like to do, through these lawsuits, is to change the way the industry operates and restore competition. It will be better for everyone. With competition comes innovation.”
None of the claims have been proven in court.