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From Antitrust Law Daily, November 25, 2013

Flat panel conspiracy verdict withstands post-trial motion, but damages are offset by settlements

By Tobias J. Gillett, J.D., LL.M.

Following a jury verdict that HannStar Display Corp. participated in a conspiracy to fix the prices of thin-film transistor liquid crystal display panels (TFT-LCDs), the federal district court in San Francisco has denied HannStar’s motion for judgment as a matter of law (In Re: TFT-LCD (Flat Panel) Antitrust Litigation, November 20, 2013, Illston, S.). The court also amended the judgment to reflect the trebling of the damages pursuant to the antitrust laws and an offset from plaintiff Best Buy’s recovery from settlements with other parties, resulting in no recovery of damages from HannStar.

Following a trial ending on September 3, the jury returned a special verdict finding that Best Buy had proved by a preponderance of the evidence that it suffered damages in the amount of $7,471,943 for its direct purchases as a result of the conspiracy. After the verdict, HannStar moved for judgment as a matter of law and to vacate the judgment as a result of settlements received by Best Buy from other parties. Best Buy moved to amend the judgment.

Direct purchase damages. The court rejected HannStar’s challenge to the jury’s award of direct purchase damages. The jury’s award was not speculative, despite its finding that Toshiba did not participate in the conspiracy and Best Buy’s failure to present evidence demonstrating which portion of its claimed damages were attributable to Best Buy. The jury had apparently adopted the damages methodology of HannStar’s expert, who had provided the $7,471,943 sum. Moreover, testimony had indicated that Toshiba absorbed the increased cost of LCD panels in the price of finished products it sold to Best Buy, and that few of Toshiba’s panels had been used in products sold to Best Buy. The jury could have concluded based on this evidence that any damages attributable to Toshiba were “modest.”

Evidence linked each of seven entities to the conspiracy, and hence there was a basis for the jury to include sales from those entities in the damages award. Further, evidence had been presented at trial regarding HandStar’s participation in the conspiracy beyond the “Crystal Meetings” between the conspirators. Thus, the damages award was not speculative despite the lack of evidence deducting sales from entities that did not attend those meetings. HannStar was “jointly and severally liable for the entire conspiracy, regardless of whether every conspirator attended Crystal Meetings.”

Finally, Best Buy introduced evidence of the ownership of significant amounts of stock in LG Display Co., Ltd. by Koninklijke Philips Electronics N.V. and LG Electronics, Inc. (LGE), of a joint venture agreement between Philips and LGE providing that each party could nominate three of the six directors of LG Display, and of a shareholder agreement providing that each party could nominate two of the nine outside directors of LG Display, as well as its CFO (Philips) and CEO (LGE). Thus, the jury had sufficient evidence from which it could find that Best Buy was entitled to recover damages based on purchases from the LG entities.

Individual injury. The jury was not required to make findings of injury as to each of six Best Buy entities. All of the evidence presented at trial treated the Best Buy entities collectively and established that “Best Buy” had been injured.

Application of Minnesota law. Best Buy also demonstrated that the application of Minnesota law was constitutional. The Due Process was satisfied “where the agreement to purchase price fixed goods was negotiated and entered into in that state,” and here Best Buy was headquartered in Minnesota and had entered into vendor master agreements and annual program agreements governing its LCD product purchases in that state.

Foreign Trade Antitrust Improvements Act. Best Buy’s claims satisfied the requirements of the Foreign Trade Antitrust Improvements Act of 1982 (FTAIA), according to the court. The jury had found that the conspiracy involved the importation of LCD panels and/or finished products containing them into the United States, and that “the conspiracy produced substantial intended effects in the United States,” thus satisfying the FTAIA. The jury’s finding that Best Buy did not prove “that the conspiracy involved conduct which had a direct, substantial and reasonably foreseeable effect on trade or commerce in the United States,” was not inconsistent with those conclusions, when read in conjunction with the jury instructions.

Moreover, Best Buy provided sufficient evidence that an “international cartel controlled well over 90% of the TFT-LCD market, charged supra-competitive prices for TFT-LCD panels, and those panels were incorporated into billions of dollars worth of finished products such as computer monitors, notebook computers, and mobile phones that were imported into the United States and sold to United States companies and consumers.”

Motions to amend and to vacate the judgment. The court granted in part and denied in part both HannStar’s motion to vacate the judgment and Best Buy’s motion to amend it. HannStar sought to vacate the judgment because the $229 million Best Buy received in settlements from other parties far exceeded the amount of treble damages. Best Buy did not dispute that the settlements it received from other parties should be offset against its recovery from HannStar, and did not dispute that it would not recover damages from HannStar as a result. However, Best Buy asserted that the court should issue a judgment reflecting the trebled damages award, after which HannStar could “demand that Best Buy acknowledge the partial satisfaction of judgment resulting from prior offsetting settlements.”

The court issued an amended judgment setting forth the amount of trebled damages, $22,415,829, “and reflecting the settlement offset, the result of which is that Best Buy may collect no damages from HannStar.”

The case is No. 10-4572 SI, MDL No. 1827.

Attorneys: David Martinez (Robins Kaplan Miller & Ciresi LLP) for Best Buy Co., Inc. Christopher Alan Nedeau (Nossaman LLP) for HannStar Display Corp.

Companies: Best Buy Co., Inc.; HannStar Display Corp.

MainStory: TopStory Antitrust CaliforniaNews

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