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From Antitrust Law Daily, July 22, 2016

Jurisdiction over foreign CRT makers upheld in Washington’s price fixing suit

By Jeffrey May, J.D.

The State of Washington adequately alleged that foreign electronics manufacturers had sufficient minimum contacts with Washington to satisfy both the long arm statute and the due process clause to pursue price fixing claims against the firms. The state made a prima facie showing of purposeful minimum contacts, and asserting personal jurisdiction over the foreign firms was not unfair or unreasonable. A state appellate court’s decision reversing dismissal on jurisdictional grounds was affirmed. The decision comes just one week after the state’s high court rejected a challenge to the suit on statute of limitations grounds (State of Washington v. LG Electronics, Inc., July 21, 2016, González, S.).

The state brought the action against the electronics manufacturers for conspiring to fix prices in the market for cathode ray tubes (CRTs) used in televisions and computer monitors. It asserted jurisdiction pursuant to the long-arm provision of the Washington Consumer Protection Act (CPA), RCW 19.86.160. The parties did not dispute that, as long as the assertion of personal jurisdiction complied with due process, personal jurisdiction existed under the long-arm provision of the CPA.

The court explained that, in order for personal jurisdiction to comply with due process: (1) the defendants had to have "minimum contacts" with the forum state; (2) the plaintiff’s injuries had to "arise out of or relate to" those minimum contacts; and (3) the exercise of jurisdiction had to be reasonable—consistent with notions of "fair play and substantial justice."

The minimum contacts were established when the defendants "purposefully availed" themselves of the privilege of conducting business in the state. The state argued that the defendants established purposeful minimum contacts by placing CRTs into the stream of commerce with the knowledge and intent that their CRTs would be incorporated into products sold in massive quantities throughout the United States, including in large numbers in Washington. The court agreed with the state that "[t]he presence of millions of CRTs in Washington was not the result of chance or the random acts of third parties, but a fundamental attribute of [the Companies’] businesses."

The defendants did not present a compelling case that the exercise of jurisdiction was unreasonable and inconsistent with notions of fair play and substantial justice, the court also concluded. "The inconvenience for the large multinational Companies to defend themselves in the forum they intentionally targeted with price fixed products does not outweigh the State’s strong interest in ensuring Washington citizens receive the protection of state antitrust laws, especially since Washington is the only forum in which indirect consumers of CRTs may be entitled to recovery," the court explained.

Dissent. The majority improperly applied a "stream of commerce" test derived from products liability law, according to an opinion concurring in part and dissenting in part. The more appropriate test for intentional torts was the "effects" test articulated in the U.S. Supreme Court’s 1984 decision in Calder v. Jones, 465 U.S. 783, it was noted. In any event, the state supreme court justices writing separately concluded that, under either test, the trial court lacked personal jurisdiction over all of the defendants except those defendants that admitted that they shipped CRT component parts to a manufacturer in Washington during the time of the alleged conspiracy.

This is Case No. 91391-9.

Attorneys: David Michael Kerwin, Office of the Attorney General, for the State of Washington. David C. Lundsgaard (Miller Nash Graham & Dunn LLP) for LG Electronics, Inc. Robert Douglas Stewart (Kipling Law Group PLLC) for Koninklijke Philips Electronics N.V. a/k/a Royal Philips Electronics N.V. Robert Douglas Stewart (Kipling Law Group PLLC) for LG Electronics U.S.A., Inc. Mathew Lane Harrington (Stokes Lawrence, PS) for Philips Electronics Industries.

Companies: LG Electronics, Inc.; Koninklijke Philips Electronics N.V. a/k/a Royal Philips Electronics N.V.; LG Electronics U.S.A., Inc.; Philips Electronics Industries

MainStory: TopStory Antitrust WashingtonNews

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