Quanta Storage Inc (廣明光電), a subsidiary of contract laptop maker Quanta Computer Inc (廣達電腦), yesterday said it could not accept a US federal appeals court’s ruling in a price-fixing case, and would continue to appeal.
The company was shocked by the US Court of Appeals’ ruling on Friday to turn over essentially all of its assets to HP Inc to satisfy a US$439 million antitrust judgement handed down in January, Quanta Storage president Ho Shih-chih (何世池) told a news conference at the Taipei Exchange.
The ruling was ridiculous and the company would file a petition for the case to be reheard en banc (before the entire bench), Ho said.
Photo: Cho Yi-chun, Taipei Times
It would also discuss with its lawyers how to file an appeal with the US Supreme Court, he said, adding that the impact of the ruling on the company’s operations had yet to be evaluated.
A three-judge panel of the New Orleans-based Court of Appeals for the Fifth Circuit ruled that the Taoyuan-based firm must give all its cash, factories and patents to HP Inc — basically surrender almost all its assets — before its appellate challenge has played out because it failed to post an US$85 million bond to prevent early collection of the crippling award.
“Quanta risked bet-the-company litigation and lost, so the district court ordered it to hand over the company,” the appellate court panel said in its 21-page ruling, although it did agree to give Quanta Storage more time to comply.
2013 CASE
In 2013, HP sued Quanta Storage and several other companies for allegedly engaging in a price fixing scheme from 2004 to 2010 by rigging bids for HP’s request for optical disc drives used to store and read media and data on DVDs, CDs and Blu-ray discs.
Quanta Storage was the only defendant not to settle out of court with HP. It said it served only as a storage contractor for Sony Electronics and Royal Philips NV, which sold the products directly to HP, and therefore it was not part of the alleged conspiracy.
A Houston jury in October last year awarded HP US$176 million in damages after a price-fixing trial, tagging Quanta Storage with all of HP’s losses from the scheme.
On Jan. 3, the trial judge, US District Judge David Hittner, compounded Quanta Storage’s woes by tripling the damages to US$439 million, after subtracting settlement credits HP had already received.
Quanta Storage had argued that tripling damages would violate US constitutional prohibitions on excessive punitive damages, but Hittner ruled that antitrust law allowed for the tripling of awards as compensatory rather than punitive damages.
In April, Quanta Storage tried repeatedly to delay HP’s push to collect on the judgement.
It said that COVID-19-related travel and business restrictions in Taiwan and China, where most of its executives and factories are, prevented it from posting the bond, while complying with Taiwanese regulations on asset transfers by publicly traded companies.
It also argued that the damages had been incorrectly calculated at trial, because jurors included purchases by HP’s foreign subsidiaries, which it claimed are not covered by US antitrust protections.
HP said its economic expert excluded purchases by the foreign units, and the appeals court agreed, upholding the money judgement.
HP also said Quanta Storage was using the pandemic as a ploy to dissipate its assets that could be used to satisfy the judgement.
“It is not apparent from the record that the district court considered the amount of time it would take for Quanta to complete the asset transfer process required by Taiwanese law,” the Court of Appeals panel said.
HP said that it was pleased that the appeals panel had agreed with Hittner and the jury.
“Quanta violated US antitrust laws by conspiring to fix prices,” Alex Roberts, one of HP’s lawyers, said in an e-mail to Bloomberg. “That conduct cannot go unpunished. HP took them to task for those violations, and now we look forward to ensuring they comply promptly” with the turnover orders.
Quanta Storage, which has surrendered some assets to a court custodian, had sought more time to comply with Taiwanese regulations before turning over the keys to its Asian factories.
It also said it needs to make sure the HP judgement is enforceable under Taiwanese law before complying with an overseas court order that essentially liquidates it.
It urged the courts to respect international comity and require HP to confirm the judgement in Taiwanese courts — or risk retaliation by foreign judges who might strip US companies of the protection of US courts in overseas disputes.
The appeals panel rejected those arguments.
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