Judge Margaret McKeown, United States Court of Appeal for the Ninth Circuit (Jason Doiy / The Recorder)
A U.S. Court of Appeals for the Ninth Circuit panel upheld price-fixing convictions against Taiwanese electronics manufacturing company AU Optronics of America and two of its executives Thursday after signaling last year that it might upend the case.
The panel upheld the verdicts against Hsuan Bin Chen, the company’s president and COO, and Hui Hsiung, its executive vice president, for meeting and conspiring with five other Asian manufacturers to fix the prices on LCD panels imported and sold in the U.S. and Asia. Chen and Hsiung were each sentenced to three years in prison. The panel also affirmed a $500 million fine against AU Optronics.
San Francisco-based Lieff Cabraser Heimann & Bernstein partner Eric Fastiff called the opinion a “brilliant” victory for the U.S. Department of Justice.
“It reaffirmed the standard by which foreign price fixers will be held accountable in the United States,” Fastiff said. “In particular, the analysis of the Foreign Trade Antitrust Improvements Act reaffirms that foreign companies that seek to fix prices to the detriment of U.S. consumers will continue to be held accountable in U.S. courts.”
The affirmation comes several months after Judges Sidney Thomas, M. Margaret McKeown and Virginia Kendall ordered Chen and Hsiung released on bail because of “substantial questions” raised following oral arguments. During arguments, McKeown and Thomas suggested they were uncertain as to whether price-fixing cases that occurred overseas are still a per se violation of the Sherman Antitrust Act.
The company’s appellate lawyers pressed on that doubt, and argued that the low volume of LCD panels that reached U.S. consumers did not have “intended and substantial effect” on U.S. commerce demanded under the 1982 FTAIA. Without that, the defense argued that the price-fixing could not fall under the Sherman Act. But the judges disagreed, concluding in an opinion written by McKeown that a “substantial volume of goods” sold in the U.S. allowed for application of the act.
“We need not reach the alternate theory under the FTAIA relating to the domestic effects on the transactions,” McKeown wrote.
“The magic words ‘domestic effects’ were not necessary to make clear that the overseas sale of panels for incorporation into products destined for sale in the United States was a key focus of the indictment,” the ruling states.
DOJ Antitrust Appeals Chief Kristen Limarzi argued on behalf of the government, while San Diego-based Cooley partner Mike Attanasio argued for AU Optronics’ Chen. Attanasio could not be reached for comment.
Hogan Lovells’ Neal Katyal argued for Hsiung. Dennis Riordan, the Riordan & Horgan partner representing AU Optronics, declined comment.
The conspiracy began in October 2001 and ran until January 2006, when the Federal Bureau of Investigation raided the Houston-based offices of AU Optronics. Following an eight-week jury trial before U.S. District Judge Susan Illston, AU Optronics, Chen and Hsiung were all found guilty of conspiring to fix prices.
Siding with the DOJ on two issues of first impression, the panel upheld the $500 million penalty imposed against AU Optronics. The company’s lawyers said Illston erred by basing the fine on the monetary gains the jury found were shared by all conspirators and by failing to follow principles of joint and several liability, which would have reduced the fine by any amount already paid by the other companies involved.
McKeown brushed aside the arguments. “The unambiguous language of the statute permitted the district court to impose the $500 million fine based on the gross gains to all coconspirators,” she stated.
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