758 F.3d 1074
9th Cir.2014Background
- International price‑fixing conspiracy among Taiwanese and Korean TFT‑LCD manufacturers ("Crystal Meetings") from 2001–2006 to set prices for LCD panels used in computers and TVs.
- AU Optronics (AUO), AU Optronics America (AUOA), and two AUO executives (Chen and Hsiung) were indicted in the Northern District of California for conspiracy in violation of § 1 of the Sherman Act; jury convicted after an eight‑week trial.
- Government alleged both (a) direct import sales of price‑fixed panels into the U.S. and (b) foreign sales whose effects on U.S. commerce were direct, substantial, and reasonably foreseeable (FTAIA domestic‑effects theory).
- Defendants challenged venue, application of per se rule vs. rule of reason, extraterritorial reach of the Sherman Act (invoking Morrison), sufficiency under the FTAIA, and a $500 million fine under 18 U.S.C. § 3571(d).
- District court instructed the jury under Hartford Fire (Sherman Act applies to foreign conduct meant to produce and that did produce a substantial U.S. effect) and allowed a gross‑gains jury finding; Ninth Circuit affirmed convictions and the fine.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Venue in N.D. Cal. | Overt acts (price negotiations with HP, Apple, etc.) occurred in Northern District; preponderance standard met | Government sandbagged venue in rebuttal; insufficient evidence | Venue proper; rebuttal not misconduct; preponderance standard satisfied |
| Extraterritorial reach / jury instruction (Hartford Fire) | Hartford Fire instruction appropriate; Sherman Act reaches foreign conduct that intended and had substantial U.S. effect | Morrison undermines Hartford Fire and renders instruction erroneous | Defendants waived Morrison challenge by proposing/accepting Hartford Fire instruction; instruction not misleading when read as whole |
| Per se vs. rule of reason for horizontal price‑fixing | Per se rule applies to horizontal price‑fixing, even with foreign conduct | Metro Industries suggests foreign‑conduct cases require rule of reason | Per se rule governs classic horizontal price‑fixing; Metro Industries not controlling here |
| FTAIA (import trade vs. domestic effects) & indictment sufficiency | Government proved import trade and pleaded domestic effects; FTAIA is merits, not jurisdictional | Indictment failed to cite FTAIA, and FTAIA bars prosecution absent domestic‑effects showing | FTAIA is merits‑based; import trade falls outside FTAIA (Sherman Act applies); indictment and evidence supported import‑trade theory; domestic‑effects allegations were sufficiently pled |
| Alternative Fine (§ 3571(d)) | Gross gains may be measured across conspiracy; district court may impose fine based on collective gains | § 3571(d) should be limited to defendant s own gains and reduced by coconspirators' recoveries ("one recovery") | § 3571(d) allows use of gross gains to all coconspirators; no statutory requirement to apply joint & several or one‑recovery rule |
Key Cases Cited
- Hartford Fire Ins. Co. v. California, 509 U.S. 764 (U.S. 1993) (Sherman Act reaches foreign conduct that was meant to and did produce substantial U.S. effects)
- Morrison v. National Australia Bank Ltd., 561 U.S. 247 (U.S. 2010) (extraterritoriality framework distinguishing merits from jurisdiction)
- Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (U.S. 2007) (horizontal price‑fixing by competing sellers is per se unlawful)
- Socony‑Vacuum Oil Co. v. United States, 310 U.S. 150 (U.S. 1940) (established longstanding per se rule against price‑fixing)
- F. Hoffmann‑La Roche Ltd. v. Empagran S.A., 542 U.S. 155 (U.S. 2004) (FTAIA excludes foreign conduct unless it has qualifying domestic or import effects)
- Jackson v. Virginia, 443 U.S. 307 (U.S. 1979) (standard for sufficiency of evidence review)
- Griffin v. United States, 502 U.S. 46 (U.S. 1991) (general guilty verdict may stand if at least one legal theory is supported by sufficient evidence)
- Metro Indus. v. Sammi Corp., 82 F.3d 839 (9th Cir. 1996) (discussed rule‑of‑reason language for foreign conduct; not controlling for classic price‑fixing here)
- LSL Biotechnologies v. [*], 379 F.3d 672 (9th Cir. 2004) (interpreting FTAIA phrasing; earlier use of "jurisdictional" not decisive post‑Morrison)