United States v. Hui Hsiung
778 F.3d 738
| 9th Cir. | 2014Background
- From Oct. 2001–Jan. 2006, TFT-LCD manufacturers met ("Crystal Meetings") to set target prices for panels used in devices sold in the U.S.; AU Optronics (AUO) and its U.S. subsidiary AUOA participated.
- AUOA negotiated panel sales to major U.S. customers (Dell, HP, Apple); some panels were imported directly into the U.S.; Crystal Meeting reports guided pricing.
- Defendants (AUO, AUOA, and two AUO executives) were indicted in the N.D. Cal. for conspiracy to fix prices in violation of §1 of the Sherman Act; jury convicted after an 8-week trial.
- Defendants challenged venue, jury instructions on extraterritoriality, application of per se treatment vs. rule of reason, and applicability of the FTAIA (import trade vs. domestic-effects exception).
- District court imposed prison and fines; AUO was fined $500 million under the Alternative Fine Statute based on collective conspiracy gains. Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Venue | Government: overt acts (negotiations with HP/Apple in N.D. Cal.) suffice; preponderance standard | Defs: venue not proved beyond reasonable doubt; prosecutor sandbagged with rebuttal | Venue proper; preponderance is correct standard; rebuttal not misconduct; evidence of overt acts in N.D. Cal. sufficient |
| Extraterritorial reach of Sherman Act / jury instruction | Government: Hartford Fire test applies; conviction may rest on (A) domestic act or (B) substantial intended U.S. effect | Defs: Morrison supersedes Hartford Fire; instruction improper because part A permits conviction on a single domestic act | Defs waived Morrison challenge by requesting/accepting Hartford Fire instruction; instruction as a whole lawful ("targeting" language subsumes intent) |
| Per se vs. Rule of Reason for horizontal price-fixing | Government: classic horizontal price-fixing is per se unlawful | Defs: Metro Industries requires rule of reason for foreign conduct | Per se applies: Metro Industries distinguishable (not a classic horizontal cartel and lacked U.S. effects); courts treat international horizontal cartels with U.S. effects as per se unlawful |
| FTAIA — import trade and domestic-effects exception | Government: conduct constituted import trade and alternatively satisfied FTAIA domestic-effects (direct, substantial, reasonably foreseeable) | Defs: indictment failed to plead FTAIA; imports/direcness not proved; domestic-effects too attenuated | FTAIA is merits, not jurisdictional. Indictment and evidence sufficiently alleged/proved import trade and, alternatively, domestic-effects (proximate/direct standard); conviction sustainable on either theory |
| Alternative Fine Statute (§ 3571(d)) — basis & aggregation | Government: gross gains may be calculated for the conspiracy as a whole | AUO: gross gains should be limited to AUO’s own gains; court should apply joint-and-several / one-recovery reduction | §3571(d) permits gross-gains measure based on entire conspiracy; no statutory basis to require joint-and-several reduction; $500M fine affirmed |
Key Cases Cited
- Hartford Fire Ins. Co. v. California, 509 U.S. 764 (1993) (Sherman Act applies to foreign conduct that was meant to produce and did produce substantial U.S. effects)
- Socony-Vacuum Oil Co. v. United States, 310 U.S. 150 (1940) (horizontal price-fixing treated as per se unlawful)
- Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007) (reaffirmed per se treatment for horizontal cartels that reduce output or competition to increase price)
- Empagran S.A. v. F. Hoffmann-La Roche Ltd., 542 U.S. 155 (2004) (interpreting FTAIA: nonimport foreign conduct outside Sherman Act unless it has direct, substantial, reasonably foreseeable domestic effects)
- Morrison v. National Austl. Bank Ltd., 561 U.S. 247 (2010) (clarified extraterritoriality analysis for securities laws; discussed by defendants but Court here holds defendants waived relying on Morrison to overturn Hartford Fire instruction)
- Jackson v. Virginia, 443 U.S. 307 (1979) (standard for reviewing sufficiency of the evidence)
- Nippon Paper Indus. Co. v. United States, 109 F.3d 1 (1st Cir. 1997) (upholding per se indictment for overseas price-fixing sold into U.S.)
- Lotes Co. v. Hon Hai Precision Indus. Co., 753 F.3d 395 (2d Cir. 2014) (FTAIA treated as merits disposition; proximate causation approach to domestic-effects)