HP Gets Quanta’s Factories and Patents in $439 Million Win
HP Inc. will get to keep all the cash, factories and patents Quanta Storage Inc. was ordered to turn over to satisfy a $439 million antitrust judgment from 2019, a federal appeals court ruled.
The Taiwanese disk drive maker was ordered to surrender almost all its assets before its appellate challenge had played out because it failed to post an $85 million bond to prevent early collection of the crippling award. However, the appellate court agreed to give the Taiwanese manufacturer more time to comply.
“Quanta risked bet-the-company litigation and lost, so the district court ordered it to hand over the company,” a three-judge panel of the Court of Appeals in New Orleans said Friday in a 21-page ruling.
“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 panel said.
Quanta tried repeatedly in April to delay HP’s push to collect on the judgment by claiming that coronavirus 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. HP said Quanta was using the pandemic as a ploy to dissipate assets that could be used to satisfy the judgment.
A Houston jury awarded HP $176 million in damages after a price-fixing trial in late 2019. Quanta was the only optical disk drive maker that didn’t settle out of court when HP sued more than a dozen manufacturers over a decade-long conspiracy to rig prices for components used to store and read media and data on DVDs, CDs and Blu-Ray discs. Industry giants including Toshiba Corp., Samsung Electronics, Hitachi-LG and Sony Electronics jointly controlled 90% of the market.
After the jury tagged Quanta with all of HP’s losses from the racket, U.S. District Judge David Hittner in Houston compounded Quanta’s woes by tripling the damages, as allowed under U.S. antitrust law, subtracting settlement credits HP had already received.
On appeal, Quanta argued that the damages were incorrectly calculated at trial because jurors included purchases by HP’s foreign subsidiaries, which Quanta claimed aren’t covered by U.S. antitrust protections. HP said its economic expert excluded purchases by the foreign units, and the appeals court agreed, upholding the money judgment.
Quanta, which has surrendered some assets to a court custodian, has sought more time to comply with Taiwanese regulations before turning over the keys to its Asian factories. It has also said it needs to make sure the HP judgment is enforceable under local law before complying with an overseas court order that essentially liquidates the company.
It urged the courts to respect international comity and require HP to confirm the judgment in Taiwanese courts — or risk retaliation by foreign judges who might strip American companies of the protection of U.S. courts in overseas disputes. The appeals court rejected those arguments.
The case is Hewlett-Packard Co. v. Quanta Storage Inc., 19-20799, U.S. Court of Appeals for the Fifth Circuit (New Orleans).
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