LIT COMMENTARY
BREAKING NEWS, Friday, 19th June, 2020:
See what amazing things happen behind closed doors when you call out the #Corruption in Texas? Here’s a prime example but we’re happy for Quanta. That said, y’all need to behave in future but we – the citizens of Texas – thank your government for stepping in and providing those essential masks, especially when Gov Abbott idiotically opened up the state again but not his mansion, a public access property.
HP Cuts Deal With Quanta Over $438M Price-Fixing Judgment
HP Inc. told a Texas federal court on Thursday it has reached a confidential settlement with Quanta Storage over a $438 million judgment issued against the Taiwanese manufacturer for fixing optical disk drive prices, and it asked the court to cancel a contempt hearing scheduled for Friday.
LATEST DOCKET UPDATES IN QUANTA TREBLE DAMAGES CASE BEFORE UNITED STATES DISTRICT JUDGE DAVID HITTNER
5th Circ. OKs Speedy Appeal Of HP’s $439M Disk Drive Win
A Fifth Circuit battle over HP’s $438.7 million price-fixing judgment against a Quanta Computer subsidiary was put on the fast-track Thursday, May 7th, a day after the panel refused to put the award on ice while the appeal played out.
MAY 14, 2020: Quanta Tells 5th Circ It Was Ordered ‘To Do The Impossible’
Quanta Storage Inc. urged the Fifth Circuit on Thursday to upend a Texas federal judge’s orders requiring it to turn over all its assets after HP Inc. won a $438.7 million judgment against the manufacturer in a price-fixing case, arguing that those orders are unenforceable.
On April 30, Quanta started the Appeal to the Fifth Circuit. On the same day, the Fifth Circuit 3-panel of Judges Dennis, Elrod and Duncan issued an order, wherein the court granted a temporary emergency stay.
On April 29, Hittner issued the all too familiar Order; Doc 437
ORDERS that Quanta Storage, Inc.’s Emergency Motion to Stay, Pending Appellate Review, this Court’s Orders Requiring Quanta to Tum Over Assets by May 1, 2020 (Document No. 433) is DENIED. The Court further
ORDERS that Quanta Storage, Inc.’s Supplement to Emergency Motion to Stay, Pending Appellate Review, this Court’s Orders Requiring Quanta to Turn Over Assets by May 1, 2020 (Document No. 435) is DENIED.
On April 22, Judge Hittner issued the following order (Doc 430);
ORDER denying without prejudice at this time 425 Motion for Order to Show Cause. Further that Quanta must full comply with the Turnover Order by May 1, 2020, or show cause as to why Quanta should not be immediately held in contempt-without further action by HP-and sanctioned a rate of $50,000.00 per day until it fully complies with the Turnover Order.(Signed by Judge David Hittner)
5th Circ. Pauses HP’s Bid To Collect On $438M Disk Drive Win
May 1, 2020
The Fifth Circuit has temporarily paused HP’s bid to collect a $438 million price-fixing judgment from Quanta Storage to consider the company’s argument that handing over assets now would cause it to violate Taiwanese law, including emergency coronavirus orders.
A Fifth Circuit panel issued an order Thursday temporarily staying HP Inc.’s efforts to enforce the optical disk drive price-fixing judgment in Texas federal court, where Quanta Storage Inc. had been facing a Friday deadline.
The appeals court is now considering an emergency motion from Quanta asking to stay execution of the judgment until its appeal is resolved and said in the order that a temporary pause is needed “to allow sufficient time to consider the emergency stay motion.”
In the motion filed Wednesday, Quanta argued that if it’s forced to turn over assets now, as the lower court has ordered, it would be compelled to break its home country’s laws, exposing it to potential criminal penalties. Publicly traded companies in Taiwan are required to follow detailed procedures before disposing of assets, but Quanta would be unable to comply given the court’s short timeline coupled with complications from the COVID-19 pandemic, according to the motion.
“It is logistically impossible for Quanta, in the middle of the pandemic and resulting turmoil for Taiwanese public and private institutions, to complete these necessary steps for disposal of its Taiwanese assets on the emergency schedule required by the district court,” the motion said.
Quanta also said the Taiwanese government has issued emergency orders in response to the outbreak that effectively commandeered some of the company’s property and repurposed production lines to manufacture face masks.
“If Quanta turns over its assets in the middle of this pandemic, Quanta will be unable to comply with those emergency pandemic orders,” the motion said. “A stay is needed to protect Quanta from the irreparable injury of being compelled to violate Taiwanese law.”
HP responded the same day, contending that Quanta’s assertions are not true and that the emergency motion is “simply a ploy by Quanta to create further delay (and perhaps further time to hide its assets).”
In a sur-reply filed Friday, after the Fifth Circuit issued its temporary stay, HP further argued that the lower court had not abused its discretion in ordering the assets be turned over, and said Quanta had also been given a chance to post bond instead of facing the order but didn’t.
“[The] orders do not represent an abuse of discretion, but an orderly exercise of the federal judicial power,” the sur-reply said. “If courts cannot demand compliance with judgments, the American legal system is toothless and respect for both courts and the rule of law is lost.”
The sur-reply also argued that Taiwanese law does not prevent Quanta from turning over the assets, it just requires certain real property be appraised beforehand. It doesn’t affect intellectual property or the purported $167 million in cash the company has, the brief said. HP also noted Quanta had not cited or provided the court with the specific coronavirus emergency orders it contends are impacting the company.
5th Cir. 3-Panel
Quanta has only said that it’s making face masks for its own employees, HP said, and hasn’t provided any evidence that it’s “doing anything to protect the general public from COVID-19.”
“Quanta is a tech company manufacturing optical disk drives and robotics arms,” the sur-reply said. “Quanta is not a medical supplies company.”
HP won the judgment in an action accusing Quanta of artificially jacking up prices for disk drives, with a Houston jury awarding the computer maker $176 million in October. Quanta was the lone manufacturer not to settle out of the case, which also initially included industry giants like Toshiba Corp., Hitachi-LG Data Storage Inc. and Panasonic Corp.
U.S. District Judge David Hittner then nearly trebled the award with a judgement issued in January.
Quanta has appealed to the Fifth Circuit, arguing that the electronics giant didn’t show how many drives it purchased itself rather than through foreign subsidiaries and is asking for the judgment to be reversed or for a new trial.
Despite the pending appeal, HP initially asked the district court to enforce the judgment in late February, calling for a receiver to be appointed and saying it could be left with “an empty judgment” if it’s not enforced now. HP cited the difficulty in enforcing judgments against foreign entities and said that Quanta “has already shown a disregard for American laws.”
Quanta argued to the district court that HP is trying to deprive it of its opportunity to appeal by “destroying” the company while the appeal is pending. Quanta also asked the court to stay execution of the judgment, arguing that enforcing it now would threaten the business’s viability and contending that the amount exceeds the value of its assets.
Judge Hittner issued an order March 12 giving Quanta 15 days to post a bond of $85 million in exchange for staying execution of the judgment, but Quanta later told the court it was unable to secure the bond, citing difficulty in obtaining assurances for overseas assets and the added difficulty of the COVID-19 restrictions.
The judge issued an order requiring Quanta to turnover its assets on April 1 and later set May 1 as the deadline for the company to comply.
On Friday after the Fifth Circuit issued the temporary stay, Quanta filed a motion with the appeals court asking for expedited treatment of the main appeal and waiving oral arguments. HP said in its sur-reply Friday those efforts will not be opposed and that the company would file its brief on the main appeal later in the day.
In a brief lodged later Friday, HP argued that while the “sheer size” of the judgment makes it appear important, the issues on appeal are straightforward. Quanta does not deny its participation in an international price-fixing conspiracy, HP said, it only disputes how much HP has been damaged by it.
HP argued that it has shown the parent company and its subsidiaries spent $7 billion on optical disk drives annually, nearly $2 billion of which ended up in the U.S. and that $510 million worth of disks were purchased from Quanta entities.
And even if the court views Quanta’s arguments favorably, the Foreign Trade Antitrust Improvements Act “provides another basis for affirmance without argument,” the computer maker said. The court already found that “HP could recover damages, regardless of who purchased” the disks.
A representative for HP declined to comment Friday. Representatives for Quanta did not respond to a request for comment.
HP is represented by Alistair B. Dawson, Alex B. Roberts and Garrett S. Brawley of Beck Redden LLP.
Quanta is represented by Marie R. Yeates, Harry Reasoner, Michael A. Heidler and Bryan U. Gividen of Vinson & Elkins LLP.
The district court case is Hewlett-Packard Co. v. Quanta Storage Inc. et al., case number 4:18-cv-00762, in the U.S. District Court for the Southern District of Texas. The appellate case is Hewlett-Packard Co. v. Quanta Storage Inc. et al., case number 19-20799, in the U.S. Court of Appeals for the Fifth Circuit.
Additional reporting by Katie Pohlman, Christopher Cole, Michelle Casady and Nadia Dreid. Editing by Kat Laskowski.
Quanta Loses, Appeals Bid to Halt Forfeiture Over Virus Concerns
Apr. 30, 2020
Quanta Storage Inc. lost yet another bid for more time to turn over virtually all its assets after failing to pay a $439 million antitrust judgment won by HP Inc., and immediately asked the Fifth Circuit to suspend the forfeiture order pending appeal.
The Taiwanese software maker filed the stay request Wednesday, hours after Judge David Hittner rejected its fourth attempt in less than a month to delay turning over $167 million in cash, plus numerous factories and all of its intellectual property, on grounds relating to the coronavirus pandemic.
Hittner was again unmoved by the company’s claim that “Taiwanese law and emergency pandemic orders” would hinder its efforts to turn over significant overseas assets by May 1—or face $50,000 in daily contempt fines—without first “domesticating” the judgment in Taiwan’s courts.
Shuttering facilities that the Taiwanese government has commandeered to make masks would also risk lives, Quanta said.
Moreover, although Hittner first directed the company to forfeit its assets April 1, his orders were unenforceably vague until he clarified April 28 that the property should be turned over to a Texas constable, the company argued, saying three days wasn’t enough time to comply,
HP blasted those “kitchen sink” arguments in its response brief, saying they were delay tactics unsupported by “law or fact.”
“Quanta is a foreign entity without a physical presence in the United States that has already demonstrated its disdain for American laws,” HP said in its brief. “Without immediate enforcement, HP faces the risk of an empty judgment.”
Moreover, Quanta’s failure to post an $85 million appellate bond—which prompted the April 1 order—”demonstrates its expectation that HP will never collect,” the brief said.
Siding with HP, Hittner expressly cited “the reasons stated in plaintiff’s response.”
Quanta then asked the U.S. Court of Appeals for the Fifth Circuit to pause the case while it considers Quanta’s appeal of the rulings against it, including the initial $439 million antitrust judgment.
That award was handed down by a jury—and trebled by Hittner—in a lawsuit alleging a scheme by top electronics companies to inflate the price of optical disk drives, a critical computer component. HP filed the case in the U.S. District Court for the Southern District of Texas.
Hittner’s ruling Wednesday came one day after he clarified two earlier “turnover” orders in response to Quanta’s argument that it didn’t know “to whom” it should forfeit its property. To the constable of Harris County, home to Houston, the judge said Tuesday.
HP is represented by Beck Redden LLP. Quanta is represented by Vinson & Elkins LLP.
The case is Hewlett-Packard Co. v. Quanta Storage Inc., 5th Cir., No. 19-20799, emergency stay motion filed 4/29/20.
“Because no reason or justification for the sentence imposed [by HITTNER], beyond the naked power to impose it…I dissent from the affirmance of a sentence that must be presumed to be UNCONSITUTIONAL and VINDICTIVE.”
U.S. v. Vontsteen, 950 F.2d 1086, 1095 (5th Cir. 1992) pic.twitter.com/2e7IvgJMJR
— LawsInTexas (@lawsintexasusa) April 7, 2020
LIT COMMENTARY
It takes a bit of accounting grace and common sense to realize that when you’re at the penalty stages of a law suit and the jury has returned $176m verdict, the financials need to be reviewed by the sitting judge before taking the drastic measure of invoking treble damages. But in Hittners’ court, his mind isn’t logical or rational. His treble damages ($439m) death warrant was effectively more than the assets of this listed Taiwanese company.
Here we have a company, Quanta (not to be confused with the airline) who allegedly was part of a group of companies price-fixing computer parts and Houston based Hewlett Packard sued. We agree, that’s not an upstanding ethical code for any business. So the jury whacked them – 176 million times. Hittner trebled, which is a drastic but allowed measure in law. Quanta wanted to appeal this ruling but failed to post the $85m bond, obviously due to the substantial sum demanded, and when considering Quanta Storage Inc.’s financials.
Now if you were not familiar, judges get great ‘kudos’ for bond revenues. Bringing that type of bond amount into the court system is a money-earner. So y’all have to recognize, when bonds are discussed, civil or criminal, it’s making money for the courts. Here, instead of Hittner issuing a bond demand for the jury trial sum ($176m) and applying a 20% bond on this amount, e.g. $35M, he got way too greedy.
More importantly, then there’s the ‘small matter’ of a pandemic, which has affected businesses worldwide. So instead of correcting the bond by reducing it to a more affordable sum, he’s refused, effectively liquidating their business, just shy of pointing a receiver.
So rather than financially punish the company with reasonable bond requests and still earning the court substantial bond revenues, he’s effectively forcing this company out of business and most likely lost the bond revenue in this case, unless Quanta can come up with the cash via their Taiwanese resources and contacts.
Hittner got greedy for personal accolades as his time on the bench nearly ends. As an 80 year-old senior judge, he wanted some more landmark cases to end his tenure (Certainly, it appears that way as on a personal note, Hittner’s currently liquidating real estate all over Texas, a sign of bench retirement looming). We’ll keep y’all up-to-date.
HP Says Quanta Flouting Order In $438.7M [Treble Damages by Hittner] Price-Fix Win after $176M Jury Found for HP
Originally Published: 14 April, 2020
HP Inc. wants Quanta Storage Inc. held in contempt for taking too long to turn over assets to satisfy a $438.7 million price-fixing judgment, but Quanta told a Texas federal judge Tuesday its efforts to comply are being complicated by the COVID-19 pandemic.
HP on Monday told U.S. District Judge David Hittner that Quanta was in contempt of his April 1 turnover order and asked the court to consider sanctions of $50,000 a day. Quanta countered Tuesday that Judge Hittner’s order contained “no deadline,” and that HP can’t “unilaterally create” a deadline for Quanta’s compliance.
Quanta pointed out for the court that HP is rushing ahead to execute the judgment entered by Judge Hittner while at the same time “enjoying a one-month extension” to respond to Quanta’s appeal of the judgment pending with the Fifth Circuit.
“As Quanta has previously shown the court, its assets outside the United States are primarily comprised on real property (e.g. factories) in Taiwan and China,” Quanta said. “As a result of the pandemic, Quanta has effectively been divested of its manpower and managerial and operational capacities in order to comply with Taiwanese emergency regulations.”
Jake Wang, the head of Quanta’s legal department, told Law360 on Tuesday that the company “has always been and will continue to” try to comply with the turnover order.
“We are not trying to delay the process,” he said. “We’re trying to expedite it, and there are things out of our control right now.”
Wang said that 99% of the company’s assets are in Taiwan, and because Quanta is a publicly traded company there, “that status raises the threshold as far as how and what we can do to comply with a U.S. court order when it’s not considered final from the Taiwanese law prospective.”
Counsel for HP pointed to arguments made in the filing when reached for comment Tuesday.
On Monday, HP asked the court to schedule a show cause hearing where Quanta’s president, chief executive officer or chief financial officer would have to explain why it shouldn’t be held in contempt and face sanctions for failing to comply with the turnover order, which it said was only entered after Quanta’s “refusal to post a supersedeas bond.” Quanta had argued it’s unable to post bond partly due to complications from the COVID-19 pandemic.
Judge Hittner allowed HP to enforce the blockbuster judgment despite the pending appeal Quanta lodged with the Fifth Circuit. HP’s request to enforce the judgment was granted after Quanta failed to post $85 million in bond by March 27.
HP said the contempt order could, for example, require Quanta and its top executives or board members to pay $50,000 a day until the company complies with the court’s turnover order. HP also reurged a request lodged this year asking Judge Hittner to appoint a receiver to the case should Quanta be held in contempt.
HP requested a receiver be appointed to dispose of Quanta’s patents, trademarks and copyrights. Judge Hittner said HP failed to show a receiver was necessary, but he did order Quanta to turn over certain property, which HP has said includes $167 million in cash, as well as intellectual property and licensing revenue. The order also granted HP’s request for a temporary restraining order to prevent Quanta from liquidating its assets.
A Houston jury found in October that Taiwan-based Quanta had participated in a scheme to fix the price of optical disk drives, which are a key component for reading and writing data on CDs, DVDs and Blu-ray discs and are used in computers, video game consoles and other devices. The jury awarded HP $176 million, which Judge Hittner nearly tripled in his January judgment.
Quanta has appealed to the Fifth Circuit, arguing that the electronics giant didn’t show how many drives it purchased itself rather than through foreign subsidiaries and is asking for the judgment to be reversed or for a new trial.
The case dates to 2013, when HP accused several companies that make optical disk drives of price-fixing, following a U.S. Department of Justice investigation into the industry. Most of the companies, including Toshiba Corp., Hitachi-LG Data Storage Inc., Panasonic Corp. and Samsung Electronics Co. Ltd. had entered into confidential settlements by 2017, leaving Quanta as the sole defendant at trial.
HP is represented by Alistair B. Dawson, Alex B. Roberts and Garrett S. Brawley of Beck Redden LLP.
Quanta is represented by Marie R. Yeates, Harry Reasoner, Michael A. Heidler and Bryan U. Gividen of Vinson & Elkins LLP.
The case is Hewlett-Packard Co. v. Quanta Storage Inc. et al., case number 4:18-cv-00762, in the U.S. District Court for the Southern District of Texas. The appellate case is Hewlett-Packard Co. v. Quanta Storage Inc. et al., case number 19-20799, in the U.S. Court of Appeals for the Fifth Circuit.
Quanta Must Pay HP Full $439 Million After Failing to Post Bond
Originally published; April 2, 2020
Quanta Storage Inc. must immediately pay a $439 million antitrust judgment won by Hewlett-Packard Co. after it failed to post an $85 million bond pending appeal, citing pandemic-related business restrictions, a Houston federal judge ruled.
“Quanta Storage alleges, three days after the deadline, it is unable to secure the reduced bond due to restrictions on nonessential business put in place by the Taiwanese government in light of the Covid-19 pandemic,” Judge David Hittner wrote Wednesday. “Quanta Storage fails to produce any documentation showing restrictions on its business.”
He ordered the Taiwanese electronics company to turn over virtually all of its assets—“including any patents, trademarks, and copyrights, and all licensing revenue”—to satisfy the judgment, which exceeds Quanta’s total value following a recent steep decline in its stock.
Quanta has asked the U.S. Court of Appeals for the Fifth Circuit to reverse the ruling against it. The decision came in a lawsuit alleging a widespread scheme by Quanta and other electronics companies to inflate the price of optical disk drives, a critical computer component.
HP filed the case in the U.S. District Court for the Southern District of Texas. The other electronics makers—including Sony and Panasonic—settled, but Quanta went to trial. The move backfired in October, when a jury handed down a $176 million verdict.
Hittner raised the amount to $439 million in early January based on the trebling provisions of federal antitrust laws, minus deductions reflecting the settlements.
After Quanta appealed, HP sought to have it post a bond equaling the full judgment, or, in the alternative, $133 million. Hittner rejected the request last month, saying it would kneecap Quanta, which claims to have less than $400 million in assets.
Even if its self-reported financials involve some creative accounting, the lower amount would still constitute an “undue financial burden,” the judge said.
He instead imposed the $85 million bond—20% of the judgment—and issued a temporary restraining order barring Quanta from transferring any assets worth $100,000 or more without court permission.
After Quanta failed to post the bond, HP sought a writ of execution and asked Hittner to appoint a receiver.
The judge rejected the receiver request Wednesday, calling it “drastic,” but otherwise granted the motion. His order requires Quanta to turn over all “non-exempt property,” along with any “documentary evidence” concerning what assets it actually has.
HP is represented by Beck Redden LLP. Quanta is represented by Vinson & Elkins LLP.
The case is Hewlett-Packard Co. v. Quanta Storage Inc., S.D. Tex., No. 18-cv-762, 4/1/20.
To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com
Quanta Storage shares plunge after large damages ordered by court
Originally published; 6 Jan 2020
Taipei, Jan. 6 (CNA) The shares of Quanta Storage Inc. plunged by 10 percent Monday after the company was ordered by a Texas court to pay US$439 million in damages to HP Inc. for alleged price fixing, dealers said.
Quanta Storage, an optical drive storage specialist and subsidiary of Taiwan-based contract notebook computer maker Quanta Computer, came under heavy pressure as soon as the market opened, falling 10 percent, the maximum allowed in a single day, on the over-the-counter market, dealers said.
That weakness remained to the end of the session without any sign that selling interest was fading because of the huge potential liability, dealers said.
The OTC index ended down 1.13 percent at 147.25.
Shares of parent Quanta Computer tumbled 1.87 percent to close at NT$63.00 on Taiwan’s main stock exchange.
On Friday, U.S. District Judge David Hittner tripled damages awarded to HP by a jury in October 2019 to be paid by Quanta Storage to US$439 million based on U.S. antitrust law.
According to a Bloomberg report, Quanta Storage argued that tripling damages would violate constitutional prohibitions on excessive punitive damages, but the judge ruled that antitrust law allowed for the tripling of awards as compensatory rather than punitive damages.
HP sued Quanta and several other tech companies in 2013 for allegedly engaging in a price fixing scheme from 2004 to 2010 by rigging bids for HP’s request for optical disc drives.
Other companies in the group cited in the conspiracy, such as Hitachi-LG, Sony and Panasonic, settled with HP, but Quanta Storage decided to continue the lawsuit.
In a statement, Quanta Storage said it served only as a storage contractor for Sony and Philips, which sold the products directly to HP, and therefore the company was not part of the alleged conspiracy.
“Quanta Storage was not capable of manipulating product prices,” the company said. “HP’s lawsuit has no merit at all.”
In addition, Quanta Storage said HP asked it to pay a larger settlement than it asked of other accused companies, and it therefore decided to go to trial.
Quanta Storage said it will appeal the ruling and did not rule out the possibility of taking the case all the way to the Supreme Court.
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