778 F.3d 738 (9th Cir. 2015), 12-10492, United States v. Hsiung

Docket Nº:12-10492, 12-10493, 12-10500, 12-10514
Citation:778 F.3d 738
Opinion Judge:McKEOWN, Circuit Judge:
Party Name:UNITED STATES OF AMERICA, Plaintiff-Appellee, v. HUI HSIUNG, AKA Kuma, Defendant-Appellant. UNITED STATES OF AMERICA, Plaintiff-Appellee, v. HSUAN BIN CHEN, AKA H.B. Chen, Defendant-Appellant. UNITED STATES OF AMERICA, Plaintiff-Appellee, v. AU OPTRONICS CORPORATION, Defendant-Appellant. UNITED STATES OF AMERICA, Plaintiff-Appellee, v. AU OPTRONICS
Attorney:Kristen C. Limarzi (argued), Peter K. Huston, Heather S. Tewksbury, E. Kate Patchen, Jon B. Jacobs, John J. Powers III, James J. Fredericks, and Adam D. Chandler, Attorneys, United States Department of Justice, Antitrust Division, Washington, D.C., for Plaintiff-Appellee United States of America....
Judge Panel:Before: Sidney R. Thomas, Chief Judge, M. Margaret McKeown, Circuit Judge, and Virginia M. Kendall, District Judge.[*] Opinion by Judge McKeown
Case Date:January 30, 2015
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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778 F.3d 738 (9th Cir. 2015)

UNITED STATES OF AMERICA, Plaintiff-Appellee,

v.

HUI HSIUNG, AKA Kuma, Defendant-Appellant.

UNITED STATES OF AMERICA, Plaintiff-Appellee,

v.

HSUAN BIN CHEN, AKA H.B. Chen, Defendant-Appellant.

UNITED STATES OF AMERICA, Plaintiff-Appellee,

v.

AU OPTRONICS CORPORATION, Defendant-Appellant.

UNITED STATES OF AMERICA, Plaintiff-Appellee,

v.

AU OPTRONICS CORPORATION AMERICA, INC., Defendant-Appellant

Nos. 12-10492, 12-10493, 12-10500, 12-10514

United States Court of Appeals, Ninth Circuit

January 30, 2015

         Argued and Submitted, San Francisco, California October 18, 2013.

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[Copyrighted Material Omitted]

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          Appeal from the United States District Court for the Northern District of California. D.C. No. 3:09-cr-00110-SI-8. D.C. No. 3:09-cr-00110-SI-9. D.C. No. 3:09-cr-00110-SI-10. D.C. No. 3:09-cr-00110-SI-11. Susan Illston, Senior District Judge, Presiding.

          SUMMARY[**]

         Criminal Law

         The panel filed an amended opinion affirming the convictions of all defendants and the sentence of the only defendant to challenge the sentence, denied a petition for panel rehearing, and denied a petition for rehearing en banc on behalf of the court, in a criminal antitrust case that stems from an international conspiracy between Taiwanese and Korean electronics manufacturers to fix prices for Liquid Crystal Display panels known as TFT-LCDs in violation of the Sherman Act.

         The panel held that venue in the Northern District of California was proper.

         The panel held that the defendants waived the argument that an extraterritoriality defense bars their convictions, and held that, viewing the jury instructions as a whole, nothing misled the jury as to its task.

         The panel held that the district court properly applied a per se analysis under the Sherman Act, rather than the rule of reason, to this horizontal price-fixing scheme.

         The panel held that the Foreign Trade Antitrust Improvements Act of 1982, 15 U.S.C. § 6a (FTAIA), is not a subject-matter jurisdiction limitation on the power of the federal courts but a component of the merits of a Sherman Act claim involving nonimport trade or commerce with foreign nations.

         The panel held that the indictment contained the factual allegations necessary to establish that the FTAIA either did not apply or that its requirements were satisfied. The panel explained that import trade does not fall within the FTAIA at all; it falls within the Sherman Act without further clarification or pleading. The panel therefore disagreed with the defendants' view that the indictment was insufficient because it did not allege import trade under the FTAIA. The panel held that the government sufficiently pleaded and proved that the conspirators engaged in import commerce with the United States and that the price-fixing conspiracy violated § 1 of the Sherman Act.

         The panel explained that if the government proceeds on a domestic effects theory, which it did here, the government must plead and prove the requirements for the domestic effects exception to the FTAIA, namely that the defendants' conduct had a " direct, substantial, and reasonably foreseeable effect" on United States commerce. The panel held that the indictment sufficiently alleged such conduct. The panel disagreed with the government that the FTAIA is an affirmative defense to a Sherman Act offense, and held that the domestic effects instruction did not result in a constructive amendment of the indictment. The panel rejected the defendants' sufficiency of evidence challenge to the domestic effects exception. The panel noted that even disregarding the domestic effects exception, the evidence offered in support of the import trade theory alone was sufficient to convict the defendants of price-fixing in violation of the Sherman Act.

         The panel affirmed a $500 fine imposed on AU Optronics pursuant to the Alternative Fine Statute, 18 U.S.C. § 3571(d). The panel held that § 3571(d) permits the fine to be based on the gross gains to all the coconspirators rather than on the gains to AU Optronics alone. The panel wrote that no statutory authority or precedent supports AU Optronics' interpretation of the statute as requiring joint and several liability or imposition of a " one recovery" rule.

         Kristen C. Limarzi (argued), Peter K. Huston, Heather S. Tewksbury, E. Kate Patchen, Jon B. Jacobs, John J. Powers III, James J. Fredericks, and Adam D. Chandler, Attorneys, United States Department of Justice, Antitrust Division, Washington, D.C., for Plaintiff-Appellee United States of America.

         Neal Kumar Katyal (argued), Christopher T. Handman, and Elizabeth Barchas Prelogar, Hogan Lovells U.S. LLP, Washington, D.C., for Defendant-Appellant Hui Hsiung; Michael A. Attanasio (argued) and Jon F. Cieslak, Cooley LLP, San Diego, California, for Defendant-Appellant, Hsuan Bin Chen; Dennis P. Riordan (argued) and Donald M. Horgan, Riordan & Horgan, San Francisco, California, and Ted Sampsell-Jones, William Mitchell College of Law, St. Paul, Minnesota, for Defendants-Appellants AU Optronics Corporation and AU Optronics Corporation America; and John D. Cline, Law Office of John D. Cline, San Francisco, California, for Defendant-Appellant AU Optronics Corporation America.

         Dr. Chang C. Chen, Law Offices of Chang C. Chen, San Francisco, California; John Shaeffer and Carole E. Handler, Lathrop & Gage LLP, Los Angeles, California; Sang N. Dang and Andrew B. Chen, Blue Capital Law Firm, PC, Costa Mesa, California, for Amicus Curiae Professor Andrew Guzman.

         Before: Sidney R. Thomas, Chief Judge, M. Margaret McKeown, Circuit Judge, and Virginia M. Kendall, District Judge.[*] Opinion by Judge McKeown

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          AMENDED OPINION

         McKEOWN, Circuit Judge:

         This criminal antitrust case stems from an international conspiracy between Taiwanese and Korean electronics manufacturers to fix prices for what is now ubiquitous technology, Liquid Crystal Display panels known as " TFT-LCDs." 1 After five years of secret meetings in Taiwan, sales worldwide including in the United States, and millions of dollars in profits to the participating companies, the conspiracy ended when the FBI raided the offices of AU Optronics Corporation of America (" AUOA" ) in Houston, Texas.

         The defendants, AU Optronics (" AUO" ), a Taiwanese company, and AUOA, AUO's retailer and wholly owned subsidiary (collectively, " the corporate defendants" ), and two executives from AUO, Hsuan Bin Chen, its President and Chief Operating Officer, and Hui Hsiung, its Executive Vice President, were convicted of conspiracy to fix prices in violation of the Sherman Act after an eight-week jury trial.2 Their appeal raises complicated issues of first impression regarding the reach of the

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Sherman Act in a globalized economy. More specifically, they contend that the rule of reason applies to this price-fixing conspiracy because of its foreign character. This proposition, pegged to foreign involvement, does not override the long standing rule that a horizontal price-fixing conspiracy is subject to per se analysis under the antitrust laws. The defendants also urge that because the bulk of the panels were sold to third parties worldwide rather than for direct import into the United States, the nexus to United States commerce was insufficient under the Sherman Act as amended by the Foreign Trade Antitrust Improvements Act of 1982, 15 U.S.C. § 6a (" FTAIA" ). The defendants' efforts to place their conduct beyond the reach of United States law and to escape culpability under the rubric of extraterritoriality are unavailing. To begin, the defendants waived their challenge that Morrison v. National Australia Bank Ltd., 561 U.S. 247, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010), displaced the Supreme Court's landmark case regarding antitrust and extraterritoriality, Hartford Fire Insurance v. California, 509 U.S. 764, 113 S.Ct. 2891, 125 L.Ed.2d 612 (1993). In light of the substantial volume of goods sold to customers in the United States, the verdict may be sustained as import commerce falling within the Sherman Act. The verdict may also be sustained under the FTAIA's domestic effects provision because the conduct had a " direct, substantial, and reasonably foreseeable effect on United States commerce." 15 U.S.C. § 6a. We affirm the convictions of all defendants and the sentence of AUO, the only defendant to challenge the sentence.

         FACTUAL AND PROCEDURAL BACKGROUND

         I. The Conspiracy

         From October 2001 to January 2006, representatives from six leading TFT-LCD manufacturers met in Taiwan to " set[] the target price" and " stabilize the price" of TFT-LCDs, which were sold in the United States principally to Dell, Hewlett Packard (" HP" ), Compaq, Apple, and Motorola for use in consumer electronics. This series of meetings, in which Chen, Hsiung, and other AUO employees participated, came to be known as the " Crystal Meetings."

         Following each Crystal Meeting, the participating companies produced " Crystal Meeting Reports." These reports provided pricing targets for TFT-LCD sales, which, in turn, were used by retail branches of the companies as price benchmarks for selling panels to wholesale customers. More specifically, AUOA used the Crystal Meeting Reports that AUO provided to negotiate prices for the sale of TFT-LCDs to United States customers including HP, Compaq, ViewSonic, Dell, and Apple. AUOA employees and executives routinely traveled to the United States offices of Dell, Apple, and HP in Texas and California to discuss pricing for TFT-LCDs based on the targets coming...

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