Hewlett-Packard Co. v. Quanta Storage, Inc.

• Citation: 961 F.3d 731
• Decision Date: 05 June 2020
• Docket Number: No. 19-20799,c/w No. 20-20235,19-20799
• Parties: HEWLETT-PACKARD COMPANY, Plaintiff – Appellee, v. QUANTA STORAGE, INCORPORATED, Defendant – Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

961 F.3d 731

HEWLETT-PACKARD COMPANY, Plaintiff – Appellee,

v.QUANTA STORAGE, INCORPORATED, Defendant – Appellant.

No. 19-20799

c/w No. 20-20235

United States Court of Appeals, Fifth Circuit.

FILED June 5, 2020

Russell S. Post, Garrett S. Brawley, Alistair Byrne Dawson, Parth Sudhir Gejji, Alex Benjamin Roberts, Beck Redden, L.L.P., Houston, TX, for Plaintiff-Appellee

Marie Roach Yeates, Esq., Harry Max Reasoner, Esq., Vinson & Elkins, L.L.P., Houston, TX, Bryan U. Gividen, Vinson & Elkins, L.L.P., Dallas, TX, Michael A. Heidler, Vinson & Elkins, L.L.P., Austin, TX, for Defendant-Appellant

Before WIENER, ENGELHARDT, and OLDHAM, Circuit Judges.

ANDREW S. OLDHAM, Circuit Judge:

Hewlett-Packard Company¹ ("HP") sued Quanta Storage, Inc. ("Quanta") for illegally fixing the prices of optical disk drives. Quanta risked bet-the-company litigation and lost, so the district court ordered it to hand over the company. Quanta argues that the evidence was insufficient to justify the $438.65 million award against it and that the district court's orders enforcing the judgment should be set aside. For the reasons below, we affirm the judgment but vacate in part the enforcement orders.

I.

This case consists of two consolidated appeals. The first arises from the district court's damages award. The second arises from the district court's enforcement orders. We summarize both in turn.

A.

Quanta makes optical disk drives ("Drives") for computers. From 2003 to 2009, Quanta took part in a conspiracy with other Drive manufacturers to fix prices for the product. HP and its subsidiaries purchased Drives from Quanta and other cartel members during this period. These Drives were incorporated into HP computers.

After foreign antitrust regulators caught wind of the cartel, so did the plaintiffs’ bar. HP sued Quanta and other Drive suppliers in the Southern District of Texas. The lawsuit was transferred to the Northern District of California as part of the Optical Disk Drive Products Antitrust Multidistrict Litigation. Most suppliers settled. Quanta did not. So the transferee court remanded HP's suit against Quanta back to the transferor court in Texas.

In October 2019, a six-day jury trial ensued. Important to this appeal, the jury heard from HP's damages expert, an economist named Dr. Debra Aron. Over an objection from Quanta, Dr. Aron testified that, according to her damages model, HP was overcharged $176.3 million for Drives.

At the close of trial, Quanta moved orally for judgment as a matter of law. Quanta argued that "the jury d[id] not have [a] sufficient evidentiary basis to determine with reasonable certainty the amount of damages Hewlett-Packard Company ha[d] suffered." The district court denied the motion.

The jury unanimously found in favor of HP, concluding that Quanta participated in the Drive cartel and that price-fixing caused HP to overpay for Drives by $176 million. Quanta renewed its motion for judgment as a matter of law. It also moved for a new trial on the basis that "the jury's damages finding [wa]s against the great weight of evidence and based on evidence that should not have been admitted." Both motions were denied. After trebling the damages (as is permitted in civil antitrust cases) and reducing the award to account for certain settlement payments, the district court entered final judgment for HP in the amount of $438,650,000. Quanta timely appealed, challenging only the damages award and not the finding of liability.

B.

Having won a judgment, HP wanted its money. After unsuccessful attempts to collect in early 2020, HP moved on March 30, 2020, for a writ of execution. The federal rules provide judgment creditors the enforcement tools available under the law of the state in which the court is located. FED. R. CIV. P. 69(a)(1). And Texas law empowers a court to "order the judgment debtor to turn over ... property ... to a designated sheriff or constable for execution," or to "appoint a receiver ... to take possession of the ... property, sell it, and pay the proceeds to the judgment creditor." TEX CIV. PRAC. & REM. CODE § 31.002(b)(1), (3). HP requested both.

On April 1, the district court declined to appoint a receiver. But it granted the writ of execution and ordered "the turnover of all of [Quanta's] ... property." That was the "First Turnover Order." As the name suggests, it wasn't the last.

Less than two weeks later, frustrated by what it considered to be Quanta's intransigence, HP filed an order to show cause why Quanta should not be held in contempt for violating the First Turnover Order. In response, Quanta noted that the order did not contain a deadline and that it was working to turn over assets. Quanta's response included a declaration from Jake Wang, Quanta's head of legal. Wang explained that Taiwanese securities laws required Quanta to take certain steps before it could dispose of its Taiwanese and Chinese property. Wang represented that Quanta was beginning that process, but COVID-19 had slowed the company down. In a subsequent filing, however, Quanta appeared to take the opposite position. It claimed that Taiwanese law and principles of international comity meant Quanta could not be compelled to begin the judgment-recognition process in Taiwan.

In a terse order dated April 22, the district court rejected Quanta's arguments under Taiwanese law and principles of international comity. The court denied HP's motion for a show-cause hearing, but gave Quanta until May 1 "to fully comply with the [First] Turnover Order ... or to show cause as to why Quanta should not be immediately held in contempt ... and sanctioned [at] a rate of $50,000.00 per day." That was the "Second Turnover Order."

Quanta responded by asking the court to clarify the intended recipient of Quanta's assets. Texas law prohibits a court from ordering a turnover directly to the judgment creditor. Ex parte Johnson , 654 S.W.2d 415, 419 (Tex. 1983) ; see also TEX CIV. PRAC. & REM. CODE § 31.002(b)(1) (requiring that a court's turnover order direct the transfer of property "to a designated sheriff or constable for execution"). Quanta had previously told the court that it "was reaching out to the office of Constable Alan Rosen," the constable designated by HP. But in this motion Quanta claimed the earlier orders were unenforceably vague as "to whom Quanta must turn over property."

The district court obliged Quanta's request. On April 27, the district court confirmed that Constable Rosen was the appropriate recipient of the property.

Because Quanta knew this before it filed its motion, the court maintained the May 1 deadline for full compliance. That was the "Third Turnover Order." Quanta timely appealed all three Turnover Orders. We consolidated the appeal with Quanta's appeal of the damages award.

II.

First up, the appeal from the district court's award of damages. Review of denial of a motion for judgment as a matter of law is de novo . Wellogix, Inc. v. Accenture, L.L.P. , 716 F.3d 867, 874 (5th Cir. 2013). "[W]e draw all reasonable inferences in favor of the nonmoving party." Ibid. (quotation omitted). We review rulings on the admissibility of expert opinion evidence for abuse of discretion. See id. at 881. We also apply that standard to the denial of a motion for new trial. Whitehead v. Food Max of Miss., Inc. , 163 F.3d 265, 269 (5th Cir. 1998).

A.

Here, the validity of the judgment turns on the interaction between the presumption against extraterritoriality set out in the Foreign Trade Antitrust Improvements Act and Federal Rule of Evidence 703. We'll discuss the presumption first, then turn to the evidentiary issues.

1.

At English common law, there was a presumption that conduct that occurred outside the country was not actionable in English courts. See, e.g. , Treacy v. DPP [1971] AC 537, 551 ("It has been recognized from time immemorial that there is a strong presumption that when Parliament ... creates an offence ..., it does not intend this to apply to any act done by anyone in any country other than England."); Lacyes Case (1583) 74 Eng. Rep. 246 (KB) (noting Lord Coke's view that the Crown could not prosecute the defendant for murder if he "struck [the victim] upon the high-sea").

From the Founding to today, federal courts in this country have adopted the same presumption. See, e.g. , Rose v. Himely , 8 U.S. (4 Cranch) 241, 279, 2 L.Ed. 608 (1808) ("[L]egislation of every country is territorial"); The Apollon , 22 U.S. (9 Wheat.) 362, 370, 6 L.Ed. 111 (1824) ("[H]owever general and comprehensive the phrases used in our municipal laws may be, they must always be restricted in construction, to places and persons, upon whom the Legislature have authority and jurisdiction."); Am. Banana Co. v. United Fruit Co. , 213 U.S. 347, 357, 29 S.Ct. 511, 53 L.Ed. 826 (1909) ("[I]n case of doubt," a statute should be construed "as intended to be confined in its operation and effect to the territorial limits over which the lawmaker has general and legitimate power."); Morrison v. Nat'l Australia Bank Ltd. , 561 U.S. 247, 255, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010) ("When a statute gives no clear indication of an extraterritorial application, it has none.").

The reach of federal antitrust laws has been construed accordingly. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 582, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ("American antitrust laws do not regulate the competitive conditions of other nations’ economies."); Am. Banana , 213 U.S. at 357, 29 S.Ct. 511 (holding that "the acts of the defendant in Panama or Costa Rica [were] not within the Sherman act").

But as the economy became more globalized in the 20th century, that presumption began to show its age. Den Norske Stats Oljeselskap As v. HeereMac Vof , 241 F.3d 420, 424 n.12 (5th Cir. 2001). So "the Supreme Court relaxed its previous stance and held that the Sherman Act authorized jurisdiction over foreign defendants so long as domestic commerce was affected and some conduct occurred within...