Optronic Techs., Inc. v. Ningbo Sunny Elec. Co.

• Decision Date: 06 December 2021
• Docket Number: No. 20-15940,No. 20-15837,20-15837
• Citation: 20 F.4th 466
• Parties: OPTRONIC TECHNOLOGIES, INC., dba Orion Telescopes & Binoculars, Plaintiff-Appellee, v. NINGBO SUNNY ELECTRONIC CO., LTD., Defendant-Appellant, and Sunny Optics, Inc.; Meade Instruments Corp.; Does, 1–25, Defendants. Optronic Technologies, Inc., dba Orion Telescopes & Binoculars, Plaintiff-Appellant, v. Ningbo Sunny Electronic Co., Ltd. ; Sunny Optics, Inc.; Meade Instruments Corp.; Does, 1–25, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

20 F.4th 466

OPTRONIC TECHNOLOGIES, INC., dba Orion Telescopes & Binoculars, Plaintiff-Appellee,

v.NINGBO SUNNY ELECTRONIC CO., LTD., Defendant-Appellant,andSunny Optics, Inc.; Meade Instruments Corp.; Does, 1–25, Defendants.

Optronic Technologies, Inc., dba Orion Telescopes & Binoculars, Plaintiff-Appellant,

v.Ningbo Sunny Electronic Co., Ltd. ; Sunny Optics, Inc.; Meade Instruments Corp.; Does, 1–25, Defendants-Appellees.

No. 20-15837

No. 20-15940

United States Court of Appeals, Ninth Circuit.

Argued and Submitted August 31, 2021 Seattle, Washington

Filed December 6, 2021

Karin Bohmholdt(argued) and Hannah B. Shanks-Parkin, Greenberg Traurig LLP, Los Angeles, California, for Defendant-Appellant.

J. Noah Hagey(argued), Matthew Borden, Jeffrey M. Theodore, Ronald J. Fisher, and Athul K. Acharya, BraunHagey & Borden LLP, San Francisco, California, for Plaintiff-Appellee.

Before: A. Wallace Tashima and Ronald M. Gould, Circuit Judges, and Jed S. Rakoff,^*District Judge.

GOULD, Circuit Judge.

Optronic Technologies, Inc., also known as Orion Telescopes & Binoculars ("Orion"), filed a lawsuit alleging that Ningbo Sunny Electronic Co., Ltd. and Sunny Optics, Inc., collectively "Sunny," violated federal antitrust law and California laws.The case went to trial and the jury gave its verdict for Orion, awarding it $16.8 million in damages.Sunny appealed this verdict and several district court rulings.We have jurisdiction under 28 U.S.C. § 1291, and we affirm the jury's verdict.In so holding, we comment on the legal analysis a district court may use to resolve pre-and-post-trial motions in similar cases, and the evidence necessary to support a jury verdict in antitrust cases.

I.FACTUAL AND PROCEDURAL BACKGROUND

A.The Parties

Orion is an American telescope company that designs and markets telescopes but does not make them.Sunny is a Chinese telescope manufacturer owned by Peter Ni, and James Chiu controls Sunny's manufacturing activities.Orion alleged that Sunny violated federal antitrust law and related California laws by unlawfully conspiring with Suzhou Synta Optical Technology Co. Ltd.("Suzhou Synta"), Synta Technology Corp.("Synta Tech"), and Celestron Acquisition LLC("Celestron"), collectively the "Synta Entities."Sunny and Suzhou Synta are two of the biggest manufacturers of telescopes sold in the United States.The relationship between Suzhou Synta and Synta Tech is disputed, but David Shen is the principal of both companies, collectively "Synta."Celestron is a Suzhou Synta subsidiary and the largest telescope distributor in the United States.Celestron made its own telescopes but stopped after being acquired by Synta.Joe Lupica was Celestron's CEO and CFO but resigned to work on Sunny's 2013 acquisition of Meade Instruments Corp.("Meade"), another telescope manufacturer.Sunny hired Lupica as Meade's CEO.

B.The Telescope Manufacturing Market

During the relevant time period, the key telescope distributors were Celestron, Meade, and Orion, whereas the main telescope manufacturers were Sunny, Synta, and Meade.Because most telescope manufacturers are private, market share data is not readily available.But public customs data show that, since 2012, Sunny and Synta have together accounted for up to 80 percent of telescopes imported into the United States.In 1991, the Federal Trade Commission("FTC") blocked a proposed joint venture between Celestron and Meade.The FTC decided that this joint venture would "be a virtual monopolist in the manufacture and sale of [certain telescopes]."Meade had tried to acquire Celestron's assets in 2002, but the FTC prevented this deal "to maintain competition."In 2005, Synta bought all of Celestron's assets, including its intellectual property, and moved Celestron's telescope manufacturing to Synta's factory in China.

C.The Meade Deal

Meade made itself available for purchase in early 2013.Orion offered $4.5 million, but Meade chose to proceed with a different $4.5 million offer from Jinghua Optics & Electronics ("JOC") and announced the proposed merger in May 2013.Sunny intervened by submitting an unsolicited $5.87 million bid for Meade.Meade terminated the JOC merger and accepted Sunny's offer.Sunny created a holding company called Sunny Optics, to facilitate its acquisition of Meade.Orion claims Celestron and Synta colluded with Sunny to help it acquire Meade.The parties agree that a company called Sky Rainbow—which Orion insists is jointly owned by Peter Ni, the principal of Sunny, and David Shen, the principal of Synta—financed Sunny's acquisition of Meade.Sunny also admits it reached out to Celestron— now owned by Synta—to request that Celestron pay for already-purchased telescopes faster than it was obliged to do.

D.The Hayneedle Deal

In 2014, Hayneedle, an e-commerce company, decided to sell certain website addresses—including telescopes.com, on which Celestron relied heavily—known as the "Haystack Assets."Orion submitted the highest bid and signed a letter of intent with Hayneedle in May 2014.The Synta Entities sent an email advising Orion that the Synta Entities were cutting off Orion's line of credit.This email stated that "if Orion really buys Hayneedle, this will be the beginning of hazard [sic], we could not trust Orion's credit any more."The Synta Entities forwarded this email to Sunny and asked Sunny to also withdraw Orion's line of credit.Sunny sent Orion an almost identical email.Not surprisingly, Orion's deal with Hayneedle fell through.Orion claims it was unable to acquire the Hayneedle Assets after Synta and Sunny cut off its lines of credit.

E.Procedural History

In September 2016, Orion entered into Settlement and Supply Agreements with the Synta Entities to resolve antitrust claims related to Sunny's acquisition of Meade.Orion then sent a demand letter to Sunny, after which Sunny stopped selling telescopes to Orion.Orion filed this lawsuit on November 1, 2016.The operative complaint set out four claims against Sunny and two of its subsidiaries: (1) price-fixing and collusion by competitors in violation of Sherman Act § 1;(2) attempted monopolization and conspiracy to monopolize in violation of Sherman Act § 2andClayton Act § 7;(3) violation of the California Unfair Competition Law ("UCL"); and (4) collusion to restrain trade in violation of California's Cartwright Act.Orion also sought compensatory and punitive damages, disgorgement, divestiture, injunctive relief, and restitution from Sunny.

Both parties moved for summary judgment.The district court denied Orion's motion for summary judgment, but granted in part and denied in part Sunny's motion for summary judgment.Orion's summary judgment motion alleged that Sunny had violated Sherman Act § 1 by conspiring with the Synta Entities to acquire Meade.Sunny argued that Orion lacked standing on this claim because Orion would not have acquired Meade regardless of misconduct by Sunny or its subsidiaries.The district court granted Sunny partial summary judgment on the issue of standing, holding "that Orion would not have acquired Meade in the absence of [Sunny's] alleged misconduct; JOC would have."But the district court found that Orion may still have been harmed by Sunny's acquisition of Meade because it concentrated the telescope market "more than five times the amount presumed to enhance market power."The district court found a genuine issue of material fact as to whether Sunny and Synta had entered into an agreement that harmed competition.Sunny also obtained summary judgment on Orion's below-cost pricing and refusal to deal claims.

Before trial, Orion timely designated two expert witnesses, Jose Sasian, PhD., and J. Douglas Zona, PhD.Sunny did not timely disclose any expert witnesses, but later disclosed fraud examiner Jeffrey Redman and economist Celeste Saravia, Ph.D. as rebuttal experts.The parties cross-filed motions to exclude the other's experts.The district court denied Sunny's motion but granted Orion's motion to exclude Mr. Redman's testimony.It partially granted Orion's motion to exclude Dr. Saravia.

A six-week jury trial was held.Dr. Saravia testified at trial, and Orion objected that she was impermissibly offering affirmative damages testimony.The district court sustained this objection and instructed the jury that it was "not to consider [Dr. Saravia's] testimony as to any amount of damages nor her opinion as to damages."After Orion rested, Sunny moved for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(a).The district court denied this motion.

The jury reached a verdict on November 26, 2019.It found Sunny liable on all claims tried before it and awarded a total of $16.8 million in damages.Sunny and Meade filed for bankruptcy on December 4, 2019, and litigation was stayed as to them.The district court entered a partial judgment for Orion and against Sunny on December 5, 2019.This partial judgment encompassed the Sherman Act §§ 1and2,Clayton Act § 7, California UCL, and California Cartwright Act claims, collectively the "Damages Claims."The district court then trebled the damages that were listed in the jury's verdict, under the Clayton Act § 4,15 U.S.C. § 15, and awarded Orion $50.4 million on the Damages Claims.

Sunny renewed its motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(b) and moved for a new trial under Federal Rule of Civil Procedure 59(a).The district court denied these motions.Sunny also moved to alter or amend the judgment under Federal Rule of Civil Procedure 59(e) to offset the value of the Settlement and Supply Agreements.The district court deducted $3.1 million from Orion's award, but did not offset any profits Orion derived from the Supply Agreement.In its view, Sunny had the burden of proof on this issue and the evidence that it offered to this end—a declaration by Dr. Saravia—was inadmissible as untimely under Federal Rules of Civil Procedure 26 and 37.

Orion moved...