State v. LG Elecs., Inc.
| Decision Date | 12 January 2015 |
| Docket Number | 70299–8–I.,Nos. 70298–0–I,s. 70298–0–I |
| Citation | 185 Wash.App. 394,341 P.3d 346 |
| Court | Washington Court of Appeals |
| Parties | STATE of Washington, Respondent, v. LG ELECTRONICS, INC.; Koninklijke Philips Electronics N.V. a/k/a Royal Philips Electronics N.V. ; Philips Electronics Industries (Taiwan), Ltd.; Samsung SDI Co., Ltd. f/k/a Samsung Display Device Co., Ltd.; Samsung SDI America, Inc.; Samsung SDI Mexico S.A. de C.V. ; Samsung SDI Brasil Ltd a.; Shenzhen Samsung SDI Co., Ltd. ; Tianjin Samsung SDI Co., Ltd.; Samsung SDI (Malaysia) SDN. BHD. ; Panasonic Corporation f/k/a Matsushita Electric Industrial Co., Ltd.; Hitachi Displays, Ltd.; Hitachi Electronic Devices (USA), Inc.; Hitachi Asia, Ltd., Appellants, LG Electronics U.S.A., Inc.; Philips Electronics North America Corporation; Toshiba Corporation; Toshiba America Electronic Components, Inc.; MT Picture Display Co., Ltd. ; Panasonic Corporation of North America; Hitachi, Ltd.; Chunghwa Picture Tubes Ltd.; CPTF Optronics Co., Ltd.; Chunghwa Picture Tubes (Malaysia) SDN. BHD., Defendants. |
David Michael Kerwin, Washington State Attorney General's Office, Brady R. Johnson, Law Office of Brady R. Johnson, Robert Douglas Stewart, Kipling Law Group, PLLC, Molly A. Terwilliger, Summit Law Group, David C. Lundsgaard, Graham & Dunn, PC, Mathew Lane Harrington, Bradford J. Axel, Stokes Lawrence, PS, Seattle, WA, Dana E. Foster, Lucius B. Lau, Attorneys at Law, Washington, DC, Andrew Wiener, Eliot A. Adelson, James Maxwell Cooper, Kirland & Ellis, Hojoon Hwang, Laura Sullivan, Munger Tolles & Olson, San Francisco, CA, for Appellants.
Molly A. Terwilliger, Summit Law Group, Aric Hamilton Jarrett, Attorney at Law, Larry Steven Gangnes, John R. Neeleman, Lane Powell PC, Seattle, WA, Andrew Wiener, Eliot A. Adelson, James Maxwell Cooper, Kirland & Ellis, San Francisco, CA, Timothy W. Snider, Attorney at Law, Portland, OR, David L. Yohai, Adam C. Hemlock, David Yolkut, Weil Gotshal & Manges, Jeffrey L. Kessler, Eva W. Cole, Molly M. Donovan, Winston & Strawn, New York, NY, for Respondents.
¶ 1 In resolving this appeal, which requires us to consider the due process limitations on the exercise of personal jurisdiction over certain foreign corporations, we hold that because a product manufactured by these foreign corporations was sold—as an integrated component part of retail consumer goods—into Washington in high volume over a period of years, the corporations “purposefully” established “minimum contacts” in Washington. Owing to our conclusion that the Attorney General alleged sufficient “minimum contacts” to support an exercise of specific jurisdiction by Washington courts, and in view of our further conclusion that such exercise would not offend notions of “fair play and substantial justice,” we reverse the trial court's order dismissing the Attorney General's complaint for lack of personal jurisdiction and remand for further proceedings.
¶ 2 On May 1, 2012, the Attorney General,1 acting on behalf of the State and as parens patriae on behalf of persons residing in Washington, brought suit against more than 20 foreign corporate entities.2 While geographically diffuse, the defendants had a common characteristic—past participation in the global market for cathode ray tubes (CRTs).3 THE ATTORNEY GENEraL broadly Alleged that the defendants had, in violation of the Washington Consumer Protection Act4 (CPA), participated in a worldwide conspiracy to raise prices and set production levels in the market for CRTs, which caused Washington State residents and State agencies to pay supracompetitive prices for CRT products.5
¶ 3 The Attorney General claimed that the defendants manufactured, sold, and/or distributed CRT products, directly or indirectly, to customers throughout the United States and, specifically, in Washington. He further alleged that the actions of the defendants were intended to and did have a direct, substantial, and reasonably foreseeable effect on United States domestic import trade and commerce, and on import trade and commerce into and within Washington. Indeed, he averred that the defendants' alleged conspiracy to fix prices affected billions of dollars in United States commerce and damaged a large number of Washington State agencies and residents.
¶ 4 In support of this, the Attorney General maintained that because, until recently, CRTs were the dominant technology used in displays such as televisions and computer monitors, this translated into the sale of millions of CRT products during the alleged conspiracy period, which resulted in billions of dollars in annual profits to the defendants. The Attorney General alleged that during the entirety of the alleged conspiracy period, North America represented the largest market for CRT televisions and computer monitors, and that the 1995 worldwide market for CRT monitors was 57.8 million units, 28 million of which were purchased in North America. The Attorney General claimed that CRT monitors accounted for over 90 percent of the retail market for computer monitors in North America in 1999 and that CRT televisions accounted for 73 percent of the North American television market in 2004. The Attorney General averred that during the alleged conspiracy period, the CRT industry was dominated by relatively few companies, and that, in 2004, four of the defendants in this case together held a collective 78 percent share of the global CRT markets.
¶ 5 By way of relief, the Attorney General sought (1) injunctive relief, (2) civil penalties, (3) damages for State agencies, and (4) restitution for consumers who purchased CRTs or CRT products, whether directly or indirectly.
¶ 6 After accepting service of process, and prior to any discovery being conducted, certain defendants (collectively Companies6 ) filed motions, supported by affidavits and declarations, to dismiss the Attorney General's complaint for lack of personal jurisdiction pursuant to CR 12(b)(2). These affidavits and declarations contained testimony that the Companies had never sold CRTs or CRT products to Washington customers or done any business in Washington.
¶ 7 In response, the Attorney General maintained that, for purposes of resolving the Companies' dispositive motions, the aforementioned affidavits and declarations should not be considered by the trial court. In the event that they were considered, however, the Attorney General requested an opportunity to conduct both general and jurisdictional discovery. The Companies opposed the Attorney General's request.
¶ 8 The trial court granted the Companies' motions and dismissed the Attorney General's complaint as against them. In doing so, the trial court denied the Attorney General's request to conduct discovery. Upon an agreed motion, the trial court entered final judgment with prejudice pursuant to CR 54(b).7 The Attorney General filed a timely appeal.
¶ 9 Additionally, the trial court authorized the Companies to request attorney fees and costs. With the exception of the Philips entities, the Companies submitted briefing requesting fees, along with supporting affidavits. The trial court granted their request for fees pursuant to RCW 4.28.185(5).8 The Attorney General appeals from this award pursuant to RAP 2.4(g).9
¶ 10 Certain defendants10 sought and obtained discretionary review of two issues related to whether certain claims of the Attorney General were time-barred. That matter has been resolved by separate opinion. State v. LG Electronics, Inc., No. 70299–8–I, ––– Wash.App. ––––, 340 P.3d 915, 2014 WL 7338746 (Wash.Ct.App. Dec. 22, 2014). The underlying litigation has been stayed.
¶ 11 The Attorney General contends that the trial court's order dismissing his complaint for lack of personal jurisdiction over the Companies was entered in error. We agree. The allegations in the Attorney General's complaint, when treated as verities, are sufficient to satisfy his prima facie burden of showing that personal jurisdiction comports with due process considerations. Considered together, the Attorney General's allegations demonstrate the following: (1) that the Companies “purposefully” established “minimum contacts” with Washington, (2) that the harm claimed by the Attorney General “arose” from those minimum contacts, and (3) that the exercise of jurisdiction in this matter is consistent with notions of “fair play and substantial justice.”
¶ 12 Civil Rule 12 is entitled “Defenses and Objections.” Section (b), entitled “How Presented,” reads as follows:
Every defense, in law or fact, to a claim for relief in any pleading, whether a claim, counterclaim, cross claim, or third party claim, shall be asserted in the responsive pleading thereto if one is required, except that the following defenses may at the option of the pleader be made by motion: (1) lack of jurisdiction over the subject matter, (2) lack of jurisdiction over the person, (3) improper venue, (4) insufficiency of process, (5) insufficiency of service of process, (6) failure to state a claim upon which relief can be granted, (7) failure to join a party under rule 19. A motion making any of these defenses shall be made before pleading if a further pleading is permitted. No defense or objection is waived by being joined with one or more other defenses or objections in a responsive pleading or motion. If a pleading sets forth a claim for relief to which the adverse party is not required to serve a responsive pleading, he may assert at the trial any defense in law or fact to that claim for relief. If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by rule 56.
(Emphasis added.)
¶ 13 Thus, whereas CR 12...
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