Judge Vacates $87M Jury Award, Approves $30M Settlement In Toshiba LCD Case

by Tara Arick on October 17, 2012 · 0 comments

in Contract Law

- From LexisNexis® Mealey’s™ Daily Legal News.

The federal judge in California overseeing the film transistor-liquid crystal displays (TFT-LCD) antitrust litigation on Oct. 15 preliminarily approved a $ 30 million settlement between Toshiba Corp. and direct purchasers, vacating a jury award of $ 87 million in damages to the purchasers on their claims that Toshiba engaged in a conspiracy with other manufacturers to raise and fix the price of TFT-LCD panels and certain products containing those panels imported into the United States (In re: TFT-LCD [Flat Panel] Antitrust Litigation [All Direct Purchaser Actions], MDL No. 3:07-md-1827 SI, N.D. Calif.).

Trial

Toshiba was the only defendant to proceed to trial in the litigation, which included both direct and indirect purchasers’ allegations that the conspiracy lasted more than 10 years and resulted in overcharges to the purchasers in violation of the Sherman Act.

In March 2010, U.S. Judge Susan Illston of the Northern District of California certified two direct purchaser classes, an indirect purchaser nationwide class seeking injunctive relief and indirect purchaser statewide classes seeking monetary damages. In June 2010, the Ninth Circuit U.S. Court of Appeals denied the defendants’ Federal Rule of Civil Procedure 23(f) petition to appeal.

Judge Illston subsequently denied the indirect purchasers’ request for a trial separate from the direct purchasers’ trial. At the time, all of the defendants in the indirect-purchaser actions except Toshiba, LG Display Co. Ltd. and AU Optronics Corp. (AUO) had settled the claims against them. All three of those defendants settled before trial. Toshiba was the only defendant that remained in the direct purchaser actions.

On July 3,2012, a unanimous jury awarded, prior to trebling under federal antitrust law, $ 17 million to direct purchasers of TFT-LCD panels – the “panel class” – and $ 70 million to direct purchasers of notebook computers, computer monitors and televisions containing TFT-LCD panels – the “finished product class” – following a six-week trial.

Toshiba filed Federal Rule of Civil Procedure 50 motions and a motion to set off the $ 261 million trebled-damages award by the $ 433 million that the direct purchasers had recovered in settlements from the other defendants.

Settlement Agreement

On Sept. 10, Toshiba agreed to pay $ 30 million in exchange for dismissal with prejudice and a release of the class members’ claims against Toshiba “concerning the purchase, manufacture, supply, distribution, marketing, sale or pricing of TFT-LCD Products up to the date of execution” of the settlement agreement. The release does not include claims arising from the sale of TFT-LCD Products by other defendants or any subsidiary, affiliate or their co-conspirators and does not include claims for product defect, personal injury or breach of contract.

Class counsel said that they would seek attorney fees of not more than 33 percent to be paid from the settlement fund and reimbursement of outstanding litigation costs not to exceed $ 4 million to be paid from the combined settlements with Toshiba and AUO.

The settlement was conditioned on the court’s vacating and setting aside the jury verdict, and Toshiba withdrew without prejudice its motion to set off the settlement amounts against the damages award.

Dell’s Intervention Motion

Dell Inc. and Dell Products L.P. (collectively, Dell), which opted out of the direct purchaser class action and filed their own lawsuit against the defendants in the multidistrict litigation (Dell Inc. et al v. AU Optronics Corp., et al. [C 10-1064 SI, N.D. Calif.]), moved to intervene in the direct purchaser class action for the limited purpose of objecting to the motion for preliminary approval. Dellargued that it would be harmed if the court approved the settlement and vacated the jury verdict because it sought to take advantage of the preclusive effect of that jury verdict.

In the instant order, Judge Illston denied Dell’s motion, ruling that Dell failed to demonstrate that permissive intervention was appropriate. The judge noted that she had denied Dell’s motion for summary judgment against Toshiba on liability issues because Dell’s claims were not identical to the issues decided by the jury.

Moreover, Dell ”is not a member of the direct purchaser class that will be affected by the settlement agreement,” the judge said.

Vacatur Provision

In granting the direct purchasers’ motion for preliminary approval of the settlement, Judge Illston rejected Dell’s argument that the court could vacate the jury verdict only if “exceptional circumstances” were present.

Rather, under Ninth Circuit precedent, the court may vacate a jury verdict “so long as doing so is equitable,” Judge Illston said.

In the instant case, “the Court is persuaded that the settlement is in the best interest of the class, and that the jury verdict was a significant reason that the case ultimately reached a settlement. The Court had indicated that it was likely to grant the set-off motion, which would leave the class with no damages recovery from Toshiba. In addition, Toshiba had Rule 50 motions pending, and Toshiba has stated that if those motions were denied it would file a motion for new trial. If the verdict stood and a new trial was denied, Toshiba faced the prospect of the direct purchaser counsel seeking approximately $ 146 million in fees and costs from Toshiba. Thus, absent a settlement, both sides would have engaged in further protracted and expensive litigation at the district court and appellate levels. The public interest in judicial economy supports preliminary approval of the vacatur provision,” the judge said.

Moreover, “the proposed settlement would vacate the jury verdict only, and would not vacate any court decision,” the judge noted.

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