$571 Million Settlement Approved in TFT-LCD Indirect Purchaser Action

This posting was written by Jeffrey May, Editor of Trade Regulation Reporter.

The federal district court in San Francisco has given final approval to a $571 million settlement on behalf of indirect purchasers of thin-film transistor liquid crystal display (TFT-LCD) panels (In Re: TFT-LCD (Flat Panel) Antitrust Litigation, March 29, 2013, Illston, S.)

The settlement resolves antitrust claims against TFT-LCD panel producers AU Optronics Corporation (AUO), Toshiba Corporation, and LG Display brought by a class of retail purchasers who bought products containing TFT-LCD panels and eight states.

The court also approved attorney fees, expenses, and incentive awards. Combined with an earlier settlement with other producers, which was approved in July 2012, the total payments exceed $1 billion.

The indirect purchaser plaintiffs alleged a “long-running conspiracy extending from at least January 1, 1999 through at least December 31, 2006, at a minimum, among defendants and their co-conspirators, the purpose and effect of which was to fix, raise, stabilize, and maintain prices for LCD panels sold indirectly to Plaintiffs and the members of the other indirect-purchaser classes . . . .” They sought equitable relief under federal antitrust law, as well as restitution, disgorgement, and damages under the antitrust, consumer protection, and unfair competition laws of 23 states.

The eight settling states—Arkansas, California, Florida, Michigan, Missouri, New York, West Virginia, and Wisconsin—asserted claims arising from indirect purchases made by governmental entities, and/or by consumers of TVs, notebook computers, and monitors containing LCD panels under each settling state’s parens patriae authority, proprietary claims, and enforcement authority pursuant to both federal and state law.

The settlement was found to be fair, adequate, and reasonable. The settling defendants agreed to pay a total of $571 million under the approved deal. The settling states will be paid $27.5 million in resolution of their civil penalties claims. The remaining $543.5 million represents consumer redress. The breakdown of total settlement payments by the defendants is as follows: AUO—$170 million; LG—$380 million; and Toshiba—$21 million.

In addition to the monetary relief, all three producers agreed to establish an antitrust compliance program. AUO and LG also agreed, for a period of up to five years, not to engage in price fixing, market allocation, bid rigging, or other per se antitrust violations with respect to the sale of any LCD panels sold to end-user purchasers in the United States.

Objections to settlement. The court rejected objections to the settlement raised by the States of Illinois, South Carolina, and Washington. The crux of their objections was that the indirect purchaser plaintiffs were risking the class members’ recovery by pursuing injunctive but not monetary relief. Generally, a class action suit seeking only declaratory and injunctive relief does not bar subsequent individual suits for damages, the court noted. The states were not entitled to the exclusion of their citizens from the class.

In addition, the court noted that the defendants had represented that the release of the injunctive class claims would not affect damages actions by states which were not within one of the defined indirect purchaser plaintiff damages classes, even if they were included in the nationwide injunctive relief class. This included the parens patriae claims by states that were not part of an indirect purchaser plaintiff damage class.

Attorney fees, expenses. The court approved the request of indirect purchaser plaintiff (IPP) class counsel for a fee award of $308,225,250, representing 28.6% of the settlement fund, and $8,736,131.43 in expenses. According to the court, “the ultimate result achieved by IPP counsel, a settlement of approximately $1.08 billion in cash, is exceptional.” The court found the award to be “proper and fair in light of the amount and quality of the work done by the attorneys in this case.”

An award of $11,054,191 as attorney fees for the settling states also was approved. These states were entitled to a total of $1,206,479 in expenses. The court denied fees sought by attorneys representing separate objectors or groups of objectors.

Incentive awards. Lastly, the court approved a total amount of $660,000 for incentive awards. An award of $15,000 for each of the 40 court-appointed class representatives and $7,500 for each of the eight additional named plaintiffs was deemed appropriate.

The litigation is No. M 07-1827 SI (MDL. No. 1827).

Attorneys: Joseph M. Alioto, Sr. (Alioto Law Firm) for Indirect Purchaser Plaintiffs. John C. McGuire (Sedgwick, Detert, Moran & Arnold) for AU Optronics Corp.

Amnesty Applicant Not Ordered to Identify Itself, Assist in Private Antitrust Suit

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The federal district court in San Francisco will not require a company that was granted conditional leniency under the Department of Justice Antitrust Division corporate leniency program to identify itself to, and cooperate with, plaintiffs in a private antitrust action, alleging a conspiracy to fix prices in the thin film transistor-liquid crystal display (TFT-LCD) industry.

The plaintiffs—direct purchasers of TFTLCD panels—sought a motion to compel the amnesty applicant to comply with the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (ACPERA) or forfeit any rights under the Act.

The ACPERA (CCH Trade Regulation Reporter ¶27,750) limits the liability in a private antitrust action of a successful amnesty applicant that has cooperated with the government’s investigation and prosecution of the underlying conspiracy. The amnesty applicant’s liability might be limited to actual damages, instead of the usual treble damages.

Grant of Conditional Leniency

The Justice Department confirmed that it granted conditional leniency to an applicant, and that the applicant satisfied its obligations under the leniency agreement to fully cooperate with the government in its investigation into the TFT-LCD price fixing conspiracy.

Several corporations and individuals were successfully prosecuted for their roles in the conspiracy. The Justice Department, however, argued that the ACPERA did not authorize the court to grant the plaintiffs’ requested relief.

The court sided with the Justice Department and Samsung, the company identified by the plaintiffs as the amnesty applicant. While the court agreed that an amnesty applicant’s cooperation was most valuable early in the litigation, it concluded that the language of ACPERA suggested that the court’s assessment of an amnesty applicant’s cooperation occurred at the time of imposing judgment or otherwise determining liability and damages. Therefore, the amnesty applicant’s conduct would not be considered until the amnesty applicant sought to limit liability under ACPERA later in the suit.

Sunsetting of Provisions

The decision is probably the first to consider a federal district court’s authority under the ACPERA to compel an amnesty applicant to cooperate with private antitrust plaintiffs. It comes as the provisions in the 2004 law that provide amnesty applicants with an opportunity to avoid treble damages are about to sunset. According to the law, the provisions cease to have effect 5 years after the date of enactment. The law was enacted on June 22, 2004.

The American Bar Association Section of Antitrust Law has called on leaders in the House and Senate Judiciary Committees to extend these provisions. It has also suggested that Congress evaluate the efficacy of the detrebling provisions.

The May 19 decision is In re TFT-LCD (Flat Panel) Antitrust Litigation, 2009-1 Trade Cases ¶76,626.