Antitrust Law Daily Disk drive price fixing win nets Hewlett-Packard $438M
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Monday, January 6, 2020

Disk drive price fixing win nets Hewlett-Packard $438M

By Peter Reap, J.D., LL.M.

A jury’s award against Quanta Storage for conspiring to inflate prices of optical disk drives was trebled.

HP Inc. (formerly known as Hewlett-Packard Company) was awarded a total of $438,650,000 in treble damages on its claims that Quanta Storage and Quanta Storage America participated in a conspiracy to artificially inflate prices of optical disk drives (ODDs) in violation of Section 1 of the Sherman Act, the federal district court in Houston has ruled. The award was calculated by trebling a jury’s October 2019 $176 million award in HP’s favor and deducting settlement credits. The judgment will include post-judgment interest in the maximum amount allowed by law until paid. Quanta’s argument that the trebled damages violated due process was rejected. Further, Quanta’s motions for judgment as a matter of law and for a new trial were denied (Hewlett-Packard Co. v. Quanta Storage, Inc., January 2, 2020, Hittner, D.).

HP filed this suit against several defendants, including Quanta, contending that Quanta conspired to artificially inflate the prices of ODDs. The case was consolidated for pretrial proceedings before the Judicial Panel on Multi-District Litigation and then remanded to this court for trial. The court’s Jury Charge instructed the jury that in order to prevail against Quanta on the Sherman Act price fixing claim, HP was required to prove:

  • That an agreement or agreements to fix or stabilize the prices of optical disk drives existed among competing sellers of those drives;
  • That Quanta knowingly participated in such an agreement to fix or stabilize prices;
  • That such an agreement occurred in, or affected, interstate commerce; and
  • That the agreement in which Quanta participated caused HP to suffer an injury to its business or property.

In addition, the jury was advised that the proper way to calculate damages is to determine the difference between the amounts actually paid by HP for ODDs at the fixed or stabilized price, and the amounts HP would have paid for the same volume of ODDs, had there been no agreement among competitors to fix or stabilize ODD prices. The jury determined that each of the required elements was proven by a preponderance of the evidence and awarded HP $176 million.

Modification of judgment. HP moved to amend the judgment by trebling the jury’s verdict and then deducting certain settlement credits from the trebled award. As a successful antitrust plaintiff, HP was entitled to treble damages, the court found. Trebling the jury’s award before deducting settlement credits resulted in $528 million. However, it was undisputed that HP received certain settlement credits and after deducting those undisputed settlement credits HP was entitled to an award of $438,650,000, the court held.

Quanta argued that the award as trebled violated due process because due process precludes grossly excessive or arbitrary awards of punitive damages. However, treble damages are distinct from punitive damages in antitrust actions, according to the court. Because treble damages are distinct from punitive damages and serve to compensate HP, not punish Quanta, the award as trebled did not violate due process.

Judgment as a matter of law, new trial. Quanta failed to demonstrate any reason why the jury’s unanimous findings should be disregarded, the court said. Quanta’s renewed motion for judgment as a matter of law and its motion for a new trial were denied.

The case is No. 4:18-cv-00762.

Attorneys: Beatrice B. Nguyen (Crowell & Moring LLP) and Alex Benjamin Roberts (Beck Redden LLP) for Hewlett-Packard Co. Zachary Levine (Wolk & Levine, LLP) and Michael Andrew Heidler (Vinson Elkins LLP) for Quanta Storage, Inc. Christopher M. Neumeyer (Asia Law) for Quanta Storage America, Inc.

Companies: Hewlett-Packard Co.; Quanta Storage, Inc.; Quanta Storage America, Inc.

MainStory: TopStory Antitrust TexasNews

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