Price Fixing by LCD Panel Manufacturers

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9-0 Supreme Court Ruling

The Supreme Court unanimously ruled that a state attorney general asserting state law claims for money on behalf of its citizens can have that case resolved by its state court, and is not required to be removed to federal court under the Class Action Fairness Act (CAFA).

All nine Justices agreed to reverse the Fifth Circuit Court of Appeals’ ruling that the State’s consumer protection action could not proceed in Mississippi state court but must be heard in federal court. The Fifth Circuit had limited state courts’ rights to hear important public matters by significantly broadening the interpretation of what can constitute a federal mass action. The CAFA statute requires that a case be removed to federal court if there are 100 or more individual plaintiffs. The State had argued that CAFA did not apply since the State was the only Plaintiff. The Fifth Circuit had ruled that, despite the State Attorney General being the only plaintiff in the case, the court would treat all Mississippi residents as plaintiffs so CAFA’s 100 person requirement could be considered satisfied. The State appealed this decision to the U.S. Supreme Court.

In the Supreme Court’s Opinion, Justice Sonia Sotomayor wrote that an action by an attorney general on behalf of the state’s citizens does not fit within CAFA’s language. The Court held that, because the State of Mississippi, through its attorney general, is the only plaintiff, this suit does not constitute a mass action. The decision ensures the right of state courts to hear such actions and retain the power to interpret state law. Read the Opinion

Case Background

Some of the top liquid crystal display (LCD) panel manufacturers in the world may have engaged in a conspiracy to fix the prices of popular LCD screens. LCD panels are often the most expensive component of the end products they are used in, such as televisions, cell phones, laptops and computer monitors.

The complaint alleges that, starting in 1996, certain LCD manufacturers engaged in regular, secret meetings to fix prices and limit production of LCD panels. This concealed conduct inhibited the ability of government watchdogs to put a stop to their illegal activities and resulted in non-competitive pricing. The lawsuit, brought by the Mississippi AG, Jim Hood, seeks civil penalties and a request for the court to order that the companies permanently cease their conduct, as well as damages for inflated prices paid for government and consumer purchases.

The companies named in the lawsuit include Hitachi, Ltd.; Hitachi Displays, Ltd.; Hitachi Electronics Devices (USA), Inc.; LG Display Co., LG Display America, Inc.; Samsung Electronics Co., Ltd.; Samsung Semiconductor, Inc.; Samsung Electronics America, Inc.; Sharp Corporation; Sharp Electronics Corporation; Toshiba Corporation; Toshiba Matsushita Display Technology Co., Ltd.; Toshiba America Electronics Components, Inc.; Toshiba America Information Systems, Inc.; AU Optronics Corporation; AU Optronics Corporation America, Inc.; Chi Mei Corporation; Chi Me Optoelectronics Corporation; Chi Mei Optoelectronics USA, Inc., CMO Japan Co., Ltd., Chunghwa Picture Tubes Ltd.; and Hannstar Display Corporation.

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Department of Justice

In November 2008, the Department of Justice filed formal charges in U.S. District Court against LG Display Co. Ltd., Sharp Corp. and Chunghwa Picture Tubes Ltd., for violations of the Sherman Act. The three leading electronics manufacturers have agreed to plead guilty and will pay a total of $585 million in criminal fines for their roles in conspiracies to fix prices in the sale of LCD panels. LG will pay $400 million, the second highest criminal fine ever imposed by the Department’s Antitrust Division.

In January 2009, the Department of Justice announced that executives from LG Display Co. Ltd. and Chunghwa Picture Tubes Ltd. agreed to plead guilty and serve jail time in the United States for participating in the global conspiracy to suppress and eliminate competition by fixing the prices of TFT-LCD panels. Under the plea agreements, which must be approved by the court, all four executives have agreed to serve a term of imprisonment, pay a criminal fine and assist the government in its ongoing investigation.

In April 2009, the court approved the plea agreements for several defendants in the case, including Chieng-Hon “Frank” Lin (CPT) – 270 days prison; $50k fine Chih-Chun Liu (CPT)- 210 days prison; $30k fine Hsueh-Lung “Brian” Lee (CPT) – 180 days prison; $20k fine Chang Suk Chung (LG) – 7 months prison; $25k fine. In the Hitachi case, the change of plea hearing and expedited sentencing for price fixing are scheduled for May 1, 2009.