In a recent case, it was decided that a post-trial settlement agreement superseded a jury verdict finding a manufacturer of televisions and television panels guilty of antitrust violations. Specifically, on October 15, 2012, a California judge vacated a jury’s $87 million verdict against Toshiba Corp. to make way for a $30 million class action settlement over allegations of price-fixing with LCD televisions. Toshiba was the only defendant to go to trial, with all other defendants settling prior to trial.

At issue was Toshiba’s thin-film transistor liquid crystal display (TFT-LCD) technology that the company had sold in two forms, including as stand-alone units that were incorporated into other products (including notebook computers, computer monitors and televisions), as well as in the form of complete products such as televisions and computer monitors. Based on Toshiba’s share of the market, consumers filed a complaint alleging that the company violated the Sherman Act by conspiring with other manufacturers to raise and fix prices of their products. The jury agreed with the class plaintiffs.

After an initial jury decision found Toshiba guilty of knowingly participating in a conspiracy to fix TFT-LCD panel prices and awarded class plaintiffs $87 million in damages that could have been trebled to $261 million, Toshiba filed a motion to offset the award with the $433 million that the class plaintiffs had already received from other defendants who had previously settled.  Apparently concerned that the judge would agree with Toshiba and the electronics company would not have to pay any damages, the class plaintiffs agreed to enter mediation, which ended with the settlement agreement between the class plaintiffs and Toshiba.

Dell Inc., who had opted out of the class action suit and filed a separate action against Toshiba, attempted to intervene and asked the court to preserve the jury’s verdict. Dell wanted to use the guilty jury decision in its own case to prevent Toshiba from arguing that it did not knowingly participate in the price-fixing scheme in Dell’s action. In support of its position, Dell argued that both the Supreme Court and Ninth Circuit required “extraordinary circumstances” before a court could ignore a jury verdict and enforce a settlement. However, U.S. District Court for the Northern District of California Judge Susan Illston disagreed with Dell, saying that the settlement simply must be reasonable after considering the hardships on both parties and public interests at stake.

Although Judge Illston indicated that she “does not lightly set aside a jury verdict,” the Judge vacated the verdict because of the amount of money the class plaintiffs had received in settlements with other defendants and the protracted and expensive litigation that would result from ignoring the settlement. The Judge also noted that vacating the verdict would not diminish any precedent, as the verdict was a jury verdict and not a court decision and therefore did not result in binding precedent. Judge Illston will conduct a fairness hearing in mid-December to make her final determination regarding the settlement.

Companies who manufacture electronics, especially televisions and television panels, should be aware of this case. Assuming that the settlement is finally approved, Toshiba will limit its damages significantly, paying only the $30 million settlement amount instead of treble damages that could have exceeded $260 million, while also avoiding Dell using the jury’s guilty verdict against Toshiba in its separate action.

Arent Fox will continue to monitor these issues. For more information on this case, please contact Anthony Lupo, Sarah Bruno, or Eva Pulliam with questions.